I do most of the talking at the table, if that's what you want. The outside attorney will also discuss. That's with District Council 33. Joe Tolan will do most of the talking with District Council 47.
Well, let's talk a little bit about the non-City players in this. How many non-City employees are involved in contract negotiations?
During negotiations this year, I think we had two. Yeah; two attorneys.
Two 64 Whole - 3/2/05 - No. 050003 attorneys? Okay. And do they negotiate the contract or are they solely providing legal services? I mean, what is their role in this process?
They work with us and they provide expertise in areas where we need expertise, like health funding or this time we had the drug and alcohol testing, those type of issues.
Okay. So let me understand this. I think we were talking about the District Council 33, most recent contract negotiations?
What was the cost associated with that negotiation? What was the cost to the City for outside services?
The outside attorneys are not paid through my office. They are paid through the Law Department. I do not know that.
And are there two attorneys generally for each of the four contract negotiations?
No. District Council 33, District Council 47 we had the two outside. For the Police interest arbitration, there were more.
I don't remember the last time for the Fire. I can tell you our plans right now are to use two outside attorneys.
But I'd like if you could put together -- I know it may not be within your direct purview, but if 66 Whole - 3/2/05 - No. 050003 you could find out for each of the most recent contract negotiations or interest arbitration, as the case may be, if you could tell me what the actual cost of outside non-government services were to each of those negotiations.
Thank you. Lastly, attached to your testimony, you talk about the training that you provide, as well as these are service-level indicators. Now, you mention the number of grievances cleared. What I don't know is how many grievances there were.
In my testimony, I believe we received less than we cleared, was the number. 124 had been received during fiscal year 2004 and 139 were cleared. I can tell you we run --
So you 67 Whole - 3/2/05 - No. 050003 always have others in the --
139. The workload, by the way, is down tremendously. We were well over 200 at one time. We're down.
I understand. This No. 2 item, number of days of training provided. What is this?
Yes. Councilman Nutter, my name is Delia Gorman, Deputy Director of Labor Relations. We conduct a one-day-long 68 Whole - 3/2/05 - No. 050003 comprehensive labor management, labor relations training for managers and supervisors in the City, mostly in the City Civil Service and --
Let me stop you right there. How many Civil Service managers do we have?
I don't know specifically, but I would hazard a guess somewhere around 1,500, maybe more.
Maybe more. This is counting for Civil supervisors and up. So it would be everyone who has supervisory responsibility for an employee.
For anyone who has supervisory responsibility for any employees, this is a required course for them.
Okay. And the figures would seem to indicate that you -- are you saying that out of the 1,500 this current fiscal year, you're anticipating providing training for 140? 69 Whole - 3/2/05 - No. 050003
I have to get you the exact number of how many people would be required to take this class, and I will do that, Councilman. We are anticipating this current year that we will do 140. We are planning to do 200 next year, and we have done more in the past. We average around 200. One year we did 300.
It is required. We do one day of training every month and we've also gone out to departments and done training for specific departments on their facilities.
But if there are 1,500 managers and the training is required, I guess what I'm not understanding is why aren't all 1,500 being trained?
Well, I'm not saying that they're not being trained. I mean, we do -- what's supposed to happen is that within six months of being appointed to a supervisory position, then you go through this 70 Whole - 3/2/05 - No. 050003 training. Now, it doesn't always happen within the first six months. Hopefully it happens within the first year. Departments are responsible for scheduling their supervisors and managers for this class, and we do as much recruiting as we can. We can handle to people per class 9 and so the number -- I would also say our 10 number is down this year, because negotiations 11 were also -- in addition to giving the 12 training, we're at the table, and we ended up 13 having to cancel a lot of the classes because 14 the negotiations went on extremely long. So 15 we were not -- 16
Yes, I 17 know. Okay. 18 Last question: Does the Office of 19 Labor Relations have any involvement in labor 20 issues that are external to the four municipal 21 labor unions? 22
Yes. The City is 23 the economic employer for the courts, which we 24 deal with a -- 25
Well, let 71 Whole - 3/2/05 - No. 050003 me be more specific. Outside of government?
No. As I used to tell Councilman Ramos, we're Mr. Inside and he was Mr. Outside.
We're Mr. Inside and he's Mr. Outside when he was over at the labor standards.
I'm sure we'll see them at some point in time. Thank you, Madam Chair.
Thank you. The Chair recognizes Councilwoman Tasco.
She's not around at the moment. In the interim, the Chair recognizes Councilman Ramos.
Thank you, Madam President. 72 Whole - 3/2/05 - No. 050003 Good to see you again, Mr. Grab.
And the Deputy. In the past, in last year, as the Administration prepared for negotiations with our two municipal unions this issue that has been so well protected by the labor movement and our labor unions here in Philadelphia; and, that is, to defend defined benefits versus defined contributions, and in the negotiations, as far as what I recall, there was again this issue of whether this City should move its work force from a defined benefit plan to a defined contribution plan. And I don't know how far you got, but I know you probably didn't get too far. I know that, and correct me if I'm wrong, that one of your proposals or one of the proposals of the Administration was to have new employees of the City have the choice between defined contribution or defined benefits. 73 Whole - 3/2/05 - No. 050003 How far along are you with that and what is your insistence? Why is your insistence on moving towards a defined contribution versus defined benefit?
One of the City's proposals in negotiations was to go to do a defined contribution plan. It just dropped during negotiations. The City's interest here is the cost. The cost of the pension plan is very large on the budget. I mean, I think you've seen how our minimum requirements have increased over the years and continue to increase, and we're looking at a way to contain that cost, control that cost.
