Thank you, Mr. City Solicitor. Are there other questions? (No response.)
Just a couple of questions. I received a response as a part of the overall responses. I guess you were here for Five-Year Plan hearings a couple weeks back, and I requested the legal costs for the federal corruption investigation, and I guess it's possible that my question was too narrow. It seems that I may have just asked for FY06 and FY07, which is what you responded to. Can you go back to, I guess, what would have been FY04 and FY05 for those costs and then we could have a complete, up-to-date total?
Sure. We actually had a very small expenditure for the federal investigation in FY03. And if 133 3/28/06 - WHOLE - BILL 060001, ETC. you were to add all of those costs, FY03 through our projected expenditures in FY06, we're talking about a total expenditure of about $4.2 million, including all funding streams to the Law Department. Most of that is for the General Fund, and of that amount, we estimate about 2.85 million of the 4.2 million is associated with the cost for cooperating with the federal investigation. For example, we have had, through the Law Department and outside counsel, to review some nearly 500,000 document pages, 700,000 e-mails, 60 gigabytes of computer data, 75 current and former City employees interviewed. We covered five trials and responded to some 130 subpoenas for document requests. So most of that 4.2 million -- as I indicated, about 2.85 million -- was associated for the cost of the City cooperation with the federal authorities.
And what was the other approximately 1.35 for? 134 3/28/06 - WHOLE - BILL 060001, ETC.
That was in connection with representation of individuals, either because they were the subject of a representation requirement, most often through a conflict issue where it was thought inappropriate by the federal authorities that our outside counsel representing the City as a whole, in their view, should not be representing particular individuals.
So in kind of shorthand, is it fair to say that the 1.35 was for actual legal expenses, legal representation expenses?
I think that's probably a fair summary. I'd have to go back and review the individual items, and I could provide that for the record, but I think for purposes of this line of questioning, that's a fair summary.
And so let's then go back. The 2.85 in a category of cooperating with the federal investigation, again, what exactly does 135 3/28/06 - WHOLE - BILL 060001, ETC. that mean and how is that distinct from the 1.35?
Much of the work that's being done in connection with the federal investigation is, in a very straightforward way, investigation and it's responding and reviewing documents and the kinds of materials I mentioned before, the nearly half a million pages worth of documents, the 700,000 e-mails, things of that nature that we review through outside counsel to determine whether the information might be relevant and, if relevant, if it's potentially covered by some type of confidentiality or other privilege.
So you're suggesting that from FY03 through FY06, you're estimating $4.2 million, and then the response from that Five-Year Plan hearing seems to indicate, and the budget book reflects as well, you're anticipating for FY07 $537,424 at the moment? 136 3/28/06 - WHOLE - BILL 060001, ETC.
I believe that's correct for the General Fund, but the total amount in '07 is an additional 50,000. So that the amount that we have requested in FY07 budget authority is $587,424, which reflects both the General Fund and Aviation Fund requests, which are reflected in the document before you.
Related to Aviation Fund issues. I don't know that I would restrict it to the Airport.
I understand. So through FY07, the anticipated expenditure is approximately $4.7 million?
Now, let me 137 3/28/06 - WHOLE - BILL 060001, ETC. move into another area and then I'll come back to some other things.
And if I may, Councilman, given the experience that we've had to date, the cooperation number that I gave you earlier, the $2.85 million for the general cooperation expenses, review of documents, electronic data, et cetera, we would expect that to also apply to about two-thirds of the expenditures that we anticipate for FY07. I gave you a number earlier of 2.85 million. So if one were to add about --
You made reference proudly, and it's certainly something to be proud about, your record with regard to what's generally referred to as MBE/WBE contracts in the Law Department. Does that come mostly from 138 3/28/06 - WHOLE - BILL 060001, ETC. the Class 250 category in the budget book?
I don't know if I would say that they're reflective of just that category. In fact, the --
But definitely Class 10 200. These are professional services. 11 And the MBEC reporting requirements now 12 have expanded the contracts against which 13 we measure performance to include 14 contracts which we manage. For example, 15 like the Lexus-Nexus electronic research 16 capability is now counted toward our performance even though it's not funded out of the Law Department.
Could you provide to the Chair by contract and I guess by contractor a list which would indicate how you arrived at the numbers, the percentages, with detailed information for each contractor related to race, gender and geography. What I 139 3/28/06 - WHOLE - BILL 060001, ETC. mean by geography is --
-- Philadelphia versus the rest of the -- in the City, outside the City.
I'd be pleased to do it, consistent with the longstanding discussion that you and I have had about privileges associated with the federal investigation.
Okay. I understand that. I mean, this shouldn't interfere too much with that.
I think I heard you talk about a request for contract details, and to the extent that those contract details might divulge confidential information about the federal investigation, I would have to demur on that, but obviously with respect to how we count the dollars for MBEC performance results, I'm more than happy to give you that information.
I 140 3/28/06 - WHOLE - BILL 060001, ETC. understand. On , I'd take a guess that if you go to a lot of these lines, 253 representations, bottom of into 6 17, I'm assuming that the abbreviations 7 here are investigation cooperating/client 8 representation? 9
Most of 11 those are -- not most. Some of those are 12 going to be the federal corruption 13 investigation? 14
I assume that's how you'll continue to designate them. Okay. There's been a fair amount of discussion back and forth in the news media about the campaign finance ordinances that have been passed. Some are related to contract reform. I don't think they've been the subject of much discussion or controversy so far, but the 141 3/28/06 - WHOLE - BILL 060001, ETC. other bill that was passed -- there have been two of them, one in 2003 authored by Councilman Goode and then a subsequent amendment to that bill primarily done by Councilman O'Neill, which added offices that are covered, as well as increased the contribution limits. My recollection is, there's been some correspondence from groups and organizations, as well as possibly news media accounts about this, and then I saw a response from you indicating that there basically was nothing else to do from an enforcement standpoint. Could you better detail, I guess, for us how you arrived at that conclusion in terms of who has to comply or who doesn't have to comply, what the role of the Solicitor's office is specific to enforcement and if there is anything else that needs to be done in this particular regard?
The campaign finance legislation that has been enacted in the 142 3/28/06 - WHOLE - BILL 060001, ETC. City imposes limits on contributions to persons who have announced intentions to run for City elective office. The contribution limits are $2,500 by individuals and $10,000 for businesses. The legislation does not limit contributions to persons who merely indicate a willingness or availability to run, and the reason for that second point and the interpretation that the Law Department has provided on campaign finance is that we believe that is required by settled case law interpreting other city laws and with how courts would enforce the law.
And how courts would enforce campaign finance law enacted by the City. As to your last question, should anything more be done or is needed in this regard, I've indicated to the Committee of Seventy and others that I 143 3/28/06 - WHOLE - BILL 060001, ETC. believe that's a policy question that is not within the scope of my responsibilities, that I have focused on what I believe the law to be and how a court would likely interpret the existing campaign finance law adopted by City Council.
So is the main issue here either the Court's interpretation or what the present definition of "candidate" is or may be? I mean, is that the central issue?
