COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, November 17, 2004 10:25 a.m. - - - - RESOLUTION 040827 PRESENT: COUNCILMAN W. WILSON GOODE, JR., Chair COUNCILMAN DARRELL CLARKE COUNCILMAN FRANK RIZZO COUNCILMAN JUAN RAMOS COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN BLONDELL REYNOLDS BROWN - - - - 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 I N D E X RESOLUTION 040827 STEPHANIE NAIDOFF, City Representative, Director of Commerce............. MARISA WAXMAN, Controller's Office... 35 LESLIE BENOLIEL, GPUAC............... 42 DON KELLY, GPUAC..................... 46 WILLIAM SMITH, GPUAC................. 48 RICK SAUER, PACDC.................... 56 JOHN MCDONALD, PACDC................. 62 FARAH JIMENEZ, Mt. Airy USA.......... 64 GINA SNYDER, East Falls Development Corporation...................... 75 AJAMU JOHNSON, PEC CDC............... 85 ROB KETTELL, Roxborough Development Corporation...................... 88 CAROLYN PLACKE, Project HOME......... 90 SALLY GLICKMAN, Phila. Workforce Investment Board................. 93 GAIL KASS, NewCourtland Elder Services......................... 114 RAYMOND WOOD......................... 120 RASHAD SHABAZZ....................... 131 3 11/07/04 - COMMERCE - RES. 040827
Good morning. This hearing is called to order. This is the public hearing of the Commerce and Economic Development Committee on Resolution No. 6 040827, a resolution authorizing the Committee on Commerce and Economic Development to hold hearings to review the findings and recommendations of the Philadelphia 21st Century Economic Development Summit, to take public testimony related to the Street Administration proposed Economic Development Blueprint and Investment Fund, and further authorizing the Committee to issue subpoenas to compel the attendance of witnesses and production of documents and other evidence. My name is W. Wilson Goode, Jr., Chair of the Committee. I note that a quorum is not present yet but it's not required. We will not be taking action on this resolution 21 today, but it is simply an informational hearing. Other Committee members present include Darrell Clarke, Juan Ramos and Frank Rizzo, and other members will be joining us shortly. 4 11/07/04 - COMMERCE - RES. 040827 The first person to testify this morning is Stephanie Naidoff, City Representative and Director of Commerce. I ask Ms. Naidoff to please approach the witness table. I also note that Vice Chair of the Committee Michael Nutter is also present. Ms. Naidoff, please state your name for the record.
I'm Stephanie Naidoff and I'm City Representative and Director of Commerce.
Thank you very much. Good morning to Mr. Chairman and Members of the Committee. As I said, I'm Stephanie Naidoff and I'm the City Representative and Director of Commerce. I'm here today to provide testimony responding to Chairman Goode's invitation to attendees at the Philadelphia 21st Century Economic Summit and others to testify at this public hearing. As I understand it, the purpose of 5 11/07/04 - COMMERCE - RES. 040827 the hearing is to review the findings and recommendations of the summit and to take public testimony related to the Street Administration's proposed Economic Development Blueprint and Investment Fund. I'm pleased to have this opportunity to review with City Council and the public the purpose for which the summit was held and the context in which recommendations arising out of the summit should be considered. As previously indicated in testimony to City Council last spring, the Department of Commerce has undertaken a strategic planning process for the City's Economic Development, a process that we have consistently indicated will result in a strategic plan to be known as the Economic Development Blueprint. The Department's mission is to create a Blueprint that will serve as a strategic plan for the City of Philadelphia's economic development investment. The Blueprint should serve as an outline against which to measure future investments, projects, initiatives and agendas. We have consistently indicated that 6 11/07/04 - COMMERCE - RES. 040827 had the summit was to be one vehicle for gathering input needed to develop an actionable Blueprint. We believe and have been told many times that the summit was one of the most constructive and positive dialogs to take place in the City's civic arena in decades. The summit advanced a number of important recommendations and outlined a set of priorities. This is exactly what we hoped would happen, and we are eager now and working diligently to evaluate the work from the summit and to use it to produce a Blueprint that will help make Philadelphia a great place to live, work, visit and do business. The Economic Development Summit was the public involvement portion of the Commerce Department's strategic planning process. It was the way to engage a broad range of constituencies in discussion about the priorities for the City's economic development and to receive their input about sets of recommendations that will promote business and foster the growth of jobs in Philadelphia. From the outset of the planning process, we 7 11/07/04 - COMMERCE - RES. 040827 determined that it could not be a unilateral government effort and, therefore, intentionally engaged some of the smartest, most innovative and most farsighted members of our community. Based on the comments I have received, there is consensus that we assembled at this event a group of individuals with stellar capability, great diversity and broad constituent representation. We also believe that we created an interactive and cutting-edge atmosphere where people truly listened to one another and where ideas were freely articulated and debated. The summit was held at the Navy Yard on September 14th and 15th. Almost 200 people attended. Both days were designed and facilitated by the Center for Applied Research, CFAR, a management consulting firm comprised of Wharton School professors. Participants engaged in three interactive working sessions over the course of the day and a half, and I'm going to describe each one briefly. The first was to generate 8 11/07/04 - COMMERCE - RES. 040827 recommendations in seven working groups through what we called an interview design process. The interview design process divided the participants into seven different working groups. The groups were organized around certain key topics in economic development. The first, "Why here? " Second, "Energizing communities. " Third, "Making work work. " Fourth, "Increasing diversity. " Fifth, "Busting barriers. " Sixth, "The economic development tool box.
Philadelphia's incentive strategies. And the seventh, "Spending wisely. " The process began with the participants conducting one-on-one interviews with one another, each asking one of four 9 11/07/04 - COMMERCE - RES. 040827 specific questions for each topic that were provided by the Commerce Department as part of the program design. Following the interviews, participants gathered into small theme groups to discuss the similarities and differences in responses they received. Each theme group then presented their findings to all the participants in the working group. The group then collectively developed five recommendations based on the information that was gathered. The session resulted in five priority recommendations from each working group with a total of 35 recommendations across the groups to bring into the next day's session. " This visioning exercise asked mixed groups from across the seven focus areas to envision Philadelphia in the year 2014 as a City where economic indicators are off the charts, businesses are thriving, and people are fully employed in high- paying jobs. 10 11/07/04 - COMMERCE - RES. 040827 Participants interviewed each other, telling the story of how Philadelphia got there. Working through a number of questions we provided, the groups came together to identify the major components of success with a focus on defining the City's role in economic development. A list of action headlines was developed by each group to capture these ideas. The third section was called, "Putting it all together. " The final task for each group then was to prioritize a set of five recommendations for the City from across the working group recommendations from the first day, creating a timeline with each recommendation assigned to a particular time frame for completion. The recommendations reflected the action headlines that were created in the previous sessions and created a vision of the future economic development of the City. The summit concluded with a fishbowl discussion that involved the seven working 11 11/07/04 - COMMERCE - RES. 040827 group leaders and Mayor Street. The discussion integrated the work across each of these three interactive sessions and offered the opportunity to learn what others had been thinking. At the summit, we indicated that we would produce two post-summit documents, a report of the summit proceedings and the Economic Development Blueprint. The first of these was an interim report of the summit which we indicated at the summit would be issued to the summit participants shortly after the event. This report was delivered to all summit participants on October 7, 2004. As indicated in the report, it was intended to be a compilation and summary of the work product of the summit. As such, the Commerce Department intended it to be an internal in-process document which was issued to summit participants for their feedback as to whether we collected and reported the information accurately and completely. Notwithstanding that October 7th interim report was never intended to be anything more than a working 12 11/07/04 - COMMERCE - RES. 040827 document for the summit participants, it has become the subject of media attention and this hearing. While I believe that the interim report, even in draft form, reflects the work of the summit and speaks for itself, I understand that Councilman Goode has asked for this hearing to focus on the issues of access to capital, business environment, capital investment, and workforce development. As indicated in the materials attached to the interim report, these same four issues were the areas in which the recommendations of the summit group were concentrating. But the summit also provided us with a vision and sets of objectives for Philadelphia's economic development future. Although sometimes the words differed, what we heard as a consensus, the envisioned goal, was clear.
Market and people-friendly Philadelphia is now the location of choice for individuals and business. That goal of the summit participants was focused on the single great vision of making Philadelphia the location of 13 11/07/04 - COMMERCE - RES. 040827 choice. Becoming market and people-friendly requires other components to be in place. As described in the interim report, Philadelphia must sustain and grow existing businesses, attract new enterprises, educate our children well, train or retrain our workers, and provide a diverse, culturally rich City and region with a solid infrastructure and an appealing environment. The summit group stressed that doing this means, above all, spending our resources wisely so as to leverage our investments, make the most of our current market strengths, achieve an appropriate balance of short and long-term goals, and bring some of those short-term goals to quick fruition to build momentum and confidence. Finally, summit participants were emphatically in favor of combining this ambitious agenda with tax reform. The interim report included the recommendations generated by the summit groups designed to achieve these objectives. The four areas that are the subject of the today's hearing was the most 14 11/07/04 - COMMERCE - RES. 040827 important priorities for the summit participants. Indeed, they were important priorities for us as we organized the summit, which is reflected in our express inclusion of these issues as part of the summit program as working group topics and as specific focus questions within those topics. Recognizing, for example, that one of the principal goals of the City's capital investment and incentive program is job creation, I sought input at the summit with regard to our investments and programs by including among other things questions regarding administrative capacity of government agencies, performance measures, and program transparency and consistency. My hope was that we would receive advise on how to maximize our return on City economic development dollars and opportunities and how to evaluate the effectiveness of these activities. I'm hopeful that today's hearing generates additional input on these areas of priority from the summit. We're looking forward, for example, to continue working with 15 11/07/04 - COMMERCE - RES. 040827 Councilman Goode's office to review the City's job creation efforts. The Commerce Department, PIDC, and other City economic development agencies recently provided extensive contribution and discussion on that topic with the Councilman's staff. All of this will be helpful to us as we consider these issues in connection with the Blueprint. Although, as the Councilman knows, we are still developing the content of the Blueprint, I can comment to you now that these issues will be addressed in the Blueprint when it is done. The second document then is the Economic Development Blueprint which we indicated at the summit would be produced by the end of the year. I believe we are still on schedule to produce the document within this time frame. The Blueprint is intended to integrate what we learned from the summit with a discussion of the City's financial and human resources, the Street Administration's priorities, the respective roles of City government, citizens and non-government 16 11/07/04 - COMMERCE - RES. 040827 institutions, and our judgment about what the City can accomplish now and what it can do to lay the groundwork for the future. Given the areas of focus of summit and this hearing, we're optimistic that the Administration and City Council will share common economic development objectives and will work cooperatively on responsible strategies and plans to implement them. The Administration's recent experience with Councilman Goode on the job creation tax credit program which would allow certain firms to claim a tax credit for creating new jobs in the City demonstrates how we would like to approach the Blueprint once it is released.
As with the job creation tax credit bill, we will want to work closely with City Council following completion of the Blueprint to review the financial impacts and reach mutually acceptable solutions. Throughout our planning process, we've done what we said we would do. We began organizing the process in April of 2004. We effectively engaged the public at the summit 17 11/07/04 - COMMERCE - RES. 040827 in September. We promptly issued a report and asked for feedback. And we are currently revising that report to respond to the comments. And we're working diligently on the Blueprint and anticipate being able to meet the stated time frame for completion. In his invitation to provide testimony at the hearing, Councilman Goode indicated that the Commerce Department and the summit participants should be saluted for the dynamic process that led to the recommendations of the summit. He also stated that he believes that open public testimony will both complement and enhance the great work that has already been done. I truly hope that this will be the case. I ask for your continued cooperate as we continue to advance our efforts to complete this exciting and rewarding process with the Blueprint. I thank you for the opportunity to speak on this important issue. And now I'll be happy to answer any questions you might have.
Thank you for 18 11/07/04 - COMMERCE - RES. 040827 your testimony Ms. Naidoff. Actually, I don't have any questions. Any questions from any Members of the committee? The Chair recognizes Councilman Clarke.
Real briefly -- and you may not be able to answer this in any level of detail. Can you talk to me about small business corridors involvement in this process? What should they do early on in the process? People are interested in creating job opportunities in neighborhoods. Can you talk to me about their strategy to approach that and those individual business people and business corridors?
