Come on. We16 work for you.17 I've kind of lost track after18 Mr. Wolf. So state your name for the19 record and begin your testimony, please.20
My name is Arty21 Elgart. I'm a Philadelphian and a22 wholesale owner of supply business. 24 We employ 85 employees. We have 8525 111 2/8/11 - TRANSPORTATION - RES. 3 I've been there for 20-some years and4 more recently in my new building for the5 last ten years. 19 At one time while I lived in The20 Philadelphian, which is the apartment21 house just adjacent from the Art Museum,22 I lived there for a bunch of years. And23 eventually at one point in time I was24 asked to join the Board, and I was on the25 112 2/8/11 - TRANSPORTATION - RES. 1008141 Board. I ran for office and I was on the2 Board there. We had a problem, not just3 The Philadelphian, but 2601, The4 Philadelphian, the Parkway House and all5 the other towers all over the City, and6 the problem was that when they built all7 these buildings in, I believe, the 1940s8 or '50s the 2601 was built, the size of9 the water meter was extremely large,10 larger than what they needed to support11 the water usage in the building. The12 Philadelphian has 769 apartments. That's13 including office buildings on the first14 floor. 17 Again, you have an apartment house, you18 have a roof that's three sections, The19 Philadelphian, which faces the Art20 Museum, and the water on the roof -- we21 have a small roof, but we also have22 seven -- I guess closer to a thousand23 toilets. My building, I have 12 toilets,24 and in my building I have some urinals,25 113 2/8/11 - TRANSPORTATION - RES. 1008141 and that's all the water we use. My bill2 is $300-and-some a month. 4 But getting back to The5 Philadelphian, they complained and the6 homeowners -- not the homeowners, but the7 association for all the high rises and8 parking lots complained that they were9 paying too much money for water. The10 Water Department agreed and said, You're11 right, we have to kind of spread this12 out. Hence I believe that this was the13 beginning of this whole thing. This is14 what started it. And there was no15 thought. They did not let businessmen16 know. We were told that they spent17 $100,000 advertising, and Jack Kramer,18 who happened to run the deli, he owns no19 property that I know of in the City of20 Philadelphia. He rents. He's in the21 deli business. And he's the only one22 that showed up. One businessman. Yes,23 they called Rohm and Haas. 25 114 2/8/11 - TRANSPORTATION - RES. 1008141 They didn't call the businessman, the one2 who is going to get squeezed the most,3 the in-between guy, the wholesaler, the4 distributor. And that's what you have of5 people behind me. You have real estate6 people. And the water tax is what it's7 really called. They call it an8 assessment. 9 It's a tax. 10 It's also protected. If you11 look at the Sterling Act of 1932, check12 on . Okay? I've read it. It's13 illegal what they're doing. It is not14 legal to just tax people and not give15 them anything more for their taxes. Do16 something. Provide a service. Do17 something different. Do something18 different. If they're going to spend the19 money on the water system and change the20 sewers, the underground, the21 infrastructure, that's one thing. That's22 not what is happening. They're depending23 on the businessman. And no one has24 touched about the wages and the people in25 115 2/8/11 - TRANSPORTATION - RES. 8
Good morning. My9 name is Wesley Firkin. I'm the Property10 Manager for WTA Real Estate Management11 Company. I represent the Thackray family12 from Thackray Crane Rental. Thackray has13 been in Philadelphia for over 75 years.14 I'm sure if you've seen a Thackray crane15 before, you've seen it building the Linc,16 working on City Hall, putting up the17 Comcast building. I think you know what18 kind of service we provide for the City19 of Philadelphia. Extreme amount of20 loyalty as well.21 Our properties are industrial22 properties. Some are owner occupied,23 some tenant occupied. Our company and24 the majority of our tenants mostly25 116 2/8/11 - TRANSPORTATION - RES. 1008141 consist of businesses in the2 construction, property and auto repair3 and maintenance, and distribution4 industries, and we employ lower- to5 middle-income people, also known as6 blue-collar folks. We have jobs like7 crane operator, truck driver, mechanic,8 machinist, handler, secretary, processor9 and janitor. What we consider a big10 business may employ 50 to 100 people, and11 there are dozens of small businesses that12 employ only two or three people that only13 exist to provide services to these larger14 businesses.15 Over the past three years now,16 I've seen several of these small17 businesses, some of them our tenants that18 employ two to three, maybe up to even ten19 employees, go completely out of business20 or, in their words, flee the City of21 Philadelphia and move to Bucks County,22 Montgomery, Delaware, even New Jersey.23 I'm now dealing with the prospect of24 losing some of our larger business25 117 2/8/11 - TRANSPORTATION - RES. 1008141 tenants and customers of our own company.2 And just to even consider moving Thackray3 Crane Rental anywhere other than4 Philadelphia isn't even something I want5 to even discuss. That's a scary idea.6 Of the top 1,000 losers on this7 stormwater fee list, I manage five of8 those properties. Before the increase to9 the stormwater, the combined annual bills10 for these properties was about 14,000 per11 year. After this increase, just these12 five properties alone are going to equal13 163,000 per year. That's a 1,130 percent14 increase. This is an additional $148,00015 in operating expenses.16 The average annual increase for17 these five properties is about $30,00018 per year, a typical 40-hour job. Per19 week this is -- this equates to five20 jobs. Five jobs. That's what we're21 talking about. It breaks down to about22 $14 an hour. It's two times the minimum23 wage, when you look at these numbers.24 How do you make up this difference?25 118 2/8/11 - TRANSPORTATION - RES. 1008141 I want to use one quick2 example. Thackray Crane's headquarters,3 2071 Byberry Road, right now our PWD bill4 is about $2,700 per year. That's going5 to now become $35,000 per year. That's a6 1,285 percent increase over four years.7 That's kind of tough to swallow.8 Compare a $32,000 increase in9 the stormwater fees for this one property10 to our real estate taxes in 2010, which11 were about 58,000, these stormwater fees12 are the equivalent of a 55 percent real13 estate tax increase. Why not just raise14 our real estate taxes 55 percent over the15 next four years? Try that on. Try that.16 Try running on that or presenting that to17 the public. Since the real estate taxes18 have already been increased ten percent19 for 2011, that's only 15 percent per year20 more for the next three years.21 I've spent an entire year22 trying to research this and get a handle23 on it. So one quick suggestion before we24 can -- why not freeze the increase at 2525 119 2/8/11 - TRANSPORTATION - RES. 1008141 percent right now. Just freeze it until2 we can figure this out.3 That's all I have to say.4 Thank you.5 (Applause.)6