I mean, realistically, how far along are you in trying to reach this goal? Do you have anything to go by in other cities that would indicate that our strong unions would move away from this very well-protected plan that they insist on? I have been, as you all know, in the labor movement and in unions all my life, all my adult life, and I know that this is something that unions do not want, that it 74 Whole - 3/2/05 - No. 050003 protects workers' defined pension at the end of their careers and the argument is is that defined contributions will become something of an uncertainty for workers. So I understand the cost. I know that that's the argument, but are you making any headway? Are there any formulas that you can look at in other cities where unions and administration and management have been able to work and progress and be able to cut the expense on our share of obligation on providing healthcare and providing pension benefits?
In collective bargaining in the private sector, the defined contribution plans are a majority now. They're new to the public sector. I mean, there are some, but they are new to the public sector. I can say that I can get you more detail of the comparables.
Would you say, then, that this is going to be, for those of us that, God willing, will be around the 75 Whole - 3/2/05 - No. 050003 City Council for a little bit -- this is going to be an issue that's not going to go away. I mean, I'm just wondering if we're tackling this issue in the proper way at this time or we're investing time and energy to look ahead and see how do we approach this. Because what we continue to hear from the Administration and from the financial analysts and those of you that are involved in the direct negotiations is that this is becoming a bigger, bigger and bigger cost every year and this could very well keep the City in deficit and in financial problems over the years to come.
With District Council 33 and District Council 47, we entered into four-year agreements, which have about three and a half years left to go on them. Will this be an issue when we come back to the negotiating table in 2008? I believe that it will be an issue. As to current employees, historically when we put in revised pension plans, it has been for new employees and not 76 Whole - 3/2/05 - No. 050003 for current employees.
Yes. In 1980 when we put in Plan 87. I don't know if it's been accepted. It's always been one of their proposals to put all the employees back into Plan 67. So we have been able to negotiate that.
So this issue will then become an issue again probably for our next Mayor and we're still probably at square one with this issue, right?
It will always be an issue of contention. Pensions is one of the issues of contentions.
Have you looked into other cities and see how far are they along with this debate?
We have some statistics, some comparables on that, and I will get them for you.
I have not -- maybe I should, and I probably will -- go and see what else is happening, because this is an issue that needs to be negotiated with our unions, because our unions are here, they've provided us with a very good work force, with its problems, but overall a very good work force, good people, dedicated to public service. I think we owe it to their members and future members of our two municipal unions to work this out where it is that we reach an agreement with our unions on how we're going to lower this pension increase that continues to skyrocket. At times, it looks like it's becoming more and more uncontrollable, but yet, we still have to protect our work force and provide them with a good pension plan. I think they've earned it.
Believe me, we have all the respect that you can have for our work force. 78 Whole - 3/2/05 - No. 050003
If you have any models in other cities that you have on hand, will you pass them on to me, please?
You're welcome. The Chair recognizes Councilman Cohen.
Thank you, Madam President. The discussion that you just had with Councilman Ramos pertained largely to the health needs of the workers, as well as the pension needs.
Could you summarize just very briefly what you see in the Administration's proposal? 79 Whole - 3/2/05 - No. 050003
The City's proposal was to go to a defined contribution plan as opposed to a defined benefit plan. That would be contributions made by the employee, and the City would determine the employee's pension when he or she retires as opposed to the plan which we now have, which defines specific levels of benefits.
And the reason for that, of course, would be, in the words of this Administration, which appreciates the work force, would be to look for a way to increase the amount of benefits?
The benefits would be -- I don't know if it would be increased. They would be different. They would be more mobile in these days when people turn over, things like that. It would be a different benefit, yes.
It would be a different benefit, but from the viewpoint of the worker, what would be your assessment as a 80 Whole - 3/2/05 - No. 050003 worker's reaction to the proposals? Is it likely that the unions are going to celebrate the change in pension plan proposal by awarding the Mayor a medal of commendation at their next convention or would they be up in arms about it?
I think it is an area where there will be a lot of discussion, and if there will be -- if there are going to be any changes, the unions will have a lot of input in whatever program the parties develop.
But what would be the purpose of doing that? Why would the Administration raise that issue now? Is it to improve the pension benefits or is it to cut the cost and thereby to decrease the pension benefits?
The City's interest there would be to provide benefits and maintain the work force. I mean, as the cost of the work force increases, the numbers of the work force decrease. One of the things we want to do is try to maintain the level of the work force, and one way of doing that is 81 Whole - 3/2/05 - No. 050003 looking at new ways of providing different benefits.
New ways more costly to the City or less costly, or is that not a consideration at all?
Less costly to the City in many ways, yes, but they would be different benefits.
But doesn't the phrase "different benefits" mask the fact that this is part of an Administration plan to cut benefits by cutting the costs? You know, you don't really ever get more with less. That's just a euphemism that's been created to hide the real purpose of plans. Nobody can do more with less or they would do everything for nothing. Isn't that the ultimate of do more for less?
No. I think the theory of doing more with less is doing things more efficiently and with --
And without any impact, then, is the Mayor's office ready to guarantee that there will be no reduction 82 Whole - 3/2/05 - No. 050003 in pension benefits?
I don't know about reduction. There would be a redirection of them.
Well, what does that mean? You know, when you come to Council, please try to be clear and honest. Don't toy with us, as so often Administrations toy with those that they think are inexperienced in labor and negotiations. Isn't the sole purpose of this, really the sole purpose of this is to cut cost; is it not?
