Committee Hearing, June 6, 2011

COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON FINANCE3 Room 400, City Hall6 Philadelphia, Pennsylvania Monday, June 6, 20117 1:30 p.m. PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR10 COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL CLARKE11 COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN12 COUNCILMAN WILLIAM K. GREENLEE COUNCILWOMAN BLONDELL REYNOLDS BROWN13 BILLS 110297, 110229, 110363, 110371, 110373, 110375, 110376, 110444, 110445, 110446 and15 110447 - - -17 2

Good2 afternoon. The Council Committee on3 Finance will come to order.4 Let me note that there is a5 quorum in the presses of Councilwoman6 Blackwell, Councilmen Green, Greenlee,7 Goode and myself.8 We'll now ask the Clerk to read9 the title of the bills that will be heard10 today.11

Bill No. A. 18 Bill No. 1 Bill No. 12 Bill No. 22 Bill No. 6 Bill No. 6 Bill No. 7 Bill No. 10 Bill No. 6 Bill No. 13 Bill No. 13

Okay.14 Thank you very much.15 We will now hear testimony on16 Bill No. 110297.17 (Witness approached witness18 table.)19

Good afternoon.20

Good21 afternoon. We understand you have an22 amendment on this bill. We heard23 testimony on this bill at the prior24 hearing, which was recessed until today.25 10 6/6/11 - FINANCE - BILL 110297, ETC.1

Yes. I have a2 proposed amendment to Bill No. 110297,3 which adds a new Section 3 to the bill.4 The amendment is in your packet, and I'd5 like to offer this up to the6 Sergeant-at-Arms.7

Could we8 get someone to get the amendment, please.9 This is the exhibit to the10 original bill that we heard testimony on,11 right?12

Yes, it is. It's13 attached as Exhibit B. It's the fair14 lending plan.15

The fair16 lending plan?17

Yes. So if you18 recall from my prior testimony, the Bill19 No. 1102 -- 100129.20

297?21

-- required --22 yes. It required a fair lending plan to23 be submitted. At the time the ordinance24 that's being submitted to extend for one25 11 6/6/11 - FINANCE - BILL 110297, ETC.1 year the term of the payroll contract2 required that this fair lending plan,3 which would otherwise have been due4 later, for it to be included with this5 ordinance.6

Okay. So7 you're presenting it today as an8 amendment because it was omitted when you9 introduced at the hearing --10

It was omitted.11

I forgot12 the date, when we had the original13 hearing.14

It was May 23rd.15

All right.16 Thank you very much.17

Are there any18 questions?19

Any20 questions?21 (No response.)22

I don't23 think so.24

Okay. Thanks.25 12 6/6/11 - FINANCE - BILL 110297, ETC.1

We'll now2 hear -- you might as well stay -- 110371.3

Good afternoon,4 Councilwoman Tasco and members of the5 Committee on Finance. I'm Nancy Winkler,6 City Treasurer for the City of7 Philadelphia, and I'm here to testify in8 support of Bill No. 110371.9 Bill No. 110371 authorizes City10 depositories to hold City funds without11 posting equivalent collateral, to the12 extent that such funds do not exceed the13 insurance provided by the Federal Deposit14 Insurance Corporation or Federal Savings15 and Loan Insurance Corporation.16 Effective December 31, 2010,17 the federal government implemented18 Section 343 of the Dodd-Frank Wall Street19 Reform and Consumer Protection Act, which20 provides for unlimited insurance coverage21 for non-interest-bearing transaction22 accounts. Beginning December 31, 201023 through December 31, 2012, all24 non-interest-bearing transaction accounts25 13 6/6/11 - FINANCE - BILL 110297, ETC.1 are fully insured regardless of the2 balance in the account at all3 FDIC-insured institutions. The unlimited4 insurance coverage is available to all5 depositors, including consumers,6 businesses and governmental entities.7 This unlimited insurance coverage is8 separate from and in addition to the9 insurance coverage provided to a10 depositor or deposit accounts held in an11 FDIC-insured institution.12 Interest-bearing accounts are separately13 covered by FDIC insurance up to $250,000.14 The proposed ordinance will allow15 authorized depositories to use FDIC16 insurance as collateral for17 non-interest-bearing transaction18 accounts.19 This concludes my testimony. I20 am happy to answer any questions you may21 have at this time.22

Are there23 any --24

And I would25 14 6/6/11 - FINANCE - BILL 110297, ETC.1 also -- I don't know if this is the right2 time, but ask to suspend the rules.3

Any4 questions?5 (No response.)6

Thank you.7 Next you have Bill No. 110375.8 (Witness approached witness9 table.)10

Good afternoon11 again. I'm Nancy Winkler, City Treasurer12 for the City of Philadelphia. With me is13 Joseph S. Clare, III, Deputy Water14 Commissioner for the Philadelphia Water15 Department. We are here to testify on16 behalf of Bill Nos. 110376 and 110375.17 Bill No. 110376 would provide18 authorization to issue Water and19 Wastewater Revenue Bonds in an aggregate20 principal amount of up to $450 million,21 exclusive of costs of issuance and22 certain other items.23 The bonds will provide new24 capital to partially finance capital25 15 6/6/11 - FINANCE - BILL 110297, ETC.1 projects approved and authorized in the2 FY12 through '17 capital budget and plan.3 Proceeds from the sale of the bonds shall4 be used exclusively for improvements to5 the City's water, wastewater and6 stormwater systems, including treatment7 plants, pumping stations, conveyance and8 collection piping and related equipment9 and facilities and for10 transaction-related costs.11 Bill No. 110375 authorizes the12 refunding of up to 240 million of13 currently outstanding Water and14 Wastewater Revenue Bonds for savings.15 Candidates for refunding shall be16 identified and selected based on our17 existing debt policy. It is the City's18 general practice to issue refunding bonds19 when the average debt service savings to20 be realized from a refunding is at least21 3 percent. It is expected that the net22 debt service after the authorized23 refundings will be lower than the24 existing debt service, providing25 16 6/6/11 - FINANCE - BILL 110297, ETC.1 potential debt service expense reductions2 to offset increases in other water fund3 costs.4 This concludes my testimony.5 I'm happy to answer any questions that6 you may have at this time. And, again,7 I'd like to ask for a suspension of the8 rules.9

Thank you10 very much.11 Who are the participants on the12 bonds? Have you made those selections13 yet?14

We have not fully15 completed the selection of the team16 members. We presently have selected17 co-bond counsels, which are Andre Dasent18 and Ballard Spahr. We have issued a19 request for proposals for financial20 advisors, which is underway, and four21 firms have been short-listed, and we22 expect to have co-financial advisors23 appointed within the next several weeks,24 after which time we would proceed with25 17 6/6/11 - FINANCE - BILL 110297, ETC.1 the selection of underwriters. But it is2 our practice and our intent to have a3 diverse team of financial advisors and4 underwriters participating, along with5 the selected co-bond counsels.6

Does the7 Office of Equal Opportunity participate8 in this process?9

The Office of10 Equal Opportunity has been invited to11 participate in the process and informed12 of our process and of the dates of our13 meetings and evaluations, yes.14

All right.15 Thank you.16 Councilman Bill Green.17

Thank you.18 Have they attended any of your19 meetings?20

They did not21 attend the short-list meeting for -- they22 were invited, but they did not attend the23 short-list meeting.24

Okay. To25 18 6/6/11 - FINANCE - BILL 110297, ETC.1 what extent is the focus of these2 meetings on involving Philadelphia-based3 underwriters in the short list for4 underwriters?5

We have not had6 any meetings related to the selection of7 underwriters.8

Do you plan9 to attempt to have at least four10 Philadelphia-based underwriters as part11 of the co-management team?12

We do weight13 Philadelphia -- whether or not a company14 is Philadelphia based or has a strong15 Philadelphia presence in the selection16 process. I'm not sure we have a minimum17 number of firms as a standard practice,18 but it's a factor in the selection19 process.20

So you21 haven't issued an RFP for these22 underwriters yet?23

There was an RFP24 issued two years ago, which -- well,25 19 6/6/11 - FINANCE - BILL 110297, ETC.1 there was an RFP which was concluded and2 which established a team of authorized3 underwriters authorized to serve as a4 senior manager in the co-manager pool for5 the water revenue bonds. That pool is6 already in place and will be in place7 until the end of this calendar year. So8 what we'll be doing is selecting from9 that pool which already exists.10

Who is that11 pool?12

I'm sorry. I13 don't have that list with me.14

Okay. I ask15 this question every time there's a bond16 offering about local participation, and17 you get the question about minority and18 women-owned participation, and every time19 you come before us -- and it's not you.20 It's happened for three years and five21 months of my presence on City Council --22 it's never known, and then we pass the23 bill and then like a week later the24 underwriters are picked.25 20 6/6/11 - FINANCE - BILL 110297, ETC.1 And so I personally want to try2 to see you have the answers to those3 questions prior to us authorizing this.4 You've had the list for over two years.5 You know who you're going to pick or you6 know who you're going to recommend in7 those meetings, and it's not appropriate8 for you to come and ask us to approve9 something when you're not coming here10 prepared to give us all of the11 information. And I think who the12 underwriters are and how this is going to13 get sold is an appropriate thing for us14 to know prior to giving you the15 authorization to go to market.16 So I don't really have any17 questions. I just want to put that on18 the record, and that will be my stance19 going forward. I will vote to get this20 out today.21

Any other22 questions?23 (No response.)24

We'll vote25 21 6/6/11 - FINANCE - BILL 110297, ETC.1 it out of Committee, but before we pass2 it, we'd like to have that information,3 please.4

So what we'll be5 able to give you --6

We'd like7 to see the list of the underwriters that8 you have approved.9

The list. We10 certainly can give you the list.11

All right.12 Thank you.13

Any other14 questions?15

Any other16 questions?17 (No response.)18

You're19 here again for the PGW bonds.20

Yes.21

Is22 Mr. Bogdonavage here?23

Yes, he is.24 (Witness approached witness25 22 6/6/11 - FINANCE - BILL 110297, ETC.1 table.)2

Good3 afternoon.4

Good5 afternoon.6

So good7 afternoon, Councilwoman Tasco and members8 of the Committee on Finance. I am Nancy9 Winkler, City Treasurer for the City of10 Philadelphia. With me is Joseph R.11 Bogdonavage, Interim Executive12 Vice-President and Chief Financial13 Officer for the Philadelphia Gas Works.14 We are here to testify on behalf of Bill15 Nos. 110445 and 110447.16 Council Bill No. 110445 would17 authorize the issuance of Twentieth18 Series Gas Works Revenue Bonds (the19 "Twentieth Series Bonds") in an amount20 not to exceed $19 million in proceeds.21 The proceeds of the sale would pay the22 cost of refunding or redeeming a portion23 of certain outstanding Sixteenth Series24 Bonds and other project costs.25 23 6/6/11 - FINANCE - BILL 110297, ETC.1 Council Bill No. 110447 as2 originally submitted would provide3 authorization to issue up to 106 million,4 exclusive of costs of issuance and5 certain other items, of Tenth Series Gas6 Works Revenue Bonds (the "Tenth Series7 Bonds"). Today we are submitting a8 proposed amendment to that ordinance to9 authorize up to $145 million of Tenth10 Series Bonds, and I have that amendment11 here with me and it should be in your12 packet as well.13 Candidates for refunding shall14 be identified and selected based on the15 City's existing debt policy. It is the16 City's general practice to issue17 refunding bonds when the average debt18 service savings to be realized from a19 refunding is at least 3 percent. It is20 expected that the net debt service after21 the authorized refundings will be lower22 than the existing debt service, providing23 potential debt service expense reductions24 to offset increases in other Gas Works25 24 6/6/11 - FINANCE - BILL 110297, ETC.1 fund costs. Given the interest rate2 volatility in the current market, the3 ordinance is structured to permit us to4 determine based on interest rates at the5 time of issuance to select several6 structures for the refunding. We are7 evaluating and will monitor the market8 for potential partial termination of a9 swap as part of this transaction. The10 proceeds of the sale would pay for the11 cost of refunding or redeeming certain12 outstanding Gas Works Revenue Bonds, any13 termination payments which may come due14 under a Qualified Swap Agreement in15 connection with the redemption or16 conversion of all or any portion of a17 certain Gas Works Revenue Bonds and other18 project costs. These transactions, if19 fully executed, could result in net20 present value savings over the life of21 the transaction in excess of 4 percent,22 or $4 million.23 This concludes my testimony.24 I'm happy to answer any questions you may25 25 6/6/11 - FINANCE - BILL 110297, ETC.1 have at this time, and I'd like to ask2 for a suspension of the rules.3

Now, does4 your department, do you select the team5 for these bonds also?6

Yes.7

So where8 are we with that?9

So where we are10 with that is, we have selected the11 co-bond counsels for that, which is Andre12 Dasent and Phoenix -- I'm sorry; Andre13 Dasent and Blank Rome, and the14 co-financial advisors are Public15 Financial Management and Phoenix16 Advisors.17

Okay.18

We have not19 selected underwriters yet.20

So when do21 you plan to select the underwriters?22

We are still --23 just by way of background, for both the24 Water and the PGW, we recently ran a25 26 6/6/11 - FINANCE - BILL 110297, ETC.1 competitive process, which is not yet2 concluded, for letter of credits. The3 City has letters of credits out that are4 coming to the end of their terms in5 August and early September for the GO,6 the Water and PGW. And so what we chose7 to do was to run a competitive process8 for all three of them, trying to get much9 better pricing and better business terms,10 and we're evaluating those responses and11 are thinking about the effect of the12 value of the savings and benefits that13 the City is deriving from that RFP14 process and factoring that into the15 selection of the underwriting teams.16

So you17 won't know until the fall?18

So it would be --19 we're probably a couple of weeks away20 from having gone through a process of21 evaluating those responses and then22 factoring that into the team, building23 the teams on the two transactions.24

Do you25 27 6/6/11 - FINANCE - BILL 110297, ETC.1 also factor in our concern for diversity2 and local preference?3

Yes, we will.4

Councilman5 Green.6

Thank you.7 Will that be done before June8 16th?9

I don't think10 we're going to be able to have completed11 that for the Water by June 16th, because12 we won't have selected the financial13 advisor, and we would anticipate14 financial advisor would participate with15 us. We don't have any meetings scheduled16 to evaluate the underwriters by then,17 but --18

