COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING JOINT COMMITTEES WHOLE & HOUSING NEIGHBORHOOD DEVELOPMENT and the HOMELESS - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, March 22, 2004 1:20 p.m. - - - RESOLUTION 040095 - A resolution amending the Fiscal Year 2004 Program Statement and Budget for the expenditure of the Neighborhood Transformation Initiative (NTI) bond proceeds. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DAVID COHEN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILMAN JUAN F. RAMOS COUNCILMAN FRANK RIZZO COUNCILMAN FRANK. J. DI CICCO COUNCILMAN MICHAEL A. NUTTER COUNCILMAN DARRELL L. CLARKE COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN MARIAN B. TASCO COUNCILMAN BRIAN J. O'NEILL - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters 1835 Market Street, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 Resolution 040095 - 3/22/04 P R O C E E D I N G S - - -
This is a public hearing of the Joint Committees of the Whole and Housing, Neighborhood Development and the Homeless, regarding Resolution Number 040095. I would ask Mr. McPherson to please read the title of the Bill. MR. McPHERSON: Resolution 040095, amending the Fiscal Year 2004 Program Statement and Budget for the expenditure of the Neighborhood Transformation Initiative bond proceeds.
We are awaiting Pat Smith. As soon as she comes in, we'll be ready to proceed. Deborah McColloch, why don't you approach the witness table. And perhaps you could give your testimony while we're waiting. MS. McCOLLOCH: Of course. I'll be happy to.
Please 3 Resolution 040095 - 3/22/04 identify yourself for the record. MS. McCOLLOCH: Good afternoon. Good afternoon, Council President Verna and other members of the Committee of the Whole and Housing, and Neighborhood Preservation and Homeless. My name is Deborah McColloch, Director of Housing. I am here today to testify on behalf of the Administration on Resolution Number 040095, which amends the Neighborhood Transformation Initiative Fiscal Year 2004 Program Statement and Budget. Specifically, I'm here to talk about changes in funding sources for the Basic Systems Repair Program and the Adoptive Modifications Programs. The proposed amendment will not revise the total amount of money allocated for these specific programs, but will revise the source of those funds. In some cases, Community Development Block Grant, CDBG funds, will be swapped for Neighborhood Transformation Initiative, 4 Resolution 040095 - 3/22/04 NTI, bond proceeds. The attached sheet which was attached to my testimony -- If anyone needs copies of it, I have extra copies -- outlines the proposed changes. Chart 1 shows budgets for five programs: Neighborhood-based rental production, basic systems repair Tier II, SHARP, Adaptive Modifications, and the Childcare Initiative, as presented in the Year 29Consolidated Plan, as adopted by City Council in June 2003. This chart includes the $15 million NTI bond proceeds added as a resource. The key lines to review in Chart 1 are those for BSRP Tier II and Adaptive Modifications. BSRP Tier II is being funded with $360,000 in state funds and $12.3 million in Neighborhood Transformation Initiative bond proceeds, for a total of $12.6 million. Adaptive Modifications is being funded with $2 million in CDBG funds, $500,000 in state funds, and $2.5 million 5 Resolution 040095 - 3/22/04 in NTI bond proceeds, for a total of $5 million. Chart 2 shows the proposed budget amendment, in which CDBG funds and NTI bond proceeds are swapped between BSRP Tier II and Adaptive Modifications. In each case, the total amount allocated to the program remains the same, $12.6 million for BSRP and $2.5 million for Adaptive Modifications. The purpose of this swap is to reduce the amount of CDBG funding for Adaptive Modifications, so that the lead hazard abatement requirements of Title X will not be triggered. The $850,000 in CDBG funds proposed for Adaptive Modifications will support the program costs only, and the NTI bond proceeds will support the construction costs of the accessibility modification. Because federal funds are being used only for operating expenses, the Title X requirements for lead testing and control will not be triggered. 6 Resolution 040095 - 3/22/04 Council members have expressed concern that the limited funding for the Adaptive Modifications Program is being used for lead hazard control and abatement, rather than creating accessible housing units as was intended. In our experience, the majority of households receiving Adaptive Modifications services do not have young children, so the lead hazard issue is less of a concern. This proposal of swapping CDBG and NTI funds solves that problem and allows the full funding to be committed to the accessibility modifications. Again, it does so without changing the overall funding level of any of these programs.
Miss McColloch, you mention in your testimony that CDBG budget will be amended. When will this amendment be presented to us? And what happens in the interim? MS. McCOLLOCH: CDBG amendments are not brought back to this Council. We follow the amendment process that's 7 Resolution 040095 - 3/22/04 outlined in our Consolidated Plan. It's advertised in the newspaper. And at the end of the period of time under CDBG regs, which is two weeks after the advertisement goes into effect, we can amend the plan.
