COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, 10/24/00 10:15 a.m. - - - Bill 000355 - Tax Increment Financing District Certification. BILL 000546 - Establishing the Philadelphia Community Reinvestment Corporation. BILL 000180 - Increase Safe Harbor Goals in Neighborhood Benefits Strategy. BILL 000181 - Employment of Low- and Moderate-Income Persons by City Contractors. PRESENT: COUNCILMAN MICHAEL A. NUTTER, Chairman COUNCILMAN FRANK DICICCO, Vice Chair COUNCILMAN DARRELL L. CLARKE COUNCILMAN W. WILSON GOODE, JR. COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 2 I N D E X Page Bill 000355 Jonathan Saidel, City Controller. . . . . . . James Curato, Commerce Director . . . . . . . 82 5 Robert Fina, V.P., PIDC . . . . . . . . . . . 104 Bill 000546 Folasade Olanpekun, City Treasurer. . . . . . 56 Ray Desiderio, Senior V.P., PNC Bank. . . . . 58 Christina Weinmann, Senior Policy Associate 67 National Community Capital Association Mary Frances Davis, Division Director . . . . 70 Greater Philadelphia Urban Affairs Coalition Rick Sauer, Executive Director, PACDC . . . . 73 Robert Sanders, Manager, Sustainable. . . . . 76 Fund, The Reinvestment Fund Bill 000180, 000181 Jahad Ali, Union Carpenter. . . . . . . . . . 169 John Thomas, Businessman. . . . . . . . . . . 170 John Simon, President, UMEA . . . . . . . . . 171 3 COMMERCE, ECONOMIC DEV. - BILL 000355 P R O C E E D I N G S
Good morning. The Committee on Commerce and Economic Development will be starting in a couple minutes. There is a Councilmember on his way, which will give us a quorum, and we will get underway in a couple minutes. Thank you. - - -
Good morning. This is the Council Committee on Commerce and Economic Development. We now have a quorum and we will start today's hearings. I'm Councilman Nutter, chairman of the committee, and to my far right, we have breaking -- breaking new ground today is Councilman DiCicco, leading a sartorial effort to have a relaxed dress code at Council hearings; Councilman Goode; Councilman Ortiz is in agreement with Councilman DiCicco's new look; as well as Councilwoman Tasco; and Councilwoman Reynolds Brown. There are four bills before us this morning. We have a couple logistical hoops that we're going to try to jump through and accommodate 4 COMMERCE, ECONOMIC DEV. - BILL 000355 a couple of people. At the end of the day, we will get all of the business done, and I've worked out with Councilman Goode that we will initially hear testimony from our City Controller, Jonathon Saidel, on Bill No. 000355. After that testimony, we will then go to Bill 000546 so we can hear from all of the witnesses on Councilman Goode's bill, and then the other bills will be called up after Bill 546. Is that in accord with the understanding of the rest of the committee? Okay. The clerk of the committee will read the title of Bill No. 000355.
Bill No. 000355, an ordinance amending Chapter 21-1400 of the Philadelphia Code, entitled "Tax Increment Financing Districts," by providing for certain additional requirements for Tax Increment Financing District project plans relating to a certification statement, good-faith efforts to provide employment opportunities for youth, and to provide contracting and employment opportunities for minority, female, and disabled business enterprises and individuals and the filing of 5 COMMERCE, ECONOMIC DEV. - BILL 000355 certain documents, all under certain terms and conditions.
Good morning, can we have the Controller at the table for Bill No. 6 0003556789. (Witness comes forward.)
I have just a quick statement, and then I'll certainly be available for any questions that you may have, Mr. Chairman, or the other Council people. I come before you today to offer testimony on Bill No. 000355, which would provide additional requirements for Tax Incremental Financing Districts. I applaud Councilman Nutter and City Council for focusing on this important subject. As you know, Tax increment financing allows the City to finance projects by issuing bonds or notes that are repaid by the increased revenues resulting from improved property values and business activity. Ideally, tax Increment financing encourages a project to move forward 6 COMMERCE, ECONOMIC DEV. - BILL 000355 where it would otherwise not and then help with funds of projects for future tax revenues that would not have come to the City but for the tax increment financing. City Council's considered and approved more than twenty Tax Increment Financing Districts in the past five years, from recently completed development of the landmark PSFS building into a premier hotel to the soon-to-be-completed conversion of the Schmidt's Brewery site from a blighted eyesore to a neighborhood shopping center. But I know this legislative body has been frustrated when considering requests for TIFs. Each time a new TIF request comes before this Council, you are told that but for the TIF, the project would not move forward, and that each prospective TIF deal will, in the long run, be a winner for the City. I know you wonder if projects could move forward without the TIF, I know you question whether the City uses TIFs to encourage projects based on a grand economic development plan, or whether TIFs have simply become entitlement that any developer seeks before 7 COMMERCE, ECONOMIC DEV. - BILL 000355 moving forward with any deal. Government is often asked to subsidize private enterprise through direct governmental grants, tax abatements, infrastructure improvements, and other expenditures. In theory, government benefits if its investments produce a positive, sustained, and widespread private market reaction. The test for whether public investment should be used to encourage private investment must then compare the costs asked of the public to the benefit of the public can expect to derive from that particular project. Among other provisions, Bill 000355 would require the Mayor to submit to Council a statement signed by the Controller, Finance Director, and Executive Director of PICA endorsing the revenue and job projections involved with a given Tax Increment Financing District. I think this could be a part of the strategy to help ensure the economic development efforts of this city -- and specifically TIF projects -- move forward based on sound assumptions. But I fear that such an endorsement alone would do little toward helping the Council 8 COMMERCE, ECONOMIC DEV. - BILL 000355 achieve its goal of guaranteeing that it is acting in the public's best interests in these matters. First, unless we find a way to actually look into a developer's heart, we will have no way to truly determine if a given project would move forward without a TIF. If a developer tells us that a deal would not move forward but for the TIF, we will still be left to take the developer at his or her word. Even if I suggest that the City no longer needs to TIF hotels, only the individual developer truly knows whether or not he or she could build a new hotel without a TIF. Second, I can certainly examine the specifics of a given TIF deal to determine if the revenue and job projections will result in a deal that benefits the City over a long term, but I would never be able to look into the future to determine whether the revenue and job growth will occur, as projected. Even if I endorse the revenue and job projections, I could only predict economic downturns or industry conditions that may be cause those revenues or jobs to wane.
I do believe that with a few changes, this legislation can achieve its goal of helping 9 COMMERCE, ECONOMIC DEV. - BILL 000355 to assure this Council that it is acting in public's best interests when considering tax increment financing legislation specific. I suggest four specific changes: 1. The City should adopt an overall economic development plan designed to support businesses and growing industries and businesses that create a significant impact on local economy. With such a plan, the Administration and this City Council could then develop criteria to help guide which industries the City is willing to subsidize, how much the City is willing to contribute for each new and retained job, and where to target subsidy assistance within the City's neighborhoods. Similarly, a plan would include an overall reevaluation of our tax structure to encourage economic development that would naturally eliminate some of the need for targeted assistance. 2. Philadelphia should follow the lead of cities like Minneapolis, which is considering proposing application fees of $5,000 to $50,000 for developers who propose TIFs to help fund economic-risk studies for the TIF project. Such a 10 COMMERCE, ECONOMIC DEV. - BILL 000355 measure would help ensure that only serious developers apply for TIF assistance, while providing necessary funding for the City's due diligence. 3. The City only support a TIF if it is accompanied by an agreement between the City and the subsidized developer that indicates the conditions upon which the City shall terminate a tax abatement or request repayment of all or a portion of tax savings received if the developer fails to meet agreed-upon job or tax revenue growth. Indianapolis employs such an agreement, which is called a "claw-back agreement," to make sure that the city protects its investments. 4. Finally, as we consider the ailing financial situation of the School District of Philadelphia, we must look to hold the District harmless when considering new TIF projects. While it is true that we are not taking away from the District to do a TIF deal, the District customarily gives up more than half of its future taxes, but must be repaid at a much slower rate that the City because of the different mix of taxes collected by each entry. In the future, we 11 COMMERCE, ECONOMIC DEV. - BILL 000355 should consider only using the City portion of the real estate tax for TIFs or, at the very least, make sure that the District's return on the TIF is paid back at the same rate as the City's return. I will be pleased in the future to work with Council to help ensure that tax increment financing is used in the most responsible manner to encourage economic development in Philadelphia. I thank you for your attention to this matter and, again, applaud you on your efforts to focus concern on such an important issue.
Thank you, Mr. Controller. Are there any questions for the Controller? (No questions from the committee members.)
Mr. Saidel, I would only ask if you could provide any additional information on -- you made mention in your testimony about process and procedures they use in Minneapolis as well as -- what are some of the traditional methodologies that are used to evaluate the projections that are often laid out 12 COMMERCE, ECONOMIC DEV. - BILL 000355 in these project plans, or how would you get to the essence of, you know, do the numbers make sense on this particular deal, will the jobs actually materialize. Again, I'm not asking anyone to make a guarantee that things are going to work out. We know people going into business have great ideas, have the best of intentions, but often things, for not even bad reasons, don't always work out. So how do we, I guess, ensure that the project plan is in fact viable?
Indianapolis is a -- I use in many cases as a good starting point when you look at an analysis. They have an overall economic plan not only for housing, but for economic development in the City of Indianapolis. And what they have done, and what we have suggested over a period of time, is you evaluate the type of industry that can grow and prosper in a place like Philadelphia, and then when you look at the different TIFs, you then begin to look at what types of industries that you think not only accelerate that production in those particular fields, but increase the job growth in those 13 COMMERCE, ECONOMIC DEV. - BILL 000355 areas. And in Philadelphia, fortunately, I haven't seen an overall economic plan in this city for a number of years upon which to then incorporate where we should give TIFs, the type of TIFs to the different types of industries we'd like to attract. If you can begin to attract businesses in Philadelphia, say, in the health care and related industry fields that we are well known for, and then look at how that domino effect of having that industry in Philadelphia, coupled with the industries that are already here, it is much easier to project the job growth in that particular field and the basis upon our return of investment by continuing that segment of our population of our economic development to be healthy and move forward. In many cases, when you look at the series of TIFs in Philadelphia that have been accepted in Philadelphia, they are a hodgepodge of different types of development schemes, without any overall sense of the impact or the overall ability to get a return of investment as to what would be good for the City in total. 14 COMMERCE, ECONOMIC DEV. - BILL 000355
Yes. To the Controller. The thing that bothers me about the TIFs is that there's a sense of entitlement among the developers, it seems, and it seems that cities posture. The Administration, both the previous one and this one, have taken it that if you don't approve a TIF, then you are really anti-business, anti-job development. And so the individual developers and this Council have really been put into -- this Council have been put into a posture of really defensive and not really asking the questions as to what benefits, what payback, what does the City taxpayers get for its abatement of taxes for such a period of time. And like you said before, we don't have a targeted strategy to see what are the specific economic development needs that we have and who we should be using TIFs to attract to get to the City of Philadelphia. If you have a garage that you need, before, you built the garage, but now you ask for a TIF. Why not? You know, it's given almost automatically. So why not ask for it, even 15 COMMERCE, ECONOMIC DEV. - BILL 000355 if it's right in the center of the City, where you know that it's going to do business. What -- you know, we are put into this situation and we don't have the mechanisms really to go into the study of each and every one of them that comes before the City of Philadelphia, you know. And I wonder what process does the Controller's office could offer us along those lines.
I think you're absolutely right, Councilman Ortiz. I have never seen a development scheme sent to me by a developer in Philadelphia that did not have a TIF mentioned, did have any type of tax abatement mentioned. It has not become -- it was supposed to be a way for us to compete with other major cities for multinational corporations, it was supposed to be a way for us to compete, to reduce the tax burdens of Philadelphia, in competition with the suburban counties and South Jersey, but it has become almost a fait accomplis that within their presentation, all I find is that they already are getting -- they're already considering in their numbers all types of tax breaks that we should use 16 COMMERCE, ECONOMIC DEV. - BILL 000355 as leverage to bring businesses into the City of Philadelphia. And I think that's a problem, and eventually you have to say no to some TIF to show that you won't be taken for granted. And you mentioned a garage in Center City, which is a TIF that I am not in favor of, and I think it's a perfect example. I am sure someone else will open up a garage in Center City without a TIF. But you always get, as you know, in government, something minutes before you have 14 to vote on it and you say -- you're told that if 15 you don't give the TIF --
And the wrong message will be sent, we'll be known throughout the world, the universe.
But I think the primary emphasis and what I can certainly help with, as is mentioned in your bill, is to look at the job 17 COMMERCE, ECONOMIC DEV. - BILL 000355 estimates, to look at the cost estimates. But what's really necessary to even get to that point is to have an overall economic strategy as to what type of businesses you're going to try to attract. Because if you have an overall strategy, then you can say, I'm going to attract X types because that dollar investment in a TIF 6 is almost a public subsidy and has a multiplier effect because that's the type of businesses we want to try to foster in Philadelphia because we already have a basis for that. So I have never seen, in my years of being the controller, some overall economic plan that can benefit South Philadelphia, North Philadelphia, West Philadelphia, Northeast Philly, and the River wards by having a total look at the economic scheme that we need to have in Philadelphia.
It is much more a blueprint for, Well, we'll put a parking lot in Center City, we'll put this over here, we'll put this over there, but there's no real tie-in of economic benefit to the people of Philadelphia for 18 COMMERCE, ECONOMIC DEV. - BILL 000355 the TIF.
I guess I have more of a statement than a question. When you talk about overall strategy, I certainly agree that we need to have something. I mean, I'm five years on the job here and most of the TIFs that have been awarded are in the 1st Councilmatic District, which I represent. And I am of the opinion that on the large scale, they are necessary. And I'm not a developer, I'm not into the fine-tuning of developing the TIF and where the financial gap may be that requires a TIF; I basically rely on the information that comes to me through the good folks over at PIDC or the Administration. But I think the strategy should be, maybe, and maybe it's the role of this committee, is, I always believe that the Planning Commission 19 COMMERCE, ECONOMIC DEV. - BILL 000355 should have a greater role in this city in determining the strategy for economic development, and incorporate what the Planning Commission's vision is, along with the Commerce Department and PIDC, to develop this -- such a strategy. To put a parking garage at Eighth and Market for the purpose of what we were hoping to be the DisneyQuest development, in my opinion, made a lot of sense. I still think it makes sense to do a garage there. Now, whether the Parking Authority or a private development should do that, that remains to be seen, because I do see the need for parking in that section of Center City because it's a growing community. But I think that we have, as a government, really not utilized the Planning Commission or put them to the task of not just developing grandiose plan of what the City will look like in twenty years, but actually be a working partner in attracting investors and developers and working in conjunction with them and the Commerce Department and PIDC to develop not only the structural plan for that -- for those communities, but also the financial and economic 20 COMMERCE, ECONOMIC DEV. - BILL 000355 plan. Because I think one goes with the other. I look at some of these books that the Planning Commission has put out over the years, and it's really spectacular what their vision of the City was, but are they doable, can we bring in the right people to make these things become a reality? So I think that, again, this may be the role of this committee to, in the feature, when we look at TIFs, but also to incorporate the Planning Commission in that discussion as to what they foresee the City's growth and how we may want to develop certain neighborhoods, even outside of Center City. Because, you know, you have to do it block by block by block, and I think Center City is, for the most part, in great shape. But where do we go beyond Center City and how do we attract private developers to put money into those communities. Maybe TIFs are worth exploring but, again, I think it's something we may want to challenge this made by this committee to play a greater role in the future.
I think, Councilman 21 COMMERCE, ECONOMIC DEV. - BILL 000355 DiCicco, that it is always been the history of Philadelphia that we have a thousand boards and commissions but they never talk to each other. We have a series of initialed organizations that never talk to each other. And I think that one of the things in the responsibility of the Council, then, is to draw all of these individuals so there's a coordinated plan, not only of economic development but how that economic development impacts on the re-creation of neighborhoods and blighted areas that I think are indispensable to the future of Philadelphia. If you coordinate the Housing Authority with the Parking Authority with the Planning Commission with OHCD with all of these thousand different organizations, which seem to drift on their own, and many do a nice job in their own particular venue, but there's no coordinated effort between the RDA and a variety of other things, then I think you have a patchwork of economic development and a patchwork of housing. But if you can put them together and have an overall strategy, an overall plan, then not only 22 COMMERCE, ECONOMIC DEV. - BILL 000355 does that TIF benefit that particular developer, but it benefits the entire scheme of where we want Philadelphia to go. And then you can argue whether a parking garage on Market Street should have been built by a private developer or whether the Parking Authority, which was originally created to create parking in areas where no parking developer would ever build a parking lot, should go back to that original purpose. But until you bring everyone together to have a common goal, you'll never really know the impact of a TIF or the variety of different ways that we can try to attract businesses in a healthy environment.
And that's the point I was making, was that the communication between the various agencies just doesn't exist. I mean, everyone is off in their own direction -- with all good intentions, but it just doesn't come together, and that is major task. It's breaking old habits, it's traditional that the Streets Department believes that they have a certain jurisdiction and they don't talk to the Planning Commission or they don't talk to the Department of 23 COMMERCE, ECONOMIC DEV. - BILL 000355 L&I until something happens. And, again, I think that's our role, either as this committee or as the full Council, to make some of those changes, because I don't think we'll ever really reach the potential that we -- I think we should be able to reach, or could reach, unless we start really pulling together. And thank you for being here.
And it was a pleasure driving you around for four years when I worked for you. (Laughter.)
If you want to become councilman, drive the Controller around for three years, and the next step up is Councilman.
That might actually be a step down. Councilwoman Reynolds Brown is next and then Councilman Clarke after her. I have one piece of information that I need to share in the realm of full disclosure. In 24 COMMERCE, ECONOMIC DEV. - BILL 000355 addition to our session, as is always, they're not only held in public but they're normally taped by stenographic services, I am participating in a project. A gentleman over to my left, your right, Charles Seymour, Jr., who's the proprietor of Claushdor (ph.) Productions, is going to be following me around for a couple days. And so I am, in addition to these microphones, I have a wireless mike on my tie or lapel, which will have no impact on my behavior whatsoever. But for those of you who may dare to talk to me for the next couple of days, just understand that there is a gentleman following me around. We won't, naturally, engage in anything inappropriate, but full disclosure is always best. Having said that, Councilwoman Reynolds Brown.
I would like to flip to another argument that's often given on why it's valuable to support TIFs, and that is, at some juncture, the School District of Philadelphia benefits. And I have reluctantly been persuaded 25 COMMERCE, ECONOMIC DEV. - BILL 000355 to support TIFs, but I move to vote for them because, at some juncture, the School District of Philadelphia benefits. You make a very specific recommendation in number 3, last sentence: "In the future, we should consider using only the City portion of the real estate tax for TIFs; or, at the very least, making sure that the District's return on TIFs is paid back at the same rate as the City's return." Whom would you suggest would be charged with assuring that? Where would that packaging or those numbers-crunching happen?
Yeah, the argument has always been that if it's a vacant land, then the School District wasn't getting any money -- meaningful money to begin with; therefore, if you give a TIF, the School District wasn't getting its portion of real estate tax that could eventually be, after a five-year period of an abatement. As an example and that in the future, the School District would get this money. And that's on the -- that's based on the assumption that the TIF is a good deal. That's based the on the assumption that nothing COMMERCE, ECONOMIC DEV. - BILL 000355 would be done on that property but for giving a TIF.
