COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, February 15, 2006 10:30 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO BILL 060001 - An ordinance to adopt a Capital Program for the six Fiscal Years 2007-2012 inclusive. BILL 060002 - An ordinance to adopt a Fiscal 2007 Capital Budget. - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. I regret the delay. This is the Committee of the Whole public hearings, and I would ask Mr. McPherson to please read Bill Nos. 060001 and 060002. MR. McPHERSON: Bill No. 9 060001, an ordinance to adopt the Capital Program for the six Fiscal Years 2007-2012 inclusive. Bill No. 060002, an ordinance 13 to adopt a Fiscal 2007 Capital Budget.
Thank you. Mr. Chapman, I believe you're our first witness. Good morning.
Welcome. Please identify yourself for the record and proceed with your testimony.
Thank you. Good morning, Council President Verna and 3 2/15/06 - WHOLE - BILLS 060001 AND 060002 members of City Council. I am Thomas Chapman, Acting Executive Director of the City Planning Commission and Secretary for Strategic Planning. I am pleased to be here this morning to present for your review and consideration the 2007 to 2012 Capital Program and 2007 Capital Budget, as recommended by the City Planning Commission at its meeting of January 24, 2006. One of the Home Rule Charter-mandated responsibilities of the City Planning Commission is to prepare and submit to the Mayor a Recommended Capital Program and Budget. As you know, this Recommended Capital Program and Budget is the Administration's proposed six-year plan for investing in the City's public buildings, community facilities and physical infrastructure. This plan continues to support municipal government priorities: Modernizing our physical infrastructure; making improvements to the City's 4 2/15/06 - WHOLE - BILLS 060001 AND 060002 neighborhoods and improving the quality of life of its citizens; growing the City's economy; increasing the efficiency of governmental operations; improving conditions related to public health and safety; and supporting the preservation and renovation of our civic assets like City Hall, the Philadelphia Museum of Art, Penn's Landing and our cultural monuments. This year, the City Planning Commission, having worked closely with the Managing Director's Office, the Capital Program Office, the Budget Office and the City departments, again recommends an austere but comprehensive Capital Program. This Recommended Program and Budget allocates our severely constrained Capital funding in a way that makes the most effective use of these resources in preserving the City's ability to deliver essential public services. It also leverages federal, state and private resources wherever 5 2/15/06 - WHOLE - BILLS 060001 AND 060002 possible. The recommended level of spending is minimally sufficient to maintain our municipal facilities. Our General Obligation borrowing limit, set by the Constitution of the Commonwealth of Pennsylvania, combined with the City's capacity to service the debt on such borrowings, will continue to impact our ability to fully fund needed facility and infrastructure improvements over the life of this Capital Program. As a result, we are again recommending funding for only the most critical renovations at City facilities. 5 billion over a six-year period for projects that renew the City's extensive infrastructure and public facilities. Implementing these projects over the next several years will continue our efforts to keep Philadelphia a great American city. The rest of my testimony will 6 2/15/06 - WHOLE - BILLS 060001 AND 060002 focus on 2007, the budget year of the Capital Program, since it is budget-year funding that becomes actual appropriations. The projects and priorities for the subsequent five years of the Capital Program represents planned spending based on our best estimates of future needs, given our Capital funding constraints. 6 million. New General Obligation Bonds issued by the City of Philadelphia will provide 52 million, or 10 percent, of this total. These borrowed funds are repaid from the City's general tax revenues. 6 million, or 9 percent, will come from tax-supported loan funds that were authorized previously. 9 million, or 31 percent, of total 7 2/15/06 - WHOLE - BILLS 060001 AND 060002 funds. Funding from other levels of government, including federal, Commonwealth of Pennsylvania and regional resources, totals $232 million, or 45 percent. Finally, $26 million, or 5 percent, of 2007 funding will be provided by private sources. 9 million, or 54 percent, of the 2007 total for the City's transportation and utility systems. 8 million, or 22 percent. 6 million, or 2 percent. Now I would like to highlight some of the key Capital projects recommended in 2007 for each of these major use categories.