Thank you7 for your testimony.8 Can we call the next panel, or9 do we have some more from this panel?10
Thank you. We14 leave it in your hands. We're not going15 to let this go, because we can't, and we16 can't afford to. So we really hope and17 pray that you guys will take care of us.18
We are19 taking this seriously, the members of the20 Committee and the Administration. You21 know, believe it or not, it's in our best22 interest to keep you in the City and be23 competitive with the surrounding counties24 and to make sure that you employ people25 120 2/8/11 - TRANSPORTATION - RES. 1008141 and, God forbid, pay a tax or two. So2 we're going to take this into3 consideration and work with the4 Commissioner and the Administration to5 figure this thing out. All right?6
Thank you8 for your time and taking the time off9 today.10 Can the Clerk introduce the11 next panel.12
Joe Starosta, Alex13 Grella, Michael Chapman and Kenneth14 Curry.15 (Witnesses approached witness16 table.)17
Thank you,18 gentlemen. We're going to move right19 along. If you could just decide who is20 going first. State your name for the21 record.22
Could you25 121 2/8/11 - TRANSPORTATION - RES. 1008141 spell that, Joe?2
S-T-A-R-O-S-T-A.3 I'm the Vice-President of Plant4 Operations for Case Paper Company.5
It's in the 7th8 District on Tioga Street.9 Case Paper Company occupies two10 buildings with nearly 600,000 square feet11 of roof area, located on Tioga Street in12 the 7th District. We have been at this13 facility for 25 years as a paper14 converter and distributor, employing 15015 union and salaried employees who enjoy16 good manufacturing wages, company-paid17 medical, dental and pension benefits. We18 operate our own union trucking fleet and19 have customers all over the United States20 and Canada. We even export outside North21 America from time to time and are proud22 that we contract out very, very little23 work. While our sales volume is very24 large with approximately 9,000 truck25 122 2/8/11 - TRANSPORTATION - RES. 1008141 loads shipped out of the facility every2 year, regretfully paper is sold in3 pennies per pound. The margins in this4 industry are tight, and nearly all of our5 customers are somewhere other than6 Philadelphia. All of our competitors are7 located outside of Philadelphia.8 Just over 11 years ago, Case9 Paper had decided to move outside of10 Philadelphia into Bucks County. This11 would get us closer to New York, which12 was our prime market at the time. Land13 was purchased and plans were drawn up for14 a new building. It seemed like we were15 going to follow Roosevelt Paper, one of16 our closest competitors, who moved out of17 Philadelphia for New Jersey a few years18 before. Through the hard work of members19 of Philadelphia government, including20 then Mayor Rendell, and owners of Case21 Paper, we found a way to stay. Since22 that time, we have invested well over $2523 million in repairing a building that is24 falling apart while modernizing our25 123 2/8/11 - TRANSPORTATION - RES. 1008141 equipment. We recently spent just under2 $1 million to replace one-third of one of3 our building's roofs.4 Right now I am pleased to say5 Case Paper is competitive in a very tough6 market because of the investments we made7 in modernizing our equipment. In 2010,8 we were able to add four employees to our9 payroll and essentially eliminated10 contracting out of any of our11 manufacturing work. Frankly, had we not12 invested, I don't see how we would be13 here talking to you today as employees of14 Case Paper.15
Excuse me.16 Gentlemen, could you take your17 conversation outside. Thank you.18
I will be19 candid, though. The future will be a20 challenge. We compete with companies who21 are located closer to our customers, do22 not pay union wages, contract out all of23 their manufacturing and are foreign based24 while subsidized by their government. At25 124 2/8/11 - TRANSPORTATION - RES. 1008141 the same time, we recognize that labor,2 pension, medical and trucking costs,3 which are a significant part of our4 business costs, are not going to stand5 still.6 We respectfully request that7 Councilmembers reconsider the addition of8 the stormwater charges. This will allow9 us to continue to focus on making added10 value investments to our business.11 Thank you.12
Thank you.13 We're going to have to try to14 be persuasive, because we can't make the15 decision. If we could change it, I think16 it would have been changed already. The17 Charter is clear on that. And hopefully18 with the Deputy Mayor and the new Water19 Commissioner here, we can have a20 conversation about that and maybe we'll21 go in the right direction.22 Thank you.23
Good afternoon24 and thank you. My name is Michael25 125 2/8/11 - TRANSPORTATION - RES. 1008141 Chapman from Chapman Auto Group. I2 represent myself with three locations in3 the City of Philadelphia, as well as the4 Auto Dealers Association of Greater5 Philadelphia.6 ADA, the Auto Dealers7 Association of Philadelphia, is a8 regional organization of 179 new car9 dealerships. We have less than 20 in the10 City of Philadelphia today. We employ11 about a thousand individuals, most of12 whom live in the City. These dealers13 represent significant tax revenues for14 City government, specifically City wage15 tax, close to $2 million, business taxes,16 more than a million and a half, as well17 as sales tax generated for 700 million in18 sales for the state.19 It is no secret that the20 current recession has hurt the auto21 industry especially hard. Just a year22 ago, dealers first started hearing about23 this new fee structure through an insert24 in our water bills. So when we learned25 126 2/8/11 - TRANSPORTATION - RES. 1008141 our bills might increase by hundreds of2 thousands of dollars, we immediately3 requested a meeting with the Water4 Department last March. We were told that5 we had been -- that they had been working6 on the new system for over a decade,7 resulting in regulations being put in8 place in 2009. At no point did it occur9 to anyone to reach out to the auto10 dealers, despite their literature11 frequently citing our industry as one of12 the most negatively impacted by their13 proposal.14 We as an industry were15 disappointed that the Water Department16 did not appear to be concerned about17 their actions' impact on struggling18 businesses. So we turned to Council19 President Verna, who coordinated a20 meeting and urged that some type of21 financial assistance program be created22 to help businesses implement stormwater23 improvements. In June, we were told such24 an incentive program