The other reality that we face is that the City of Philadelphia gives a break on real estate taxes, but in many cases, we get back the money in gross receipts tax, we get back the money in net profits tax, we get back the money in City wage tax if there's additional employment. None of those taxes that we get money back by fostering a TIF goes to the School District of Philadelphia; it needs the real estate taxes or it gets nothing. So it has always been my assumption that you cannot guarantee that a TIF is going to work. And it may be that in three or four years, you find out that that TIF -- that the TIF was not necessary. Therefore, if we would have had someone who built on that property without the benefit of a TIF, the School District would have gotten their portion of the real estate taxes. So in many ways, what I'm stating to Council is, maybe we ought to give them some funding out of the General Fund, because we are 27 COMMERCE, ECONOMIC DEV. - BILL 000355 getting benefits by additional employment, additional business taxes, and a variety of other taxes that come to Philadelphia that come into the General Fund but never see the light of day in the School District's fund, because they either get real estate taxes or they get money from the State or the federal government. They don't have an income tax to speak of and they don't have a City wage tax to speak of, and they're not an independent taxing authority, as they are in other school districts throughout Pennsylvania.
And so then would PIDC be the agency charged with that scenario?
It could be the direction of the bill that however the functioning unit that you prescribed under the new legislation would be, that pooling of funds for the TIFs, that it could come out of PIDC, it could come out of our General Fund as a -- as after the end of the fiscal period, you estimate how much money the School District might have gotten and then give them a certain portion of that every year, just to keep them going. You know, theoretically, if we TIFed 28 COMMERCE, ECONOMIC DEV. - BILL 000355 every property in the City of Philadelphia, the School District would have no money except for the money get they from the State. So it may work in five years, but they would not have any funding base, because their primary funding base is the real estate taxes.
Mr. Saidel, first I have one quick question and, I don't know, maybe -- I see Mr. Fina here, and I don't know, he may be the best person to answer this, but I'll ask you this: What's the benefits associated with the TIF ordinance versus a 108 loan?
Well, 108 loans are limited, and usually they're done in combination. Usually, it -- I've never seen somebody get a TIF 29 COMMERCE, ECONOMIC DEV. - BILL 000355 who didn't get the 108 money. You know, one is not directly through the City of Philadelphia, and the TIF is -- directly affects our taxing power by effectively forgiving taxes for a period of time, and then that money is used along usually with 108 money. And that whole mixture that usually comes in to a developer when -- when some of these deals are approved by Council. And I've never seen one without the TIF and 108 money. But they're just different categories, but the TIF is a taxing provision that directly affects our revenue stream as -- you know, HUD 108 money is federal.
I just recall instances where we decided not to do a TIF, and the Administration felt that it may be appropriate to provide a 108 loan.
Well, it depends on the availability of the 108 money. We use different -- there's supposed to be different criteria for both of them, but anytime I've ever seen a TIF, they have 108 money, but you can find areas, even in your district, where 108 money has been available, but a TIF was not something that was 30 COMMERCE, ECONOMIC DEV. - BILL 000355 pursued.
With respects of the legislation that we speak of today, it talks about opportunities for low-income individuals low- and moderate-income individuals in neighborhoods throughout the City of Philadelphia. In reality, I would say probably 99.9 percent of these TIFs will ultimately pay prevailing wages. Do you think -- do you agree with that assumption?
I have not seen any ones that don't have prevailing wage. I --
So when you're talking about prevailing wages in this particular city, you're normally talking about unions.
Realistically, as it relates to the goals of this particular legislation and, actually, one of the bills that we speak of a little later on in this testimony today, is it realistic to assume that we would be able to meet these goals given the number of MBE, WBE individuals or low-income and moderate-income individuals in the various neighborhood throughout 31 COMMERCE, ECONOMIC DEV. - BILL 000355 the City that are members of the union across the board?
I think that has to be the case. I think that we have to make every effort to make sure that we meet the goals. I think that if you look at where we've been given TIFs for the last number of years, I have always believed that TIFs and 108 money should be used in areas that partly you represent and you've been, you know, you've been pushing TIFs in the Cecil B. Moore area, which I applaud. I think that if you can utilize economic development schemes that truly are areas where someone may not want to build a development or build a business opportunity within an area that they wouldn't go unless they were given viable entitlements by the City if Philadelphia, I think that that is a perfect example of where those opportunities should occur. And prevailing wage and union benefits, to me, is not something that is ever arguable. That has to be the case in any development or housing scheme the City of Philadelphia.
Well, if those 32 COMMERCE, ECONOMIC DEV. - BILL 000355 individuals -- I guess I'm more to the workforce. In reality, the majority of the trades have a very low number of minority participants among its rank and file. And if we're requiring a certain number under this legislation, how realistically are we going to be able to achieve that goal if people just are not in those particular trades?
I remember, you know, when I had the pleasure of being associated with the Housing Authority a number of years ago that we set up an agreement with the building trades that they would actively recruit tenants and children of tenants within the housing developments to become journeymen, eventually journeymen within the trades, and I know that that's been expanded. I think one of the areas for this type of a bill is that for the building trades and for anyone's that involved in the construction industry, that they have to actively recruit minorities and women to be involved in the trades and give them an opportunity to receive the benefit of union pay in the City of Philadelphia; and, therefore, move forward and look at that also as an investment opportunity to bring people up 33 COMMERCE, ECONOMIC DEV. - BILL 000355 from being working poor to middle class and making them stakeholders in the community and giving them an opportunity to have the same respect and opportunities that you and I have had, and lucky to have, in the City of Philadelphia. But that has to be -- I think that has to be something that's worked out and actively recruited. If somebody wants our benefits and our forgiveness for taxes, then they're going to have to make every effort available and show us every effort available to -- so that people get a prevailing wage and, I think, be a part of the trade and workforce.
Should the developer be responsible or the trades? I mean, in a number of these particular trades or -- well, all of them, actually, there are certain requirements above and beyond what some individuals may have in some of these communities. And a number of business agents that I've met with over the years have indicated a willingness to do that, but people aren't qualified for the various apprenticeship programs. And I don't see any mechanism that gets 34 COMMERCE, ECONOMIC DEV. - BILL 000355 them into the system that will allow them to pass the apprenticeship test and ultimately become a journeyman. And I'm wondering who's -- at some point, who's going to take the bull by the horns and say we need to provide these particular opportunities on the front side so that people will benefit on the back side. The Housing Authority, because Mr. Green has been very aggressive in that, I agree with you, incorporated a relatively decent program, but that's a small percentage of the population. And at some point I'm wondering, should the City of Philadelphia step forward, or should we require that the developer step forward, should we require that the various building and trades step forward and provide some sort of training mechanism that allows these people to get the appropriate educational skills to go into the apprenticeship program and ultimately placement. And that's my --
I think, Councilman, it's probably a combination of both. I would always hold the developer responsible. Anybody who's 35 COMMERCE, ECONOMIC DEV. - BILL 000355 getting a tax break from the City of Philadelphia should be responsible to meet the levels that we impose as a condition upon receiving that tax benefit. Though, again, I've seen the IBW, I've seen a number of the building trades that are now, much more than they were 10, years ago, 9 actively beginning to recruit the minorities of 10 all persuasions. And if need be, there should be 11 ongoing classes, preschool classes, before they 12 take the apprenticeship test so that people can 13 have an opportunity in the long run to get the 14 good-paying jobs that we're giving tax breaks for. 15 But I think a developer, anybody who's getting a break from us should be held accountable if they want that break, and that should be a condition.
Yeah. 36 COMMERCE, ECONOMIC DEV. - BILL 000355 Thank you, Mr. Chairman.
Mr. Controller, all of the data I've seen in terms of -- in the direction that Councilman Clarke was talking about, in terms of projects that have been done in the City of Philadelphia, Center City, the hotels, the other construction that has taken place through the use of either TIFs or Office of Housing and Community Development grants and so on down the line, they have shown they have shown -- the data has shown that most, the overwhelming majority of individuals that come in and work in those projects are from outside of the City of Philadelphia. And I don't mean 60/40; I mean 70, 80 percent of the individuals outside of the City of Philadelphia. And that says to me that most of the monies that are being taken in by the developer and the workers are -- is just going outside of the City of Philadelphia, obviously. And I'd like to see that change. I'd like to see the figures really correspond in which we have the overwhelming majority of citizens of Philadelphia get those jobs in those projects and a small 37 COMMERCE, ECONOMIC DEV. - BILL 000355 minority from outside. And I think we have to strive and I think we are going to have to legislate that developers really adhere to that. And I -- and this is not talking about minorities; this is talking about citizens of Philadelphia working of all of the different racial and ethnic groups in the City.
Well, I think you have to watch the legality of that type of legislation. In many cases, the unions have open shops and they'll come in and a developer will say, I need laborers, 20 electricians, and they'll grab 14 from a pool. So they may not necessarily be 15 living in Philadelphia, but I'm more than happy to 16 take their wage taxes while they're working in 17 Philadelphia. Though I've always believed -- 18
Well, I'd like to 19 get the wage taxes, but also I'd like for the 20 aggressive -- (Unintelligible, parties talking over each other.)
Yeah, and the investment is placed back in to pay your mortgage and living in a vibrant community within Philadelphia. 38 COMMERCE, ECONOMIC DEV. - BILL 000355 I would -- if I had my druthers, I would just hire Philadelphia folk, but I don't know -- I don't know if that could meet any type of legal muster, and I think that's something that should be looked at. And when you place a paragraph like that in a piece of legislation, you have to make sure that it can, you know, pass the constitutional muster and legalities that may exist in the Commonwealth. That I don't know. But I think we are all in agreement that we'd like to hire Philadelphians first for everything, but the object is -- I believe that. But how you do that in a legal matter, I think, would have to be looked at very closely.
Well, the reality is that the huge overwhelming majority of the individuals that are being hired on these project are not Philadelphians.
No, I -- years ago, I was in favor, Councilman, where, you know, you have a contractor that's competing in an RFP that's located in Philadelphia with a contractor that's located in New Jersey and we never gave that contractor in Philadelphia credit for paying wage 39 COMMERCE, ECONOMIC DEV. - BILL 000355 taxes to his employees or business taxes. And I was told years ago that we could not favor contractors located in Philadelphia in comparison to an RFP.
I think as long as it's not done race-specific, I think constitutional muster can probably be passed.
Councilman Clarke has a follow-up and then Councilman DiCicco.
Thank you, Mr. Chairman. Mr. Saidel, in your response to both Councilman Ortiz and myself, you talked about the developer being responsible to some degree for the workforce. Isn't it true that the developer traditionally hires a general contractor, that general contractor hires the subs, and they are ultimately responsible for the workforce. And isn't it realistic to say that the developer couldn't, frankly speaking, care where that 40 COMMERCE, ECONOMIC DEV. - BILL 000355 individual who's working on that project lives, what zip code that person is, what color that person is, as long as they can come on time and under budget?
I think that's the case, but if you make a condition upon the developer getting a tax benefit, the power of funds will flow down to an enforcement provision that you necessarily want within that law. I mean, if you give a developer a $5 million tax break and you condition it upon X, Y and Z, if you're that developer, you're going to make sure that whoever your subs are, that they live within that compliance. And then what we should do as a city is to go and examine their books and records to make sure that they're within the compliance and we have a claw-back provision.
So you're saying that the contractor shouldn't have any responsibility for --
Oh, no. I think that -- you know, you follow the dollar. If you're giving a tax break to the developer and that development would not occur but for the TIF or the 108 money, 41 COMMERCE, ECONOMIC DEV. - BILL 000355 then the contract, the GC would not be working but for the TIF and but for the 108 money. So if you're giving a tax break to the developer, then it's the developer's responsibility to make sure the GC follows those rules and regulations that are conditioned upon that tax break. If they do not and you take away the abatement or take away the 108 money, then the GC loses his employment too. So the economic benefit is what creates the enforcement of rules and regulations. And I think, you know, people's profit motive actually makes them better people.
Thank you, Mr. Chairman. Just to follow up on the question raised by Councilman Ortiz, or the comments raised by Councilmember Ortiz. A year or two ago -- Mr. Applebaum's in the room, I see him -- I thought we had a conversation that when we discussed -- when we make purchases or do contracting we were able to -- or I thought we 42 COMMERCE, ECONOMIC DEV. - BILL 000355 were looking at the possibly of giving a point preference, more or less, for those companies that were Philadelphia-based, all things being equal.
I'm not sure if we ever got to that, but I thought we were working towards that goal and if there's a way in which we can legally attain that --
Well, all things being equal, that's -- we could that, because then we the choice between someone giving us -- both giving us the lowest bid, I would always pick the Philadelphia person. But the reality is, as you know, Councilman, that it costs more money to do business in Philadelphia than it does to do business out in Perry County. So if you're going to buy goods and services in Perry County, nine times out of ten, that bid request will be lower. And that's -- I've always had a problem with that, but the legal department has always had a problem with that type of issue.
Not to take off on a different subject, but when we're talking about 43 COMMERCE, ECONOMIC DEV. - BILL 000355 contracts, and I think we got into the discussion a year or two ago when we were speaking about buying cars for our fleet. I think we were purchasing the cars from a dealer in New Jersey, and if I'm not mistaken, I think the cost of the cars was maybe $10 less per car at the New Jersey dealership than it was with the Philadelphia dealer. But by law, because it was the lowest bid, we still had to go there, and I was wondering if there's a way, you being an attorney, maybe you can help us, if we could do some sort of a point preference because of the reasons you stated. We are getting the wage taxes out of that dealership, the sales taxes are staying in the City and in the Commonwealth. Shouldn't those two factors alone weigh into the cost of buying the car versus buying it in New Jersey or in another state? You know $10 a car, I see Mr. Applebaum shaking his head.
I think they should, but the -- and I'm sure you can ask the Commissioner, but the manner in which RFPs are presented, they have never been Philadelphia-first RFPs. You know, based on the lowest, we're supposed to get 44 COMMERCE, ECONOMIC DEV. - BILL 000355 the best bid for the most -- the lowest bid for the best qualified within the terms and conditions of what we're looking for. But I would much rather deal with Philly folk than -- because -- and I do the same thing with New York. When New York comes down and wants to take our money and invest it, I asked them the last time some company in Philadelphia got business out of New York. But in the end, I've got to look at the competition, regardless of geography. And that's unfortunate.
And maybe we should get the Pennsylvania Society to have their --
I always wondered about that, you know, all the law-makers going to New York to spend their hard-earned money. Whatever. And the other comment I wanted to make about -- with working with developers and trying to encourage them to hire Philadelphia contractors 45 COMMERCE, ECONOMIC DEV. - BILL 000355 is, in my experience, dealing with many of the developers in my district, and particularly those developers that were requesting a TIF, I was able to develop a relationship with those developers over a period of time, and, more or less, was able to encourage them, again, all things being equal, that it would be in not only their best interests but in our best interests if they would look to Philadelphia contractors and subcontractors first. And I'm happy to say that in the majority of those cases, even with the entertainment center, which is probably one of the biggest projects we're undertaking, the Simon folks have entertained those referrals, or at least the request to look at Philadelphians first. And in most cases, they did hire Philadelphia-based companies to do the architectural work, subcontracting, engineering work; they did that first. All things, again, being equal, I wouldn't want them to accept an inferior contract in terms of what they needed for their project just because that contractor was a Philadelphia company. But there are so many of 46 COMMERCE, ECONOMIC DEV. - BILL 000355 them here, I'm sure in the scheme of things, they could find someone or a few of them to pick from. So that's the kind of thing that, as a District Councilperson, I'm able to -- when we're talking about the TIF and they're seeking my support on a TIF, I'm able to work that into the dialogue of why I would be willing to support, you know, when I'm willing to support the TIF. And thank you again, Mr. Controller.
Let me mention quickly that Councilwoman Tasco has a question. Given the discussion and the direction that it's going, I should mention that many of the ideas and concepts that are being discussed are actually very pertinent to another bill that will be heard today, which is Bill No. 000181, which lays out certain additional requirements on contractors for City -- to get City work, one of which is provision that deals with the issue of a certain percentage of workers on the job who would be low- and moderate-income people. We'll have an extensive discussion, I'm sure, on that particular bill and also on the percentages that are laid 47 COMMERCE, ECONOMIC DEV. - BILL 000355 out. I know Commissioner Applebaum is here to discuss that particular bill, but that bill may get at some of the -- many of the issues that my colleagues have just been discussing with regard to contracting opportunities for workers and businesses. Councilwoman Tasco. Councilwoman, hold on for one second. Councilman Ortiz, we actually had a couple of yields while you were in your questioning a while ago, which went on extensively. Were you finished, or do you want to come back?
All right, I'm just trying to keep track of everything.
It's on his yield too. I think it's the same question.
In terms of developing the specifications which we would require of the developer to meet -- for instance, the lowest responsible bidder -- how do you -- couldn't we define what "responsible" would mean 48 COMMERCE, ECONOMIC DEV. - BILL 000355 in terms of, saying, Well, if it's a Philadelphia company, it has a benefit added to Philadelphia for getting the Philadelphia company. Don't we establish our own criteria? Or are we subjected to State laws or something like that?
Yeah. Councilwoman, you know, as I mentioned years ago, I've always believed we should hire and buy Philadelphia first, because not only is there a benefit that we get goods and produce and product and development out of a company that's located in Philadelphia, but we then reinvest our payment for that product back into our community to keep our businesses open. I mean, we spend, you know, 6, $7 billion a year on a variety of different projects. I can't imagine why we would need to buy anything outside of Philadelphia businesses. And then we benefit greatly by increasing the employment pool because of the reinvestment of those tax dollars back into those communities by utilizing those businesses. But I have never found a mechanism to stay within the parameters of the law, as to the State law, in relationship to those type of bidding procedures. Now, I would be more than happy to 49 COMMERCE, ECONOMIC DEV. - BILL 000355 approve, as the controller in the pre-audit function, anything that would pass legal muster to give Philadelphia first people an opportunity -- to compete, actively compete for their goods and services that we need, as well as the variety of other things that we purchase almost on a daily basis. It would be great if we could just plow that money that we take out of their pockets back into a business located in Philadelphia so that they can continue to prosper and hire more people. And that domino effect, you know, then increases our tax flow in the long run, because as they hire more people, the less people that need government assistance, more people that are paying wage taxes, they're paying their mortgages, their gas bill, their water bill, and a variety of other things. And I think we benefit from that in a multiplier effect. How you do that within the legal framework is another story is, another story.
Any other questions 50 COMMERCE, ECONOMIC DEV. - BILL 000355 for the Controller on Bill No. 000355? (No further questions.)
I hate to do this to you. Actually do have one last question for you myself.
Almost. A question has been raised with regard to the first section of the bill on the -- that talks about TIFs should not be approved by Council unless there are essentially three signoffs. One of the questions that's been raised is whether or not that can potentially result in a virtual veto or -- and I'm not saying you would do this, but talking more about anyone in the office, that there would be an unnecessarily withheld approval, which could potentially collapse a project or would be in direct conflict with the sponsor of the TIF or the Administration. And I guess I needed to at least ask you for the record, if there was, I guess, a 51 COMMERCE, ECONOMIC DEV. - BILL 000355 different mechanism that at least required some statement, something short of a signoff, but more than nothing.