And isn't it generally the situation when you cut costs, you're going to cut the benefits, and that the Administration recognizes they like to cover it by talking will it be a redirection of benefits and maybe here or there, there might be somebody through some mathematical quirk that might actually get more. But overwhelmingly the idea is to make it less 83 Whole - 3/2/05 - No. 050003 costly, isn't it? And I know no way in the pension thing, except by maybe cleaning up some practices that maybe need to be cleaned up. And in any event, irregardless of the cost, to cut pension costs without cutting the pensions. I mean, if there's some wrongdoing being done by a pension board, as I suspect in cases where companies are not willing to reveal pension facts, but except in those cases, it seems to me wherever you're going to cut pensions, to achieve a cut in cost, you've got to achieve a cost in pensions. And isn't it the fact that it's well thought to be the case that a defined benefit plan is cheaper to operate than the plan we have now?
You know, I don't know why we go through the motions of calling ourselves a government that's run by the democratic party when we adopt republican party principles. And I don't mean to be 84 Whole - 3/2/05 - No. 050003 name-calling against republicans, but they have certain policies and democrats have certain policies, but it seems to me, to be honest, if we're going to adopt republican policies like cutting labor costs to the bone, cutting pensions to the bone, we're adopting policies favored by republicans. And they have a right to favor them and fight for acceptance of their views, but we ought not to import them into democratic administrations, because, otherwise, we're not being truthful with workers. We say the democratic party stands for rights of workers, yet we adopt the same programs that the republican party seeks to adopt to cut costs, and to me, that's a terrible offense to people, to campaign one way and to do something else differently. So I will be sharply opposed to any change in pension plans unless it can be shown that the pension actually received by the worker will at least be the same as he would get under the current plan but, if possible, might even be improved, but at least it's got 85 Whole - 3/2/05 - No. 050003 to be guaranteed that no one will get less than he's currently getting. That gives people some confidences in the future, retirement years. When I get old enough to retire, I want to be sure that I'll get at least what I get now. I don't want to look into an indefinite future and say by that time the Administration will have found wonderful ways to redirect the pension money, so I'll be getting a half to a third of what I'm getting now. And I think that message has got to be made loud and clear, because a democratic party can't exist as a republican light party, darting in and out, adopting a republican policy here or there, because if you really believe in these republican policies, I think you ought to campaign honestly and try to win support. And it's not too difficult. If President Bush could get reelected president, I think it's pretty easy for a lot of folks to get their views accepted. So they ought to campaign honestly. 86 Whole - 3/2/05 - No. 050003 But as long as this is a democratic administration, relying on labor for many of its votes, I think it's got to be honest with labor. It's got to guarantee that it's not going to be leading the way to lower labor standards. Thank you, Madam President.
You're welcome, sir. Thank you. Are there any other questions of members of the Committee? (No response.)
Seeing none, the Committee will stand in recess until 1 o'clock. (Short recess.)
The Committee of the Whole is now back in session. I would ask Mr. McPherson to please call our next witness. MR. McPHERSON: Mayor's Office of Information Services.
Good afternoon. Thank you for your patience. 87 Whole - 3/2/05 - No. 050003 Please identify yourself for the record and proceed with your testimony.
Good afternoon. Dianah Neff, Chief Information Officer, Mayor's Office of Information Services, and with me is Michael Dean, First Deputy CIO. Council President Verna and members of the City Council, I am pleased to provide the testimony for our proposed fiscal 2006 operating budget. The Mayor's Office of Information Services works in partnership with City agencies to implement and manage information systems that support and enhance City government operations. MOIS coordinates the City's information technology activities by providing centralized planning, enterprise IT standards, IT project management, computer training and desktop support. MOIS also operates the City's central data center and the metropolitan wide-area network called CityNet and the operations support center. MOIS is requesting a total of $11,363,778 from the General Fund for fiscal 88 Whole - 3/2/05 - No. 050003 2006. This General Fund represents a total decrease of $249,976 from the fiscal 2005 estimated obligations. I think it's worthy to note that this budget includes 103 budgeted positions, which is a decrease of six full-time positions from the number of filled positions in December 2004. It also represents a 35 percent decrease since my joining the City in May of 2001. We have gone from 139 General Fund positions down to 103. I'm going to skip some of the details, or would you like me to read all of this into testimony?
I believe everyone has a copy of your testimony, so you could abbreviate it, if you will.
