Committee Hearing, October 18, 2011

COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON FINANCE3 Room 400, City Hall6 Philadelphia, Pennsylvania Tuesday, October 18, 20117 10:15 a.m. PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR10 COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO11 COUNCILMAN BILL GREEN COUNCILMAN WILLIAM K. GREENLEE12 COUNCILMAN JAMES KENNEY COUNCILWOMAN BLONDELL REYNOLDS BROWN13 BILLS 110130, 110518, 110560, 110612, 110613 and 11066015 - - -17 2

Good2 morning. We'd like to call the Committee3 on Finance to order, and we note that we4 do have a quorum in the presence of5 Councilmembers Greenlee, Blackwell,6 Goode, Kenney and Tasco.7 We will now ask the Clerk to8 read the bills that will be heard today,9 the bills that we will be hearing this10 morning.11

Bill No. 110130, an12 ordinance amending Chapter 19-1300 of The13 Philadelphia Code, entitled "Real Estate14 Taxes," to provide a credit against the15 tax for owners of condominiums and16 cooperatives and planned community units17 who do not receive regular City refuse,18 recycling and bulk item collection19 services; all under certain terms and20 conditions.21 Bill No. 110518, an ordinance22 authorizing the Procurement Commissioner,23 on behalf of the City of Philadelphia, to24 enter into a lease and related agreements25 10/18/11 - FINANCE - BILL 110130, ETC.1 with the Philadelphia Municipal2 Authority, for use by the City of certain3 cogeneration facilities to be located at4 the Northeast Water Pollution Control5 Plant, 3899 Richmond Street,6 Philadelphia, Pennsylvania, all under7 certain terms and conditions.8 Bill No. 110560, an ordinance9 amending Chapter 19-200 of The10 Philadelphia Code, entitled "City Funds -11 Deposits, Investments, Disbursements," by12 revising the list of City depositories13 because of non-compliance with certain14 provisions of that Chapter, under certain15 terms and conditions.16 Bill No. 110612, an ordinance17 amending Bill No. 110136 (approved June18 24, 2011), entitled "An ordinance to19 adopt a Fiscal 2012 Capital Budget," by20 adding and revising certain projects,21 amounts and sources, under certain terms22 and conditions.23 Bill No. 110613, an ordinance24 amending Bill No. 110135 (approved June25 10/18/11 - FINANCE - BILL 110130, ETC.1 24, 2011), entitled "An ordinance to2 adopt a Capital Program for the six3 Fiscal Years 2012-2017 inclusive," by4 adding and revising certain projects,5 amounts and sources, under certain terms6 and conditions.7 Bill No. 110660, an ordinance8 constituting the Eleventh Supplemental9 Ordinance to the Amended and Restated10 General Airport Revenue Refunding Bond11 Ordinance; authorizing the Mayor, the12 City Controller and the City Solicitor,13 or a majority of them, to issue and sell14 one or more series of tax-exempt or15 taxable Airport Revenue Refunding Bonds16 of the City of Philadelphia; designating17 the obligations to be refunded from18 certain proceeds of such Airport Revenue19 Refunding Bonds; setting forth the use of20 proceeds; providing for the pledge of21 certain passenger facility charges solely22 for bonds which refund the City of23 Philadelphia, Pennsylvania, Airport24 Revenue Bond, Series 1998B and the City25 10/18/11 - FINANCE - BILL 110130, ETC.1 of Philadelphia, Pennsylvania, Airport2 Revenue Bond, Series 2001A; determining3 the sufficiency of pledged Amounts4 Available for Debt Service; covenanting5 for the payment of interest and6 principal; authorizing the Bond Committee7 to take certain action with regard to the8 terms and conditions of the Airport9 Revenue Refunding Bonds and related10 agreements and the elections under the11 Amended and Restated General Airport12 Revenue Bond Ordinance; authorizing the13 Director of Finance to take certain14 actions with regard to the sale of such15 Airport Revenue Refunding Bonds, the16 investment of the proceeds thereof and17 the City's continuing disclosure18 obligation; and specifying applicability19 of sections of The First Class City20 Revenue Bond Act and the Amended and21 Restated General Airport Revenue Bond22 Ordinance.23

Thank you.24 We're going to ask the City25 10/18/11 - FINANCE - BILL 110130, ETC.1 Treasurer, Ms. Nancy Winkler, to come2 forward to testify on Bill 110560.3 (Witness approached witness4 table.)5

Good morning,6 Councilwoman Tasco and members of the7 Committee on Finance. I'm Nancy Winkler,8 City Treasurer for the City of9 Philadelphia. I'm here to testify on10 behalf of Bill No. 110560.11 Bill No. 110560 amends Chapter12 19-200 of The Philadelphia Code by13 amending Section 19-201, entitled "City14 Depositories," by revising the list of15 City depositories due to non-compliance16 with certain provisions of that Chapter,17 under certain terms and conditions.18 M&T Bank is currently an19 authorized depository. This bill seeks20 to delete this institution from the list21 of authorized depositories since M&T Bank22 no longer meets the requirements to23 remain an authorized depository. The24 Administration supports this bill.25 10/18/11 - FINANCE - BILL 110130, ETC.1 This concludes my testimony. I2 am happy to answer any questions you may3 have at this time.4

Thank you5 very much.6 Are there any questions on7 behalf of members of the Committee?8 (No response.)9

Thank you10 very much. You want to speak on the next11 one, and then you'll be done.12

Sure.13

Is there14 any suspension of the rules on this one?15

Yes.16

Thank you.17 (Witness approached witness18 table.)19

Good morning,20 Councilwoman Tasco and members of the21 Committee on Finance. I am Nancy22 Winkler, City Treasurer for the City of23 Philadelphia. Accompanying me today is24 Chellie Cameron, Deputy Director of25 10/18/11 - FINANCE - BILL 110130, ETC.1 Aviation - Finance and Administration for2 Philadelphia International Airport.3 We're here to testify in support of Bill4 No. 110660, the Eleventh Supplemental5 Ordinance to the Amended and Restated6 General Airport Revenue Bond Ordinance of7 1995, which is known as the General8 Ordinance. The bill provides for the9 refunding of up to 260 million of the10 Airport's 1998B, 2001A and 2001B bonds.11 No bonds will be issued to refund any --12 I'm sorry; no bonds will be issued to13 fund any capital projects not already14 funded. Rather, this transaction is15 simply a refinancing of bonds previously16 issued to fund existing airport projects17 in order to get a better interest rate,18 to lower our interest costs.19 As you may know, in 2010, the20 Airport accommodated 30.8 million of21 passengers and close to 461,000 aircraft22 operations, making it the ninth busiest23 airport in the nation in terms of24 takeoffs and landings.25 10/18/11 - FINANCE - BILL 110130, ETC.1 The 2010 refunding bonds will2 be issued, subject to favorable market3 conditions, to refund the Series 1998B,4 2001A and 2001B Airport Revenue Bonds,5 which were callable on July 1, 2008, July6 1, 2011 and June 15, 2011, respectively.7 It is the City's general practice to8 issue refunding bonds when the average9 debt service savings to be realized from10 a refunding is at least 3 percent.11 All revenues pledged to secure12 the payment of the 2011 bonds will be13 derived from the Airport revenues, rents,14 rates and other charges imposed on all15 lessees, occupants and users of the16 Airport and all other revenues derived17 from the Airport constituting pledged18 "amounts available for debt service," as19 defined in the General Ordinance. The20 bonds that will be issued under this bill21 will not be general obligations to the22 City. They will be payable solely from23 the project revenues pledged under the24 General Ordinance.25 10 10/18/11 - FINANCE - BILL 110130, ETC.1 Thanks to the members of the2 City Council for your consideration of3 Bill No. 110660. I also would like to4 request a suspension of the Council rules5 to allow for the first reading at the6 next meeting of City Council.7 This concludes my testimony.8 We are happy to answer any questions you9 may have at this time.10

Thank you11 very much.12 Are there any questions?13 (No response.)14

Thank you15 for your testimony.16

Great.17

We will18 now call on the opportunity to hear Bills19 No. 110612 and 110613, capital20 amendments, Youth Study Center.21 (Witnesses approached witness22 table.)23

Good24 morning.25 11 10/18/11 - FINANCE - BILL 110130, ETC.1

Good morning,2 Councilwoman Tasco and members of the3 Committee on Finance. I am Rebecca4 Rhynhart, Budget Director for the City of5 Philadelphia. I am here to testify on6 behalf of Bill Nos. 110612 and 110613.7 These two bills will amend8 previously adopted Bill No. 110135, the9 Fiscal '12 through '17 Capital Program,10 and Bill 110136, the Fiscal 2012 Capital11 Budget. These amendments will allow for12 appropriations to be added to the Capital13 Program and Budget. Appropriations in14 the amount of 16 million are needed for15 the new Youth Study Center project. This16 project has experienced cost overruns due17 largely to problems with the initial18 prime general construction contractor and19 severe winter weather. The 16 million of20 appropriations needed consists of 10.521 million of current cost overruns and 5.522 million of contingency for unforeseen23 circumstances. Funding has been24 identified for the full 16 million, and25 12 10/18/11 - FINANCE - BILL 110130, ETC.1 the contingency being added is necessary2 to make sure that appropriations are3 available, if needed, to keep the project4 on schedule. The funding is coming from5 two sources, which is reflected in the6 amendments, 13.2 million of funds from7 other governments, which are available to8 be used on public safety projects, as9 well as 2.8 million of pre-financed10 general obligation bond proceeds.11 Included in these amendments is12 an administrative change in Section 1 of13 each of the previously adopted bills.14 Before final passage of both bills in15 June, City Council approved an additional16 7 million to be added to the Capital17 Program and Budget for Fiscal 2012. The18 additional appropriations were added to19 the detail pages, but were not adjusted20 correctly on the cover page of Section 1.21 An adjustment to Section 1 will show a22 difference of 23 million to include the23 16 million for the new Youth Study Center24 project and the correction for the25 13 10/18/11 - FINANCE - BILL 110130, ETC.1 additional 7 million previously approved.2 These two bills should be treated as3 companion bills.4 I would like to request a5 suspension of the rules to allow for6 first reading at Council's next session.7 This concludes my testimony,8 and we'd be happy to answer any questions9 that you have at this time.10

Nobody has11 any questions.12 The funding from the two13 sources that you identified, 13.2 million14 of the funds are coming from other15 governments. What does that mean?16

There17 actually -- it's money from the state.18 The state provided reimbursements for19 some of the costs to design and build20 CFCF, and that money was in a grant to be21 used for other public safety projects.22 So it's from the state.23

Other24 public safety projects --25 14 10/18/11 - FINANCE - BILL 110130, ETC.1

Such as this.2

Such as3 this, but have there been identified any4 other projects, maybe for fire stations5 or something like that?6

I think this was7 viewed as -- this project and the8 completion of this project on time was9 viewed as such a top priority that we10 felt that we needed to use this money for11 that purpose, but fire stations are12 something that we know need capital money13 and that's one of the reasons that we14 increased the amount for fire stations in15 the Fiscal '12 Capital Budget. It's16 definitely a priority of the17 Administration.18

Okay.19 Thank you.20 Councilwoman Blackwell.21

Thank22 you.23 I want to say a special thanks24 to Maceo Cummings and The Temple Group25 15 10/18/11 - FINANCE - BILL 110130, ETC.1 for their work in West Philadelphia.2 Thank you.3

Thank you4 very much.5 There being no other questions,6 we appreciate your testimony.7 The Chair now recognizes, I8 guess, the Water Department for Bill No.9 110518.10 (Witness approached witness11 table.)12

