Thank 2124 3/30/05 - Whole - Budget you. Are there any questions or comments from Members of the Committee? (No response.)
Seeing none, thank you. We will now hear from the Board of Building Standards. DEPUTY COMMISSIONER BURNS: Again, Council President, my name is Fran Burns, Deputy Commissioner of Administration. I appreciate the opportunity to present the Board of License & Inspection Review Fiscal Year 2006 operating budget request to City Council. The Board of License & Inspection Review is requesting a total fiscal year 2006 budget of $206,082 in the City's General Fund. The General Fund budget represents a decrease of $9,095 from Fiscal Year '05 estimated obligations. The Fiscal Year 2006 request will fund three full-time General Fund positions comparable to the Fiscal Year 2005 authorized General Fund position level. 2125 3/30/05 - Whole - Budget Any questions on the Board of License & Inspection Review?
I don't have any. Does anyone have any questions? (No response.)
Thank you. The Zoning Board of Adjustment is next. DEPUTY COMMISSIONER BURNS: Again, my name is Fran Burns, Deputy Commissioner of L&I. I appreciate the opportunity to present the Board of Building Standards' Fiscal Year 2006 operating budget request to Council.
Wait a minute. I thought we just did that. We just did that. DEPUTY COMMISSIONER BURNS: We did the Board of L&I Review and prior to that, we did Zoning Board of Adjustment. Zoning Board was the first one.
We 2126 3/30/05 - Whole - Budget knew the dollar figure was wrong, but let's go back to the Zoning Board of Adjustment, please. Councilman Rizzo?
I'm curious the Zoning Board of Adjustment, L&I does that?
I wasn't sure. Thanks. DEPUTY COMMISSIONER BURNS: I think when I first started, you had asked for L&I Review Board and I presented first Zoning Board of Adjustment. I then presented L&I Review Board. So that the third board that hasn't been presented is Board of Building Standards.
Councilman Rizzo, do you have any questions on what has been presented?
Charlie straightened me out. It's already been 2127 3/30/05 - Whole - Budget straightened out. DEPUTY COMMISSIONER BURNS: Excuse me.
What are you testifying on now? DEPUTY COMMISSIONER BURNS: Board of Building Standards.
Thank you. DEPUTY COMMISSIONER BURNS: Sure. The Board of Building Standards is requesting a total Fiscal Year 2006 budget of $117,277 in the City's General Fund. The General Fund budget represents a decrease of $4,527 from Fiscal Year 2005 estimated obligations. The Fiscal Year 2006 request will fund two full-time General Fund positions comparable to the Fiscal Year '05 authorized General Fund position level.
Seeing none, thank you. 2128 3/30/05 - Whole - Budget DEPUTY COMMISSIONER BURNS: Thank you.
Earlier you talked about the billboards. I just got information that that ordinance that we were talking about that we're waiting for was sent over in January of '02 to the Mayor's office.
Well, it's only March '05 and you will be receiving a copy of it as we speak.
Very well. 2129 3/30/05 - Whole - Budget This Committee will stand in recess until 1:30. So I'd like someone from the Administration to let the Water Department know that we'll be hearing from them at 1:30. Thank you. (Short luncheon recess.)
Good afternoon, Everyone. I apologize for the delay. I would ask that the Water Commissioner please approach the witness table, identify himself and proceed with his testimony. Commissioner, we do have a written copy of your testimony. We will certainly be more than happy to give it to the stenographer. It will be transcribed in full. So if you could summarize, we would really appreciate it. Thank you. COMMISSIONER BRUNWASSER: Thank you. I'm Bernard Brunwasser, Acting Water Commissioner, and I'm joined here today, on my left is Deputy Commissioner of Finance and Administration, Joseph Clare, and on my right 2130 3/30/05 - Whole - Budget is Deputy Commissioner for Operations, Debra McCarty.
Welcome. COMMISSIONER BRUNWASSER: Again, it's a pleasure to be here today. I will summarize the testimony. It's a pretty extensive amount of testimony, but we do have a lot of good things to say. Our operating budget request this year is technically about $3 million less than our request back in Fiscal 2005. The good news that we have for you is that our water continues to be extraordinarily clean and pure and healthy. Our rivers continue to improve. We've done a lot of significant things in the watersheds area and in managing our system to keep improving our environment and our stewardship of the environment not only in Philadelphia but now partnering with some of the suburban communities as well. We have a huge system. We have three major water treatment plants. Each of the three plants was recognized this past year 2131 3/30/05 - Whole - Budget in winning an EPA Directors Partnership for Safe Water awards. Our three plants are among only about 35 in the country that have won this award. Our three wastewater plants last year won gold awards, including one platinum award for the Southeast Plant, which means perfect regulatory compliance with our permits for five consecutive years. All three of our plants had at one time or other now won platinum awards for perfect regulatory compliance on the wastewater side. Those plants are working very, very well. Our rates, even though they are going up, are still significantly lower than most of our surrounding neighbors, and these rate increases, although are not very popular, are still reasonable given all of the new regulatory requirements we are forced to comply with. The individuals in the Water Department are on many of the top committees in the country for their various expertise. 2132 3/30/05 - Whole - Budget We have many homegrown experts in this Department on various facets of water treatment and wastewater treatment. We're very proud of them. And we're very proud of all of our employees. And with that, I'll leave it open for questioning.
Very well. Thank you. You spoke about the water rate increase. I believe that goes before the hearing examiners that was approved for, what, '05? COMMISSIONER BRUNWASSER: Right. Back in January, I approved an increase in rates after hearings were held in front of an independent hearing officer, and the rate for fiscal '05 that took effect on February 1st was an average 12.8 percent rate increase, or about $5.33 for what we would call the typical residential customer. Seniors would see a smaller rate increase than that.
2133 3/30/05 - Whole - Budget Because of the discount? COMMISSIONER BRUNWASSER: Because of the discount. Seniors who are eligible, income eligible.
And you anticipate the rates will be going up again in '06? COMMISSIONER BRUNWASSER: Yes. And what is before the hearing officer now and will be worked out in a series of formal and informal hearings -- in fact, I think the first informal hearing begins tonight, where the public can come in and voice their opinions --
How does the public know about the hearing? COMMISSIONER BRUNWASSER: This has been widely advertised in the City newspapers, including, I think, two Hispanic papers.
Where is the hearing being held? COMMISSIONER BRUNWASSER: 144 West Dauphin, which is a school, Hunter's 2134 3/30/05 - Whole - Budget School.
Do they in fact have hearings scheduled in every section of the City? COMMISSIONER BRUNWASSER: Most sections of the City, I guess. We have a schedule. We will provide -- we have a lot of material here, that we can certainly provide that as well. That's part of one of our packages.