But something in the middle that essentially says the package at least goes to you, that the City should get or would be required to -- I want to choose my language carefully. That the City should at least get some response from the Controller or from the PICA Board that they've at least looked at this and opine whatever they opine, but that that opinion does not necessarily block the TIF or prevent it from going forward; you always again naturally have the opportunity to come and testify at any public hearing on a TIF project, and certainly, the weight of your argument would weigh heavy on our hearts and minds. What's your reaction to that?
I never really thought about it being a blocking mechanism; I actually thought of this bill as being an ability for me to help Councilpeople to better understand what the implications are of the projections, but I would 52 COMMERCE, ECONOMIC DEV. - BILL 000355 never send a document back to Council that said I disapprove, without any statement as to the reason -- a comprehensive statement as to the reasons why. And I -- and if Council decides that if -- that PICA, myself, or the Finance Director are wrong, then I think there should be a mechanism of two-thirds vote, or however you want to do it, where there can be an override, if it's the concern of the majority of Council that that is something that is necessary. But I never thought about the fact that I would have carte blanche to do that 'cause that never really entered into my thought about the bill.
Okay. So if an arrangement was made whereby you are, you know, clearly and obviously a part of the process that we are going to get some kind of response or reaction, anything from, you know, yes, no, to, you know, a short novel, you're not -- I don't get the impression that you're particularly rigid in what the mechanism is versus that there be a process, that you have an opportunity to comment, for instance, on what's going on and, again, 53 COMMERCE, ECONOMIC DEV. - BILL 000355 naturally, taking advantage of your right to come and publicly testify, and we'd have to take all of that into consideration in the course of the evaluation of that particular TIF project.
No, I think that if it was anything more than that, it would be an infringement upon your responsibilities and powers as a city council for me to unilaterally be able to say no to something like that. I think that -- I think when I looked at the bill, I thought that my job would be, because I was asked by Council to be involved and look at the process, and if I thought it was not an adequate return on our investment, that I would say so. And then the ultimate decision, I've always believed, is in your branch of government, and I respect that.
Okay, thank you. I appreciate that. Any questions for the Controller? (No further questions.)
It's my pleasure, Mr. Chairman. 54 COMMERCE, ECONOMIC DEV. - BILL 000546
Thank you. Okay. I know he's here and I know we also need to move on to Councilman Goode's bill. Mr. Fina, would you wish to be grilled now or would you rather sit with the Commerce Director, Mr. Curato later? (Mr. Fina responds off mic.)
You choose later, yes. Very smart move on your part. (Laughter.)
We will now ask the clerk to read the title of Bill 000546 so we can take all of the testimony on that bill.
Bill No. 000546, an ordinance amending Chapter 21-800 of the Philadelphia Code, entitled "Advancement of Economic Opportunities," by adding Section 21-802 on the Philadelphia Community Reinvestment Commission.
Councilman, do you wish to make any opening statement? I thought I saw about a 10-page speech that you had prepared over there and I'd like to give you an opportunity to give it. 55 COMMERCE, ECONOMIC DEV. - BILL 000546
Let me first thank the Chair for the timely hearing of this bill. This bill is based on legislative findings from the Community Reinvestment Report released by my office a couple months ago, which was made available to this committee and the full Council and the public at large. I would also like to thank those who testify on behalf of this bill, including the Administration. I think that all of the things on the agenda actively move forward in the whole issue of neighborhood transformation and creating opportunities for disadvantaged persons, businesses, and neighborhood. I look forward to hearing the testimony. Thank you very much.
Thank you, Councilman. We'll first have the City Treasurer. 56 COMMERCE, ECONOMIC DEV. - BILL 000546 (Witness comes forward.)
My name is Folasade Olanipekun, and I am the City Treasurer. I am here to testify on behalf of proposed Bill No. 8 000546, introduced on September 14, 2000. Bill 9 No. 546 would amend Section 21-800 of the Philadelphia Code, entitled "Advancement of Economic Opportunities," by adding a subsection, 21-802, to create the Philadelphia Community Reinvestment Commission. The Administration is fully supportive of the CDFI Program's mandate of using limited financial resources to invest in and build the capacity of private, for-property, and nonprofit financial institutions to provide capital and services under-served people and distressed communities. It is a very important tool to be used for neighborhood in desperate need of economic stimulus. The Administration also supports the creation of a Philadelphia Community Reinvestment Commission as a strategy for helping to realize 57 COMMERCE, ECONOMIC DEV. - BILL 000546 the full potential for the CDFI Program. However, as you know, the Home Rule Charter, as a general rule gives the Mayor sole authority to create boards and commissions, except in special circumstances that do not apply here. Since Council is legally unable to act upon Bill 8 No. 546, it is the intent of this administration to create by executive order a commission that is comparable to and embraces the spirit and intent to proposed Bill 546. This concludes my testimony, and I'll be happy to answer any questions you may have.
Are there any questions for the Treasurer? (No questions.)
Madam Treasurer, you have stunned the community. (Laughter.)
We have no ability to respond to your testimony. And for that, you are free to go.
Unless other questions come up. 58 COMMERCE, ECONOMIC DEV. - BILL 000546 Mr. Ray Desiderio. (Witness comes forward.)
Thank you. I'm Ray Desiderio. I'm a senior vice president at PNC Bank of Philadelphia here. And I'm happy to lend our support to this bill. My job at the bank, I'm a senior community development officer of PNC Bank, and I'm responsible for managing the bank's community development activities. I've been in banking for 38 years and have worked on community development issues for the past 30 years. PNC Bank strongly supports this bill, which will provide much needed capital for community development financial institutions through the institution of Philadelphia Community Reinvestment Commission and the operation of local CDFI Fund for the primary purpose of lending support to Philadelphia-based intermediaries and CDFIs. The Greater Philadelphia Coalition, of which I am a co-chair, has seen fit to create a task force under the offices of the Committee for Community Economic Development to support this 59 COMMERCE, ECONOMIC DEV. - BILL 000546 issue. We feel that the ultimate result will be the fostering of proactive, cooperative initiative around small-business lending and economic development in the City of Philadelphia. PNC considers CDFIs and intermediaries to be much needed conduits between the bank and the community which the bank serves. These intermediaries play a vital role in supporting the bank's community development lending, investment, and service activities. There are a welcome and important complement to the overall community development business strategies. Strong CDFIs possess day-to-day intelligence on the community development community due to their active involvement. Strong CDFIs understand the community strengths and weaknesses of borrowers, the availability of quality funding, the details of public and private-sector financing required to get the deals done, and the political culture within the business which is transacted. The best CDFIs use this market information to create efficiency in the way projects or businesses are financed. We at PNC have had the good pleasure of 60 COMMERCE, ECONOMIC DEV. - BILL 000546 working with an excellent, well-managed CDFI here in Philadelphia, the Reinvestment Fund, and for all of the reasons stated here, are an active supporter and we are an investor in the fund. The Reinvestment Fund takes a three-pronged approach to economic development: First, it is an active small-business lender in Philadelphia, providing debt for scores of urban-based businesses. More than 50 percent of its borrowers are minority owners. TRF is a licensed SBA lender. Secondly, TRF provides equity financing for growth businesses through a venture capital affiliated called DVCRF Ventures, in which PNC is an active investor. The venture financing supports companies that are profitably expanding and provide quality jobs for entry-level workers. Thirdly, TRF is an active source of grant support for a small group of quality workforce programs that are training inner city workers and linking them to urban and suburban community. And PNC supports the International Community Association, a trade group which 61 COMMERCE, ECONOMIC DEV. - BILL 000546 supports CDFIs. In fact, PNC is the corporate sponsor for NCCA's national conference here in Philadelphia in November. PNC has a major commitment to the Pennsylvania Community Development Bank. The goal of this bank is ultimately one of empowerment, specifically financial empowerment, through CDFIs. Without an influx of investment capital opportunities for low-income Philadelphians in the communities in which they live, these resources will continue to shrink. The importance of new financial tools and resources in the revitalization of the Commonwealth's disadvantaged communities cannot be overstated. The bank and PNC's investment are designed to provide these resources by supporting CDFIs. We expect that our support of this issue will impact the CDFI movement in Philadelphia. Funding provided by this legislation will leverage the support provided by this program.
While not officially designated CDFIs, PNC Bank has worked very closely with two other important intermediaries in the City of Philadelphia. These are the Local Initiative 62 COMMERCE, ECONOMIC DEV. - BILL 000546 Support Corporation and the Philadelphia Neighborhood Development Collaborative. Both of these organizations provide much needed, technical, and systems-building capacity to community development corporations engaged in economic activities in Philadelphia. If these organizations elect to become CDFIs, this legislation would also enhance their capability. We at PNC hope that the information provided in this testimony will be helpful in the final determination of passage of City Council Bill 546. We applaud the efforts of the sponsors, and especially Councilman Goode, in this initiative. Public-private partnerships are important in this city, and we're happy to join in this effort. Thank you.
First I'd like to thank you for your support for Greater Exodus. 63 COMMERCE, ECONOMIC DEV. - BILL 000546
I wanted to ask you a question about a particular business corridor, or it could be anywhere in the City of Philadelphia. As you know, I represent most of North Philadelphia, on the lower side, and we have several commercial corridors, some of them thriving, some not doing so well. We get questions from business owners and people who are interested in opening businesses on those corridors, particularly on Cecil B. Moore here of late about financial assistance, access to capital, lending practices that are somewhat beyond the traditional lending practices, and I see here in Councilman Goode's document that he speaks to that. But what happens on a number of occasions is that we make the capital available but we don't necessarily give the technical assistance to businesses, and two, three years down the line, they end up folding. And I'm wondering, what is your suggestion or recommendation as it relate to the technical side of it, developing an appropriate 64 COMMERCE, ECONOMIC DEV. - BILL 000546 business plan, making sure that that business plan is carried out, and other things related to operating the business long-term. Can you spoke to that for a minute, please?
Yeah. I know well the corridors you're speaking about, and I know that there's a dire need for a continued or even start-up economic activities in those corridors. There's no question that a number of those businesses are unsophisticated businesses; in many cases, start-up businesses; and in many cases, businesses that need capital, capital infusion. To invest in those businesses and not provide the technical and educational assistance is just a problem that will just become more complicated. In the many cases, because those businesses are start-ups, because there are capital requirements and for -- and because there is a lack of capital that is available to that, many of those businesses have a tendency to fail. So it would not be in the best interest of the banks or the CDFIs or the intermediaries to make investments in those businesses unless there 65 COMMERCE, ECONOMIC DEV. - BILL 000546 was a very definite commitment to technical assistance and education of those business owners. And technical assistance and education before, during and, most importantly, after. We have elected, and in my testimony, I remark about the close association we have with the CDFIs in the City and the fact that this bill 9 will just strengthen the CDFI movement. We've worked very closely with those organizations because we find that they have the best intelligence on those communities, they have the wherewithal to interact in those communities, they have the ability to be the conduit between the banks and the communities, and most importantly, they do have programs that provide that technical and educational assistance. So it makes much sense, a lot of sense, for us as banks to provide the CDFIs with the grant support that they need to continue those activities, and many of us in the banking industry in Philadelphia do provide that support, as well as our investment support to the CDFIs. So there's no question that there's a need for technical assistance before, during, and 66 COMMERCE, ECONOMIC DEV. - BILL 000546 especially after the loan is made.
Thank you very much. Mary Frances Davis. (Witness comes forward.)
I'm sorry, you can please -- I made a mistake. Christina Weinmann. You can stay, please. I'm sorry, I apologize, my mistake. But Miss Weinmann can come up as well. (Witness comes forward.)
I have a witness list that I'd like to stay in compliance with the witness list, and I apologize to Miss Davis.
It was my oversight. Miss Weinmann? 67 COMMERCE, ECONOMIC DEV. - BILL 000546
Good morning. I'm pleased to testify before the committee on behalf of this bill to establish the Philadelphia Community Reinvestment Commission and to provide oversight for community reinvestment strategies for the City. In the interest of brevity, I'd like to submit my testimony for the record and instead just tell a little bit about National Community Capital here in Philadelphia and summarize my testimony in three key points. First of all, my name is Christina Weinmann. I'm the senior policy associate with National Community Capital Association, a national community development and financial intermediary headquartered here in Philadelphia. We were founded in 1986, and we represent more than 400 CDFIs nationwide. One of our primary purposes is to build a strong national CDFI industry through our financing, training, consulting advocacy, and information services to CDFIs. And as Mr. Desiderio mentioned, we are having our 16th annual conference here in Philadelphia in November, where we've got 500 -- over 500 CDFI practitioners coming from across the 68 COMMERCE, ECONOMIC DEV. - BILL 000546 country to come learn more about trends in industry and to receive some of the more premier training for CDFIs in the country. One of my first points is that CDFIs are experts in developing partnerships and leveraging private capital with public funds. They work with mainstream financial institutions, community groups, governments, and neighborhoods to channel private investments into low-income, low-wealth and under-served communities. And as Mr. Desiderio said, banks use CDFIs as strategic partners to cultivate new markets. The second point that I wanted to make is that mature, high-performing CDFIs are increasingly concerned with value recapture. And I think that the proposed Philadelphia Community Reinvestment Commission could provide overall perspective and, as Councilman DiCicco suggested, a coordinated effort amongst agencies, financial institutions, and non-private and public community development organizations to provide overall perspective and a check to ensure that targeted impact and that investment (unintelligible) sustainability in these communities. 69 COMMERCE, ECONOMIC DEV. - BILL 000546 Finally, as a model for the Philadelphia Community Reinvestment Fund -- the model for the Philadelphia CDFI Fund, in 1994, Congress established the CDFI Fund within the U.S. Department of Treasure to support a national comprehensive community economic strategy by investing in CDFIs, like what this bill is proposed to do. The funds bolsters economic development by investing in CDFIs. And by investing institutions, not projects, the fund helps CDFIs respond to their markets by increasing their ability to manager risk, to enhance capacity, and to be flexible in their financing. The CDFI Fund makes the most effective use it use of limited federal resources. It uses relatively small amounts of federal money to leverage significant amounts of and private non-federal dollars, promotes private entrepreneurship, and encourages self-help and self-sufficiency. National Community Capital is -- strongly supports Bill 546. We applaud Councilmembers Goode and Blackwell for introducing this important legislation. On behalf of National 70 COMMERCE, ECONOMIC DEV. - BILL 000546 Community Capital, I thank you for this opportunity to share my views and would be pleased to answer any questions you may have.
My name is Mary Frances Davis. I'm a division director with the Greater Philadelphia Urban Affairs Coalition. I have 30 years experience in addressing issues related to community and economic development. Thank you for the opportunity to testify today in favor of this bill establishing a community reinvestment commission, the Philadelphia Community Reinvestment Commission. The Greater Philadelphia Urban Affairs Coalition, as you may know, is a large nonprofit civic organization in Philadelphia, which brings together community leaders from low-income and minority neighborhoods with corporate executives and other stakeholders to solve urban problems. 71 COMMERCE, ECONOMIC DEV. - BILL 000546 In that context, our board, the GPUAC Board, has created a committee for community and economic development, and I am the staff person for that committee. The purpose of the committee is to create and partner with efforts to promote community economic development in Greater Philadelphia. To that end, we involve all stakeholders in finding permanent solutions of great magnitude. In the context of that, we create task forces which address specific issues of importance to our low- and moderate-income and minority neighborhoods. Just such an issue is the need for neighborhood small-business investment capital. Among the members of our group are nine banks: Beneficial Savings Bank, Commerce Bank, Commonwealth Bank, First Union Bank, Keystone Financial, Mellon Bank, PNC Bank, Sovereign Bank, and Summit Bank. These banks particularly are concerned that the $700 million that these lenders have invested in home ownership in Philadelphia's low- and moderate-income neighborhoods over the past couple decades will be ill-spent unless 72 COMMERCE, ECONOMIC DEV. - BILL 000546 economic development funds are targeted to neighborhoods which have made such progress in housing and community development that small business capital investment will bolster those markets to the point that they are self-sustaining. Our committee agrees -- I'm sorry. Our committee includes, in addition to lenders, neighborhood representatives, the CDC association, the major CDFIs that are already on the scene -- that is LISC, (Local Initiative Support Corporation to) in the reinvestment fund, and hope to include others emerging CDFIs as they come forward and the Philadelphia Neighborhood Development Collaborative. We have formed a small business capital team to create the type of strategy that will, we believe, feed very well into the strategic approach of the Philadelphia Community Reinvestment Commission. And we look forward to using our small business team to delve into issues raised and proposed by the Commission and to working closely with the Commission to advance its goals. 73 COMMERCE, ECONOMIC DEV. - BILL 000546 Thank you.
No? Okay, thank you. Rick Sauer and Robert Sanders. Mr. Sauer is first and then followed by Mr. Sanders. (Witnesses come forward.)
Members of the committee, my name is Rick Sauer. I'm the Executive Director of the Philadelphia Association of Community Development Corporations. It's a citywide association of 60 CDCs and other community groups working to revitalize our neighborhoods and rebuild communities. And I'm here today on behalf of our members to voice our support for the creation of the Philadelphia Community Reinvestment Commission to help plan and implement community investment strategies for the City of Philadelphia. As you know, sponsors of housing and 74 COMMERCE, ECONOMIC DEV. - BILL 000546 community development projects have the daunting task of assembling a jigsaw puzzle of financing to support their projects, ranging from approaching public sources, various City, State, and federal agencies to private lending institutions foundations, and other investors. With the active support of these players, the local CDCs, during the 1990s, were able to demonstrate their capacity to serve as a vehicle for neighborhood reinvestment in the neighborhoods, developing over 3 and a half thousand housing units, over a million square feet of commercial and retail space, as well as a number of other facilities and other community development activities. A key to the success of these projects has been their ability to utilize public-sector resources to attract and leverage private-sector involvement in the neighborhoods. And we really need to build on what we've done there, both continuing the efforts of housing and commercial redevelopment in general, but also in supporting the expansion of small businesses in our neighborhoods. We all know that the City does not have 75 COMMERCE, ECONOMIC DEV. - BILL 000546 enough resources at its disposal to address the myriad of issues in our neighborhoods, and especially it's a timely band important issue right now is, we're about to embark on the neighborhood transformation initiative. I think it's critical that we take a closer look at how we are using our current funds to make sure that we're using them in the most efficient and strategic manner to advance our neighborhood revitalization goals. I think the proposed Philadelphia Community Reinvestment Commission can may an important role in this process. It can look at how public funds can be used to better leverage resources from the private sector, we can give thought to how we can allocate new City funds to leverage more resources from the State of Pennsylvania, and, most importantly, we can better coordinate the delivery of both public and private-sector resources so that we can restore the local real estate markets in our neighborhoods and achieve our neighborhood revitalization goals. Thank you for the opportunity to comment. We certainly are glad that Councilman 76 COMMERCE, ECONOMIC DEV. - BILL 000546 Goode has introduced this legislation, along with Councilwoman Blackwell, and we strongly support its passage. Thank you.