Good13 morning.14 COMMISSIONER NEUKRUG: Good15 morning.16

Would you17 please state your name for the record and18 begin your testimony. 20 COMMISSIONER NEUKRUG: Good21 morning, Chairwoman Tasco and members of22 the Finance Committee. My name is Howard23 Neukrug. I'm the City's Water24 Commissioner. in support of Bill No. 2 At the heart of this bill is an3 authorization for the City to enter into4 a lease agreement for funding the design,5 construction and operation of a highly6 innovative, green and cost-saving project7 proposed for the City's Northeast Water8 Pollution Control Plant. 16 It will save us money, $20 million over17 the 16-year life of the lease. It will18 continue to save us dollars for decades19 to come after that. 1 diversify our energy resources and to2 reduce our overall risk to the volatile3 and uncertain energy markets. 8 As Water Commissioner, one of9 my priorities is to fully exploit these10 resources, converting our wastewater11 treatment plants into innovative resource12 recovery facilities for our region. This13 bill puts us on this path. 17 It is for this reason that the18 Department has designed the cogeneration19 system to minimize noise and20 environmental pollution and to make it a21 durable capital asset able to provide a22 positive return on investment even after23 the lease expiration. 1 employees in concert with the operations2 at the Northeast Wastewater Plant. This3 cogen facility will be expensive to4 build, and while we may have considered5 moving forward with this project using a6 more typical public works approach, there7 were certain tax advantages set forth in8 the American Recovery and Reinvestment9 Act of 2009, also known as the stimulus10 bill, that makes this current opportunity11 critical and timely. The Act provides12 the City a unique opportunity to use an13 alternative financing structure, which14 saves us $12 million. 21 A few points on the selection22 process. 1 excellent companies. Each proposal was2 evaluated by a team of reviewers based on3 a number of factors, which included best4 value to the City, including lease and5 maintenance costs, the proposer's6 financial strength and experience, its7 economic opportunity plan and its8 maintenance plans. Proposers were also9 given the opportunity to present in10 person directly to the selection11 committee. Ameresco was selected based12 on the lowest overall cost and the13 highest overall evaluation. 17 Ameresco is the project18 developer and has responsibility for19 delivering a completed biogas20 cogeneration facility and maintaining the21 equipment. Bank of America will provide22 the nearly $50 million of the financing23 for the project through the facility24 lease. 1 Philadelphia-based company, will be the2 general contractor and the coordinator of3 the construction responsibilities under4 the EOP. 7 In conclusion, I respectfully8 request that the Committee approve this9 bill and waive its rules so that the bill10 may be read at the next meeting in City11 Council. This is a wonderful opportunity12 for the City to take advantage of an13 underutilized resource. 22

Thank you23 very much.24 The Chair recognizes Councilman25 21 10/18/11 - FINANCE - BILL 110130, ETC.1 Kenney.2

Thank you,3 Madam Chair.4 It's not a question. It's more5 of a comment. As a member of this6 Committee and also as the Chair of the7 Committee on the Environment, I think the8 Water Department has been just stellar in9 its approach to these environmentally10 sensitive issues and have done a lot of11 work in putting us on the map as a city,12 as a very forward-thinking city13 environmentally. I recognize the Water14 Department probably has more access to15 more money than most other departments,16 but that being said, I just -- every one17 of your projects that you've trotted out18 in the last few years has just been19 really spectacular, from storm water20 management issues in South Philly to your21 solar stuff out in the treatment plant to22 this, and it's just been fun to watch,23 and I just want to compliment you on your24 efforts.25 22 10/18/11 - FINANCE - BILL 110130, ETC.1 COMMISSIONER NEUKRUG: Those2 words are greatly appreciated,3 Councilman.4

You joined5 PGW with the whole cogeneration.6 COMMISSIONER NEUKRUG: That's7 correct. And if you see Sunday's8 newspaper, there was an article about PGW9 and cogeneration, and this is certainly a10 part of that strategy.11

Thank you.12 Glad you're moving in the right13 direction.14 Any other questions?15 Councilwoman Blackwell.16

No.17 We concur. Thank you.18 COMMISSIONER NEUKRUG: Thank19 you.20

Councilman21 Green. Who is next?22

Thank23 you, Madam Chair.24 Commissioner, in your written25 23 10/18/11 - FINANCE - BILL 110130, ETC.1 testimony, you talk about some of the2 other -- or you refer to some3 disagreements of some of the companies4 that did not get the contract. And I'll5 be honest with you, I'm far from an6 expert on this whole process or the whole7 cogeneration issue, but could you talk8 about the costs? I mean, is the lease9 costly to the City, Ameresco's proposal,10 or what other factors were kind of put in11 here?12 COMMISSIONER NEUKRUG: The13 factors that were considered -- and, yes,14 cost is certainly a key factor, and15 Ameresco was the best cost deal in the16 eyes of the City in the way we judged the17 criteria for energy costs moving into the18 future. There are a number of different19 approaches that could be taken with this20 project, whether it's public works or a21 power purchase agreement or a lease22 agreement, like this one is, and we23 carefully considered this. We had24 discussions about this long before we25 24 10/18/11 - FINANCE - BILL 110130, ETC.1 issued the RFP, during the RFP process2 and making our conclusions and even3 reviewing those coming up to City Council4 today, taking a look and confirming that5 in our eyes, the Ameresco project is the6 best move forward.7

Do you8 have or could you provide us some kind9 of -- is there like a comparison on that,10 on the cost of the other -- is it in11 here?12 COMMISSIONER NEUKRUG: There13 are a number of questions that were14 issued by a number of the companies that15 was not Ameresco, and there were a number16 of questions that were asked and a series17 of answers that were provided for that.18 And if you do not have that in your19 packet, I apologize and we'll get that to20 you before the end of this hearing.21

It might22 be in here.23 COMMISSIONER NEUKRUG: It looks24 like this (indicating).25 25 10/18/11 - FINANCE - BILL 110130, ETC.1

It's in2 there? Okay.3 Thank you.4 COMMISSIONER NEUKRUG: Thank5 you.6

I'll look7 at this.8

Councilman9 Green.10

Thank you.11 You mention during your12 testimony that we're under time13 constraints. Could you explain that to14 me?15 COMMISSIONER NEUKRUG: Yes.16 There's some -- through the Recovery17 Act/stimulus bill, there is some18 potential for some savings of about $1219 million in tax credits that go to the20 third party and reduces the total cost to21 the Water Department of this project if22 we start construction before December23 31st, 2011.24

December25 26 10/18/11 - FINANCE - BILL 110130, ETC.1 31st, 2011, which is two and a half2 months from now, roughly. You said in3 your testimony in response to Councilman4 Greenlee's question that you had begun5 the process way before issuing the RFP,6 which is in September 2010. When did you7 begin the process?8 COMMISSIONER NEUKRUG: We began9 this process well before I was Water10 Commissioner, so I can't give you an11 exact date, but we've been working on12 this for a number of years.13

Right. And14 so I'm offended that you have been15 working on something for two years and16 you go through an entire process, you17 reach conclusions without involving us,18 and then you come before us and say if19 you don't pass what we bring you, there's20 no alternative for the City, because21 there's only two and a half months left,22 and so we'll lose the opportunity for23 these savings.24 Do you think that that's a25 27 10/18/11 - FINANCE - BILL 110130, ETC.1 reasonable way to approach this Committee2 and City Council?3 COMMISSIONER NEUKRUG: No, I4 certainly do not, and I apologize. I'll5 take the heat here for the Department in6 not briefing you sooner on this. I'd7 like to make sure that that does not8 happen again. I value your opinion and9 the opinion of Council on projects like10 this.11

I appreciate12 that, but it's fair to say that if we13 don't pass this, we're not going to be14 able to begin another legal process that15 is going to result in a different person16 being chosen?17 COMMISSIONER NEUKRUG: That's18 correct. We'll probably still19 consider --20

Within the21 timeframe of the --22 COMMISSIONER NEUKRUG: We'll23 probably still consider moving with24 cogen. We'll probably put it off for a25 28 10/18/11 - FINANCE - BILL 110130, ETC.1 number of years then.2

Right. I3 appreciate your statement, and hopefully4 in the future we won't be in this5 situation. We'll begin the conversations6 much more in advance.7 COMMISSIONER NEUKRUG: I'd much8 prefer that than sitting here without you9 having full information.10

You mention11 that based on your analysis, that this12 was the cheapest solution, but your13 analysis has some key assumptions, one of14 which is that energy prices don't change.15 And maybe you could just go through what16 the key assumptions are that lead you to17 conclude that this is the cheapest18 solution, and when responding to that19 question, could you discuss whether you20 mean cheapest in terms of cost of21 construction, cheapest in terms of22 ultimate or most beneficial in terms of23 ultimate ROI, and what assumption in that24 analysis did you make about the total25 29 10/18/11 - FINANCE - BILL 110130, ETC.1 kilowatts of energy possible in a year2 under this proposal versus the other3 proposals that were presented, big4 turbines, six small turbines, in terms of5 the return from the ability to sell more6 power back to the grid than, say, perhaps7 this proposal would allow, et cetera.8 COMMISSIONER NEUKRUG: I'll9 quickly turn over to my experts that are10 on either side of me, but I will say that11 the primary mechanism of not the cheapest12 but really the best solution for us at13 this point in time, which involves14 non-monetary things such as the building15 structure being of durable design,16 something that is permanent, something17 that's part of the Philadelphia Water18 Department after the 16 years of the19 lease agreement, will still be there and20 still operating and still generating21 electricity, without a third party22 involvement, is something that's very23 important to us and part of the key part24 of this design and part of the reason why25 30 10/18/11 - FINANCE - BILL 110130, ETC.1 we went with the lease agreement in the2 first place.3 In terms of how we evaluated4 these, there was a number of different5 criteria. Probably the most important or6 maybe the easiest one to explain is7 really net present value savings, and8 this project beat out the others in terms9 of net present value savings. When you10 do that type of analysis, you are, of11 course, projecting into the future energy12 costs, because you're always comparing13 this to a baseline, and we used what we14 considered -- we made three different15 curves what future electricity costs16 could be and we used the most17 conservative, the lowest one, in18 evaluating what the net present value is.19 So we think the savings are actually20 going to be higher.21 And the last piece of this is,22 no, I can't be positive. No one can be23 really positive what future energy costs24 are going to be. So what we look at is25 31 10/18/11 - FINANCE - BILL 110130, ETC.1 how do we diversify the electrical needs2 of the Philadelphia Water Department in a3 reasonable manner that looks over not4 just this facility but looks over all our5 electrical needs, and, quite frankly,6 this is about 15 percent of the future7 electrical needs. So even if we make8 great savings here, we still have 859 percent that we're relying on, a little10 bit of solar, a little bit of different11 types of things. But we're hedging our12 bets here. We're diversifying our energy13 portfolio by doing this project.14

I want to be15 clear, I think it's a great project. We16 ought to be doing things like this. This17 Administration is a leader among cities18 in the country with respect to things19 like this. It's just an understanding of20 how we reach this conclusion that I think21 sort of is what we're supposed to be22 doing here.23 And so in terms of total24 kilowatts per year capable of being25 32 10/18/11 - FINANCE - BILL 110130, ETC.1 produced, is this proposal the proposal2 that you received that provided the3 maximum number of kilowatts that could be4 produced per year?5