Neighborhood Infrastructure projects focus on improvements to the City's overall physical infrastructure. Examples of Neighborhood Infrastructure projects include street reconstruction or resurfacing, street lighting, signage and traffic control improvements, the reconstruction of water and sewer mains and improvements to transit facilities. 9 million is recommended for Neighborhood Infrastructure projects in 2007. 7 million is recommended for neighborhood street reconstruction and resurfacing, the 9 2/15/06 - WHOLE - BILLS 060001 AND 060002 reconstruction of the South Street Bridge, design services for the rehabilitation of the bridge carrying Woodland Avenue over the SEPTA tracks at 49th Street, traffic control and street lighting improvements, traffic calming measures, and school and pedestrian crossing signs. 2 million of state and federal funds. The Water Department will continue to make strategic improvements in the expansion and reconstruction of water and sewer lines serving the City's neighborhoods, with $54 million of self-sustaining funds recommended for these projects. 5 million in federal, state and other government funding is recommended for transit improvements, including continued West Market Street Elevated reconstruction, ADA accessibility compliance, completion 10 2/15/06 - WHOLE - BILLS 060001 AND 060002 of the new Frankford Transportation Center and various station improvements at Wayne Junction, Allen Lane, Olney and Pattison. The next category, Economic Development, is comprised of projects that support the growth and development of the City's economy. These projects serve to retain and attract businesses, provide jobs for residents, and support neighborhood-based job creation employment centers, such as at neighborhood industrial districts. Projects at the City's airports, as well as those that support commercial, industrial, port-related and hospitality industry development, fall into this category. 8 million is recommended for Economic Development projects. An ambitious improvement program will continue at Philadelphia International Airport to ensure that this facility meets world-class standards. 2 million of federal and private funds, are recommended for airport improvements in 2007. Funds will be used for airport expansion, increasing airfield capacity, improving runways, and modernizing and expanding terminal buildings. An additional $275,000 of self-sustaining funding, matched by $975,000 in state and federal funds, is recommended for airfield lighting and perimeter sidewalks and landscaping improvements at Northeast Philadelphia Airport. Continued funding to support development in the City's industrial parks is also recommended in 2007. In City-managed PIDC industrial parks, existing resolving funds are recommended for an additional land acquisition and associated improvements. 5 million of City, state and federal funding is recommended for infrastructure improvements and the 12 2/15/06 - WHOLE - BILLS 060001 AND 060002 phased development of the City's Sound Stage Facility. The third category, Government Efficiency projects, promotes government operating efficiencies and provides for more effective service delivery. Projects in this category include communication system improvements, database and computer-related initiatives, and energy conservation programs. The Government Efficiency category also includes facility assessment studies, most improvements to municipal government office buildings, and the modernization of service buildings used by the City's operating departments. A total of $53 million is recommended for Government Efficiency projects in 2007. Recommended projects in this category include $4 million for improvements to computer and communication systems used by the Police and Fire Departments. For the Managing 13 2/15/06 - WHOLE - BILLS 060001 AND 060002 Director's Office, $2 million is recommended for critical renovations and improvements at City-owned sites.
Budget year funding of $1 million is recommended for the Mayor's Office of Information Services to continue the development of an integrated database to coordinate the efforts of several City departments in providing social services to families and children. The Municipal Energy Office continues its efforts to increase the City's energy efficiency. In 2007, $500,000 is recommended for lighting and mechanical systems upgrades at facilities throughout the City. 2 million is recommended. For the Department of Public Property, $13 million is recommended for continued investment in 14 2/15/06 - WHOLE - BILLS 060001 AND 060002 the City's 800 megahertz communications system and the wireless 911 system. Nearly $24 million in self-sustaining revenue bond funds is recommended for the Water Department for engineering, administration and vehicle acquisition. The fourth category, Health and Safety projects, promotes overall improvements in public health, safety and welfare. Examples include improvements at the City's water and waste treatment plants, asbestos abatement, fire alarm and fire suppression systems in public buildings, environmental remediation, improvements at City shelters and security improvements at our prison facilities. ADA accessibility modifications are also considered Health and Safety projects. 2 million is recommended for Health and Safety projects in 2007. Projects in this category include $425,000 in new tax-supported 15 2/15/06 - WHOLE - BILLS 060001 AND 060002 funds for mechanical and interior renovations at the Stenton Shelter, a family-care facility. For the City's prison system, $500,000 is recommended for security and utility systems improvements. And for Fleet Management, $800,000 in City and state funds is recommended for fuel tank replacement and associated environmental remediation. The 2007 budget recommends $42 million in self-sustaining funds for improvements to water and wastewater treatment facilities. 9 million in City Operating funds is recommended for the Health Department. The fifth category, Civic Assets projects, contribute to the livability of the City as a whole, as well as to the City's reputation as a destination for tourists and visitors. Examples of projects in this category 16 2/15/06 - WHOLE - BILLS 060001 AND 060002 include most Art Museum, Penn's Landing, Fairmount Park and Zoo projects. The continued rehabilitation of City Hall also falls into this category. A total of $15 million is recommended for Civic Assets projects in 2007. Funding totalling $4 million for City Hall in 2007 is recommended to allow continued roof repairs and exterior restoration, as well as improvements to interior systems. An additional $16 million is programmed for this project through its completion in 2011. At the Philadelphia Museum of Art, $585,000 is recommended for plumbing, heating and fire alarm improvements. 7 million of City funding is recommended for improvements to historic structures, utilities, drainage, landscaping, roadways and footways, and athletic and play areas. 8 million is recommended for 17 2/15/06 - WHOLE - BILLS 060001 AND 060002 waterfront area improvements at Penn's Landing and for the Schuylkill Banks riverfront. State matching funds totalling $500,000 are recommended for the Tidal Schuylkill projects as well. Improvements to Suburban Station and its connecting concourses will be completed, including ADA accessibility compliance. More than $5 million is recommended for this project, of which $117,000 is City funding. And, finally, the sixth category, Community Facilities projects, includes the renewal of facilities serving residential communities such as branch libraries, neighborhood parks and recreation facilities, police and fire stations, neighborhood health centers and other projects that serve neighborhoods, promote their improvement and are consistent with the City's neighborhood revitalization objectives. 6 million is recommended for Community Facility projects in 2007.