Well, the issue related to candidate is how courts, through settled case law, have interpreted that phrase, and it has been interpreted not to include those who have announced merely an intention to run or availability to run for an elective office in the City.
Right. Well, I understand that, but for certain narrowly defined purposes, we can have, in accordance with the code provision, I 144 3/28/06 - WHOLE - BILL 060001, ETC. think we're allowed to have definitions that apply to certain situations; is that correct?
Certainly the City Council consistent with the law can interpret and define particular terms, but what I am referring to in terms of settled case law is what I believe not only Pennsylvania courts but also federal courts, including the United States Supreme Court, have indicated were within the scope of campaign finance restrictions, which would otherwise be interpreted by some as a potential abridgement of First Amendment rights. And so I think there is a fine line that needs to be drawn as between what is an acceptable level of campaign finance regulation and that which runs afoul First Amendment privileges as interpreted by the United States Supreme Court.
Right. I understand. 145 3/28/06 - WHOLE - BILL 060001, ETC. Let me go back to the budget book for a second. On , there is a line item involving $85,000. All of these expenses seem to be related to the Aviation Fund or the aviation section at least, $85,000 for a category called "airline bankruptcies." Are we in the middle of litigation? Are we anticipating some? What are we paying for?
I think there's no 13 surprise that the airline industry has been under tremendous economic pressures of the last few years. We were very directly involved most recently in a very substantial way in the second bankruptcy of U.S. Airways. We've also been involved in national airlines, United and other aviation industry bankruptcies. So we have prudently, I think, listed and expected a line item reflecting ongoing lower level of interest types of bankruptcies in which we are continuing to be engaged, and 85,000 we thought was 146 3/28/06 - WHOLE - BILL 060001, ETC. an appropriate level of expenditure for the coming year.
Subject to something actually happening, or are you just -- I mean, are we constantly doing research? This is to anticipate something that may happen and you just have it designated for that particular use?
We have some ongoing bankruptcy involvement I believe with national airlines. I'd have to provide for the record, Councilman, exactly what the ongoing level of bankruptcy involvement is. We have closed out, for example, the second U.S. Airways bankruptcy, but there was a deadline of, I believe, yesterday for U.S. Airways to accept or reject all of the leases relating to its locations. So even after the bankruptcy proceeding was officially terminated at least insofar as the bankruptcy court appearances, we still had ongoing activities, and I wouldn't be 147 3/28/06 - WHOLE - BILL 060001, ETC. surprised if either in U.S. Airways or in other ongoing bankruptcies we would have some expenses. But I'm not focused on a particular airline or a particular new level of work when we projected the 85,000.
Okay. Two last areas. Concern has been expressed to me -- it may have also been expressed to other members -- regarding a particular enforcement issue, and it revolves around billboards and apparently some enforcement matters that have gone through the state court system and apparently a few that have even made their way into the federal court system up to and including the United States Supreme Court. The issue seems to revolve around what happens after someone loses in these matters and whether or not the City then requires the removal of the billboard or payment of overdue fees, and in many instances they either languish -- 148 3/28/06 - WHOLE - BILL 060001, ETC. or a concern is that they languish in the courts or we get to the point of making settlements or extended continuances. Five particular cases have been pointed out to me and I just wanted to better understand what was going on. Should I tell you what the cases are or are you already familiar with these cases, or how do you want to proceed?
I'm more than happy to give you a summary of where I think we are in the billboard litigation area, and if you have particular follow-on questions, I'd be happy to respond to those. I can tell you it has been an extremely difficult and frustrating effort to enforce the City's billboard requirements.
In fact, it has been characterized to me by representatives of the billboard industry that they are 149 3/28/06 - WHOLE - BILL 060001, ETC. engaged in a full-scale billboard war in Philadelphia.
"They" being the billboard industry. Every step in the enforcement process has led to new litigation. So we're not talking about finality with respect to any of these matters that you referred to, even for those where the United States Supreme Court has denied certiorari. What we have, I think, in the main are the following ongoing litigation matters involving the billboard industry, and I think it's, from my perspective, more helpful to give you a summary than to worry about the onesies and twosies, because we've not significant numbers out there of billboards that need to be regulated effectively. We have about 2,800 billboards that the Licenses and Inspections 150 3/28/06 - WHOLE - BILL 060001, ETC. Department considers to be legal. With respect to those legal billboards, you may recall that the effort by the City previously to set a billboard licensing fee was the subject of litigation and was struck down in terms of the City's authority to enforce its license fee. Last June, I believe it was June, of 2005 as part of the budget process, the City Council enacted a billboard license fee. That fee has been the subject of litigation by the billboard industry. Although it is currently on a voluntary basis continuing to pay much of that fee.
They've litigated in connection with the seven percent excise tax, which was also enacted last June as 151 3/28/06 - WHOLE - BILL 060001, ETC. part of the process related to the budget. There has been an effort by the City to enforce against what we consider to be the illegal so-called eight-sheet billboards, which are located frequently in neighborhoods on the sides of residential and commercial structures and the subject often of inappropriate advertising given the locations, involving alcohol, tobacco and other products that one would assume shouldn't be near schools and in neighborhoods. The billboard industry has litigated our efforts to enforce against those 800 to 900 illegal signs. We also have seen efforts by City Council to legislate with respect to the proximity of certain advertising, like alcohol, near schools and faith institutions, and all of those efforts are currently the subject of litigation against the City of Philadelphia. And so if you look at it as a whole, it is clear to me anyway that we 152 3/28/06 - WHOLE - BILL 060001, ETC. need a much more comprehensive approach than five individual billboard cases might provide, and I have been, through my office, engaged in attempting a comprehensive settlement. It hasn't been reached, but I am hopeful that it might be. And I think if we were successful in reaching such a settlement, it would allow us to legitimize those billboards that can be legitimized, remove those that are illegal, hopefully at no cost to the City, and provide a revenue stream consistent with the requirements of the Five-Year Plan. That is my hope, and as soon as I'm in a position to report further, I'd be happy to do so publicly, but I would also offer to do so privately, if that would be helpful to you or other members of City Council.
Well, thank you. It would certainly be helpful to me. I guess the one thing I didn't completely understand, once we have won 153 3/28/06 - WHOLE - BILL 060001, ETC. or the other side has lost, why don't we just go and take the billboard down ourselves?
Well, the normal requirement is that you get a judgment in your favor and then you seek to enforce through a judicial process that judgment. At every step when the enforcement is contemplated, there is additional litigation and appeal. We have considered the possibility, in the example of the eight-sheets that we believe to be wholesale illegal, the possibility of removing those at the City's cost, but it seems to me that we would certainly have the liabilities associated with that. We would have the costs associated with that to the extent that we didn't get compensated for our expenditures.
That would probably lead to one more piece of litigation with 154 3/28/06 - WHOLE - BILL 060001, ETC. respect to whether that was an appropriate chargeback. In short, it seems to me that trying to remove these at an individual level, putting aside the liability and putting aside the cost and putting aside future litigation, it seems to me at least that trying to seek a comprehensive settlement with regard to how these ought to be removed and how they ought to be assumed as to the costs by the billboard industry is a much more effective way to proceed, and that's the reason we have been moving in that direction.