Hi. I'm6 Dr. Christopher Crockett. I'm the Deputy7 Commissioner of Planning and8 Environmental Services for the Water9 Department.10 When we went through the11 selection process and one of the12 comparisons for the alternatives that we13 used was all the different proposals were14 compared against the same baseline of the15 Department doing nothing, just continuing16 to buy electricity the way we do, without17 entering into any kind of cogeneration --18

That's not19 the question.20

I'm going to get21 to your answer about total kilowatts.22 A number of the proposals that23 came in, we had two sets of criteria for24 the proposals. One is based on the25 33 10/18/11 - FINANCE - BILL 110130, ETC.1 design that we had worked on for public2 works based on the needs of the facility3 and its operation, which was designed to4 maximize the kilowatt hour production for5 using our own biogas and supplementing6 from PGW, if we needed to. We could7 blend both gases. So one of the natures8 of producing biogas at our facilities is,9 it isn't always constant, and so if we10 had multiple engines, it would allow us11 to maximize the use of the gas available.12 There were alternative13 proposals for a power purchase agreement14 that were also provided that we also15 entertained and looked at. Some of them16 could probably produce more total17 kilowatt hours in a year, but we were18 looking at it from in terms of it's a19 facility we're operating and what are we20 doing with it. If it was a power21 purchase agreement, that would be22 something that would be a separate23 consideration.24

Right. So25 34 10/18/11 - FINANCE - BILL 110130, ETC.1 really what you're saying is, you didn't2 do an apples to apples comparison of the3 various proposals. You ran it against4 your baseline as opposed to the savings5 available under each proposal vis-a-vis6 each other proposal, because you didn't7 look at the total kilowatts that could be8 produced by one person versus another, so9 you didn't really compare the savings to10 the City of one person versus another,11 because you in your analysis of what was12 the best result -- and I'm not saying you13 reached the wrong conclusion. I'm just14 saying that your presentation didn't15 address the key assumptions that you16 make, which really put at question your17 ultimate conclusion because of variables18 that you just sort of assumed were steady19 state, you compared your own baseline, et20 cetera. And certainly that's not the21 kind of analysis I'm looking for when I'm22 considering a project or that really even23 is -- the private sector would never do24 it that way.25 35 10/18/11 - FINANCE - BILL 110130, ETC.1

Excuse me. I'm2 Barry Davis. I'm with the City's Law3 Department.4 I just wanted to make sure that5 I understood what you're saying,6 Councilman, because I think in this7 project what the baseline was, that we8 issued an RFP with a particular design,9 and that design did maximize the use of10 the digester gas at the facility. And,11 in fact, as Dr. Crockett mentioned, it12 allowed for even additional production13 using gas from PGW as well. And so that14 was the concept that was presented.15

This is not16 a legal question. This is about getting17 to net present value, and if you didn't18 crunch the numbers, I really don't -- I'm19 sure it was a legal process. I'm not20 questioning that.21

Well, I think the22 numbers were crunched in the sense that23 projects that were offered by the24 respondents in response to this project25 36 10/18/11 - FINANCE - BILL 110130, ETC.1 basically made those same assumptions2 about maximizing the electricity. So I3 looked at these proposals, and I don't --4

If some can5 produce higher kilowatts -- more6 kilowatts per year than others and we7 have the ability to use not just our8 biomass but other gas from PGW, et9 cetera, and there is a savings from10 producing electricity from using PGW gas11 or biomass, then we have not done a12 comparison of the net present value of13 each project as compared to each other14 project. We've done a comparison of the15 net present value of each project,16 assuming all things are equal among those17 projects in terms of how much electricity18 they can produce a year and other things,19 and it is in that regard that I'm saying20 that. And this doesn't come from any of21 the bidders. It's not a complaint. This22 is based on the couple of hours that23 these gentlemen were kind enough to spend24 with my Chief of Staff yesterday learning25 37 10/18/11 - FINANCE - BILL 110130, ETC.1 about this project.2

I just want to add3 one more factor, and I don't want to be4 argumentative about this. The size of5 the system was also based on what the6 base load of the facility is. So the7 idea was that you'd match the output of8 the electrical generation equipment to9 what the minimum load is at the facility.10 And this facility has a very generally11 constant load, and so it's not -- the12 idea was not to export the power but13 rather to consume all the power on site.14

But that's15 an assumption that we made that may or16 may not be the proper assumption, because17 we can sell power back to the grid under18 state law. And so if we have the ability19 to produce more than that and the power20 price is higher and we're not consuming21 it on site, then you haven't compared22 that to the other proposal and, in my23 view, haven't done a proper analysis of24 the various alternatives presented to you25 38 10/18/11 - FINANCE - BILL 110130, ETC.1 for that reason.2 COMMISSIONER NEUKRUG: And we'd3 be very happy to take a look and4 particularly work with PGW or other5 companies who may be interested in that6 type of arrangement, but this is at the7 Northeast Plant for the purposes of the8 water utility what we need to do and how9 we need to design a facility in a10 community. We felt this was the best11 alternative that we have in front of you.12

And I13 really, because you haven't done the kind14 of analysis that I believe should have15 been done, I have no way to question16 that.17 COMMISSIONER NEUKRUG: Okay.18

Thank you,19 Madam Chair.20 COMMISSIONER NEUKRUG: Thank21 you.22

The Chair23 recognizes Councilman Kenney.24

Thank you,25 39 10/18/11 - FINANCE - BILL 110130, ETC.1 Madam Chair.2 I heard you during your3 testimony. You referred to the Deputy4 Commissioner as a doctor.5 COMMISSIONER NEUKRUG: That's6 correct, yes.7

Just out of8 curiosity for my perspective as people9 who work for the City, could you kind of10 go through your credentials from your11 educational background.12

Yes. I have a13 Civil Engineering degree from Drexel14 University, a Master's in Environmental15 Engineering from Drexel University, a16 Ph.D. in Environmental Engineering from17 Drexel University and a Registered18 Professional Civil Engineer in the State19 of Pennsylvania.20

And,21 Commissioner, what is yours?22 COMMISSIONER NEUKRUG: I'm a23 Professional Engineer, graduate of Civil24 Engineering from the University of25 40 10/18/11 - FINANCE - BILL 110130, ETC.1 Pennsylvania. I'm also a Board-certified2 Environmental Engineer and an Honorary3 Diplomat in the Water Resources4 Engineering.5

I'm glad to6 see we have such smart folks working for7 us. Thank you.8

And9 working for the City, no less. Thank10 you.11 Councilwoman Brown.12

Good13 morning, gentlemen.14 COMMISSIONER NEUKRUG: Good15 morning.16

Please17 tell me how many Deputy Commissioners you18 have.19 COMMISSIONER NEUKRUG: I20 currently have four Deputy Commissioners.21

Are they22 appointed or civil service?23 COMMISSIONER NEUKRUG: They are24 appointed.25 41 10/18/11 - FINANCE - BILL 110130, ETC.1

How many2 of them are women?3 COMMISSIONER NEUKRUG: One is a4 woman.5

How many6 of color?7 COMMISSIONER NEUKRUG: None.8

What is9 the next level of professionals with10 responsibility? You have your Deputy11 Commissioners and then you have what?12 COMMISSIONER NEUKRUG: We have13 our executive team.14

How many?15 COMMISSIONER NEUKRUG: I'll16 have to get back to you with those17 numbers, but let me just say that -- and18 I hear you, and we also supplied you with19 quite a bit of information about our20 entire organization and ethnicity and21 gender of everyone in our department.22

Yes, you23 did. I'm now seizing the opportunity to24 put it on the record.25 42 10/18/11 - FINANCE - BILL 110130, ETC.1 COMMISSIONER NEUKRUG: Good.2 Thank you. And they represent numbers3 that I look forward to working with you4 to improve into the future. I think that5 there is -- what you're alluding to here6 is certainly something that is clear from7 my perspective does need to be reviewed8 and we need to make some improvements9 there, and look forward to working with10 you and all of City Council to make sure11 that ethnicity and gender of our12 employees, particularly our upper13 management and supervisors, continue to14 move in the right direction.15 I am somewhat limited in that I16 have a limited number of exempt17 positions, number one. And, number two,18 I abide by the civil service process for19 the 99.9 percent of the people that20 report through our operations, our 2,00021 employees.22

There are23 2,000 employees in the Water Department?24 COMMISSIONER NEUKRUG: About25 43 10/18/11 - FINANCE - BILL 110130, ETC.1 2,000, yes.2

How long3 have you been Commissioner?4 COMMISSIONER NEUKRUG: I've5 been Commissioner for seven months now.6

And so the7 executive committee is made up of whom?8 COMMISSIONER NEUKRUG: By name?9

Not at10 all. By composition.11 COMMISSIONER NEUKRUG: By12 composition. The executive committee13 is --14

Or15 professional rank, professional position,16 if you will.17 COMMISSIONER NEUKRUG:18 Professional.19

Forgive20 me?21 COMMISSIONER NEUKRUG: I have a22 Deputy Commissioner for Operations. I23 have a Deputy Commissioner for Finance, a24 Deputy Commissioner for Planning and25 44 10/18/11 - FINANCE - BILL 110130, ETC.1 Environmental Services, Deputy2 Commissioner for Environmental3 Compliance.4

And those5 are the four that you spoke of?6 COMMISSIONER NEUKRUG: Yes.7

That's the8 executive team?9 COMMISSIONER NEUKRUG: Those10 are my deputies. I also have a general11 manager, who is civil service, in charge12 of engineering and construction.13

Is that14 the total composition of the executive15 team?16 COMMISSIONER NEUKRUG: Joanne17 Dahme. Sorry. My head of my Planning18 and -- I'm sorry; Public Affairs.19

Planning20 and Public Affairs?21 COMMISSIONER NEUKRUG: No. I'm22 sorry. General Manager of Public23 Affairs. I do a lot better with a sheet24 in front of me.25 45 10/18/11 - FINANCE - BILL 110130, ETC.1

Of course.2 Are these all exempt positions?3 COMMISSIONER NEUKRUG: Yes,4 they're all -- no. The General5 Manager -- I have five exempt positions6 right now, including myself.7

And so8 when you say you look forward to working9 with members of Council to ensure that10 out of 2,000 employees they look like11 Philadelphia, number one, and that you12 have people of color and women in13 positions of leadership and14 responsibility, how do you plan to go15 about doing that?16 COMMISSIONER NEUKRUG: I'm17 looking at a number of different18 features. One is certainly in hiring and19 making sure that we go to minority20 schools and other places to get a21 cross-section of engineers in particular22 to come to the Water Department, looking23 at our training programs to see how we24 can move folks from -- at certain levels,25 46 10/18/11 - FINANCE - BILL 110130, ETC.1 particularly the entry level, and have2 them trained to be able to not only take3 but pass a civil service exam for higher4 levels, and looking at just opportunities5 wherever I can to continue to diversify6 at the Philadelphia Water Department. I7 think it's a critical element of what I'm8 in charge of doing and what I look9 forward to doing every day.10

A couple11 of more questions. You have the four12 Deputy Commissioners. What is the next13 level down of professionals that report14 to them?15 COMMISSIONER NEUKRUG: It's16 also the service, and each division is17 different. In the Operations Division,18 we have a manager of plants, a manager of19 field work, someone who goes out and20 actually -- at planning and environmental21 services, we have a planning research22 manager. We have a director of the23 Office of Watersheds and those types of24 levels, most civil service, all typically25 47 10/18/11 - FINANCE - BILL 110130, ETC.1 long-term Water Department employees.2