Great. On , I think it's important to go over some of the fiscal '05 activities and recognize some of the work that has been done by the department and the agency to achieve the Mayor's goal of using information technology to better deliver services to 89 Whole - 3/2/05 - No. 050003 citizens and businesses. In September of 2004, the Mayor appointed a 17-member Wireless Philadelphia Executive Committee. The Mayor's Wireless Philadelphia Initiative will provide wireless Internet access throughout the City. This will strengthen the City's economy and transform Philadelphia's neighborhoods. Wireless Philadelphia will work to create a digital infrastructure for open-air Internet access to help citizens, businesses, schools and community organizations make effective use of this technology to achieve their goals, while providing a greater experience for visitors to the City. This project has generated considerable world-wide interest and when implemented will place Philadelphia at the forefront of cities using technology to create an environment for innovation for the long-term benefit of its residents. Last year, another exciting program that we implemented was an on-line bill paying capability that for the first time provided 90 Whole - 3/2/05 - No. 050003 individuals with the ability to transact business over the Internet with the City. MOIS has been working with the City departments to deploy this new capability. Today visitors to the City's website can pay water bills, real estate, school, net profit and wage taxes. Users can get a business privilege license, search for information about deeds, property records, historical photographs, access and obtain copies of police department accident reports, pay parking and traffic violations and file for and pay for some types of building permits. Since January or in January, we had over 3,300 transactions that occurred on-line, representing a value of 375,000. For the month of February that was just closed, we had almost $45,000 being transacted over the Internet. The City is also deploying a Vacant Property Management Information System to efficiently track the acquisition, assembly and disposition of property. This new system is taking advantage of the new parcel map 91 Whole - 3/2/05 - No. 050003 recently developed by the Records Department, the address matching capabilities of the Unified Land Record System and the City's extensive Geographic Information System. The Vacant Property Management Information System will streamline land acquisition and disposition processes by providing for on-line methods for users to research, assemble and request parcels for projects and automating the Development Authority's acquisition and disposition processes. It will facilitate marketing of City-owned property by creating an electronic property inventory and improving communication by allowing property requesters to view project status and receive notifications about milestones and deadlines. It will create an electronic document repository for each project, enabling City staff to electronically track project progresses. Policymakers, administrators and managers will be empowered with enhanced decision-making tools. 92 Whole - 3/2/05 - No. 050003 I think while we have had some very exciting projects, it is also worth noting that MOIS is working to implement a number of enterprise capabilities and standards in support of common business needs across departments. The City has a significant investment in enterprise and departmental applications and systems that support the day-to-day work of City employees. Many of these applications represent older technologies that are reaching the end of their life cycle and for which programming and technical support expertise is fast becoming unavailable. The legacy systems, as they're called, must be replaced soon.
Recognizing the need to plan for and implement a solution for the migration of these aging legacy systems, the City has selected the Oracle Enterprise Business Suite as a City standard and began its implementation. Replacement of the Water Revenue billing system and adding a collections application is the first use of this standard. 93 Whole - 3/2/05 - No. 050003 In FY06, the City will begin the development of a Human Resources Information System using this standard. Still to be addressed, however, is the replacement of the City's aging financial, payroll and related applications. Over the next year, the IT Governing Board will assess these critical technology needs in greater detail and will be working to develop an application migration strategy to guide investment over the next three to seven years. Also listed below are a number of enabling capabilities that are being used across multiple departments. There is the enhancement of the City's e-mail capability through consolidation and replacement, enhancing and extending the provision of the help desk and desktop support for City workers, the electronic bill presentment that we discussed. We continue to keep the City's GIS data updated and are creating web services that can be used across the departments without having to be reprogrammed every time. We created an Oracle grid and 94 Whole - 3/2/05 - No. 050003 storage area network that provides a shared environment for the deployment of departmental applications that has saved significant dollars across the City licensing. We've also deployed an imaging and document management solution. Revenue and Fleet are the first to use this, and we have several additional departments that will soon begin this as well. MOIS is continuing to develop a disaster recovery plan to ensure that the City and its departments are able to maintain critical IT applications in the event of a catastrophe. This year MOIS is conducting a risk analysis to determine what is needed to maintain critical applications. Based on this initial planning, MOIS will begin implementation of the disaster recovery measures to ensure continuity of the critical business functions. Additional funding to support this effort is being requested in the FY06 capital budget. Madam President, that concludes my remarks, and I'll be happy to answer any 95 Whole - 3/2/05 - No. 050003 questions.
Thank you very much. Ms. Neff, you mentioned on the bottom of , top of of your testimony the need to develop interface programs to support the sharing of property information among departments and the City's NTI business partners. Who are the City's NTI business partners, and would you elaborate on what information is shared?
Certainly. I have with me the program manager that is working on the VPMIS. I'd like to call David Baldinger up, if I may.
That would be fine. Good afternoon. Please identify yourself for the record.
David, you're going to have to push the button and pull the microphone closer to you, please. 96 Whole - 3/2/05 - No. 050003
You had asked about the NTI business partners. I think we're using that term to kind of reflect -- to represent the community organizations, community development groups that are being supported through the City's housing and neighborhood redevelopment activities, the development community individuals, community organizations. I mean, all of those people are involved in one form or fashion in many of the City's housing and redevelopment activities. So those are the business partners themselves. The information that we're sharing -- that we hope to share through the creation of the Vacant Property Management Information System is really the property information that the City has on properties within the City, who owns what property, what are the tax status of those properties, L&I 97 Whole - 3/2/05 - No. 050003 status of those properties, which properties are in the process of being acquired, what is the status of that. The process, as you know, takes a very long time, and even once a property has been slated for acquisition, it may be months or even years before that is available, and right now it's very difficult to kind of get accurate, quick information as to what the status of that acquisition is. And through the Vacant Property Management Information System, we hope to have a single place where that information is stored and provide a way for all of the interested parties to quickly get that information in a form that is usable to them.
When do you think all of that will be available?
We believe it will take about another year to complete that effort. We hope to do it in phases, so that it's not a full year before there are any benefits, that we can kind of roll out benefits as we move along. 98 Whole - 3/2/05 - No. 050003 We've done a conceptual design. We are in the process of putting together the development team to kind of undertake the creation of this. We're building on a lot of the work that has already been done, the Records Department parcel base, the Unified Land Record System, the GIS work that --
I think it's sorely needed and I think it would be wonderful if we're able to access all of that information.
Yes. This has been something that we've all been waiting for for a very long time.
It's very complicated, but I think we're making real progress and within the next year, we should be see the fruits of that.
99 Whole - 3/2/05 - No. 050003 Ms. Neff, you mention in your testimony the Wireless Philadelphia Initiative. Can you explain what this initiative is, what it will cost and who will pay for it?