1 million in City funds is recommended for the renovation of playgrounds, basketball and tennis courts, lighting and needed repairs to recreation facility buildings. 7 million Pennsylvania Department of Conservation and Natural Resources grant will support these efforts as well. The Fairmount Park Commission is recommended to receive $300,000 for new park and street trees and to remove dead and dangerous trees throughout the City. The Free Library continues its program of mechanical systems upgrades at branch libraries. In 2007, City funding totalling $750,000 is recommended for boiler and HVAC systems, as well as exterior and interior renovations at several branches. The Health Department will continue to upgrade its neighborhood health facilities with recommended funding of $250,000 for 2007. HVAC and 19 2/15/06 - WHOLE - BILLS 060001 AND 060002 other building improvements will be made at public health centers and other facilities. The Fire Department will continue major investments to improve working conditions for its personnel and to ensure the continued operational effectiveness of its stations. 1 million recommended for roof replacements, ventilation systems and interior renovations. Also recommended is $360,000 in 2007 for HVAC and mechanical improvements, roof replacement and other interior and exterior improvements at neighborhood police stations. In closing, let me again say that the City Planning Commission has worked closely and collaboratively with the Managing Director's Office, the Capital Program Office, the Budget Office and the City departments to solve a 20 2/15/06 - WHOLE - BILLS 060001 AND 060002 difficult challenge, effectively allocating limited Capital funds to ensure the City's ability to deliver needed public services. The Recommended Capital Program and Budget makes strategic investments in Philadelphia's infrastructure, investment that is critical to our City's economy and quality of life and that leverages resources to the greatest extent possible. Our role as stewards of Philadelphia's public facilities and natural and built environments demands that we continue to invest in their improvement and that we continue to seek the resources that will enable us to do so. Thank you, President Verna and members of Council for your attention this morning. I'm now happy to address any questions that you might have.
Again, I'd like to set the rules for the public hearing. Councilmembers on the first go-around will each be given five minutes, and I would like to start with the first five minutes. Mr. Chapman, you state that our General Obligation borrowing limit set by the Constitution of the Commonwealth of Pennsylvania, combined with the City's capacity to service the debt on such borrowing, will continue to impact our ability to fully fund needed facility and infrastructure improvements over the life of this Capital Program. As a result, we are again recommending funding for only the most critical renovations at City facilities. I ask, in your opinion, putting our debt issue and our ability to pay aside, what should be the size of the Capital Budget and Program?
I'll answer that. I'm Gary Jastrzab, the Director of 22 2/15/06 - WHOLE - BILLS 060001 AND 060002 Strategic Planning and Policy at the City Planning Commission. In 2000, we did an analysis based on life-cycle replacements of City infrastructure and facilities and roughly estimated that the City should be spending approximately $185 million per year to maintain and improve our existing infrastructure.
Well, how did you determine the size of the proposed 2007 Capital Budget of $52 million?
That amount was based on -- well, actually, over the six-year period, the Budget and Program combined, the fiscal guidance that we received from the Finance Director and Budget Office was $300 million for that six-year period. So we were actually looking at a target of about $50 million of new City General Obligation debt per year for these projects.
How 23 2/15/06 - WHOLE - BILLS 060001 AND 060002 did Finance arrive at the 300 million? Is somebody from Finance here? Would you like them to come up to respond?
Is someone here from Finance? Please identify yourself for the record.
I'm Dianne Reed, Budget Director, and I have with me the Capital Budget Deputy, Tina Ginnetti.
I'm sorry. You're going to have to identify yourself for the record.
I'm sorry. Tina Ginnetti, Deputy Budget Director for Capital. The debt limit is set by two things. One is the constitutional debt limit, which is 13.5 percent of the ten-year moving average of real estate 24 2/15/06 - WHOLE - BILLS 060001 AND 060002 tax assessments, minus outstanding debt. But another factor that constrains our ability to borrow is the debt as a percentage of revenue. And at this point, it's the debt as a percentage of revenue that is establishing the budget limits.
I don't think we got a response as to how the 300 million was arrived.
Well, it's a combination of those factors. The constitutional debt limit restricts the amount that we can borrow, and also our ability to service the debt restricts the amount that we can borrow. So it's a combination of those two factors.
Those are constraining factors. However, there is more detail that we could provide. There is a calculation that is made in order to 25 2/15/06 - WHOLE - BILLS 060001 AND 060002 appropriately scale each year's spending limit based on necessary year-end balance that has to be certified by the controller.
Can we have something in writing before the end of the day, please?
Thank you very much. Mr. Chapman, does the City Planning Commission have a copy of the recreation facility assessment study?
I believe we have a copy of that study that was conducted by the Capital Program Office. The Capital Program Office could probably provide much more detail about that particular study.
Well, my time is up, but whoever is familiar with that study, I would like them to give us a summary of its findings. Not right now, Mr. Tustin. I 2/15/06 - WHOLE - BILLS 060001 AND 060002 will obey the rules that I set forth, and I expect everybody else to do the same. Councilman Kenney.
Thank you, Madam President. Mr. Jastrzab, you had indicated that actually the Capital Budget should be $185 million.
But that's a relatively conservative, thoughtful estimate of 185 million.
What does, in your opinion, the fact that we're only being asked for $52 million do on a rolling basis to our ability to maintain our existing facilities in an appropriate manner?
