COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON FINANCE - - - - Room 696, City Hall Philadelphia, Pennsylvania Tuesday, November 18, 2003 10:25 a.m. - - - - BILL 030660- an Ordinance amending Title 11 of The Philadelphia Code, entitled "Water and Sewer," by adding certain standards for 12 the Water Department rates and charges by requiring the collection of rates to fund a 13 system of City Payment or consumer credits for the cost of work performed to maintain certain water and sewer connections, under certain terms and conditions. PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILMAN DARRELL CLARKE COUNCILMAN FRANK DICICCO COUNCILMAN JAMES KENNEY COUNCILMAN BRIAN O'NEILL - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 I N D E X BILL 030660 PAGE KUMAR KISHINCHAND, Water Commissioner.. EARL CALLAWAY......................... 30 JIM MCSTRAVOCK........................ 34 ANTONIO CRUZ.......................... 44 KIMMER SATTERTHWAITE.................. 45 STEVE LUMKIN.......................... 67 NAOMI ZASLOW, HAPCO................... 78 3 11/18/03 - FINANCE - BILL 030660
Good morning. There being a quorum, the Committee on Finance will hold public hearings with regard to Bill No. 030660, water laterals. To my right is Councilman O'Neill; to his right, Councilman Kenney; and to his right, Councilman DiCicco. The Chair also notes that Councilman Darrell Clarke is here, and we thank him. The Clerk will please read the title of the Bill. While doing so, we would ask Mr. Kishinchand, Commissioner of the Water Department, Kumar Kishinchand, come to the witness table with whomever you would like. Thank you.
Bill No. 030660, an Ordinance amending Title 13 of the Philadelphia Code entitled, "Water and Sewer," by adding certain standards for Water Department rates and charges by requiring the collection of rates to fund a system of City payment or consumer credits for the cost of work performed to maintain certain water and 4 11/18/03 - FINANCE - BILL 030660 sewer connections, all under certain terms and conditions.
Thank you very much. Does anyone have an opening statement? Councilman O'Neill, opening statement, or are you prepared for the Water Department to speak?
Well, I just want to offer some background on how this bill 13 came about. It's really been 24 years of seeing the senior citizens, families with very strapped incomes with two people working, trying to put their children through school, having something happen to them that is no 19 fault of their own, but has an expense attached to it of about $3,000 to $6,000, and that is if a water lateral, for whatever reason, it breaks, it gets crushed, it cracks, but it needs to be replaced, the water or sewer lateral. And while I think it's unfair to have a homeowner be responsible for that in 5 11/18/03 - FINANCE - BILL 030660 any respect, really from the curb out to the main, whether it be the sewer main or the water main, that is under the street. And I believe it is just absolutely unfair and something that should be corrected. And the homeowner should not be responsible for something under the City street. The City street is a public domain. And no more than we would want a homeowner to fix a pothole or a sink hole in front of their house, would shudder to even suggest it, I don't think this is really any different. The Water Department and the Managing Director's Office have been very helpful. And I don't want this to sound anything adversarial, because they have actually turned the bill I had back in September into an Administration bill, which is before us, so that we can move forward together on this. They recognize the situation as much as I do, and I applaud them for it. I also think we'll have some testimony about a warranty program for the 6 11/18/03 - FINANCE - BILL 030660 part of these laterals that will be on the homeowner's property, and their responsibility, where they can buy a small insurance policy to cover that. I really want to thank the Commissioner and the Managing Director for their help with this.
Thank you. Thank you, Councilman. Commissioner Kishinchand.
Good morning, Chairwoman Blackwell and Members of the Finance Committee. My name is Kumar Kishinchand, Water Commissioner for the City of Philadelphia. I would like to thank City Council for providing me the opportunity to testify regarding Bill No. 030660, introduced by Councilman O'Neill. I do have extra copies.
I'd like to say cosponsored by every Member of City Council.
Let that go on the record that it is cosponsored by the other City Councilpersons. 7 11/18/03 - FINANCE - BILL 030660 Section 13-101 and 13-201 of the Philadelphia Code direct the Water Commissioner to consider many factors when setting rates and charges for customers connected to these systems. Bill 030660 would require the Water Commissioner to consider a new set of factors, that is, the costs of customers of replacing certain water and sewer pipes that connect their properties to the City system. I am here today to testify in support of Bill 030660 and to provide information about its impact on the City's Water Department and our citizens. From my discussions with Councilman O'Neill, I know that the goal of this legislation is to protect our customers from the expensive and unexpected costs to replace pipes in the public right-of-way. Our customers have the responsibility for maintaining certain water pipes in the public right-of-way under the Philadelphia Code, Article 13-502, and for sewer pipes under Title 53, Section 14794 of the state's laws governing the Cities of the First Class. 8 11/18/03 - FINANCE - BILL 030660 Most water and sewer utilities and municipalities that provide water and sewer services currently cover the cost of replacement of the customers' water and sewer pipes in the public right-of-way through charges in their rates. There is a public benefit to having these costs covered. Leaking water and sewer pipes, if not promptly repaired, can cause serious damage to the public infrastructure and adjacent private properties. This bill provides a valuable tool for better managing the impacts of both the leaks and the repair work associated with the customers' pipes. Bill 030660 would direct the Water Commissioner to ensure that the City's Water Fund has sufficient funding to pay for the costs of the repair and replacement of the pipes owned by the property owners, or alternatively, provide funds for a system of credits to property owners for repair work or replacement of pipes. The money for any program must come through a formal rate process to cover the cost. 9 11/18/03 - FINANCE - BILL 030660 Now I'll address our HELP Program. For many years the Water Department has been concerned about the costs to customers of the repair and replacement of water and sewer pipes. In the early 1990s, the Water Department established a Homeowner Emergency Loan Program, which we called HELP. Over the years we have improved that program to ease that burden on homeowners of getting estimates and choosing a plumber under emergency conditions. The City currently contracts directly with plumbers to provide service 14 through HELP to about 1,000 homeowners each 15 year. The zero percent interest loan is now available for five years. However, despite access to this program, many customers choose not to fix their water and sewer leaks. Additionally, for the poorest of our customers, HELP is not a solution. Many property owners cannot afford the additional monthly cost of even a zero percent interest loan. For this reason, the Water Department, with the support of the Office of Risk Management, has been 10 11/18/03 - FINANCE - BILL 030660 investigating pipe warranty programs that could help all our customers. Over the last three years, the City officials have met with several companies that provide repair and replacement warranties for water and sewer pipes. Commonly, these programs are offered through the utility as an option for the customers. For example, the customer would pay about $60 per year additional for the pipe warranty. The warranty companies contract with local plumbers to provide needed repairs or replacements, much like the City does in the HELP Program. Our concern about these voluntary programs has been that the property owners that most need the security of the warranty program would not participate.