Thank you. Are there questions from members of the Committee of Miss McColloch? (No response.)
Thank you, Madam President. I just have a question about BSRP Tier II. Is that the targeted basic systems? MS. McCOLLOCH: That's not the Targeted Basic Systems Repair Program. This is the general Basic Systems Repair Program that's carried out by the Philadelphia Housing Development Corporation. 8 Resolution 040095 - 3/22/04
Okay. Thank you. That's all I wanted to know. Thank you.
Thank you, Madam President. Good afternoon, Miss McColloch. I was going to ask the question on the BSRP. You said this is the money targeted for the traditional program, the traditional BSRP, so there are certain income restrictions on this. MS. McCOLLOCH: Yes. On this funding? Yes.
Is it using NTI bond proceeds? MS. McCOLLOCH: It's using NTI bond proceeds, but it's following -- it's following the regulations that we established as if it was being funded with Community Development Block Grant funds.
But that's imposed by the local administration. There 9 Resolution 040095 - 3/22/04 are no HUD requirements -- MS. McCOLLOCH: There are no --
-- with income restrictions under this funding scenario. MS. McCOLLOCH: On the Neighborhood Transformation Initiative funds.
Yeah; I mean, I thought -- MS. McCOLLOCH: I want to make sure I understand the question. Are there HUD restrictions on the Neighborhood Transformation Initiative funds?
Right. MS. McCOLLOCH: No. We're carrying the program out because it's a combination of CDBG and NTI. We're carrying it out in accordance with the CDBG funds.
But we don't have to. MS. McCOLLOCH: We don't have to, that's correct. 10 Resolution 040095 - 3/22/04
But we've made a decision that the NTI funding for this particular program will have certain income restrictions. MS. McCOLLOCH: Yes.
Why are we doing that? MS. McCOLLOCH: We're doing that because the program is funded with a combination of both types of funding. And so, because we have one program, we're following the regulations that are more restrictive.
Okay. What's the difference, in terms of percentages, HUD -- government -- HUD money versus NTI money? MS. McCOLLOCH: There's more NTI money than there is CDBG funds.
Substantially more? MS. McCOLLOCH: Yes, substantially more. You can see by the chart.
So I guess my 11 Resolution 040095 - 3/22/04 question is, why do we opt to impose guidelines? I mean, is there a philosophical reason? MS. McCOLLOCH: Well, the philosophical reason --
I mean, do we have a -- MS. McCOLLOCH: -- is that we're trying to serve the lowest income people, the people in the greatest need. BSRP has really become our biggest homelessness prevention program.
All right. MS. McCOLLOCH: And we're trying to serve those folks --
So there's a need -- MS. McCOLLOCH: -- that have any other --
We have sort of a HUD funded traditional BSRP dollars. MS. McCOLLOCH: Right. 12 Resolution 040095 - 3/22/04
So we would supplement that by using... MS. McCOLLOCH: NTI funds.
And incorporating the similar guidelines as the other one. MS. McCOLLOCH: Right.
All right. MS. McCOLLOCH: And the goal is because the need so far outstrips the resources. We are trying to make sure that the people -- the neediest people are receiving these funds for -- to make home repairs.
Again, that Basic System Repair Program is very dear to me. It helps so many people, so I understand. 13 Resolution 040095 - 3/22/04 The people that are on the list for basic system repairs right now, how will they be affected by this swap? MS. McCOLLOCH: They will have -- There will be no effect. For -- For a consumer of the program, there's no 8 difference in the program. They won't know any difference between what the source of funding is.
But let's just talk about Basic System Repair Program, if we may, just for a minute? Because again, there are so many people. Could you just give us a quick report on the status of that program, how long the average wait is for a person that's in need. And are we up to schedule, behind schedule, ahead of schedule? Where exactly are we with that very important program to I think all of us here? MS. McCOLLOCH: I'm sorry. I don't have that information with me, but I can provide that for you. I have to get it from -- This program is carried out by the 14 Resolution 040095 - 3/22/04 Philadelphia Housing Development Corporation, PHDC. And so, those folks keep all of the figures. So I can provide that report.
But you have no 7 personal knowledge of... MS. McCOLLOCH: I know there is a waiting list, and I know there is a time delay. But I don't know what it is without talking to the staff people.
Thank you. Miss McColloch, for the record, can you tell us what agency is responsible for the Adaptive Modifications Program? MS. McCOLLOCH: The funds are put under contract from my office, the Office 15 Resolution 040095 - 3/22/04 of Housing and Community Development, to PHDC, who in turn holds a contract with the Philadelphia Corporation for Aging, PCA.
