Well, how do you do it? I think we ought to be concentrating not -- I'm not arguing against your doing what you're urging be done, but I'm saying I don't think it meets the problem.
And I think we got to concentrate on how does government make life better for people. It's what we've been talking about at least ever since the days of the new deal when government in the United States took a sharp turn in the direction of accepting a responsibility to make life better for people. And how can you do that with the poor people? We in Philadelphia emphasize maybe making ourselves more available to immigrants. Maybe we ought to give rich people all kinds of incentives to come here, which means making life cheaper for rich and more expensive for poor, just working in the opposite direction --
Councilman -- 102 6/14/05 - Resolution 050272 - Commerce
-- than you ought to be working. But I don't know of any real programs we have in the City or goals that we have toward achieving changing the income of the very poor people and increasing that.
We're going to move on to the next panel in a second, but I think you make an excellent point. I want to try to rephrase your question. Who are actually the good lenders for poor people?
But who are, and what are we doing to create good lenders for poor people?
So we should be investing in credit unions? 103 6/14/05 - Resolution 050272 - Commerce
We should be investing in Community Development Financial Institutions?
And we should be investing in Pennsylvania Community Development Bank?
Yes, we should. And as you described it, and I thank you for that description, we should be. (Applause.)
And a number of the banks are doing an excellent job as well. They're trying quite hard, as you know.
For poor people? Thank you, Secretary. We want to invite you to stay around a little bit longer. We wanted to move to our next panel also.
All right. Thank 104 6/14/05 - Resolution 050272 - Commerce you.
Thank you. We're going to call up the panel of State Representative Dwight Evans, Sharmain Matlock-Turner and Hannah Burton from The Food Trust. Good afternoon. We'll recognize Representative Evans first and then Sharmain and then Hannah. We'll let you make your presentations and then we'll have questions at the end of the three. REPRESENTATIVE EVANS: Good afternoon. Thank you, Mr. Chairman. Thank you, Madam Councilperson. I'd like to thank you for the opportunity to speak to you about some exciting things for the City of Philadelphia and its neighborhoods. This spring, as a result of the budget process, for the Pennsylvania Fresh Food Financial Initiative we provided a $10 million in economic stimulus grant from the state Department of Community and Economic 105 6/14/05 - Resolution 050272 - Commerce Development. That grant is being used to provide supermarkets with planning grants, direct loans and loan guarantees. Access to full-service grocery stores has long been an issue in large urban and small rural areas of Pennsylvania. Access to fresh, nutritional, affordable groceries and produce is critical to the health of every community. The Fresh Food Financing Initiative is an innovative new program that will continue to work to increase the number of supermarkets or other grocery stores to underserved communities across the state. It will meet the financial needs of supermarket operators that plan to operate in these underserved communities where infrastructure costs and credit needs cannot be fulfilled by conventional financial institutions. Its partners are the Reinvestment Fund, The Food Trust and the Greater Philadelphia Urban Affairs Coalition. To date, the Fresh Food Financing Initiative has committed resources to five 106 6/14/05 - Resolution 050272 - Commerce supermarket projects state-wide, three of them in Philadelphia. Applications for another nine eligible projects have been received. The first project to receive funding from the initiative is Brown's Shop Rite right here in Philadelphia, resulting in the creation of 250 good-paying jobs. 97 percent of the hiring are minority and female employees. Within two weeks of the advertising for these jobs, store owner, Jeff Brown, had 4,500 applications, primarily from local residents. He continues to receive at least 100 applications each week from people just starting in the work force, welfare-to-work candidates, retirees who are seeking to supplement their income and others with previous retail experience. The two other Philadelphia sites participating so far in the initiative are the Shop N Bag at 4th and Brown, which will retain 30 jobs, and the Fresh Grocer in Progress Plaza, which will result in 240 new jobs. These three projects received over a 107 6/14/05 - Resolution 050272 - Commerce half a million dollars in Fresh Food Financing Initiative funds. 2 million invested in our communities, creating jobs and improving the quality of life in our neighborhoods. Having said all this, I encourage City Council to make use of all the typical tools of economic development to attract major grocery stores, including the TIF, small business loans and political leadership. The results will only be positive for our City. Since this effort should be strategic in nature, I believe it would be to the City's benefit to invest in market studies to determine true market demands for supermarkets in our neighborhoods. It would provide the information businesses need to make decisions about investing in local communities. The Philadelphia Department of Commerce has a program, the Urban Industry Initiative, which would serve as an excellent model. I take this opportunity to persuade City Council to work with state legislators 108 6/14/05 - Resolution 050272 - Commerce and other state officials in promoting the recommendations of the Governor's Task Force on Working Families.