In addition, at any given time, there are thousands of customers that are not current on their water and sewer bills who may also neglect to pay the warranty charges and lose coverage. The Water Department also believes that a program that includes all customers would have much 11 11/18/03 - FINANCE - BILL 030660 lower costs per participant. From estimates we have received from the potential vendors, we believe that cost for a warranty for water and sewer pipes, for both water and sewer pipes as described in Bill 030660, would cost less than $4 per property, per month. Warranty companies provide the advantage of management of the risks associated with the numbers of pipes that fail, the responsibility for assessing eligibility, managing contracts with the plumbers and bolstering customer service functions. Warranty companies may also be interested in providing coverage on an optional basis for the portion of the customers' pipes that are not in the public right-of-way. The Water Department recommends that the City further investigate a warranty program as a system of City payment. Instead of a warranty program, the City could manage the repair and replacement of the property owners' pipes in a manner similar to the HELP Program. The Water Department currently manages HELP by utilizing 12 11/18/03 - FINANCE - BILL 030660 licensed plumbers to provide repair and replacement of pipes. A City plumbing inspector is assigned to each job. He provides an initial assessment of the required work. The plumber is selected by a computer system that uses several factors determining which plumber is at the top of list. The plumber and inspector are in communication about the progress of the work and the changes to the initial assessment. The inspector makes a final inspection prior to the approval. The Water Department currently manages about 1,000 repairs in this manner using two inspectors and 15 plumbers. From the permit records and other information available, we expect that there would be 6,000 to 8,000 jobs annually eligible under Bill 20 030660 and through HELP for pipes not in the public right-of-way. The cost per job for the residential properties covered by HELP is $2,500. The Water Department would need to hire additional staff, including an estimated six more inspectors, two supervisors and 13 11/18/03 - FINANCE - BILL 030660 office support. Budgeting for the entire cost of the program will be difficult in the beginning given the uncertainty about number of repairs. Initially, we expect that about $20 to $25 million in new Water Fund revenue would be needed. The Water Department has concerns about a consumer credit program. We believe that the credit program could result in inefficient, costly and inconsistent repairs. We base this on our experiences with the early design of the HELP, which was similar to a credit program. The loan applicants were required to hire their own plumbers. The City required multiple estimates to make sure that the work recommended by the plumbers was consistent and that the applicant got the lowest price. In many cases the work was delayed for long periods of time until the plumbers responded. Under the current design of the HELP Program, the City contracts with the licensed plumbers and oversees their work. Thus, the jobs are quickly and effectively repaired. 14 11/18/03 - FINANCE - BILL 030660 There are other issues to be considered. Bill 030660 does not cause the City to take on additional responsibility for claims related to leaks, clogged drains or injuries caused by conditions on the sidewalk or street. Property owners will retain the responsibility for maintaining their properties and avoiding placing of materials in drains that will clog them. This is very important, since there are 500,000 customer locations that the City cannot regularly inspect. Bill 030660 does not differentiate among the classes of customers who would be covered by the funding.
The costs associated with residential and small commercial water sewer pipe replacements can be reasonably estimated. Costs for replacement of large sewer pipes would be more variable. In addition, the Water Department does not know the size of the sewer pipes that connect large facilities, such as office buildings, apartment buildings, parking lots and industrial sites to the sewer system. Our 15 11/18/03 - FINANCE - BILL 030660 billing system is based on the size of the water meters. The size of sewer pipes is not recorded in the system. However, it should be possible to develop a system that pays for a portion of the cost incurred by the customer with large pipes. Should this ordinance be passed by City Council, a process will follow during which the Department, in consultation with City Council and the Mayor's Office, determines which program would be most advantageous and least costly to the citizens and the City. After that, PWD would hold a formal rate process and seek City Council budget approval to obtain the funds to cover the costs of the chosen program. Then, depending on the program, we will either go through the bidding and contracting process to acquire a warranty company, or go through a planning and hiring process to find outside plumbers or additional staff. Thus, it is important to note that this new program will not be available to homeowners immediately. Full implementation of the program is 16 11/18/03 - FINANCE - BILL 030660 estimated to take upwards of one year. In summary, Bill 030660 will provide important benefits to the City water and sewer customers and provide valuable protection to the City's infrastructure. Thank you for your time and attention. My staff and I are available to answer any questions you may have about the impact of this Bill. Thank you.
Thank you, Commissioner. How would this affect the Water Department's capital program?
We expect to run this program on our operating budget. We don't expect this to be a capital program.
I know you mentioned $25 million. Would the Water Department find itself needing to borrow money to fund this initiative?
No. We would expect to modify the rates in order to raise the funds to cover this particular program. We would need to go through the public hearing 17 11/18/03 - FINANCE - BILL 030660 process as we normally do and inform the Council about the need for the rate increase and the amount.
Great. And again, who would do this new service? Would it require bids for contractors?
If we choose to go with the warranty program, as I've outlined, we would go through the Request for Proposal process in selection of the companies. There aren't too many firms that provide this warranty service. There are two or three of them. Risk Management has been very helpful in identifying some of those firms, and we talked to some of them. So I think the process would be to go through the RFP process to choose a warranty program, if that is the direction City Council and the Administration wants to go.
If we pass this out of Committee today, which we assume we will, and pass it in City Council, how long would it take before the program would start?
It would take 18 11/18/03 - FINANCE - BILL 030660 about a year for this program to really get going because we need to go through the rate hearing process, raise the funds, get approval from City Council for appropriation authority and go through the RFP process, select a vendor. Vendor contracts. It's a very arduous process, as you probably are aware. We expect it would probably take about a year to do so.
And we assume that, in terms of advertising that, I assume the ratepayers would receive notices in their mail with their bills, et cetera, so that there is a City-wide and absolute effort to reach every customer?
We will attempt to do that. As you know, we have bills sent out every month to every residence, and we can put a bill stuffer in them to inform them what the program would be like once we decide which direction to go, whether it's going to internal or warranty.
Thank you. Further questions? 19 11/18/03 - FINANCE - BILL 030660 Councilman O'Neill and then Councilman Kenney.
Commissioner, it seems clear from the testimony that while there may be a thousand or so a year that get replaced now, the laterals, there's probably 6,000 to 8,000 out there that should be replaced. And when they're not replaced, which they're not being replaced right now -- only those that are the very worst, that are causing the most severe problems -- these pipes that aren't being replaced that need to be replaced are causing other problems, sometimes very significant below the surface of the street.
I think, perhaps, I might be misleading this particular testimony. The 1,000 are the ones that come to us for HELP loans, and we follow-up on them. There are a number of folks who do not come to us for HELP loans. They go directly to the plumber and replace them once they get the violation notice and do it on their own. So these 6,000 to 8,000 are actually the 20 11/18/03 - FINANCE - BILL 030660 numbers that we've derived from the folks who get the permits to repair them. So these are being repaired, but in some cases perhaps not as speedily as we would like to see them.
So you think there are 6,000 to 8,000 a year that are being replaced?
Now, how many would you estimate need to be replaced and aren't that are out there that you're going to have to deal with once this change takes place?
That's a number we have not been able to really estimate well enough. My sense is that -- because we see the depressions occurring in the streets or on the sidewalks, et cetera, and we send our customer service people to advise those folks they need to fix them, we think that 6,000 to 8,000 would probably be the number that's done on an annual basis. But that's still a soft number.
Your rate 21 11/18/03 - FINANCE - BILL 030660 change will be based on a 6,000 to 8,000 number?
Not some other number that is out there, but not being dealt with today?
Unless we in further study find that we missed something. We may have to modify that. But it's not going to be significantly higher if we go beyond 8,000.