When do you19 expect to go to market?20

Probably -- well,21 the PGW letter of credit expires on22 August 19th, so we will have concluded --23 we would hope to have sold the bonds in24 July. But it may be -- it would be25 28 6/6/11 - FINANCE - BILL 110297, ETC.1 probably towards the end of July, would2 be my guess.3

We've4 discussed in private and before in public5 the potential of doing auction sort of6 processes with respect to -- instead of7 firm underwritten offerings and revenue8 bonds seem especially well suited to9 that, Water, et cetera. Is there any10 plan to look at these offerings as the11 potential to go that route?12

Well, the Water13 transaction is a new money transaction14 and a refunding transaction, and it would15 be somewhat challenging to incorporate16 the refunding, although it's possible, to17 incorporate a refunding transaction.18 It's far less common to do that in a19 competitive sale.20 We're also -- so, no, we don't21 at this point for the Water, which22 it's -- we could theoretically sell those23 competitive. I think to try to sell24 the -- I don't think it's feasible to25 29 6/6/11 - FINANCE - BILL 110297, ETC.1 sell the PGW bonds competitive. However,2 I have had conversations with you about3 seeking to create -- to look at4 competitive opportunities, and we are at5 this point seriously considering and will6 most likely proceed with a competitive7 sale of the City's trans.8

Okay. Thank9 you.10

Any other11 questions?12 (No response.)13 COUNCILWOMAN TASCO:14 Mr. Bogdonavage, would you please explain15 why PGW believes it is a good idea to16 refund certain of its long-term bonds?17

Certainly.18 Good afternoon, Councilwoman Tasco and19 members of the Committee of Finance.20 Right now PGW has, as21 Ms. Winkler pointed out, two ordinances22 before you, one to refund up to $1923 million of the 1975 ordinance bonds and24 up to $145 million of the 1998 ordinance25 30 6/6/11 - FINANCE - BILL 110297, ETC.1 bonds. The combination of both of those2 transactions will result in a net present3 value savings of about 4 percent, or4 north of $4 million, which would save PGW5 and the ratepayers that interest cost as6 we go forwards. So at this point in7 time, with the favorable interest rates8 that are in the marketplace, we think it9 is very prudent to take advantage of the10 market and also to at this point in time11 have about a $4 million plus savings that12 we can pass on through the reduced13 expenses that PGW is paying to the market14 right now for interest.15

Why does16 Bill 110447 need to be amended to17 increase the maximum refunded bonds from18 106 million to 145 million?19

Initially we20 had done some sensitivity analysis, along21 with our financial advisors, and the22 reason that the increase up to 14523 million, there is a component of PGW's24 Eighth Series Bonds that are variable25 31 6/6/11 - FINANCE - BILL 110297, ETC.1 rate. Right now there's $255 million of2 those outstanding. PGW is in the process3 with the City of looking at the financial4 economics of whether or not we would be5 switching these over to a fixed-rate6 mode, and if that's the case, obviously7 when the ordinance was introduced at $1068 million, it did not give us the9 flexibility to consider refunding some of10 these bonds or converting them from11 variable rate to fixed. The amendment up12 to 145 now gives us the ability to, if it13 is economically possible, to refund these14 or convert these bonds that were not15 contemplated in that 106 million16 ordinance as it was originally17 introduced.18

In your19 testimony on , you state there20 could be a total savings of $4 million if21 all of the anticipated transactions are22 done. Could you please break down the23 savings between the two bills. Is the 424 million savings figure based on the25 32 6/6/11 - FINANCE - BILL 110297, ETC.1 106 -- I think you just did that, said2 that -- or on the 145 million?3

Well, the4 components that make up the in excess of5 $4 million, the Bill 110445, which is the6 up to $19 million of 1975 ordinance7 bonds, at today's rates look like about8 somewhere between 800,000 and a million9 dollar savings of that 4 million that I10 mentioned. And then additionally, in the11 Bill 110447, up to $145 million, there's12 two components of that. We would be13 refunding some Series A bonds of the 199814 ordinance, Series 2 and 3, and that has15 about $2 million of savings with it. And16 if PGW goes ahead and converts some of17 the variable-rate bonds to fixed, there18 would be an additional savings of19 probably up to about a million and a half20 to $2 million of additional savings.21 So they're the three22 components. The first bill for the 1923 million is about 800 to a million24 dollars. The second bill, 447, is about25 33 6/6/11 - FINANCE - BILL 110297, ETC.1 roughly three to three and a half million2 dollars of savings on the 1998 issued3 bonds.4

Thank you.5 Any other questions?6 (No response.)7

Thank you8 very much.9

Also, I don't10 know if Ms. Winkler had asked, we'd like11 for a suspension of the rules on the12 bill.13

Okay.14

Thank you.15

Thank you.16 We will now hear testimony on17 Bill 110373, Mr. Alan Greenberger.18 (Witness approached witness19 table.)20

Good21 afternoon.22 DEPUTY

Good23 afternoon, Madam Chair, members of the24 Committee. I'm Alan Greenberger, Deputy25 34 6/6/11 - FINANCE - BILL 110297, ETC.1 Mayor for Economic Development and2 Director of Commerce. I'm here to3 testify in support of Bill No. 110373 as4 offered today, which includes one small5 technical correction suggested by the6 City Solicitor's Office. There's a7 change of a single word.8 This bill amends Section9 19-2600 of The Philadelphia Code relating10 to the business privilege tax by11 excluding from the tax certain12 investments made under the Department of13 Treasury's New Market Tax Credit program.14 New Market Tax Credits are an15 economic development tool created by the16 federal government to encourage private17 investment in low-income communities.18 Local economic development financing19 providers like the Philadelphia20 Industrial Development Corporation have21 received allocations in the past, along22 with national financing providers like23 Wells Fargo and The Reinvestment Fund.24 The program requires the creation of a25 35 6/6/11 - FINANCE - BILL 110297, ETC.1 single-purpose entity to act as a conduit2 for the tax credits allocated to each3 project.4 A strict interpretation of the5 current requirements of the Code would6 make these single-purpose entities7 subject to the business privilege tax.8 This local tax inadvertently reduces the9 benefit of an important federal incentive10 program to low-income areas of the City.11 Decisions about which projects the12 credits are applied to are up to each13 economic development financing provider,14 so it is important that Philadelphia's15 treatment of this benefit is consistent16 with the rest of the United States.17 Taxing the federal credits18 passing through single-purpose entities,19 created solely to comply with New Market20 Tax Credit regulation, reduces the amount21 of the federal incentive available to22 actually close project funding gaps for23 City-based projects. When seeking24 funding from a national financing25 36 6/6/11 - FINANCE - BILL 110297, ETC.1 provider, Philadelphia projects actually2 compete nationally for the limited3 resources provided throughout the New4 Market Tax Credit program. Without5 action, we run the risk of discouraging6 national financing providers from7 investing in projects here if there is a8 perception that Philadelphia is unique in9 taxing these benefits.10 This change would also benefit11 projects seeking New Market Tax Credit12 through local financing providers. For13 example, PIDC was successful in securing14 $60 million in tax credits for investment15 in areas identified by the Census Bureau16 as low-income communities throughout the17 City. PIDC's allocation leveraged $14818 million of private investment into19 Philadelphia, which would not have20 occurred but for the availability of New21 Market Tax Credits in Philadelphia.22 There are very few cities in23 the country where the local tax code has24 this unintended consequence. Washington,25 37 6/6/11 - FINANCE - BILL 110297, ETC.1 DC encountered the same problem with its2 business tax and they amended their code3 to remove this tax liability from the4 program. Philadelphia needs to take5 similar action to remain competitive.6 Let me emphasize that this does7 not exempt the private developer from8 payment of the BPT in full on their9 business activity in the City. This10 exemption only affects revenues of the11 new special-purpose entities created to12 implement the program which revenues13 would otherwise be exempt.14 This concludes my testimony. I15 ask that the Committee report this bill16 out with a favorable recommendation, with17 a recommendation that the rules of18 Council be suspended to permit first19 reading at the next regularly scheduled20 meeting of the whole Council.21 Thank you for opportunity to22 testify. I'll be happy to answer23 questions.24

Are there25 38 6/6/11 - FINANCE - BILL 110297, ETC.1 questions?2 (No response.)3

Thank you4 very much.5 DEPUTY MAYOR GREENBERGER:6 You're welcome. Thank you.7

We will8 now hear from Commissioner Michael9 DiBerardinis relative to Bill 110363.10 (Witnesses approached witness11 table.)12 COMMISSIONER DiBERARDINIS:13 Good afternoon.14

Good15 afternoon.16 COMMISSIONER DiBERARDINIS:17 Councilwoman Tasco, members of the18 Committee, my name is Michael19 DiBerardinis, Deputy Mayor and Parks and20 Recreation Commissioner. With me today21 is Mark Focht, First Deputy Commissioner22 for Parks and Facilities. It is a23 pleasure to be here with you today, and24 before I start my formal testimony, I25 39 6/6/11 - FINANCE - BILL 110297, ETC.1 want to thank Councilwoman Reynolds Brown2 and Councilman Kenney for their work on3 this ordinance and their continued4 support of the Parks and Recreation5 Department.6 I appear before you today to7 present testimony in support of Bill No.8 110363, which, if adopted, would allow9 the Department to retain needed revenue10 from competitively bid agreements to11 support the Fairmount Park system to a12 safe, clean and ready-to-use state for13 all Philadelphians. This ordinance would14 establish a Parks and Recreation Programs15 and Facilities Fund into which revenue16 would be deposited from competitively17 awarded agreements that utilize areas and18 facilities in the Park. The Department19 of Parks and Recreation would then be20 authorized to spend money from this fund21 to support programming and/or care for22 the facilities in the Fairmount Park23 system.24 Two recent agreements which25 40 6/6/11 - FINANCE - BILL 110297, ETC.1 demonstrate the benefits of revenue2 generation and retention are special3 event management at the Fairmount Park4 Horticulture Center and the new Cosmic5 Cafe at Lloyd Hall. In both cases, a6 concessionaire was selected through a7 citywide competitive RFP process. Parks8 and Recreation worked with the Budget and9 Finance Offices to determine the amount10 to retain and how these funds would be11 used to support operations, programming12 and/or capital needs of the specific site13 or the Fairmount Park systemwide. This14 process allows for funding generated by a15 private operator to be reinvested in a16 facility or site, removing that cost from17 the City's operating or capital funds.18 This ordinance is rooted in the19 history of our Fairmount Park, when in20 1868 the Pennsylvania General Assembly21 first directed the Fairmount Park22 Commission to deposit revenue generated23 from activities in the park to a fund24 established exclusively for the purpose25 41 6/6/11 - FINANCE - BILL 110297, ETC.1 of caring and enhancing the park system.2 Numerous other municipal park systems3 utilize similar arrangements to support4 programming, operations and maintenance.5 These municipal park systems include St.6 Louis, New York, Los Angeles, Seattle and7 Minneapolis. I am happy to share this8 best practices data with the Committee.9 Therefore, I am requesting this10 Committee's favorable consideration of11 Bill No. 110363, and I ask that the rules12 be suspended so that the ordinance may be13 passed upon the second reading of14 Council.15 I would also like to thank the16 Parks and Recreation Commission and17 specifically the Commission's Revenue18 Enhancement Committee for their19 leadership and work. I would also like20 to thank our colleagues in the Law,21 Budget and Finance Department, as well as22 our own Parks and Rec staff who worked23 hard on this ordinance.24 Thank you for your attention.25 42 6/6/11 - FINANCE - BILL 110297, ETC.1 I'd be happy to answer any questions.2

Thank you3 very much.4 You have a special events5 person now that runs the Horticulture6 Center? If there's an event there, do7 you work with this concessionaire?8 DEPUTY COMMISSIONER FOCHT:9 Correct.10 COMMISSIONER DiBERARDINIS:11 I'll allow Mark to answer that.12 DEPUTY COMMISSIONER FOCHT:13 Mark Focht, First Deputy Commissioner.14 The special events of the15 Horticulture Center are currently managed16 by Stephen Starr Catering. They were the17 successful firm selected through the18 competitive RFP process that was held19 about two years ago.20

So if an21 individual wants to utilize the22 Horticulture Center, they would negotiate23 with him --24 DEPUTY COMMISSIONER FOCHT:25 43 6/6/11 - FINANCE - BILL 110297, ETC.1 Correct.2

-- in3 terms of all of the details?4 DEPUTY COMMISSIONER FOCHT:5 Yes. Yes. They book the facility for6 special events.7

Do they8 operate out of that? Otherwise, do they9 have a restaurant or something in there?10 DEPUTY COMMISSIONER FOCHT: Not11 at the Horticulture Center. It's only12 open for special events.13

So it's14 just the managing outside events?15 DEPUTY COMMISSIONER FOCHT:16 Correct.17

Thank you.18 Any other questions?19 Councilman Green.20

Thank you.21 How does this -- the end of the22 ordinance states that any monies to be23 spent from this special fund must be24 authorized in the budget and by25 44 6/6/11 - FINANCE - BILL 110297, ETC.1 ordinance. How does that relate to like2 next year where we won't have authorized3 any funds from this fund to be spent on4 behalf of the park, at least when we pass5 the budget this month, unless there's an6 amendment that is forthcoming?7 DEPUTY COMMISSIONER FOCHT:8 Councilman, we believe there is an9 amendment forthcoming. We have provided,10 at the request of Budget and Finance, the11 projections of revenue from both the12 operators at the two facilities, Cosmic13 Cafe at Lloyd Hall and the Hort Center14 special events agreement, provided the15 projected revenue from both the operators16 and the associated projected expenses.17

And what are18 the revenues?19 DEPUTY COMMISSIONER FOCHT: The20 revenues combined between the two21 concession agreements is about $135,00022 in Fiscal Year '12.23

Between the24 two concessions?25 45 6/6/11 - FINANCE - BILL 110297, ETC.1 DEPUTY COMMISSIONER FOCHT: The2 two combined. It's about $30,000 from3 Lloyd Hall and about 105,000 from the4 Horticulture Center. Again, they are5 projected bookings that were in response6 to the RFP.7

Thank you.8

The Chair9 recognizes Councilwoman Brown.10

Good11 afternoon. Please speak in some12 additional detail around the catering13 contract and how that -- where you14 started and where you ended up in terms15 of the announcement to the world that it16 existed, how many persons ultimately17 submitted a proposal, et cetera.18 DEPUTY COMMISSIONER FOCHT:19 This would have been for the Horticulture20 Center. We released an RFP approximately21 just shy of two years ago now. I do not22 remember how many folks attended the23 pre-proposal meeting, but there were24 many. We believe we received, if I25 46 6/6/11 - FINANCE - BILL 110297, ETC.1 recall correctly, four proposals. It was2 narrowed to two firms. We had3 face-to-face interviews with two firms,4 and ultimately selected Stephen Starr5 Catering. The selection was made by a6 committee that included representatives7 of Parks and Recreation, Procurement and8 the Office of Economic Opportunity.9

