COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COUNCIL COMMITTEE ON FINANCE - - - Room 401 City Hall Philadelphia, Pennsylvania Wednesday, 12/12/01 9:15 a.m. - - - BILL NO. 010694 - NTI bill. COUNCILMEMBERS PRESENT: Jannie L. Blackwell, Chair Marian B. Tasco, Vice Chair Darrell L. Clarke David Cohen Frank DiCicco Wilson W. Goode, Jr. James F. Kenney Donna Reed Miller Michael A. Nutter Angel L. Ortiz Blondell Reynolds Brown Frank Rizzo Anna C. Verna, Council President - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 12/12/01 FINANCE COMMITTEE - BILL 010694 INDEX WITNESS Lance Rothstein, Capital Programs Office......... 6 Pat Smith, NTI Project Manager................... 9 Bob Solvibile, First Deputy Commissioner, L&I.... 15 Joyce Wilkerson, Mayor's Chief of Staff.......... 35 Rob Dubow, Deputy of Finance..................... 36 Jonathan Schmidt, Policy Analyst, NTI............ 37 Maxine Griffith, Executive Director.............. 44 City Planning Commission Herbert Wetzel, Executive Director, RDA.......... 54 Reverend Isaac Miller, PIA....................... 66 Jeremy Nowak, President, Reinvestment Fund....... 81 Richard Sauer, Phila. Assoc. of CDCs.............124 Steve Culbertson, Exec. Director, Frankford CDC 134 David Thornburgh, Pennsylvania Economy League....142 Carlos Peraza, Senior Program Director, LISC.....149 Rev. Steven Avinger, Sr. Greater St. Matthew.....163 Baptist Church, South Philadelphia EPOP Reverend Dr. Carolina Harris Ram Sue.............167 Black Clergy, Snyderville CDC Delores Shaw, EPOP...............................169 G. Whitman, Temple U. Center for Public Policy 173 Glen Bryant, Director, Office of City............181 and Community Relations, University of Pennsylvania Wayne Johnson, Secretary-Treasurer...............186 District Council 33 Jeff Brown, President, AFSCME Local 1971.........187 and District Council 33 Tom Zamartis, Business Agent, Local 222, AFSCME 209 3 12/12/01 FINANCE COMMITTEE - BILL 010694
Good morning. Thank you, everyone, for coming back this morning. Before we begin our hearing, I would just, on another matter, like to thank everyone who came out last night to 3801 Market where we hosted an annual holiday party for 1000 people who don't have places to be. In fact, I want to just thank everyone who volunteered from all the community groups in West Philadelphia, including University City District, my substations, police officers, you name it. People from across the City as well: Neil Stein from Striped Bass; Gabe Maribella, Avenue B; Giuseppi Sanala (ph), Famiglia Restaurant; Penn Mutual. You name it. AmeriChoice. All the people who volunteered. I will tell you that you can imagine what it looks like with almost 1000 kids running around. We never ran out of food and never ran out of gifts. In fact, we have some left. Martha Washington just asked for some. We thank God for his mercy and for the ability to try to do our part to make a holiday season nice. We thank Power 99. We also had all kinds of games. They were on the radio. We just 4 12/12/01 FINANCE COMMITTEE - BILL 010694 had a grand time. We give God the glory. We accept the fact that we are our brother's keeper. This hearing is all part of that. Trying to transform neighborhoods is certainly an example of the fact that we are our brother's keeper. We have a responsibility to improve the quality of lives for people and to improve the neighborhoods and commercial corridors in which they live. Thank you, Glen Bryant from Penn for being there. Thank you everyone who can hear me who participated in any way. The hundreds of volunteers who served the food, everyone, everywhere, we thank you for coming. We thank you for volunteering. We thank you for participating. Let me formally begin our Council hearing. This is the continuation of the Finance Hearing with regard to Bill No. 010694that we began yesterday. When we ended, we had members of the technical staff who were at the witness table. We would like to clarify that issue. Madam President, are they here? We can clarify the issue.
I thought we did that yesterday. 5 12/12/01 FINANCE COMMITTEE - BILL 010694
The question was whether or not the issue was clarified yesterday. Let me say, to my left, we have President Verna; to her left, Vice Chair Marian Tasco. To my right, Councilman James Kenney; to his right, Councilman Michael Nutter. The President said she thinks we had the issue clarified. I'm not sure of that so I'll defer to her or to whomever.
The technical staff did meet with the Administration last evening. We'll call them up at the appropriate time. They are working on something presently.
We'll defer the issue of the project review team and its participation until further down the line in our hearing. Does the Committee have anything to say otherwise? Since we will defer that issue for a little later, we will go right into our panels.
I would like to 6 12/12/01 FINANCE COMMITTEE - BILL 010694 ask Lance Rothstein some questions.
You mentioned that last night. Mr. Lance Rothstein, would you come forward? (Witnesses come forward.)
We thank you for agreeing to defer to this morning, Madam President. This is Project Director for the Capital Program Office, Lance Rothstein. Coming with him is Pat Smith. Please identify yourself for the record. Thank you for coming in.
My name is Lance Rothstein. I'm the Project Director at the Capital Program Office for the Neighborhood Transformation Initiative.
Thank you. I note in the testimony that was provided to us yesterday that there are a number of subcontractors under the Hill structure. Can you tell us what each of these subcontractors were paid or will be paid? What specific functions have they done or will do? Who 7 12/12/01 FINANCE COMMITTEE - BILL 010694 are the principals in these companies?
Today I don't have the physical cost values of each of the subcontracts. We'll have to get back to you on that.
I'll have to go back to my office and get it during the hearings today.
Do you want that faxed? I'm sure you could go into one of the offices and they could fax it to you.
As far as the leads and the company owners go, I believe there should have been a page in the Power Point Presentation package that came. If not, I can get that to you as well.
Actually, there's another document that lists more extensively the principals of each of those companies. I can get that too --
I'm sorry. Could you direct us to which of the presentation package and what page?
I don't have a copy with 8 12/12/01 FINANCE COMMITTEE - BILL 010694 me of Bill 010694 right at the moment. I didn't bring it with me today.
Hill International is basically what amounts to the leader on the project. Under Hill's role, they've hired a number of subcontractors. As part of the presentation that you received yesterday, American Community Partnerships is responsibility for the community outreach aspects of community notification. Gannet Fleming is responsible for the computer support model we've been discussing. We've 9 12/12/01 FINANCE COMMITTEE - BILL 010694 also got several other people on the team. We've gotten Envision, Ltd, doing scheduling.
The master schedule, which is one of the primary pieces of the deliverables under the scope of work.
I think that you ought to get us more -- the information, as I said. Any number of our offices have fax machines. I'm sure if you called your office, they could fax you the information we're asking.
We'll have Mr. Rothstein do that. We should explain that the Hill International Group put together a team of subconsultants to support specific parts of the work product. In doing so, also met the City's requirements around minority, female and disabled participation as part of that. Overall, you can almost look at the project having three major components; the technical side of the project, which deals with master schedules, budgets and things of that nature that they managed. They're program managers. What they 10 12/12/01 FINANCE COMMITTEE - BILL 010694 do is put together -- group people together, like customized to your project and to your needs. We also have a series of environmental consultants because of the scale of the project.
Not to be redundant, but why don't we just wait until we're provided with the information and you can explain to us what each subcontractor is doing and is responsible for.
I have a list of each of the sub's names. I can explain to you briefly now what --
No. I think I've asked you how much are the subs being paid, who the principals are in the companies and what functions will the subs do. So rather than give us a portion of what we're asking for, I would like you to come back with the information in whole. Thank you.