would indeed be25 127 2/8/11 - TRANSPORTATION - RES. 1008141 created, but we received our new bills in2 July without any new details. In3 November, a program did appear, and it4 turns out that the PIDC does not feel the5 auto dealers would qualify for their6 assistance.7 Just a point, they were8 offering up $5 million. The impact if9 all the auto dealers were to comply so10 they would have zero increase would be11 over $22 million.12 The ADA wants to support the13 sustainability efforts of the Nutter14 Administration, but we do not support the15 idea that businesses on whom the most16 rain falls must be the ones penalized.17 This proposal will increase rates on many18 of our dealers tenfold. On top of this19 Administration's recent property and20 sales tax increases, many dealers in the21 City are fearful for their ability to22 stay in operation.23 We understand that the state24 mandated that the City create a25 128 2/8/11 - TRANSPORTATION - RES. 1008141 stormwater management plan, but we also2 heard that the state DEP has given3 extension to other cities and counties4 across the state in order to prepare for5 the impact. We ask that City Council6 push the Water Department in requesting7 an extension, and we also ask that City8 Council instruct PIDC to improve the9 incentive program so that businesses will10 be able to utilize it to improve their11 stormwater management while surviving12 these increased fees.13 Several decades ago most of our14 dealerships were located within the City,15 but today the vast majority of these16 dealerships have closed or moved to the17 suburbs. Various City policies over18 those decades helped accelerate that19 exodus, and I ask that you not increase20 the burden on the dealers that have21 chosen to stay in Philadelphia.22 Thank you very much.23
Thank you.24 Please begin your testimony.25 129 2/8/11 - TRANSPORTATION - RES. 1008141
Good afternoon,2 Chairman Jones, Councilman O'Neill. My3 name is Alex Grella. 11 I am on the executive committee12 for Building Owners and Managers13 Association of Philadelphia, commonly14 known as BOMA. For a point of reference,15 BOMA Philadelphia is a non-profit16 organization whose members provide over17 117 million square feet of workspace in18 and around the tri-state area. In the19 City of Philadelphia alone, BOMA member20 buildings provide approximately 4421 million square feet of office space for22 over 200,000 building occupants and23 employees. Our member buildings define24 the skyline and are a tremendous economic25 130 2/8/11 - TRANSPORTATION - RES. 2 BOMA and its member buildings3 have long supported the implementation of4 a parcel-based stormwater fee structure5 that is currently being phased in by the6 Philadelphia Water Department. 13 Under the previously imposed14 meter-based billing scheme, we might well15 ask, How does the size of a water meter16 correlate to a property's contribution to17 stormwater? The short answer is, There18 is no correlation. For example, we offer19 a 32-story high rise which would20 typically occupy a parcel of21 approximately 25,000 to 35,000 square22 feet of impervious surface. This same23 property would be served by a three-inch24 meter and often, for redundancy purposes,25 131 2/8/11 - TRANSPORTATION - RES. 1008141 a second meter of equal size would be2 installed. For two three-inch meters the3 cost for stormwater management would be4 approximately $1,365 a month, or $16,3765 a year. 13 We would also consider a car14 dealership occupying approximately15 152,000 square feet having two restrooms16 and a few hose connections being fed by a17 single one-inch meter. They would pay18 $116 per month, or $1,387 per year for19 its stormwater contribution. 22 As these examples clearly23 demonstrate, those properties occupying24 the least amount of impervious surface25 132 2/8/11 - TRANSPORTATION - RES. 9 From our perspective, our members should10 not be required to shoulder the burden11 and subsidize those who are not paying12 their fair share. 21 We recognize that whenever22 there is a change in the system, there is23 some adjustment required for all parties24 involved. Those who pay the lower rate25 133 2/8/11 - TRANSPORTATION - RES. 1008141 under the meter-based system will2 presumably be paying a higher rate under3 the parcel-based system. 7 BOMA endorses the suggestion8 that the City's stormwater runoff and9 sewage system be made more efficient so10 that the City's businessowners and11 residents alike will benefit from a12 cleaner city. 21
I just22 have a question. I understand what23 you're saying. There's winners and24 losers, and your people are winners25 134 2/8/11 - TRANSPORTATION - RES. 1008141 because they've been losers. I mean, if2 you reverse it.3 The question of implementation4 and phase-in and all that I think are5 different issues that mostly have been6 discussed today and fairness going in7 that regard, but there's another issue.8 Is the Commissioner still here?9
It's not12 before us, but, Commissioner, you might13 as well comment on it.14 Sixty percent of this city15 still lives in the pre-1945 world of16 combined systems, the older parts of the17 City. Newer parts built since about 194518 or so are in separate systems, separate19 pipe coming in and out for water and a20 separate pipe for sewage. So that if you21 live in a combined area or your building22 is in a combined area -- and most high23 rises are in combined areas because24 they're nearer to Center City -- all your25 135 2/8/11 - TRANSPORTATION - RES. 1008141 water, in addition to all your sewage, is2 very expensively treated at the water3 treatment plants. Separate systems, very4 efficient. Their water goes out to the5 creeks and tributaries and eventually the6 river, and only their sewage is treated.7 That's number one.8 Number two -- and that's not9 treated that way. We're not billed10 accordingly. There's no lower bill for11 separate systems than there are for12 combined systems.13 Secondly, the gentleman who was14 here -- and I believe he left --15 mentioned that his business has 1316 toilets and where he used to live has17 1,300. I don't think there's any sewage18 volume bill in place or has ever been.19 I've never heard of it anyway. But20 certainly in fairness and equity, if21 somebody had 1,300 toilets and somebody22 had one toilet, you'd think that23 something is wrong with this program if24 that's not fairly split up between the25 136 2/8/11 - TRANSPORTATION - RES. 1008141 one and the 1,300. And I don't think it2 is.3 So you're saying your industry4 would be in favor of tackling the sewage5 system the same way we're tackling6 stormwater, by drilling down as far as we7 could to see how we can more equitably8 charge those producing the sewage and9 sending water into the treatment plants10 more than the people who don't have much11 sewage and are taking their water and12 sending it