Committee on Finance, June 4, 2025

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 4, 2025 10:00 a.m. PRESENT: COUNCILWOMAN KATHERINE GILMORE RICHARDSON, CHAIR COUNCILWOMAN CINDY BASS, VICE-CHAIR COUNCILWOMAN NINA AHMAD COUNCILMAN MICHAEL DRISCOLL COUNCILMAN CURTIS JONES, JR.

COUNCILWOMAN JAMIE GAUTHIER COUNCILWOMAN RUE LANDAU COUNCILMAN JEFFREY YOUNG, JR. BILLS: 241024, 250103, 250174, 250324, 250332, 250528, 250529, 250530, 250566, 250567, 250568, 250569, 250570, 250571 - - -

Good morning. I now not that the hour has come. And to begin today's hearing, the Clerk will you please call the roll to take attendance. Members that are in attendance will please indicate that you are present when your name is called.

Councilmember Jones.

Present.

Councilmember Ahmad.

Present.

Councilmember Driscoll.

Present.

Councilmember Thomas.

Present.

Vice-Chair Bass. (No response.)

Councilmember Gilmore Richardson.

I am present. Thank you. A quorum of the committee is present and this hearing is now called to order. This is the public hearing of the Committee on Finance regarding Bill Nos. 250569, 250570, 250332, 241024, 250567, 250571, 250103, 250530, 250528, 250529, 250566, 250174, 250324 and 250568. Clerk, will you please read the titles of the bills.

Bill No. 22 250569, an ordinance authorizing various encroachments in the vicinity of 2654 South 10th Street, Philadelphia, PA 19148, under certain terms and conditions. Bill No. 250570, an ordinance authorizing encroachments in the nature of a sidewalk café in the vicinity of 2101 East York Street, Philadelphia, PA 19125, under certain terms and conditions. Bill No. 250332, an ordinance amending Chapter 19-3200 of The Philadelphia Code, entitled "Keystone Opportunity Zone, Economic Development District, and Strategic Development Area," to provide for additional extensions of certain benefits, under certain terms and conditions. Bill No. A. and Republic First Bank as authorized financial institutions in which the City Treasurer may deposit funds, all under certain terms and conditions. Bill No. 250567, an ordinance constituting the Twenty- Eighth Supplemental Ordinance to the Restated General Water and Wastewater Revenue Bond Ordinance 11 of 1989, as supplemented; authorizing the Bond Committee to issue and sell one or more series or subseries of tax-exempt or taxable water and wastewater revenue bonds and revenue refunding bonds; authorizing agreements to provide credit enhancement or payment or liquidity sources (or any combination of the foregoing) for such Bonds; providing that such Bonds shall bear interest at fixed or variable rates; determining the sufficiency of pledged Project Revenues; authorizing the Director of Finance to take certain actions with regard to the sale of such Bonds, the investment of proceeds thereof and the City’s continuing disclosure obligations with respect to such Bonds; setting forth the use of proceeds of such Bonds; covenanting the payment of interest and principal; supplementing the Restated General Water and Wastewater Revenue Bond Ordinance 13 of 1989; and specifying applicability of sections of The First Class City Revenue Bond Act and the Restated General Water and Wastewater Revenue Bond Ordinance 18 of 1989. Bill No. 250571, an ordinance amending Chapter 17-1400 of The Philadelphia Code, entitled "Non-Competitively Bid Contracts; Financial Assistance," to modify exceptions and provide for reporting and recordkeeping in connection with invocation of such exceptions, all under certain terms and conditions. Bill No. 250103, an ordinance authorizing the Procurement Commissioner, on behalf of the City of Philadelphia, to enter into an agreement with the Philadelphia Energy Authority for coordination of a guaranteed energy savings contract for implementation and evaluation of energy conservation measures designed to reduce energy, water, wastewater, or other consumption or operating costs at specified City properties, all under certain terms and conditions. Bill No. 250530, an ordinance authorizing an increase in the non-electoral indebtedness of the City within the Pennsylvania constitutional limit; authorizing the Bond Committee to sell bonds at public or private negotiated sale, to provide funds toward various capital municipal purposes; providing for appropriations to the Sinking Fund Commission for the payment of such bonds; and authorizing agreements to provide credit or payment or liquidity sources for the bonds in connection with issuance of the bonds, and certain other actions authorizing an increase in the nonelectoral indebtedness of the city within Pennsylvania constitutional limit, authorizing the bond committee to sell bonds at a public or private negotiated sale, to provide funds toward various capital municipal purposes, providing for appropriations to the sinking fund commission for the payment of such bonds, and authorizing agreements to provide credit or payment or liquidity sources for the bonds in connection with issuance of the bonds and certain other actions. Bill No.

250528, an ordinance approving the Fiscal Year 2026 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds in connection therewith, and acknowledging receipt of the Revised Forecast of Capital Budgets for Fiscal Years 2027 through 2031, all under certain terms and conditions. Bill No. 250529, an ordinance approving the amendment of the Fiscal Year 2025 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works (including the supplying of funds in connection therewith) subject to certain constraints and conditions and acknowledging the receipt of the Revised Forecast of Capital Budgets for Fiscal Years 2026 through 2030, as amended. Bill No. L. 1449, Section 4, as amended, to prevent and eliminate blight; authorizing the Director of Planning and Development and the Director of Commerce to file 2 applications to obtain other grants from the Commonwealth; authorizing the Director of Commerce to use the Section 108 Loan Guarantee Program; and authorizing the Director of Planning and Development and the Director of Commerce to enter into all understandings and assurances contained in such applications and take all necessary action to accept the grants; all under certain terms and conditions. Bill No. 250174, an ordinance amending Chapter 19-4600 of Title of The Philadelphia 17 Code, entitled "Low-Income Tax 18 Provisions," by extending the 19 deadline for low-income taxpayers to apply for a refund or forgiveness of Real Estate Taxes, under certain terms and conditions. Bill No. 250324, an ordinance amending subsection 19-2604(6) of The Philadelphia Code, entitled "Credit for Contributions to Community Development Corporations, Nonprofit Organizations Engaged in Developing and Implementing Healthy Food Initiatives and Nonprofit Intermediaries," under which businesses may enter into agreements to make contributions to community development corporations and certain other organizations to receive tax credits, by expanding eligibility for recipients of such funds and the uses to which such funds may be used; and which taxes that are used for this tax credit program, and increasing the number of businesses to which the credit shall be made available; and providing the option for a commensurate grant program; all under certain terms and conditions. And finally Bill No. ) Plan which includes 9 housing production and 10 preservation, home affordability, 11 homeowner and renter assistance, 12 related contractor training and 13 support, blight and vacant property 14 reduction, urban beautification, 15 neighborhood infrastructure, and 16 other related programs; approving 17 the issuance by the Authority of 18 bonds, notes or other evidences of 19 indebtedness (including 20 reimbursement obligations related 21 to lines or letters of credit) in 22 one or more series to finance or 23 refinance such plan and authorizing 24 and approving the obligation of The City of Philadelphia to pay in full when due the Service Fee and other amounts payable under the Service Agreement; authorizing certain City officers to take certain actions required to issue such bonds, notes or other evidences of indebtedness; covenanting that The City of Philadelphia will make necessary appropriations in each of the City’s fiscal years to provide for, and will make timely payments of, the Service Fee and other amounts due under the Service Agreement; requiring an annual program statement and budget to be approved by Council, and other requirements; and authorizing and approving the Director of Finance of the City and other City officials to take other necessary or appropriate actions to effectuate the purposes of this ordinance; all under certain terms and conditions. There are no other bills at this time.

Thank you. Thank you very much. I'd like to also recognize the presence of our colleague Councilmember Jamie Gauthier, who is the sponsor of two bills being heard in the Committee on Finance this morning. Clerk, will you please call the first panel we have to testify on Bill No. 250569.

Yes --

And also recognizing the presence of our Finance Committee Vice-Chair, Councilmember Cindy Bass. Clerk, you can call the first panel that we have to testify on Bill No. 250569.

For Bill No. 250569, we have Noelle Marconi, Director of Legislative Affairs for Streets. (Witness approached witness table.)

Good morning. Please 8 state your name for the record and 9 proceed with your testimony. 10

Good 11 morning, Chairperson and majority 12 Leader Gilmore Richardson and 13 members of the Finance Committee. 14 My name is Noelle Marconi and I'm 15 the Director of Legislative Affairs 16 for the Department of Streets. I'm 17 here today to offer testimony on 18 Bill No. 250569, introduced by 19 Councilmember Squilla. 20 This bill authorizes 21 2654 South 10th Street, LLC, the 22 owner, to install, own and maintain 23 various encroachments in the nature 24 of a canopy and sidewalk café at Oregon Steaks located at 2654 South 10th Street, all under certain terms and conditions. An existing canopy made of permanent structure will be located along the curbline of 2654 South 10th Street and encroach a distance of feet 8 towards the south along the north 9 sidewalk of Oregon Avenue, leaving 10 14 feet of clear and unobstructed 11 footway. 12 A total of four tables 13 and eight seats for a sidewalk café 14 will be located along the curbline 15 of 2654 South 10th Street, leaving 16 eight feet of unobstructed footway. The Department of Streets is not opposed to these proposed encroachments. This concludes my testimony and I'm pleased to answer any questions you may have.

Thank you. Thank you very much for your testimony. Are there any questions or comments from members of the committee for this panel? (No response.)

Okay. There being no 7 further questions, we will now move on to Bill No. 250570. Clerk, will you please call the first panel for Bill No. 11 250570.

The first panel for Bill No. 250570 is Noelle Marconi, the Streets Department.

Thank you. Thank you again. Please state your name for the record and proceed with your testimony.

Good morning, Chairperson and Majority Leader Gilmore Richardson and members of the Finance Committee. My name is Noelle Marconi and I'm the Director of Legislative Affairs for the Department of Streets. I'm here today to offer testimony on Bill No. 250570, introduced by Councilmember Squilla. This bill authorizes Dennis Kirby, the owner, to install, own and maintain an encroachment in the nature of a sidewalk café at The Monkey Club located at 2101 East York Street, under certain terms and conditions. A total of four tables and seats for a sidewalk café 15 will be located along the south 16 sidewalk of Amber Street along the property line of 2101 East York Street. The Department of Streets is not opposed to this proposed sidewalk café, as it will maintain the minimum of six feet of clear unobstructed footway. This concludes my testimony and I'm pleased to answer any questions you may have.

Thank you. Thank you very much for your testimony. Are there any questions or comments from members of the committee regarding this bill? (No response.)

Okay. Seeing none, we thank you very much for your testimony and we thank you for being here. We will now move on to Bill No. 250332. Clerk, will you please call the first panel we have for Bill No. 250332.

The first panel for Bill No. 250332 is Dawn Summerville, the Deputy Commerce Director.

Thank you so much for being here. You know we certainly appreciate working with you and are thankful for your good work. Please state your name for the record and proceed with your testimony.

Dawn Summerville.

Thank you. You may proceed.

Good morning, Chairperson Gilmore Richardson and members of the Finance Committee. My name is Dawn Summerville. I am the Deputy Director Commerce Director for Business Development for the Commerce Department. I'm here to testify on Bill No. 250332, which would authorize the City of Philadelphia to apply to the Commonwealth of Pennsylvania for the extension of the Keystone Opportunity Zone benefits for projects in Harrowgate, East Kensington, University City and the Navy Yard. These sites are managed by Crown, Smith and Roller, Wexford Ensemble and the Philadelphia Industrial Development Corporation respectively. KOZ is an economic development program created by the Commonwealth to stimulate investment and employment growth on vacant or underutilized properties. Businesses located in these specifically-designated zones are authorized to apply for state and local tax credit exemptions and tax abatements for a term up to 10 years. The KOZ program allows the city to spur economic development and attract businesses that may not otherwise choose to develop or locate in Philadelphia. This state program has been a critical tool in the region's economic development toolkit, helping to offset the high cost of development in Philadelphia, attracting hundreds of millions of dollars in private investment and generating more than 10,000 local jobs in our city. In fact, much of the development in Philadelphia has seen in the past years on vacant 10 industrial sites has been 11 incentivized in part by the KOZ 12 program. In order to keep KOZ 13 benefits in place, the city is 14 required to submit a KOZ extension 15 application to the PA Department of 16 Community and Economic Development 17 at least 90 days prior to 18 expiration on October 1. 19 The application must 20 include a City Council legislation authorization in order for the city to submit application. Akin to previous rounds of KOZ designations and extensions, the city will require each owner to enter into a pilot agreement or payment in lieu of taxes in the amount of 110% of what otherwise would have been the real estate tax liability for the unimproved property for the duration of the KOZ benefits. The 110% pilot agreements generate long-term revenue for the redevelopment of KOZ sites. In addition, all KOZ beneficiaries are required to submit or update their career- connected learning plan to ensure there are apprenticeship and workforce opportunities for Philadelphia School District students. Finally, an Economic Opportunity Plan or EOP is always required to show evidence of equitable contract use, which may include financial investment, design, construction and operations. The KOZ program provides a unique opportunity to leverage educational and workforce development opportunities for all Philadelphians. The city remains committed to working with developers and businesses to ensure that we create meaningful opportunities and access for underserved Philadelphians and families. As a reminder, the state will not approve a KOZ extension application without Council approval, school district approval and the aforementioned city requirements in place. Thank you for the opportunity to testify today. I'm happy to take questions at this time.

Thank you. Thank you very much for your testimony. The Chair now recognizes Councilmember Jones.

Hello, Ms. Summerville. How are you?

Well, Councilman.

Good. When was the first KOZ established in Philly?

The Keystone Opportunity Zone definitely predates my time here in city government. I would say, possibly around Rendell or before. It's been around for over 20-something years.

Have we done a study to look at -- so give me the areas that they are. I heard Kensington.

Harrowgate, East Kensington, University City and the Navy Yard.

Have we kind of chronicled what the economic benefit of those districts are and whether or not this firm would have chose this space, but for that KOZ? I mean -- and I'm not expecting you to have it today, but at some point could you provide it to the Chair so she can tell the rest of the committee. Do you keep that kind of information?

We do track information. I will say we will get that information back to you, Councilmember Jones, but I will also say that currently the Commerce Department is doing an impact study of what the KOZ has done for the city of Philadelphia. Under my tenure I can tell you that I've seen the KOZ benefit expand beyond just the core of Center City, which has always been a targeted interest for us. There's other development happening, whether or not it's in West Philadelphia. Parkside has received KOZ benefits. I'm happy to see that they're expanding also. We're now looking and seeing development in East Kensington taking advantage of the KOZ. There's been tough times. Although the pandemic might seem that it was four or five years ago, we're still seeing the impact of development, the increase in development which has staggered development throughout the city or paused development during KOZ. But, yes, we will get that information over to you and we're currently in the midst of hiring for our study.

So anecdotal evidence, give me one or two of your crown jewels, successes under KOZ.

I would say one crown jewel is the CIRA Centre. I think what you're also seeing is the master plan development and what happened in the Navy Yard. Another crown jewel that we're looking at is the Bellwether District. The fact that you have the development that you have in Parkside Avenue. I think there's several developments that we can point to. Smith and Roller, which is sitting here with us today, their development. Those are all opportunities that will not only bring new business into the city, but spur opportunities for growth in the workforce space.

Then finally, if someone comes to one of our offices and says I have an address, it's in the KOZ, do we know all of the codifying programs that will be able to kind of do a benefit for that business in that location? Do we have that ability to cross-reference other programs to say if you locate right here, here's how much contribution the government is going to give you?