Would you10 please submit to the Chair the list of11 all contracts held by restauranteurs who12 do business with any of the Fairmount13 Park and Recreation facilities?14 DEPUTY COMMISSIONER FOCHT:15 Certainly.16

And let me17 just ask one subsequent question. So the18 current contract is in place for how many19 years and what is the renewal?20 DEPUTY COMMISSIONER FOCHT: The21 agreement -- I'll take them separately.22 The agreement with Stephen Starr events23 for Lloyd Hall was a one-year agreement24 with three one-year renewals. We just25 47 6/6/11 - FINANCE - BILL 110297, ETC.1 exercised the beginning of the second2 year. And then the Cosmic Cafe at Lloyd3 Hall, which your committee approved this4 morning, would be a five-year agreement5 with a five-year extension.6

Okay. So7 if you will submit that information to8 the Chair, that will give us a broader9 picture of what's happening systemwide10 when it comes to how well the City is11 doing with contractors, et cetera. I'll12 leave it there.13 DEPUTY COMMISSIONER FOCHT:14 Certainly.15

Thank you.16

One of the17 concerns I have is the cost of utilizing18 these facilities prior to -- I don't know19 what the fees are here or the scale, but20 when the City was managing this, the21 costs were very high. An average person,22 middle-income person, found it very23 difficult to rent, utilize those24 facilities.25 48 6/6/11 - FINANCE - BILL 110297, ETC.1 Are the costs going to be in2 the range where Ms. Average Philadelphian3 can rent these places, utilize these4 places, or are they going to be so5 expensive only the wealthy can use them?6 DEPUTY COMMISSIONER FOCHT: No,7 Councilwoman. We believe that in both8 cases -- let me speak specifically about9 the Horticulture Center, because that's10 the one that's used for more special11 events. There's a multi-tiered price12 structure for the use of the event, and13 it's kind of like a menu of different14 options depending on which rooms, how15 much time. There is also a non-profit16 rate that's for the use of the facility.17 So there's a base facility rent, and then18 depending on the extent of catering or19 other service you want, the price20 obviously goes up from that. But we feel21 that the base rent, the base fees, are22 very competitive throughout the City and23 then there is a non-profit discount on24 that.25 49 6/6/11 - FINANCE - BILL 110297, ETC.1

They're2 competitive you think with the local3 hotels or catering facilities?4 DEPUTY COMMISSIONER FOCHT:5 Yes. Yes. They're very competitive with6 local hotels or catering, considering7 that at the Horticulture Center you have8 both an indoor and outdoor option. So9 you can book your event outdoors and if10 it rains that day, you can move it11 inside, and also we have a 300-car12 parking area. There are many different13 benefits to that facility that make it14 very competitive with other facilities.15

Thank you.16 The Chair recognizes Councilman17 Green.18

Thank you.19 Are you doing the same sort of20 thing with libraries? Is there a plan to21 set up a special fund for concessionaires22 in the library system or in the23 libraries?24 COMMISSIONER DiBERARDINIS: Not25 50 6/6/11 - FINANCE - BILL 110297, ETC.1 at this point. There may be. But it2 would sort of fall in the realm of the3 foundation -- the library foundation in4 terms of leading that. But certainly not5 opposed to it, but it would have to be6 worked out with the trustees and the7 foundation to see if their interest is8 strong to move this forward.9

Okay. I10 mean, it's just parks, libraries, recs,11 it seems like we're on a very slippery12 slope where we're taking dedicated13 funding out of the City's revenue pool14 and putting it into these resources. Is15 the intention to spend this money on16 things that are not being spent on the17 Park or is it to supplant General Fund18 dollars with the money that's then in19 these funds, or that will depend on a20 year-to-year basis?21 COMMISSIONER DiBERARDINIS:22 Look, certainly my hope is it is not a23 dollar-for-dollar replacement. I mean,24 so my hope is this enhances both our25 51 6/6/11 - FINANCE - BILL 110297, ETC.1 capital funds, enhances that capital fund2 investment that the City makes, leverages3 it, but my hope isn't that we raise4 hundred thousand dollars or whatever in5 the future, we raised 500,000 and that6 goes against our capital budget. I hope7 it doesn't work that way. It's not my8 assumption. My view is this adds to our9 ability to invest in our infrastructure10 over time, not that it remains a flat11 gain.12

But it will13 be our discretion by ordinance as to what14 we appropriate given what's in the fund15 every year, et cetera?16 DEPUTY COMMISSIONER FOCHT:17 Correct.18 COMMISSIONER DiBERARDINIS:19 Yes.20

Okay. Thank21 you.22

And this23 is just for the Park facilities, not the24 Recreation Department facilities?25 52 6/6/11 - FINANCE - BILL 110297, ETC.1 COMMISSIONER DiBERARDINIS:2 That's correct.3

Thank you4 very much. Do you want a suspension of5 the rules?6 DEPUTY COMMISSIONER FOCHT:7 Yes, please.8 COMMISSIONER DiBERARDINIS:9 Thank you.10

Thank you.11 Next we have Water Department,12 Bill 110446.13 (Witnesses approached witness14 table.)15

Thank you.16 Good afternoon. Would you state your17 name for the record and begin your18 testimony.19 COMMISSIONER NEUKRUG: Good20 afternoon, Chairwoman Tasco and members21 of the Committee. I am Howard Neukrug,22 Water Commissioner, appearing before you23 this afternoon to testify regarding Bill24 No. 110446. I'm joined by Joe Clare,25 53 6/6/11 - FINANCE - BILL 110297, ETC.1 Deputy Commissioner for Finance for the2 Water Department, and Joanne Dahme,3 General Manager for Public Affairs.4 This ordinance closes a5 loophole that currently allows property6 owners who apply for a discontinuance7 permit, otherwise known as D-Permit, to8 avoid stormwater service charge billing.9 A D-Permit is an accounting tool used by10 the Water Department and the Water11 Revenue Bureau to signal that a12 property's water and sewer services have13 been turned off or discontinued. The14 current language in the Code did not15 anticipate the new method for charging16 for stormwater services and thus this17 clarification or correction is needed.18 By closing this loophole, we19 will help ensure that property owners pay20 for their share of the cost to treat21 stormwater, even during periods when22 there is no water or sewer service to a23 property, and that's since stormwater and24 the cost required to treat its impact can25 54 6/6/11 - FINANCE - BILL 110297, ETC.1 never be shut off or discontinued.2 As you know, the Water3 Department initiated a new parcel-based4 stormwater billing system for5 non-residential properties on July 1st,6 2010. These charges are currently being7 phased in over four years. More8 recently, we have recognized that the9 impacts of these changes on our most10 highly impacted customers have justified11 early action for additional assistance.12 Our four-part plan to help these13 customers includes, one, established a 1014 percent cap for Fiscal Year 2011 and 201215 for these mostly high impacted customers;16 two, implemented a Customer Advisory17 Committee to review the phase-in process18 and other issues for the stormwater19 rates; three, initiated a low interest20 loan program and are investigating other21 innovative incentive-based programs to22 provide parcel credits; and, four, we've23 offered to support for this legislative24 action to close the D-Permits loophole.25 55 6/6/11 - FINANCE - BILL 110297, ETC.1 Indeed, this information was2 shared with the Customer Advisory3 Committee in a meeting on May 19th, and4 the members have indicated their5 preliminary support for this action. In6 general, they felt that every parcel7 contributes stormwater runoff to our8 system and that these costs need to be9 shared by all who benefit.10 Thank you for your11 consideration and this opportunity to12 testify. I'd like to ask that the rules13 be suspended, and I'd be happy to address14 any questions you may have.15

Thank you.16 The Chair recognizes Councilman17 Greenlee.18

Thank19 you, Madam Chair.20 Good afternoon. I know in your21 testimony you say about that you expect22 the actual collection rates will be low23 initially. Are a lot of these24 properties -- you say there's 19,000 of25 56 6/6/11 - FINANCE - BILL 110297, ETC.1 them. I assume when somebody takes one2 of these D-Permits, they're not intending3 to do anything for a long time, I guess,4 right?5 COMMISSIONER NEUKRUG: That's6 generally correct, yes. These D-Permits7 are for the actual physical disconnection8 of the water service line.9

Right.10 Right. So, I mean, are these -- I guess11 that's why you say they will be low12 initially. Is your thinking eventually13 these folks will start to do something14 with the properties and then -- I mean,15 would it be normally that you think they16 would pay the bills while they're not17 doing anything with the property?18 COMMISSIONER NEUKRUG: Well,19 some of these properties are vacant or20 not paying their taxes nor water bills.21

That's22 what I was getting at.23 COMMISSIONER NEUKRUG: And we24 will continue to certainly for the year25 57 6/6/11 - FINANCE - BILL 110297, ETC.1 term have those kinds of issues into the2 future, but we're also looking at a3 number of properties that have D-Permits4 that may be a parking lot or may be5 another type of facility that has either6 its entire or a piece of its property7 under a D-Permit condition.8

Now, the9 property once these -- the ones you just10 talked about that aren't paying taxes,11 water bills, whatever, or any kind of12 bills whatsoever, when they want to do13 something with the property and they -- I14 don't know what the word is --15 discontinue the discontinuation, I guess,16 are they expected to pay everything17 before they get that permit to restore18 water service?19 COMMISSIONER NEUKRUG: Yes, and20 there are a number of different21 variations to that theme, but generally22 if the City is taking over the property,23 the City is exempt, the RDA is exempt24 from this process, and it is certainly25 58 6/6/11 - FINANCE - BILL 110297, ETC.1 the intent of both the City of2 Philadelphia and the Philadelphia Water3 Department, who'd really like to see4 these sites developed -- we'd much rather5 have a water/wastewater/stormwater6 customer than a stormwater-only customer.7 So we're looking forward to working with8 any property owner who is looking to9 redevelop their property.10

Last11 question. Do many people, once they take12 these permits out, do a lot then13 eventually move to reopen it, to restore14 service, or are the vast majority of15 these places eventually taken over by a16 government entity?17 COMMISSIONER NEUKRUG: I think18 the past trends that -- I'm speaking very19 generally here -- is that not a lot has20 happened with these vacant lots, but I21 think as we see the City of Philadelphia22 move to redevelop and become a bigger and23 better city, that we will see more and24 more action to put these vacant lots back25 59 6/6/11 - FINANCE - BILL 110297, ETC.1 into the private payroll.2

So you're3 talking mostly -- are you talking about4 mostly lots here? Is that what you're5 talking about mostly?6 COMMISSIONER NEUKRUG: These7 are parcels that have no water service or8 sewer service. So you can imagine that9 there may be some entity such as parking10 lots that may not require water service,11 but most certainly all homes and most12 businesses require at least a toilet.13

You use14 the word "lot" as opposed to structure15 only, or were you just using that as a16 general term?17 COMMISSIONER NEUKRUG: It could18 have a structure on it, but, again, the19 structure would typically be unoccupied.20

Right.21 Okay. Thank you.22 Thank you, Madam Chair.23

The Chair24 recognizes Councilwoman Blackwell.25 60 6/6/11 - FINANCE - BILL 110297, ETC.1

Thank2 you, Madam Chair.3 I do have a question about4 this. I think this could be a5 disincentive. We're already with our6 stormwater rates trying to -- or7 earmarked to collect $120 million. This8 is another 5 million, and it seems to me9 that -- this sounds and feels like a tax10 increase to me. And we have been talking11 a lot about where we want to -- if we12 want to deal with tax increases and how13 we want to do it. And in addition, it14 seems to me that this is a disincentive15 to businesses.16 Lots where we may be able to17 get people to invest on all of the sudden18 have another bill that they didn't know19 about. I think we need to consider this,20 Madam Chair, before we act.21 Thank you.22 COMMISSIONER NEUKRUG: Is that23 a question for me?24

Yes.25 61 6/6/11 - FINANCE - BILL 110297, ETC.1 COMMISSIONER NEUKRUG: Okay.2 Well, thank you, Councilwoman, and as we3 have talked, this, first of all, is4 certainly not a tax increase. This is a5 recovery of utility funds, and right now6 we are approximately a $120 million year7 utility, and those funds are required to8 be received by the Water Department from9 the ratepayers of the City of10 Philadelphia. And I guess the question11 going back is, who should be those12 ratepayers, and the more -- the larger13 the group of people that are out there14 that are supporting this through their15 parcel-based system, the lower the fees16 could be for everyone.17 So we're looking at this as18 part of the relief package that we have19 here for those customers who are highly20 impacted and those others within the City21 of Philadelphia who are being hit with22 stormwater fees, that everyone pay their23 fair share, and that includes vacant24 parcels, that includes properties such as25 62 6/6/11 - FINANCE - BILL 110297, ETC.1 Loews and other sites where they may have2 a piece of parking lot that has a3 Discontinued Permit associated with it.4 So it's a reasonable approach5 to take. No one likes to be charging6 anybody for any product, but the7 stormwater service fees do have to be8 collected.9

We10 have not yet received the 120 million11 that we're trying to get, in addition to12 squeezing out the last penny, and it just13 seems to me that those who may invest in14 small businesses don't know if --15 everybody who invests is not Loews or16 another big business, and this just17 pushes it a little bit over the edge, in18 my opinion.19 COMMISSIONER NEUKRUG: Okay.20

Thank21 you.22 COMMISSIONER NEUKRUG: And for23 us, it's a question of fairness to the24 ratepayers for the City of Philadelphia.25 63 6/6/11 - FINANCE - BILL 110297, ETC.1

Do you2 want to put on the record that everybody3 is paying the stormwater fee, that we all4 pay the stormwater fee.5 COMMISSIONER NEUKRUG: Everyone6 should be paying the stormwater fees.7

So right8 now these individuals are not paying the9 stormwater fee?10 COMMISSIONER NEUKRUG: That's11 correct, yes.12