through a separate system13 directly, not to the treatment plant but14 directly to the streams and eventually15 the river. And you don't have to answer16 that, but I want to ask the Commissioner,17 first of all, if he's heard anything18 worthwhile today, new -- I know you're19 not new at the Water Department, but new20 on the block in this position. It's one21 thing to do things in a capsule -- and22 oftentimes in our offices, statistically23 everything is working out well, we know24 we're being fair to this group and that's25 137 2/8/11 - TRANSPORTATION - RES. 1008141 going to cost this group, but it's still2 fair. And those issues that the Chairman3 mentioned and that others have mentioned4 dealing with, wow, did you really think5 through 14,000 to 160,000 and the6 Thackray example for five buildings and7 the others that have been mentioned?8 But, first, if you could talk about9 the -- is there any plans to keep trying10 to be as fair as possible and getting11 into the sewage costs, which are12 enormous? Sewage treatment, that is.13 COMMISSIONER NEUKRUG: First of14 all, in terms of the sewage treatment,15 there is a wastewater sewer bill. That's16 separate from the stormwater bill, and17 we're very careful about separating those18 two.19 In terms of the stormwater20 costs, we recognize that there are21 different types of treatment for22 stormwater in a separate system than in a23 combined system, but the reality is is24 that there are significant costs25 138 2/8/11 - TRANSPORTATION - RES. 1008141 associated with all stormwater, and as a2 matter of fact, much of our program is3 based upon looking at stormwater4 similarly throughout the City and5 managing stormwater on the land before it6 gets into our sewer system.7 So there are significant costs8 associated with different parts of our9 programs. Some are unique to stormwater,10 some are unique to combined sewer11 systems, but all in all, it seems to12 measure out.13
Well, you14 agree that it costs you more to treat15 water that didn't need treating at the16 sewage treatment plants for 60 percent of17 our customers than the other 40 percent18 who have separate systems and only send19 sewage there?20 COMMISSIONER NEUKRUG: Only if21 you're only looking at the cost of22 treating the rainwater at the sewage23 treatment plant, which, of course, is an24 expense, but also our programs involve25 139 2/8/11 - TRANSPORTATION - RES. 1008141 defective lateral systems, which are2 unique to the separate system. We're3 looking at our rivers and streams, like4 the Poquessing and the Pennypack, and5 you're looking at issues there. So there6 are a significant level of costs. And if7 you look at any one spot in the world,8 there would be unique circumstances9 dealing with the water, wastewater and10 stormwater issues.11
Right, but12 I just want to know if the Water13 Department is also working on the14 inequities involved. You're never going15 to convince me that sending that water16 that doesn't have to be sent to the water17 treatment plant and as expensive as water18 treatment is, that there's not a19 different cost. I don't care if it's not20 double, if it's a minor cost. Is anybody21 looking at, hey, we're going to start22 doing this in an equitable way? That's23 the first question.24 COMMISSIONER NEUKRUG: And to25 140 2/8/11 - TRANSPORTATION - RES. 1008141 answer that first question, I believe2 that we've been looking at how to do this3 most equitably, and I believe that we4 have found this equitable balance here5 between stormwater and wastewater. There6 are other factors such as I&I,7 infiltration and inflow, into a separate8 system that -- a sanitary system that9 does go to the wastewater treatment plant10 also. So it is a very -- it's a much11 more complicated discussion than perhaps12 right here.13
I would14 agree on that, but I've never heard that15 combined systems don't cost more because16 of the treatment of things that don't17 have to be -- of product that doesn't18 have to be treated than separate systems,19 which may not be cost free on the water20 side, but we're not sending them to --21 COMMISSIONER NEUKRUG: And22 whose costs are going to go up in the23 near future because of new regulations on24 the stormwater system being put together25 141 2/8/11 - TRANSPORTATION - RES. 1008141 by EPA. So we are looking -- it is a2 balancing act, and perhaps I can say I3 should get back to you before I --4
Okay.5 Now, the real question is -- because it6 came up today, and I think the gentleman7 was making a point. He may not have8 stayed, but I'd like to know whether9 he -- give me the 1,300 toilets versus10 the 13, or whatever it was. Are they11 equally charged for the amount of sewage12 they produce that has to be treated?13 COMMISSIONER NEUKRUG: Yes,14 they are.15
How do you16 do that?17 COMMISSIONER NEUKRUG: We do18 that through the usage of the water19 measured by the water meter.20
Okay.21 COMMISSIONER NEUKRUG: The22 assumption is that some percentage, some23 very high percentage, of all the water24 that's consumed in the water meter also25 142 2/8/11 - TRANSPORTATION - RES. 1008141 goes through the toilets and other2 apparatus in the homes and businesses.3
Well,4 thank you. If I see him again, I'll tell5 him about that, because I had not thought6 that through.7 The last thing is, I'm not8 going to argue that what you're trying to9 do isn't equitable in the long run. If10 we could have a magic wand and it didn't11 cost anybody anything, winners and12 losers, it was small amounts going here13 and small amounts coming from there, but14 these are fairly enormous amounts. Do15 you have any intention to review this as16 to whether there's any way you can soften17 the blow?18 COMMISSIONER NEUKRUG: Well,19 first let me agree with you and I think20 you make a very good point and I think21 it's been well heard here today, and I22 think the people at Philly Water have23 understood this for a while, this idea24 that, yes, it's a good idea, what we're25 143 2/8/11 - TRANSPORTATION - RES. 1008141 doing seems to be fair and appropriate2 and cost neutral, but there are a heck of3 a lot of people out here, who we've4 witnessed today, who are going to be in5 trouble with this new rate.6
And they7 all played by the rules and the rules8 changed.9 COMMISSIONER NEUKRUG: And we10 want to work with them. We feel like we11 have been working with them, but clearly12 from the sentiment I heard here today,13 we're going to have to double our efforts14 and try even harder. The problem is is15 that someone in the City of Philadelphia16 is going to have to pay the stormwater17 bill. So for every dollar we don't18 collect from the true cost of service19 analysis goes somewhere else, either to20 another business or to a homeowner.21