Has the entire $5 million associated or allocated been made available to PHDC? MS. McCOLLOCH: No because we haven't had -- until this resolution goes through... Assuming that this resolution 11 is passed, then that will free up the funding to put it all under contract to PHDC.
So the $5 million will be put -- MS. McCOLLOCH: Correct, will go to --
Do you have any indication as to what the backlog is for Adaptive Modifications? MS. McCOLLOCH: The backlog starting this year, at the beginning of the fiscal 16 Resolution 040095 - 3/22/04 year, was approximately 700 people on the -- households on the waiting list. And I know they are moving through that backlog, but I don't know the number as of today that they have treated. But I could provide -- get that information for you.
Thank you. Are there any other questions from members of the Committee? (No response.)
Seeing none, I would ask Miss Pat Smith to please proceed with her testimony.
Thank you, Council President Verna. Good afternoon. My name is Patricia Smith. Good afternoon, President Verna, Councilwoman Blackwell, and members of the Committee of the Whole and Housing, Neighborhood Development and the Homeless. My name is Patricia Smith. I'm Director of Neighborhood Transformation. I'm here today to testify on behalf of the 17 Resolution 040095 - 3/22/04 Administration in support of Resolution 3 040095, which amends the NTI fiscal year 2004 program statement and budget. When the Administration transmitted the FY'04 NTI program statement and budget in May 2003, we proposed spending $28 million on the demolition of dangerous houses. The Administration wishes to increase this line item by $25 million, for a total of $53 million. The additional funds are needed because the pace of demolitions in FY'04 is greater than we projected in the original budget. In FY'04, the City has contracted or has under contract for more than 1,100 demolitions under our targeted area program, and demolished another 336 houses as part of our City's emergency curbside program. In addition, contractor bids have been higher than we estimated in our original FY'04 budget. Bids for the targeted program are averaging about 18 Resolution 040095 - 3/22/04 $22,000. This number includes the cost to remove any asbestos that is identified, demolish the building, stucco party walls, install topsoil, seed and fencing of the demolition lots. A major cost driver has been the significant number of party wall treatments in the bid package. For example, for every 100 demolitions, we stucco about 64 party walls, and that the party wall treatments have been averaging about nine per wall. The additional $25 million in the budget and the appropriation authority that the Administration is requesting will enable us to issue the following NTI targeted bid packages through June 30, 2004. The packages are listed in the testimony and include Jefferson Square, Kensington, a small bid package of scattered sites in Lower Kensington, Grays Ferry, Belmont, a small bid package in West Philadelphia that's a combination of scattered sites, a small scattered site bid 19 Resolution 040095 - 3/22/04 package in West Philadelphia. It would also allow us to set aside approximately houses as part of the 5 third phase of Emerging Contractors Program 6 that is administered by the 7 African-American Chamber of Commerce. 8 Haddington, Ludlow, a small bid 9 package that we're proposing for the Lower 10 Northeast, Allegheny West, Logan, and then 11 another demonstration -- emerging 12 contractors field demonstration training 13 program. 14 There are several demolition bid 15 packages, including APM east and west, Ludlow, Jefferson Square, and Belmont, that are ready to go but awaiting funds that are included in this amendment. We have worked very closely with District Councilpersons on developing bid packages that are included in the $25 million. And I also want to point out that several of the very large bid packages, for example, Kensington, Grays Ferry, Allegheny 20 Resolution 040095 - 3/22/04 West and Haddington, will be breaking up to cover as part of this amendment and would also be included in our FY'05 budget. 2 million for insurance costs, and 250 for asbestos and air monitoring expenses for the remainder of this fiscal year. I also want to talk a little bit about our economic opportunity work. While the primary objective of the NTI demolition program is to eliminate dangerous buildings from Philadelphia neighborhoods, the Administration is committed to using NTI as a vehicle to help create business and employment opportunities for minority business and City residents. The African-American Chamber is helping to build the capacity of minority and women owned firms who are interested in becoming prime demolition contractors.
The Emerging Contractors' Program provides technical, financial and management assistance, helping firms to 21 Resolution 040095 - 3/22/04 negotiate the City's complex procurement processes and grow their business. It teaches participants how to demolish unsafe and dangerous residential buildings by offering hands-on experience in the field. In FY'04 the Emerging Contractors have already successfully demolished about 74 houses under the training program. The proposed amendment will enable the city to allocate additional houses to the Contractors' program for demolition in this fiscal year, about 40 additional houses. In addition, the City continues to satisfy our subcontracting goals that were set out in the NTI Economic Opportunity Plan for demolition activities. Of all the contracts that have been let as part of our targeted program as of the March report, MBEs account for about 49 percent, and WBEs percent of the 24 subcontracts. Plus, minority firms are performing 34 percent of the curbside 22 Resolution 040095 - 3/22/04 demolition work. Philadelphia residents represent more than 75 percent of the work force on the target area demolition projects. This resolution... The following -- Following my testimony I also included a chart which summarizes all the changes to the NTI FY'04 budget, including the swaps and funding between CDBG bond proceeds, state funds for other program activity. Thank you.
