I don't have that level of detail, but I can definitely get back to you with that answer. And I hopefully will be able to get back to you with the answer of how it gets maintained.
I think it's important, though, that we look at the type of grass or whatever greenery is used there to cut down on maintenance.
Absolutely. And I'm sure that has been thought through. And I need to talk to the project manager who is handling that to get 66 2/7/01 Capital Budget Hearings that level of detail. But I will get back to you with that answer.
Thank you, Madam President. First. I want to correct, to my recollection, some statements that were made with respect to allocations to rec centers. One in particular made mention of the fact that there were certain things that were done to rec centers that had to come out of District Council" allocation. It's my understanding in certain instances that it's not necessarily the case. When we have Citywide lighting contracts, it does not come out of that Council District. And other things like we have a roofing-wide contract, it doesn't come out of that 1.2 million.
You also made a statement with respect to replacements for swimming 67 2/7/01 Capital Budget Hearings pools, that that did not come out of the Councilperson's District allocation, Mander Swimming Pool in particular, 33rd and Diamond. I recall that year that the entire $900,000 that we spent for that swimming pool came out of the Councilmatic Direct. We were not able to fund any other centers.
I believe that's what triggered the policy that changed so that since then we are not exempting --
Miss Griffith, I'll be talking to you about that later. There's a couple other issues. One in particular is as a former staff person for a Councilperson, a big part of my responsibility was dealing with neighborhood issues. And this whole issue about infrastructure improvement continued to be a problem. And to give you an example, on a particular block in my District, back when you were able to do curbs and sidewalk -- I think it was the 68 2/7/01 Capital Budget Hearings 2700 block of Morrison Street -- we went out and spent approximately $50,000 to do new curbs and sidewalks. Six months later, the Water Department came out to do a new sewer line and tore out all of the brand-new curbs and sidewalks, and we had to spend an additional $50,000 on top of what was spent just for the sidewalks. We also had to do street resurfacing. And I raised that question at that time about this lack of coordination. I was told that a better job would be done. Here we're are years later on the 2900 block of Sedgley Avenue. We recently had another sewer line reconstruction, having just had the street paved a year and a half ago. And I guess I want to know who is really paying attention to this because I continue to see this through my District. I'm assuming that it happens in other areas, that we continue to waist money.
I'm going to let Dick speak to that, but let me add one point. The Mayor has just initiated, really, 69 2/7/01 Capital Budget Hearings sort of a groundbreaking construct; that is, working groups of agencies that deal with like matters so that they will work together and coordinate. So, for instance, there is a City Services working group and a City Operations working group, I believe both chaired by the managing director. And two of the issues are, one, to make sure that policy matters that are interagency matters get vetted and parsed through in a coordinated way so that operational issues get vetted and parsed through in a coordinated way.
It was my understanding that we already had that in place. Are we going to change the people, or are we going to change the structure?
Yes. It is now at the Mayoral level, and people are paying attention.
I have this ever increasing issue having represented an area that has 70 2/7/01 Capital Budget Hearings probably some of the older recreation centers in the City Philadelphia; one in particular is 26th and Master. I'm being told that the Philadelphia Athletics used to actually play baseball there. Those of you that know about baseball and have been around for a while will understand how long ago that might have been. In some of these centers, we continue to put upwards of 200, $300,000 in a particular fiscal year, essentially, just to maintain the facility, fix the major systems, keep the heater running. And my question is -- and I actually got killed at a community meeting because I had the nerve to make this statement. At some point, do we look at what point we have to make a decision to stop putting money into these older recreation centers and come up with a strategy to replace the facility and maybe a more efficient facility or smaller facility? What's the tip point? I've actually talked to the Recreation Commissioner about this at great length, and he agrees with me in some respects. I think that we 71 2/7/01 Capital Budget Hearings got to come up with -- it doesn't make sense to keep putting money in some of these facilities.
Let me speak to that conceptually, and, again, Dick may want to speak to it more specifically. I agree. And at the Planning Commission we are thinking through the same issues. Part of what we're thinking about, also, is the flexible use of facilities. So that if we are able to develop funds, to find funds to replace that facility, that facility could meet a number of needs and, therefore be more effectively and efficiently used. But I think you're right. We have to bite the bullet in a way. I've also had conversations with Commissioner Richards, and I know of his concern to make sure the facilities that we have are really usable and are not just sort of squares on a map.
Well, since the folks at this table are the ones that coordinate the Capital Program in league with the Commissioner of the 72 2/7/01 Capital Budget Hearings agency in question, you are now talking to the people who will be making the determination over the next year. And this is an issue that's already been joined. And we'd be happy to work with you and other Councilmembers that are concerned and, obviously, with the Recreation Commissioner.
My last question relates to State capital initiatives, funding for centers, parks. How does that happen? Is it based on the State-elected officials' ability to get funding to match the City allocation of funding? Is there some sort of equitable way that this money comes to the City, or is it based on how great your state senator is or your state representative is?
I understand your question. Let me ask if there's anyone else at the table who might know more about this than I do. And if not, we would have to get back to you. Obviously, there are agencies and entities that are very creative and very successful at getting state funds, but you're really asking a broader question -- what's the process; what's the procedure; what's the protocol. And I think we 73 2/7/01 Capital Budget Hearings would have to get back you. I don't have the answer.