The Keystone Opportunity Zone is a parcel-specific program, which means that it has to be designated, unlike other zones that may be if you're sitting in a KIZ Zone or Key Innovation Zone. So this is partial specific, meaning that you're applying to a specific parcel and most times that is the developer or the land owner, right, that they're bringing a business in. And if a business comes into that zone, yes, we make them aware of the benefits that they can get. Quite frankly, if they're sitting -- because I -- we are or we don't try to be, but we are good stewards of public dollars and public funds. If you are sitting in a KOZ benefit, that's your benefit. We're not going to layer additional benefits on top of Keystone Opportunity Zone because it is a golden benefit.

Thank you, Madam Chair. Thank you.

Thank you.

Thank you. Thank you very much, Councilmember Jones. Prior to recognizing Councilmember Ahmad, I wanted to recognize the presence of our City Controller, Christie Brady, who's here with us this afternoon and her First Deputy Bill Rubin and team. We thank you all so much for joining us for the hearing. The Chair now recognizes Councilmember Ahmad.

Thank you, Madam Chair. I wanted to hone in on your crown jewel that you mentioned, the CIRA Center Keystone Opportunity Zone. That actually became a flashpoint case where lucrative state and city tax abatements subsidized the relocation, which was not what it was meant for, of high margin Center City law firms, most notably Dechert and Woodcock Washburn rather than attracting new firms or jobs from outside Philadelphia. So independent fiscal reviews show 400 million in foregone state and local taxes across CIRA tenants over the KOZ term versus the less than 6.7 million in demonstrable new wage tax revenue to the city that could have happened. 60% of the tenants already resided in Philadelphia, at least signing, undercutting the purpose of a KOZ. Then City Controller, this was a while ago, put total KOZ revenue loss to the city and school district at greater than 380 million with only 132 million recaptured via wage tax in overall net fiscal yield. These outcomes triggered amendments to guidelines and a pending state bill aimed at closing the so-called zone hopping loophole, but yet we have none of that -- the state law has not materialized and we really need reforms before we do this, right, so we need guardrails. And peer cities like Chicago, New York could be a template for us for our local legislative reforms. This could include prohibiting zone hopping, one-and-done policy, relocation fee to the city if we're going to allow them to do this and a secure clawback for noncompliance. I don't know if you have that. I don't believe we do. Linked -- and this is really important because of the Mayor's huge initiative for the H.O.M.E. Initiative. Linked development contribution to the workforce housing in KOZ zone. We don't have that in this either. And a dashboard-type transparency so the public is aware of the benefits that are to be derived or not to be derived from these policies of tax incentives and in realtime, not after the fact. So these are some of the concerns I have and I wanted to hear how -- because this is already documented that we have these issues. I wanted to know what we have in store from you to avoid this?

Thank you, Councilmember Ahmad, for your historical perspective. Again, as I stated and as you stated, the CIRA project and what happened there was years ago, again prior to my tenure of taking over KOZ so I appreciate that. What has been put in place is that we have had career- connected learning, pilot agreements and other things that are in place. Again, I want to remind the Finance Committee that this is a state program that the city takes advantage of, right, and it has helped significantly in investments throughout the city. We again are doing our impact study that under former Council President Clarke and Councilmember, I believe, Gilmore Richardson has requested that we report in on our incentive study, which is what we're in the process of doing now. The Dechert case, which I can't speak on because my background is not in law. It's --

It --

Hold on. It's not in law. It's in economic development. That case was because quite frankly attorneys found a loophole in a state program. I will also let you know that coming into Governor Shapiro's administration our team met with Governor Shapiro's team and let them know what our thoughts were about certain loopholes, KOZ-hopping and that the state is working on revamping all of their benefits and KOZ is one of them. We're hoping some of our recommendations that we made to Shapiro will come in that, but since Governor Shapiro has been in place there's been no new KOZ designations for the state of Pennsylvania.

So these recommendations that you made to the Governor for hopefully passing legislation to avoid this kind of zone-hopping, is there anything we can do in our own jurisdiction with our local laws to address this?

I think speaking with the state, telling the interest, right, we want development. We want good development. We want good development partners, but we also want to make sure that our school district remains whole and that our benefit is going into our residents and new businesses coming in. So I say we continue the conversation collaboratively, right, as from state to city.

But at the very least with not needing any state intervention, we can have a transparent dashboard that could elicit and show the public and us exactly what we're doing. So that, we need nothing from the state.

No, you're correct. That's something that we can look into. We'll take under consideration. But I also want to be clear that we've also put guardrails in place. As I stated, the Career Connected Learning program, the EOP, the Pilot program, that is what the City of Philadelphia and Commerce Department had worked together to put forward. No other jurisdiction within the state of Pennsylvania has other guardrails in place.

So just to be clear, in the way that currently we stand it will still allow zone-hopping. Meaning, somebody who's already in the city, not a new business, not new jobs but just relocating, does this allow us to continue to do that?

The state program, in order to move from KOZ zone to another, you cannot move without additional investment, growth within your business and hiring of new employees, that is correct. That is a state requirement.

So just for us as a city, we would be losing the revenue moving from the current role into a new KOZ --

I don't know that I can confirm that we're losing revenue. That's a case-by-case basis. I don't think we've seen a lot of zone-hopping. Again, we'll be happy to talk about that further.

Just to be on the record, we did lose in this CRA KOZ zone. We have it documented by multiple sources that that was the case. So we just need to be very cautious moving forward. While we on the surface looks like a great thing, but we have unscrupulous people taking advantage of that. And I want to make sure we have guardrails in place and it could entail hopefully working with our state partners, but we need to put whatever we can at least to be able to illuminate to all of us what exactly is happening and who's getting in there and who's benefiting, which is the transparent dashboard.

I agree. Thank you.

Thank you.

Thank you. Thank you very much for your testimony. And if we could just get a response for Councilmember Ahmad regarding Philly Stat 360 because I don't know with the new dashboard if that information could be shared via Philly Stat 360 possibly, which is the initiative that I know the Administration has already gotten up and running, so that could be an opportunity to share the information that Councilmember Ahmad is requesting. And in addition to that, I think I heard Councilmember Ahmad request any information be submitted to the committee regarding KOZ zones that have changed from the original designation, correct?

More so, who is relocating into these places.

Okay.

That's my main concern.

And who is relocating. And you can submit the information to the committee and I'll dissem --

Can I get something in writing from your office so that we'll make sure that we're answering you clearly?

Yes.

Thank you.

Thank you so much. The Chair now recognizes Councilmember Gauthier.

Thank you, Madam Chair. And I promise to be brief. I just wanted to weigh in because I think this is a really important conversation and because my district is included in this bill. I have some version of this conversation with Dawn every time we get these requests. So it's not only the request to place a project in a KOZ. Typically, developers will come back to add additional parcels or to extend the time, and I'm constantly asking what are we giving up and what are we gaining back from the community. So I'm glad that the city is doing an impact study. I think we really need it, not to stop KOZs but to ensure that we're getting concrete maximum benefit for the community. And with my projects, I typically negotiate CBAs outside of what the city already includes in the program. So beyond the Career Connected Learning for all the parcels in my district, I negotiate CBAs that provide benefit over and above what Commerce has already worked out. But I'd love for this to be more standardized and for us to have more concrete answers about the impact of the program.

Thank you. Thank you so much, Councilmember Gauthier. And thank you again for your testimony. Are there any additional questions from members of the committee? (No response.)

Okay. Seeing none, we thank you again for your testimony. We'll now proceed to Bill No. 20 241024. Clerk, will you please call the first panel we have to testify on 241024.

The first panel for Bill No. 241024 is Jacqueline Dunn, City Treasurer. (Witnesses approached witness table.)

Welcome back. It's good to see you. Thank you so much for being here. Please state your name for the record and proceed with your testimony. CITY TREASURER DUNN: Sure. Thank you, Chair. Good morning, Chair Gilmore Richardson and members of the Committee on Finance. I'm Jacqueline Dunn, City Treasurer. And with me this morning are Shakina Clark, Deputy for Banking, and Sarah Cho, Chief of Staff in the Treasurer's Office. I'm here to testify this morning in favor of Bill No. 241024. This bill would amend the list of authorized depositories under Section 19-201 of the City Code to remove Citibank and Republic First Bank as authorized financial institutions in which the Treasurer may deposit funds. In April 2024, Republic First Bank was closed by the Department of Banking at the State -- Banking and Securities at the state and virtually all of the assets were acquired by Fulton bank, another existing city-authorized depository. Existing city deposits with Republic First Bank, all accounts that are managed by the family court system are now with Fulton Bank. As Fulton Bank is on the approved depository list currently, no further amendments to the code are required. In October 2024, the city also received a formal request from Citibank to be removed as a depository. Citibank does not currently hold any city deposits but previously provided pay card services from the years 2014 to 2016 before selling the entity that held that city contract. Citibank has re-examined prospective business lines and is shifting away from providing government banking services in this market. Citibank has stated that the bank remains committed to providing banking services to consumers and businesses in Philadelphia. While the bank maintains a local administrative office, there are currently no 17 branches in Philadelphia. The Treasurer's Office views both of these changes as administrative adjustments with no practical impact to our banking activities. The Administration respectfully recommends adoption of this bill and respectfully request that the committee give the bill a favorable recommendation and further recommend that rules of Council be suspended so as to permit first reading of the bill at the next session of Council. Thank you for your consideration and the opportunity to testify and we're here to answer any questions you may have.

Thank you. Thank you very much for your testimony. And for the record and for the members of the committee, I wanted to thank your office for the 43-page slide deck that you all submitted to my office per my request regarding all of our city depositories. I know that this legislation is germane to the removal of two of our city depositories, one for a merger obviously, and then the second relative to the financial institution moving away from providing government banking services and having less of a geographic footprint here in our community. But I wanted to state for the record that I did ask for all of the locations of every bank and financial institution that's a city depository, their hours of operation, all of their career opportunities, all of the loans, mortgage products I should say, that were originated, that were below $250,000 and I appreciate the receipt of that information and I have been reviewing it. I wanted to state for the record for this hearing even though we are just doing two removals, that my concern is relative to a number of financial institutions who work with many of my district colleagues who set up in neighborhoods and in communities with the promise of better banking services, particularly for communities in Philadelphia who most often rely on check cashing services as an example. And they start off with offering evening hours, you know, maybe once or twice a week. And also, I have weekend hours as well for many working class Philadelphians who are not able to get to the bank between the hours of 9:00 and 5:00 or who can only go to the bank on the weekend. And so, I do have relative concern as the Finance Chair regarding the bank branches that we have in our communities that are not providing extended service hours. I'll say based on the data that you all did provide in the slide deck that TD Bank seemed to be doing the best relative to hour availability. We'll continue to work with you all on this, but I do have concern that I wanted to put on the record, particularly because we are doing business with all of these particular banks. In addition to that, many of them have employees that may work in the city of Philadelphia, but the number of individuals who live in the city of Philadelphia versus work in our city is completely different. And I have concern there too. Because if we are doing business with them, they should be hiring individuals who live in the city of Philadelphia. So I wanted to put that on the record prior to passing along to our Vice-Chair Councilmember Cindy Bass. Thank you.

Thank you, Madam Chair. Actually you answered my question, which was why were they being removed as the depository. So you thoroughly answered that. I guess the only other question I have is was there anything that would be lacking with their removal? Is there any gap that needs to be closed through your eyes from the work that they were doing? It doesn't sound like it with Citibank but maybe with Republic First. CITY TREASURER DUNN: Sure. Thank you, Vice-Chair. No, our office has had and the family court system has had a number of meetings with Fulton Bank in regard to the transition from Republic to Fulton to make sure that that service goes -- that transition goes as smoothly as possible. The relationship team was retained in the takeover by Fulton, which has been a positive in the court's eyes. And so, we continue to monitor that to make sure it goes well. But primarily the adjustment in the code is really just a cleanup provision.

Okay. That's all. Thank you. I just wanted to make sure we were covered. Thank you, Madam Chair.

Chair now recognizes Councilmember Jones.

Thank you, Madam Chair. As a part of this evaluation, we look at each of those financial institutions, CRA reports? CITY TREASURER DUNN: Yes. We on an annual basis -- our office both requests updated information from all of the depositories regardless of whether or not they actually hold deposits, but if they are on the list in the code as an approved institution we request a number of documents from them, not only about their financial viability and the government services, banking services that they provide but also their CRA activities, compliance with the predatory lending prohibitions and things of that nature. We review that and then also use that information in the annual lending disparities study that we produce.

So my assumption is that all of them passed with adequate review? CITY TREASURER DUNN: All of the institutions that hold city deposits have satisfactory or highly -- outstanding rather CRA ratings. Currently, it is something that we want to make sure we're on top of because we want the institutions that we're actively working with to be in good standing and be making significant efforts in the community.

Did I hear some are better than others? CITY TREASURER DUNN: They go through periodic evaluations. And so, you'll see scores -- for example, Wells Fargo several years ago their score dropped. They've made a lot of efforts to make strides to improve. We've had a lot of conversations over the years with that institution as an example and their CRA rating has gone back up through the federal review process. But, yes, it is something that we that we care about and we monitor.

Can you on a quarterly basis provide that to the Chair so that if it fluctuates in any way we can throw up a red flag and ask why? CITY TREASURER DUNN: Sure. The scores are updated annually. We're happy to provide that quarterly, but they're scored on an annual basis just as a practical matter, for clarity. But we are of course happy to provide that.

I'm okay with annual. CITY TREASURER DUNN: Okay.

Thank you. CITY TREASURER DUNN: No 22 problem.

Thank you, Madam Chair.

Thank you. Thank you very much, Councilmember Jones. And I just also wanted to put on the record, particularly because there's been a real concentration around housing in the city of Philadelphia around the concern for the mortgages under 250,000 but also individuals who are suffering with tangled titles and deeds who we have many programs here in the city of Philadelphia to help them resolve the issue, but then they may need to come back to get a HELOC as an example to help the home and the condition of the home. I also wanted to put on the record for our small businesses. We have a number of small businesses who have a very hard time interacting with some of the larger banking institutions. And I've also read and I'll tell you Citizens Bank I think does a really good job in emailing the reports directly to us, and I still receive them. So as an example, if we could have all of the banking institutions that serve as depositories follow the same sort of pattern as far as reporting as Citizens Bank, I think that would be helpful. Because I do read the report and I do notice that typically on the lower end of the business loan products, there's not very much activity. But the higher end loan products, it's much more activity. Same thing in the mortgage realm and in the mortgage products, the lower end is not very much activity, but the higher rate mortgages that we know many Philadelphians cannot afford, they're doing more business and in that realm. And the areas of concentration are more so in certain districts than others. The middle neighborhoods don't see as much movement on the lower end mortgage products. So I wanted to just put all of that on the record so you know and understand what we are thinking about, particularly as a committee moving forward and ensuring that all Philadelphians have the opportunity to do business with these institutions who are doing business with us. And I think the threshold is 100 million, right, for each of them around sort of the process for them to be considered? CITY TREASURER DUNN: Yes, the code requirement. Yes, at the time of consideration, correct.

Exactly. Okay. So thank you very, very much. We appreciate it. We'll disseminate all the information to the committee and we thank you for being here. CITY TREASURER DUNN: Thank you, Chair. And we'll follow up regarding your last request about appropriate structure for that. Thank you.

I'll work with you on that and I appreciate it. Thank you very much. Are there any other questions from members of the committee for this panel? (No response.)