Right.22 COMMISSIONER NEUKRUG: So23 that's the balancing that we're doing24 here.25 144 2/8/11 - TRANSPORTATION - RES. 1008141 So we want to help as best we2 can, but we have to recognize that we are3 a utility that doesn't print money like4 you guys -- like the City of Philadelphia5 doesn't, and we need to have a balanced6 budget at the end of the day. So the 1207 million is what we need to bring back in,8 and we need to find a way to do that9 equitably and to provide the least amount10 of pain as possible to all our good11 customers.12
I'd love13 to work with you on that, and I want to14 reemphasize that you could not have a15 better staff out on the street trying16 to -- they can't change this system17 that's in place right now. You can, but18 they can't. But given that, they19 couldn't be trying to be more helpful.20 They have really worked hard.21 Thank you.22 COMMISSIONER NEUKRUG: Thank23 you.24
Thank you,25 145 2/8/11 - TRANSPORTATION - RES. 1008141 Councilman.2 Before you go, this loan3 program is strictly for businesses?4 COMMISSIONER NEUKRUG: Yes, it5 is.6
So let me7 get this -- you weren't here, but I get8 to give that presentation to your9 predecessor on Thursday for his years of10 service. But do you not recall me asking11 for the same program for laterals for12 residential customers? Do you not13 remember me asking to have the dual14 lateral problem and having these kinds of15 special programs?16 COMMISSIONER NEUKRUG: Well,17 regardless of -- I trust that the answer18 is, yes, you did ask. I was not here for19 that, but I'd be happy to relook at that.20
I'll23 definitely be in that discussion. That's24 been going on for 20 years.25 146 2/8/11 - TRANSPORTATION - RES. 1008141
Thank you so6 much.7 Are there any other folk here8 to testify? Okay.9 Thank you. We're winding down.10
Yes. I'll make it11 short and sweet, I hope.12 My name is Ken Curry and I'm13 Director of Facilities with Cardone14 Industries. With me today somewhere in15 here is Brian Preski. He's esquire on16 behalf of Cardone as well. We appreciate17 the opportunity to express some of our18 concerns here with respect to the19 additional fees imposed upon businesses20 such as ours by the PWD implementation of21 new stormwater runoff fees.22 Given the stated reason for the23 implementation of this new fee and the24 environmental stewardship that it hopes25 147 2/8/11 - TRANSPORTATION - RES. 1008141 to foster, I can tell you that the very2 nature of Cardone's business is an3 environmentally conscious model. Cardone4 restores used automotive parts back to5 their original equipment quality using6 only about 15 percent of the energy7 needed to build a new part. These parts8 would otherwise end up in a landfill or9 scrapped for their raw material value.10 Cardone Industries was awarded the11 Governor's Award for Environmental12 Excellence in 2003 and 2007.13 The remanufacturing of used14 parts is not the only area in which15 Cardone is environmentally friendly. In16 addition to the 60,000 tons of discarded17 or non-usable auto parts that Cardone18 remanufactured, the company also recycled19 the waste and by-products generated20 during the remanufacturing process.21 Eight thousand five hundred tons of scrap22 metal, 6,800 tons of cardboard, 2,50023 tons of municipal waste were recycled24 into electrical energy, the equivalent of25 148 2/8/11 - TRANSPORTATION - RES. 1008141 approximately 1.8 million kilowatt hours.2 Fifty-three thousand gallons of waste oil3 recovered from cores and cleaning4 processes were recycled into fuel. Seven5 hundred and twelve tons of wood skids6 were sent to a recycler and reused, and7 the list goes on and on.8 Simply put, I am here to relay9 a very simple message. Cardone employs10 over 4,000 Philadelphians. We are part11 of the neighborhood and have made every12 effort in recent to stay a viable company13 in the face of competition from Mexico,14 India and China. That has made us very15 cost conscious, not only for the company16 but for the people that we employ.17 Cardone has become more than18 just an employer. We have endeavored to19 become interwoven into the community in20 which our facilities are located. We21 have opened a healthcare facility on site22 for our employees, and just recently, we23 also even plowed the streets around our24 buildings in Philadelphia to relieve the25 149 2/8/11 - TRANSPORTATION - RES. 1008141 load off of the City.2 That being said, these3 excessive charges will have a negative4 effect upon our ability to continue to5 conduct business in Philadelphia. As you6 are aware, our current fee is based on7 water meter, but will change to be based8 on property size and area of the property9 that are impervious, such as asphalt,10 building, concrete, et cetera. We have11 calculated the potential cost to Cardone12 and we believe that this additional cost13 will impact Cardone for an estimated14 $410,000 a year.15 We must be cognizant of these16 additional charges and the impact they17 have upon our business and our ability to18 continue in the face of the international19 competition that seeks to undercut our20 prices. We ask you for your help in21 getting relief from these fees.22 Thank you for the opportunity23 to speak here today.24
And thank25 150 2/8/11 - TRANSPORTATION - RES. 1008141 you for your environmental stewardship.2 That was impressive by way -- and I think3 understated a lot of times how companies4 are beginning to evolve, one, because of5 social consciousness, but also it impacts6 their bottom line to reduce, reuse and7 recycle. So it makes a lot of sense.8
I remember10 when you were our largest private11 employer and you had about 1,700. So12 4,000 is really a great story as well.13
Citizens for23 Pennsylvania's Future, PennFuture, and24 Pennsylvania Environmental Council.25 151 2/8/11 - TRANSPORTATION - RES. 1008141 (Witnesses approached witness2 table.)3
Thank you.4 State your name for the record and you5 can begin your testimony.6
Good afternoon.7 I'm Patrick Starr. I'm Senior8 Vice-President of the Pennsylvania9 Environmental Council, and I wanted to10 thank you for this opportunity to speak11 today. I have copies of my testimony12 here. I will depart completely from my13 written testimony, given what we've heard14 this afternoon, and comment on some of15 the things that have occurred. And I16 just want you to know the Council is a17 statewide organization that does have18 hundreds of business members, and so I'm19 very sensitive to some of the things20 being discussed here today.21 I want to go back to some22 basics. Stormwater runoff is not an act23 of nature. It is an act of manmade24 changes to the land. I think everybody25 152 2/8/11 - TRANSPORTATION - RES. 1008141 here understands that. And in some ways,2 you could say the stormwater runoff is a3 pollutant. And I think we have a general4 agreement in our society that the5 polluters should pay for the pollution6 they cause. And so I just want to say7 that this is a fee because we are8 allocating fairly