Good morning. My name is Rob Sanders. I am a manager of the Sustainable Development Fund, a designated fund within the -- reinvestment fund, and I'm speaking as a representative of the Reinvestment Fund this morning, in support of Bill 000546. The Reinvestment Fund is a CDFI based in Philadelphia that was founded in 1985. Over the last 15 years, the Reinvestment Fund has invested over $200 million in community revitalization projects, community service organizations, and small business enterprises. The vast majority of these investments were made in Philadelphia. The RF's mission is to use capital and 77 COMMERCE, ECONOMIC DEV. - BILL 000546 technical expertise to build wealth and create economic opportunity for low-wealth communities and low- and moderate-income individuals. The fund accomplishes its mission through its financial support of affordable housing developments, community facilities, small businesses, and workforce programs. In years, the Reinvestment Fund has 10 grown to where we now manage more than $80 million 11 in a assets. These funds have been entrusted to 12 us by more than 700 investors. S. Treasury Department. How are we organized? The Reinvestment Fund is a nonprofit organization with two nonprofit subsidiary corporations and one wholly-owned, for-profit subsidiary. TRF has a core loan fund that attracts investments from individuals and investors. Each year, TRF files a registration statement with the Pennsylvania State Securities Commission. 78 COMMERCE, ECONOMIC DEV. - BILL 000546 In addition to TRF's core loan fund, we've established three entities that I mentioned -- two nonprofit, one for-profit. The Collaborative Lending Initiative is one of these. It was founded in 1994, which is a bank loan consortium comprised of member financial 8 institutions. , which was founded 10 in 1997, is the nonprofit general partner of DVCRF 11 Ventures LP, a limited partnership formed to 12 provide venture capital to growth companies with 13 strong job creation potential for entry-level 14 employees. 15 And then the Enterprise Investment Corporation is a for-profit company that was formed to house TRF's SBA loans. S. Small Business Administration and regulated by the Pennsylvania Department of Banking. So what has all of this accomplished? We believe that over the past 15 years, TRF has demonstrated it is possible to create an organization that combines a strong public purpose with sound business discipline in its lending and 79 COMMERCE, ECONOMIC DEV. - BILL 000546 investment programs. Our $200 million in cumulative loans and investments have leveraged $1 billion in public and private capital. The result of this invested capital has been to create over 6,000 new affordable housing units, 5,000 child care slots, 5,500 charter school seats, and 1,800 jobs in small businesses, as well as retaining 16,000 jobs overall. In the past year alone, TRF has made more than $38 million in new loans and investments. Charge-offs have remained less than 1 percent of outstanding loans. And the Reinvestment Fund's capital-to-asset ratio, which is equity capital to total assets, how much equity we have, that ratio stands at above percent. 17 Now, I would conclude that essential to 18 this growth in our assets and financial capacity 19 was the support of the federal and State CDFI 20 Funds. S. Treasury over the years and $2 million from Harrisburg. This public-sector support has been very important in attracting ongoing private investments. Indeed, one of the great values of 80 COMMERCE, ECONOMIC DEV. - BILL 000546 CDFIs is their demonstrated capacity to bring private investment to the settlement table, to build wealth, and create economic opportunity for low-wealth communities and low- and moderate-income individuals. The Reinvestment Fund strongly supports the creation of the Philadelphia Community Reinvestment Commission as well as the creation of a Philadelphia CDFI Fund. Thank you. I'll take questions if there are any.
Thank you for your testimony. Any questions? Councilman Goode.
Thank you. Mr. Sanders, I don't know if you are prepared today to respond to this, but could you speak a little bit to demographics of some of the end-users of your finances?
The great majority of the end-users that will benefit from our financing has been low -- and I mean low, not moderate, but low-income families. Primarily at this stage in the Reinvestment Fund's development, it's still 81 COMMERCE, ECONOMIC DEV. - BILL 000546 true that the majority of our financing has been to affordable housing projects and to community service facilities. These would be health care centers, day care centers, charter schools, or to developers of affordable housing. And the overwhelming beneficiaries of that financing has been low- and moderate-income constituents -- again, within the City of Philadelphia.
Thank you very much. Is there anyone else who I did not call on or was not on the list for Bill 000546 who wishes to testify at this time? (No response.)
Okay, seeing none. . . Again, I hate to keep going back and forth, but I believe our commerce director is here now, and he wants to get his testimony in on Bill 24 000355, so we're going to go back to that bill, complete that, and then take care of Bills 180 and 82 COMMERCE, ECONOMIC DEV. - BILL 000355 181. That would be Mr. Curato, the Commerce Director and Mr. Robert Fina, Vice President of PIDC. (Witnesses come forward.)
Good morning, Mr. Chairman and members of the committee. My name is James Curato, and I am the City Representative and Director of Commerce for the City of Philadelphia. I would first like to thank you for accommodating my schedule this morning and hearing my testimony today on Bill No. 000355, which would amend Chapter 21-1400 of the Philadelphia Code, entitled "Tax Incremental Financing Districts." As the City Commerce Director, I fully support the spirit and intent of Bill 355, and I fully support the idea of requiring developers to undertake good-faith efforts both to provide employment opportunities for youth and to provide contracting and employment opportunities for minority, female, and disabled business enterprises and individuals. Notably, many of the provisions proposed by the legislation are already being 83 COMMERCE, ECONOMIC DEV. - BILL 000355 accomplished through the TIF program, administered by PIDC in cooperating with the City, and will continue with or without this legislation. However, certain provisions of the proposed legislation would significantly and detrimentally alter the autonomy that now vests with the Mayor and City Council in approving each district. Therefore, I cannot support Bill 355 as currently drafted. I do have some amended language that addresses the several sections of the bill that I would respectfully submit to the committee for its review. I understand that prior to my arrival here this morning, the Controller testified, and I have also indicated to the chairman that we do not object to a basis for our projections being evaluated. However, we do believe that the legislation as drafted, that gives the Controller and PICA what would amount to almost a right to preempt any TIF legislation should be changed.
Mr. Curato, can I at least mention to you -- I know you didn't have the benefit to being here earlier, and that was by agreement. You had, I believe, a ground-breaking 84 COMMERCE, ECONOMIC DEV. - BILL 000355 to attend. I did raise that issue earlier with the City Controller and at least we should place on the record again, one, the Controller's view, and it was just his view, that he would not, I guess, unnecessarily withhold such a statement. But secondly, I think we began a discussion that led to a conclusion that stepping back from a strict requirement that would not allow the Council to make an approval without having such certification a statement. I think that there is a way to at least ensure a comment or a review of such a project, again, without either infringing on the prerogatives of the executive branch or even of the City Council. And so along those lines, I think we'll be able to work something out on that. I'd like not to, I guess, have you so deep in the hole on the record with regard to where you would not like to be, and I'd rather like to, if possible, steer you in the direction of where you would like to be and some of your ideas and some of your thoughts. I think we kind of got it on what your concerns and -- what your concerns might be.
I'll just, if it's all right with the chairman, just complete the rest of my testimony. Under Section 21-1403(1) as drafted, the bill would require that no TIF district be approved by City Council, unless the ordinance 9 creating the TIF district is accompanied by a statement signed by the Finance Director, Controller. And the Executive Director of PICA. That's the issue that we just discussed. And, again, if there's a mechanism for comment, as you pointed out, Mr. Chairman, that would be acceptable to us. The bill further requires that any TIF district plan include a statement that there will be an economic opportunity plan submitted for the TIF district. The economic opportunity plan would contain a statement that the developer shall use good-faith effort to ensure that the project shall provide for the maximum feasible number of year-round part-time and full-time employment opportunities for low- and moderate-income youth and a preliminary implementation plan for such 86 COMMERCE, ECONOMIC DEV. - BILL 000355 employment goals. The bill as drafted also goes on with similar language for minority, female, and disabled enterprises and individuals and the preliminary implementation plan. The provision that the developer shall use good-faith efforts to provide for these employment opportunities would also be applied to any TIF district approved after January 1, 1998. I do have some amended proposed amended language that was provided to me by the Law Department regarding these sections. I have reviewed the amendments and would submit them to you. I don't believe that they would in any way alter the intent of what was trying to be accomplished with the bill. It's, I think, more along the lines of just the Law Department providing language that they felt more comfortable with, and I'd be glad to submit those.
If we're talking about the same language, although I have not seen what you plan to provide 'cause I have not seen any of the amendments that you wish to talk about, I know the Law Department did express concern, and 87 COMMERCE, ECONOMIC DEV. - BILL 000355 I'm already prepared to make at least one amendment that had to do with a legal issue involving, I believe, the language maximum feasible number.
There are at least three sections where that language is used, and I agree with that that needs to be deleted.
Yes, Mr. Chairman, that is correct. And I will leave what I have here with you.
Can we -- Mr. Curato, you may recall in your previous tenure with us, you and I had an exchange on the floor -- it was a very nice one -- and I believe I asked you about a particular project and whether you were carrying the secret documents in your briefcase. You at least stated for the record at that time that you did not have the secret documents in your briefcase. You did not say that you didn't have the secret documents, just that 88 COMMERCE, ECONOMIC DEV. - BILL 000355 they weren't in your briefcase. But please don't keep the amendments so secret.
Mr. Chairman, I remember that exchange well. I believe it had to do with the Civic Center and whether or not I had a secret plan involving the Civic Center. I do remember that very well.
I would also note that do not have my briefcase today either.
The amendments, again, that were submitted, I think, reflect the fact that we do support the intent of this legislation. And you referenced the fact that it really was just the language related to the phrasing "maximum feasible number." With those changes, we can be supportive. I would just conclude my testimony by saying that we are, and continue to be, eager to work with City Council in developing TIF districts 89 COMMERCE, ECONOMIC DEV. - BILL 000355 that foster economic growth throughout the City and to provide City Councilmembers and their staff with any relevant data that is required to achieve that goal. With respect to the job and tax projections, both the Finance Director and I are willing to sign off on any plans that are submitted to Council. I believe that we can find a way to solicit the additional comments that you had talked about. And with the minor changes that were suggested this morning, we're prepared to support this legislation.
Thank you very much for your testimony. I do have a couple of questions and some things I'd like to walk through. I've looked at the amendments very quickly. I again understand exactly what you're trying to accomplish, and number one, by essentially deleting the Controller and the Executive Director of PICA. Again, I would only say back to you that I think somewhere in that section, we need to make some reference to receiving comments or a review by those entities, 90 COMMERCE, ECONOMIC DEV. - BILL 000355 but take them out of the area where essentially there would be a locked revision on approval or disapproval. We can bat about some language on that. What I'd like to get to, though, is your amendment on -- or your number 2 amendment seems to take a significant amount of that section 9 out and replaces it with new language, which, again, which we've just seen for the first time. My thought on this was to just remove the language where it says "contain a statement for the developer, that the developer shall use good-faith efforts to ensure that the project shall provide," and then just delete "for the maximum feasible number of" and then let the sentence continue. Your testimony seemed to talk about -- I thought that it was difficult for you for some reason to provide this, I believe what's called, a preliminary economic opportunity plan up front. Is that the sum and substance of what you're trying to communicate to us?
Your testimony is not numbered, but on one of the pages, it says, 91 COMMERCE, ECONOMIC DEV. - BILL 000355 "An economic opportunity plan is required for all TIF districts and becomes one of the closing documents. Currently PIDC does not attach its economic opportunity plan to the initial preliminary TIF project plan. The documents required to be submitted under the preliminary TIF project plan are specifically enumerated by State law and, therefore, it has been PIDC's custom to conform to the requirements of that State law." I understand your need to comply with State law, but we are allowed to establish our own provisions in terms of our own approval-making process. And while I understand that the entire plan may not be complete, and as I understand, these provisions -- I mean, kind of the way it works in the real world is that the final components of an economic opportunity plan are often negotiated subsequent to the transaction being completed, or at least until the legislation has been voted upon. I don't necessarily see where it is an unreasonable burden that you would be able to at least give the framework or the outline of what that economic opportunity plan would be or what your goals might be, as you 92 COMMERCE, ECONOMIC DEV. - BILL 000355 proceed down the path to conclusion. Would you agree or disagrees with that?
So it's not impossible to give us at least a framework of what you're trying to do or what you would be trying to accomplish, understanding that that is not the final plan, that is merely the framework or the outline of what you're going to try to do, but we could see it, we'd have an opportunity to have some discussion about it in the public hearing. And I think we all understand that it is really subsequent to the developer understanding that I've got my TIF approved, I have my financing lined up, that you're really legitimately in a position to even have those final negotiations and come up with the final economic opportunity plan. I mean, is that kind of the scenario of how it all works out?
Could I add 93 COMMERCE, ECONOMIC DEV. - BILL 000355 something to your statement, Mr. Chair?
Mr. Director, if we could -- if you can, within that structure that the Chair just delineated for you, I think the key question for me has become that a developer has to answer one question, and we have to decide upon that one question. But for the TIF, but for the TIF, this project would not be done. And I think, given the current economic conditions in the country, the State, the City, given the current situation, I think that question, prior to everything else, has to be presented fully answered to this Council. But for. I mean, if we are talking about a project up in North Philly, where there is empty land and there is probably no prospective of getting and somebody comes in and says, I need a TIF in order to develop over here. But for us being able to do that, if he is able to present the project and says yes. But it is for a Center City project that could be done, and the developers have come to see it almost as an entitlement, I think that question has to be fully 94 COMMERCE, ECONOMIC DEV. - BILL 000355 answered. And I don't think they're answering that question right now. And that's in addition to what. . .
Thank you, Mr. Chairman. As a follow-up to Councilman Ortiz, isn't it also a question as to not necessarily the area of the City where potential development may be looked upon, as it is more related to what the components of the deal for the development is all about. I think in the minds of some of my colleagues and a lot of other folks, when we speak about development in Center City, most people feel that because it's Center City and it's the vibrant commercial hub of the City, every deal that is put on the deal will automatically become a reality and it will automatically work and can get done. Again, you weren't here earlier, Mr. Curator, but through some of my communications with developers in the last five years, even in Center City, the deal sometimes will not work unless there is some financial incentive or some 95 COMMERCE, ECONOMIC DEV. - BILL 000355 monies that the public sector needs to put up to fill the gap. Eighth and Market is a perfect example. A TIF was created and approved, the Parking Authority put their money on the table to develop a garage, and still today, two years, maybe a little bit longer, since all of those financial packages were approved, we still don't see development because it is not as easy to do as all of us would like for it to be. I mean, I don't know that we can just say TIFs -- I mean, I don't think anyone is suggesting that we throw all TIFs out the window, but I just don't think that we could sit here today and make any really determination as to what we should structure into the TIF, because I think each TIF, each development brings a different set of circumstances to the table that need to be dealt with at the time of their application. And if you care to comment on that, either one of you, I'd appreciate that .
If I may add to you. But that's why I said the but-for question. But for this TIF. And then rationalize it and 96 COMMERCE, ECONOMIC DEV. - BILL 000355 then explain it and then substantiate it. But for this TIF, this project cannot be done. And put that forward -- be it in Center City or anywhere else. But you have to be able -- we have to be able to have that question answered. And I'm -- you know, I'm resolute that we need to do it, because I think the developers have taken this as an entitlement without having to answer that question --
And I think you're probably right in many cases, or in some cases. I think what you have to rely on is the due diligence of the Commerce Department and PIDC who do this as a normal course of business. They're familiar with what the projects would cost, they are familiar with what the application or the developer is presenting and the jobs that it will create. They know the financial market and what kinds of money are available to the project. 97 COMMERCE, ECONOMIC DEV. - BILL 000355 So, in most cases, even though I deal with the two agencies and I talk to the developers, I'm really at everyone else's mercy to tell me what they feel is necessary to make the project a reality. I recall Mayor Rendell calling me two or three years ago about the high-rise development at Eighth and Walnut, and the name of the development I forget at the moment 'cause it still hasn't happened. But the developer was seeking a 20-year TIF. Somewhere around $15 million, and I'm not sure if that's the correct number. And we discussed it and I thought that years was 15 entirely too long, I thought we'd be setting a 16 precedent for future developers who might be 17 looking for the same kind of terms in their TIF. 18 And we went back and forth with that developer and 19 I think it has since changed to reduce not only 20 the length of the TIF but also the amount of the TIF. And the developer walked from the job. However, a different developer came to the table and said, I can do it for 10 to 15 years and I can do it for $10 million as opposed to 15. So I think that there are those kinds 98 COMMERCE, ECONOMIC DEV. - BILL 000355 of discussions about the but-if that are ongoing. And what we get for the most part is the final result of all of those questions and issues that are looked at and scrutinized by the Commerce Department and PIDC. And if you'd care to comment, I'd appreciate it.
Well, I actually -- and I'm not just saying this to be diplomatic, but I actually agree with both of you. Councilman Ortiz, I can assure you that I will be a tough sell when it comes to City assistance, and that's the way that I approach the way we use our City resources to help projects. If we are needed to step in and help to get a project going, and if the project is good for the City and will create jobs and is helpful in either generating additional development or in revitalizing a neighborhood or will help a certain sector of our economy, and it is clear to me that without our assistance, that project would not go forward, then I will be inclined to favorably consider it. But I can assure you, I do not approach 99 COMMERCE, ECONOMIC DEV. - BILL 000355 TIF projects or any other City assistance as though they are entitlements. I look upon City funding for projects as not a right but something that we are to use very judicially and only when necessary. And then to Councilman DiCicco's point that we have -- the TIF program has been used very successfully for a number of Center City projects. And the Councilman is right: there are a number of those projects that, I think, have really done wonders in bolstering Center City development. And I just have not been on the job very long, but in my review of the projects that were done, the TIF program was necessary. The one I have the most direct experience with was down at Penn's Landing for the family entertainment center. That project will completely revitalize the waterfront, it will give us, if not the best waterfront in the country, then certainly one of the best. And I think that the TIF program was very effective in that regard. So I can assure you I will review every proposal very carefully and judiciously and not -- and that program will not be abused. 100 COMMERCE, ECONOMIC DEV. - BILL 000355
Thank you, Mr. Chair. With all due respect to my former colleagues from the Commerce Department and PIDC, I would not suggest that we are strictly at the mercy of the due diligence, nor could we be at the mercy of due diligence. My question is really geared toward not so much whether due diligence has been done with respect to the developer and a specific project, but we talk about Tax Incremental Financing Districts. Yet I have yet to see a proposal, while I've sat here on Council or even before coming to Council, that's actually established a district where tax increment financing was available to more than one developer. My problem has been twofold. I will not completely rehash my problems with past TIF projects where I feel that there was not a financial need demonstrated or at least not submitted to individual members of Council, but certainly, there has not been a TIF district approach to try to change the actual market 101 COMMERCE, ECONOMIC DEV. - BILL 000355 conditions within a district for more than, quote/unquote, the client of PIDC or a specific client of PIDC. My question is more, since this bill 6 really addresses how to create some public benefit beyond that benefit that goes to the specific developer, what is in the future of TIF? Is there going to be any strategic planning in terms of doing TIFs, as the City Controller talks about, to actually create TIF districts where unknown developers come in to really spur revitalization, particularly in view of the fact that not only do we have -- tax increment financing has been concentrated in specific areas of the City and in specific Councilmatic districts, but beyond that, in very specific areas, we've done TIF districts in exactly the same area, which means that we establish a TIF district and the intent of it was to change the market there for private investment, then why didn't that impact that market? And why do we continue to reestablish TIF districts that essentially overlap? I mean, when are we going to do it correctly, actually carve out areas of the City where we're trying to spur private investment 102 COMMERCE, ECONOMIC DEV. - BILL 000355 and allow it to be an open process to all developers that may want to develop there?