Councilman, as you know, we have a number of programs in a number of agencies, not only the Commerce Department 19 11/07/04 - COMMERCE - RES. 040827 but PCDC and other agencies that working hard with our neighborhood small business communities. And I think that they are achieving some notable successes. But the whole point of making this a topic at the summit is that we believe, and I think we all believe, that we can always improve on what is being done. So we are studying a lot of the discussions and the recommendations that were given to us at the summit to look for ways in which we can improve leverage, perhaps consolidate, make more efficient the resources that we are already putting into small development. It is a critical part of the City's economic development and a very important part of the Economic Development Blueprint that we will be issuing at the end of year.
Can you be a little more specific? Basically what it sounds like you're saying, we have a mechanism in place and we're just going to add more resources. And although I agree that there is a mechanism in 20 11/07/04 - COMMERCE - RES. 040827 place, but if you look at some of the commercial corridors throughout the City, I see a substantial decline in the number of them and I think we may have to do something different. So I was hoping to get a sense of a different approach, more aggressive approach, something out of the box.
Well, I would start by saying I don't think that the answer is necessarily to add more resources. I don't think that as a City in any one of the important elements of economic development we have the ability right now to add a lot of resources. But what we can do, and especially because we have so many smart, committed people working on it both within the Administration and City Council and all of the related organizations that are devoted to this, I think we can figure out some better ways of leveraging resources and making sure that we are targeting them to really enhance the small business and commercial corridor activity that does exist in Philadelphia and that should be improved and enhanced in the 21 11/07/04 - COMMERCE - RES. 040827 future.
Ms. Naidoff, does the Administration still plan to pursue the $500 million investment fund?
And that's not new resources that would be available for neighborhood commercial corridors?
The application of the Investment Development Fund is yet to be decided. That's part of what we will address in the Blueprint.
But you seem to be suggesting that we need to use our resources more wisely to leverage more private investment but don't necessarily need more resources for neighborhood commercial corridors. I don't know if that's what you meant to say, but that's what you conveyed.
I think it is a dual track, Councilman. I think what we need to do is where we can invest more money we have to make some wise decisions about what will spur economic development most effectively in the 22 11/07/04 - COMMERCE - RES. 040827 future. But mostly importantly, I believe there is also a great opportunity that comes out of this very good dialog that took place in September at the summit to look again at the resources that we are applying and see if we can leverage them differently. I used the phrase zero based budgeting at the summit, and I do believe that there is an opportunity to rethink how we're doing what we are doing with current resources as well. And I think we have to do both.
Well, we will actually be taking extensive testimony today about neighborhoods, neighborhood economic development commercial corridors and I hope you will listen to that testimony closely.
I certainly intend to do that, and we look forward to hearing that input and getting us and helping us shape the recommendations in the Blueprint.
Thank you, Mr. Chairman. 23 11/07/04 - COMMERCE - RES. 040827 To follow up or the Councilman's question, as an example, it's my understanding that a substantial portion of the $500 million Economic Development Fund will go toward infrastructure improvement in certain areas along the waterfront. We have various commercial corridors -- I'll give you one as an example. I'm always going to put a plug in during this testimony. The ridge and Cecil B. Moore corridor is a corridor that we've asked, we reached out to the community, we reached out to the business people. They've organized. They're working very diligently using barebones minimum resources to try and bring that corridor back. And one of the things that continues to come back to me is "What about our curbs and sidewalks? What about our infrastructure improvement?" Those are the types of things that, frankly speaking, a lot of these business people won't be in a position to implement themselves. So I'm wondering is that a part of the capital improvement programs that we're 24 11/07/04 - COMMERCE - RES. 040827 talking about on a broader scale. Will we also incorporate some of these neighborhood commercial corridors to create such amenities that will make them a more conducive corridor to shop. And, frankly speaking, some of these sidewalks you can't even walk down.
I certainly appreciate what you're saying. And we are looking forward to including the input that you and others will give us for the allocation of the resources for that investment fund, and the kinds of things you're talking about will certainly be in our thinking.
At the end of the day, how will these decisions be made to actually implement these resources? Will you simply take input from Councilmembers and community groups and go somewhere and huddle in a room and figure out how you're going to spend this money and dole it out to various areas and we basically get what we get? Or is there some sort of a check-off with the elected officials in the City of Philadelphia beyond the Mayor's office, i.e., City Council? 25 11/07/04 - COMMERCE - RES. 040827
I certainly can't imagine the kind of process you just described ever taking place, at least not in my lifetime have I seen things like that happened. But I know that it is the goal of this Administration to develop its Blueprint, make its recommendations, and then as the implementation of it goes forward, obviously we want to work collaboratively with the City Council, as I said in my testimony, to figure out what the results should be, what the implementation strategy should be. Piece by piece, we will be discussing with City Council every piece of the implementation of those recommendations as they occur. They are not going to be done in a back room somewhere.
Thank you, Mr. Chairman. Madam Commerce Director, I just want to get a little clarification of what I 11/07/04 - COMMERCE - RES. 040827 thought I heard you say. I may have clearly misunderstood it. It was in response to Councilman Clarke's question. You said that you could not imagine the kind of process that the Councilman laid out taking place in your lifetime. I didn't really understand that. What did that mean?
I think he was describing something that sounded like it was taking place in some dark room somewhere. I think he used that phrase.
Maybe now. I'm sorry. But anyway, that his was the image that I had my mind as he was talking about it, and I can't any kind of public policy would be arrived at in that way.
Let me encourage you to expand your imagination. So how would you envision it 27 11/07/04 - COMMERCE - RES. 040827 happening?
I think exactly the way I tried to describe, which is that we will develop the Blueprint and then the implementation of the strategies, the recommendations of that Blueprint will be developed in collaboration with City Council.
Just one last question. And what process would you envision would take place to do what you just said? I mean, can you give me a little more detail? Step-by-step, what would actually happen?
I'm just trying to figure out how do we engage, how will Council be involved? Is it in a more formal process through a bill and public hearing? Is it a series of informal meetings and discussions for input?
I would imagine both. I think that there would have to be a number of bills that would be proposed by the Administration to carry out each step of the 28 11/07/04 - COMMERCE - RES. 040827 recommendations, each set of the implementation strategies. And we would certainly expect that there will be hearings on each of those. But at the same time, I hope that there will be the kind of informal collaboration you're talking about so that we can have some informal discussions before we shape those bills and we know that we're working together on that.
Thank you, Mr. Chairman. Thank you, Ms. Naidoff for coming and testifying before us. In your statement, you mention that the second document would be produced probably on time by the end of the year. Can we -- I would want to either in this document or in some kind of other means to have an idea what project or projects you see this Administration prioritizing before the end of 29 11/07/04 - COMMERCE - RES. 040827 the tenure of this Administration. As still a freshman on this City Council, I have been around this City Council and the civic and political life of the City for many, many years. I always see some very nice plans and strategic documents and then they end up in a file or nowadays they land in some folder in your PC that no one gets to see. So I'm interested to see that this Administration will have a project or a number of projects that before the year -- before December 2007 or underway, can we expect the type of definitive indication in any of the upcoming documents that came out of the summit?
I can't predict now whether there will be specific projects in the blueprint. I expect there will be, but I have to go back to what I said before, which is it is in our view a strategic planning document. And a strategic planning document is intended to provide overall guidance for objectives. And that's what we're looking to see this document, this Blueprint, create. 30 11/07/04 - COMMERCE - RES. 040827
And I appreciate you elaborating on the definition of a strategic plan for me. But can we count on before December 31st of 2007 of something actually going on? And I bring this up because I think it's important for the people of Philadelphia to see that this Administration before its term is up will have a project or number of other projects. Not to say that this Administration has not produced some good projects, in this view. But if this summit was so important to the City of Philadelphia as well have indicated and as I well observed as a participant, that we should have something come out, something that the public can see that in fact is indicative of this strategic plan. Lately, I pick up the paper or turn on to KYW and I hear that our Penns Landing project is dead. I heard on Sunday that something was happening with the Byberry Hospital project. I had someone call PIDC who have been very forthcoming, very cooperative 31 11/07/04 - COMMERCE - RES. 040827 with my office, and they didn't know if there his was any new development in the Byberry Hospital site. But yet I heard it on KYW. There was something on Sudan about -- and the report was that there was something happening there. So I, of course, as a person that is interested, like all my colleagues on this Council, in job creation and economic development, I said, "Wow, something happened in the last few days I wasn't aware of." But PIDC couldn't tell me anything new. So because of those things, I'm concerned that we will do a nice strategy document and maybe -- 2007 comes up very, very quick, and the next person to hold office on the second floor might convene his own or her own summit and there goes your strategy and your work down the drain. I know that happens a lot. I sure would like you guys to have something that you prioritize and say, "When this process is over with, this is our priority or these are our projects and they're going to get started before 2007."
Let me address the 32 11/07/04 - COMMERCE - RES. 040827 specific first and then the more general. The specific you raised about the Byberry project, and I'll be happy to provide you with the information. I don't know what was on KYW. I didn't hear it myself, but that RFP announcement was made several weeks ago. And it was in the newspapers. I can send up the clippings as well. I can't imagine why the person PIDC said there was no news on it other than the fact that maybe since the announcement of several weeks ago there has been no new developments, but we'll provide you with information about that. On the more general question, I think we're in absolute accord because I believe that our goal as well is to present and actionable Blueprint. We've been saying that all along. And we want very much to make sure that we create, as I said in my testimony, the kind of confidence and momentum that we believe the City is capable of and that you only do that with specific projects and we intend to have specifics that we will work with you on developing and implementing, 33 11/07/04 - COMMERCE - RES. 040827 and that's exactly what the Administration is intending to do.
Do you think that will be included in the end-of-year report?
I think there will some guidance on specific projects, but I think, as I said, it will be a strategic planning document and there will probably be the kind of collaboration that I was talking about with Councilman Nutter and Councilman Clarke before that will allow us to develop more specific plans and objectives in collaboration with City Council.
Do you think that would timeline that we would want to do this or start this by 2006, 2007?
I can't imagine that we won't have some projects that we expect to get underway within the next two years, as you're suggesting.
Questions from other Members of the Committee? Councilman Clarke. 34 11/07/04 - COMMERCE - RES. 040827
Thank you, Mr. Chairman. Just one follow-up question on the neighborhood issue. Do you anticipate having smaller summits, neighborhood-type summits participation by business people, community leaders?
We had a number of neighborhood people, neighborhood community leaders involved in the summit. We hadn't thought about having additional summits. We had been asked at the summit to have some sort of a follow-up session once the Blueprint is ready, and we will try to do that. But this is an idea we hadn't thought about and will be happy to consider it.
All right. Because in anticipation of trying to do something like that, I'd actually gotten a list of all of the -- the list that was available of the business people in my councilmanic district in the hopes that we would have some sort of neighborhood summit maybe at Temple University or somewhere, 35 11/07/04 - COMMERCE - RES. 040827 somewhere that's central to the business people in North Philadelphia, and have similar type of dialog and resources from the government available to have that interaction with business people. I'm hearing that you more than likely would be willing to participate in that.
I'll be happy to talk to you about doing something like that.
Are there any other questions for Ms. Naidoff. (No response.)
Thank you, Ms. Naidoff. Our next witness is Marisa Waxman from the City Controller's Office. Good morning, Ms. Waxman. Please state your name for the record.