Thank you very much. The Chair also notes that we received a communication from Joyce Wilkerson with regard to 11 12/12/01 FINANCE COMMITTEE - BILL 010694 information requested yesterday. In front of me is the Vacant Property database that Councilman Nutter requested. These binders. No. 2, the estimates NTI bond program budget for Fiscal Year 2005 to 2007 that Councilman Nutter also requested. It's in our packet and being re-duplicated now. I'll pass that out when it comes back. That's another chart. We do have that information that was requested yesterday. Do we have outstanding issues that the Committee would like to mention? Perhaps, Madam President, it would be helpful, I would like to ask Bob Solvibile if I could ask you a question. Is that all right? With Pat Smith and Joyce, unless you would like to respond yourselves. I've been thinking about this last night. What might help to clarify all of this -- we're now passing out again the chart, NTI Bond Program for Fiscal Year 2002 to 07 that was requested by Councilman Nutter yesterday. The Committee has that information in hand. I was trying to think last night about what would be helpful and what would kind of ground 12 12/12/01 FINANCE COMMITTEE - BILL 010694 this whole program so that it becomes a tangible real thing for everybody to see. We all understand that, you know, communication is everything. I always say that in an elected official, we spend 75 percent of our time translating English into English. That's part of the problem. For example, my understanding, and you can correct me, with Hill Company -- and let me thank Michael Griffin who passed out toys last night, vice president and regional manager for passing out toys to some thousand kids last night, along with all the other volunteers at 3801. My understanding is that what the Hill Company is doing, on the one briefing, it's really organizing the blight part of NTI. Again, Members of the Committee, I'm speaking for myself to try to make it real and ground it for everybody. Hill has the contract to organize demolition and encapsulation of prioritizing. In my district, I've done all that. We've done our background work. I can give you a photo of every property I want demolished. I can give you tax information. I can do that. We did that. When the Mayor said "blight," we started running. I have 13 12/12/01 FINANCE COMMITTEE - BILL 010694 a lot of volunteers, community people and developers who worked with me. " I've been quite about my district. I've got posters, formal booklets from my district. If necessary, I'm glad to use it as an example and to produce information that might help members of this committee and my colleagues, if we can do that. Having said that, my understanding is that, for example, in Mantua, in some areas we will need to defer, which is the hardest part of the demolition encapsulation. We will have to defer some demolition where we want to move people into other neighborhoods. We'll have to treat those other neighborhoods, do some property acquisition, do some rehab. Then we can move people into the neighborhoods and do the demolition. " The first phase is to get rid of those imminently dangerous properties, to encapsulate and to clean and seal properties. My question is, once you decide on a list, given that you worked with the District 14 12/12/01 FINANCE COMMITTEE - BILL 010694 Councilperson to determine priorities -- and also let me also say to the Committee that I submitted a proposal for every area in my district. I want my people who live there to know that. I didn't just do Mantua. We have proposals for everybody from Gloria Guard to Parkside Historical Preservation Coalition, Saunders Park, Mill Creek, West Philadelphia Coalition of Neighbors and Businesses. We have one binder with just proposals that we submitted to the administration. I've done my district. Also what I think we need to realize is that when one chooses an area, you can't do it in a vacuum.
You have to choose an area and relate it to commercial revitalization, to businesses, other social service agencies, like rec centers, hospitals, health centers, commercial corridors. All that has to be considered along with a Neighborhood Transformation Initiative. Councilman Clarke, who has more vacant lots than anybody, you can't create an oasis in a desert. It's a lot more difficult to create that. You almost are forced, in my opinion, in his area to kind of create a commercial corridor or some 15 12/12/01 FINANCE COMMITTEE - BILL 010694 institutional program along with housing in order to make it work. It can't feed off itself. You have to have some way to integrate these things. I'm trying to ground this. Generally, as Committee Chair, I try to be a facilitator. It seems to me that somewhere, somebody has to try to make it real so that we all are together moving in one direction and we understand what that is. That's what I'm taking time to do today. I hope it's okay with everyone. Having said all that, Mr. Solvibile, given an address that the District Councilperson agrees to and a general program where encapsulations are helpful, where demolitions are helpful, where clean and seals are helpful, where in the last phase you have to do demolition with the hopes of creating with the developer a whole new neighborhood, how long would it take to do those things? I understand we're going to have to submit bids regularly to get this stuff done. I'm trying to give the Committee a sense of timing of how it goes. If we're doing these proposals, as Path Smith said it at a former meeting or told us, we would have to submit RFPs every week, I'm trying to get 16 12/12/01 FINANCE COMMITTEE - BILL 010694 the Committee a sense of what demolition means and how it fits into everything.
Bob Solvibile, First Deputy Commissioner, Licensing and Inspections. With the proposal we're working with Hill on, 150 every two weeks to do -- roughly, the first year would be 2500 planned for demolition, encapsulation. We're estimating 500, but haven't finalized it. Then gearing up to about 3500 a year the second year for demolitions. All together, the five-year plan that the Mayor has stated and Chief of Staff looks like the reality of the situation.
With respect to demolition, over five years. We're projecting 14,000 properties. That's dealing solely and exclusively with dangerous, imminently dangerous type buildings. Based on that number, we expect to do 2500 in the first year, ramp it up to 3000, then 3500 and start stepping it down to meet that five-year production goal. We also at the same time are looking at seeing if we can do 500 encapsulations a 17 12/12/01 FINANCE COMMITTEE - BILL 010694 year to reach our goal of 2500 over five years. We may also have to step the encapsulation up. We're a little concerned and constrained by capacity on the contracting side. How many demolition contractors will be able to bid and carry this work out? You also asked questions not only about the demolition, but then how does all this tie into a redevelopment process. The way we envisioned this, as you said, if some people, like your office and other officers, there are community organizations who know that they want certain types of demolition and encapsulations to happen in their neighborhood. At the same time, we need too look at redevelopment proposals. Maxine Griffith, Executive Director of the Planning Commission, talked about one of the things we failed to do in the past is when people plan, they say we want to do this type of rehabilitation or this type of redevelopment in our neighborhood. We may plan it in terms of the idea, but there was very little linkages in terms of resources. Now we can say we're going to identify what dollars can move which projects forward in which particular order. Do we need to do 18 12/12/01 FINANCE COMMITTEE - BILL 010694 acquisition in order to acquire property which might be at this point not imminently dangerous or occupied in order to assemble a lot. That would then trigger a whole series of other actions, like finding a house for an individual. So the trick of this or the challenge for us as an Administration is to plot out all the detail that go into this on a master schedule. So if we know in year two we want to do a land assembly to support a project that there's developer interest in and resources that can brought to the table, we know we may have to start doing certain actions now. That's the type of work that the Hill Group will do for us; this master scheduling. If you will, you should think of them as our tools. I think that's very important. They're not the decision makers. They will help us working with the Council put together bid packages, arrange the orders, make sure we have the right bid spec, make sure we do the environmental control, make sure the streets that have to be closed down, when they have to be closed down, when the sewer laterals have to be capped, If you will. They're our tools and extension of government in terms of the technical 19 12/12/01 FINANCE COMMITTEE - BILL 010694 side. But the decision-making is still here. The City will continue to do things -- you know, the procurement process. We're issuing bid packages. We'll be subject to all the procurement rules and regulations of the City, including lowest responsive bidder. We will still be doing inspections and legal notices you have to do in order to take action against a dangerous property.