Councilman, I'll just give you my brief answer, and then maybe ask Mr. Fina to respond since he has more of a history with the program than I do directly. The TIF is really one tool that can be used. The other one that comes to mind, when you talk about setting up areas or districts to encourage development without a specific developer in hand is the Keystone Opportunity Zone legislation, which, I think we've had a good bit of success with and is about to expanded. Pending final approval legislation in Harrisburg, we will be able to add more acreage to the Keystone Opportunity Program, and I think that's one tool that can used very effectively. My own experience with TIFs and how they're used is that we do tend to be more reactive. When a developer comes to us with a project, if there is a gap or shortfall, as Councilman Ortiz pointed out, that but-for argument, that we've tended to step in at that point, and it has been, at least in my experience, 103 COMMERCE, ECONOMIC DEV. - BILL 000355 the case that the TIF district directly overlaps the boundaries of a certain project that we want to do. And I think what you're alluding to this morning is the possibility of creating TIF districts perhaps in certain neighborhoods that encompass a larger area and that can be used as an incentive in more of an open competitive process, if I hear you correctly. I think that's certainly something we can explore. I know that we do need to have a TIF strategy in place, certain guidelines and criteria as to what constitutes a proposal that the Administration would be willing to support. I have started to work on that. My initial reaction was to not make it purely location-based; in other words, to not say, we're only going to support TIF proposals in certain areas of the City. My initial thoughts were to gear it more towards direct economic benefits to the City, primarily jobs, and areas where supporting a TIF could revitalize a neighborhood and spur additional development. But I have not completed those 104 COMMERCE, ECONOMIC DEV. - BILL 000355 guidelines yet. I would be glad to share those with you and with other members of Council when they're completed. Maybe if it's acceptable, if I could just ask Mr. Fina to comment just for more of a historical perspective.
Good morning. My name is Robert Fina. I am Senior Vice President at Philadelphia Industrial Development Corporation, PIDC, and I've had the pleasure of speaking before members of City Council on TIFs many times in the past. The program is about seven years old, not five; we've been doing them for seven. And there's been a number of success stories, both in Center City and out of it. We have proposed -- more specifically to your question, Councilman Goode, we have had more than just, say, project TIFs. The Philadelphia Naval Business Center encompasses more than just the Kvaerner project as a TIF, as well as 13th Street Passages, which is in Center City, which is more than just a project. 105 COMMERCE, ECONOMIC DEV. - BILL 000355 We've avoided doing those larger geographical areas for many of the concerns that Council has raised in the past, that you won't basically know that there is a but-for argument if you create a TIF district and then during the term of that TIF district, years usually, projects 8 come in and out of that process. In fact, what 9 you've done on the Philadelphia Naval Business 10 Center is require us to come back annually every 11 time we use TIF revenue, in effect, asking us to 12 give you the right, as you require, the right to 13 approve each TIF district within that -- or each 14 TIF project within that TIF District. 15 So we'll certainly explore with the 16 Commerce Department both methods of applying 17 TIFs. There isn't a right way or a wrong way. We 18 are in compliance with the law. Other parts of 19 country use the larger geographical TIF districts, 20 as well as other parts of the country use a per-project basis. There are advantages and disadvantages to both. When you create a TIF district, there's some disadvantages. If you're a property owner and you make improvements in that TIF district, 106 COMMERCE, ECONOMIC DEV. - BILL 000355 you do not have a tax abatement by right, as you do now. So you lose certain aspects of it. So we were very careful in presenting that to you, that you would be able to at all times wrap your arms around what we're proposing. And I just wanted to add one more comment. We do, at your request, at this Council's request, and Councilman Goode, you were one who championed that about a year ago, that we do a financial gap analysis and we provide that to Council and your staff. And we've been doing that for the last TIFs that have been presented to you, that we do a gap analysis to show but for the TIF, that particular project, that project could not proceed based upon the assumptions and numbers that we put in that analysis that we share with you. I'll be happy to answer more questions if there are any.
As a follow-up to that, it's a interesting argument in terms of the whole but-what-if scenario. I'm assuming, or was assuming under the context of my comments, that we were providing TIFs because there was not a market 107 COMMERCE, ECONOMIC DEV. - BILL 000355 there for private investment, but you're saying that they are very deal-specific and have always been very deal-specific.
Councilman, I'm not sure. Not always. We have -- that's been --
Other than the Navy Yard and other than a couple of examples, they have generally been deal-specific.
And you're suggesting that they should be deal-specific.
I'm suggesting that it depends on the nature of what's being proposed and the economic goals and objectives of the Administration and of City Council. So far, we've only closed 8 TIFs. Of the 24 that you've approved, only 8 have closed. It's a very -- it's -- it's -- is not a giveaway and is not -- even with a TIF, a project doesn't necessarily move forward.
One last follow-up. In light of Councilman DiCicco's very aggressive tax incentive legislation agenda, have you begun to revisit the whole issue of TIFs, the fact that 108 COMMERCE, ECONOMIC DEV. - BILL 000355 we are extending abatements to ten years?
We will be doing that. I think Councilman DiCicco's efforts have been terrific as far as giving us additional incentives to attract development. So to the extent that it helps our cause and impacts whether or not additional TIFs are needed, we'll certainly be looking at that.
You're welcome. Mr. Chairman, if I could just, if I may just one other point that was in my written testimony that I did not mention when I gave the testimony here this morning. The provision in Bill 355 that made the provisions on the hiring the youth and minority, female, disabled business enterprises retroactive to January 1, 1998 I think would be somewhat problematic. This is another example of where I think we support your intent and we can certainly make efforts to --
Well, I saw that in your testimony, and I had put an asterisk next to it to ask you the question. When I looked at the TIF schedule, the 109 COMMERCE, ECONOMIC DEV. - BILL 000355 number -- I believe the number's now at -- we're now at number 24, have done 24, right? My recollection was that we picked that particular date so as to not interfere with any project that was already underway, but there are some that have been approved since that time, which, to the best of my knowledge, at least at the time of introduction, were not underway. And so I guess I need to get from you what projects have gone into play since January 1, 1998 that you think will be affected by this bill. And rather than painfully dragging you through that, now that I have reoriented myself to the document, since '98, we have, I believe: Cecil B. Moore Avenue. That was on 6/18/98; Penn's Landing 6/18/98. How is that project going? St. James Court, December 10, '98; Brewery Park, December 10, '98; Convention Center Garage, 1/14/99; Jump Street, 1/14/99; West Philadelphia Retail, 1/26/99; Pavilion Market East, 1/14/99; 110 COMMERCE, ECONOMIC DEV. - BILL 000355 Whitaker (I don't remember that one), 6/17/99; Ashton (I remember this), 6/24/99; New Market (I think that's the Hotel W), 12/9/99; 13th Street Passage, 12/9/99;l. Gateway, 12/9/99; Schmidts Plaza, 4/13/2000; Networks, 4/13/2000; West Chestnut Retail, 4/13/200; And Ninth Street Retail 4/13/2000; And we did -- Councilman DiCicco, didn't we do Silver City right before we left? Was that June?
So estimate of June of 2000. Now, I mean, some things could have changed since May 18, 2000, but have most of these projects started?
Or are they anywhere near started at the moment? I mean, some are probably are a little further along than some others.
There are some further along than others, and rather than go through each one, project by project, I mean, my reaction is that some of these are further along than others, some of them -- there are a lot of agreements that have already been signed. I think in most cases, we can go back to the developers and ask that they incorporate the provisions of this bill.
I mean, I think in this particular section, all we're asking is when -- and we say that they are along, I mean, they may have started digging in the ground, but I don't necessarily know from any of these, especially on the retail commercial stuff, that they've determined who their employees are going to be, selling clothes, or whatever they're going to be selling, and all we're saying is, if there's an opportunity, to make sure that some young people here in Philadelphia get a chance to work at a project for which we've provided a tax 112 COMMERCE, ECONOMIC DEV. - BILL 000355 incentive for. Rather than having them take three pieces of transportation to go work at the King of Prussia Mall, it would be nice if they could work right here in the City. Maybe they could go there after school.
I mean, look, I'm not trying to jam anybody up, but if you haven't even started down the path of putting up a sign saying "Jobs Available," then I don't think that we're causing you that much of a problem to try to figure out how to make sure that some Philadelphia young people get some employment, whether in the summer or during the school year. So, I mean, no, I don't necessarily want to go project by project and, you know, if it, you know, becomes such a violation of something, you know, I'm a pretty open-minded person, but, I mean, I looked at the dates before we picked one, and based on an evaluation of where things were at the time, it didn't seem that anybody was in any particular jeopardy. Most haven't even put a shovel in the ground yet. Mr. Curato? 113 COMMERCE, ECONOMIC DEV. - BILL 000355
Mr. Chairman, if I could maybe follow up on your question.
I think maybe what we need to discuss here, without getting into all of the fine details is, even though there might not have been any ground -- shovel in the ground or any construction that has begun, a lot of this stuff, at least on the retail side, the developers are negotiating with potential tenants. So while you may have not seen any -- Penn's Landing a perfect example. There are a number of tenants that are in place and there are a number that they're trying to sign an agreement to do that, to locate to that site. So, in all fairness to them, some of these things we're asking for may actually interfere with what they're doing. I mean, in the case of Silver City my experience --
Right. But, Councilman, if I can, I mean, Penn's Landing is a great example. I mean, it's billed as a family entertainment place. I have to assume that a fair number of young people will probably work at 114 COMMERCE, ECONOMIC DEV. - BILL 000355 Penn's Landing. I would be stunned, based on the continued extensions -- I mean, with every respect to -- I mean, it's a complicated project. But even in the negotiation with these respective tenants, if they have not made determinations on their youth workforce yet, then how is our saying to them, At the time that you're in that phase, to the greatest extent possible, we'd like to make sure that young people in Philadelphia versus somewhere else. I mean, you know, young people being equal --
And I agree, and I think you know my position on residents.
People working in the City and for the City should all be required to live here.
But what I'm suggesting is that in some cases that -- I'm using Penn's Landing as one of the examples -- there are 115 COMMERCE, ECONOMIC DEV. - BILL 000355 a number of tenants who have already entered into a contractual agreement with the Simon Group. And I'm certain, from my conversations, that many things that you're suggesting or requesting have already been implemented. But for those -- "but for," that's becoming a key word today, a buzzword.
But for those tenants that have not yet signed the agreement, I don't know how far along they are in their negotiations, and would this interfere with their --
Well, Mr. Curato may actually know the answer to that particular question. What was your last employment?
Mr. Chairman, my concern is that -- as I said to you earlier in my 116 COMMERCE, ECONOMIC DEV. - BILL 000355 testimony, we support this concept, I think it's worthy, I totally support Philadelphia youth being a part of these projects. We have no problems or issues in carrying this forward. I'm just a little bit concerned that we're going back with developers who have been through the process and imposing new after-the-fact regulations on them. And I say that with the understanding that I think virtually all of these developers would also agree that these are worthy goals to be achieved and would work with us on that. I'm only concerned that I'd rather do this with the prior approved TIFs on more of a sense of just conveying that this is important to us, rather than putting them into the process and having them to have to agree to regulations that we're imposing on them retroactively.
With all due respect, Mr. Curato, I have been hearing that same phrase about our inability to do what Councilman Nutter is talking about and requiring of 117 COMMERCE, ECONOMIC DEV. - BILL 000355 developers, and that we will begin doing this good-faith effort, you know, in the next ones. Since I've been here, and I've been here since 1984, and a lot of development has taken place since then, and the issue has been that we've always heard that, and not just you, you're just brand new, but from every commerce director that has come before us. And the reality of it has been that none of these things have ever been met so that throughout all of the development that we have seen, we have seen that he citizens of Philadelphia and the young folks and so on really are not being employed. And it's really disheartening to see the data that we get from RDA in terms of projects that are being built right now. And most of that data is totally depressing because most of those individuals do not reside in the City of Philadelphia. And then, as Councilman Nutter says, can we just begin putting forward some sort of a requirement? I don't think it's that difficult that in the year 2000 and on forward, we expect developers who get all of these things from us to be responsive. We ask teachers to live in the 118 COMMERCE, ECONOMIC DEV. - BILL 000355 City of Philadelphia. I mean, if they don't live here, they can't be hired. We have policemen, firemen and so on. I think it's really a thing that maybe shouldn't even have to be legislated. It should just be taken for granted almost, and it is not. And that's the pity of it.
Mr. Curato, could I -- I mean, maybe there is some solution to this. The language reads that the developer shall use good-faith efforts to ensure these things. Now, I mean, I can only speak for myself, but I mean, it would be pretty much the sense of the committee. I mean, if they've already made agreements, signed documents, you know, laid out what their workforce is going to be and kind of signed, sealed, and delivered, we have no right to try to undo that, and it is not our intention -- certainly not mine -- to try to do that. But in a purely we haven't even dealt with that situation because we're still trying to figure out how we can put the roof on, I think we can go to someone and say, This is important to the City, it is a part of the project plan. You 119 COMMERCE, ECONOMIC DEV. - BILL 000355 haven't even started down that particular road, this is what we'd like you to take a look at and use your good-faith efforts to do it. If you've already done it, my view is that there's nothing we can do about it. So, I mean, I'd only ask you to give that some thought and maybe it will give you some additional comfort level. Go ahead.
Just, again, I'm just somewhat concerned about imposing new provisions on a developer who's been through the process after the fact. I would go -- I will go to every developer who has gotten a TIF approved and convey the sentiments of this ordinance and the goals that we're trying to achieve. I would expect that --
Wasn't it a part of our sentiment, or someone's sentiment, in the first place?
When they were done, when the negotiations took place, did anyone sit in the room say, Now, you're going to have a whole lot of jobs, whether adults, kids, seniors, babies. To the extent that you can, you know, by the way, since we're helping to provide this economic incentive, I mean, you are going to try to hire people from the City or the region. I mean, someone did say that, didn't they?
We can re-express them. My concern is -- and just again to 121 COMMERCE, ECONOMIC DEV. - BILL 000355 reiterate -- imposing new provisions on a developer after the fact. We're looking at developments that have been approved under one set of guidelines, that have been made it through Council, TIF bills that have been approved signed by the Mayor, we're going down the path, and then all of a sudden, we're coming back and saying, We are now going to impose new regulations on you, even though it's after the fact. What I'm saying is, we can go back and say to them --
Mr. Curato, I don't necessarily look at it as imposing something new. I have to assume and believe -- or maybe I want to delude myself into believing -- that it was already a part of the program and the package when all of this was discussed. I mean, there had to have been some discussion like that. Mr. Fina, I mean, what happens in these discussions? Don't we talk about these kinds of things?
And I think those sentiments were expressed in the beginning, at Council. 122 COMMERCE, ECONOMIC DEV. - BILL 000355
Because Mr. Curato is now the newly-appointed commerce director, he hasn't been a part of the negotiations on TIFs. And I've been before this Council, as I mentioned, many times. We do require every TIF developer, every recipient of a TIF, to do an economic opportunity plan.
In that plan, it talks about hiring -- well, I'll use the word "goals." I don't know if that's the legal term, but --
But with this group, I'd just like to speak very openly. Those goals have included employment of various levels of income and race and gender and location. We've also been very successful in doing things at such -- well, I'll give you one example, the Loews Hotel, of bringing people from welfare to work into employment.
That was not a part of the economic opportunity plan at the time, but we and 123 COMMERCE, ECONOMIC DEV. - BILL 000355 the developer, in --
And the intent of City Council have asked them to do those things and we've done that.
We're trying to anticipate your wisdom, Councilman. And, seriously, you know, that was the goal that the Administration at the time, this current administration, wants to see occur -- welfare-to-work employment. That was a major focus; at the same time, still adhering to the goals of the economic opportunities plan. They exist. Adding a provision that says, you will, to the maximum extent possible, or some language that --
That language is being -- (Unintelligible, parties talking over each other.)
-- and under 21, I think that would, providing it doesn't conflict with 124 COMMERCE, ECONOMIC DEV. - BILL 000355 other agreements. I mean, most of these economic opportunities plans,, as you require, have been submitted and completed already. So by this language, we'd have to go back and amend them. I think Mr. Curato's right in asking -- that he ask the redeveloper to do that.
Let me add to this discussion. And I understand what Councilman Nutter's talking about. As an example, we talked about the Networks TIF, a component of the Networks TIF, particularly in the discussion phase, was incorporating a program with Community College. And we actually met with the head of Community College and had the developers of the network go meet with them, and they were talking about Community College being a feeder system into the e-commerce development opportunities in that facility. Would you feel more comfortable if we talked about the School District of Philadelphia, who, by and large, would deal with individuals 125 COMMERCE, ECONOMIC DEV. - BILL 000355 under -- hopefully not 21, 'cause we hope we still don't have kids in the School District at 21 -- providing some sort of a feeder system into these types of job opportunities. I understand we have a school of business. One of the magnet schools, I think, is Bartram. It's a School of Business. And we have a School of Communications, which is William Penn to possibly be participating in some of these TIFs. Would you feel more comfortable with us having some sort of language or provision that requires that these developers work with the school system in the City of Philadelphia or the Catholic school system or some other type of entities that provide educational opportunities? I mean, would that make you feel more comfortable? 'Cause we have done something similar to that in the past.
Councilman, what you're 21 asking for is actually being done to some degree. We've used previously the Private Industry Council, and now I think it's called "The Workforce 2000," as an entity, as an agency to help bring about employment of Philadelphians. 126 COMMERCE, ECONOMIC DEV. - BILL 000355 And that's where these jurisdictions are. They -- the Worforce 2000 doesn't have jurisdiction outside of the City. The welfare-to-work programs that exist in Philadelphia, they may be funded by the feds and the State, but they have jurisdictions within the County and the City of Philadelphia. So that's where their focus is. So that is all being done. I don't think that there's a -- I'd be willing to stake a risk in saying that the TIFs that have been completed, those projects funded with TIFs, you would be very pleased at the employment in those TIFs being in Philadelphia.
And I agree with that. And in speaking to the TIFs in my district, you know, as Councilman DiCicco indicated, we talked about that process early on with the developer and get some assurance that they would work with us. But I guess what we're trying to get is some language that specifies the process. I personally, I think that this is rather vague, to talk about individuals under 21. I'd rather see something a little more detailed and a little more 127 COMMERCE, ECONOMIC DEV. - BILL 000355 specific, which is why I talked about maybe the school system, both Catholic and public school systems, I'd like to see a program actually set up to be a feeder system into these programs, and not just the Private Industry Council and workforce development agencies. So if that's something that we can incorporate, I'd like to see that, you know. Yeah, Councilman DiCicco referenced the -- one of the schools, I think, works with the hospitality -- it's a hospitality feeder system. So I think that, you know, we want to get -- I personally would like to see something a little more specific if we agree on the goals associated with what we're talking about today.
Councilman Clarke is correct. What we need is specificity. And what -- and my staff has been working on an amendment as the discussion goes on. And I believe that the lowest responsible bidder is the one that usually gets the contract, is that correct, when we put it up for bid? The lowest responsible bidder?