It makes it difficult. We're not spending the amount of money for a city of this size with the number of facilities that we have to 27 2/15/06 - WHOLE - BILLS 060001 AND 060002 allow us to both maintain and improve existing facilities.
I assume that that also means somewhere down the road it becomes more expensive also, because the deferred maintenance on various facilities create more serious problems going forward, which require more expensive repairs and/or replacement. Is that a fair --
And I need the Finance Department one more time, someone from the Finance Department or Budget. And maybe if Planning understands or Capital Office understands the answer to this question or knows the answer, they can jump in. Of the additional non-City facility Capital dollars we're being asked to appropriate or give authorization to appropriate, what impact does that have on the continuing 28 2/15/06 - WHOLE - BILLS 060001 AND 060002 constraint on our ability to take care of existing facilities? For example, the other river cities, other types of borrowings, what does that do, and if it didn't exist, what would we be able to provide for our existing facilities?
Dianne Reed, Budget Director. Those other borrowings are outside the context of the General Fund and they are not -- they don't affect the constitutional limit-related spending cap that we have for the Capital Program.
The only thing that it does affect is the debt-to-revenue ratio, which is kind of a market effect, which has to do with how much it will cost us to borrow money or how rating agencies might rate the City's fiscal health overall.
Well, the River City money is the Water Fund, but 29 2/15/06 - WHOLE - BILLS 060001 AND 060002 the $150 million in cultural and corridor dollars would be in that category, correct?
Well, it's proposed that the borrowing would go through an external agency. There would be an increase in the City's debt service, but that's kind of just an operating effect at this point. It doesn't really affect the Capital Program. We could not increase the size of the Capital Program based on that because of the other constraints on the Capital Program.
Isn't the debt service on those other non-City facility Capital appropriations, doesn't that affect our ability to pay our debt service? Doesn't the debt service --
It's a bottom-line General Fund kind of an issue, but it is not a Capital Budget issue. 30 2/15/06 - WHOLE - BILLS 060001 AND 060002
But if you don't have enough money to pay the interest, then you can't borrow as much as you need. Is that a simplistic way of saying something that's accurate?
If we did not do the borrowing, we would not have more money available for the Capital Program as the constraints have been configured.
How does the Capital Budget get done? Do you guys do your analysis and assessment and then come up with a number that you think is a reasonable number, then go to the budget and finance people and they say, Well, this is what you have available and scale it back, or do they come to you first and say, This is what we have available, fit it in to what the number is?
It's the latter. I mean, we're basically given a target based on the calculations done by the Finance Director and Budget Office and asked to work within those constraints. 31 2/15/06 - WHOLE - BILLS 060001 AND 060002
But does not that mean you're working within the reality of the need? Because, as we said, $52 million is a lot short of 185, and if we're deferring maintenance long term, it's going to cost the taxpayer more money in the end.
That's one reason why we, in this Recommended Capital Budget and Program, we're recommending the most critical renovations to City facilities.
So, Ms. Reed, what are the factors that determine the number that you go to the Planning Commission with that say, Here's what you have to work with, fit it in?
I would say the biggest factor really is the size of the assessments. If the City goes to full valuation, for the end of the ten-year period, every year we would add -- we would begin to reflect that expected growth, and that would be a good thing 32 2/15/06 - WHOLE - BILLS 060001 AND 060002 for describing how much money we ought to be able to spend, but in the end, it's going to be restrained by that debt-to-revenue ratio.
But it's impacted by the current debt that we're paying off now, stuff that we borrowed on in the past?
So past borrowings have impacted where we are today in our constraint?
Thank you. The Chair recognizes Councilman Clarke.
Over the 33 2/15/06 - WHOLE - BILLS 060001 AND 060002 last couple of years, we've been talking about a process that creates a team of City employees that can essentially do Capital improvement work to some degree, and the Administration indicated a willingness to look at that. I haven't gotten any official response. I don't know if you're actively working on that. As it relates to this process of Capital improvements and borrowing, if such a team were set up, there were City employees, they would essentially take the place of contractors as it relates to performance of the work. In terms of the purchase of materials, could that be done without utilizing a traditional Capital improvement process whereas we had to bid through the normal Capital improvement process or could we just simply do it through procurement and purchase materials through a procurement process separate and aside from the normal Capital improvement process?
34 2/15/06 - WHOLE - BILLS 060001 AND 060002 Mr. Tustin, please identify yourself for the record.
Good morning, Council President, members of City Council. My name is Rick Tustin. I'm the Director of the Capital Program Office. Councilman Nutter, the Administration has been looking -- I'm sorry. I apologize. I apologize. Councilman Clarke.
We're on the same side of the room, so that's understandable. It's okay.
No. I know you all pretty well. It's just a slip of the tongue.
You might want to take a break just to let some of the redness draw out of his face.