the cost of the runoff9 to those who generate the runoff. And so10 that is where it is a fee, not a tax, and11 I think you all understand that, and I12 just wanted to kind of underscore that13 point, which is also embedded in my14 testimony.15 That said, you know there's a16 list of 1,000 top winners in this city in17 terms of this fee. You could requisition18 that 1,000 top winners list and you could19 review it. You will find there are20 thousands of other winners on that list.21 Gentlemen, you're elected22 officials. You know that the winners23 very rarely show up at public hearings.24 It's the losers who show up at public25 153 2/8/11 - TRANSPORTATION - RES. 1008141 hearings. So it might be interesting to2 hear the economic impact to the winners3 of the jobs they might create with their4 reduced stormwater fees, of the5 investments they might make with their6 reduced stormwater fees.7 So I just think that it's8 important to take into account that9 unless my math is wrong, Councilman, in10 answer to your question, what would be11 the average change in the stormwater fee,12 it's zero. If it isn't zero, then13 they're lying to us. I understood that14 this was a neutral, cost neutral, change15 in fees. So zero is the average change.16 That means somebody is winning and17 somebody is losing.18 Now, what is this really about?19 It is about that no one likes the rules20 of the game to be changed in mid play.21 We all know that. We all hate that.22 It's annoying, and it has real impacts on23 the losers. Real. I mean, these could24 be disastrous in some cases.25 154 2/8/11 - TRANSPORTATION - RES. 1008141 So I want to compliment you on2 focusing on the equitable approaches to3 the impacts on the losers, because we4 don't want to lose their jobs. We don't5 want to lose their commitment to our6 city. These businesspeople impressed me7 enormously the commitment that they've8 made. As you know, to still be in9 Philadelphia after so many others have10 left, we need to treat them with kid11 gloves and try to figure out how to12 retain them, but let us not miss the13 point here. This is a fair fee14 allocating a cost, and it has a benefit15 to our society of reducing pollution, and16 that also has economic value to our city.17 We will have cleaner rivers, we will have18 cleaner streams, and that improves our19 community as well. We see it on the20 Delaware riverfront and other riverfronts21 in our city that are rebounding after22 decades of pollution, causing people not23 to want to be there.24 So I will sort of end with25 155 2/8/11 - TRANSPORTATION - RES. 1008141 that. I mean, I had a prepared2 testimony, but I just felt compelled to3 share those thoughts with you. I think4 that the focus on trying to mitigate the5 impact on the thousand biggest losers is6 really key, but let's not lose sight of7 the benefits and the fairness inherent in8 a fee allocated properly.9
Thank you.10 All testimony will be entered into the11 record.12
Thank you15 for your abbreviated comments, and they16 were very well taken and pointed. We got17 it and appreciate it.18
19 Thanks for having me. My name is Rachel20 Vassar and I am the Philadelphia Outreach21 Coordinator for PennFuture, and22 PennFuture is a statewide environmental23 public interest membership organization,24 and we work to create a just future where25 156 2/8/11 - TRANSPORTATION - RES. 7 And we have been noted from the8 Philadelphia Inquirer as Pennsylvania's9 leading environmental organization, and10 we're also the lead organization behind11 The Next Great City initiative, which is12 a coalition comprised of over 10013 organizations in the City of14 Philadelphia, representing public health15 organizations, faith-based communities,16 labor, social service organizations and17 civic associations. 22 And one of the ten policy23 recommendations we had and the reason I'm24 here today was Next Great City advocated25 157 2/8/11 - TRANSPORTATION - RES. 1008141 to stop sewer backups and flooding, and2 that recommendation was identified by3 polling businesses and residents in4 Philadelphia. And in that polling, we5 identified that 21 percent of residents6 had had a basement flood in the past year7 and that 31 percent of businesses8 suffered property damage as a result of9 flooding in the previous year. And those10 residents and businessowners also both11 agreed that when they were asked what12 their top -- the top five challenges13 needed to improve livability in the City14 were, two of those top five15 recommendations were, one, to reduce the16 amount of sewage and other pollution17 entering our rivers, and, two, to fix the18 City's water and sewer system to stop19 leaks and water main breaks. And through20 those recommendations, Next Great City21 formed a stormwater subcommittee to find22 how to best address those issues. And23 The Next Great City Stormwater Committee24 found at that time that Philadelphia25 158 2/8/11 - TRANSPORTATION - RES. 1008141 collected its fees for stormwater for2 non-residential customers based through3 the customer meter size, which has been4 discussed previously. And in looking at5 how other cities address the stormwater6 problem, Next Great City found that over7 400 cities and towns -- and this8 addresses some of the ones you asked,9 like what cities are doing it. So10 Austin, Texas included; Cincinnati, Ohio;11 Los Angeles, California, which was12 mentioned; Miami, Florida instead charge13 a fee for stormwater management based14 either wholly or in part based on15 impervious surface. 25 159 2/8/11 - TRANSPORTATION - RES. 19 The first is, we believe that20 stormwater runoff quality and quantity21 has been identified by the EPA as the22 number one source of pollution in our23 rivers and streams, and, as we said,24 businesses and residents identified that25 160 2/8/11 - TRANSPORTATION - RES. 1008141 as a concern. 6 Stormwater has also caused7 flooding and basement backups in several8 City neighborhoods. 18 So that refers to the federal laws that19 are required for the City to reduce its20 overflow. 23 There are other examples where24 the City spent and will spend millions of25 161 2/8/11 - TRANSPORTATION - RES. 1008141 dollars to better manage stormwater. 22 Also, for the first time, bill customers23 whose properties are not served by the24 meter but continue to contribute to the25 162 2/8/11 - TRANSPORTATION - RES. 5 Perhaps most importantly,6 however -- and this is one of the real7 reasons that PennFuture supports this --8 is that the reallocation program actually9 incentivizes private on-site stormwater10 management, as some customers to receive11 the stormwater credits to reduce their12 stormwater fees will implement stormwater13 management practices, some of which were14 touched on by others, which I could talk15 about a little bit, being like rain16 gardens or infiltration islands or17 vegetated swales, et cetera.