Does the City initiate the process, or does the State initiate the process? Does the senator get from his constituents, We need this recreation center fixed? And then does he go to the State and gets in touch with the Councilperson, and they figure out a way to --
Or is it an ad hoc process where it sometimes happens one and sometimes happens another way. And that's something that I would be very interested in finding out too. And we will to get back to you.
Thank you. The Chair recognizes Councilman Kenney.
Thank you, Madam Chair. We're dealing currently in Council with a very complicated issue at the Public Property Committee, dealing with cable television and the desire for the cable television companies outside of 74 2/7/01 Capital Budget Hearings Philadelphia to come in and compete with our incumbent carriers. As a result of that process, we have been exposed to the fact that there is a build-out plan. It's proposed to start in Northeast Philadelphia and move it's way down Northeast Philadelphia in a crescent shape through the top tier, northern tier of the City, and up into the far northwest. What kind of coordination or involvement does the Planning Commission or any of its staff have relative to the needs of that build-out? For example, if you go through any of our city streets in Center City and many neighborhoods, you will see, similar to what Councilmember Clarke talked about, was kind of a patchwork quilt of various street openings, whether it's City agencies, Streets Department, Gas Works, Water Department or whether it's telephone companies, cable TV companies, who does the overall coordination of who's opening what, where, when and when they're covering it? And can we, similar to what, I think, Councilmember Clarke was leading to, can there be 75 2/7/01 Capital Budget Hearings some coordination when RCN gets approval to move forward and their plan is submitted, will Public Property, Streets, Water and Gas perhaps coordinate some way that they know when a street is being opened by a particular entity, that they can then coordinate that effort to do whatever work needs to be done in that particular area? And I know it's a massive planning issue.
And, frankly, Councilman, it's not one that the City Planning Commission has been directly involved in. I would suspect that either the Streets Department and/or the Managing Director's Office would be the coordinating entity. I don't know whether there's someone else you might want to --
To add to the question, the issue of deregulation in gas, deregulation in electric, obviously the phone service has been deregulated for a while. There's so many different companies. And I assume that all of them or most of them hopefully are requesting street opening permits. So maybe that's a way, a database, which will enable us 76 2/7/01 Capital Budget Hearings to kind of track where most of the work is being done in a given time.
We have the Managing Director and the Streets Commissioner here.
I'm Joe Martz, the Managing Director of the City of Philadelphia. And, Councilman, I expect that within a month to be sending over some legislation with regard to a new ordnance regulating rights of way in the City of Philadelphia so we can start getting our hands around this because it is an enormous problem, and we recognize that. I equate it to, basically, the next generation of infrastructure build-out in America. And it's happening in big cities. And people want to come in here, and they're asking for ordinances, and we give them those ordinances because we want to promote business. But at the same time, they're tearing up our roadways. They're making it extremely difficult for us to manage what is actually in our streets. So we expect to be across the street, and I expect it will be a very lively discussion in the next moth about what's the right thing to do 77 2/7/01 Capital Budget Hearings with regard to managing our rights of way.
My name is William Johnson, Streets Commissioner. I might add that in the interim, the Streets Department does coordinate the opening and issue permits for opening of streets. And we have the right of way unit. We're trying to manage that process to minimize the number of times that a street is opened and the amount of road construction that might be taking place in the City at any time.
Do you expect that that unit would have interface with any companies like RCN or any other competitors that may come in due to the telecommunications act which is promoting and intended to promote competition amongst cable, high-speed Internet and telephone service?
Again, if I may, Councilman, it does. The problem seems to be that people come in and ask us for ordinances and the right to open up the street and put some duct work in at a specific location. What we'll find out during the actual build-out is they'll go down the street and they'll have to move it out. 78 2/7/01 Capital Budget Hearings So we think it's important for us to get our hands around the whole problem because in the end, I would say especially in the Center City area, we just don't have a sense of where everything is supposed to be.
Okay. Thank you. Miss Griffith, I don't know if you were in the room on Monday when the hearing on fiscal stability and intergovernmental cooperation was being held, but I questioned the Administration Representatives at the time and mentioned a comment that I read that you had made in the Philadelphia Inquirer and, again, yesterday read in a copy of Sunday's Washington Post about the view that the Planning Commission would like to find a way to have the City shrink gracefully. I'd like to give you an opportunity to explain what that means and perhaps give us some idea of what your vision is relative to that effort.