I know you mentioned upwards of a year, but could this be done in six months, before Council adjourn in the summer, if everybody really put their nose to the grindstone?
That would be very hard to do so. Because as you know, we have not even started on the rate hearing process yet and we have not informed City Council that there would be a rate change as a result of this. And the budget will be passed some time in April, I suspect. It's after that that we go through the RFP/RFQ process and get 22 11/18/03 - FINANCE - BILL 030660 somebody under contract. So that would be a pretty fast turn-around for City agencies to do that. We will attempt to do it as fast as we can.
Do you know how many other water systems have the homeowner being responsible for the entire run of the laterals?
Most of the utilities actually cover the portion in the public right-of-way. They pay for it and pay through the rates.
Most of the utilities actually cover the cost of replacement of these pipes in the public right-of-way.
This is where we 23 11/18/03 - FINANCE - BILL 030660 are going. As far as the rest is concerned, I don't have numbers.
Thank you, Madam Chair. Commissioner, is there any coordination between the Streets Department and the Water Department relative to street repairs that are affected by a lateral disintegration? Because it seems that a lot of the curbside repairs that are done are as a result of bad laterals that are washing away the under-soil, causing the lateral to degrade even further, and also sinking the street. Is there any type of information that you guys have kind of coordinated together to figure out how many are related to lateral disintegration and what the cost is? There may be an ability to compare the two, cost of 24 11/18/03 - FINANCE - BILL 030660 the street repairs and the lateral replacement, reimbursement, whatever kind that is.
There is a lot of coordination between Licenses and Inspections, the Streets Department and the Water Department on this particular issue. In fact, we had a committee formed to look at this so that we would coordinate and respond in a timely fashion, not only to repair the underground infrastructure, but the service line that's leaking or a lateral that's collapsed, but also then pass that information on as soon as it's fixed through the Streets Department, because they share our customer information system. Then they follow-up and repair it. Generally what happens is, once the lateral is repaired, we backfill that repair, make it safe, and then subsequently the Streets Department comes in and finishes off the job. Occasionally, it takes a couple of months. They've been trying very hard to bring that timeline down to about one month to 25 11/18/03 - FINANCE - BILL 030660 complete the job. So there is a lot of coordination between the Streets Department and the Water Department.
Do you envision the possibility that once this program is in place, the ability to prioritize the laterals that need to be replaced with the incentive or the credit or reimbursement, or whatever form the reimbursement takes, to prioritize those areas first? Because one of the things I notice is that a lot of times the Streets Department goes back two or three times and fixes the same area by the curb, and the lateral hasn't been replaced. And they just keep on doing the same redundant job of replacing the sinkhole.
Our hope is that this particular program will give incentive to the homeowner to advise us as soon as he or she sees that there is a problem in that area. And because they don't have to pay for it anymore in the public right-of-way, they would hopefully call either the Water Department or the warranty company, whatever process we set 11/18/03 - FINANCE - BILL 030660 up for them.
One of the other issues is one of style, too. I don't think the Water Department does this. It's probably either L&I or Streets. When someone calls about a sinkhole or a curb depression or the street by the curb is depressed, they're issued a violation. One of the things that bothers people is that the issue of a violation, that somehow they did something wrong, I think needs to be looked at and perhaps changed. Because from a homeowner attitude standpoint, they're being cited, which means they've done something wrong, which means that the City -- you know, us versus the City kind of mentality. If there is some way of changing even the term of what it is by not issuing a citation to anyone, by not issuing a violation, that would be a big help in changing the kind of attitudes about people wanting to report these things. Because once they report them, an inspector comes out and issues them a violation. It's like, why did I 27 11/18/03 - FINANCE - BILL 030660 bother calling because now I'm in trouble. So it's just something in your thought process, in your coordination with the other departments involved in this would be helpful. Secondly, do we get warranties now when a contractor replaces a water main or sewer? Is there a warranty associated with that work and that equipment?
There is a one-year warranty on all new main sewers and main water service?
Why then would it be difficult to get similar warranties on laterals, since it's done as a matter of course?
I misunderstood you. I thought you said there were only one or two companies that would provide warranties for laterals. 28 11/18/03 - FINANCE - BILL 030660
These are the companies that would take on this particular whole program and provide the warranty once we put them under contract with us. That would be a warranty program for repair of these. And subsequent of that, of course, there would be a one-year warranty for any subsequent defect that is found.
The plumbing contractors we deal with now, do they provide a warranty under the work for the laterals for the work they do under the auspices of the City?
That's correct. They provide a warranty for work that they have done repairs on.
Including laterals, yes. This particular warranty program, this would be a warranty City-wide for all customers. And so when the customer essentially finds that there is a defect in the street, they could call up this warranty 29 11/18/03 - FINANCE - BILL 030660 company and get it fixed, because they've already been paying a certain amount of charge on a monthly basis. So that is a different kind of warranty than the warranty on work that has already been done.
You're welcome. Are there any more questions from Members of the Committee? Seeing none, that will end our public hearing part of this -- further questions? I'm sorry. Let us complete the witness list. Mr. Jim McStravock, plumbing contractor. Is Mr. Earl Callaway here, Treasurer, Master Plumbers? Is Mr. Callaway here?
You two are coming up together. And then Naomi Zaslow, Public 30 11/18/03 - FINANCE - BILL 030660 Relations Director for HAPCO. They are the three witnesses. Good morning. Thank you for your patience. Please begin your testimony.
Good morning. I'm Earl Callaway. I'm a member of the Master Plumbers Association of Philadelphia. We are a local and professional trade association with state and national affiliations. I'm here this morning to say that this Bill will cause a loss of revenue and jobs to the City, neither of which it can afford. Small plumbing businesses, which account for a majority of our membership, do this type of work. We employ excavating contractors, the people who dig for us. They employ operators, laborers, mechanics, secretaries and accountants. We employ plumbers, plumber apprentices, laborers accountants and our wives, who are our secretaries. So now you know who the real boss is around the office. We pay licenses fees, permit fees and taxes to the City. Boy, do we pay taxes. We purchase our materials, 31 11/18/03 - FINANCE - BILL 030660 tools, equipment and trucks from local suppliers. We pay more taxes. Boy, do we pay taxes. We, the small businesses of Philadelphia, create jobs and we generate revenue for the City. If you think that turning over this work to the public sector is more beneficial to the City than leaving it to the private sector, then I totally disagree with you. Thank you.
Can I respond? I didn't hear anything from the Commissioner that indicated in either of his plans that the public sector is going to start doing this work. Could you please respond to that, Commissioner? Because I didn't hear that from you.
Essentially, the programs that we've been considering are going to be the ones whereby we would hire the plumbers in the private sector to do all the repairs. We would just oversee the work. If we were to do it in-house, within the Water 32 11/18/03 - FINANCE - BILL 030660 Department, we would hire only the inspectors to inspect the work that the private plumber would be doing.
That is similar to the HELP Program today. And if we go with the warranty company, it is our expectation that the warranty company would contract with the plumbers in the local areas and proceed with the work on that.
Isn't it true that there will be no less work for the private sector, but there should be a lot more work because of those laterals that are causing problems that aren't getting fixed because the homeowners can't afford it? Somebody will now be responsible to pay for it and there should be more work than less?