Thank you. Council President Verna, does this go against his five-minute time? Let me try to answer your 35 2/15/06 - WHOLE - BILLS 060001 AND 060002 question. The Administration has been looking at that, putting together a Capital recreation construction team. They've had conversations with the Controller's Office, who has to certify projects as being Capital eligible. And in concept, they're very much in tune with that concept of going forward with that. To answer your specific question concerning the purchase of materials, at this point in time, the proposal would be that we sit down with the Recreation Commissioner and develop a series of requirements contracts for purchase of material for the types of material that recreation crew would need, put those into effect so that at a time a project would come up, you'd only have to write a purchase order against an existing requirements contract to purchase that material. And that could be a very quick process. So, for instance, if they needed cement or 36 2/15/06 - WHOLE - BILLS 060001 AND 060002 drywall or metal studs or whatever on a regular basis, individual requirements contracts could be set up for those purchases or groups of those purchases and be in effect so that they could just simply go place an order, get an invoice for that order, write a purchase order against that contract, and the material could be delivered.
All right. And if we were able to set up such a process using City employees, using this particular purchase order type of strategy, none of that would go towards our debt limit; am I correct?
Well, the money would still come out of the Capital Budget, so all of the purchase of material would be Capital eligible because it's to do a specific Capital project, just like a contractor would buy material and that would be paid for out of the Capital funds.
Why would 37 2/15/06 - WHOLE - BILLS 060001 AND 060002 it have to be paid for out of the Capital Fund?
Why couldn't it be paid for out of the traditional General Fund dollars?
Normally -- it could be paid for out of Operating funds. A Capital project can be funded from either Capital or Operating dollars.
An Operating project like a maintenance job doesn't have the reverse. In other words, that cannot be paid for out of Capital funds. But the simple answer to your question is, it could be paid for out of Operating or Capital funds.
I asked this question because we have a constitutional issue with respect to our debt capacity. So we obviously have to think outside of the box, because we can no longer continue to deal with a $52 38 2/15/06 - WHOLE - BILLS 060001 AND 060002 million Capital improvement program, particularly the elected officials in this room who have to stand for reelection. That's simply not going to get it out in the community. If there is a way that we can, given the potential of having the surplus in the next couple of years, if there's a way that we can do Capital projects and not impact our debt capacity, utilizing Operating funds for purchase of materials, utilizing City employees for actual doing the contracting work, don't you think that's something that we need to look at in a serious way?
Because we've been talking about this for a couple of years, and you've indicated that you're looking at formulating a 39 2/15/06 - WHOLE - BILLS 060001 AND 060002 team.
I think we should look at purchasing the materials out of General Fund dollars so we don't deal with the constitutional debt limit issue, but we're still able to get Capital improvements in our municipal facilities.
How long do you think it would take you or the Administration to come back with a mock-up of a strategy that would be able to do that?
I would have to confer with the Budget Office. Those kind of decisions, either Budget or Finance would make those decisions as to whether we would use Operating dollars to pay for work that is basically Capital in nature. That won't be our decision. So I can get back to you as 40 2/15/06 - WHOLE - BILLS 060001 AND 060002 soon as I confer with them and see if they have an answer to your question.
Okay. Thank you. Can you forward that through the Chair?
And we would hopefully have that information within a couple days, because we would like to see this go into effect --
-- on July 1, or tomorrow really would be fine with me.
Thank you. The Chair recognizes Councilwoman Tasco.
Thank you very much. Let's go back to the limits on our ability to borrow. If we wanted to 41 2/15/06 - WHOLE - BILLS 060001 AND 060002 get creative and support our facilities that really need refurbishing with Capital dollars, could we not use the proposed borrowing that we're going to do for the Art Museum, which is part of the City anyway, some of the other facilities, to borrow that money to help with the City facilities? If we're going to stretch our dollars, are we going to limit our ability to repair rec centers and police stations and fire stations? We don't have enough money for that, but we're going to borrow $150,000 over here --
150 million. I'm sorry. Would it be possible to use that outside borrowing to help us with our City facilities?
That was the concept for the outside borrowing, to help us to catch up with facilities where there had been deferred maintenance or where there are badly needed repairs. 42 2/15/06 - WHOLE - BILLS 060001 AND 060002
So you're saying a part of the $150 million that we're going to borrow through an outside entity, some of that money is going to be used for City facilities like the rec centers?
The Art Museum is one example of that, yes. I think also the Zoo. Some infrastructure improvements at the Zoo had been proposed for some of that money as well.
The rec centers, I don't know that the list has been finalized for the separate borrowing, but there is funding in the existing Capital -- or the Recommended Capital for rec centers.
I'm not talking about Recommended Capital. I'm talking about the $150 million that we're going to be asked to vote on to borrow 43 2/15/06 - WHOLE - BILLS 060001 AND 060002 $150 million through an outside entity for the Art Museum, the Zoo and maybe some other facilities. Could we not borrow also on the outside to support the City facilities that are stretched because we don't have the money through the regular borrowing to maintain? If we have a limit of $50 million each year, or whatever, because we have a constitutional limit on how much we can borrow and all of that, why have we not used this process of borrowing additional money through another entity so that we could take care of our City facilities? Not the Art Museum, not the Zoo, but the recreation facilities, the libraries, the fire stations, the police stations and whatever else we need.