Thank you for the opportunity. The reporter that wrote that original piece is a very fine reporter, and I'm grateful anytime City Planning is on the front page of the 79 2/7/01 Capital Budget Hearings Inquirer. However, that was not a quote from me. And even though my picture was prominently displayed with a quote floating over it, if you -- as I'm sure you read the article, shrinkage is not a word that I use. What I did say -- and the first part of the sentence was in there, not the second -- was we have to accommodate the folks who are here. We have to do a good job in terms of capital and other planning for the folks that are here as we build for the future and as we set a base for future development. And we can't be so focused on future development that we neglect the needs of the populations that are here. Someone else used shrinkage, and God bless them. Certainly, I don't think any of us want to see a smaller city. On the other hand, the Sun Belt is a reality; suburbs are a realty. And the post-industrial change in East Coast cities is not just a Philadelphia problem; it's a problem, really, up and down the coast and in the Midwest as well. 80 2/7/01 Capital Budget Hearings
I think other cities probably have responded differently than we have in places like Boston and Chicago. And I always mention New York, but New York is sort of an anomaly due to its synergy and energy and continued desire for people to come there and do business. But I think cities like Boston and Chicago are similar in scope; one being smaller, one being larger than Philadelphia but certainly have that post-industrial problem and seem to have responded differently than Philadelphia has over the past years. 15
And we're beginning to. I'm sure you heard about an initiative, that the Planning Commission has started to look at the North Delaware Riverfront for instance, and to see how we can sensitively, without doing damage to the industrial base that's there, look at other opportunities for development. And we're doing that in other places as well. The gentleman to my left not only helps out with Capital Budget, but he and his staff developed -- and we hope to bring to the Commission, 81 2/7/01 Capital Budget Hearings soon, a plan -- the working title is "Livable Cities" -- where we will at look at ways to retain the folks who have options, who could move to New Jersey but we don't want them to move to New Jersey, and on and on and on. So balancing the need to, again, create a vibrant robust City for the folks who stayed -- and that is my quote. We also want to prepare for those who will come. And a lot of people, as you know, are first- or second-generation suburbanites have seen the error in their ways and are coming back. And we want them to come back to Philadelphia. There's also --
We're getting those four-bedroom empty nesters whose kids are out of college, but that cohort of 35 to 50, three, four children in school, we're not doing too well. I don't think they're coming back at all. We're not doing too well holding onto them.
Well, I think you pointed out an important element. The school system is 82 2/7/01 Capital Budget Hearings always something that's cited but also general economic development and economic health. And I know the Commerce Director and others have done an amazing job in trying to attract high-tech firms and firms of the future. So there's no one answer. There's no 8 magic bullet. But there's a synergy, I think, amongst and between elements. And, again, it's not just a numbers game. Someone pointed out the other day that Cincinnati, I believe, is a city that has lost population but has gained in economic health vibrancy. So we also have to focus on generating that kind of energy and synergy while we still plan for folks to come back.
Let me make just one suggestion relative to my experience with the group of people that are my peers that I grew up with and got married about the same time, started raising families about the same time. Sadly, out of a dozen of them, nine or so no longer live in the City. And some of them, moved for various reasons, reasons we can't change. 83 2/7/01 Capital Budget Hearings But some of them also told me that they never wanted to really go, but their wives gave them such a hard time over lack of space and kind of amenities in the home -- a family room, garage, deck, closets -- and they wanted new construction. And they could only really afford that 120,000 to $170,000 house. To find a single home with wonderful amenities in places like East Falls and other places in Philadelphia are going to pay over two and into the threes, which is terrific. I'm glad we still have those kind of neighbors in the City. But part of our problem is there's very little choice for that family in a row house in Mayfair, South Philadelphia, West Philadelphia who wants to move up. They don't really always want to move out. But when they look around at what's available to them from a housing stock choice -- amenities, new construction -- we just don't have it. We've spent about $80 million or so in the last three years in this City building housing for low become, moderate income people, which I think is a wonderful thing. People really need that 84 2/7/01 Capital Budget Hearings kind of opportunity to be housed in our city, and there's a desperate need for that kind of housing. However, in many ways, I think we've ignored, not intentionally, but we've ignored the needs of that working-class family of all ethnic backgrounds and races who find the need to want to move up and can't because we don't invest the kind money and effort into providing that kind of housing opportunity for them. So they wind up in Washington Township and Montgomery County and Delaware County in working-class neighborhoods that are often very much integrated. I know my peers who weren't used to living in integrated neighborhoods find themselves very happily living in suburban communities that are integrated, and the real integration is they're living around people of their same income. And they had their epiphany, which is wonderful, but I would like to give them the opportunity to have that epiphany here in the City. So in your planning procedure, it would really be hopeful that you would be looking towards that market rate housing opportunity whether it's on 85 2/7/01 Capital Budget Hearings the Waterfront in parts of Northeast Philadelphia or whether it's in other areas of the City, it's something that we really don't have, and it's one of the elements, I think, of population retention that we really need to go after.
And just one final comment. I am not a District Councilperson, so I don't have the same emotion as it comes to the Capital Budget. I look at some of the bigger items, what we're doing on large-scale items. But one area of suggestion I would give after being around here nine years or so is that there really needs to be more coordination with the District Council people. They really do know their districts. They know their needs. And we've gone through this since 1992, 1993 and the last Administration and now till today. They really don't feel like they're really part of this loop. And what they wind up getting is what you guys send to us. And I'd hate to see a situation where we would be in an effort to try to start changing in a major way the Capital Program. 86 2/7/01 Capital Budget Hearings But without their District Council input, we're going to really start -- and I think it's here already -- creating some feelings that we need to assert ourselves in ways that maybe the Administration doesn't want us to. So that's just one word of advice. I'm more of a neutral observer in this because I don't have a district to be directly concerned about personally. But I think those ten District Council people in here really need the opportunity, early on, to be part of this process so that when this document comes, it's not a surprise to them.
