Committee Hearing, January 29, 1998

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEES ON LAW AND GOVERNMENT AND LICENSES AND INSPECTIONS - - - Room 400 City Hall Philadelphia, Pennsylvania Thursday, January 29, 1998 1:10 p.m. - - - CONTINUATION OF INVESTIGATION INTO SECTION 8 HOUSING - - - PRESENT: COUNCILMAN DAVID COHEN, Chairman COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILWOMAN ANNA CIBOTTA VERNA COUNCILMAN RICHARD T. MARIANO COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN HAPPY FERNANDEZ COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK DICICCO COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 I N D E X Fredrick S. Pernell, Interim Executive Director Philadelphia Housing Authority. . . . . . . 3 Manuella Costa, Director, Section 8 Program Philadelphia Housing Authority. . . . . . . 25 Karen Moon, Deputy Executive Director for Operations, Philadelphia Housing Authority. . . . . . . 27 John Kromer, Director Office of Housing and Community Development. . . . . . . . . . . 92 Ed Schwartz, Head of the Institute for the Study of Civic Values. . . . . . . 167 LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 3 Law and Government/Licenses and Inspections P R O C E E D I N G S

Law and Government, and Licenses and Inspections is now in session. There's more than a quorum present, though the quorum was established at the previous meetings. This is a continuation of hearings. This may be the last, or there may be one more, following which the Committee will be preparing a Committee report, following all of the hearings, outlining the Committee's recommendations. The first witness today is going to be Mr. Pernell, the Acting Director of the Public Housing. Mr. Pernell, we're delighted to see you here.

Thank you, Councilman.

And please identify yourself for the record.

Good afternoon. My name is Fredrick S. Pernell. I am currently serving as the interim Executive Director of the Philadelphia Housing Authority.

May I ask you, sir, to keep the microphone very, very close to you.

Is that better? LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 4 Law and Government/Licenses and Inspections

That's better.

I want to once again thank you for inviting me to testify here this afternoon. Our agency has anxiously awaited the opportunity to present information and share information about the Section 8 program, which is currently administered by PHA. To begin, I think it's important to note the context of the testimony that we have elected to provide today. As originally concepted, we were prepared to give you a statistical breakdown of the technical aspects of the Section 8 program. But in light of events and current hearings that have already occurred, I don't think that will be necessary. And I believe that in response to the reports that were circulated yesterday by the Mayor's Office, it is important that we respond directly and definitely to some of the concerns raised there. " Because the report contained several proposed actions and recommendations to improve PHA Section 8, I've elected to use it as the basis of my testimony rather than to use Council's time to cite, as originally intended, the regulatory technicalities of administering the program. As interim Executive Director of PHA, I have an obligation to attempt to respond to the recommendations and issues that are outlined in the report and to clarify PHA's position in reference to them. One suggestion offered in the report references an improvement in public access to information about the location of Section 8 units. This information is public information. The information is available, and upon request of the PHA through our Office of Public Affairs, is distributed to those who request it. It is updated quarterly, and it has been regularly available for Council and others to peruse. Next, the report references our agency's ability to determine and disclose the public availability of Section 8 certificates. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 6 Law and Government/Licenses and Inspections PHA's ability to provide this information has been adversely affected recently by HUD's continuing changes to regulations governing funding availability. S. Department of Housing & Urban Development representatives, and on occasion, in order to develop a mutually acceptable leasing schedule. To date, though, HUD has not endorsed any consistent methodology for determining the number of certificates that will be available. Through our monthly meetings, however, HUD advises PHA of their estimate of how many certificates and vouchers will be available in the coming month. In addition, it's important to note that PHA has not received any new tenant-based fair-share fundings since 1994. Since that time, the availability of Section 8 certificates is the result of turnover in the program. And since turnover is based upon participant behavior, our estimates to estimate any number of available certificates based on this activity has not been very reliable. To the extent that we do possess LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 7 Law and Government/Licenses and Inspections reliable information regarding certificate availability, we will continue to make that information available to the public. The report also recommends that the Section 8 telephone hot line be fully supported. Our agency has committed to incorporating the use of the Section 8 telephone hot line as a permanent part of our Section 8 operation once additional staff is hired for the Investigative Unit. We feel this a direct way to respond quickly to concerns that are raised in the community. It also makes reference to enhancing the administrative plan that was identified in the Mayor's improvement plan. PHA's administrative plan is to document the fully detailed remedial actions that the agency has taken when tenants commit program or lease violations, as well as procedures for denial of termination of rental assistance. The plan was completed in October. It awaits approval of the PHA Board prior to it being able to be implemented. There also are major concerns around implementing an effective termination policy.

