COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE Room 400, City Hall Philadelphia, Pennsylvania Tuesday, October 19, 2010 10:20 a.m. PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM K. GREENLEE COUNCILMAN JAMES KENNEY COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 100548 - An ordinance amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by revising the list of City depositories because of non-compliance... BILL 100549 - An ordinance amending Section 19-201 of The Philadelphia Code, entitled "City Depositories," by amending the process for the selection of City payroll depositories... BILL 100612 - An ordinance amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by amending Section 19-201... BILL 100654 - An ordinance authorizing the issuance of one or more series of general obligation bonds... 2
Good morning. The Committee on Finance will come to order. I'd like to note that we do have a quorum in the presence of Councilmen Green, Greenlee, Goode, Kenney and myself. We will now ask the Clerk to please read the bills that will be heard today.
Bill No. 100548, an ordinance amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by revising the list of City depositories because of non-compliance with certain provisions of that Chapter, under certain terms and conditions. Bill No. 100549, an ordinance 20 amending Section 19-201 of The Philadelphia Code, entitled "City Depositories," by amending the process for the selection of City payroll depositories, under certain terms and conditions. 3 10/19/10 - FINANCE - BILL 100548, ETC. Bill No. 100612, an ordinance 3 amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by amending Section 19-201, entitled "City Depositories," by authorizing the City Treasurer to deposit funds in Wells Fargo Bank, National Association, under certain terms and conditions. Bill No. 100654, an ordinance 12 authorizing the issuance of one or more series of general obligation bonds to provide funds to refund certain outstanding general obligation bonds of the City of Philadelphia; authorizing the Mayor, City Controller and City Solicitor or a majority of them to sell the bonds at public or private negotiated sale; setting forth the purposes for which the proceeds of the bonds will be expended; providing for the maturities and other terms and conditions for the form of the bonds; providing that bonds may be redeemable prior to maturity; providing 4 10/19/10 - FINANCE - BILL 100548, ETC. sinking funds for the bonds and for appropriations to the Sinking Fund Commission for the payment thereof; authorizing agreements to provide credit enhancement or payment or liquidity sources for the bonds and certain other actions.
Thank you very much. Let me recognize that Councilman DiCicco and Councilwoman Blackwell have joined the Committee. We will now hear testimony on Bill 100548. We have someone here from the Administration. (Witness approached witness table.)
Good morning. Would you please state your name for the record and proceed with your testimony.
Sure. Good morning, Councilwoman Tasco. My name is Rebecca Rhynhart, City Treasurer, the 5 10/19/10 - FINANCE - BILL 100548, ETC. City of Philadelphia. Bill No. 100548, introduced by Councilman Goode, amends Section 19-201 of The Philadelphia Code, entitled "City Depositories," by removing City National Bank from the list of authorized depositories. City National Bank is not in compliance with Section 19-201(2)(f), which requires each authorized depository to provide the City annually with a statement of community reinvestment goals, including the number of small business loans, home mortgages, home improvement loans and community development investments to be made within low- and moderate-income neighborhoods in the City. In addition, each authorized depository must provide a long-term strategic plan to address disparities in its lending and investment activities. The City Code requires the City Treasurer to withdraw all City funds from any bank or institution that has not complied with these requirements. 6 10/19/10 - FINANCE - BILL 100548, ETC. City National Bank did not provide the above requirements, so is not in compliance with the City Code. There are no City funds currently deposited with City National Bank. The Administration has no objection to removing this bank from the list of authorized depositories. This concludes my testimony and I'm happy to answer any questions you may have.
The Chair recognizes Councilman Goode, and also recognizes that Councilwoman Blondell Reynolds Brown has joined the panel.
Thank you, Madam Chair. I have no questions. I just wanted to note for the record I have an amendment to this bill. I'm amending M&T Bank from the original version, so I will be offering that amendment during the meeting.
Thank you. Are there any questions of this 7 10/19/10 - FINANCE - BILL 100548, ETC. witness regarding this bill? (No response.)
Thank you very much. The next bill, No. 100549. Are you going to testify on that one?