Thank you. The Chair recognizes Councilwoman Miller.
Thank you, Madam, President. Good morning. My first question is, the City's ability to issue new debt is restricted by legal debt capacity. My Council District has so many capital 87 2/7/01 Capital Budget Hearings needs, particularly with regard to many of the antiquated recreation centers and schools. I'm sure some of the other Council Districts have the same problems. Is this Administration working on a long-term solution to these capital reinvestment problems? As a Councilperson, I feel like we're kind of cutting and pasting or robbing Peter to pay Paul. And each year, you figure what you can do and what you can't do. So I'd just like to know if this Administration is working on a long-term solution to this capital reinvestment problem.
Yes. We share your concern about our limited debt incurring capacity, and we are looking at ways to expand that capacity. I guess the first way is to look at trying to see whether we can change the way the limit is calculated, looking at the State Constitution, to see whether that can be amended. And another thing we are looking at is whether there are projects that can be appropriately funded through other entities like authorities, for 88 2/7/01 Capital Budget Hearings example.
Thank you. We can continue that discussion at another time too. The Broad and Erie Subway intramobile improvements has been in the design stage for about five years now. It's a combination of Federal and City money. When will begin to see this much needed project in construction?
I wonder whether someone from SEPTA is here that could respond to that question.
Good morning. My name is Joseph Syrnick. I'm from the Streets Department. Councilwoman, as you know, we're managing that project. And you're quite right. This has been a long time in the making. I think you'll see Phase I of this go to construction this year. This has been a very complicated project. There's a lot of interface there with SEPTA and with the community at large. Some of the issues up there when we first started this project, we were planning to do a 89 2/7/01 Capital Budget Hearings certain kind of work with an interface with the trolley. And some of those decisions, because of the way the trolley has changed operation, has caused us to change our attack. But we want to get it right. And this when done will be a tremendous improvement for both the pedestrians and the transit users as well as the general motor traffic. So I think you'll see something this year. And you're right. It's been a long time.
While you're still there, Joe, when are you going to start on Ogontz Avenue, the resurfacing?
That's a question I need someone from Highways to help me with. And I don't think there's anyone here. So can we get back to you on that?
Sure, sure, okay. An infrastructure rail line funding increment, City and State dollars. Can environmental remediation activities include cleaning up the tons of trash illegally dumped along rail lines and from bridge overpasses, particularly in the Broad and Luzerne and Old York Road street area? 90 2/7/01 Capital Budget Hearings
If I understand your question correctly, Councilwoman, that's really an Operating Budget question as an operational question. I don't know whether there is someone here who might be able to respond. Commissioner Johnson.
Can environmental remediation activities include cleaning up the tons of trash illegally dumped along rail lines and from bridge overpasses? And that money, I assume, is City and State money.
I can speak to the fact that we do work with the railroad to try to get them to take care of their properties. Those are not City properties. Those are properties, rights of way, that are owned by the railroads. And we have been trying to work with the railroads to get them to clean up their properties in our communities.
But sometimes, for example, Old York Road, in the 38, 3700 block, goes over one of those SEPTA overpasses. But the City is basically who we call to come out and clean Old York 91 2/7/01 Capital Budget Hearings Road, which is probably one of the worst dumping areas in the City. So we were just wondering if there's some other ways that we can get some other dollars to keep that a little bit cleaner rather than keep pulling on your budget all the time, the Streets Department budget. So that's why I asked that question. Also, I didn't see in the Capital Budget -- and maybe it's there. Are there any dollars for fencing? Are there any monies anywhere for fencing?
There's no money for fencing? So what are we going to do about fencing all of these lots? And maybe that's a part of the Blight Elimination Plan. But we get lots of calls in our office from constituents once we clean a lot while the City still owns. I know if the lot is given to a block association or a neighbor or whatnot, it's their responsibility to put the fence up. But when I read some of this -- and it 92 2/7/01 Capital Budget Hearings talks about the aggressive plan to clean vacant lots -- I was wondering what you were going to do, if you were going to put up a fence. And if so, is there money?
Yes, Councilwoman. There's no money in the Capital Budget, but you are correct in that the Neighborhood Transformation Program anticipates that part of its charge will be the fencing and maintenance of vacant lots and the cosmetic improvement of those lots. And I think when we come to brief you on that program, you will see that that is included.
Okay. Just a couple more questions. I see there is money allocated for school speed limit signs, and the question is: Is there now going to be a systematic approach for signage at all elementary schools including charter schools coming out of this line item, or will the process continue to be complaint-driven?
I think that would be a question that could be responded to by Streets if the appropriate staff is here.
Councilwoman, Charlie 93 2/7/01 Capital Budget Hearings Trainor, Chief Traffic Engineer. The school flasher program will continue in the methodology that we have in place now where we receive applications from schools and we wind up setting up our list of schools in each Council District prior to our letting the contract out. And those are the schools that will be done under that particular contract.