Certainly. The initiative is to create a wireless infrastructure that will cover all 135 square miles of the City of Philadelphia. We have worked with a group of stakeholders from the community that have identified needs with our K through 12 education, our universities, our non-profits, our chambers, our minority groups, and have put together a business plan. It is estimated that it will take $10 million to construct the network, and this will be funded through non-City dollars via taxable bonds or bank loans and will be paid back through a revenue-generation model, so that people will pay a subscription fee to use the network and that will go back to the payment of the loan.
Who would be doing the bonds? Would the City be doing the bonds? 100 Whole - 3/2/05 - No. 050003
The recommendation has been submitted to the Mayor and I don't have the final answer to that. We have recommended a government structure to be created, and whether that's the final model or not, we're waiting to hear from the Mayor.
Also, what is the $32,018 in your FY06 budget for Love Park wireless hot spot, why that's mentioned on ?
Well, I can talk to that. In April of 2004, the Mayor asked to create a pilot area or a test to see if wireless would be readily accepted by the community. To do that, we contracted with an outside company to come in, deploy the equipment and then to maintain the website and the support for anybody that wished to come into Love Park, register to use and have access to the Internet for free. Within the first two months, over 1,200 people had signed up to use access from Love Park. So the $32,000 was for the actual 101 Whole - 3/2/05 - No. 050003 deployment of the equipment and then the annual maintenance to have the connection to the Internet and to support the website and customer service calls.
Ms. Neff, can you just tell me what Project OSAN is?
Sure. Project OSAN, although I can't spell out the acronym, is the Water Revenue Bureau application for billing and collection that we talked about with the Oracle Suite of applications. So we have a system that is over 15 years old and we are replacing that. It is a 16 multi-department project. We're working with 17 Revenue, Water Revenue Bureau, the Water 18 Department and MOIS using the standards that 19 were selected to replace that aging system. 20 And the acronym they call it is OSAN.
Thank you. Also on of the detail, you're requesting $968,000 for software spectrum. This is an increase of more than $337,000 over 102 Whole - 3/2/05 - No. 050003 your FY05 estimated obligations. What are these funds for and why the increase?
Good afternoon. I'm Michael Dean, the Deputy Chief Information Officer. One of the things that we've tried to do over the last year is really approach software procurement in a bit of a smarter fashion. So one of the things we've done is, where we used to procure software centrally at MOIS as well as at the department level, we've tried to shift all of the procurement back to MOIS so that we can leverage some of our economies and get a better price. So what we often do is, we make a centralized purchase and then have the monies transferred over from the departments.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Good afternoon. You have to forgive 103 Whole - 3/2/05 - No. 050003 me for being skeptical, but I've been around this business for a long time and it always frightens me when I hear the word "free" or it's not going cost the taxpayers of the City any money. You know I have an interest in the wireless network proposal, but lots of concerns on why we're even going there with the availability and I'm curious why we didn't have more of maybe a partnership or relationship with the providers that are already out there to keep a system first class. In this area of technology, it has to be well maintained and be first class. What consideration has been given to the possibility that government funding of an Internet system will result in government censorship or cause for government censorship? How are you going to deal with that issue?
Well, I think it's important to note that the proposal that has been made is not to have it be government run. It's a public-private partnership. Through a request for proposal, we'll contract with the 104 Whole - 3/2/05 - No. 050003 private sector to build, manage and deploy the network. There is a proposed entity to be created that is waiting the Mayor's approval that will oversee this. So it will be outside of the government.
Well, I hear outside the government all the time, but we always have a way because of the way we account for things when we involve ourselves with something, your involvement is government involvement, your colleague's involvement, the taxpayers. Every minute you spend on this, it's taxpayers' money. I mean, that's a bit much at the moment just comparing your involvement in this, but let me give you an example. If someone's viewing scourt.com on the Wi-Fi network, are government funds being used to facilitate what happens next? What if a family values coalition find out about it and asks that access to scourt be blocked out? I mean, how are we, government sponsorship -- you can say that it's going to be private. It 105 Whole - 3/2/05 - No. 050003 will never be private. And, again, I've heard that our police radio system was going to cost $30 million when we first built it and now we're up close to $65 million. Again, I'm very skeptical about that, but I just can't imagine how we could, as a government, involve ourself in a project like this and not be involved in it.
The examples you gave really are Internet providers that create those websites. This is the creation of an infrastructure that allows people to have access to the Internet. We are not providing services. We are not providing those applications. What we're providing is the low-cost access, affordable access ubiquitously across the City to the Internet. And the same things that are out there today will be out there, but they won't necessarily -- the infrastructure that we're creating is that, an infrastructure to allow people to connect out to the Internet and not -- we are not in the service delivery 106 Whole - 3/2/05 - No. 050003 mode as far as applications and websites.
Let me go back to my first question. What you're describing is already out there.