Just a few minutes ago you heard from the Secretary of Banking, Bill 6 Schenck, as he discussed some of the steps being taken by his department. We have taken these recommendations seriously at the state level and are moving forward with regulations, policies and enforcement and, when needed, legislation to strengthen consumer protections and encourage families to create their own jobs and security. What I'd like to do is, I heard your questioning about the payday loan. I'd like to speak a little bit to that issue. , Congress just voted to change the laws governing the filing of bankruptcy. The new law prohibits an individual debtor from filing until the individual has received a briefing from an approved non-profit budget and credit counseling service. Particularly with the issue that Councilwoman Marian Tasco raised, as you know, at the state level, we do have in 109 6/14/05 - Resolution 050272 - Commerce law currently under the financial abuse issue to deal with that question. House Bill 1478 now before the state House would establish a new regulatory program governing the making of payday loans in Pennsylvania. A payday loan is defined as a short-term loan, advance of money or credit to a consumer for a fee, charge or any other consideration. I plan to amend 1478 to make credit counseling mandatory for the potential debtor before a payday loan or extended payment is approved. The counseling must occur within 90 days prior to the loan application. While we cannot save everyone, the fact of the matter is, uniform financial decisions is bad for all of us. I believe this move extends consumer protection at a moment it is most needed to include front line financial education, another recommendation of the Task Force. In an ideal world, I would absolutely agree with all of the comments that I've heard that payday loans are bad, but the 110 6/14/05 - Resolution 050272 - Commerce fact of the matter is, we also understand the political reality. It is my hope that City Council and Mayor Street will continue the efforts and strengthen whatever policies and regulations are appropriate at the City level. A partnership in this area will further move families beyond living paycheck to paycheck and make sure working families are treated fairly by financial institutions. " Thank you very much, Mr. Chairman.
Good morning. My name is Sharmain Matlock-Turner. I'm the President of the Greater Philadelphia Urban Affairs Coalition, and it's a pleasure to be here, Councilman Goode and Councilwoman Marian Tasco, Councilman Cohen. As Bruce Katz stated in his comments this morning, GPUAC was pleased to work with 111 6/14/05 - Resolution 050272 - Commerce them to make sure that as they took a look at Philadelphia and the issues that are facing low-income working families, that there was an opportunity for us to really sort of dig into the data with them, bring our real-life experiences to the table to ultimately develop a report that I think that we all are very proud of and one that as we can see, from Councilwoman Marian Tasco's participation and leadership today, we're continuing to look at to see what we should do to really move the issues forward. I want to talk about this morning a couple of things, but I want to impress that it is important that as we look at issues to support low-income working families, that certainly I don't think anyone as a part of this process is forgetting the importance of improving incomes, whether it's with the earned income tax credit, better jobs, affordable housing. All of those things are absolutely critical, but if we are incentivizing on the one side to improve incomes, if all the money is going out the 112 6/14/05 - Resolution 050272 - Commerce door on the other side for expenses that are too high, then what are we ultimately doing to improve the incomes in helping low-income working families move into the middle class? So I think these issues around expenses are just so critical, at least for those who are accountants, that we make sure that we look at both sides of the ledger. In focusing on how do we reduce expenses for families, I think we clearly need to make sure that we are creating alternative products. We all know that education and information is absolutely critical, but I think as your questions certainly highlight and focused this morning, that we must also make sure that the market is working, and, that is, we can give people the best information in the world. If there's not some place for them to then go and use that information where there are fairly priced goods and services, they're ultimately going to only be there -- they're only going to be responding to predatory services. So we clearly need to get people 113 6/14/05 - Resolution 050272 - Commerce information, make sure they're informed about choices, what's going on in the market, and, of course, I think what the other conversation is about curbing abuses. We've talked, I think, or at least you've heard a lot this morning about what I would consider the big picture. I want to share with you the story of one particular family that lives in the City of Philadelphia. They're the Brown family. It's a real family. It's not a family that we made up. It's a family that lives next door to my assistant, Bonnie Morgan, who works with me at GPUAC. The family next door to her, Candi, Calvin and their four children, live in the Overbrook section of Philadelphia. The children are ages 2 to 13. The family is currently financing a home in the Overbrook section, a $65,000 rowhouse. Calvin is employed full time. He earns $33,000 a year. Candi worked full time at one point at a pharmaceutical company as a data-entry clerk until this last December. The company went through a merger and she was ultimately 114 6/14/05 - Resolution 050272 - Commerce laid off. Currently she's receiving unemployment and working part time on the weekends at a shoe store. She brings home roughly about $150 a week. Candi also is taking classes at Philadelphia Community College and wants to get her Associate's degree and become a veterinarian technician. So how are the Browns paying for basic necessities? Let's take a look at what is really mentioned in the Brookings Institution's study highlights. What are the three areas where they are spending their money?