PHA has adopted a termination policy that addresses LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 8 Law and Government/Licenses and Inspections serious lease violations. Upon receipt of a notice of court findings regarding a tenant's serious or repeated lease violation, PHA does act to terminate a family's program participation. In addition, we terminate lease assistance to those people who have committed fraud, bribery, or any other criminal activity in connection with any federal housing program. It's important to note that in regards to this termination policy, we do rely on information provided to us by the court system because we are responding to tenants who are holding leases with landlords who may or may not have involved us in the eviction process for the tenants currently in possession. In addition to our new administrative plan, we will adopt a policy where people who commit drug-related criminal activity or violent crime will be terminated from the program. Our forthcoming administrative plan also outlines a policy where applicants who are arrested, convicted or evicted from a unit due to violent criminal activity within the past three years prior to the date of their certificate LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 9 Law and Government/Licenses and Inspections interview will be denied participation in the Section 8 program. In appropriate cases, PHA may permit a family to continue receiving assistance providing that the member determined to be engaged in the prescribed activity does not reside in the unit. This is an area of great concern, particularly in those situations where the violating member is a minor. PHA will involve individual circumstances with the advice of the judicial court officers. In reference to terminating landlord contracts, as cited in the improvement plan, PHA routinely terminates landlord contracts on the basis of a landlord's failure to comply with the program regulations. It is important to stress that our effectiveness in administering these policies is strengthened by the support of the local and municipal court systems. We experienced similar difficulties on the public housing side. Another recommendation in this Section 22 8 plan involves the hiring of additional PHA inspectors and investigators. We are in the process of reviewing our staffing needs with respect to the Inspections Unit and will hire LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 10 Law and Government/Licenses and Inspections additional inspectors as we deem appropriate. We have already completed a review of the investigative units and determined that additional staff is needed and have conducted interviews and committed to the hiring of five additional investigators. These new investigators will bring a total of eight field people assigned to that unit, as well as a direct supervisory person coordinating that effort. There is also contained in the improvement plan a strong recommendation that a housing agency begin to provide supportive social services and case management, and PHA is acutely aware of the needs of local families with regards to supporting services and case management and that those needs have largely gone unmet in the current climate of shrinking resources. Section 8 families, like their low- income private market renter counterparts, have been adversely affected by funding cuts at all levels of government. While the Section 8 program is primarily a housing program, we do recognize that access to supportive services is a component that LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 11 Law and Government/Licenses and Inspections has the potential to aid a family's ability to meet certain basic requirements necessary to successfully maintain its housing assistance. And, as indicated in the report, any services that PHA makes available to the Section 8 families are available on a voluntary basis only. We cannot mandate participation in our family self- sufficiency programs.

We also cannot make participation in a supportive services plan contingent upon a person's ability to continue to participate in the Section 8 program. PHA does endorse the report's proposals to expand services to families who are experiencing difficulty in meeting program obligations, maintaining family housing in the community at large. But the first step to this process is resolving community concerns regarding assisting families to establish a process to identify those families who are experiencing these problems and to strengthen the agency's ability to enforce our program regulations in a timely manner. As noted earlier, we have expanded our LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 12 Law and Government/Licenses and Inspections investigative staff. The cost to PHA to expand this investigative staff is approximately $500,000 a year. These investigators will be the first conduit that provide backup information to PHA in getting out and front of issues that have been brought to our attention and require involvement in case management. The report correctly identifies Section 10 8 inspection staff as a key component in strengthening PHA to better enhance program regulations. We are reviewing our staff again. The Authority is committed to funding additional positions and providing additional resources. And efforts to improve our capacity in this area have also been identified and are scheduled to be funded with dollars generated by Section 8 administrative fees. To the extent that the Section 8 administrative fees are utilized to support activities within the Section 8 program, it needs to be noted that there's a direct impact on PHA's operating budget. PHA has, as allowed by HUD, customarily utilized Section 8 reserves to enhance its operating budget. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 13 Law and Government/Licenses and Inspections While we expand our opportunities within the Section 8 program, we need to stay cognizant that there will be a ripple-effect funding in other areas of the Authority. Although we can't effectively evaluate with any precision the number of housing families that will be affected, families who might otherwise receive housing or supportive --

Excuse me, Mr. Pernell.

Yes.

Councilman, unless it's a question of clarification --

No, no, no, that's fine.

We're going to hold all questions basically until he finishes.

Okay, go ahead. I'll ask it then.

Go ahead Mr. Pernell.

Thank you Councilman. Families who otherwise may have been housed through public housing programs will increase the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 14 Law and Government/Licenses and Inspections City's demands for housing and shelter services. Despite PHA's financial constraints in supporting both the Section 8 and public housing programs, we are committed to expanding services and will continue to explore other sources of funding to further enhance our ability to provide voluntary supportive services for all program participants. PHA is currently operating a case- management-oriented program, the Section 8 family self-sufficiency program. Through FSS, PHA provides counseling on education, employment opportunities, parenting, and credit repair to Section 8 families who have the goal of becoming self-sufficient. The pilot program affects 250 families that are currently enrolled, and it is our goal to expand to an additional 255 families. Our recruitment strategy includes regularly scheduled monthly FSS orientations that are open to all Section 8-eligible participants. It is PHA's experience in operating a relatively small program that it is demonstrated that the cost of managed care case management is very high. Nonetheless, we will be expanding the staff LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 15 Law and Government/Licenses and Inspections in this area also. Additionally, we are interested in pursuing services which may be funded through other City agencies that we can help make available to our Section 8 program. The administrative report also encourages PHA to pursue opportunities to increase site-based certificates. PHA has endorsed a policy of allocating the project-based certificate program the maximum number of certificates allowable under HUD regulations, that is currently percent. 14 Additionally, we have aggressively 15 pursued any funding that HUD has made available through specific site-based programs. PHA fully supports the efforts of the local housing partners to develop and administer project-based assistance and continues to be a principal administrator under the single-room occupancy and moderate rehab programs within the local area. Our experience in administrating both the tenant-based and project-based programs has provided a unique perspective on the importance of the available of both types of housing. It is LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 16 Law and Government/Licenses and Inspections imperative that PHA be a partner in developing a strategy that strikes the proper balance between assisted housing in a project-based program and a tenant-based program. Additionally, PHA's low-income housing program effectively makes 15,000 site-based units available within the City of Philadelphia's jurisdiction. Within this context, a continued availability of tenant-based assistance is a valuable resource in providing a portion of families with a choice in selecting a unit of housing. With regard to the actions on the part of the Board of Commissioners that was cited in the report, while PHA does currently does make information available regarding available funding, number of locations of all Section 8 units, opportunities to increase site-based certificates, as well as policies and procedures changes and utilizes other resources, the Authority will look to produce such information in the form of a Section 8 annual report, which will be readily distributed amongst the City agencies interested in the Section 8 program. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 17 Law and Government/Licenses and Inspections Regarding the report's recommendation that the board make Section 8 certificate allocations on a monthly basis, the process by which this is accomplished is not clearly described in the proposed action.

