We'll go back to that. Any other questions for the Commissioner? Councilman Kelly.
I have one question. I want to get back to what Councilman Nutter was referring with the cost plus 10, the cost for, of course, our suburban customers. I just want to know if we would be competitive if the cost were, say, 12 percent above the cost of providing and treating that water or 15 percent or whatever? I was wondering if anything was being done in that area. For instance, this surcharge, if I may use that term, for uncollectibles, you might say, that's about 3 percent that's being put on the bills for the people who pay in Philadelphia. Has that been ever thought about adding that on to the bills of the people that, of course, we're selling it to in the suburbs? COMMISSIONER BRUNWASSER: Well, I 96 05/20/04 - TRANSPORTATION - RES. 040298 think the answer is that we have these contractual agreements with the suburbs and we charge them for what --
I know it's cost plus 10. I'm thinking, though, would we still be competitive if it were or percent 8 above cost? 9 COMMISSIONER BRUNWASSER: The answer 10 to that is probably yes. The to other 11 question, the suburban customers, it's been 12 our experience, with very few exceptions over 13 the years pay on time. So there's never a 14 delay or we get a hundred percent of what's 15 bill. So it would be inappropriate under the way our contracts are structured to charge them that piece which is of a retail nature inside the City boundaries, just as it would be improper for us to charge them for inside city inlet cleaning or inside city maintenance of 3300 miles of water main that they don't use. So it's that kind of thing which accounts for some of that difference between retail and wholesale. There's so much that we do internally for the retail customer that we 97 05/20/04 - TRANSPORTATION - RES. 040298 do not do for the wholesale customer. They're basically buying in bulk and then they have to turn around and do what we do.
But you would still be competitive in the market, in other words, if you increased it to, say, to 8 percent? 9 COMMISSIONER BRUNWASSER: I would 10 assume that, yes. 11
Two last 13 questions, Commissioner. 14 Thank you, Councilman. 15 First, how long is the term of the 1987 ordinance with regard to cost plus 10? Was there a set term or is there a limit as to how long we can contract with these customers? And are those contracts -- COMMISSIONER BRUNWASSER: That was James Palladino our rates manager. The ordinance doesn't have a timeline, but we did sign a number of contracts with that 10 percent provision. Just as we have the old water contract with Bucks County Water and 98 05/20/04 - TRANSPORTATION - RES. 040298 Sewer that dates back all the way to 1966.
Hold on for a second. You said the 1987 ordinance has no 5 time limit in terms of how long you can sign a contract for? COMMISSIONER BRUNWASSER: Oh, no, I misheard that.
What question where you answering? COMMISSIONER BRUNWASSER: I thought you meant is there something about the ordinance itself that makes it go out of fashion. Upon that ordinance being passed, we signed six, I think, wholesale wastewater contract for a duration of 35 years.
And this is a contract between the Water Department and? COMMISSIONER BRUNWASSER: Upper Darby --
Well, why don't we do this. Why don't you get to us a list of all your contractual agreements, who they're with, length of term, I'd like to see a copy 99 05/20/04 - TRANSPORTATION - RES. 040298 of the contract. Second, what are the length of terms of contract for the six? Do you know them? COMMISSIONER BRUNWASSER: They began to be signed probably in 1988, and through the early '90s I think all of the long-term agreements were signed and --
Now, how are you in a position as a Water Department -- who has to sign off on these contracts? Is there any City Council approval? COMMISSIONER BRUNWASSER: I don't believe there's any further approval beyond the ordinance. In other words, I don't believe the ordinance requires us --
Why are you able to sign a 35-year contract? Normally, any contract over a year requires City Council approval. COMMISSIONER BRUNWASSER: I think in this particular instance that -- well, that right was given to us, to the Water Department, through the ordinance.
Through the '87 100 05/20/04 - TRANSPORTATION - RES. 040298 ordinance? COMMISSIONER BRUNWASSER: Yes. Now, you have to remember --
I hate to interrupt you. I think the Home Rule Charter says that any contract of more than a year must be approved by City Council. As much as we love our ordinances, they still don't outweigh the Home Rule Charter. Please identify yourself for the record.
My name is James Palladino, the rates manager with the Water Department. The '87 ordinance does provide us with the authorization under City Council's approval to enter contracts of varying lengths up to, I believe, years in length. I am 20 somewhat aware, less aware of the stipulation 21 you've cited about a one-year contract being 22 the limit without City Council authorization. 23 I'm not sure how they duck tail, but the 24 ordinance did go through extensive hearings 25 here in '87. It replaced an earlier ordinance 101 05/20/04 - TRANSPORTATION - RES. 040298 in '76, I believe, that extended the same authority with respect to the length of time a contract can be entered. And in fact, for practical reasons -- and we have these customers, the six customers that Commissioner Brunwasser was talking about, they have 25-year term contracts extending from the period about '88 to 1990. Without that length of term like that, these wholesale customers would never have been in a position to float moneys to pay us millions of dollars --
No, I understand why someone would want a long-term contract and I'm not say that we would not necessarily support a long-term contract. What I'm trying to understand is how statutorily or through an ordinance we could convey to you the authority to enter into a 25-year contract without requiring City Council approval of the actual contract. Now, I'm sure it was creatively written. Now I really do need to know the Bill No. on the '87 contract which I hope somebody in your team has because our next call is going to be down to the Chief Clerk's 102 05/20/04 - TRANSPORTATION - RES. 040298 Office to get a copy of it.
There may be a distinction that I'm unaware of the one-year contract which may be related -- and I'm hypothesizing here -- may be related to the City purchasing services as opposed to this contract which involves selling services.
I'm going to take it that someone creatively figured out that this is almost potentially like a concession or something akin to it, because normally the year contract issue is for when the City is purchasing a service. In this particular instance, someone is giving us money.
And it may have been handled that way. This is a significant long-term relationship. I mean, this is not like having a concession to sell hot dogs down in Fairmount Park. We're talking about some pretty serious money here. Does anyone on the team know the 103 05/20/04 - TRANSPORTATION - RES. 040298 Bill number?
No, but I can provide it. COMMISSIONER BRUNWASSER: We certainly will provide it and copy of the bill 7 if we have it. Or not, the City Solicitor's office could provide it.
I'm sure they could, but I'd like to get it now. Do you recall if there is a particular section in the Philadelphia Code that was amended by this ordinance from '87?
No, it did not. I'm almost certain it did not amend the Philadelphia Code, Councilman.
Okay, it was a contractural arrangement type ordinance. Okay, this will be quite fascinating. Councilman Kelly.
Thank you, Mr. Chairman. I just have one question here and it's sort of a follow-up to what the Councilman was saying. In this ordinance, is 104 05/20/04 - TRANSPORTATION - RES. 040298 there any provision in there that deals with inflation or anything like that?
Under the contracts we've entered under the authority of the ordinance, we can raise rates to our wholesale customers with 90 days notice.
And that's what we've done. We've noticed them. We've provided --
It's not an ironclad contract where it says it sets a certain rate for a certain time.