Good morning. I'm Marisa Waxman, Director of Finance and Policy Analysis in the Office of the City Controller. Good morning, Chairman Goode and 36 11/07/04 - COMMERCE - RES. 040827 Honorable Members of the Committee on Commerce and Economic Development. Controller Saidel requested that I participate in the Mayor's Economic Development Summit on his behalf and that I come before you today. The Controller is hopeful that the summit and other efforts will lead to a clear, economic development strategy that can expand the City's tax base while improving the quality of life and financial condition of Philadelphia's firms and families. The Economic Development Summit was superbly organized, and I was impressed by the interactive aspects and valued the enlightening exchanges with people with diverse background and experiences. As a member of the "busting barriers group" which sought to address the high cost of doing business in Philadelphia, I find it disheartening that most of the group's work product was not included in the interim report distributed by the Commerce Department. I would like to take this opportunity to provide feedback on the interim report and my 37 11/07/04 - COMMERCE - RES. 040827 experiences at the summit. Many of the themes that emerged out of the summit are ideas that have long been championed by the City's Controller Office. For example, improved governmental transparency in the areas such as economic incentives and the budget process were often discussed as essential to providing top-notch government to the citizens and taxpayers of Philadelphia. While I agree with many of the findings included in the interim report accurately reflect my experiences at the summit, I must address the characterization of tax reform as being a sort of afterthought in the discussion of Philadelphia's future economic vitality. Five of the eight groups placed tax reform or lowering the cost doing the cost of business as the first item on their time line. And two other groups made it their second action item during the action headline exercise. From this, I gather that the groups viewed tax reform as a precursor to other 38 11/07/04 - COMMERCE - RES. 040827 strategic actions a clear priority and an intervention that can and must be implemented in the near future. While the interim report states that the participants were reticent when Mayor Street asked for specifics about tax reform, it is unfair to imply that no 8 specific recommendations were mentioned. The summary goes on to state that a better understanding of tax reform is necessary. This representation is not compatible with my experience at the summit. During the busting barriers session, the final fishbowl activity and throughout the two-day summit, participants were already well informed about the specifics of tax reform, and rather than seeking continued debate, people wanted action. The time for debate has passed, and I hope that the final Blueprint reflects actions rather than continued calls for discussion and education about tax reform. The City of Philadelphia needs a rational, equitable and transparent strategy for an economic development to achieve its potential as a preferred to live, work and 39 11/07/04 - COMMERCE - RES. 040827 visit. Thank you.
Thank you for your testimony, Ms. Waxman. I agree with your analysis of what happened in the summit in terms of tax reform being a dominant issue. But today we're actually discussing a lot of other issues, including access to capital for small businesses. The Controller recently released a study, I believe, you may have actually prepared for the Controller's Office. Could you enlighten us on the findings of that study?
That study actually talks about two specific things: Small business lending and lending with small businesses. And these two different things do cause a lot of confusion. Lending to small business is lending businesses who have revenues under $1 million, I believe. Whereas small business lending means the loans themselves in amount were small. One of the main findings of this 40 11/07/04 - COMMERCE - RES. 040827 year's report was that we've been tracking the geographic distribution of small business lending and loans to small businesses, and we found that this year for the first time since we began tracking in, I believe, 1996, that low to moderate income communities received the majority of those loans. There are also some other trends about the actual size of the loan. The average loan amount was declining. The full report is available on our Web site at www.philadelphiacontroller.org.
And while the trend shows that a majority of small business loans are happening as of 2003 in low and moderate income neighborhoods -- I think that number was 52 percent -- do you believe that number is high enough, given demographics of Philadelphia?
That, I'm really not prepared to comment on. If you'd like me to go back and take another look at all of the data, I'd be happy to.
I also forwarded to you an analysis by the National Community 41 11/07/04 - COMMERCE - RES. 040827 Reinvestment Coalition that said that Philadelphia, despite making some improvements in terms of small business lending to lower income areas and to minority census tracks, still ranked 99th and 100th out of the 100 top metropolitan areas. So we're still at the bottom of the heap in terms of small business lending. Can you sort of reconcile the findings of your analysis with that analysis?
Well, I don't have specific details, but basically I can agree that even while we're improving, we may not be where we need to be in order to ensure economic vitality throughout the City in low to moderate income neighborhoods, high income neighborhoods everywhere.
Did you find the analysis to be legitimate that Philadelphia in 42 11/07/04 - COMMERCE - RES. 040827 fact does rank 99th and 100th in terms of lending to lower income areas and minority census tracks?
I don't recall specially where rankings were, but that jobs with my memory of having read the report you sent.
Thank you. Are there questions from other Members of the Committee for Ms. Waxman? (No response.)
Thank you, Ms. Waxman. We actually will bring our first panel which is the Greater Philadelphia Urban Affairs Coalition, Small Business Lending Task Force, Leslie Benoliel, Don Kelly, William Smith. Please state your name for the record.
Good morning. My name is Leslie Benoliel. I'm the Chairperson of the Small Business Lending Task Force of Greater Philadelphia Urban Affairs Coalition 43 11/07/04 - COMMERCE - RES. 040827 and Executive Director of the Philadelphia Development Partnership. , and distinguished Members of the Committee. Thank you for this opportunity to testify today on the Economic Development Summit, the Blueprint, and Mayor's Investment Fund. To other members of the Small Business Lending Task Force of the Greater Philadelphia Urban Affairs Coalition, and I'll be referring to that as GPUAC. Joining me today in offering our testimonies, to my left is Donald Kelly of GPUAC and staff member of the task force, and William Smith of Citizens Bank, spokesperson for the bank members of the task force. We're here today to support the recommendations of the Economic Development Summit and strongly urge that those recommendations relating to facilitating more and equal access to capital for small neighborhood businesses be made a priority. Stable healthy small businesses are essential to the quality of life and the economic 44 11/07/04 - COMMERCE - RES. 040827 well-being of our neighborhoods. They're the life blood of our neighborhood economies, especially in our low income and minority communities. Small businesses provide accessible, affordable goods and services. They circulate dollars in the community. They create jobs for local residents. They generate income for their owners, households, and families. Access to capital is essential for small businesses to start up, grow, and sustain themselves. The task force was established in early 2003 to examine and respond to the disparities in the distribution of small business loans to low and moderate income and minorities areas of the City. The task force produced a report with analysis and recommendations in March of 2004 that focused on increasing both borrow readiness, qualify for loans and bank willingness to make loans. The task force representatives presented testimony to this very Committee in March of 2004, summarized its findings and 45 11/07/04 - COMMERCE - RES. 040827 recommendations, and we made a bold proposal. The task force proposed that the City of Philadelphia make an investment of $47 million in a set of initiatives that would serve the leverage the amount of private sector lending in those target areas from approximately 100 million per year to 200 million in private sector loans over a three-year period. The proposed initiatives include 11 million for a loan guarantee fund, 10 million 12 in capital for community development financial 13 institutions, $5 million for business training 14 credit counseling and technical assistance for 15 businesses, 5 million for capacity building 16 and new product development, and 2 million to 17 develop a coordinated information referral 18 system and to do marketing and public 19 outreach. 20 These recommendations reflect the 21 multi-prong approach designed to close the gap 22 between borrow readiness and lender 23 willingness, thus increasing the flow of 24 capital to small businesses in our 25 neighborhoods. And we propose that this 46 11/07/04 - COMMERCE - RES. 040827 funding be considered to come out of the proposed Investment Fund. The task force and its participating institutions were encouraged by the positive respond in City Council that was expressed through Resolution No. 040349, which unanimously endorsed the task force recommendations if April 2004. We're pleased to note that the participants in the recent economic development summit included this very same set of initiatives in one of its priority recommendations. These expressions of support affirm the shared concern among private and public sectors about this issue of access to capital and the importance of public/private partnerships to address this very issue in a meaningful way.
We commend the work of the summit participants and the Commerce Department staff and endorse its recommendations. Thank you.
Thank you, Ms. Benoliel. Mr. Kelly. 47 11/07/04 - COMMERCE - RES. 040827
Good morning, Chairman Goode and Members of Council. My contribution to the testimony today of the Small Business Task Force of GPUAC is to emphasis the increasing significance of small businesses to local economies, such as those in the lower income and minority areas of the City. Its lawmen recognize that small businesses account for the majority of jobs in this country, however, recently two changes in the general environment make this even more significant. The first is that our economic recovery is turning out to be a relatively jobless one. The second is that the reelection of a conservative Administration in Washington and in Congress offers little hope that unemployed and underemployed people will have the comfort of any significant safety net. What recourse will people have and their communities have other than to expand existing small businesses and to create opportunities for people to start new businesses of their own? As economic development experts will 48 11/07/04 - COMMERCE - RES. 040827 say, the keys to the growth of a small business sector are technical assistance, access to capital and marketing. That is precisely what the package of $47 million package of initiatives proposes to do that we are urging Council to support as part of the larger $500 million economic development initiative.
Good morning, Councilman Goode and to the Committee. On behalf of my colleagues banking industry, we would say that we see our work with the Small Business Lending Task Force as an opportunity and working with the same fervor and commitment and spirit that we as a collective worked in 1975 to produce the Delaware Mortgage Plan. We see this as an opportunity to get more business access to capital. So we embrace wholeheartedly the work of the task force, and it is our goal and objective to bring all of banks online and embrace the work of the task force. 49 11/07/04 - COMMERCE - RES. 040827
Can you reconcile the finding that we are improving in that a majority of loans, 52 percent, were made in low and moderate income neighborhoods in 2003 but at the same time analysis showed that we still ranked 99th and 100th in terms of lending to lower income areas and to minority census tracks?
I'm not sure how to reconcile that except that it isn't right that we're 99th or 100th, that we've got to make a lot of progress in this area. I think the partners that we've brought together in the Small Business Lending Task Force recognize that and are working at what we've identified as the gap between borrower, readiness, and lender willingness. And we have to close that gap. The more we close that gap, the more capital will flow in forms of credit to small businesses in these target 50 11/07/04 - COMMERCE - RES. 040827 areas. Even though at this point we don't have the City's response to our proposals, we're still moving ahead and our Committee has endorsed the idea of a pilot project to establish a more liberal set of lending guidelines and then to organize a training and counseling system to help businesses apply to banks under this pilot program. So we're going to proceed with that whether or not we get City support. City support will greatly enhance that whole initiative and enable us to apply it city-wide. But we do note that the Controller's analysis does recognize progress being made starting in 2003. And I think in large measure because of the priority Council has made of this whole issue and that now the more aggressive response that banks are taking --
Excuse me for interrupting. I might add, that is actually the first year that we required our City's depositories to give us small business lending goals for low and moderate income areas. 51 11/07/04 - COMMERCE - RES. 040827
Well, that's obviously a contributing factor. We did note that the total number of loans to small businesses increased from 5,574 in 2002 to 7,087 in 2003. And of the loans going to small businesses, the number and percentage low and moderate income areas increased from 2200 in 2000, which then represented 42 percent of all those loans, to 3,713 in 2003 which now represents 52.3 percent. So for the first time, as was noted earlier, this is now a majority of the loans going to these areas. And the dollar value of loans to small business in low and moderate income areas increased for the fourth year in a row from 80.6 million in 2000 to 138.5 million in 2003. Our goal is to get that up to 200 million in a three-year period, but we need the City's support to reach that goal to buildup the support system to small businesses so that they're more bank ready and to provide some kind of recourse to banks to encourage them to make loans make loans that they would consider too risky in the normal course of 52 11/07/04 - COMMERCE - RES. 040827 business.
Thank you. Are there questions from members of the panel? Councilman Clarke.
Thank you, Mr. Chairman. Good morning. You referenced ed the jobless economic recovery. And I agree with you. Unfortunately, too often it hits dead center in the lower income communities and minority communities. I happen to represent a substantial amount of the community that has an extremely high level of employment officially, but in those areas we actually have this, quote/unquote, underground economy where people figure out a way to make a living, folks cutting hair in their basements. People selling dinners. I mean, people are going to figure out a way to make do. And my question is, those type of individuals will not be in a position more often than not to get the loans, the investment from capital from lending institutions that we 53 11/07/04 - COMMERCE - RES. 040827 traditionally speak of. Have you all given any thought to any nontraditional ways that we could make capital available to people to kind of formalize their businesses and become taxpaying members of the society and enhance their business acumen? I mean, it's quite prevalent out in the neighborhoods. You'd be quite amazed when you walk around the neighborhoods in the daytime. You see people that's kind of out there and you say, "Well, how are people surviving?" And they have this informal job.
And if they go to a bank for a loan, the bank is going to say, "Well, can I you see your tax statements over the last three years and financial reports." And it doesn't show up there. This is really an issue, and this has come up repeatedly, and Leslie with the Philadelphia Development Partnership works with micro-entrepreneurs and maybe can address that.