Although HUD has provided the Housing Authority with a great latitude in establishing waiting-list priorities and response to local needs, a requirement for the board to restructure this policy on a monthly basis needs to be made consistent with the body of regulations regarding waiting-list management. The report's description calls for the ending of local preferences for tier-one households while simultaneously suggesting that PHA board make determinations regarding the issuance of the Section 8 certificates among specific classes of already-designated tier-one household. The report does not address the establishment of a priority of applicants conforming to criteria other than the tier-one criteria. PHA needs a clarification on which categories of applicant families the Administration seeks to include in any revision that may be required in our administrative plan. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 18 Law and Government/Licenses and Inspections The Administrative also cites proposed state, federal, and legislative action within the context of the recommendations regarding PHA's Section 8 program, PHA cannot respond to the inclusion of recommendations regarding changes to composition, authority and term of PHA board, or legislative changes to provide for the employment contract with the PHA incoming director. Those issues, in our opinion, are separate from this discussion. If PHA increased the proportion of site-baited certificates -- excuse me, I'm sorry. If PHA is to increase a proportion of site-based certificates to tenant-based certificates, it will require federal legislative action. Many of the recommendations contained in other sections of the report should be reviewed by HUD as they appear to go in a different direction with the current regulatory and statutory requirements that are currently being handed down to the Philadelphia Housing Authority. Also cited in the report is a recommendation to enhance coordination between PHA and City agencies. PHA fully supports this LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 19 Law and Government/Licenses and Inspections recommendation. Of primary concern to our agency because of its potential adverse impact is the immediate discontinue of the City's case management service upon the placement of a sheltered client into a PHA section unit. This simply means that someone who may have been identified as needing specific care, who is participating in the shelter system, loses that case management immediately upon their placement within PHA as a Section 8 recipient. There needs to be better coordination between the Office of Emergency Shelter Service to ensure that we, number one, are able to identify who these people are and, number two, for a specific period, continue the services from other areas before they are rolled completely into the PHA fold. Families who leave the shelter system and move into transitional housing are eligible for case management service. However, again, these services terminate at the time that the assistance is offered through the Section 8 program, regardless of any documented need on the part of that family. PHA applauds the City Department of LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 20 Law and Government/Licenses and Inspections Revenue in its efforts to increase coordination between the City's Department of Licenses & Inspections prior to the issuance of rental real estate licenses. The report recommendation regarding increased coordination between PHA and L&I, the Police Department and the School District provide the potential for a much more effective use of our combined resources. And, I might add, it allows us to address issues that are not germane only to the Section 8 program but that cross the boundaries into our other public housing programs.

However, it should be noted that all such recommendations will require that PHA develop specific inter-agency strategies and agreements that support and clearly define goals in order to ensure that each party is aware and accepts its role and responsibilities under the agreement. We continue to support our ongoing relationship with the Office of Emergency Shelter Services and the Office of Housing and Community Development, and will continue to accept referrals from these agencies. Regarding the report's recommendation LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 21 Law and Government/Licenses and Inspections to commission a rent comparability study, PHA requests further information regarding the interests of these named agencies, OHCD, RDA, and PMFA, in such a study. The financial commitment of each party that would benefit from such a study should be conducted jointly and the responsibility of each party in maintaining a rent data base following its creation. I've attempted to address the Mayor's report and to clarify some of the issues that directly affect PHA. On behalf of the Housing Authority, I would just like to thank Council for the opportunity to be here and present our position regarding the Mayor's proposed plan and also to enlighten you to some of our positions on improving the Section 8 program. Section 8 is an extremely valuable resource. And in light of some of the changes that are coming out of Washington, I think it's important to be noted for the record that we will probably have more Section 8 as opposed to less Section 8. There are certain HUD mandates on the public housing side that will result in increased relying on Section 8 as an alternative housing LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 22 Law and Government/Licenses and Inspections strategy. It's imperative that the City come together to formulate a plan that not only includes PHA's resources but brings PHA to the table as a partner in developing that strategy. I thank you for your time, and will address any questions you may have.

Thank you very much, Mr. Pernell, for a very interesting report. Let me ask you, were you present at the Mayor's announcement of his recommendations yesterday?

No, I was not. I was out of town at the time.

You were not. Second, the report of the Mayor, to what extent did it incorporate PHA's views? Or was it written by people in the Mayor's office that were not directly connected with PHA?

The PHA was involved in one meeting, a coordinating meeting about a month ago where a lot of these issues were discussed. The final report was submitted to our office on Monday. We did submit comments back, and some of LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 23 Law and Government/Licenses and Inspections those comments were incorporated into the final plan. But we did not receive the document until Monday.

All right, thank you. Councilman Kenney.

Thank you, Mr. Chairman. Mr. Pernell, I believe this is the first time that you've appeared before City Council --

Yes, it is.

-- in giving testimony, and I'd like to commend you on your thoroughness and your delivery. And I think that you were very thoughtful in your presentation. And I thank you for it.

Thank you, Councilman.

Under current PHA regulations and to your knowledge, how many tenants in the PHA-administered Section 8 -- which is different, obviously, from the HUD-administered program -- have been terminated in the past year or two, that you're aware of?

I have that information LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 24 Law and Government/Licenses and Inspections available.

Mr. Pernell, if you would like to have some members of your staff sit with you, that's quite common practice in City Council. Feel free to have them join you.

For the record, I would like to ask the Deputy Director for Operations, Miss Karen Moon, and the Director of our Section 8 Program, Miss Manuella Costa, to join me at the table.

Very good. Let me, during this period, introduce the ten members of City Council who are participating in the hearings. I'm facing: Councilwoman Krajewski; Councilwoman Fernandez; Councilwoman Blackwell; Councilman Rizzo; Councilman Nutter; Councilman Ortiz; myself, Councilwoman Cohen; Councilman Kenney; Councilman Mariano; and Councilwoman Verna, who is the majority leader of City Council. That represents ten Council members, more than a majority. Thank you. So, you see, you're providing the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 25 Law and Government/Licenses and Inspections majority of City Council with very important information.

Thank you very much. The question again, Councilman, was for the last two years?