All right. Thank you. Can you explain why you've abandoned the fire hydrant system? COMMISSIONER BRUNWASSER: Well, that's a good question. We have been working closely, the Water Department, has been working closely with the Fire Department for more than five years on beefing up the regular hydrant system in the same areas that the high-pressure fire system is located. What we've done, fire fighting has changed considerably over the past hundred years. Our old high-pressure system goes back 2135 3/30/05 - Whole - Budget to the first decade, I think, of the 20th century, and it was constructed because we had a lot of major garment industries just north of Center City. We also had begun building skyscrapers in Philadelphia with the advent of the elevator and escalator and the need of high pressure to reach those tall buildings and to put out the fires in any of those major garment works with the advent of new fire fighting equipment, new building materials, sprinklers and other things. We now believe and the Fire Department -- more importantly, the Fire Department believes that it was time to abandon the old high-pressure system. High-pressure systems have been abandoned in, I believe, New York and Chicago as well. So it basically was a system that had outlived its usefulness. With the kind of equipment the Fire Department now has and with the new codes that have been passed over the years, fire codes and fire prevention methods, new materials, we believe that that old system can be disbanded. 2136 3/30/05 - Whole - Budget
What are the projected savings from this in FY06 and the out years of the next five years? COMMISSIONER BRUNWASSER: Yes. There will be savings to the General Fund. The Water Department believes that what we will be able to do is knock down -- in fact, we had decommissioned, I think, in January. There will be savings of half of the O&M expense for the system, about $613,000 in the current Fiscal Year '05. In Fiscal '06 -- there's both an operating and capital component to our cost. So in '05, the cost will be 1.413 --
I'm not asking for the cost. I'm asking about the savings. COMMISSIONER BRUNWASSER: $613,000.
You said that was for '05? 2137 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: Right.
Will that be annually for the five-year plan? COMMISSIONER BRUNWASSER: It actually gets bigger. It actually gets bigger.
So what would it be for '06? COMMISSIONER BRUNWASSER: In '06, it drops by, I think, another $813,000 to a total of 600,000, which is strictly for capital expense. In '07, it drops by another $200,000. In '08, it drops another $200,000, and by '09, it's gone entirely.
For how much? COMMISSIONER CLARE: The total savings in '09 would be approximately $2.1 million under current rates. It would be considerably higher if we kept the system in operation.
The Chair recognizes Councilman Rizzo. 2138 3/30/05 - Whole - Budget
Thank you. Commissioner, how many miles of pipe do we have and what size is that high-pressure system? Ballpark. COMMISSIONER BRUNWASSER: I don't -- we'll have to get that number for you.
It's many miles, right? COMMISSIONER BRUNWASSER: It's a fair number. I think there's about a thousand hydrants all together.
Tell me about eight-inch main, ten, 12, what? COMMISSIONER CLARE: Eight to 12.
I would think that. Commissioner, has there been any thought -- we're abandoning it in place. We're not going to dig it up. Is there any thoughts of maybe using it as a conduit for other infrastructure like fiberoptic? It's a heck of a conduit that's underground and it 2139 3/30/05 - Whole - Budget should be utilized and maybe even sold off for other utilities, gas, water, cable. My God, it's a natural conduit. COMMISSIONER BRUNWASSER: Yes, Councilman, we agree, and there is a committee that has been recently formed to explore things just as you suggest, conduit and cable, et cetera. And we will look at that with an eye to either make it a winner for the City or at least not a costly loser.
My point is, I think we need to communicate to let people know. Not everybody monitors these hearings and knows. Eventually I would assume you're going to remove all the high-pressure hydrants and salvage those or resell them. Sell them on eBay, right? COMMISSIONER BRUNWASSER: Yeah. I mean, apparently they don't have a whole lot of value, unfortunately, but --
Scrap, I would assume. COMMISSIONER BRUNWASSER: Yeah, some scrap, and depending on how we structure 2140 3/30/05 - Whole - Budget a contract, that may offset some of the cost.
But my point is, we really need to let the other utilities know, all these other communication providers, that there may be a natural multi-mile conduit there already in the ground, which is probably the more significant cost of any underground excavation, that it's there and it's available. So I think it needs to be marketed a bit. COMMISSIONER BRUNWASSER: Correct. Correct.
You're welcome. Do you mind if we go back to the figures of the proposed or projected savings. The cumulative number, I believe you said in FY05 it was 613,000; for '06, 1.2 million; '07, 1.4. Do you want me to wait until you get your page? COMMISSIONER CLARE: I'll give you the exact numbers. 2141 3/30/05 - Whole - Budget
When you're ready, just let me know, please. COMMISSIONER CLARE: In '06, the savings is approximately 1 million 472. In '07 --
Wait a minute. I thought it was 613 in '05? COMMISSIONER CLARE: In '05, the saving is 613.
And '06? COMMISSIONER CLARE: 1 million 472; '07, 1 million 653; '08, 1 million 838; and then in '09, the 2.1 million. '09 and beyond is 2.9 million.
2.9? COMMISSIONER CLARE: 2.1 million. I'm sorry.
Okay. We're looking for pennies here. Can you explain why these savings were not reflected in the Fire Department's budget? COMMISSIONER BRUNWASSER: I'm 2142 3/30/05 - Whole - Budget not that familiar with the Fire Department's budget. I'm kind of assuming that it's -- I don't know whether the Fire Department handles it directly or through interfund. I see Mr. McPherson indicating direct. This came about probably after they had begun preparing their budget, so that's --
Ms. Reed, would you be able to respond to that question? Can you tell us why these savings were not reflected in the Fire Department's budget? DIRECTOR REED: Dianne Reed, Budget Director. I think that the Commissioner is correct in that this was an opportunity identified by the Fire Department a little bit late in the process, but I'll have to get back to you on that for sure.
Very well. Thank you. Commissioner, on -6 of your detail, within the Residual Fund you are requesting $125 million for full funding of 2143 3/30/05 - Whole - Budget annual requirements. Can you explain what this is for? COMMISSIONER BRUNWASSER: 54-6?
Yes. COMMISSIONER BRUNWASSER: I guess that could be -- this is the $125 million from our Sinking Fund reserve that is planned to be used for water and sewer infrastructure as part of economic development.
Is this what we commonly have gotten to learn is called River City? COMMISSIONER BRUNWASSER: I think that's certainly part of it, yes.
Will this be an annual requirement? COMMISSIONER BRUNWASSER: No. 20 This, I guess, is a one-time requirement.
This is somewhat misleading. Do you know how these funds are going to be used? COMMISSIONER BRUNWASSER: 2144 3/30/05 - Whole - Budget Pardon?
Do you know how these funds are going to be used? COMMISSIONER BRUNWASSER: No, not in any detail at all. No. 7
Do you know who will oversee their expenditure? COMMISSIONER BRUNWASSER: I'm not certain. I've heard that perhaps PIDC will do that, but, again, I have to defer to either the Finance Director or Chief of Staff.
Do you have bond counsel's opinion that these funds can be used, and, if so, I would like to simply see a copy of what they say. COMMISSIONER BRUNWASSER: Right. I don't think we have any formal legal opinion at this point, but we certainly could ask for that.
What is the cost to the water rate payers if these funds are spent? COMMISSIONER BRUNWASSER: Well, the cost would incur mostly to the General 2145 3/30/05 - Whole - Budget Fund, because the Sinking Fund reserve is the source for the excess interest earnings payment that happens every year.
Well, can you tell us what the cost of the surety bond is? COMMISSIONER BRUNWASSER: I don't know what that cost will be yet. I don't think we have any direct information yet.
Well, do you know who would pay for it? COMMISSIONER BRUNWASSER: I am also not certain of where the payment is coming from.