I would3 ask that you resubmit all of that to the4 Chair with a description, job5 description, of both the four exempt6 positions and the job descriptions of7 those professionals next level down. And8 I think it's regrettable -- it's9 certainly no doing of your own, having10 been there for seven months, but that in11 2011 we have a top level organization12 that does not look like Philadelphia. So13 you have a lot to overcome and a14 responsibility to put people of all color15 persuasions and gender in the pipeline so16 that they can rise to the level of17 leadership and responsibility.18 COMMISSIONER NEUKRUG: Great.19 I absolutely agree with you.20

Thank you21 for your --22 COMMISSIONER NEUKRUG: And I23 look forward to working with you on that.24

Thank you25 48 10/18/11 - FINANCE - BILL 110130, ETC.1 very much.2 Thank you, Madam Chairwoman.3

Following4 up on that comment in terms of the5 pipeline and the civil service process,6 have you become familiar with that7 process and how it works in terms of8 people moving from one level to the next?9 For example, if someone takes the civil10 service exam for a promotion, are they --11 how does that process work in your12 department?13 COMMISSIONER NEUKRUG:14 Councilwoman, I am a 33-year employee of15 the City of Philadelphia and I've been16 exempt for less than a year. So I am17 quite familiar and I've been quite18 successful in myself moving through that19 ladder. It's a difficult process, as you20 know, when you have a process that is21 geared towards making sure that there is22 no favoritism played through a process.23 It becomes very need-blind and very24 unaccepting of any kind of change.25 49 10/18/11 - FINANCE - BILL 110130, ETC.1 Sometimes it works really well and it2 leads the top candidates to the top of3 the list, and sometimes it doesn't.4 In any case, what's required is5 that my managers have a choice of number6 one or two from a civil service exam7 that's given. So it's a question of how8 well someone does on a civil service exam9 whether they become number one or two on10 that list and whether then the position11 is made available for us to hire from.12 So it is a limited process in13 terms of to put in your own desires,14 whether it's to hire your cousin or to15 increase diversity or whatever it may be.16 It's a difficult process to emit change17 in your overall human resources.18

It's19 difficult in that it sort of impedes the20 progress?21 COMMISSIONER NEUKRUG: It's a22 rigid process. I won't go so far as to23 say it impedes, but it's a rigid process.24 So you can have -- and any time that you25 50 10/18/11 - FINANCE - BILL 110130, ETC.1 as an employer have the opportunity of2 hiring one of two people, it doesn't give3 you a lot of opportunity to ensure that4 those one or two people is the person5 that you want, for whatever reason.6

We'll have7 further discussion about this during the8 budget.9 COMMISSIONER NEUKRUG: Okay.10

By that11 time, we'll have some conversation about12 it.13 COMMISSIONER NEUKRUG: Okay.14 Good.15

Thank you.16 Any other questions?17 Councilman Green.18

Thank you,19 Madam Chair.20 I would really like to see from21 the Water Department an analysis of the22 benefit of selling power back to the grid23 at wholesale at peak times. That's when24 people turn on this kind of generation25 51 10/18/11 - FINANCE - BILL 110130, ETC.1 activity in general. And sort of the --2 as I think about it, the fact that when3 wholesale prices are five times the4 retail rate and that -- which happens5 during the summer at peak heat days when6 it's 112 degrees and everybody has got7 their AC on -- that we would use that8 internally, offsetting a retail rate9 instead of selling that power wholesale10 at that time, and paying the retail rate11 and getting a five times return on that12 decision really makes the entire analysis13 that's done flawed. And so whether it's14 this -- I guess we are stuck with this15 proposal because of the timing, but we16 really should have a written plan for17 maximizing the return out of this asset18 that the City is going to have going19 forward, and I'd like to see the Water20 Department put together that plan so that21 we have the ability to make far more22 money than your projections currently23 show are sort of savings, especially the24 ability to sell power at peak times into25 52 10/18/11 - FINANCE - BILL 110130, ETC.1 the wholesale grid, et cetera. Is that2 something we can get from you guys?3 COMMISSIONER NEUKRUG: Two4 comments. One is, yes, Councilman, we'll5 get that information to you as quickly as6 possible. I don't think that will be too7 hard. And would love to work with your8 office in going through in detail, at9 your pleasure, the types of energy10 projects we see in front of us and how we11 maximize the return to the City from12 those projects. That's clearly something13 I'd love to work with you on.14

Thank you15 very much.16 COMMISSIONER NEUKRUG: Thank17 you.18

Thank you19 very much.20 Any more questions?21 (No response.)22

Thank you23 very much for your testimony. You want a24 suspension of the rules?25 53 10/18/11 - FINANCE - BILL 110130, ETC.1 COMMISSIONER NEUKRUG: Yes,2 please.3

Thank you.4 COMMISSIONER NEUKRUG: Thank5 you.6

The next7 bill will be on Bill 110130.8 (Witnesses approached witness9 table.)10

Good11 morning.12 COMMISSIONER TOLSON: Good13 morning.14

17 COMMISSIONER TOLSON: Good18 morning, Councilwoman Tasco and members19 of the Committee on Finance. I am20 Clarena Tolson, Streets Commissioner for21 the City of Philadelphia. I'm here to22 testify on Bill No. 110130. 1 and cooperative owners that pay for2 private refuse collection. 1 financial benefit. The tax credit would2 unfairly advantage those property owners3 because of their increased collection4 frequency. Many of the condominium and5 cooperative locations receive multiple6 collections throughout the week by7 private-service companies. All other8 residential households receive9 one-day-a-week trash and recycling10 collection by the City. 14 One of the most significant15 impacts this bill will have on the City16 will be the cost to the City's General17 Fund. 20 Since 2005, there has been an21 increase in the condominium units from22 22,000 to approximately 33,000, according23 to the Condominium Association. 1 units with weekly collection. 9 million for the City's General7 Fund to pay out each year. Since the8 financial crisis in 2008, the City has9 endured painful budget cuts and revenue10 increases. 16 Also, this tax credit is likely17 to be an incentive for owners of18 multi-family rental property to convert19 their properties into condominiums in20 order to receive the advantage of the tax21 credit. 8 Condominiums that are six units or less9 are exempted from this fee. 21 This concludes my testimony,22 and thank you for the opportunity to23 testify on this bill. 1

Thank you2 very much.3 The Chair recognizes -- I think4 Councilman Greenlee had his light on.5 COUNCILMAN GREENLEE:6 Councilman Kenney is the sponsor.7

Thank you8 for your testimony. Sitting here with9 Councilman Goode and -- what is that10 equipment? What is the thing that you11 have?12

IPad.13

His iPad,14 which is fabulous, because he just pulled15 up the original bill on condo trash,16 which is dated 2002. So we've been at17 this for quite some time. And the18 original suggestions that I made back in19 2002 would have kept you from buying all20 that equipment in the first place and21 trying to service condominiums that22 really can't be serviced in a traditional23 way by a City trash truck. 1 back in 2002. 6 Trash trucks can't access a lot7 of these high-rise condos and their trash8 facilities because they're kept in9 refrigerated rooms and it's on their10 premises. 14 So what we were asking people15 to do in order to get the service that16 everybody else gets is for an entire17 condo building to put their trash on the18 sidewalk for weekly pickup, which is19 totally ridiculous. 8 So you guys didn't make these9 decisions. These were executive10 decisions made by the Street11 Administration and now being argued by12 the Nutter Administration. And I13 understand their point of view. The fact14 of the matter is is that people who live15 in condominiums have been treated16 differently because they either live17 vertically or they're in a condo18 structure. 21 I can live in other types of facilities22 that are residential row houses or23 whatever and get the service. 6 This was an easy problem to7 solve in 2002. It's an easy problem to8 solve now, and it doesn't mean the City9 has to sit down and write a check and10 send it out in the mail and do all the11 administrative stuff. You add a box, you12 check off condominium, and you pay $20013 or less, whatever we may negotiate. You14 check that off and don't pay that in your15 real estate tax. It's a very simple16 process. 17 I don't know how much we spent18 on buying trucks and retrofitting trucks19 and all that other stuff, but we could20 have saved all that aggravation and time21 and just did what Chicago does and22 Washington, DC does and just -- it's23 simple. )9 COMMISSIONER TOLSON:10 Councilman, thank you so much. I would11 say that you're right, that if different12 decisions had been made in the past, we13 might be at a different place. However,14 after the activity that we had in the15 2005 and 2008, we did purchase the16 trucks. And I do want to just make the17 clarification that presently we service18 by dumpster over 1,500 units. So we have19 the trucks. We have the --20

And if21 that's an acceptable solution for22 everyone involved, then we can pick it up23 that way, but when it's not an acceptable24 solution for particular buildings, we25 63 10/18/11 - FINANCE - BILL 110130, ETC.1 should be able to do something like this.2 The other issue you raised in3 your testimony I just want to take4 immediate issue with is that condo5 conversion, I don't think, is happening6 as a result of someone getting a $2007 rebate. I mean, we're in the strongest8 rental market in Philadelphia probably9 that we've ever been in. So anybody who10 has rental units, they're not running to11 convert them to condos, because they're12 making a lot more money as a rental unit,13 and, rightfully so, they're paying14 private haulers, because it's a business.15 Condos and condo living has16 always been looked at as the same as17 apartment living. It's not. These18 people live vertically, own their19 property as they do a house and pay real20 estate taxes. Apartment dwellers, rental21 apartment dwellers, live, pay their22 landlord. The landlord runs a business.23 They provide the service.24 So I don't think you really25 64 10/18/11 - FINANCE - BILL 110130, ETC.1 compare the two in regards to trash2 removal. I mean, my frustration is that3 we've been talking about this since 20024 and there was a lot easier solutions. So5 I appreciate your testimony, but I just6 wanted to make that clear.7 COMMISSIONER TOLSON: Thank8 you.9 (Applause.)10

One thing to11 note on what you said, Councilman, just12 in terms of the cost is significant to13 the City. So we've estimated it close to14 6 million a year to give the credit,15 which over five years is a $30 million16 hit to our General Fund, at a time when17 tax revenues are down and the City's18 financial resources are strained. So I19 just wanted to make sure --20

Numbers are21 always an interesting art form. And when22 you're -- and this is everyone, not just23 this Administration or even your24 testimony. When you're estimating25 65 10/18/11 - FINANCE - BILL 110130, ETC.1 something that you don't want to do, the2 cost is always higher than it is when3 it's something you want to do. Because4 we don't really know all the5 participation that's going to take place6 one way or the other. You're projecting7 an increase in participation. I don't8 know if it's going to be that.9 So it's a number. It's maybe a10 higher number than it really is. Maybe11 we can negotiate a number on the rebate,12 on the credit. I mean, there's ways of13 dealing with it as opposed to saying we14 just don't want to do it.15

The Chair16 recognizes Councilman Greenlee.17

Thank18 you, Madam Chair.19 Good morning. First, I want to20 say I agree with everything Councilman21 Kenney said. Commissioner, if I could22 just -- and let me preface by saying, you23 know I think the Streets Department in so24 many ways are doing a great job, and you25 66 10/18/11 - FINANCE - BILL 110130, ETC.1 and Deputy Commissioner Williams and2 everybody has been very responsive. But3 on this issue, you talk about the -- in4 your testimony you say 3,700-plus units5 get weekly collection. Then later I6 thought you said something about 1,700,7 but whatever. There is, according to8 your estimate, 33,000 condominium units.9 So that means 90 percent are not getting10 the service; am I right?11 COMMISSIONER TOLSON:12 Approximately, yes.13