Over the last year or two, to your knowledge, in the PHA-administered program, how many tenants have been terminated for cause?

The statistics we have --

Miss Costa, could you please identify yourself for the record.

And keep the microphone up as close to you as possible voice, please.

Hi, good afternoon. My name is Manuella Costa.

You're going to have to do better than that. Really bring it up so that it practically touches you.

Okay. My name is Manuella Costa, and I'm the Director of the Section 8 Program. Good afternoon, everybody.

Good afternoon. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS Law and Government/Licenses and Inspections

In trying to answer your question, I would like to tell you that I don't have statistics for the last couple of years.

We do have statistics on termination from 1989 until the current year.

Whatever you have available.

There were 3,825 vouchers terminated for cause during the period 1989 to 1997.

And during the course of the termination proceeding, it had been testified to in earlier hearings that tenants, when they are notified of impending either investigation or potential eviction proceedings, have the ability to leave the property with the certificate and request a new landlord to accept that certificate, thereby ending in many ways the termination process. Is that in fact true?

That is true.

Is there some HUD or federal regulation that allows that and ties the hands of PHA?

The answer is yes. But I LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 27 Law and Government/Licenses and Inspections will defer the explanation to Miss Costa.

Yes, it is a federal regulation that mandates PHA to issue a certificate to a person that received an eviction notice as long as the family notifies PHA that they are in the process of being evicted. As you can imagine, in the majority of the cases, that really stops the eviction process and allows the family to move to another unit.

And if there's a problem with the particular family unit, that problem then in fact moves with them to their new unit, or maybe it doesn't, but it can.

Yes.

Has there ever been a request made by PHA to HUD or to the Congress to change that, to give you more latitude and authority in actually terminating people, not only from the unit, but from the program altogether if they observe to be?

My name is Karen Moon. I'm the Deputy Executive Director for Operations. To answer your question, the Housing Authority has not made such a request. But there LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 28 Law and Government/Licenses and Inspections are discussions that are currently underway across this country because of similar problems that are being communicated to the Department of Housing and Urban Development. And I would have to say that the Philadelphia Housing Authority does, in fact, support such a move to eliminate that problem.

And understand. I mean, there's a lot of blame that can go around for problems in any program. And, Mr. Pernell, you've been here A relatively short time. And, again, we're looking forward to trying to find solutions to these problems without casting blame on anyone. I'm sure there's a lot to go around. So I'm glad to see that PHA is moving and trying to get control over their tenant base. And may I ask as separate question --

Could I ask a follow-up on that one question? Does anyone understand why that was originally part of the law? Has anybody ever from the national headquarters informed the local PHA why that exists? Is it merely to terminate an LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 29 Law and Government/Licenses and Inspections eviction proceeding and make it similar for PHA?

No, not really, because it is not the Housing Authority who initiates the eviction action; it is the landlord. And I think it was primarily designed to enable landlords to make decisions about the resident population, not necessarily to terminate their assistance that was associated with it, but to give the family an additional opportunity. When you couple that with the fact that there are no direct services that are offered to the family to help them to eradicate those kinds of problems so that when they do move to the next unit, that those problems just duplicate themselves.

I think that's the point that Councilman Kenney was directing his question at.

Yes, it is.

It also should be noted that it is -- generally when a landlord in Section 23 8 or in any rental situation retains the access to the property and the problem tenant is gone, it would be that landlord that carries through on the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 30 Law and Government/Licenses and Inspections eviction process. And in those cases, once get possession of the unit back, a lot of landlords just search for new tenant let the other tenant go on their merry way.

And, again, similar to the first question I asked, how many landlords have been terminated from the program since 1989 or the date you gave me relative to the tenants.

That information is not in the packet, but I can provide it to you.

Would you provide it to the Chair, please.

Yes.

How does PHA determine the legal number of tenants residing in a Section 8 property? Are there numbers, family size versus numbers of bedrooms, yard space, square footage? Is there a specific policy or guideline on how many people can live in a two-or three-bedroom house?

Yes. The basic formula is the same as it is on the public housing side: It would be two individuals of the same sex per bedroom. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 31 Law and Government/Licenses and Inspections There is a review process where families are coming in, they are to provide the Housing Authority with the numbers of people who are occupying the unit, and that is the basis of it. Now, one of the reports is that individuals are actually moving other people into the household. Again, that is an issue that should be followed up on immediately or initially by the landlord of the property. When we certify a family as being eligible to participate in the program, there is an identifiable number of family members who are identified by name, by sex and by age who should be in fact be in that unit.

In the event that the landlord is not a resident of either the street or the property or even the city, for that matter, and probably does not have an overriding need or desire to care about who is living in the property, as long as he or she is getting the rent, who then would be responsible at PHA for responding to community complaints or to neighborhood complaints about an over-large number LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 32 Law and Government/Licenses and Inspections of people who are unrelated living in the property?

It would be the Investigative Unit initially. In effect, what would happen is if a community member were to call to say that there were an inordinately number of individuals occupying the unit, that information would be investigated by the Inspections Unit. And depending upon what the Inspections Unit found, then the service rep would be utilized to determine whether there was some follow-up action that needed to occur.

And does that include eviction proceedings on the part of PHA?

It would include notification to the landlord that this was existing, because the Housing Authority cannot evict the individual occupant.

And I just have two more questions and I'll be happy to move onto the next Council member.

If I might, just one thing to add to that. If we find that the documentation is accurate and the landlord does not take action LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 33 Law and Government/Licenses and Inspections to resolve the problem, the recourse that is open to us is to terminate the assistance to the landlord, which typically motivates them.

It's probably the only thing that may motivate them.

Yes.

Why do we not require Section 8 tenants and landlords to participate in available PHA programs on life skills and appropriate landlord and tenant responsibilities? Why is it only voluntary and not mandatory?