Well, I look forward to the briefing, but do you have a sense of the timetable?
I'm hoping, Councilman, that it is imminent, but I can't give you an exact date, and I'm 155 3/28/06 - WHOLE - BILL 060001, ETC. happy to provide, as I suggested earlier, more details for you privately.
You indicated that you had a list of, I guess it was, billboards that are legal?
The Department of Licenses and Inspections does. We may have it in the Law Department, but I'm sure if you were interested in a list, I could seek it for the record.
And then there's a much larger list, I assume, of illegal?
Well, the ones that I'm aware of that -- the list that's been used for estimating revenues for both excise tax purposes and license fee purposes indicates about 2,800 sign faces as they're normally termed in the billboard industry, that there are about 2,800 sign faces that the Licenses and 156 3/28/06 - WHOLE - BILL 060001, ETC. Inspections Department considers to be legal. I am told that there are an estimated 800 to 900 eight-sheets that are considered illegal. And then there are the individual signs that you indicated have been the subject of litigation. I suspect that we're talking about a relatively small number. So it would appear that the legal sign faces are probably outnumbering the illegal ones at this point.
We are collecting. I've been checking with the Revenue Commissioner and the budget department, and it's my understanding that we anticipate receiving both excise taxes, the seven percent excise tax adopted June of last year, as well as billboard fees for the current fiscal year. And I believe we're projecting about 1.5 million in the way of a license -- I'm sorry; 1.5 million in connection with the 157 3/28/06 - WHOLE - BILL 060001, ETC. excise tax and a significant sum, I don't have the exact number before me, in connection with the billboard license fee.
If you could provide that information to the Chair, that would be helpful.
Speaking of imminent, I remember getting last year either an opinion or a part of a veto message document. It's hard to keep track of the veto messages I get. I get a fair number of them, so I can't always keep track of the veto messages. But in one of the documents, there was mention made -- this is with regard to bond financings and the issue of competitive bidding and qualified teams and those matters, and one of the answers to either an issue or a question, you had laid out that you didn't really need to address a particular issue because an Executive 158 3/28/06 - WHOLE - BILL 060001, ETC. Order was imminent in terms of addressing that issue. My recollection is that was, I believe, sometime in December of 2005 tied to a particular piece of legislation. Can you tell me what the status is of the Executive Order that was referenced in the December 2005 letter?
My recollection of the Acting Finance Director's testimony before City Council two or three weeks ago suggested that it was still being worked; that is, the draft Executive Order. It has been a difficult process, not only because there was a desire to craft an Executive Order that, as much as possible, paralleled the contract reform legislation not applicable to some or all bond transactions, but there was also a desire to ensure that the City remained competitive and was not in fact put in an uncompetitive position relative to other bond issuers. I'd be pleased to ask the 159 3/28/06 - WHOLE - BILL 060001, ETC. Finance Director to provide a more detailed response for the record, if that is your desire.
Well, I'd appreciate that, but, I mean, I always make the general assumption that any Executive Order, no matter what department it affects, ultimately is either being worked on directly by the Law Department or finds its way back to the Law Department even if someone else came up with the idea. From a Law Department standpoint, what do you think the timing is for the issuance of this particular Executive Order?
Well, I would hope it would be soon, but I'd have to request that timing estimate from the client, because we are in this regard the drafters as opposed to the client. I would hope it would be soon, but as you suggest, it has been less timely in its completion than I think anybody in the 160 3/28/06 - WHOLE - BILL 060001, ETC. Administration would have liked to see.
Okay. Well, I mean, I think it certainly passed the expiration date of the term "imminent" from December of last year. I mean, it's outside of that range. So now we're into "soon"?
Well, all I can tell you is what I just said, which is that it has been less timely than anyone would have desired. I can get a time estimate from the client. I am not the client in this matter. But I understand your desire for something sooner rather than later, and I think that coincides with the client's desire as well.
Well, the client is certainly the Finance Department and obviously insofar as Executive Orders are approved and signed by the Mayor, I would certainly count the Mayor as a client as well. But we've been working directly 161 3/28/06 - WHOLE - BILL 060001, ETC. with the Finance Department on this draft.
So this is primarily a Finance Department issue and they're moving the issue? I mean, are they the generator, instigator, creator of ideas and policy in this particular regard?
I suspect everybody has ideas on this Executive Order, but they are the principal client with whom we work on a day-to-day basis with regard to bond transactions.
Okay. Last question. And thank you, Madam Chair. Solicitor, this is a particularly delicate discussion, which in no way, shape or form reflects any view or opinion on my part, but it is an attempt to get to the heart of a question and, if not, a criticism of the government in general and this Council in particular. So now I ask as our attorney 162 3/28/06 - WHOLE - BILL 060001, ETC. to try to give some response. I will not make reference to any particular individual in this discussion, and speak in more general fashion, if not, slightly hypothetically. Of course, the reality is, there is a live situation. I make reference to in the past week or so, at least three major newspapers, and I'm not sure what one of them has said in particular on their editorial pages, but the Philadelphia Inquirer, the Philadelphia Daily News and the Philadelphia Tribune have made particular commentaries, editorial comment, with regard to lack of action by City Council in regard to a matter which just occurred with regard to a member on March 17, 2006. You have written to us, provided advice to the Council President in a letter dated March 20th in response to a letter from the President dated March 16th, giving advice with regard to 163 3/28/06 - WHOLE - BILL 060001, ETC. the issue of the ability of a member to hold office following action in criminal legal proceedings. On Sunday, the 26th, the Philadelphia Inquirer gave their opinion for the second time, made reference to, and I quote, responding to the point that's been raised with regard to a nuance in criminal law, "that a person isn't technically," quote/unquote, "convicted of a crime until formal sentencing. Here's a thought: Council should come up with a new policy. Upon a guilty felony verdict by judge or jury, a member of Council must resign or be expelled." Philadelphia Daily News on Wednesday, March 22nd gave their opinion and decried the fact that a member could still pull a City paycheck while a convicted felon. Today the Philadelphia Tribune on their editorial page criticized City Council as adding further insult to 164 3/28/06 - WHOLE - BILL 060001, ETC. taxpayers by having them continue to pay the salary of a member in this particular situation and that the City Council should take action to prevent a member from attending or participating in Council business. My question to you is, based on your analysis of the law as you have laid out to us in the letter dated March 20th, is there any action that could be taken by City Council? And I'm only aware of, I believe, four different types of legislative action that this body primarily can take on any set of matters. We can pass a bill, we can pass a resolution, we can amend City Council rules, or we can change the Home Rule Charter. Are you aware of any other legislative action that this body can take in any regard, not specific to this particular matter?
Understood. I'm just trying to think about legislative 165 3/28/06 - WHOLE - BILL 060001, ETC. authorities that are authorized for City Council, and I, off the top of my head, don't consider -- I don't think of another category. That's correct.