Groceries, utilities and a car. Candi is pretty good at shopping. She goes to all of the discount shops. She goes to BJ's Wholesale, Save-a-Lot, Shop Rite, all those kinds of stores and really looks for the best possible bargains. She spends about $430 a month on groceries. Her utility bills, she's got the same sort of set of utilities that all of us have. She does live in Philadelphia, so you know that she has that PGW bill, which happens 115 6/14/05 - Resolution 050272 - Commerce to be the highest utility. And I'm sure in looking at the Brookings report, you sort of see where PGW sort of fits on the list of utilities. In our region, she's paying $138 a month for natural gas, $72 for electricity and about $70 a month for her telephone services. The Brown family also has a car. And the car expenses -- now, remember what I said about some of the other expenses and that they're buying a house and all that? Their car expenses are $1,177 a month. That's nearly $1,200 a month. That's their car expenses. Let me tell you about this car. You might think that maybe she's driving a Mercedes or a BMW or a Lexus. Candi is financing a used 2004 Dodge Intrepid through Triad Financial through a lender called Bar None. Her car note is $511 per month. Why so high? 99 percent. Financing charges alone are $13,817 over the life of the loan. 116 6/14/05 - Resolution 050272 - Commerce These financing charges are the same amount the Blue Book says it would cost to buy a second 2004 Dodge Intrepid. Candi has insurance through Safe Auto at a cost of $426 per month for full tort, a more expensive option for those who know, that you can get limited tort insurance, which restricts your ability to bring certain kinds of lawsuits. But she's got the full tort insurance, and she spends about another $240 a month for gasoline. That's how we add up to $1,177 per month for her car. Now, let's add that in to her other expenses, she and Calvin's expenses. Home mortgage, $588; day care, about $400; again that car at $1,177; all her utilities together, about $280 a month; and then her groceries, $430, giving a grand total of $2,875 a month. Now, let's compare that to she and Calvin's income, and you're looking at an income of a little bit more than $3,000. Take away the expenses, which again don't include all of her expenses, and right there, Candi 117 6/14/05 - Resolution 050272 - Commerce and Calvin have $181 left after paying those major expenses. We haven't sort of added in the other costs of healthcare, clothing, entertainment, the cost of Candi going to Community College. So you can see how easy it is for this family to get in debt. And the deeper they get in debt, the worst it could become. A cycle of debt. Missed payments, possible payday lending, short-term borrowing. We believe we can reduce the odds of the Brown family getting into debt by reducing their expenses. Reducing their expenses makes a clear difference in how much money this family would have at the end of the month. If we just reduced the car loan and the gas bill in particular, let's take a look at the difference it would make. If their car costs were cut in half, they could save $5,628 a year. If we could cut the gas bill in half, that would save $828 a year. That would be a total savings of almost $6,500, raising the amount of income that the family would have to spend by 16 percent. 118 6/14/05 - Resolution 050272 - Commerce In your packet I've included charts that will help you take a look at these numbers. In order to accomplish these changes, I am not suggesting that government go it alone. This will take a concerted effort by leaders from all sectors in Philadelphia, but what is important and clear is that the effort can make a major difference in the lives of families in our communities.
It is families like the Browns who are the backbone of our City, and our success as a City depends, to some extent, on their ability to move themselves and their children forward into a stronger economic situation. If the Browns can build a successful future, their community will be stronger and the City will thrive. Now I'd like to turn my attention to some of the recommendations in the Brookings report. 99 percent. As you know, it's not just car loans. Predatory loans, as you've already talked about, are too common in the home 119 6/14/05 - Resolution 050272 - Commerce mortgage lending industry. That can also be found among short-term lenders, check cashers, rent-to-own stores and at tax time when commercial tax preparers promote refund anticipation loans. Typical victims of predatory lenders are people with numerous debts and poor credit records who are in need of cash, or people like the Browns who need a car and might not realize that they could get a better deal. In order to combat predatory lending, we will need a real partnership between business, government at the state and City level and the non-profit sector. Here are some examples of how this is working today. To combat predatory lending, GPUAC manages two programs. One is called PHIL-Plus and its companion, Mini-PHIL. These products are home improvement and debt consolidation loans. They are for homeowners with credit problems or for those who do not meet the credit worthiness requirements of lenders participating in the City's PHIL Loan program. They enable owners to borrow money 120 6/14/05 - Resolution 050272 - Commerce for home improvements and debt consolidation at reasonable rates and affordable terms. Thereby, helping them avoid predatory loans. 49 percent. 3 million. GPUAC, in partnership with the City's Neighborhood Transformation Initiative, banks and housing counseling agencies, developed and administers the loans. Another initiative that's going on in Philadelphia that we hope that you will continue to support is the Campaign for Working Families. We offer free tax services and we educate the public about getting the earned income tax credit and avoiding refund anticipation loans, whose interest rates can be as high as you've heard, as 600 percent, to provide cash for only a few days before tax refunds would have arrived anyway. 121 6/14/05 - Resolution 050272 - Commerce This tax season the campaign brought $20 million to 12,000 low-wage families working with the IRS and other partners and operated free tax sites. 2 million to 7 Philadelphia's households over the last three 8 years. 9 And one additional program that I 10 want to share with you, because we are just in 11 the beginning stages of developing and rolling 12 out this initiative, with the support of City 13 Council and the Neighborhood Transformation 14 Initiative, and that's the Philadelphia Home 15 Buy Now program. You may have seen an article 16 in Sunday's Inquirer that talked about the 17 success of this. And this is a program that 18 helps those through their employers actually 19 gain support to buy property in the City of 20 Philadelphia. 21 Now, I just want to touch a little bit on the second issue that is so important that I know you've heard a lot about, and that's about consumer information and financial education. As the Banking Secretary 122 6/14/05 - Resolution 050272 - Commerce said, financial education is critical to helping low-income working families really make good decisions. I am going to skip ahead and just make one other comment before I close and ask that the rest of my comments be included as a part of the record. There really are -- again, I want to emphasize, as we look at this whole area, it is important that we continue to deal with all three legs of this stool.