Mr. Trainor, how many are you going to be able to do per Council District this year? Is that going to change? Does this dollar amount change anything?
With the $500,000 -- we have an estimated cost of about $15,000 per school. So we're in the vicinity of the low 30s total Citywide that we can do. The number that we do per district is based on the number of applications that we have within each district. If we're able to do 33 schools total and we have at least three applications from each Council District, we can do three schools per district.
So that's really no change then; am I not correct? 94 2/7/01 Capital Budget Hearings
I have no more questions at this time, Madam President.
Thank you, Madam President. Mr. Dubow, the cap that's on our borrowing in the State Constitution that puts a ceiling, is that uniform throughout the state.
I think it's for first-class cities. I think it's just for us.
Is it better or worse that we would be if we were lumped together with everyone else? Do you know that answer?
And it may be something that when it started out, it was considered a benefit.
Right, historically. Because things change over time. 95 2/7/01 Capital Budget Hearings
-- lobbying approach. The other question I have is -- and I can't seem so find it. I know it's in here. There is a reference in the testimony to using PICA funds, reprogramming existing PICA borrowings that have been sitting still for a while. And that's been talked about for quite a long time because there was an enormous spike in capital spending after the PICA law passed. And it has slowly gone down as PICA funds shrunk. And now our capacity borrowing capacity is shrinking. They were all big projects that were referred to, that the larger institutions within the City were getting these reprogrammed PICA funds. Is there any thought being given to rec centers for instance, as a place -- because this is where we used a lot of these PICA funds initially with limitations to safety and maintenance and not new construction. And it seems like those limitations while they're still there, the 96 2/7/01 Capital Budget Hearings questions, for instance, that the Councilwoman Miller and Councilman Clarke mentioned, a lot of those issues in existing facilities, the older facilities even more so -- maintenance, repair, safety -- apply even today. Is there any thought to not just doing it for big institutions but for neighborhood facilities, reprogramming PICA funds?
The list of projects we put together actually consumes the whole amount of reprogramming funds available.
Yes, for reprogramming. And PICA's ability to issue debt for new projects expired in '94.
There are also interest earnings on projects, and we have not talked to PICA yet about how that money will be used. And one of the things we can talk to them about is whether it would be appropriate to use it for recreation facilities. 97 2/7/01 Capital Budget Hearings
Councilman Cohen, do you still want to be recognized?
As a former Eighth District Councilmember, I support all of the recommendations made by Councilwoman Miller. But I'm sure the needs everywhere are very great. But in the Eighth District particularly, in the 17th Ward, there had been a battle for 30 years to get a library. The library is bursting at its seams. And I was hoping that in the Capital Program there would be a plan made to acquire property right adjoining to it that seems currently to be available as a result of neighborhood action against an undesirable tenant or occupant of the land. And I'm wondering whether that has been raised with the Planning Division or the Public Property Division. It's been raised with the library, but I know expansion of the library would involve capital 98 2/7/01 Capital Budget Hearings funding, and it would have to go, probably, through the Public Property Department and the Planning Commission.
Since the head of the Free Library is here with us, if I could ask him to come and speak to that issue.
Good morning. I'm Elliot Shelkrot, the present Director of the Free Library. I have had discussions with the group of people, many of whom are represented here just before me regarding the question that you raised on the acquiring of land near the Ogontz branch. The Ogontz branch is a well-used branch of our system. It is not more heavily used than any other branches of comparable size. And I did point out there was land available that could be used if, in a future, time we wanted to expand. But it is my understanding that it is not the Administration's policy to purchase land just in case there is an expansion plan down the road.
Well, I would like to point to a very recent experience in connection with 99 2/7/01 Capital Budget Hearings the stadium. The Acme warehouse had been offered to the City of Philadelphia when it became available, and the City turned it down. And I believe the statistics will show that the City invested many, many, additional millions a short time later to acquire it. There was a shortsigntedness for which the City is paying very heavily in its current efforts to acquire that stadium. It seems to be clear that this is a neighborhood that had long been deprived of library facilities and the then current view that majority people didn't kind of use libraries. The community waged a long battle taking 33 years from the time they mean began the fight. And even I am not going to have 33 more years to wage that battle. It's clear that the usage is heavy and is increasing. And I think there has to be some long distance planning because if you wait to acquire the land at just the moment when you're going to be using it and don't have any foresight to look into the future, then I think you just run into impossible expensive areas. I think a study will show that the 100 2/7/01 Capital Budget Hearings community deserves the expanded facilities the expansion library would give. It would in part repay for the many years this area was deprived of the library when it ought to have had it. And it would be a great thing for that area of West Oak Lane and East Germantown that it covers. So I would like to hear back from the Public Property Department what it's plans are in land acquisition because I believe the land at this point would be much more available at a much more economical price than it might be at a later time. Thank you, Madam President.
You're welcome. The Chair recognizes Councilwoman Blackwell.
I'll only ask one question on this segment. I know we've been doing a lot of talking about PGW and all that entails. On the Citywide environmental remediation section on , does that include the PGW under grant sites as well?
That's totally 101 2/7/01 Capital Budget Hearings separate under PGW?