And an18 overall reduction in stormwater runoff19 would reduce the pollution to our20 streams, alleviate flooding and basement21 backups, diminish exposure to the City of22 potentially crushing liability and23 lessening the need for many of the24 services that support the stormwater fee,25 163 2/8/11 - TRANSPORTATION - RES. 3 Many of these stormwater4 management practices also have secondary5 quality of life benefits for ratepayers,6 including cleaner air, more attractive7 surroundings, lower energy costs, higher8 property values and new green jobs, such9 as those discussed by Mr. 18
My name is Brian25 164 2/8/11 - TRANSPORTATION - RES. 1008141 Glass and I'm a Senior Attorney at2 PennFuture. 10 As you know, the Philadelphia11 Home Rule Charter authorizes the12 Philadelphia Water Department to fix and13 regulate rates and charges for services14 that are provided City residents. In15 turn, The Philadelphia Code provides the16 standards by which the Water Department17 is to fix and regulate those rates and18 charges. One of those standards provides19 that, quote, The rates and charges shall20 be just, reasonable and21 non-discriminatory as to the same class22 of consumers. All non-residential23 properties are in the same class of24 consumers. As such, their rates and25 165 2/8/11 - TRANSPORTATION - RES. 4 The recently approved5 stormwater rate design satisfies that6 standard. Under the new design,7 customers are charged for stormwater8 services based on the size of their9 properties and on the amount of hard10 surfaces covering those properties, which11 are both good indicators for how much12 stormwater those properties actually13 contribute to the sewer system. So14 customers pay for the operation and15 maintenance of the City sewer system16 based on how much they use it, no more,17 no less. This design is eminently fair,18 just and reasonable. 20 Under that design, customers were charged21 for stormwater services based on the size22 of the water meter servicing their23 properties, which bore little to no24 relationship to how much stormwater those25 166 2/8/11 - TRANSPORTATION - RES. 1008141 properties actually contributed to the2 sewer system. 10 One court considering the11 previous rate design in which stormwater12 rates were based on a customer's meager13 size commented on whether such a design14 was in fact non-discriminatory. Although15 he ultimately did not decide the issue,16 Philadelphia Court of Common Pleas Judge17 John Herron in a case called Public18 Advocate versus City of Philadelphia19 acknowledged that this method of charging20 for stormwater collection appears to21 present a discriminatory rate among22 consumers of the same class. Let me say23 that again. The method for charging for24 stormwater that is based on the size of a25 167 2/8/11 - TRANSPORTATION - RES. 4 Given that rather candid5 acknowledgment, it would be imprudent for6 Philadelphia to return to the previous7 stormwater rate design, which likely8 would expose the City and the Water9 Department to legal challenge from10 customers who were overpaying under that11 design. You heard from one of them12 today. 15 Fortunately, there is another16 way to help customers who have seen their17 rates increase as a result of the18 recently approved rate design. Because19 under the new stormwater design, charges20 are based in part on impervious area,21 customers can take steps to reduce those22 hard surfaces on their properties and23 capture stormwater that would otherwise24 flow into the City sewage system. There25 168 2/8/11 - TRANSPORTATION - RES. 1008141 are a number of stormwater management2 practices. You've heard about them. I'm3 not going to go into them. And the Water4 Department is offering a number of5 programs. 9 But for all of these reasons, PennFuture10 and Next Great City urge the Committee11 and Council to keep the stormwater rate12 design in place. 20
I guess23 you guys all feel like winners in this24 even though you're not involved in the25 169 2/8/11 - TRANSPORTATION - RES. 1008141 financial give or take. But I just have2 a question for you, and it's really a3 question for the Commissioner as well.4 When you get into the how do you do this5 equitably, you've made the equations work6 equitably, but how about the7 implementation? How do you do it without8 putting somebody out of business or9 crippling their competitiveness, those10 kind of things?11 One way -- we talked about12 it -- is just looking at the impact,13 trying to spread it out, trying to14 mitigate it, all those things. There's15 another part, though. We're downstream.16 We're at the bottom of the hill,17 Montgomery County, Bucks County, counties18 above them. When we talk about fracking,19 we're not talking about Philadelphia20 fracking. Nobody is fracking in21 Philadelphia. Why are we concerned about22 it? We're concerned because it's coming23 eventually down into our water system.24 If Cardone Industries, the last25 170 2/8/11 - TRANSPORTATION - RES. 1008141 company that testified, with 4,000 jobs,2 almost all inner city, just a phenomenal3 story there, if they were in another4 jurisdiction upstream, my understanding5 is they wouldn't have this problem. I6 may be wrong on that, but that's my7 understanding.8 Doesn't it only get fair, we're9 not just punishing our own, when everyone10 upstream has the same program and is11 cleaning up their act, so to speak, or12 charging appropriately so they can clean13 it up and the water that's coming to us14 is in a condition that we don't have to15 treat that also in addition to our own16 water that we have to expend dollars for?17 What can you tell the Committee18 about where all that is in the big19 picture? Because it's very unfair to20 somebody downstream to be paying for21 somebody upstream, and if no one up there22 is paying, somebody down here is paying.23
I'll take a stab at24 it.25 171 2/8/11 - TRANSPORTATION - RES. 1008141
You would see in my4 testimony, Councilman, that I revealed5 openly no one else in Pennsylvania is6 doing what we're talking about doing here7 today.8
If we were9 at the top of the hill, we'd be a great10 example to everyone downstream.11