We cannot make it mandatory for the Section 8 family to have any kind of counseling. We can offer it on a voluntary basis. And recently we're going to start having the services of an agency that is going to target our Section 8 regulation in order to offer counseling services which include parenting, child care, financial aid, and different kinds of help. But it will be on a voluntary basis.

And I guess the second question would be: Has PHA made a request to HUD or to Congress for the appropriate changes LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 34 Law and Government/Licenses and Inspections to allow PHA to mandate that kind of counseling?

No. We as an agency have not. But in response to your question, there is currently at the HUD level an assessment program that is being developed for the Section 8 program. Nationally, although there are guidelines and handbooks, similar to the public housing "fee map" as it's called, the public housing management assessment program, there was no national standard that Section 8 administrators had to add here to. HUD is in the process as we speak -- and one reason for my being at a conference last week -- of developing what they call "the C Map Program," which is the Section 8 management assessment program. And one of the issues that was debated hotly at the conference that I just left was the ability to mandate the participation in the family self-sufficiency programs. It should also be noted that that same assessment speaks directly to the issue of providing opportunities for people to go beyond the traditional census tracks and neighborhoods that support public housing, almost to the extent LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 35 Law and Government/Licenses and Inspections of a mandate that we are literally to provide information not just locally but on counties in the surrounding area that will accept Section 8 recipients because, of course, tenant-based Section 8 vouchers are totally portable. You can take them wherever you want.

I believe myself that individuals who are suggested to participate in a voluntary program and refuse are probably exactly the families that need it the most. And I think that would be a good thing for PHA to continue to pursue, and that's mandatory participation in programs for both tenants and for landlords relative to responsibilities. Finally, in the Mayor's report yesterday -- and if you argue with these numbers, please feel free to interrupt me -- he gave list of average rental rates for properties from zero-bedroom, I guess that's an efficiency, through six bedrooms. And they go as follows. One bedroom would be 570 per month; two, 704; three, 881; four 1104, five, 1270; and six, 1436. My suggestion -- and if you disagree, LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 36 Law and Government/Licenses and Inspections please feel free -- is that I own, for example, one property. I don't know why I ever purchased it, but I have a rental property, and I recognized after getting a rental problem that it is not the business that I should be in. But be that as it may, I have a two-bedroom property in a small row house in South Philadelphia. And I have had tenants who are both elderly who have been in there for about more than ten years now. They are very good tenants, and we haven't raised the rent because they are such good tenants. I get about $300 a month; I could get as much as 4, in the market, in that particular zip code. But that two-bedroom house, if it were converted to a Section 8 property, I could obtain $700 for it. If we're looking for available revenues to provide social service, inspection services and other services, my suggestion is we try to rationalize and equalize these rental rates and use the savings to provide those social services needs to our tenants and to our landlords. And I think that it would serve not LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 37 Law and Government/Licenses and Inspections only the program but the tenants of Section 8 much better than they are being served today.

The numbers you quoted are correct. And nationally or locally, I'm positive, because we're participating in a review currently. But nationally, that is the trend that seems to be most concerned throughout the country. One other thing that should be noted, though, is that it is, in a lot of cases, some of the project-based units that are receiving even rents in excess, and a lot of that is associated with declining real estate values in areas that were subsidized ten, fifteen years ago.

I understand.

I think the HUD push on Section 8 right now is to reevaluate the FMRs across the board and make them more in line with what the local area is receiving for similar-size units.

Thank you. Thank you for your answers, and thank you, Mr. Chairman.

Thank you. With respect to that, are the rental rates that were quoted by Councilman Kenney, was that the total LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 38 Law and Government/Licenses and Inspections rental or the 80 percent share that the federal government provides?

That is the maximal allowable for the types and size of the units that he indicated.

So the federal government would be paying 80 percent of that? Doesn't the federal government pay 80 percent, and the tenant percent?? 11

No. Actually, it's 70 12 percent, and the tenant or the participant pays 30 13 percent. 14

All right. That's 15 70/30 percent. 16

Correct. 17

Is there any 18 information as to how many tenants in fact pay the 19 30 percent? Do you have any information on that? 20

Yes, we do have that information. I don't have that information here.

How do you get that information?

How do we track that information? LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 39 Law and Government/Licenses and Inspections

Yeah, how do you get that?

We know what it is that we pay on behalf of each individual family.

Right.

That's considered to be the HAP payment. So we know all of the individuals that are participating pay no more than 30 percent.

Well, how do you know they're paying anything? The reason I raise this question is that there was a lot of talk out in the community that there's sort of an unwritten agreement. The landlord says, "I won't go after the 30 percent if you don't bother me about keeping up the property." And I was just wondering, is there any way, do we know whether tenants do, in fact, pay the 30 percent?

Councilwoman, if there are people who have a side bar deal, the only thing I can equate it to is some of the issues that surround us with wage compliance on the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 40 Law and Government/Licenses and Inspections construction side. We don't have any knowledge directly of people not paying the rent. That would be a violation of the agreement and subject to immediate termination. But we, as far as I know, have no way of determining if someone is actually doing that.

Because even if the 70 percent rate, at the figures that were quoted by Councilman Kenney, the rental rate is still very, very high compared to the regular market in Philadelphia.

Councilman, just so that there is total clarity on this, it should be noted that if a Section 8 tenant has no income, then the landlord is eligible for 100 percent of the subsidized FMR.

So if the tenant has no income, where does the tenant get the 30 percent to pay the designated share?

It's based on the income that you have. If you have no income, you're not required to pay anything.

In other words, the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 41 Law and Government/Licenses and Inspections 30 percent share, if the tenant has no income, the landlord has agreed in effect by becoming a landlord under Section 8 to waive that 30 percent?

No. The landlord will receive -- in the case of a two-bedroom unit that goes for $704, if the current certificate-holder has no income, the landlord will receive the full $704 from the federal government.

The full hundred percent?

Yes.

Okay. Councilwoman Fernandez and then Councilwoman Verna.

In looking at the --

You're following up on this, right?