Okay. So our powers under the Home Rule Charter, if not the state enabling act for a city of the first class, are limited to passing bills, passing resolutions, amending or creating our own rules for this body and amending the Home Rule Charter; is that right?
Okay. In your legal opinion as the City Solicitor and our attorney, given the critique and the criticism as laid out by three major daily newspapers within the last eight to ten days and what they think we should do within our powers, is there any bill, resolution, amendment to our own rules or change in the Home Rule Charter that could be taken that would cause any 166 3/28/06 - WHOLE - BILL 060001, ETC. different result than the opinion that you laid out and the requirements of the Constitution of the Commonwealth or any other case law related to this type of matter?
I will give you a response, but let me just predicate that response briefly. I believe you and the members of City Council are put unfairly in a very difficult position by the media, because it is my legal judgment that you have no authority to effectuate the result that has been requested of City Council under the law. And despite one of the characterizations in the editorial that you read to me a moment ago, we're dealing with an official who has not been convicted of any crime. He has been found guilty in terms of a jury verdict, which is not conviction under Pennsylvania law, and, therefore, he is not subject to removal from office under Pennsylvania law, except upon conviction, 167 3/28/06 - WHOLE - BILL 060001, ETC. which is understood to mean a judgment of sentence upon a guilty verdict. That has not occurred. It may occur on July 6th, is my understanding, of this year, but until that date, City Council has no 7 authority to effectuate the results that have been demanded of it by the media through the mechanisms that you have noticed or summarized in your question to me.
If we remove ourselves from the present circumstance, is there any other circumstance or condition under which City Council -- let's put aside the current matter. Another member, another situation, anything else that happens. Is there any bill, any resolution, any change to our rules of Council or any Home Rule Charter amendment that somehow could be crafted or created that would allow City Council to expel a member from this body or force a member to resign for any reason? 168 3/28/06 - WHOLE - BILL 060001, ETC.
With respect to a criminal matter, and that's all that I am going to consider right now, with respect to a criminal matter, I believe the answer is unequivocally no with regard to expulsion prior to conviction, which upon conviction is automatic in terms of removal from office, in my judgment. And so there may be some internal leadership issues that could be addressed by Council rules that it has the authority to adopt, not unlike those that have been adopted by the federal Congress, but with regard to expulsion or removal --
Are you specifically speaking about if someone were in a leadership post to which they've probably either been elected or appointed by the members and some action that under that circumstance those same members, to the extent that someone can either be appointed or elected to something, they can usually be unelected or de-appointed in that particular 169 3/28/06 - WHOLE - BILL 060001, ETC. circumstance, but that's an internal matter that has, I think, still nothing to do with whether the person serves in the body; is that correct?
That's correct. We're dealing with leadership posts that I understand both the Majority party and the Minority party and the United States Congress have adopted for the regulation of their members as to their leadership post, but not to elective office as elected to positions of responsibility by the voters.
So for me to finally understand this, it sounds like the only way an individual under whatever circumstance, and not speaking to the current matter at all, the only circumstance under which a person who has been elected by the voters to be removed from office is either upon final conviction, which means sentencing, or some proceeding which may possibly involve impeachment under rules by the 170 3/28/06 - WHOLE - BILL 060001, ETC. General Assembly; is that correct?
Certainly upon conviction, but it's not clear to me that there is authority at the General Assembly either to do something in connection with impeachment. In fact, the case law that I have seen has suggested that even with regard to a recall procedure by the voters, that it must be based upon cause, and there is case law describing what cause is, and it is certainly more than inconvenience. So it is not clear to me what the General Assembly authority would be in this connection, but in the opinion that I wrote dated March that you 18 alluded to earlier, I did note that there 19 is a procedure for officials not 20 employing the convicted individual to seek removal from office. It is called a quo warranto proceeding. It can be brought by a District Attorney of the county involved or the Attorney General of the Commonwealth, but only upon 171 3/28/06 - WHOLE - BILL 060001, ETC. conviction of the individual involved. And I moreover stated in my opinion that I believe that upon conviction, removal is automatic and that the City would have the authority to stop the paycheck of a convicted official without having to go to a third-party proceeding to seek removal.
Lastly, could you forward your direct opinion with regard to the authority and powers of City Council, not specific to any particular person, but to the general question of either the body's ability to force a resignation or expel a member given the at least four forms of legislative action that we can take? If you could forward to the Chair your formal opinion with regard to that power or lack thereof, I would greatly appreciate it.
And, again, I would simply indicate that I don't believe that any of the proposed actions, those proposed by the media, are within Council's authority, but I will provide a formal opinion for the record through the Chair as quickly as possible.
I understand. -- (continued) your opinion with regard to any actions that the Council Committee on Ethics could or could not take in that particular context, that would be helpful as well.
Thank you. Councilwoman Reynolds Brown. 173 3/28/06 - WHOLE - BILL 060001, ETC.
I understand that there has already been discussion and dialogue around the Conditional Tax Forgiveness Program.
Well, first let me commend the leadership and you and your staff for doing what I call "taking it to the trenches" to talk radio where persons who are and will be most adversely affected get to hear it from your mouth to their ears about the why and where kind of information. I think it's out-of-the-box thinking. Because we all get the mail and the printed material, but to hear it and then to hear the instructions I think makes an enormous difference. So I think that's a 174 3/28/06 - WHOLE - BILL 060001, ETC. practice you should continue. Speak to how is the program going since it is relatively new in terms of approach to citizens, what has been the impact or the effect of the level of complaints, and has doing the way you do it, has this neutralized the negative feedback, the mystique, the confusion, the misinformation that came with the initial delivery of the program.
Thank you, Councilwoman. With the help of members of City Council and their staffs and other stakeholders, immediately upon becoming City Solicitor in April of last year, I sought some effort to come up with a program that would reduce the likelihood that people might lose their homes through sheriff sales because of delinquent real estate taxes. Just before I had become City Solicitor, some 61,000 delinquent tax accounts had been referred by the City for collection to Linebarger, our collection agent on this 175 3/28/06 - WHOLE - BILL 060001, ETC. matter.
Through a process involving a number of stakeholders, we formulated a program that had two parts. One was to work out a repayment option for folks that were at the 150 percent of federal poverty level or below to make the repayment option possible, and for those that are on the lowest economic circumstances, such as Social Security income, we're prepared to have a minimum payment of $25 a month to allow people to become tax compliant and take whatever time it takes to repay their obligations to the City and stay in their homes.