One last question. Looking at your Five-Year Plan, in the rate stabilization fund, it appears in FY '04 you have $107 million and in FY '05, $63 million. What's the $44 million for? COMMISSIONER BRUNWASSER: That's the draw down from rate stabilization in order to meet our bond covenant test of 1.20 times senior debt service. In other words, when we 105 05/20/04 - TRANSPORTATION - RES. 040298 raise rates the last time and in raising rates this time, our proposed rates do not raise rates to the level that current revenue alone will get us the bond coverage test, but it's a combination of the rate increase, money coming in, and monies in our rate stabilization account that gets us to the 1.20. Otherwise, if we didn't have this rate stabilization fund, the rate increase would have to be higher.
Let me ask this question, and you don't have to go through all of it now. You have five different funds. What I'd like you to do is whether it's the $1.88 or this average ratepayer with the 6,000 gallons a month, I'd like you to take -- and maybe it's $17.27 in your chart. I'd like you to break that out and show us how much of that goes to any of the five funds. Show me where the money is going and how it's being used. I mean, how do these funds get money? COMMISSIONER BRUNWASSER: The construction fund, for example, gets money in two major ways. One is through the sale of 106 05/20/04 - TRANSPORTATION - RES. 040298 bonds --
You're going to send it to me. COMMISSIONER BRUNWASSER: Okay. Yes.
Any other questions for the Commissioner? (No response.)
Thank you very much. COMMISSIONER BRUNWASSER: Thank you.
Revenue Commissioner Nance Kammerdeiner. Please identify yourself for the record and tell us all about what you want to tell us. COMMISSIONER KAMMERDEINER: Nancy Kammerdeiner, Revenue Commissioner. The Water Revenue Bureau which is responsible for collecting water and sewer fees is a part of the Department of Revenue. I don't have prepared testimony. I came expecting questions from you and will do my best to answer those questions. If I don't 107 05/20/04 - TRANSPORTATION - RES. 040298 right now, I will get answers to your questions.
Good afternoon, Commissioner. COMMISSIONER KAMMERDEINER: Good afternoon.
Commissioner, could you walk us through the current status of the collection process where you are? I know during the budget process, we learned -- got some, I thought, some very interesting statistics. For the purpose of this hearing, could you tell us where we are with your collection process? COMMISSIONER KAMMERDEINER: I believe you're referring to the questions that came up during the budget testimony about our collection factor. And at that time, we indicated that the current collection factor is 85 percent. In other words, in the current year, we collect 85 percent. But that means that since that's a monthly billing, that includes bills that go out toward the end of the year that there's really very little time 108 05/20/04 - TRANSPORTATION - RES. 040298 to collect on. So you really have a better figure if you look at collections over time. And after about three to five years, we collect approximately 96 to 97 percent of what has been billed. That gives you a much better picture than with the current year collection, and that's more comparable to what you were referencing in that hearing to PGW collections. We didn't realize when we were here at the budget hearing that the PGW numbers were quoting were collections over time. We thought they were current year collections and responded to what we thought your question was and we were actually giving you apples and oranges instead of something that was comparable.
You're saying your collection rate is 97 percent? COMMISSIONER KAMMERDEINER: Over time. After you factor in additional efforts at collection enforcement. We lien property if there is a delinquent charge and it hasn't been paid. And so if the property sells, we'll get collections on that. 109 05/20/04 - TRANSPORTATION - RES. 040298 One of the chief enforcement tools we have, of course, is water shutoff. And as you know, there's a moratorium from November 1 through April 1 in terms of water shutoff. But we have concerted efforts working with the Water Department to identify accounts that are delinquent, and we refer to the Water Department the accounts that should be considered for shutoff. And I know they can give you some more updated figures than I have, some of the Water Department folks who are here can really update it. But we have referred over 29,000 accounts to shutoff since April 1 and significant number of those have already been shut off or the people have come forward and paid so that they could avoid shutoff. That's probably our most useful tool in terms of collection.
Are you able to tell us about the outstanding debt and where you personally as the Revenue Commissioner, where you are with -- are you satisfied? What is exactly -- I know you're never satisfied, but -- 110 05/20/04 - TRANSPORTATION - RES. 040298 COMMISSIONER KAMMERDEINER: I was just going to use that term.
Tell me, because we got an impression during the budget process that things were in very bad shape. And you're now reporting that they're not as bad we first thought. Where exactly are we today? How much money is out on street? COMMISSIONER KAMMERDEINER: I'm looking for something that I compiled after our hearing. Give me one second. (Pause.) COMMISSIONER KAMMERDEINER: One of the things that came up during the course of that hearing was an indication that we keep receivables on the books for 15 years. This is much longer than any other utility keeps receivables on the books. And at that time we were uncertain about the original source of that 15-year requirement. Some research since then has shown that it was a 1916 ordinance of Council that required this. Other factors from that ordinance has been rescinded or replaced, but that requirement has not been. 111 05/20/04 - TRANSPORTATION - RES. 040298 And so I would expect at sometime in the relative near future we'll be back to ask for a recision of that provision and appropriate replacement language in terms of how that should be handled. That having been said, that means that we carry on the books a principal of delinquency that appears to be much higher than you would usually see with a utility. If you look at the period from 1998 through 2003, we had a principal balance of $132.9 million. Of that, however, only about 65 to 70 million represents the last three years and includes a lot more in 2003, which was still under really active enforcement activity. So our receivable looks significantly higher when you consider it over a 15-year period and is, I'm sure you know, collections after two to three years on something like a utility service become very, very difficult, if not impossible.
Commissioner, I just have a question here in the 112 05/20/04 - TRANSPORTATION - RES. 040298 uncollectibles. You don't have any restrictions like PGW has as far as water shutoffs and whatnot? COMMISSIONER KAMMERDEINER: Yes, we do. We have a moratorium on shutoff from November 1 through April 1, essentially the same time period that PGW has a moratorium. And so during that time period, we do not shut off residential accounts. We will continue in that time period to shut off commercial accounts.
In other words you still have the same restrictions as PGW, yet your collection rates are about 96 percent versus their probably 91 percent or 90 percent? COMMISSIONER KAMMERDEINER: I don't know if they have any other restrictions that we don't have, but if you're only refer to the moratorium on shutoffs, yes.
You have payment plans for people who are really hard-up for -- COMMISSIONER KAMMERDEINER: Yes, we do. We have low income program referred to as 113 05/20/04 - TRANSPORTATION - RES. 040298 Wrap. It's specifically designed for people who are in poverty, very similar to their Community Responsibility Program.
Could you take a two-minute recess until Councilman Nutter comes back. Just give him a minute. You can just hang out there. COMMISSIONER KAMMERDEINER: Okay. Thank you. (Brief recess.)
We're going to get restarted. Commissioner, could you clarify your answer with regard to collection rates and total amount -- have you provided us in the past with a chart laying out what the outstanding taxes are and given us kind of a bit of a snapshot of 30, 60, 90, 120, 180 plus, anything like that? COMMISSIONER KAMMERDEINER: I had prepared something after my budget testimony, I don't know whether it was distributed to you, that had aging on both the tax and the water billings to show how much was still 114 05/20/04 - TRANSPORTATION - RES. 040298 outstanding. If you haven't gotten that, I will have to check and see that that gets to you. What I had not included in there, and I can, is on the water specifically the 30-day collection, 90, 120. I had looked at it in terms of which year of billing and how far that had been outstanding. So I will add to it the 30, 90, 120 day.