They're trying to give us everything else. I guess it's just as well we don't have that. Thank you. I can wait on mine.
We were told that we were reaching our debt limit capacity. Will you explain that for the record, please, and give us what was meant by that statement and what is our current ability to borrow?
The State Constitution limits the amount of our outstanding debt to thirteen and a half percent of the ten-year average of the assessed value of real estate in the City. At the end of Fiscal Year 2000, we were within $342 million of that cap. Since then the voters approved an addition $160 million which counts against that cap. So we have about $180 million in capacity left. 102 2/7/01 Capital Budget Hearings That capacity can only go up if we retire debt or if assessed values go up. So our ability to use City money for capital projects is constrained by that limit.
And what are our projections of increasing that capacity by retiring debt?
Over the life of the Capital Program, looking at the debt retirements and increases in assessed value, we project that we can fund about $90 million a year through '05 and then dropping off to about 46 million in '06 and 37 million in '07. And that's probably about the range that it would stay and inceasing slightly in years after that.
We were also told at that briefing that our current percentage of our Operating Budget in terms of debt service payment is at either 17, 18 or even close to 20 percent of our current budget. Is that true?
And how does that impact delivery of services? 103 2/7/01 Capital Budget Hearings
I think it's actually about percent. And it impacts service by consuming a 4 portion of our Operating Budget, and it makes us 5 particularly sensitive to downturns in the economy, 6 for example. 7 So if revenue goes down, then that 8 obligation level is fixed, so it might become even a 9 higher percentage of our revenues. 10
So if it is anywhere 11 between 15 and 20 percent, how does that compare 12 with our ability to deliver services? Is that a 13 reasonable -- a percentage of our budget that is 14 perhaps a bit too high? 15
In a perfect world, it would probably be lower, but one of the problems we face as an older East Coast City is a need to keep up an aging and infrastructure, and as a result, our debt is probably higher than, let's say, newer cities in the Southwest.
In your statement on , you state that the City's stimulus program provides the framework for capital expenditures and economic development. The goals of the program are to retain attract business and so on. And you go 104 2/7/01 Capital Budget Hearings on. And to meet these goals, a proposed 2002 Capital Budget channels $127 million into a variety of infrastracture projects. What are they, and what does this paragraph really mean in terms of the economic stimulus monies now being used for this?
Well, I see that we're lucky enough to have our Commerce Director here, and I'm wondering whether Jim would like to come to the mike and speak to our economic development focus as it relates to stiumlus dollars.
And what does this paragraph -- it says a lot. It has a lot of words in it but very few specifics that we can relate to.
It's a very general statement that basically says we use stimulus dollars to stimulate the economy, but that is the reason why --
We'd like to see some specifics put to that. 105 2/7/01 Capital Budget Hearings
That is the reason I asked the Commerce Director to come to the microphone.
Good morning. My name is James Cuorato. I'm City Representative and Director of Commerce. Councilman, If I understand your question --
The Economic Stimulus Program has been a very helpful economic development tool for us specifically in areas where the programs, the traditional programs, that we have to help businesses that are administered through our delegate agencies don't quite apply. And that is often the case in neighborhood based projects where certain criteria for lending or grant programs need to be met and aren't met. However, we still believe that a project is worth while, can help to revitalize a neighborhood and is worth the investment.
Jim, the paragraph, you have it in front of you. 106 2/7/01 Capital Budget Hearings
That's a very general statement. We all know what the Economic Stimulus Program is supposed to be. It says $127 million, FY2002 Capital Budget channels $127 million. I want to know what this $127 million going to be channelled to.
Let me give you a more specific answer. In the breakout of the various divisions within the Department of Commerce, I'll give you, in two minutes, an answer. For commercial development, which is to say improvement of our neighborhood centers, we have $1.8 million in the budget year. For the kinds of projects that we label economic --
1.8 million -- no. 1.6 million for neighborhood commercial centers.
You're breaking down the $127 million? 107 2/7/01 Capital Budget Hearings
Yes. For those kinds of projects that we label economic development which includes PIDC industrial parks and contributions to local neighborhood industrial areas like Port Richmond, that category totals $15 million in the budget year. There's about a million plus --
Could you break down that $127 million for us, submit it to us in writing to the Chair.
I would like to see the answer to this last line, to meet these goals, Capital Budget channels into a variety of infrastructure projects that support hospitality and tourism, defense conversion and commercial and industrial development. That's a very generalized type of statement, and I want that generalized statement to come down to the specifics and break down $127 million.
We'd be happy to do that. I think the next level in terms of detail can be found in the blue book, Investing in Philadelphia, the recommended Capital Program starting on . 108 2/7/01 Capital Budget Hearings But we will actually take it down to an even finer level of delineation for you and get that to you in the format that you request.
Commissioner, how would you define or state the infrastructure needs right now of the City, and how would you begin to prioritize those infrastructure needs and put a number of cost to that.
I can also submit to you an outline that we did on the life cycle cost of the City's infrastructure, and we will get that over today.