But13 this is new fees.14 COMMISSIONER NEUKRUG: If I can15 clarify.16

Would you,17 please.18 COMMISSIONER NEUKRUG: Yes.19 The $5 million is not associated with a20 new fee above the 120. The $5 million21 represents the ability of us to22 reapportion that $120 million and find23 another class of customer that should be24 contributing to pay in that 120. So it's25 64 6/6/11 - FINANCE - BILL 110297, ETC.1 not 120 plus 5. It's 120 million is the2 utility costs that we are trying to3 recover, and here is 19,000 parcels in4 the City of Philadelphia that are not5 contributing to that $120 million. The6 portion of that that we're thinking about7 is somewhere around $5 million worth of8 recoverable funds. So it's finding --9 and when you do that, then, of course,10 everyone's fees are reduced throughout11 the customer classes.12

Councilman13 Green.14

Thank you.15 Just if you can remind me, the16 City is exempt from this fee, the general17 fee that applies to all commercial18 properties?19 COMMISSIONER NEUKRUG: That's20 correct, yes.21

Is the state22 and federal government exempt?23 COMMISSIONER NEUKRUG: The24 City-owned properties.25 65 6/6/11 - FINANCE - BILL 110297, ETC.1

How about2 state and federal?3 COMMISSIONER NEUKRUG: No.4

They're not5 exempt?6 COMMISSIONER NEUKRUG: No.7

How about8 property owned by -- I can't remember the9 name of the -- Delaware River10 Corporation?11 COMMISSIONER NEUKRUG:12 Waterfront Corporation?13

Entities14 owned by the City?15 COMMISSIONER NEUKRUG: Only16 vacant land or land that is underutilized17 owned by the City would be considered18 exempt.19

So City Hall20 right now, is it exempt?21 COMMISSIONER NEUKRUG: No, it22 is not.23

Okay. Just24 vacant land?25 66 6/6/11 - FINANCE - BILL 110297, ETC.1 COMMISSIONER NEUKRUG: Vacant2 land.3

So what4 about the Navy Yard?5 COMMISSIONER NEUKRUG: The Navy6 Yard is not exempt.7

Is not8 exempt? Okay.9 So basically it's 120 million a10 year sort of in perpetuity that we're11 raising from this charge?12 COMMISSIONER NEUKRUG: That's13 correct. And it's the same -- and we had14 been collecting that money in the past.15 We're just changing the manner in which16 we charge for it. And when it was17 associated with a water meter, there was18 some more sense that made sense. If you19 got a D-Permit and you discontinued the20 water meter, we never really thought21 about the fact that the stormwater charge22 was not being charged properly.23

So there is24 no increase in the amount of stormwater25 67 6/6/11 - FINANCE - BILL 110297, ETC.1 money that we are collecting from2 customers or from citizens or businesses3 in Philadelphia?4 COMMISSIONER NEUKRUG: Not any5 more than the general rate increase that6 we've experienced last July 1st and about7 to experience this coming July 1st.8

And how much9 is that?10 COMMISSIONER NEUKRUG: I11 believe it's 5.9 percent this July 1st.12

So basically13 the stormwater changes created a lot of14 winners and losers?15 COMMISSIONER NEUKRUG: It16 created a number of people whose17 stormwater bills would be reduced and18 others who what we are considering highly19 impacted and who has been a primary20 concern for us over the last number of21 months and years.22

And who are23 the winners?24 COMMISSIONER NEUKRUG: The25 68 6/6/11 - FINANCE - BILL 110297, ETC.1 people that benefit most from this change2 are those who use -- who are our best3 water customers. So those companies that4 use a lot of water for their processes5 for the buildings and do so on a6 relatively small surface area. Those in7 terms of a water business who highly8 efficiently use water are the ones whose9 stormwater bill will be reduced.10

So like a11 very tall Center City building is a12 winner?13 COMMISSIONER NEUKRUG: Would14 typically have their stormwater costs15 reduced.16

And a17 spread-out manufacturing facility18 employing a couple thousand people would19 be a loser?20 COMMISSIONER NEUKRUG: Would21 pay more, yes.22

And so --23 COMMISSIONER NEUKRUG: And24 that's why --25 69 6/6/11 - FINANCE - BILL 110297, ETC.1

-- could you2 explain why that's the way we want to3 incentivize essentially taxation in the4 City? I mean, we could choose to take it5 from a Center City office building or we6 can choose to take it from a manufacturer7 paying a living wage to families, and we8 didn't make that choice?9 COMMISSIONER NEUKRUG: Well, if10 you look at the 550,000 properties11 throughout the City of Philadelphia, you12 can always find examples that seem very13 unjust, and perhaps you've picked out two14 of them, but in general, the process15 makes a lot of sense and cities all over16 the country are moving in this direction,17 because the cost of stormwater is based18 upon the size of a property, and if19 there's someone who owns a five-acre20 parking lot in North Philadelphia, the21 costs to the City for collecting that22 stormwater is significantly higher than,23 let's say, a half-acre forested or green24 area.25 70 6/6/11 - FINANCE - BILL 110297, ETC.1 So, yes, there is a2 differential that may not have been3 played out in the old form of rates that4 is more clarified now and generally is a5 better way to do things, but on any6 specific case, there are issues, and7 we're very aware of that. We're very8 concerned about that, and that's why we9 came to an agreement with the most highly10 impacted customers to limit the increase11 on those properties to 10 percent a year12 for the next two years.13

Does that14 cost you money on the other side, or you15 just don't lower the rates as quickly on16 the other side?17 COMMISSIONER NEUKRUG: Well, we18 will need to recover our costs. So, yes,19 there are costs associated with any kind20 of change we make here, yes.21

So when you22 increase the rate limit to 10 percent,23 you essentially decrease the amount of24 cut, say, a Center City office building25 71 6/6/11 - FINANCE - BILL 110297, ETC.1 was going to get on stormwater fees to2 pay for that?3 COMMISSIONER NEUKRUG: Well,4 no, we did not, and that's why -- in my5 testimony I talked about the four6 different points of what we're doing to7 move forward to deal with this perceived8 or real inequity in some of our customers9 by not just putting a cap on the10 increases, but also by convening the11 Customer Advisory Committee so that all12 types of parcel owners could have a13 chance to understand and to react to how14 we charge for stormwater, and then come15 before you again for the next rate16 process to see what we can do in terms of17 a long-term fix.18

So you did19 not cap the decrease?20 COMMISSIONER NEUKRUG: No, we21 do not cap the decrease.22

Does that23 not create a shortfall in cash flow?24 COMMISSIONER NEUKRUG: Is that25 72 6/6/11 - FINANCE - BILL 110297, ETC.1 the correct way of saying it? Yes, a2 shortfall in revenue, yes.3

That will4 never be recovered because you're not5 going to go back and recover what you6 would have otherwise recovered this year.7 COMMISSIONER NEUKRUG: Right.8

So how much9 is that on an annual basis?10 COMMISSIONER NEUKRUG: We're11 looking at four and a half million for12 the first year and about nine for the13 following year. We're hoping that before14 we hit that following year, we'll have a15 new rate process in place so we won't16 even have to deal with that. So we're17 really talking Fiscal Year '12, four and18 a half million dollars.19

Well, I20 mean, I wouldn't plan on that.21 Let me ask you this: Can we by22 ordinance change the rates for stormwater23 fees sort of however we want? I mean,24 can we go back to charging Center City25 73 6/6/11 - FINANCE - BILL 110297, ETC.1 office buildings what they were paying2 prior to this change?3 COMMISSIONER NEUKRUG: Can City4 Council do that?5

Yes.6 COMMISSIONER NEUKRUG: Yes.7

That's all I8 need to know.9 Thank you.10 COUNCILWOMAN TASCO:11 Councilwoman.12

Thank13 you, Madam Chair.14 This is a follow-up on what15 Councilman Green asked about this16 decrease. If you say you are looking for17 120 million, then it seems to me then18 Jane Q business should then be -- you19 should be looking for 115 if you're20 trying to raise 5 million from this; is21 that correct?22 COMMISSIONER NEUKRUG: Not for23 this coming year, but, yes, we're looking24 for -- as we go through our next rate25 74 6/6/11 - FINANCE - BILL 110297, ETC.1 process, if we have more parcels that are2 sharing in the cost for stormwater,3 everyone's bills will go down. That is4 the intent, and that's why we're here.5 We're looking to reduce in -- this6 particularly hits the residential7 customer and the highly impacted customer8 if we don't move forward with this.9 Those are the two customer classes that10 we're looking to support through this11 process.12

What13 about the 10 percent cap, which I think14 my colleague also asked about. How does15 that fit into this new charge?16 COMMISSIONER NEUKRUG: The 1017 percent cap is another piece of a18 four-pronged approach to supporting those19 businesses that are highly impacted. One20 piece is to limit the percent increase to21 the 10 percent and the second piece of22 this is to issue this change in ordinance23 to cover up this loophole so that there's24 a larger share of customers to share in25 75 6/6/11 - FINANCE - BILL 110297, ETC.1 the costs and benefits of the stormwater2 service charge.3

So are4 these new people, these 19,000 people you5 want to charge, do they get -- where do6 they fit into a 10 percent cap?7 COMMISSIONER NEUKRUG: They8 will fit into the 10 percent cap in the9 same way, as I understand it, as if they10 had been paying all along.11

When12 is this bill effective should it pass?13 COMMISSIONER NEUKRUG: This14 bill is effective upon passage.15

So16 this bill is effective immediately.17 Thank you, Madam Chair.18 COMMISSIONER NEUKRUG: And,19 Councilwoman, we've heard from many of20 our customers and have heard only21 positive response on having this occur.22 COUNCILWOMAN BLACKWELL:23 Customers calling say they're glad they24 have a new bill?25 76 6/6/11 - FINANCE - BILL 110297, ETC.1 COMMISSIONER NEUKRUG: No.2 Well, the educated customers, which are3 typically the ones from the UBOAP and4 others like that who have become educated5 in this issue, understand the importance6 of this bill.7

What's8 UBOAP?9 COMMISSIONER NEUKRUG: United10 Business Owners Association of11 Philadelphia. They're a group of12 self-formed entity that came into being13 because of the stormwater charges14 changing and who testified here in15 February 8th, were here testifying16 concerned about the increase in the17 stormwater rates.18

So what19 happened?20 COMMISSIONER NEUKRUG: What21 happened was, we issued this four-point22 approach to solving the issue23 temporarily. One is -- it's basically to24 cap the increases to 10 percent. Some of25 77 6/6/11 - FINANCE - BILL 110297, ETC.1 them were -- most of these businesses2 were going to see a 100 percent increase3 this July 1st. We limited it to 104 percent. And we looked at forming this5 Customer Advisory Committee, where they6 and others have a voice on how the future7 of the rate system should be put together8 for the City of Philadelphia. And the9 last piece of it was looking at this10 D-Permit and getting this D-Permit11 loophole eliminated.12

The Chair13 recognizes Councilwoman Brown.14

Good15 afternoon.16 COMMISSIONER NEUKRUG: Good17 afternoon.18

Please19 state the name of the organization you20 mentioned that you said is very familiar21 with this new initiative.22 COMMISSIONER NEUKRUG: Right.23 Well, first of all, there's the Customer24 Advisory Committee that has 2225 78 6/6/11 - FINANCE - BILL 110297, ETC.1 representatives on it from all walks of2 life of the City of Philadelphia who are3 getting a firsthand education in how4 stormwater rates are created in5 Philadelphia and how they're charged so6 that they can help us come up with some7 new mechanisms to see how we can make8 things better in Philadelphia.9 The group in particular that I10 was referring to is the United Business11 Owners Association of Philadelphia.12

Are they13 an arm of the Greater Philadelphia14 Chamber of Commerce?15 COMMISSIONER NEUKRUG: I do not16 believe so.17

So what do18 we do for those businesses that are not19 members of this professional20 organization?21 COMMISSIONER NEUKRUG: Well, we22 could not look at this organization as a23 customer class. Instead, we looked at24 what we considered the most highly25 79 6/6/11 - FINANCE - BILL 110297, ETC.1 impacted customers, and those were ones2 that we considered whose annual increase3 in stormwater rates were going to be4 above 10 percent. We made that5 threshold, because some of these have6 seen an initial increase of 1,0007 percent, going from $10 a month to $100,8 $200, $3,000 a month. So there's some9 pretty large increases for some of our10 customers. So we looked back and11 realized that a 10 percent increase a12 year seemed to be a reasonable cap and a13 reasonable expectation that businesses --14 not that -- they're still not paying15 their fair share, but they're moving more16 in that direction at a more comfortable17 clip.18

And your19 response to Council Lady Jannie20 Blackwell's question was that if passed,21 this would be effective immediately?22 COMMISSIONER NEUKRUG: This23 would be effective immediately. Just the24 D-Permit loophole.25 80 6/6/11 - FINANCE - BILL 110297, ETC.1

Just the?2 COMMISSIONER NEUKRUG: The3 D-Permit loophole. What I'm testifying4 here today is just one aspect of this,5 which is a number of customers in the6 City of Philadelphia who have parcels who7 don't have water service, do not have8 water service -- so you can imagine what9 kind of parcels we're talking about10 here -- and who are not required today to11 pay for stormwater. So any parcel that12 does not have water service does not have13 to pay for -- that has a D-Permit doesn't14 have to pay for stormwater service. So15 we're trying to close this loophole so16 that the stormwater fee is uniform17 throughout the City so that we don't have18 this acreage of land that is not19 accounted for and, therefore, residential20 and other businesses have to pick up21 their costs.22

Their fair23 share.24 COMMISSIONER NEUKRUG: Their25 81 6/6/11 - FINANCE - BILL 110297, ETC.1 fair share.2

So the3 goal is laudable, but I believe we as a4 government have a responsibility in5 keeping consumers and citizens and6 taxpayers informed about surprises, and7 what I'm not hearing is some space given8 to educating, informing, enlightening and9 then some folks got to hear it seven10 times before they get it or then see it11 in a bill. I'm missing that in this12 dialogue.13 I don't believe that that's14 fair for us to institute anything where15 we're not giving taxpayers and citizens a16 chance to become acquainted with this new17 reality.18 Thank you, Madam Chair.19

What20 outreach have you done to these customers21 that you're trying to collect from, that22 you will try to collect from?23 COMMISSIONER NEUKRUG: Excuse24 me?25 82 6/6/11 - FINANCE - BILL 110297, ETC.1