L&I. We've increased the inspection capacity of L&I in recognition of the fact we're trying to move from approximately 1300 demolitions a year to ultimately, at our peak year, 3500. That's almost tripling the rate of what we're doing now. It becomes a really multiple -- managing multiple bid packages on the street at different times. If you will, you can think of them as the conductor of an orchestra. The City has a role. Council has a role. They're just making sure everything -- sort of like the music, to get some harmony, that the music comes together and we're not 20 12/12/01 FINANCE COMMITTEE - BILL 010694 stepping over one another. We made a very strong commitment that we need to be in neighborhoods talking to people with the District Councilperson so that people understand what's happening, why it's happening, why we have to do demolitions, when we can encapsulate. We've also, in the program statement that we had given out as well as in our individual briefings when City Council put out the encapsulation priority principles and things of that nature, have gone into communities and talked about that. As we said, we'll be working at the direction of the District Councilpeople in setting up community meetings, making sure that we reached people who need to be touched with. My objective, and I feel strongly about this, is that people in neighborhoods need to have adequate notice about what's going on and when it's going on and why it's going on.
Thank you. I say this because again we note that nothing happens in a vacuum. Demolition, clean and seal, encapsulation is also affected by private investment. If I have a 21 12/12/01 FINANCE COMMITTEE - BILL 010694 developer -- for example, I have a developer who has invested 50 million in private dollars in my area. We've built over 1000 new units in my area. In fact, they are prepared to invest another 50 to 75 million if we can work with the City in getting them the properties. So when they go in a row house block where there are three abandoned homes, they may tear them down or they may gut them and do rehab. They pay for that. That doesn't become a City's expense. That's why I say to Members of the Committee and colleagues, nothing happens in a vacuum. That's not an expense that is born by the City, unless we consider if they've been able to acquire those properties through the City what that means. That is why I say nothing happens in a vacuum and why it is important that we work with the District Councilperson to get this done. The other thing I wanted to make clear is that the whole issue of who runs what in terms of the City. I've been thinking about that as well. In terms of who is going to make the decision, I understand -- in fact, I spoke with Ms. Wilkerson just before the hearing started about it. That's 22 12/12/01 FINANCE COMMITTEE - BILL 010694 one of the reasons I asked Bob Solvibile to come up. In terms of demolition and L&I functions, Hill may help put the package together. But it is certainly the City, in this instance, and even when we move over to development, it is the City agencies who will run -- who will run NTI. I've been asked and talking about, is the City putting out bids? Will we have a new project manager? Is there some other entity coming aboard? I'm told it's the City and the agencies that we've traditionally worked with; albeit we'll have a new consolidated housing structure. It will still be City agencies who will drive all of this. Is that correct?
All of us know and love Bob Solvibile. We have an L&I question from Councilman Kenney.
Thank you, Bob. I love you, too. We're talking about demolition. What is the current average cost per demolition for a normal residential structure in Philadelphia as we are demolishing houses today? 23 12/12/01 FINANCE COMMITTEE - BILL 010694
Counting the environmental and stucco, which is the 10,000 number yesterday, I read all the components that go into the demolition at roughly $10,000. The average for the 1300 last year --
Counting the asbestos removal, the actual demo bid that you've had some experience with comes in around 65 for a two-story row home.
You take the stucco of both walls adjacent, it's about $1200 each roughly, two-story home, that's $2400 additional on the 65. And any environmental that has to be done. In today's world, every building that gets demolished has to have an asbestos inspection. In most cases, when asbestos is found, it's another $1000 onto the bill. The 10,000 average is an average for demolitions, all demolitions in the City.
I understand that 24 12/12/01 FINANCE COMMITTEE - BILL 010694 particular component. It's my understanding the $6200 number was the number. You're saying on average we spent ten?
Counting the stucco and everything, it averages roughly to 10,000.
How many properties do you think under the NTI plan that are demolished in a string will need to be stuccoed? I would probably argue that none, because they're being demolished in a string.
Our estimative when we were doing it with Hill and talking with Hill is that roughly it would be 60 percent string and 40 percent hand demolitions.
Not every one. If you do five in a row and you come to a property, that gets stuccoed.
The number of stucco opportunities is significantly reduced due to the fact we're intending to take down larger swats of land.
Presently, Councilman -- 25 12/12/01 FINANCE COMMITTEE - BILL 010694 and it will more than likely change with the NTI initiative -- if we demolish 1300 homes a year, we'll stucco roughly 650. It's usually half of what you bid. You stucco walls for half of that. So NTI would be a little less than that.
How do we know that if we don't have addresses of what's coming down?
We don't know what the schedule of addresses for the demolition are.
That's what they're working on now, which house at what point and what bid package. For example, as you know, I think Councilmen Ortiz and Goode mentioned yesterday the importance of economic opportunities. One of the other things we're looking at in terms of packaging properties is we will look at combination of different types of bid packages and different sizes. We can be much more inclusive in terms of the contracting community having the opportunity to bid on different size packages. So you don't, if you will, preclude the little guy. The other thing we're looking at is a part of the budgeting piece. It's some related 12/12/01 FINANCE COMMITTEE - BILL 010694 activities that we, the City, might not do right now. They may not be -- they may be adding things. For example, we get a lot of complaints from developers in terms of what happens to the debris that's left afterwards. Do you let it sit and cover it over? Do you right now take it all and make sure you have clean fill left behind? As Herb Wetzel can talk about, we end up paying -- if we don't put in the right compaction now, we end up paying for it when the developer comes because increased development cost. Do we in certain community hydroseed? We're talking with the Pennsylvania Cultural Society. Do you do something immediately after demolition to treat the land afterwards? There will be a cost related to that. What we want to do in terms of the budget -- we are being conservative for budget numbers. We'd rather over-budget in a sense, if you may, and then come under that on average, as opposed to coming under. You know, saying it's going to be 65 or 75 and we end up -- because of change circumstances, we feel pretty good about that 10,000 budget number. 27 12/12/01 FINANCE COMMITTEE - BILL 010694
I've been in City government ten years. I've never seen a project come in under budget. Never seen a project come in under budget. The question I have for Bob is that if we're going to do large-scale demolition, as opposed to what we're doing now, taking out the bad tooth in the middle of the block, do we not get economies of sale that would bring down the cost of demolition? Because we are going to be potentially bidding out larger numbers that can be done at once, as opposed to coming back and forth on curbside bids on individual houses. Shouldn't we be experiencing some economy of sale?
We would have economy of scale. In looking at that number, $10,000 number, long and hard, and I was a part of that decision, what the average would be, is that with all of the unknowns and the asbestos removals and how that's increased dramatically, Councilman, it's -- the 6200 is a bid that was little row homes in South Philadelphia that we did with the Keller project. But with the homes in Councilwoman Blackwell's area and Councilman Clarke's area, west of Broad, big three-story row homes, it's about $8800. 28 12/12/01 FINANCE COMMITTEE - BILL 010694 There's always asbestos. The environmentals have been driving our costs up through the ceiling every year. It's been up about $2000 in the last three years.
If you're telling me now in a North Philadelphia three-story row house or West Philadelphia larger home, larger than South Philadelphia with the asbestos issue and the stuccoing it's 8800, it's still not 10,000.
I thought you were concentrating on demo costs. Not counting the stucco. Stucco west of Broad is --
Absolutely. West of Broad should be around 11 or 12. In areas of Mantua where the homes are bigger and three-story houses to stucco, the average cost, I believe, is $2800 a wall. On a two-story it's about $1500. The environmentals are really a lot more in the bigger homes.
40 percent of the homes are scheduled to be taken down by hand, the way you describe it. I assume it's accurate as far 29 12/12/01 FINANCE COMMITTEE - BILL 010694 as people climbing up on a scaffold or something and pulling the house down brick by brick. How many people are going to be hired to do that? Do we have any estimate as to how many people we'll need to do -- of 14,000 demolitions, how many people are we --
A crew to demolish by hand consists of a foreperson and usually three laborers. Anything more than that to actually do the demolition is just too many people around that can get hurt. Then it would be a trucking company or container company to put debris in.
I should multiply 40 percent of 14,000 by 4? That's how many people?
40 percent of 14,000, which would be hand demolition by four, yes. Three actual laborers and a foreman.