Actually, it is not. I'll be happy to explain the process that we went through. We met with the major stakeholders throughout the City. Only 58 percent of our households today have connection to the Internet. Of that, it's very much skewed along a socioeconomic line. In our more fluent neighborhoods, we have access as high as 91 percent. In our minority and disadvantaged neighborhoods, it's as low as 17 percent. 18 What we're looking to do is to 19 create an organization that will help with the 20 digital divide, making sure we get computers 21 into the home, that we have the training and 22 the education through our non-profits to reach 23 out and help people effectively use this 24 medium, to work with our small and minority 25 business chambers, to show and do training and 107 Whole - 3/2/05 - No. 050003 education as a component of this on how businesses can effectively use the Internet to expand their businesses. We heard from the focus groups. For example, the School District has been working very diligently to wire or unwire their campuses. They will have 200 of the 270 schools that will have wireless access, but they are missing what they call the last mile, the ability to reach into the homes of the parents. And they were one of the groups that participated on the survey and had reached out to over 5,000 homes that have children, and the single biggest issue was cost. So there is not an affordable high-speed broadband network and there is none that have the roaming capabilities, which are important for government to be able to use that. What you have today in the market for broadband wireless is fixed wireless. You can't take your DSL connection outside. You can't take your cable connection outside. So that's why their hot spot capability was 108 Whole - 3/2/05 - No. 050003 looked at. One, if you look at the cost for infrastructure to deploy a wireless network, it's $20 to $100 per household past. If you're looking at cable or DSL, it's up towards of $700 to $1,500 per household past, and for fiber, it's $2,000 to $3,000 for household past. When you look at those infrastructure costs, it is difficult to have a low-cost high-speed network that's accessible to everyone, and our percentages bear that out. 76 percent of the survey respondents noted that the number one reason they didn't have Internet access was cost.
Cost of possibly the hardware, not necessarily the service, because you know as well as I do that there are some services that are very low in cost. Did we look at all at the possibility of -- you're talking about penetration, you're talking about the cost of, again, the laptops that would be needed for 109 Whole - 3/2/05 - No. 050003 people to go on. Did we work with the existing providers to try to increase the penetration with them; in other words, to have a government program that gets the equipment out there that people may need? I mean, our schools, our rec centers. Was there any conversation with any of the providers to work hand in hand to do what you said, to go into some of the poorer communities? But I can tell you, you can put a wireless signal out into poor communities and I don't know anybody that's going to be able to log on, because they don't have -- and I understand you have a plan to make loans. I mean, that's all nice, but it just to me -- again, being around this stuff for a while, seeing when government tries to get involved in things that are different. We have a tough time doing some of the basic stuff around here, let alone getting involved in high technology when, again, you say it's not out there. My question of you is, what have we 110 Whole - 3/2/05 - No. 050003 done, the statistics that you just gave, have we sat down with Verizon, have we sat down with Comcast and tried to fix that?
I did meet with both of those organizations and I will say on the Verizon side, I met with their network side of the house, as their wireless side would not meet with me. So, yes, we did reach out to them. They cancelled the meetings. I can't tell -- so, no, I did not meet with the wireless side of the house. I did meet with their network side of the house. They see this as a business opportunity. They're excited about being able to bid on the actual deployment and support of --
The Verizon network side of the house is partnering with equipment manufacturers and are waiting for the release of the request for proposal to build the network. So, yes, they see that as a new business opportunity. 111 Whole - 3/2/05 - No. 050003
But doesn't it seem appropriate that before you move to a government-built system that you talk to the people that you really need to talk to? The network people are all well and fine, but without talking to the wireless side, I think the answer to my question is that, no, you did not.
Well, I outreached to them. I can't force them to come and sit in a room and meet with me. I can document dates, and when three different times I had scheduled to meet with the group and they did not meet with me.
Councilman Rizzo, I don't mean to cut you short.
No, you haven't. You've given me a lot of time. The next go-around.
At 112 Whole - 3/2/05 - No. 050003 this time, the Chair recognizes Councilwoman Brown.
Please forgive me if I missed the answer to this question. I was struck, too, by the text, which spoke to the fact that there's a guarantee that no taxpayers' dollars will find their way to the system. Restate for me where the dollars will come from then to do this, what I believe to be a very progressive, forward-thinking way to go.
We, being the Wireless Executive Committee, put together a business return on investment model that puts together a plan to take this and market the construction of the network via taxable bonds or bank loans. And there has been considerable interest around this, and we believe that it is financable without using 113 Whole - 3/2/05 - No. 050003 City General Fund or capital dollars. And the plan is built on that. The revenue-generation model comes from charging a fee to have the Internet access.
And, therefore, the rollout of what you just walked through is contingent on the bond activity, correct?
Then, finally, speak again to the relationship, the interaction, the work that's been done with the Philadelphia public school system, since the overwhelming majority of the children who attend our public schools do not have this kind of high-tech advantage in their homes.
Correct. And this has been an important goal for the School District, is to reach out to the homes to improve the relationship between administrators and teachers and the family unit, whether it's a simple thing as being able to know what your child's homework 114 Whole - 3/2/05 - No. 050003 assignment is. The School District has created tutorial applications to work on behavioral problems. They have a whole dedication group that are working on that. And so they were very excited and were a part of the executive committee in looking at what our needs were in the community and then looking to see how we could meet them. And we believe that having this low-cost ubiquitous network, but also marrying that again, they have a training program where they work with families and they place computers in the homes. In the last two years, they placed 3,000 computers. We are working to create this low-cost ability, whether it's recycled computers and then adding a wireless card, which can be done for under $50, to make them accessible, but we also agreed as a committee that it was very important that people have some skin in the game and that there be a low-cost rate for low income and disadvantaged and that that would then help them use the 115 Whole - 3/2/05 - No. 050003 equipment and the training that you get to do the connection. And so if we have this very low-cost rate, that it would be used, and that's what the results of the survey have shown also.
We know that the challenges in the costs facing the School District are massive and huge when it comes to meeting the needs of those 219,000 plus children. Is there any sense that they are prepared to make a financial commitment of sorts towards this initiative particularly for its students beyond the 3,000 computers that they've already made happen?
Well, they continue -- their commitment is more like in kind. They're working on the applications, the report card applications, the tutorials, the homework applications. So their commitment is to do the outreach and to also assist in the training of the families, because it's not just putting a computer and it's not just having Internet access. You have to know those basic computer 116 Whole - 3/2/05 - No. 050003 skills.