But I also wanted to make sure that in addition to that we incentivize people to stay on these what could be some long repayment plans. We didn't want to see a repeat of the circumstances that some of us have heard about and dealt with in connection with 176 3/28/06 - WHOLE - BILL 060001, ETC. repayment of the PGW bills, for example. So as part of an effort to incentivize people to pay up or to stay current on their repayment plans, we came up with what we ultimately termed the Conditional Forgiveness Tax Program. If you're up to 250 percent of federal poverty guidelines, for a family of four, that's approximately $48,000 income a year, and I think that would scoop up a very large percentage of City residents, but if you're at 250 percent of the federal poverty level and you sign up for this program by May 1st or you repay the amount of your delinquency by May 1st, we will forgive all of the interest and penalties associated with that account. We believe that could save the average taxpayer about 40 percent on their entire tax bill. We believe that as many as 20,000 taxpayers may reside in their homes and could be eligible for the program, assuming they meet the economic guidelines. And we believe that those 177 3/28/06 - WHOLE - BILL 060001, ETC. accounts would provide the City potentially with up to $100 million worth of tax collections. Now, if we forgive the interest and penalties and that's about 40 percent, that means that the City could collect about $60 million, that people could be forgiven about 40 million of it, they would become tax compliant, they would be into the system. And as I think we all understand, when you deal with people who are newly non-paying taxpayers or newly delinquent, we have a much better opportunity to collect those dollars owed to the City. In this instance, we're dealing with taxpayers who on average have been delinquent more than five years. So we really needed to come up with some new tools to bring them into the system, and I'm very hopeful that in fact this process will allow us to do that. As of last Friday, which is the last information that I have, we've had 178 3/28/06 - WHOLE - BILL 060001, ETC. about a thousand taxpayers contact Linebarger about this program. We're still far short of the 20,000 that we think potentially could qualify, which is why I've been beating the bushes, been on radio, television, talking to the news media. We really want to get the word out, and I've gone on as long as I have because I'm trying to get the word out through this Council proceeding for media who may be here that this is a real opportunity and we hope people will take advantage of it by the deadline of May 1st.
It is an opportunity. My personal opinion is I think it's government at its best in trying to find out-of-the-box, innovative ways of helping citizens honor up in many instances where they want to. So I would imagine tracking is certainly in place if already you know you're at the 1,000 benchmark. Are there any linkages with 179 3/28/06 - WHOLE - BILL 060001, ETC. CDCs around the City and/or Department of License and Inspection for landlords or homeowners who deal with L&I, just in terms of different layers and tentacles to get the messages out?
Well, we've been working directly with housing counselors. I've offered if there are Councilmembers, and I make the offer again today, who would like to have a community meeting, who would like to have participation by myself or others from the Law Department and the law firm of Linebarger, which is handling this collection effort for us, we want to be able to assist in getting the word out in every mechanism and proceeding that we can find.
Okay. Another resource you may want to consider are transition to work programs that service folks of that particular population who would benefit from this as well. And are you familiar with the Benefit Bank? 180 3/28/06 - WHOLE - BILL 060001, ETC.
Okay. That's another avenue that has been put in place by the Mayor's office of faith-based initiatives for citizens who meet income criteria as you just defined, and it's a one-stop-shop for all the breadth of services one can benefit from if you are of a certain income level. And so this program would neatly fit into the Benefit Bank as well.
Sure. DHS. On of your testimony, you give discussion to the continued work with DHS in the development of programs to remove barriers for permanent placement of children. So give us an update on where that is, how you're assisting, why and how it's working and where the progress has been. 181 3/28/06 - WHOLE - BILL 060001, ETC.
I want to ask Barbara Ash, our Chair for Social Services, to join me, but if I could very briefly indicate that this clearly is important to our families and children, and it's one that I have been directly involved in. One of the things that I'm trying to accomplish is to work directly with the Family Court. We've had numerous conversations with the new Administrative Judge, Dougherty, and I continue to have those conversations, expect to meet with him again soon. But essentially what we're trying to accomplish is really focus on prevention. We want to intervene at a much earlier stage in the cycle for two primary reasons. First, it seems to me that's when you can be most effective and that's when you can be, frankly, most efficient from a cost perspective. Once we get people into the system, it takes a long time and it costs 182 3/28/06 - WHOLE - BILL 060001, ETC. a lot of money to get results that may or may not be equivalent to effective prevention services. So as part of the DHS budget for FY07 and the request that has been made to the Department of Public Welfare for the Commonwealth, we have begun to essentially steer toward prevention services and funding for those programs as opposed to the judicial system, which obviously still needs to operate and we want to support it, but it is always better to do the prevention. And I'm going to ask Barbara, if you would, just talk for a moment about what kind of successes we've had to date.
Excuse me. Identify yourself for the record, please, and talk directly into the mike. 183 3/28/06 - WHOLE - BILL 060001, ETC.
I'm sorry. Barbara Ash, Chair, Social Services, Division of the Law Department. As the Solicitor has said, one of the biggest things that we have been doing is, prior to, I guess, about three years now we used to run what we call lists in the courtroom.
Lists, where a Solicitor would be assigned to a different courtroom and not follow a case from inception. With the Mayor's system of now trying to -- with the Mayor's program of trying to make sure that children are adequately represented, we have hired approximately another 14 attorneys, where we now have attorneys assigned to a case from its inception. So, therefore, the attorneys work with the DHS social worker very closely, and we are targeting cases to leave the system. A lot of cases that 184 3/28/06 - WHOLE - BILL 060001, ETC. are in the system have been in the system a long time, and prior to that, the attorneys did not know the cases very well. The social workers were not well versed in what they need to do legally for the children to exit the system. One of the things that we have been working on was working with getting older children out of the system. A lot of older children who are no longer considered to be good candidates for adoptions have been lingering in foster care for long periods of time. One of the things we've instituted is permanent legal custodianship. We are one of the first jurisdictions to use this system so effectively, and since its inception in early 2004, 1,185 children have been placed with their family members without DHS's involvement. Prior to that, children would have to stay in care with their kin, continue to stay committed to the department. And now we have freed them, so those kids can go with their 185 3/28/06 - WHOLE - BILL 060001, ETC. caregiver, and their caregiver could make decisions about them without having to be court involved.
And hopefully captures those children so that they don't have to age out the system.
That's right. And what that does is, that gives them a family when they get past 18. A lot of times children who remain in foster care, once they leave at age 18, they lose ties with their foster parents and caretakers. But now they are family members. They are more engaged in the community. And these children do do well.
So the funding is there for those 14 attorneys to continue to be assigned to a child and then stay with that child throughout their connection with Family Court. Is that what I'm hearing? 186 3/28/06 - WHOLE - BILL 060001, ETC.
That's what you're hearing. All of our attorneys are assigned to cases. It's dedicated caseloads. And they remain with those caseloads until that child exits the system.
If I could add just one more item, in connection with the attorneys staying with the children and being assigned to a particular courtroom as part of a team effort, one of the issues we've had to address, particularly in Barbara's area, in Social Services, is a high attrition rate. This is a very difficult area of legal practice, and one of the things that we have focused on -- and I say "we," because it's really been an effort involving myself and Donna Mouzayck, the First Deputy, and Barbara and the folks who work in the Social Services group. We've really tried to focus on supporting them and letting them know that not only do I and all of us 187 3/28/06 - WHOLE - BILL 060001, ETC. consider this to be important work, but we want to be there to support their ongoing effort so that we can cut down on the high level of attrition rate. And so far in the last few months, I can say, thank goodness, that attrition seems to be slowing down and we've been able to hire and get the authority to hire the attorneys that we need to staff up completely in Social Services. So I think we're in a good place now. We're not out of the woods, but we're working hard to make sure that we've got an effective Law Department partner as part of this DHS effort to support our children and our families.