And I14 assume, going back to what Councilman15 Kenney said, a lot of it has to do with16 just logistics, right? I mean, I'm17 looking at my friends from The18 Philadelphian and from Society Hill19 Towers. Obviously you don't want people20 putting out hundreds of bags or tens and21 tens amount of dumpsters on 24th Street22 or something, right? I mean, that23 wouldn't be good for anybody.24 So how logically, realistically25 67 10/18/11 - FINANCE - BILL 110130, ETC.1 could you service these people?2 COMMISSIONER TOLSON: Just let3 me give a little bit of clarification,4 and I thank you, Councilman. It's very5 good to work with you as well. So I6 appreciate your comment.7 Just a point of clarification.8 We're servicing approximately 3,700 units9 now. Of that, the number that I10 mentioned, the 1,700, are those that11 receive it by dumpster. So they don't12 put out bags at the corner. We have13 buildings downtown that receive our14 services and they have almost 200 units15 in the building. So those -- our ability16 to service them with a variety of manners17 or strategies has been applied already.18 There are those that put it out by bag19 and there are those who put it out by20 dumpster. That choice is by the21 condominium association, the individual22 condominium association, not the23 overarching association.24 We work with each building. We25 68 10/18/11 - FINANCE - BILL 110130, ETC.1 go out to inspect it to determine what2 their needs are, and then agree upon the3 collection strategy and the collection4 day, and we service them that way. So we5 are using dumpsters to service some and6 we're using bag collection to service7 others.8

So the9 ones that are not getting it, have they10 just -- how has that come to that11 conclusion? Has that been their12 decision? Has there not been a meeting13 with them? I'm just trying to figure out14 the ones that don't receive the service,15 which are the majority of the units16 apparently.17 COMMISSIONER TOLSON: Yes. At18 the time that we did the initial19 outreach -- there was a series of City20 Council hearings and we had a change in21 regulations and the like -- we reached22 out to the associations to ask for those23 who would be interested in having City24 services, and only some of them responded25 69 10/18/11 - FINANCE - BILL 110130, ETC.1 that they want to have City service,2 others did not.3

And4 getting back to Councilman Kenney's5 questions, isn't it probable that one of6 the reasons is just going back to7 logistics again, how do you get in there,8 how do you service them?9 Now, all the ones that are10 picked up, they're all picked up11 somewhere on the City street --12 COMMISSIONER TOLSON: No.13

-- the14 ones that are picked up now, or do you go15 on private property?16 COMMISSIONER TOLSON: Some of17 them we'll go on the private property.18

Has there19 been concern maybe expressed some place20 about insurance and insurance risks, that21 kind of thing, by doing that?22 COMMISSIONER TOLSON: One23 moment, please.24 That has not been an issue. We25 70 10/18/11 - FINANCE - BILL 110130, ETC.1 ask for them to sign a waiver, and we've2 been fine so far.3 And I should just note that4 those that may be larger and have their5 collection otherwise, not with City6 collection, they're being collected by a7 trash truck as well.8

So I9 guess it's similar like when you pick up10 on driveways, I think basically the11 City's position is you have no12 responsibility or you're not held13 accountable for any damage?14 COMMISSIONER TOLSON: If we go15 into someone's parking lot, we have no16 responsibility for the conditions of17 their parking lots.18

And it19 would be the same here, right?20 COMMISSIONER TOLSON: Yes, same21 here.22

But,23 again, aren't there a lot of places where24 just getting in and out would be an25 71 10/18/11 - FINANCE - BILL 110130, ETC.1 issue? I mean, isn't that part of the2 problem here, probably why a lot of --3 and I guess they can speak for themselves4 when they come up, but isn't that one of5 the problems here? Again, I use The6 Philadelphian as an example because I7 know the building very well. I live near8 it. I'm just trying to figure out how9 that could be done; that's all.10 COMMISSIONER TOLSON: The same11 place where their trash truck presently12 goes, a City trash truck --13

But it's14 once a week as opposed to -- you would be15 picking up once a week.16 COMMISSIONER TOLSON: That's17 the frequency that we collect the people18 who live next door.19

I20 understand that.21 COMMISSIONER TOLSON: So if we22 were to use that same comparison of it,23 there's no difference between going up24 versus going out. The people who live25 72 10/18/11 - FINANCE - BILL 110130, ETC.1 next door get once-a-week collection.2

But it's3 not -- I mean, you're talking about a4 large amount of trash that would have to5 be kept somewhere for a whole week.6 That's a little different than, say, my7 house where I have to find some place to8 keep two, three bags or something, right?9 I mean, if you're talking about a whole10 building, you're talking about -- it11 would have to be a large place to store.12 In a very large condo building, where13 would they put the trash?14 COMMISSIONER TOLSON: I think15 issues of storage are a concern in many16 of our neighborhoods, whether I go to17 West Philadelphia, Chinatown, North18 Philadelphia, parts of South19 Philadelphia. I think that people there20 would argue too that in their houses,21 they are challenged with storage issues.22 So I think that the issue of23 storage is not one that I can necessarily24 understand quite readily, because we all25 73 10/18/11 - FINANCE - BILL 110130, ETC.1 have a responsibility to store our2 materials for the week until it's3 collected. So for an apartment building,4 for a building that may have three units,5 a trinity of sorts, storage is a6 challenge, but they still have to make a7 capacity -- they have a responsibility to8 make a capacity for storage of their9 materials.10

But11 you're talking about hundreds of units12 here, Commissioner. You're not talking13 about three, four units. I mean, you're14 talking about a large amount of trash the15 building would have to be responsible for16 storing. That just sounds like that17 would be a whole lot to expect somebody18 to do or to find a place to put. I'm19 just talking realistically here. I just20 can't see where that would be.21 COMMISSIONER TOLSON: I can't22 recall the building at this point, but I23 do remember when we first started with24 the conversion or allowing people to have25 74 10/18/11 - FINANCE - BILL 110130, ETC.1 the collection, that there was some2 concern about taking parking spaces to3 put dumpsters for the collection. Well,4 I'm not sure that having to lose two5 parking spaces to hold dumpsters is not a6 reasonable accommodation for storage.7 But I just would say that everyone has to8 store their materials on site.9

Not to10 belabor the point, but you're saying11 that's where they would take away two12 spots on the street to have their13 dumpsters? I'm sorry.14 COMMISSIONER TOLSON: No; in15 the parking lot.16

Oh, the17 parking lot. Okay.18 I still don't -- I mean, I19 agree with Councilman Kenney, and we20 can't turn back the clock. I mean, the21 easiest thing would have just been to22 give the credit back in 2002. I know we23 can't do that, but it still seems like a24 fairness issue to me, that there's people25 75 10/18/11 - FINANCE - BILL 110130, ETC.1 who just can't realistically have their2 trash picked up by the City, and that's a3 basic service that I think they should4 get. But anyway, thank you,5 Commissioner.6 (Applause.)7 COMMISSIONER TOLSON: Thank8 you, sir.9

What does10 that do for my constituents? I don't11 have a lot of cooperatives or condos, but12 I do have this trash fee in these13 duplexes that I get complaints about all14 the time, and they pay taxes also, but15 they're charged $300, I believe, for16 trash pickup.17 COMMISSIONER TOLSON: That is a18 concern that we have, Councilwoman, that19 for buildings that are multi-unit, more20 than one, those owners will pay a trash21 fee of $300 for the service. However,22 the same type building that is condos,23 they get up to $200 per unit credit.24 That is a concern.25 76 10/18/11 - FINANCE - BILL 110130, ETC.1

Well, it2 is a big concern.3

Just a4 point of information. How many two-unit5 condos are there in the City?6 COMMISSIONER TOLSON: I don't7 know that number. I have to ask the8 Association, but I know that they exist.9

Well, I10 asked the Association when they testified11 to kind of talk about whether or not12 that's a widespread thing. I doubt that13 it is, but two-unit condos don't seem to14 make any sense.15 COMMISSIONER TOLSON: I think16 it's quite common in South Philadelphia.17

That18 they're condos or that they're duplexes?19 COMMISSIONER TOLSON: That20 they're condos.21

We'll let22 them speak to it, because I'm not sure.23

And the24 question I'm raising is on where25 77 10/18/11 - FINANCE - BILL 110130, ETC.1 this last paragraph or next-to-the-last2 paragraph, "Condos that are six units or3 less are exempted from this fee. So4 under this tax credit bill, the owners of5 condo units in a six-unit or fewer6 building would not have to pay the $3007 fee, but would also be eligible for a8 subsidy up to $200 per unit so they can9 get trash collection services more than10 once a week."11 COMMISSIONER TOLSON: That's12 correct. As the legislation is written,13 that is correct. And a further concern14 for us would be that in addition to15 having the credit, they also have the16 ability to go to the citizen drop-off, is17 another benefit. We have no ability to18 control that.19

If I may,20 what does citizen drop-off have to do21 with it?22 COMMISSIONER TOLSON: In terms23 of citizens bring us quite readily their24 materials from their household. So if25 78 10/18/11 - FINANCE - BILL 110130, ETC.1 you have a mattress that you don't want2 to hold or bags of trash --3

Isn't that4 saving the City, because they're dragging5 it to you instead of you going out and6 picking it up?7 COMMISSIONER TOLSON: We still8 make the stop, so it's not really a9 savings per se.10

Is it a11 cost per se?12 COMMISSIONER TOLSON: Certainly13 there's a cost.14

If I take a15 mattress, whether I'm a condo owner or a16 homeowner, and strap it to the top of my17 car and drive it to a drop-off center,18 that's costing you money?19 COMMISSIONER TOLSON: Yes.20

What if I21 leave it outside my house on Friday for22 trash day?23 COMMISSIONER TOLSON: If you24 are a condo that we don't service, you25 79 10/18/11 - FINANCE - BILL 110130, ETC.1 have a responsibility to have your trash2 hauler take that away.3

Any time --4 I mean, I'm certainly not a sanitation5 hauling expert, but any time I bring the6 trash to you, how does that cost you7 money?8 COMMISSIONER TOLSON: Because9 we still --10

When you11 had to pick it up anyway.12 COMMISSIONER TOLSON: No.13 That's part of the problem and the14 challenge. Just like small commercial15 businesses that may want to bring us16 materials, people undersubscribe to those17 that they have to pay and then they18 either illegally dump it or they may19 bring it to us and --20

Illegally21 dumping is a totally different thing,22 because you have to go out and then clean23 up the mess and that costs money and time24 and personnel.25 80 10/18/11 - FINANCE - BILL 110130, ETC.1 COMMISSIONER TOLSON: Yes.2

But if you3 got a guy sitting on a chair letting4 people go into a drop-off site and that5 person brings that trash to you, how is6 that costing you any more than picking it7 up on the sidewalk?8 COMMISSIONER TOLSON: We still9 then pay for disposal.10

You're11 going to pay for disposal if you pick it12 up.13 COMMISSIONER TOLSON: Not if it14 were from a property that we don't have15 to service.16

Well,17 that's another reason why they should get18 the tax credit.19 COMMISSIONER TOLSON: No, no.20 Just for clarification -- so I'll just21 make up an example, not to say that22 anyone would do this. If I subscribe to23 a service and I pay for dumpster24 collection that doesn't include any type25 81 10/18/11 - FINANCE - BILL 110130, ETC.1 of bulky items, so they won't take that2 without charging me an extra $50, well3 now I'm going -- instead of having my4 private guy take that, I'm going to now5 instead take it to the citizen drop-off6 and have the City take it.7