I'm sorry. I'm Rebecca Rhynhart, City Treasurer for the City of Philadelphia. I'm here to testify on behalf of Bill No. 100549. Bill No. 100549, introduced by Councilman Goode, amends Section 19-201 of The Philadelphia Code, entitled "City Depositories," by amending the process for the selection of City payroll depositories. Specifically, the bill 8 10/19/10 - FINANCE - BILL 100548, ETC. requires the City Treasurer to implement an RFP/RFQ process every four years seeking applications from banks and other qualified institutions that wish to receive City payroll deposits. In addition, Bill No. 100549 requires the proposed recipient of the contract for City payroll deposits to submit a fair lending plan that responds to the latest annual lending disparity study commissioned by the City as part of the Council approval process for the contract and each annual renewal of the contract. The Administration has no 16 objection to this bill. This concludes my testimony and I am happy to answer any questions.
Thank you, Madam Chair. Just a couple questions for the record. When was the last RFP for 9 10/19/10 - FINANCE - BILL 100548, ETC. payroll deposit contracts issued?
Thank you. I have no other questions. I want to offer for the record that I will be offering an amendment to this bill as well related to the next bill to be heard. Thank you, Madam Chair.
Thank you. Next bill, 100612, Wells Fargo, name change.
Rebecca Rhynhart, City Treasurer, City of Philadelphia. I'm here to testify on behalf of Bill No. 100612. Bill No. 100612 amends Chapter 23 19-200 of The Philadelphia Code by amending Section 19-201, entitled "City Depositories," authorizing the City 10 10/19/10 - FINANCE - BILL 100548, ETC. Treasurer to deposit funds in Wells Fargo Bank, National Association, under certain terms and conditions. Wachovia Bank is currently an authorized depository. This bill 7 maintains continuity of banking for accounts held under Wachovia Bank due to the corporate merger of Wachovia Bank into Wells Fargo Bank, National Association. This concludes my testimony and I'm happy to answer any questions.
Thank you very much. Are there any questions? Councilman Goode.
Just a few questions. For the record, through this bill, Bill 612, this is simply a name change, we're not authorizing a new 11 10/19/10 - FINANCE - BILL 100548, ETC. depository?
And though your testimony states it as a corporate merger, to some extent it was actually an acquisition of Wachovia by Wells Fargo?
That's right. The Law Department might be able to better explain it, but my understanding is that Wells acquired Wachovia and they merged.
So Wells Fargo will be responsible for a fair lending plan in response to the next disparity study?
And that will be based upon Wachovia's lending performance? 12 10/19/10 - FINANCE - BILL 100548, ETC.
That's right. Right. It's based upon the combined entities' lending performance, so that will include Wachovia.
It stays -- the name change goes from Wachovia to Wells, but the payroll deposit contract will be with Wells.
So when there is a renewal of their contract which has to be approved by ordinance 15 under the new bill that's been heard today, there will be a fair lending plan attached to that ordinance?
Thank you very much. Any other questions? (No response.)
Next, Bill 13 10/19/10 - FINANCE - BILL 100548, ETC. 100654.
Rebecca Rhynhart, City Treasurer, City of Philadelphia. Bill No. 100654 will authorize the City to issue one or more series of general obligation bonds in a principal amount not to exceed $320 million exclusive of costs of issuance and certain other costs. Proceeds from the sale of the bonds would be used to refinance all or a portion of the City's general obligation bonds Series 1998, 2001, 2003A and 2008B to result in lower interest payments. It is the City's policy to issue refunding bonds when the debt service savings to be realized from a refunding is at least three percent. Our current plan of finance is to issue traditional fixed-rate bonds. Due to advertising requirements, I would like to request that second reading and final passage do 14 10/19/10 - FINANCE - BILL 100548, ETC. not occur before November 18th. This concludes my testimony and I'm happy to answer any questions you may have.
Thank you very much. Are there any questions? Councilman Green.
Can you share with us where you are in the process for ID and selection of those who will be responsible for the execution of this matter?