Now, did I have a recollection from that hearing that we may be carrying on our balance sheet outstanding debts in excess of seven years. COMMISSIONER KAMMERDEINER: Yes. I addressed that while you were out of the room, Councilman. We did some research after that budget hearing to find out what the source was for our carrying receivables for 15 years. We found that it was a 1916 ordinance that had never been rescinded or changed and that piece has been carried forward in the Philadelphia Code as a requirement on water receivables.
What's the requirement, length of time for how long you 115 05/20/04 - TRANSPORTATION - RES. 040298 carry? COMMISSIONER KAMMERDEINER: Yes. It actually indicates that we can't write them off or remove them as receivables until at least years. 7
I assume you're 8 going to sending over an ordinance about that? 9 COMMISSIONER KAMMERDEINER: We 10 certainly want to do that and we'll be working 11 with the Water Department and the Department 12 of Finance to ensure that we come up with 13 appropriate language for, shall we say, the 14 modern age. 15
Okay. Tell me a little bit about our legal strategy as it relates to collections. How aggressive are we through the courts pursuing outstanding debts? COMMISSIONER KAMMERDEINER: I assume in this context you're talking specifically about the water and sewer debts.
Well, you can tell me about those. But if we have other experiences, you can talk about that as well. COMMISSIONER KAMMERDEINER: They're 116 05/20/04 - TRANSPORTATION - RES. 040298 parallel in many ways, except that with water and sewer we also have the shutoff enforcement possibility. In terms of water delinquencies, we do lien properties because we follow the property with the water and sewer debt. The Law Department files judgements against the individuals in Municipal or Common Pleas Court, depending upon the dollar value of that receivable. And they also seek execution on those judgments in order to find and pursue the assets of the person who has the account and who has the judgment that's been filed against them. We use collection agencies from Revenue, and the Law Department also uses collection agencies and co-counsel to pursue the collection of the receivables.
We've heard a little about that. What's the collection rate by the outside agencies and by the Law Department? COMMISSIONER KAMMERDEINER: I will have to get information for you on that by the 117 05/20/04 - TRANSPORTATION - RES. 040298 various agencies. On the Law Department, I don't know. I can only give you information on the three agencies that Revenue uses for collection.
What is it? COMMISSIONER KAMMERDEINER: I don't have it here with me. I will have to get that.
How much, if at all, do we avail ourselves -- I mean, there are people out there who kind of make a business out of buying accounts receivables; is that correct? COMMISSIONER KAMMERDEINER: I know there are. We have not sold water and sewer receivables or factored them as I know some utilities do.
Why is that? COMMISSIONER KAMMERDEINER: It has just not been one of the strategies we've followed. I don't have a particular reason for you on that. We had looked at it and talked about it, but --
Is it just a 118 05/20/04 - TRANSPORTATION - RES. 040298 policy decision? Is it just a practice? COMMISSIONER KAMMERDEINER: It would be a policy decision.
Is it just we've never done it before so, therefore, we don't do it? COMMISSIONER KAMMERDEINER: We talked once about doing that, but it was right after the real estate tax lien sale, and we chose not to go out with water and sewer liens right after that.
Do you have any information on -- when you talk about factoring or some of other strategies, what is the typical, I don't know, is it a discount or what's the typical rate that you end up with in terms of the bill is 100, we sell it to someone who buys AR accounts, what would we typically get back? COMMISSIONER KAMMERDEINER: I don't know. I believe they examine the portfolio, take a look at efforts that were made to collect and review all of the information they can gain about that receivable to try and 119 05/20/04 - TRANSPORTATION - RES. 040298 determine what their potential for collection would be. I would expect that that rate would differ depending upon the age and alternative collection actions that have already been taken. I can't give you an exact amount. I think it would vary from portfolio to portfolio in terms of what you were trying to sell.
You've probably provided this to us in the past, but if you could get us information on the collection agencies -- does Revenue actually do any collections of its own? COMMISSIONER KAMMERDEINER: Certainly, with the bills, we bill and --
No, I mean old debt. The collection agencies are dealing with old debt, I assume, right? COMMISSIONER KAMMERDEINER: Right.
What's the threshold, is it 90 days, 120? COMMISSIONER KAMMERDEINER: Again, it depends whether it's tax or water, but in terms of -- 120 05/20/04 - TRANSPORTATION - RES. 040298
Let's talk about water. COMMISSIONER KAMMERDEINER: With water, to go into the shutoff cue, which is the first level of enforcement activity, we're dealing with delinquent at least two cycles and at least $75. And in terms of going to collection agency, I would have to double-check this, but I believe they go to the collection agency at about 120 days and have 120 days with the collection agency.
What I'd be interested to know is who our agencies are, what their collection rate is, how much we pay them, how much they've collected, those kinds of issues. COMMISSIONER KAMMERDEINER: Okay. I'll get that together.
Commissioner, as always, it's been a pleasure. COMMISSIONER KAMMERDEINER: Thank you very much.
I JUST had one 121 05/20/04 - TRANSPORTATION - RES. 040298 question. I guess as might as well ask you, Commissioner. Again, it wasn't anything particular about the Water Department. It actually got started by the gas works don't collect as well as you. But all things being relative, I've seen people that can live without gas. I haven't seen anybody can live more than about hours without water without 10 their neighbors calling me at least and me 11 calling the Health Commissioner and Police 12 Department. 13 I would hope our collections could 14 even be higher because of the leverage you 15 have when there's no substitute. You can 16 substitute things for gas. You know, for heat 17 you can substitute kerosene or electricity. 18 Water, pretty hard to use bottled water in the 19 quantities you need to do certain things. But 20 I do want to mention, because I don't want to 21 blind-side somebody later, that I think we can 22 up -- I don't think we're aggressive enough 23 with our water collections even though we have 24 a much higher rate. I know there was some confusion and I was caught up in it a few 122 05/20/04 - TRANSPORTATION - RES. 040298 weeks ago. It depends on how you state this year versus -- COMMISSIONER KAMMERDEINER: Correct.
But I do want at a later time to be talking about aggressive collection versus traditional collection, which I don't think is as aggressive as it could be. We're going to be back here again, I'll save that for then. We don't have to be talking about through this evening. COMMISSIONER KAMMERDEINER: Okay. Thank you. We'll talk about that in the future.
May we have Mr. Brunwasser back, please? Councilman O'Neill.
Commissioner, the average residential water bill in this City is -- did I hear $42? COMMISSIONER BRUNWASSER: That's about right, yes.
So using the 123 05/20/04 - TRANSPORTATION - RES. 040298 number requested, the 70 million for the lateral program, it's about a quarter of the total increase being requested, so about how much is that a month? COMMISSIONER BRUNWASSER: Well, we were using approximately $3.50, which is what we based on preliminary discussions.
So I can actually tell somebody their bill might go up 43 or $4 a month to have the protection of the lateral of the street being handled by the Water Department? COMMISSIONER BRUNWASSER: Correct.