Where is it envisioned these individuals will be coming from?
Again, one of the roles of Hill is to make sure that we reach out and work closely with contractors around so we can meet our economic opportunity goals on both the employment side of the equation as well as the vender contractor side of the equation. 30 12/12/01 FINANCE COMMITTEE - BILL 010694 If I may, I want to note just for the record another potential impact on cost which no 4 one --
Can I interrupt you for one second. I want to get to the issue of cost as it relates to demolition. We're attempting to utilize local contractors and local people in the hand demolition, the 40 percent hand demolition. Have we in any way analyzed wage rates -- for example, what is the hourly rate, if you know, of a hand demolition worker on a given row house property?
I'm not sure. It would be the prevailing wage, roughly 18-something an hour, plus benefits. I'm not sure.
We're going to be needing a substantially larger number of people, I suspect. Have we analyzed the wage rates of both union and non-union companies? 31 12/12/01 FINANCE COMMITTEE - BILL 010694
That's some of the work going on now as putting together the budget, master budget.
What is the wage rate of a laborer in union contract company, as opposed to a non-union company?
No. I'm aware of what the prevailing wage is. I'm not sure of the actual union versus non-union.
Could someone provide that information? I want to ask one question while Ms. Smith is here on an issue of economic impact that you raised in your answer. There's a letter dated December 10, which is a response to a letter written August 3 to Councilman Rizzo, relative to his question on return on investment. Actually, the second paragraph struck me. I can't imagine how this analysis was conducted. Let me read for the record the response: "What is the return on investment?" "Over the course of the NTI bond's 30-year debt service 32 12/12/01 FINANCE COMMITTEE - BILL 010694 schedule, the expected additional benefit to the City of Philadelphia's economy totals over $47 billion. This estimated benefit consists of $295 million in bond expenditures, 1.1 billion in related housing construction and preservation expenditures, 10.4 billion in wages from new City residents, and 35.8 billion cumulative in increased real estate values. "The cost of the NTI bonds over the 30-year debt service schedule is 585.2 million. Therefore, the return on investment for the program over the 30-year period is estimated to be 8000 percent return on investment."
It says 8000 percent, the $585.2 million cost. Where did that analysis come from? I've never seen a return on investment of 8000 percent.
What we did was work with the Budget Office in trying to capture the various aspects of this. For example, based on the NTI goals -- and we had to make some assumptions around this. What I can do, since this is not my area of expertise, we 33 12/12/01 FINANCE COMMITTEE - BILL 010694 can have the individual who worked with Mr. Dubow walk us through that. Essentially, for example, one of our goals is 16,000 new housing units. If we were to achieve that production goal, there's a multiplier effect that people use. So we generated numbers off of that.
Maybe Mr. Dubow can answer. Certainly we want to look on the bright side of life. Don't you think this is a little overly naively ambitious. The concern that I have is if this is some of the assumptions that we're working with, I'm beginning to have increasing doubts as to the ability to carry forth this program. This is something that is like absolutely fantasy.
We were trying to be responsive to the Councilperson's request. This type of analysis and the way he couched is was a difficult one. Because, again, the challenge with NTI, as I said yesterday, is that it's not a single project like the Convention Center. It's not a single program. It's really a multiplicity of different things. So we made an effort. We had said in April that one of the 34 12/12/01 FINANCE COMMITTEE - BILL 010694 objectives -- can we increase the population base? We assumed if we did that what the impact was. In one way, we were trying to be responsive to the question that was being asked of us in using --
When Councilman Rizzo got this letter, if he believed it he must have been jumping up and down doing handstands. It's astounding to me that -- Rob, maybe you can bring some clarity to this. I think this is the kind of information that makes people believe this may, in fact, happen. When, in fact, our poling data, and any poling data shown, shows that people leave the City because of schools and taxes. If the schools aren't being fixed, where are these new people coming from and all this wage tax revenue and new residents buying middle-class, market-rate housing? This is extremely misleading. I would like to see some specific analysis of how these numbers were reached. With an 8000 percent return on investment, how do I invest my money in this? I can retire.
Of the 16,000 housing units, are any market-rate housing? 35 12/12/01 FINANCE COMMITTEE - BILL 010694
It's 16,000 units, but a big number of them are subsidized housing?
We were looking at the construction cost, whether they're subsidized or not. Construction costs create jobs and things of that nature.
They create jobs when they're getting built. However, once they're built, I don't see the job creation that goes with that. I mean, the job creation is during the building. I don't see within the plan a long-term objective of job creation that will create employment for 10, 15 years of people.
This is Joyce Wilkerson. I'm Chief of Staff. First of all, these numbers are not included in any of our five-year plans or any of our projections that the City has. As I indicated yesterday, our proposal is not predicated on the ability to generate revenue off of this program. I think there will be some revenue generation happening. I would like to have Rob Dubow explain to 36 12/12/01 FINANCE COMMITTEE - BILL 010694 what the response -- what the response was made to and walk through the details of the analysis.
What we looked at was a couple of the reports from EPOP. We looked at what they assumed would be the impact on housing values from getting rid of abandoned houses, from building new houses what that would mean in terms of --
I don't want to interrupt you. It says right here in the letter that "the EPOP analysis of a reduction in value of properties on blighted blocks of $6720 is not included in this analysis."
No. It says here what the numbers are. Then it goes to and says, "Please also note the estimated benefit does not include induced benefits associated with increased real estate values of properties near NTI activities." In their report, Blight Free For Philadelphia, the EPOP Organization writes, "The presence of an abandoned house on the block reduces the value of all other properties by an average of 37 12/12/01 FINANCE COMMITTEE - BILL 010694 $6720." That is not included in the analysis. So I guess we should ratchet it up even more if we were to include that part of it. As Councilwoman Blackwell said, I want to make this a little real and ground this. To me, this isn't grounding; this is a helium balloon.
Could I call to the table the policy analyst that worked with the budget analysis? (Witness comes forward.)
Good morning. My name is Jonathan Schmidt, policy analyst, NTI.
I recently graduated from the Wilson School of Public Affairs.
No. In generating these numbers, we did struggle with coming up with the methodology for doing this. We did assume the NTI 38 12/12/01 FINANCE COMMITTEE - BILL 010694 goals would be achieved. Which meant that what we assumed as far as housing cost was $110,000 per house in the construction value.
The cost of affordable housing in the City at the moment is approximately 110,000. Much of that is being subsidized; nevertheless, the overall cost is 110,000. In some cases, the market-rate housing values might be higher. We did 110,000 for all units, whether market rate, preservation or affordable housing. We assumed at the market rate, that that would be fully provided by the market. For the affordable housing, we went with the NTI assumption or goal that we would reduce the subsidy to 40,000 per unit, which meant the private leverage or external leverage from the City would be 70,000 additional. We assumed that the -- while we didn't take into account the EPOP analysis of the effect on other properties, we did take into account that the new development would likely occur on vacant land or land that is currently not paying taxes. Which 39 12/12/01 FINANCE COMMITTEE - BILL 010694 meant that approximately 50 percent of the land that would be used currently is not paying taxes and would be in the future.
Including the ten-year tax abatement for new construction?
-- it's done over 30 years. It's over the lifetime of the bond. It's a 30-year projection. It does take into account the tax abatement and the kicking in after year ten.
What I would like, I'd be interested in seeing a detailed report on the analysis and the factors that you used and the assumptions made to get to this amazing number. Now that I've read it. I'm so excited.
Thank you. The Chair also notes that in attendance 40 12/12/01 FINANCE COMMITTEE - BILL 010694 are Councilwoman Reynolds Brown, who has a question, Councilmembers W. Wilson Goode, Jr., Ortiz, and Clarke. Let me ask a question. How are fencing of lots, adding mulch or whatever those tree pieces are called, murals and benches, are they in the L&I cost or someplace else?