Okay. Seeing none, we'll now move on to Bill No. 22 250567. Clerk, will you please call the first panel for 250567.

The first panel for Bill No. 250567, Matthew Bowman, Deputy City Treasurer. (Witnesses approached witness table.)

Thank you. If you could please state your name for the record and proceed with your testimony.

Good morning. My name is Matthew Bowman, Deputy City Treasurer. Joining me is City Treasurer Jackie Dunn and there are also members of the Water Department here to answer any questions. I'm here to testify on behalf of Bill 250567. This would provide authorization to issue water and wastewater revenue bonds in an aggregate amount up to $1 billion exclusive of original issue discount, if any. You have my written testimony. You probably don't need me to blabber on about all the specific uses. Essentially, this allows the Water Department to continue funding their capital program and invest in its infrastructure over several years. We recommend adoption of this bill. We respectfully request the committee give the bill its favorable recommendation and further the committee recommends the rules of Council be suspended so as to permit first reading of the bill at the next session of Council.

Thank you. Thank you very much for your testimony and thank you again for your work. This is relative to capital and infrastructure needs for our Philadelphia Water Department. I'm still going to put on the record that I did submit a letter to the Commissioner regarding concerns on the other side of the ledger for Water. I'll now pass it to Councilmember Jones.

Thank you so very much. And maybe you're not the -- you're the messenger as opposed to the message. But the question becomes for me, there's an ambitious project that impacts my district that goes from the Belmont Water Treatment Center under the Schuylkill River and up into East Falls. Does this bond help finance that in lieu of being reimbursed by the federal government or is that separate?

I would defer to the Water Department on that. CITY TREASURER DUNN: While those representatives come up, Jackie Dunn, City Treasurer. But in general the bond --

State your name for the record. CITY TREASURER DUNN: Jackie Dunn, City Treasurer. Thank you. The bond ordinances allow us both to draw down state revolving loan funds, as you mentioned federal low-cost loans and to borrow money as a city to invest in projects that are all approved by the budget each year.

Is this like an accounts receivable financing mechanism? Is that what we're doing with borrowing in anticipation of state grants? CITY TREASURER DUNN: It depends project to project. At the state level we get approved for specific projects or baskets of projects for the state revolving loan program or Pennvest. I'll defer to the Water Department on the specific project that you referenced.

Good morning, Council. My name is Vahe Hovsepian. I'm the Capital Budget Director at the Philadelphia Water Department. This specific project that you're talking about is going to be funded through bond proceeds.

So it is going to Finance what we are talking about and we will catch up with the reimbursement from the federal government or state government; is that right?

It's going to be fully funded through our bond proceeds. I don't think there's a provision for --

So we don't have a grant for this in other words?

No. 3

Okay. That answers my question. Thank you, Madam Chair.

Thank you. Thank you very much, Councilmember Jones. Are there any additional questions for this panel? (No response.)

Okay. Seeing none, we thank you very much for your testimony. We will now move on to Bill No. 250571. Clerk, will you please call the first panel we have to testify on 250571.

The first panel for Bill No. 250571, Camille Duchaussee, Chief Administrative Officer. (Witness approached witness table.)

Excellent. Thank you so much for being here today. Thank you for your work and for all of your collaboration. Please state your name for the record and proceed with your testimony.

Good morning, Chairman Gilmore Richardson and members of the Finance Committee. My name is Camille Duchaussee, and I'm the Chief Administrative Officer for the City of Philadelphia. And I'm testifying on behalf of the Administration today in regard to Bill No. 250571, an ordinance 19 amending Chapter 17-1400 of The Philadelphia Code. Firstly, I want to very sincerely express my appreciation to you, Majority Leader Gilmore Richardson, for the work and partnership with your team for engaging members of the Administration in thoughtful dialogue around procurement practices and policies. The spirit of collaboration reflects our shared commitment to good governance and the responsible and efficient management of the city's procurement practices. This shared commitment must also include the implementation of sufficient internal controls to safeguard against ineffective procurement processes or the misuse or inappropriate manipulation of the same. So together, we aim to ensure that our contracting practices serve the public interest and strengthen trust in city operations. The Administration is committed to continuous improvement of the city's procurement framework to ensure transparency, accountability and contracting opportunities and deliver on the promise of the Mayor's day one Executive Order 2402 directing improvement of resident service delivery. So again, I very much want to express my thanks to you, to your office, to the committee for its continued engagement and I look forward to continuing that conversation and happy to answer any questions that you may have.

Thank you. Thank you very, very much to our Chief Administrative Officer. And I too echo your sentiments and greatly appreciate the opportunity to work together, the collaboration that we've been undertaking over the last year. And, colleagues, I want to say for the record that this is not the last time we'll be working on this issue, but this is a further continuation of the work that we'll do to ensure that our internal controls around contracting and the conformance of contracts happens in a way that is good for the public interest. Okay. So I wanted to put that on the record. This particular legislation deals with the emergency and exigent circumstances for the Administration to be able to contract when there are emergency or exigent circumstances. But more to come. We're still talking about everything that you all have learned throughout the past year and all the processes that are being put in place that we want to ensure we codify in the code. So thank you very, very much for your work. Are there any additional questions for this panel? (No response.)

Okay. Seeing none, we thank you very, very much for your work and thank you for the collaboration. Okay. We'll now move on to Bill No. 250103. Clerk, will you please call the first panel for 250103.

The first panel for Bill No. 250103 is Emily Schapira, President and CEO of Philadelphia Energy Authority and Dominic McGraw, Program Director, Energy and Climate Solutions.

Thank you. Please state your name for the record and proceed with your testimony. MR. McGRAW: Good morning, Chairperson Gilmore Richardson and members of the committee. I am Dominic McGraw, Program Director of the Office of Sustainability, Division of Energy and Climate Solutions. Thank you so much for the opportunity to provide testimony on Bill No. 10 250103. The Office of Sustainability works to improve the quality of life in all neighborhoods. In support of this broader mission, the Energy and Climate Solutions Division manages programs that advance Philadelphia's climate and energy goals. The Division focuses on reducing carbon emissions from municipal and residential, commercial and industrial buildings, leading by example through our efforts in municipally- owned buildings. The Guaranteed Energy Savings Act, or GESA project, targets deep energy improvements in city buildings. 6 Using GESA projects can access 7 unique financing that allows energy 8 and operations savings that pay for 9 the building's improvements over 10 time, limits the upfront costs and 11 saves the city money. 12 But beyond that, the 13 energy reductions and carbon 14 emission reductions for the project will also improve operations and resilience of our office buildings, courthouses, health care and homeless services facilities and it will improve cost-effectiveness in addressing critical capital upgrades and create unique opportunities for local, minority- owned and women-owned businesses. My testimony today will focus on energy savings, climate pollution reduction, procurement process and project management for this opportunity. My colleague Emily Schapira from the Philadelphia Energy Authority will cover other aspects for this project in this bill as well. At a time when energy costs continue to rise and the effects of climate change have been felt increasingly in our communities, our work on the improvement of the city's Municipal Energy Master Plan, which sets goals to slash greenhouse gas emissions by 50% for the city's built environment, by reducing energy consumption by 20% and moving to 100% renewable electricity by 2030 is more urgent than ever. This work is key to reaching Philadelphia's commitment to carbon neutrality by 2050. 3 million Retrofit project at the Philadelphia Museum of Art and the $91 million Philadelphia Streetlight Improvement project that is over 80% complete at this point. Together these projects have resulted in significant energy savings and cost savings while improving city operations and public safety. As you know, AI and data centers increase the stress on the electric grid and electric supply has not been keeping up with demand. Energy-efficient buildings have become more critical to lowering operating expenses and achieving carbon neutrality. Our efficiency work both lowers the city's utility costs and helps reduce stress on the grid, keeping electricity rates affordable for all Philadelphians. This GESA project uses long-term energy savings to fund large-scale capital upgrades across these four facilities, these improvements ranging from lighting and HVAC to electrical systems and windows. This will cut the energy use and bolster resilience, helping critical sites like city health centers and homeless services facilities stay reliably-powered during peak demand. The Office of Sustainability Philadelphia Energy Authority, Capital Program Office, Department of Public Property, Department of Public Health and Office of Homeless Services have been working together to develop this project for over two years. The support of the Law Department, Office of Economic Opportunity, City Treasurer's office and Finance team have made this innovative financing and contracting approach with the opportunity for diverse businesses possible. Today's bill intends to advance the procurement process for an energy services company or ESCO to partner with the city to deliver this project.

We have undergone a rigorous collaborative process to find the best contractor and value for the city. After a competitive RFP process, we have selected Johnson Controls, Inc. or JCI to continue the development and implementation of this project. If approved by City Council, JCI will provide turnkey implementation, performing the audit design and ultimately construction of the energy improvements for these 5 facilities included in the project. 6 Alongside the project contractor of 7 JCI, the Office of Sustainability 8 and the Philadelphia Energy 9 Authority will provide regular 10 updates to City Council and the 11 public on the project's progress. 12 For these reasons, we 13 ask this committee to move forward 14 with this 14 building GESA project and approve Bill No. 250103 with the suspension of rules. I would be happy to answer questions at this time. Thank you.

Good morning, Chair Gilmore Richardson, members of the committee. I'm Emily Schapira, President and CEO of the Philadelphia Energy Authority. I want to note I'm joined today by the chairman of my board, Mitchell Swann, who's here in the audience. I'm testifying today in support of Bill 250103 to enable capital improvements, as Dom said, to city-owned buildings using 8 the Guaranteed Energy Savings Act, 9 or GESA. This project will 10 implement robust energy savings 11 measures and address deferred 12 maintenance to ensure that these 13 critical municipal buildings that 14 also provide critical community functions are more comfortable, durable, welcoming and affordable for the city to manage and maintain. As an independent municipal authority, PEA provides capabilities that the city does not have on its own, including holding long-term contracts on behalf of the city and issuing financing for energy projects. Bill 250103 would authorize the city to enter into an intergovernmental agreement with PEA, allowing PEA to then enter into a Guaranteed Energy Savings contract for capital improvements on the city's behalf across this portfolio of buildings. This project, which we refer to as Quadplex Plus Community Health, will focus on comprehensive energy and capital improvements to the Quadplex, which includes City Hall, the Municipal Services Building, One Parkway and the Criminal Justice Center. It includes seven city-owned health centers and three city-owned homeless services facilities. As Dom mentioned, this will be the city's fourth GESA project. You know about all three of the past ones, including the ongoing Philly Streetlight Improvement Project. We are weeks away from completion of replacing all 130,000 street and alleyway lights citywide and have received great feedback on that. All of these three past projects have been successful at lowering utility costs while upgrading aging infrastructure. The Quadplex Plus Community Health project would be the first time that PEA and the Office of Sustainability are working with multiple city departments all at once to deliver building energy retrofits. GESA projects are different than typical procurements as you've heard. They wrap together the design and build components in project implementation and allows for operational and capital work to blend together for optimal project implementation. There's no upfront budget allocation required for GESA projects in the city and annual utility and operational savings support project repayment over a maximum of a 20-year contract term. For example, the Streetlighting project has a 10-year payback and completely pays for itself. So that's kind of the design that we look for. A prime vendor is selected before an investment grade audit is performed to determine the final scope, cost and subcontractors on the project before financing is issued and construction begins. Johnson Controls was awarded the project through a public, transparent, competitive RFP process led by a selection committee that included representatives from about a dozen city departments. This project will be governed by a signed Economic Opportunity Plan and JCI will work with the City of Philadelphia's Office of Economic Opportunity to contract with certified M/W/DSBE firms and meet workforce requirements. JCI has pledged to maximize opportunities for local, diverse skilled workers and businesses to gain experience and build wealth by improving critical energy infrastructure in the city and has committed to just over 50% participation by diverse business enterprises across the whole project. A quarterly Economic Opportunity Plan Oversight committee will monitor project spend and approach to engaging local, diverse businesses on the project.

We've also added additional opportunities for feedback and connections between contractors and energy service providers, not just Johnson Controls, to ensure that we continue to support an inclusive environment for local, small and diverse businesses that create economic opportunity in Philadelphia. PEA supports this 12 building Quadplex Plus Community 13 Health project as a strategy to 14 efficiently wrap energy savings measures with critical capital upgrades to reduce costs, improve indoor air quality and comfort, increase durability and resilience, engage local and diverse companies and hire diverse Philadelphians. For these reasons, we ask for your support of Bill No. 23 250103 and look forward to returning to this committee in the fall to seek separate authorization to finance this project. Thank you.

Thank you. Thank you very much for your testimony and thank you so much for your work. I know, Emily, you stated it in the second to last paragraph of your testimony relative to the minority participation rate for this project. If you could just give the committee detail regarding the minority participation for the project and the process that you all have undertaken.

Absolutely. So I'll speak to the process first. We meet with the Office of Economic Opportunity in the RFP stage pre-release to make sure that they have assessed the project and decided what they think an appropriate level of participation will be as sort of a minimum floor. We certainly don't look at that as a ceiling. And on this project, they suggested 30% to 50% would be reasonable. That's what we required in the RFP. Johnson Controls was the winning proposer. They have committed to over 50%, that's 50.5%. So --

And I apologize. I just want to get this on the record. You talked about the winning proposal. If you could give the dates when that occurred.

I will get back to you on that one. I'll send that to the committee with all of the process of the procurement.

Thank you.

Yep. And to be clear, we follow the city's procurement norms. It's fully transparent, all public documents, so happy to share anything related to that. The way a GESA project evolves is that we select that prime bidder and then they put together their pool of subcontractors. So Johnson Controls internally had a bid process where they invited tons of diverse contractors, happy to provide bid lists or anything else you'd like to see for that and then selected from those bidders to make up the subcontractors. Those negotiations are still ongoing so I don't have details for you today on who all those subcontractors will be, but that is something once the project is contracted that will be finalized.

And if you could provide us with a timeline.

Yes. So once we have Council approval to move forward, the investment grade audit has already been close to completed. There's a little bit more to do there, but that's something that Johnson Controls took on at their own risk before contracts have been completed and we can sign the contract as soon as Council is comfortable approving that. And then we'll need to move forward with the financing process which we hope will be in front of City Council in the fall first thing. And once we have that, we can get started on construction. So we're anticipating construction would take place over the course of two years, probably starting in late 2025 through '27.

Thank you. Thank you very, very much for your testimony. Are there any additional questions for this panel? The Chair now recognizes Councilmember Ahmad.

Thank you, Madam Chair. Good to see you all here doing important work. Just wanted to know, you said that there's no 12 monetary participation from the city to be clear, right? And in terms of the reason for wanting this is so that there's participation of the departments and all to allow the work to happen; is that a correct reading of this?

Yeah, you actually are reading that exactly correctly. So there's no upfront budgeting required from the city, because as much as possible we try to design these projects to be completely budget neutral. So the energy and operational savings is what pays for the debt service on the project. So no capital budget was used, for example, on streetlighting at all and that was a $91 million project. On this project, we have identified a pretty large scope of things that can be self-funded. There are a few things that I don't want to get into too much detail here because they're still being finalized, but I will say there are a few parts of scope that we'd really like to be able to do as part of this project but don't have as strong of an energy payback to be able to make them budget neutral. And so, there will be a process over the next probably year in working with each of those departments to decide whether they want to contribute capital dollars from their capital budgets to pay for those upgrades. And we can do it all at the same time as part of the same project. We're still working on that. We have a Phase 1 plan that would be kind of the self- funded stuff and then hopefully we'll be able to get to a Phase 2 that has some of the other things that aren't quite self-funded, but that'll be something for Council to approve in the next year's budget.