Clearly, with our work we do work with precisely the population 54 11/07/04 - COMMERCE - RES. 040827 that you're talking about, and there are thousands of these people like that in all the neighborhoods. We run a small program but a significant problem helping probably 400 entrepreneurs a year in the general Philadelphia area. Clearly, there's much more work that we need to do, and there are other agencies out there that work with these populations as well to help give them literacy training and help with some of the credit issues. What we propose in our set of initiatives is that there be funding set aside to provide the technical assistance and training and credit counseling a lot of these people need in order to take their businesses to the next level to help them formalize their businesses. And we also propose that additional capital be made available to placing these alternative lending pools the community development financial institutions, of which there are several in Philadelphia, and few of us do actually provide loans to this segment of the population. 55 11/07/04 - COMMERCE - RES. 040827
I'd ask Ms. Naidoff earlier if you would be willing to participate in a, quote/unquote, for lack of a better term, North Philadelphia Economic Summit. Would you and your various agencies be willing to participate in something similar to that?
Clearly. We'd love to. I participated in the Economic Development Summit, but clearly if we can expand --
See, I want to kind of give a little bit more of a neighborhood flavor. I mean, I don't have anything against the navy yard, but I think the participation level could be enhanced if we actually have some of the dialog in the neighborhoods, give people an opportunity to come and discuss their issues and give what I think may be some good information to all of us whose responsibility it is to put some of this together. 56 11/07/04 - COMMERCE - RES. 040827 So thank you. We'll be in touch. Thank you, Mr. Chairman.
Are there other questions for this panel? (No response.)
Thank you very much for your testimony. Our next panel is a very large panel. I will call the first two witnesses, Rick Sauer of the Philadelphia Association of Community Development Corporation and John McDonald. Good morning. Please state your name for the record.
Good morning, Chairman Goode and Members of the Committee. My name is Rick Sauer and I'm the Executive Director of the Philadelphia Association of Community Development Corporations. And I have copies of my testimony here for Members of the Committee. In the capacity as Executive Director of PACDC, I also participated in the Mayor's Economic Development Summit held last 57 11/07/04 - COMMERCE - RES. 040827 September. PACDC represents 80 members, including 50 community development corporations working to revitalize neighborhoods throughout the City and address resident needs, and more than 30 of these CDCs are directly engaged in economic development activities, working to grow neighborhood economies and several of them are here today to testify. But clearly they have a lot of experience and knowledge to bring to this larger issue of an economic development strategy the City. I think as members of the previous panel well noted, businesses located in our neighborhood are the backbone of Philadelphia economy, providing jobs as well as local access to goods and services. CDCs play an intricate role in supporting these neighborhood economies. They assist local business growth. They attract new industry and retail to neighborhoods. They improve the physical appearance of neighborhood commercial corridors. They partner with local business associations. And they undertake commercial 58 11/07/04 - COMMERCE - RES. 040827 and residential real estate development. As a follow-up to the discussion earlier during Ms. Naidoff's testimony, we strongly believe that the City's Economic Development Blueprint should directly recognize and support the importance of neighborhood economic development and the role that CDCs play in the process. I think it's also important that the proposed Economic Development Investment Fund have a balance distribution of funds between larger scale waterfront projects as well as supporting economic development activities in existing neighborhoods. The summit underscored the importance of energizing communities and strengthening neighborhood commercial corridors. That was actually one of the focus areas of the break-out groups in the first day. And as mentioned, on behalf of CDCs who had significant experience and expertise working with many of Philadelphia's commercial corridors, we urged that the City's Economic Development Blueprint Investment Fund make 59 11/07/04 - COMMERCE - RES. 040827 strengthening these corridors a central component of the strategy and a priority for work. To build on the work of the City's Neighborhood Transformation Initiative, we strongly urge that the fund focus on improving the physical appearance and curb appeal of neighborhood commercial corridors. This could include things such as providing funding for CDCs to work with small businesses to do facade improvements, to redevelopment vacant commercial and mixed used properties on commercial corridors, to create more attractive streetscapes, whether that's banners or improve lighting, greening and other physical improvements that I think Councilmembers were alluding to earlier, and working with other City departments like the Streets Department to ensure that they're also making improving the attractiveness in neighborhood main streets a priority. Several programs that are critical to sustaining the economic vitality of Philadelphia's neighborhood main streets are 60 11/07/04 - COMMERCE - RES. 040827 currently in jeopardy. There has been reductions the past couple years in the City's CDBG allocation and it's very likely that trend could continue, so the resources that the City has had at its disposal to support neighborhood economic development are dwindling. The City should -- the need to support additional funding for the neighborhood development grant program special service districts, things such as a facade security grant program and grants for predevelopment, planning, marketing and promoting those neighborhood commercial corridors.
At the summit, leaders also gave due recognition to the important role the City can play in marketing, the role that marketing plays in strengthening economic development. I want to encourage the City to tap into the capacity knowledge that CDCs have about their neighborhoods and use them as a resource in this effort. We think the City could work with CDCs to survey neighborhood commercial corridors, conduct retail market analysis, and 61 11/07/04 - COMMERCE - RES. 040827 identify opportunities to attract new businesses and strengthen the mix of existing businesses on these corridors. And we'd be happy to work with the City around such an effort. Also, as a member GPUAC's Small Business Lending Task Force, PACC also supports the recommendations formulated by the task force to use 47 million over three years to support initiative that provide both technical assistance to small businesses as well as increase their access to capital as part of a larger strategy to support small business development in the strengthening of neighborhood economies. Finally, the construction rehabilitation of housing has an important economic development component. So in addition to supporting increased funding directly for neighborhood economic development, we support the possibility that's been raised by the Administration to use a portion of the economic development investment fund to support the Philadelphia Housing Trust 62 11/07/04 - COMMERCE - RES. 040827 Fund that we've been advocating for as well. In closing, I'd like to highlight that the Economic Development Investment Fund holds great promise for the City. And to sustain that promise, it must support economic development in all of Philadelphia neighborhoods. It certainly may be appropriate to focus on some marquis large-scale projects such as the proposed redevelopment of the Navy Yard or creating a new community along the north Delaware Riverfront, however, we urge City Council to make good on the promise of this fund by committing a significant amount of the resources, potential up to half, the citizens and communities who need it most. Thank you.
Good morning, Mr. Chairman and balance of the Council. I'm John McDonald. I am the President of Impact Services Corporation CDC in the Kensington and 63 11/07/04 - COMMERCE - RES. 040827 Allegheny area of the City. And I'm also President of PACDC. The nice part about following Rick is that I can cut my testimony and just highlight a couple items here. In the interest of time I would like to, again, support the notion that commercial corridors are extremely important and that the economic development dollars be at least focused on those areas in part. It's keenly important to communities throughout this City. I also believe that we should support the Economic Development Fund, GPUAC on its proposal to invest $47 million over the three-year period on initiatives to provide technical assistance to small business and increase their access to capital. And then I would also like to support the notion and again reiterate the importance of dollars to go into the community development financial institutions. There are many small CDFIs. Not everyone is big as Jeremy Noak (ph), the loan fund. It does a fantastic job, but there are a lot of smaller ones in the neighborhoods that are focussing on very small business and, 64 11/07/04 - COMMERCE - RES. 040827 again, have difficulty in capitalization. It's hard to compete at the federal level for these dollars when you're small, so we have to rely on the City. And I think that would be a wise investment on the part of some of these economic dollars. And that would be it.
Thank you, Mr. McDonald. Are there questions for this panel? (No response.)
Thank you. Our next two witnesses are Farah Jimenez and Gina Snyder. Please state your name for the record.
My name is Farah Jimenez, and I am Executive Director of Mt. Airy USA, which is a community development corporation in Northwest Philadelphia. And before I begin my testimony, if the Councilman will let me indulge with a few words of appreciation, I want to thank you for convening this hearing and for being committed to economic development concerns in 65 11/07/04 - COMMERCE - RES. 040827 Philadelphia. Also, I more personally want to thank you for being the first to recognize the worthwhile investment neighborhood commercial corridors and particularly in our commercial corridor with our first grant from the City when you were at the Commerce Department, and then clearly more recent the impact of your work with economic tax credit and stating CDBG minimum spending goals for economic development has had amazing impact in our work. And I also just for fun want to let the record show that I still love you even though you stole Iola Carter from us when she was a former director of the Avenue Project. But I thank you for having her be part of the effort that you have for neighborhoods. The subject matter before us today is of particular interest to me and Mt. Airy USA. For the past years, we've engaged in 21 commercial development work and commercial 22 corridor revitalization work and, in fact, we 23 were founded by residents strictly for that 24 purpose of improving the neighborhood's 25 commercial and retail environment. Our 66 11/07/04 - COMMERCE - RES. 040827 founders believed that if we improve the conditions along Germantown Avenue, which is our neighborhood main street, that we would begin attracting jobs, creating private investment, much needed goods and services to our community and increased equity to the homeowners, many of whom live on blighted residential blocks just off of Germantown Avenue. So the question is, were they right in their thinking? And while we're in the midst of this continued struggle to improve our commercial corridor, the early indicators show that the trends are encouraging and if not exhilarating. In my testimony today, I want to us Mt. Airy as a backdrop and speak to the lessons learned and some of the truths of community economic development we've discovered. First, I want to say that economic development in Philadelphia just generally and historically has gotten short shrift. You look the at the amount of funding and the amount of employees dedicated to housing development in comparison to those 67 11/07/04 - COMMERCE - RES. 040827 dedicated to economic and commercial development, and clearly it's not at the top of the feeding frenzy. As a result, when there's less money that's available for economic development overall in the City, less of it seems to trickle down to neighborhoods. In contrast, when the City Commerce Department had an average of $25 million a year that it could allocate in economic stimulus funding for City-wide economic investment, a good number of that came to CDCs and neighborhoods. Less is available now, less than $5 million on average per year, and as a result, less of that money becomes available for our projects. So I would recommend that we stay true to this fund that might become available that stays true to economic development and economic development remain defined as the creation of long-term, permanent jobs rather than it be redefined some other kind of activity. Second, the Neighborhood Transformation Initiative, which we're all familiar with, evidences the importance of 68 11/07/04 - COMMERCE - RES. 040827 neighborhood commercial investment.
Neil Mayor, who is with the University of California at Berkley, did an analysis for the Philadelphia Neighborhood Development Corporation of the different categories in NTI, including regional choice down to reclamation, and one of the trends that was interesting that they saw that the regional choice neighborhoods of their building stock had percent allocated to commercial 12 businesses and retail rather than the reclamation neighborhoods had 0. So as you went from communities of choice, like Chestnut Hill, Center City, you had increased commercial investment. And if you went to the reclamation neighborhoods, you had an absence of commercial investment. So there is a need for the City, in terms of recommendation, to stay firm to economic development as a priority agenda, particularly on neighborhood commercial corridors. The third truth is that broken windshields need to be fixed first. We see that example in New York City where when they 69 11/07/04 - COMMERCE - RES. 040827 focussed on the small details, they started to see a resurgence in their economic environment and people's confidence in that city and its potential to grow and get stronger. In the Center City District and University City District implemented a special services district cleaning initiatives because they recognized that if it's dirty and soiled, it creates a sense of fear and lack of investment. In Mt Airy, what we've done is we've created the Ambassadors Program, which is an avenue cleaning initiative that employes three full-time staff to clean Germantown Avenue. It's a program that hour businesses strongly asked us to implement and the test of that commitment from the businesses is that they voluntarily contribute about $60,000 a year to this program. While we do receive some City funding through the Commerce Department for that initiative, it's staged as decreasing each year such that in two years' time -- we just started getting funding last year. In two years time from then we will receive no funding for this initiative from 70 11/07/04 - COMMERCE - RES. 040827 the City. And the funding that we receive currently is $30,000 a year, while it's a $100,000 a year program on average. I would recommend that the Commerce Department and the City continue to support these kinds of neighborhood cleaning initiatives because it is about the broken windshields. Fourth, it's easier to grow local businesses than it is to attract new ones. We can look at examples in Philadelphia on grand scale like Comcast, which is a home-grown business, Mothers Work which is a home-grown international business. " Meanwhile, we know the story of the Kaevernas of the world where we spent a lot of money trying to attract those kinds of businesses. Mt. Airy's story is very similar. In fact, 90 percent of the 31 new businesses we've attracted over the last two and a half years are all resident-owned, and most are 71 11/07/04 - COMMERCE - RES. 040827 small businesses; they're not outside corporations. So we need to figure out ways that we can support home-grown businesses and small business development. We at Mt. Airy partner with the Business Center, which is an incubator program, where we provide a business plan competition. And over the last couple years we've had four new businesses come to us as a result of that. So if you were to average the cost of this program and the return on in terms of new businesses, not even job creation, you're looking at 10 to $15,000 per new business being created. I'd also suggest that when we talk about investing in small business that we remember that while we're very interested in growing small business, we're particularly interested that they grow and build in Philadelphia. So we want to maintain that connection, and they way that we've done that in Mr. Airy is that our business plan competition provides additional incentive to businesses that locate in our neighborhood 72 11/07/04 - COMMERCE - RES.