Right? And maybe we should add a new section to 180 here that actually construes and then puts to the legislation something that goes along those same lines, where two or more sponsors, developers, bidders have submitted substantially equivalent bids in a future OHCD and DOC-covered project, the sponsor -- or builder -- a developer or builder which has demonstrated the superior ability to meet or exceed the numerical goals set forth in subsection 2 a. above shall be deemed the lowest responsible bidder. And I think that gives you a greater enhancement of the criteria in which to select who the builder or the developer is going to be. Do you agree with that?
But I would -- I would think that the City Law Department should review that language. I'm not sure if that's something that we can do.
I think you can do it. 129 COMMERCE, ECONOMIC DEV. - BILL 000355
Thank you, Mr. Chairman. I was glad to know that after spending or approving hundred of millions of dollars in tax and probably implementing projects for tens of millions of dollars in tax financing, that we are able to report that there are some jobs going to Philadelphia residents, that there are some welfare-to-work opportunities, there are some opportunities for minority and women and disabled businesses. But I think what we're trying to get to today is what specifically in negotiating TIFs with developers do you require as it relates to this legislation? And it's interesting that you said that we would be pleased with the statistics in terms of employment. But have you actually submitted job-monitoring reports based on those TIF projects that are already in effect? I'm not willing to necessarily take your word for it.
Councilman, PIDC does general monitoring for all of our programs. Normally what we require is that one year after 130 COMMERCE, ECONOMIC DEV. - BILL 000355 opening, permanent employment must be documented. And then we do that for three years. We're collecting that data now for the TIFs as it relates to this. So I think --
The data is available. It's probably in a format that has to be collated and presented, you know, in a much more intelligent way. But, yes, that data does come in. As a project is completed in all of PIDC's programs, City Council has received this information in the past for all PIDC's programs, employment, where that employment comes from. And then we track that for three years from the date the project's is completed.
Well, let me ask you a question regarding TIF contracts or general PIDC lending contracts. If those employment numbers 131 COMMERCE, ECONOMIC DEV. - BILL 000355 are not met in any case, would you sort of rescind the tax increment financing, or would you call the loan?
It depends on the program. We have not built that into the TIF program employment, except in certain special cases. You may recall the Cardone TIF that we did for that project. We had that the TIF would go away if employment were at -- were not met at -- for both those TIFs that Cardone only received approval for two of those projects have not closed. But that was the spirit that City Council wanted to approve those projects, that's what we included. We did have in effect claw-back of the TIF for that. We've proposed claw-backs in almost every TIF of late for different circumstances. One has to deal with, again, the discussion of the but-for's, is the TIF really needed, and others do have employment requirements.
But as of this date, there are no requirements regarding employment goals or minority contracting that would cause you to call that loan or rescind financing or a tax incentive based upon not meeting those goals. In 132 COMMERCE, ECONOMIC DEV. - BILL 000355 other words, there is no penalty.
You asked for it at the table, they do meet some goals, but in terms of the goals you asked at the table, they are not requirements. And if they are not met, they still get the money; is that correct?
Okay. What I just said, for two particular TIFs, there was a grave concern of this Council that --
You're talking about proposed projects that are not going into effect yet; I'm talking about past PIDC lending practices and I'm also talking about TIFs that are already in effect. I'm not talking, you know, the claw-backs that you proposed this spring; I'm talking about the up to 20 projects you did before 133 COMMERCE, ECONOMIC DEV. - BILL 000355 that and the tens of millions of dollars, the hundreds of millions of dollars of financing that PIDC has done. I'm saying, when you talk about a track record in terms of employment and in terms of minority contracting, have you ever had requirements that caused you to call the loan or rescind the financing or bring back the tax incentive?
The answer your question succinctly, our past practice is, yes, we do have requirements on the number of --
Do you have requirements in place that caused you to rescind the tax incentive or call the loan? I mean, are the requirements that stiff that if someone does not meet an employment or minority contracting goals, that you take back the financing or tax incentive?.
The employment goals on most of our programs, that is the case, Councilman. We do have default mechanisms. That's the mechanism for the -- if we find a project in default --
And have you ever 134 COMMERCE, ECONOMIC DEV. - BILL 000355 taken any money or tax incentives back?
Could you please submit any documentation to that effect the Chair.
Councilwoman Reynolds Brown on the point and then Councilman Clarke..
Thank you. Following up on Councilman Goode's point, define "claw-back." And is that synonymous with "penalty"?
Oh, I would absolutely say yes. What we offer, what you've approved in just the TIF program alone are an inexpensive way to finance a portion of a project, understanding 135 COMMERCE, ECONOMIC DEV. - BILL 000355 the TIF never finances all of the project, but a portion of the project. We have built in lately a claw-back in which that TIF if -- would be accelerated and paid (unintelligible) by the developer if they do not meet certain -- if they make certain income levels or if they don't do certain employment. It varies with the project, depending on the negotiations that we enter in with the TIF developer. That does happen.
Define "lately." The testimony says that there are 24, and 8 have closed?
I'm curious to know, at what juncture in the has the penalties 17 that you've talked about and/or claw-back been 18 instituted? 19
I think that's been an 20 (unintelligible) process coming before you, 21 Council. That is, you require more, and we 22 basically responded to your request. 23
So now claw-backs, 24 or penalties, as you have defined them, are a standard operating procedure with all future 136 COMMERCE, ECONOMIC DEV. - BILL 000355 TIFs?
We propose that on all TIFs so far of late, all TIFs have a form of claw-back in them, yes.
"Of late," meaning of the last Council round and the ones proposed before Council now.
Thank you, Mr. Chairman. That was actually going to be one of my questions, Mr. Fina, to explain the claw-back provision, but I'll go on now to the other parts of my questions. In line with Councilman Goode's other questioning about the creation of these TIF districts, my recollection, when this was originally explained to me, I in fact thought they were actually going to be districts where multiple 137 COMMERCE, ECONOMIC DEV. - BILL 000355 developers would possibly have opportunities, but if you're saying that wasn't the original intent, so be it. What I'm trying to get at, the question I'm trying to get at is with respects to the Mayor's blight initiative. I know one of the reasons why some of these developments would be more feasible than others is that you have developable parcels, there are certain things associated with the site that makes it a feasible project for certain developers. Is PIDC involved in the discussion as it relates to the Mayor's blight removal initiative? Because a large part of that, from my understanding, is supposed to create light industrial, other type of retail and commercial development opportunities. Are you all involved in that process at all, in any level of detail?
Well, can you explain to me what level and how. I mean, what part of the discussion? 'Cause I, you know -- I mean, I'm just trying to get a sense as you talk about your reformulating your TIF policy in 138 COMMERCE, ECONOMIC DEV. - BILL 000355 response to Councilman Goode's question, and what exactly are you looking at?
I've provided a substantial amount of information and met with various people from the Mayor's neighborhood transformation program. I wanted to make sure I used the right phrase here so I'm clearly understood. So I've, other members of PIDC have met with that group, I've met with specific people from the Mayor's Office to talk about how a TIF or a TIF program could be implemented into the -- used in conjunction with that program, with that initiative.
So if, as we talked about earlier, these TIF districts, say, for instance, if some parts of City -- unfortunately it may be in my district -- we were to be in a position to clear two square blocks of land, we can look at possibly creating a TIF district if the financing associated with that was more favorable than any potential abatements as it related to Councilman DiCicco's prior bill. I mean, is that a part of the discussion? I'm just trying to get a sense as we 139 COMMERCE, ECONOMIC DEV. - BILL 000355 talk about strategies and planning for our neighborhoods.
The answer would be yes, again, in a broad way. I mean, considering that, again, the program, the TIF program, you really don't finance anything until you really develop it, because it's the incremental taxes, it's the new taxes.
So everyone would have to be comfortable that there will be incremental taxes to provide a TIF loan.
To fund a piece of development. Normally that does not occur until permanent financing. Occasionally there is construction financing that's associated, but it's much riskier because you never know whether a TIF will be created. Going back into the history of the program, just quickly, in California, when they created huge TIF districts and they paid for infrastructure improvements in those TIF districts -- roads, highways, itself -- with bond issues 140 COMMERCE, ECONOMIC DEV. - BILL 000355 that were going to be supported by the incremental taxes in those districts when development occurred, the development never occurred, the bonds defaulted. So that's one issue that you have to be very cautious on that. The development will likely occur before you start funding the improvements within that district, whether the infrastructural or building that anticipates the revenue will be there. We have to be very careful here in the City not to do that.
Can we give an effective date of the TIF, say a year out, when we will feel comfortable that possibly we were able to lease up, we were able to get enough tenants and developers to develop that parcel, and at that time, we can move ahead with the TIF?
Certainly, Councilman. That's what we basically do with the TIF program now. We create an effective date that goes forward from this date to get the -- to gain the benefit.
I believe Councilman Goode wanted to add to that? 141 COMMERCE, ECONOMIC DEV. - BILL 000355
In a previous testimony question on a separate TIF project, I probably mentioned before that I did have in my opening discussion with the City's Finance Director, when she first came to town, she talked about TIF districts in Texas and how they're working effectively. But then following what you were saying, if a particular proposal for a TIF district or proposal within a TIF district do not provide but for a certain amount of revenue, it's assuming that that's the amount of financing that it would yield. But in terms of floating bonds for infrastructure and so forth, wouldn't that be the call of the Finance Director anyway, rather than PIDC?
The State program has an authority -- not a city -- has a redevelopment authority or an industrial authority proposing to do the TIF. Under that legislation, an authority can issue bonds. We have not issued bonds for that very reason, because one is that the City said they will not guarantee those bonds; and secondly, we wanted to be certain that the TIF 142 COMMERCE, ECONOMIC DEV. - BILL 000355 project would proceed. There's nothing -- there is no right or wrong to implementing a TIF. You could do it with bonds, you could do it in a large district, you can do it as the Finance Director proposed. We haven't seen the advantages beyond what we're doing presently in Philadelphia to move off the mechanism we propose. We're certainly open to it and we will talk and negotiate and develop a strategy for TIFs here in Philadelphia going forward, as the Commerce Director has indicated.
Somewhat unrelated, but you did bring it up, the Keystone Opportunity Zones. Mr. Curato, you weren't here at the time as the commerce director, but when they did the selection of the various zones, I wasn't a councilperson at the time, but I was kind of like a deputy councilperson, so I had a little 143 COMMERCE, ECONOMIC DEV. - BILL 000355 authority in terms of working within the district. That process did not lend itself to input of Councilmembers or staff, and I was a little upset because there were several areas within the district that I thought, had we had the opportunity of having a KOZ, we would have been able to develop some types of businesses, institutional, industrial, retail, light commercial. Can you tell me in the future how you will work, you know, as the Commerce Director as it relates to your interaction with Council offices when you make these decisions and policies associated with commercial development and designation of areas? 'Cause we kind of like got caught in on the tail-end, and I had to connect to the American Street Corridor and got a little small part next to Temple University, but it didn't really make a lot of sense, but I felt that I needed to have something in there, to be honest with you. Can you tell me how you will deal with that in the future.
Councilman, I think if I 144 COMMERCE, ECONOMIC DEV. - BILL 000355 understand the legislation pending in Harrisburg, there is going to be a relatively short time frame for submitting the expansion zones. Our department has already started doing some research based upon the prior work that was done, which areas were included, what our priorities are. I believe that we're only going to have probably a couple months to do this. I can tell you, we will reach out to members of Council to get their input as we put together the final plan. There are going to have to be some tough decisions made, because it's a popular program, the incentives are real and substantive, and there's a lot of demand for those areas. So there will have to be some tough decisions made. But we will -- I mean, I will ensure that my staff is working on this, does reach out to members of Council, and makes sure that their priorities are included in our decision-making.
Just one quick 145 COMMERCE, ECONOMIC DEV. - BILL 000355 statement for the record, and then I'm shortly going to have a logistical problem in terms of Councilman DiCicco's time. We may have to move into a public meeting, then come back to a public hearing. Mr. Fina, you, in one of your responses as one of my colleagues, made reference to reporting various pieces of information, and I was reminded that City Council passed Bill No. 990181, which was signed by the Mayor on 6/1/99, that required various reporting requirements for, at the time, existing TIFs and other TIFs going forward. That reporting date was December 31th of every year. I do not recall either at December 31, 1999 or at any time during the course of the year 2000 receiving any reports regarding TIFs. The items to be included were not limited to all data on: the number of construction and permanent jobs and demographic data on those jobs; the implementation of a plan for utilization of minority, female and disadvantaged businesses for contracting opportunities created by the establishment of the district; and any other data that is pertinent to 146 COMMERCE, ECONOMIC DEV. - BILL 000355 the financial, contracting, and employment operations of the district. Can you tell me what's going on with that reporting requirement?
Yes. PIDC is at best attempting to obtain that information. There's a number of agencies that you might have noted in Mr. Curato's testimony who monitor the employment in TIFs. And PIDC has been in communication with them, have set up meetings because that data has been slow in being brought to us so we could provide it to the Mayor's Office, that the Mayor can comply with the ordinance and provide it to City Council.
Well, I mean, about a month and a half -- you're about two months short of a year and a half, since the bill passed. It's taking you almost a year and a half to get this data together?
We'll probably be about a year behind. 147 COMMERCE, ECONOMIC DEV. - BILL 000355
So we should get a report by December 31, 2000, and that's going to tell us about --
Well, the data should be more than just for one year. We hopefully will have data up to the date of receiving it. So it could take on almost two years of information.
Okay. But you expect to meet the reporting deadline for this year?
Okay. I think Councilman Cohen and Councilwoman Blondell Reynolds Brown were next.
I just want to make one more comment, if I may. When Councilman Goode asked me on data concerning have we defaulted anyone for 148 COMMERCE, ECONOMIC DEV. - BILL 000355 not creating jobs, I think my more appropriate response, Councilman, should be: If they have not created the jobs under our loan programs, they will have been defaulted. Most times, developers have met the job requirements that have been imposed on us by City Council, by HUD, and by the State. So we may not have any defaults in the past half a dozen years because every developer has met the job requirements as imposed by those programs. So I want to be very careful.
You're saying that because you don't have any defaults based on job monitoring, you're assuming that they all met the goals? Is that what you're saying? 'Cause that's what it sounds like you were saying.
What I'm clearly saying is that we have very, very stringent job creation requirements in our loan program.
But do you have strict job-monitoring requirements? That's what I'm asking.
Do you have strict 149 COMMERCE, ECONOMIC DEV. - BILL 000355 job-monitoring requirements?
Based upon job-monitoring, have you called any loans? And your response just now was that you may not have any defaults based upon job monitoring because you're assuming there's no --
That's not what I'm saying. What I'm saying is that, if a developer --
Yes. I'm saying that of late, as far as the data that PIDC has, if the developer or borrower has not met the job requirements they would be defaulted.
If no one has defaulted, therefore, they have met the --
We look forward to receiving that information, not so much people who have defaulted based on job-monitoring; we look forward to the job-monitor reports in general. 150 COMMERCE, ECONOMIC DEV. - BILL 000355
Councilman, we do provide that data to City Council on a regular basis, on an annual basis. That data has come from PIDC on job creations within Councilmatic districts.
What I specifically just responded to. It has job creation within Councilmatic District for dollars loaned. We have the per-loan, we have the --
Mr. Fina, you're saying that we've received that every year.
I'm sorry. My question is not if you made a loan for $1 million, that loan's supposed to create 50 jobs, whether you submit a report that says, For this $1 million loan, it's supposed to create 50 jobs. I'm asking, do you support -- do you 151 COMMERCE, ECONOMIC DEV. - BILL 000355 send documentation to Council that actually monitors whether those 50 jobs were created? Not whether you put on a piece of paper that for that $1 million, we were supposed to get 50 jobs. I'm asking, is there actually a monitoring report that shows that we know that those 50 jobs exist?
Councilman, we don't provide you with all of the data in our files, if that's what's you're asking for. You're welcome to come to PIDC and look through that data anytime. We can arrange that so --
We provide you job-monitoring reports; don't give you or any Councilmember all the data that supports that information. It would be voluminous, that amount of data. PIDC has done thousands of transactions in our 41-year history.
What I would suggest, Mr. Fina, and I will now formally request is, if you could compile at least the job data for the last five years for all of your transactions, provide that to me as the Chair, which I will 152 COMMERCE, ECONOMIC DEV. - BILL 000355 certainly distribute to all of the members and see if we can get to the bottom of this particular issue.
'Cause there appears to be a disconnect someplace. Councilman Cohen?
Mr. Chairman, for probably more than 30 years, but at least 30 years, I have been trying to find out facts to support the notion of increased employment of minorities and women in the construction field whenever construction takes place. I started when the federal government introduced what then was a controversial so-called Philadelphia Plan. They picked Philadelphia as a place of maximum discrimination against minorities and women in the construction industry, and they tried to develop a plan, the federal government. There were two witnesses at a hearing in either 1969 or 1970. One was Councilman Longstreth, and the other was myself, from the Philadelphia City Council at that time. Councilman Longstreth opposed the Philadelphia 153 COMMERCE, ECONOMIC DEV. - BILL 000355 Plan, I supported it. Ever since that time, I have sought to get information like the kind that Councilman Nutter and Councilman Goode before were referring to, actual facts. Were I to ask this question, could anybody tell us how many new union electricians, carpenters, and the components of all of the building trades union, how many new ones have come in from the Philadelphia area, how many of them were low-income or minority or women? And how many are employed in these projects? With the blight program coming up, people in the constituency can't understand -- I've never be able to understand why, when there is a need for construction and there's so much unemployment amongst young people, why the two areas can't be combined so that the young people can develop the skills, go through the apprenticeship programs, get into union membership, and become full-time, tax-paying members of the community at the same time that we build so many things. Now, how do we get to the facts? We don't -- Mr. Fina, with due respect to you, we 154 COMMERCE, ECONOMIC DEV. - BILL 000355 don't think that the reports which say that nobody was defaulted; that proves that they, you know, met all of the goals. All that proves is that nobody paid any attention to whether or not they met the goals, and eyes were probably closed. Because I know of no -- when I go out in the community, I ask questions, how many people here know anybody in this neighborhood who is a member, say, of any particular construction union and who became such in the last five years? I never get a response. Now, what data do you have in your job information that you say you don't make us -- you give us the conclusions, but you don't give us the facts. We would we would like that kind of data. And with respect to Councilman Nutter's question, we would like that kind of data and the information Councilman Nutter from your job base. Would your data show that? In other words, how many more carpenters are there in the minority -- in the communities where there are heavy minority percentages? How many women have become union members in different places? And then we can then 155 COMMERCE, ECONOMIC DEV. - BILL 000355 find out from the unions about the various job assignments they get, because we get complaints at every level that nothing happened, nothing is made available, and that when in the neighborhood jobs are provided in particular construction assignments, the jobs are only provided to meet technical requirements, and that there's no 9 training that actually goes on at all. And Councilman Nutter, I would just like to suggest, I think it's very important that City Council have its own monitoring body, its own inspection team, and its own method of determining the facts so that we can, you know, meet on an equal basis with the other statistics given us, and then we can determine what additional enforcement methods are needed. And I think Councilman Clarke might feel that that is a useful purpose. Because this seems to be such a difficult area to deal with, when, on the surface, it seems like it ought to be very simple to deal with. Thank you, Mr. Chairman.
Thank you, 156 COMMERCE, ECONOMIC DEV. - BILL 000355 Councilman. (Applause.)