What2 outreach have you done to these?3

Hi. Joanne Dahme,4 Public Affairs Manager for the Water5 Department.6 We have been working with all7 of our customers, including the customers8 with D-Permits, to do a lot of public9 education, general information about the10 new stormwater fee for the past three11 years. So a lot of these properties are12 aware that the reason they're not being13 charged is because they do have a14 D-Permit. They have to essentially apply15 to us, because we don't always have16 information about what properties have17 D-Permits and which don't. So they put18 an appeal in and they note they're a D19 property owner and we give them an20 exemption.21 So they're very much aware, a22 lot of them, not all of them, but many of23 them are very much aware that this24 D-Permit process exists, and they're25 83 6/6/11 - FINANCE - BILL 110297, ETC.1 taking advantage of that. So they2 recognize they have an opportunity not to3 pay. But we will certainly -- they know4 we're working on this. We've been very5 up front about -- we're hearing from6 other customers who are impacted that7 they want us to do this. Howard8 mentioned the United Business group.9 They had sent us a letter with a list of10 things they'd like to see happen. This11 was one of them, because a lot of their12 members and other customers go on our13 parcel viewer site and see properties14 that aren't paying, and they call us and15 say, Well, why isn't this property16 paying? That's not fair. And we agree,17 and that's one of the only things18 sometimes some of the impacted customers19 in the Water Department agree about, that20 everyone should pay what they're supposed21 to be paying, because they do feel as if22 they're sharing a greater burden. So we23 did make a commitment that we would24 continue to pursue this working with City25 84 6/6/11 - FINANCE - BILL 110297, ETC.1 Council.2

Councilman3 Greenlee.4

Thank5 you, Madam Chair.6 Not to elongate this, but just7 so I'm clear from what you said,8 Ms. Dahme, so a lot of these people who9 have D-Permits have gotten bills or they10 are aware? When you say they're aware,11 I'm just trying to be clear, how are they12 aware?13

Initially some of14 these properties were getting15 stormwater-only bills from us, because we16 weren't aware there was a D-Permit on the17 property. They came back to us and said,18 By the way, you know, I got a19 discontinuance permit on this property20 years ago, I shouldn't be paying. And we21 looked into the existing Philadelphia22 Code and saw that that was indeed the23 case with the way the Code is written24 today. So we had to get back to them and25 85 6/6/11 - FINANCE - BILL 110297, ETC.1 say, We will give you a temporary2 exemption from that, but be aware that we3 don't want that exemption to be forever,4 because we don't think that is right, and5 our customers who are now paying don't6 think that is right either.7

So how8 many of those, just roughly9 percentage-wise, would you say?10

Out of the 19,000?11 I'd have to get back to you on the12 percentage.13

Just on14 Councilwoman Reynolds Brown's point about15 being aware, because I know that was16 always raised from day one on the whole17 issue of the stormwater, how early we18 knew, how much preparation we were given.19 So there were people who had the20 D-Permits that you were aware of that did21 not get the bill?22

No. Everyone did23 get a bill.24

Everyone25 86 6/6/11 - FINANCE - BILL 110297, ETC.1 did get a bill?2

Everyone did get a3 bill. So some of these properties came4 back to us to note that they had5 D-Permits. There are many properties --6 when Howard mentioned a lot of these7 vacant parcels out there who have been8 abandoned --9

So10 they're not paying anything and never --11

They have never12 been paying anything. They probably will13 remain unaware and are often the people14 who are really hard for us to track down,15 because the billing addresses aren't16 necessarily good. It's the other group17 of customers who are parking lots and18 properties that have been redeveloped19 since the original time of those20 D-Permits were taken out that are useful21 businesses, when you think about Loews22 parking lots, hospital parking lots,23 parcels of land that are very active, but24 because the way they've been redeveloped,25 87 6/6/11 - FINANCE - BILL 110297, ETC.1 the parcels are drawn around where that2 original account that was abandoned3 exists. So those parcels certainly know4 and are very much aware --5

And they6 would have gotten a bill or some7 notification?8

Yes. Yes.9

Okay.10 Thank you.11

Thank you.12 Any other questions?13 Councilwoman Brown?14

No, thank15 you.16

Thank you17 very much.18 COMMISSIONER NEUKRUG: Thank19 you.20

Okay.21 Bill 110229, Community Development Block22 Grant, Deborah McColloch.23 (Witness approached witness24 table.)25 88 6/6/11 - FINANCE - BILL 110297, ETC.1 MS. McCOLLOCH: Good afternoon,2 Councilwoman Tasco and other members of3 the Finance Committee and members of City4 Council. I am Deborah McColloch,5 Director of Housing. I am here to6 present testimony on behalf of the7 Administration on Bill 110229, which8 amends Section 1108 of Chapter 21-1100,9 ("Community Development") of The10 Philadelphia Code relating to financing11 mixed-use projects on or around12 commercial corridors, under certain terms13 and conditions.14 The Administration has15 discussed a proposed amendment to the16 bill with the sponsor that would remove17 the following language under Section 110818 of Chapter 21-1100 of The Philadelphia19 Code: "At least 5 percent of the annual20 Community Development Block Grant21 entitlement, as provided by the federal22 Department of Housing and Urban23 Development, shall be allocated to24 economic development for mixed-use25 89 6/6/11 - FINANCE - BILL 110297, ETC.1 projects on or around commercial2 corridors." I would like to offer that3 amendment now.4 The Administration supports the5 Mixed-Use Development Program, which was6 created to address the issue of vacant7 commercial storefronts and upper floor8 residential units on neighborhood9 commercial corridors. This past year,10 the Office of Housing and Community11 Development and the Commerce Department12 awarded $1 million in Community13 Development Block Grant funds to five14 developments through the Mixed-Use15 Development Program. The selected16 developments will create a total of 1217 affordable housing units, nine commercial18 spaces and approximately 35 to 4519 permanent local jobs. The Year 3720 Proposed Consolidated Plan continues this21 program in Year 37 at the same level of22 funding of $1 million.23 While the Administration24 supports the Mixed-Use Development25 90 6/6/11 - FINANCE - BILL 110297, ETC.1 Program, given these uncertain economic2 times and the recent federal and state3 funding cuts of 16.5 million, we do not4 support legislation that mandates5 specific budget allocations. Now more6 than ever, we need the flexibility to7 make decisions about how best to use8 scarce resources to achieve our goal to9 serve low and moderate-income households10 and to revitalize communities.11 Thank you for the opportunity12 to testify today. I'm happy to answer13 any questions you may have.14

So what15 are we doing here, since I was16 distracted?17 MS. McCOLLOCH: We are18 eliminating -- we're removing from the19 Code a section under 21-1108, "Economic20 Development," which was included last21 year indicating that at least 5 percent22 of the CDBG entitlement must be allocated23 for a Mixed-Use Development Program, and24 rather than have a legislative25 91 6/6/11 - FINANCE - BILL 110297, ETC.1 requirement to have a 5 percent2 entitlement for the program, we are just3 including the program in our Con Plan,4 which you're going to hear later on this5 afternoon, of a million dollars for that6 program. And this original bill was7 sponsored by Councilman Jones, and we've8 met with him, and he's in agreement with9 this amendment to change Chapter 21-110010 and include the program in the Con Plan11 as we're going to present it later on12 this afternoon.13

Any14 questions?15 (No response.)16

Thank you17 very much.18 Ms. Gina Snyder. Is she still19 here? Gina Snyder, East Falls20 Development Corporation?21 (No response.)22

Ms. Snyder23 did submit testimony to support Bill24 110229, and that will be put into the25 92 6/6/11 - FINANCE - BILL 110297, ETC.1 record as presented.2 We omitted Mr. James White on3 the stormwater piece.4 Mr. White, do you still want to5 testify or do you want to submit your6 testimony for the record? Please come7 up. It's up to you.8 I'm sorry. I'm moving too9 fast.10 (Witness approached witness11 table.)12

I'm sorry, Madam13 Councilwoman. If it would please the14 Council, I would submit my testimony into15 the record.16

You want17 to summarize? You can put it on the18 record however you'd like.19

Am I allowed to do20 that?21

Summarize,22 sure.23

Thank you for the24 opportunity to testify today. My name is25 93 6/6/11 - FINANCE - BILL 110297, ETC.1 James White and I'm the Policy2 Coordinator of the Philadelphia3 Association of Community Development4 Corporations. PACDC is an association of5 90 community development corporations,6 CDCs, and other organizations that have7 extensive experience designing and8 implementing strategies to address9 abandoned and blighted properties in the10 neighborhood. Today I would like to11 focus my testimony on the unintended12 consequences of Bill No. 110446.13 We agree in theory with the14 intent of this bill, that charging15 properties that formerly had water16 service but were shut off for their share17 of the stormwater management fees reduces18 stormwater fees for everyone else.19 Although, if you recall the last20 stormwater management fees hike, for lack21 of a better term, did have an impact on22 lower-income property owners, folks that23 run supportive housing programs, daycare24 facilities, as well as the owners of25 94 6/6/11 - FINANCE - BILL 110297, ETC.1 rental properties that serve low-income2 residents across the City.3 PACDC would suggest -- and I'm4 just highlighting and skipping here -- an5 amendment stating that the City will6 offer hardship agreements for low-income7 property owners and for acquisitions by8 non-profits. Additionally, the City9 should offer waiver or recapture10 agreements with long-term self-amortizing11 loans that are recaptured at resale but12 are subordinate to other financing.13 We feel that by adding these14 amendments to the proposed legislation,15 it will avoid any delays that may be16 caused by liens or increasing liens on17 vacant properties in the future that18 would make them harder to acquire for19 non-profit developers or CDCs that are20 interested in remediating blight in their21 neighborhoods.22 Thank you for your time.23

Have you24 talked to the Water Department about25 95 6/6/11 - FINANCE - BILL 110297, ETC.1 this?2

We had several3 conversations ongoing, either through4 Regional Legal Housing Services or5 through our members, with the Water6 Department. I just believe that we feel7 that we need to really investigate this a8 little bit further before passing9 immediate legislation that will have an10 immediate impact on our community without11 fully giving a scope to what the impact12 of the legislation is, Madam Chair.13

So are you14 saying that there could be possibly15 vacant properties that your CDCs might16 want and --17

And there could18 be -- these could end up with increased19 liens due to these fees that we may not20 be aware of. Time and time again we've21 had problems when approaching the22 Administration to acquire properties, as23 you know, in the past, and sometimes the24 intention of the legislation, although it25 96 6/6/11 - FINANCE - BILL 110297, ETC.1 has a great meaning and a greater good,2 sometimes we incur an unintended3 consequence that may be unforeseen. So4 we're just asking for a little bit more5 time to get a little bit deeper dive into6 exactly what the Water Department is7 proposing.8

So if9 there are liens on properties, you have10 to satisfy those liens when you are11 acquiring those properties?12

In some cases, yes.13 In some cases, these liens aren't14 resolved. In some cases, they end up15 being bills that are passed on to the16 non-profit developer in the process from17 the City.18

Councilman19 Greenlee.20

Yeah.21 Thank you, Madam Chair.22 That's what I was trying to get23 at. So if there's taxes or water owed on24 these properties, sometimes you have to25 97 6/6/11 - FINANCE - BILL 110297, ETC.1 pay those?2

They're3 inadvertently passed on to the developer4 in the process because they aren't5 extinguished in a timely manner.6

Madam7 Chair?8

Yes.9

Mr. White,10 you said that you are currently in11 discussions with the Water Department?12

Yeah. We have13 different members of ours, Regional Legal14 Housing Services and some of our other15 CDCs, that have had conversations16 regarding stormwater management issues in17 the past. We've also had conversations18 where the Water Department has come out19 to our Association and did presentations20 regarding the increases in the fees of21 stormwater.22 So our question becomes, Madam,23 with all due respect, is if this is going24 to be a bill that's going to be, as soon25 98 6/6/11 - FINANCE - BILL 110297, ETC.1 as it's passed, immediately enacted, I2 think we need to take a little bit longer3 look overall at what the scope of what4 this does beyond what its intent is,5 because what we've discovered is6 sometimes the good intentions7 sometimes --8

The9 conversations are good. The discussions10 are healthy. At the end of those11 presentations, what was the ask? What12 were the expectations raised by the13 Association of the Water Department? And14 have those concerns been adequately,15 appropriately addressed in writing or at16 all?17

No, ma'am, they18 haven't. That's why we're coming here19 today at the last minute when we realize20 that this bill was introduced and would21 have an immediate impact. We've asked22 several questions about what the23 long-term projections would be of these24 fees beyond the fixed years 2012 and25 99 6/6/11 - FINANCE - BILL 110297, ETC.1 2013. We have asked -- and these are2 questions that we're still waiting to get3 the answers for from the Administration.4

You've put5 those questions in writing?6

We put, yes, in the7 form of e-mail and the form of other8 memos that Regional Legal Housing9 Services has developed. So this for us10 has been an ongoing concern, and what we11 would ask, as I stated, is that if this12 bill were to pass, that they would amend13 the bill to include hardship agreements14 for low-income property owners such as I15 suggested and for the acquisitions by16 non-profits of these vacant properties so17 that there is -- or some type of waiver18 or recapture agreement so that we can19 avoid any unintended consequences that20 this bill may have.21 COUNCILWOMAN TASCO:22 Mr. Clarke, Councilman Clarke.23

Thank you,24 Madam Chair.25 100 6/6/11 - FINANCE - BILL 110297, ETC.1 Mr. White, how are you?2

Hi. How are you,3 sir?4

You're5 talking about private acquisitions by6 CDCs, not government-assisted7 acquisitions?8

We're talking about9 private acquisitions and some10 government-assisted acquisitions where11 we've had problems.12

We can't13 hear you. Would you please speak into14 the microphone.15

Yes.16

Well, on17 government acquisitions, all the liens18 are -- and I'm assuming we're talking19 about using NTI or some other kind20 condemnation measures -- that those liens21 actually assist the City in the22 condemnation process, because the23 acquisition -- the compensation to the24 property owner actually goes against the25 101 6/6/11 - FINANCE - BILL 110297, ETC.1 lien. So we actually don't have to pay2 for that, if there are substantial liens.3 So that's actually beneficial. If it's a4 private acquisition by a CDC, which, to5 my knowledge, at least of the ones in my6 area, it's like very minimal. I mean,7 most of the acquisitions done by the CDCs8 are either government-assisted or they9 acquired already publicly owned10 properties. So to change the program to11 address three, four, five properties I12 think is --13

We also have14 private developers in the Association,15 sir. So it's not just the non-profits16 that you're speaking of.17

I mean, the18 issue is if you --19

Please20 speak into the microphone, Mr. White. We21 have old ears. We can't hear you.22