You're welcome. Miss Smith, I recall from earlier hearings on NTI that the Administration proposed to acquire every property it treated under the NTI program. That is, for each property demolished, the Administration would acquire it through condemnation. Is this still the Administration's intention?
In our FY'04 program statement and budget, we said subject of funding availability, that we would 23 Resolution 040095 - 3/22/04 prioritize the acquisition of demolished lots, and of course we said subject to funding availability. Even though we've increased our acquisition budget by about $24 million for this fiscal year, most of that money has been set aside for development projects. One of the things the Administration will be exploring is how do we begin to, in a planned fashion, begin to use Sheriff sales as a way to acquire demolished lots because of the fact that we don't have enough acquisition dollars for condemnation.
The acquisition budget is completely committed at this point in time, and there is no 19 available funding for acquisitions after FY'04. Am I correct in assuming that?
In the five-year projection, we did not include any bond proceeds for acquisition. One of the things that we did talk about as a part of this year's program is, 24 Resolution 040095 - 3/22/04 as we begin to file declaration of takings and the City recovers tax revenues that would have been -- you know, that we're entitled to, that we would begin to recycle some of those funds. We didn't include that in the '04 budget because we had not yet filed any declarations of taking. So, I'm hoping to allocate some of those dollars, you know, depending on the pace of declarations that --
Do you have any indication as to how much money that would be?
No because we won't -- First we have to see what's paid into court. Then it would depend on how much in delinquent taxes, you know, are being paid off. And then we give, I think, it's 45 cents on the dollar. Fifty-five cents will continue to go to the School District.
Okay. Miss Smith, Council has authorized the acquisition of more than 4,000 properties 25 Resolution 040095 - 3/22/04 in the last 18 months. Of the total number of properties authorized by City Council since 2002, how many have actually been acquired by the RDA and turned over for development purposes?
Okay. The RDA is in the process of some notes that were given to me by the Office of Housing and Neighborhood Preservation. I want to make sure I get this right. Okay. In FY'03 and '04 we authorized condemnation of about 5,512 properties.
5,512. That's the number I was given. We've met with the Office of Housing and Neighborhood Preservation, Mr. Hanna and Miss Califano; have met with District Council representatives to review these projects. And from these priority meetings we expect they're giving priority to 642 Resolution 040095 - 3/22/04 parcels, representing development projects. And the RDA expects to have declarations of taking issued for these high priority parcels by the end of this fiscal year. In terms of the specifics of each development project or priority project that's going forward, I don't have that detail. Unfortunately, Mr. Hanna had a death in his family and wasn't able to be here with us today you.
Very well. 14 I have several questions that I'd 15 like to ask but I see that a number of 16 Council members have their lights on. I'll 17 just ask one more question. 18 We've heard repeatedly about the 19 proposed consolidation of the housing 20 agencies. Can you tell us the status of 21 that consolidation? 22
Again, I have not been -- As we bring on Mr. Hannah... He's been the point person on the reorganization. I know there have been a 27 Resolution 040095 - 3/22/04 series of discussions with -- internally about that, particularly in light of the fact that the City's block grant resources are going to be lower this year. Those are probably ongoing conversations, both with the labor unions, as well as management staff. I'm not privy at this point to the details of that conversation.
Thank you. At this time the Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Good afternoon, Miss Smith and Miss McColloch. Miss Smith, I just have some preliminary questions to try to understand the process a little better. Who constructs the budget for the NTI program and the various amendments to it?
My office -- My staff does, myself, working with Jacob Fisher. 28 Resolution 040095 - 3/22/04 We work with the various, you know, operating departments, looking at where we are in terms of the expenditures.
So it's yourself. You mentioned a Fisher person; is that it?
And who decides how much you allocate to each budget item and to each District per item?
Well, with respect to the demolition activity, when we first unveiled the NTI program statement and budget, what we looked at was first --
Are you talking about the current year's budget, FY'04?
Yeah, FY'04. And I believe it's a carryover from '03. But we looked at the level of vacancy and dangerous buildings within a Council District, and then tried to project 29 Resolution 040095 - 3/22/04 the number of demolitions we could anticipate within that given budget year. So if we allocated $30 million, we try to look at a range of expenditures, as well as houses. It's -- Again, it's a financial projection and budget that we were putting together. And we do that almost, you know -- about this time of year. In fact, we're beginning to work on the '05 budget.