So we will get a bond but later. And for right now you're floating your own bond for this?

We haven't decided yet on what the financing will look like. I think that's sort of up to the City Treasurer's Office and how they'd like to see it. It might fit in with other bonds that the city is doing. It might need some other mechanism. There are a lot of options on how to do it, so that will come before this committee in the fall.

And an unrelated question. You know, 19% to 22% of the carbon footprint comes from our cars and buses and trucks. I just wanted to know -- I know this is not the scope, but since I have you here what is the plan for PEA and our Office of Sustainability in that space? And I know the federal government's investment has reduced or hopefully they're not undoing things. I just wanted to know the vision. And I digress, Madam Chair, but I wanted to get this on the record. MR. McGRAW: So I can state that this project allows through the reduction of energy consumption, electricity consumption specifically, that gives more capacity for these buildings to add potentially chargers or other devices where they might not have been able to due to limited capacity in that local grid section, so that's one piece of it. And then the other piece we can get back to you on the timing of this, but the Managing Director's Office is running an RFP now around public charging and what that could look like. So that's a concessions agreement that's being run through the Managing Director's Office and I can get back to you.

Throw that in when you come back. Thank you very much. Thank you, Madam Chair.

Thank you. Thank you very much, Councilmember Ahmad. Are there any additional questions for this panel? (No response.)

Okay. Seeing none, we thank you very much for your testimony. We'll now proceed with Bill No. 250530. Clerk, will you please call the first panel we have for Bill No. 250530.

The first panel for Bill No. 250530 is Tavare Brown, Deputy Budget Director for Capital. (Witnesses approached witness table.)

Thank you so much for being here today. Please state your name for the record and proceed with your testimony.

All right. How's everybody doing? My name is Tavare Brown. I'm the Deputy Budget Director for Capital. I have a little more than moral support. So good morning, Chair Gilmore Richardson and members of the Finance Committee. My name is Tavare Brown, Deputy Budget Director for Capital. I'm joined by Jackie Dunn, the City Treasurer, and we're here today to testify on Bill No. 250530. This bill will authorize an increase in the nonelectoral indebtedness of the city in an amount not to exceed $351 million to fund the City's Fiscal Year '26 or 2026 capital budget. This increase would be within the Pennsylvania constitutional limit. As of April 30, 2025, the city's legal debt limit is 19 million -- I'm sorry, 19,680,000,000. And the amount of the debt applicable to that limit is 2,752,000,000. As a result, the city has a debt margin of about 16.9 billion. The proposed FY26 capital budget for new general obligation or GO bonds is approximately 337,190,000. The proposed ordinance 10 includes the new GO loan amount plus the additional 4% for cost of issuance. This brings the loan authorization amount to approximately $351 million. If approved, the loan authorization with finance capital projects classified for the following purposes in the following categories: So 9,344,000 for transit or SEPTA-related cost. 68,599,000, for Streets and Sanitation-related costs. 213,083,000 for municipal buildings. 38,973 -- I'm sorry, 38,973,000 for parks, recreations and museums. And lastly, $21,001,000 for economic and community development. So that gives us that total of $351 million. I respectfully request that you report Bill No. 250530 out of committee with a favorable recommendation and I further request that the rules of Council be suspended so as to permit first reading at the next session of Council. The FY26 loan authorization will be amended to reflect any applicable amendments to the FY26 budget if anything changes. This concludes my testimony and I'll be happy to answer any questions that you might have at this time.

Thank you. Thank you very much for your testimony and thank you for all your work in the capital office. We appreciate you. Any questions for this panel from members of the Committee? Chair now recognizes Councilmember Ahmad.

Yes. Thank you so much, Madam Chair. Quick question about the category breakdown that you gave for transit, the 9.3 million. Is that part of the 135 million that we contribute to SEPTA?

No, that's primarily on the operating side. This is --

This is capital?

-- a percentage of the state's or a percentage of a match for state- and federal-related funding that we give to SEPTA on the capital side.

And what will this be used for?

Sure. There's a variety -- I can give you the full breakdown after.

Just briefly.

But basically improvements to central stations, such as things like the 15th Street Station. They've done a ton of ADA and elevator-related improvements at various stations throughout Philadelphia. And, you know, just making the city's transit safer and easier for everybody to use.

And this is all we are giving SEPTA for capital expense?

This all of the bond funding that we're giving, yes. There are additional appropriations in the budget, but most of that is primarily for grant funding that we'll be receiving or we anticipate receiving.

Thank you, Madam Chair. Thank you.

Thank you. Thank you so much, Councilmember Ahmad. Are there any further questions for this panel? (No response.)

Okay. Seeing none, we thank you very much for being here. Thank you for your testimony. We'll now proceed to Bill Nos. 250528 and 250529. Clerk, will you please call the first panel for those bills.

The first panel for Bill No. 250528, Melanie McCottry, PGW's Senior Vice- President Corporate Affairs and Chief of Staff and Gemela McClendon, Executive Director Philadelphia Gas Commission. (Witnesses approached witness table.)

Thank you. Thank you very much for being here. Please state your names for the record and proceed with your testimony. MS. McCLENDON: My name is Gemela McClendon. I'm the Executive Director of the Philadelphia Gas Commission. Good morning, Chairwoman Gilmore Richardson and members of the committee. The Gas Commission appreciates the opportunity to testify in support of Bill No. 20 250528, which embodies its recommendations to City Council regarding the Philadelphia gas Works Fiscal Year 2026 capital budget unanimously adopted by the Commission on April 15, 2025. PGW's testimony to Council will provide the details of the capital budget endorsed by the Gas Commission. This testimony will supplement PGW's testimony and focus on the recommended budget constraints and limitations and other policy issues. We respectfully request this committee to report out this bill with a favorable recommendation together with the suspension of rules so that it may have its first reading at the next Council session. At its public meeting held on April 15, 2025, the Gas Commission endorsed FY2026 capital budget and the not-to-exceed amount of $185,000,212 and spending authority available to PGW for purposes of expenditure and/or commitment at the start of the fiscal year on September 1, 2025, subject to the limitations stated in Bill No. 250528. The Commission's recommendation to City Council are detailed in the resolution and order dated April 29, 2025, which is attached to my written testimony as Appendix No. 1. 146 billion. 212 million. The proceedings undertaken by the Commission in reviewing PGW's proposed FY2025 -- capital budget were completed in 4 full compliance with Pennsylvania 5 Sunshine Act. Members of the 6 public were allowed to testify at 7 the Commission's public hearing 8 held in this matter on February 18, 9 2025. The full transcript from 10 that hearing, along with all 11 Commission public proceedings, may 12 be found on the Commission's 13 website. 14 During that hearing, two 15 members of the public were present. 16 And of that number, one member 17 chose to testify. That testimony 18 was considered by the Commission in 19 rendering its decision. As a 20 culmination of an indepth project 21 to update the body of governance 22 standards applicable to PGW's 23 capital budget, the Gas Commission 24 in 2013 adopted the capital program protocols and City Council made them applicable to PGW's FY2014 capital budget. These protocols introduced several new or amplified standards, but for the most part they restated and reorganized existing budget standards set out in the Commission's capital budget principles and other various directives adopted over the years in the Commission's capital budget decisions. The protocols also incorporated certain constraints and conditions applicable to PGW's capital budgets, which the Commission repeatedly recommended and City Council has repeatedly adopted. These provisions -- these include provisions regarding line item lapse, line item lapse lifespan limitations, the use and limitations on conditional spending authorizations and the respective line item transfer authority of PGW and the Commission. The Commission once again adopted these protocols and recommends that City Council require PGW to adhere to them as a condition of its capital budget approval. These protocols are attached to Bill No. 250528 as Exhibit 2. The Commission respectfully recommends that Council approve Bill No. 250528. On behalf of the Philadelphia Gas Commission, thank you for the opportunity to provide this testimony and I would be happy to answer any questions that you may have. MR. McCOTTRY: I intended to testify on both bills. Good morning, Chair Gilmore Richardson and members of the Committee on Finance. I am Melanie McCottry, Chief of Staff and Senior Vice-President of Corporate Affairs. With me in the audience are members of PGW's management team. I'm here to testify in favor of Bills 250528 and 250529. Bill No.

250528, PGW's proposed FY2026 capital budget for $185,212,000 supports a capital plan to replace existing facilities and acquire additional assets to ensure safe and reliable operations. Secondly, funds are requested to maintain PGW's ability to respond to the needs of its customers by improving the efficiency and reliability of PGW's existing customer delivery infrastructure and support new load growth and revenue opportunities, which help minimize the need for future rate relief. The vast majority of PGW's FY2026 capital budget requests, over 92% is focused on core functions, gas processing, distribution and field services. The remaining budget requests are for fleet facilities and information technology investments. Most of this budget request reflects funding of PGW's cast iron main replacement program, both its historical 18-mile program together with authorization for an accelerated replacement program to be funded entirely through a distribution system improvement charge, the disc surcharge mechanism that is approved by the Pennsylvania Public Utility Commission. This budget also includes proceeds from a grant available to municipally- or community-owned utilities to repair, rehabilitate or replace natural gas distribution pipelines. This grant was approved as part of the Investment and Jobs Act, which included the Natural Gas Distribution Infrastructure Safety and Modernization Program Bill No. 250529, PGW's FY2025 capital budget received initial approval from City Council in an amount totaling $194,382,900. PGW is seeking City Council's approval to amend this budget, increasing budget authorization by $10,208,000. In addition, PGW is seeking budget reauthorization for several projects that will not be completed within their approved two-year lifespan. However, most of these projects will require no additional spending authority. If approved, this amendment will result in a revised budget totaling $204,590,900. The need for this amendment is necessary to support the completion of critical initiatives that PGW deems necessary to maintain a safe and efficient utility as well as ensure PGW's capital spending is in compliance with approval granted by City Council. The amendment before you today is a consolidation of separate actions taken by the Philadelphia Gas Commission in fulfilling their responsibility to review and recommend approval of PGW's amendment requests. PGW respectfully requests that the committee give these bills its favorable recommendation and further that the committee recommends that the rules of Council be suspended so as to permit first reading of these bills at the next session of Council. I would like to extend our appreciation to both the Gas Commission and its staff for conducting a budget review that was both efficient and comprehensive. Also on behalf of PGW, I would like to thank City Council for its past support of our efforts to serve the citizens of Philadelphia and look forward to your continued support, and a special thank you to Councilmembers Driscoll and Jones for performing double duty as both Gas Commissioners and Councilmembers. Thank you for your time and consideration in this matter. I'm happy to answer any questions you may have at this time.

Thank you. I thank you very much for your testimony. Do you have testimony that's separate for '529? MS. McCLENDON: Yes.

Okay. Excellent. So I recognize you for your testimony for Bill No. 250529. For the record, Melanie McCottry's testimony was for 250528 and 250529. Please proceed. MS. McCLENDON: Thank you, Councilwoman. Once again, my name is Gemela McClendon. I am the Executive Director of the Philadelphia Gas Commission. We appreciate the opportunity to testify in support of Bill No. 15 250529, which embodies the Commission's recommendations to City Council regarding the amendment of PGW's FY2025 capital budget unanimously adopted by the Commission and the FY2012 budget, which was adopted by City Council. As Ms. McCottry' has stated, she provided the details on the requested capital budget amendment. This testimony is intended to supplement that, and we also request that this committee report the bill with a favorable recommendation together with the suspension of the rules so that it may have its first reading at the next Council session. As Ms. McCottry noted, PGW filed four requests to amend its FY2025 capital budget. Collectively we refer to these as the FY2025 consolidated capital budget amendment request. These amendments represent a combined total of $10,208,000 in additional spending. These amendments would reauthorize 13 previously approved capital budget line items from PGW's FY2023 capital budget with no 21 additional spending authority, reauthorized two additional line items from PGW's FY2023 capital budget, both with additional spending authority, reauthorized one line item from its FY2024 capital budget with no additional spending authority and reauthorize an additional three capital budget line items from PGW's FY2024 capital budget with additional spending. The consolidated capital budget amendment also adds conditions to a previously approved capital budget line item that is related to a federal grant received by PGW with no increase in spending authority. After completing its standard due diligence review of PGW's request, Commission staff found in the Commission agreed and adopted, finding that these requests appeared reasonable. The Commission's specific recommendations to City Council are detailed in the Commission's four sets of resolutions and orders, which are attached to this testimony, written testimony as Appendix No. 1. And the Commission respectfully recommends that the committee approves Bill No. 250529, on behalf of the Philadelphia Gas Commission and its commissioners. I thank you for the opportunity to provide this testimony and I'm happy to answer any questions that you may have.

Thank you. Thank you very much for your testimony. And a special thanks to our Finance Committee members Councilmember Driscoll from the great 6th Council District and my District Councilmember, Councilmember Jones from the 4th Council District for your service on the Gas Commission. We appreciate your work. Are there any questions for this panel? Chair recognizes Councilmember Driscoll.

No 3 questions, Madam Chair. Just a thank you to Melanie and Gemela and the entire staff at the Gas Commission for all your hard work on this budget.

Thank you. Thank you so much, Councilmember Driscoll. We thank you for your work. We look forward to continuing to work with you. I just wanted to give a special thanks to David Ford. And then I know we also have additional advocates here today. We look forward to continuing to work together with all of you on these matters. So thank you very much. I will now proceed to Bill No. 250566. If you could please approach the witness table and state your name for the record and proceed with your testimony. (Witness approached witness table.)

Hello. Good morning, Councilmember Gilmore Richardson, other members of the Finance Committee and members of City Council. I am Mark Dodds, Interim Deputy Director of the Division of Housing and Community Development. I will present testimony on behalf of the Administration on Bill No. 250566, which permits the city to apply for federal Community Development Block Grant, CDBG, HOME Investment Partnership, Emergency Solutions Grants or ESG and Housing Opportunity for Persons With AIDS or HOPWA funds and for state funds from the Department of Community and Economic Development or DCED. The bill refers to Exhibit A, which is the proposed Annual Action Plan 2025 to 2026, the required HUD funding application. The Annual Action Plan 2025 to 2026 details our plan for spending funds from the four primary federal sources I named as well as from the state's DCED, the Housing Trust Fund and the proposed home bond as it relates to existing annual action plan projects. 9 million in ESG funding for the upcoming fiscal year. E. housing plan. The Annual Action Plan, goals are to create affordable homeowner and rental housing opportunities, preserve affordable homeowner and rental housing, reduce homelessness and expand special needs housing opportunities, foster open access to all housing and community resources and programs, address economic, education and income needs of people and communities, strengthen community assets and manage vacant land, promote fair housing and access to opportunities. E. plan. E. is continuing to invest in programs that work. E. Initiative in the upcoming fiscal year. As detailed in the Annual Action Plan, over half of our total funding will go to put and keep people in homes. This work includes production preservation of rental housing. Mortgage Foreclosure Prevention and Eviction Prevention Programs, Rental Assistance, home repair programs such as Basic Systems Repair and Heater Hotline. We will also continue programs to prevent homelessness and support people with special needs. These programs include rental assistance through HOME Investment Partnerships and HOPWA programs and the Adaptive Modifications Program. We will continue to invest in organizations and programs that meet our residents where they are serving them in their own communities. These include our housing counseling agencies, our neighborhood advisory committees and our neighborhood energy centers. We will also continue to expand cleaning and greening efforts through the PHS Land Care program. Vibrant commercial corridors are important for safe and healthy communities that help provide economic opportunity for all. Accordingly, we invest significant resources in community economic development. The plan includes funding for business loan programs, commercial-oriented real estate grants, corridor management support, building improvement support. The coming year will continue to be challenging. We are determined to meet that challenge. Please know that we will rely on City Council to approve this plan expeditiously because the city will forfeit its funding from HUD unless the city submits an approved Annual Action Plan no later than August 15, 2025. To permit expeditious transmittal of the Annual Action Plan to HUD, suspension of the rules to permit the first reading at the next Council session is requested. In closing, the Division of Housing and Community Development is grateful to Council for sustained commitment to housing and neighborhood infrastructure. E. Initiative to address Philadelphia's housing crisis. Thank you for the opportunity to present this testimony. I'm happy to answer any questions that you or other members of Council may have.