Ms. Reed, are you in a position to respond? Do you have any knowledge? How can we budget something that nobody seems to know anything about? Ms. Reed, do you know who is going to pay for the surety bonds? How is this budgeted? I don't know what to take from this testimony. 2146 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: We know that the source of the funding is our Sinking Fund reserve, the Water Department's Sinking Fund reserve. It's my understanding that that reserve could be replaced with a surety bond or a letter of credit.
But you would have to know what the cost is, don't you? COMMISSIONER BRUNWASSER: Correct, but we have not personally explored the cost. It's probably three to five percent of the amount, but that's a big difference.
So that would take us to over $5 million? COMMISSIONER CLARE: It's possible.
Pardon me? COMMISSIONER CLARE: Yes, Your Honor. It's possible.
But where is it budgeted? COMMISSIONER CLARE: The cost 2147 3/30/05 - Whole - Budget of the surety bond right now is not budgeted unless it's taken out of the 125 as part of the transaction.
I think we certainly need more information than you're able to provide us today. Councilman Clarke, your light is on. Did you want to be recognized? I think you're going to have to get information on many of the unanswered questions today and we'll just have to have a call-back. The Chair recognizes Councilman Clarke.
Thank you, Madam President. Good afternoon, Commissioner. Commissioner, let me understand your rate increase process. You indicate that you went to the PUC -- COMMISSIONER BRUNWASSER: Not the PUC. We're not PUC regulated.
You went to? I'm sorry. 2148 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: Well, I think we're going to pass out some booklets for you.
Talk to me about the process. COMMISSIONER BRUNWASSER: The first step in the process really is that when we take a look at our finances, we look at our revenues and expenditures. We review those on a continuous basis. When we believe that we are not receiving enough revenue to cover our expenses, we have to seek a rate process, and what we do is, we commission the rate study, first of all, to confirm our suspicions, and once that study is complete, we announce our intention to hold a rate process by sending a letter to the President of City Council. We did this a while back. Shortly after announcing our intent, we request that a hearing officer, an independent hearing officer, and a public advocate be chosen to --
Who selects 2149 3/30/05 - Whole - Budget the independent hearing officer? COMMISSIONER BRUNWASSER: Both of those positions are jointly selected by the Mayor, the President of City Council and the City Controller.
Okay. COMMISSIONER BRUNWASSER: And once that happens, the hearing officer -- well, anyway, the rates are also filed with the Department of Records.
With respect to the selection process, will all three of the members have to agree on that, hearing officer and public advocate? COMMISSIONER BRUNWASSER: I believe so.
It can't be a two-one vote; it has to be all three? COMMISSIONER BRUNWASSER: I believe so. Under our regulations, I don't think there's any great detail as to requirements, but it's in one of our regulations.
Wait a 2150 3/30/05 - Whole - Budget minute. You say there is no great detail or you just don't know? COMMISSIONER BRUNWASSER: I think it pretty much states that they jointly have to agree upon a hearing officer and a public advocate for the rate case.
With a unanimous vote? COMMISSIONER BRUNWASSER: I don't think it says unanimous.
It doesn't say anything? I'm just trying to understand. COMMISSIONER BRUNWASSER: No. 15
Normally when you have three people, it gives you an opportunity -- COMMISSIONER BRUNWASSER: I don't believe it says unanimous, but --
All right. COMMISSIONER BRUNWASSER: -- I think, in effect, it is.
Okay. Go ahead. I'm sorry. So they select a public advocate and -- 2151 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: Right. The rates -- they're chosen. At the same time, the rates are filed with the Department of Records, and there are notices in the paper which allow any interested party to register and be a party to the rate case, to be part of the formal rate case.
Is there any criteria associated with it being a party to the case? COMMISSIONER BRUNWASSER: I don't believe so.
Just a citizen? COMMISSIONER BRUNWASSER: Right. I think even a citizen can be a formal party, but --
You think? COMMISSIONER BRUNWASSER: They would have an opportunity to cross-examine Department witnesses and present testimony of their own.
All right. You say you think. You think or is it -- 2152 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: No. 3 That would be -- a single person can be, I think, a party, a formal party.
A formal party? COMMISSIONER BRUNWASSER: Right. Typically they're not. Typically residential customers are represented by the public advocate. That's the role that the public advocate would play in this whole proceeding. And then there are other interest groups that, of course, can be parties, large meter customers or commercial or industrial groups.
Then what happens? COMMISSIONER BRUNWASSER: The hearing officer will call all the parties that registered with the Department of Records, call them together and schedule rate hearings, both formal rate hearings and informal rate hearings. At these hearings, there's a court stenographer that takes everything down, and the hearings then are scheduled, they take 2153 3/30/05 - Whole - Budget place, a record is developed. The various attorneys prepare their briefs of the case. Those briefs find their way to the hearing officer. The hearing officer then summarizes the case.
Excuse me. I hate to keep cutting you off, but as you're speaking, I want to ask questions about it. When you say the attorneys prepare briefs, are you -- COMMISSIONER BRUNWASSER: To the formal parties, the formal parties.
So it does not have to be an attorney; an individual citizen is not required to get an attorney to prepare a brief? COMMISSIONER BRUNWASSER: That's true. That's true. And they can opt out at any time. In other words, they want to be a formal party, they want to cross-examine witnesses, things of that nature, that could happen.
Okay. COMMISSIONER BRUNWASSER: But 2154 3/30/05 - Whole - Budget do they want to file a brief? I guess to the extent that they have the ability or they want to hire someone to do that for them, that's fine.
Okay. COMMISSIONER BRUNWASSER: So ultimately the various attorneys in the case summarize the case for the hearing officer, stating their points. The hearing officer summarizes the case and accepts or rejects some of these arguments. They're all on the record. And the hearing officer makes a recommended decision to the Water Commissioner, and then the Water Commissioner reviews the hearing officer's --
Is it solely the hearing officer or is it the hearing officer and the public advocate, or just the hearing officer? COMMISSIONER BRUNWASSER: The hearing officer has taken the legal brief of the public advocate, the legal brief of the City, the legal brief of any other formal party and puts it into the record. And the 2155 3/30/05 - Whole - Budget record, I mean, the transcript is there for me to review, all of the record is there, the exhibits and arguments, and the hearing officer has all that, and then he makes recommendations to the Water Commissioner. Then the Water Commissioner reviews the hearing officer's report, gives it substantial weight, looks at the record, looks at the transcripts and all the other material and then renders a final rate determination. Ten days after the final rate determination, new rates can go into effect.
You determine the final rate increase or decrease, it goes into effect. Is that ten-day period given for any opposition or is there challenges to that? COMMISSIONER BRUNWASSER: No. 23
What's the significance of the ten-day period? COMMISSIONER BRUNWASSER: I 2156 3/30/05 - Whole - Budget think it has to -- the rate determination has to reside in the Department of Records. I think that's basically --
So the Commissioner makes the ultimate determination? COMMISSIONER BRUNWASSER: That's right.
There's no 10 ability to challenge that determination? COMMISSIONER BRUNWASSER: Only in court.
Only in court, okay. Thank you. With respect to your chart on of your testimony, earlier in your testimony you referenced that the bills that rate payers get in the City of Philadelphia include both the water and sewer rates? COMMISSIONER BRUNWASSER: Correct.