We expect that there would be. Because as I mentioned earlier, we don't know of the folks who are ignoring repairs of these and causing the 33 11/18/03 - FINANCE - BILL 030660 problems in the streets, et cetera. And what it also does is, when things get really bad, sometimes you get properties that are abandoned, and perhaps that would be saved. I think as far as the plumbing industry in Philadelphia is concerned, they should not expect to see any reduction of work for them.
Could you and the people that work for you that are involved in this make an effort after this hearing to meet with particularly the plumbing contractors and the Master Plumbers Association so that they're fully informed on what your intentions are and how this should work?
Let me say certainly we know that water is a common denominator between being homeless and not. That is one of my main areas of interest. Certainly, we want to make sure that the small business owner and contractor is working, as 34 11/18/03 - FINANCE - BILL 030660 well as to make sure we can do our best by the citizens in this City, who, if they have no 4 water, essentially might as well come and visit my office like so many others because if you don't have water -- people can try to bundle up, even when it's cold; and people can make try to make arrangements when it's hot. But if you don't have water, you just can't live inside. You might as well go to a shelter. We hope that we can protect everybody involved; the consumer, the homeowner, the residential customer, and certainly the plumbers who need the work. Sir.
Good morning. My name is Jim McStravock. I represent in excess of 65 plumbers that are licensed in the City of Philadelphia. We're opposed to this bill. There are programs out there. If it is going to be a plumber that is going to do the work, then, if I'm not wrong, would they have to have an RFP package and be certified by the Water Department to install the laterals and 35 11/18/03 - FINANCE - BILL 030660 water services?
But would they have to be members of -- like the HELP Program has to plumbers. Would you have to have a 8 list or would it be any master plumber? 9 And who would set the rates for the 10 amount charged per lateral, per water service? 11 To me, I look at this bill as price 12 fixing. Each job is totally different. My 13 overhead is different than somebody else's. 14 This bill would price fix. When you price fix 15 and excavate, there are safety issues involved. If you're going to pay $1,000 to $1,500 for a lateral, you know that plumber is not going to do shoring if they're going to dictate. That's the amount they're going to pay. There are costs involved in doing this work, and I think that's not being considered. This bill to me seems to be a price fixing system designed to knock the average plumber out of making a living. We do not do that much plumbing inside the house. We've lost 36 11/18/03 - FINANCE - BILL 030660 the interior plumbing. You need a license and you need a permit to do the work. The home centers have killed us. The homeowners doing their own work have killed us. This is the only legitimate work we have left. And if this is taken away, you're going to put a lot of plumbers out of business that do excavations. I do work for PHDC. This would theoretically kill probably 40 percent of my contract that I do for PHDC. There are programs out there. The HELP Program is a good program. It's a zero-interest loan. Anybody is qualified for that. To run this City-wide, I feel is taxing the homeowner unnecessarily. On an average, it's one in five in their lifetime, in their lifetime, that have to pay for this. So you're taxing people for something that they're never going to use.
Councilman O'Neill can correct me. I believe that the homeowner will have the option to get a 37 11/18/03 - FINANCE - BILL 030660 warranty or not; is that correct?
So the homeowner will have the option. And maybe the Commissioner can answer the question. And the question is, will any licensed registered plumber be able to participate, or is that part of a process that we have to develop? Can you answer that, Commissioner?
I can't fully answer that because the program hasn't been developed. As I said, the program hasn't been developed, whether it's in-house or a warranty program. But when you consider that we have about 15 plumbing contractors under contract to repair thousands of defects in a year, and we're talking in terms of 6,000 to 8,000, obviously, one would expect that there would be a lot more plumbers who would be put under contract with either a warranty company or in-house. As I said, right now we have not really sorted out all the details on this particular program. But generally I think, as 38 11/18/03 - FINANCE - BILL 030660 the Councilperson has mentioned, this is going to certainly help not only the customer, it's going to help the public infrastructure also from deteriorating as it does at this point.
How many licensed plumbing contractors are there in Philadelphia?
Actively engaged in the City, I would say roughly 500. There are more, but they work for hospitals, they work for other plumbers.
Since under the HELP Program there are 15 contractors participating in that program, why does that not hurt the other 400-some-odd plumbing contractors who aren't in the program? Isn't what we're talking about here the same thing, but on a larger scale? Why was the HELP Program good, but this program is not?
The HELP Program was designed for somebody who could not afford 39 11/18/03 - FINANCE - BILL 030660 it, and it was a zero-interest loan, which we can't compete against. It's a good program for people who can't afford it. If every plumber had the option to get on that list if they wanted to, they price fix. Somebody can't tell me a lateral is going to cost $1,200 when my back hoe costs are $450, my permit costs are $500, my material and labor cost exceed the cost of doing the job. And like I said, it does not take into consideration the safety issue. When you price fix, there is a huge safety issue in shoring.
How do the 15 contractors that are involved in the HELP Program exist in this price fixing atmosphere?
They do a thousand a year. They have other work. And if you would ask them what they charge a private homeowner, it would almost be double what they would charge through the HELP Program.
How is it cheaper for government -- I've never seen a system where government is cheaper than the 40 11/18/03 - FINANCE - BILL 030660 private sector.
Because they're price fixing. They're dictating the price. If you wanted to get into this, you can have a contract of $450,000, or whatever your contract amount is, and do the work and continue to do the work. If somebody is going to hand you $400,000 worth of work free, without doing paperwork -- there is paperwork involved, but without a bidding process, it makes it easier for that plumber. He doesn't have to advertise. He doesn't have to do anything extra.
Do you have any idea what the variation is between one row house lateral and another row house lateral, as opposed to one plumber? I can't imagine that the price is that varied that people wouldn't go shopping. If I can get a lateral for $1,200 or $1,500 and you come in and say, well, it's 3,000, I'm not going to hire you. So how big of a variance is there on average?
There is a variance that large, if not larger. It is the point 41 11/18/03 - FINANCE - BILL 030660 and the purpose of the homeowner. You don't go buy a refrigerator or a TV without shopping. Every customer I always go to, I tell them to shop. I want you to price it. It's the homeowner's responsibility to do that. This work would take away work from plumbers and go to people that have equipment.
Who do you envision doing the work if this program is in effect? The plumber has to do it. How will the City cap the charge?
Yes, they do. That is why they only have 12 or 15, because the majority of plumbers can't compete at that dollar.
Commissioner, do you envision a maximum charge under the program we're discussing today?
Again, as I said, the program isn't in place. We would look at 42 11/18/03 - FINANCE - BILL 030660 exactly what the appropriate charge is for those particular programs. Right now the prices may vary because of the length of the laterals, et cetera, but the prices are based on per foot. And actually I have Mr. Satterthwaite, who runs our HELP Program, who might be able to give you a little more detail, if you'd like.
I respect the testimony of the people at the table, and also of yours, but it seems to fly in the face of logic that somehow if we make it easier for people to take care of their lateral problems and have them repaired that somehow that's bad to generate all that additional work that's not being done now, because people are basically just ignoring it. And, you know, it's one of those expenses that I really can't see. It's not like my plumbing inside my house is flooding my house. I can't really see it. It's in the street. I ignore it until I really have to do something about it, until my toilet backs up or everything is starting to collapse. I just don't understand 43 11/18/03 - FINANCE - BILL 030660 on a rational basis how increasing the opportunities of work is bad for the plumbing industry.