Thank you. Thank you very much for your testimony. Are there any questions for this witness, for this panel? (No response.)

Okay. Seeing none, we thank you very much for your testimony. We'll now proceed with Bill No. 250174. Clerk, will you please call the first panel that we have to testify on 250174.

The first panel for Bill No. 250174 is Kathleen McClogan, Revenue Commissioner. (Witness approached witness table.)

Thank you very much. Please state your name for the record and proceed with your testimony. COMMISSIONER McCLOGAN: Good morning, Chair Gilmore Richardson and members of the committee. My name is Kathleen McColgan. I'm the Revenue Commissioner and Chief Collections Officer at the Department of Revenue. I'm here today to testify for Bill No. 250174 and to respectfully request an amendment to the legislation. This bill amends Chapter 17 19-4600 by extending the deadline to file an application for the Low-Income Real Estate Tax Freeze to September 30th of the year in which the real estate tax is due, allowing applicants to freeze their tax bill at the earliest year possible back to 2025 and requiring the Department of Revenue to identify and automatically enroll eligible taxpayers into the Low Income Real Estate Tax Freeze Program. We share the goal of reducing the tax burden on the city's most vulnerable residents and are proud to administer the many tax-relief programs designed to help Philadelphians remain in their home. The Department of Revenue launched the existing Low-Income Real Estate Tax Freeze Program in fall of 2024 supported by a robust outreach strategy. We continue to accept applications for the Low-Income Real Estate Tax Freeze beyond the currently legislated deadline of January 31st. However, we have concerns about the proposed changes, including the fiscal impact and administrative complexity. Based on current enrollment, enrollment trends and projected increases in property valuations, we estimate that the proposed changes could reduce real estate tax revenue by approximately 6.2 million over the course of the Five Year Plan, with 2.7 million impacting the city's General Fund and 3.5 million affecting the school district. The total fiscal impact is expected to grow beyond the Five Year Plan due to anticipated increases in property assessments. While freezing taxes at the 2025 assessment level may have a modest impact in the short term, the cumulative revenue loss will grow significantly over time. Additionally, the Department of Revenue is not legally permitted to automatically enroll taxpayers in programs due to confidentiality laws and data limitations. Where legally permitted, we leverage available data to guide targeted outreach and automatically enroll eligible taxpayers in accordance with the law. Applicants would also be required to submit income documentation for each year included in the requested look-back period, which adds complexity to both the application and the review processes. To address this, we respectfully propose amending the bill to reduce the look-back provision with the goal of providing relief while also protecting the long-term fiscal health of both the city and the school district. The Administration is continuing discussions with City Council on the amendment. Thank you for the opportunity to testify. We look forward to working with Council to evaluate the proposal and explore additional strategies to support vulnerable homeowners across Philadelphia.

Thank you. Thank you very much for your testimony. Are there any questions for this panel? The Chair now recognizes Councilmember Isaiah Thomas.

Good morning -- well, good afternoon. Question, so I think it's ironic that you're coming before us right now to testify about concerns around relief that we want to offer for constituents, specifically looking at revenue that will be lost by the school district. I know you named a couple other sources, but the one that stuck out to me the most was the school district. Based on your testimony, you testified that $3.5 million that would normally go to the school district could possibly not go to the school district; is that correct? COMMISSIONER McCLOGAN: That's correct.

So why is the Administration not for increasing the real estate millage percentage of revenue that goes to the school district right now? Well, we are pushing for us to go to 56.5% right now in order to offset the loss of revenue that we know is coming to the school district. And we also looked at the idea of the school district's budget being one that produces a budget that operates on a deficit. So help me understand why is it that we should remove our proposal but the Admin isn't looking at the recommendation that we made as it relates to getting that revenue for the school district right now?

Rob Dubow, Finance Director. A couple of things. We are not opposing this bill. We're still working with the sponsor and we're confident that we will reach an agreement. We do have proposals for the school district in our budget and Five Year Plan, including the increase in parking fees that should generate about 4 million a year for the district. And we're recommending, as you said, the move in the millage shift. But at the back end of our plan, as we try to balance our budget against their budget needs and we still view that the key thing for the district's long term financial stability is the state coming up and doing its share.

I just want to put on the record that in your testimony you say that we should share a goal of reducing tax burden on the city's most vulnerable residents. And I don't know if that's what we're recommending and what we're doing. I think that the folks over here as it relates to this legislative body, that's what we're fighting for in the midst of this budget. But I do think that there is some conflicting messages in your testimony here today and I wanted to put that on the record based on some of the things that we've been advocating for and fighting for, especially when we talk about using schools and children as a tool or a tactic in the midst of negotiating when we've been trying to make the schools and the children and the people who work in those schools a top priority. Thank you, Madam Chair. I just wanted to put that information on the record based on some things that I found problematic with that testimony.

Thank you. Thank you very much, Councilmember Thomas. Are there any additional questions for this panel? (No response.)

Okay. Seeing none, we thank you very much for your testimony. We'll now call Panel 2.

Jonathan Sgro, Community Legal Services. (Witness approached witness table.)

Please approach the witness table. State your name for the record and proceed with your testimony.

Good morning. Jonathan Sgro of Community Legal Services.

Please proceed.

Good morning, Chair Gilmore Richardson and members of the committee. My name is Jonathan Sgro, and I'm a Divisional Supervising Attorney at Community Legal Services where I represent homeowners struggling to afford their property taxes. I'm here to testify in support of Bill 19 No. 250174, which would extend the deadline to enroll in the Low-Income Tax Freeze Program. Since 2023, the assessed value of a Philadelphia home increased on average by more than 50% citywide. Many homeowners, especially those in majority Black and Brown neighborhoods, saw much larger increases, leaving many homeowners and my clients worried that they won't be able to live in their neighborhoods much longer. CLS is so grateful to City Council, especially Councilmembers Gauthier and Landau, for championing this vital program that protects our most vulnerable homeowners from rising taxes and the risk of displacement. For years Philadelphia has been recognized as a national leader in creating programs that keep residents in their homes. The Low-Income Tax Freeze is a critical addition to our safety net and the city's only true protection for low-income homeowners facing the effects of gentrification. To some, an increased tax bill of a few hundred dollars per year might not sound like much, but for homeowners on fixed incomes or working low-wage jobs even a modest increase can be the difference between keeping up with your bills or losing your home. At CLS, we are thrilled to have this new program in our toolbox to preserve generational homes and wealth. Unfortunately, the program remains grossly underenrolled. Fewer than 3000 homeowners are enrolled out of an estimated 62,000 eligible households. That's under 5% and it's not nearly good enough. The truth is these programs only work if homeowners know about them and are able to enroll easily. That's why it's so important for City Council to pass Bill No. 250174, which would give homeowners more time to enroll in the program. It would also allow homeowners who are unable to enroll this year to still freeze their tax bills at an affordable amount. Without these changes for many homeowners, it will be too late. By the time they learn about the program, their tax bill will have increased to an unaffordable level, and freezing at that point will be no protection at all. As a city, we take pride in the fact that for generations, even those with low and moderate incomes, can realize the dream of homeownership. In this context, property tax policy is affordable housing policy. We don't just need new affordable housing, although we certainly do, we need programs like the Low-Income Tax Freeze to keep families in the affordable homes they already own, which is why CLS urges City Council to pass this bill giving more time to homeowners to access this important program. Thank you for your time and your support. I'm happy to answer any questions that you have.

Thank you. Thank you very much for your testimony. Are there any questions for this panel? (No response.)

The Chair now recognizes Councilmember Ahmad.

Thank you, Madam Chair. You referenced the inability for us to even get everybody to participate in programs we have and we heard prior testimony saying there were some reasons why we could not do automatic enrollment, some privacy issues. From your vantage point, and this is also true for the Homestead exemption, right, that we don't have full participation, what is the solution given that they're saying there's privacy concerns, they are not able to automatically enroll? What does that mean?

Yeah. We at CLS have been advocating for years for auto-enrollment. I think the one thing that could be improved upon I think where we do have commonality with the Department of Revenue is cross-enrollment, when people enroll in one program, even one tax program, to then use the information they've provided in that application to enroll them in another program or at least tell them that they're eligible for it and what the savings would be. I'll just give you a quick example. We represent homeowners all the time with tax delinquencies and we help them enroll in something called the Owner-Occupied Payment Agreement. That application requires probably the most documentation of any tax program in the city of Philadelphia. And it seems that it would be relatively easy to use the information provided as part of that application to also enroll that person in the Low-Income Tax Freeze Program. And that's something that is not currently happening that I think is a good example of what could be happening. And I don't think it's limited to just tax programs, although that's the low hanging fruit. We can talk about things like TAP, home repair programs, all these different touchpoints in the city of Philadelphia where the city interacts with homeowners. We could be using those touchpoints to help people access these programs.

So from your legal organization that does legal opinions, what is the privacy concern here that that was mentioned? I don't quite understand that. I know I should have asked it to the previous panel, but where do you see this being -- if they've already submitted this information to be cross-referenced for other things, they've already submitted it, they've already sort of exposed themselves, what is the privacy concern that you can see is a problem? The reason I ask, aside from the privacy concern when I asked about why don't we have automatic Homestead exemption, put people on the roll, they said because they could benefit from some other program rather than Homestead or down the road they could. I said with all the tools we have, with AI, a good use of AI could actually game out that and to figure out when that person would benefit from this program versus that program versus the third, so I think we can take care of that. But I don't understand the privacy concern that seems to be always thrown up saying we cannot breach something. You don't know either?

I'm with you, Councilmember. I don't quite understand the privacy concern either. We're not talking about disclosing that person's information to a third party. We're talking about utilizing somebody's own personal information to help them access programs. I think to the extent there is a privacy concern, it's easily solved by adding a check box to the application that says, do you authorize the department to inform you about a way that you could save thousands of dollars on your tax bill. My guess is that most people would check that box.

That's what I was looking for. Okay. Thank you so much. Thank you, Madam Chair.

Thank you. Thank you so much, Councilmember Ahmad. Are there any further questions for this panel? (No response.)

Okay. Seeing none, we thank you very much for your testimony. We thank you for being here today. We'll now proceed to Bill No. 250324. Will the Clerk please call the first panel for Bill No. 250324.

The first panel for Bill No. 250324 is Kathleen McColgan.

Okay. Thank you so much. Please state your name for the record and proceed with your testimony. COMMISSIONER McCLOGAN: Good morning, Chair Gilmore Richardson and members of the Committee of Finance and Councilmember Gauthier. I am Kathleen McColgan, Revenue Commissioner and Chief Collections Officer at the Department of Revenue. Thank you for the opportunity to testify today on Bill No. 250324. Bill No. 250324 amends Chapter 19-2600 of The Philadelphia Code to expand the Community Development Corporation, CDC, tax credit. Specifically, it would increase the maximum tax credit from $100,000 to $125,000. Additionally, the bill directs the Administration to expand the number of available credits unless it chooses to fund two new grant programs instead. Under the proposed expansion, businesses can sponsor up to 50 additional organizations engaged in community development activities such as community organizing, housing counseling and affordable housing development. Up to three businesses can sponsor a single organization, dividing the $125,000 tax credit appropriately. However, the CDC tax credit would not be expanded if the Administration funds two grant programs totaling 6.875 million per year to distribute to organizations engaged in neighborhood economic development activities or community capacity building. As delineated in the corresponding fiscal note, the estimated financial impact of this bill is up to approximately 30.1 million over the FY26 through FY30 Five Year Plan. The Department of Revenue in partnership with the Department of Commerce has advocated for the phase-out of tax credits in favor of direct financial support, such as through the Quality Jobs Program. Past experiences suggest the impact of the tax credits is modest and tends to disproportionately benefit large businesses. While grants are the preferred way to support qualifying nonprofits, the grants proposed in this legislation present significant budgetary challenges and would be difficult to fund within current fiscal constraints. The Department of Revenue has concerns about the implementation of Bill 250324 in addition to financial cost. One of Revenue's primary goals is to simplify the tax filing process for local businesses. Expanding the number and complexity of tax credits undermines this goal. Moreover, the current structure of the CDC tax credit limits the city's ability to strategically direct public investment. While the Department of Revenue and the Department of Commerce strongly support the mission of community development organizations, we believe there are more effective and fiscally responsible strategies to achieve these outcomes. We continue to support solutions that allow the city to invest intentionally without adding complexity to our tax system. Therefore, we respectfully recommend that this bill be held so that the Departments of Revenue and Commerce as well as the Department of Planning and Development may work collaboratively with City Council to identify alternative approaches to support community development. We look forward to continuing our work with City Council to achieve this shared goal.

Thank you very much for your testimony. Are there any questions for this panel? Okay. The Chair now recognizes Councilmember -- so this is what I'll do. If the committee members are okay, may I recognize the bill's sponsor Councilmember Gauthier, and then I'll recognize Councilmember Ahmad and Councilmember Thom -- Councilmember Ahmad only. Councilmember Gauthier.

Thank you, Madam Chair. I just wanted to take a moment to address the committee about the critical importance of this bill. This bill would provide vital operating funding for community development corporations that are engaged in a number of activities that make neighborhoods more equitable and affordable. Our CDC community, you know, we have dozens of CDCs that have been working across the city I would say since the '80s. These are organizations that have brought many neighborhoods back from the brink of despair. They have, in fact, turned neighborhoods into places that are ripe for development and now the focus has to be stopping displacement. CDCs also have played a vital role in the revitalization of commercial corridors. I can name numerous commercial corridors across the city, whether we're talking about Baltimore Avenue, 52nd Street. There would be no 13 Ogontz Avenue without CDCs or at least Ogontz Avenue how it exists now. Germantown Avenue as it exists now would not exist. So not only have these organizations brought forward thousands of affordable housing units that have been critical in our neighborhoods, they have built back up our business corridors which are the lifeblood of our communities. During COVID, these are the organizations that the city tasks with no additional operating support that the city tasked with getting out rental assistance, with doing housing counseling. These organizations have ramped up their work time and time again when the city has needed them to and now it's time for the city to offer support to these organizations, particularly in an unreliable federal government where funding for housing and other aspects of community and economic development have been cut. I also think that this is critical to move in this way as we embark perhaps on an $800 million H.O.M.E. Initiative. It's the CDCs that will be the ones to develop and preserve a large amount of affordable housing and undertake other critical programs needed in the city. And so, that's why the support is vital. We have an existing CDC tax credit program. It is well- used. It has been well-used for many years. And the intent here is to expand the support that's being offered. And I also just want to put things into context. I appreciate the partnership with the Administration, but we've had -- I was a little surprised about the testimony on the Low-Income Tax Freeze bill which we had already agreed upon last year even though we're working to make tweaks. I just find it -- I just want to put it into context that the testimony against tax programs today has been testimony against tax programs that help people and that help organizations doing mission-oriented work. We just had a whole discussion before about the KOZ program, which we give large, large tax benefits to corporations all over the city and we're just now doing an impact study. And so, I think we have to have the same -- I support development. I had part of my district in that KOZ bill. But in the same way that we support increased development in our neighborhoods, in the same way that we support for-profit corporations without asking the same questions or noting the same problems, we need to support our mission-based organizations that are making neighborhoods more attractive, more affordable and more equitable. And so, I want to ask that the committee members support this request and I also want to note that the bill gives the Administration the option to do a tax credit program or a grant program, but the support is necessary and it would be -- and it's also necessary that it's multi-year and not something that CDCs have to fight for every single fiscal year. Thank you so much. (Applause.)