Let me just parenthetically -- because I already mentioned this to the Managing Director who just happened to be in a meeting two days ago, that Monday night I had -- and this is, to me, we should be charged with a crime, this is how bad this one is. A 75-year-old man, Byberry Road, west of Academy, first block west of Academy, very heavily traveled, very wide street, older, very old singles maybe 50 years old. It's a very tiny Levittown type Cape 124 05/20/04 - TRANSPORTATION - RES. 040298 Cods on one side but the other side was built as part of the Parkwood Manor development, the very beginning of it, row homes, 1960 vintage. The man just paid off his house, lived there 40 years or so. His street had a huge sinkhole. The Water Department came out, told him that it was all being caused by his laterals and that he would have to sign an agreement to pay for the laterals or they would lien his property anyway and then he'd have to pay a lot more. It wouldn't be the Help Program, it would be the lien program. Being a person of that generation, he signed whatever he had to sign and the bill initially was about $11,000 because the sewer is on the other side of the street. This is a street that takes buses, school buses, tractor-trailers, everything imaginable. There's only a few through streets through Parkwood. It's 3,000 homes but it was all built with cul-de-sacs so the builder could put about a thousand more units in the development. His bill actually, he was told as it 125 05/20/04 - TRANSPORTATION - RES. 040298 was being done, there was a work order approved. He didn't understand quite what it was. He said it had something to do with flagmen and some other things, but it was another $1300 was added so his total bill was over 12,000. To you, the Help Program is helping him. That is an absolute outrage under anybody's definition what is fair whether it's somebody 75, somebody on a fixed income, somebody living in the house, has this catastrophe happen out in the middle of the street and somebody who works for the City would have the insensitivity, the callousness to blame this on a 75-year-old man water laterals when that is beyond any logic or reason that a lateral by itself -- this didn't run from his house. They took out one block of concrete from his sidewalk and he has a pretty long run of driveway from those row homes before you get to the curb and then he's got to go all the way across the street. Not only was everything done in the street, it was done on the other side. And it wasn't just a little damaged where the curb was depressed. 126 05/20/04 - TRANSPORTATION - RES. 040298 This was on the other side the street and it was a huge sinkhole. We'll take that one up later, but it defies all of the estimates that I have been given as to what the average or what the usual cost of a lateral replacement is. The Managing Director asked me for the information. I'm trying to get it from the gentleman. He didn't have copies with him. He said there's something we have to do for this person. I think there's a lot we have to do for this person. That is just the most recent lateral case. I would ask you before the next time you come back, because I believe -- first of all, I believe this is a capital expense, capital eligible expense, and I hope the Water Department and Managing Director's Office and the Administration are working on that now because this is no different in the street than a sewer in my opinion. Somebody's got to tell me otherwise. I've got people investigating other jurisdictions that take care of this and how they charge it and 127 05/20/04 - TRANSPORTATION - RES. 040298 everything. But I do know that there are a lot more laterals out there that need to be replaced that are being replaced when we have to give that threat of a lien to somebody or a shutoff if they don't do it. And we're aware of it. It's a good thing for the Water Department to take over the laterals.
But I also think it is counterproductive for the lateral replacement program to be given the blame or the credit, depending on where you're coming from, for the bulk of this increase. Because there is a backlog, and I think it's a tremendous backlog of pipes that we know are damaged under the streets that are hurting the street and they're hurting the water infrastructure tremendously and when we get ahold of it will make a difference of that. But I want when you come back here or before you come back here, because I know we're having another hearing, we're looking out four years, all I want is a list of the addresses, residential in the City that had laterals replaced in the last four years. I want to compare it to the projections. Because we're 128 05/20/04 - TRANSPORTATION - RES. 040298 going to do it a lot cheaper because of our leveraging the numbers with the contractors than an individual is going to do and hopefully we'll get a better warranty than one year. Because I think people are going to want this work enough they're going to warrant more than a year of their work if it's done right. So if you can get that for me before the next hearing, it will be very helpful because I believe that the number of 70 million maybe the right number, but it's not based on, I don't believe, on historical data. And I think the Water Department should come clean on what they're really talking about. They're not talking about a rate increase because this is how much it's going to cost to fix the laterals that are going to need to be fixed in the street over the next four years as it would have been over the last four based on the number that were fixed. It's a much bigger catchup program. It's going to take us years to get it, and we should be honest with people about what this rate increase involves. 129 05/20/04 - TRANSPORTATION - RES. 040298 It involves saving and protecting not just our infrastructure in the Water Department, but the infrastructure of the street itself that has been deteriorating because it is so hard to force people to pay 3, $4,000 or whatever for something they had nothing to do with that's in the street usually. So please get that to me. We'll have further discussions on it. And I hope also a report on where we are with the Capital Budget. Because if you take the laterals and put them in capital, then you're paying debt service with something that should have 30, 40 year life. I know there's other issues. I know there's all kind of excuses to want to use operating. But if there's a way of using capital when you're doing this as part as a larger rate increase, all people are going to know is this great program so they won't get socked and that the whole system will get help, the 43 percent proposed increase is being blamed on this $4 a month that they're going to have to pay to protect themselves. I hope we can get this in a better 130 05/20/04 - TRANSPORTATION - RES. 040298 light. I don't think it's been handled very well up to now. COMMISSIONER BRUNWASSER: Councilman, I agree with a lot of what you said. I've attached in the documents today a copy of the press release, and I took care when we announced the rates that this was not the emphasis of the rate increase. It's only percent of the entire revenue requirement 11 we would have had to go out for rates in any 12 fashion. And we support this bill. The 13 people who have had the unfortunate experience 14 of having these pipes fail and having to pay 15 1500 or $3,000 in a surprise bill -- 16
Or $12,300. 17 COMMISSIONER BRUNWASSER: We will 18 look into it, obviously, and get back to you. 19 But what I want to emphasize is, I took pains 20 to make sure that any information that came 21 out of the Water Department did not reflect 22 that this was the cause of the rate increase 23 because it wasn't and because it's good policy, we support it.
But there's a 131 05/20/04 - TRANSPORTATION - RES. 040298 difference even with the percent, there is a difference if you say the amount -- there's a percentage and it will ballparked no matter how you do it of how much is curb out and how much is curb in in terms of what goes. And homeowners are still going to keep responsible for inside the curb. We're going to have the trap or curb out. And anecdotally, I've talked to several plumbers that do a bit of this work, they thought 75 percent was a fair number that's somewhere between the trap and out. I don't know if that's correct. But let's just assume it's correct or it's fair enough that we can use it as a round figure. If there were a thousand replaced each year for the last four years, assume 75 percent of them would have been our responsibility, that is all that should be related to the cost of laterals in terms of us assuming responsibility. The catch-up part, the part we don't have to lien people anymore and get done because we don't have all the difficulties should be separated out. That should be purely a good Water Department 132 05/20/04 - TRANSPORTATION - RES. 040298 policy that has nothing to do with just in the ordinary course of business what we would be charging ourselves with instead the customer. I believe that there's a wide difference between those two numbers. I don't have a problem with it, I just can't explain it to anybody that way because it keeps getting lumped together. This number for the last four years may have been 10 million, it may have been 15. But we want to do 70 because we know what is out there. But that number, whether it's 10, or whatever should be separated out from 15 the 70 and made clear what we're really doing. It's not just to save the $3,000 bad luck that the person's had to pay anytime in the last four years, using that, but that plus what we know needs to be done and should be spread over all water customers because it could happen to anybody anywhere. And if you could work on that, I'd appreciate it. I'm certainly not against this program. I just don't want it to be killed for the wrong reasons, both for your sake and 133 05/20/04 - TRANSPORTATION - RES. 040298 my constituents' sake. COMMISSIONER BRUNWASSER: I agree.