I'm sorry.23 The Association consists of24 also private developers and non-profit25 102 6/6/11 - FINANCE - BILL 110297, ETC.1 associations and supportive housing2 facilities.3

Was the end4 use affordable housing?5

Yes. The end use6 in most cases is affordable housing. In7 some cases, it's supportive housing or8 community facilities.9

And my10 limited knowledge of that is that at the11 closing, which all of those require, that12 the City traditionally waives if it's for13 affordable housing or a non-profit use14 that's going to be supportive of the15 community or a low-income community, that16 normally -- and I'm sure somebody can17 correct me if I'm wrong, which I am18 frequently -- that that should normally19 be waived at the time of settlement.20

In most cases, yes,21 sir.22

So, I mean,23 how many times are you talking about?24

Off the top of my25 103 6/6/11 - FINANCE - BILL 110297, ETC.1 head --2

Personally3 I don't ever remember a situation with a4 non-profit --5

I'd say we've had6 more than 20 incidents in the past.7

In the8 entire City?9

Across the City,10 which is why I'm here, so...11

Okay. But12 don't you think that 20 is relatively13 easy to just simply waive it as opposed14 to changing the entire Water Department15 program? I'm just asking a question.16

Do I think it's17 easier --18

Let19 the man have his peace.20

Do I think it's21 easier to change the 20? Probably, sir,22 but given the back and forth that we've23 had, I would say no, because it hasn't24 been resolved.25 104 6/6/11 - FINANCE - BILL 110297, ETC.1

Okay.2

Maybe it's3 not resolvable.4

Can I just add one5 more thing? I think if it was resolved,6 I think our members wouldn't be7 concerned, I wouldn't be here, and I8 would have just passed on testifying9 about it. So to us, it's an issue of10 concern, and all we're asking for is a11 deeper dive, a closer look at what we're12 getting into with this bill.13

The Water14 Department has left, so they're not here15 to respond. We'll try and figure it out.16

Thank you, Madam17 Chair.18

Thank you.19

Thank20 you, Mr. White.21

The Chair22 recognizes Councilman Green.23

Thank you,24 Madam Chair. I'd like to ask that we25 105 6/6/11 - FINANCE - BILL 110297, ETC.1 briefly go into the public meeting so I2 may record my vote on all of the matters3 before us today as a yes vote and then4 come back into the public hearing.5

We will6 recess our public hearing and go into the7 public meeting to allow Councilman Green8 to leave his vote.9

Thank you,10 Madam Chair. I request your consent to11 vote yes on all bills appearing before12 the Committee.13

And14 amendments?15

And16 amendments.17

Thank you.18

Thank you,19 Madam Chair.20

All right.21 We'll go now back into our public22 hearing.23 Next we have Bill 110444,24 Community Development Block Grant25 106 6/6/11 - FINANCE - BILL 110297, ETC.1 ordinance, Ms. Deborah McColloch, Mr.2 Alan Greenberger.3 (Witnesses approached witness4 table.)5 MS. McCOLLOCH: Would you like6 me to begin?7

Beg your8 pardon?9 MS. McCOLLOCH: Would you like10 me to begin?11

Sure. I'm12 sorry. 13 MS. McCOLLOCH: Good afternoon,14 Councilwoman Tasco and other members of15 the Finance Committee and members of City16 Council. I am still Deborah McColloch,17 Director of Housing. I will present18 testimony on behalf of the Administration19 on Bill No. 1 and the state funds from the Department2 of Community and Economic Development,3 DCED. The bill refers to Exhibit A,4 which is the Year 37 Consolidated Plan,5 the required HUD funding application. In6 order for the City to receive funding7 from HUD, the City is required to submit8 an approved Consolidated Plan to HUD no9 later than August 16th, 2011. 1 1st, 2011 details our plan for spending2 funds from four primary federal sources,3 the state's Department of Community and4 Economic Development and Housing Trust5 Fund. 5 percent reduction,17 or approximately $9 million less, than in18 Year 36. 6 percent reduction, or21 approximately $2 million less, than in22 Year 36. 1 Assistance funding, represent an2 additional loss of nearly $5 million. In3 Year 37, based on the current rate of4 earnings, the Housing Trust Fund budgeted5 amount is $7 million, a decrease of6 $500,000 from Year 36. 073 million. 3 Reductions to core programs4 were minimized by not making5 across-the-board cuts. 7 million less9 funding, which would result in 40010 households not receiving basic home11 repairs. 13 Second, non-core programs were14 reviewed for performance and impact. 20 Third, we identified other21 eligible funding sources to fill gaps in22 funding for core programs. 7 Instead of making across-the-board cuts,8 the staffing and delivery of programs at9 each agency was examined for impact of10 services. 16 Finally, after completing the17 steps outlined above, additional18 reductions were required to balance the19 budget. 6 The Administration remains committed to7 affordable housing production, housing8 preservation programs, mortgage9 foreclosure prevention and other key10 housing services. Within the11 Consolidated Plan budget, continued12 funding is proposed for homeownership13 housing and rental ventures financed in14 conjunction with the Low Income Housing15 Tax Credit and special needs housing to16 assist the homeless and those with other17 special needs. 32 million in Year 37. 6 In addition to CDBG and HOME,7 the Year 37 Consolidated Plan includes8 federal funding from the Housing9 Opportunities for Persons with AIDS10 program, which the City of Philadelphia11 administers for a five-county12 metropolitan region, including13 Philadelphia, Bucks, Chester, Delaware14 and Montgomery Counties. The federal15 formula for HOPWA funds is based on the16 historical and contemporary AIDS caseload17 in the region. Rental assistance to18 allow persons with AIDS to rent their own19 apartments or home is the largest single20 expenditure of HOPWA funds. 4 million from Fiscal Year24 2011. 1 related to the decrease in the number of2 newly diagnosed people with AIDS. 8 Another source of federal9 funding for housing in Year 37 is the10 Emergency Shelter Grant program. 17 In the past, another major18 source of funding for housing has been19 the Section 108 loan program. Under the20 Section 108 loan program, the City is21 allowed to borrow funds against future22 CDBG entitlement grants. 1 economic development ventures and to2 support specific housing development3 ventures. While economic development4 Section 108 loans are self-sustaining5 through the repayment of debt, subsidies6 for housing funded with Section 108 loans7 must be repaid from CDBG entitlement8 funding. 17 Thank you for the opportunity18 to present this testimony. In order for19 the City to receive funding from HUD, the20 City is required to submit an approved21 Consolidated Plan to HUD no later than22 August 16th, 2011. 6

Thank you7 very much.8 Questions?9 (No response.)10

Would you11 like to go back to 1987, '89 when the12 rafters were filled with...13 So just kind of wrap it up and14 tell us what does all of this mean for15 us?16 MS. McCOLLOCH: Well, what it17 means is that we have the $16.5 million18 reduction in funding, but that to the19 best of our abilities, we've maintained20 funding for our core programs, and our21 core programs are affordable housing22 production, housing preservation --23 that's the Basic Systems Repair24 Program and the programs that go along25 117 6/6/11 - FINANCE - BILL 110297, ETC.1 with that -- for housing counseling,2 which includes the Mortgage Foreclosure3 Prevention Program, the diversion4 program, and also for community economic5 development programs.6 So as much as we can, we've7 avoided reductions in those programs.8 We've moved money around between CDBG and9 the Housing Trust Fund to try to maintain10 those programs, which is the example of11 the Heater Hotline, which in the past has12 been funded with state money and it's not13 in the budget this year. We feel that's14 a core program. We have to make sure we15 have the Heater Hotline. So we're16 funding that with Housing Trust Fund17 money, and we've done our best to18 maintain those priorities.19

You talk20 about on the four CDBG-funded21 programs that were cut by 16.5 percent,22 YouthBuild, Utility Emergency Services23 and ECA and the Child Care Facilities24 Fund. How does that look in terms of25 118 6/6/11 - FINANCE - BILL 110297, ETC.1 dollars?2 MS. McCOLLOCH: In terms of?3

Dollars.4 MS. McCOLLOCH: Dollars.5

I mean, I6 know because we use -- all of them are7 good programs. YouthBuild is a good8 program. Certainly we've supported the9 Utility Emergency Fund in the past to10 keep people warm, same thing with ECA and11 the Child Care Facilities Fund.12 Do you have an idea of -- what13 do they go from, from what to what?14 MS. McCOLLOCH: Yes. Yes.15 Hold on one second, I can tell you.16 Utility Emergency Services Fund17 goes from 1.4 -- 1.525, I beg your18 pardon, 1.525 to 1.275. So it's been cut19 by $250,000.20

Okay.21 What about ECA?22 MS. McCOLLOCH: ECA goes from23 800 to 669, 669,000. The Child Care24 Facilities Fund goes from 650,000 to25 119 6/6/11 - FINANCE - BILL 110297, ETC.1 543,000, and YouthBuild goes from 600,0002 to 502,000. And in each of those cases,3 that's just the standard cut -- we were4 cut in federal funding by 16.5 percent,5 so we just applied that cut to those6 programs.7

So does8 YouthBuild have other funding other than9 the funding from your department?10 MS. McCOLLOCH: It has direct11 funding from HUD for the YouthBuild12 program, in addition to this funding that13 we provide.14

What about15 the Child Care Facilities Fund? That's16 our fund, right?17 MS. McCOLLOCH: Child Care18 Facilities Fund also has some funding19 from the William Penn Foundation, but the20 Child Care Facilities Fund has remaining21 uncommitted, unallocated funds from the22 current fiscal year that it can carry23 forward. So it will actually have over24 $700,000 available to it in the next25 120 6/6/11 - FINANCE - BILL 110297, ETC.1 fiscal year to carry out its program.2

What about3 ECA?4 MS. McCOLLOCH: ECA has5 additional funding through the state6 weatherization program, and this funding7 will not reduce the funding for the8 neighborhood energy centers. They will9 continue to be funded.10

Okay.11 Well, they'll probably testify, I guess.12 You have questions?13 Councilwoman Brown.14

Good15 afternoon, and thank you for your16 testimony. Too often professionals in17 government do not get thanked for what's18 called follow-through, which is19 fundamental in the work that we do. So I20 want, on behalf of my office, I want to21 say thank you for at least a half dozen22 seniors we were trying to be helpful to23 who all needed heat in some way, form or24 fashion. So the Heater Hotline works.25 121 6/6/11 - FINANCE - BILL 110297, ETC.1 The follow-through on the number of2 persons that I talked with personally on3 the phone made a difference in seniors,4 and the intervention during those cold5 winter months made a difference for them6 as well. So thank you.7 MS. McCOLLOCH: Great.8

Any other9 questions?10 (No response.)11

Well, I12 guess we can't go back to 1987, '88, '8913 and have all the discussion.14 Councilman Clarke. I'm sorry.15

That's16 fine. No problem, Madam Chair. I just17 had one quick question.18 You may or may not be able to19 answer it. First, I want to thank you20 for doing a good job with a bad situation21 and figuring out a way to maneuver the22 finance go-around and ensure that we keep23 the core program.24 HRP, I understand that we25 122 6/6/11 - FINANCE - BILL 110297, ETC.1 haven't been using it as much as we would2 have liked. In terms of the criteria, is3 that a local policy? I know part of the4 problem has been community groups. You5 have to establish a certain level --6 there can only be a certain level of7 vacancy on the block to qualify for the8 HRP dollars. Is that a local policy?9 MS. McCOLLOCH: Yes. That's10 been a local -- that's a local program11 policy, mostly to ensure that the12 property can get a mortgage. It's based13 on rehabbing a property and the home14 buyer getting a mortgage to put that15 portion into the development budget. So16 properties with high vacancy rates are17 less -- properties on blocks with high18 vacancy rates are less likely to get19 mortgages, so we've been making that20 requirement of the program, but it is a21 local policy, not legislative.22

The reason23 I ask that, because I know of instances24 where, say, for instance, 28th Street,25 123 6/6/11 - FINANCE - BILL 110297, ETC.1 the Project HOME is working on up in2 Strawberry Mansion, they have been3 essentially on hold for two years because4 there are two PHA properties that take5 them over that threshold because they're6 two vacant PHA properties, and you know7 how difficult it is to get properties8 through the inventory, so they've been9 unable to move forward on that HRP. So10 I'm wondering given some of the changes11 in the way --12 MS. McCOLLOCH: We could13 certainly look at that, yeah.14

And just15 from a policy perspective, because there16 happens to be a lot more vacant17 properties now for unfortunate reasons.18 Could we possibly look at changing that19 local policy?20 MS. McCOLLOCH: Yeah. One of21 the reasons why the HRP program was not22 allocated additional funding this year is23 because it has unspent funding from the24 prior fiscal year, as you and I have25 124 6/6/11 - FINANCE - BILL 110297, ETC.1 talked about, and we have thought we need2 to take this time to look at that program3 overall, and that may be -- the sort of4 change you're describing may be one that5 we need to look at.6

Yeah.7 MS. McCOLLOCH: If we have8 properties --9

If we do10 utilize HRP, it will call for other11 people to say, You know what, I'm going12 to actually go out and renovate or try13 and purchase and renovate a property on14 that block.15 MS. McCOLLOCH: Right.16

Because we17 can be the stimulus, not the fill-in.18 You understand what I'm saying?19 MS. McCOLLOCH: I understand,20 Councilman.21

All right.22 Thank you.23 Thank you, Madam Chair. That's24 it.25 125 6/6/11 - FINANCE - BILL 110297, ETC.1 COUNCILWOMAN TASCO:2 Ms. McColloch, how many vacant properties3 do we have in the City now? What is the4 official number?5 MS. McCOLLOCH: The official6 number? I don't know what the official7 number is.8 DEPUTY MAYOR GREENBERGER:9 Publicly owned or all told?10

All told.11 DEPUTY

I12 think -- I'm going to look back at -- is13 it in the 40's? I think it is in the14 40,000's, of which about 25 percent is15 publicly held.16

I was just17 telling Councilwoman Blackwell in 197318 there were 37,000 vacant houses. We19 haven't made much headway, have we, or20 they just -- people just keep abandoning21 the houses.22 Thank you very much. You have23 testimony, Mr. Greenberger?24 DEPUTY

No.25 126 6/6/11 - FINANCE - BILL 110297, ETC.1

Thank you.2 All right. Thank you very much. Would3 you stay around? We have other people to4 testify.5 MS. McCOLLOCH: Yes.6