In this particular chart, in these other municipalities or counties or authorities, does that include solely water rates or does 2157 3/30/05 - Whole - Budget it include the water and the sewer rates? COMMISSIONER BRUNWASSER: The column on the left says Monthly Water Bill. That is only water. That's only the water side of the bill. In the second column, the Monthly Bill, you see a lot of N/A's there, and I'll explain that in a second. That's only the sanitary wastewater part of the bill. We also charge for storm water. That's not shown here. And that's approximately $18 a month. And that's -- excuse me. That's not 18. It's less than $18 a month. $18 is roughly the service charge today.
Let me understand this. So in the chart, on the column on the right, there's no number for sewer for any of these locations, any of these locales? COMMISSIONER BRUNWASSER: The reason for that is, these are only water providers. In a lot of suburbs, not all suburbs have a sewer charge directly. Some of the sewer charges, particularly those 2158 3/30/05 - Whole - Budget associated with storm water, are often buried in their taxes. It's part of their tax bill 4 in many cases. Or they pay some other sewer assessment kind of charge in many of the suburbs. So only in those areas where we had a comparable service were we able to list dollar amounts.
The reason I ask that is, conceivably if you're doing an analysis on the water charges, understanding that in Philadelphia there's no listing of the sewer, some of these locales could in fact not have any sewer charges to the customers or -- COMMISSIONER BRUNWASSER: Not called sewer charges. In some cases, they do. In some cases, they don't.
So we don't really know what the number is in comparison to other locales for both water and sewer? COMMISSIONER BRUNWASSER: Correct. Correct. There are many communities that really have not a clue as to their storm water charge, for instance, and we do. We 2159 3/30/05 - Whole - Budget have a pretty sophisticated delineation among our various charges, because we need to have that. And some of these other communities, you know, again, some of these wastewater charges are in their taxes, sometimes they have a sanitary waste bill but no storm water bill.
So is it your contention -- because if I'm looking at this chart, understanding that Philadelphia does in fact have a sewer charge and that sewer charge, based on your testimony, can get the total number up $40-something an hour, $47 per month, if none of these other locales have sewer charges, then conceivably Philadelphia may not rank as highly as it appears in this chart. COMMISSIONER BRUNWASSER: Well, again, we can only compare apples to apples, and that's what we are trying to do here. Believe me, they're paying for sewer. They just don't know -- in many cases, they don't know how much. It's part and parcel of their tax bill, and their tax bill 2160 3/30/05 - Whole - Budget contains sewer. In other words, it would be like trash collection here. It's part of our tax bill. We don't have a separate trash collection bill if you're a residential customer.
I mean, I bring that up because you talk about comparisons between Philadelphia and other locales, how we are much better off in terms of the rate payers, but yet you don't indicate -- I mean, how do you know that if you don't know specifically the sewer charges for the other locales? We have a finite number for an average household in Philadelphia, which is 40, 45, whatever. If you compare it to what you have listed, not knowing what those costs are for sewer, then we would only be lower than one Pennsylvania American Water without knowing what the cost of the sewage is. COMMISSIONER BRUNWASSER: That sounds correct, but, believe me, they are paying for sewer. They just can't tell us how much they're paying for sewer. 2161 3/30/05 - Whole - Budget
Okay. But, I mean, how do you know that ours is lower if you don't know what the number is? COMMISSIONER BRUNWASSER: For one thing, we charge them on a wholesale basis. Many of these communities are our customers. They're our customers.
That was actually my next question, who we're selling water to. COMMISSIONER BRUNWASSER: You have to remember, they're wholesale customers of ours. We're not allowed to retail outside of our borders. Now, we charge them a significant amount of money. We make, out of our wholesale customer base --
Before we get to that, that was my next question, but let's finish up on this one first. Can you give me an example -- because our bills come to us as one bill, as you indicate in your testimony. So we don't get a 17.50 water bill and then a separate 2162 3/30/05 - Whole - Budget sewer bill. So I'm trying to get a sense of your claims -- and I believe you -- that we have low water rates than other municipalities. I'd like to be able to determine the factual basis of that, and, therefore, you would need to include some of these locales' sewer rates so you can get an accurate number. COMMISSIONER BRUNWASSER: Yes. We would include them if they knew what the answer was. They don't. They don't know what that answer is.
So how do we know? COMMISSIONER BRUNWASSER: We know that it's significant, because wastewater costs if you're treating to full secondary standards, which you need to treat to today, generally run 50 percent -- well, in our case, we probably -- our bill is almost two-thirds sewer costs. Sewer expense is actually more expensive than water.
Okay. COMMISSIONER BRUNWASSER: So we 2163 3/30/05 - Whole - Budget know that if, in the case of Pennsylvania American, if they're serving some customers out there -- let's take Aqua Pennsylvania, which here is Philadelphia Suburban. It really should be Aqua Pennsylvania now. We know that many of the customers that Aqua Pennsylvania services for water in our suburbs come to us for wastewater. So already we know on a wholesale basis what we are charging in bulk for sewage service. Now, that, of course, has to work its way back to the customer, but we don't -- we have an arm's length role here. Let's say Lower Merion, take Lower Merion for an example. Lower Merion gets a wholesale wastewater bill from us based on the amount of flow and the strength of that flow. We charge them for that. Now, Lower Merion, on top of the charge from Philadelphia, they have their own pipes, their own inlets, their own storm sewers that they have to maintain in addition to the charge that they send to us. So we know that it's a significant chunk of money to the average customer in 2164 3/30/05 - Whole - Budget Lower Merion, but unless they get charged for their sewers separately, we don't know, we can't tell you how much it is. We just know that it's a significant piece and probably in excess of the water side of their utility that you see here.
Okay. With respect to the cost or the charge relating to raw cost of water to suburban counties, what is that in comparison to the raw cost of water provided to the citizens of the City of Philadelphia? COMMISSIONER BRUNWASSER: Well, by "raw cost" --
There's a cost of water. In most people's minds, it's free, but I'm assuming we put some number to the raw cost of water, then the cost associated with the systems that provide the water. So I'm trying to get a sense of what we're charging other municipalities. COMMISSIONER BRUNWASSER: What you're thinking about -- and I know we had some discussions at length. I know Councilman 2165 3/30/05 - Whole - Budget Rizzo is here, and he certainly brought this subject up on occasion and others have. We wholesale water in bulk to two customers that we have, Aqua Pennsylvania and Bucks County Water and Sewer. Let's take Bucks County Water and Sewer. They get their water through one big pipe at a pretty constant rate day in, day out, and that costs us something. We have calculated all the costs associated with providing Bucks County with water. We've done depreciation. We've done other things on the capital associated with the Baxter Plant that services them and the pipes that service them, and we then add ten percent called a management fee. Well, actually, that's an older contract. That's about the only contract we have that doesn't really have a management fee. When we renegotiate that water contract, it certainly will have it. But we collect all of the costs to us and depreciation, return on investment, and that's what we charge Bucks County. Now, when you send 20 million 2166 3/30/05 - Whole - Budget gallons of water a day through one pipe at a steady rate and contrast that with sending 4 million gallons a day to a big community, 5 let's say Torresdale community, and let's say 6 it's 20 million gallons a day, but you take a 7 look at the pipes that you have and the 8 infrastructure that it takes to send that same 9 amount of water to thousands of customers, and 10 then you take a look and -- you have that 11 aspect, and then you have to turn around and 12 bill each of those customers every month and 13 collect and mail, you know, postage, et 14 cetera, then the cost is a retail cost. You 15 are also cleaning your inlets. You're also -- 16
So you're 17 saying that the administrative costs, the 18 infrastructure associated with the cost of 19 providing water to an area that could be 20 comparable in terms of pure usage to Bucks County is higher because of the administrative and infrastructure versus a single pipeline that pushes water out to a county and then they have their infrastructure out there to distribute and their billing process? 2167 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: Right.