Thank you. Thank you very much, Councilmember Gauthier. The Chair now recognizes Councilmember Ahmad.

Thank you, Madam Chair. I have a question for the Revenue Commissioner. When you mentioned that there are expanding the number and complexity of tax credits, this is just saying three entities can participate in one tax credit dividing it up. And the increase is just 100,000 to 125,000. So could you explain what you mean by the complexity because we've been doing this for a long time? So I'm not sure that the city don't have the ability to handle three people divided -- three entities dividing up the tax credit where the complexity is. COMMISSIONER McCLOGAN: Thank you for the question. Our concern is trying to simplify the regulations and filing requirements across the board. And because we have seen that tax credits are not well-utilized, you know, adding them to our instructions and our filing just makes it more complex for taxpayers to figure out how to file, what the requirements are. And so, we're just working to simplify the filing process in general.

So the filing process for the taxpayer is where you're having the problem, not the division of the tax credit amongst three entities. That's pretty straightforward and simple. So you're saying how the taxpayer understands the utility of a tax credit and giving them -- in lieu of taxes giving that money to the nonprofits -- COMMISSIONER McCOLGAN: That's from a revenue perspective. Is there something that you wanted to add, Karen?

Hi. Karen Fegely, Acting Commerce Director. I just came as a backup because of Commerce's experience, also sort of our piece of administering the program. Everything the Commissioner has said is accurate. I just wanted to add there has been a need for the program as it exists, right, where there can be two business partners because there are a limited number of businesses that have this kind of BIRT liability. It has made things complicated at times, because sometimes one CDC is able to secure one business but not the second business. We have gotten requests can I add a third because then I can make the number, which I know is why it's in the proposal, it does add to the complexity for the CDC who's sort of managing these three relationships, having to make sure they're getting that full $100,000 or now it would be $125,000 every year, and that communication back and forth with the Revenue Department, ensuring that now three partners are sort of up-to-date, eligible and all of that stuff. It's not impossible. This isn't like a deal-breaker, but it does add to the complexity for everyone involved. That's all I think we're saying.

Complexity is the name of the game in everything we do. So I am confident that we can manage the complexity of having three CDCs divide up $125,000 tax credit to be able to do this. But what I'm hearing is it's not that part of the -- that's not part of the problem. Part of the problem is the actual accessing the tax credit by the business to use this method. That's a separate problem we're talking about. That is not connected to this 125,000 into three parts. I just wanted to go on the record to say that, that those are two distinct problems and how you administer the program so more people participate and use the tax credit opportunity is not germane to this discussion, per se. This is after you've collected or you have participation. And we should probably look at that to see why the same conversation we had, why don't people use programs that we have. That's up to us and Commerce and everyone to talk about and inform our businesses in the city of Philadelphia, that you have this opportunity to directly invest in our communities using this tax credit method. And I think -- from what I know being a small business owner myself that we would love to improve our communities because guess what? The return on that investment is very big. This impact that was mentioned is just the impact of putting out the money, but the impact of what the money does and what the CDCs can do with that money is really what we need to see. That's the return on investment. That's the information that would tell us, you know, whether it's worth to understand the complexity and work with it. I believe it does just anecdotally, but maybe you can satisfy your concerns about saying what is the return on this investment, what are we getting when we do this, does that balance out to be a plus for us in the long run. The ecosystem of CDCs have kept this city alive. Let's be clear. They do so much for our city that our city government cannot do or does not do. These are the partners you want to be viable, you want to make sure they're able to keep delivering what they've been delivering to make Philadelphia a stronger, healthier and prosperous city. So I think the equation should be what are we putting in, what are we getting and what is the impact of that. I believe it comes out in a positive for us to be doing, and you can work out details of course. The devil is in the details. However, I think we should not shy away from doing something that has overall good because details make us do a little extra work and figure out how to manage this. Thank you, Madam Chair.

Thank you. Thank you very much, Councilmember Ahmad. Are there any further questions for this panel from the committee? (No response.)

Okay. Seeing none, we thank you very much for your testimony. We'll now proceed with Panel for Bill No. 250324. Will 2 the Clerk please call Panel 2.

Panel 2, Jamila Harris Morrison from ACHIEVability; Rick Sauer from Philadelphia Association of CDCs; Majeedah Rashid from Nicetown CDC; and Michelle Feldman from East Falls Development Corporation. (Witnesses approached witness table.)

Thank you so much for being here. Please state your name for the record and proceed with an abbreviated version of your testimony because we do have your written testimony. Thank you.

Good afternoon. I believe it is now Chair Gilmore Richardson and other members of the Committee on Finance. My name is Rick Sauer. I'm the Executive Director of the Philadelphia Association of Community Development Corporations. Thank you for the opportunity to testify in support of Bill 250324. As requested, I'll summarize my written testimony. It was already submitted. I just also want to acknowledge that a number of our members have also submitted written testimony that won't be testifying in person here today. First of all, we want to express our gratitude to Councilmember Gauthier for sponsoring this legislation as well as the eight other Councilmembers who have signed on as cosponsors, demonstrating the strong citywide support and impact this funding will have. As mentioned, the city relies on community development corporations to deliver a range of critical services to residents and small businesses, such as addressing key affordable housing, social service and neighborhood economic development needs. 4 billion in economic impact of the city of Philadelphia. So for a modest investment, the city is making and they're getting much more out the back-end. Despite this reliance on CDCs to deliver services that are much needed by our residents, the critical resources that the city provides to CDCs through a range of programs tend to be very programmatic-specific and they're often insufficient to cover the increased cost of running an organization and aren't always flexible enough to respond to many new emerging needs in our communities. These funds are also allocated on a yearly basis, which makes it more difficult to engage in long-term planning and to attract and retain qualified staff. This bill addresses these shortcomings by creating a new program to provide reliable, accountable, flexible and multiyear funding to CDCs to better enable them to fulfill their mission. The Community Capacity Building Fund, which is the name we put to this, would support 50 nonprofits at level of 125,000 per year which will support a broader range of critical services and essential operations, strengthening CDCs to develop innovative programming that is responsive to evolving community needs in delivering lasting neighborhood change. And as mentioned, this bill provides the Administration with the flexibility to implement it either as a grant program or as an expansion of the city's existing CDC Tax Credit Program, which currently is limited of only supporting neighborhood economic development activities. I will note that that program has been around for 16 years. It has a very strong 17 involvement by both the businesses 18 that are supporting the CDCs that 19 are out there. There is a 20 challenge I think sometimes in 21 lining up a business partner 22 because you have to have a 23 significant amount of tax liability to participate, and that's why the idea of enabling a third business to participate and partner with the CDC was incorporated into the legislation. This bill also represents a strong local leadership we need to meet this moment. The Trump Administration has proposed a 44% cut to the HUD budget and deep cuts to many other federal programs that help our residents. Flexible multiyear support for CDCs will enable the city to better insulate key community supports from harmful actions at the federal level going forward. CDCs are also key providers of affordable housing and related services. E. Initiative and better support the goal of creating equitable solutions to our affordable housing crisis. In closing, we just see that the challenges facing our communities every day, addressing them requires having strong, committed partners on the ground that are trusted in the community. That is the role of CDCs in Philadelphia and that is the strength that this bill builds on. We fully support this legislation and strongly urge members of the Finance Committee to report it with a favorable recommendation. Thank you.

Thank you. Thank you very much for your testimony and for your work. We truly appreciate your work and wanted to recognize Garrett as well. We appreciate each and every one of you. Please state your name for the record and proceed with your testimony.

Good afternoon. Jamila Harris- Morrison, Executive Director of ACHIEVability, PACDC Board President and lifelong West Philadelphia resident. Good afternoon Chairwoman Gilmore Richardson and Councilmembers. We really appreciate you taking the time to take this bill 16 up for consideration and to move it out of the Finance Committee. Today we come to you, as we've heard CDCs are really the lifeline. They are the invisible heroes that keep this city going. Our CDC network of over 50 organizations that touch from Kensington to Kingsessing to Cobbs creek down to Frankford, those groups are working tirelessly building affordable housing, activating our commercial corridors, trying to address the impending gun violence epidemic, making sure that residents, renters can stay housed through eviction prevention services, making sure that homeowners are connected to Basic Systems Repair, title tangled issues and things -- title tangled services that can help them maintain long-term assets. So when we look at this funding, we see it as a critical lifeline to keeping this network going, especially in a very unpredictable funding ecosystem that we're operating in. We understand that Philadelphia has the stubborn notable image of being known as the city with the highest poverty level out of the 10 largest cities. We are working actively each day to undo that name of us, and that number would be infinitely higher if we did not have CDCs on the ground providing vital but also long-term services to residents to keep them whole. This funding we cannot continue to do it on a hope and a hustle. Okay. We have too many people who rely on us as trusted messengers, as people that they can come to in a time of need, as people that they come to, to celebrate a community block party. So CDCs really do weed themselves into all facets of community. So we really encourage and would appreciate the support of Council to support this legislation, which really shows that it's an investment, not just in the organization but in some of our most vulnerable Philadelphians. It's an investment that shows that you trust that CDCs know how to lead, know how to do what's best because many of us have team members that are people with lived experience, directly from the community or have experienced some of the challenges of the residents that we're seeing. And so, this funding will allow us to retain and attract staff. As we know inflation is out of control. Everything costs more. This work is labor-intensive. If you want somebody to knock on the door to see if you're eligible for the Homestead Act, if you want somebody to go talk to a business and see what their needs are, you need somebody who wants to be out in the streets, live customer service, not remote, those people need to be compensated at a rate that they can live on family- sustaining wages. This funding also provides us opportunity to build infrastructure and capacity and the ability to plan. Right now everything is a one-year cycle. And so, this would be a critical difference, this multi-year aspect, that would allow us to think about how we do IT infrastructure, how we do wellness, how we expand the services, how we scale up the things that are actually working. So we really appreciate your consideration of this bill and hope we can count on your support to move it out of committee. Thank you for the opportunity to speak today.

Thank you. Thank you very much, Madam Chair of the PACDC Board, and representing obviously ACHIEVability in West Philadelphia. You forgot one title and that's a former --

Gomper Stomper.

-- Gomper Stomper for full disclosure for the committee. We thank you very much for your testimony. I'd like to say for the record we recognize the presence of Councilmember Jeffrey Young from the 5th Council District. We thank you for being here. Also wanted to say for the record that we did receive written testimony that we will submit for the record from Mount Airy CDC. And then we'll recognize now our two additional witnesses from the other CDCs for your testimony. So please approach the witness table. State your name for the record and proceed. I apologize if I said 6th. I meant 5th Council District. You know I know that. Okay. Please state your name for the record and proceed with your testimony.

Good afternoon, Chair Gilmore Richardson, esteemed Councilmembers. My name is Majeedah Rashid. I'm Chief Operating Officer of the Nicetown CDC and a member of PACDC. I thank you for allowing me to testify this morning -- this afternoon on Bill 17 No. 250324, the proposed Community Capacity Building Fund. My testimony today will give the perspective of the Nicetown CDC regarding this bill. The Nicetown CDC was founded in 1999, and our headquarters and program facilities sit centrally in Nicetown's commercial corridor. Since our inception, we have established a succession of corridor neighborhood plans, a comprehensive NAC program, economic and mixed-use development, affordable housing, Rebuild projects, land management, corridor cleaning and violence prevention programs and more. We have been on the ground and in the mix serving very low, low and moderate income residents and businesses with what we have been blessed to achieve and from the muscle. Despite our track record of success, we have also had many failures and struggles. These challenges were primarily related to a lack of flexible funding that would allow us to more effectively address the wide range of acute and chronic needs in the neighborhoods that we serve. We all too often have to turn clients away or send them to hard to reach places only to be again turned away. Additionally, we have always been in need of key personnel that will lift the burden and need for our existing staff to wear multiple hats. We constantly struggle to maintain the balance needed to be productive and serve our constituents effectively. The Community Capacity Building Fund would provide a reliable source of flexible funding that would not only help alleviate the lack of specific resources needed for our organization, but will allow us to better serve and build the capacity of our communities to become self-reliant. That is of the highest importance. Like many of our fellow CDCs, we may be awarded grants, contracts and other funding that have limited timelines, typically one year. As soon as we are able to really make a difference, the funding runs out. This threatens interruption of services and may cause us to cease operations or providing critical services and resources. The same is true of development, whether affordable housing or economic or commercial development. We need the Community Capacity Building Fund because it will provide multiyear funding and allow CDCs to be more reliable, sustainable and effective in our efforts. CDCs have been one of the primary producers of affordable housing. We need to ensure that our CDCs are strong with the capacity to continue helping to address the affordable housing crisis in Philadelphia. Especially with the current goals, we know the CDCs will have a major role in bringing those goals to reality. Our city relies on CDCs that have been impactful with affordable housing and providing vital services to our constituencies for decades. Now is the time to support CDCs that are the first responders to ever- increasing and multi-level community threats. This includes our collective efforts with gun violence prevention, public safety, community engagement and organizing. We are faced with numerous alterations and cuts to funding streams federally, which extends statewide and locally. Our current funding streams too often fail to cover our organizational costs, which may weaken our stability and hinder the growth of our programs and projects. This proposed bill cannot be kicked down the road. It is needed now more than ever. These and all coordinated efforts of CDCs are worthy of support and the proposed Community Capacity Building Fund will definitely be a positive step in the right direction. On behalf of the Nicetown CDC, our fellow CDCs and all of the communities that we serve in this city, I ask that you approve Bill No. 250324. Thank you again for this opportunity to testify.

Thank you. So wonderful to see you. We thank you very much for your great work in Nicetown. We certainly appreciate you. And I know Councilmember and our Vice-Chair Councilmember Bass appreciates you as well. Okay. Please state your name for the record and proceed with your testimony.

My name is Michelle Feldman and I'm the Executive Director of the East Falls Development Corporation. And first, thank you to the Finance Committee, to Councilmember Gauthier and all of City Council for the opportunity to offer comments in support of the CDC Community Capacity Building Fund. I offer my comments in my role as the Executive Director of the East Falls Development Corporation. Our organization is laser-focused on commercial corridor revitalization along Ridge and Midvale and Conrad Street in Northwest Philadelphia. We carry out our mission through one-on-one technical assistance, convening our business association, comprehensive neighborhood planning and capital improvements to enhance the vibrancy of our business district and neighborhood. While we are a community filled with gems such as (inaudible) and Vault and Vine, we experience a growing commercial vacancy rate and a business district in need of physical improvements to increase foot traffic and create a sense of place. We like to say we are a small but mighty CDC with one full- time staff member and three additional part-time staff, along with a network of wonderful volunteers, including board members and committee members. And while we work each and every day to address the issues our small business community faces from both a micro and a macro perspective, additional funding will be transformative for our organization and our community. A second full-time staff member would allow us to better serve our existing businesses and recruit new ones. Further, additional funding would meet gap or matching funds for innovative projects like our Boat Launch, the East Falls River Landing or substantial seed money for our growing business association to begin our evolving rainy day loan fund for our entrepreneurs. We hope you will consider this a new and vital resource for our city's community development corporations, as organizations like ours continue to work on the ground to serve our residents and small businesses. Thank you for your time and attention this afternoon and we are happy and eager to answer any questions or share any additional information.