Let me just say that we will cooperate with Council in furnishing whatever information we have. That includes whatever information is being compiled right now across all of our economic development agencies. Whatever information Council wants, we would be glad to provide. If there is specific information that Council wants that we either are not compiling right now or are not compiling in a way that is useful to Council, then we will adjust our methods of compiling that data in order to be responsive. But there's no -- I mean, I'll just assure you on behalf of the economic development agencies and the Department of Commerce, there's no effort to withhold any information. If we're not gathering data that is useful for your purposes, then we will try to make adjustments so that we can do that.
Okay. Any other questions for Mr. Curato or Mr. Fina on Bill 157 COMMERCE, ECONOMIC DEV. - BILL 000355 000355?
Mr. Curato, there is this business on Susquehanna that has not gotten a TIF, but it's really growing, and it may increase or it will double, maybe even triple the amount of neighborhood employees that it now employs. And I asked you a few months back about it. They were planning, because they were being induced by Delaware County, and they were really considering that move because we could not provide -- and to me, it was inexplicable because with so much empty land around North Philadelphia, we could not provide for them the land that they needed. Where are we on that?
Councilman, my staff has followed your initial inquiry and a similar inquiry that we got, I believe from Councilman 158 COMMERCE, ECONOMIC DEV. - BILL 000355 Kenney. We have been working with this company on a weekly basis. My understanding is that we did find a site for their expansion plans. I need to get back to you with the most current information on that, and I commit to you that I will.
Okay. Mr. Curato, what I would like to do at this point, 'cause we're all going to -- and we have been here a long time, and I appreciate those in the audience still waiting to testify on Bills 180 and 181. We have a couple of logistical problems that we're trying to deal with here. I need to engage in some very quick discussion with you on the record about the amendments to Bill 355; hopefully we can reach agreement on that. And then what I would like to do is move into a public meeting to formally make those amendments; one Councilmember needs to leave and want to leave his vote in the meeting on that. We'll get those bills reported out and then come back into a public hearing to take testimony on Bills 180 and 181. And we'll go as long as we 159 COMMERCE, ECONOMIC DEV. - BILL 000355 can go. With regard to your recommended amendments, what I would like to do is read back to you what I'd like to do with those amendments, 'cause I'd either like to take all of what you have in some cases, chop up a little bit of what you have, and keep much of what was already in the bill. So I'd like to go through that. First, on the first page of the bill, I would agree to the deletion or the bracketing in Section 21-1403(1), the language would read: No 13 Tax Increment Financing District (TIF District) shall be approved by the City Council unless the ordinance creating the TIF District is accompanied by a statement signed by the City Finance Director. . . Brackets start at the comma and continue to the comma before the word "that." So it includes the comma and brackets right before the word" that. What that does is, it leaves the Finance Director in, it takes out at that stage the Controller and the Director of the Pennsylvania and Governmental Cooperation Authority. 160 COMMERCE, ECONOMIC DEV. - BILL 000355 Do you agree with that?
Okay, thank you. In number 2, I would like that to read: The project plan shall also include a statement that there will be an economic opportunity plan submitted for the TIF District and that the economic opportunity plan will contain: A. Detailed statement by the developer that addresses the developer's good-faith efforts to ensure that the projects shall provide for the maximum feasible number of year-round part-time and full-time employment opportunity to low- and moderate-income youth (persons under the age of 21) and a preliminary implementation plan for such youth employment goals. In addition, the economic opportunity plan will contain a detailed statement by the developer that addresses the developer's good-faith efforts to ensure that the project shall provide for significant. . . Delete the words "the maximum feasible number of" and continue with contracting, construction, and job opportunities, including, without limitation, goods, services and equipment to minority, female 161 COMMERCE, ECONOMIC DEV. - BILL 000355 and disabled business enterprises and individuals in a preliminary implementation plan for these employment goals. Any and all TIF Districts approved by Council after January 1, 1998 shall also be subject to the good-faith efforts requirements -- no, I'm sorry. Shall also be subject to these good-faith efforts requirements. And take out the word "the" and substitute the word "these" in that particular sentence. And the sentence would end at "requirements." So delete the rest of the phrase that continues with "that the developer shall use good-faith efforts." I believe for the most part, that captures most of the essence and spirit of what you have put forward.
The language containing the phrase "maximum feasible number," I believe you retain for the --
It was deleted for 162 COMMERCE, ECONOMIC DEV. - BILL 000355 the minority. The legal there is, in the minority, female and disabled business, as I understand it from the Law Department, that has a protected-class issue. You cannot have that particular language. The youth is not a protected-class issue and, therefore, the language is not objectionable, or raises a constitutional issue.
Okay. I -- the version of the amendment that the Law Department provided me did not make a distinction between those two classes. So I am not able to say with full confidence that -- I mean, I certainly take you at your word that that's your understanding from the Law Department. I just have not heard that directly from the Law Department and would only raise the issue that, just pending a legal review, we would --
I understand. Let me try to give you some additional comfort. What I'd like to do is report the bill 24 out. There are issues that Councilmembers have regarding another provision of the bill. I do not 163 COMMERCE, ECONOMIC DEV. - BILL 000355 expect to call the bill for a vote until we have that particular matter resolved. It's not a major issue; we'd like to tighten something. I'll look at the issue that you are raising. If we're going to have amendments on the floor, it's just as easy to make two of them as it is to make one. And we'll make sure that the language is correct.
Okay. And that would word fine. And I guess on the issue of the retroactivity, I presume I was not able to persuade you that imposing these provisions --
Mr. Curato, I will report back to the Administration that you fought a furious battle. Unfortunately, you were just outdone and you have nothing to be shamed of. It happens every day. (Laughter.)
Thanks. I don't want to be mean and point out the fact that even 164 COMMERCE, ECONOMIC DEV. - BILL 000355 your amendment coming up did not delete that particular provision. But, you know. And on the third provision, we will fully accept everything you put forward on that, which is, at the section in number 3, you have -- I'll try to cut to the chase here. It continues with the final economic opportunity plan. You inserted the language containing the developer's method(s) for implementation. We will add that. The sentence continues: Comma, the TIF District ordinance, and all other related documents. Your amendment deletes the rest of that paragraph. And I would be in agreement with that. Let me add one other thing addressing the issue raised in number one. I would propose to add a new number 4, which would read: The TIF project plan shall also be submitted to the City Controller and the PICA Board, and we will spell out PICA (Pennsylvania Intergovernmental Cooperation Authority Board) prior to any public hearing in order to solicit and receive their comments and analysis of such project plan. That then removes and addresses, I believe, but it does close the loop in terms of 165 COMMERCE, ECONOMIC DEV. - BILL 000355 their participation, but it does not create a barrier. Is that --
Thank you. Lastly, in response to a conversation with another Councilmember, I wish to amend Section 2 such that the effective date for this bill is January 1, 2001.
Move into public meeting take action on two bills then return to the public hearing is that acceptable?
Thank you. What I would like to do with the committee's concurrence is to now into a public meeting in order to deal with these amendments and at least take action on two bills and then return to the public hearing. - - -
We are now in a public meeting and we wish to take action at the moment on two bills. I'd first like to ask Councilman Goode 166 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING for a motion on Bill 000546.
Mr. Chairman, I move that we report Bill 000546 out of committee with a favorable recommendation and that the rules of Council be suspended so as to allow first reading at the next Council session.
It's been moved and properly seconded that Bill No. 000546 be reported out of this committee with a favorable recommendation and further recommendation that the rules of Council be suspended so as to permit first reading at our next session. All in favor, say aye? Any opposed, say nay? The ayes have it and Bill No. 000546 is approved. Councilman DiCicco, could I trouble you for a motion on the amendments to Bill No. 000355, as read into the record in the public hearing?
Thank you, Mr. Chairman. I move that the amendments that were read into the record on Bill No. 000355 be 167 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING approved.
All in favor, say aye? Any opposed, say nay? The amendments are approved. Councilman DiCicco, a motion on the bill as amended.
I move that Bill 12 No. 000355, as amended, be reported out of this committee with a favorable recommendation and a rules suspension?
It doesn't matter, we've got a short calendar. I'll take the motion.
And that the rules of Council be suspended so as to permit first reading at our next session of City Council.
All in favor, say aye? Any opposed, say nay? Bill No. 000355, as amended, will be 168 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING reported out of this committee with a favorable recommendation and a rules suspension. - - -
We will now go back into our public hearing. This is the Committee on Commerce and Economic Development. We will take testimony on Bills 000180 and 000181. Now, we have -- as is often our practice, I would like to -- in this instance, I would like to try to accommodate some members of the public who have been here for some time. I know the Administration people have been here for a while as well. I do not necessarily think their testimony will be as long as yours. And so I'm sure, at least with Mr. Applebaum, will cost me tremendously, but I'd like to get members of the public who have an interest in speaking on Bill No.'s 000180 or 000181 up to the witness table. I think Mr. Simon and other some individuals may be here to testify with regard to some of those bills. I'll ask the clerk to read the title of both bills.
Bill 000180, an ordinance 169 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING amending Chapter 17-900 of the Philadelphia Code, entitled "Neighborhood Benefit Strategy," by further providing for safe harbor goals. And Bill No. 000181, an ordinance 6 amending Title 17 of the Philadelphia Code, entitled "Contracts and Procurement," by adding a new Chapter 17-1000, entitled "Employment of Low- and Moderate-Income Persons by City Contractors," which requires persons performing work under certain construction contracts supported by City funds or City financial assistance to hire certain percentages of low- and moderate-income persons, under certain terms and conditions. (Witnesses come forward.)
Gentlemen, please identify yourselves for the record and you can proceed with your statement.
Good morning, Mr. Chairman and members of the Council, my name is Jahad Ali, I'm a union carpenter as well as I'm a member of UMEA and --
Can you bring that microphone a little closer to you, please. Thanks. 170 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING
I'm on one of the committees that monitor participation for businesses involved in construction as well as employment of trades people in the construction field. I'm also a member of the GBCA, which is a program that has been initiated last year by the General Building Contractors Association of Philadelphia in order to identify disadvantaged firms that can compete on all of these projects that you're talking about, because in the past, we've had businesses who were in business that didn't really have the support that they needed to (unintelligible) their businesses -- financial statements, backing, and forecasting. Go ahead.
John Thomas, business person in the City of Philadelphia. I am here at the request of -- good afternoon, everyone, the Chairman and City Councilmembers. We've been through this with the shipyard Kvaerner. I'm sitting here listening to really a lot of hogwash that's -- sorry, let me get Mr. Simon, who is the president of UMEA to introduce himself to Councilmembers. 171 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING
Good evening, Councilmembers. My name is John Simon. I'm the President of the United Minority Enterprises Association.
Mr. Simon, I need move that microphone a little closer to you. We have a new high-tech sound system, which makes it impossible for us to hear you.
My name is John Simon, the president of United Minority Enterprises Association. We've been in this struggle for about years with City Council, trying to get 14 minorities and women and neighborhood people into 15 the construction industry. Our organization was 16 one of the organizations that introduced 17 legislation to Councilwoman Blackwell, that got 18 passed, Chapter 17-500, to help minorities get 19 contracts in the City. 20 And I have a panel here of committee 21 workers that have been working for about seven years now in their areas of trying to get minorities on City contracts. And I think you will hear some of the things that they will address to you. 172 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING Thank you.
Before I start on my tangent, I'd like for Jahad Ali, because he's the most civilized here than I am, so I defer to Mr. Jahad Ali.
I would just like to say I'm more calmer now as I get older. The one thing I wanted to mention is the history of UMEA and John Simon. Ten years ago, when all of this construction was in its heyday, one of the biggest supporters for the minorities, or the only supporter for utilization of minority businesses was John Simon. When there was a court challenge, as we know it today, the (unintelligible) decision, when they initially challenged 17-500, it was UMEA's efforts that intervened on behalf of our members to fight that case. One of the things that resulted from us, our intervention in that case, was that although we lost that case because of Judge Bechtel's (ph.) Decision, the reason why we lost it was because the City doesn't have a disparity study. And in all of these efforts that you're undertaking today, you need to have that as 173 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING a basis for whatever decisions you make. And one of the things about UMEA's effort is, we're always in last, we're always invited last, and we're the first out there fighting, and sometimes, we're the only ones fighting. And you need to know the road that you're embarking on -- I'd like to use Councilman DiCicco's words "but for" today. But for your efforts, black men, black women, Latino men, Latino women are out of the construction -- would be out of the construction field. We know very well -- I know from my own eyes and my experiences that white men, white women will be utilized. You have to use that word "minority" to establish firms. "Minority" is white women. So you have to be aware of that. But going forward, I think that you need to be commended for your efforts because you're the same people that I see in the neighborhoods when I'm riding to the store or going wherever with my children, and the people that are out there now looking for employment, it's really ironic, because, as Councilman Cohen said, there should really be a marriage of the 174 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING youth that we have to be employed and the construction industry, because the construction industry is one of the only industries that doesn't have -- that has a worker shortage. So why isn't that marriage happening? Because of old people holding on to old ideas and old traditions. There has to be a barrier between getting our youth in these programs. One of the things that came out during the trial was Dr. Burn from Atlanta testifying that what happens is, when we bring youth into these unions, they advance in age, and years 14 down the road, they are businesses. So -- and 15 because a man more than likely or a woman more 16 than likely will work for a firm and say, I could 17 do this on my own after I've gained 20 years of 18 experience, and they go out on their own and they 19 start a business. 20 So that's really what the issue is. They're stopping our youth 20 years earlier from being their competitor 20 years down the road, which you hear all the time out there. So I think that the things that all you distinguished members are trying to do will make a 175 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING great impact on employment of Hispanic, black men and women in the field. It will make a difference in the neighborhoods because when you push for black businesses, you can almost assure that black businesses hire black workers. If we are working in the neighborhood, then we are going to be able make our own money. And we can start one day -- hopefully, one day, one of these young kids out there can start, be a worker, be a developer, and be sitting right here with you or your children, discussing a TIF that they want to do. So all of our efforts are really based on a great foundation and I think you guys need to be commended.
I'd like to add something to what you just said. In 1984-'85, when the big boom of construction began in the City, and it lasted ten years, and now we're going through another one, we were told right there in that caucus room by construction unions and the building trades and the developers that we didn't 176 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING have any African-American contractors and we didn't have any Latino contractors. Therefore, that was one of the reasons why, in terms of contracting and subcontracting in the big jobs, in terms of the Convention Center, the Marriott and all of the hotels that were being built, we could not have a minority presence, we were lacking. It was an excuse, obviously, it was an excuse. Now we have not only African-American contractors, we have an association of African-American contractors, we have an association of Latino contractors. But we still can't go through the door, we're still not getting the contracts. And, in fact, it is making the new regulations that are being structured make it even more difficult for minority contractors to compete. So instead of making it easier for competition to evolve, it seems that we -- as we get to another level, then we make it more difficult to be able to compete. Before, it didn't matter; we didn't have the contractors. Now we have the contractors, so the rules change. And the rules seem to change every time 177 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING we become eligible to play under the old rules. So under the old rules, we used to be able to compete at neighborhood levels. Now in the new rules, it makes it a little bit more difficult for minority contractors to be able to compete, and it seems that that's the process that we're going. And now we have a huge construction going on, and the data that we keep getting from RDA and OHCD, and we're putting money into -- and this is not the big developers, this is not big developers, this is not about building the Hyatt or building one of the newer hotels and so on. This is about projects that are going on in the neighborhoods and then we find and we get a data and we look at it, and most of the individuals that are working in those projects, 72 percent over here, 65 percent over there, 56 percent over here, they're all from outside of Philadelphia. And the amount of contracts, obviously, is very small. And they usually make it so that they just meet the minimal criteria that we set forward. And it shouldn't be. It shouldn't be this hard. It should not be this difficult. And we and David -- David was speaking 178 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING about his history, going back to 1968 and the Philadelphia Plan and the federal court, and we're still talking about the same thing. And a whole new generation of people are sitting around this table. And years down the line, Darrell Clarke 7 will probably be saying, you know, why hasn't it 8 happened? Like I'm saying right now. Because I 9 asked those questions back in 1985, and I'm asking 10 those questions again. 11 You know, and it's got to change. We 12 got to be able to put it into legislation and we 13 have to demand it, or else nothing gets built 14 really. 15
Councilman, may I just answer 16 that. 17 One of the problems that we had, we can 18 see it, at least in my opinion. One of the 19 problems is people that were in Council didn't 20 know what was going on because it was designed for you not to know. Let's look at reports. We just heard PIDC say they weren't even giving you reports. So the people that elected you were saying, My man is letting me down, what's happening? You hear it on 179 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING the radio all the time, why aren't blacks participating? Because you have a thousand and one other things to do and you're thinking that the program's working, and it's not. I think you need to look at who sits on that board at PIDC, I think you need to look at some of the ways that PIDC can assist developing contractors. See, the unions, their position is, they really only care about those man hours. They're -- basically, they care about man hours for now. It's our directive to make them hire our people, to get our people -- black men, Hispanics, women, disabled into those unions. And when we do our job, it will make it easier for other things to happen. One thing I wanted to just mention to the committee was when you get this data, try to get it in an electronic format because it's going to do you no good and us no good if he brings over boxes and boxes. But we have CPAs, just like they have CPAs, and we can put macros in those Excels. To find out what we want, we can create our own data bases. 180 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING So I would just advise the committee to get all of your data in electronic format if you can.
I, in fact, know what's been happening out here because I was a staff person a long time, I've worked with you, you've done work in my district, and we've sat down and suffered the same levels of frustration. You came into the district, you wanted to hire neighborhood people, you hired neighborhood people, and you were told that these people weren't in the union, so they had to go. This is a shell game, this is a shell. 'Cause a developer comes in and he says he wants to do the right thing, and he meets with Mr. Marks -- I'll use him as an example, God rest his soul. And he promises him he's going to do the right thing, all right? And he goes out and he gets his general contractor. And the general contractor says he's going to do the right thing, all right? And they go out and they get the subs. And the 181 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING subs say they're going to do the right thing. But it seems like the right thing is never done, because when those contractors and those subcontractors say that they're reaching out to neighborhood people, they're being told that you have to have certain kind of neighborhood people. From both ends, all right? From the people in those communities, they want certain types of people, and the people and the business agents from those various trades say you got to get certain kind of people. They say you got to get union people 'cause they have membership in the union hall that need to work. And we have people standing on the corner that need to work. So we end up at an impasse because we're then restricted with this thing called "prevailing wage," which is a good thing, 'cause I support prevailing wage. But what ends up happening with this prevailing wage, it means union. I mean, let's stop kidding ourselves. 'Cause if people are going to do prevailing wage, they're more than likely going to have a union contractor, and that's a good thing, because I'm very supportive of 182 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING unions. But the reality is, our inability to access trades across the board has been abysmal. You know, and I don't know whose fault it is. I can't say that here today. And I think it's all of us from, you know. The political end, maybe we haven't been aggressive enough. You know, from the community end, maybe people haven't gotten themselves prepared. From the union end, maybe they haven't been open enough, you know, in making sure these people can pass those apprenticeships. So, you know, I want to commend you guys for being here years. I can say to my 15 friend and colleague Councilman Ortiz, I will not 16 be here 20 years from now asking this question. 17
And I will not be 19 here 20 years, I can guarantee that. And it will 20 be by my choice.