That type of cost cannot be paid for directly out of the bond proceeds, with the exception of maybe some hydroseeding greening directly tied to a demolition activity. What we have done and are beginning to do is to look to other resources to support greening activities for the vacant lots, including really using as our model the work that's been done in the America Street Empowerment Zone and New Kensington Community Development Corporation where they do a lot of tree planting and post and rail fencing to help in terms of a beautifying objective. It may not deal with security issues. As I said, we are looking to fund greening activities over and above basic cleaning, through private resources. An example of that is in federal grants the managing director's office is going to be 41 12/12/01 FINANCE COMMITTEE - BILL 010694 bringing someone on who is very familiar with funding programs that we might be able to tap at the federal level coming out of, say, like the agricultural department. We were successful in securing a small grant from the William Penn Foundation to start modeling some of our greening activities for them and to create an overarching strategic plan and resource development plan. So we can't, unfortunately, use bond proceeds for that activity. We'll be looking to outside money for that. One of the things that I personally think is a wonderful opportunity is a concept of what we've been calling "the Green Fund." We began to have conversations with some of the major foundations about this, including the Philadelphia Fund. It's a model in part that may be the way with the stadiums. We created a Children's Fund. Could we create a Green Fund and use it as a basis as a large-scale community campaign? Contribute a dollar toward the planting of a tree. It doesn't have to be a street tree. The Empowerment Zone model shows that if you plant trees around the parameter of a lot and even though it's not completely fenced off, 42 12/12/01 FINANCE COMMITTEE - BILL 010694 that does tend to deter things like illegal dumping.
Thank you. I note Mr. Coates is here. Thank you for your support last night. Thank you to the Anderson family as well. We have questions from Councilwoman Reynolds Brown and Vice Chair Tasco.
Good morning, members of the Committee. Pat Smith, you've already partially addressed the answer to my question. My interest is very specific and narrow. It stems from past experience in the arts and current role as Chair, Recreation Parks and Culture Affairs. The context is, as an example, ten years ago, Philadanco, the leadership there saw fit to actually rehab houses adjacent to that artist cultural institution to accommodate dance artists who needed housing. Given that as an example, when we look at the percent for arts that currently exists with large-scale projects, what kind of thinking or strategy has been given to ensuring that arts and culture organizations are a part of this NTI initiative? You've discussed the green space 43 12/12/01 FINANCE COMMITTEE - BILL 010694 point with Philadelphia Horticultural Society, which is the second part of the question. Now can you focus on artists and arts and cultural organizations, especially when we know the economic impact they bring to Philadelphia.
We had some preliminary conversations with the executive director of the Avenue of the Arts. They're undergoing a strategic planning process. Part of our conversation was the role they can play, particularly in the northern part of the Avenue of the Arts in connection with NTI. As they do their strategic planning, would there be any opportunity for linkages there? Another thing is on the City's side, under the leadership of Jane Golden in the Murals Art Program, looking to tie the mural program closer to greening activities within neighborhoods. I think one of the most wonderful examples of an artistic approach to greening is the work that Lilly Yep has done with the Village of Humanities in the Art. Those would be the type of things we would like to replicate with that. In terms of house and other development 44 12/12/01 FINANCE COMMITTEE - BILL 010694 activities, the Planning Commission has also been looking at the concept of artists zones and lots, lost-type zone areas. Particularly, again, people think maybe in the northern part north of Broad could there be some opportunities along that way? I don't know if Maxine is able to talk about the North Avenue of the Arts work you're doing.
May we note that we're very proud that under the graffiti arts program, we're number one in the nation. We're very pleased with the new experimental program Jane Golden has to try to create some senior citizen lots, benches and mural programs. We love every single bit of it. We think that our City is doing a great job in that regard. (Witness comes forward.)
Identify yourself for the record. Thank you for being here.
Maxine Griffith, Executive Director of the Planning Commission and Secretary for Strategic Planning. Good morning, Members of the Committee. We've been working at the Planning Commission for sometime on a comprehensive plan and 45 12/12/01 FINANCE COMMITTEE - BILL 010694 development strategy for Avenue of the Arts North. We expect to have a draft plan before Avenue of the Art Board of Directors or their subcommittee by late January. This includes not only the usual planning elements. Our community planning group has also been working with the various entities along North Broad. They have been working in concert with a contract that's been let by the Mayor's office to look at operating expenses, how to get a grip on the fiscal picture of these organizations, and how to weave that into an overall development strategy. In addition, recently as part of our purview as coordinators for the capital budget, we've been looking at capital budget strategies for especially the small arts organizations. So as, unfortunately, our capital resources diminish, we do not leave those groups standing alone. We help them figure out a way to provide capital support and infrastructure support for them.
That's exactly what I would ask we be mindful of. The City's Mural Arts Program is wonderful and great. It's unprecedented in terms of it's accomplishments. 46 12/12/01 FINANCE COMMITTEE - BILL 010694 In no way to diminish that already great effort, we should be mindful of other arts programs not Center-City based in various districts around the City. We've heard District Councilpeople voice clearly how they want to be involved in that process. It's important that we be mindful there are artists and culture organizations around the City that should be a part of this strategic plan. That's my fear, that we not miss out or miss the opportunity to include them across the board.
We'll be sure to work with you and your staff and other Councilmembers as we move forward.
Thank you. Ms. Griffith, don't leave. Let me say to all who are here, I'm hearing the grumbling that people have to go and this is your second day. I'll ask my colleagues and members of the Committee to allow us no more than ten minutes for questions. We'll call you on and we'll go back to our questions. We'll try to give you your respect. We thank you for your patience. 47 12/12/01 FINANCE COMMITTEE - BILL 010694
Thank you. Good morning. I had time to read your letter. I did not get it yesterday. I have some questions related to your response to my inquiry. I was under the impression when we left the meeting that we had regarding how to best think about the redevelopment of the Logan area, the way we might be able to do it that would not be costly to the City but be a way to encouraging developers to look at that valuable land along the Boulevard. While you mentioned one developer who was interested, there have been several inquiries. Based on that, we believe we could create some competition and interest in that area which could also help us deal with the revitalization of the surrounding community. What disturbs me -- and then after that meeting -- I thought we had a good meeting. I thought something was going to happen. I see it's not happening. I am concerned. I'm more concerned that your letter states that your main concern is that the designation of the new redevelopment area will create expectations that there will be a high level of public dollars, NTI 48 12/12/01 FINANCE COMMITTEE - BILL 010694 proceeds and others, committed to the neighborhood when this may not necessarily be the case. So when we attempted to try to put the revitalization of the surrounding area on the table, that did not come through. We were disappointed with that. I guess what I'm saying, are you saying and is Ms. Smith saying that the people in the surrounding areas, not the sinking-home area, but the periphery, cannot look forward to any development that may come from proceeds of the NTI bond?
No, of course not. Let me restate something I said yesterday. I didn't realize you hadn't yet reviewed the letter. It was based on the letter. What we're saying is in terms of the establishment of urban renewal areas or the expansion of urban renewal areas, we're seeing that we've been asked to see it by NTI leadership as part and parcel of the program. We have a backlog of about 15 requests for expansion. We have on staff now six community planners that do that work. So the decision about how to move forward is part of the NTI investment 49 12/12/01 FINANCE COMMITTEE - BILL 010694 strategy; looking at acquisition costs, looking at community plans and how to move forward. So we're definitely not saying that the whole area was not to be included. As a matter of fact, we were trying to say, and perhaps the letter was worded poorly, the exact opposite. Because we wanted to do comprehensive plans, we saw this as part of the overall NTI strategy. However, we also said, and there might have been some staff-to-staff miscommunication, because I got another sort of verbal communication from your office subsequent to the meeting, we had thought you wanted to respond specifically to a specific developer who had a plan and wanted to move forward. What I was suggesting in the letter is if that was the case, to talk to Joe Leonardo. There might be some more focus instruments. I was thinking about Act 94 that would not be staff intensive and not be global to respond to that specific need. Because that's what my staff had told me that was of more timely concern to you. We were certainly not trying to say, and I apologize if we gave you that impression, that we 50 12/12/01 FINANCE COMMITTEE - BILL 010694 were not looking globally at the whole community. That's what NTI is about.