It sounds like you're telling me that they pay less for water than we do. COMMISSIONER BRUNWASSER: They pay less on a unit-charge basis at the border, at the border of Philadelphia. They then take that water, the million gallons, and 11 distribute it and pump it and distribute it 12 through their own system to all of their 13 customers, all their individual customers. 14 They meter them, they bill them, they fix 15 those pipes. 16
How much 17 less per unit cost than the City of 18 Philadelphia? 19 COMMISSIONER BRUNWASSER: Well, 20 our most recent customer, which is Aqua Pennsylvania -- even though we have a lot more service, we provide a tremendous amount of services to inside City customers that we don't provide to outside customers. Aqua Pennsylvania signed an 2168 3/30/05 - Whole - Budget agreement with us a few years ago, and it was good because we now are able to market more of our reserve capacity. We have a significant amount of capacity to produce water in Philadelphia, water of the highest quality, and we're very proud of that. Now, they needed some water in one of their areas of service, and actually it was a power plant that was built in Eddystone, Pennsylvania. They didn't have such strong water reserves there, so they opted to come to Philadelphia and see if we could wholesale water and they could push it to that area, and the rate that they signed up for is very close to some of our -- the lowest block rate of some of our largest water users inside Philadelphia. In other words, we have a declining block rate in the City. It is cheaper -- just as I said, it was cheaper for us to provide one pipe, one steady flow of water to Bucks County, it's also cheaper if you have a big water-using industry in Philadelphia, because they may be operating on a 24-hour basis, and 2169 3/30/05 - Whole - Budget the infrastructure required with that is less than if you had to send that same volume of water to a bunch of residential customers. So we recognize the usage pattern and the cost to Philadelphia. Our rates are cost-based, and we recognize that in a lower block or lower-unit cost to some of the very heavy users in Philadelphia. And the same thing happens with the suburban customers. You have to recognize the fact that they are taking a steady stream of water, and that's all you have to do. You have to pump it out there and they have to do the rest.
You said earlier we charge a ten percent management fee? COMMISSIONER BRUNWASSER: We charge a ten percent management fee, I think, on virtually every wholesale contract that we have, except the oldest wholesale contract, which is the Bucks County Water contract, which dates to 1966. We incorporated a ten percent management fee in, I believe, 1987 on all the other subsequent contracts. 2170 3/30/05 - Whole - Budget
When is that contract terminating? COMMISSIONER BRUNWASSER: 2011.
And I'm assuming we will impose some management fee at that time? COMMISSIONER BRUNWASSER: Correct.
As it relates to determining the rates for wholesale outside of the City of Philadelphia and if we have any inside the City of Philadelphia, is that a similar process or is that included in this process with residential rate payers? COMMISSIONER BRUNWASSER: Right. The wholesale rates do not go through a hearing process. As a matter of course, when we do a detailed comprehensive cost of service and rate design, we have to do wholesale also. We have to do wholesale and retail and see what the mix -- how that affects our cost. Once we know what those rates are, we can, with 90 days' notice, we can change rates to wholesale township 2171 3/30/05 - Whole - Budget customers.
So with respect to the wholesale process, is it the Commissioner or internally you determine what those numbers should be? COMMISSIONER BRUNWASSER: Right. And basically we filed a study with the increased rates. In other words, we don't do this haphazardly or we just decide we want more money. We have to have some data and details. And so when we commission a rate study, we also study township rates, and as soon as we have the study in hand, we can give them 90 days' notice that rates are going to be changing.
So do you have the ability because you are the Philadelphia Water Department to determine before you raise the rates on the citizens of the City of Philadelphia, it will be more prudent to raise the rates on wholesale customers? COMMISSIONER BRUNWASSER: It's all part of the whole -- in a way, it's part 2172 3/30/05 - Whole - Budget of the whole process. I can tell you that we raised rates to the wholesale customers long before we raised rates to the residential customers, because the rate process did not happen as quickly as we would have liked, but that didn't stop us from raising rates to the townships, and that, we did.
The Chair recognizes Councilman Rizzo for a point of information.
Commissioner, could you answer this question: If we weren't in the wholesale water business, would the rates to our customers be less? COMMISSIONER BRUNWASSER: No. 19 No. They'd probably be a bit more, because we would have to pay for all of the capital that's been constructed that also services the suburbs. In other words, our water plants were designed in the 1950s when, I guess, most people believed our population would continue to grow to about two and a half million and we 2173 3/30/05 - Whole - Budget had, of course, a lot more industry back in those days, a lot more water-intensive industries, breweries and packing plants. So it helps us to be able to wholesale water in this particular instance so that we spread some of those capital costs that we have at the Baxter Plant, let's say, and some of the pipes --
Is that the same with wastewater? COMMISSIONER BRUNWASSER: Yes. Exactly so, yeah.
Thank you. With respect to the wholesale sales in other municipalities, I'm going to assume that they probably don't have the capabilities of getting alternative sources of water without a major infrastructure improvement or 2174 3/30/05 - Whole - Budget addition. Am I correct? COMMISSIONER BRUNWASSER: Yeah. I think to some extent, that's correct. In other instances if we weren't there, they would obviously have to look for other sources. Aqua Pennsylvania, for example, has some of its own sources of water. The reason they came to Philadelphia, by and large, was, there are certain places within its large area network that it would take them a lot more to pump water from an area perhaps where they're producing it to where they need this water to be, because they have more of a sprawling area than we have. And so it made sense to them, because the numbers came out all right, that it was better for them to buy water from us on a wholesale basis and distribute it where they needed it in more of a weaker area of their distribution than it would have been for them to get it from another area of their distribution and have it pumped a great distance. They'd have to have the infrastructure to do that. 2175 3/30/05 - Whole - Budget
So it's a substantial cost that would have to be taken into account if they determine that they were going to go to alternative sources? COMMISSIONER BRUNWASSER: Correct, and it's especially true on the wastewater side. With few exceptions, most of those townships are dependent on our wastewater treatment plants, and our plants actually were built and sized appropriately to take their wastewater load. And since those plants were built with two-thirds federal money, the Federal Government is also a partner in this.
I'm a little concerned that there's not a process beyond just the Commissioner, and I understand you guys are the experts, to determine increases or decreases in wholesale rates, because I think the average person, the average layperson, would say, Before you start raising our rates, why don't you raise the rates of the suburban guys, because they're taking our jobs, taking our tourism. 2176 3/30/05 - Whole - Budget I mean, there's always this battle between suburbia and the City of Philadelphia. But without a, quote/unquote, independent process, we're simply left with the process that incorporates the Commissioner and his staff on determining whether or not we should raise those rates in suburban counties and outside the State of Pennsylvania as opposed to raising the rates on the City municipal customers. I don't know if there's some charter-mandated requirement that prohibits that independent analysis that could determine the rates on wholesale customers outside the City of Philadelphia. Do you know if there's a reason why we don't do that? COMMISSIONER BRUNWASSER: It is the City Charter.