Thank you. Thank you very, very much for your testimony and thank you for your work in East Falls. We appreciate you very much. Thank you all so much for being here. I'd like to recognize the presence of our Council President Kenyatta Johnson. Thank you for being here, Council President, for our Finance Committee hearing. We certainly appreciate all of your hard work. Thank you all so much. We're now going to proceed. Are there any other questions for this panel? Any questions for this witness? (No response.)

Okay. Seeing none, we're going to proceed now to Bill 2 No. 250568. If you could please, Clerk, call the first panel we have and the only panel we have on 250568. You can state your name for the record and proceed with your testimony.

Panel 1 for Bill No. 250568 Matt Bowman, Deputy City Treasurer. (Witnesses approached witness table.)

Thank you very much for being here again. State your name for the record and proceed with your testimony.

Matt Bowman, Deputy City Treasurer. Good afternoon, Chair Gilmore Richardson and members of Finance Committee. My name is Matt Bowman, Deputy City Treasurer. Here with me today is our Finance Director Rob Dubow, City Treasurer Jackie Dunn and other senior representatives from the Administration. We're here to testify in support of Bill 250568. once amendments are agreed upon and finalized. We continue to work through amendments and are confident that through collaboration with our partners in City Council we will end up with a draft that we can all support. E. Plan, a program to build and preserve 30,000 units of new and existing housing and otherwise support affordable housing across the city. The bonds would be issued in an aggregate amount up to $800 million outstanding, plus related cost of issuance, credit enhancement and discount. The bonds would be secured by the city's obligation under the service agreement to budget and appropriate annually amounts necessary to pay the service fee, which would be sufficient to pay debt service on the outstanding bonds. E. is a transformational investment to provide quality, safe and affordable housing in Philadelphia. The bond proceeds would be used to preserve homes, make homes more affordable, build more housing and improve municipal customer service for homeowners, renters, landlords, developers and contractors. Ultimately, the bond proceeds would be spent to prevent housing instability and homelessness, ensure that housing and neighborhood infrastructure are in a state of good repair and more resilient, redevelop vacant lots and buildings, beautify city blocks in order to promote the health, welfare and safety of the residents of the city, prevent and eliminate blight and encourage the provision of healthful homes, a decent living environment and adequate places of employment for residents of the city through redevelopment, renewal, rehabilitation, housing, conservation, urban beautification and similar activities which may also be undertaken in commercial and mixed-use areas. Our intention is to issue the bonds in two tranches of approximately $400 million each, as proceeds are needed. This proposal is fiscally responsible as the estimated additional debt service is in line with our long-term debt management policies and maintains the declining debt structure consistent with best practices. Additionally, the flexibility to manage the allocation of proceeds for investments is really a key benefit. We are well-positioned to disperse these funds quickly because they largely support existing programs. For the new initiatives, we have dedicated teams of inhouse experts and consultants driving successful implementation, including Guide House and Reinvestment Fund, who both bring significant experience in a number of key areas, including consumer protection. The bill, once amendments are agreed upon and finalized, will enable the city to deploy these funds efficiently and effectively to address housing needs across the city. I want to re-emphasize our shared agreement that we have a housing crisis, which underscores the urgency and importance of passing the legislation now so we can spend these funds as quickly as possible and with the flexibility that entails. We have the capacity to spend these funds quickly and we intend to do so and we can do so without undermining District Councilmembers' decision-making or authority. The Administration recommends adoption of an amended bill. We respectfully request that the committee give the bill, once amendments are agreed upon and finalized, its favorable recommendation and further that the committee recommends that the rules of Council be suspended so as it's the first reading of the bill at the next session of Council. This concludes our testimony and we're happy to answer any questions.

Thank you. Thank you very much for your testimony. For the record, what is the cost of the debt service per year for this borrowing?

So after both borrowings have been done, we estimate the debt service to be, depending on where interest rates wind up, between 65 and 69 million a year after both are issued.

I apologize for that. I'm going to ask you to repeat due to the hard-working men and women of the Philadelphia Fire Department on their way to an emergency. Please repeat.

So after both series of bonds are issued, we estimate that, depending on interest rates, debt service will be somewhere in the range of 65 to 69 million a year.

So 65 to 69 million per year. How much would that cost across the life of this five year plan?

Of this five year plan? I think Matt's going to look that up.

You're going to make me do some math on the spot, um --

About 270, I think.

Okay. So approximately -- you said 270?

Yeah.

So 65 times 5.

The first year the second issue doesn't come until FY28. So for the first couple years the debt service is about half of what I was saying.

I see. I see. Okay. Because --

One of the things we looked at is how this fits into our long-term debt structure and what happens to our debt service if you include this, the proposed Rebuild borrowing and proposed GO borrowing. Even with all of those borrowings, our debt service would be lower in 2030 than in '26 and then it continues to decline after that, and that's in large part because of the fall off in our pension obligation bond debt service.

Right. And so -- may you repeat the last portion.

Yeah. So that decrease that we're showing after FY29 is in large part because of our pension obligation bonds that have that balloon payment in FY29.

Right. And so, what is the projected cost for the entire length of the borrowing?

It's about 1.3 billion. A little over 1.3 including principal and interest.

Okay. So $1.3 billion including principal and interest. And then for the record, if you can aggregate out how much is just the interest.

About 500 million, which is typical for all our bond deals. We have interest that we pay.

Right. And then how much about?

About 500 million. It's basically a difference between that 1.3 billion that I mentioned and 800 million, so about 500. Did that right my head.

Just for the record. I'm just asking for the record.

No, I understand exactly why you're asking.

And what would it cost per year if the borrowing were at $400 million?

So 400 million is about 33, about half of what we're talking about.

Okay. And then across the five year plan?

So that would be about 170 roughly, 170, 175.

Okay. And then for the length of the borrowing?

That we'd have to -- it would probably about half, right. Basically about behalf of that 1.3 billion.

Okay. And so, for the record how would you say a borrowing like this compares to the pension obligation bond from 1999?

Yeah, thank you for asking that. In a couple of ways. The total amount is smaller and this has leveled debt service over time as opposed to a balloon payment like the pension obligation bond did. So there wouldn't be that big hurdle in the future that we see with the pension obligation bond.

So it sort of spreads it out over time instead of a one-time balloon payment like the one we are soon to deal with in the life of this five year plan, correct?

Correct.

Okay. And then would you say that the market conditions are similar to that time?

I think rates are actually a little lower than they were back then. There's some instability in the market now because of uncertainty, particularly around federal policies but rates are a little lower now.

Those bonds in 1999 were between 6.5 and 7%.

Okay. You said 6.5 and 7%?

Correct.

Okay. And then do you know the percentage now because I think you're doing the taxable bonds, correct? I know we had this conversation early on in the process.

Yep. We are projecting that for the first deal we'd be in the high 5s, and in the second we'd be in the mid-6s.

Okay. May you repeat that?

Sorry. For the first bond issue we're assuming that we'd be in the high 5s in terms of percent. And then for the second bond issuance in the mid-6s.

Okay. So the first bond issuance would be in the high 5s and the second would be in the mid-6s. But you do -- and I know we talked about this before but I have to ask for the record, if there is an opportunity to sort of aggregate out the portion of the borrowing that would be eligible for nontaxable bonds?

And we provided a response on that. I think what you're asking for -- we talked about the programs that were eligible so we can give you the dollar amounts for those programs.

Right. And I know you all submitted the information, but because we are now undertaking the bond authorization relative to the H.O.M.E. proposal, I just think it's important to get on the record and on the transcript for this hearing that we did ask if there was an opportunity to aggregate out sort of the programs between nontaxable bonds and taxable bonds, recognizing that the latter would sort of save you with the interest rates.

Right. And the trade-off is between that and the flexibility and moving between programs.

Right, understood. But I just wanted to get that on the record. And do you see any potential impact around the cost of the borrowing currently? Any impact, meaning around the bond yields and the percentage rate? Based on your previous answer, I think you said high 5s and then second tranche mid-6.

Yeah. And so, there's always particularly for the second issue uncertainty around interest rates because that's a couple of years out. So whatever happens with interest rates will have an impact on the cost of the bonds.

Thank you. Thank you very, very much for that. And then for the record if you could just state the timeline for the first borrowing and the second borrowing. And then if there are any particular factors that you all will take into consideration prior to the second borrowing.

So the first borrowing we're assuming in this fall and then the second borrowing we're assuming in November '27 so in Fiscal '28. And the timing of bond issue is driven by the pace of spending.

Can you repeat the last portion?

I keep doing that. Sorry. The timing of bond issuance will depend on the pace of spending.

The pace of spending?

Yes.

Okay. And then if you -- because you were here, Rob, I just have to ask this. If you could talk about lessons learned from Rebuild because we still have a number of Rebuild projects that have not seen completion. I'm not a District Councilmember full disclosure, but I do care about the work of my District colleagues and all the projects in their districts.

Yeah. There are a number of things that wound up delaying Rebuild. First, there was a lawsuit that challenged the beverage tax. And so, until that lawsuit was settled we didn't know whether we'd have that funding stream so that slowed down the start of the program. And then there was the pandemic, so work stopped during the pandemic. And then because of those multiple delays, spending, I mean, costs went up, inflation went up, and so the cost of projects went up. So one of the big lessons there was is it's important to move things through as quickly as possible and that's what we would do with this program.

Okay. And then lastly, have you all considered around the federal uncertainty and particularly around the tariffs and the impact on sort of the home market and the purchasing of goods and services supplies? Have you considered that as a part of this plan?

Yes. That's part of what we looked at as we looked at production.

Okay. Excellent. All right. Are there any further questions from members of the committee? The Chair recognizes Councilmember Thomas, then Councilmember Ahmad. Councilmember Thomas.

I'm wondering why is the Admin not okay with us just doing the first 400 million now, assessing how that goes and then coming back to the table for the second 400 million?

We want to be able to move as quickly as possible. We see the crisis and we want to move forward.

Based on your testimony right now, I believe you said that the second borrowing would take place in the year 2027?

November '27.

So help me understand how delaying the second 400 million will slow down the process if you don't plan to borrow it for another two years? You introduced this concept to us in March of this year I believe. And so, if we're able to get -- hypothetically speaking, if we're able to get the first 400 million from the time you introduced this concept to us in March to us taking a vote in June, why is it that you don't have faith that we can't do the second 400 million when we have two years to figure that out and we can also use those two years to maybe iron out any kinks or unanticipated problems that might exist?

It has nothing to do with having faith or not having faith. It's that we see this as one complete plan. We want to get approval for the entire plan soon. So we want to make sure that we have the entire thing like what happened with the NPI project, the total amount was approved upfront. And it happened with Rebuild too. This is the pattern that we've done for these projects. We've approved the total amount --

How much was NPI?

400.

How much was Rebuild?

Rebuild, 300.

How much is this?

This is 800.

A little difference, right?

Well, also Rebuild was done years ago so --

And both of those didn't go exactly the way planned, right. So we're using examples of things that was significantly less money, that also didn't go well. So I think with the spirit of the Chairwoman's original question as it relates to lessons learned, I believe one lesson learned is that maybe we shouldn't do the whole 800 million at one time.

So I would say one of the lessons learned from Rebuild is that you need to be able to move quickly and Rebuild didn't for a couple of reasons: One, hopefully both that won't recur now which is a lawsuit challenging funding source and a pandemic. So, yes, if things like that happen again, then this could slow the project down. We are going under the assumption that they won't and then we're going to move forward.

But you can see what my energy is as it relates to the recommendation, so that's why I'm offering some resistance because I just don't for a lot of different reasons, and I've said it on the record as well as in private negotiations, I don't understand -- I mean, we now have details. I want to take a moment to commend the Council President as well as the City Controller for putting themselves in a position to offer a little more oversight than what was originally proposed in the concept of this H.O.M.E. Initiative. But I mean, where I sit I just think that based on the testimony that's being provided today as well as the details that has already been sent over to Council, I'm not convinced that this is a good idea. I'm not convinced that 400 million is a good idea, let alone 800 million is a good idea. And there's nothing that you've said in the midst of the questions that I've asked where I feel like you're providing an incredible answer that at least puts me in a position to be able to say that I think that this is a good idea.

So I'd say that the rationale is this is an entire program, much like we've done with earlier programs. We approve the whole amount upfront. There is a housing crisis in Philadelphia. I think everyone agrees with that. We are proposing ways to attack that crisis and the large majority of the programs that are in this proposed program exist already. So we have the ability to spend and to get these dollars out the door quickly.

There's an education crisis in the city of Philadelphia as well. You all used that and talked about it a little bit earlier. There's a poverty crisis in the city of Philadelphia as well. I just looked at Councilmember Young. He talks all the time about the fact that there's a gun violence crisis in the city of Philadelphia as well. I'm sure someone else will talk about a SEPTA crisis and so many other crises that exist in the city of Philadelphia. I don't see us pouring a billion dollars into those crises. So since we're pouring a billion dollars into this particular crisis, that's what you're proposing, you're going to see a certain level of scrutiny because there's a lot of us who on a consistent basis hear from constituents who talk about a lot of other things that's not just housing. So with that being said, I just wanted to put that information on the record because I'm very concerned and I'm hoping that the Admin is open to a dialogue around possibly approving a part of it now because you have folks like me who's skeptical about the entire concept. So the idea of jumping off the bridge and going straight into the water with 800 million I think it creates a lot of fiscal questions, especially considering, again I'll reference what the Chairwoman said, as it relates to uncertainty around decisions coming out of D.C., also considering previous issues that we've seen when we've done this level of borrowing.

And let me just address them here. You talked about some of the other crises for education. For example, we put $280 million a year in contributions to the school district above the amount that they get from our taxes so that's --

So, Rob, since you want to go there --

Can I finish? I let you finish. That's --

-- I mean, since you want to go there how much more have we increased in spending in year-round school?

What? Sorry?

How much more have you increased in spending in year-round school?

In year- round school, it's about $20 million.

Right. So when you look at the increase in spending along with the increase of inflation as well as the overall crisis that we're dealing with our facilities, that's a $6 billion crisis. We appreciate the fact that we put a few more pennies in the public education, but we haven't done nothing significantly to put a dip in the facilities crisis as well as the fact that we have to consider that we have contract negotiations coming up next year. So I just wanted to put my information on the record, but I have more than enough energy to be prepared to go back and forth with you on any fiscal issue that you want to discuss today because I fundamentally disagree with H.O.M.E. And I don't know if there's anything that you can say to convince me right now that this is the direction that the City of Philadelphia needs to go in as far as investing a billion dollars.

I think the only point I was trying to make is that for those other issues you talked about we have substantial investments. It's not like there are not investments in those items.

That was my point. I vote and I read. I know we have investments in those issues. I was using those as examples to communicate social ills that we have in the city of Philadelphia. And I personally -- thank you, Madam Chair.

Thank you. Thank you very much, Councilmember Thomas. I wanted to know very quickly, then I'm going to pass it to Councilmember Ahmad, what are we currently spending on housing per year?