So that's an internal process, for the most part? I mean, when you put together the FY'04 budget and looked at the number of vacant buildings, unsafe and dangerous, may... put the numbers down by District, the number of buildings you thought you would on average demolish or you'd developed a range. And then you allocated the dollars based on... At the time you were using, I guess, the 14,000 average per property demolition costs, and just multiplied times the number of properties? Is that the way 30 Resolution 040095 - 3/22/04 you did it?
Yes. That's -- Yes. It's an internal process. And then we transmit a preliminary budget. Then we have meetings, individual meetings, with Council people to answer questions, discussed what we were suggesting. And then sometimes we make some adjustments for the final budget.
Okay. And then we approve that budget and the various schedules in accordance with the NTI bill 14 that I think we approved in '02, laying out, for instance, on , total number of buildings, the amount that are dangerous, what you estimate on a demolition, average demolition costs. And then you get your totals. And that was the $19.6 million; is that correct?
Okay. And just so I make sure that I'm looking at the same 31 Resolution 040095 - 3/22/04 material, in the proposed amendment before us in the Resolution, it makes reference to Exhibit D, proposed amendment to . Is that -- Actually, it should be ?
Well, no. Actually, , if we were to go back to the original... I guess the pink bill?
The actual Council Ordinance, the number of pages is different than this Bill. So that's why there's a discrepancy. So, it was actually in the 14 ordinance. 15
Well, you can say 19. But 19 and 13 is the same, because we all have our books in front of us. I don't have the original Ordinance --
All right. So in the processed amendment, which seeks to increase the demolition budget by $25 million, who then made the decision to decrease the line item for the Fourth District by $1.1 million?
What we did at that time, I made a decision, looking at what I knew to be real bid packages that had already or -- had already been let or about to be let, and what was in the pipeline. I was looking at how do we cover those costs. For the Fourth Councilmanic District we had not yet completed the field survey in the decision meeting. And therefore, I just projected a range and an average.
Well, I understand that. But why would you in the same amendment seek to increase the total amount of demolition money, while at the same time taking money away from a particular District, even if you didn't think for some 33 Resolution 040095 - 3/22/04 reason that the dollars were going to be spent in the course of that fiscal year? Why would you make the cut? We already approved a larger amount.
I didn't view it as a cut, in that that means the money is gone. It just meant that we didn't expect spending it at that time, given where the project was, you know, how much we were going to actually be spending in this fiscal year.
Well, I can appreciate your perspective, but generally when you start a budget with one amount of money and you seek to change the budget to some other amount of money, and if the number is lower, which from my perspective it's a cut. You don't have as much as you started out with. So it's less, right?
And what we are now proposing, since now that we've gotten the new numbers in for your District, it actually is an increase even over what --
I gotcha. We'll get to that. The secondary concern with that is -- And I... You may be alluding to -- You can pick it up later on. But your own testimony indicates that we're spending through the demolition collars obviously much quicker than the Administration had anticipated. And so, even with the best of intentions, at a later point in time we could find ourselves in a situation where there's no money left to make up what had been taken away. Isn't that possible?
Well, again, it's -- it's -- it's... It's going forward. It's sitting down -- You know, again, looking at the vacancy levels and trying to project how many bid packages we can do.
I understand that. But the vacancy levels aren't going to change. 35 Resolution 040095 - 3/22/04
So... I mean, there are a number of people from the community who have concern about this; and as... I mean, again, if you read one number when you start and you read another number when you end, and if there's a significant difference between them, in excess of 40 percent loss, then that's a problem. It's a 43 percent, quote unquote, cut in the current fiscal year. You may seek, again, with the best of intentions to make it up at a later point in time. But we're here for the purpose of increasing this budget by $25 million because we've obviously blown through in the first half of the fiscal year the entire demolition budget that you expected to go for the entire year. You allocated $28 million for FY'04. 36 Resolution 040095 - 3/22/04 We've now realized, halfway through the fiscal year, that that's all gone; and you seek to increase it by 25. We don't have an endless access to resources at the tail end of the process here. And we're already front loading a number of the items. And so, by the time we were, quote unquote, ever able to catch up, or the rest of the process caught up with us, or people did whatever they needed to do, you could literally have run out of money. And so... I mean, when we started this, we said that everyone should get some base amount of dollars. And then there are always going to be other Districts, certainly beyond the Fourth, who have greater needs. But I mean, I must strongly object. And then we can move on to the next part, that, without consultation, without a discussion, without an explanation, that an amendment would come in -- and only by searching through it, and then comparing it 37 Resolution 040095 - 3/22/04 to the original FY'04 budget did we find that there was a difference between the items. Now, there's supposed to be a general agreement that there will be no 7 defunding of items or projects that's in the Bill without a consultation with the member. And so it has caused a great amount of consternation. If the people from the Fourth District who have come who want to testify, if you could stand and have Miss Smith better understand what your concerns are through this process, there is a feeling of unfairness about this. And we can go into details of that a little later on. But the basic message here is, I want the money back. (Laughter and applause.)