We've got to make sure that there are really fairly priced goods and services in the marketplace and we need to figure out how best to incentivize the market to do that, whether it's a PHIL Loan program or a Fresh Food Financing Initiative. We need to make sure that the information is available in a way that people are going to be able to use it effectively, whether it's in schools, whether it's on the Internet, whether it's in community groups and organizations, whether it's through housing counseling agencies, CDFIs. And, finally, we need to make sure 123 6/14/05 - Resolution 050272 - Commerce that the rules are fair for everybody and we need to let people know what's going on with people who are really doing things that they shouldn't be doing in our communities and publishing that information and making sure that we know what's going on with people who are doing the right thing. Thank you.
Good afternoon. My name is Hannah Burton and I'm a Senior Associate at The Food Trust where I manage the Pennsylvania Supermarket Campaign and work with Sharmain at the Greater Philadelphia Urban Affairs Coalition and the Reinvestment Fund to manage the Pennsylvania Fresh Food Financing Initiative. Philadelphia faces a unique paradox in which communities like lower North Philadelphia and West Philadelphia have buying powers of approximately $130 million per square mile. This buying power, which is a pretty impressive number in and of itself, exceeds the City average, which is $97 million per square mile, and yet Philadelphia as a 124 6/14/05 - Resolution 050272 - Commerce whole, despite this attractive buying power, has the second fewest supermarkets of any comparably sized city in the nation. We've talked a lot today about how this impacts low-income consumers in terms of direct price impacts, but there's some indirect costs that I'd like to touch on as well. For transportation-limited families, the limited access to supermarkets adds to transportation costs, and there are health effects as well. The Food Trust's report Food for Every Child showed that for communities with limited access to supermarkets, these were also the same communities where you saw very dire impacts of health-related diseases, cancers, diabetes, obesity. Last year, Pennsylvania spent more than $4 billion on the cost of obesity-related diseases, and these costs are increasingly being borne by those who can afford it least. I'd like to say that Pennsylvania is emerging as a leader in the fight to increase access to healthy foods. Thanks, in part, to 125 6/14/05 - Resolution 050272 - Commerce the leadership of Councilwoman Tasco and Councilwoman Reynolds Brown, who held hearings starting in 2002, and Representative Evans and Representative Oliver, who held hearings at the state-wide level, we now have this incredible opportunity to finance supermarkets in low-income communities to help take care of some of these health-related costs that low-income communities are facing. The response to the initiative has been tremendous from the supermarket industry, which Representative Evans touched on, and we're seeing in Philadelphia in particular responses ranging from mom-and-pop stores, small stores about 8,000 square feet to the 57,000-square-foot Shop Rite that Representative Evans mentioned. Increasing the number of supermarkets in low-income communities really helps contribute to the stability of these communities, gives options to families who are limited in terms of their transportation choices, and it creates a more competitive environment, which I think is a critical 126 6/14/05 - Resolution 050272 - Commerce factor in terms of bringing those prices down, which we've discussed earlier. Financing, obviously, is a very important tool to close the urban grocery store gap, but it's not the only action that's needed, and the Brookings report mentions two additional reasons why low-income neighborhoods have fewer full-service grocery stores, problems with market analysis and problems in the development process in Philadelphia. In terms of the market analysis, I think we've touched on the reasons for that today. They tend to underestimate the demand for food retail because they rely on national census data and national market trends and don't do a good job of capturing the incredible diversity that we see in Philadelphia's neighborhoods. Our neighborhoods have population density that results in a concentrated buying power, which is significantly higher than the suburbs where the median incomes may be higher. 127 6/14/05 - Resolution 050272 - Commerce I strongly support the recommendation that this City would invest in a market study of the true market demand in its neighborhoods and then market the results.