Sure. We have already selected bond counsel for the transaction, which is Cozen O'Connor and Grant & Lebowitz, both of which are Philadelphia-based law firms. For the financial advisor, we 15 10/19/10 - FINANCE - BILL 100548, ETC. have PFM and Acacia. PFM is a local firm here in Philadelphia and Acacia is a woman-owned firm in New Jersey. In terms of the underwriters, we have not selected underwriters yet. That will be a process that we'll go through in the coming weeks.
And talk through again for this particular hearing on this bill the process for underwriters.
Sure. We have an RFP/RFQ process where we put out an RFP/RFQ and get responses from banks, and then we establish pools of underwriters for each of the types of deals. These are general obligation bonds. There was a pool of eligible underwriters established. And then we -- for each bond deal -- and this is one of them -- we look to that pool to pick specific underwriters for that deal. There's a selection committee made up of representatives of the Treasurer's Office 16 10/19/10 - FINANCE - BILL 100548, ETC. and the Finance Department for general obligation bonds, which reviews the firms in the pool based on the ability to market and sell our bonds at the lowest cost. We look at various factors, the ability to do similar types of deals in other parts of the country resulting in the best experience. We look at local presence and the importance of that to the local economy. We look at getting a good mix of minority and women-owned firms in that group of underwriters to sell the bonds as well. So there's a variety of factors.
With those that ultimately were awarded the legal side of this transaction, is there any requirement for them with regards to MBE/WBE participation?
Well, Grant & Lebowitz is a minority-owned firm. So what the Treasurer's Office does on the bond deals, it's not the specific contract that has a percentage that's 17 10/19/10 - FINANCE - BILL 100548, ETC. minority, unlike other areas of contracting with the City, but what the Treasurer's Office does is has a majority firm as well as a minority on every bond deal. So there's always 50 percent, or one of the two bond counsels are always minority or women-owned, and the same goes for financial advisor.
And one observation I've made, with the benefit of hindsight, is the assurance that what is said, stipulated or agreed upon on the front end follows through on the back end. So what practices, what measures do you have in place to ensure what you just said, that there is an MBE/WBE participation?
Well, I'd be happy to provide you with the details of our past deals as well as the information on this deal. I mean, we do that, so I'm happy to provide that to you.
So you're saying it becomes a contract? 18 10/19/10 - FINANCE - BILL 100548, ETC.
All right. Back to the underwriters, is there any -- point of information to Madam Chair and members of this Committee -- any mechanism by which there's a report back to this Committee around who ultimately ends up being awarded as underwriters? Is there any mechanism for that for us?
We'd be happy to provide you that information. We can easily do that.
Well, my interest is really a step farther than that and, that is, what I call standard operating procedure to ensure that MBEs and WBEs end up in these kind of massive 320 million, because these don't come along often, and as you well know, because we've talked about this in conference, there continues to be that perception, rightly or wrongly, that our 19 10/19/10 - FINANCE - BILL 100548, ETC. city is not doing all it can do or should do when it comes to opportunities of this type, of this scale for MBE/WBEs. I'm delighted to hear that those who were awarded are Philadelphia-based operations, but --
I fully agree with -- we fully adhere to having MBE and WBE firms and desire to have greater participation. So that is something that we've, I think, done actually quite a good job on, and maybe it's a matter of communicating it to you and to Council.
That would be helpful. That would really be helpful as a next step once it moves from this stage. That would be very helpful.
In making the determination what you are assessing 20 10/19/10 - FINANCE - BILL 100548, ETC. who you might put on the deal and knowing that we do have a concern that local businesses are given some preference for doing business with the City, but on the other hand, if you do not have -- how does that weigh against your ability to fulfill the WBE/MBE provisions that we require on your contract? If you're deciding between company A and company B, company A is Philadelphia, not a minority or a woman, company B is a woman or minority but does not live in Philadelphia, how do you make that decision how to fill that -- to make that commitment?
We usually have six to eight firms on any one of our bond deals, so it's not just one firm that gets the business. So if out of the six to eight firms, then we get a good mix. So we'll look to get some firms that are local presence and some that are minority/women owned, so that actually we can accomplish both. 21 10/19/10 - FINANCE - BILL 100548, ETC.