And when you look at the proposed amendment, you will 38 Resolution 040095 - 3/22/04 see that there is a range of how the $25 million is allocated. I think million goes to the 5 curbside, and the balance goes to the other 6 Councilmanic Districts. Some got more. 7 They have more need. Some received a 8 little less. 9 In many instances, there is a 10 significant amount of similarity between 11 the Fourth District, in some instances, and 12 the Ninth Council District. I believe, at least according to the amendment, there's an anticipated increase to the Ninth of about $805,000. And so, from my perspective, where I would like to be, at a minimum, when this process is done in the course of the day -- And there are other issues, I understand, that may get raised -- is, I want the $1.1 million back. And I want the same amount of increase that a comparable District, which is on the low end of things because other Districts, as I indicated, receive more. 39 Resolution 040095 - 3/22/04 And they should get more because they have more need. But I at least want the 1.1 and I want the 8'05. And so we're really talking about a $1.9 million increase, based on the amendment in front of us. And we can go through those numbers again. Now, you'll, I'm sure, want to tell me about your proposed Haddington package. And maybe the process is catching up with us. And the testimony has numbers in it on which... I mean, I've spent a fair amount of time and my staff spent some time trying to reconcile the numbers in your testimony on with the proposed amendment to . And I could not figure out how these numbers match up in any way, shape or form. When you go through all the analysis, it... at least for my purposes, it did not make any sense. So could you explain the difference between the proposed amendment to Resolution 040095 - 3/22/04 and the numbers in your testimony?
I'll be happy to. When we transmitted the Resolution 5 to Council, again, we were doing a projection, a range of houses. And we were using an average number in that budget amendment that you reference on . Since that time, what we've done is that we've gone through all the bid packages and actually looked at the actual cost that we are estimating, or based on awards of contracts, or contracts being bidded. And so, for example, we had Haddington listed as a project for this year, for this fiscal year. We, at the time that we transmitted the Resolution, even internally, didn't flow exactly how many properties would be slated for demolition activities in Haddington. Since the transmittal of the Resolutions, we have both completed the field survey, and a decision support meeting, where we identified working with 41 Resolution 040095 - 3/22/04 the District Council office, 195 properties. And then that number... We cost estimated that number that's transmitted to the District Councilperson for signature -- review and signature. Then we proceed with putting together bid packages based on those numbers. So, 195 properties were identified as demolition candidates that were approved by the District Council. I allocated out of the $25 million 100 properties at a cost of 3.3. That number doesn't -- You know, one of our challenges is that while we can use an average number when we do get hard numbers -- because we know party wall treatments and the like -- we adjust that. So that's why the number for Haddington in fact has gone up, the 3.3 million. So we also adjusted, since we only had $25 million that we were seeking appropriation authority for and what remains in this fiscal year, we made some 42 Resolution 040095 - 3/22/04 adjustments, you know, with the emergency curbside number, and the like, so that we can meet that -- you know, part of that obligation in this fiscal year. Again, you know, these are, you know, budget and financial projections. As we get actual numbers in, we make adjustments to reflect, you know, what in fact, you know, the actual numbers are.
In view of what you just said, are you going to be offering an amendment to Exhibit D?
We can put in the specific numbers. I hadn't... To be honest with you, I didn't really think about the formal amendment of that. But this is what we actually are proposing, in my testimony, how the $25 million will be spent.
But that doesn't equate to what we have in the 43 Resolution 040095 - 3/22/04 Resolution in Exhibit D. And that's --
I apologize for that, Council President. We'll mark up the Bill 8 so that when we go into public meeting...