A City-wide marketing package could also address the perception of safety issue, with up-to-date crime statistics to directly head on the misperception that Philadelphia isn't a safe place to do business. Cities like Milwaukee and Chicago have already done this, used independent data analysis, specifically to attract more supermarkets in the absence of financing, so we know that it works. The second issue in the Brookings report cited evidence that the development process in Philadelphia is slower and more cumbersome. Philadelphia's neighborhoods would benefit from a strategic City-wide plan focused on stimulating new investments and improvements in the food retail sector. This has already been tried successfully in cities like Dallas and Baltimore, where cities have worked to assemble large parcels and build a 128 6/14/05 - Resolution 050272 - Commerce comprehensive package of financial incentives to attract full-service operators. The historical assumption has been that retail will follow housing, but that's not always true, and we have an incredible opportunity with the Neighborhood Transformation Initiative to assemble those sites that are large enough to have full-service grocery stores and to build neighborhoods that address this basic daily service. To this end, I recommend that Philadelphia create a dedicated economic development entity to help attract retail development to neighborhoods. In closing, I would like to say that cities around the country are really looking to Philadelphia and to Pennsylvania as a leader in stimulating the redevelopment of supermarkets in low-income areas. We can go further, though, by focusing attention on how Philadelphia can market itself and how it can direct resources to retail development projects to build jobs and create healthier neighborhoods. Thank you. 129 6/14/05 - Resolution 050272 - Commerce
Thank you very much. Really great testimony. Representative Evans, we'll start with you first. First, I want to thank you for your leadership in establishing the process to finance and support food markets, supermarkets in the City of Philadelphia. And reading your testimony, Hannah, I said, Well, we've already begun, but there's some more work to be done. We talked earlier about the whole issue of this bill that's coming up and you said that you're going to amend the bill to require counseling? REPRESENTATIVE EVANS: Yes.
What else are you doing in the state? We talked about the political will of the legislators, and I've sort of called on you often to sort of provide the leadership to other Representatives to read the Reinvestment Fund and look how all of this impacts on their constituents in other parts of the state. What's happening with that? 130 6/14/05 - Resolution 050272 - Commerce REPRESENTATIVE EVANS: Well, I think, Madam Councilperson, that you're correct in the information that you provided. The way that I've attempted to approach it is, one, starting off, first and foremost, was with the study with the Working Families policy report; in other words, getting the Governor's office involved in building a consensus across the state. There were 70 people that were on this particular task force, all types of people, all types of issues. So the first thing is trying to build the political consensus. You understand the dynamics of Harrisburg first. Secondly, in building that political consensus, you heard some of the things that Sharmain Matlock-Turner said, which is on our legislative agenda. For example, trying to deal with CDCs, community development corporations. We are trying to -- that's on our budget list that we're attempting to finance, those particular organizations. The third thing is the education 131 6/14/05 - Resolution 050272 - Commerce process. For the first time, the element of financial literacy, the Secretary of Banking I think indicated to you that he now has an office on financial literacy. That never happened before. We're now working with the Secretary of Education in trying to educate all of the school districts across the Commonwealth of Pennsylvania. The debate that's constantly a part of this whole question is, is it volunteer or is it mandated. That's basically the debate that's occurring. As you know, we had PSFS at one time. As a kid, that's basically how I began to learn my banking practices, was at PSFS. Well, the debate centers on the question what is the best way to approach this. One of the reasons why I quoted what took place with the Bankruptcy Law was, for the first time, the United States government has embraced mandatory counseling. And with this huge debate around Social Security, obviously people are going to need and understand far more knowledge about what to do 132 6/14/05 - Resolution 050272 - Commerce about their money. So I think there is a question that people are now moving in the direction of having some sort of mandatory counseling. So I think that's one part of it, but the other part of is, as Sharmain Turner said, you must also have different venues available for people, because there's no question that when you start talking about payday loans, predatory lending, rent-to-own, that is fundamentally a market failure, and as a result of that market failure, fundamentally we have to create alternatives. I think that that's the direction that we're trying to move in the legislature, but in moving in that direction, first let's talk about education. You have to -- I'm not talking about people. I'm talking about the process. I'm talking about legislators in the process. We have, I think, two great blueprints, this document and this document. This is the only City in the nation and the only state in the nation that basically you 133 6/14/05 - Resolution 050272 - Commerce have a state blueprint and you have a City blueprint. Now the question is, for those of us at the legislative side and executive branch, is to begin to get into the question of implementation. That's where we now are. Through your leadership in this hearing, we're now having a hearing on this discussion. So I think we got the blueprint. We need to begin that process of looking at how we can create other venues for people, other than things like payday loans and people taking advantage of individuals who are vulnerable.
To Sharmain, I certainly thank you, the Coalition, for its leadership and your whole program around the Working Families and the whole issue of providing products to families as alternatives. I appreciate your leadership in working with the banks to come up with some of the products that you have developed. In looking at all of this, the two blueprints, one from the state, which you participated on, and the City blueprint, we certainly have a 134 6/14/05 - Resolution 050272 - Commerce lot of work to do, but it gives us this whole area and gives us an opportunity to discuss some of the needs and help educate -- our Council was on board with everything, so we'll be finding, I'm sure, creative ways to address some of the many issues. I just want to point this out. Normally I throw these flyers away, but I picked this up from my door today and it says -- this is from a company that's offering home improvement work and it says "senior citizens discount" and "payment as low as $45, but we give free estimates for PHIL loans." So we're going to check this out. Usually when people start with stuff like this, we're talking about PHIL loans, City does this, it adds credibility to this flyer. And we certainly hope that the company is a credible company. I'm not speaking on the company. I don't know who they are, but I thought it was very interesting that they're using this term now, because it's all about gaining people's confidence in their company and then, of course, they then proceed to prey 135 6/14/05 - Resolution 050272 - Commerce on these individuals.