On this deal, you have Cozen and O'Connor and you said the minority --
They're a minority firm. They are African American and woman owned.
Okay. Thank you very much. Any other questions? Councilman Green.
Thank you, Madam Chair. I note for the record that at each hearing that I've been at regarding bond offerings, at every hearing I or someone else has requested a follow-up after the closing of exactly what is the breakdown between M/WBE and women-owned and local firms, and we have not received that information. So once again I'm 22 10/19/10 - FINANCE - BILL 100548, ETC. requesting that data be provided to us for all previous bond offerings since the Nutter Administration has been in office and for this one.
I believe we gave all that information to your office, but I'm happy to provide that again. We can talk afterwards. I definitely want to make sure you have it. So we in no 11 way are trying not to give you your request.
What would be helpful is if you would provide the information to the Chair and then we would provide the information to the Councilpeople.
The other question is, do you -- currently, just for the record, there are no goals with respect to participation of percentage requirements for local business enterprises in bond offerings, is that 23 10/19/10 - FINANCE - BILL 100548, ETC. correct, and there is no requirement that even a local business enterprise be included in a particular bond offering?
There is not -- while there's not a set percentage in writing, we do have two or three local firms on every deal, as well as two or three minority firms out of the six to eight firms. That's a common practice. And when we give the information to your office, Councilwoman Tasco, we'll highlight that so that you can see that from past deals.
And not just -- the information will include data about what percentage of the allocation they were given, not just whether or not they were on the list and had an allocation. In other words, in a 320 million bond offering, if you have a minority and woman-owned firm, two of them and two local business enterprises and the allocation they get is 10 million each and 280 million is left for the big 24 10/19/10 - FINANCE - BILL 100548, ETC. New York firms, then obviously the fact that there were four firms that met those criteria doesn't really mean much because most of the economic benefit did not go to local business enterprises or minority or women-owned firms. So the statistics that we're looking for, or I'm looking for, are what percentage of the allocation went to those firms, because I think that will be most telling for this Committee.
There being no -- let's just go back to -- Ms. Rhynhart, are you asking for a suspension of the rules on all of these 25 10/19/10 - FINANCE - BILL 100548, ETC. bills except the last?
All of them except the last one. Because of the advertising requirements on the GO bond, we actually can't have final passage before November 18th.
Madam Chair, that triggers another question for me. Help me understand further. Underwriters come after what step? Just walk through the various steps, then tell me where in that --
Sure. Underwriters will get selected in the next few weeks, and then after the underwriters are selected -- that is a separate process from the advertising that goes on. So those things can happen simultaneously.
Okay. And 10/19/10 - FINANCE - BILL 100548, ETC. so is there a reason why you come sharing with us those who have been awarded the opportunity prior to the underwriters versus coming before us telling us who the entire package of those who will get the opportunity? Do you follow me?
Right. Well, for this bond deal, we are trying to get into the market as quickly as possible on the refunding because of the interest rates, so we're trying to do several steps simultaneously, because the interest rates are low and it awards us good savings right now.
Are all of your offerings online, all contracts listed online?
I might defer to the Law Department on that. I could get you that answer. Do you want Francois to 27 10/19/10 - FINANCE - BILL 100548, ETC. come up? (Witness approached witness table.)
Good morning, Madam Chair. I'm Francois Dutchie, Divisional Deputy City Solicitor. The RFPs for underwriters, because those contracts are not non-competitively bid contracts and are not subject to Chapter 17-1400, they do not go on eContract Philly. They do appear -- there's another part of the City's website called RFPs Online, and I think it appears -- they do appear on that, in that part of the City's website.
I guess why I was asking is, the whole process of selecting bond counsel and all of that, are they on -- RFP online?
The bond counsel and financial advisor RFPs do appear on eContract Philly because those are non-competitively bid contracts. 28 10/19/10 - FINANCE - BILL 100548, ETC.
So will the underwriters be a part of the eContract, the underwriters?