May I address that, please? The work is being done by the private sector. The work is not going --
You're missing my point. My point is, is that right now there is a universe of laterals that are not being done because people can't afford to do them or they're ignoring them.
I don't think that was his testimony. I think his testimony was that they do a thousand and the private sector does 8,000.
Right. But on top of that universe, there's another group of people --
You have to identify yourself. 44 11/18/03 - FINANCE - BILL 030660
My name is Antonio Cruz. I'm a private contractor. There's a process that the Water Department uses to determine what is a bad lateral and what is not. The lateral has been violated, that lateral has to be done whether the homeowner does it or not, and I believe that the Water Department does it already, correct?
If one of your inspectors issues a violation to a lateral, and whether the property is vacant or whether the homeowner cannot afford it, do you just continuously let the lateral ruin your water main or sewer main, or do you go in, rip it up and replace it and address the issue or do you abate the violation; is that correct?
The Water Department. They do it at a minimum basis to correct the 45 11/18/03 - FINANCE - BILL 030660 immediate danger.
With your permission, I'd like to have Kimmer Satterthwaite who runs the HELP Program and some of the abatement programs to answer that question.
Good morning. My name is Kimmer (ph) Satterthwaite. I'm the manager of the HELP Loan Program.
There's a couple of points that I'd like to make clear. First of all, our prices are competitive. We have 15 contractors working in our program. We've surveyed these numbers over the past years and we came up with what I think are competitive numbers based on industry standards. I don't dispute their 46 11/18/03 - FINANCE - BILL 030660 overhead charges. I don't even know their overhead charges. But the guys we're working with also work for PHDC, the Redevelopment Authority. So our prices are competitive. Are they making a lot of money? I don't think any contractor or any business person will work for free. There must be some type of profit margin. We have set costs, but we also allow for situations, because plumbing is a very inexact science. So we don't know what happens until we dig up the street, until we excavate, and we make the repairs accordingly. We bill accordingly based on footage, standard prices that we can look at. We can't just let the plumber dictate what the costs are, because our first interest is to our water customer. And I think that's where this confusion may be with the private contractors. We try to be as fair as we possibly can be with the constraints of the program. The HELP Loan Program is a very, very simple program. To be eligible for the program, you must be the homeowner living in 47 11/18/03 - FINANCE - BILL 030660 the property. You must have a current water bill. We're not going to loan you money when you already owe us money. And you must have an operable water meter. So if you meet these qualifications -- we don't do income tests. We have presidents of universities in our program. We have people from different City Council offices participating in our program. We have people on public assistance in our program. It's a straight program. It's no 12 interest, so whatever the cost is, you divide it by 60 and that's your monthly price, that's your monthly cost. People who cannot afford this cost, we refer them to PHDC for their work. So the income qualifications or the overhead, I can't really address because I don't know their finances. But I think our prices are competitive.
We're not disputing your cost. You're absolutely right to try to get the best price for your customers. That's the way America works. That's the way business works. But what we're saying here 48 11/18/03 - FINANCE - BILL 030660 today is that there are already programs in place to help these people. Now, here you want to come and put a blanket program in to cover the whole City, which is going to in turn knock the private contractor out of business. I mean, it's going to knock the people who have been doing this work all along out of business. This is our objection to this program. This is what we're objecting to. We need to be able to operate in the free marketplace. And if you come in and take this away from us, it's no longer a free marketplace. It's a marketplace dictated by the Water Company, and that's un-American. That's what we're saying.
Thank you. I understand the objection. The objection is that the status quo should remain. People, if you're the one in five who have this happen to you, you get the $3,000 to $6,000 bill, the ultimate reverse lottery for somebody on a fixed income or with a family to feed, you're 49 11/18/03 - FINANCE - BILL 030660 penalized where you did nothing wrong. This is not turning it over to the public sector. Absolutely, unequivocally not turning it over to the public sector. I think the Commissioner has made that very clear. Secondly, whatever happens as a result of this bill, the City, the Water Department, will be responsible for replacements in the right-of-way, in the public domain, which is the way it is everywhere else. A homeowner should not be responsible for this repair or replacement in the right-of-way. I think everyone agrees on that. The part of the laterals that are on the property of the homeowner, under the property of the homeowner, will still be the homeowner's responsibility, will still be eligible for the HELP Program. And many people may decide that that is a risk they are willing to take rather than pay the warranty cost, whatever that $4 or $5 a month charge may be. And when I say under the HELP Program, they don't have to use HELP. Only one in six or seven are using it today. If 50 11/18/03 - FINANCE - BILL 030660 the same numbers hold, and I wouldn't see why they would not, all those repairs made on the homeowner's property would still be the same as they are today, either in the HELP Program or just going out and using the contractors who aren't in the HELP Program, which apparently 90 percent or so are using today. The question isn't whether there's going to be more work, whether there's going to be less work; it's whether the Water Department has unfair regulations. This is an unfair system. Anybody who objects to it is trivializing what happens to a homeowner when this hits them. And it's the reason why many people prolong and prolong this replacement, because they simply can't afford it and don't want to go into debt over it. And we can end that today. I believe it will result in a lot more work. The Water Department won't have to go in and do a repair themselves if somebody doesn't respond to a violation. They are responsible. I think they're the jobs that plumbers will get. If plumbers want to change the Water 51 11/18/03 - FINANCE - BILL 030660 Department program and expand it to more plumbers, I believe there is going to be a lot more work and a lot more opportunity to do that. I can just tell you that I have not met a homeowner yet who went outside the HELP Program that knew about the HELP Program and understood it. People usually don't want to pay more for a repair than they have to, and they usually don't want to pay it out-of-pocket or go to a bank to get a loan if they don't have to. But the number between a thousand and 6,000 to 8,000 are doing that. About 90 percent of them. That should be a concern of us and the Water Department and the entire City to see why a homeowner would pay more and have to foot the bill immediately than have an interest-free loan over five years and pay less money up front for the bill 21 itself with a one-year warranty. So I hope we can recognize the objections. It's status quo or change. The bill is definitely for change. I think it's very positive. And I believe the contractors, 52 11/18/03 - FINANCE - BILL 030660 the plumbers, can work with the Water Department to get as much of this work as they can, all of this work if they can, and put their cards on the table in a private room 6 where businessmen meet with government and work out their differences. Thank you.
I'd just like to actually ask the Commissioner. He keeps referring to a warranty company. He means like an insurance company. A warranty is when you buy something and it has a warranty on it. This is something that is an insurance company basically coming and certifying that if something goes bad, the City will come in and repair it. So that's technically an insurance company. Wouldn't that be a more accurate description?
Well, I don't know. Whatever you want to call it. We call it warranty because we are warranting that if something goes wrong with a property in the 53 11/18/03 - FINANCE - BILL 030660 public right-of-way that it will be fixed. Because they are now paying the same amount of money -- every customer is paying the same amount of money to get that kind of warranty.
According to your own testimony, you had said that approximately 8,000 cases would probably be involved. A thousand of them are being handled by your department right now. And approximately maybe 7,000 are being handled by the private sector as of today. My point that I had mentioned to you before was asking you, if you issue a violation to a homeowner and that homeowner does not address it, that's still going to be abated. That was my biggest -- you tried to drive it on a home run the fact that there are some cases where they're not being addressed. But that's not true. They are being addressed. They are being abated by your own department.