The part I didn't understand about this is why is the lateral service program being looked at in the context of a four year window? I'm left with that impression from your response to the question from the budget hearing that you answered back on May 14th. I mean, you're not going to do $70 million worth of work in that four-year time frame, are you? COMMISSIONER BRUNWASSER: Quite possibly.
How many laterals would that represent? COMMISSIONER BRUNWASSER: I forget exactly. Perhaps along the line of about 8,000 annually.
Now, who's going to be doing this work? COMMISSIONER BRUNWASSER: Plumbers, registered plumbers, licensed plumbers. 134 05/20/04 - TRANSPORTATION - RES. 040298
You're not going to place any cap on the amount that we would pay for in any fiscal year? I man, how are you going to manage this program? Anybody that shows up we're just going -- COMMISSIONER BRUNWASSER: The program can go different directions.
I mean, we don't resurface everybody's street in the course of the year even when they need it. COMMISSIONER BRUNWASSER: Correct.
We limit the amount of money that we're prepared to spend on a particular program or a service. So I don't understand why the 70 was only being attributed to a four-year period which seems to match up perfectly with the rate increase. COMMISSIONER BRUNWASSER: I was answering the question in the context of what it does to the proposed rates. I didn't look beyond the four years so much except to say that when you do capitalize laterals -- and I know we had a bit of this discussion at the 135 05/20/04 - TRANSPORTATION - RES. 040298 budget hearing. When you do capitalize the laterals, in a period of years, the annual 4 debt service cost will then be approximately 5 $20 million. And we have to cover debt, as 6 you know, our senior debt by 1.2 percent, 1.20 7 percent which means 15 years down the road if 8 we have $20 million debt service associated 9 with going out for 20 million in debt each 10 year for laterals, then you have to raise 11 rates $24 million to meet your bond coverage. 12 And then as you continue to go out 20 million 13 or so each year -- and of course I'm talking 14 about today's dollars, the equivalent of $20 15 million a year --
But, again, that seems to be a program that seemingly has no 18 limit to it. If you said, "Look, we're going to have a lateral program" -- this was Councilman O'Neill's idea. He's brought it forward. Many of us certainly support it. I'm not trying to interfere with the implementation of his idea and I don't know how exactly he's laid out the program, but, I mean, this would not be the first program 136 05/20/04 - TRANSPORTATION - RES. 040298 where the government decides, we're going to spend X amount of dollars a year on the repair of sewer laterals. And when you reach that limit in the course of the year, sir, ma'am, I'm sorry, we've reached our -- and you're on the list and we'll take care of you when the funding becomes available. I mean, yours would not be the first Department that ever said that in February or March, "We're out of funding for this fiscal year for that particular thing and we'll be glad to have a conversation with you on July 1." Why wouldn't you do it that way and stretch it out a bit? I mean, for a new service and new program for which homeowners have had no recourse whatsoever in the past, this sounds like everyone who shows up is going to get taken care of the moment they walk in the door, cost notwithstanding. COMMISSIONER BRUNWASSER: Well, we have looked at, for instance, the permits that are taken out in L&I for this type of work and anecdotally we believe there's considerably more of these water lines and sewer laterals 137 05/20/04 - TRANSPORTATION - RES. 040298 that need replacement, but as soon as the homeowner understands that he's on the hook for that service, they don't go any further than that. So we're heading into a bit of an unknown territory, and I grant you that. I can foresee that depending on the way the program is handled, we may have to put people on a priority and say, "Look, we'll get to you beginning July 1 of the following year" if you've used up too much money or you can't transfer money from one place to another. But there are also ways of putting the burden on perhaps a warranty company. And depending on how contracts are structures between us and the warranty company, they may take that burden.
It's just another perspective. COMMISSIONER BRUNWASSER: But you're absolutely right. We don't really know.
The Councilman has been pushing this issue. I agree with the issue. I just was wondered how you're going to manage it. We don't have to figure that 138 05/20/04 - TRANSPORTATION - RES. 040298 out right now. But I would at least like you to think about it. Okay. Thank you. COMMISSIONER BRUNWASSER: You're welcome.
Naomi Zaslow, Philadelphia Homeowners Association. Good afternoon.
Please identify yourself for the record and proceed with your testimony.
I'm Naomi Zaslow, Public Relations Director for the Homeowners Association of Philadelphia. This is Willis Alston who is head of our Water Department Committee, and Harry Zaslow who is a past President. We did appear when you and Councilman O'Neill were talking about Water Department and laterals. And a question we asked then was, will you hook on to the rise in water rates because of the laterals, and that seems to have been part of it and that 139 05/20/04 - TRANSPORTATION - RES. 040298 was disappointing to see because we feared that when it came up. We like the idea, but we worry how it's going to come out.
Well, I can assure you that working with Councilman O'Neill and his leadership on this particular issue, I don't necessarily know that this will end up the way it seems at the moment. I believe just from the Councilman's questioning and other issues that have been raised, there's still some unanswered questions, and we'd like to know better how it will affect better.
And also last night, we had a general membership meeting and there were questions about what's happening with the laterals, the status of that situation. So if anything comes forward, we would love to know about it.
Surely. The Homeowners Association of Philadelphia was founded in 1954 and is celebrating our 50th anniversary. 140 05/20/04 - TRANSPORTATION - RES. 040298 Our mission is and was to upgrade and preserve property in what had been the City of homes. Some of our 3,000 members finally remember the neighborhoods where they lived and worked. The goal of low and moderate income residents was to own and live in a row house or small apartment building. They also struggled and saved to buy another property to supplement the family income and to work toward the American dream. As decades passed, the atmosphere, the neighborhoods, and the attitude towards low and moderate income property owners changed. Tough and punitive government rules and regulations showed little regard or interest in helping property owners. Ever increasing property taxes, wage taxes, business taxes caused many owners to eventually abandon property and leave the City. Rules were also enacted enabling tenants to live rent-free while owners were prosecuted for bills and taxes they couldn't pay. It's no secret and has been evident today that Philadelphia is losing people, 141 05/20/04 - TRANSPORTATION - RES. 040298 business, revenue, and credibility because it taxes its residents beyond what is reasonable and workable. The Philadelphia Water Department request for a 43 percent increase is really deplorable. Water Department administrators and employees salaries can rise if rates increase, but residents do not have that opportunity or luxury especially in low and moderate income neighborhoods. If replacement or improvement of the water system is needed, why hasn't the Water Department management set aside funds for that purpose every year in previous years? If funds of that magnitude required, the Water Department can seek a bond issue but should not impose rates that gouge residents. Enforcement of water bill 19 payments, collection agencies, and huge fines imposed on owners are a testament to the fact that residents cannot pay what is demanded now without the proposed increase. Owners and renters both suffer from water shutoff. Any increase in water rates will be a great burden on the low and moderate income property owner, 142 05/20/04 - TRANSPORTATION - RES. 040298 manager, and renter. HAPCO hopes there will be no game playing since the 43 percent is such a staggering request that A lower increase would be more palatable. Any increases placed on the backs of already overtaxed property owners will continue the flight from the City, provide less revenue for the City, and continue the decline of homes and neighborhoods. Government housing is one answer, but it cannot fill the need of low and moderate income renters throughout the City. We ask that the Water Department find other ways, not a 43 percent increase in water rates, to serve the needs of the Water Department and the residents of Philadelphia. Thank you.