040827 rather than take the resources we provided them and move over the border to Montgomery County. The final two truths is that it's important for us to sell the sizzle. There's a reality that we don't have enough money to do absolutely everything that we have in our agenda, but we do need to find opportunities to invest in big, sexy, exciting projects. What we did in Mt Airy -- well, the example in Center City would be, of course, Liberty Place and the Liberty projects and what that meant in terms of people seeing it as new investment in downtown. In Mt. Airy we built Phoebe Commons, an 18,000 square foot office and retail complexion that houses the post office, the Philadelphia Federal Credit Union Nationwide Insurance, and through our shared office leasing program we have seven new small businesses that have opened up, including law firms, consulting businesses, and other non-profits. By creating that building, we've had three new businesses open up. And they decided to open there because -- nearby, I 73 11/07/04 - COMMERCE - RES. 040827 should say, decided to open there because of the proximity to Phoebe Commons. As a result of that project, we decided to do another 15,000 square foot complex just catercorner from that development initiative to continue the renaissance. And once we started to announce that project, we have a local merchant who decided to take their auto repair shop and is now looking to convert that into an 18,000 square foot mixed use project. So A business that was succeeding just as a service provider now has the potential to be a huge job engine. So with respect to that, my recommendation is that the Commerce Department continue to fund the Neighborhood Economic Development Fund which is a source monies that can fund neighborhood commercial development projects like Phoebe Commons. The $250,000 that was invested in Phoebe Commons was leveraged 10 times over, and the $250,000 that's going to be invested in the Pelham Professional Building which is the next project is being leveraged 10 times over. I 74 11/07/04 - COMMERCE - RES. 040827 would argue that there should be not only continued funding in that but increased funding because the program's been capped at $250,000 for the last years. 6 Finally, I would say that whatever 7 funding is made available, like this $500 8 million pot, that it is important that monies be flexible. One of the challenges is that many CDC projects, neighborhood economic development projects are expected to be funded through CDBG dollars. The Community Development Block Grant, while a wonderful source, attaches a lot of unfunded mandates. One specific example is when we did the Phoebe Commons project when initially there was the thought that we would have CDBG funding in the project, we were required to do an archeological dig. If we had not had CDBG funding in the project, we would have saved that $30,000 and invested it in the project. Similarly with facade grant programs that the Commerce Department has, it now has been -- those economic stimulus dollars have been commingled with CDBG dollars such that 75 11/07/04 - COMMERCE - RES. 040827 there are projects that as little as 5,000 may trigger Davis Bacon requirements, which I think is frankly ridiculous for signage and small facade improvement jobs. So I would recommend that the Economic Stimulus Fund be retained as flexible funding and not be commingled with other sources that may trigger unfunded mandates. Thank you for the opportunity to testify.
Thank you very much. My name is Gina Snyder. I'm the Director of the East Falls Development Corporation, and I want to thank you, Councilman Goode, for holding this hearing and taking testimony from community development corporations in particular. And I am here today to support neighborhood commercial corridors as part of the City's economic development strategy. The East Falls Development Corporation works entirely in the area of economic revitalization. We actively work to 76 11/07/04 - COMMERCE - RES. 040827 attract businesses into our commercial corridor, bring in new investors, and support existing businesses. There are very exciting things happening in East Falls right now. There's over a hundred million dollars of new investment with new mixed income rental housing with subsidized and market rate housing coming in and retail coming in the pipeline. We've also recently completed a designed program for the area called East Falls Reconnects to the River that are focussed on improvements to the riverfront business district. We are going to be part of in this new River City, we think. We have a $10 million plan that is already partially funded. And the reason for this program is basically to bring the public infrastructure up to meet the private investment that's happening. We have worked very closely and have been very strongly supported by Councilman Nutter and the Commerce Department, Streets Department, Capital Programs, PIDC, 77 11/07/04 - COMMERCE - RES. 040827 Fairmount Park. A lot of agencies have worked together to try to move us forward. At the same time, though, the picture is not entirely rosy in East Falls despite the bursting housing markets. On our main street riverfront business corridor, Ridge Avenue, the sidewalks are not clean. Pavement is broken. There is no welcoming signage. There's no signage that says you're in East Falls. There's no directional signage. We have very limited parking. We have vacant and boarded up buildings in the commercial corridor. And we have businesses closing. I speak to dozens of businesses interested in coming into East Falls every year. And some of the reasons that they don't come are the problems that I've just described to you. That is keeping them from coming in. We also do not have enough businesses right not to support a neighborhood improvement business district. We're really strong believers in bringing the private market into play in economic development, and 78 11/07/04 - COMMERCE - RES. 040827 we do not think that our program should be driven by a government engine but that it should be a partnership and there are real opportunities for using some of the government resources to jump start us into a position where the private market can step up to the plate. I think East Falls is on the verge of something very exciting, but it's going to take a concerted effort to make that happen. In the first area -- I want to go through some details that I think are instructive. If there is a large economic development fund, I think it ought to be partnered with coordination among City departments to support the priority of resources into commercial corridors. And I'd like to give you some examples of how the limitations in other City departments can conflict with the priority on economic development. We have half a million dollars in capital funds through the Commerce Department to build a parking lot and an original commitment from Public Property to fund the operations of this parking lot in the 79 11/07/04 - COMMERCE - RES. 040827 first few years. That commitment was withdrawn, and we are now being required to come up with a plan to fund the operations of the parking lot, which is the most difficult time to fund the parking lot in the first two years. We know we're going to be able to cover costs in the long run, but it would be helpful to have some kind of partnership with the City to get over this initial hump.
The estimated expense for a project like that is about $20,000 a year. It's not a lot, but it's the kind of thing that we need to move forward. There's also other kinds of limitations. There's severe limitations in the Streets Department. They do not have the resources to put in attractive lighting in the business districts, and I think that individually you would hear a number of business districts with the same kind of concern. The funds are so limited in the Streets Departments that they're requiring us to use a different color light bulb in our parking lots as opposed to our on-street 80 11/07/04 - COMMERCE - RES. 040827 lighting because they do not want to accidently change a light bulb that is not their responsibility. The problem with this from a commercial corridor perspective is that the public sees all the lighting together as one complete welcome mat. The result of the lack of resources in the Streets Department means that we're going to have our welcome mat looking a little strange. And it's for these reasons that I think that if it's a large pot for economic development, some of those issues needs to be addressed. In the area of -- also in the Streets Department, because of limited resources, they do not have staffing to have someone to perform a historical review which is a necessary precursor to the expenditure of federal funds. Although this is not limiting a project that we have right now, we are continually applying for federal funds and other main streets corridors will be applying for federal funds, and without someone to do historical review, the project cannot move forward. 81 11/07/04 - COMMERCE - RES. 040827 The final area where this idea of coordination is very important is what's been termed concierge government. This is a terrific model that the City would be wise to follow, which is when someone is trying to open a small business, which is what we are all supporting, the government isn't -- what they need is concierge government particularly if you're opening restaurants. And what that means is that when they come to put in application, they are not sent into a maze where they have to stand in this the line in L&I and this line in the Health Department and this line, and there's no clear order about where they're supposed to go, what needs to happen first, last. Things start happening that pull them out of order with inspections, with the gas company and so on. And the result is that they incur high start-up costs in bringing in new businesses because the cost of starting up business is so extreme and the length of time can sometimes go on for an additional six months simply because of the problems of getting the approvals that are 82 11/07/04 - COMMERCE - RES. 040827 necessary. And they're usually -- we're talking about, as Farah mentioned, people who live in the neighborhood who are starting small businesses. This is not their -- they're not McDonalds and Starbucks, they don't have a whole team of people who know how to do this and they're trying to do it by themselves, and it's hard. While we support them, they're running into these kinds of obstacles. There are also opportunities for a neighborhood economic development investment fund to focus on our commercial corridors to improve the physical appearance and curb appeal such as banners, improving sidewalks, lighting and such. In our case, we have the necessary funds federal funds to build a traffic island in East Falls. However, that island cannot be maintained by the Streets Department. We have to come up with the funds to do that. So there's another minor item where some small amount of funds could really help us with the curb appeal. In the area of a neighborhood 83 11/07/04 - COMMERCE - RES. 040827 improvement district which is commonly considered special services district, it would be helpful to have funds for start up of a neighborhood improvement district. Once they get started, it should be able to operate on its own.
But often times it takes consulting resources, feasibility analysis. And I think we should be able to bring some private resources to the table and have them match with some economic development funds to be able to put that kind of project forward. Finally, a reserve for capital improvements and capital programs is absolutely critical. We are applying for most of our improvements' major funding from state and federal dollars, transportation dollars as well as state programs through DCED, DCNR and the Redevelopment Assistance. These programs all require local match, for example, is an 80/20; they're looking for 20 percent local match. My understanding is capital dollars are extremely limited in the City in the future. And what that means is that it severely limits our opportunity to grab that 84 11/07/04 - COMMERCE - RES. 040827 80 percent because we can't get the percent here to bring in that 80 percent of federal dollars. It seems like an economic development fund would prioritize that kind of investment that would be a highly leveraged investment spent to improve the commercial corridor. There are items both large and small where neighborhood commercial corridor could make great leaps in its development with a partnership with the City to support economic development. We're bringing in new residents and new businesses and do have the capacity to do even more if economic development resources were directed onto commercial corridors. Thank you very much.
Thank you. 19 Questions from the Committee? 20 (No response.)
Thank you. Our next two witnesses are Ajamu Johnson and Rob Kettell. Please state your name for the record. 85 11/07/04 - COMMERCE - RES. 040827
Ajamu Johnson, Commercial Corridor Manager for People's Emergency Center Community Development Corporation working on Lancaster Avenue. Good afternoon. As I just mentioned, I'm Ajamu Johnson. I'm testifying on behalf of Gloria Guard and the People's Emergency Center Community Development Corporation. Over the past years, PEC CDC has 12 provided a wide range of neighborhood preservation, community building and commercial development programs to help transform neighborhoods in West Philadelphia to communities of choice. During that time, we've converted over 80 properties into 106 units of affordable transitional housing and permanent house for social service facilities and a community playground. I'd like to take this opportunity to thank the Council for allowing me to testify today, and especially to Councilman Goode for your ongoing and significant work in the economic development. The CDC Tax Credit 86 11/07/04 - COMMERCE - RES. 040827 Program has allowed PEC and other CDCs to dramatically increase the amount of programs and initiatives that we can do in economic development. Duane Morris, our CDC tax credit partner, has allowed us to begin to address several quality of life issues in and around the Lancaster Avenue corridor. Some of those issues include cleaning and safety to which we've been able to contract with the University City District for cleaning and security services on and around Lancaster Avenue. For beautification, we've done several lot greening programs, partnering with PHS and we were able to assist several businesses in commercial facade programs with the assistance of the Commerce Department Small Business Commercial Improvement Program. For marketing, we designed and distributed the Lancaster Avenue Business directory with the assistance of the University City District. And last June, we held our fist annual Taking It to the Streets Festival which is a street festival which was 87 11/07/04 - COMMERCE - RES. 040827 held on the 3900 block of Lancaster Avenue and attracted between 800 and a thousand neighborhood residents and merchants. This assistance from Duane Morris has also allowed us to leverage additional funding from the local initiative support corporation, the William Penn Foundation and Wachovia Regional Foundation. The City's Economic development strategy should directly support neighborhood economic development and recognize the important role that CDCs play in this process. PEC is excited about our accomplishments to date and are consistently looking for innovative ways to expand our commercial revitalization activities. Therefore, we believe that the Economic Development Fund should include a significant focus on strengthening neighborhood commercial corridors. It should explicitly support improving the physical appearance and curb appeal of these corridors, including providing funds for CDCs to work with businesses to upgrade facades and create more attractive 88 11/07/04 - COMMERCE - RES. 040827 streetscapes. A portion of the Economic Investment Fund should support critical investment economic development programs assessed by CDCs in which CDBG funds have been declining over the past several years. Finally it should support GPUAC's proposal to invest 47 million over three years in initiatives to provide technical assistance to small businesses in their access to capital. I'd like to thank you. And I have additional copies of my testimony should the Committee need them.