Councilwoman, this is Dianne Reed, Budget Director. It has been the decision of the Administration to recommend that rehabilitation of existing City 44 2/15/06 - WHOLE - BILLS 060001 AND 060002 properties be addressed through the Capital Budget. The proposed 150 million borrowing is really an economic stimulus concept to help stimulate neighborhood business corridors and also to help the major and all contributing arts and culture institutions throughout the City, which have been suffering because they cannot get funding through corporations or through foundations for bricks and mortar kinds of projects. The Zoo has had problems with the sewage system failing and materials running down the walkways, and the Art Museum has to bring in the major art works for the shows through the same bay that the garbage goes in and out of, and we don't have space in our Capital Budget for those kinds of projects. So in order, especially in the case of the Art Museum, for them to get the accreditation that they need to bring the big shows in that have produced the kinds of room 25 nights that we have at the hotels and the 45 2/15/06 - WHOLE - BILLS 060001 AND 060002 rest of the business and tourist attraction benefits that have resulted, a stimulus borrowing has been proposed to keep the momentum that has been going continuing and give us a leap forward.
My understanding is that this money is going to be used to fund projects where there is little or no 10 likelihood of foundation support to leverage funding, like Ms. Reed mentioned, sewers at the Zoo or the loading dock at the Art Museum. You can't get people excited about supporting those kind of projects, because it's not the kind of a project where you can say that this loading dock was supported by the such-and-such foundation or sponsored by the such-and-such foundation.
Thank you, Madam Chair. 46 2/15/06 - WHOLE - BILLS 060001 AND 060002 So, Mr. Chapman, you're saying you don't think you can get like Waste Management or somebody excited about a new loading dock at the Art Museum? I mean, it's kind of like that's the business they're in. I love the world of irony. I seem to recall that the past two budgets there were proposals in the budget to cut funding to the Philadelphia Museum of Art. Do you have any recollection of that on the operating side?
Personally, Councilman, no, but maybe Ms. Reed can answer that question.
Dianne Reed, Budget Director. The funding for the Art Museum was restored last year for this year's budget and it is constant at $2 million. There's also money in the arts and culture Class 200 funding of the Commerce 47 2/15/06 - WHOLE - BILLS 060001 AND 060002 Department and there is economic stimulus funding.
I understand that, Ms. Reed. I read the budget. I know what's in there now. That wasn't my question. My question was, didn't the Administration for the past two years pass two budgets consistently proposing cutting funding on the operating side for the Art Museum? Isn't that true?
We had a seriously constrained budget last year at the time that we proposed the Operating Budget for '06. I mean, we only had a million and a half dollar fund balance at that time and --
Well, if it was so constrained, how did you restore the funding? What happened?
What happened was 48 2/15/06 - WHOLE - BILLS 060001 AND 060002 that --
What happened was, we ended up with a much better outcome for '05 than expected. As we were describing yesterday --
You didn't know that until the fiscal year had already closed. You didn't find out how good a year you were having, and you only restored it because the Council fought you on it. You didn't find out how great a year you were having until September of last year; isn't that right?
No. We found out toward the end of the final budget process, but, yes, Council advocacy was critical to the restoration, absolutely.
So now we are in a situation where we have an outside borrowing of $150 million, all for good and worthy goals, but for the regular citizens in the City, we have a 49 2/15/06 - WHOLE - BILLS 060001 AND 060002 $52 million budget, which has been declining over the past couple years. Now, let me ask this question: With regard to the debt ceiling, what has been the impact of increased real estate values throughout the City over the past couple of years and any growth opportunities with regard to borrowing on the Capital Budget side?
Well, because that is a 13-and-a-half-year moving average of assessed value, it takes a long time for any improvement in any particular recent year to be reflected in what the overall capacity is. It's going to be like a marginal change. If we go to full valuation, we should have a huge leap, which will make that marginal change a little bit bigger, but all the lagging years have a huge impact.
Well, change has been going on for more than a year or so, correct?
Yes, in terms of the 50 2/15/06 - WHOLE - BILLS 060001 AND 060002 market. I don't know that that's been captured by the official market value assessment that the City abides by.
So let's go back to where Councilwoman Tasco is or was. $150 million in outside borrowing for good and worthy causes. $52 million for the rest of the citizens in the City. I mean, why don't we just incorporate a larger Capital Budget as a part of this larger borrowing? I mean, ultimately it's all the same money, right?
It has to do with the strategic goal that you pick for what will be included in the borrowing.
Well, why don't you tell us what the strategic goal is, where we have a declining Capital Budget and we're going to find ourselves right back where we were in the late '80s into the '90s with a tremendous amount of deferred maintenance on City-owned facilities. Isn't that where we're going, if we continue to spend less and 51 2/15/06 - WHOLE - BILLS 060001 AND 060002 less for the other facilities that we own? I'm not juxtaposing one against the other, but we have borrowed less and less for regular City facilities over the last few years, which is where we were in the '80s going into the '90s.
Which will make it more expensive for us to fix our own facilities later down the line.
With respect to any specific facilities and their condition, when actual projects are prioritized, the ones that have the most critical health and safety or service-related impact are put at the front of the list so that in fact, practically speaking, everything is not sort of deteriorating at the same rate. The Capital Program Office is a careful steward of those projects.
I understand that, but they can only "carefully steward" what they have 52 2/15/06 - WHOLE - BILLS 060001 AND 060002 available to them. If the testimony earlier was we have $185 million in need, we're only spending 52, you know that there are a lot of places possibly not on the verge of falling down but certainly in need of attention, and the more you neglect them, the more expensive it is over time.