If I may, to follow up, the idea would be before we might have went ahead and created an urban renewal area. And that would have been the end of it, without thinking, do we have dollars for acquisition, dollars for development? As Maxine talked about, we have a whole list of requests for expansion. Now we want to sit down with people in Council districts and say with the Councilmen, Create an urban renewal areas. What are the redevelopment plans similar to -- you know, like, Councilwoman Blackwell, you have X-number of developers. This would be the demand on the other part of the City's resources. I think a lot of times just one piece of the pie gets done. You end up building up frustration because when it comes time to do the second part, we don't have the dollars. So you still don't get what you need. That's what we're talking about, this concept of comprehensive planning and thinking about not just the activity of creating the area, but making sure we're going to have resources. 51 12/12/01 FINANCE COMMITTEE - BILL 010694 We try to look at the picture in its entirety instead of one slice of the pie. That's what we're trying to do differently.
I would add, as I said yesterday -- and I think I made reference to RDA as well -- the Planning Commission in a way is not making independent decisions. We're making decisions as part of a global program, a more comprehensive program. So when we get a request, we have conversations with RDA, we have conversations with Pat's office. We look at moving forward with that project in light of, as Pat said, what resources are available to complete the project from soup to nuts. Yesterday Councilman Nutter made reference to a project that we had worked on together with all the best intentions and a lot of energy from all sides doesn't seem to have gone anywhere. That's because the resources weren't in place, the agencies that have to implement -- as you know, Planning has no money. We're not an operational agency. So the connection between the work we do and the work of OHCD, Commerce Department and other implementing agencies, that connection was not 52 12/12/01 FINANCE COMMITTEE - BILL 010694 there. That's what we hope to remedy under NTI. But to do that, it means in a way we give up a little bit of our independence as an agency.
I really am concerned. We've gotten a lot of people who are interested in that area. I'm looking at it from a point of view where if the interest is so high, they may be willing to spend the money.
That's why I asked -- you might have gotten a call this morning. It's the reason why Rich Lombardo wasn't here. I asked Rich to actually call your office this morning to try to follow through on that letter. We realized you had spent a lot of time here at the hearing. We wanted to see if there's ways we can be responsive and still work within the NTI framework.
If NTI is going to cover everything, what if you don't want any of the bond proceeds? What if you want to proceed with the development, say, in the Logan area and we may not need NTI, what happens? Everybody in the City believes the whole blight program, everything they say is going to be solved by $295 million or some sense of this program. If you don't -- if the 53 12/12/01 FINANCE COMMITTEE - BILL 010694 dollars are not there, how does one deal with development absent NTI?
Let me give the short answer and then let the NTI director give the broader answer. The way that NTI works is actually to leverage other dollars. It's a leveraging mechanism. That leverages private dollars, but it also leverages governmental dollars and state and federal dollars. In a way, NTI is less a program that's discrete and more a way of leveraging money to do what we need to do. That answers your question in one way.
Suppose I want to do a project and you say, Well, it's not part of NTI. It's got to be a part of NTI in order for us to leverage these other dollars? I have put together a developer. I have private funding. I have XYZ. I want this project to go forward. I don't want someone to tell me it's got to be part of the NTI program to get moving.
What I've done is ask Herb Wetzel from the Redevelopment Author to come up. I thought it would be helpful to walk through a 54 12/12/01 FINANCE COMMITTEE - BILL 010694 development project which was completely privately funded and financed in the way that it interfaced with City systems as an example.
Good morning. I'm Herbert Wetzel, Executive Director of the Redevelopment Authority in the City of Philadelphia. Councilwoman Tasco, we recently engaged in a process with a private developer in Councilman DiCicco's district over in the brewery town section. The developer wanted assistance to acquire additional land. The developer bought the old Schmidt's Brewery site, but was in need of additional land to create the entire parcel for the development program he wanted to engage in. He was able to come to the Redevelopment Authority as a result of support from the Councilman to authorize, in which we came before Council, an ordinance to condemn additional land to assemble the overall site for the development. In this case, the developer was willing to pay for all costs associated with land assembly. The City would not have to provide any funding for the land assembly. As a result of that, we obviously came before Council, got the ordinance, 55 12/12/01 FINANCE COMMITTEE - BILL 010694 filed a Declaration of Taking, and are assembling the land for a major redevelopment project. Both the land assembly and the entire project itself will be paid for by the developer. In a similar situation, as Councilwoman Blackwell mentioned this morning, we've assembled properties for a private developer in West Philadelphia. Although that developer has not paid for the land assembly or the assembly of buildings, we have used City resources to assemble the buildings. But the entire redevelopment, post the land assembly, has been paid for by that private developer. Those are examples where the private developer is paying all the development costs, including land assembly or paying for post-land assembly development cost.
Those are the alternative methods I mentioned at the end of my letter.
In fact, it gives one the opportunity to get rid of blight. In my area, for example, the same developer in question, we had a property on the corner of Chestnut Street in one of the main thoroughfares to come in Center 56 12/12/01 FINANCE COMMITTEE - BILL 010694 City. If you go down 58th Street, you'll hit Chestnut. People go from the Airport and come down and always see blighted properties at that corner. So we said, look, we need you to develop those properties. Now there's a bright, shinny corner. Where I have three corner properties coming along that corridor, we've been trying for the last couple years to get those. We have those listed in a package to try to acquire. If we try to really focus on development, community development, we can change neighborhoods. Because in this instance, we're part of the designing process. You are not going to see that blight in that corridor if you come through West Philadelphia because we're going to try to get rid of that. Those are the kinds of things that after a while, you can get into when you form partnerships with private developers, with the City. Just like on the front of my last news letter you received, you see big, shiny playground equipment. That is in a park that was a drug-infested park. We went to our private institutions and asked for money. There's $200,000 worth of playground equipment from the Children's Hospital of Philadelphia there. The 57 12/12/01 FINANCE COMMITTEE - BILL 010694 City has invested over as much for their part. We have a private developer who is rehabbing 75 houses on the perimeter. The fourth side of that, which is Huey School, is on 52nd Street so it's part of a commercial corridor. We've done this to spur development on that commercial corridor. Across from that is the church. We believe in public, private, institutional, governmental partnerships in order to change neighborhoods. You know, my philosophy is each person is a committee of one who has to fight to improve your area. If we decide and focus that we want to create these partnerships, all things are possible. I'm willing to work with any of my colleagues to talk about what works for me to show you what I have done for a success story. It really keeps you motivated. When you see successes, it keeps you pushing on to get through all the millions of steps to get the stuff done for the next project.
I would just like to add, Councilwoman Tasco, that the frustration you feel is the frustration that the development community feels. There's a fundamental real estate reality, 58 12/12/01 FINANCE COMMITTEE - BILL 010694 and that is site control is everything. If we own that site you're talking about now, those developers could compete today to develop that land. That's the change we want to make. We want to make sure we have land ready in the inventory so when they knock on your door, we're able to deliver the land.