Good morning. Thanks for the opportunity to testify. I'm Rob Kettell with the Roxborough Development Corporation, speaking more on my behalf than the corporation. Roxborough is a fairly stable community, but it's commercial corridors are really in need of assistance. It's not CDBG eligible. And I think it's important that any new economic development incentives sort of incorporate what I consider sort of the two 89 11/07/04 - COMMERCE - RES. 040827 things you want evaluate public policy on the equity and efficiency, the fairness and the impact. And I would think that if it's going to be the Philadelphia businesses and residents that are eventually contributing to either the bond issue or whatever tax form its being funded out of, that you'd want to be fair to, I guess, all of the contributors as to where the money is spent and it shouldn't be targeted to any one geographic area or for any one industry. And on the efficient or getting the bang for your buck, I think it's important to look at some of the communities like Roxborough where a relatively small amount of money can have a large impact. And that's essentially my testimony. Thanks.
Thank you. Thank you very much. Is Donna Henry here? Carolyn Placke, Sarah Thompson? Please state your name for the record. 90 11/07/04 - COMMERCE - RES. 040827
Good afternoon. My name is Carolyn Placke. I'm Director of Housing and Community Development for Project HOME. Project HOME is a multi-service agency providing street outreach, supportive housing, comprehensive services and community economic development. We're energized by the commitment demonstrated by the City of Philadelphia under the leadership of Mayor Street and Councilman Wilson Goode in securing Philadelphia's economic future. I'd like echo PACDC's and other members testimony on the vital role that CDCs play in Philadelphia's economy. We also encourage the City to support COMMUNITY economic development corporations as we work together to rebuild our neighborhoods and commercial corridors. Since 2000, Project HOME has been working with the Neighborhood Transformation Initiative, public and private foundations, the City's Economic Development Tax Credit Program, and the Cecil B. Moore Ridge Avenue Business Association to implement strategies 91 11/07/04 - COMMERCE - RES. 040827 for improving the physical environment of the Ridge Avenue Business District. I'd also like to thank Councilman Clarke for highlighting the work that has gone on along the Ridge Avenue/Cecil B. Moore corridor where Project HOME and the business association has been focussing substantial economic development initiatives since 2000. Our plans call for strengthening and retaining existing businesses, attracting new businesses, and creating a safe place to work, shop and socialize. As a result of our collective efforts to date, business occupancy has increased from approximately 47 to 52 percent, and open space development has increased from 5 percent to 100 percent. Our commercial corridor has also within three blocks of the recently completed Learning Center and Comcast technology labs. The Center's mission is to stem the digital divide through technology, education and workforce development. This fall, we launched small business development seminars which are open to all community residents as well as 92 11/07/04 - COMMERCE - RES. 040827 businesses. Approximately small businesses attended these trainings and they received training on marketing small businesses, promoting your business, and graphic design. As you can see, the Ridge Avenue commercial corridor is experiencing a rebirth and we're achieving our goals for promoting economic development in our neighborhood. Although there is measurable increase in the overall stability of our neighborhood, economic development remains a high priority. The proposed Economic Development Fund should encourage balanced funding between large-scale waterfront development and CDC's supporting neighborhood economic development activities. Project HOME encourages the City to maintain its focus on neighborhoods by dedicating significant funding to each of the following: Strengthening our commercial corridors through streetscape facade improvement programs, including greening, sidewalk repair, district signage, street lighting, and trash receptacles, encouraging the marketability of commercial corridors with 93 11/07/04 - COMMERCE - RES. 040827 community safety and crime prevention funding, increasing business occupancy by increasing resources to renovate vacant and develop new commercial properties, supplementing decreased CDBG funds for pre-development planning and marketing and support for neighborhood special services districts, and finally, strengthening small businesses and increasing access to capital by supporting GPUAC'S proposal to invest 47 million in technical assistance to low interest loans. Thank you.
Thank you. Any questions from members of the Committee? (No response.)
Our next witness is Sally Glickman from Philadelphia Workforce Investment Board. Good afternoon, Ms. Glickman, and thank you for being patient.
Good morning. My name is Sally Glickman and I'm the Executive Director of the Philadelphia Workforce 94 11/07/04 - COMMERCE - RES. 040827 Investment Board. I bring greetings from my chairman Georg Davis, Senior Vice President of Lincoln Financial Group, who sends his regrets that he is unable to join you today. I want to thank Council and you, Councilman Goode, for this opportunity to speak about the work of the Philadelphia Workforce Investment Board. I also want to thank the City and the Commerce Department for inviting Mr. Davis and me, along other several other members of our Board, to participate in the recent Economic Development Summit. We worked very closely with the Commerce Department. And from our perspective, the information sharing that came out of the summit discussion was extremely valuable and will be instrumental in further framing our efforts in the broader context of economic issues and challenges. For those on Council who may not be completely familiar with the Philadelphia Workforce Investment Board, we are a private sector led commission appointed by Mayor Street under the provisions of the Workforce Investment Act of 1998. At the Mayor's 95 11/07/04 - COMMERCE - RES. 040827 behest, we act as the policy body, the research and development arm, if you will, for the City's public workforce system which is supported by approximately $300 million in annual funds that flow into Philadelphia from a variety of federal and state sources. Under federal law, we are the governance body for the local corralling system and directly secure and oversee the distribution of over $16 million in federal funding annually. We are 1 of 21 workforce boards in the Commonwealth and 595 across the nation. Our fundamental mission is to build a world class workforce investment system in Philadelphia. We do this by coordinating programs and fostering initiatives that support the productivity and growth of business and which promote the self-sufficiency of all Philadelphians. Our vision for Philadelphia is a thriving employer community supported by a dynamic and easily accessible workforce with the skills and flexibility necessary to be a driving force in the City's economic vitality. 96 11/07/04 - COMMERCE - RES. 040827 As Council is well aware, there are many issues that challenge region's economic growth. One of the most pressing of these is an increasing gap between the jobs that are available in the region and the skills and qualifications of our workforce. This situation is further exacerbated by the fact that two-thirds of all Philadelphians have serious literacy issues hindering their ability to successfully complete a post-secondary degree, increasingly the key to earning a family-sustaining wage. There are a variety of other statistics I could share with you today to further illustrate our challenge, a challenge shared, by the way, by many older industrial cities, but we are all acutely aware of the impact. Our poor are getting poorer. Our employers are struggling to find and retain entry level workers and our City's tax base is continuing to shrink even as the demand for services increase. I mentioned before that we are charged to directly oversee federal funds 97 11/07/04 - COMMERCE - RES. 040827 appropriate under the Workforce Investment Act totaling about $16 million per year here in Philadelphia. These funds are mandated for investment in the system and to provide training and other workforce services for adults, dislocated workers and youth. While you may not be familiar with these funds, you may remember them in a former incarnation, CETA, which in 1979 became the Job Training Partnership Act, and then in 1998 the Workforce Investment Act. Twenty-five years ago, the total federal appropriation in 2003 dollars under CETA was over $21 billion nationwide. Today, that investment is under 5 billion. You heard correctly.
During a period when our workforce grew by over 40 percent, the federal investment in the development of that workforce has been reduced by over 75 percent. And that does not account for all the federally funded programs that have been eliminated during that time period. So even as the imperative to improve the skills of our workforce becomes more and more urgent to our productivity as a nation, 98 11/07/04 - COMMERCE - RES. 040827 not to mention our tax base, the federal investment that traditionally supported these efforts is diminishing rapidly. And I can guarantee that if Congress struggles to cover increasing costs for national security, Medicare, Medicaid, Social Security and interest on the deficit, the situation will only become more challenging. Although this information is not exactly encouraging, I did not come here today to depress you. Clearly, we must face the reality that solutions to these challenges must become increasingly local in nature, and we are devoting considerable effort in this regard. That is why the Philadelphia Workforce Investment Board and its operational partners have leveraged over $20 million in new federal, state, foundation and employer investments against our core workforce investment act allocation over the last two years. That is also why early this year we kicked off a literacy initiative with the goal encouraging employers to make more investments in the foundation skills of their entry level 99 11/07/04 - COMMERCE - RES. 040827 workers. And most importantly, that is why we continue to seek new opportunity to eliminate duplication, to maximize resources, to innovate to partner and to advocate. And we are not alone. Council has played a critical role in advancing the City's workforce development efforts as well. In partnership with the Mayor, you have maintained your commitment to Community College of Philadelphia. Arguably, our most important vehicle for the delivery of education and training and, hence, economic development in the region. You have passed legislation to encourage employers to hire individuals coming out of incarceration, effectively removing barriers to work for thousands of people who simply need an opportunity to become productive members of our workforce. These are just two of the many examples of how Council and the Administration has been key partners in addressing Philadelphia's workforce challenges. Today, I have one more suggestion for a way Council can support workforce 100 11/07/04 - COMMERCE - RES. 040827 development efforts in Philadelphia. Did you know that someone who works in high school is more likely to graduate and to complete a post secondary degree, they will out-earn their non-working counterparts over their lifetime irrespective of race or background. However, only about percent of youth living in 9 poverty work as teenagers compared to 60 10 percent of youth whose family incomes are considered middle class. That is why the Philadelphia Workforce Investment Board and its youth council under the leadership of Pamela Crawley initiated the Work Ready Philadelphia Private Sector Internship Program in 2003. Co-Chaired for the last two years by Mayor Street, Lincoln Financial Group CEO, Jon Boscia, Philadelphia School District Superintendent Paul Vallas. So far, we have provided over 400 youth with summer internship opportunities using funds exclusively raised from employers and foundations. Many large companies are partners in this effort, as are many small employers. They pledge a thousand dollars to 101 11/07/04 - COMMERCE - RES. 040827 support a youth in their workplace for six weeks and suppose them to the possibilities open to them for hard work and education. This past summer Councilman Ramos supported Work Ready Philadelphia by sending targeted letters to his key constituents. I encourage you all to promote this campaign in 2005 and consider ways you can help us recruit the man employers with whom you work to support this critical effort.
In closing, I want to thank you for your time today. We share your goals and look forward to working with you to shape and advance the City's workforce and economic development agendas.
Please discuss with me the difference between a career link center and a career link access point.
Sure. A career link 102 11/07/04 - COMMERCE - RES. 040827 center, it's primary focus would be the delivery of career link services. A career link access point provides access to the career link system at a place where the primary mission would not necessarily be the delivery of workforce serves, so, for example, a library, anyplace that has internet access. So what we try to do was use -- it's a way to connect into community-based organizations and others and connect the individuals who are receiving services to workforce services. And a lot of people just need those kind of basic services and people can be easily cross-trained. The staff at the access points can be easily cross-trained to help individuals navigate them. The career link centers themselves offer a much higher level of service around resume development and a lot of referrals we're beginning to track so I don't have numbers for you today, but a number of individuals that end up in the career link centers are actually referred from the access point. So it's a great way to connect the community into these services and make them 103 11/07/04 - COMMERCE - RES. 040827 aware of the services.
So one shows up at the Redeemer Christian Life and Education Center, go to a computer and then link up to the career ling center?
Yes. Staff at every access point is trained and connected to the staff at a standalone center in that community, in that geographic area. So what will happen is somebody would go in. The perhaps would say to somebody, "You know, I'm really unhappy with my job or I'm unemployed," whatever it is, and the staff there would have enough knowledge to help them navigate the electronic career link system which is operated by the state. If they were in need of more assistance in order to get a job, that staff person would have the information to refer to them or to suggest to them that they might want to go visit the center that's specifically set up for that. But it's a no-cost way to link career link services into the community. And we think it's been very effective. But, again, I don't have the 104 11/07/04 - COMMERCE - RES. 040827 referal numbers with me today.
You mentioned this early in your testimony. What's the budget for Workforce Investment Board?
There's $16 million that comes into the City for the workforce services. The workforce investment budget which includes a variety of other sources is about 1.5 million.
Okay. Sixteen million is for Workforce Development Corporation?
Not all of it goes to the corporation. It's a little bit confusing.