Two other comments on this issue, Madam President. You've been very generous. First, Miss Smith, I appreciate what you said. And we can go through those components. I just wanted to mention to you, because you seemed a little perplexed at a comment that I made earlier... I just want to mention to you, from of Bill 20 020036... This is the bill that created the NTI program... there is a bullet point that says, when a project is defunded, the Administration, in consultation with the District Councilperson, will reprogram the unexpended funds allocated for the project 44 Resolution 040095 - 3/22/04 to support another project within the Councilperson's District. I think most of us have generally taken that to mean that if something were to happen, even with funding for a particular item or a particular project, you don't lose the money. And so again, I don't want to totally beat this horse into the ground, but if there were some issue about the 1.1, I think we have to figure out a way not to on paper have the dollars go away, and still have them allocated to the District so as to not cause this kind of consternation and worry, that if the process is moving a little slower -- and we're getting towards the end of the fiscal year -- that somehow you don't lose money. It's not like it's going anywhere or should disappear. So I offer that to you as a way of dealing with this situation.
Yes. And I think when we give you the corrected amendment, it will in fact show the increase instead of 45 Resolution 040095 - 3/22/04 the decrease it's still our projection for a hundred properties is about 3.3 million.
And I understand that. And the whole package is about 6, and --
Yeah. It's six five. But when this program started, I thought the first budget had demolitions at an average of about ten or eleven thousand dollars. The last budget or the current fiscal year is showing fourteen, and now you're expecting to go to twenty-one? I mean, as you will probably painfully recall, through many hearings there was a lot of discussion about demolition costs. And one of the features that was at least proposed in this is that there would be so much demolition that it should 46 Resolution 040095 - 3/22/04 actually destabilize the costs or drive them down. Now, when I first arrived in Council -- And I know that bid specifications and the quality of work that we're demanding has changed. But I seem to recall that demolitions were at about the seven, eight thousand dollars standpoint. Now, maybe that's not good enough for us any more. And certainly things do change over time. But I mean, we're talking about over the past seven, eight, nine years, like, a 300 percent increase in demolition costs, when we have clearly put more supply, if you will, out on the market. I mean, this situation defies every principal of economics that, I mean, anyone would learn. Why do the costs keep going up when we're putting so much supply out on the street?
There's a couple of things that have been happening. We put a lot of supply out on the street; you're 47 Resolution 040095 - 3/22/04 absolutely correct. First of all, when we were doing the... again, our projections, we didn't have the experience of actually letting bid packages. I mean, historically the City had not -- I'm just saying, historically the city had not let as large a bid packages that we've been doing. And we have not -- We've been getting mixed responses from the contracting community. In some instances we may have only had three bidders bid. Last year we didn't have a lot of participation. We're getting more contractors now bidding in some of the later projects. We're starting to put out -- go back to putting smaller bid packages out so that more people can respond. But the bottom line is is these numbers are now benchmarked on our past experience, and what are being bidded and what's being bid at the lowest number. I 48 Resolution 040095 - 3/22/04 mean, this is based on the low number that's taken. We believe -- are disappointed that, you know, we have not gotten smaller numbers because of the number -- the larger amount of work being put out.
Well, okay. I mean, I guess the last thing is -- I mean, what --
-- of Council members are still -- 49 Resolution 040095 - 3/22/04
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. Let me pick up where Councilman Nutter left off. In your testimony, Miss Smith -- Good afternoon, by the way.
You talk about how the estimated bids for fiscal year '04 have risen since presentation of the budget which is less than a year ago. Talk to me a little bit about how the costs of demolition have risen since the original NTI legislation.
I mean, we've been keeping the records every time we put a package out to bid. And this goes through 50 Resolution 040095 - 3/22/04 the traditional procurement bid package, you know, process. So it's put out. You know, we solicit bids...
My question more so is, what was the projected estimated cost of demolition per building when you originally proposed NTI, in light of the fact that it's now $22,000 per building?
Right. It's doubled. Back in, I think in FY -- When we put the budget together for the first full year of NTI, which we --
I'm not talking about actually when you proposed the legislation originally, not in the first budget. But when the legislation was proposed, what was the anticipated cost of demolition per building?
I believe at that time we thought it would be around $11,000. I'm not absolutely...
I believe it was probably slightly lower. But if we take 51 Resolution 040095 - 3/22/04 the $11,000 figure, it's now double that cost. Does that mean you can do half the number of buildings?
We're going to do -- Yes, it does mean that we'll do less number of buildings than we originally projected.
I would say this point -- I mean, our original range we said somewhere between 10 and 14, based on that average number that we were using. So you can have that. So I would say now between 5 and 7.
Following up on what Councilman Nutter said -- And I'll be a little more direct about it -- do you or do you not control the market with regard to demolition in NTI areas?
I -- I -- We put the City -- The City, you know, puts out a bid package. We get responses.
Is there anyone else doing demolition of residential properties in NTI areas at that sort of 52 Resolution 040095 - 3/22/04 critical mass?
So you do control the market or should control the market with regard to demolition in NTI areas?
Well, we're the only -- I mean, the City is the only, you know, entity that puts out these large demolitions. We're the only ones that are doing that.