So to the Housing Trust Fund, it's around $30 million a year and sent over from the General Fund. There are some pots in the General Fund that add on to that and then there are debt service on the NPI bond issues.

Right. So debt service on NPI. And how much is that per year?

NPI is at 28 million a year, and then we're kind of winding down the NTI issue that's still at million a year. 5

You said winding down 7 the? 8

NTI. We're 9 kind of towards the end of that and 10 it's about 16 million a year. 11

NTI from -- 13

Neighborhood 14 Transformation. 15

-- the Street Administration, correct?

Yes.

I'm just saying this for the record so people understand the difference. If you could go back to, and you were here so we thank you for your historical knowledge and context, specifically around NPI from last term, if you could talk about the original allocation for NPI, the original ask, and then how NPI was set up year over year. Just walk us through that process.

The original ask was 400, yep. And it was set up as doing multiple bond issues as cash flow requirements required.

Repeat that. I don't know why but the last part you can't hear.

Yeah, I guess I trail off. So it was a $400 million authorization with multiple bond issues and the timing issues depended on when cash was needed.

Right. But originally was it supposed to be 150 million a year? CITY TREASURER DUNN: Good afternoon. Jackie Dunn, City Treasurer. The first two borrowings for NPI were perhaps 100 million each and the third borrowing was 150 million. So there's 50 million remaining in that 400 million authorization that has not been issued. But the plan was to do even increment borrowing, you know, over time as Rob has mentioned.

Meaning, because I thought that it would be 100 million per year. CITY TREASURER DUNN: Correct. The first two issuances were, as you stated, 100 million. And I think they're around 18 months apart. And then the third, there was a decision to increase because of the need that those programs had to shift some of what would normally have been in the fourth borrowing earlier into the third year. So it was a $150 million borrowing.

Okay. Great. Thank you. The Chair now recognizes Councilmember Ahmad. And if you could just state for the record how much we are expending per year. CITY TREASURER DUNN: On the NPI programs?

You could just state for the record NTI, NPI and then Rebuild. CITY TREASURER DUNN: The question is regarding the debt service?

Mm-hmm, for each one for each year. So NTI, NPI and then Rebuild. CITY TREASURER DUNN: Sure. For NTI, the Transformation Initiative the current fiscal year is 16.4 million in annual debt service.

Hold on one second because I'm trying to take notes. NTI current per year for debt service is 68,000,000? CITY TREASURER DUNN: 16, 1-6.

1-6. Okay. 16 million. CITY TREASURER DUNN: See, we found some savings right there.

Oh, there's savings right there. All right. So NTI currently for the life of this proposed five year plan debt service amount is million per year? CITY TREASURER DUNN: About 16.5 million across the five year plan annually, yes.

Okay. And then NPI? 8 CITY TREASURER DUNN: 9 NPI for the next three fiscal years 10 are around 28 million annually and 11 unless additional bonds are issued, 12 that amount -- is that the Housing 13 Trust Fund adjustment that last two 14 years? 15

So a small 16 portion of that debt service for NPI is paid out of the Housing Trust Fund, but the remainder is paid out the General Fund. CITY TREASURER DUNN: Okay. So that annual debt service is around 28 million for the NPI borrowings that have occurred to date. That does not include estimated debt service from the fourth NPI amount that hasn't been borrowed yet.

Which is the 50 million? CITY TREASURER DUNN: Correct.

Okay. And may you please repeat those numbers again. CITY TREASURER DUNN: For NTI, the Neighborhood Transformation Initiative, is about and a half, 16.5 annually. And 16 NPI for the three issuances to date is around $28 million annually. And for the three NPI borrowings that have occurred and for the Rebuild program, the annual debt service is around 14.5 million annually for the two Rebuild borrowings that have occurred to date.

Okay. And so, if you could also state now NTI, NPI and Rebuild the spending per year for each of those programs.

So we would have to get back to you on the NTI. I think that predates, maybe even predates somewhat Rob's time at the City, so we'd have to get back to you on that.

Well, Rob was here which is why I'm continuing to ask these questions. The historical knowledge and context is important. So let me move to NPI then. NPI, how much is spent per year? CITY TREASURER DUNN: I don't have it broken out per year, but for the two issuances that -- sorry, for the three issuances that we've completed so that would be million, they've spent 90 million of the first 100, 78 million of the second 100 and about million of the third issuance 5 which was 150 million. And those 6 numbers are from April. So it 7 would be a little higher now that 8 we're in early June. But those are 9 dollars actually that have gone out 10 the door from the Trust to the 11 vendors or contractors and agencies 12 that are part of the NPI program. 13 The NPI programmatic 14 teams have commitments for a number 15 of the dollars that haven't gone out the door yet. So there are things that are in process that have not come across our desk.

Right. And then for Rebuild, how much was the spend per year?

So Rebuild, the first issuance we spent about $90 million and that did take, you know, as we've all talked about there are those delays that took about five years, about four and a half years to spend that first 90 million. The second bond issue we spent just over 60 million in 8 months. So it has ramped up quite 9 a bit once they got over the those, 10 external factors we talked about 11 and then some of the teething issues of standing up a new program.

Sure. And I ask that question because based on the question from earlier, Rob, you stated that the second tranche issuance for the H.O.M.E. bond authorization would be November 2027 which will be Fiscal Year '28. We're now looking at FY --

Right, that's correct.

We're now looking at FY26. And I ask that because each of those numbers that I've heard even though the bond issuance for each of those programs give or take let's just say 400 million for NPI and 400 for NTI and the dollars allocated for Rebuild, at no point as a city were we able to spend $400 million in two fiscal years. So my question to you is listening to all the numbers that you all have provided, the debt service that we've had to continue to pay on each of these initiatives, and for each of the issuances noting that we have never spent $200 million in one year for any of these programs that's over the historical life of the city, why is there a rush on borrowing $800 million right away?

Well, we're not borrowing 800 right away. Let's be clear --

But you understand what I'm saying. The question is you want to borrow 400 million now.

Yes.

You want to come back in November '27, FY28 for an additional 400 million.

Yes.

But there's never been a time -- and let me stop there. You also want to do the debt service allocation in the life of this five year plan that we're slated to approve currently for both of the borrowings, so that's why I'm bringing it up. No, you don't want to borrow 800 now. But you want to do 400 now, 400 November '27 which will be FY28. We would have to include the debt service allocation in the life of this five year plan. As a result of that, whether you borrow or not that allocation will be made. And so, thinking about the debt service amounts that we've paid in addition to each of the issuances and how much has been able to be spent over all of these programs, would you think it would be more fiscally prudent of us to start with the first 400 and then after program evaluation and determination, come back to evaluate how much we were able to do and then make a determination from there?

Yeah. No, I think in terms of being fiscally responsible the bond issue will happen if we spent money. So I think in terms of being fiscally responsible the authorization allows us to move forward. I don't think that it's bad fiscal policy to approve the total amount of the funding upfront. Again, the spending -- the second borrowing will depend on the pattern of spend. And we are doing a number of things to --

So can I stop you there?

Yeah.

I apologize for the interruption, but you said the second bond amount will be determined by the amount that you spend.

Yes.

And so, is there a commitment to state that if you're not able to spend the $400 million in the first two years prior to coming back to us in November of '27 and FY28, that you would not then come back for that same amount?

So our plan is to spend all this money, spend it quickly and be ready to borrow. Again, if we have not spent the money, right, we would not come back and look to borrow again. If we still have money, we're not going to borrow before we need it.

But the key here though is that the debt service allocation will have already been done in this five year plan, right?

But the debt service payments will be tied to what we actually borrow. So if we wound up borrowing a different time, our debt service will look different going forward. It's like everything else in our five year plan. It's based on assumptions and those will -- they can change over time. They can look different in future plans.

But the money will still be set aside for that particular use, correct?

So it is projected in this plan that that's how money would be used, that's right. But that doesn't mean that if we change when we borrow that, that debt service projection won't change. It will change if we change that projection.

Okay. I'll hold there. The Chair now recognizes Councilmember Ahmad.

Thank you, Madam Chair. A bold plan and I know we have to be bold. However, that bold plan I don't see it reflected in the growth that has been projected which you say is 0. It doesn't jive how we can be expected to invest all this and get all this activity and then yet have no 9 growth.

Yeah, we don't project no growth. we project relatively slow growth because of all the other things that are going on in the economy. One of the responses that we sent to the questions from Council was the projection of how many jobs we thought would be created here. I think it was in the 30,000 range. So there's a definite projection of jobs created.

I mean, if you're going to be bold, we have to be bold all the way across because that gives confidence to people, investors, to look at what our own projections are. And if we can on one hand ask for all this money and then the other hand say, oh, we're going to be mealy mouthed about this, just as a city who's looking to grow and get investors and people to come here, we have to have a consistent picture and saying that we're going to be very, minimal in projection here but asking for all this here, really we need to have an adjustment there, because we really need to look at what we're projecting to the -- the hope factor is really important in how we can attract more people to invest in our city, to move to our city. So that's one point. Two is could you just explain -- these are revenue bonds, not general obligation bonds, right, which revenue bonds are more risky. Can you explain what are we getting -- to do this as a revenue bond, what are we seeing is sure shock to be able to pay down this bond? Could you explain why we're going this way versus that?

So revenue bonds, really this case it means it's being issued by an authority, in this case the RDA, because the H.O.M.E. Initiative is consistent with the RDA's overall mission, so that's why we're issuing through the RDA. So that makes it a revenue bond since it's not being issued by the City directly. But through this process, we'll be committing to paying the debt service from all of our revenues so it is as secure for investors as a general obligation bond. And that's how the rating agency rate it. They rate it the same because it has the same security.

But they want a higher return on --

They do not. They want the same return.

What are we using as the asset to say we're going to be able to pay down, you know, do the debt service as opposed to having GO bond?

It's all of our revenues for each. It's the same security.

We're on the hook is what I'm trying to establish. Very much so.

Yes, these are borrowings.

Yeah. Okay. Just understanding my colleagues' concerns about how much on the hook are we, so the lack of alignment of growth projection and then yet we are going to be obligated for so much, it's probably why is the growth projection doesn't look as robust as it could because we are feeling risk, you know, risk averse here?

No. The growth projection has to do with really what's going on in the national economy. And let me take a step back. Our growth projections come from an outside econometric firm. We work with who looks at what's happening not only nationally but globally. They then join us at a meeting at the Federal Reserve here where we talk to other economists who say it could be great things going on in the city, but if the national economy is going to be going through really hard times, you're still going to have a really big impact on our growth. So for example, higher tariffs mean that there is less economic activity, that affects us. And so, things like this initiative will help offset that kind of impact, but they don't mean that if there's a nationwide economic slowdown that we're going to see multiples of growth of what the nation is seeing.

So that just brings me right back to the risk we are taking, right. So we are understanding our volatile national landscape. We are asking to go on the hook for 400 million with another 400 million in very short time. And yet we can't have -- and we don't know what those revenue projections are going to be because we're iffy about that. So is this the right time to do, even though we want to be bold, if all these other parameters are not matching up? How is it that we are being asked to sign off on 800 million?

So we have revenue projections in our plan that take into account that uncertainty and we have a plan that is balanced assuming the debt service on this bond issue. And actually, when we get past the years of our five year plan, our debt service goes down in large part because of what's happening with those pension obligation bonds. So, yes, I do think this is an appropriate time.

I choose to disagree. Thank you very much. Are you -- oh, Madam Chair is here. Okay.

Thank you very much, Councilmember Ahmad. Are there any additional questions for these witnesses? The Chair now recognizes Councilmember Thomas.

I don't have any of these questions planned, but I'm just listening to the testimony. I think Councilmember Ahmad made a good point. She talked about the budget has projected job growth of 0, but we're being asked to fund a program that creates how many jobs, 30,000. Help us understand that. How do we have a budget with a projected job growth of 0, but we're looking at passing a budget that's supposed to create 30,000?

So the budget and five year plan don't project 0. They project small growth. But at a time when you're seeing that kind of growth from the national economy, that's a good time to do stuff locally that will help generate jobs.

I don't know if that answered the question, but okay. So 30,000 jobs over the next year or so is considered small growth. That's not big growth. That's just what we're doing, right? That doesn't include the rest of the private sector.

So we're also here at the same time that we're looking at the federal government cutting funding for our three or four biggest areas of wage tax, right, education, medicine, government. They combine for about a billion dollars in taxes. So our other parts of our economy are probably going to see declines because of that and we've already started to see that with educational institutions doing layoffs or hiring freeze. So, yeah, overall we're not going to see the kind of growth we would like if that's happening. And that's why you see the projections you see in our plan, but it's also why it's important for us to make investments.

I think you make some great points. So I'm wondering why are we getting rid of the $100,000 BIRT exemption knowing those things exist with no 15 significant investment in no 16 industries at all and no relief for small businesses on the net income portion side. I think you're absolutely right. I agree with everything you said. So help me understand those decisions if that's your thinking right now.

So the exemption, we like the exemption. We would rather keep it. It is going away because of legal challenge and the risk we think that challenge presents. We are proposing to invest $30 million in small businesses through Commerce, through both grants and assistance with tax preparation. We also are including in our proposed plan over $200 million in tax cuts, so we have a large investment in taxes and we have an investment in grants to our businesses.

200 million in tax cuts next year?

No, over the five year plan.

Interesting. Okay. Doesn't necessarily again address my question, right, but I hear you with your response. You talked about the $30 million Commerce program. Since you brought that up, how much of that 30 million will go to businesses and how much is for staff?

So I think it's probably about 29 million that goes to businesses.

29 million goes to businesses and 1 million will be for staff to be able to disburse the revenue?

Well, to administer it so that we can make the application process simple and get the grants out quickly. Because one of the things that we've heard that frustrates people is we have these programs, we don't administer them well, they're overly complicated. It takes a while to get grants out.

So looking at it from an economic lens thinking about how many businesses will be impacted by the exemption going away, what made 29 million a sweet number? How many businesses are going to be impacted by the exemption going away to the point whereas though you calculated that 29 million would be the appropriate number to offset the situation?

That's roughly the gain in revenue from the exemption going away. So we wanted to take all the revenue we're getting from the exemption going away and putting it into this program.

Where'd you get that number from?

What do you mean where'd we get the number from?

So you said you anticipate an extra 29 million in revenue that businesses are going to have to pay because the exemption is going away.

Right.

Where'd you get that number from?

We did a calculation of businesses that had revenue of 100,000 or less --

And did you consider the creative economy, like people who might be a sole proprietor, people who might be a 1099 employee?

Yes.

And the number we came up with was $29 million?

Yeah.

(Inaudible).

Please, yes, Madam Chair.

To Councilmember Thomas' point regarding the fund, I think it will be helpful if you could provide just a breakdown based on the information that you all have already shared with us for the record of what the allocation would be for that fund?

Yes, we can. We can provide that.

Thank you, Madam Chair. I'm going to go on the record to say that those numbers don't sound accurate to me. I will be very curious to hear how 29 is the sweet spot that we found. My last set of questions --

We will show you. We can provide that.

That would be amazing. Thank you. I did ask for that earlier in the budget --

And we did provide -- we may have provided it and we will provide it again.

We hear you. Thank you. And so, to close out my series of questions the Chair of the committee talked about three programs that were already panned out in bonding. I'm wondering thinking about NTI and NPI. There's some duplication there. I'm wondering why are we not funding those programs at a larger amount?

So there is not really duplication with NTI, but with NPI a lot of the programs that were in NPI will be continued in this bond -- through this program. And that is part of we're proposing to continue the programs and to expand them. That's exactly what this program does.