I want to follow up on one part of Councilman Ortiz's question. The figure that you gave, $1.6 million, for neighborhood commercial seems very, very small because I know we're working on Broad and Godfrey on the supermarket. That would probably utilize that entire amount. And, yet, I know there must be other neighborhood projects also that are being developed. 109 2/7/01 Capital Budget Hearings
Briefly, to answer that, yes, it's less than what we put in the few years. There's a backlog currently of about $7 million. And one thing we do do to get down to that very limited $90 million is to very carefully screen the capacity of departments to implement to move forward on projects. So because there is somewhat of a backlog, it takes time to negotiate these projects with the business associations and the neighborhood residents. We limited funding in the budget year somewhat compared to past years.
Thank you. In today's Daily News, there's an article about the airport forfeiting a two and half million dollar deposit on a land purchase involving the airport in Tinicum Township. I wonder if there's anyone here who can shed some light on the story because we're bound to get questions from our constituents.
He's working his way to 110 2/7/01 Capital Budget Hearings the microphone now.
Could you give us a picture of what the circumstance is?
The story refers to the loss of a deposit that was put down in an effort that actually began in late 1998 to acquire an adjoining piece of property to the airport that used to be the word headquarters of the Scot Paper Corporation. ). I believe they're a real estate investment company. And it's now known as International Plaza. It's about a 50-acre parcel. The Airport had an interest in trying to obtain it when we became aware that it was available for sale in late 1998. My recollection at that time was that we initially -- at the time Dennis Bowie was our Director of Aviation. We were interested in a purchase place, or we were looking at a purchase price of approximately $100 million. And we also 111 2/7/01 Capital Budget Hearings were aware that under a previous agreement with the Township of Tinicum, the Airport could not make such a purchase without the specific approval of the Tinicum Township Commissioners. Mr. Bowie departed at the end of calendar 1998. There was a three-month period when I was actually Acting Director of Aviation prior to the arrival of Fred Testa in April of 1999. We continued discussions with Coal Brand during that period. And a transaction was carried out whereby the Airport did acquire a small piece of that parcel in order to build the international terminal which is now under construction. That acquisition was tied together with the whole financing and development lease package that was approved here at City Council in the middle of 1998. But in the discussions that led up to that small acquisition, that's where the discussion began of the Airport buying the entire property. A deposit was put down in early 1998 of a million and a half dollars. That was a refundable deposit. An Agreement of Sale was entered into 112 2/7/01 Capital Budget Hearings which -- let's see. I have some notes to put this into the proper chronology. The million and a half was for an Agreement of Sale that would have expired in June of 1999. When Mr. Testa became Director, he continued the negotiations to acquire the property, and, in fact, in July of 1999 asked for an extension of the Agreement of Sale into October of 1999 and at the time was asked to place another million dollar deposit, to add a million dollars to the existing million and a half. So at that time, we had a two and a half million dollar deposit, an Agreement of Sale and negotiations going on both with the owner of the property and also with the Township of Tinicum. And the sale would have been contingent on getting the approval not only of the Tinicum Township Commissioners, but, of course, of our Philadelphia City Council. In October when that extension was expiring, Mr. Testa made a decision to get an extension into the month of November to continue negotiations which required two million of the two 113 2/7/01 Capital Budget Hearings and a half million becoming non-refundable. In November another extension was granted to the Agreement of Sale. Negotiations continued with the Tinicum Commissioners and with the property owner. And in December of 1999 another $450,000 of that remaining deposit became non-refundable in exchange for another extension of the purchase agreement. Ultimately, in February of the year 2000, just about one year ago, the Tinicum Township Commissioners rejected the City's offer which involved approximately $10 million in payments in lieu of taxes to make up for the real estate taxes they would be losing by losing the private property owner there. Shortly after that, Mr. Testa was terminated. I became Acting Director again in March of last year. We resumed negotiations with the Tinicum Commissioners in April. We met with them in April, May and June of last year. Our initial meeting revealed the fact that we were about $30 million apart. They were 114 2/7/01 Capital Budget Hearings looking for approximately $40 million in payments in lieu of taxes. Our last offer under Mr. Testa in February was about million.
6 In our subsequent meetings, we got a 7 little bit closer but really didn't make tremendous 8 progress and ultimately were notified in June of 9 last year that the property owner would grant no 10 further extensions of the agreement. And because we were unable to get the Tinicum approval, and, subsequently, we would have had to come to our own City Council, essentially the Agreement of Sale expired. We have not been able to purchase the property. We still have a strong interest in acquiring the property but not -- we can't do it without the Tinicum Township approval. So the two and a half million dollars was lost as a result of not being able to consummate that acquisition. And it is regrettable. But I think that looking back, I really don't necessarily find fault with the decisions that were made during that period by the former Director. And I think that he was making those decisions based 115 2/7/01 Capital Budget Hearings on his confidence that he would be able to ultimately consummate this acquisition and unfortunately was not able to do so.
In your judgment, is the criticism by the former Director, Mr. Testa, this current criticism that the current City Administration, in effect, dropped the ball, do you think that's valid, or do you think that that's just part of what happens when there are differences of opinion with respect to, say, the Mayor and someone who gets terminated from service?
I agree with you that the comment in the paper that I read this morning is not valid, by Mr. Testa.