The City Charter. So we can't do that? COMMISSIONER BRUNWASSER: The City Charter --
Prohibits 2177 3/30/05 - Whole - Budget us from doing that? COMMISSIONER BRUNWASSER: The City Charter says the rates are set by the Water Department. As long as the Water Department sets rates in compliance with City Council ordinances; for instance, percent 8 discount to eligibility senior citizens would 9 be a mandate of City Council, as long we raise 10 rates -- 11
I 12 understand that. I'm asking about the 13 prohibition from a process that is 14 incorporated in residential increases or 15 decreases, rate payers, that includes the City 16 Council President, City Controller and Mayoral 17 appointment to determine or make 18 recommendations as it relates to rate 19 increases or decreases. 20 I guess I'm trying to determine, is 21 there a prohibition that would not allow us to 22 incorporate that process in the event that we 23 thought we needed to have some increase in 24 rates for wholesale customers outside the City 25 of Philadelphia? 2178 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: Well, the way I see it, and I've been with the Water Department for 34 years, the City Council can affect rates through our budget. If in theory, not only in theory but in fact, if there's something in our budget that doesn't seem appropriate or right or we're not -- then theoretically that could have an effect on rates. So that's kind of the bite of the apple.
I'm not looking at a hostile situation. COMMISSIONER BRUNWASSER: Right. I understand, but assuming that we budgeted --
But my concern is that you will raise the rates on the citizens before you will raise the rates on the wholesale customers. I don't want to do that. COMMISSIONER BRUNWASSER: We have already raised the rates on wholesale customers because we didn't have to go through the rate process. So we have the study on 2179 3/30/05 - Whole - Budget which retail rates are based. That same study is also the way we base our wholesale charges. The fact that we didn't have to go through a rate process, we were able to raise wholesale rates within 90 days. We had to wait to and we are waiting again for the next three fiscal years to change the rates for our inside City customers. So the townships are not avoiding rate increases, by any means. They've gotten them and they've gotten them --
I'm not saying they're avoiding them. I'm suggesting that maybe we need to be raising rates on townships -- COMMISSIONER BRUNWASSER: They're set by contract.
-- even more so than the citizens. COMMISSIONER CLARE: There's very long-term contracts with the wholesale customers, and the contracts basically call for the rates to be set based on cost of service, plus a management fee. So there's 2180 3/30/05 - Whole - Budget very little discretion that the Commissioner has in setting the wholesale rates. It's basically --
Excuse me. How long are those contracts for? COMMISSIONER BRUNWASSER: Well, most of the wastewater contracts that we've signed in recent years are for 35 years.
Wastewater or water service? COMMISSIONER BRUNWASSER: Water service are also very long contracts. I was saying earlier that the Bucks County contract, which was signed in 1966, goes until 2011. It's a 45-year agreement. Now, we are able to change rates as our costs go up. We provide a study and we show that they are costing us more money, and we are eligible to collect our costs and raise them appropriately, but we can't -- we have to 2181 3/30/05 - Whole - Budget operate under the contracts that are in force.
Point of information. I really need to chime in here. Can I chime in here? Commissioner, what I'm hearing, and maybe you're not, is that we've got something that they want, very valuable, wastewater treatment facilities that people don't want in their backyard. We've got water that they want, because it's probably cheaper for those water utilities to buy it from us than it is to manufacture it, purify it, whatever they have to do. What I'm hearing is, we've got something that is very valuable, and we may be selling it to -- we might be giving it away instead of charging top dollar for it. You're throwing this around the Commissioner as discretion. You have discretion to say, No, don't sell it; am I right? COMMISSIONER BRUNWASSER: Well, after the contracts expire, yes.
My point being is that what I'm hearing is that you 2182 3/30/05 - Whole - Budget need to jack the price up a little bit here to make it worth our while. And also if this is such a good business, why aren't we out selling more water? Why aren't we going after some of the other municipalities that have their own municipal water companies and provide them water? If this is a good deal and the sewage treatment plants are under capacity because they were built for two and a half million people, that our water supply system was designed for two and a half million people, you should be beating the bushes if this could bring the rates down, which you said maybe more wholesale customers could bring the rates down for some of our core customers, our businesses and our residential users. But what I'm hearing here today, that maybe you're not negotiating the best deal that you could negotiate or with your prerogative to change the rates midstream, no 23 pun intended, but maybe you're not doing that. Maybe you're not adjusting the fact that -- and I'm not suggesting we hold them hostage 2183 3/30/05 - Whole - Budget for our water, but we've got it, they don't. And to give it away at a price that maybe isn't the price that it should be, to help what Councilman Clarke is saying, maybe give our rate payers some relief, maybe you're looking in a way that's not -- you hear what I'm saying? COMMISSIONER BRUNWASSER: Absolutely. I understand. I understand.
I think Councilman O'Neill said basically the same thing the last time we had this go-around. COMMISSIONER BRUNWASSER: Right. The Councilman said that avoidance of building a wastewater plant is priceless, as I recall. And I agree with him there.
And I think if you raise the price, I don't think they'd blink, because the last thing they want -- how much does a water treatment plant cost to build? How many millions? COMMISSIONER BRUNWASSER: Well --
Millions, 2184 3/30/05 - Whole - Budget millions, millions, a lot of millions.
Probably more like a billion. COMMISSIONER BRUNWASSER: If you wanted to build a Baxter Plant, you're talking hundreds of millions of dollars.
So I think you might be able to cut us a better deal than you do and I think you ought to look at doing that. COMMISSIONER BRUNWASSER: Right. When we market water -- and we have tried. We've looked at Delaware, we've looked at New Jersey and, of course, other areas in Pennsylvania -- we have to partner with someone, because we don't have the franchise outside of our borders. We have to go through an authority or a community or Aqua Pennsylvania. For instance, Aqua Pennsylvania pretty much surrounds Philadelphia. We would have to partner with them, for instance, to 2185 3/30/05 - Whole - Budget push water south. And we have explored talks with Aqua Pennsylvania and with Chester. We believe that Delaware eventually will be, next time there's a drought, will be facing some hard times. Now, this is the time when it's been raining, et cetera, and they've kind of put their heads in the ground now, you know, and ignored it. Now is the time for them to sign up for a long-term solution to their future problems, but you can't force them.
Well, Commissioner, it's not a matter of forcing them. If you're going to sell them water and they have a little municipal water company that they don't control, the deal you should cut is the fact that they're going to be the supplier of our water or that small municipality puts a pipe up to their pipe and -- if we're going to sell them water, they got to cooperate. If we have a potential customer of Richboro Water Company and Aqua America is all around it, the deal is, we're not going to 2186 3/30/05 - Whole - Budget sell you water unless you give us the ability to run our water. It's like the regulation of electricity. It's the same concept. So I think that what you have to do is write into your deal the fact that they're going to be the supply line for the potential sale of Philadelphia water to other municipalities or we don't do the deal. I know they're going to resist it, because they want to supply the water. COMMISSIONER BRUNWASSER: I understand what you're saying. We do have some limitations on what we can do. The ten percent return that we're getting on virtually all of our contracts is comparable, if not better than, a lot of the private utilities are allowed to earn today.
But I agree with my colleague. We've got something here that they want, both in the area of water treatment and water, and it sounds to me like we could do better, because I think that they just sit back and say, Boy, are we lucky we have Philadelphia supplying us our water and 2187 3/30/05 - Whole - Budget treating our waste and we get it for a piece of cake.