Well, the good news is that the PHIL Loan advertising seems to be working.
I hope that the company is a positive. But, again, part of the whole effort is trying to get out into the marketplace. As a part of developing the PHIL-Plus and the Mini-PHIL loan, part of the roll-out -- and that part has been a little bit slower -- is, our partnership with local community groups and organizations who are actually going to work throughout the City of Philadelphia actually getting information into the hands of people to sort of know that these loans are actually available. And what happens a lot of times as we develop these initiatives, the real tough part is finding the appropriate venues to get the information out to people. So the more support that we can have, as we think about developing these, we've got to make sure that we get approval for money and budgets and 136 6/14/05 - Resolution 050272 - Commerce proposals for marketing. Because if we can't get the information out, if we can't get it in circulars, if we can't get billboards up, if we can't do advertising that are going to reach the largest number of people, then it becomes a small program that doesn't have the kind of impact that we really want it to have. So we must continue the positive marketing of those programs that we know that we have that are actually working well.
Thank you. Thank you all for your testimony. We thank you for the time you've taken to come today. We will continue with this dialogue and discussion as we move forward, and we want to thank you. We have two other people to testify. And State Representative Evans, you might not want to leave. We have Lance Haver. Lance Haver wants to come forward and testify, and he may raise some issues you might want to respond to. REPRESENTATIVE EVANS: Thank 137 6/14/05 - Resolution 050272 - Commerce you very much.
I brought the sign to hold it up. Let me introduce myself first. I'm Lance Haver. I'm Director of Consumer Affairs for the City of Philadelphia. Thank you very much for this opportunity. I'd like to start out by saying how much I appreciate these hearings and focusing on this issue. The reason why I brought the sign here today and wanted to make an issue of it is to try and convey to you how difficult this issue is to address. Here you have the Secretary of Banking, who is a decent, honorable man, who is saying that he is on the side of poor people, supporting legislation that would raise the legal interest rate in the State of Pennsylvania from percent to 20 910 percent. A decent, honorable man, who is 21 so overwhelmed by how bad the situation is for 22 poor and working people that his solution is 23 to raise the legal interest rate for those 24 poor people from 24 percent to 910 percent. There is something fundamentally 138 6/14/05 - Resolution 050272 - Commerce wrong with that. That's why I appreciate these hearings. That's why I'm thankful for the opportunity to speak about it, because, unfortunately, it's not just payday lending. It's also when you talk about milk prices. I really appreciate the Mayor giving me this job, because I was able to go through the Milk Marketing Board. The Milk Marketing Board sets the floor price for milk. If you sell milk at a lower price than what the state says is legal, technically you can go to jail. Realistically, you get fined. If that corner store that you heard about sells milk for three times the floor price, that's legal. We failed, even though we tried. We went before the Milk Marketing Board and said, If you can set a floor price for milk below which if you sell it you go to jail, how come there isn't a ceiling price for milk? And it's not just milk prices. It's also SEPTA. Poor people, according to SEPTA, are captured riders. They don't have a choice. So the City Transit Division is 139 6/14/05 - Resolution 050272 - Commerce subsidized at a much lower level than the suburban riders. And it's easy to see, anyone who rides the train or sees Wayne junction, if you just think for a second, would that train station in that shape be allowed to exist in Lower Merion? And you can see what the problems of poor people, poor consumers are, and it's true, poor pay more. I have some very concrete ideas, if you allow me to talk about them. I do want to talk about car insurance briefly. As Councilman Clarke pointed out, we were successful in the attempt to lower car insurance by pointing out the numbers for limited tort. We've had some very minor success at lowering other rate increases. What we are now focusing on is setting the rates based on credit histories. The State of Missouri has done a study that showed that race and credit histories correlate much better than anything else. We are getting ready to file that. The Law Department is going over that, and I would circulate that to City Councilmembers and ask 140 6/14/05 - Resolution 050272 - Commerce that you have a look at it and decide to join it so that we don't allow the insurance industry to say that because you are divorcing, because you are out of work, because you've had some health problems, that your house is more likely to catch on fire, because that's what they're doing. They're saying if your credit history goes down because you haven't been able to pay your bills on time, then it's more likely you'll have a catastrophic fire in your house. That's why they have to charge you more money. The second issue for car insurance and homeowners insurance is legal red-lining. What they do is, they group areas together, and just miraculously it turns out that Chestnut Hill in Allstate's grouping turns out to be in the suburbs and West Oak Lane turns out to be in North Philadelphia. They assure me it's not based on race. It just happens to be racial in its content. Now, what do we do about that issue?