The Philadelphia Workforce Corporation is the fiscal agent for the Workforce Investment Act Title funds. So all of the money that comes in comes in through their door. As a result of them being designated the fiscal agent for Title 1, they also handle about 110 million. The numbers move. I think last year the total budget was 105 11/07/04 - COMMERCE - RES. 040827 about 130 million. So it's about 110. Much of that TANA. There's a lot of other money that comes down from the state, and they manage that all and cost allocate all kinds of budgets. About 6 million of that then goes out the door directly to the organization that manages the whole Youth and Work Ready programming on behalf of the Board and its Youth Council, and that's the Philadelphia Youth Network. So the contract for all of the youth services are kind of connected and happen through the Philadelphia Youth Network. And I apologize for the complexity of this. The federal law and the way to manage these are not always the simplest. And I'm more than happy to get you more information. What I've included in the package is a brochure about Work Ready and information about career link. And then on the other side behind my testimony is information about the Board, what we do, including our current list of our board members.
There is 106 11/07/04 - COMMERCE - RES. 040827 certainly an awful lot of information here. What I don't see, and maybe very well overlooking it, is some connect with the Philadelphia school system, the School District.
Well, actually, the connect with the School District -- and that would really be through the Youth Council and Work Ready Philadelphia which is more than just a private sector campaign. The School District of Philadelphia has always played an active role on our Youth Council. In fact, the first Chair -- one of the Co-Chairs of our Youth Council in 1999 was David Hornbeck. And even through all of the transitions with the School District, we've maintained a close working relationship with the school system. And Craig Williams who's the Deputy Chief Academic Officer is actually Co-Chair of the Workforce Investment Board Youth Council.
We just worked with them to secure funding and a planning grant 107 11/07/04 - COMMERCE - RES. 040827 for a transition funding for out-of-school youth through a series of foundations. The School District -- besides Paul Vallas, of course, chairing Work Ready Philadelphia in the private sector campaign, the School District of Philadelphia, starting two years ago, became an investor in Work Ready Philadelphia. It used to be the kids who had to go to summer school had to make a choice. I mean, they had to go to summer school, they couldn't have jobs. And there was a recognition on the part of the School District that frankly kids who have to go to summer school are exactly the ones who probably need to go and also get exposed to the workforce. The School District funded a thousand slots this past summer for summer school youth and worked with us to put those kids in half-day programs so that they were able to work as well and tie summer school to employment. So there's a lot of connection on the ground, I think, where it's important to make this happen.
So you say, 108 11/07/04 - COMMERCE - RES. 040827 however, that the School District picked up the tab for those young people?
So where is there some level of commitment with this 130 million you talked about for --
About 7,000 youth get served with the public money that's coming in every year. The School District made a thousand more slots available. I also want to give credit to the foundation collaborative. One of the other things that we've been able to do under Work Ready -- I talked a little bit about eliminating duplication. One of the things that was happening, and still happens to some degree but much less now with youth, is there were multiple points of entry and multiple referal mechanisms, so we weren't maximizing the interest of employers and other partners. The foundation collaborative that always did the foundation summer employment program for years and years and the School District came together with Work Ready Philadelphia, which 109 11/07/04 - COMMERCE - RES. 040827 is the core WIA funded and TANA funded program, and we now have a single registration system, a single mechanism for securing providers, a single contracting payment mechanism. So what we've been able to do is lower administrative costs for all of those programs by creating a single point of contact. And frankly, a unified front for Philadelphia's youth workforce development efforts, and the School District has been an incredible partner in helping us to achieve that.
When I consider that process, the bureaucracy around that many, many years ago and to hear what you just explained, there's been substantial progress, so I commend you for that. Thank you for your testimony.
Thank you, Mr. Chairman. Thank you, Ms. Glickman, for coming in and testifying this morning. I've always 110 11/07/04 - COMMERCE - RES. 040827 been very pleased with the work that the WIB does and all the other offshoots from this organization. If line with the education questions of my colleague, if I'm a high school senior, will someone at my high school, the counselor or someone, talk to me? I'm undecided whether I want to go to college or maybe I have decided I cannot go to college and I'm looking for a J-O-B. Is someone there at the school going to tell me, "Look this is career link. Go into career link." Is that going on in our high schools?
Well, I'd like to say I hope so. But I do want to be honest about where we found some gaps. We are very concerned about particularly through 19 24-year-olds. We see -- we're looking at measures and, in fact, earlier this year. We're concerned about this transition of individuals who are coming out of a relatively supportive youth system into an adult system and whether they're getting the support needed. And we initiated a pilot at one the 111 11/07/04 - COMMERCE - RES. 040827 sites to look specifically at this population. We are concerned that they're falling through the cracks. So I don't know that youth are being referred or getting the one-on-one attention that they need in the schools. We can try to encourage and do a lot more with publicity and career days and all of these things that's been ongoing. But I do want to be clear that we are concerned about what happens to youth when they make that transition into the adult system.
What I'm referring to is that we should consider -- and if my office can be of any help, we'd be glad to help you -- that in every senior in our public school system, and you can extend it to our parochial and other school systems around, that every senior should be aware, first day of school in September of your senior year that career link is out there. Start looking and using career link. Just this past a few weeks ago, Senator Kerry's wife Teresa Heinz was in town and I took her to a career link up at 112 11/07/04 - COMMERCE - RES. 040827 Congresso De Latino Unidos. She was very impressed with the system and the way it was working at that community center. Having said that, there's still a lot of people out there that do not know that this career link system exists. And I like the system. My office uses it. It's been helpful to many people that come to my office looking for employment. But I would sure like to see that every senior is aware from the day he becomes a senior, goes to school in September, that career link is out there. Access it. They should be shown how to access it and have that counselor. So I would like us to work on making this emphasis with the School District to make this good program available, particularly to those seniors.
Absolutely. I'll work with the school district on something in a protocol and I'll follow up with Council when that' completed. Thank you very much.
Councilman Juan Ramos recommendation really needs to be underscored, particularly for seniors. And as 113 11/07/04 - COMMERCE - RES. 040827 you seek to deepen the outreach for to 21-year-olds the Philadelphia Department of Recreation has taken an active look at this particular population and has opened teen centers across the City designed to bring or have tangible relevance activities for young people, including this particular age group. So I'd like to suggest for the record that you have a conversation with Commissioner Victor Richard to see about bringing career link centers in some of the rec centers where you have these teen centers already in place up and running. That's another way of addressing the concern you have and to a population that is deserving of the awareness of career link centers. So please have a conversation and reach out to Commissioner Victor Richard.
Certainly. And I'll follow up with you as well on the outcome of that conversation.
Thank you, Ms. Glickman. 114 11/07/04 - COMMERCE - RES. 040827 Our next witness is Gail Kass.
My name is Gail Kass, and I am the President of the Presbyterian Foundation for Philadelphia and NewCourtland Elder Services.
I'm pleased to be asked to speak to you this afternoon regarding the issue of workforce development in Philadelphia. While I was an attendee at the Economic Summit, I reserve my remarks today just about workforce development and what we've been able to accomplish. As I said before, I am the President and the Chief Executive Officer of the Presbyterian Foundation for Philadelphia and NewCourtland Elder Services. I've been a resident of the City of Philadelphia since 1965 and each of my four grown children live in the City of Philadelphia and raise their 115 11/07/04 - COMMERCE - RES. 040827 children here. I know I don't look old enough, but I am a grandmother. My employer is the successing organization to the Presbyterian Hospital. And when we sold the hospital to the University of Pennsylvania, we made the important decision to commit our energies and our money to improving the lives of frail elders in the City. We do this through nursing homes, elder apartments and programs, and we have over 1400 nursing home beds in the City and employ over 2,000 Philadelphia citizens. Soon after we embarked on this complex and challenging business, we came to recognize that we could not bring a higher standard of living to our residents without forging a partnership with our staff. And I point out to you that many of our staff are people who have life challenges which make them as frail as some of our elders. We further recognized that a meaningful partnership had to include training, education, and the promise of career 116 11/07/04 - COMMERCE - RES. 040827 advancement and increased income. Before we began, our turnover rate for employees across the network was over 150 percent per year, while the national average in the field of long-term care was a hundred percent. In the past few years since launching our Employee Pride Program, our turnover rate is below 30 percent, and the national average has creeped up considerably over 100 percent. These are extraordinary results. A most essential element of NewCourtland Pride Program is an extensive, nationally-recognized and award-winning career advancement system which we call the Ladder of Opportunity. The ladder provides in-house training and education coupled with scholarships and tuition reimbursement for pre-nursing classes and schools for licensed practical nurses and registered nurses and bachelors and masters degrees in nursing. The in-house training and education is carried out in the nursing homes when appropriate but most recently is conducted in NewCourtland's own newly renovated 41,000 square feet 117 11/07/04 - COMMERCE - RES. 040827 state-of-the-art education center on NewCourtland's Germantown home campus. Classes are conducted here to train interested non-nursing personnel to become nursing assistants to offer a six-week advanced training course for already certified nurses, to offer an eight-week post-graduate training course for recently graduated LPNs and to provide educational opportunities for nursing and non-nursing personnel from across the network. The six-week course I referred to for nursing assistants is perhaps our best known and most widely availed of with our graduates, numbering over 150. At the end of this course's study, these nursing assistants are designated as specialists and they have expanded leadership responsibilities and they receive more money per hour. This first and important step on the ladder sets the stage for this population to seriously consider undertaking educational opportunities which take them outside of the nursing home campuses to LPN schools or colleges where they study to 118 11/07/04 - COMMERCE - RES. 040827 become registered nurses. Since launching the Ladder Program, hundreds of NewCourtland personnel have taken advantage of its programs and have advanced their careers and increased their incomes.
Our employee turnover is greatly reduced and we have become the employer of choice in long-term care services in the region boasting very few job openings at the current time. The rest of the health care industry consistently talks about working with short staff or large us of agency personnel. When a NewCourtland Nursing assistant completes the course work in LPN school, she accepts a job in the NewCourtland network and her salary essentially doubles. Most often her education has been completely paid for through federal grants and NewCourtland scholarships and stipend money. If she is able and interested, she can then take courses and become a registered or bachelor's prepared nurse, again through tuition reimbursement and scholarship dollars, her tuition and books have been completely paid for. And when she takes her 119 11/07/04 - COMMERCE - RES. 040827 new job in the network, her salary increases dramatically again to double. Think of the difference that that makes in her life and in the lives and the vision that her kids hold. NewCourtland recognizes that one of Philadelphia's greatest resources is the number of its citizens who are available and wanting to work. Sometimes they need encouragement and to be offered the wherewithal to stretch beyond their place of comfort or fear. NewCourtland has found there are no more talented, loyal, and devoted employees than those who have been given these advancement opportunity. And the dollar saved on turnover and reduced patient resident error largely pays for the program in total. Philadelphia must take a leadership position in disseminating information regarding existing successful workforce development programs and should provide start-up incentives for those employees who wish to launch programs of their own. Everybody in every community benefits when one of these problems programs works. Thank you. 120 11/07/04 - COMMERCE - RES. 040827
Thank you. Our next witness is Raymond Wood. Please state your name for the record.
Yes, I will. My name is Raymond Wood. I'm an entrepreneur, urban developer with over years experience in the 9 City of Philadelphia. And I appreciate your 10 having these hearings to give me an 11 opportunity to express some things that have 12 been on my mind and in my work experience, and 13 so I wanted to thank you. Beside me is 14 Rosalind Plummer. She is in-house counsel and 15 she rides shotgun. 16 I have two companies at this time. 17 One is Plumb Wood Developers which is the 18 company that has spent a lot of time, money, 19 and energy working on development initiatives 20 in this City. I also am the Chairman of the 21 Board of the TraneStop Resource Institute 22 which is an advocacy, archival, and 23 educational organization. In fact, we were 24 here in City Council to receive a Council 25 resolution on the 23rd of September, John 121 11/07/04 - COMMERCE - RES. 040827 Coltrane's birthday, but there was a couple other parties going on.