To my understanding, and because I have limited knowledge about housing development, during the course of our discussion, I thought the urban renewal process would help us gain site control at a rate that would be much less than what we would pay because it's a unique area. The dollars would make it attractive for the developer who might want to pay to gain site control. That's was my impression. What I was pushing for the urban renewal for was to make it easier for the developer to acquire the land. We might not ever have the money to develop the land. If we find a way -- if the urban renewal process is the way that we can do it to create the competition, because it is valuable land, that way -- that is why I was pushing for -- not to ask you to pay for it. I want to make the process easier 59 12/12/01 FINANCE COMMITTEE - BILL 010694 for the developer to gain sited control to move forward. Otherwise, I will not be here, and none of us will be in our lifetime, when the land is developed.
The only difference is that the development of an urban renewal area is only one way you can acquire property. What we're suggesting is another way that is less labor intensive, frankly, on the City side given limited staff resources that would get you to the same end.
At the same cost? That's what I'm talking about, cost. We don't need to talk about the specifics here. That's something for us to have a discussion about. I want it to be clear that it is the way to help us acquire the land, given the unique circumstances of the Logan area. And creating the competition where we may not have to ask the City for any dollars. If the process, acquisition process, is made easier, then we can work with developers to look at that land.
The last person to ask questions before the Panel No. 1 comes up is Councilman Nutter. After that, we'll start the 60 12/12/01 FINANCE COMMITTEE - BILL 010694 panels and work it out.
Thank you. In the same area where Councilwoman Tasco was a second ago, the Chair made reference to the binders where we're sitting. Mr. Wetzel, my recollection from yesterday is a question was asked with regard to the amount of property or land in the City's inventory or the various agencies. I think when the question was initially asked, we did not know the answer. I think at the tail end of the day, there was a chart produced that showed what that number was. I think in actual total as well as the percentage. I think the percentage was percent. 16 Have copies been given to the Chair for distribution? Do you know, Ms. Smith?
We put this together late last night, this morning. I don't know. This was the breakout based on the dangerous-building database, as well as the vacant property survey. Again, that was as of January 2000. The City-owned properties that were dangerous buildings is 7.6 percent. RDA owned 1.4 percent. PHA owned 1.4 percent. 61 12/12/01 FINANCE COMMITTEE - BILL 010694 With respect to --
In that regard, just so I understand, 7781 properties in our database from January of 2000, we figure that number has probably grown if some of the other buildings haven't fallen down on their own, the government and its various entities own 10.4 percent of those properties; 801 of them. Do we have any idea how we ended up owning these properties?
There's probably a lot of 62 different ways. Some of those might have been acquired under urban renewal programs as long as 20, 30 years ago that were never marketable properties. There are those acquired through sheriff sale for which the City bid on them and there's been no end user. Those are probably the main reasons why. PHA has had the scattered sites that have been abandoned.
We have 801 properties in our current inventory within the government. A part of the debt proceeds will now be used to demolish dangerous properties that we own that we acquired, for whatever reason we acquired them for. 62 12/12/01 FINANCE COMMITTEE - BILL 010694 And 10,000 a piece -- I think you add three zeros.
10,000 per property. That's million dollars. $8 million of the 7 proceeds used to tear down properties that the 8 government owns?
Part of the proposal here is that the government aggressively acquire a lot of property; is that correct?
Vacant sites we're going to acquire. Okay. Now, the second chart, are these the vacant lots?
That is also vacant lots as well as vacant buildings that aren't considered dangerous is on the second chart. That was based on the -- it's out of 59,796 parcels in the City that either vacant buildings or vacant lot. Remember, we have 26,000 vacant houses and 63 12/12/01 FINANCE COMMITTEE - BILL 010694 31,000 vacant lots.
Out of the 26,000 vacant buildings, 8000 of them are dangerous; is that correct?
In the second chart, you combine the vacant buildings and vacant lots, which gets us the large number of 59,421. Out of that, the government owns, and its agencies, 9750?
The 9750 number, does that also include the 801 number?
Probably does. The vacant property survey included everything.
We didn't do the run on that basis. We can. That's one of the reasons we're starting to get refined numbers, because of the work that Gannet Flemming has been doing. 64 12/12/01 FINANCE COMMITTEE - BILL 010694
For the people who have been involved in this, do we know how many vacant lots of the 31,000 are owned by the City or any of its various agencies?
We will run those numbers. We can run it. I would be guessing, to be frank.
Mr. Wetzel, when you were talking with Councilwoman Tasco about the need to acquire land or property, obviously site control is king, what have we been able to do with the property that we already own in terms of redevelopment opportunities? How quickly can we dispose of property we own.
We can dispose of properties that we already own in 90 days or less. That's never been the real problem. The real problem has been on the acquisition side rather than the disposition side. In many cases, what we've tried to do -- I'll give you a recent example. The Redevelopment Authority acquired a parcel near 5th and Jackson in '71. It was an old movie theatre. It was demolished. Nothing happened on that until last year. 65 12/12/01 FINANCE COMMITTEE - BILL 010694 The Presbyterian homes decided they wanted to finance and secure funds for an elderly housing project at that location. The parcel we owned at that location was too small for the project. We worked with Presbyterian Homes and condemned additional sites adjacent to the project, which had become vacant land. As a result of that, we were able to dispose of that old parcel as well as add new parcels. Now a 62-unit subsidized elderly housing project, that will be about a $6 million development, will happen at that site. A lot of the stuff that we own is not necessarily marketable because it's a lot on this block surrounded by other vacant lots, which are still privately owned, for example. Part of the land assembly process is the consolidation of that land into marketable parcels. Individual lots, unless they're next door to a homeowner, are impossible to offer for redevelopment. So if you look at PHA scattered sites, you could go -- there are blocks in this City that have land or land and buildings owned by the Redevelopment Authority, PHA, City of Philadelphia 66 12/12/01 FINANCE COMMITTEE - BILL 010694 and by PHDC. There could be four separate public owners on the block. Again, what we want to do is consolidate those titles and then assemble the rest of the vacant land. So it's a single parcel with one ownership.
For the Davis Buildings of the 801 owned by various governmental entities, 109 are owned by PHA. Do you plan to use bond proceeds to demolish dangerous buildings owned by PHA?
If it's still going to be in Housing Authority inventory, they have access to demolition proceeds. Some of what we're seeing now, though, are private parties acquiring some of the vacant lots and parcels from the Housing Authority.
In connection with other developments being done. For example, Cecil B. Moore Homes happening in North Philadelphia involve some sites being acquired from the Housing Authority. I think the Schmidt's development that Herb was referencing includes lots. I think some structure is being acquired from the housing 67 12/12/01 FINANCE COMMITTEE - BILL 010694 authority. If it's going to be reused by the Housing Authority, there would be federal funds available. If it's disposed of to an entity outside of the Authority, the bonds proceeds might be used for that demolition.
Say it's a dangerous building and it comes down and the City does the demolition, we do bill the Housing Authority for the cost of that demolition.
It didn't seem me we would use tax payer bond proceeds to demolish PHA-owned properties when they have their own budget. Let me ask the questions I wanted to ask.
Could we please defer and get some of our panels started? Or we're going to lose our people. I know Councilman Ortiz has questions. Councilman Kenney has another question. Our panels are saying they've been waiting two days. If we don't get started, they can't stay. 68 12/12/01 FINANCE COMMITTEE - BILL 010694 Can we work it in between? Panel, question, Panel, question? Would the Committee agree to that?
Thank you. Panel Number One, General Overview - Federal, State, Regional and Local Stakeholders. Philadelphia Interfaith Action, PIA. I have a PIA development in my area along what is called "The Dusty," the Nehemiah Project. We're very, very proud of it. Jeremy Nowak, President of the Reinvestment Fund. David Thornburgh, Pennsylvania Economy League. Carl Greene is at a graduation where I'm supposed to be guest speaker. He's not here. Richard Sauer, President Philadelphia Association of CDCs. I see my friend Steve Culbertson who has been here. He may be here as well. Finally, EPOP's Gordon Whitman who is part of this group. (Witnesses come forward.) 69 12/12/01 FINANCE COMMITTEE - BILL 010694
We're very happy to have you speak in any order. Thank you very much. Identify yourself and make your testimony. We do thank you for your patience.