Thank you. Councilman Clarke, can I just ask a question on this vein?
Thanks. I'll just have a presidential minute, as they say. Can we go back to the 35-year contract? COMMISSIONER BRUNWASSER: Yes.
Wouldn't the contract have to come back to City Council every four years for approval? COMMISSIONER BRUNWASSER: No. 20
How does this work? COMMISSIONER BRUNWASSER: City Council enabled the Water Department to --
I beg your pardon? 2188 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: City Council back in 1987 passed an ordinance which had a lot of issues addressed, including a management fee, and we're allowed to charge a management fee that gave us -- not allowed. That told us to charge a management fee for water and sewer in any future contracts that came up, but we were allowed to sign contracts for as long as 35 years on the wastewater side of the utility in order -- and the reason for it was, these --
Is it a Charter issue? I mean, I never heard of -- COMMISSIONER BRUNWASSER: No. 16 The Law Department was, of course, part of this deal. Back in the late 1980s, it was decided by the then Commissioner that in exchange for a long-term contract, in this case 35 years, a wastewater customer could pay for their capital up front, and that's what happened in those days. We got large capital payments up front for the capital that was already in place.
What 2189 3/30/05 - Whole - Budget year was that? COMMISSIONER BRUNWASSER: 1987.
Do you still have a copy of the Law Department's opinion? COMMISSIONER BRUNWASSER: Yes, but I don't think we have it with us. We actually provided it during the rate hearings in City Council recently, but we can certainly provide it again.
Would you provide us another copy, please? COMMISSIONER BRUNWASSER: Sure. Sure.
Just one last follow-up. In the earlier statement when I asked about a process that essentially was comparable to the process for residential rate payers and you implied that if we were to somehow adjust the Water Department's budget, there may be a necessity to look at increasing 2190 3/30/05 - Whole - Budget opportunities for revenue from the external customers of the City of Philadelphia, I just want a little clarity on that. Are you saying that if there was some budgetary issues in the Department, you may have to look at those contracts or those rates and adjust those rates? What exactly did you mean by that? Explain that to me. COMMISSIONER BRUNWASSER: No. 11 What I was saying was, the way our rates can be affected by City Council is through various ordinances; for instance, again, the discounts to charities, discounts to eligible senior citizens, discounts to schools, percent 16 discounts. 17
I was 18 going to ask that question. I don't mean to 19 interrupt you, but if you look on the last 20 page of the Commissioner's testimony, a 25 21 percent discount is provided for charities, 22 churches, non-profits, hospitals, schools and 23 universities. And with that being said, 24 according to the chart we have, 3,200 25 organizations or individuals took advantage of 2191 3/30/05 - Whole - Budget that to the tune and cost of $7.2 million. So they get the same discount rate as the senior citizens; am I correct, percent? 5 COMMISSIONER BRUNWASSER: Yes. 6 And I should -- 7
I'm not 13 looking to impose any additional increases for 14 internal customers. I'm looking to impose 15 some additional costs to external. So if 16 you're suggesting that we want to increase our 17 revenue by taking away some of the exemptions 18 from the internal customers, that's not what 19 I'm looking for. 20 COMMISSIONER BRUNWASSER: No, 21 no, no. I didn't think so either, but what 22 I'm saying is that when we propose a budget, 23 we send that to the Administration. The 24 Budget Bureau reviews it, the Mayor's office 25 reviews it, and then it comes here to City 2192 3/30/05 - Whole - Budget Council. If the budget is approved, that is the biggest triggering mechanism for -- that's the expenditure side basically of the equation, and then we have to balance that budget with revenues. In our case, we get the revenues through rates. We have a history now the last dozen or so years of very modest, if any, rate increases, by and large. We had six consecutive years of no rate increase throughout the '90s simply because we saved an enormous amount of money operationally and through refinancing and through other methods, and we were able to absorb the increased costs of wages and health benefits and inflation throughout the '90s without raising people's rates. We get to the point now that we have to have some increase in rates to balance our budget. So if our budget is somehow too big, if there's something wrong with our budget, then that is the way that rates would be affected. 2193 3/30/05 - Whole - Budget Now, how that --
Rates internally? COMMISSIONER BRUNWASSER: Yeah. You have to cover your budget.
If you're sitting here telling me that if we decrease your budget, you will look to increase the rates on suburban counties -- COMMISSIONER BRUNWASSER: No, no, no, no. If you decrease --
I'm not looking to create a problem for our internal customers. COMMISSIONER BRUNWASSER: Right. If you decrease our budget, then we decrease the rates. We may not be able to do the job, but we will decrease the rates, because our requirement to raise rates would be less. Lower budget, lower rates. We think our budget is right, and we take a sharp pencil to our budget every year, but --
Let me 2194 3/30/05 - Whole - Budget understand it. You said if we were to decrease your budget, you would in fact decrease the rates. Is that what you meant to say? COMMISSIONER BRUNWASSER: Yes. Yes. That is, in theory and in fact, City Council's role in the whole rate-making process. You review our budgets. If our budget is too high and you lowered the budget, then we're going to spend less money, by definition, and if we spend less money, than we need less revenue and services go down in our case. But --
Well, the last part, you added that last, part service will go down. COMMISSIONER BRUNWASSER: Right. If everybody wants -- if they want to us continue with the good work we've been doing and we get -- believe me, within the industry, we are top dog, we're very well known in the United States and the world, and we get a lot of accolades. We get awards. Some of it is in the testimony. 2195 3/30/05 - Whole - Budget
All right. So you're telling me -- COMMISSIONER BRUNWASSER: If you want to run the Demille Water Department, it will cost you a little less, but not much less.
If it's going to impact services, I obviously don't what to do that, but it sounds like to me that the bottom line is, you're not looking to increase the revenue from our surplus -- I'm sorry; from our wholesale customers outside of the City of Philadelphia, bottom line. COMMISSIONER BRUNWASSER: We have certain restrictions, certain legal restrictions, because all of our relationships with these township customers are embodied in contracts. So they signed up on a basis of we would charge them all of our costs, we would recover all of our costs from them, plus ten percent management fee. And that's what they signed up for and that's what we have to give them so long as these contracts are in force. These contracts comport with an ordinance of 2196 3/30/05 - Whole - Budget City Council which dates back to 1987.
If our costs go up, then -- COMMISSIONER BRUNWASSER: Their costs go up, correct.
Commissioner, with the senior citizen discount, isn't that by a means test presently, and those that were receiving the discount when the means test was initiated were grandfathered? COMMISSIONER BRUNWASSER: Yes. Yes. This dates back to the early 1980s, and we keep raising the means test by way of CPI each time we change rates. I should say that this is actually a dated piece here under Senior Citizen Discount. It says 24,400. That was the threshold under the rates up until February 1st. That threshold has been raised to 26,100. So I need to correct that. 24,400 has been raised to 26,100. So that seniors, people who become 65, if their 2197 3/30/05 - Whole - Budget household income is less than 26,100, they should apply and they will receive a 4 percent discount. 5
Very 6 well. 7 Councilman Rizzo, did you want to be 8 recognized? 9
Yes. Thank 10 you. 11 Commissioner, one of the issues that 12 I've talked to former commissioners about, and 13 you probably were aware of it, is the way we 14 allow contractors to get a permit to take bulk 15 water from a fire hydrant. I mean, I know 16 personally and I passed it on, but nothing was 17 ever done about it, where a contractor from 18 the suburbs gets a permit, comes into 19 Philadelphia with his water truck, loads a few 20 thousand gallons of water on the water truck 21 and then goes back to the suburbs and waters 22 his flowers. 23 What's he paying for that permit to 24 come and haul away thousands and thousands of 25 gallons of water in the truck? 2198 3/30/05 - Whole - Budget COMMISSIONER BRUNWASSER: Well, that permit fee is going up substantially with this rate filing.