Right.8 COMMISSIONER TOLSON: We have9 businesses, small businesses, that do10 that that we don't service and we have11 others that do it that we don't service,12 some of our residential apartment13 buildings. That is a cost to the City,14 when they should be taking care of that15 service privately with their other16 materials.17

But they're18 paying for it already in their real19 estate taxes. If I'm a condo owner and20 I'm not serviced by the City and I have21 to take a mattress, for want of a better22 example, I pay my real estate taxes for23 the privilege of hauling that mattress to24 you so you can dump it in a landfill.25 82 10/18/11 - FINANCE - BILL 110130, ETC.1 That's part of my real estate taxes right2 now. So I don't understand how that's3 unfair or inequitable. When I'm paying4 $3,000, $4,000 in real estate taxes and I5 take my mattress to you to landfill it,6 that's something that they should have to7 pay for privately?8 COMMISSIONER TOLSON: I'm9 talking about under the circumstances of10 getting a credit, we would have no11 ability to control where their materials12 go when people bring it in.13

What we're14 all trying to avoid is people saying, You15 know what, it's not worth all the16 aggravation of taking it down there, I'm17 going to dump it under I-95, and then we18 have to go out and clean it up anyway.19 COMMISSIONER TOLSON: Well,20 that could happen as well.21

But22 wouldn't you rather have it brought to23 you as opposed to having --24 COMMISSIONER TOLSON:25 83 10/18/11 - FINANCE - BILL 110130, ETC.1 Certainly, but what I'm suggesting is2 that when people receive private3 collection, all their materials would be4 handled privately then.5

Right.6 COMMISSIONER TOLSON: If they7 share any of that back with the City,8 that's not a help to us.9

But they're10 already -- and this is where we kind of11 diverge. They're already paying their12 real estate taxes for a service they're13 not getting. They're paying for it14 privately and they're taking a portion of15 that and bringing it to you. And that's16 a cost to the City?17 COMMISSIONER TOLSON: Under the18 present circumstances, present19 circumstances, no, that's not a cost to20 us.21

Right.22 COMMISSIONER TOLSON: However,23 if people were to receive a $200 credit24 and then decide to still share their25 84 10/18/11 - FINANCE - BILL 110130, ETC.1 trash, that is a cost to us.2

How do you3 quantify that cost? What's the unit cost4 of a disposal of a mattress compared to5 what they're paying in real estate taxes?6 For example, what portion of the real7 estate taxes goes to Sanitation? Have we8 broken that down? What goes to Police?9 What goes to Sanitation? What goes to10 Fire? I mean, we drill down that deep?11

I think the12 Commissioner was just making a point on13 an extra cost, but we could get back to14 the basic issue at hand, which is the15 $200 credit and that -- we're willing to16 provide and we are providing weekly17 collection to condo owners and we'll18 provide dumpster collection.19

But in many20 cases the weekly collection is21 inadequate. I'm not saying you should22 pick it up more than once a week, but the23 weekly collection and the actual carrying24 out of that weekly collection is25 85 10/18/11 - FINANCE - BILL 110130, ETC.1 inadequate and sometimes unworkable. And2 to say to those folks, Because it's3 unworkable and inadequate, pay for it4 yourself, I think is still unfair to a5 person who is paying real estate taxes.6 If I live in an apartment7 building, I'm paying rent to my landlord,8 who is running a business. I'm not9 paying the City real estate taxes. The10 landlord is, because he's running the11 business. And I think the disconnect is12 between apartment dwellers and condo13 owners, that condo owners are treated as14 apartment dwellers. That's not the case.15 They pay real estate taxes, and a lot of16 it.17 And the other issue, just for18 the record, there seems to be some19 misnomer that condo residents are wealthy20 people who live just in the Murano and21 residences at the Ritz. These are senior22 citizens, they're blue-collar23 working-class people who live in condos,24 who are struggling like everyone is, but25 86 10/18/11 - FINANCE - BILL 110130, ETC.1 paying real estate taxes for a service2 they can't get. Now, you say, yes, we3 can do it, but I don't think in all cases4 it's adequate or workable.5 (Applause.)6

Councilman7 Green.8

No.9

Any10 questions or comments?11 (No response.)12

We do have13 questions about this trash, a total14 discussion about trash, particularly15 about the duplex owners.16 COMMISSIONER TOLSON: Yes.17

I do18 believe we do have a bill which we have19 to call up for a hearing to have that20 discussion.21 COMMISSIONER TOLSON: Just for22 clarification on your point, all23 condominiums are exempted, not just those24 that are in six or larger. All25 87 10/18/11 - FINANCE - BILL 110130, ETC.1 condominiums are exempted from the fee,2 the $300 fee, just for clarification. I3 think when you were making comment4 earlier or my response may have been5 misleading, but all condominiums are6 exempted.7

Any other8 questions or comments?9 (No response.)10

Thank you11 very much.12 Is there anyone else here to13 testify on this bill? We have the next14 panel, Mr. Giblin, Gary Krimstock, Tony15 Campisi and Marsha Bacal and Jovida Hill.16 (Witnesses approached witness17 table.)18

Would you19 state your name for the record and20 proceed with you testimony.21

Good morning,22 members of Council. My name is Jovida23 Hill and I appear before you today on24 behalf of the Logan Square Neighborhood25 88 10/18/11 - FINANCE - BILL 110130, ETC.1 Association. Our neighborhood stretches2 from Broad Street to the Schuylkill River3 and from Market Street to Spring Garden4 Street. We appreciate this opportunity5 to speak in support of Bill 110130 that6 would provide tax relief to our7 residents, who are owners or shareholders8 of the City's condominiums and co-ops.9 On Tuesday, October 11th, the10 LSNA Board voted unanimously to support11 an annual tax credit for condominium,12 cooperative and planned community owners13 who, by necessity, pay for private trash14 collection and who do not receive trash15 or recycling collection services from the16 City. I'd also like to add that it's17 absolutely logistically impossible for18 these residents to have once-a-week trash19 pickup by the City. It would be20 unsanitary, it would pose a health21 hazard, and just logistically it would be22 impossible because of the high density of23 these buildings.24 Many of our residents are25 89 10/18/11 - FINANCE - BILL 110130, ETC.1 owners of buildings that include Kennedy2 House, Penn Center House, the Phoenix,3 the Murano, CityView I and II, the4 Tivoli, 2200 Arch Street, 2201 Cherry5 Street, Rivers Edge and the Lofts at6 Logan and many other high-density7 buildings in our neighborhood.8 I also serve on the 8th Ward9 Democratic Executive Committee in the10 24th Division. I am elected by my11 neighbors, and the majority of them are12 unit owners in CityView I and II and the13 Tivoli.14 Collectively, the passage of15 this bill will provide thousands of16 Philadelphia residents with much-needed17 tax relief. Your support of this18 legislation will be greatly appreciated,19 and I thank you for this opportunity.20

Thank you.21 We'll let everyone testify and then we'll22 ask the Committee to ask questions after23 that. All right?24 Would you identify yourself for25 90 10/18/11 - FINANCE - BILL 110130, ETC.1 the record, please.2

Yes. Madam3 Chairperson, members of the Committee, my4 name is Gary Krimstock from the5 Philadelphia law firm of Fineman6 Krekstein and Harris. I'm here as legal7 counsel for the Greater Philadelphia8 Condominium Managers Association and as a9 Board member of the Community10 Associations Institute. Our11 constituents, Board managers, Board12 members and unit owners and residents at13 condominiums, co-ops and homeowners14 associations in Philadelphia are present15 here today in large number in support of16 this bill. 1 condominiums, cooperatives and homeowners2 associations. Equality of municipal3 services was an early and primary focus4 of the group, and the correction of the5 inherent and blatant unfairness in the6 City's trash collection policy has been a7 long-time target of GPCMA's advocacy8 efforts. 12 Since the first major13 Philadelphia developments in the late14 1970s of common-interest communities in15 Philadelphia, the individual citizens and16 taxpayers owning such residential17 properties have been treated unfairly by18 the City in the provision of basic and19 important municipal services. 1 private service. 7 Now, after more than three8 decades of history, these common-interest9 communities are much more popular and10 prevalent. Nationwide they number more11 than 300,000 communities, housing about12 60 million people. There are now about13 25,000 condominium, co-op and homeowner14 association residential units in15 Philadelphia. As has been done now in16 many municipalities across our state and17 the country, including in our closest18 neighboring state, New Jersey,19 Philadelphia sought to correct the20 longstanding inequality to right this21 wrong by the unanimous City Council22 passage in 2002 of Bill No. 010659, also23 introduced by Councilmembers Kenney and24 DiCicco. 17 It has been addressed in New Jersey with18 annual reimbursements by the municipality19 to community associations. Other20 municipalities in our state only charge21 those taxpayers who receive municipal22 trash services by a line item on their23 property tax bill. 1 community association homeowners. This2 Bill No. 13 Not all of these residences are located14 on Rittenhouse Square. They are also in15 almost every neighborhood in the City,16 and more are being developed in those17 areas every day. Some of the owners of18 these homes are young singles or couples19 starting their careers who buy them20 because they are often small and all they21 can afford. 1 public-sector employees who buy them2 because they have to live in the City and3 want to be convenient to public4 transportation. In any case, they are5 still paying real estate taxes just like6 any other homeowner in the City, and they7 deserve and should be entitled to the8 same City services. 16 This bill provides the fairest17 and simplest and most cost-efficient18 solution to this inequality problem: No19 annual tax credit to the affected20 homeowners -- I'm sorry; an annual tax21 credit to the affected homeowners for the22 cost that they pay for their private23 trash service. 1 getting this tax credit. Most of the2 community association developments are3 high-density, multi-family residential4 buildings or complexes with large5 concentrated volumes of trash that6 require specialized equipment, labor and7 collection scheduling. It would be8 costly, impractical and inefficient for9 the City to provide the necessary trash10 collection services to these communities11 that would be comparable to what it now12 provides other single-family households13 in the City. 1 week. 11 Those figures are for trash collection12 only one day per week, which would not be13 sufficient to collect the average weekly14 output from community association15 households. The number of community16 association units in the City is at least17 25 percent greater today.