You think it was a good business investment to try to consummate the transaction and as of now hasn't been able to. And to keep it alive during that period of time, it was necessary to make an investment and to retain the possibility of ownership? I don't know who else would buy that land now. 116 2/7/01 Capital Budget Hearings Tinicum Township has always had commissioners that are tough to deal with, whether it's on business matters or labor matters.
We've gone to great lengths to try and re-establish a more cooperative relationship with them, and that effort began with those meetings in April of last year where we tried to get back to the table to see how far apart we were. But, unfortunately, we were not given enough time by the current property owner to complete those discussions.
And the money involved, that was not general fund money, was it?
No, it was not. And, in fact, that's a very good point. The money is really provided through airline rates and charges. And we had the full approval of the airlines through a majority interest vote to proceed with that. Not only with the acquisition but certainly with the payment of the deposits in question.
And has there been any criticism by the airline companies concerning the (inaudible) and/or the renewed efforts by the City to still try to acquire the property. 117 2/7/01 Capital Budget Hearings
No. The airlines would still support our further efforts to obtain the property. And we feel that if we can ultimately buy the property and probably negotiate a more reasonable purchase price and a reasonable agreement with Tinicum, that that money will not really have been lost.
Thank you very much. This committee will stand in recess until 2 o'clock in the afternoon. Thank you very much. - - - 118 (Stenographic recording of proceedings taken over by Josephine Cardillo, Certified Reporter at 2:15 p.m.)
Good afternoon. This is the continued public hearing on Bill No.'s 010001 and 010002. May I ask Mr. Dubow and Mr. Tustin and Maxine Griffith to please approach the witness table. (Witnesses come forward.)
Thank you, Madam Chair. Mr. Dubow, I'd like to go back to the discussion we were having early this morning with regard to the PICA dollars and the reconciliation process. You had walked us through, to some extent, your view of where things are as it relates to PICA. I'd like to get a better understanding. In the worst-case scenario, if for some reason this preprogramming process is not approved, you had made mention early earlier that the City was faced with two choices: either to 119 2/7/01 - CAPITAL BUDGET HEARINGS not move forward on the individual projects or look to get dollars from other sources to have these projects go forward. I'd like to get a better understanding of that part of the process. And if you would, please, walk us through what steps would need to be taken under that situation or circumstance, the desire of the Council or the individual members was to move forward on any one or all of these projects, how would that happen?
If PICA did not reprogram funding for these projects and we decided we wanted to go ahead with them, there would be two options. One would be to see whether there were other non-General Fund avenues -- for example, going through authorities to fund the projects. And the other would be to move funding from other General Fund projects into these projects.
Well, give me a little more details on both of those options, please.
What about dollars from other entities. 120 2/7/01 - CAPITAL BUDGET HEARINGS
For example, the way we're handling repairs at the Vet, going through PAID, we could decide if we wanted or thought we could do any of these through another authority.
So are you saying that new legislation would have to be introduced, the public hearing process?
And then the second option would require amending the Capital Budget to shift funding from existing funded projects to these projects.
(Indiscernible) while we're in the Capital Budget process, would we not know that we had been turned down until after the Capital Budget had been approved, which 121 2/7/01 - CAPITAL BUDGET HEARINGS would then require another bill to introduced amending the, at that point in time, just-recently-approved Capital Budget? Give me a little more detail, please.
Okay. If PICA came to the determination at its February 20th board meeting, then we could come back to you during this process. If they did not, if they didn't get back to us until either March or April or whatever meeting they got to, then we'd have to come back after the process was over with an ordinance 13 seeking to amend the budget.
So now we're taking about sometime in the spring, and you would be trying to get something done, I assume, before the summer legislative recess?
And you would amend the Capital Budget in such a way as to keep it at the $90 million, or would you have already made a decision as to which projects which were already in the Capital Budget are not going forward?
I think our attempt would be to keep it at the $90 million, so we would have 122 2/7/01 - CAPITAL BUDGET HEARINGS to look to see what other projects would be replaced.
And how long do you have to try to make that decision. The $90 million does have to go on the ballot in November, I assume, right?
By May, we'd have to know the categories; for example, you know, government buildings. Not the exact projects.
So does that have to go back to the Planning Commission?
So what's the latest date by which you have to have some information from PICA in order to make this happen if the decision is negative --
Let me take a step back, I'm sorry. If we were going to fund this through some other means other than City data, if we were going to through authorities, another authority, 123 2/7/01 - CAPITAL BUDGET HEARINGS that would give us some more time 'cause we wouldn't need to get it on the ballot. So, for example, in the scenario we talked about, just to take an authority, if we went through PAID, we wouldn't have to go back -- we wouldn't have to get anything on the ballot.
To get it on the ballot, then we need to know something from PICA probably at their March meeting, I would think.
Okay. If you decide to go an outside-authority route, do I also assume that you then have to come back and amend the City's Operating Budget to account for additional debt-service requirements that you had not anticipated?
That's correct. Unless other things change in our debt-service category between now and then. One of the things that we had looked at is what would happen, you know, with other debt that we anticipate issuing next year and if that timing is changed.