That's correct. We abate them and lien the property. We bill 24 them. And if they don't pay, we lien the property. 54 11/18/03 - FINANCE - BILL 030660
So we do not have any increase in detriment to your existing conditions of your own water and sewer lines, correct?
No. You missed the point about the promptness of correction. What causes the infrastructure, public right-of-way infrastructure, to break down is the delays that occur before a person says, "I'm not going to do it." And we eventually have to go in and do it.
Okay. But once your inspectors issue that violation, they have 10 days to correct that violation.
After that, you have the option of going in and fixing the problem immediately if it is that detrimental to the system, correct?
We suspend the service. That's the option. We suspend their water service. If they receive a notice of defect -- I might add, it's not a violation notice; It's a notice of defect. We have 55 11/18/03 - FINANCE - BILL 030660 addressed that issue, Councilman Kenney, about changing that view of it.
Once they receive a notice of defect, they have a time frame of 10 days, and then it's reinspected. If it still hasn't been addressed, they have another 10 days in most cases, unless it's a severe problem. Like if you see water shooting up out of the street, yes, it would be addressed by suspending the water service. That's how we abate the problem. A lot of cases we don't make the repairs to the water line unless there's a special situation that requires that. But in most cases how we abate the problem is by suspending the water service alone.
If that violation just by shutting off the water does not abate the problem -- in other words, you can still have 56 11/18/03 - FINANCE - BILL 030660 roof drainage going through that system and still causing a blockage. You're telling me that if you know very well that the homeowner is not able to physically pay for that repair, you're going to continue with that violation and not immediately take care of or even shut off the lateral?
If it is a sewer lateral that has collapsed there is no point in shutting the water off necessarily because that's not going to correct the problem because, as you point out, storm water is ultimately going to undermine it. It has to try to go through the lateral. In those instances where we see that there's a danger to public health and safety, we go in and we get a plumber. We don't do it in-house, by 57 11/18/03 - FINANCE - BILL 030660 the way. We go and hire a plumber to go and abate that particular problem and then we bill 4 the property. If they fail to pay, we lien the property. That's how the system works.
There is a built-in process to eliminate and abate those extreme cases where there is possibly total abandonment of the property?
You explained earlier that you possibly could be doing additional. You might not be doing any additional. You might be handling those initial 8,000 cases, whereas opposed 1,000 is being done by your department today. Now you're proposing to do all 8,000.
Those particular ones that we have to go and abate do not necessarily come to our attention until things have gotten so bad that the infrastructure has collapsed.
How would that change the notification process of you being notified? There's a lot of homeowners that still are not 58 11/18/03 - FINANCE - BILL 030660 going to be aware that that program is going to be available to them.
Well, as Chairwoman Blackwell said, she wants us to do an outreach to inform them. And as I mentioned, through our monthly billing --
Can I ask you a question? How many homeowners do you honestly believe know that the HELP line is available?
I don't know if we can debate this. I don't keep statistics on how many people read the flyers. I don't think this is an appropriate debate for me to engage in.
Commissioner, could you make it a point to have your violation notices accompanied by an explanation of the HELP Program forthwith?
Everybody who receives a notice of defect gets information about the HELP Loan Program.
Could you send 59 11/18/03 - FINANCE - BILL 030660 us a copy of that?
Councilman O'Neill, that's our point exactly. If every homeowner has that option, why do you think they're going to the private sector? If only 1,000 are taking it, that's their right. They have the right to choose. They're getting notified.
They're still going to have a right to choose when it's on their property. They should never have been since 1920 responsible for anything in the public right-of-way, and no other water customers anywhere are.
There are more water departments that cover from the home to the main than there are that just cover in the right-of-way.
Councilman O'Neill, I am not aware of any township outside of Philadelphia -- I'm not saying that there aren't any -- I'm not aware of any them that 60 11/18/03 - FINANCE - BILL 030660 do handle the sewer lines in the right-of-way. I am a registered plumber in the entire State of New Jersey, and that department does not handle in the right-of-way. The homeowner is responsible for even that area there.
Well, I disagree with you, okay? In Pennsylvania and in most of this country, homeowners are not responsible for anything under the street. And they shouldn't be. It's a common sense thing when you talk to people. This isn't something the public debates with you. They just say absolutely it's an unfair system. Now, do the contractors have some work to do with the Water Department? I believe you've had some work to do for some time that neither of you have been doing because there is obviously some tension. But that doesn't affect whether doing this is right, putting the right-of-way under the responsibility of the public domain, the public entity. The Water Department doesn't do their own lateral repairs now when they have 61 11/18/03 - FINANCE - BILL 030660 to go in and abate. The Commissioner just said that. There's never going to be public repairs. There are going to be private repairs, and then it's a question of who in the private sector gets the work. That's not the subject of this hearing. If we want to have another hearing and discuss it and have testimony back and forth, we do that kind of thing through resolutions. I'd be glad to help participate in that. But this is about a program that is very clear, very unambiguous, puts the City in charge of the public domain and the homeowner responsible for what is private on private property.
Excuse me, Councilman. In essence, it goes back to price fixing.
See, that's the subject of another hearing. The question is, is it the right thing to do, to have the City, the Water Department, responsible in the street? If there is price fixing going on right now with the HELP Program, that's a different issue, not for today, not to decide 62 11/18/03 - FINANCE - BILL 030660 whether it's better for the City and for individual homeowners to have the City responsible for laterals under the street.
But my point was, if 6,000 people are choosing another way, and they have the option, why are you not letting them choose instead of taxing them on the water bill for an average of one in five that's ever going to have to need it?
I can just tell you that every homeowner I've talked to -- and they've been to senior citizens that have mainly discussed this at senior meetings -- have told me that when they have not used the HELP Program it was because they did not understand it, they did not know how it worked. They were under the gun. They had a plumber at their door and they wound up paying more than they would have paid interest-free over five years that they had to pay all at once. You're making your assertion. That is what has been told by everyone who has gone outside the HELP Program to have these repairs made. I don't think that's the subject of 63 11/18/03 - FINANCE - BILL 030660 this hearing. I think it could be the subject of another hearing, whether price gouging is going on, whether the HELP Program is being run properly, whether it's fair. This has to do with whether we stay with the status quo, which I believe is totally unfair to homeowners, or whether we change it and make it more fair and also have a public benefit to our infrastructure.
Your other point was that the homeowner has a sudden break and they have $3,000, $6,000 worth of cost. That happens every day in the plumbing industry, whether it's a water heater, a boiler. Are you going to take that from us too?
I'm telling you if that boiler were in the right-of-way, which I know it's not, I would be talking about it. I'm only talking about what's under the street. It is basically unfair to have a homeowner responsible for anything on a street or under it. And it's time we recognize that. The fact that the City also gets a benefit is, I think, an added bonus to this. But the 64 11/18/03 - FINANCE - BILL 030660 homeowner should not be responsible under the street. That's the plain and simple purpose of this bill.
And then you're going to warranty at the homeowner's option for an additional fee for the curb trap into the property and water service. That's taking a lot of work from the average plumber that will not want to do the paperwork that the Water Department has.