The answer to me is stockholder advocacy. C. shares, we should reach out to their City Councils and say, Will you join us with introducing resolutions saying unless Allstate stops their red-lining against people of color, we're going to move to have our pension plans drop Allstate stock. That's a very real threat if we get the top 50 cities in America to enter into it with us. We have the same interests. We have the same issues. We should be working with them for stockholder advocacy. In the same brilliant way this Council has used stockholder advocacy for other victories, we can use it for economic parity for poor and working people in the City of Philadelphia. On utilities, there are some concrete things again that we can do. First and foremost, we should fight the merger between Exelon and PSE&G, which will give Exelon the largest utility merger in the history of the United States. It will give the new company much more market power, and 142 6/14/05 - Resolution 050272 - Commerce what it will do, unfortunately, is give them control of the pipeline, which means PGW will end up paying much more for natural gas unless we protect PGW, and that means that poor people in the City of Philadelphia will end up paying much more than the surrounding counties, because the surrounding counties will have the control of the gas pipeline. We should also continue to think about lowering costs for the utilities by combining meter reading with gas and water. We should establish a revolving fund from some of the NTI money, from some of the other pools of money to help people put new heaters into their homes so they can lower their energy bills. We should use the collective buying power of the City residents whenever we can. Now, I tried to do that with car insurance. We put out a request for proposals to the car insurance industry for a basic no-bones car insurance where we could use the collective buying power of the entire City. We got no 25 bids. We're analyzing why we failed, whether 143 6/14/05 - Resolution 050272 - Commerce it's the problems of the insurance industry or there is something -- because I did this, and to be honest with you, I may have made a mistake. But we have to figure out how do we use the collective buying power of the City. Another example is for the City to offer an Affinity credit card, like many people say you can get a credit card and the Affinity goes to support your favorite charity. Well, we should have an Affinity credit card for the City of Philadelphia where the Affinity charge goes to support the arts. That's one of the ways to continue to support the arts. It costs absolutely nothing out of the City's operating budget. We're such a large market, that we could actually control the interest rates that the credit card company could charge, and we would have another revenue stream and we'd also be able to have a better product for the consumers in the City. We should also start talking to the socially responsible investment funds, talk to them about investing in our supermarkets and 144 6/14/05 - Resolution 050272 - Commerce investing in some of the other industries that are here in the City and actually negotiate with them. If you're willing to help us bring supermarkets into the City so consumers can get quality food at affordable prices, we'll be willing to talk with you about investing some of our pension fund in those investments. Finally, in education, the School District last year, I went before the School Reform Commission. They committed to instituting a mandatory consumer education, financial education program. I would ask Council that when the School Reform Commission comes before you, to ask what's the status of that. Because as important as Shakespeare is, as important as it is to know who Romeo and Juliet are, it's also important to know what the APR is and how do you budget and how do you write checks and how do you stay away. So I fully support all education.
I'm not suggesting that we should be anti-intellectual like the current President, but I am suggesting that just as important as being able to recite a Shakespearean sonnet is 145 6/14/05 - Resolution 050272 - Commerce to know when I've been taken advantage of at the car lot. I'd be happy to answer any questions. Again, I want to stress the payday lending bill that the decent Secretary of Banking is supporting would raise interest rates legally to 910 percent. If you follow his logic, it would be like this: We have criminals who hit people over the head. We do all types of things to try and stop it. We haven't been successful, so let's legalize it and tax it a little bit, and, therefore, that will be the best we can do. I think we have to say no, we can do better and we should do better. Thank you very much.
Thank you very much, Lance. I think we've got to find some way to get to the other state reps, because he's fighting the political will. Because basically he is a good, decent guy. So he's fighting what they're being presented with by the payday lenders. So he's trying to offer an alternative, because we can't get 146 6/14/05 - Resolution 050272 - Commerce what we really want, but that's another discussion that we -- and I will be calling you for a meeting.
I understand that, and that may be a tactical decision, but I think in all honesty, we have to say to each other that when you legalize an interest rate at 910 percent, you're not helping poor people.
It may be the best you can do, but don't tell me it's good. It may be the best choice of all bad choices.
I agree with you. We have one last person to testify, Anthony Jones. Good afternoon.
Good afternoon. Thank you very much for allowing me and Wynelle Coleman, my partner, to come and speak to you in regards to the different things that are going on in our community today. I'd like 147 6/14/05 - Resolution 050272 - Commerce to thank Dave Cohen, Councilman Wilson Goode, Jr. and all Council.