Yes. We also do have carry-forward money available that hasn't been spent from the past which can be used.
It's over 200 million. It's about 208 million of carry-forward at this point.
It is associated with projects. They're all in the purpose category that's appropriated for Capital, and sometimes adjustments have to be made among them based on 53 2/15/06 - WHOLE - BILLS 060001 AND 060002 criticality of projects. Probably Mr. Tustin could speak more specifically --
I'd love to see a listing of the $200 million in carry-forward and what it's been designated for and why would it be unspent.
Are they obligated dollars that have not been spent?
Doesn't it make you nervous when everyone turns around?
The decision from the Capital Budget folks is that they are not obligated per se. They have been allocated to projects. They're unspent funds that are associated with projects, but are not obligated in an earmarked sense.
Ms. Reed, do we have the cash? 54 2/15/06 - WHOLE - BILLS 060001 AND 060002
Yes. We have borrowed this money. This money has been borrowed previously.
I think we're all getting very confused. I would assume that with that money that we have, we shouldn't have to borrow any more.
Well, we redefine the Capital Program every year and there 55 2/15/06 - WHOLE - BILLS 060001 AND 060002 are projects that are added and updated so that the amount of money that we have sitting there is not going to cover all the projects hypothetically that would need to be done. We need to continue to borrow in order to make sure there's enough money as the list moves forward to bring the new projects online.
Ms. Reed, could you or one of your colleagues provide us with a list of the -- I cannot repeat exactly what you said, authorized but unobligated or --
-- we have it, but we're not giving it to you? I mean, whatever the proper characterization is. If you could show us in totality the $200 million that you've identified, what it's attached to but not earmarked for. And I think we have just a couple outstanding -- at least one outstanding year of a disputed $7 million, as well as an unvoted on 56 2/15/06 - WHOLE - BILLS 060001 AND 060002 question for the '06 budget. So, I mean, there are a number of holes in this situation.
Councilman, if I could, this is Gary Jastrzab. Each year for the Capital, Council approves appropriations in the budget year. Those monies are usually presented to the voters as a loan authorization allowing the City to borrow new GO funds for those projects. The last time that authorization occurred was for fiscal year 2005. There was no loan authorization for last year's Capital Budget. And with the money that's -- with the amounts that have been appropriated by Council for individual projects, often times those funds are not spent all in the budget year and they are automatically carried forward as part of an amendment process, which you will be seeing later in this overall budget process when we carry forward unspent funds in other Capital projects. We will 57 2/15/06 - WHOLE - BILLS 060001 AND 060002 carry them forward or propose to carry them forward into fiscal year 2007, so that should an authorization be granted by Council and the voters, those projects can continue uninterrupted.
Councilman Nutter, I'm going to be accused of favoritism.
I gave up my time, so I'm going to ask you to give up yours, and we're going to have another go-around.
Thank you. I would like to get back, if I may, to the recreation facility assessment study. How much did that 58 2/15/06 - WHOLE - BILLS 060001 AND 060002 study cost us, Mr. Tustin?
Richard Tustin, Capital Program Office. The cost of the assessment study was approximately $260,000.
And what did we learn from that study, if you could be brief?
We evaluated all the A and the B recreation centers City-wide, roughly 110 in total. We looked at all the major components of each facility, both building, play area, ball fields, pools, et cetera. We evaluated them on a priority system, a rating of one through six, six being the highest priority, which would be items that should be done immediately. It could be considered life and safety issues. Five are critical items that should be done as soon as possible. Four would be items that should be done within the next year. Three, again, would be items that are fine right now that will 59 2/15/06 - WHOLE - BILLS 060001 AND 060002 last another three years or so, and then two and one, one being you're probably fine for the next ten years without doing anything to that particular item. We then assembled that information and put it into a matrix to determine how much money would be needed to take care of the item priority six level and five level, which were the two highest priority levels, and we had that in a format that has, I know, been shared with you, Council President. As you know, there are four volumes. Each volume is about four or five inches thick at least, maybe bigger. They also include color photographs of each facility as well. That is, in essence, what the facility assessment is.
So how was the study used to determine the amount of funds allocated to the Recreation Department in 2007 and throughout the Capital Program? 60 2/15/06 - WHOLE - BILLS 060001 AND 060002
Well, as you know, a majority of the money for the Recreation Department actually goes to the City Council individuals, the ten districts. That is a fixed number that I understand has been traditionally given per year. In addition to that, there is a certain amount of money that is put into life safety. Another category is for pools, I believe, and major infrastructure. There is not enough money in any of those City lines to complete all of those items in the highest priority levels, but with the hopes of working with Council and their ITEF funds, it's possible we can work on those projects and get those things completed.
Well, with 500,000 that each district has been told that they could spend, we're not going to get much done. Can anybody tell me what recent 61 2/15/06 - WHOLE - BILLS 060001 AND 060002 repairs have been made to the South Street Bridge? Is the Streets Commissioner here or somebody that would be able to talk about what we're doing? COMMISSIONER TOLSON: Good morning.
Good morning. COMMISSIONER TOLSON: Clarena Tolson, Commissioner of the Streets Department.