So they're working on programs within the school for basic computer skills of the children, and they're extending that to the family. So as they select the families to get the computers, along with that comes a commitment to do six to eight hours, I believe, of training so that they can then effectively use that tool to participate in the programs that are being established.
Thank you for your testimony. Thank you, Madam Chair.
Thank you, Madam Chair. Ms. Neff, I'd like to go back for a moment to the Wireless Philadelphia Initiative. I commend you for your foresight 117 Whole - 3/2/05 - No. 050003 and your interest in this particular area. For the amount of information that's available, it certainly sounds interesting, if not exciting. I just have a couple of detail questions. I'm trying to better understand this proposal. The first of which is, notwithstanding the more than laudable goal of trying to whether it's bridge, what's often referred to as the digital divide and who has access and who doesn't and reaching into the homes and the like, what I've wondered about from time to time is, why is this a business for the City of Philadelphia to get into, given all of our other challenges?
Well, again, the charge was to look at what the interest in the community was. We brought together these different 17 different people from all different groups in the City, whether it's tourism, it was our health community, the universities, the School District, the non-profits, the business chambers, to hear what their needs were and put together a 118 Whole - 3/2/05 - No. 050003 program and a plan. It will also --
And what they said was we needed wireless access throughout the City? That was the main issue?
Well, was how can that stimulate economic development. Obviously it's in support of the neighborhood transformation. One of the things that we heard from our focus groups with our small businesses in our minority chambers was that telecommunications costs are a much higher percentage of their operating expenses. The Small Business Administration did a study in March of 2004 that collaborated what we also heard from the focus groups. And so as we were looking at how this technology -- it has a low-cost entry point, it meets the needs of -- it met the goals of the Administration in neighborhood transformation, it met the goals with the School District. It was looked at --
I'm sorry. I don't mean to cut across you, but you 119 Whole - 3/2/05 - No. 050003 mentioned it any number of times. Now, I understand when you lay out a game plan, that people need to basically stick to the message. And so I know that throughout the course of the hearings, we will hear a great amount about neighborhood transformation initiatives and all of the various aspects of the government in which it entails. It has, in a short period of time, virtually no operating department in the government, is not functioning under the overall umbrella of the neighborhood transformation initiative. I think I understand that now. What does wireless Philadelphia have to do with the NTI program, which is primarily for the demolition of dangerous properties, redevelopment in some areas, of cleaning up lots and building some new homes in different places? And I know there's market-rate houses being built in different areas and they also are now somehow the beneficiary of NTI. I mean, in many of our neighborhoods, what does wireless access have to do with changing what's going on in our 120 Whole - 3/2/05 - No. 050003 communities?
I think it's a good question, and what we looked at was not only how this thing rates but also at economic development at the neighborhood level and how do you enhance that opportunity for small businesses, the neighborhood businesses to be able to compete, and that's where the tie-in with wireless Philadelphia is.
So the crying need for small businesses in our communities and what's going to level the playing field for them is wireless access in neighborhoods?
It is reduction of telecommunication -- it was not the only thing, but it is one of those things that they have identified that will help them be successful and be able to compete. We have done a number of one-square-mile pilot areas. We've involved a non-profit, a community business district and a school in that area to take the input that we received from our stakeholder and focus 121 Whole - 3/2/05 - No. 050003 groups and to see what impact that that has. Probably West Philadelphia is the group or area that has been in existence the longest and has some examples where they work with the people's emergency center in transitional housing, and that by giving them training and education and skills in using the Internet, they've been able to create new businesses, websites, you know, as simple as selling candles, but that brought an income into this household. It's working with the small business chambers to identify a need and see how that could be met through the use of wireless.
Okay. But I kind of go back to my original question, that I want to better understand who the private partners are. I mean, if any of the information from today's newspaper story is correct, it seems to indicate -- this is from the interview with yourself -- the City and private companies will partner to design and build the network, mostly installing transmitters throughout the City. Once the 122 Whole - 3/2/05 - No. 050003 network is built, the City's private partners would be responsible for billing, technical support, maintenance and marketing.
Again, I'm trying to understand, why is this a business for us? If there are private people out there that want to do these things, why is this now a core business for us as opposed to -- we kind of pick up trash, make sure water comes out of your faucet and some of those kinds of things.
One of the answers is that there's limited resources. The way this technology works is that the devices are mounted on street lamps. It's one of the most cost-effective ways of the disbursement of the devices to allow the signal to take place. You have a limited resource. You can't put nine antennas on a street light. You can put one. So if you have an infrastructure that allows businesses to use that to deliver services, then rather than having every street 123 Whole - 3/2/05 - No. 050003 light in the City of Philadelphia covered with antennas, you make the system available for people through a set of criteria to be able to use and deliver services over that network. So the reason that it's a public-private partnership is, we're using City assets, our street lights, to be able to deploy the equipment to allow the infrastructure or the wireless network.
I know the boundary. I mean, we've got wires running from house to house and probably connected over telephone poles when we gave out cable franchises and people are using -- I mean, companies are using our rights-of-way to do that, but we're not in the cable business. I mean, other than the loftier goals -- which I agree Internet access is critically important, it will spur economic development. I have no dispute with you about those issues. I am still trying to understand why are we in this business when we're getting out of -- we're severely restricting our involvement in some other businesses, like 124 Whole - 3/2/05 - No. 050003 libraries and those kinds of services and recreation centers? And if there are private people who want to do this, then what they will do is contract with us to use our light poles and they will pay us a fee. So what does the City get out of this? How much money will this generate for the City of Philadelphia and how much will it cost us, if anything? Because now you're talking about doing either a borrowing or a bond issue. You assume that the subscriber fees will be the debt service for the bond issue. If the subscriber fees do not meet the debt service payments, who is responsible for the shortfall?