I didn't think so. The warranty program is being talked about by the Water Department. They still have to go through it. It's not part of this bill. It is something that they are thinking about offering the homeowner, who is now stuck still with what happens on their own property. This bill specifically deals with the street from the curb out or from the trap out and not anything on the property. It just 65 11/18/03 - FINANCE - BILL 030660 recognizes that the maintenance of the laterals are still the homeowner's responsibility, and any breaks or replacements needed on the homeowner's property are the homeowner's responsibility. The warranty program, it is insurance, but it's the kind of insurance that's in the form of a warranty. If you buy a new refrigerator or somebody wants to warrant their old refrigerator, they're basically warranting they'll replace it. But it's just language. It is insurance, no 14 question about it, but it's warranting the replacement if anything goes wrong with what's under the ground. They can't see it. They just agree to warrant it when they think they have enough to form a large enough group. Whether they do that, whether people are interested in buying it is a totally different question. It's not before us today. I think it was good that the Commissioner talked about it, because I know they have been working on it. But right now we're talking about who's responsible under the street. And it will be 66 11/18/03 - FINANCE - BILL 030660 the City and not the homeowner.
I just have one more comment as far as what Jim said about price fixing. My next-door neighbor across the street from my office had a curb trap replaced by the Water Department under the HELP Program. My friend, the neighbor, asked me if I could do it and give him a price. He got in contact with the HELP Department. They did it for $1,000. I could not touch that for $1,000. They had two fellows do the job. They had no safety equipment on the site. There was no ladder.
I agree with you that there could be situations like that. That's not before us today. If there's problems with the HELP Program, we'd love to hear about it. But it has absolutely nothing to do with whether the City takes responsibility under the street. It's whether what is going on and has been going on is fair, or whether it should it be changed to something that is fair. I believe it has been unfair to the person owning the house and it 67 11/18/03 - FINANCE - BILL 030660 should be changed. I think a whole lot of people agree with that. Are we open to discussion later or at another time about whether the HELP Program is right, whether it is the Water Department doing the work when the HELP Program is there, whether it's a private contractor because the Water Department is supervising and becoming involved in it? They're all legitimate issues. I don't believe they're legitimate issue as to whether the City should be responsible under the street.
Good morning, Chairman. I'm Steve Lumkin. I'm a master plumber. I'm one of those other 400 plumbers that's in the City of Philadelphia. The program seems to be designed to undermine the very foundation of our craft. The only thing that distinguishes a plumber right now, as you can see, is that one can work in the street versus someone working in the home. It promotes bootlegging if someone can just work in a home because you can't see that work. But the only thing that 68 11/18/03 - FINANCE - BILL 030660 distinguishes a plumber is one that can go out in the street. And that's the only kind of work that the plumbers have left today. The way I'm hearing the bill, it's not complete. His numbers aren't complete. I believe we need to have another hearing or at least get some more testimony because you don't have enough plumbers here. I just happened to come in on the spur of the moment. I'm listening to it, and I'm saying, "Hey, no 12 other plumbers really learned about this." But if the City would take over laterals, they would be taking over a lot of the fiber which brings our City together. I go out in other neighborhoods and visit people, not because I'm liked; because I'm qualified, Because I'm the one that can do the job. I see the bill is going to extinct some of the persons or the very fiber which this trade is all about. I ask that you either prolong it or have another hearing on it and don't approve it today and have some more plumbers assembled, because we weren't notified. 69 11/18/03 - FINANCE - BILL 030660
Let me just respond to you. I could have had this room 4 filled to the girders and outside with homeowners. It's a no-brainer when you ask a homeowner whether the City should be responsible in the street. The answer is yes, emphatically. However, I also believe that there is going to be more work for plumbers as a result of this, and all the work is going to be done by plumbers, not by the Water Department. So I would disagree with you. I don't know which plumbers are going to do it. That's not my concern. But there will be plumbers doing the work in the street and on the property of the homeowner after this bill, I think, in greater numbers than there has been up to now. More laterals will be replaced. They will be replaced by plumbers. The other part of it isn't germane to this discussion, as to whether or not the Water Department is dealing fairly on the HELP Program or other programs with plumbers. I think we can have a full hearing on that and 70 11/18/03 - FINANCE - BILL 030660 we can learn more about it, because that's still going to be around because the homeowner is still going to be responsible on their property. So the outdoor plumbing that's done, just like the indoor, is still going to be done by plumbers. I believe there is going to be more. We can have an honest disagreement on that. But I hope we don't have an honest disagreement that the homeowner should not be responsible for the repairs under the street.
It just seems to me that this is some sort of device that syndicates doing laterals, because there's only one big company involved in it. They're going to be able to put their big foot down and dictate the rules. It's not fair. People now have the decision to make. Plus that program is already in effect. It's already being done. You haven't identified the persons who really need the work, whether it was senior citizens specifically, whether it was African Americans, whether it was Latinos in poor communities, because some of those 71 11/18/03 - FINANCE - BILL 030660 houses are even abandoned, are vacant or they are scheduled to be demolished or rehabbed.
One thing I know is laterals do not know who owns the house, whether it's a senior, whether it's a person of color. They just break, and whoever owns the house is stuck. They're still going to be stuck if it's on their property. It's going to be the City who's stuck if it's in the street, which is, I think, the way it should have always been.
Excuse me. There's just one other issue. If I do a curb trap in a home, and I do a trap into the property and I get down and the lateral is bad, that looks bad on me when I sold the person a curb trap and I get down there -- and it happens, and the Commissioner will tell you or Kimmer will tell you that that does happen. Then how do I justify myself for replacing the trap and I'm connecting it to something that's no good? How long is it going to take the Water Company to come back and do it? In the meantime, I look like somebody who is bad, who replaced 72 11/18/03 - FINANCE - BILL 030660 the trap, and that wasn't the problem. It's underground. You cannot tell.
My understanding is the trap is part of the City's responsibility. It's from the trap or the curb out.
I have one more thing. Maybe we can create more supportive programs to help the persons that are in neglect or need laterals to get their work done better instead of just attacking the very fabric of what the plumbers are built on, because that's the only thing that separates plumbers from bootlegs is working in the street. Or prolong this meeting or just recess it to another time to get some more numbers together because the Commissioner didn't have his numbers together. He didn't have all his numbers.
I don't care what the numbers are. The question is, what is fair. Let me finish. You asked for something. I'm going to tell you. I don't believe there's any merit into holding something up that still has a year to work on. 73 11/18/03 - FINANCE - BILL 030660 I talked to the appropriate Committee Chair to make sure that we either have hearings or enter into some discussion with the existing problems that you're talking about that may also affect any new program that goes into play. Absolutely. This should be an increase in work for plumbers, not a decrease. But the one thing I know is, it will be a lot more fair to homeowners than it is today. I know that's not an issue that anybody wants to address. I understand your issue is jobs and whether the Water Department is treating you fairly. But I believe it's a separate issue from what's before us today. And I believe there's actually going to be a lot more laterals than the Water Department is talking about because I think a lot of them are bad and just haven't hit the violation point. And it's going to be in the Water Department's best interest to fix them before they do get to that point. So I have no doubts there's going to be more work than less. We're going to debate the Water 74 11/18/03 - FINANCE - BILL 030660 Department's dealing with the HELP Program and all that. The HELP Program is not before us today. Before us is whether we change the responsibility under the street. I'd be glad to have a full hearing on the HELP Program and the Water Department's contracting with plumbers at a future date. It will certainly be long before this program becomes final.