My name is Reverend Isaac Miller. I'm testifying on behalf of Philadelphia Interface Action and the 30 congregations and organizations throughout the City that PIA represents. The Neighborhood Transformation Initiative, NTI, is the best and boldest plan to rebuild the City of Philadelphia. PIA has labored hard to bring such a plan about. For over a year PIA pressured Mayor Street to come up with a plan that was large enough in scale to address the magnitude and the depth of the crisis that has caused our City to sink and crumble. Mayor Street did. On April 19th, nearly eight months ago, Mayor Street presented to you, the City Council and to us, the citizens of this City, his Neighborhood Transformation Initiative. NTI will do what no other initiative has ever done. It is a public safety and a pre-development strategy. NTI means that 14,000 70 12/12/01 FINANCE COMMITTEE - BILL 010694 abandoned, mostly dangerous buildings will be demolished. Not only will NTI make the City safer for our firefighters, police officers, children and residents, it will create the opportunity to reconstruct. NTI will create buildable sites where developers, both for profit and not-for-profit, can build a wide range of new developments. New construction is the key to turning the tied on the massive evacuation of people leaving the City. You can't have a City when people a day are packing 13 their bags and moving out. The only winners are the 14 moving companies. 15 PIA knows this can work because our sister 16 organizations in the Industrials Areas Foundation 17 have done it. We have built over 5000 Nehemiah 18 homes. Rebuilding an entire section of Brooklyn and 19 the South Bronx. In East Brooklyn the number of 20 murders went from 126 to 10. Home improvement loans 21 doubled in areas around the new Nehemiah Homes. 22 Major new commericial developments opened. 23 Here in Philadelphia, as you have just 24 mentioned, PIA tried to build 1000 Nehemiah Homes. 25 We successfully built 135 in West Philadelphia. Why 71 12/12/01 FINANCE COMMITTEE - BILL 010694 didn't we build 1000 homes? Because then Mayor Rendell would not deliver buildable sites for construction. This is a City that is losing population. This is a City where land is our greatest asset. But as long as the land is hidden, no developer will build. NTI will make the land buildable and available. The right role for government is to do the pre-development work, not to micro-manage the market. The City suffered 30 years of government neglect dominated by a culture of avoidance and denial. Now you, the Members of City Council and Mayor Street, must regain the ground lost under Mayor Rendell and previous Administrations. You cannot do that if you continue to delay. You cannot do that if you continue to put what most citizens consider to be re-districting ahead of the life and death of communities. You cannot do that if you and the Mayor allow personal disputes to get in the way of resolution. We are here to ask you to be leaders in making NTI a success. For that to happen, this Finance Committee and City Council as a whole must 72 12/12/01 FINANCE COMMITTEE - BILL 010694 approve NTI. We know there are now two versions of NTI; the City Administration's plan and Council President Verna's plan. PIA believes the Mayor's plan is superior. However, PIA understands that there needs to be a compromise. In fact, we offered to host talks between the Mayor and Council President to come to an agreement. There are two things that threaten the success of NTI. One is not starting. The biggest threat to NTI is not starting. PIA is asking you to reach a reasonable agreement and to vote on it by December 20. No one wins with further delay. The second threat to the success of NTI is over controlling and micro-managing. If City Council insists on micro-managing NTI, then you will strangle it. You will kill it. You will guarantee its failure and the death of the City.
President Verna's amendment this morning goes some way to alleviating these concerns. But her bill will still burden the City Administration with too much bureaucracy and red tape. It will guarantee that our City will never compete with Conshohocken and West Chester. The only thing built in Philadelphia will be the little efforts that have 73 12/12/01 FINANCE COMMITTEE - BILL 010694 dotted the landscape for the last 30 years. The exodus of people out of the City will continue. To conclude my testimony, we in Philadelphia Interfaith Action call on this Finance Committee and the City Council as a whole to move forward on NTI. Reach a reasonable resolution that does not compromise the success of NTI. Vote on NTI by December 20. We've had people who have had to leave because of the amount of time that has been taken. Let me summarize the comments of Reverend Geneva, First Reform United Church was going to make to you. I believe you've got copies of it. On behalf of Reverend Geneva, last week, I and five representations from five Center City congregations met with Councilman Frank DiCicco to express our concern that the Neighborhood Transformation Initiative be passed by December 20. Councilman DiCicco told us last week he thought it would be political suicide for City Council not to pass an NTI bill. The time is running out. Less than ten days remain. We urge you to move on the Mayor's plan because it coordinates and streamlines the management process so that all segments of the City can cooperate to 74 12/12/01 FINANCE COMMITTEE - BILL 010694 make NTI successful. It would be tragic if members of City Council were the ones to block this bold initiative because of internal squabbling. The citizens of Philadelphia expect more from their elected leaders. This is on behalf of Reverend Gordon Simmons from Reformation Lutheran Church since he had to leave. First, PIA has members and allies in every City Council district in the City. And your district, Councilmember Tasco, we have five member congregations. PIA as a whole in these institutions, and residents in particular, want to make it clear to you that we're looking forward to your leadership on this issue. We're tired of delay. PIA is also clear that NTI is a plan to rebuild the City, not one neighborhood over another. It is time to stand for the whole. Philadelphia is greater than some of it parts. Some areas are more blighted than others. Different areas will need different kinds of investment. NTI will fail if the central question becomes narrowly asking, What's in it for me? Again, on behalf of Reverend Simmons, I 75 12/12/01 FINANCE COMMITTEE - BILL 010694 conclude, we in Philadelphia Interfaith Action call on this Finance Committee and City Council as a whole to move forward on the NTI, reach reasonable resolution that does not compromise success. Vote on NTI by December 20. Thank you.
I thank you and appreciate your comments. I appreciate the comments of Reverend Simmons. I would like to say that the people of the district elected me to be their representative in government. They elected me to be a responsible representative. They elected me to review, analyze and make decisions based on the things that are before me. In the end on NTI, my question has always been, what will the City look like from today's map to tomorrow's map? In the end, they're going to ask me, what did it mean to the 9th Council District? That is not being narrowly focused. That is representing my district in the 9th Council District 76 12/12/01 FINANCE COMMITTEE - BILL 010694 who sent me here to represent them. As I sit and deliberate, that is what I'm doing. I'm exercising my leadership to make sure they're taken care of in the NTI program.
Thank you. I appreciate the opportunity to respond. You asked what the City will look like? One, I think the City of Philadelphia when we pass NTI that makes sense and stands the chance for success, I think it would look like a model for the nation as a whole for what the whole of the nation struggles to do, especially since the terrible strategy of September 11. We've got to figure out how in the world we, as a country and a nation, move forward in ways that really honestly bring some hope and some meaning for the country and the democracy that we hold dear. I believe that you'll see a City of Philadelphia that's an example for all of the great older cities of this country. Cities that the reputation of this country were built on beginning to stand and rise again. A place where folks are not leaving our communities, where institutions like 77 12/12/01 FINANCE COMMITTEE - BILL 010694 the church that I represent doesn't have to beg, borrow and steal for talented people in the pew so that the work of the church can begin to happen. I think you're talking about a City where neighborhoods are beginning to blossom again with good, solid people that once moved to Jersey and beyond City Line Avenue begin to say we want to come back to the City because it was once great and it is in the process of being great again. I think the same thing applies to your district, Councilwoman Tasco. We're not trying to tell you how to vote. We're trying to speak to you in a sense of the kind of hope and concern, the vision that we have for the City that member institutions in your district have for the district and for the City as a whole.