In light of the fact that you control the market -- (Councilman Cohen began speaking, out of the range of the microphone, not reportable.)
I'm just saying, yes, I mean, you know, we are the only the City, the only one that has the... For example, the state -- We have the power to let out bids for the demolition of dangerous buildings.
And to a certain extent, you control the market because this is a market that you created. 53 Resolution 040095 - 3/22/04
Well, I guess I'm a little reluctant to use the word market, in that we're doing public safety type activities. We're the only --
Well, that's my next question. But I'm just going to deal with the fact that you're putting out to bid a significant amount of business that would not exist if NTI was not created. Therefore, you created the market. So to what extent do you control the market you created?
I mean, the way I look at it, Councilman, is that the City carrying out its police powers, you know, can control how many, you know -- And given the amount of money we have, how many buildings we can demolish.
Can I interject here a minute, please? 54 Resolution 040095 - 3/22/04 I know that with demolitions of one property, we went from 9,000 to 12,000. Now, it's questionable whether it's 21,000 or 22,000. I think you're missing what's being said or maybe I'm missing something.
I think before when we demolished, we simply demolished a building. We waited a couple of years before the side walls could be stuccoed. Am I correct?
So in this new contract that you let, it's not only the demolition; it's the stuccoing of the party walls; it's the cleaning of the lot; it is the grassing of the lot; and it's the erection of the small fence.
So would you say that is the reason why it is now 55 Resolution 040095 - 3/22/04 costing $22,000 per property?
It's -- It's -- It's part of the reason. And another big part is that we're doing a lot more stuccoing of party walls than we anticipated in these bid packages.
I think that's what your answer should have been.
The Chair recognizes Councilwoman Tasco for a point of order.
When you initially developed the package for demolition, were these features included in the specifications?
We had contemplated doing it, but we did not have any experiences to the cost. Like, we -- we made a couple changes in the methodology.
So when you put the specifications together, did you have any idea of what you want done to the house 56 Resolution 040095 - 3/22/04 and the party walls, and all of that, when you demolished the property?
Yes. And we made -- we made an estimate. We have not had any experience doing this type of --
I mean, L & I have been doing this for hundreds of years, forever. And I think an issue was raised during the course of the discussion about why they weren't doing it. Because they work from a basis of experience and understanding what needed to be done, and also had some idea of the cost that -- what it should cost. And so I asked you that question. And did you have the specifications? And you don't have the experience in dealing with that, so that may take care of that answer. The other question is, did you put a 57 Resolution 040095 - 3/22/04 cap on the costs that you would pay for this? Because right now we're talking about 21,000. In the spring you may come back and say, well, it's gone up to 30,000. Where is the control?
Well, again, the control is if we get in numbers that are above our revised estimates, we can reject the bid.
Going back to Councilman Goode says, we're the only game in town. Why can't we control it?
Because part of it, I guess, is that tension between if the building is dangerous and needs to come down. And the numbers before, under the emergency curbside, we were just looking at the costs to take down the house, as opposed to the other costs. Now we look at all the costs in its entirety. So we weren't actually comparing apples to apples 58 Resolution 040095 - 3/22/04 before. And to the extent that, you know, we stopped -- we can stop the targeted demolition program, but that does not eliminate the fact that there's still dangerous and imminently dangerous buildings that need to be demolished. So I don't know that we can kind of not do those. Do we just do the extreme cases and not bid that out? But, you know, we're trying to, you know, be responsive to -- when we go out into the neighborhoods with Council staff identifying properties, you know, making sure we get all as many we can within the targeted area. That was one of the changes we made in the program. So, you know, we can go back and, of course, look at not carrying out a targeted program any more. But we thought that was one way, instead of, you know, kind of scatter site, you know, where we've just been here, there, and everywhere, try to sort of, like, you know, much more 59 Resolution 040095 - 3/22/04 comprehensively work in the neighborhood.
That's why the costs should be less, if it's targeted, and you're not running all over City. You're into the community --
But these are the numbers that we've been getting in, Councilwoman, both --
We just -- Well, we have to give the budget as part of this process.
So the costs to demolish the building has gone from $11,000 to $22,000 --
The number of buildings has gone from 14,000 down to, you estimate, five to seven thousand. The next question is, are you demolishing now simply based upon dangerous buildings or are you demolishing for land assembly?
We've always demolished for the public safety dangerous buildings.
My question is, what percentage are you doing with regard to dangerous buildings, and it being a public safety issue? And what percentage are you doing with regard to land assembly, in view of the fact that the cost has doubled, and the amount of buildings that you originally intended to do when you first submitted the legislation to Council has decreased from 14,000 to five to seven thousand?