Thank you, Madam Chair. My question is, I guess, for the Commissioner, and maybe the other gentleman can answer. Earlier in your testimony I think the question was asked how do the other municipalities handle this situation. And I believe you said that similar to what is being proposed in this bill.
That is correct. The survey that we've done of about 13 municipalities, 10 of them do the repairs themselves.
Are those 75 11/18/03 - FINANCE - BILL 030660 municipalities in the general Delaware Valley area, surrounding suburban communities, South Jersey, by any chance?
I have the names of the municipalities that were surveyed. Pittsburgh, Allentown, Baltimore, Camden; Louisville, Kentucky; Cincinnati.
Do you know of anything in the suburban counties in Pennsylvania?
Suburban counties, no. We did surveys of larger cities, such as Allentown.
I appreciate that. I was just curious as to whether or not the suburban counties have a similar program that is being proposed here. I suspect that some of the same plumbers that we were talking about probably do some work in the burbs as well. 76 11/18/03 - FINANCE - BILL 030660
I'm from Horsham, and I'm a master plumber here in Philadelphia.
They handle it under the ground in Horsham, but the taxes are so much higher.
That could be debated. I have some neighborhoods in my district which probably the taxes in your township pale in comparison to some of what my people are paying.
Are you talking about business taxes or real estate taxes?
Real estate. And it covers the trash. It covers the sewer services and everything else. But look at what you pay. You can't even live.
Well, I don't know what the tax rateables are in Horsham. But again, I know of many, many neighborhoods in the City of Philadelphia where people who 77 11/18/03 - FINANCE - BILL 030660 have a 16-foot front row house are paying in excess of $12,000 a year for real estate taxes. And that is not just a handful. There are many people that pay that kind of price. I was just curious. So the suburban counties have a very similar program that we're proposing here today; is that fair?
And after this exchange, we're going to move on with our list of those witnesses to testify. Thank you, Councilman. This will be the last question and then we'll move to Miss Naomi Zaslow, Public Relations Director for HAPCO.
Are the homeowners going to be assessed? Councilman DiCicco had a very good point with the frontage. Are they going to be assessed due to the frontage of their property, whether they have a storm and 78 11/18/03 - FINANCE - BILL 030660 a sanitary lateral, or are they going to be assessed a flat fee and then the Water Department eats the cost for a storm and a sanitary or a larger size water --
Right now the program, as I said, isn't complete. The rate structure hasn't been developed. But it's going to be a uniform assessment, just as we do with usage and whatnot. Some people have dual laterals, storm as well as the sanitary. The others have only one sanitary which feeds in it, but they all pay the same rate. We treat them uniformly.
Thank you very much. Ms. Zaslow, Public Relations Director for HAPCO, Homeowners Association of Philadelphia. We'll have someone to pass out your testimony. Good morning. Thank you for your patience. Please identify yourself for the record.
Good morning. I'm Naomi Zaslow, Public Relations Director for 79 11/18/03 - FINANCE - BILL 030660 HAPCO, the Homeowners Association of Philadelphia. Two of my board members, Louis Austin and Harry are here to join me if you have any questions. Thank you. The Homeowners Association of Philadelphia was established 50 years ago in 1954 and has worked to preserve and maintain low and moderate income housing in Philadelphia for its more than 3,000 members. Water, as you have said, Councilwoman Blackwell, is the staff of life and a commodity whose importance cannot be questioned. As your Committee prepares to consider whether to again raise water rates, I know you will agonize, as do our members, on whether the need is great enough to impose more financial burdens on the residents of our City. As owners and managers, our members would appreciate having the cost of replacing service pipes between the connection to the water main and the curb line assumed by the City. The cost of $2,000 to $5,000, although it does not often occur, is very difficult for 80 11/18/03 - FINANCE - BILL 030660 the owners to pay, as you, Councilman O'Neill, have said, and adds to the abandonment of property and the blight that follows. HAPCO would ask for information on the number of properties needing service pipes replaced last year and the approximate cost to owners. Then we would like to know the amount of the increased water rate and the income that would generate. That would make it clear whether the cost to every property owner every year is worth the assistance it would provide to those with water main problems. We have some questions: Will the bill apply to multi-family dwellings? Is the new water rate designed to pay for the City's involvement in other things, like tearing up streets in other places? Does the Water Department recognize property owners' difficulty in paying for water? That difficulty is reflected in unpaid water bills that we know are a problem to the Department. 81 11/18/03 - FINANCE - BILL 030660 We have some suggestions, and they're only suggestions: Philadelphians pay taxes to the State of Pennsylvania. Let the State assist the Water Department. Water rates in the City have increased enormously already. Have the Water Department float a bond for needed funds and repay slowly for that purpose that you're addressing today. Or have the City impose a 1 percent sales tax and funnel funds for that purpose to the Water Department. We also ask that the Water Department stop using shut off of services that impact so severely on residents. HAPCO and its members need and appreciate the services of the Water Department, but property owners also need to be able to pay their bills. We would like to see the assistance the proposed legislation provides for water main problems, but not at a cost that exceeds the expense. Thank you for the opportunity for us to pose our questions, and we hope that 82 answers will be provided.
Thank you very much. I think they were very important and poignant questions. Certainly, we are asking the Water Department if you would respond to the Chair with regard to the issues raised, and we will make it available to Members of the Committee. Let me ask the Committee if any Members want to respond or question HAPCO? (No response.)
Thank you very much. Thank you for your testimony.
Is there anyone else here who would like to testify with regard to this Bill? (No response.)
Seeing none, the public hearing segment is now ended. COUNCIL OF THE CITY OF PHILADELPHIA 83 PUBLIC MEETING COMMITTEE ON FINANCE - - - - Tuesday, November 18, 2003 - - - - Public meeting conducted by the Committee on Finance, held in Room 696, City Hall, Philadelphia, Pennsylvania, on the above date, to consider action on the following: BILL 030660. PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILMAN DARRELL CLARKE COUNCILMAN FRANK DICICCO COUNCILMAN JAMES KENNEY
We will enter into the stated meeting. The Chair recognizes Councilman O'Neill with regard to a motion concerning Bill 030660.
Madam President, I move that Bill No. 030660 be reported out of this Committee with a favorable recommendation and also a recommendation that the Rules of Council be suspended so as to allow first reading at our next Session. (Duly seconded.)
It has been properly moved and seconded that Bill No. 17 030660 be reported out of Committee with a favorable recommendation, and a recommendation for suspension of the Rules so as to permit first reading at our next Session of Council. All in favor say aye. (Aye.)
The ayes 85 have it, and so this bill passes. This will end our public hearing and stated meeting. We thank you all for your attendance. Let me thank Members of the Committee for their patience and all who have come to testify. We certainly look forward to working with you as we proceed. Thank you, Commissioner, as well. Thanks. (Council adjourned at 11:45 a.m.) - - - - 86 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 November 18, 2003, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON FINANCE _________________________ Lisa C. Bradley, RPR