What is it now? COMMISSIONER BRUNWASSER: I'm hearing it's $105 for a six-month period.
For six months? COMMISSIONER BRUNWASSER: Plus estimated usage.
Self-managed, obviously? COMMISSIONER BRUNWASSER: Yeah, I believe so. I believe so.
So I have a big tanker truck and I want to come into Philadelphia, block in, tap into a hydrant. I would hope, Commissioner, that the people that get these permits get them for legitimate reasons, that they're working in the community, they're doing a project, streets project or whatever, that when a contractor files for a contractor from Ambler, 2199 3/30/05 - Whole - Budget Pennsylvania, that for 105 bucks, they could take hundreds of thousands of gallons in the period of six months, right? COMMISSIONER BRUNWASSER: That's certainly possible.
Because you don't have any water -- COMMISSIONER BRUNWASSER: Now, you have to remember that our rates are very low even -- and he's going to spend more on gasoline to get it from us, then get it back to Ambler than he's going to spend on the water.
I can tell you that they would prefer to take it from the fire hydrant and wash down their trucks and wash down the driveway with our water than they would the water that comes from either their well or the municipal government. All I'm asking is that these permits not just be rubber stamped and given out, that they really need to be legitimate, because nothing gets me more than when I see or having a police officer come to me and say, you know, 2200 3/30/05 - Whole - Budget I saw a truck at a water hydrant loading up and I asked the guy where he was going and he told me back to Montgomery County. So I would hope that they be scrutinized to the point where they're legitimate. I mean, there's times when people need access to water, but to give a permit, it should be for the specific length of the job, not for six months. I mean, just imagine having a free source of water for six months. If it's abused, it can really -- even though it's probably not significant to you, I think it's significant to the people that see that kind of activity and think they're getting over on us. So I would like to see that whole program reviewed and overhauled. Now, you indicate the rates are going to go up, but I'm just talking about the process itself to get the authority to go and load up a truck with Philadelphia water and not use it for the purpose that the program was intended. Would you agree with me? COMMISSIONER BRUNWASSER: Yes. 2201 3/30/05 - Whole - Budget Yes. As a matter of fact, Councilman, I don't know all the details, but I think we actually have tightened up, because you have mentioned this specifically to me before. I don't have the details all in front of me, but --
I understand. Now, Commissioner, we touched on it briefly a few weeks ago about some of the work that is going to go on that the Water Department is going to do, and the importance is to communicate, and we kicked around maybe two or three jobs, the one that's going to cross over Lincoln Drive. Now another one has surfaced, which Councilman Nutter elaborated on the other day, which was a Wissahickon Avenue disruption there. Could you comment on -- I understand it's going to allow people to abandon their septic systems, but what is the impact it's going to have? And could you go backwards and just identify some significant Water Department projects, the one that's going to go through the cemetery or under the cemetery, 2202 3/30/05 - Whole - Budget just to talk a little bit about what we can expect and what we can communicate to our constituents? Because, again, the people that use Wissahickon Avenue are hearing about this and it's starting to concern them, knowing that there's the potential of the Bells Mill Road job, there's the potential of this one. I mean, how are they going to get out of their neighborhood to go to work if we have not good coordination and good communication? So if you could walk us through the jobs that you're aware of, including the most recent, the Wissahickon Avenue, on what impact that's going to have on that Mount Airy community and other people that use that? As you know, that is a heavily used stretch of road. COMMISSIONER BRUNWASSER: Right. That's a good question, obviously. We're going to pass out to all the Council folks copies of our street capital work that we see over the next 18 months that we budgeted for for roughly the next 18 months so that people can see what intersections, what 2203 3/30/05 - Whole - Budget streets are affected. I mean, we do try to replace over 4 miles of water main each year. So that, in 5 itself, is a very disruptive process, but a 6 necessary one, of course. And we hope to do 7 eight to ten miles of sewer main, which -- so 8 in total, you're talking about disruptions all 9 over the City. I know that the area that 10 you're most familiar with is certainly one of 11 those areas that's most affected. 12 As far as Wissahickon Avenue is 13 concerned, that is a sewer job that will 14 replace some of the septic systems that are 15 failing, and actually some of them have been 16 cited by the Health Department. They have 17 some problems with the land being able to 18 accept a new septic system perhaps or it 19 should never have been put in in the first 20 place, but in any event, on Wissahickon Avenue, we believe there will be a two- to three-month disruption, and there's really no 23 way of getting out of it. It's Wissahickon between Westview Avenue and Springbank Quarter -- I'm sorry; Hortter Street, and it 2204 3/30/05 - Whole - Budget should be two to three months sometime within this construction period. It has not gone out for bid yet. It will probably go out very shortly, and hopefully all the work can be done before the cold seasons --
What's your definition of disruption? Are you talking about the street being closed? COMMISSIONER BRUNWASSER: Yes. That street would have to be closed for two to three months. I know it's a narrow point in the street, but the way -- it's two lanes. There are no shoulders there, and the way it sits, it just has to be done in that fashion. Our engineers tell us that there's no avoiding it. Now, when this thing happens and we have a contractor, we talk to that contractor, when we get a little closer to it, we are going to be coordinating with the Streets Department, Police Department, Traffic, all the stations that have traffic bulletins. We are going to -- we're working, I think, with 2205 3/30/05 - Whole - Budget Streets right now to find what the best alternative route will be, what the detour should look like, and, of course, we try to do this with the least impact on the neighborhood, but it's unavoidable, I think, in this particular case.
One thing, Commissioner, I hope with all the things -- and you're going to take a minute to talk about the other cemetery job, whatever that -- I forget what you call that project. I hope that all these don't hit at once. Let's finish one before we start another. Because if you had Wissahickon Avenue out and also disruption to Lincoln Drive at the same time, I think Bucks County would have a lot more water customers. So really, sometimes the folks over there, they think about what they need to do, but sometimes the ramification of these jobs has to also be considered as part of your responsibility, not just -- COMMISSIONER BRUNWASSER: Sure.
-- start 2206 3/30/05 - Whole - Budget doing three things at once that are going to have a major impact on our City. COMMISSIONER BRUNWASSER: Right. I mean, this is something that we have to coordinate the jobs as well. In other words, you can't take two or three main arteries out --
Commissioner, that has happened and that's why I'm cautioning you. Before your time as Commissioner, obviously, but during your time in the Water Department, there have been lots of lack of coordination where three or four things happen at once. I mean, I saw them start to dig up a detour route. It was that bad. So I would appreciate that, because three months with Wissahickon Avenue out is going to be a real, real problem. COMMISSIONER BRUNWASSER: I understand. 2207 3/30/05 - Whole - Budget