Madam7 Chair, may I say thank you?8

I'm sorry.9

That's10 all right.11 May I say thank you as well.12 We've worked together for many years.13 These are tough times, but we do14 appreciate it. Thank you.15

Thank you.16 We now call on Anthony Council.17 Next to testify after Mr. Council will be18 Mr. White, John Rowe and Robert Grossman,19 if you're here.20 (Witness approached witness21 table.)22

Hello.23

Good24 afternoon.25 127 6/6/11 - FINANCE - BILL 110297, ETC.1

Good afternoon,2 Madam Chairperson. 20 Local 1971 members have not21 received a cost of living adjustment from22 2003 to present, or approximately eight23 years. During that time, in 2004 and24 2006, there were layoffs. 1 that was a concern because there was a2 budget cut in funds. 12 Although our numbers have13 dropped, the members continuously have to14 maintain the same level of work, which15 means that they sometimes have to do the16 job of at least two or three of their17 former comrades who were laid off. 1 and they have been placed in other2 agencies and receive as much as $13,0003 less that they were making. 9 Sorry. Excuse me. It just10 upset me that I have to say this. 1 my testimony, and, that is, why every2 time there is a cut in funds it is3 balanced on the back of the members of4 Local 1971 or the bargaining unit5 members? In fact, in an example, in one6 agency you could lay off every single7 bargaining unit member and still not8 cover the budget shortfall. 18 The members of Local 1971 are19 hard-working citizens of this city. 1 and their pay, and in some agencies, they2 cannot even receive the small sum of a3 longevity pay that is sometimes no more4 than $25 a month. 6 In fact, in the case of where7 everything is going up, my members are8 actually in the hole. They continuously9 lose against the economy, and yet they10 continue to perform their duties11 admirably. 18 Therefore, I am requesting that19 Council provide some extra funding to20 continue this good service that these21 individuals that provide it. You hear22 about the Basic Systems Repair Program23 and how well it's doing. 1 program work are actually the members of2 Local 1971. 14 One of the things that my15 members are very proud of is being16 citizens of Philadelphia. 3

Thank you4 very much.5 Any questions?6 (No response.)7 (Applause.)8

Let me9 just ask you a question. Are all of10 your -- what department are the members11 of your Local 1971, what major12 department? Are they throughout OHCD?13

Well, they14 consist of members from OHCD, RDA and15 PHDC. Those are the three housing16 agencies in which I represent and which17 my members are a part of.18

So have19 you gotten any notification as to how20 many of them would be laid off?21

No. At this time22 we have not been notified as to how many23 members will be laid off, and that is a24 concern for me and my members.25 134 6/6/11 - FINANCE - BILL 110297, ETC.1

Could we2 have someone come up from these3 departments, RDA, PHDC, and Deborah,4 Ms. McColloch, would you come back,5 please, to the table.6

Would you like me7 to --8

Just move9 to the side.10

Yes.11 (Witnesses approached witness12 table.)13

You've14 heard the testimony from Mr. Council.15 Could you please have a response to that16 in terms of the number of people who have17 been laid off. But the question I want18 to ask, are these cuts from the Community19 Development Block Grant dollars or how20 much money comes from the General Fund?21 Does any money come from the General22 Fund?23 MS. McCOLLOCH: No.24 DEPUTY

No.25 135 6/6/11 - FINANCE - BILL 110297, ETC.1 MS. McCOLLOCH: It's cuts from2 Community Development Block Grant and3 HOME.4

Beg your5 pardon?6 MS. McCOLLOCH: It's cuts from7 the Community Development Block Grant8 program and the HOME program, both.9

So if10 there are layoffs coming down the pike,11 is that because of the 16.5 percent cut12 from the federal government?13 MS. McCOLLOCH: Yes.14

Why don't15 you all just tell us what's going on. I16 don't have the questions. You heard the17 testimony.18 DEPUTY

I19 have the numbers. In Ms. McColloch's20 testimony, she said that the operating21 costs that are the department operating22 costs are also being proposed to be cut23 16.5 percent from the CDBG side and 11.924 from the HOME side. That adds up to a25 136 6/6/11 - FINANCE - BILL 110297, ETC.1 little over about $5.3 million of cuts2 that we think, in fairness, the agencies3 collectively needed to take while we were4 at the same time cutting programs to that5 same extent.6 We don't have the breakdown by7 agency yet, but the overall impact is8 probably -- and most of that money is --9 the vast majority of that money is to pay10 for people's salaries. So the impact is11 approximately 58 positions, 21 of which12 we think are currently unfilled and 37 of13 which are currently filled and would need14 to be layoffs.15 COUNCILWOMAN TASCO:16 Thirty-seven layoffs?17 DEPUTY MAYOR GREENBERGER:18 Mm-hmm, spread over five agencies.19

The other20 question was in terms of his comment21 about the salary increases of some and no22 salary increases for others. Do you want23 to talk about that?24 MS. McCOLLOCH: There's not25 137 6/6/11 - FINANCE - BILL 110297, ETC.1 been -- there's not a new collective2 bargaining agreement. We are still3 working on now a seven-year-old4 collective bargaining agreement. And so5 the employees who are covered by that6 collective bargaining agreement have not7 had increases because we have not8 negotiated a new agreement for that9 period of time, and that's why there10 haven't been increases for members who11 are governed by the collective bargaining12 agreement. There are three different13 agreements, one at OHCD, one at PHDC and14 one at the Redevelopment Authority.15

So those16 employees who fall into this local,17 because you do not have a collective18 bargaining agreement, have not19 been compensated for the number of years20 without the collective --21 MS. McCOLLOCH: They haven't22 had a raise for that period of time23 because we are still operating under the24 old collective bargaining agreement.25 138 6/6/11 - FINANCE - BILL 110297, ETC.1

The Chair2 recognizes Councilwoman Blackwell.3

Thank4 you.5 And yet they say they've gone6 from 300 positions down to 133.7 DEPUTY

I'm8 sorry, Councilwoman?9

They10 say their positions have gone down three11 to one, from 300 to 133. Would you12 comment on that?13 MS. McCOLLOCH: I don't know14 what the numbers -- that's what15 Mr. Council has said. I don't know that16 independently. I don't have any17 independent information about what the18 reduction in the numbers is.19

Has there20 been any increase in hiring in any of21 those departments in the last year or22 two, and what level of employment?23

There's been24 increase in population at the25 139 6/6/11 - FINANCE - BILL 110297, ETC.1 Redevelopment Authority based on receipt2 of NSP dollars, the stimulus money. So3 staff was added to deliver the programs4 associated with the NSP. So there was an5 increase in staffing associated with --6

Would you7 speak into the microphone?8

Oh, I'm sorry.9

Would you10 identify yourself, please, first for the11 record.12

My name is Ed13 Covington, the Executive Director of the14 Redevelopment Authority, Madam Chair.15 And with respect to new hiring16 at the Redevelopment Authority, it's been17 primarily associated with the NSP18 stimulus money, which has enabled us to19 deliver greater housing programs for the20 City.21

So how22 long does that stimulus money last?23

Until the24 expended date, which is 2012. And so25 140 6/6/11 - FINANCE - BILL 110297, ETC.1 there will be additional time after that2 as we continue to have proceeds from the3 sale of properties that have been4 financed with these dollars, but5 basically it will amortize down over time6 and those dollars will disappear, and7 staffing will be affected accordingly.8

So the new9 hires that you brought on are basically10 funded through the NSP funding?11

That is12 correct. And they're discretely funded13 through that means, because they are a14 part of the budget for the NSP dollars15 that have been received through OHCD.16

What17 categories of employment are these18 people?19

Both bargaining20 unit individuals were added as well as21 individuals not in the bargaining unit.22

Could you23 give us a breakdown of the people who24 were hired?25 141 6/6/11 - FINANCE - BILL 110297, ETC.1

I don't have a2 precise breakdown at the moment, Madam3 Chair, but we can get that information.4

You can5 get that to the Chair, how many are6 bargaining employees and how many are7 not?8

Be happy to9 provide that.10

All right.11 MR. McINTOSH: Good evening,12 Madam Chair. My name is Anthony13 McIntosh. I'm the Executive14 Vice-President of the Philadelphia15 Housing Development Corporation, and we16 too at PHDC did experience an increase in17 staffing as a direct result of receiving18 stimulus dollars to administer the19 weatherization program.20

And what21 were these -- what did these employees22 do? What is their responsibilities?23 MR. McINTOSH: They support the24 activities under our weatherization25 142 6/6/11 - FINANCE - BILL 110297, ETC.1 initiative, from inspectors to2 administrative support, as well as3 financial support as well in our Finance4 Department.5

Were any6 of these employees ever in your7 department before or worked for any of8 the other agencies, RDA, PHDC or OHCD?9 MR. McINTOSH: No. No.10

So the11 people who were laid off were never12 called back to work at --13 MR. McINTOSH: No, that's not14 correct. We've called back numerous15 people. We have a collective bargaining16 agreement that dictates the process as it17 relates to those people that may remain18 on a layoff list and their callback19 rights.20 But with respect to the21 stimulus program, 50 percent of our22 funding was received in the initial year.23 So in order to meet our production goals,24 there was a ramp-up of staff in an effort25 143 6/6/11 - FINANCE - BILL 110297, ETC.1 to meet our production demands, and as2 those stimulus dollars expire, which is3 scheduled for March of 2012, we will also4 be having a ramp-down. This is a ramp-up5 and it's a ramp-down, and it was6 discussed with the union leadership at7 that time and the plan was reviewed with8 that leadership.9

Okay.10 Thank you very much.11 You have something to say,12 Mr. Greenberger?13 DEPUTY

Just14 a correction to something I told you15 before and you wrote down. Right now the16 projection is, there are 21 vacant17 positions that will be unfilled. There18 are projected 31 layoffs across five19 departments and five people who we think20 we can change the funding source outside21 of these funding sources.22

And23 because all of your funding basically24 comes from the Community Development25 144 6/6/11 - FINANCE - BILL 110297, ETC.1 Block Grant dollars from --2

In these3 agencies, a lot of it does. Some4 Commerce does, and in Commerce we think5 there's some shift we can make to protect6 several jobs.7

Okay.8 Thank you very much.9 Any questions?10 (No response.)11

Thank you12 very much.13 Mr. Council?14

Madam15 Chairperson, I would just like to make an16 additional response to some of the things17 they said, if that would be acceptable.18

Speak into19 the microphone. Identify yourself,20 please.21

I am Anthony22 Council, President of Local 1971.23 And one of the things that I24 would like to bring also to this25 145 6/6/11 - FINANCE - BILL 110297, ETC.1 Committee's attention is this, when we're2 talking about the exempt and the number3 of individuals -- and this is based on4 information I received from the5 management itself -- if you take OHCD,6 they have 26 bargaining unit members and7 they account for 24 percent of the total8 salary costs within that agency, or9 approximately $953,955. The total exempt10 costs is $3,102,653, yet once again I11 don't know how they're going to pick the12 numbers, but as I like to continuously13 state, that as always, my members pay the14 price for layoffs. And I can provide you15 data showing you that a large part of the16 salary cost is not my bargaining unit17 members. It is not the members of Local18 1971. That if you have a large number19 with them or you hear salary, that's20 based on the number of them, but in a lot21 of cases -- and I'll give you an example22 here. In one case, such as in the RDA,23 we have the director salaries of 2324 directors, the equivalent of $2,120,396.25 146 6/6/11 - FINANCE - BILL 110297, ETC.1 That's 23 individuals, which means that2 these individuals actually direct 2.53 people. And, in fact, if you include the4 total exempt, that's including directors5 and exempt, you would get a total salary6 cost of $2,497,662. That's 30 people.7 If you count the bargaining unit members,8 you get a cost of $2,463,800. Once9 again, I'd like to point out that the10 exempt salaries are higher than the11 bargaining unit members.12 We also deal with a large13 number of salaries that reached the level14 of over $100,000, and yet, once again, my15 members will begin to pay the price for16 budget cuts.17 So I just wanted to bring that18 to the attention of the Committee as19 well.20

Thank you21 very much.22 Any other questions?23 (No response.)24

Thank you25 147 6/6/11 - FINANCE - BILL 110297, ETC.1 very much for your testimony.2 We will now have Mr. White,3 Mr. Rowe and Mr. Grossman, and then we'll4 go back to the Water Department. We're5 going to finish this testimony here.6 (Witnesses approached witness7 table.)8

Mr. White,9 are you testifying?10 Good afternoon. How you doing?11

Good afternoon.12

Would you13 state your name for the record and14 proceed with your testimony.15

I'm John Rowe, the16 Executive Director of the Utility17 Emergency Services Fund.18

Go ahead.19

Thank you,20 Councilwoman Tasco, members of the21 Finance Committee, members of City22 Council, for the opportunity to testify23 and for the continuing support of City24 Council. UESF provides emergency25 148 6/6/11 - FINANCE - BILL 110297, ETC.1 financial assistance to prevent utility2 service from being shut off and to get3 utility service turned back on for very4 poor families in Philadelphia. I5 distributed a handout which we can6 follow.7 Over the past five years, USEF8 has had the opportunity to assist over9 24,000 families. On the back side of the10 handout, the locations of the families11 that we serve by census block groups and12 Council districts are presented.13 OHCD is proposing to cut a14 quarter of a million dollars of emergency15 utility assistance in FY2012. If this16 happens, 700 very poor families will be17 without utility service this coming year.18 Since USEF is the last resort, these19 families have no other recourse. The20 utilities match USEF grants dollar for21 dollar. So the City's poorest families22 will lose an additional quarter of a23 million dollars in matching funds. The24 proposed funding cut will result in a25 149 6/6/11 - FINANCE - BILL 110297, ETC.1 total loss of a half a million dollars.2 The families we serve are very3 poor, with an annual income of around4 $13,700, or 80 percent of the federal5 poverty level. Eighty-two percent are6 female-headed households, and the average7 family consists of an adult with between8 one and two children. These funds are9 used entirely for emergency grants. No10 funds are used for operational or11 administrative costs.12 The need for utility assistance13 for vulnerable families is immense.14 During the five-week period preceding15 this year's LIHEAP season, USEF provided16 emergency financial assistance at the17 unprecedented level of $800,000 in five18 weeks. Every year we spend all of our19 funds, and there is never a carryover.20 LIHEAP is threatened with a 5021 percent funding cut from the federal22 level. This means that 50,000 eligible23 Philadelphia families who receive LIHEAP24 this year may not receive LIHEAP next25 150 6/6/11 - FINANCE - BILL 110297, ETC.1 year. Even without a 50 percent cut to2 LIHEAP, there are only enough LIHEAP3 funds to assist two out of three eligible4 Philadelphia families.5 We see firsthand the families6 who do not receive needed help. They7 come to us because we are the last8 resort, and we help if we have the funds.9 Seven hundred families will not be able10 to pay their utilities, or they may try11 to pay the utilities but not pay their12 rent, risking eviction, or not pay their13 mortgage, straining the City's mortgage14 foreclosure prevention efforts even more15 so. The families will be at increased16 risk of homelessness, costing the City17 much more either to prevent their18 homelessness or pay for extended stays in19 the shelter system. Families will not20 purchase adequate food or medicine for21 their children, resulting in unhealthy22 children and the longer term negative23 effects on children's growth and24 development.25 151 6/6/11 - FINANCE - BILL 110297, ETC.1 The cutting of a quarter of a2 million dollars not only impacts upon the3 energy utility security of low families,4 it also deeply affects these other5 crucial areas.6 On behalf of the 700 families7 who would be without utility service or8 worse, I respectfully ask that the9 quarter of a million dollars is restored.10 It will be leveraged into $500,000, and11 problems would be prevented before they12 occur.13 The provision of utility14 assistance is a more proactive and less15 expensive approach to larger problems16 that the City will have to contend with17 resulting from the loss of utility18 services.19 Thank you.20