1 the maximum of $200 per unit per year for2 all units, but in reality significantly3 less, since the annual cost for private4 trash service varies greatly among the5 community associations, but few are close6 to the $200 per year maximum and many are7 much less. Our last survey in 20088 showed an average annual cost of about9 $120 per unit. 17 Administratively, the tax credit process18 would be simplified and easily19 verifiable, because the community20 associations maintain all the records for21 their buildings' trash collection22 expenses. 5 For all the foregoing reasons,6 my clients urge you to support the7 passage of this important bill. )10

Thank you.11 The Chair recognizes Councilman12 Green.13

Thank you.14 I'm not sure -- I just wanted15 to confirm that I heard you correctly.16 The average cost per unit in your17 association is $120 per year?18

Yes.19

Thank you.20

Any other21 questions?22 (No response.)23

Next24 witness, please.25 100 10/18/11 - FINANCE - BILL 110130, ETC.1

Good morning and2 thank you for this opportunity to testify3 before this Committee. My name is Tony4 Campisi and I serve as Executive Director5 of the Pennsylvania and Delaware Valley6 Chapter of Community Associations7 Institute. CAI is a 31,000-member8 national organization dedicated to9 building better communities. CAI10 provides information, education and11 resources to association-governed12 communities, including condominiums,13 cooperatives and homeowner associations14 and the professionals that support these15 communities. The Pennsylvania Chapter16 represents an estimated 15,000 such17 communities across the Commonwealth,18 including approximately 900 communities19 with thousands of housing units within20 the City of Philadelphia. 1 City Council Bill 110130, which would2 provide a credit against the tax for3 owners of condominiums, cooperatives and4 planned community units who do not5 receive regular City refuse, recycling6 and bulk item collection services. 15 On June 13th, 2002, the bill was adopted16 by City Council. Then-Mayor John Street17 returned the bill to City Council without18 his signature with a letter stating that19 the City would not enforce the law. In20 response, City Council filed suit to21 compel the Administration to enforce22 municipal refuse collection from23 community associations in the City. 1 Council, including then-Councilmember2 Michael Nutter, now Mayor of3 Philadelphia. 9 Unfortunately for owners of10 condos, co-ops and planned community11 units in the City, the issue of refuse12 collection remains unresolved. While the13 City has extended an offer of weekly14 curbside collection, the volume of trash15 that these communities accumulate makes16 this an unsanitary solution that would17 cause many other health and neighborhood18 concerns. 1 this bill may not pass constitutional2 muster because it may create a separate3 and distinct class of residential real4 estate. I would suggest the City has5 already accomplished this by its refusal6 to adequately provide a municipal service7 to what the City considers a distinct8 class of residential property owner. And9 the reason why may in fact reside in the10 common understanding and interpretation11 of what a condominium is or is not under12 state statute. Pennsylvania's Uniform13 Condominium Act, adopted in 1980 by the14 State Legislature, along with two15 companion acts, the Real Estate16 Cooperative Act adopted in 1992 and the17 Uniform Planned Community Act adopted in18 1997, define the creation, management and19 governance of association-governed20 communities in Pennsylvania. It is21 important, however, to note here that the22 three forms of ownership defined under23 these statutes simply define a legal form24 of homeownership. 2 This is critical to the issue we are here3 to discuss today in the following manner:4 A condominium does not5 translate to a high-rise or mid-rise6 building, just as a planned community7 does not translate to a subdivision with8 one-acre lots in a suburban setting. A9 condominium under state statute may be a10 25-story building with ten units per11 floor in Society Hill. It may be a12 townhouse community with four or six13 units connected in a row in South14 Philadelphia. 21 The point I make here is22 simple. A condominium, co-op or planned23 community unit is nothing more than a24 single-family home. 1 are not commercial buildings comparable2 to apartment buildings owned by a single3 owner. These communities are a series of4 individual homes owned by many individual5 owners. A condominium association, in6 whatever physical structure it assumes,7 is no different than a block of row homes8 in any one of your Council districts. A9 block of row homes consists of10 single-family homes that line the sides11 of a block, connected by a shared common12 vertical wall and each owned by an13 individual owner.

A high-rise14 condominium building consists of15 single-family homes that line a hallway16 and that share a common vertical wall,17 stacked upon each other, with another18 common horizontal wall consisting of a19 ceiling in the unit below and a floor in20 the unit above. 1 City or Fishtown. 10 This is an issue not limited to11 the City of Philadelphia. Community12 associations across Pennsylvania and in13 fact across the nation deal with this14 very same issue. In most states, owners15 in community associations pay municipal16 taxes for services that are in many cases17 not provided to residents who live within18 the association, including road19 maintenance, refuse collection and other20 municipal services. 7 Here in Philadelphia,8 Councilman Kenney is proposing that the9 City offer a tax credit of up to $200 per10 residential unit to address the disparity11 in collection services. )20

Thank you21 very much.22 Are there any questions? Thank23 you.24 Councilman Green.25 108 10/18/11 - FINANCE - BILL 110130, ETC.1

Thank you.2 I'm honestly not sure exactly how I feel3 about this issue, but intellectually I'm4 having some trouble with what you're5 saying, because what the City is saying6 is they will treat condo owners and7 cooperative owners, et cetera, like every8 other citizen that will pick up the trash9 once a week. The way trash is currently10 collected in condos, it goes down a chute11 or something else if it's a very large12 building and goes into a big dumpster, et13 cetera, but the way it's collected in14 apartment buildings in North Philadelphia15 is, people have to keep it in their16 apartment all week and put it out once a17 week. So it's sort of like the way18 things are -- the way the condo was set19 up from the beginning assumed that there20 would not be City collection. But if you21 want to do it, you can -- everybody can22 reduce that from their condo fee, they23 can keep it in their condo. I don't24 suggest you do that. It's not a25 109 10/18/11 - FINANCE - BILL 110130, ETC.1 practical solution, but what I'm saying2 is, it is actually treating at least,3 unless I'm thinking about this in the4 wrong way, it is actually treating condo5 owners the same as apartment dwellers in6 Southwest Philadelphia the same. You7 could keep it in your condo, not8 aggregate it, and put it out once a week.9 It would be unsightly, it would be a10 health problem. I agree with all those11 issues, just as it is in high-density12 areas in Southwest Philadelphia when13 there's a large apartment building.14 There's a lot of bags out on the street,15 et cetera.16 So my point is, intellectually17 I'm having trouble accepting that you're18 not being treated equally. It's not an19 ideal solution. I absolutely agree with20 that.21 And the other thing -- and you22 can comment on these or not. The other23 thing that it seems to me is that what24 goes into the price of a condo is what25 110 10/18/11 - FINANCE - BILL 110130, ETC.1 the real estate taxes are, what the condo2 fees are, which currently in many cases3 include refuse collection, et cetera.4 And so on the front end, you're getting a5 discount on the price of that condo6 because people are factoring into their7 payment and what they can afford what the8 condo fees are, and that's happened from9 the beginning of the condo association to10 today. You are paying less for that11 condo because you don't get trash12 collection, and it's built into the13 price.14

Let me address15 the first part of your question. I think16 the point I'm trying to make is, I think17 you have to separate a condo building18 from an apartment building. An apartment19 building is owned by a commercial entity,20 by one owner, and a condo is individual21 owners, as I testified, individual row22 homes, in effect. I think there is a23 difference, and I think the individual24 owners are paying taxes that a renter in25 111 10/18/11 - FINANCE - BILL 110130, ETC.1 an apartment building is not paying.2 I'm not sure that the second3 part of your question is accurate. Condo4 communities, particularly -- we're in a5 depressed real estate market nationwide.6 Some states have been hit harder than7 others. Some municipalities have been8 hit harder than others. One of the9 exceptions to that depressed market is10 right here in Center City Philadelphia11 with the condominium community that has12 continued to do very well, albeit at a --13 not as well as it has been doing.14 I would not necessarily agree15 that the price of a condo is discounted16 as you suggest. I don't see the evidence17 of that.18

I mean,19 people buy what they can afford, and what20 they can afford, unless they're21 extraordinarily wealthy, is based on22 payments, and you factor into what you23 can afford all of the payments that you24 have to make. And so that payment25 112 10/18/11 - FINANCE - BILL 110130, ETC.1 includes private collection, which lowers2 necessarily what you can afford on a3 mortgage for what you're paying for the4 condo.5

Well, what I6 would suggest to you --7

I mean, just8 a purely monetary -- I'm not talking9 about anything but just the pure10 economics of it. You can afford a11 payment. If that's 1,500 a month and12 refuse is 20 bucks of that a month,13 currently you don't have that 20 to make14 your mortgage payment.15 UNIDENTIFIED SPEAKER: But16 you're still paying real estate taxes.17

And that18 also is factored into what your payment19 is. So there's three factors that20 determine it - your real estate tax, your21 condo fee and your mortgage payment.22

I would suggest23 that the monthly condo assessments in24 many cases could be reduced and made more25 113 10/18/11 - FINANCE - BILL 110130, ETC.1 affordable for individual unit owners if2 they didn't have to provide for a service3 they're already paying for in municipal4 real estate taxes.5 (Applause.)6

Right. And7 if that were the case, you'd have more8 for the payment for your mortgage side,9 which would increase the price of condos10 by that amount, because it's a11 three-factor payment formula. It's real12 estate tax, condo fee and mortgage13 payment. You reduce one, you can pay14 more for the others.15

In general --16 well, I'm not sure if I understand you17 correctly, but are you suggesting that if18 this service were provided, that19 municipal taxes would have to go up and,20 therefore, they would pay more in21 municipal --22

No, no, no.23 It's much more of a direct benefit to the24 condo owner, because in theory, if what25 114 10/18/11 - FINANCE - BILL 110130, ETC.1 I'm positing is correct, which is that2 people buy based on the payment they can3 afford, they'll be able to afford more4 for condos if we pass this bill.5

Well, I would6 agree it would be a direct benefit for7 the owners of condos, clearly.8

And increase9 their prices by the amount they can add10 into extra borrowing to have the same11 payment.12

But it would be13 more of a direct benefit because it would14 treat condo owners equitably and not have15 to put them in the position of paying16 twice for a service.17

Right. I18 mean, I was for --19 (Applause.)20

One of the21 things that you mentioned I'm actually22 strongly in favor of, which is charging23 for trash collection so that people are24 not charged if they don't have it, and I25 115 10/18/11 - FINANCE - BILL 110130, ETC.1 would start by reducing real estate taxes2 across the board in an amount equal to3 the amount it costs to collect trash in4 the City, which gets us to a very similar5 place, but seems to me to be more6 equitable for everybody, because then7 you're only paying for the service that8 you get.9

And there are10 some cities that handle it that way.11

Right.12 Thank you.13

Any other14 questions?15 (No response.)16

Next.17

Good morning. My18 name is James Giblin. I'm the General19 Manager of the Kennedy House located at20 1901 JFK Boulevard. It happens to be a21 30-story cooperative building with 55922 apartments and approximately 700 or more23 residents. 5 I'm going to diverge a little6 bit -- divert a little bit from my notes7 here because some of the comments that8 I've heard. What I believe we're talking9 about here is to right an inequity that10 has happened and has continued to happen11 to residents of condos and co-ops12 throughout the City for more than 2513 years. And as Gary Krimstock mentioned14 in his earlier comments, the reason that15 GPCMA got together 25 years ago was for16 that one reason. 20 Condo and co-op owners have21 faced the equivalent of double taxation22 regarding the City's policy on collecting23 trash and recyclables or, at very least,24 taxation without representation. 7 During the Street8 Administration, the Pennsylvania Supreme9 Court upheld a ruling affording all condo10 and co-op owners the opportunity to11 receive trash collection services from12 the City. We heard at that time that13 Mr. Street offered to pick up all14 high-rise condo and co-op trash if the15 homeowners would place the trash on a16 curb for once-a-week pickup. Can you17 imagine if the residents of my building,18 the Kennedy House, piled their trash all19 from a week on the street at Cuthbert20 Street behind our building? 4 The other significant issue is5 that once-a-week pickups recommended by6 Mr. Street would not suffice for any of7 our high-rise buildings. And to go back8 to what was said originally by Gary9 Krimstock and Councilman Green, the10 difference is, once a week is not the key11 here. What is the key is the amount of12 trash that is provided -- that is put out13 at the curb that the City will pick up14 for an individual resident, approaching15 240 pounds. I would venture to say that16 my residents probably create the same17 amount of trash, but because it's18 once-a-week pickup, that would not19 suffice. There's no storage for it in20 our building. 5 Additionally, my building pays6 over a million dollars in real estate7 taxes. That's significant. 10 Now, that equates to approximately $8011 per unit. 19 I'd also like to tell this20 panel that besides managing condos and21 co-ops for the past 20-plus years, I'm22 also a retired member of the Philadelphia23 Fire Department. 1 for our condos and co-ops because the2 City says it can't afford it, to me, is3 tantamount to saying that the Fire4 Department will not fight fires in5 high-rise buildings because it's too6 costly for the City. )9