Very good. What do you think has been a factor for the trend and fewer and fewer levels of attrition?
What do you believe has been the factor? You say 188 3/28/06 - WHOLE - BILL 060001, ETC. the attrition rate is beginning to take a downward trend. So what do you think is an attributing factor to that? More staff that are able to just keep their arms around these cases, or what?
I have my view, but I think Barbara wants to say something, so I'll let Barbara say it and then I'll add if I need to. Go ahead.
Well, traditionally, Social Services has not been viewed upon very positively in a lot of fields. For instance, we did not have a lot of support from prior administrators. With Mayor Street, with the Solicitors that have come along, children have been put at a priority by the City and the Law Department. We have actively engaged to interview attorneys who not only say they want a job with the City to get a job, but attorneys who have had some experience in the social services field, 189 3/28/06 - WHOLE - BILL 060001, ETC. attorneys who are dedicated. And just today an attorney showed me a letter that --
Yes. Just today an attorney showed me a letter that he got from a law firm that offered him $100,000 salary to come to work for them, and he said no, he liked working in his unit because he now sees that the Administration is positive towards children, is giving us the support we need. And we have a very close working relationship with the Department of Human Services, and whenever our attorneys now say that they need something, it's not like, That's too much money. We have total support of the Solicitor. He is very involved in my shop, and he continues to stay involved, and he wants to know. And when it starts from your leadership down, then people are proud of their work. 190 3/28/06 - WHOLE - BILL 060001, ETC. We also now are reducing the caseloads and we're seeing results. We're seeing children come up to us and say, Thank you for giving us a family. And there's nothing that -- when I went to law school, I did not expect that I could be rewarded with the work that I'm doing, and I think that that's the most important thing. We don't bring any money into the City, yes. We spend the money, but we're saving lives.
Saving lives indeed. And departments are talking to each other, particularly those departments that are intimately involved with children at different junctures of their lives. So that's been a change. I worked in Family Court for a few years, and this kind of program was simply not in place. So I think it's enormous progress. Final question. Is there a link between what you're doing and the work of the Managing Director's office, 191 3/28/06 - WHOLE - BILL 060001, ETC. this newly announced program that focuses on police districts, where they're beginning to see -- they sort of capture children early who are becoming entangled with the juvenile justice system? So they capture them in a preventive/intervention kind of way so that they don't end up where we don't want them to be? I can't recall the name of that program.
Or Adolescent Violence Reduction. And, yes, we are very directly engaged. The Mayor has had numerous meetings, at which both the Managing Director and I have participated, along with Barbara and the DHS Director, et cetera. We believe, again, the more focus we make earlier in the child's life to intervene and really steer them into a positive direction, the more likely that 192 3/28/06 - WHOLE - BILL 060001, ETC. we're going to be able to keep them in that positive direction. We've gotten some preliminary support from the state in connection with the budget for Fiscal '07, but we haven't gotten all that we wanted. So just before coming over here, I authorized an appeal to protect our needs in connection with the youth program, such as the one that you just mentioned, the AVRP program, and we're going to continue moving in that direction.
Okay. Any connection, link with the Achievement Independence Center at 7th and Market?
It's funny that you ask. Ellen Walker, who is the Acting Deputy for Prevention, is coming to speak to my attorneys. Because a lot of times in court, we want to refer the families -- I understand that we want to get more families to be involved in Achieving Independence Youth Center, and so my attorneys are referring families to 193 3/28/06 - WHOLE - BILL 060001, ETC. that, especially those families that the children are not committed to us but we're just offering services to those families. So, yes, we are doing that, and she is going to be speaking to my attorneys to do it periodically so they'll know what's been happening and what is new at the center.
And what opportunities exist across systems to better serve children.
Okay. I want to put on the record how much I appreciated the good work of Donna, and I'm going to spell it, because I'll butcher it otherwise, M-O-U-Z-A-Y-C-K, who was helpful with the City employee adoptive benefits, some might call it, challenge and helpful in the way that we were able to settle that and in a wonderful way for that City employee. So thank you very, very much for the 194 3/28/06 - WHOLE - BILL 060001, ETC. important work.
Councilman Rizzo. This is the final Councilman questioning so we can move on to the Commerce Department. Thank you.
Thank you, Madam Chair. City Solicitor, could you tell me what the Law Department's involvement is in a project called Project OCEAN, an IT project?
The Law Department's involvement is through our Intellectual Property Division. We have served as legal counsel to the folks who have responsibility on both the program side in the Water Revenue Bureau as well as 195 3/28/06 - WHOLE - BILL 060001, ETC. the technical side in the Mayor's Office of Information Services.
From what I understand, we have a project that's tagged Project OCEAN, who this project was supposed to develop, like you mentioned, a Water Revenue billing program, and to date, we've spent almost $20 million on this program, with licensing, et cetera, which is going to -- that was probably a good investment, the licensing, because it's going to be needed for whenever this project gets developed. But can you tell for the record, has the company that was contracted with, Oracle, have they abandoned this project? Could you just fill us in a little bit on what the problem is with this project and is it going to be litigated or what exactly is going to occur here? Because we're talking a significant amount of money, as you would agree.
We, "we" being the 196 3/28/06 - WHOLE - BILL 060001, ETC. so-called Information Technology Governing Board, have been very much engaged with this effort trying to come to a conclusion that would meet our requirements in the most cost-effective way. I participate as a member of the ITGB so-called, and we have come up with an approach that we think, with Oracle's support, can work. The next step in that process is to meet at a very senior level of the Oracle Corporation, because we think it's in both their interest and ours to come to a mutually satisfactory resolution 16 that protects not only our reputations on the Oracle side but also the requirements and the costs on the City side. So I am very hopeful that we're going to have the high-level meeting at a senior corporate level that will integrate the three operating divisions that have had some piece of this project in the past. We will be participating through the divisional deputy who heads 197 3/28/06 - WHOLE - BILL 060001, ETC. our Intellectual Property Division, Michael Athay, and I'd be happy to schedule a private briefing for you to bring you up to date and let you know where we're going. And I think you can probably appreciate that in a public forum, I'd prefer not to say more than I have said. But it's very clearly on my radar screen and we are very much involved in trying to get a satisfactory resolution for the City.
I'll respect that comment. There's another issue that has been dragging on and it probably needs your attention. It's an issue of, legislation was passed here, a bill was passed here in this Council, to establish a rotational towing program where an effort to try to bring under control the wreck chasing that we have in the City of Philadelphia where people are, through the Procurement Department, placed on a rotation. If there's an accident on the 198 3/28/06 - WHOLE - BILL 060001, ETC. Expressway, company A comes, B, C until you rotate back around. Well, it's been a really long time, and this is an important issue to our City. This is a practice that needs to be brought under control, this wreck chasing, and I would appreciate whatever you could do to get this on track, because there's apparently a lot of people involved, the Police Department, Procurement. Procurement seems like they've been moving forward. And whoever the attorney in your shop is that is working with the Police Department, I think it would be greatly appreciated, because I get people constantly asking me when will this rotational system be established to make it a better situation than it is currently. So I don't know what you can do, but I'd appreciate whatever you could do to get this thing moving for us.