I might want to12 argue with you about top or down, but the13 point is, your point is well taken. It14 is a difficult situation when in fact it15 is a true statement that this is not16 being done outside the City of17 Philadelphia, nor is it being done in18 South Jersey. And so while we can sit19 here and tell you that this is a20 commonplace practice in many parts of the21 nation and many other major metropolitan22 areas already have it in place, we cannot23 sit here and tell you that it is24 commonplace in Pennsylvania or among our25 172 2/8/11 - TRANSPORTATION - RES. 1008141 immediate neighbors.2 So I just -- you should be3 joining us. What I also say in my4 testimony is, we would like to hold up5 the model of the Philadelphia Water6 Department in Harrisburg, because we7 believe that what it is doing is correct8 and we need this implemented throughout9 the State of Pennsylvania, and we have10 supported legislation that would11 encourage the creation of stormwater,12 what are called, stormwater authorities13 or utilities in Pennsylvania to charge14 similar fees. So our statewide15 perspective -- and I know my colleagues16 are supporters of the same thing -- we17 want this everywhere. That is not the18 situation we face now.19
Does the20 PUC have the same power statewide that21 the Philadelphia Water Department has22 within the borders of Philadelphia, city23 and county, to implement this?24
I can't address it.25 173 2/8/11 - TRANSPORTATION - RES. 1008141 I'm not an attorney. I don't know,2 Councilman.3
I can. I mean,4 there is a piece of legislation to change5 the stormwater --6
Right now there is11 an argument about whether or not12 municipal authorities can charge for13 stormwater. That's my candid --14
But that18 wasn't my question. My question is, can19 the PUC force them to?20
I was going to say21 it's really not an issue of the PUC being22 the driver in this instance, because it23 is not the driver. If there is a driver,24 it would be Clean Water Act and some of25 174 2/8/11 - TRANSPORTATION - RES. 1008141 the other national --2
No. Just3 answer the question. That's all. It's a4 simple question. Does the PUC have the5 authority to order this around the state6 the way the Philadelphia Water7 Commissioner is able to order it within8 our borders?9 COMMISSIONER NEUKRUG: I'll10 just repeat that everyone pays for11 stormwater in one fashion or another.12 Whether it's through your tax base, your13 property taxes, through a sales tax or14 through a utility fee, everyone is paying15 for this, and it's a little bit hard to16 find out where exactly it's coming from17 in different jurisdictions.18
If Marcellus19 Shale drilling and fracking is any20 indication as to where we're going as a21 state, I'm not encouraged by it. But22 that being said, that Philadelphia should23 be a leader in environmental stewardship.24 I think the question that my colleague25 175 2/8/11 - TRANSPORTATION - RES. 1008141 has is level playing field. As we try to2 counter-balance our need to and rightful3 need to protect our environment, does it4 mean -- and I understand this particular5 fee is designed to change behavior. You6 also change behavior by shooting someone7 dead, basically. I mean, you can change8 behavior that way. So the object is to9 balance, in a recession, how we get what10 we want out of the stewardship without11 killing the goose that's paying the12 bills. So that's what we're trying to13 do.14 COMMISSIONER NEUKRUG: And if I15 may, the purpose of this is not to change16 behavior. It's to make a more equitable17 system, but as a part of that, behavior18 change is one of the outcomes.19
Do you23 have that going on anywhere upstream?24 That's kind of what I'm getting at.25 176 2/8/11 - TRANSPORTATION - RES. 1008141 COMMISSIONER NEUKRUG: First of2 all, I'd like to --3
I just4 want a whole picture here. That's all.5 COMMISSIONER NEUKRUG: I'd like6 to thank Councilman Jones for his7 leadership in the issue of Marcellus8 Shale and much of the work that's9 happened there. We at Philly Water are10 very interested in what happens upstream11 from us. We have a dynamic Drinking12 Water Source Protection program. We're13 connected in with partners all up and14 down the Schuylkill River and Delaware15 River. We're looking very closely to see16 how we can effect change not just with17 the Marcellus Shale issue, but all these18 stormwater issues and pollution issues19 and even quantity, the amount of water20 that makes it to the City of21 Philadelphia.22
We hold you23 in high regard. And as a kid, I'll never24 say "Schuylkill punch" again. It's great25 177 2/8/11 - TRANSPORTATION - RES. 1008141 water. We want to keep it that way. The2 question becomes, how do we implement our3 good intentions so that it doesn't have4 an unintended consequence of decimating5 the economics of our industries here.6 COMMISSIONER NEUKRUG: In7 fairness of how you enact things -- and8 we can only be responsible for obviously9 for the City of Philadelphia, but we are10 working with EPA and we're working with11 the state to look at how stormwater is12 managed everywhere, and we are advising13 EPA on what we think would be a good next14 phase for its stormwater regulations.15 And I would say that the suburbs are16 behind us, but -- "behind us" meaning in17 time, but they will be seeing the same18 kind of ratcheting down that we're seeing19 here.20
Thank you.22 Is there anyone else here to23 testify?24 (No response.)25 178 2/8/11 - TRANSPORTATION - RES. 1008141
Seeing none,2 we will thank all of the participants3 today. I saw an article and the headline4 said, "The rain falls on the just and the5 unjust alike." So what we want to try to6 figure out after the follow-up is who is7 just, what is unjust, and let's fix it,8 and fix it in the positive direction9 that -- and thank you as environmental10 advocates for moving us in the right11 direction. The question now is for us to12 get it right in the implementation phase.13 So thank you.14
Thank you15 for your testimony. It was very fair and16 balanced.17
This18 concludes the hearing, and thank you all19 for your participation.20 (Committee on Transportation21 and Public Utilities concluded at 1:5022 p.m.)23 - - -24 25 179 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on February 8, 2011, and that7 this is a true and correct transcript of same.8 9 10 11 12 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 16 17 18 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23 24 25