Thank you.21 Councilwoman Blackwell.22

I23 would like to thank Mr. Rowe for his24 commitment and his dedication to helping25 152 6/6/11 - FINANCE - BILL 110297, ETC.1 people with Utility Emergency Services2 Fund. I hope that all of those, Deb3 McColloch and company, will hear so that4 if there is some way that we can provide5 any assistance, some way we can restore6 some dollars, that we would consider7 that. When he says he'll take a quarter8 of a million and double it, he will.9 He's done a phenomenal job over the years10 and we're grateful for all that he does.11 Thank you, Mr. Rowe.12

Thank you.13

Thank you.14 I agree, and we've tried every year to15 try to help you.16 So we're sending out the word17 to Ms. McColloch.18

Yes, you have, every19 year. Thank you. Thank you.20

Two21 hundred fifty thousand dollars, I'm sure22 you have that in the kitchen cabinet over23 the stove. So you can get back to us on24 that, please, Ms. McColloch.25 153 6/6/11 - FINANCE - BILL 110297, ETC.1 MS. McCOLLOCH: Beg your2 pardon?3

You'll get4 back to us on looking at how we may be5 able to fund it, because we do get calls6 all winter long and he does provide a lot7 of support services. And I'm looking at8 this map, and certainly the 9th District9 is a recipient of a lot of services from10 this program, as well as most of the11 City, but I'm looking at the 9th12 Councilmanic District.13 Thank you very much.14

Thank you very much.15

Thank16 you.17

Next we18 have Mr. Grossman, or who did you say19 was --20

Councilwoman,21 Drew Becher, President of PHS will be22 proceeding.23

Would you24 identify yourself, please.25 154 6/6/11 - FINANCE - BILL 110297, ETC.1

Hi. Good2 afternoon, Councilmembers. Drew Becher,3 President of Pennsylvania Horticultural4 Society.5

How you6 doing?7

18 Public spaces filled with thriving19 greenery create a more appealing urban20 environment. 9 Over the past three decades with10 significant investment from the City's11 Office of Housing and Community12 Development, Philadelphia Green has13 demonstrated that greening not only14 improves the quality of life and15 strengthens community bonds, but also16 attracts investment and creates community17 wealth. We very much appreciate the18 support, and we have put these resources19 to very, very good use. 1 The Philadelphia LandCare2 Program in a recent report on vacant land3 management submitted to the RDA disclosed4 that tens of thousands of blighted and5 unattended vacant lots in Philadelphia6 have a dramatic economic impact on the7 City, not in a good way. The8 Philadelphia LandCare Program has9 responded to this, and with our Clean and10 Green program and treatment have11 transformed over 5,000 of those 40,00012 parcels that we talked about earlier13 throughout the City over the past ten14 years. This program targets15 neighborhoods that are severely plagued16 by vacancy and abandonment. 1 University of Pennsylvania is showing2 significant declines in assaults near3 LandCare sites. 7 Community LandCare is an8 important component of the Philadelphia9 LandCare Program. In this program,10 community organizations are funded to11 provide 60 jobs for neighborhood12 residents keeping up 1,700 parcels free13 of debris. 17 Also in this program is the18 Philadelphia Tree Initiative. It really19 goes to support Mayor Nutter's planting20 of 300,000 trees, and in recent years,21 the Green City Strategy has been one of22 the foundations of the TreeVitalize23 program that we run in the City. 1 Philadelphia has attracted other funds2 from public and private investment and3 has used community volunteers to plant at4 least 2,000 trees each year on City5 streets. Traditional contract planting6 programs would only yield about 5007 trees. 10 Over the past 16 years, PHS and11 Philadelphia Green program has been12 instrumental in the creation of the13 citizen support groups of "friends of the14 parks" groups, a network at over 10015 neighborhood park sites. 1 with the people of Philadelphia using2 greening to create safe and attractive3 neighborhoods and again to watch this4 city grow. 6

Thank you7 very much for your testimony.8 Any questions?9 Councilman Greenlee.10

Thank11 you, Madam Chair.12 Just so I'm clear here, do you13 have an ask here or are you just14 saying -- I mean, are you asking for --15 what are you asking for?16

We are supporting17 the plan --18

So you're19 supporting what you're going to get?20

Yes. We love what21 you're doing. We think it's fantastic.22 You probably don't hear that that much,23 but thank you so much for everything you24 do.25 161 6/6/11 - FINANCE - BILL 110297, ETC.1

Thanks.2 Just so I'm clear. Okay. Thank you.3

Next,4 Mr. James White and Cicely5 Peterson-Mangum.6

Good afternoon,7 Madam Chair, and thank you for the8 opportunity to testify. My name is James9 White and I'm the Policy Coordinator for10 the Philadelphia Association of Community11 Development Corporations. 18 We understand the predicament19 the City is in given substantial proposed20 cuts in federal and state funding for21 housing and community development22 programs. 1 the Con Plan from CDBG, HOME and HRA2 alone. 16 First, reform the City's vacant17 property management system. Especially18 given reduced funding for housing and19 community development, it is critical20 that the City move toward implementing of21 a new policy stream that processes of22 reusing vacant land and buildings to23 stretch these scarce resources. 1 Philadelphia have left tens of thousands2 of trash-filled vacant lots and3 deteriorated buildings. 6 billion in8 lost household wealth, more than 209 million in City maintenance costs each10 year and at least 2 million in additional11 uncollected property taxes each year. 20 The City has substantial21 progress -- has made substantial progress22 in the past several months in developing23 new policies to facilitate productive24 reuse of blighted properties. 16 Two, expand housing17 opportunity. The demand for housing18 assistance has grown as the economy has19 weakened. 1 City, its revenues are only half of what2 they were four years ago, and we are3 facing further cuts in funding for4 federal and state housing programs. At5 the same time, recent and proposed6 increases in property taxes threaten the7 ability of residents to stay in their8 homes. We urge the City to take the9 following steps to expand housing10 opportunities and help residents stay in11 their home: Help offset a loss in12 federal and state funding for housing by13 increasing dedicated funding for the14 Philadelphia Housing Trust Fund by $415 million per year by actively supporting16 passage of state legislation HB 639,17 authorizing the ordinance approved by18 City Council in November 2009. HB 63919 was approved by the House in April. 19 Three, strengthen small20 business and neighborhood shopping21 districts. Philadelphia's neighborhood22 economies have been severely impacted by23 the downturn in the national economy. 1 revitalization of a number of commercial2 corridors. 20

Thank you21 very much.22 Would you please get copies of23 the testimony.24 Thank you very much. Any25 169 6/6/11 - FINANCE - BILL 110297, ETC.1 questions or comments?2 (No response.)3

Thank you4 very much.5 The Chair recognizes the next6 witness.7

Good8 afternoon, Council, and thank you for9 this opportunity to give testimony on the10 Office of Housing and Community11 Development Year 37 proposed Consolidated12 Plan. 17 Logan CDC is a community18 development corporation serving the Logan19 neighborhood of Philadelphia. 1 Assistance Corporation, opened its doors2 in July of 2008. In just three years, we3 have made significant contributions to4 the Logan neighborhood. After years of5 silence, our neighborhood finally has a6 strong unified voice. 1 commercial corridor revitalization2 program; plans for a mixed-use real3 estate development project on the Old4 York Road commercial corridor, with the5 recent award of funding from OHCD; the6 hiring of a part-time uniformed7 sanitation specialist to clean the8 sidewalks along the commercial corridor;9 the installation of three cameras along10 the Logan Triangle to prevent illegal11 dumping; the planting of over 50 trees12 throughout the neighborhood; and the13 coordination of ongoing vacant lot14 cleanups through the Logan NAC. Logan15 NAC is also organizing the return of16 "Let's Love Logan Day," a festival of17 family fun, food and important18 information for Logan residents. Please19 come out June 25th at TS Park. 1 months. 14 We also recently launched the Logan15 Business Association. 22 Thank you for your time, your23 attention and your interest. 7

Thank you.8 Any comments?9 (No response.)10

Well, I'd11 like to comment. I'd like to thank you12 very much for your leadership, Cicely,13 and what you're doing over in the Logan14 area, and I do thank the City and OHCD15 for the support of the Logan CDC as well16 as the NAC. If we did not have this17 organization in that community, it would18 die. So they are keeping it alive and19 developing plans for the future for the20 Triangle. It's not easy, it's not sexy21 and it's not exciting, and they're22 begging and scraping and scrimping every23 way, but I appreciate your leadership and24 that support you have from a great staff25 175 6/6/11 - FINANCE - BILL 110297, ETC.1 you have. So thank you very much.2

Thank3 you, Councilwoman Tasco and Council.4 Thank you.5

Thank you6 very much.7 Is there anyone else here to8 testify on this bill?9 (No response.)10

Okay.11 There being none, Mr. White, would you12 stay here. Let's talk to the Water13 Department about your issue. Have you14 talked to them?15

We've talked16 briefly, and what I thought we agreed was17 that we would meet this week with our18 membership and our director and the19 Regional Legal Housing Services to20 address our concerns in full. But I'm21 willing to sit around and talk about it22 now, if you'd like.23

Have you24 explained to them your concerns about the25 176 6/6/11 - FINANCE - BILL 110297, ETC.1 runoff -- or the stormwater?2

Yes, Madam Chair,3 we have. I have mentioned some of those4 concerns to them briefly while in the5 session, and I believe the Commissioner6 has said he's willing to meet.7 COUNCILWOMAN TASCO:8 Commissioner, you want to make a comment9 about this. He raised some issues about10 future problems associated with11 acquisition of properties that may be12 liened or something for the CDCs to13 acquire.14 COMMISSIONER NEUKRUG: Yes, and15 thank you for allowing me to come back16 up, and thank you, Mr. White, for17 bringing these issues to my attention.18 The D-Permit ordinance that's19 in front of you really is to close this20 loophole and to make things fairer for21 residential customers in Philadelphia and22 for our industrial customers as well.23 In terms of -- I did read24 through Mr. White's testimony, and I25 177 6/6/11 - FINANCE - BILL 110297, ETC.1 think with some discussion, we're2 certainly on the same page. Our intent3 is on the same page. My question for you4 is -- I'd welcome having public dialogue5 right now. I am looking for this6 ordinance to be moved today. So I'm7 wondering how we can proceed with that8 and with Mr. White, whether it's publicly9 through you or, Mr. White, if we could10 meet later this week and discuss this.11

Well, as I12 mentioned, with your permission, Madam13 Chair, we would like to meet with the14 Commissioner and his staff, along with15 some of our leadership and our Board of16 Directors who have brought these17 concerns, and I serve them, they're my18 constituents, in a -- not in this forum,19 but in another meeting, but would hope20 that Council would recess the hearing and21 convene before the end of session so that22 we can move this significant legislation.23

Well, what24 we can do, we can move it out of25 178 6/6/11 - FINANCE - BILL 110297, ETC.1 Committee. It stays on the Calendar2 until we vote it. That way -- because we3 are in a short time space, and so if you4 resolve your issues within the next day5 or so, then we can move it. It goes to a6 first reading and then a final vote with7 final passage. So if we leave it here,8 then we'll have to come back for another9 hearing. So we can move it out of the10 hearing. It will stay on the Calendar11 until you all have resolved your issues.12 COMMISSIONER NEUKRUG: Thank13 you, Councilwoman.14

Thank you,15 Councilwoman.16

Thank you.17 All right. Anyone else to18 testify on anything?19 (No response.)20

Here we21 go. We will adjourn our public hearing22 and go into our public meeting.23 We now ask Councilwoman24 Blackwell to offer amendment to Bill25 179 6/6/11 - FINANCE - BILL 110297, ETC.1 110 -- I'm sorry. We'll ask Councilman2 Goode to offer an amendment to Bill3 110297.4

Thank you,5 Madam Chair. I move the amendment to6 Bill No. 110297 be approved.7 (Duly seconded.)8

It has9 been moved and properly seconded that the10 amendment to 110297 be adopted.11 All in favor?12 (Aye.)13

Is there14 any opposition?15 (No response.)16

There17 being none, the amendment is passed.18 The Chair recognizes Councilman19 Goode to vote Bill 110297 out of20 Committee.21

Thank you,22 Madam Chair. I move that Bill No.23 110297, as amended, be reported out of24 the Committee with a favorable25 180 6/6/11 - FINANCE - BILL 110297, ETC.1 recommendation and the rules of Council2 be suspended so as to permit first3 reading at our next Council session.4 (Duly seconded.)5

Thank you.6 It has been moved and seconded that Bill7 110297, as amended, be reported out of8 Committee with a favorable recommendation9 and that the rules of Council be10 suspended so this bill can have first11 reading in Council's next session.12 All in favor will say aye.13 (Aye.)14

There15 being no opposition, this motion is16 carried.17 Bill 110371 -- I'm sorry. The18 Chair recognizes Councilman Goode to19 report out Bill 110371.20

Thank you,21 Madam Chair. I move that Bill No. 11037122 be reported out of Committee with a23 favorable recommendation, that the rules24 of Council be suspended so as to permit25 181 6/6/11 - FINANCE - BILL 110297, ETC.1 first reading at our next Council2 session.3 (Duly seconded.)4