Yes, following up on these numbers. Could you clarity -- I'm understanding that the numbers cited by Councilman Kenney, that's the maximum possible. It doesn't mean that's what is charged; it's the maximum rate that LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 42 Law and Government/Licenses and Inspections would be allowed.

Yes. Councilwoman Fernandez is correct. There is a local FMR rate that is calculated by HUD. And in those cases where the fair market value is lower, you should receive a lower payment. One of the problems is, that information has not been updated as currently as it should have been.

And the FMR is calculated on a regional basis as opposed to a local basis.

Yes.

So we're competing with averages in Montgomery, Delaware, Chester, Bucks, County.

Yes.

In the FMR determination.

Right, but you're --

Which are higher.

But you're thinking for your property you could get more, but you wouldn't necessarily be able to get more LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 43 Law and Government/Licenses and Inspections because one of the complaints earlier was that it's really not fair if you have a neighborhood where rents are, let's say, $300 for a one-room apartment, but you have a Section 8 person property-owner able to get more. So I think I wanted to clarify that this is the maximum amount.

But if I converted that property and accepted Section 8 certificates, I would be getting significantly more money than I'm getting now.

But not necessarily the maximum.

Not necessarily the maximum, right.

I just didn't want it to be misleading.

On that one point, do you have any statistics which indicate what percentage of properties receive less than the maximum?

Yes. We have we can provide that information.

You don't have that LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 44 Law and Government/Licenses and Inspections available?

Yes, we do. We can provide that information.

All right, we would like to have that information.

Mr. Chairman.

Councilman Rizzo, do you wish to follow up on that?

No, it's not the same question.

Councilwoman Verna.

Thank you, Mr. Chairman. Mr. Pernell, I don't mean to be putting you on the spot. But when we first had our Section 8 hearings, I had gotten a list of the Section 8s in my district, and I had my office do a computer printout as to how many Section 8 properties were owned to one individual. And I found that there was a partnership that owns 29 Section 8 properties in my district; 19 of those properties are tax- delinquent to the tune of $42,341. I also checked to see -- and I find LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 45 Law and Government/Licenses and Inspections this absolutely appalling -- this partnership owes $83,772 in water bills. I mean I think that could reduce probably the water rate for all of the citizens in the city. We also found out that of the 29 7 properties have not residential rental permits. 8 Now, you know, I think that this was 9 initiated really to help the poor. I think we're 10 really helping the greedy in this instance. 11 I'd like to know what we're going to do 12 to, first of all, penalize somebody like this. He 13 doesn't live in the City, or that's not where 14 they're registered from. So he's in Bala Cynwyd, probably sunning himself in Florida somewhere, and getting a check every month for the 29 properties. I find that absolutely appalling. I'd like to know what we're doing now, how are we addressing it now? I have not had the opportunity to read the Mayor's report. I would like to know how the Mayor is going to address problems such as I just enumerated to you.

Okay, I would defer the specific comments on the Mayor's program on those specific action to Mr. Kromer. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 46 Law and Government/Licenses and Inspections However. I will say that during our first coordinating meeting, there was a cross section of the City represented that was unlike any meeting that I had ever participated in. One of the basic issues that came us was this issue of delinquent taxes. We have relied, for the most part, on the issuance of a new rental license --

I'm sorry, a new rental what?

The issuance of a new annual rental license for a particular property as our trigger mechanism to see that a landlord is doing the things that he's supposed to do. Part of our checklist did not include a current tax statement, tax receipt, and it did not include current receipts for utilities. Those are things that we very easily now can incorporate into our checklist, and that would be an issue that would delay the issuance of a certificate -- a certification of a unit to a landlord. But those are issues that we would have to, as I mentioned in my testimony --

You say we would LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 47 Law and Government/Licenses and Inspections have to do that?

We, the PHA.

You, the PHA are going to do all of that?

Yes, we are going to coordinate with the City Department of Revenue, and --

And how about a rental license, will L&I be handling that?

Yes. We have --

I'll tell you, in searching this out, I found that this gentleman had a real scheme going. If he bought the property in 1988, for instance, he had his taxes up to date, only so that's he could get the Section 8 certificate. He never paid a penny in taxes or water bills thereafter. So simply going for a rental license, if that's in fact what he's going to do, I think at that time, we should definitely check to see if the property taxes and the water bills are current.

And, Councilwoman, there LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 48 Law and Government/Licenses and Inspections is an annual recertification process for the rental license. On the PHA side, it's a simple matter of expanding our checklist to include that information, but we must --

Well, I'm sorry to say, but somebody had to be sleeping on this one.

Well, we must coordinate with the City Department of Revenue and the Water Department in order to get that information. And it's one of the inter-agency agreements that we've identified as being necessary for this process to run a lot more smoothly.

Thank you.

Councilwoman Blackwell, do you want to follow up on the question of the rental values, or is it a different area?

One of my colleagues mentioned that if a tenant has no 21 income, that this person -- that the landlord is paid a hundred percent. How many cases like that are you aware of? You gave us some numbers at the beginning. Give us some idea, how many of the total numbers LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 49 Law and Government/Licenses and Inspections and how many people rent to people with no 3 income?

I've been told that currently, there are probably about 300 people that fall into that category.

There are 300 people renting separate Section 8 units?

Yes, 300 out of about 10,000.

Okay, 300 out of about 10,000. These are people who rent to landlords with no income? Or do you know whether or not there was some reason whether they lost their jobs, whether they're victims of this Act 35? Or do people just go to landlords and tell them, "I don't have any income, rent me a place"?

Well, they would have to first come through PHA in order for us to do an -- we do an income verification and we screen people to deem them eligible for the program. They are then just given a list of landlords who accept Section 8 certificates. And if that landlord accepts the certificate that is in the possession of someone who has no income, LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 50 Law and Government/Licenses and Inspections then he or she is entitled to the full FMR for that unit.

Thank you.

All right, thank you. Councilman Rizzo.