My name is Wynelle Coleman and I'm here with Mr. Jones as a partner in creating financial literacy. Anthony Jones is proud to testify today, as well as myself, because we're committed to the Philadelphia community as members of the community and dedicated to each individual. As partners, Anthony has created relationships with organizations such as NOVA Bank and other organizations outside of the City. He is a liaison that does business development for the federal government, bringing relationships and partnerships together through an extensive network of technology, CDICs, CDFICs and CRAs and community relationships. He brought to me a copy of the Brookings Institute report three months ago, and with that, a copy of that report, it empowered us to validate and solidify our financial literacy program. Myself, I am a community worker 148 6/14/05 - Resolution 050272 - Commerce through Grace Baptist Church of Germantown and I am also a financial planner by trade and education. You should have before you a copy of our report, and what I would like to do first of all is address some of the resolutions. This financial literacy, it's just a brief synopsis of what we could do globally for the entire state and the community. We'd like to address some of the resolutions that you put forth in your memorandum. However, if addressing what the Secretary of Banking was saying and our predecessors were saying, one of the crux problems of financial literacy is, the community as a whole, all we really have learned from the beginning is that you get money, you spend it and use it. What our program hopes to address or will address emphatically is how to take advantage of our current technology that is going on with a cashless society that was created about 20 years ago as we move forward to the future. It also will serve the 149 6/14/05 - Resolution 050272 - Commerce underbank and it will also address the needs of educating children from the time they enter a school system. So we would hope to accomplish this from a grass roots basis. Your customer requirement, that particular slide is all about reaching that child by the time he's working age and he knows how to get a paycheck. We still have a lot of our community using cash checking systems, and this way, they will learn how to use banking so that they can create and save and pay themselves first and stop being consumers of products instead of being consumers of savings. We also would like to help their parents in getting their parents to understand how you can purchase a home, as well as be an entrepreneur. This way, you're giving back to your local community, as well as being a taxpayer. We would like to help raise the economic level of our community so that we are consumers of empowerment as opposed to just out of need and necessity in a negative way. 150 6/14/05 - Resolution 050272 - Commerce Anthony will speak at this point on some of...
In developing this, I've been working about ten years at community reinvestment. I've been blessed to have people like Prince Gilliard, who is the President of the Hospitality Association, as a very good friend and mentor, a gentleman like Ed long, who is involved in creating something called Corporate and Government Partnership, Brian Hartline from NOVA Savings Bank, Bob Smick, to help me develop this as a company to deliver to our community things that I know, because I was born in Philadelphia. I was raised in 15th and Green in a basement apartment, and my mother came up out of that basement apartment and moved into a house in New Jersey. Now me and my brothers and sisters are good, tax-paying, educated individuals, as well as my children. What I have developed is called an Online Community. This Online Community is designed to generate products and services, and the transactions that occur in the 151 6/14/05 - Resolution 050272 - Commerce particular community where it occurs and a portion of that revenue goes back by strategically negotiating with manufacturers, retail stores from A to Z. Because the consumers currently today are just consuming products. We are very large consumers, but we're not getting a piece of the transaction. And I have developed that Online Community with a partner named Rodney Mitchell. We have our own Internet service providing company. The transactions are manageable. You can build them for the school, you can build them for chambers of commerces, college/universities, and the structure is to have a university adopt a high school, a high school adopt a middle school, and a middle school adopt a grade school. I received an award from Councilman Clarke for being involved in giving money to the smaller elementary schools, because the children didn't have books and pencils and pens and holes in their sneakers. So I was a part of an organization called Real Kappa Phi. This motivated me to get involved in this 152 6/14/05 - Resolution 050272 - Commerce more. I went to the NOVA Savings Bank and said, I don't want a job, I want to know how to buy a bank. I said, I want you to teach me how transactions occur. We have to learn how to process our own transactions. Currently today we're not doing that. And we can do it. Under the law, the current law, is CDFIs. My vision is to have these CDFIs, online community services, in our community directly across the street from predatory companies, such at check cashing places or these bill payment companies who are taking a lot of our transactions from our community. If we teach the one, two, three's of paying your bills, banking, saving and investing, I think that's going to help all of us as a community. And in my components here, you'll see my memorandum understanding of the Online Community. 80 percent of the money comes to me. However, ten percent of the money is going to go to a foundation, and the foundation is going to be structured where the 153 6/14/05 - Resolution 050272 - Commerce transaction is going to be based on zip code. That money will go back to that community where that person lives. And they can use a piece of plastic anywhere in the world, but the money of the transaction that's supposed to be shared back to the community will go to that fund, and it will administered by your community, that organization. It may be a church, chamber of commerce, something that is developed by that online community. All of this is on the website and it's more detailed. The other thing, this revenue-sharing will go into a pot. I'm currently involved and on the Board of the Community Lenders Community Development Corporation. That's a corporation of 16 banks that pulled together their monies to help in different areas. Their goals and strategy is to achieve community investment loans, mixed loans, mixed-used loans for housing, also use loans, eligible borrowers, eligible projects, eligible transaction security, loan income affordability.
Every transaction that occurs, a portion of that transaction must have a 154 6/14/05 - Resolution 050272 - Commerce piece that goes towards education, because that's our problem currently today. I think if we had the money, we can do a lot of different things. Currently our schools wouldn't have to go through this. So in closing, I'm thanking this committee and the Brookings Institute for showing us as a community how we've been taken advantage of for so long, and I thank you very much.
Is there anyone else to testify on this resolution? (No response.)
We thank everyone for their testimony. This hearing is recessed to the call of the Chair. (Committee on Commerce and Economic Development concluded at 1:45 p.m.) - - - 155 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on June 14, 2005, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)