No. The underwriter RFPs do not appear on eContract Philly. They appear on another part of the City's website. EContract Philly is specifically for those contracts that are defined as non-competitively bid contracts under Chapter 17-1400 of the Code.
If you're looking, Councilwoman, to see if it's disclosed in a public manner, it is. I mean, the selection of underwriters is posted on the web. So if you were wondering if it's posted publicly, it is.
Well, it sounds like the end product is posted, but the opportunity and awareness of the opportunity is not. 29 10/19/10 - FINANCE - BILL 100548, ETC.
No. Actually, it is. It's a distinction between what part of the website, but the RFPs for underwriters are definitely and always posted online.
All right. So where would I go to look? I'm interested. Where would I start?
You would look on phila.gov, the City's website. If you go into, I believe, the business tab, and then it gives -- after that, it gives -- there's a tab for contracting with the City, and then you'll see several different sections, eContract Philly, RFPs Online and I think the section for procurement contracts.
Got it. Okay. 30 10/19/10 - FINANCE - BILL 100548, ETC.
What we've tried to do is have Sheila Lloyd send around the notices when things are posted online, so if you have anyone who is interested, then you can notify them. So when you get those e-mails, click on them, because she's part of the minority oversight committee. We've asked her to let us know. So if you have anyone who is interested in applying, they can do that.
Thank you. Okay. There being no further discussion relative to these bills, we will now close out our public hearing and go into our public meeting. The Chair recognizes Councilman Goode for a motion on Bill 100548.
Thank you, 31 10/19/10 - FINANCE - BILL 100548, ETC. Madam Chair. I move that the amendment to Bill 100548 be approved. (Duly seconded.)
It has been moved and seconded that the amendment to Bill 100548 be adopted. All in favor will say aye. (Aye.)
There being none, the motion is carried. The Chair recognizes Councilman Goode to report out Bill 100548 as amended.
I move that Bill No. 100548, as amended, be reported out of the Committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
It has 32 10/19/10 - FINANCE - BILL 100548, ETC. been moved and properly seconded that Bill 100548, as amended, be reported out of Committee with a favorable recommendation and that the rules of Council be suspended so that this bill 7 can be heard at Council's next session. All in favor will say aye. (Aye.)
There being none, the motion is carried. The Chair recognizes Councilman Goode to report out Bill 100549.
I move that the amendment to Bill 100549 be approved. (Duly seconded.)
It has been moved and seconded that the 33 10/19/10 - FINANCE - BILL 100548, ETC. amendment to Bill 100549 be adopted. All in favor will say aye. (Aye.)
There being none, the motion is carried. The Chair recognizes Councilman Goode.
Thank you, Madam Chair. I move that Bill No. 14 100549, as amended, be reported out of the Committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
It has been moved and seconded that Bill No. 22 100549, as amended, be reported out of Council with a favorable recommendation and a request that the Council rules be suspended so this bill can be heard at 34 10/19/10 - FINANCE - BILL 100548, ETC. Council's next session. All in favor will say aye. (Aye.)
There being none, this motion is carried. The Chair recognizes Councilman Goode.
Thank you, Madam Chair. I move that Bill 100612 be reported out of the Committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
It has been moved and seconded that Bill 100612 be reported out of Committee with a favorable recommendation and a request for the suspension of the rules so that this bill can be heard at Council's next 35 10/19/10 - FINANCE - BILL 100548, ETC. session. All in favor? (Aye.)
There being none, this bill is carried. The Chair recognizes Councilwoman Blackwell to move Bill No. 12 100654.
Thank you, Madam Chair. I move that Bill No. 15 100654 be reported out of Committee with a favorable recommendation. (Duly seconded.)
It has been moved and seconded that Bill 100654 be reported out of Committee with a favorable recommendation. All in favor will say aye. (Aye.)
Those opposed? 36 10/19/10 - FINANCE - BILL 100548, ETC. (No response.)
There being no opposition, this motion is carried. There being no further business, this meeting is adjourned. Thank you. (Committee on Finance concluded at 10:50 a.m.) - - - 37 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on October 19, 2010, and that this is a true and correct transcript of same. -------------------- MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)