That position10 would not only be inequitable, but also11 unconscionable based on any standard of12 decency and the City's mandated13 responsibility.14 This ordinance from Councilman15 Kenney would go a long way in restoring16 first-class citizenship to our residents17 and others who reside in condos, co-ops18 and nature ways throughout the City.19 I implore you, please end this20 inequity.21 Thank you.22 (Applause.)23

Marsha24 Bacal.25 121 10/18/11 - FINANCE - BILL 110130, ETC.1

This is my trash2 bill. I have been working for ten years.3 There's more at home, but it was too4 heavy to carry. I want to put a face on5 this problem.6

Could you7 pull the mike to you, please.8

Sorry. For your9 information, this is my trash bill.10 These are all -- this is the11 correspondence that I have accumulated12 twice-over in trying to get this problem13 taken care of. My name is Marsha Bacal.14 I have spoken before. I was there in15 2002 and I'm back again.16 I am a resident of Society Hill17 Towers, a member of its governing Board,18 a past Chairperson of the Towers19 Community Political Action Committee and20 a Board member of CDAG.21 This paperwork represents ten22 years of work advocating for the redress23 of a civic wrong. In these files are24 hours of testimony, position papers,25 122 10/18/11 - FINANCE - BILL 110130, ETC.1 court rulings, meeting notices, rallies2 and letters to the editor. It represents3 efforts made by a condominium community4 composed of 700 units, 1,200 residents,5 800 voters, who have a 60 percent voter6 turnout, probably among the highest in7 the entire City. And, more importantly,8 it represents a community that has been9 denied a City service for which they have10 already paid for.11 The concept of homeowners seems12 to be a problem here. Because we are13 vertical, we are considered second class.14 We are not homeowners in the same light15 as those who live in a horizontal basis.16 I lived in Fox Chase from 196017 to 1980 in a split level. I paid my18 taxes, and my trash was picked up. I19 moved to the Society Hill Towers in 1980,20 and for 31 years, I've been double taxed.21 You can do the math. I won't do it for22 you.23 There's no logical reason why,24 no justification that a certain group has25 123 10/18/11 - FINANCE - BILL 110130, ETC.1 to be singled out for a denial of2 service. It's just not defensible. It's3 discriminatory, and it needs to stop.4 (Applause.)5

I will not burden6 you with figures. You've been given7 plenty of figures. Suffice it to say8 that it costs the Towers in excess of9 $50,000 a year to collect that trash, and10 I have heard from the grapevine that the11 cost is probably going to go up next12 year. That's unconscionable. It also13 represents a point in the assessment or14 condo figures that we pay.15 The City has an obligation.16 Let's do it. It really is simple. It's17 about fairness, and it's about time.18 (Applause.)19

Thank you20 very much for your testimony.21 Are there any questions from22 the members of the Committee for these23 witnesses?24 (No response.)25 124 10/18/11 - FINANCE - BILL 110130, ETC.1

Thank you2 all.3 Is there anyone else here to4 testify on this bill?5 (No response.)6

Thank you7 all for coming and for your testimony.8 This ends our public hearing on9 the bills that we have received testimony10 on. We will now go into our public11 meeting, and the Chair calls on12 Councilman Goode.13

I'm sorry.14 Madam Chair, can I just make a request,15 could we -- excuse me. If you can stay16 until we vote on this, it would be17 helpful, and plus it's a little noisy too18 on the way out.19

Could we20 please ask you to -- if you have to21 leave, please leave quietly, but the22 Councilman has requested that you try and23 stay until we take action on this piece24 of legislation. Thank you.25 125 10/18/11 - FINANCE - BILL 110130, ETC.1 The Chair recognizes2 Councilwoman Blackwell for Bill No.3 110560.4

Thank5 you, Madam Chairman. I move that Bill6 No. 110560 be reported out of Committee7 and also a request for the suspension of8 the rules so that this may be heard at9 our next session of Council.10 (Duly seconded.)11

It has12 been moved that Bill 110560 be reported13 out of Committee with a favorable14 recommendation and a recommendation that15 the Council rules be suspended so this16 bill can be heard at Council's next17 session.18 All in favor will say aye.19 (Aye.)20

Is there21 any opposition?22 (No response.)23

There24 being none, the motion is carried.25 126 10/18/11 - FINANCE - BILL 110130, ETC.1 The Chair recognizes --2 (Applause.)3

The Chair4 recognizes Councilwoman Blackwell for5 Bill No. 110660.6

Thank7 you, Madam Chairman. I move that Bill8 No. 110660 be reported out of Committee9 with a favorable recommendation and also10 a recommendation for suspension of the11 rules so that it may be heard at our next12 session of Council.13 (Duly seconded.)14

Thank you.15 It has been moved and seconded that Bill16 110660 be reported out of Committee with17 a favorable recommendation and that the18 rules of Council be suspended so that19 this bill can be heard at Council's next20 session.21 All in favor will say aye.22 (Aye.)23

Is there24 any opposition?25 127 10/18/11 - FINANCE - BILL 110130, ETC.1 (No response.)2

There3 being none, the motion is carried.4 The Chair recognizes5 Councilwoman Blackwell for Bill No.6 110612.7

Madam8 Chair, thank you. I move that Bill No.9 110612 be reported out of Committee with10 a favorable recommendation and also a11 recommendation for suspension of the12 rules so as to permit first reading of13 this bill at our next session of Council.14 (Duly seconded.)15

It has16 been moved and seconded that Bill No.17 110612 be reported out of Committee with18 a favorable recommendation and a19 recommendation that the rules of Council20 be suspended so this bill can be heard at21 Council's next session.22 All in favor will say aye.23 (Aye.)24

Is there25 128 10/18/11 - FINANCE - BILL 110130, ETC.1 any opposition?2 (No response.)3

There4 being none, the motion is carried.5 Councilwoman Blackwell.6

Thank7 you, Madam Chair. I move that Bill No.8 110613 be reported out of Committee with9 a favorable recommendation and that the10 rules of Council be suspended so as to11 permit first reading at our next session12 of Council.13 (Duly seconded.)14

It has15 been moved and seconded that Bill 11061316 be reported out of Committee with a17 favorable recommendation and that the18 rules of Council be suspended so this19 bill can be heard at Council's next20 session.21 All in favor will say aye.22 (Aye.)23

Is there24 any opposition?25 129 10/18/11 - FINANCE - BILL 110130, ETC.1 (No response.)2

There3 being none, the motion is carried.4 We'd now like to ask5 Councilwoman Blackwell to call up the6 amendment on Bill 110518.7

Thank8 you, Madam Chair. I move that the9 amendment to Bill No. 110518 be adopted.10 (Duly seconded.)11

It has12 been moved and seconded that the13 amendment to Bill 110518 be adopted.14 All in favor?15 (Aye.)16

Is there17 any opposition?18 (No response.)19

There20 being none, the motion is carried and the21 amendment is adopted.22 The Chair recognizes now23 Councilwoman Blackwell to report out Bill24 110518, as amended.25 130 10/18/11 - FINANCE - BILL 110130, ETC.1

Thank2 you, Madam Chair. I move that Bill No.3 110518, as amended, be reported out of4 Committee with a favorable recommendation5 and also for a suspension of the rules so6 as to permit first reading at our next7 session of Council.8 (Duly seconded.)9

Thank you.10 It has been moved that Bill 110518, as11 amended, be reported out of Committee12 with a favorable recommendation and that13 the rules of Council be suspended so this14 bill can be heard at Council's next15 session.16 All in favor will say aye.17 (Aye.)18

Those19 opposed?20 (No response.)21

There22 being none, the motion is carried.23 Let me note for the record24 Councilwoman Blondell Reynolds Brown is25 131 10/18/11 - FINANCE - BILL 110130, ETC.1 here and -- Councilman Kenney, did I note2 that you were here earlier?3

No, but4 thank you.5

For the6 record, he is here.7

Thank you.8

Councilman9 Kenney, you have any comments about Bill10 110130.11

Thank you,12 Madam Chair. Before I make a motion to13 move the bill out of Committee with no14 suspension, I want to explain that the15 reasoning for the no suspension is that16 the Mayor has communicated with me that17 he would like to have some discussion in18 this regard, which I'd be happy to do,19 and because of our constricted calendar20 between now and the time this term ends,21 I would like to keep moving the ball22 forward.23 So I move that Bill No. 11013024 be reported out of this Committee25 132 10/18/11 - FINANCE - BILL 110130, ETC.1 favorably with no request for suspension.2 (Duly seconded.)3

I'd like to4 speak on this.5

Please do6 so.7

Thank you.8 I'm very concerned with the9 pricing of this tax credit given the10 testimony today that it costs $120, not11 $200. We just heard from a12 representative from Society Hill Towers13 that there are 700 units and their cost14 of collection is $50,000 a year. They15 would receive an aggregate credit of16 $140,000 a year, 200 times 700. And so17 there just seems to be a disconnect18 between the cost of collection, and it19 seems to me that -- I guess my question20 for the Councilman is, are we going to21 look at perhaps amendments to the bill in22 the next couple of weeks that would deal23 with the actual cost and potentially24 allow a credit to not exceed the actual25 133 10/18/11 - FINANCE - BILL 110130, ETC.1 cost of collection for a particular2 building?3

The4 language of the bill as it exists says5 "up to $200." That was done6 intentionally, with the intention of7 having room to negotiate, and we expect8 that with discussions with the Mayor that9 if he can find himself able to support it10 in some form, that it would be a reduced11 number more reflective of what the12 testimony has been today.13 Councilman Goode has his iPad.14 I don't think he needed it, but he said15 that the cost for, I think -- what was16 it, $14,000, not $140,000 for Society17 Hill.18

Two hundred19 times 700 is --20

Fourteen21 thousand.22

And as23 Sarah, my Legislative Assistant, tells24 me, it will be up to $200, reflective of25 134 10/18/11 - FINANCE - BILL 110130, ETC.1 each individual condominium's trash2 collection cost. So in the one example3 it would be $80, the credit would be $804 per unit. Another example would be $1205 per unit, but not to exceed $200 per6 unit.7

So I think8 the Administration's estimates were based9 on 200 or based on the amount actually10 paid?11

Probably12 based on 200, which, again, I was not in13 any way questioning the testimony of the14 Administration, but when you're looking15 to estimate something, you estimate it16 higher because it's more onerous, so --17

I don't want18 to get --19

It was not20 me, it was Councilman Goode.21

I don't want22 to get into an iPhone/iPad calculation23 today, but 200 times 700 is $140,000.24

I have a25 135 10/18/11 - FINANCE - BILL 110130, ETC.1 BlackBerry. I only have a BlackBerry, so2 I'm way out of the question.3 So with all those comments, I4 would move the bill out of Committee --5 make a motion to move the bill out of6 Committee, with no suspension, favorably.7 (Duly seconded.)8

Well, we9 had a second. Let's just call for the10 vote. All in favor of the bill being11 reported favorably out of Committee with12 no suspension of the rules will say aye.13 (Aye.)14

Is there15 any opposition?16 (No response.)17

There18 being none, the motion is carried.19 (Applause.)20

There21 being no further business before this22 Committee, this Committee is adjourned.23 Thank you all for taking your24 time to come out. Thank you.25 136 10/18/11 - FINANCE - BILL 110130, ETC.1 (Committee on Finance adjourned2 at 12:20 p.m.)3 - - -4 5 6 7 8 9 137 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on October 18, 2011, and that7 this is a true and correct transcript of same.8 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23