I'd be happy, Councilman, to check into it as soon as I 199 3/28/06 - WHOLE - BILL 060001, ETC. return to the office and provide a response for the record. I'll let you know not only where we are, but when we're going to get to the goal line on this effort.
Again, it's a situation that has been here for many, many years, and I think that this is an opportunity, and we've said to the people that are involved in this practice of wreck chasing that, We want to bring you in, but there's a right way to do it and racing to the scene of an accident, getting a person at their worst time when they're involved in an accident, having them sign a document that the fine print is scary, it really is, and then try to get your vehicle back if you decide to not do business with one of these individuals is not a very pleasant situation. So I think the quicker we can get this, like you said, to the goal line would be greatly appreciated. 200 3/28/06 - WHOLE - BILL 060001, ETC.
All right. You have my commitment to work with you in trying to get that objective.
Great. Thank you. Thank you for all of your good work. I know you have some tough times over there.
Thank you very much. MR. McPHERSON: The next department is the City Rep and the Director of Commerce.
Thank you very much. Please identify yourself for the record and begin your testimony.
Good afternoon, Councilwoman Blackwell. My name is Duane Bumb, Senior Deputy Director of Commerce. I'm here for City Representative and Director of Commerce Stephanie Naidoff, who is ill and unable to join us today. 201 3/28/06 - WHOLE - BILL 060001, ETC. Here with me today are Mjenzi Traylor, First Deputy Director --
Excuse me. Could we have a little quiet. Thank you.
Here with me today are Mjenzi Traylor, First Deputy Director of Commerce; Charles Isdell, Director of Aviation; Janis Pierce, Deputy City Representative, and actually a whole host of other heads of related agencies in support of our efforts. I'm here today to provide testimony on behalf of the Department's FY2007 operating budget requesting $267.5 million, an increase of $30.9 million over the FY2006 estimated obligations. And if I have your permission, Councilwoman, I'd like to condense some of the testimony that we have provided, and then we'll be happy to answer any questions you may have after that.
202 3/28/06 - WHOLE - BILL 060001, ETC. Absolutely, and it will be presented as if it were read in entirety.
But I'll finish this first part. 7 million. I'm going to skip over -- we give some description of various departments. The Office of the City Representative, one of the highlights this past year, as you all know, would have been our participation in the Live 8 and Elton John concerts. Within Commerce, where we administer international business development, Keystone Opportunity Zone, the Mayor's 203 3/28/06 - WHOLE - BILL 060001, ETC. Business Action Team and a whole series of other services to the business community. I want to focus some discussion, though, on some of the new initiatives that we are proposing in the current budget. Over the past year, the departmental activities have centered on the objectives, strategies and tactics outlined in the City's Economic Development Blueprint, which serves as a strategic plan for economic development in the City. Among the priority listed in the Blueprint is the New River City Initiative. Already the Administration's commitment to public investment, planning, site assemblage and infrastructure improvements have helped to stimulate widespread private investment along the waterfront. The City has committed to providing $125 million from unlocked water and sewer bond reserve funds and will leverage state and federal funds to address the 204 3/28/06 - WHOLE - BILL 060001, ETC. standard public responsibilities of planning, land assembly, environmental remediation, demolition and infrastructure. The investment will create opportunities for private developers to commit significantly greater levels of capital in anticipation of market-rate returns. This measure was introduced in City Council in January, and we will be briefing Councilmembers shortly to move this exciting initiative forward. Another initiative concerns the use of $150 million in bond proceeds to fund improvements in neighborhood and cultural corridors. The idea for this initiative was born out of a broad strategic thinking in two distinct areas. On the commercial corridor side, beginning in FY06, the City broadened the scope of NTI to focus attention and resources on neighborhood commercial corridors. The initial phase of NTI acknowledged the need for focused 205 3/28/06 - WHOLE - BILL 060001, ETC. attention on neighborhood commercial corridors but, for the most part, did not attempt to tackle this issue. On a parallel track, during 2005, the Mayor met with many cultural and civic leaders and Councilmembers to discuss the growing needs of Philadelphia's cultural community. In addition, the Mayor's Arts Funding Task Force has convened over the past year to discuss sustainable funding for arts and culture. With the guidance of the Task Force, the Mayor has been able to identify a number of significant projects that, with support of the City of Philadelphia and other funders, will have major impact on Philadelphia's arts and cultural community. Today, we are fortunate enough to be in a position to act and invest strategically in our neighborhood and retail corridors, as well as in our cultural corridors. A portion of the $150 million proceeds will be used to 206 3/28/06 - WHOLE - BILL 060001, ETC. advocate for and grow Philadelphia's commercial amenities, including those found in some of our cultural corridors like the Ben Franklin Parkway and the Avenue of the Arts. A second target use of the bond proceeds will be to implement the ReStore Philadelphia Corridor Program under the direction of NTI. The goal is to restore the historic role of neighborhood commercial corridors as central places to shop, to work and to meet neighbors. Potential uses of the bond proceeds may include streetscape and lighting improvements, acquisition and renovation of select commercial buildings, and a loan reserve pool to increase access to capital for small businesses. Philadelphia generates a significant amount of funding to support its vibrant hospitality and tourism sector.
The Greater Philadelphia Tourism and Marketing Corporation, or GPTMC, is partially funded through the tourism tax 207 3/28/06 - WHOLE - BILL 060001, ETC. and is a national model for the support of the hospitality and tourism industry. GPTMC continues to utilize its portion of the tax applied to hotel bills to advertise and market the region's tourism assets, including arts and cultural destinations. These promotional efforts as well as the efforts of the Philadelphia Convention and Visitors Bureau, or PCVB, to attract conventions, meetings and international tourists are paying dividends. Philadelphia has received positive recognition in national and international publications, including being named "America's next great city" by National Geographic Traveler Magazine in 2005, as well as being one of four cities in the world to watch by Time Magazine in 2006. Rather than stand back and enjoy the accolades, however, we plan to capitalize on this recent positive interest in the City. 5 million line item for promoting Philadelphia will 208 3/28/06 - WHOLE - BILL 060001, ETC. be used to broaden existing marketing efforts by GPTMC and PCVB to elevate the national and international profile of Philadelphia, increase visitor trips, respond to mounting competition from other cities, and ultimately encourage both businesses and employees to make Philadelphia their home. On the knowledge industry front, Philadelphia has a competitive advantage in the knowledge industry. Our outstanding universities, research facilities and highly skilled workforce make Philadelphia a valuable location for 21st century business. This advantage was recognized in the Economic Development Blueprint, and growth of the City's knowledge industry is one of the Administration's key objectives. Through a combination of student retention initiatives, the knowledge industrial partnership, workforce development programs and targeted incentive programs, Philadelphia can grow the knowledge 209 3/28/06 - WHOLE - BILL 060001, ETC. industry jobs necessary to expand our residential population and our economy. Building on these activities, over the coming year Innovation Philadelphia will expand its investments targeting Philadelphia start-up companies, launch an innovative new intellectual property donation program, refine and implement a strategy to grow the City's creative economy, and spearhead an effort to attract the key 13 to 34-year-old knowledge worker 14 demographic that is so important to the 15 City's future success. 5 17 million in the FY07 budget to support 18 Innovation Philadelphia and continue 19 those crucial efforts to grow the City's 20 innovation economy. 21 Our testimony cites several 22 examples of major developments in the 23 City which are indicators of the positive 24 growth momentum we're experiencing right 25 now. Some of that extends to our 210 3/28/06 - WHOLE - BILL 060001, ETC. neighborhoods, and we've got other examples across neighborhoods across the City. I want to turn to the third division of our department and the most substantial, Aviation. The Division of Aviation oversees the various planning, operational and development activities associated with Philadelphia International Airport and Northeast Philadelphia Airport. 2 million. The additional funding is required due to increases in existing operational, security and maintenance requirements, as well as increased funding for capital projects on a pay-as-you-go basis. 2 million, including appropriations in the Police, Fire, Fleet Management, Public Property, 211 3/28/06 - WHOLE - BILL 060001, ETC. Law and Finance Departments, as well as debt service appropriations within the Sinking Fund Commission, which will be fully funded by non-tax revenues from airport operations. There have been a number of successes over the past year and I'm going to leave that to the Aviation Director to detail for you in the Q and A.