The Administration is looking at those issues right now and we are looking at that. We have presented the -- the "the" being the. The Wireless Executive Committee presented a plan to the 125 Whole - 3/2/05 - No. 050003 Administration. The Administration is working through those issues at this time. But there are a couple of things -- it will actually reduce the cost of service delivery for government as well. Today we have field inspectors that do not have wireless access. We pay a high fee for cellular wireless that doesn't have the speed or performance. We aren't able to send engineering diagrams to our field workers. Our inspectors, we have shown that we can save two hours per day per inspector by having wireless access in the field. But they need a performance better than what is available at the slow speed cellular wireless. So we have looked at, by the third year in our business model, of saving the City approximately $2 million a year in reduction in our telecommunications.
So you're saying we're going to have a service that is not available in the private market at all? Do they not have wireless access because we don't have a carrier? 126 Whole - 3/2/05 - No. 050003
There is no nomadic outdoor roaming capability at broadband speeds in the market today. COUNCILMAN DiCICCO: Point of information.
The chair recognizes Councilman DiCicco for a point of information. COUNCILMAN DiCICCO: Thank you, Madam President. Who has or who supplies the wireless service at Head House Square at 2nd and Lombard and who does provide the service at Love Park? Aren't they private companies that provided that service basically free?
Right. It's the same issue. Who provides it at Borders?
The City pays for 127 Whole - 3/2/05 - No. 050003 the Love Park. We contract with the circuit to the Internet through Verizon for Love Park. There is a different -- I'm not sure on the Head House. At one time it was -- COUNCILMAN DiCICCO: Was it Sprint? I should remember. I did a cable cutting as opposed to a ribbon cutting.
They were going to convert theirs to a fee based. They were going to have it free for a period of time. I don't know if that has occurred. That was done with the South Street business district. COUNCILMAN DiCICCO: South Street Head House District, right.
Right. So I'm not familiar with who all of their vendors were that were involved in that. I can tell you about Love Park, because the City did do that as a proof of concept that there was an interest in wireless and there was a huge interest in wireless. It today is free from Love Park to Boat House Row. That corridor is using an equipment manufacturer called TroPost that 128 Whole - 3/2/05 - No. 050003 provides the antennas that provides the wireless capability. COUNCILMAN DiCICCO: Do we have any way of knowing the number of people who have subscribed to that or the number of hits? I'm terrible when it comes to computer technology. But do we have any way of knowing that --
We do. COUNCILMAN DiCICCO: -- and what the prognosis going forward would be on the numbers of people? For me, the problem with this is, technology moves at such a rapid pace. What is new today is old news tomorrow. And I'm wondering, and I don't know if anybody has had the answer, a year, five years down the road, will all this stuff that we're talking about today be so antiquated that it's not going to be needed anyway? And the up-front costs that are involved concerns me, notwithstanding the other questions that have been asked about, if we don't meet that level of participation, who 129 Whole - 3/2/05 - No. 050003 will pay for the difference between whatever the costs are and what we have subscribers to. I mean, I have a Blackberry. I think most people do. I was in Florida for three days doing e-mails in my office. Not my office; we were closed on the weekend. But I don't know if it's worth that risk. That's my concern, because of the speed in which technology is changing literally daily.
Yes. We agree. One of the things that we heard in our focus group was the concern about obsolescence. We worked with technical experts from our universities. We worked with Intel in understanding the industry and where it was going. They make the chips that are used on the wireless technology, and where they thought the various different technology would be over. We've built into the business plan the ability to upgrade. One of the things when you select your business partner will be to ensure that you look at what's their R&D, how can they migrate, how do you keep this system up and running. 130 Whole - 3/2/05 - No. 050003 So that there is -- and we also used a very conservative business model for penetration rates based on what has occurred in other communities of smaller sizes across the United States. We're confident that we can make the penetration rates that are set in the business plan to address some of the concerns and issues and that there would be enough cash flow generated to build working capital to keep the system operated, and that will be a requirement as well in our fee when we select a technology partner. COUNCILMAN DiCICCO: All right. I just have that concern. I mean, I heard libraries being mentioned earlier. I don't know if it was you or Councilman Nutter. We took pride in ourselves being able to have all the libraries in the City of Philadelphia equipped with computers and now we've reduced the hours of operation, which means that all those computers are sitting there for most of the day unused. People who had this experience in 131 Whole - 3/2/05 - No. 050003 the technology to train and instruct people who went to the library in how to use this equipment, now we're moving a step beyond that. And something that was literally free -- not free, because the taxpayers paid for -- we're looking to get into another area where the taxpayers will be paying for technology to provide a service, which we don't know from a business standpoint whether it's going to even break even. I mean, it may break even now, but two, three years down the road, the likelihood is that we may be confronted with paying the bills. If we do the bonds, as Councilman Nutter was saying, somebody is going to pay it and it's going to be the taxpayers. I don't know. No one has ever come up to me -- and I don't mean this to be sarcastic -- in my district, and I represent a very broad diverse district, including Society Hill, Queen Village, Kensington, South Philadelphia, no one has ever come up to me and said, Could you get us wireless? I mean, there's something we really need. 132 Whole - 3/2/05 - No. 050003 I've never seen that. I've never heard that. Again, I don't mean that to be sarcastic, but people want their libraries open again full time, they want fire stations to stay open. They're not asking me about wireless communication systems. I just don't know. But thank you.