Thank you very much. I just want to be clear from the testimony. You mentioned last night that there was a membership meeting?
And has HAPCO 143 05/20/04 - TRANSPORTATION - RES. 040298 taken a formal position?
Well, we were definitely in favor of helping people when it's not their problem but it's the problem in the street. But our fear was and has been realized that a huge rate increase would be placed on the water rates and that purpose is only -- we asked in our questions at that time how many people a year are you talking about helping? And is that increase that you might request going to reflect that small number or even as we see now laid on as if it's only for the laterals when it really is for probably needed other things. I have something here that was given by one of our members yesterday that taking over the sewer lateral expense now paid by homeowners is a great idea, but we have to watch the taxes don't come up concomitantly.
It seems like 144 05/20/04 - TRANSPORTATION - RES. 040298 you know him pretty well.
Harry Zaslow, past president of HAPCO. It depends on the definition of the description of the project, what it's called by. I look at this lateral situation as being an insurance policy for the residents of Philadelphia. If we can present this in a better psychological way by saying, we're not increasing water bill and they don't even know what it is. There's a fire policy, there's liability policy, there's a water policy that all of us share in that policy on a broad scale. Perhaps you want to think about that.
Well, it's an interesting perspective. As you were speaking, not to bring another utility that's -- I don't know how people feel about them. But sometimes on your phone bill they have the different -- although I always feel like I'm 145 05/20/04 - TRANSPORTATION - RES. 040298 getting taken advantage of at a certain level, but they have these wire the maintenance plan and then they have the guardian plan as if -- depending what things happen to your phone lines in your house kind of determine what level of service you get. But it's just a separate line and you know what it is. And if your phone bill is up, then they come in and do whatever it is that they do. I am interested, and I'm going ask the Water Commissioner to come back up, to get to the issue that you raised which is -- Commissioner, why don't you come up and join these fine ratepayers who love the opportunity to sit next to you and maybe ask you a couple hundred questions. In your testimony there's the chart, and you have the fiscal year '05 to '08, $307 million and you've got 70 for the lateral service program. If the lateral service program were not in that list, if the new number was 237, what would the rate of the increase be? COMMISSIONER BRUNWASSER: It's in 146 05/20/04 - TRANSPORTATION - RES. 040298 the attachments that I prepared. I think the first year instead of 9.7 percent, it would be 7.1 percent and it would be a little lower each of the other years. We would still have to seek moderate rate increase.
Well, all these things, I guess, are relative. I mean, what's a 43 percent increase, is that like exorbitant, outrageous? COMMISSIONER BRUNWASSER: Not today. I happen to know about some of the things that are happening in other cities in the United States. Atlanta is facing a tripling of their rates over the next five years. They have $3 billion in capital.
Yes, I was going to say, don't they have a massive infrastructure project going on that's being paid for by both the city and the state? COMMISSIONER BRUNWASSER: I think the state is helping them perhaps to some extent but not to a great extent.
Give us a sense of -- I mean, what we have in front of us is 147 05/20/04 - TRANSPORTATION - RES. 040298 43 percent. You've got a $370 million program over the four fiscal years; $230 million, what's the number?
I'd have to go back and get my papers and look it up. But it's in the package that I presented today...
Is it in the letter that you sent me or is it in the bigger document? COMMISSIONER BRUNWASSER: Actually, there was an answer to Councilman O'Neill's question during the Five-Year Financial Plan hearings. And I think it's in this package. Probably closer to the back. Maybe it's not. Maybe it's not in this package. I remember in year one it would go down from 9.7 to 7.1, and I think all the increases were around 6 percent to 6 -- okay, here it is.
You're talking 7.1, 6.4, 7.4, 6.8? COMMISSIONER BRUNWASSER: That's correct.
So what's that 148 05/20/04 - TRANSPORTATION - RES. 040298 what's that, 14.2?
It's a cumulative process. It's not added. COMMISSIONER BRUNWASSER: The 43 percent that's been referred to --
Can I just have a number then? COMMISSIONER BRUNWASSER: It looks like about 28 percent if you add these percentages together, 28 percent. Now, 43 percent is rounding up the average rate increase -- we're asking for four years stepped-up rates, 9.7 percent year one and the average rate increase over each of the next four years, we're requesting 9.3 percent. When you multiply it, it goes to 42.7 when compounding it.
The comparable number compounded without the warranty program is 31 percent versus 43.
Because of when the hikes hit, it's really -- the fourth hike is three years after the first hike; is that correct? 149 05/20/04 - TRANSPORTATION - RES. 040298 COMMISSIONER BRUNWASSER: It's three years, right, but that last hit is good for a full year afterwards. It's been characterized as a three-year. It's like saying, you know, "I'm a City worker. I get paid tomorrow. I get paid every two weeks, but tomorrow's check is my second check within two weeks." So it's a little disingenuous.
It's -- how do you want the characterize that. I think you can justify either one depending on which side you're coming from. COMMISSIONER BRUNWASSER: Exactly.
I have an unrelated question. It's a fiscal question, but it's unrelated to the laterals although it involves laterals or lack thereof. I've always been told that about 40 percent of the City is combined and about 60 percent is separate, or it should be reversed? COMMISSIONER BRUNWASSER: It sounds reversed, to me. I can be corrected by any of the staff.
Okay, 60 150 05/20/04 - TRANSPORTATION - RES. 040298 percent combined, 40 percent separate. Whatever it is, whether it's 40, 50 or 60, what is the cost of treating water in a combined system that would not have to be treated if it were in a separate system? COMMISSIONER BRUNWASSER: Well, that's not an easy one to answer. You know, our rates don't get into the detail or, you know, we have properties that are two blocks from the Baxter Plant and then we have properties where the water has to be pumped out, you know, 10 miles away from the Baxter Plant and there's no --
If you don't have it to the penny, I wouldn't mind. I just think there's some cost that -- see, this is a big system. I don't think most people know whether they have a combined system or a separate system or if they have one that other people have a different. But I will tell you that you don't have to be very smart, and that's why I know it to be true, that if you live in a separate system area, which I represent just about all separate system 151 05/20/04 - TRANSPORTATION - RES. 040298 areas, you are saving the Water Department a whole lot of money on treating water that is missing the waste stream. Whatever the number is, it's significant, particularly if you go back 50 or 60 years since the separate system started. What happens is in a combined system, we don't hear problems about laterals very often. One pipe breaks. Until the street sinks, who cares? No environmental problem, nothing going into the streams, the river. It's a major problem where you've got separate systems and the lateral goes and the person gets the reverse lottery, they get penalized for something they had nothing to do with. However, there's no recognition of all the money they're saving the system by having the separate system in the first place, which everyone I talked to still willing to accept responsibility on their end. But there's no 22 recognition ever, and there's never been a recognition of all the savings because it's so much of that water in the combined system gets treated expensively that doesn't have to be 152 05/20/04 - TRANSPORTATION - RES. 040298 treated if they were just in a separate system. So there's got to be a saving on the other end that's significant.