No, I just won't be here; I will be doing something else. But it's at a point, I agree with all 183 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING of you gentlemen and my colleagues, it is time to cut this crap, all right, let's be up front. We all know what's going on, right? And I have had an opportunity to talk to a lot of people in the union, they are my friends, all right? And I'm not going to get around that, they are my friends. We have had discussions, I've talked to Mr. Roundtree about the issues. I had a meeting last week with all of the business agents on a project at 17th and Poplar Street, 42 units that we're getting ready to build. And they've expressed a willingness to participate, but they talked about having being able to have people who are appropriately trained to get into the apprenticeship program. You guys got to help put us in a position where we can provide those people and Mr. Round and my colleagues, because we want to do the right thing from this end of the table, and I know you want to do the right thing, and we got to make people who say they want to do the right thing do the right thing, all right? So we'll be here with you. 184 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING I agree with you, Councilman, when it's time for reelection, I, like you, would like to be able to say that we resolved this issue, maybe not a hundred percent, but to some level that we can feel proud of.
All right. So thank you. So we're going to be here with you and we're going to do what we have to do. And, again, I say I've talked to a number of my friends who are in the trades, and they've expressed a willingness to work with us, all right? So we will see, all right? This is the new generation, and we'll see what happens. Councilman?
I just wanted to ask, do any of the gentlemen at the table remember Bill No. 649 in City Council? That was the first legislative attack we attempted to make to open up the construction industry to minority folks. And we had a great campaign running. It went on for several years. We didn't make it, but I think we 185 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING may make it now. I would like to see -- you know, I want Darrell Clarke to have to do what Councilman Ortiz predicted, but that will happen unless -- unless we decide we're going to change it, unless we reject the notions. You know, all of us in Council have had different people tell us, if there are any particular minorities or even a group of minority you want hired, we'll hire them. But that's not what we want. We want a process whereby everybody can access the skills that we need to carry out this construction boom. And our first responsibility has to be to minorities, young minorities in Philadelphia. And I think if there's this close cooperation we can do it. And women, and women of color, yes, I think they face different problems than white women, but white women also face problems because they're women. And I think we want to clear it up for everybody. There's got been to be a free, open playing field so that we can then accuse them 20 years later, as developers, we can insist that 186 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING they treat the next generation the way we want this generation treated. Thank you very much.
Can I just say, Councilman Cohen? We'd like this to continue too, but we want to be involved. In fact, we want to go one step further. We would like to enter into a business arrangement with Council to let us be one of the ones to provide a proposal to assist you with the monitoring. Like I had said earlier, we have CPAs just like everybody else. We can work in a joint venture relationship with any firm to do this monitoring. But you get one advantage: because we're in this business, just like you're in the political business, we're in the construction business. And when you have your meetings, you have to have people at that table to be able to handle whatever comes up. You just can't be at a loss because decisions are being made at the table that you people sit at.
I think you're absolutely right. I think you've got to be involved in the monitoring phase and in every 187 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING phase of this. And only when you're satisfied will we know that the job has been done.
Yes. I'm looking at the new faces on City Council of whom some I've met. Blondell Reynolds Brown, I'll start with you. You took over Gussie Clark's seat; that's highly commendable. You're a young, fresh brain, face, entity. You bring a certain vitality, obviously, or you would not be sitting at City Council's sessions, you would not be a City Councilperson. Gussie Clarke is my heart. I want you -- and I told you this when I met you over the Christmas holidays, that I expect a lot out of you. Darrell Clarke, I have not met yet; I have seen him, you know, we've physically seen one another. Wilson Goode, Jr., we've seen one another; I don't know you personally. I've only talked to Blondell Reynolds Brown. I'm a maverick. You see this gray hair? It didn't happen overnight. I have possibly a young-looking face, but I turned 57 in September, okay? And the life expectancy of an African male, we know what these figures are, so 188 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING we don't have to go there. But I'm saying all of that to say that I've been fighting with these guys for a very long -- I've been fighting a lot of battles for a long time, and. I don't have that much time. I hope I do, you know, I hope I'm able to be around to the age of 100 really. But, realistically, I don't know. But I'm saying all of this today, that I have a daughter who will be in December. The 12 younger group here, I'm quite sure, Goode, Clarke, 13 you have children. We want something for the 14 future of our children. My heart is bleeding 15 sitting here, being redundant, listening to the 16 crapola, the B.S. that's been going on for the 17 last 30, 40, 50 years. 18 I mean, how much longer is it going to 19 take for people in positions of power, people who 20 have authority, people who are delegated responsibility, people who are being vast sums of money to expedite programs that are in fact not being done? There are overlays and overlays and overlays of federal bureaucracy from the federal 189 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING level to the State level to the City level, and then you have all these certifying agencies that sit on their rear-end -- you know, they're obviously sitting on their thumbs, you know, doing nothing, shuffling papers, trying to look important. You know, what the heck are they doing? What is anybody doing, in fact, to get anything accomplished? so that Darrell Clarke, 30 years from now, won't be in a position that Dave Cohen is in 30 years later. I mean, we have the experience as a group to fight these battles for you people on City Council, if you let us come to the negotiating table with us instead of letting us know a day before this is supposed to happen, that you're invited. That's not the way to treat your friends. We're your friends, not your enemies, okay? Make us a part of what goes on in getting people like PIDC responsible. Let us be an oversight part of monitoring what they do in fact or do not -- and it's obvious they're not doing the right thing, but they are being paid vast sums of taxpayers' dollars to do. I'm quite sure they have their favorite people that they deal with. 190 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING They all do. The Old Boy Network, you know, that club at the top that everybody alludes to, the Old Boy Network is still alive in the year 2000. We don't play golf with contractors at the exclusive country clubs; we're not invited. If we do, it's to be a caddy, okay? We're not at the private chubs in Center City where the white contractors go and discuss deals. We're not at the Mainline homes when deals are being done. Black contractors are not there. When we get invited to bid on a job --
Exactly, it's already been decided. The dollar amounts -- the money has already been parcelled out to this good old white boy here, this good old -- and we talk about minority -- we talk about white females as being a minority? Oh, no kidding. Well, guess what, their uncles, their fathers and their grandfathers say, You are a minority because you're female, here, you own the company, and now there's 51 percent stock, okay? And that has happened, and 191 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING they've gotten City contracts, they've gotten State contracts and federal government contracts, and nobody's called them on the carpet, and that's a bunch of crap, and I'm here to tell you it's a bunch of crap today. And City Council is sitting here and think that white women in America are equal to being considered minorities? Then somebody needs to go back to school and get some more lessons on what's going on in corporate America because that's not the way the game is played. Kvaerner Shipyard, we fought like the devil. We were here, UMEA, the United Minority Enterprise Association was here to make sure first on the front line, to make sure that minorities -- we wrote up all kinds of legislation, just like this packet here that went out to all of City Council from our newly-elected Mayor Street, who I happen to love and respect and like him, to every -- a few of you responded, and here's some more copies today. We were here on the front line challenging, prodding, pleading, begging, asking, praying that some of these dollars would come into 192 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING the African-American community. Well, guess what? It never happened. Not one time did anybody allude to anything -- everybody came up out of -- the chambers were full. By God, they were full. But the deal had already been -- City Councilmembers didn't even know what the they were passing, pardon my vernacular. They passed a bill 9 that allocated the money and didn't even know what it was for or who it was going to or for what purpose. These are the elected officials that we -- oh, well, I didn't know. Well, I said I was in on this, okay? I am not trying to humiliate anyone in City Council, believe me, I'm not. But I am bleeding from my heart for every minority person in this city. And I have a list of contractors, I have letters from contractors who -- let just read you something here, and I'm not going to go on and on and on because --
Let me say this, and I apologize for missing some of your 193 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING statement. I have some other material that I'd like to share. To the extent that you have documents or letters, I mean, if you can, one, give us a flavor of what they are about.
All of them can be added to the official record today, and Councilmembers will be able to read them.
A general contractor saying that we can't find minority contractors, subcontractors, et cetera. Then we get, when they do and are able to find some, they get a $100,000 contract, of which a percentage is supposed to go to a minority contractors. He goes on the job, he's assigned a certain amount of work, he needs a certain amount of people. Let's say he's required to do -- and I have one here. Five floors in a hotel.
Based on his cost analysis, he only needs two men, but the general 194 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING says, Oh, no, you need five men. So he's got to hire three more, okay?
He's got 90 percent of the job completed. Every two weeks, he's supposed to be paid because he's got to pay his personnel, he's got the pay the unions their money. And the union is like La Cosa Nostra, we all know that. You know, they're going to get theirs.
You have a right to say what you want to say, but I'm not going to accept any disparaging remarks --
I just want to go on the record myself because I'm friendly with the union workers and some of the management. And I want to just say that that was his frustration coming 195 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING out. But I agree with you, Chairman, that the union are outstanding individuals and they're in business like everybody else, but that's just his opinion.
I understand. And you're entitled to opinion and I'm entitled to say that I'm not going to accept that kind of language in the record.
Okay, thank you, Mr. Chairman. Now, as I was saying, these are noble European, Eurocentric contractors dealing with minority contractors, who will say one thing and change up and do something completely different. They put more minority contractors out of business. You might as well take an AK-47, an Uzzi, and just spread the John Brown things -- I 196 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING mean, it's like having an army with all the sophisticated military weaponry going up against people with sticks. And that's what it amounts to.
I think we're at a stage, though where-- and I can -- normally, you know, people might say, "I can understand your frustration." I'm not going to say that because I can't necessarily understand your frustration because I'm not in the same business that you're in. But I think we do have a sense of what the magnitude of the problems are. What would be helpful to us is a couple of things. One, we do have a couple bills here pending that are trying to help improve the situation. Two, it would be helpful to this committee, if not to all of Council and the government, to have a sense not only of the frustration and the problems, but also suggestions for solutions as to what we should be doing. Now, I do feel compelled to mention to you, there were statements made while I was out of the room, and a complaint, legitimate, was made 197 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING about short notice. I will take responsibility and accept the fault for short notice to Mr. Simon. On the other hand, you may or may not be aware, these bills were introduced on March 30, 2000.
They were duly advertised for this hearing. I had a meeting with Mr. Simon and another gentleman during the summer to talk about minority contracting issues, and gave them copies of these bills during that time.
So we are trying. And there are more opportunities for people to contact, whether it's myself or 16 other members of City Council, about these particular issues. And one point: I have not heard a word since March 30, 2000 other than a separate conversation, separately driven by issues that Mr. Simon and a group member wanted to talk about, I haven't heard from one contractor about either of these bills.
Mm-hmm. All right, be that as it may and I respect -- 198 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING
So could you share with us a couple ideas about what you'd like to see us do in the government?
The key thing, Councilman Nutter is -- and we've been asking for this for a very long time. We need UMEA with you guys. We would like to be an integral part of sitting down and being on your oversight committee, sharing -- because we come from the contracting base, not from a 40-year City-employee base. You got to have contractors that will tell you who know, who've been out there and getting their butts kicked.
And let me tell you, if you don't do that, you know what you'll get? You'll get that one person who says, Oh, I've been working with this City agency and I know what guys are going through out there. And you'll get 199 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING another and one another one, and it's going to be ongoing nonsense.
Councilman, one thing I wanted to just mention was, sometimes other people who are your agencies will -- they will make a statement that there's a conflict of interest for UMEA to be on any oversight board or any committee. However, they don't make the same argument when the unions are being put on each one of these boards. So you just need to keep an open mind. And all we really want to do is, by being on the boards at those times, we can address whatever's on the table then. But in coming here today and talking about the bills that are coming up, the things that I wanted to add was on the -- I believe it was on Bill 180, where you have -- anywhere on the bill you have low-income, that you have it addressed to the project area. I believe it was 181, I think 181, somewhere in there? I think it's 181, Councilman. It's article 6.
Are you talking 200 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING about within the definition of low- and moderate-income person?
Right, that it be specifically for that area. You cite here HUD. They cite 42 UFC. However, this bill mirrors Section 3. And one of the things that makes Section 3 so unique when it's enforced is that it ties into the project area, because their loophole is that a person could be low-income from anywhere in Philadelphia, and we really want to benefit the people that are in the neighborhood where the project being funded.
So if you can just at least specify that it be from that neighborhood or the adjoining neighborhood stepping out.
Mr. Ali, if you want to tie it to that particular neighborhood, and this hotel is being built over here, now it doesn't fall under that bill, and I've got a problem with that. We've accepted minority, low-income employment in neighborhoods and we're now going off of the bigger picture. I disagree with you on that. 201 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING
Well, I don't know if we're in disagreement, Councilman, because what it's saying is, either the adjoining neighborhoods, stepping out. What's the next neighborhood closer to this neighborhood in each direction stepping out? We're talking about hirees and businesses, because all of -- these jobs, these bills are not -- they're not employment guarantees. You have to have businesses or individuals capable of those skills or those businesses capable to fund stuff. And I was in court five years ago. And when I looked around, I mean, I know what the GBCA is going to do, I know what the unions are capable. I know the arguments that their lawyers will put forth, is what I'm trying to say. And one of the problems we're going to have is, you have to have people with the ability to perform, and you can't get it by just putting a blanket thing there. If you don't say specific neighborhoods, then the flip side, is what brings the unions coming in saying, Oh, we got all these guys from the Northeast, they're low-income.
Fine. All I'm saying is, I don't want to be tied down to some 202 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING project at 16th and Cecil B. Moore, and that's what happens.
We end up fighting over that with the building and trades unions about two or three jobs at 16th and Cecil B. Moore, all right? And when I see the employment opportunities down here on all of these hotels and we don't fight for that, I don't want to get tied into 16th and Cecil B. Moore, I want to deal with a policy that addresses the entire city.
Adding on to Councilman Clarke, if I may, Mr. Chairman?
I mean, I think it limits us. Let me tell you something, when we say "low-income" and" moderate-income, between African-American and Latino, we represent probably 70 percent or more of that. The Supreme Court and other federal courts say that we cannot use race in that sort of situation. The issue is that labeling, low- and moderate-income, puts into play. As Councilman 203 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING Clarke says, we have the Convention Center, we have the airport, we have hotels, we have Penn's Landing. All of these are construction jobs that contractors should be bidding for, sub. I don't want -- I don't want you guys just to be able to bid on a project at 16th and Cecil B. Moore or Fifth and Indiana in the Barrio. I want us to be able to be subcontractors across the City and be included. And we have to make sure that you and Latino contractors are included across the City.
See, that's what you should be asking us to begin putting forward, that we ensure a process in which Latino and African-American contractors are included across the City. And, therefore, we begin then, through you, employing Latino and African-Americans from the neighborhood.
Gentlemen, let me make this recommendation to you because actually, even shortly, I will have to leave. I think that your testimony has been very, very helpful. We have representatives from the City government, 204 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING some of whose testimony might be a little different than yours, and I think we need to hear that testimony and better understand what some of the issues are, complications, and the like. And I would then expect that we will recess this hearing to a date certain. If we don't finish all of the testimony today or if finish the testimony, we may have actions that need to be taken, amendments that need to be put forward and a whole host of other things. So what I'd like to do at this point is get the City Representatives up so we can get a sense and a flavor of their testimony, get some Q and A going with them as well, and make sure that we're going in the right direction, okay?
Gentlemen, thank you very, very much. I appreciate it. Why don't we get Mr. Applebaum, Mr. Roundtree, and Mr. Brooks to the table. (Witnesses come forward.)
Gentlemen, you've been patient with us today and we're going to ask 205 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING you to continue to do so. This is what I would like to suggest, with the acceptance of the committee: One, I know you all have written statement. You'll submit them to us and we will read them. Two, there was a statement provided, or reference made to a letter by one of the gentlemen testifying that was sent to the Mayor. I have copies of that letter, which I'd like to give to you. And, three, what -- I think you probably anticipate that this portion of the hearing could go for a little while because there are going to be a lot of questions. We're not going to finish. What I'd like you to do then third is, understanding the issues that were raised by the gentlemen at the table earlier, I'd like you to be prepared to not only respond to questions that are going to be raised by your own testimony but also by the letter to the Mayor and by their testimony here today at a continued hearing on November 1st, at 2 o'clock in the afternoon. That will then give you time to 206 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING respond to all of those issues. I think, Mr. Roundtree, I know, in your testimony, there was some issues raised about a particular component of one of the bills. You and I had a sidebar discussion. I think at the moment, you don't have a proposed solution to that problem. Councilman Ortiz and Councilman Clarke, I know, had some side decisions about some provisions. We also had time to address those particular concerns as well. Mr. Brooks, I think we've had this ongoing discussion in the past about your reports, which are now, I believe, are now responding to not only the previous executive order but also a bill passed by this Council on your reporting requirements on various projects. What I would like for you to be able to respond to specifically, in addition to any other things that are in your testimony, is to give us a better understanding of why, in many instances, these projects that I'm looking at, your latest report of July 3, 2000, Amoco, McDonald's at Haines Street and Stenton Avenue, 53 percent of the people working on the project were 207 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING non-Philadelphians, and a whole host of other projects that are up in the 40s an 50-some-odd percent range of non-Philadelphians participating in all of these neighborhood projects. I would like detailed information as to what the problem is, why this continues to go on, and any recommendations that you might have for addressing that particular problem. Councilman Ortiz may have additional requests.
Yeah. Could you add something to the same request. As we get that there are certain individuals -- a certain high percentage of individual working that are non-Philadelphians, I'd like to find out the breakdown of the Philadelphians that are working, you get me? I'd like to find out, of those that are Philadelphians working in those projects, how do they break down in terms of ethnicity and race? I want to find out how many are African-American, how many are Latinos, how many are women, Asian or whatever. So if we have 50 percent that are non-Philadelphian, I'd like to find out the 208 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING breakdown of the 50 percent that are Philadelphian. And then, if you can, I would like to have that breakdown by skill level. How many are laborers, how many are carpenters, how many are electricians. And a breakdown of those in terms of how many of those are Latinos, African-American, and so on. Got that? COMMISSIONER APPLEBAUM: Yes, sir.
Any other information requests as we are anticipating recessing to a date certain that will provide the government officials, Administration officials with the opportunity to be very responsive? Councilman Clarke.
Thank you, Mr. Chairman. Mr. Chairman, I ask that, I guess, Mr. Roundtree from MBEC be prepared to respond to the status of -- I believe it was Bill -- it was a bill -- an ordinance in September of '99, Bill 23 No. 990221-A. That was a prevailing wage bill. And the subsequent amendment, Bill No. 000319, requiring that all participating trades set up a 209 10/24/00 COMMERCE, ECON. DEV. - PUBLIC MEETING training and apprenticeship and placement program. And it referenced several programs that are currently in effect; one of them being the Housing Authority and Congreso, top win programs that will be feeder systems into the various trades cross the board.
You want me to be prepared to respond to that on November 1st?
No problem. Any other information requests in suspicion of the continued hearing? (No response.)
Seeing none, the Committee on Commerce and Economic Development will stand in recess until Wednesday, November 1st, at 2 o'clock p.m. Thank you. (Adjourned at 2:08 p.m.) - - - 210 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, October 24, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT BILL NO.'S 000355, 000546, 000180, 000181 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter