Committee Hearing, November 30, 2006

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, November 30, 2006 1:05 p.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, CHAIR COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCIL PRESIDENT VERNA COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN RAMOS COUNCILMAN DANIEL SAVAGE COUNCILWOMAN MARIAN B. TASCO BILLS 060108, 060109, 060504, 060766, 060005 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2

Good afternoon, everyone. AUDIENCE MEMBERS: Good afternoon.

Thank you for being here. It's 1:05, and we have to show our new Councilpeople that we try to start on time. So we're trying real good to give them a positive impression. The Finance Committee is now being called to order. Councilman Goode to my right, he's always here and always on time. To my left, Councilman Greenlee, we welcome him or, as they said on the radio one day, Greentree. And to his left, Councilman Savage. And we have Councilman Clarke, who is providing us a quorum today. The majority of members being present, we will begin our hearing. We're going to ask the Clerk to read the title of the bills.

Bill 060005, an ordinance amending Section 4.09 of the 3 11/30/06 - FINANCE - BILL 060108, ETC. Restated General Water and Wastewater Revenue Bond Ordinance of 1989 to authorize the Director of Finance to use funds currently held in the Debt Reserve Account established and maintained under the said General Ordinance to purchase appropriate surety bonds or insurance policies for deposit in the said Debt Reserve Account in lieu of current deposits; further, directing the Director of Finance to transfer all excess funds remaining in the said Debt Reserve Account after purchase of the said surety bonds or insurance policies to the Water and Wastewater Revenue Fund; and further, amending Section 4.12 of the said Restated General Water and Wastewater Revenue Bond Ordinance of 1989, entitled "Residual Fund," to establish a new sub-account into which shall be deposited all residual water and wastewater operating revenues resulting from the transfer of funds from the Debt Reserve Account to the Revenue Fund and 4 11/30/06 - FINANCE - BILL 060108, ETC. thereafter to the Residual Fund, the entire balance of the said new Residual Fund sub-account to be used to finance water-related infrastructure projects.

Thank you. Thank you all for being here. We'll start with this hearing. We will ask those who are here, we see our Managing Director, Pedro Ramos, if you're testifying on this bill. Our City Solicitor, Mr. Diaz, are you testifying here? Thank you very much. Is there anyone here other than yourself, Ms. Gladstein, to testify on this bill?

I'm begging your forbearance. We're expecting the City Solicitor, as well as an amendment that we'd like to offer today. So if we could respectfully request that you put another bill in front of this and give us a few minutes, we'd appreciate it.

Thank 5 11/30/06 - FINANCE - BILL 060108, ETC. you very much. We would only request that we be straight. We don't want four or five amendments and changes during the whole process.

We agree. You're going to get one clean version.

Thank you.

You're welcome.

Thank you very much. We will ask the Clerk to read the title of -- do I assume then that you're prepared for Bill No. 060504 and all the other bills? Because we'll move forward with whomever is here. We have a lot of people here, too, and we don't want to hold up anybody's time. The Clerk then will read the title of the bills in their order, Bill 22 No. 060504.

Bill 060504, an ordinance removing a portion of a property in the 41st Ward of the City, 6 11/30/06 - FINANCE - BILL 060108, ETC. from the Philadelphia Keystone Opportunity Zone, subject to the request and consent of the owners of said property, under certain terms and conditions.

Is Ms. Califano here? (No response.)

We will ask the Clerk to read the title of Bill 060766. And we note that we expect that when you ask to come, be ready. We have Commissioners. We have people around the City. We have our Managing Director, all of these people, all of those here from the unions, people across the City. If you're not able to be here, then why don't you call us and tell us. That's all. You disrespect everybody's time. Bill No. 060766.

Bill 060766, an ordinance amending Chapter 19-1500 of The Philadelphia Code, entitled "Wage and Net 7 11/30/06 - FINANCE - BILL 060108, ETC. Profits Tax," and Chapter 19-2800 of The Philadelphia Code, entitled "Pennsylvania Intergovernmental Cooperation Authority Tax on Wages and Net Profits," by excluding certain tuition reduction benefits from the definition of taxable compensation, under certain terms and conditions.

Do we have our Commissioner of Revenue or Mr. Diaz here? We're prepared to move forward. The Chair likewise notes that to my right is Councilman Frank DiCicco, who is also here, and we thank him for being a member of this Committee. Please identify yourself for the record and begin your testimony. COMMISSIONER KAMMERDEINER: Good afternoon, Councilwoman Blackwell and members of the Committee on Finance. I'm Nancy Kammerdeiner, Revenue Commissioner, and I'm pleased to be here with you today to present testimony 8 11/30/06 - FINANCE - BILL 060108, ETC. regarding Bill No. 060766. This bill will amend Section 4 19-1500 of The Philadelphia Code, entitled "Wage and Net Profits Tax," and Chapter 19-2800 of The Philadelphia Code, entitled "Pennsylvania Intergovernmental Cooperation Tax Authority on Wages and Net Profits," by excluding certain tuition reduction benefits from the definition of taxable compensation. If enacted, this bill will exclude tuition benefits received by employees of not-for-profit healthcare systems that are affiliated with not-for-profit universities from taxable compensation for purposes of the City wage tax. And when I use "wage tax" from here on in, I'm referring to both the City wage tax and the PICA tax portions of the wage tax. Tuition remission or reimbursement programs are often provided as benefits for the employees of educational organizations, and the 9 11/30/06 - FINANCE - BILL 060108, ETC. " The City of Philadelphia mirrors the federal treatment and excludes these benefits from compensation for purposes of City wage tax. Philadelphia is fortunate to have several medical schools and teaching hospitals that are part of larger universities. These educational organizations offer "qualified tuition reduction" programs for their employees that are recognized as excluded from compensation for City wage tax. However, one of these universities has chosen to establish a separate entity for its healthcare system. While this entity remains a not-for-profit healthcare system and is affiliated with and 100 percent owned by a not-for-profit university, it is no longer an educational organization as defined by 10 11/30/06 - FINANCE - BILL 060108, ETC. the Internal Revenue Code and as recognized by the City of Philadelphia. As a result, its employees who participate in the tuition reduction program are now required to include these benefits as part of their compensation for calculation of City wage tax. The bill before you would permit these benefits to be treated as if these employees worked for an educational organization. The financial impact of this bill is limited. I'm advised that the wage tax paid in 2005 included approximately $240,000 for tuition reduction benefits received by employees of this healthcare system. However, I've also been advised that the maximum benefit for participants in the tuition reduction program have been reduced and that this, in turn, will reduce the amount of tax that would be paid if this benefit remains part of taxable compensation. 11 11/30/06 - FINANCE - BILL 060108, ETC. The description I have given of this bill and its financial impact are based on my understanding of the proposed intent of this legislation. However, I do have a concern about the way an affiliate is defined in the bill before you. The bill refers to a section of the Pennsylvania Code regarding Non-Profit Corporation Law for the definition. That provision contains a much broader, more ambiguous definition than the one that's been described above. If indeed the narrower interpretation is the one desired by this Council, then I would suggest that the bill be amended to clarify that the not-for-profit affiliates intended to be recognized here are those that are wholly or 100 percent owned and controlled by a not-for-profit university. I have attached some draft language for an amendment for your consideration so that you could take this into account in your deliberations. This concludes my testimony.

12 11/30/06 - FINANCE - BILL 060108, ETC. I'd be happy to answer any questions you might have.

Thank you very much. Are there questions from members of the Committee with regard to this legislation? (No response.)

Thank you, Commissioner. The Chair notes to my left we have Councilwoman Marian Tasco, who is likewise present. We thank her. We'll now ask the Clerk to read the title of Bill Nos. 060108 and 109. We welcome our Managing Director, thank him for his patience, the Water Commissioner, Bernie Brunwasser, and all of those from Air Management. We likewise will be hearing after that Mr. Matthews, is he here, District Council 33 and the union representative, Andy Bond, Mike Keough, Louis Willis, Dave Sharpanski, Mike Coia, Don Brindley, 13 11/30/06 - FINANCE - BILL 060108, ETC. and then we will hear from members of the PAC and Donna Henry, Southwest CDC, with regard to this bill. We welcome you, Managing Director, and whomever you would like to bring forward. We'll ask the Clerk to read the title of both bills.

Bill 060108, an ordinance authorizing the Water Commissioner and the Procurement Commissioner, on behalf of the City of Philadelphia, to enter into a Service Contract with the Philadelphia Municipal Authority, pursuant to which the City will assume certain obligations under an agreement that the Authority will enter into with Philadelphia Biosolids Services, LLC to design, finance, build, own and maintain facilities and equipment, and provide operating services, for the management of the City's wastewater treatment solids, all under certain terms and conditions; and Bill 060109, an ordinance 14 11/30/06 - FINANCE - BILL 060108, ETC. approving an extension of the term of existence of the Philadelphia Municipal Authority and authorizing the Authority to design, build, finance, own, operate, maintain and lease facilities and equipment, and provide related services, for the management of the City's wastewater treatment solids, all under certain terms and conditions.

Thank you very much. We welcome you and invite you to begin your testimony.

Good afternoon, Councilwoman Blackwell and members of the Finance Committee. I'm Pedro Ramos, Managing Director. Thank you for the opportunity to provide testimony in support of the Biosolids Recycling Center improvement project. Water Commissioner Brunwasser and his staff are prepared to provide you with comprehensive testimony on the plan to transform the existing 72 acres into a clean, odor free processing facility, 15 11/30/06 - FINANCE - BILL 060108, ETC. with state-of-the-art pollution control systems that will benefit our community and our environment, while saving ratepayers approximately $190 million over the life of the program without anyone losing their job or getting demoted. The BRC improvement project will benefit the surrounding community and our City. As you will hear from Commissioner Brunwasser, by implementing the proposed technologies with the improvement project, the City will become compliant with air quality standards. The new thermal-drying facility will be enclosed and will produce 10 percent Class A pathogen-free biosolids. Our current facility produces 30 percent Class A biosolids and 70 percent Class B biosolids. Class A biosolids are considered fertilizer, while Class B biosolids are considered solid waste. Unpleasant odors from the BRC that have impacted our citizens for years 16 11/30/06 - FINANCE - BILL 060108, ETC. will be eliminated. Outdoor biosolids storage piles will not be required with this enclosed facility. The absence of outdoor storage piles will reduce the space required to process materials by approximately one-half and significantly improve site aesthetics. Therefore, the space occupied by the facility will be reduced from approximately 72 acres in size to approximately 35 acres. The amount of truck traffic will also be reduced. New technology will result in the reduction of finished product from 200,000 tons of material a year to approximately 60,000 tons of material, because the Class A pellets that are produced are so much lower in weight than currently produced de-watered biosolids. Approximately 7,000 truck trips will be averted under this proposal. Of course, this will have a positive impact on the surrounding community and our City by reducing the 17 11/30/06 - FINANCE - BILL 060108, ETC. diesel truck air pollution and the associated noise and other disturbances associated with truck traffic. I understand fully that DC 33 leadership at the plant continues to oppose this project because it is a form of privatization. However, I wish to stress that we have committed that no 10 person will lose his or her job or be demoted on account of this project. I also want to make clear that with the previously planned, apart from anything happening with BRC, with the previously planned elimination of composting at the BRC, the number of workers that would be transferred on account of this project is approximately 60. All of the employees at the BRC will be transferred to other units in the Water Department or other City departments. Again, no one would lose their job and no one would be demoted. To summarize, again, no one will be demoted or lose their job on 18 11/30/06 - FINANCE - BILL 060108, ETC. account of this project. Odor from the BRC will be eliminated. Truck traffic will be dramatically reduced. The space occupied by the BRC will be reduced from 72 to 35 acres. Philadelphians will benefit $190 million over the life of the transaction, with the present value of $102 million. I think the issue here around this transaction at the end of the day boils down to the issue over the 60 positions that would be transferred but not demoted or anybody lose their job and the value of the transaction to the ratepayers, regardless of any dispute that may arise as to what that is, and we believe the Water Department has budgeted that responsibly. Finally, I want to thank you for the opportunity to present testimony.

We ask for a favorable recommendation and action to vote this bill out of Committee following today's testimony. And I'll now ask Commissioner Brunwasser and his 19 11/30/06 - FINANCE - BILL 060108, ETC. staff to present testimony.

Thank you. Might I note, to my right we have the Council President here. This is her area and she's entertained community meetings in this regard. She is here. Councilwoman Blondell Reynolds Brown and Councilman Juan Ramos, as well as Councilman O'Neill, who are on this Committee, are likewise present. And let me say, Mr. Managing Director, there are many aspects of this, and Water Commissioner, of this legislation that concern us. One is, of course, the process, the odor, all of that, and that we need to discuss. But the whole issue of jobs and privatization affects many of us who support labor unions. Many of my colleagues came to me this morning about the issue. And may I also say that it really upsets us, because we were told in housing reorg that nobody would lose their job. Now 20 11/30/06 - FINANCE - BILL 060108, ETC. they're even threatening to take Vacant Property Review Committee. They've already laid off John Coates and his staff, and now they're threatening to take the whole process away from us, without me knowing it, so that by December 10th, we won't even have a Vacant Property Review Committee to use to transfer properties into and to help people in neighborhoods do side yards and that sort of thing. So not only have they taken the jobs away, they've also taken a committee away, the function of VPRC, a committee that Council formed in 1976. So you know, we're really concerned when we hear that no one will be demoted, nobody will lose their job and everything is going to be okay, because we were told that likewise through eight hearings in housing reorganization, and it just hasn't happened. So there are many aspects to this. 21 11/30/06 - FINANCE - BILL 060108, ETC. (Applause.)

So as you know, we have union people here, we have community people to likewise testify. We have the President here, whose area is affected by odor and other aspects. This is a tough one, and so I think it is, in all fairness, it is up to the Administration to kind of take us there if you think we can get there given the issues that are at stake. Thank you. Commissioner?

Councilwoman, may I just have one comment --

Absolutely.

-- on the credibility of the assertion about no one losing their job or being demoted. We're prepared to put that in whatever form is acceptable to the union or this body. That's a commitment that the Commissioner has made publicly and privately, and 22 11/30/06 - FINANCE - BILL 060108, ETC. we're prepared to stand by in whatever form is acceptable.

Thank you. Thank you very much. Commissioner Brunwasser? COMMISSIONER BRUNWASSER: Good afternoon, Councilwoman Blackwell and members of the Finance Committee. My name is Bernard Brunwasser and I'm the Water Commissioner. I'm here today to testify on Bill Nos. 060108 and 060109. These bills will authorize the City of Philadelphia, acting through the Philadelphia Municipal Authority, to engage in a long-term contract for the operation of the City's Biosolids Recycle Center. This project will make major improvements to that facility, including a significant reduction in odors. Rather than read my testimony, which I hope you all have and hope you'll have a chance to review it if you haven't already, I'd rather kind of just take you quickly through our presentation booklet 23 11/30/06 - FINANCE - BILL 060108, ETC. to kind of shorten the presentation and leave more time for questions. I do have one slight change to one of the pages in the presentation booklet, , and I have copies of that change here. Also, as you mentioned earlier, Councilwoman Blackwell, we do have Morris Fine from Air Management Services, who will, I guess, be able to answer some of the air pollution questions that you may have. Going through the presentation booklet rather quickly, Slide No. 2 gives you an aerial view of the Biosolids Recycle Center as it's been generally in the past years or so. It's a 72-acre 19 site. Most of the time it has a large 20 amount of biosolids product, whether it's sludge cake, the initial de-watered product or compost. There's generally a significant amount of product on site. We're going to change the view. This is obviously a site that people see 24 11/30/06 - FINANCE - BILL 060108, ETC. coming into Philadelphia from the south from I-95, and that's also bounded by the Platt Bridge, where you would probably experience the worst of the odors. Slide 3 is an artist's rendition of what the new biosolids site would look like, and that's an odor-free enclosed processing facility and it has state-of-the-art pollution control systems and air scrubbers, which virtually eliminate odors. On Slide 4, just a quick overview on what biosolids actually are, we collect wastewater from all of Philadelphia at our three wastewater treatment plants and we pump that product to the solids. We pump or barge to the biosolids plant in Southwest Philadelphia. Prior to 1980, we did not have to dispose of biosolids on land, but we got out of ocean dumping of biosolids in the late '70s and early '80s. Slide 5, another overview of the plant. It's 72 acres. It's close to 25 11/30/06 - FINANCE - BILL 060108, ETC. the airport, next to the Platt Bridge again, and it processes the biosolids from all three plants. And the de-watered biosolids are processed into either Class A or Class B product. The next slide tells you that Class A is our compost product and it's basically pathogen free and it's regulated as a fertilizer. Class B biosolids is not pathogen free and is regulated as solid waste. And currently we can only do about 30 percent Class A on site, and that's done by composting, and 70 percent, the rest of it, is Class B product. Slide 7 tells you how we dispose of the product today. Class A, 60,000 tons per year is composted. Class B, 140,000 tons go to agricultural applications, strip mine reclamation and landfill. And currently the site has budgeted 108 positions and filled approximately 93 employees.

Define 11/30/06 - FINANCE - BILL 060108, ETC. "compost" for us.

Hi. My name is Dennis Blair and I'm Manager of Planning and Research. Compost is a product where biosolids have been placed in piles and air has been drawn through the piles and temperatures have elevated in those piles and, as a result, the higher temperatures have killed the pathogens. So it's a process by which Class B biosolids can be made into Class A biosolids.

Thank you.

I think it means putting hot air through sludge until the waste becomes fertilizer.

Thank you. COMMISSIONER BRUNWASSER: The next slide gives you our annual BRC costs currently, both operating and capital combined. On the rehab and renewal, you'll see $3 million. That's actually 27 11/30/06 - FINANCE - BILL 060108, ETC. from our capital budget, and we base that number on looking back the past years 4 and seeing how much we had invested in 5 capital at that site, and it's averaged 6 about $3 million. It can vary from year 7 to year, and, in fact, some of you may 8 have gotten a report as early as 9 yesterday afternoon. That's when we saw 10 a report from the City Controller, which 11 called into question some of our numbers. 12 The two basic numbers that the 13 Controller's report had question with was 14 the capital costs that we have been 15 expending out at the biosolids site, the future costs. We believe that 3 million is a conservative figure, because that's what we've been spending for the past 15 years. The plan is now 25 years old. The City Controller has allocated half a million dollars per year for capital at that site, and we think that's woefully short of what we would need, based on our past experience and based on our experience on wastewater facility 28 11/30/06 - FINANCE - BILL 060108, ETC. maintenance as a whole. We'll be responding in a letter shortly to the Controller about our disagreements. , these are the problems that we've been facing for a number of years actually, and some of these problems, of course, have affected the neighborhoods surrounding the plant. First and foremost, odor issues. Our Clean Act Air permit has not been renewed because we have continuous odor problems at that site. The site aesthetics. As you saw, it was a 72-acre site basically covered with biosolids or sludge product, and we certainly want to clean that up. As I said earlier, 30 percent of our biosolids gets composted into Class A. The other 70 percent, Class B, had a lot of opposition by environmental groups and local ordinances within the state and we're not sure of its future and how long we'll be able to continue to use land application for Class B. 29 11/30/06 - FINANCE - BILL 060108, ETC. And we believe there is going to be a pretty rapid landfill disposal cost escalation. And that's the other point that we differ with the City Controller, if you've seen his report. It's about a $5 per ton difference in what we estimate to be the costs going out. What I should tell you is that this bid came to us through an RFQ/RFP process. We had a group put together, which included a member of City Council's staff and folks from the Law Department, MBEC and Procurement. We also hired a technical expert to help us evaluate all of the options, all of the options not only in the United States but in the world. This is a -- Camp, Dresser and McKee has an international reputation and expertise in the area of biosolids. There are a lot of processes out there. We have studied all of the ones that we believe were feasible for a city like Philadelphia, with the size and 30 11/30/06 - FINANCE - BILL 060108, ETC. the location of the site. So we issued an RFQ and an RFP, and PBS, Philadelphia Biosolids, submitted a responsive proposal. Now, Philadelphia Biosolids Services is made up of Synagro, which is the largest biosolids processor in the United States; McKissack and McKissack, a percent WBE equity member, also for 11 design and construction; and Len Parker 12 Associates, general contractor, and he's 13 a ten percent MBE equity member. The 14 other key component is Andritz-Ruther. 15 They're the builder of this 16 thermal-drying equipment, and CH2MHill, 17 which is an engineering firm that is on 18 board to design the plant. 19 Slide 12 gives you M/W/DBE 20 participation plan for the project, and this was vetted all along through the Procurement Department and MBEC.

As you can see, the interim operations portion, which is the construction of the plant and the getting rid of the biosolids on 31 11/30/06 - FINANCE - BILL 060108, ETC. site, that's 50 percent participation. Design of the plant is 40 percent MBE participation; construction of the plant, 39 percent participation; and long-term operations, 28 percent participation. The plan is for PBS to manage the current BRC operation for a three to five-year interim construction period, and they would shut down the composting operation, which we all recognize needs to be shut down. Unfortunately, that's our Class A way of getting to the best type of product, but it also has a major effect on the odors there. PBS is to finance, design, build, operate and own this facility, this-thermal drying facility at BRC, for years, with a five-year extension 20 option by the City. And what a thermal-drying facility is, it evaporates water similar to a clothes dryer, then forms fertilizer pellets to use in agriculture. And some of the pictures behind you there will 32 11/30/06 - FINANCE - BILL 060108, ETC. show you what these plants look like, and we actually have photographs of the complexity of them inside, indoors. But the technology has been around for a while and it's been perfected. Every year it gets even better. The benefits of the project, it eliminates the odors and achieves the CAA, the Clean Air Act permit compliance. It will all be Class A pathogen-free biosolids or pellets, and it will be a new enclosed facility and state-of-the-art pollution controls. No 15 more outdoor storage of biosolids, no 16 more sludge, no more piles, and it reduces the truck traffic in the area by 7,000 trips a year. Currently it's about 10,000 trips a year to handle 200,000 tons of product, and it will be approximately 3,000 trips a year now, a decline of 7,000, because there's 60,000 tons of product as opposed to 200,000. What that also does for us, for the City, is to basically make 35 to 40 33 11/30/06 - FINANCE - BILL 060108, ETC. acres available for something else, and since the plant will not give off odors, there's a wider variety of things that could go out there. The City is going to pay PBS $20 million per year during the interim period, and PBS is going to finance, design, build and operate and own this facility. They will have to -- they will be investing $66 million in that facility. 3 million 15 goes to energy. 16 Next there's a chart up there. 17 It also indicates the same thing. We 18 have projected savings over the 23-year 19 period of $193 million. On a net present value savings basis, if you -- we acknowledge that 20 years from now a dollar saved might be worth 50 cents to us, and so net present value analysis says $102 million in net present value savings in today's dollars basically if 34 11/30/06 - FINANCE - BILL 060108, ETC. we go to this process. And that will accrue to the benefit of our ratepayers, because the increases of the future will be moderated by the savings at this facility. This is another area where we had a disagreement with the Controller's estimates, and, again, he had assumed that we would only be spending half a million dollars for capital at the current plant that we have as opposed to 3 million, which is up in our historic number. So the facility is now 25 years old and its replacement value is about $75 million. So $500,000 per year would provide less than one percent of the replacement value of the facility. And you have to remember, this is a biosolids facility. This is not -- there's some caustic -- this is not something that's free from problems. And our experience tells us that less than one percent is just not enough to renew a plant. One of the things that we have 35 11/30/06 - FINANCE - BILL 060108, ETC.

done because we have been looking at this possibility of outsourcing this particular plant, we did not invest heavily in capital the last couple of years, nor did we project to spend a lot in capital, and that may have led to this opinion that only half a million dollars in capital would do it. Now, one of the major -- one of the most important things to us has been the labor issues. As Managing Director Ramos has said, there will be no layoffs that will result from the project. We will do whatever it takes to assure City Council that that will be the fact. All current employees will be transferred within the Water Department to equivalent positions, many with exact same title. There will be no demotions. There will be, again, no layoffs. The staff at Biosolids currently are free to seek jobs with PBS if they like, and if they try it and don't like it, we will guarantee that the 36 11/30/06 - FINANCE - BILL 060108, ETC. Water Department will take them back within one year. Whether they leave for another City agency or another company, if they choose, they will be welcomed back into the Water Department. We have had a number of meetings with DC 33. We also met with DC 47. And we received this winning bid from Synagro and Philadelphia Biosolids in late 2004. We took several weeks to evaluate the bid, and when we determined that this was something we wanted to pursue, we contacted the union and began having meetings with them. They had some options that they wanted us to look at, including one that was raised by the Controller's report called thermophilic digestion, but I wanted to assure you that the Department and its experts have looked at thermophilic digestion and have looked at many other options out there. Unfortunately, many of them are not appropriate for Philadelphia, and we've 37 11/30/06 - FINANCE - BILL 060108, ETC. evaluated them and we've decided that they were not right for us. What this project also does is, it does create 75 construction jobs that will be union run and 30 permanent jobs at the new site. So if I can summarize, basically just repeating what Managing Director Ramos has said, the project is good for the environment. It's good for the community. Very important, it's good for the ratepayers. It keeps City workers employed with the City. And project approval now will allow us to immediately begin implementation of these benefits. So I'm ready to take any questions, unless you want to hear --

I guess we'd like, Madam Chairwoman, if you would accept the long version of the Commissioner's printed testimony into the record, we request that and ask whether you would prefer to have question and answer to the 38 11/30/06 - FINANCE - BILL 060108, ETC. testimony thus far or take the testimony of Morris Fine, the Director of Air Management.

I would like to, if the Committee will agree, to entertain some questions now based on the testimony that you've given, and we're happy to submit the Commissioner's full testimony as part of the record for this Committee hearing. I'll defer my questions. I'll call on President Verna first.

Thank you. Thank you very much.

You're welcome.

Commissioner, can you describe the process and time line that was followed in developing this proposed transaction? COMMISSIONER BRUNWASSER: I believe this particular transaction began about 2002, but I'd like to turn that over to Dennis Blair. 39 11/30/06 - FINANCE - BILL 060108, ETC.

We first started this process in late 2002. We were approached by a company called U.S. Filter. At the time, we had had a lot of problems down at the site and were beginning to think about alternatives to control odors and to deal with the issues there. U.S. Filter proposed to us that this technology was available, was growing in use and that they could implement it in a fashion that would probably result in a savings to the City, while at the same time giving us a Class A product and an odor-free facility. That began our process. And in 2003, we issued a request for qualifications. Based on that, we had four firms submit. Two of those were qualified. In 2004, we issued a request for proposal. The two firms that received that, only one of those actually finished and submitted a proposal, and that was the Synagro proposal creating 40 11/30/06 - FINANCE - BILL 060108, ETC. the limited liability corporation, Philadelphia Biosolids. And we received that proposal shortly after Thanksgiving at the end of 2004.

Thank you. Commissioner, whenever I hear scrubbers, I think of trash-to-steam, and I know you said that this is an air scrubber and I believe you indicated that it's similar to a clothes dryer. I think the record has to be very clear as to precisely what this air scrubber is. There is no burning; am I correct? COMMISSIONER BRUNWASSER: Correct. Correct. The biosolids are not burned.

I'd like you to say that, please. COMMISSIONER BRUNWASSER: Yes. And, again, the dryer is a very good analogy, we believe. In fact, I think one of the large pictures that we have does have a dryer, at least a portion of 41 11/30/06 - FINANCE - BILL 060108, ETC. the dryer there.

Is it here? COMMISSIONER BRUNWASSER: Yes. Let's see if we can point that out. UNIDENTIFIED SPEAKER: These are slides here that show the dryer, what it looks like. This slide over there shows the odor dispersion model. This slide shows the odor dispersion model, with the outer rings showing the current odor dispersion on the max an average day, and this little dot in the center showing the dispersion of the odors with the thermal-drying facility. Thank you.

Councilwoman, the dryer is -- the analogy is perfect to a clothes dryer. It's basically that. It's a large rotating drum. It has multiple channels by which the biosolids can move through that drum, and hot air is fed into there just as it is in your dryer, and basically the biosolids are 42 11/30/06 - FINANCE - BILL 060108, ETC. being dried through that process into a small pellet that then can be used as a fertilizer. The air that goes through there, the majority of it is recycled. About 85 percent of it is recycled. The percent that is not is going to be 9 discharged to the outside, and that's 10 where the scrubber comes in. The 11 scrubber is basically a pollution-control 12 device that removes essentially 13 everything from that air stream. It can 14 be scrubbed with water or it can be 15 scrubbed with chemicals, but it's a process to remove all of the pollution from that air stream before it's discharged to the outside.

Thank you very much. Commissioner, can you tell us, what involvement did the Water Department have with District Council 33 through this process? COMMISSIONER BRUNWASSER: Yes. 43 11/30/06 - FINANCE - BILL 060108, ETC. We initially had our first formal meeting with District Council 33 in January of 2005. That doesn't include anything that may have been -- informal meetings that may have happened on the plant itself. But we met at the beginning of 2005 and we met later in March of that year. And then actually since we introduced the ordinance, we've met a number of times and listened, tried to explain what this project was all about. We did explain that this project from the very beginning would never have gone forward if layoffs were part of the bargain. That was a non-starter for me anyway. And we said that we would absorb all employees at their same level in other places within the Department. We discussed the details of the financial comparison between going to this Synagro or Philadelphia Biosolids solution versus continuing with what we have today and just eliminating the composting, which is a large contributor 44 11/30/06 - FINANCE - BILL 060108, ETC. of the odor problem. So we made those kinds of explanations, and we listened to -- received and listened to any other alternatives that the union had.

Were any other alternatives proposed? COMMISSIONER BRUNWASSER: Yes.

How many?

I would say they probably talked about four or five different alternatives. By far, the majority of those alternatives are things that have never even been tried, not even on a bench-scale application. And one of the requirements that we clearly made clear was that we weren't going to implement a technology unless it had been in practice in full scale in a number of applications in cities of comparable size to ours.

With that being said, how many cities does the company in question have, how many other 45 11/30/06 - FINANCE - BILL 060108, ETC. cities do they have their facilities?

They have them in a number of large cities. They operate thermal dryers in New York City; Baltimore; Pinellas County, Florida; Sacramento; Honolulu. And in addition, this technology that we're talking about, thermal drying, is also operated in Houston, in Louisville, in Milwaukee and Chicago and other cities like that. So it's a widely used technology both here and in Europe. It's been around in Europe since the 1970s.

Council President, if I can add to that -- and I apologize, and we'll make sure that we get standard-size copies of the boards that are up in Council Chambers for distribution and for the record. Okay. I understand you do have them in your packet. If you look at the second aisle from my left on the bottom, that is a facility in Florida, and you can see a facility right there in the 46 11/30/06 - FINANCE - BILL 060108, ETC. middle of the footprint with a fair amount of typical dense suburban residential development right around the plant.

Isn't there one in New Jersey? COMMISSIONER BRUNWASSER: Yes. In fact, some of the members of Council staff --

Did attend. COMMISSIONER BRUNWASSER: -- were taken out there, yes.

Commissioner, if the Water Department were to delay the implementation and continue with your current process for 18 months -- it's my understanding that the union is asking for an 18-month delay -- can you tell us what would the impact on the Department and the water ratepayers be? COMMISSIONER BRUNWASSER: Well, financially it would be significant. The 47 11/30/06 - FINANCE - BILL 060108, ETC. delay would cost us about 250,000 a month in additional costs to bring the facility into compliance with the Clean Air Act, another 250,000 a month in escalating costs of construction at the facility. Some of the capital plans that we have delayed would have to be implemented, because some of the equipment will fail. We also would lose half a million dollars per month in lost savings because of the difference in costs between the Philadelphia Biosolids submission and our having to continue to operate that plant pretty much as it is and switch most of the compost to landfill. The other part of it -- so the ratepayer really for an 18-month period, that would be almost a million dollars a month that they would be losing out, and 18 months is roughly $18 million. So the next set of rates that we would have to look at to balance our books would be that much higher. 48 11/30/06 - FINANCE - BILL 060108, ETC.

Councilwoman, if I may add in the context of that, again, if it balanced out against some of the labor issues, the number of people that would be transferred but none of them laid off or demoted at that point after composting goes away as currently scheduled is 60 positions, 60 people. COMMISSIONER BRUNWASSER: Sixty people, yes. And I think the biggest losers would actually be the community, because the odors would continue. The trucking -- the 10,000 trips would continue, as opposed to 3,000 trips and so air pollution from the trucks would continue. So it would delay the benefits to the area.

Commissioner, I think you touched on it very slightly, but I'd like you to elaborate, what are the air quality issues with the current process and how will they be improved by your proposed system. 49 11/30/06 - FINANCE - BILL 060108, ETC. COMMISSIONER BRUNWASSER: Yes. We do have Morris Fine here from Air Management Services, but the key thing would be -- it's also in this booklet, but the air dispersion, the odor dispersion study that was done by experts indicate that there's approximately eight-tenths of a mile, I believe, is the average day of dispersion from the site. And Mr. Bolno from my staff is pointing out. And the further out ring, on worse days, a larger swath of the neighborhoods are affected. But with this thermal-drying plant, it is really just a very small part of the site that might have some odor to it, but it's all on site, not beyond the fence line. So all of the neighborhoods would be improved. They would not have odors from this facility any longer. And the next slide over, you can see what the difference is. You can hardly see the amount as far as the amount of odor escaping. It's almost 50 11/30/06 - FINANCE - BILL 060108, ETC. gone.

Would you mind if we have someone from Air Management come up to address that? COMMISSIONER BRUNWASSER: Not at all.

Is Mr. Fine here?

Yes. Councilwoman, while Mr. Fine comes up, if I can just reiterate that the description of that chart, it looks like a target, with the hazy blue outer and green center. The little section, the little bull's eye in the middle, is the difference between the before and after, the little piece in the middle being impact post project versus the current situation by the outer circles.

Thank you. Mr. Fine.

Yes. Good afternoon. I have testimony, if now 51 11/30/06 - FINANCE - BILL 060108, ETC. would be appropriate to deliver it or if you would like to ask questions. Either way.

The Chairwoman said it would be fine to present your testimony.

Thank you. Good afternoon, Chairwoman Blackwell and members of the Committee on Finance. I am Morris Fine, Director of Air Management Services in the Department of Public Health. I appreciate the opportunity to present comments today on behalf of the Department regarding the odor compliance status of the Philadelphia Water Department's Biosolids Recycling Center. Air Management Services is responsible for enforcing state, federal and local air quality standards for stationary sources of air pollutants in Philadelphia, including the issuance of operating permits to sources that emit regulated pollutants. 52 11/30/06 - FINANCE - BILL 060108, ETC. Air Management Services issued an air operating permit to the Water Department for this facility on June 1, 2001. Since the operating permit was issued, Air Management Services has received numerous odor complaints from nearby residents and has cited the Water Department on numerous occasions for odors emanating from the facility. The five-year term of the permit expired on June 1, 2006. Pennsylvania regulations currently prevent Air Management Services from reissuing an operating permit to any party with outstanding violations against it unless the party has entered into a binding agreement that includes a definitive correction plan and compliance schedule. As a result, because of outstanding issues that prevent the Water Department from entering into such an agreement, Air Management Services has not been able to renew the Biosolids Recycling Center air operating permit. 53 11/30/06 - FINANCE - BILL 060108, ETC. Having neither a compliance plan nor a current operating permit, this facility continues to operate in violation of federal, state and local laws. The Water Department and Air Management Services through the Law Department have, however, been in cooperative discussion for several years regarding development of a plan to implement odor controls at the BRC. Air Management Services has taken into consideration the planning complexities, including the economic expenses, in allowing additional time for concluding the compliance process. In addition, the Water Department has implemented some interim control methods to reduce off-site odors, including redesigning the existing compost pile, treating emissions from the main process building, reducing the amount of stockpiled materials and covering and relocating the cake storage area further away from the residential neighborhoods. 54 11/30/06 - FINANCE - BILL 060108, ETC. Air Management Services strongly believes that the only reasonable long-term solution to eliminate odors from the BRC would be by applying additional appropriate technologies and practices. Odor control technologies for water pollution control plants are available and in use in many other areas of the country. The Boston, New York City, Los Angeles and Sacramento municipalities have successfully addressed problem odors from biosolids recycling operations by pelletizing to produce fertilizer and installing biofilter systems. I would like to emphasize that as an air enforcement agency, Air Management Services has no preference as to whether the odor mitigation strategy pursued by the Water Department is performed through outsourcing or by traditional City services. Our concern in this case is that whichever strategy is finally chosen, it will be designed 55 11/30/06 - FINANCE - BILL 060108, ETC. and operated in a manner that will eliminate the current odor nuisance. The odors from the BRC are well known to the residents of the area, and many visitors' first experience of Philadelphia's air quality may very well be the odors from this facility as they travel from Philadelphia International Airport into the City. Eliminating odor emissions from the BRC would be beneficial to Philadelphia's air quality in general and perhaps also be a positive influence to the City's image. Thank you very much for your attention. I'd be happy to answer your questions at this time.

Madam President, do you have more questions?

No, not for Air Management at this time. I don't want to belabor this by asking all of these questions, and I think the Managing Director and the Commissioner have made it eminently clear 56 11/30/06 - FINANCE - BILL 060108, ETC. and they have repeated it at least three or four times that there would be no City employee from the Water Department laid off.

Or demoted.

Or demoted. And I personally would feel a lot more comfortable if in fact, Mr. Director, we could get something in writing from the Mayor stating that, so if in the future something were to happen, I think then the union members and we could have something to hang our hat on.

On behalf of the Administration, we'd be pleased to provide that to City Council.

Thank you.

Thank you very much. This is very important, because, again, with regard to the housing reorg, we have union people 57 11/30/06 - FINANCE - BILL 060108, ETC. fighting union people. We have people who are bumping down, fighting people that they've worked with and 30 and 35 5 and 38 years. It's a nightmare. We have 6 people who, since they come to City 7 Council, now get that deducted from their 8 pay, and just all kinds of measures that 9 are just insufferable. And now to be 10 told that they're even not only -- they 11 laid off 42 people and said they were 12 hiring 44, but obviously at lower 13 salaries. So that's union busting by any 14 definition. 15 (Applause.) 16

And 17 all of this concerns us, because not only 18 does the President have an area -- and 19 it's City-wide when you deal with air 20 pollution and odors and all of that -- but you have people who live -- we have a requirement that people live in our City, as you know. And when people live in our City, work in our City, they deserve a right to feel that they're protected by 58 11/30/06 - FINANCE - BILL 060108, ETC. the officials they elect. It's very disheartening to fight over and over and over again for the same people who elect us and who pay all of our taxes so that we can sit here today. So it really, really upsets us, because as I said, we try to stay close to these issues. We try to defend and support our people. And the people here and the people across the City who work in the City and who are members of the union are our neighbors, too. They're somebody's neighbor. Somebody up there has a neighbor. And they're all our residents. And so we really, really are concerned and we would really have to have those assurances tightly written or amended into the bill, as my colleague said, so that we are sure that our people are protected. Those of us who are up here -- and we know we'll get a fuller discussion as we go on and we know that as we go on, we translate English into English, and 59 11/30/06 - FINANCE - BILL 060108, ETC. the unions help us understand what we're talking about here. And as much as all of us, those of us who know people who may work for Synagro or some other company, we don't really know the -- at least let me speak for myself. I don't really know what makes this process or this company better than some other. And we'll ask the unions when they come. In glancing through their document, AFSCME District Council 33, Local 394, they're asking for time themselves to come up with a process. Why can't we do that? I realize we'll save some monies, but in terms of trying to work it out -- and we have no problem with Synagro. Is this the best process? Is there something else that's not pellets or that's just washing the stuff so it becomes something else, some other process, for those of us who don't know this? We realize all of you who work with it, it's second nature, but if it's not kind of poetry or housing, I don't know what you're talking 60 11/30/06 - FINANCE - BILL 060108, ETC. about. So why is this best? Why is this company best? And why shouldn't we work with the unions and give them two years to come up with a process? (Applause.)

Councilwoman, in response to President Verna's question, the Commissioner laid out the process that's been going on for some time, starting with legal and technical objectives that the Water Department has to fulfill, and described the process that's been really several years in getting to this point. Now, at the end of the day, it's pretty much about what -- at the end of the day, you're absolutely correct. It's a policy decision about whether this is a fair deal for the ratepayers at this time. The professionals that are in the management of our Water Department certainly believe that this is the best proposal they have. Even if there were 61 11/30/06 - FINANCE - BILL 060108, ETC. another proposal out there -- and I don't think we encountered a better solution -- we are at a point with a very strong plan for the life of this deal to save the ratepayers, but in today's dollars it's worth over $100 million. And even the people that want to argue with that still are talking about tens of millions, scores of millions of dollars at the end of the day versus 60 positions, where nobody loses their job or gets demoted. So it's really a matter of what -- in terms of what's fair overall.

Thank you very much. Councilman O'Neill, your light has been on a while.

I just have two questions. One is a follow-up to both the Council President and Majority Leader. Is it possible to work an amendment into this legislation? As much as I appreciate that the Mayor, Managing Director would abide by their 62 11/30/06 - FINANCE - BILL 060108, ETC. letter -- and I don't have any doubt about that -- the next Mayor and the next Managing Director say, Hey, that was the last Mayor and the last Managing Director, assuming you move on to something else, too. I know you're not bound by the two-term limit as the Mayor is. Is it possible, has it been looked at to do it that way so that it is more binding than just a document that would have 13 months' duration?

We're prepared to entertain any way of documenting and institutionalizing the commitment that we're making, and we'll be happy to talk to the Law Department staff, Council's tech staff and anybody else that wants to be a part of that process, because we're prepared to make that a solid commitment as -- it's a solid commitment and we're willing to document it any way that works for you.

My second 63 11/30/06 - FINANCE - BILL 060108, ETC. question is, I know we're going to hear about alternatives that weren't considered, that language in the RFP that excluded other alternatives, and I think Mr. Blair mentioned one thing, that there was this criteria of having seen it in operation in other places. And we'll hear more about that, but just looking at this from the Commissioner's standpoint and from the Administration's standpoint that, hey, if this is what we want, we've studied it, this is the best and it's going to save us a lot of money, why can't we do it ourselves and save the money? (Applause.)

Commissioner, I don't want to sound like -- I mean, I'm pretty serious about this question. We have treatment facilities. Those treatment facilities could have been farmed out. There's nothing magical about the treatment facilities' technology or anything that 64 11/30/06 - FINANCE - BILL 060108, ETC. it couldn't be done by a private company. There was a decision to do it. They're being operated very well. Every time there's a problem, it gets fixed. It's just a matter of whether we're in control of our environment or somebody else, and that's what I'm driving at here. Because we've in the past, not just in the water treatment area but in other areas, we could have brought Oracle in to run our IT. We'll use Oracle's stuff, but we're running it.

And I'll have the Water Commissioner describe it in greater detail, but at the end of the day, it's an opportunity for the City to -- well, first of all, I think you acknowledge in your question that there's a history in the Water Department in particular of wherever there's an opportunity for collaboration around alternatives and doing things in-house, I think particularly Commissioner Brunwasser's history is one where he and his team have 65 11/30/06 - FINANCE - BILL 060108, ETC. found ways of doing things internally. I don't think there's any dispute that we've done that, that whenever -- and it's not like they have a record of going around and trying to find ways of doing things non-union. That's not how this Department has operated, and I think that there's a history of discussion.

I didn't mean non-union. I assume the new employees are going to be unionized. They're in Philadelphia.

Well, right.

If we want this operation to run, I don't think it's going to run if it's not union.

But the project gives us an opportunity, gives the City an opportunity, to get a substantial capital investment done in a way that caps our costs and contains our costs in a predictable way over the long term. Some variables, like energy is going to be a variable, but they're going to be a 66 11/30/06 - FINANCE - BILL 060108, ETC. variable regardless. But it is a way of getting into compliance and getting a more useful, more compliant, more community-friendly facility in a short period of time and starting to realize the benefit to the ratepayers of what we're doing now versus what we're doing then. You can always go back to step one and start all over again and get to the end and start all over again.

But I think maybe my question wasn't made clear. Assuming the savings are there, if the savings are there, we do revenue bonds and clearly justify them to bondholders. We did that with these other facilities. I mean, every one of them could have been -- we could have saved money if we had farmed them out to the private sector. And that happens in a lot of cases, but we have other reasons for -- I mean, we own the airport. There's companies that do that. I mean, you can go on and on with -- and the risk 67 11/30/06 - FINANCE - BILL 060108, ETC. and the responsibility goes somewhere else. But there are a lot of good reasons to have control of it. One, you mentioned community friendly. I'd rather have the City be community friendly than a company headquartered somewhere else. I mean, that's just -- (Applause.)

I mean, is the savings -- you don't have to answer this. If it's a much bigger question, don't consider just a yes or no. But is the primary savings here someone else's labor costs versus ours? Because if the technology is going to be the same cost whether we buy it or they buy it, I don't understand where the savings are. (Applause.)

A lot of the savings is in the number of people that Synagro would use to operate this facility, but the real reason I think --

Why would they have to use any more than us? And, 68 11/30/06 - FINANCE - BILL 060108, ETC. again, I don't want to --

I don't know. I don't know why -- I mean, it's compared to what we're doing now.

I don't care about what we're doing now. What we're doing now, we're going to change. Everybody agrees on that. Even the union agrees on that, we got to do something different.

When you operate this new facility, I think the real issue here is it's this new complex technology that we've never operated. It's not a part of our core business. It's nothing that we have experience with. And the integration that's required between the de-watering step, where the material must be de-watered precisely to a certain level when it enters this dryer or you end up with something other than pellets out the other end. You end up with clumps. You end up with things that are not marketable. And if that product is 69 11/30/06 - FINANCE - BILL 060108, ETC. not marketable, it goes from something that can generate a revenue to something that might incur a large cost to just be simply landfilled rather than sold to a blender who is going blend those little pellets in bagged fertilizer and sell them at Lowe's. So it's a very complex technology that requires control and it requires somebody with experience. We do not have that experience. These folks have that experience. They operate these all over the country. And a really good example to look at is Milwaukee. They were famous for making Milorganite, their product, but even Milwaukee has contracted out the operation of their facility. They, too, found that competing with other pellets and the complexity involved caused them to decide to contract that out. And around the country this is a technology that's operated almost exclusively by the private sector. As a matter of fact, I'm 70 11/30/06 - FINANCE - BILL 060108, ETC. not aware of any utility that does all aspects of this, including doing the integrated design build, constructing the facility, operating it and marketing the product. What we get here with Synagro is, we get linked into a national market for the product. So the ability to take it to Florida, to take it to many markets throughout the country, to possibly market it as an energy product, all of that comes with that facility. All of that is something that we would have to try and develop on our own, and it would be very difficult, very costly. We had a lot of problems going from ocean dumping to composting and we incurred tremendous costs at that facility for well over a decade before we finally were able to figure out how to do that, because it wasn't our core competency. We don't want to repeat that.

Councilman, if I could just add one other thing from a 71 11/30/06 - FINANCE - BILL 060108, ETC. compliance perspective and sort of risk of compliance, which is that one of the elements of this transaction is that, in a sense, the risk of the laws changing on the end product is borne by the company, as well as the risk of the market for the end product, meaning that if nobody wants to buy the pellets, the little fertilizer pellets, as opposed to --

They'll eat them, but not literally.

Synagro will have to eat them. And also if the rules change about what's a good enough pellet, it's their problem, not the City's. So the City is able to at least get some predictability of cost and a little bit more avoid some of the risk around compliance.

Thank you. I have one more question, Madam Chair, before I let somebody else go. What you've said is clear and both the different reasons you gave, and 72 11/30/06 - FINANCE - BILL 060108, ETC. at least I understand them. I may not know enough to disagree or agree with them, but it involves this system. As Mr. Blair said, this is in a lot of places. A lot of cities, big cities, are doing this, and they've been doing it since the '70s. Are there any facilities dealing with compost, the biosolid area here that we're dealing with, of any size, other than a small town or a very small jurisdiction, that are doing something else? And the reason I ask that is, a technology that's been around since the '70s, it's reliable, a lot of jurisdictions use it is comforting, but I'd rather know what the cutting-edge technologies are that somebody may be using and maybe doesn't have the track record of 1970s until now but might be something that would be taken into consideration. I know if there is an answer, it may be against your interest with my 73 11/30/06 - FINANCE - BILL 060108, ETC. vote, but I just want to know, what else is there and is anybody doing it, even if it's not enough to satisfy the Water Department's requirement that it be pervasive?

One of the things that you hear -- and it was in the Controller's report, and you probably heard it in some of these others things -- is thermophilic digestion. This is a technology that's gaining a little bit more use in the 2000s. The Controller's report mentions that there are four cities using this. However, this is a technology that still does not reduce odors. It still leaves you with an odors problem. It still potentially has an odors problem and a disposal of the final product.

You said reduce. Doesn't the one you're talking about eliminate odor?

It doesn't completely eliminate odor, no. 74 11/30/06 - FINANCE - BILL 060108, ETC. We had taken a look at it. We had estimated with the consultant that it would cost us $90 million just to implement it at our wastewater treatment plants. And really it's a process that's implemented before the BRC facility. It's actually implemented at the wastewater treatment plant. And with that kind of cost, it is certainly more expensive than even our current operations, let alone the technology that we're proposing here. So even though you hear this technology now and you'll hear that a few cities may be using it -- LA is, by far, the biggest. LA, though, is having constant challenges over the quality of the product that it's trying to dispose of from the surrounding communities.

It's not pellets?

No. It's a thermophilic-digested product that's then further treated. 75 11/30/06 - FINANCE - BILL 060108, ETC.

What's its after life or next life? Where does it go once they dispose of it?

They form it into various products that they can apply --

What's it look like if it's not pellets, thermal something?

When you do thermophilic digestion, you still end up with a product that looks a lot like our Class B cake. It's basically --

Sludge.

-- been heated and killed the pathogens, but it still looks like that sludge that we produce down at this facility. So it still has the same disposal problems. The product has definite air issues, and I'm aware of the fact that facilities have been closed in Myrtle Beach, South Carolina and in Mobile, Alabama and I believe there are probably a couple of other facilities in this 76 11/30/06 - FINANCE - BILL 060108, ETC. country that went to that and --

Mr. Blair, I don't want to go on too much. That doesn't sound too cutting edge to me. Is there anything that's more of a cutting-edge technology that's out there that seems to have a lot of promise and, for whatever reason, you decided not to go with it?

No. I'm not aware of any other technology.

So it's pretty much this or something that isn't close, based on what you just summarized?

Barry just mentioned to me -- I mean, I don't know what you're thinking about. The Changing World Technology facility that operated our site for about five years and --

I'm not thinking of anything. I'm hoping you'll think of something to tell me.

That company has gone bankrupt. 77 11/30/06 - FINANCE - BILL 060108, ETC. Barry mentioned another one. There's a turkey processing type facility that supposedly turns biosolids into oil that you may have read about. That's never been proven to work. I mean, I don't really consider these kinds of technologies that are in a small pilot scale that hasn't been able to work as something that we can really be considering at this time. They're probably a decade away from ever being implemented, if they work out. So I don't really even consider those as the kinds of things that you were asking about. I still consider them to be things like thermophilic digestion.

Okay. Thank you.

Councilman, if I can go back and just footnote the issue of elimination versus reduction of odor. I mean, we're really talking about impact of any odor coming out of the process on the community, and the board with the 78 11/30/06 - FINANCE - BILL 060108, ETC. little targets on it represents that the small little quarter-size image in yellow being the after and the bigger green circles being the current.

So it's significantly reduced.

Virtually eliminated, or the impact on --

If you get close enough, you'll still smell it, but not many people will be that close.

Right.

Thank you.

Thank you, Councilman. Councilwoman Tasco.

Thank you.

Thank you for your patience.

Good afternoon. It's a very interesting discussion, and I certainly understand the need to try and reduce the odors and beautify that site down near the airport. 79 11/30/06 - FINANCE - BILL 060108, ETC. My questions, though, go back to the labor issues. I am concerned about the 60 employees who might be transferred or have the opportunity to go someplace else. We sat here all spring and through the fall as we watched the reorganization of the housing department and we were told over and over again that these employees would not lose their jobs. But what happened, even though we might want to amend this bill and put some clause in there that these people can't be fired or they can't be -- they have their rights, we don't have any jurisdiction over the civil service rules, because -- (Applause.)

Because what happened -- and certainly I hear both sides, and we do need the facility, but you also have people we have to look at and protect. And so I want to know, how do the seniority rights work when someone else selects another position in another 80 11/30/06 - FINANCE - BILL 060108, ETC. department? Certainly this Administration won't be here. What's the binding rule on future administrations? And if there are layoffs in the department where the employee is sent, there are layoffs, what are the seniority rights and are they the last one hired, the first one to go? I mean, those issues are very important to me as we look at it. It's more than just saying, Oh, well, they'll have a job. That may be true for a minute, but we know down the line there could be cuts, there could be -- and what are the bumping rights and all of that? We don't control what the process is. We can only come out and express our concerns and give support, but we can't change the rules.

Councilwoman, those are very important questions, and all of them should be addressed. I'd like to, first of all, offer to give you a very prompt written response to all of these, 81 11/30/06 - FINANCE - BILL 060108, ETC. but the short answer is that we're prepared to make that commitment. The rules about after somebody is transferred and how the seniority for a person that came from the plant stacks up against a person of similar seniority, it's something that I assume is -- there are already rules under the collective bargaining. If there are not, we'd be prepared to clarify them.

But right now these employees are in an environment where they are not threatened with layoffs or cutbacks and they seem to know that in years, they're going to be 17 able to retire from their job. If they 18 go someplace else, that may not be so 19 comforting. 20

Hi. My name is Teresa Vollmer. I'm the Human Resources Manager for the Water Department and petrified witness. Never done this before, so bear with me if I stutter and stumble. 82 11/30/06 - FINANCE - BILL 060108, ETC. I also worked in the Personnel Department for years and I pretty much 4 know all the ins and outs of civil 5 service. Civil service rules will have 6 no impact on what happens with the people 7 at BRC. We have close to 200 vacancies, 8 all of which these people will fill, and 9 their seniority will stay exactly the 10 same. They'll be in the same department. 11 They'll be in the same job class. Their 12 performance reports are still going to be 13 done by the Water Department. There is 14 actually no impact on seniority 15 whatsoever. And we have never had 16 layoffs at all in the history of the 17 Water Department, and we don't foresee 18 any layoffs in the future, especially 19 with the number of vacancies we have. 20

So you're 21 saying that these 60 employees would 22 still be employed within the Water 23 Department? 24

Right. We have 25 sufficient vacancies at this moment that 83 11/30/06 - FINANCE - BILL 060108, ETC. we could place everybody and still have vacancies left.

Councilwoman, another difference between the two scenarios you've described is, when you talk about the Water Department, you're talking about a total population of about --

Close to 2,000.

-- 2,000 employees in the Water Department. So when you're talking about 60 people, you certainly have a lot more -- it's not as difficult a challenge as the other case that you've cited. COMMISSIONER BRUNWASSER: And also your question about bumping, that would not be an issue. No one of those employees from BRC will be bumping anyone else. There are existing vacancies for all of those employees.

But they would not be working in the BRC, they would go to other -- 84 11/30/06 - FINANCE - BILL 060108, ETC.

They'll work in similar situations in other parts of the Department. They will use their skills.

Within their job class.

So if you are an equipment operator right now at BRC, you will be an equipment operator at another site in the Water Department, same salary, same seniority.

Well, let me just ask you another question about the savings. Are you counting savings also on the BRC relative to personnel? Because if you place the employees in other departments, there's not a savings, because you still have to pay them their salary, right? COMMISSIONER BRUNWASSER: That's correct, Councilwoman.

So is that counted in the savings that you have calculated, the personnel issue? COMMISSIONER BRUNWASSER: We 85 11/30/06 - FINANCE - BILL 060108, ETC. have appropriations sufficient in Class 100 for personnel at other units of the Water Department to take on people from BRC or hire new people and that will not count against the BRC. In other words --

Councilwoman, the bottom line is that the 60 positions that would otherwise exist at the BRC would not exist. The 60 people who are currently filling all those positions would be guaranteed that they'd have a job and that they would not be demoted. They'd be working within class. So in a sense, I mean, what you're getting at is, those 60 positions do go away at the BRC, at least as far as the City employment is concerned. The private provider will run that plant with about 30 people, and people that work for the City would have a chance to also have a chance for those employment opportunities. Other savings from the project come from the changes in operating costs and efficiencies. 86 11/30/06 - FINANCE - BILL 060108, ETC.

Would the employees who might choose to stay with BRC be City employees or would they work for BRC?

They would be employees of the company. The Commissioner has also made a commitment that if within a year an employee who had transferred to the private company wishes to come back, that they would be brought back. That's a separate guarantee and separate promise from the one we've said over and over again, which is that nobody would lose their job and no one would get demoted and everybody would have the opportunity to stay within class inside the City, and we expect them all to be in the Water Department.

Do the employees at -- I guess this is not an issue for us, but would the employees at BRC be part of a collective bargaining unit?

Yes. 87 11/30/06 - FINANCE - BILL 060108, ETC.

That's probably a question -- you're asking about whether the employees of the private company would be part of a collective bargaining unit. That's something that we would probably ask Mr. McKissack or somebody from Synagro to answer. Our understanding is that this is a company that has experience with organized labor.

Could you come to the table, please.

I'm Pam Racey with Philadelphia Biosolids Services. And we certainly expect to be organized -- we don't know which union yet. Typically we use Operating Engineers, but we're open to whatever unit our employees would like to work with. We've priced this project at union-scale wages and fully expect to be represented by a bargaining unit. Which one is unsure yet.

Thank you. Were there any other questions?

I don't 88 11/30/06 - FINANCE - BILL 060108, ETC. have any more questions around the labor issue. Councilwoman Brown has, and I may come back.

Thank you. Councilwoman Blondell Reynolds Brown.

Thank you, Madam Chair. I do have a follow-up to Councilwoman Tasco's questions regarding keeping the employees whole once the transfer has been made. Could I please trouble you to bring your Human Resource Director back to the witness table.

I have written something up. Is it okay if I read it?

Why don't you wait for her to ask a question.

Oh, sorry.

You're here to answer questions.

Sorry.

Good 89 11/30/06 - FINANCE - BILL 060108, ETC. afternoon. You mentioned in response to Councilwoman Tasco's question that the employees will be transferred and their status remains untouched, correct?

Correct.

Is this a special accommodation specific for this initiative or is that standard operating procedure within the Department?

That's standard operating procedure in civil service. Even if a function that you have performed is eliminated, if you are in a current civil service title, you may be moved to another position, but you do not lose status or pay or benefits.

Okay.

And, Councilwoman, in addition to that, as we've said several times this morning, we're prepared to document and make that part of the record, the legislation, something to the union. We're prepared to document that in any way that gives you comfort. 90 11/30/06 - FINANCE - BILL 060108, ETC.

Okay. COMMISSIONER BRUNWASSER: We also, I should mention, we are very concerned about our employees, and we have reached out to the union, and we know that at least the composting employees in any case will have to be reassigned within the Department. And what we would like to do is to work with the union to determine the best way to do this with the least amount of heartache for anyone. And we have some ideas on how to accomplish a smooth transition for all employees, whether they just be the ones that are affected by composting or all of the employees, and Ms. Vollmer here will be assigning someone full time to help with any transition issues.

That raises two subsequent questions for me. "Reached out" is a relative phrase, to reach out, and it has different definitions depending upon what side of the table you're on, number one. And 91 11/30/06 - FINANCE - BILL 060108, ETC. number two, to what Councilman Juan Ramos and I were discussing, what you just articulated, would it not have been in order to have those very same discussions prior to this hour? (Applause.)

Actually --

Councilwoman, if I may respond, I believe that the Water Department has made every effort. Certainly has made every commitment that it's made here, it's made before and will be prepared to make again. As for transition issues, you have to get to a point where a transition is on the table, and it has not been for want of trying to have those discussions that they haven't happened. We're prepared -- we've made as solid a commitment I think as anybody could make on this issue of people not losing their jobs, not getting demoted and working, because I think anybody would -- I think the leadership and 92 11/30/06 - FINANCE - BILL 060108, ETC. management would agree that this is an organization where today there's some disagreement. On a day-to-day basis, I think there's been an ability to work through all issues together, and I think this is one area where we're confident that those transition issues would get worked out. We're confident of that and prepared to document that commitment.

I thank you all for your testimony. Madam Chair.

Thank you. Councilwoman Tasco, a follow-up.

Thank you. Commissioner, how many vacancies did you tell me you have in the Water Department? You have appropriation power for how many vacancies, how many positions? COMMISSIONER BRUNWASSER: In total, we have probably -- what we do is, 93 11/30/06 - FINANCE - BILL 060108, ETC. we about half fund vacant positions, and we have in excess of 300 vacancies right now.

So why haven't you filled them? COMMISSIONER BRUNWASSER: We --

Is there a budget issue with that? COMMISSIONER BRUNWASSER: No, there is no budget issue. We have had a lot of folks leave on DROP in recent years and we have had some difficulty in getting eligibles for some of our positions. (Audience member yelling "hiring fee.")

There's no hiring fee. COMMISSIONER BRUNWASSER: We have been working with the Managing Director's Office and hope to work with Central Personnel to aggressively fill many of our vacancies, but we do have sufficient vacancies to take on everyone 94 11/30/06 - FINANCE - BILL 060108, ETC. at BRC. One thing I should mention, I've said it in months past, we are not saying anything negative about the union. The union has done a fine job at that site. We had issues back in the late '80s and early '90s when that site was very unpleasant and not operating as nearly as efficiently as it's been operating under in recent years, the past 12 years or so. What has happened is a technology change. It's hard to walk away from this new technology. It's not -- although it's not new to -- it's new to us. It's not new in the industry per se, but this is what's happened. And the union, we worked very well with the union in the early '90s to come up with better and better ways to be more efficient with the type of operation that's out there, and we have gone about as far as we can with that operation in efficiency. What we are looking at now is this brand new technology to us, and 95 11/30/06 - FINANCE - BILL 060108, ETC. that's where the differences lie. If you switch technologies, you need a different skill set in some cases. In other cases, you don't need as many employees, et cetera. And this is what we're dealing with today.

If you had, let's say, a forklift driver -- I don't know what the positions are. If you had four positions vacant and they're filled, but a forklift driver is going to transfer from the BRC, so you have five, would you increase it to five or would that person have to do something else? COMMISSIONER BRUNWASSER: Right. It depends on the situation. We know that we have exact same title vacancies for many of the employees out there, but we have also begun to look at equivalent titles which are at the same pay range. But in no case -- if we have to have an overage, with the fact that people have to take sick time from time to time, they have to take vacation time 96 11/30/06 - FINANCE - BILL 060108, ETC. from time to time, I don't think we'll have a major problem, but I'll let Teresa Vollmer answer that.

The question is whether we'd have five equipment operators rather than one? Yes, we would have five. Number one, we have a lot of people who will be attriting out shortly, because we have lots of people in the DROP program. So even if we had an overage, it would be very temporary. We don't see any issue absorbing people at all. We actually have more vacancies than we have people that are going to be fitted into the vacancies.

And we're prepared to work with DC 33 around, again, any transition issues, and we have -- I think there's a good history of being able to work through those issues once that's where we are in the process.

Thank you.

Councilman Ramos. 97 11/30/06 - FINANCE - BILL 060108, ETC.

Thank you, Madam Chair. This is directed at the Water Department. This sounds like a good project, this Synagro project, but something seems to have -- I don't know if the word is "wrong," but it doesn't seem like you had the union in the real process deciding -- (Applause.)

And I say that because if you would have -- and I'm not saying you didn't try, but if you would have, I don't think we'd now be confronted with a partner in this government, which are our municipal unions, getting ready to sit there at the witness table and say that they're opposed to this. I mean, if we look at our unions as partners, then we have to make sure that we walk out as partners and that their concerns are reconciled to the point where we won't have this type of 98 11/30/06 - FINANCE - BILL 060108, ETC. almost adversarial hearing of the government, the Administration presenting a project. And to a certain extent, it's almost unfair to Synagro, that there is a project and that at least what I'm hearing is that, Yeah, we reached out to the unions, but now we have to move on. And you're not saying it, but I'm interpreting correctly is that you go ahead with them or without them. And as partners, we can't have that type of approach in government, or at least in my view of governing. What are you proposing so that the union can come back into partnership with this idea that here this afternoon sounds like something that is a serious proposition being made by the Administration? COMMISSIONER BRUNWASSER: Well, I do understand the point. Again, we have been in conversation with the union for nearly two years, but --

99 11/30/06 - FINANCE - BILL 060108, ETC. Conversation, you mean meetings where you have exchanged proposals and you've gone back and forth on the details. Because I can have a conversation on the phone with anyone about anything and sometimes it might, either my fault or the other side, the conversation doesn't get anywhere. I'm just conversing. I'm not negotiating. I'm not being necessarily in a conversation being meticulous about sentence two in this contract, in the second paragraph, sentence number two. I mean, was it that exhausting that finally you had to say, We have to move on, or was it just conversations? COMMISSIONER BRUNWASSER: Well, Councilman, again, we started the project back in late 2002, as Mr. Blair has spoken about, and first of all, that was the beginning of evaluating what was out in the marketplace. And we ourselves, although we have lots of engineers and we were into wastewater treatment and we've been involved with the BRC, are not 100 11/30/06 - FINANCE - BILL 060108, ETC. necessarily experts on what is out in the marketplace, and that's why we contracted with the company Camp, Dresser and McKee as an international expert on biosolids to help us evaluate what was out in the marketplace. It's more of an engineering scientific thing. This is why I made the point that --

Well, because it was engineering scientific, you left maybe the union out of that part of the process? COMMISSIONER BRUNWASSER: Well, at that point in time, we knew that we wanted to move to all Class A biosolids and we knew that our method of going to Class A biosolids with the technology that we had was composting, which exacerbated an existing odor problem. We could not see, and we cannot today, that we can continue with the process that we have now and meet all of our objectives. And so what we did is hire an expert, worked with a team and do an RFQ/RFP 101 11/30/06 - FINANCE - BILL 060108, ETC. process to see what was out there. And when we got a proposal that we knew could work, that's when we began to talk to the union and inform them of what we were considering and where it was going. Now, we had eliminated many of these other processes simply from they would not work in Philadelphia or if they have not been proven to work elsewhere, and that's kind of the approach that we took. It's kind of hard to go to the union at the outset and say, Hey, look, we have to change this process. They are experts at the current process, just as we had some people who are experts at the current process, but they probably, most cases, would not know what was out in all of the areas in the country and in the world in doing an efficient job of converting biosolids to Class A and then ultimate disposal.

I understand. I can follow your answer. I worked in the environmental business, not 102 11/30/06 - FINANCE - BILL 060108, ETC. in this particular area of the environmental work, but I understand it a little bit. It still doesn't answer my question. What my concern is, why is it that it is not resolved by now? If we started in 2002 to talk to the unions and you treated them as partners, how come we're now hearing an adversarial -- or you guys are in adversarial respective roles?

Well, Councilman, if I may add, I mean, I think on this particular issue, there's just a fundamental difference that while we're talking about, whether it's 190 million or 100 million forbearance to the ratepayers to avoid transferring 60 positions to equivalent roles or not, there is the fundamental issue, which we understand and respect and track record in this department of working around, and that's that privatization historically is a bad term. We understand it and have 103 11/30/06 - FINANCE - BILL 060108, ETC. tried to consider other alternatives. The professionals, the engineers, the finance folks in the Water Department have tried to do that. I guess I want to also for the record make one other offer, and I stepped aside for a minute to consult with the City Solicitor, who had been in the corner, and that's that we're prepared to, either by side letter or through mutual agreement with DC 33, to also document as part of our agreement with DC 33 the commitment we've made here today about no layoffs and no demotions.

Are you referring to within the collective bargaining agreement?

Within the framework of the collective bargaining agreement, either by side letter or by mutual agreement, we're prepared to do that.

Thank you, Madam Chair. 104 11/30/06 - FINANCE - BILL 060108, ETC.

Thank you very much. Are there questions? Councilwoman Tasco, was your mike on?

No. 8

Thank you.

And I believe, Councilman, if it's by letter, if what's deemed appropriate is a side letter, we're prepared to offer that up today.

What is the total cost of the project? COMMISSIONER BRUNWASSER: Do you mean over the 23-year period?

What is it going to cost to build and construct? COMMISSIONER BRUNWASSER: The plant itself will cost approximately $66 million, but that is going to be built by Philadelphia Biosolids.

Then I have another question. It says that the 105 11/30/06 - FINANCE - BILL 060108, ETC. City would pay PBS 24.3 million per year during Class A period. What's Class A period? COMMISSIONER BRUNWASSER: Class A period is after the new building is built and is operational.

It's to Synagro, 9 plus the energy costs. That's the that was corrected. 11

I believe that 12 you're looking at the old version of 15. It says we would pay PBS 25 -- I 14 forget the exact number. We handed out a 15 new version today that splits that number 16 between a payment to PBS of, I believe, 17 19 million and a direct payment of energy 18 costs of about 5.3 million. 19

For the entire years of operation? For what period?

That's for the Class A period, the first year of it, which would be around 2010, 2011. Obviously the contract has escalators 106 11/30/06 - FINANCE - BILL 060108, ETC. that would change those costs over time. No one can hold the same cost for 20-some years. So the contract has built-in escalators that generally follow the Consumer Price Index that would increase the price each year that Synagro -- the price that they would charge us for those services.

And it's costing us now how much?

Right now it's costing us about $26-some million to operate BRC. COMMISSIONER BRUNWASSER: 26.2, I believe.

Our current costs of operation are shown on of the handout, and they're about 26.2 million, and that's for operating costs for capital, for renewal and replacement of the facility, amortized vehicle purchase, for a total of 26.2.

Thank you.

Thank 107 11/30/06 - FINANCE - BILL 060108, ETC. you, Councilwoman. We'll ask that you remain. We'd like to now bring forward the union, Sherman Harris, District Council 33, Andy Bond, Mike Keough, Louis Willis and Dave Sharpanski. The Chair would also like to note the presence of Wendell Young from the Retail Clerks and also from Talking Unions. We hear you. Welcome. (Applause.)

Councilwoman, thank you for letting us testify. With respect to the letter agreement or that side agreement, we are also prepared to amend our resolution so that the existence of that agreement is recognized in the bill.

Thank you. We'll look forward to receiving the document, the letter, and amending the document. Thank you, Mr. Managing Director.

Mr. Director, you're staying with us? 108 11/30/06 - FINANCE - BILL 060108, ETC. Mr. Director?

Mr. Ramos?

You're staying with us?

Yes.

Thank you.

When do you anticipate that letter will be received?

I understand the Solicitor is working on it right now.

Thank you. See, the Solicitor thought he was here on another bill. Thank you very much for your patience. We'll ask you to identify yourself for our record, then begin your testimony. Thank you very much.

Thank you. Good afternoon, Madam Chairperson and the Committee. My name is Sherman Harris. I'm the Assistant to the President of 109 11/30/06 - FINANCE - BILL 060108, ETC. AFSCME District Council 33. I'm here on behalf of Mr. Matthews in support of Local 394's position in this Synagro debacle. Originally I was only here to introduce them and thank you for being here, but in sitting here and listening to this testimony, I ask that the Council would just allow me a point of privilege, because as a 20-year member of the Water Department, I'm insulted, I'm upset and, in union terms, pissed off, because this is a bunch of rhetoric that's attacked our members. One of the first questions I asked was the relationship between the Water Department and the Administration of the Water Department. In 1980 when I came to the Water Department, there was labor unrest to holy hell. We fought everything. We came against everything the Department tried to do. Over the years, we got smart. We developed a relationship with the Department where we 110 11/30/06 - FINANCE - BILL 060108, ETC. partnered with them in trying to resolve the issues that was causing labor unrest. I personally was in one of the first labor management groups at the BRC southwest facility where we sacrificed our attitudes and our positions to walk along with this Department to make changes. During that time, between the '80s and early '90s, we developed a calm workplace where everybody got along. We did what we had to do to make the changes. In 1992, the Department started -- I'm sorry; early '80s, excuse me. In the early '80s when the Department started the de-watering facility, which is the crust of this sludge processing plant, we came in as unknown new technology that they're talking about today. Every member -- you have some that have been here 20. I've got 20-something years. You have quite a few here that's been here. We were all brand new and we became experts in this 111 11/30/06 - FINANCE - BILL 060108, ETC. field. We learned this process. We helped the Department win award after award after award. For them to sit here today and call us dumb and ignorant because we can't understand technology -- (Applause.)

-- is insulting. It is very insulting. I personally was a maintenance supervisor during the big crucial '92 campaign when they had the same song and dance, if we don't make repairs, we got to lay off or transfer or close this facility. In 1992, union rep, as well as maintenance supervisor, went against the union on some issues, went with the union on some issues, but we sat down and we rolled up our sleeves and we knuckled it out and we made changes that saved the Department $15 million. Now you come along with a new process. You wait until the end of the process to call us into the room and tell us to eat the process or go along with it, which has been the 112 11/30/06 - FINANCE - BILL 060108, ETC. attitude they've had the whole time, and now you want to call us dumb and ignorant and we know the process, we are the process. You're looking around this room, there's a hundred some people in here. I believe about a good 50 of them work there. They know the process. The plant manager there, who we have gained a lot of confidence in, he trusts us. This Administration has left him out of the process, as well as us. We're insulted. It's a problem. All we asked from the beginning until now was to let us sit down, look at some alternatives that we believe that will save the City money, will impact the environment of the community and help our union also. They have refused. We were just in a PAC meeting where they specifically said they will not accept any other alternatives. That was the question I asked on the floor. They danced and danced. I asked for a yes or no. Their answer was no, it's Synagro or 113 11/30/06 - FINANCE - BILL 060108, ETC. nothing. We've had a little passing discussion with Synagro. Synagro, the company, is not our problem. The problem for us is the process that this Administration has brought to the table that has excluded us. That is the issue for us. We know if we sit down six months, months, we will resolve the 11 problems. 12 We agree that changes need to 13 be made. We've been there. We know what 14 has to be done. We agree. We disagree 15 with the way they're doing it. That's 16 the first thing. 17 I need to also talk about the 18 layoffs. And all this will be supported in testimony from Local 394. The layoffs are a shell game. Let's not kid nobody. You got 300 positions that the Department has refused to fill for the last, what, good year, six months to a year. Six months to a year. They've held these positions because they're determined to 114 11/30/06 - FINANCE - BILL 060108, ETC. shove the Synagro contract down our throat and move our people into positions. If, in fact, however you look at it, if I moved the 92 people, the bottom total on the union side is 92 jobs lost, no matter how you look at it, period. All right. I want to calm down and introduce to my right Mr. Andy Bond, who is the business agent of Local 394. Beside him I have two of a team of employees who presented this package to you. They've researched this package. They've talked with you on numerous occasions. Two employees that are part of a team that I'm proud of, that I've watched work in the last eight months, work diligently. I think 11 o'clock last night, 12 o'clock some nights. They're dedicated employees, and for this Administration to insult them, it hurts my feelings. But there's Mike Keough and Joe Ramos sitting with us. (Applause.) 115 11/30/06 - FINANCE - BILL 060108, ETC.

We also have to my left, we have a few of our stewards that are part of this process. We have our President, Mr. Randall Grove, is sitting there, and our Eastwick PAC member. Just in the front here, it's easy to say we got 150 years of experience. For a department to tell me I don't know what's going on and I can't understand technology, it's crazy. Thank you. Mr. Andy Bond. (Applause.)

Good afternoon, Councilwoman Blackwell and members of the Committee. Before I read my statement, I would also like to make a comment that time and time again we have went to the Water Department to try to work this out. I am not going to say as they said many times, because like they said, they started this process in 2002 and we didn't sit down to start talking until 2005. And if we talked a good six or 116 11/30/06 - FINANCE - BILL 060108, ETC. seven times, then it's not known to me. Now, they keep saying that they hired expert after expert to come in and give them all these analysis. We have the whole AFSCME international behind us. They have research teams. They have municipalities that have the same process that we have that we could have gone, sat down and worked with. We met, but it was more just like Councilman Ramos said, it was just a word game. You sit down. If we say black, they say white. It just went nowhere. It was just, I guess, to hold us off bay until we got to this point, it seemed to me. I took this office ten years ago when Pete Matthews, President Matthews, became President of District Council 33, and at that time, we have a unit in the Water Department called the Distribution Unit. They're the people that fix the water mains that pop in the street. Now, what the Water Department 117 11/30/06 - FINANCE - BILL 060108, ETC. used to do was, they used to put a million dollars aside for the private contractors to come in at that time of the year to work with us, which at the end of the year we would have to go back and clean up what they messed up. But we sat down and negotiated and worked out what we call a winter schedule. We've been doing that for the last ten years, where we sat down and we have saved this City $10 million alone, because they would have to put that million dollars up every year. So for them to sit down and just to say -- it's a slap in our face for them to keep saying how dumb we are. These are the people -- there's an old saying down at District Council 33: This City works because we do. (Applause.)

Local 394 has a long history of working cooperatively with the Water Department. Well, then it goes back to ten years ago, which we have 118 11/30/06 - FINANCE - BILL 060108, ETC. saved them the $10 million. This was money that the Department always put aside for the contractors to come in and work with us. But at the end of the year, we would have to go back and fix what they messed up. And that was every year, and it would be at cost, because we usually do it on overtime. During the Rendell Administration, we sat down with the people at the BRC and worked and worked and worked diligently and saved the City $15 million. Our concerns with the current situation are because both Local 394 and concerned citizens in the community surrounding the BRC facility have been deliberately kept out of the loop. And that's what we've been saying all along. They knew that this was coming about. They sat down in 2002, came up with whatever they was and worked on it, worked on it, and kept the union out of this loop. They never sat down and talked to us until 2005. 119 11/30/06 - FINANCE - BILL 060108, ETC. And all we are asking for is for them to come back and sit down earnestly with us and listen to some of the ideas that we have with modern technology, just as -- I forget his name -- Councilman --

O'Neill.

-- O'Neill asked was there other technologies out there that's suitable to what the Water Department needs, and we know firsthand that there are. And one of them was what they talked about, the digestive system, which when I introduce Mike and Joe, they will elaborate on that and explain it to you diligently. So Mike.

Hi. My name is Mike Keough, spelled K-E-O-U-G-H.

Get the mike closer.

Sorry. My name is Mike Keough. Thanks for having me. 120 11/30/06 - FINANCE - BILL 060108, ETC. Please bear with me. It's the first time I testified before Council. I'm going to read a prepared statement. To risk a change in biosolids regulation is low, not high. No 7 significant regulatory changes are on the horizon. PWD administrators continue to overstate the risk. The Water Department also expects the public support for current programs to decrease. In speaking with Pennsylvania and Maryland regulators, there are no 14 plans to halt any land application of Class B biosolids or change any regulations concerning land application. The City's biosolids program has increased land applications in both states and have an excellent record of community cooperation. These land applications have increased 13 percent since Fiscal 2004. These programs are operated by contractors and have been in operation since the Water Department stopped ocean 121 11/30/06 - FINANCE - BILL 060108, ETC. dumping in 1980. The cost of these programs compare favorably to other east coast cities. Even if regulations affecting land application of Class B biosolids change, we would still not be facing any environmental crisis. The DEP would give the Water Department at least ten years to move out of Class B land application and into new technology. Regulators realize there are hundreds of Pennsylvania municipalities using the same disposal methods and would give them time to make changes. The odors at BRC are manageable. PWD administrators have overstated the significance of odor emissions at BRC as one of the criteria for requesting the contract operations of the plant. The BRC has always operated with the philosophy of continuous improvement and has implemented practices to reduce odors. Before 1995, the site had 19 identified sources of odors. 122 11/30/06 - FINANCE - BILL 060108, ETC. Currently, BRC has 12 identified sources, and with cooperation from Water Department management and if we implement what we call Plan B, the BRC would only have four identified odor sources, and that's a 79 percent reduction of 1995 levels. These reductions in odors will be achieved without major capital investment through existing disposal contracts and improving handling practices. The concern is increasing for the impact of greenhouse gases on global climate change. The Synagro dryer is not the right technology for the Water Department to use if the City is going to make any positive contribution to the reducing of greenhouse gases. The proposed pelletizer will emit large amounts of greenhouse gases and will surpass current BRC emissions as a total. Pelletizer emissions will substantially increase the amount of nitrous oxide, carbon monoxide in the 123 11/30/06 - FINANCE - BILL 060108, ETC. community already taxed with similar emissions generated by the Sunoco Refinery. These additional emissions will increase the creation of ground-level ozone, acid rain and lead to poor water quality. It is well known that these conditions contribute to respiratory distress and can be seen as a neighborhood complaint of the Synagro's NYOFCo plant in the South Bronx where there was a disproportionate number of childhood asthma cases. Contract operation will save the City money. S. Filter for contract operation of BRC was contract operations would save the City money. S. Filter decided to pull out of the process when they realized they could not compete with the cost-effective programs ran by BRC. S. Filter could not save the City money. Any savings this proposed contract may realize is highly speculative. The Water Department can 124 11/30/06 - FINANCE - BILL 060108, ETC. only show savings by fabricating scenarios of continued public employee operations that are exaggerated in their assumptions. Water Department administrators jumped to conclusions about the desired technology.

The Water Department failed to involve the stakeholders from the very start of the process, a necessary component of a successful long-term plan. Water Department administrators continue to only limit the view of technology options before they develop an RFP for contract operations. There are many good examples of wastewater agencies making serious searches for technologies that best serve their communities. PWD did not do this. Evidence of the inefficiency of this planning process is the City received only one proposal for the operation of BRC. Water Department administrators should have gone back to the drawing board when only one bidder responded to 125 11/30/06 - FINANCE - BILL 060108, ETC. the RFP. Water Department administrators wrongfully failed to examine options to make improvements through its own staff. The Water Department has been fully capable in the past of carrying out complicated programs and accomplishing cost-effective improvements. Why not in biosolids? The following statement is taken directly from the Water Commissioner's Fiscal 2007 operating budget testimony, , March 7, 2006. 6 million in Fiscal 2000, and 16 million in Fiscal '01. Costs for Fiscal '03 and '04 remain in the $17 to $18 million range. Beginning in 1993, an aggressive strategy has been implemented at the facility, including investment in more efficient equipment, the implementation of streamlined work processes negotiated with AFSCME District Council 33, partial 126 11/30/06 - FINANCE - BILL 060108, ETC. " The Water Department issued a flawed RFP at an unfavorable time, yielding only one proposal. Not only did the Water Department issue a flawed RFP, the Water Department issued an RFP at a time when major firms in wastewater business were reorganizing or had not yet established full capabilities. Several firms today would be able to provide long-term services. Since there are no 16 emergency conditions driving the City to make changes to its biosolids program, the City can take the opportunity to work with Local 394 to implement innovative and cost-effective solutions. Water Department administrators have not fully explored the opportunity to upgrade digesters. Water Department wastewater plants have sufficient capacity in their digester to support 127 11/30/06 - FINANCE - BILL 060108, ETC. innovative processes that would produce Class A biosolids with low odors. The innovations might also produce more digester gas with energy benefits to reduce the quality of biosolids and save utilization expenses. Opportunities to use digester gas for electricity production will not be possible if the gases have to be used for drying. New types of electrical generation systems and new kinds of combined heat and power systems are being developed in response to new energy conservation goals. If major changes in fuel costs occur or if taxes are imposed on carbon emissions, then benefits to the City using digester gas for maximum electricity production will grow. The proposed Synagro contract will interfere with making optimal use of digester gas. Alternative biosolids processes could be installed with little capital expense to produce improved biosolids. The BRC managers and operators have 128 11/30/06 - FINANCE - BILL 060108, ETC. experimented successfully with using lime and other materials to make a Class A biosolids and reduce odors. These alternatives are cost-effective alternatives to a dryer. Technology innovations could provide future benefits not seen today. Many innovations have been introduced in the wastewater industry over the past decade. These innovations will most likely allow the City to produce better biosolids products at lower costs in the future, but if the City signs up with a 25-year contract with Synagro, then the City will not be able to benefit from these future innovations. I'd like to turn this over now to Joe Ramos.

Good afternoon, Councilwoman Blackwell and members of the Finance Committee. I have a few more points to make. My name is Joe Ramos again, as I said. Number one, the Water 129 11/30/06 - FINANCE - BILL 060108, ETC. Department administrators understated the risk of the dryer technology. They failed to mention the fire hazards and the explosions that have been experienced by many of the pelletizers that have been built across the country and had been occurring with alarming frequency. The media has carried stories about fires and explosions in New York; Toronto; Ocean County, New Jersey; and Lakeland, Florida. This is not a fool-proof technology. In New York City and Baltimore, the dryer operations have had odor problems. Several community groups in the Hunts Point section of the Bronx have organized around their concerns regarding odors and pollution coming from the New York pelletizer. Some of these organizations include the sustainable South Bronx, the Point Community Development Corporation, South Bronx Clean Air Coalition and Mothers on the Move. Point No. 2, the risk of 130 11/30/06 - FINANCE - BILL 060108, ETC. putting all our eggs in one basket has not really been considered. Very few large cities, including Philadelphia, until now have chosen to put all these processing and distribution programs for biosolids into one outlet. When only one outlet is available in the event of an accident, then the agency is vulnerable to serious disruption. The dryer contract operation makes the City very vulnerable to problems with dryer equipment. The City should be expanding the number of companies participating in its biosolids program, not reducing that number. Poor contractor performance elsewhere has not been adequately considered as a risk factor. Synagro's performance has been attacked by communities in New York City and has been attacked by government officials in Rockland County, New York. Two farming districts in Pennsylvania that have experienced community upset over the 131 11/30/06 - FINANCE - BILL 060108, ETC. biosolids have been due to Synagro operations. Synagro's reputation in some areas is that the company is heavy-handed and unresponsive to community complaints. The risk to Philadelphia Water Department's wastewater treatment if the contractor fails to perform has not been properly evaluated. The Water Department's compliance with effluent standards depends on removing sludge consistently from its process tanks. If the contractor would ever fail at being able to accept sludges from the three wastewater treatment plants, then Philadelphia would be at risk of non-compliance with its effluent criteria. If the Water Department administrators reassign the entire staff out of BRC, then the experienced Water Department employees would no longer be available to step in and resume operations in a situation of contractor non-performance. Since Philadelphia is a 132 11/30/06 - FINANCE - BILL 060108, ETC. uniquely large contract, no alternate private contractor is likely to be found by the City to replace Synagro in the event that the Synagro contract is terminated for non-performance. This fact itself might interfere with the possibility the City could successfully deal with contract non-performance. The City might be forced to accept inferior service or pay additional costs. The risk of the cost of energy is another factor. The dryer technology will use a vast quantity of natural gas to dry these biosolids. Over the past two years, gas prices have varied by 60 cents a therm. Since the dryer may use up to 5 million therms a year, this is a variable cost of up to $3 million a year. The risk for this unpredictable cost is borne entirely by the City's ratepayers, as stated within the contract proposal. Because of the potentially high cost of gas in the future, many other cities in the world have avoided using dryer 133 11/30/06 - FINANCE - BILL 060108, ETC. technology. The cost savings of the contract are exaggerated vastly.

The administrators have falsely projected high savings by making unreasonable claims for future costs of the current program. These false projections cause the current operation to appear expensive in comparison. Water Department administrators have made no allowance for change orders that the contractor may seek from the City in the case of unforeseen cost increases. Elsewhere Synagro has aggressively sought such changes when the contract has been lean. The price offered by Synagro to Philadelphia may be falsely low to capture the contract. As the old saying goes, if the deal looks too good to be true, then it probably is. )

The cost to the City of Baltimore of its contract for de-watering and drying its sludge is 134 11/30/06 - FINANCE - BILL 060108, ETC. about $600 a dry ton. Sacramento is paying about $700 a dry ton. How can Synagro offer to do it for Philadelphia for $350 a dry ton? You have to ask yourself. The Water Department administrators have not adequately considered the possibility that Synagro may have low-balled its costs in order to get the contract first and then dismantle our ability to operate the facility so they can negotiate a better deal. Finally, the benefits of the pellets themselves are exaggerated. Biosolids pellets themselves can cause community problems, as they can catch fire, they emit odors when they are re-wetted and they are not of high value to farmers as fertilizers. The existing supply of biosolids pellets from New York, Boston and Baltimore has already overwhelmed the market, so that the pellets can no longer be sold for a positive cash flow. Every day around the 135 11/30/06 - FINANCE - BILL 060108, ETC. country large quantities of pellets end up in landfills anyway. And that concludes my comments. I will turn it back to Andy. (Applause.)

Thank you. Before I go back to my statement, I just want to elaborate a little bit on this about them talking about filtering District Council 33 into different spots in the Water Department. I want you to get a clear understanding here. We are down by 300 employees in the Water Department. A few months ago, talking to Bernie Brunwasser back and forth, the Managing Director had allotted us 180 positions to be filled. So that left 120. Where do you think the 120 is supposed to come from? BRC. They are playing a shell game. And those are 120 positions that will never be filled again if you contract this facility out. See, nobody is looking at that. We are losing those jobs. They will never be filled again. 136 11/30/06 - FINANCE - BILL 060108, ETC. So for them to sit here and say no one is going to be laid off, no, they're not going to be laid off. We're going to lose the positions, and that's the problem. See, they come here and say this Synagro like it's the pie in the sky, but they're not telling you everything. We have two vendors that's going to testify here today that will show you that they can do it more efficiently and cost effective. (Applause.)

Good afternoon.

Good afternoon.

Please identify yourself for the record before you make your testimony and let us know the name of your company.

It would be a pleasure to do so. I want to thank you. My name is Michael Coia. I'm the General Manager 137 11/30/06 - FINANCE - BILL 060108, ETC. of a company Applied Reclamation Techniques. I'm a civil and environmental engineer with over years 5 experience in various aspects of 6 environmental consulting and construction 7 operations. I practiced in the greater 8 Philadelphia for the majority of my 9 career. I've been involved in the last 10 five years with a number of projects 11 involving Philadelphia, as well as the 12 anthracite region of the coal industry 13 and I've met a number of you folks and 14 Council representatives trying to bring 15 dredge materials up to reclaimed mine 16 sites up in the anthracite region. 17 We've also been working with 18 the Philadelphia Water Department for a 19 number of years in looking at options 20 that currently exist. One of the 21 premises that was discussed earlier today 22 is odd as professional servicing 23 environmental activities. Councilperson 24 asked about high technology, cutting-edge 25 technology. There's low-end technology 138 11/30/06 - FINANCE - BILL 060108, ETC. that is just as proven effective and being applied elsewhere in this country to make Class A product. Class A product is not only done by composting and it's not only done by pellets. There's plenty of other ways to do it that are proven, and other cities are doing it every day of the week. The approach that we developed in concert with the Philadelphia Water Department's BRC staff -- and we actually worked with the BRC staff and with Philadelphia Water Department engineering management staff in technology development. These are people that, curiously, didn't testify today, but they have been involved with looking at a number of different technologies. Those technologies have been referred to as Plan B. You've heard some discussion about Plan B earlier today. That Plan B set of options continues to be seen as technically acceptable within the Water Department, 139 11/30/06 - FINANCE - BILL 060108, ETC. within the BRC staff, environmentally superior to the current operations that are there. Everyone knows that the current operations of composting need to change. These technologies that can be applied are technically and environmentally superior and will be far less costly, both with comparison of the existing prices that are being paid by the Water Department and the proposed pricing that is in front of you with this privatization approach. We believe that under Plan B there are plenty of opportunities for Class A low-odor, treated product to be taken up for reclamation of mine sites and other impacted areas as cover soils. It's being done elsewhere. It can be done here. The technology was demonstrated at the bench level and at pilot scale level with the BRC staff over the past few months in concert with trying to get an alternative to this privatization approach. 140 11/30/06 - FINANCE - BILL 060108, ETC. So the BRC themselves has a plan and has an opportunity to do another alternative besides making pellets or doing composting. It's just not in the management plan that seems to be moving forward as being reflected in this privatization approach. My company, Applied Reclamation Techniques, previously submitted a proposal to the Philadelphia Water Department to manage Class A biosolids for the production of manufactured soils. This would be used in mine reclamation and other environmental reclamation programs. Our proposal will implement Class A biosolids treatment and produce manufactured soils at far less costs than the current Philadelphia Water Department composting costs and far less costs than what is in front of you with the privatization proposal. As I understand privatization in general -- and I'm not an economist. I'm a civil and environmental engineer -- 141 11/30/06 - FINANCE - BILL 060108, ETC.

the City is supposed to pay less and it's supposed to have less risk and it's supposed to have longer-term benefits to the City than currently doing it themselves or, as was earlier described, revamping your own internal processes to do it better yourselves with your own staff. I believe that in review of this privatization proposal that's in front of you, that it neither captures a financial benefit nor does it capture any kind of risk benefit for the City. Privatization in some cases may represent a sound municipal contracting policy when total costs and operational risks are reduced below those of current or anticipated operations. The Synagro Biosolids privatization contract accomplishes neither of these objectives. We believe that the privatization approach would contractually obligate the City to pay significantly higher costs, while bearing the same or perhaps even higher risks. 142 11/30/06 - FINANCE - BILL 060108, ETC. A thorough evaluation of current Class A biosolids management approaches which can be implemented over the next to months should be 6 considered in light of the poor choice 7 that is currently in front of the 8 Department. In particular, I would like 9 to highlight some positive considerations 10 from our proposal and that of the work 11 that was done by numerous professionals 12 with the BRC staff and the Philadelphia 13 Water Department's engineering staff over 14 the past two years. 15 First off, significantly lower 16 costs. It is estimated that the future 17 total costs for the City implementing 18 biosolids management in the manner in 19 which the very union staff and BRC 20 operating people at the plant want to do 21 would put costs in the range of $80 to 22 $90 per wet ton, not the $26 million 23 that's the bogey that's set up in the 24 current privatization spreadsheet that you see. 143 11/30/06 - FINANCE - BILL 060108, ETC. The Controller's own report has demonstrated to you that these numbers that are in that tabular summary probably owe themselves to be reinvestigated further. I'm not saying they're wrong, but they ought to be reinvestigated further. I believe that the $80 to $90 per ton bogey is really the bogey that somebody should be shooting at. And when you look at 200,000 tons a year that the Water Department worries about, we're talking about $18 to $19 million. That's the target that the very staff that are sitting here, these professionals that have been operating the plant very successfully, are shooting at to get at. I don't know where $26 million comes from, but it's tabulated as being a number. The projected biosolids costs are significantly less than Synagro's proposed service fee, not to mention the additional requirement of the City to pay 144 11/30/06 - FINANCE - BILL 060108, ETC. the Synagro natural gas fuel costs. And it was previously discussed about what is the real price of natural gas as we move forward, what price per therm should we be talking about. We believe that the overall privatization proposal that are in the range of about $122 a ton, $125 a ton are way over the cost of what it should be to implement a Class A alternative strategy. Our proposed Class A manufactured soils program would cost the City a total projected long-range cost of about $80 to $90 a ton, and that assumes that the current Philadelphia Water Department BRC staff are doing the Class A treatment approach and then the materials are moved up from manufactured soils placement. That's a total cost of $80 to $90 a ton. It's been stated earlier that the City placed a requirement that these operations be already demonstrated having been done by the contractors that are doing work and with a technology that's 145 11/30/06 - FINANCE - BILL 060108, ETC. proven. I'm certain that the Philadelphia Water Department with a properly-put-on-the-street RFP for manufactured soils would be able to garner a total cost of $80 to $90 a ton, not $120 a ton. That's 50 percent difference in cost.

Well, my world of privatization, as an environmental engineer, I'm not sure a $50 increase in the bogey is necessarily a target that one should be putting up on a pedestal as being the best opportunity that someone could have gone and solicited. Next topic, preservation of business activities and jobs in the City and in the region. Under the current high-cost privatization scheme, job losses in the City would include, but are not limited to, the union staff at the BRC. We've heard a lot of discussion about the union jobs that are going to be lost at the BRC. What about the related jobs of the industry that moves materials out? What about the related jobs that 146 11/30/06 - FINANCE - BILL 060108, ETC. could be in the ultimate location where this material could be placed? We project that at least 100 jobs could be cut at the BRC alone and another 120 to 200 jobs in the region, which is not just Philadelphia, it's other counties adjacent to Philadelphia. Those jobs in directly related industries will be adversely affected. Under privatization, income to the local and regional companies whose services currently support the BRC services will be impacted negatively. Our proposed alternative for Class A manufactured soils production preserves many of the BRC jobs expected to be cut by the Synagro contract and would preserve and expand other related jobs, not only in the City of Philadelphia but in other related areas. The City and the regional economy will be improved by another alternative for Class A production of materials that's not pelletization. 147 11/30/06 - FINANCE - BILL 060108, ETC. Another topic, decreased risks of sole sourcing biosolids management. The City's BRC program has consistently and effectively managed the risks associated with biosolids management by not allowing a single contractor to be responsible for either land application or other ways that the City currently disposes of their materials. The City's BRC has successfully utilized a flexible program with multiple contractors and multiple outlets of biosolids management and maintains a proven program. There's already discussion of the BRC folks limiting and eliminating composting. The elimination of composting and the replacement with another alternative is one of the avenues that the union supports moving forward with. Acceptance of the Synagro privatization scheme will render the City completely dependent on one single contractor. As recent history has shown, 148 11/30/06 - FINANCE - BILL 060108, ETC. even corporations that appear to be the most effective and financially sound and have done the project in multiple cities and have success in multiple cities, even those companies can fail and do something unexpectedly. If significant problems arise with future privatized operations, the City will incur all of the risks without any of the available biosolids management personnel in experienced positions that currently are being successfully implemented. Our proposed Class A mine reclamation program would fit very well in the current BRC mixture of biosolids management approaches and contractors. Flexibility will be maintained and shorter term, ten-year perhaps, contracting vehicles will be available. It is highly likely that multiple contractors, not only my company but multiple contractors, will be capable and interested in bidding on the bringing up of Class A biosolids for mine 149 11/30/06 - FINANCE - BILL 060108, ETC. reclamation. Finally, when this Class A manufactured soils program can be implemented with a number of other biosolids management alternatives, such as the EnerTech technology that is going to be discussed next, this will offer the ability for the Philadelphia Water Department management to continue in their current operations. Last topic. It was talked about earlier that approximately 70 acres of this site could be made available and a number of those acres could be made available for other activities.

We believe that there's availability of additional long-term public/private partnerships that can arise and should arise once an alternative set of programs are being implemented by the Philadelphia Water Department. Under our proposed Class A manufactured soils program, the City will benefit from additional public/private 150 11/30/06 - FINANCE - BILL 060108, ETC. partnerships, which can be implemented at the BRC site. It is not necessary to wholistically say that it's either a public work or a private contractor doing the work. There's opportunities for public/private partnerships that can evolve as long as all parties are willing to sit and talk to each other at the table. Under a program that we are currently developing with District Council 33 and EnerTech, additional City jobs would be created by the development of a large renewable energy production facility. Why look at this vacant land as just vacant land? Why not consider the production of renewable energy, biodiesel and ethanol, right in our own backyard in a facility that is already on Philadelphia land, where there will be the ability to utilize additional District Council 33 jobs that could create additional revenues for the City and additional ratables from that 151 11/30/06 - FINANCE - BILL 060108, ETC. industry? We're currently working with AFSCME District Council 33, along with Pennsylvania and federal government authorities, for the development of this facility, which would utilize portions of the current BRC site as part of a successful implementation of alternate Class A technologies discussed here today. Once again, I thank you for the opportunity to speak on behalf the union's position. )

Thank you very much. Please identify yourself for the record.

Good afternoon, Councilwoman and members of the Finance Committee. My name is Don Brindley. I'm the Vice-President of Eastern Projects with EnerTech Environmental. The company is based in Atlanta, Georgia, and despite 152 11/30/06 - FINANCE - BILL 060108, ETC. the fact that we've been in existence since 1994, we probably fall into the cutting-edge technology piece of the evaluation. In the interest of time, I promise to be brief. I am currently employed by EnerTech Environmental as Vice-President of Eastern Projects. I am a life-long resident of the Philadelphia area and hold a BS degree in chemical engineering from Drexel University and have over 14 years of experience in the water and 15 wastewater industry. 16 In July of 2005, our 17 Vice-President of Biosolids Projects, 18 Mr. Ray Kearney, submitted a proposal for 19 an alternative long-term biosolids 20 management plan to the Philadelphia Water Department. Ray is a nationally recognized expert in the regulation and management of biosolids with over 35 years of engineering experience. That proposal detailed plans to construct an 153 11/30/06 - FINANCE - BILL 060108, ETC. EnerTech SlurryCarb Facility at the Philadelphia Biosolids Recycling Center, similar to the plant that we are currently constructing in Rialto, California. The Rialto facility will process 675 wet tons per day of biosolids -- very similar in size to the facility we're talking about in Philadelphia -- from five regional municipal authorities and will produce 120 tons per day of E-fuel, a coal-like product certified by both the California Energy Commission and the Green-E Renewable Electricity Certification Program as a renewable fuel. Our proposal in July detailed the following benefits for the Philadelphia Water Department versus the privatization plan that is currently being considered: Number one, an environmentally friendly, long-term biosolids recycling solution that places the Philadelphia Water Department at the forefront of advanced technological 154 11/30/06 - FINANCE - BILL 060108, ETC. solutions; Number two, a biosolids recycling solution that aligns well with industry trends and eliminates agricultural land application of the end product. Very important; A method of biosolids utilization that renders no by-product and, therefore, no long-term contingent liability for the Philadelphia Water Department; Another very important issue as well, a process that will consume 60 percent less energy and mitigate the risk of natural gas price escalation; A renewable energy component that will generate E-fuel to support biodiesel and ethanol production at the envisioned renewable energy production facility at the Philadelphia BRC site; The retention of all existing BRC personnel and the addition of 15 to 20 Philadelphia Water Department operations staff; 155 11/30/06 - FINANCE - BILL 060108, ETC. And in conjunction with our partners at Applied Reclamation Techniques, we'll provide the City with a diversified portfolio of Class A biosolids disposition strategies and renewable energy alternatives. Thus, we see real potential for synergy between the financial, environmental and societal objectives of the City of Philadelphia and what our company has to offer. We very much appreciate your time and consideration today and are committed to speaking or meeting with anyone that this Committee thinks appropriate to consider and evaluate the EnerTech and Applied Reclamation Techniques' offering that we would like to develop. I would be glad to answer any questions at this time.

Thank you very much. Are you prepared for questions now, gentlemen? 156 11/30/06 - FINANCE - BILL 060108, ETC.

Sure.

Thank you. Councilman O'Neill.

I think the Council President was just stating that this is really something the Water Department has to respond to, but I just want to make sure I understand, because I was very interested in reading through this whole package that the union had presented. Plan B really drew me in because it's the Water Department's Plan B. It's not the union's Plan B. And so I was interested in it. And then going to the conclusion page, No. 2 and No. 7 particularly deal with odors from composting going away, because there's not going to be any composting.

No composting at all.

So composting/odors, no longer an issue under Plan B. 157 11/30/06 - FINANCE - BILL 060108, ETC.

Correct.

I just want to make sure that's clear.

That's correct.

I also want to make sure it's clear, because the Council President also asked me, were these two proposals that we just heard from submitted to the Water Department? And there's a difference, as I explained, between something that was submitted to the Water Department, which I believe both of yours have been, and the RFP, which you couldn't respond to because it was targeted to a different technology than yours. So only somebody with the pellet technology could respond to it. So, one, no composting, no 20 odors. Two, the two distinct and different but both using City forces, one may actually increase the jobs that the City has before the Water Department and the Water Department has actually worked with those proposals, but were rejected 158 11/30/06 - FINANCE - BILL 060108, ETC. clearly by the RFP, which limited itself to a particular technology that neither of those could respond to legitimately.

That's correct.

Just as a sort of laying a foundation I'm just trying to do here, because I think the Water Department really has to respond to this. Because as I look at what has been described as the problem, the smell, the odors, which we know are coming from compost, the union officials that are here and their employees from the BRC, you understand that composting could be yesterday's news, but it doesn't mean that you have to be yesterday's news.

That's correct.

And it doesn't mean that there isn't a better alternative to -- forgetting the privatization issue -- to the pellet proposal.

That's correct.

That's correct. 159 11/30/06 - FINANCE - BILL 060108, ETC.

Can I respond to that quickly?

Yes.

In fact, the plans that are Plan B have composting out of the equation, have the staff reductions that would have been according to the composting being eliminated. Those staff positions, I believe the union has already clarified that they have accepted that that's going to be. So if one sets as the bogey, if you will, of the target and says that all the staff are still there and that composting is still there and the attendant costs and risks and odors and all issues associated with it are still in the equation, I submit that that's the wrong bogey to be putting --

So what you're saying, I believe, is that we shouldn't be comparing in all the cost savings and what will happen if this legislation is passed, we shouldn't be comparing it to what's going on today 160 11/30/06 - FINANCE - BILL 060108, ETC. with composting and a number of employees needed to make it work. It should be something different, like comparing the proposal that's in front of us in the legislation with Plan B.

Correct.

That's correct.

And that's not been presented to us by the Water Department.

As I understand it --

And the savings, for instance, that we heard about, whether we go by the Water Department's numbers of 90 million or the Controller's numbers of 40 million, the present value savings over the period of this contract, we don't have the present value savings of going to either of your technologies.

Correct.

Which you had mentioned 80 to 90 on the one. I 161 11/30/06 - FINANCE - BILL 060108, ETC. mean, in other words, your position is that there would be more savings and we shouldn't be comparing it to something that we know isn't going to stay with us, because something is going to change.

Yes. Our specific proposal --

Let me make --

And how many positions, while I'm on it, because I'll just leave it with this, how many positions are involved in the reduced number of employees that the union has already agreed to if we do away with the composting, as we are doing now, and go to Plan B?

Thirty-three minimum, no more than 40.

That would be doing the job at that time?

Right.

Thank you.

Let me clarify one thing. No matter what happens, no matter 162 11/30/06 - FINANCE - BILL 060108, ETC. what happens, there's already been an agreement that compost is gone --

Okay.

-- as of February. They will start to eliminate the composting.

But all these numbers are compared to composting.

See, and that's what we were saying all along. Why wouldn't they bring the numbers in from when we already downsized? That's where they should have started the numbers at.

Right.

Because those would be the true numbers. Because starting February, the composting is supposed to be gone. Those employees that work there will be infiltrated into the Water Department. See, one thing about this that we haven't discussed, the first five years of this contract, nothing changes. Nothing changes. They will still be 163 11/30/06 - FINANCE - BILL 060108, ETC. doing what's going on. And plus they're kind of going in reverse because they're going to use a solution that's called mine mixing that has a worser smell than you ever --

That's No. 8 7 on your conclusions.

Yes.

Okay.

So composting is gone regardless.

Now, let me make sure I understand what you just said. If this legislation doesn't pass, composting is gone in February and the odor associated with composting is gone in February.

Yes.

Odor and cost.

And cost, but particularly the odor. Councilwoman Verna's constituents are not concerned about the costs, from what I understand. They're concerned about the odor. 164 11/30/06 - FINANCE - BILL 060108, ETC.

There's going to be three issues: Odor, cost and aesthetics.

Okay. Now, if we pass this and the pellet operation comes in, that composting with its attendant odor will continue for five years?

No. 10

Or something else will happen?

No. What we're saying nothing changes, basically the first three to five years of the contract allows the contractor to come in and build his building. While he's building that building, he's going to do what we're going to be doing anyhow.

Oh, okay.

The current staff anyhow is going to stop composting and clean the site. Now they're going to move out 60 people or say 92 people and put in people to do the same thing 25 we're going to be doing anyhow, and I'm 165 11/30/06 - FINANCE - BILL 060108, ETC. not sure --

So for five years, the same thing is going to be going on. There won't be any odor, but there also won't be any pellet operation.

Right.

So if the biggest issue is odor -- and for people that live around there, I'm sure that's the biggest issue. Aesthetics probably isn't a bad item either, but it's gone in February.

That's correct.

Mr. Councilman, if you would look at other technologies that have been proven and are being used around the country to make Class A materials, odors are solved with those techniques as well.

All right.

So eliminating composting and eliminating odors still requires something else to be done or else there's going to be 60,000 tons of 166 11/30/06 - FINANCE - BILL 060108, ETC. stuff that has to go to the landfill.

I understand. It doesn't disappear. Okay.

Councilman, what's happening? Where is the composting going?

Go ahead.

Composting is a process that it's become costly and, of course, an odor problem.

So what happens to it?

So basically you change the way you do your sludge. You'll do more of landfill and more of what they call land applications, which is farmland applications. Now, of course, what we all agree with, the Department as well as us, is that you need a good Class A. And we want to clarify something. Pellets is not the issue. It's Class A. And Class A just simply takes more pathogens out of the sludge and it will be used for more 167 11/30/06 - FINANCE - BILL 060108, ETC. things and applied more places, create a bigger market for disposal. That's all that's going on here. So the pellets are pretty and everything. That's fine. But if it's not a Class A, the pellet doesn't mean anything. Class A is the crucial thing here. Composting is the current way of making a Class A. It has become obsolete, period. We all agree. We don't disagree with that. The problem is that they're selling you pellets is the only way to make a Class A. We're saying it's not. That's not true. As you can see in our packet, we've become -- they're educating us every day. As we research this contract, we're finding there's plenty of other ways to make Class A. They are trying to smoke screen that system and tell you there's only one way, is these pellets. These pellets are just a process that Synagro uses to make money, which we have no problem with. 168 11/30/06 - FINANCE - BILL 060108, ETC. But we do agree Class A has to be a definite part of the problem, period.

In fact, internally within the Philadelphia Water Department's own staff capabilities, I'm very impressed as a consultant/contractor with the capabilities of the engineering and development personnel who sit here in Philadelphia, as well as the people that, as you say, make it work every day out at the BRC. Those very people who have been in the developmental stage are experts in the country and the world on innovative --

Can I just ask you to take a break? I think it might be helpful.

Sure. (Short recess.)

We will resume our hearing. Thank you for your patience, and we will resume our testimony. Are there any other questions 169 11/30/06 - FINANCE - BILL 060108, ETC. from members of the Committee? (No response.)

And I know, Councilwoman, that you wanted to ask the Water Commissioner a question. So we'll ask Commissioner Brunwasser to be available as soon as we're finished here, and then we'll hear from PAC, Tyrone. And is Donna Henry here? I don't think I saw her. Oh, there you are. Then we'll hear that testimony.

You had heard from Local 394 and the members of District Council 33. I am here today to ask you to put off voting the Synagro proposal out of Committee for these three reasons. We would like for you to follow the past procedures allowing Local 394 to sit at the table during discussions about solutions to the City's biosolids recycling needs, instruct the Water Department to earnestly sit down with Local 394 and take advantage of the experience members bring to the table, 170 11/30/06 - FINANCE - BILL 060108, ETC. and to work with the union to develop new alternatives that will be less costly and more effective, more efficient, and, most importantly allow Local 394 at least two years to work with the Water Department to come up with an alternate plan. And that's all we're asking for. We're asking for them to sit down with us for two years, because for the first five years, nothing happens. So why they can't give us two years, why is it a great rush for this? That is something we just don't understand. And we'd like to thank you for hearing our concerns.

Thank you very much. We appreciate your testimony and your patience and the attendance of you, the union and all who are here. Thank you very much.

Thank you.

We would now like to hear from Eastwick PAC and Southwest CDC. I'm sorry. After 171 11/30/06 - FINANCE - BILL 060108, ETC. them, I did promise -- I'm sorry. Commissioner, would you come forward as well. That's all right. Commissioner, the Councilwoman is happy to wait until after the community testifies. So we have two more individuals to testify and then we'll call you. Thank you. Welcome.

Good afternoon, Councilwoman Blackwell, Chairman, and Councilmembers. I'm from the Eastwick PAC, Project Area Committee, which is one of the largest community groups of --

Please identify yourself for the record.

My name is Tyrone Beverly. I'm a member of the Eastwick PAC, on the Board. Also, I am a resident in the area and I did experience the smell at the plant. For several years -- I've been there for 23 years, and during that time, 172 11/30/06 - FINANCE - BILL 060108, ETC. I have seen where the City had worked very diligently to try to curb that smell. As of now, we are experiencing a better condition out there in Eastwick in reference to the smell. There was a time at your dinner hour you could not have dinner, but that particular problem has sort of subsided over the years. I would like to say that we attended a meeting in reference to Council President Verna whereby the community had some questions. I don't think we have enough information for us to go forward to entertaining anything from Synagro at this time. We need more time, more data, and we need to have a clear understanding where Synagro is going. For us to have lack of information to know whether this particular new plant is going to be combustible, how will it fit in with Runway 1735 with the new airplanes coming over, what's going to be much closer, what will be the effect. We're the 173 11/30/06 - FINANCE - BILL 060108, ETC. highest cancer rate area in the City, and I'm saying that we need to be looked at in a different way than what we're being looked at as far as us having a new plant and don't have the data. We cannot support at this time not having them coming to a PAC meeting whereby we can sit down and get the information that we need to be a viable community that will not have these health issues, will not have this new smell. And we need to know who we're going to talk to when we have the problem. Right now we can call you, the Council-At-Large and I call our Councilperson in reference to the problem. How will we talk with Synagro? What, are we going to have a third-party system? And we're concerned about that. We're your constituents. We're the residents, and as a resident and one that lives on Lindbergh very close to the plant, I'm concerned. And I do have a wife that has cancer, and I have a major concern out there. 174 11/30/06 - FINANCE - BILL 060108, ETC. When I moved there -- I'm not saying cancer couldn't have come to my wife, but I know now my wife has cancer and she has cancer of the throat, and I'm very concerned. My mother-in-law just died with brain cancer on Chester Avenue. So we have some major concerns. Look at the data in reference to Eastwick and the cancer population. This Council here has a real obligation to us, to talk to us about our medical problems, about our needs out there. And we at the PAC, we have lost our funding. I have to put this in there. We have lost our funding, but we have not lost our drive. We will continue on to be the Project Area Committee. We are going to speak for our community and we're going to speak about our needs. At this time, we're asking that you back off and don't fast-track this legislation. Give us a chance to talk with Synagro. Give us a chance to investigate Synagro. Give us a chance to 175 11/30/06 - FINANCE - BILL 060108, ETC. get the information. I understand our President did go down to Synagro and looked at the facility, but when the questions was asked, he couldn't answer. We need to have direct communication with Synagro at the Eastwick PAC. I thank you for the time. I'm asking you, please, think of it as a health issue, a smell issue, as a community issue. Thank you. (Applause.)

Thank you, Mr. Beverly. Any questions?

I just have a statement, if I may.

Certainly.

Tyrone, I certainly want to thank you for taking the time to come in. I know that you're very active in the community. 176 11/30/06 - FINANCE - BILL 060108, ETC. Have you been in touch or has Eastwick PAC been in touch with Synagro to invite them to a meeting to try to get the answers that you're seeking?

At the end of the meeting, Councilwoman Verna, that you had, the town meeting, Craig Maladoshan (ph) talked with Synagro. Synagro was supposed to get back with us and we would keep that dialogue going. We have not heard from Synagro. You know we're really having problems in our office, but we do have staff there for eight hours a day, and we have not heard from Synagro at all. And I'm saying that I think that it's like a disrespect not to talk to us, because we are the affected community. We are the Eastwick area.

Well, I certainly would agree with you that they certainly should have met with the community, if that was the community's desire. And if Synagro is still here, I would suggest that we're going to be 177 11/30/06 - FINANCE - BILL 060108, ETC. considering this and that you go before the committee and explain what this process is going to be about. Looking at this, we know about the horrible odors that once existed out in that community, and I recall several years ago there had been a convention in the City and conventioneers were staying at a hotel by the airport. It was during the summer months and, of course, they had their air conditioners on. The stench was so bad, I am told, that all of the conventioneers decided to leave because they thought this was going to be another Bellevue Stratford incident. So they left. I heard from many of my constituents. We could smell it sometimes in South Philadelphia if the wind were blowing in that direction. So that has, I agree with you, that has improved a great deal, because I understand that line was put on to much of what was out there. 178 11/30/06 - FINANCE - BILL 060108, ETC. We talk about all of the problems with traffic and we hear that 70 percent less traffic will be in place if in fact this bill and Councilman Clarke's bill were to pass Council. I'm saying "if it were to pass." With that being said, do you think the community would be a loser or a winner?

Well, as you know, Councilwoman Verna, in dealing with some of the problems in some of the redevelopment of Eastwick, we were at least fortunate enough to have that dialogue with you when the post office come that we weren't going to allow certain traffic out there. That's why we made them -- not made them, but that's why we requested that that cut would come into the Island Avenue bridge to make sure that the trucks didn't run on Lindbergh. In our particular area, you have a couple things going on, in which you know. 291 has been cut off, all for 179 11/30/06 - FINANCE - BILL 060108, ETC. expansion of the airport, and that's why I said to you, now that you're going to have 1735 come directly over top the houses, get that close with that vacuum of exhaust from the planes, what do we know that's going to really do to the community? How do we know what's going to happen there?

Well, Tyrone, I know you call my office quite frequently and I'm sorry that you did not call before today to advise me that you had this conversation at our last meeting with the people from Synagro and they ignored you. Had you called me, perhaps there could have been a scheduled meeting and they would have been there to address your interests and concerns. However, with that being said, I have nothing further.

I would just like to say, no disrespect to you, Councilwoman Verna, I think you know me well enough to know if I have a concern, 180 11/30/06 - FINANCE - BILL 060108, ETC. I'm definitely coming in your office. I have no problems with a dialogue with you, and I would never ever talk with anyone without talking with you.

I know.

But in saying that, I would like to say that we have to be very clear, that it seems like there's a shutting down of Eastwick, and I'm saying that we're not going to shut down. We have real problems out there, and I don't think that a fast-track legislation is the answer to anything. That's all I'm saying. I'm saying to you, Synagro needs to sit down and talk to us, and I'm hoping, I'm asking you as my Councilperson that you don't put this on the fast-track legislation and run this through on December like that project went on 63rd Street.

Which project are you referring to?

Transfreight. 181 11/30/06 - FINANCE - BILL 060108, ETC. That went in on the last of the bill, and that was a $2 million project, ending up costing million. So if we're talking 5 about price cuts, I hope that you don't 6 do that on the end of the Calendar. 7

Thank you. I believe --

I hope you do something next year, give us a chance to talk to them.

I believe the woman from Synagro, she raised her hand. You heard this gentleman speak and I would like you to please talk to him before he leaves the Chamber. Thank you.

Thank you.

Thank you, Madam President. Any other questions for Mr. Beverly? (No response.)

182 11/30/06 - FINANCE - BILL 060108, ETC. Ms. Henry, please identify yourself for the record.

Good afternoon. I am Donna Henry, Executive Director of the Southwest Community Development Corporation. The Southwest Development Corporation supports Bill 060108 as it was proposed. Southwest Philadelphia has more than its fair share of pollutants. While we understand that jobs come with pollution, those jobs are not being held by many Southwest residents. At times, there is an awful stench coming from the existing Biosolids Recycling Center in Southwest, and we understand that bad odors aren't necessarily harmful to our health. Southwest CDC has concerns about potential effects to the health of Southwest residents, but has confidence that the Water Department will monitor levels of pathogens, Aspergillus fungi 183 11/30/06 - FINANCE - BILL 060108, ETC. and heavy metals, such arsenic and cadmium, to ensure that they are safe. Southwest CDC has heard presentations held by the Water Department employees affected by the proposed change and has weighed the information against how it will affect the residents of Southwest Philadelphia. Southwest CDC supports the Southwest Philadelphia environmental activists who have researched the new process and determined that the noxious emissions will be reduced, decreasing or eliminating the unpleasant odors that drift across Southwest Philadelphia. Southwest CDC supports the process that will create Class A biosolids which can be reused without known health threats. After visiting a comparative plant to understand the process, Southwest residents and environmental activists shared their views and were impressed with the process and the final product. 184 11/30/06 - FINANCE - BILL 060108, ETC. Southwest CDC also supports the process that will reduce truck traffic in and around Southwest Philadelphia and the pollution that comes with them. We understand that this action will be minor compared with all trucks coming and going throughout Southwest, but it is a step in the right direction. Thank you for the opportunity to present this testimony.

Thank you very much. Councilman O'Neill.

Ma'am, I understand your testimony from your organization and I just want to know, it sounded like you were comparing what you're now in favor of to what we were just told by the panel of witnesses that were up here, including the gentleman that's still sitting in the middle from the union, that that's all gone in February regardless of whether Synagro or Plan B takes effect. 185 11/30/06 - FINANCE - BILL 060108, ETC. Did your organization and the environmentalists you mentioned, were they comparing the Synagro to the current composting or were they comparing it also to Plan B? "Plan B" being everything that was testified to, including the two gentlemen that were sitting right on the side you were on.

My --

Because the odor is gone, from what they testified to, either way.

Right.

There's no 16 more composting come February.

My understanding was that they looked at the Synagro product, the pellet product, with being Class A and that they were satisfied and impressed that product in what would be coming into Southwest, not necessarily comparing it to the existing process, which we know will go away, the composting. 186 11/30/06 - FINANCE - BILL 060108, ETC.

I'm not talking about the existing process, because that is going away, but I'm thinking the two alternatives that are in Plan B within the Water Department's alternative plan.

I'm not aware that they compared it to Plan B, no. 10

Okay. Thank you.

Thank you very much. Are there further questions? (No response.)

Thank you very much. Commissioner Brunwasser, would you come forward. Councilwoman Tasco has a question.

And, Madam Chair, I do have a letter here from Robert Stewart, who is a Committeeman in the 40th Ward, the 11th Division in Southwest Philadelphia. I will give it 187 11/30/06 - FINANCE - BILL 060108, ETC. to the stenographer so it will be made part of the record.

Thank you, Madam President. He was here and had to leave.

I know. He had to leave because we were running rather late. And he does in his letter testify that he is in favor of both bills.

Thank you. Thank you, Madam President. So as part of the record, we will have a statement from Mr. Robert Stewart from the 40th Ward stating his support for both bills. Thank you very much. Councilwoman Tasco.

I just have a question to clarify Class A and Class B. The discussion has been around Class A. What happens to the Class B biosolids? COMMISSIONER BRUNWASSER: At 188 11/30/06 - FINANCE - BILL 060108, ETC. the present time, what happens to Class B biosolids is, there are some land application programs.

I mean, what's going to happen going forward? Does everything now become Class A? COMMISSIONER BRUNWASSER: Under the proposal from Philadelphia Biosolids, yes.

All the Class A and Class B will be dried out and produced as pellets? COMMISSIONER BRUNWASSER: Yes. That's the proposed plan, yes.

So you don't have a separate operation for Class B biosolids under your new proposal? COMMISSIONER BRUNWASSER: That's correct. We're transforming it all to Class A, which we believe is a more acceptable process, more acceptable product, I should say.

The gentleman from the union testified that 189 11/30/06 - FINANCE - BILL 060108, ETC. beginning in February you're not going to do any more composting. So what's going to happen and what's going to happen to the Class B biosolids? COMMISSIONER BRUNWASSER: Well, at the time that there's no composting, then we won't be making any Class A product. It will all be Class B.

Well, the material will essentially have to be landfilled. It will end up going to a landfill at a fairly expensive price. You know, you can't step up the farm application or some of the other applications of Class B. You have to take it to landfill.

Okay. Thank you.

Councilman O'Neill.

I think what you just said at least conflicts with what is in the materials before us as Philadelphia Water Department's Plan B, because that is something different 190 11/30/06 - FINANCE - BILL 060108, ETC. than landfilling all of the material. Could you comment on, one, is there a Plan B, and what is your position on it? Because it would seem to me from what I read that if we don't pass these bills, Plan B is the alternative, but Plan B isn't described by what Mr. Blair said on everything being Class B going out to wherever you can take it, landfilling it or whatever, but something that the Water Department's own staff has been working on for several years with the two gentlemen that were sitting here. I think we need a lot more dialogue about Plan B before we can appreciate Plan A. And if there is a Plan B and all we've been hearing about are comparisons to an obsolete composting that has two months left, shame on you for presenting it and shame on us for having to listen to it. (Applause.)

Because I really don't want to hear about 191 11/30/06 - FINANCE - BILL 060108, ETC. comparisons to composting if it's not going to be around past February. But if there's a Plan B, I do want to hear comparisons between what is obviously Plan A that's before us and Plan B, which is what has been described as what will happen if this legislation doesn't pass. That would be a legitimate comparison. COMMISSIONER BRUNWASSER: First of all, Councilman, the comparison that you have in front of you on those charts that we presented is a comparison between the proposal from Synagro and what the Department is doing now but without composting. So it is a proper comparison.

So it is Plan B? COMMISSIONER BRUNWASSER: No. 21 Plan B is not -- the Plan B that the gentleman was speaking to --

The "gentleman" being the head of the union? COMMISSIONER BRUNWASSER: Yes. 192 11/30/06 - FINANCE - BILL 060108, ETC.

Okay. He has a name, I think, and you work with him all the time. Why don't you just identify him. COMMISSIONER BRUNWASSER: Well, there were references to Plan B --

Well, there were union officials there and there were a couple of private people. The union officials introduced Plan B. I'd really like it to be clear that this wasn't two private entrepreneurs that introduced Plan B, but your own union. (Applause.)

Let me speak to Plan B.

And why do we have to hear it from them? Why don't we get the full discussion from the first panel? If there's a Plan B, why don't we hear about it?

Point of information.

Pardon 193 11/30/06 - FINANCE - BILL 060108, ETC. me. We have a point of information on the table. Excuse me.

Question withdrawn.

Point of information on the table. Councilman Goode.

Commissioner, did you just say that the comparison that we have is a comparison between Plan A and no plan at all? COMMISSIONER BRUNWASSER: No. 14 No. What I said --

It's not a comparison between Plan A and Plan B. It's a comparison between Plan A -- COMMISSIONER BRUNWASSER: First of all, I have to address Plan B so you'll understand what my position is.

My question was, what did you say the comparison was between? COMMISSIONER BRUNWASSER: It's between the proposal from Philadelphia 194 11/30/06 - FINANCE - BILL 060108, ETC. Biosolids compared to what is happening at the site today, our current operation, with a change from composting to landfilling.

Is that actually a serious option, in your mind? COMMISSIONER BRUNWASSER: Yes. I mean, that is the back-stop position for us.

That's your Plan B. COMMISSIONER BRUNWASSER: That's our Plan B. That's the comparison that you have. We have not discussed this alternate Plan B that was brought up by --

That is actually worse than not presenting the other Plan B.

Was what the union brought to us as Plan B, now that there's two Plan B's, was it -- COMMISSIONER BRUNWASSER: No. 25 We've discussed -- 195 11/30/06 - FINANCE - BILL 060108, ETC.

That's not foreign to you, is it? COMMISSIONER BRUNWASSER: No. 5 No. That was an internal internally -- that was an internal document and what we would consider more of a brainstorming session inside the Water Department. And we evaluated that and we've spoken to the union on several occasions about that particular proposal, which is known now as Plan B. It's not the Water Department's Plan B. It's not our proposal.

I'll tell you what, the union's Plan B sounded a lot better than yours. (Applause.) MS. McCARTY: I'd like to speak to that. I'm Debra McCarty. I'm the Deputy Commissioner of the Water Department of Operations. The employees we're talking about are under my charge, and I am very concerned about what happens with our employees, and we've met 196 11/30/06 - FINANCE - BILL 060108, ETC. several times, as has been mentioned. The Plan B that I believe -- I didn't get a packet, but what I believe that you all have that was presented by the union is, as the Commissioner said, an internal document that someone generated. No one was asked to do this. This is something that was developed. We looked at it. We went through it with a fine-tooth comb and we've developed a different -- and Plan B is maybe a bad name, but we've developed something other than what the Plan B I believe you have, and it is, as the Commissioner said, basically it is when we stop composting in March, not in February but in March, we're going to have to go to landfill, because there just aren't the outlets that the most optimistic person would want out there. There just aren't for this Class B. It will not be Class A sludge biosolid. It will be Class B.

So the 197 11/30/06 - FINANCE - BILL 060108, ETC. mine mix that Synagro would be doing for five years that was described to us by the previous panel is not going to happen. It's going to be the landfilling of the material after you stop composting. Because they're not going to have the plant built for five years, so something has got to happen starting February. MS. McCARTY: Well, it will be three to five years.

What happens then in the interim? MS. McCARTY: Well --

They're going to landfill everything? MS. McCARTY: No. I was telling you what our fact -- our stop gap, what our Plan B is. What the Water Department's Plan B is, it's a Plan B if we don't go forward with PBS.

Go ahead. What do you do for three to five years -- MS. McCARTY: We won't. That 198 11/30/06 - FINANCE - BILL 060108, ETC. will be Synagro.

What will Synagro do? MS. McCARTY: Pam Racey from Synagro, I believe, wants to speak to that.

I would really like to address that. And first, I'd also like to say that our contract allows us up to five years to be fully operational, but our intent is to be fully operational with a new plant in three years. And that's one year of permitting and two years of construction. And Synagro has the discretion to do multiple things with it in the interim, and our plan is to do a combination of land application in Virginia, Maryland, Pennsylvania and mine reclamation in Pennsylvania as well as landfilling. Synagro has been a contractor for the City for over ten years. We previously provided mine reclamation and we're currently providing agricultural land application in 199 11/30/06 - FINANCE - BILL 060108, ETC. Maryland. And our company, just to give you a flavor, we have 600 municipal contracts across the country, and we don't just offer pelletization. We offer every commercially proven biosolids management option that's available. So we don't have to come to Philadelphia and say, Gee, Councilman O'Neill, drying is right for you, because that's all we do is drying. We could offer you thermophilic digestion, in-vessel composting, reclamation, land application, but truly when you look at it with an objective hat, heat drying and pelletization is what makes the most sense for the City. There's huge opposition to reclamation in the Pennsylvania mines. We could give you a website with tons of articles associated even with Mr. Coia's company where they've been kicked out of Hazleton. There's no sludge, no dredge signs. That's why we're saying this 200 11/30/06 - FINANCE - BILL 060108, ETC. isn't a realistic, sustainable option to flip the switch in March, shut down the composting and say, I'm going to ship 60,000 tons up to the mine sites in Pennsylvania. It just won't happen.

Is that whether it's Class B or Class A?

That's right.

I just want to make the record clear.

Right. When you're doing pelletizing, you get to reduce the volume by 90 percent. So instead of having 200,000 tons to deal with, you have much less material to move out into the market. So that's one of the reasons we're anxious to get this thing online in three years instead of five, is because it's going to be a big effort for us over this three years to move this out. We're going to Virginia, Maryland, Pennsylvania landfill, and we're anxious to get it into the process facility where we're going to make a product that people 201 11/30/06 - FINANCE - BILL 060108, ETC. actually want to buy instead of --

What would be during the three-year period when you won't have a plan and you have those other options that you mentioned, I think there were three --

Four.

-- agricultural mining, landfilling --

Well, land app in Virginia, Maryland and Pennsylvania. That's agricultural land app in those three states. We are going to do some mine reclamation in Pennsylvania.

That's two.

And landfilling.

That's three. You said four.

I was counting states.

Okay. But I just wanted to know which is more expensive, doing what you just described 202 11/30/06 - FINANCE - BILL 060108, ETC. in some percentages between the ag, the mining and the landfill, or doing all landfill during those three years?

Well, it depends how far you have to go. Okay? I mean, the more land application you do, the further out you have to go, because there's limited sites. So if you're doing a small amount of land application, it's more cost effective than landfilling. But, for example, for me to do land application in Virginia is just as costly as landfilling, because I've got to drive it. I've got a $40 haul to get to Virginia.

Why are you not doing all landfill then?

Because the costs stay more with us than the landfill. We internalize more of the costs than giving it to the landfill.

Doesn't it cost you the same thing whether you internalize it or not? Explain that. 203 11/30/06 - FINANCE - BILL 060108, ETC.

Okay. Say it's our trucks, it's our transportation and whatnot. So even though the cost is greater, the profit to us is greater -- I mean, the cost is the same. We make more profit going to land app than we do paying a landfill tip fee, because we ourselves are doing the land app.

Wouldn't that be for anybody that was doing that?

Well, not for the City, because you're contracting out with a private contractor. So, in other words, I'm saying to you if you did a bid for --

No, but if we contracted out with a private contractor, whether it was you or anyone else, they would still have the same better choice of doing the land app rather than the landfill.

To a certain extent, that's true.

So why are 204 11/30/06 - FINANCE - BILL 060108, ETC. we sitting here saying we're going to do 100 percent? Because it sounds a lot worse to me doing 100 percent landfill.

I don't think they're saying 100 percent landfilling. They're saying they're going to keep --

That is what they said, by the way. Sorry.

They're going to keep doing land app with the piece that's land applied now. With the piece that was composted, they're going to landfill it. So they would have a similar split.

That's all we're talking about is the composting part, aren't we?

We're doing it all, everything.

No, but the part that we've been talking about, are you doing landfill, land app or mining?

No. It's with everything. 205 11/30/06 - FINANCE - BILL 060108, ETC.

But it's only the compost that will change in those three years, and that's all we're limiting our question to here.