I'm not really prepared with this specific, but just from recollection of the information I've had privy to over of the past several years, subject to check, I would say the cost of treating storm what water that's capture in the combined system and actually finds its way to the treatment plant is on the order of, I'm thinking, between 5 and $10 million a year out of a $400 million water waste water budget. Now, if you want to capture that, separate the combined system so that that storm water, the first flush, if you will, doesn't go into the sewage treatment plant for treatment, there's going to be a lot of capital costs associated with the separation of storm water and sanitary sewers where you have the combined system. Probably isn't cost effective thing to do totally. But to answer your question directly, I'm thinking in the 5 to $10 million 153 05/20/04 - TRANSPORTATION - RES. 040298 per year range of actually collecting and treating and transporting to the treatment plants, waste water treatment plants, the storm water. That's about the magnitude.
But there has to be better than a guess. We don't have to have it today. But I've got to know if I'm running this company what it's costing me per household just dealing with volume, averages, and things coming out of a separate house and coming out of a combined house. Somebody might live a little closer, but that all evens out.
We have that number. I just don't remember it exactly right now. It's not that we are just guessing. We have a calculated number for that. I don't have it with me right now.
Do you pay the same amount of money, does it cost the same to treat a cubic foot or a gallon, whatever you want to use. I kind of like the gallon idea because at least I can relate to it. But the same quantity of water, does it cost the same 154 05/20/04 - TRANSPORTATION - RES. 040298 to treat it when it comes from a combined system as when it comes from a separate system?
Generally speaking, the combined waste water that is collected from rain water, et cetera, has a lower strength than the overall sewage that's influent to a sewerage treatment plant, so it probably cost less because of the strength element of storm water than it cost to treat regular sanitary waste water which is not combined. It's a lower strength volume you're treating.
You don't have to decide today. We're coming back. But is it 5 percent less, is it 10 or is 50 or what? I mean, there's got to be -- this is much bigger picture than just, are we going to start taking care of laterals because it's the right thing to do, Number 1; and 2, it actually helps the entire infrastructure that we have. But there's also another issue here. People, you pay more to put in a separate system, the contractor just passes it along to 155 05/20/04 - TRANSPORTATION - RES. 040298 you in a new house, and then you wind up paying twice often because your laterals go. And it also happens that a person whose lateral goes tends to be unlucky again because there's something wrong often with, not the lateral, but something under that street that causes to wash-out or whatever that causes the pipes to crack, crush, or break. We can talk about that more another time. But there are issues I want to develop further. Most people don't know the difference. Just like they didn't know or don't know that a certain percentage of their bill is to pay for people that don't pay. And I think we can put pressure on ourselves to collect more if we tell them how much of it is. People are very unsympathetic to people that can pay and don't and their neighbor pays for them. And I believe the Water Department has -- Commissioner, could you comment on that? You're kind of on the spot. Your not new with the Department, but in your position. Water is a terrible thing to live 156 05/20/04 - TRANSPORTATION - RES. 040298 without. We've been going easy on people in the Gas Works, but by the same token people can get away with it longer because they can find other ways of heating or cooking or whatever. Water, you heard me earlier -- nothing is a hundred percent, but, boy, we've got such great leverage with somebody with the power of shutoff. Forget liens. Just shutoff and then the cost of returning it. If it happens once to you, you're going to find how much it cost to do the work that you get billed for, this is not an inexpensive adventure for somebody. Do you think we can raise our collections? " Is the Commissioner still here? I don't mean her personally. If I'm working in the Revenue Department, and I'm collecting the Water Department's bills, I mean, it all has to come out of the Water Department, the pressure. Because a person in Revenue they have no interest. We're trying 157 05/20/04 - TRANSPORTATION - RES. 040298 to get police overtime down and the Managing Director mentioned the other day there's three parties to this, the courts and the DA. But if the courts and the DA cause it, we don't any leverage and they have no interest because the Police Department is the one that runs up the overtime. We're trying to find ways to do that. But how do we -- recognizing that Revenue has no interest in it, it's Enterprise funds, it goes in the Water Department, it doesn't help the bottom line of the City one bit. The Water Department has every interest in it because the money does go to it the Water Department. The Water Department has this great lever of shutoff and the person can't do very much in their house for very long, how do you increase collections? " Some people call them deadbeats, but just say non-payers. 158 05/20/04 - TRANSPORTATION - RES. 040298 COMMISSIONER BRUNWASSER: Well, in answer to your question, I know many of the people in Revenue are very good employees and they try to do a good job. One of the ways the Water Department has tried to assist the Water Revenue Bureau in collections is to work with them. Basically, they're major functions are metering, billing, and collection. Metering, you're aware of our AMR project. It's the biggest in the country and usually successful. Almost every customer now has automatic meter reading devices in their place of business or their home. So we've kind of taken care of that. Those devices have tampering signals. Those devices now are read by computer.
We've developed a revenue protection unit within the Water Department. Because we now have AMR, they have the ability to take a look and see which accounts need to be investigating, accounts that have not shown any usage. Maybe there's something wrong with the meter, maybe there's something wrong with the device, maybe the meter has been tampered with. And so this 159 05/20/04 - TRANSPORTATION - RES. 4 million in revenue over the last three years or so, and that's found billings, not the once that come in the future because they discovered that somebody had tampered or taken out the meter or reversed the meter. Those are the kinds of things that they see. That's number one, helping them with the metering situation, and certainly have done that. Billing, the Water Department took the billing system over back in the early '90s, and we got monthly billing in 1993. The collections that you see now, about 85 percent current and 96-plus within the year, in other words cumulative collection factors. That's the way it's been pretty much since monthly billing came into effect. Collections in the Revenue Department were actually less effective under the quarterly billing system. So we've actually seen a bit of an uptick there. We've also work closely with Water Revenue Bureau in trying to make sure that these accounts that still have some potential 160 05/20/04 - TRANSPORTATION - RES. 040298 for collection are gone after aggressively. And we've worked with Nancy and Marleen Duley and some of the folks over there over the last few years, and we've seen a little better results. Finally, you have collections and that's something we can't do a whole lot about.
If you tell me that you're okay. You'd like to have everything current, but that's 85 percent but you're pretty proud that 96 percent is paid within a year, I figure, you know, I got a year. What is the -- if you said within three months you're going to get a shutoff notice. Remember, a gas bill can be in a small house can be 3 or $400 in a given month, and I at least have some sympathy for that. A water bill could be 30. And with the size of that bill and the leverage you have over that customer, how could you -- percent, increase your collections by percent, starting just with that based on the numbers you gave me, 161 05/20/04 - TRANSPORTATION - RES. 040298 you increase them by 1 percent so the 96 becomes 97. What does that represent dollar-wise? COMMISSIONER BRUNWASSER: One percent of the dollars that the Bureau collects now would be about 3.8 million, 3.6 million, something like that.