And with that, I will submit this testimony, and we're happy to respond to any questions you might have.
Thank you very much. On of your testimony under the New River City Initiative, you state that the City has committed to provide $125 million. Can you explain how the City has committed these funds, what the benefits to the City are of spending them, when we'll begin receiving these benefits and whether or not they're included in the Five-Year Plan?
I can't actually 212 3/28/06 - WHOLE - BILL 060001, ETC. answer that last question. It is in the Five-Year Plan, I believe. The New River City Initiative would be authorized under a bill that was introduced in City Council two months ago, and we will have a hearing on that. We'll have a public hearing on that to give much more detail. But to answer your questions, we have at least $125 million currently in Water Revenue reserve funds, which can be released by putting in place a surety bond. Those $125 million of bond proceeds can then be applied to appropriate capital-eligible expenditures for water and sewer investments across the City. We are focusing them in four areas: To encourage private development along our waterfronts. A good example of that would be some of the major housing developments that are being considered both along the North Delaware, the Central Waterfront and along the lower Schuylkill. Some of the public 213 3/28/06 - WHOLE - BILL 060001, ETC. infrastructure along those same waterways, including public parks and trails that can also act as amenities for the private investment; some public investments throughout the City in what we call the Green City strategy, which would provide primarily storm water relief in neighborhoods as part of larger housing developments. One example of that might be the large Mill Creek development in West Philadelphia, which will provide us with an opportunity to create some new and innovative storm sewer relief strategies to relieve overflow in that neighborhood. Again, all of these investments -- I'm sorry. The fourth category would be funding within the Navy Yard, a fully publicly owned facility to upgrade the level of water and sewer infrastructure so that it is standardized with the City's other infrastructure throughout the City as we integrate that 1,200-acre parcel into the City's 214 3/28/06 - WHOLE - BILL 060001, ETC. City-wide system. All of those developments that are being proposed are being targeted strategically to increase the City -- to be consistent with the master plan that's been undertaken for all the waterfront areas and also to leverage maximum investment by the private sector.
All right. We are certainly interested in where these projects are, but we believe if the Administration wants to push forward to considering this for '06, that we really need details immediately, or Council may want to consider pushing it forward to the '07 budget so that we have plenty of time to consider them. On of your testimony, you state, quote, "Today we are fortunate enough to be in a position to act and invest strategically in our neighborhood retail corridors, as well as our cultural corridors." Based on PICA's testimony that 215 3/28/06 - WHOLE - BILL 060001, ETC. identifies almost 500 million of speculative items and risks, is now the best time for us to borrow and create new debt?
Again, we'll have much more detail for you when we introduce legislation that would authorize the $150 million bond issue, but I can tell you that from our perspective, yes, we -- again, of the $150 million, it is for capital-eligible activities. Most of those investments are for City-owned facilities. And I know there's been some discussion here about the need to increase the amount of investment in deferred maintenance, whether that be for streetscape improvements, which is the commercial corridor component of that initiative, or in some of the major cultural institutions, like the Art Museum, which in fact is a City responsibility.
Thank you. 216 3/28/06 - WHOLE - BILL 060001, ETC. The Planning Commission testified that the City should be spending $185 million a year on maintaining our infrastructure, yet our capital budget is for nearly 52 million as opposed to 185 million. How do you reconcile the differences in those figures in terms of what's best or what's prudent at this time?
I can't address directly the discrepancy that they are citing in the number you're stating. I can tell you that part of the challenge in the City capital budget is funding within the bond cap under the City's general capacity for debt. The $150 million, which would be proposed to be issued through the Philadelphia Authority for Industrial Development, would accomplish much of that by, again, investing in City-owned resources to take the burden off of the capital bill and also not to increase the City's debt capacity. 217 3/28/06 - WHOLE - BILL 060001, ETC.
You're requesting a $2 million increase in economic stimulus funds for '07. How do you intend on spending them and how did you spend the '05 and '06 economic stimulus funds?
The economic stimulus funds are probably our most flexible funding source. We use them for a whole variety of our financial incentive tools. We provide some staffing oversight. The Mayor's Business Action Team, for example, is funded through that funding source. We use them as part of our very successful business retention efforts. I think we are citing within, for example, our office retention efforts having successfully retained 96 of 98 major companies in the Central Business District, some of those of which we were required to provide incentives in order to keep Philadelphia as a competitive location. So the economic stimulus fund was part of that. 218 3/28/06 - WHOLE - BILL 060001, ETC. Sometimes it leveraged state resources or other non-City resources as part of a total incentive package. We also use those funds to support initiatives like Select Greater Philadelphia, which is the regional marketing effort. We have in the past used those funds in part to support the activities of Innovation Philadelphia. We are here today to talk about a separate line item for Innovation Philadelphia, but to answer your question about how we used them in the last two years, the funds have been used to support that effort. We use those funds to support several non-profit organizations that provide technical assistance to the City. Those organizations can range from groups like the African-American Chamber of Commerce, the Hispanic Chamber of Commerce, the Philadelphia Development Partnership, Women's Opportunity Resource Center. There are a whole series of 219 3/28/06 - WHOLE - BILL 060001, ETC. those. We use those funds to provide incentives like facade grants along commercial corridors where we provide matching grant money to small businesses to improve the fronts of their buildings. We use those funds to provide festival grants through neighborhoods in the City and planning grants to non-profit community organization. Those are just some of the examples of the sort of activities we fund. We find that we never have enough money to do all the things we want to do on a City-wide basis and, hence, our request to increase the funding source.
Thank you. Would you submit to the Chair a list that we can make available to our colleagues of how these funds were used in the last three years and what you plan for '07?