Thank you. Expanding the conversation beyond water and taxes, in a typical arrangement, who pays the gas bill, who pays the electric bill in a Section 8 home?

It depends on the individual situation. When a Section 8 participant finds a unit and notifies the Housing Authority that found a unit, there's an inspection that takes place. There is a form that the landlord has to complete that indicates what the utilities are, whether or not those are utilities that the landlord is going to pay. Or that they are the responsibility of the participant. So it depends on each individual's situation.

I honestly don't know too many landlords in today's environment that include utilities when they rent a property because they have little control over the amount LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 51 Law and Government/Licenses and Inspections of utilities that are used. And electric, if it's misused, can become very, very expensive, along with gas. My question is: With this recertification process that occurs annually, if a tenant has zero money and you have 300 people out there, how are they paying their electric bill, how are they paying their gas bill, and if their electric is shut off, have you ever had a situation on a Section 8 home where the energy company was -- is that just a hands-off policy that's hands policy if it's Section 8?

This is going to be complicated, but I'm going to attempt to explain this. Because when we say that HAP payment or the payment that the government makes on behalf of the family is a hundred percent because they do not have income, in effect, they may have some income. But there is a situation where there's something called "a utility allowance" that is computed for a family. The best example I could give you is if we looked at the income of a participant, and 30 percent of their adjusted LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 52 Law and Government/Licenses and Inspections gross income would result in them paying $50 a month towards their payment towards the total payment of rent to the landlord, and we look at the utilities that have identified that the family is going to be responsible for paying, and those utilities are electricity and gas, there is an allowance that is computed for each of those utilities. The total of those allowances is then deducted from whatever 30 percent of their adjusted gross income. And taking my example further, 30 percent of their income causes the family to pay $50. The utility allowance for the utilities that have been identified equals $200. There is a -- there is a $150 difference. The family, then, is computed as paying zero rent. If that is making any sense.

I understand.

Who pays the utilities then?

We provide -- the family is responsible for paying the utilities based on the utility allowance check, or the difference of 150 that we sent send to them. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 53 Law and Government/Licenses and Inspections Because the expectation each month -- because the expectation is that they would conserve their utility usage so that that amount of money would compensate the usage.

So if their electric bill -- if, let's say, their usage is less, they still get the fixed amount and they can do whatever they want with the excess? So if they decide to really cut back, that's money for --

That is correct.

What if they don't pay the bill?

If you don't pay the bills, well -- but from my years in the utility business, I cannot remember a Section 8 house ever being terminated for nonpayment.

It does happen. Because the reason I say that, if the -- if the property does not have utilities or service, the property would not meet housing quality standards.

Did the homes that Mrs. Verna indicated that didn't pay water bills ever have their water shut off?

The water is the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 54 Law and Government/Licenses and Inspections responsibility of the owner, and so we would terminate that property if the water was, in fact, cut off.

But that's not my question. Did it ever get shut off?

Not that I'm aware of.

So if it were shut off -- why was it hands off the water revenue? Was it basically because it was a Section 8 house and they said, We're going to treat that differently than another person that doesn't pay their water bill?

I honestly don't know.

In our attempts to coordinate with the Water Department, there is nothing in the system that identifies a Section 8 unit. We provided a list of Section 8 addresses to the Water Department, and they then did a computer takeoff of those addresses and came up with the data. But in an ongoing basis, it's one of the difficulties of managing this type of program. There's nothing that identifies something as a Section 8 unit to people outside of LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 55 Law and Government/Licenses and Inspections the realm of PHA.

Thank you.

I think we're beginning to go pretty far from the main purpose. These are interesting. And I think out of this will come a strong recommendation by the Committee that there been some kind of joint continuing cooperation between the City and the PHA. Because I think there's a lot that's missing between the cracks. But that basically is not the major aspect of this hearing. We're very much concerned, we're trying to point out areas that we think. And we thank Councilman Rizzo for raising that point, as we thank the other Council members for raising their points. Councilman Nutter.

Thank you, Mr. Chairman. Mr. Pernell, Miss Moon. And Miss Costa, welcome. We have been eagerly anticipating your presence here with us. We understand that you were not able to share information with us on two previous occasions. I think it should be LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 56 Law and Government/Licenses and Inspections noted for the record that --

I believe, Councilman Nutter, that Mr. Pernell's choice not to be here.

As I said, Mr. Chairman, they were prevented from being at the hearing. And this hearing started at 1 o'clock or about 1:20. And, so far, mass hysteria has not broken out. I think the City is still operating and functioning and the Section 8 program is probably still doing whatever it's doing. You could have been here, I guess, a couple of occasions ago; and the general public, as well as this body, I believe, would have benefitted from your presence. I'm going to ask you a couple questions. I want to get back to the area where Councilman Cohen was. Mr. Pernell, you said in your response to Council Cohen that some PHA personnel had some level of participation in the development of the report that was released yesterday. Was that your testimony? LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 57 Law and Government/Licenses and Inspections

Yes, that is correct.

Okay, would you care to share with us what that level of involvement was for either yourself, Miss Moon, Miss Costa, or anyone else at PHA.

The basic issues fleshed out in the report released yesterday are relatively consistent with the information that we've provided to our board and at the request of Mr. John Este, who was coordinating on behalf of the Mayor throughout the different on-and-off testimonials that were expected from the Housing Authority. The issues that were reduced to paper, we pretty much were in agreement that they were issues, but a lot of things needed to be more crystal clearly fleshed out. And let me be a little bit more specific. There is a tone to the report that the responsibility of a lot of these things rests solely with the Philadelphia Housing Authority. We feel, as it relates also to our Public Housing Agency, that a lot of services out there are being directed and are being provided. There just isn't LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 58 Law and Government/Licenses and Inspections a clear reporting and coordinating mechanism for folks to set up a continuum of care for these people. The best example and the most direct is the shell shelter people. We meet with Mr. Nardone's people every month and we try to coordinate our efforts. But there is no formal process right now that takes the information that may have been gathered on a potential Section 8 resident, that is gathered by the Office of Emergency Shelter Service and formally transfers that information to PHA if that client comes into our care.