Over the past years, 7 I've involved myself in neighborhood economic 8 and cultural stimulus using a combination of 9 private resources and sweat equity. I've also 10 been active as a small business advocate and 11 was elected a delegate to the first White 12 House conference on small business under 13 President Jimmy Carter. I was a member of the 14 first Philadelphia Mayor's Small Business 15 Advisory Council under former Mayor Bill Green 16 and the Delaware Valley Family Business 17 Council, as well as a member of the 18 Pennsylvania Food and Agricultural Task Focus 19 focussing on bringing fresh food to the 20 inner-cities. 21 The thrust of my projects has always 22 been to bring job stimulation, community pride 23 and self-help, economic and cultural 24 development to existing long-term residents of 25 our City's depressed African-American 122 11/07/04 - COMMERCE - RES. 040827 communities, what used to be quality working-class neighborhoods. My purpose in speaking here today is to raise the issue of economic racism and political corruption in the context of four areas of concern which have arose from my own experiences finding to conduct business on an equal footing in the City in a way that benefits the sizable African-American community. Those four areas of concern are promoting community redevelopment community and economic stimulation versus neighborhood gentrification. The role of government in supporting private, neighborhood-based economic development activities by African-American developers, businesses and entrepreneurs. The historic role of the City's minority business development programs and agencies and disqualifying African-American businesses and entrepreneurs in favor of brokers. The need to advance participation by City Section 3 and City-based and African-American entrepreneurs and major 123 11/07/04 - COMMERCE - RES. 040827 public-supported, taxpayer-subsidized development activities. As an African-American I've always been concerned that our communities not only have little economic advancement, but since a rise of the '60s and '70s, they've actually gotten work. Politicians, black and white, speak patiently and eloquently and conducted expensive studies about the needs for these economically depressed communities. However, when I set out in good faith and with my own resources to help restore the stability of these communities to which I felt culturally attached, I learned some hard lessons about the insincerity of government officials and how corruption was driving local government policies and behavior, cutting off black communities from the tools necessary to elevate them. And I give you two examples, one is residential and one is commercial. I could have given you 10 of the development initiatives, but these two will suffice to point out what I'm talking about. In my residential example, in the 124 11/07/04 - COMMERCE - RES. 040827 West Parkside community I went into my pockets and worked with an area community organization to put together the West Parkside Cooperative Housing Development of 64 homeowner apartment units in two long vacant structures. The development would have permitted a select number of low and moderate income renters to cooperatively own the apartment units as well as on-site resident-owned grocery store and a laundromat. Those were the businesses. C. My development package was so detailed that even the price and brand washers and dryers for the laundromat were identified and the residents co-op agreement and rules were included in the detail. The Federal Housing Agency supported the project. I had paid for control of the real estate from my own private sources and had secured a mortgage commitment from the National Cooperative Bank. The community group was excited and on board as we 125 11/07/04 - COMMERCE - RES. 040827 approached the City for their blessings to smooth the way any Zoning and License and Inspections issues. Then an interesting and shocking thing happened.
City housing officials first expressed concern that we were successfully moving the project without them and started pressuring representatives of the community organization to drop me and the project. When I resisted that effort, City government had a City-paid lawyer forge signatures on court documents to illegally take control of the contractor real estate from me and then just transferred the real estate to a politically connected white developer under investigation by the Feds. The City funded the white developer and then changed the project to rental housing with no economic benefits for the community. This developer, the City's builder of choice, went on to put many black subcontractors on the project out of business by not paying them for their work. I also never received any compensation for my investment monies. 126 11/07/04 - COMMERCE - RES. 040827 The commercial example. As bad as the Parkside experience was for me, the commercial example is more outrageous and abusive. Having learned my lesson about the City control of community organizations, I took a slightly different route in developing the historic 125-year-old Ridge Avenue farmers market building, then located in a depressed, drug-infected Francisville section of North Philadelphia. Off the bat, I hired men 12 right off the corner to clean out the building and recycle the contents. Interestingly enough, they rose to the occasion and they did their job admirably. It's a 45,000 square feet space, and they were able to clean that building out in 30 days. I also kept a local community group informed so they could participate in job placement component of mine, strictly private development. I secured a mortgage commitment from a private bank and from the Philadelphia Industrial Development Corporation and was awarded a self-generated seed money grant from the Pennsylvania Depart of Agriculture. I also secured direct 127 11/07/04 - COMMERCE - RES. 040827 involvement from over 150 farmers, including black farmers from the south, all of whom were prepared to hire local workers from the Francisville community. I also had the beautifully 125-year-old market building historically certified and entered into the National Register of Historic Places. And I laid out a long-term development plan to improve the housing stock surrounding the market for the benefit of perspective employees. Despite this outpouring of money, sweat, equity and heart, my City government found a way to undermine the development. I first received a demand that the project be turned over to Rouse (ph) or some other -- in their words -- well-healed white developer. Failing that, the City Councilman at the time to whom I had taken the project for his support pulled a City-owned parking lot from me which had been contracted to me as part of my development package and passed the lot on to a politically connected white, but not well-healed, former City Housing worker as a 128 11/07/04 - COMMERCE - RES. 040827 policy matter the same City Councilman denounced the importance of my commercial food market and job creating development in the economically depressed North Philadelphia community if favor of the residential housing, upscale gentrification, and expansion from the neighboring Spring Garden community. When I continued to move forward with my development without the parking lot, the City committed the final blow by beginning the physical leveling of the historic certified building over the weekend without any notice to me, and in so doing created a dangerous enough structure to warrant leveling the entire structure. They then went and invoiced me for the privilege.
In conclusion, my perspective and experience, and it's not the lack of experience or resources or even the absence of good set-aside programs that keep African-American entrepreneurs out of the mainstream and that keeps black communities at the mercy of government, it's willful, political corruption, racial economics, local 129 11/07/04 - COMMERCE - RES. 040827 government constantly asserts itself negatively to African-American entrepreneurs who have a job-creating or community restoration agenda. Instead, the City favors political brokers who simply take a few dollars off the top from connected white business in exchange for a black face. This setup creates no knew jobs or economic experience for the African-American businessman or the black community. If this one aspect of corruption alone could be addressed, the African-American business community and residential community could accomplish more in the way of self-help and actually play a vital role in the City's economic life. However, because of the historical damage already done by the City's long-standing policies and conduct, we need to take this a step further. We need to make the City go to the same place where it constantly finds millions of dollars in subsidies for well-healed developers and grab a few million to bring economic stability to depressed urban communities and African-American businesses. 130 11/07/04 - COMMERCE - RES. 040827 I want to thank you for giving me the opportunity. I am still an active developer. I still have some active projects ongoing and certainly would like to ask that my City government not prevent me from doing business in the City. There's a lockout for me doing business in the City, the major cities and the like. And I want to thank you very much. I would want to say Ms. Reynolds Brown that I would like to talk to her about my TraneStop Resource Institute and the work we're doing. We're doing some real positive things with the jazz renaissance and we have a program to create employment for artist, of course, and certainly to get the community involved again in its own cultural development.
Thank you for your testimony, Mr. Wood. It was highly appropriate as we consider a half a billion dollar investment fund.
Is Rashad Shabazz 131 11/07/04 - COMMERCE - RES. 040827 here? Please approach the witness table. Please state your name for the record.
My name is Rashad Fahem Shabazz. I'd like to say good afternoon to everyone who is present. It seems as though most have left. So I guess this is an unimportant part of the meeting. I'm not trying to be smart or anything, but I have to try to be as real as possible. I appreciate you have these hearings. I personally didn't hear about the summit. I guess my form of information is not up to date. WHHT Radio, that's generally what I listen to. I missed it. I would have liked to have attended. This is a seriously vital aspect. I'd just like to say before I read what I wrote here, I think this is a good opportunity if you are providing for the public to be more involved and learn more and understand more about the economic development which is really our life. We are born, we live, and we have to eat to live. So economics is next. And it's very important. 132 11/07/04 - COMMERCE - RES. 040827 This hearing so far and the people who were ahead of me, they laid out a lot of technical information with many acronyms and figures that most the public can't figure out and they're not kept abreast of this language. The major problem that human beings have in this society is the language, which leads to an understanding, knowledge and understanding. If you can't understand the language, then it's impossible for you to know and you'll never understand. And so we need a change of language to begin with, and then that will give us a better, broader knowledge of each other and then we could formulate, we could change systems and procedures that it would include everyone in the society on the same level and basis. Since we are all human beings, we should all be able to function and live through the society equally, freely and justly. And that is not what we have been experiencing here in this country and throughout the world. Freedom, justice, and equality is life itself. So without it, there are those who are dead and there are those who 133 11/07/04 - COMMERCE - RES. 040827 have it who are living somewhat because they're not living totally because they're living off of the dead who don't have freedom, justice, and equality. So I would just like to read this basically. My back ground basically is I was born in Williams Osteopathic Hospital between 20th and 21st Susquehanna Avenue, Philadelphia on June 15, '42. Lived all my early life in North Philadelphia, Arlington Street, 1700, then Columbia Avenue, then 2400 North Revere. I attended George Washington Carver School, Thomas Peirce and Simon Gratz School. I graduated in 1960. S. Army in 1960 and I left in '63. Post-graduation education was electronic technology course and waste and fresh water treatment plant operator. Economic history. The first product of economic development for Europeans was the sale of captive slaves from Africa. That's the first business that was developed here in this land by European immigrants. The knowledge and labor of the captured slaves was 134 11/07/04 - COMMERCE - RES. 040827 used not to build economy for themselves but for European economy. Now the time has come to captive slave descendants must establish their on economic life under their control and for their benefit and future. Steps possible to achieve this. In all districts where African-Americans live, stop City planning activities. Turn all planning over to community group planners. Stop all outside business investment in these areas unless 50 percent or more ownership is documented in the hands of African-American residents of the district. Some steps needed to achieve the economic development of African-Americans. City planning retraining means that City planning is currently done outside of the knowledge and the participation of the residents and neighbors of the districts that are populated by the working poor and the poor, the destitute poor. They have no input and no knowledge of any City planning procedures and decisions and so forth and so on.
That, of course, is the foundation of all 135 11/07/04 - COMMERCE - RES. 040827 these groups that talked here before, foundation of their inroads into these areas and control over the economics of these areas. Exempt from taxation. The taxing structure is, of course, imbalanced. You can't expect the working poor and the destitute poor to pay any taxes comparable to those who have had an undue advantage every since the beginning of this land in the compilation of capital, accumulation of capital and amassing of capital freely, er without hindrance, and without regulation, fairness, justice across the board. There's no way that these people can pay taxes on the same par and, of course, suffer the despicable inhumanity of the people amassed in capital being free from paying taxes for years upon years and totally getting out of paying taxes altogether. Finance all businesses from City money the same percentage. These and other efforts will level the economic playing field by opening up these area so more people can begin to work businesses which will increase 136 11/07/04 - COMMERCE - RES. 040827 business for the other groups in the other districts. If the depressed and impoverished areas of the City which house mostly African-American people and other ethnic groups also, if they were enabled to open up businesses in their areas and control the business activity in their areas for the benefits of themselves, their children, their grandchildren and their future, then that would increase across the inner-business relations among the people because that would be supply and demand. It would go back and forth. You'd have inner-production, you'd have all kind of other economic interchange that would enhance the City itself and could possibly bring the City up to a higher level of economic development. But this one-sidedness of those who hold capital, who are amassing capital, who have had the advantage to do this and their continued manipulation of the rules and regulations of the system to operate business in this City and country, that is only going to a dead end. That is going to destroy the whole fabric of 137 11/07/04 - COMMERCE - RES. 040827 the economic life of this country, which it's doing right now. And you're going to have the capital concentrated in fewer, fewer hands and the mass of the people holding nothing which is going to bring a collapse eventually. So I thank you very much. And Councilman Clarke, he did make a suggestion about having these hearings in the neighborhood. I hope he follows through with that. I would like to be abreast of that. I would like to get your phone number. I don't have it so I'd like to get your phone number, Councilman.
Absolutely. Thank you for you testimony. I did a few things from it, but specifically what may be helpful is a glossary of economic development terms so that we can communicate and have a shared language about it. Thank you. We also have written testimony from Andrew Toy, Local Initiative Support 138 11/07/04 - COMMERCE - RES. 040827 Corporation, which I will give to the stenographer. That concludes our witness list. Is there anyone else here to testify? (No response.)
Thank you all for coming. This hearing is recessed to the call of the Chair. (Council adjourned at 12:55 p.m.) - - - - 139 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday November 17, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT _________________________ Lisa C. Bradley, RPR