Commissioner, again I will ask. Can you tell me what recent repairs have been made to the South Street Bridge? COMMISSIONER TOLSON: Yes. Most recently, we have done a number of repairs to South Street Bridge, all considered fairly minor. However, we do have specific concerns about the bridge and its final construction. Most recently, our work included repairs to the seam. There is a steel plate over the seam of this bridge, 62 2/15/06 - WHOLE - BILLS 060001 AND 060002 which used to be a drawbridge. The metal plate shifted several weeks ago and it had to be put back in place. Because of the nature of the drawbridge, its construction, the amount of vibration on the bridge, the plate will, from time to time, shift. We at this point are inspecting the bridge fairly regularly. I would say that we had someone who was doing some overview, review of the bridge plate and other pertinences probably weekly just to make sure that everything is fine. After our recent snowstorm, the plate did shift with the plowing activity and things like that and we've again had to move and put it back into place.
Well, I know I have photographs and I guess they're more than probably a year old, and they do indicate the very dangerous conditions of the bridge. Can you tell me what the time line is for the replacement of the South 63 2/15/06 - WHOLE - BILLS 060001 AND 060002 Street Bridge? COMMISSIONER TOLSON: Yes. We expect to move to complete our design work through our contractor, Gannett Fleming, and move to construction by April of 2007.
What factors, if any, will impact that time line? COMMISSIONER TOLSON: There are a number of factors that impact our ability to begin. First, the bridge is a very complex one, actually being five sections, some of it over top of Penn property, over top of railroads, the expressway and the river. It provides access to, one, University of Pennsylvania property, and there's no 20 other access other than by the bridge. Impacting our ability to come to closure on this is first completing the design process and all the reviews and --
When 64 2/15/06 - WHOLE - BILLS 060001 AND 060002 is the design process to be completed? COMMISSIONER TOLSON: The design process should be completed by this fall.
What is the amount that has been agreed to for the replacement of the bridge? COMMISSIONER TOLSON: It's about $38 million.
Is there any way at all of expediting this? Because, as I said, I think you're going to have to be called upon very, very frequently to do repairs, because it's a very dangerous situation. COMMISSIONER TOLSON: Councilwoman, we share the concern. Our bridge engineers and our maintenance fellows are also concerned about making some replacements. Though the bridge is structurally sound, the metal structure is quite sound, there's concrete that was encasing some of that structure, and that is the portion that we have some problems 65 2/15/06 - WHOLE - BILLS 060001 AND 060002 with. So what we are doing now is knocking off some of that concrete so that it doesn't have the opportunity of falling. Additionally, we may be placing some netting under some portions of the bridge where there's a sufficient clearance for the traffic below. We are also encouraging the state to help us move through the process with the state and the feds for the review so that we can accelerate as much as possible. However, University of Pennsylvania does have to build a replacement bridge for Hollenback in the meanwhile. So there's kind of a schedule that's in place, and it's difficult to change all those schedules. Additionally, Amtrak has to remove the catenary wires that are over the line that is presently in place. So there are a number of complex factors.
So 66 2/15/06 - WHOLE - BILLS 060001 AND 060002 it's not as simple as one would think. COMMISSIONER TOLSON: And I wish that I could make it happen immediately. If it were the spirit of willpower, we'd have it done next month.
I'm sure. COMMISSIONER TOLSON: However, there's some challenges to us in our ability to make it happen that quickly.
Fine. Thank you very much. The Chair recognizes Councilman Kenney.
Thank you, Madam President. Commissioner Tolson, who owns the bridge? Does the City own it? COMMISSIONER TOLSON: That's a City bridge.
Has there ever been any research or investigation as to any naming rights value of the bridge? 67 2/15/06 - WHOLE - BILLS 060001 AND 060002 COMMISSIONER TOLSON: Not that I'm aware of.
It's not named after anyone, so it wouldn't be like removing a name? COMMISSIONER TOLSON: I don't know who Mr. South is, no. 9
No. I was just wondering whether or not it would make any sense to try to investigate some corporate naming right to maybe establish an ongoing maintenance fund with that money so that we could kind of have an endowment for the maintenance of the bridge. COMMISSIONER TOLSON: We can investigate that.
Thank you. Let me move to the Capital Budget Office for a moment. Mr. Tustin, is your personnel, the staff in your office, was it funded out of the 2006 budget, your personnel costs, or was it funded out of the Capital Budget? 68 2/15/06 - WHOLE - BILLS 060001 AND 060002
A portion of our personnel is funded out of Capital, not the total office.
It's paid for by the Capital Budget at least up until now?
And I know you're not the financial person for the City, but for the Budget Office or the Finance Department, does it make any sense to pay $6 million worth of salaries and pay for them over 30 years? If 69 2/15/06 - WHOLE - BILLS 060001 AND 060002 anybody can enlighten me, I'd be interested in knowing, especially considering our constitutional debt limit at $6 million that should be paid for out of Operating, my mind, and we're paying for it out of Capital, reducing our debt limit $6 million more -- or increasing it $6 million more and paying the cost of it over 30 years. It doesn't seem to make much fiscal sense.
I understand your question, Councilman. I don't have an answer directly to that question.