Excuse me. Would it be an idea as they do in some collections to say, if you'd pay by the 10tj of the month, it's this number; and if you pay by the 15th, it's going to go up by this amount? If you could just do that so people would have a compulsion to pay on time. COMMISSIONER BRUNWASSER: I think the way the system is, I think we have a 5 percent penalty if you miss the due date. I should say, senior citizens, by the way, are very, very good at paying their bills, and other folks are not.
Now, the one year window, what do you estimate if we change that to a six-month window to consider ourselves in pretty good shape instead of a 162 05/20/04 - TRANSPORTATION - RES. 040298 year. If we use that target instead of a year target as to when things are we're not so proud of? That would have a big effect, I would think. COMMISSIONER BRUNWASSER: Councilman, I would applaud any improvements in collection. One of the things, of course, that was mentioned that we do have that four month moratorium and what we'd like to see is an income-based moratorium, not a wholesale moratorium. And I'll tell you why --
Is that City or State, the moratorium. I just want to know. I should know it, but -- COMMISSIONER BRUNWASSER: I think we have it in our regulations. Council was considering an ordinance to put that in place in the late 1980s. We decided we'll handle it by regulation.
You never did the income based? COMMISSIONER BRUNWASSER: No, we didn't because, frankly, it may be a little bit difficult to administer, but I think we 163 05/20/04 - TRANSPORTATION - RES. 040298 should give it a try.
I think your customers would appreciate it a lot more. COMMISSIONER BRUNWASSER: And not only that, not only for collection reasons, but the operations of the Water Revenue Bureau for four months, you know, some of those folks might be sitting on our hands because there's not much they can do. And then suddenly, I guess come late February or early March whenever they begin to send out those new shut-off notices, then suddenly, you know, you've got to perhaps pay overtime, et cetera, et cetera because you have this crazy glitch in your operation. You're working hard for eight months, nine months, and the other three or four months, you know, things are quiet. If only to get more efficiency out of the workers at the Water Revenue Bureau, I think putting a dent into this moratorium would be advisable. And I think that's one of the things we want to sit down with Nancy and the people at the Bureau and come back to you with a proposal that Council could live with. 164 05/20/04 - TRANSPORTATION - RES. 040298
Could you get me information before the next hearing? Could you send us the regulation the water Department imposed itself that doesn't have income limits for the four-month moratorium. COMMISSIONER BRUNWASSER: Sure.
Thank you. Commissioner, could you provide to the Chair -- there's another troubling issue that bothers me, and maybe you were here. I asked this question two years ago. Could you provide to the Chair all of the permits that contractors have that can come to -- how much, first of all, is the permit for a person to take water from a fire hydrant? COMMISSIONER BRUNWASSER: I don't recall. I believe that's something that's being changed within these rates as well, I think, trying to get a better cost figure, a more logical number. 165 05/20/04 - TRANSPORTATION - RES. 040298
Well, I question this process, and I'll say it again. There's a permit that allows a contractor to go to a hydrant and fill up a water tank truck for a fixed fee. They can take as much water as they want. Am I correct? COMMISSIONER BRUNWASSER: I would have to go back to my staff to make sure. I think you're probably correct.
I understand that that is a pretty good deal for a person to engage in one of those permits where they have a water truck that holds a thousand, 2,000 gallons that they can actually take that tanker truck back to their facilities and use it to wash equipment and do all kinds of things with that water. I think that we're too easy. If I could get a permit that cost me a hundred bucks a year and be able every day to go to a hydrant at City limits and load a thousand, 2,000 gallons of water on a truck and take it back and use it wash down my yard, or water flowers with it, whatever -- and we're dumping a lot or the new Commissioner. 166 05/20/04 - TRANSPORTATION - RES. 040298 But I think you really need to really examine that process because I understand that there are some of those permits that do exactly what I described. Pick up a few thousand gallons of water, park the trailer in the parking lot, and use it for all the non-palatable issues that exist. So I'd like to know how many of those permits that we have, how we manage that to be assured that it is being used in an appropriate manner. COMMISSIONER BRUNWASSER: We don't have those statistics for you right now. But I remember we answered that question that you raised about two years ago. At that time, I don't think it was an extensive list of contractors, but just to tell you what we're proposing in these new rates, and I don't know the current charge, but a one-week permit for use of standard pressure hydrant, $185, and a six-month permit for use of standard pressure hydrant, $1600. And I'm sure these are quite a bit higher --
That's for a 167 05/20/04 - TRANSPORTATION - RES. 040298 year? COMMISSIONER BRUNWASSER: For six months. So I think we're trying to make sure that if somebody needs to hook up to our water it's for the right purpose.
Exactly. But you can imagine, that's a pretty good deal. If you have a trailer that holds a few thousand gallons of water and you visit that hydrant two or three times a week and use it to do all the things that I described earlier, that's a pretty good deal. And I understand the purpose of the permit is to allow contractors to get water when they're working in a specific area. That's what that program was designed for, not from what a police officer reported to me. I mean he was curious. He didn't know. He was on patrol and every day at City limits, this contractor was pulling up. He stopped him, thinking that he was doing wrong, and he showed him the permit. And he said Monday Tuesday, Wednesday, Thursday, and he was heading back to Montgomery County. 168 05/20/04 - TRANSPORTATION - RES. 040298 COMMISSIONER BRUNWASSER: Right. That's certainly not the intent of these permits. We do have a person who's responsible or tries to police this for us and he'll probably be the one providing this information.
Great. Thank you, Commissioner, and good luck. COMMISSIONER BRUNWASSER: Thank you.
I've been here for three hours or four hours. A lot of technical information is coming through. We don't really recognize or realize the nature of people who are retired or limited in their income who are in poverty who cannot pay these rates. I don't know the statistics, but I would say in this City there must be at least 20 to 30 percent of people who are in the poverty level, you know, not able to pay their bills. That's really something to think about. How do we solve that problem? That's really a tough problem. 169 05/20/04 - TRANSPORTATION - RES. 040298 I remember back in the late '50s my water bill was semiannually $7. It came out to $14 a year. Of course, the decade of the '50s was a wonderful decade. But through our experience, I find that every three years or two years, the water rates keep going up and up and up and up until it's going to come to a point where in economics it's called the law of the diminishing returns which means that we're going to go broke. The people are not going to be able to pay for it. I know that there's inflation also. But we're in the people business, not in the business of water.
Right. We'd like to think we're in the people business also.
I think you are. I just wanted to say how impressed and encouraged I am representing HAPCO at the level of inquiry and response, although the responses were difficult to follow, but I really feel that you were trying your best.
Thank you very much for 170 05/20/04 - TRANSPORTATION - RES. 040298 having us. We appreciate it, and we know you will factor in that while you have a collection problem, maybe there are people who don't want to pay, but there are also people who can't pay. So that's what we wanted to get across.
Thank you very, very much. There are no further witnesses at this point. And we will recess this hearing until June 15, 2004 at 2 o'clock p.m. here in room 400. Thank you very much. (Council adjourned at 5:35 p.m.) - - - - 171 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Thursday, May 20, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES _________________________ Lisa C. Bradley, RPR