Let me ask this question, and this is for each of the members of current panel. Have you been asked in your time as Interim Executive Director to specifically write down what you perceive to be the problems with the Section 8 program, whatever they may be and potential solutions in any kind of white paper or discussion paper or any other color of paper that you might choose to write such a report on? Have you been asked to do that in your capacity as LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 59 Law and Government/Licenses and Inspections interim executive director?

We have been asked to provide information, not in the form of a series of recommendations, but to provide background information on the program.

You're talking about program operations?

Program operations.

And data related to how many people participate?

Yes.

Okay, Miss Moon.

I specifically have not been asked to develop what I would consider to be the critical issues on paper. As Mr. Pernell stated, I was a part of the meeting, the coordinating meeting that was held. And during that time, there was an agenda where we indicated what we considered to be the critical issues and began to have dialogue about addressing those issues.

That was one meeting?

Yes. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 60 Law and Government/Licenses and Inspections

When was that?

It was December 10th.

December 10th?

Yes.

Okay. Miss Costa, you run the Section 8 Program for PHA?

Yes I do.

Have you been asked to provide any documentation as to what the problems or articulate any potential solutions to those problems in the Section 8 program?

No, exactly the same that Miss Moon said applies to me. I was invited to the meeting and I was a part of that meeting. And at that meeting, we identified some issues that we had some concerns with.

Okay, so you as the direct manager of the program, I assume you report to Miss Moon?

Yes, I do.

Miss Moon, you report to Mr. Pernell, and the three of you were asked to participate in the meeting about this program but you have not submitted any report, LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 61 Law and Government/Licenses and Inspections suggestions, criticisms that would impact on the future of the Section 8 program, even though it is within your jurisdiction?

That's correct.

Well, let me ask the question then. From your perspective. What are the problems with the Section 8 program?

There are many areas we definitely could improve the operation, and one of them is definitely the hiring of investigators.

Miss Costa, I ask you again to bring that microphone closer.

Sure. And the investigators, I think, would really help the program to detect fraud. For instance, to detect the instances where we have illegal occupants on a unit, and it would help us to really run a better program. So I think it is very good that that is happening. Another critical issue that was referred here, and I feel it's really critical, is the fact that many of our landlords might owe money to the City. And I think the fact that we are now going to work jointly with the Department LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 62 Law and Government/Licenses and Inspections of Revenue, it's going to be able to put in place some kind of a mechanism that will address that. It's going to be very beneficial to us, too. Also, I do believe that the implementation of local preferences is going to be very good for the program, and I think that's definitely a critical issue.

Do you have any particular perspectives -- any of you can respond -- to the issue of changing the percent formula 12 on project-based locations versus the certificate 13 program, where the current guidelines allow a 14 person, once they have a certificate, to live 15 anywhere they want in the City of Philadelphia?

Well, this program is meant for freedom of choice. Everybody should have the right to live where they want to live, and that's what the public program does. Yes, I do have problems. I think that the project-based program doesn't generate as much interest as the tenant-based program. When we do matters of solicitation to our wait-list participants and we offer project-based, the rate of refusal is very high. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 63 Law and Government/Licenses and Inspections

Do you think that has anything to do with the general notion that many people, depending on their income, if they happen to be poor choose not to, or would be reluctant to live with a whole lot of other poor people.

I don't know, I don't have no idea I don't know why exactly. I do believe one of the reasons why it's happening is because project-based system is not portable, so the family's really tied to a certain location; while with the tenant-based system, the family can live wherever they want to go, anywhere in the country.

Mr. Pernell, do you have any particular perspective on the idea of the concentrating or over-concentrating of poor people in particular sections of the City?.

On a personal level, I think that it leads to the types of problems that become -- that precipitate the need for these types of hearings. In my official capacity now, I referenced a second ago the C map program. And LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 64 Law and Government/Licenses and Inspections one of the mandates of that program, again, is to ensure that the Housing Authority or the Section 8 administrating authority has in place a mechanism that allows tenants -- that not only allows but in some cases steers certificate-holders to areas of low concentration of economically distressed as well as communities that are racially polarized. It is going to be a part of the federal mandate. And to get, as HUD likes to sometimes dabble in the minutia of things, one of the requirements is literally that we are going to have to provide maps of areas that are identified by their concentration of poor and their racial mix. That's from a --

Why do they want that information?

There is a big discussion around the Section 8 programming choices from the standpoint of a fair housing issue. It appears to be the hot-button issue on the Section 8 program. And for the record, I would like to say that the discussion was referred to several times as "the Philadelphia situation." We are on the public housing side faced LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 65 Law and Government/Licenses and Inspections with changing legislation on the public housing density issue. We are being mandated in a lot of cases to, in some cases, demolish; in other cases, reduce the density of our public housing units. And the proposed solution as written today is additional Section 8 tenant-based support.

Is that because the national strategy is generally toward deconcentrating poor people or thinning out economically distressed areas?

It is the clear mandate from the Department of Housing and Urban Development.

So from HUD, we're getting policy directives to deconcentrate; and at a local level, we're being faced with the prospect of reconcentrating or more densely populating poor people in the Section 8 program?

That is -- I don't know if that is the intent, but the --

I didn't ask about intent; I asked about effect.

The two are definitely not in line from a policy standpoint. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 66 Law and Government/Licenses and Inspections

In reading the Mayor's report, which got to Council members at least a day after the media were fully informed by the Mayor of his plans, the Council members were kept in the dark. As I read that report this morning, I noticed, or believe I noticed, that the Mayor carefully refrained from using word "cluster" or "clusterization," but the changes that he was proposing would, in fact, make clusterization much easier to attain. I'm wondering, did I read it right or did I read it wrong? What's your response to that? But I would like that question --

Well, yeah, I mean, read it that way, and I guess the folks at the table have to answer for themselves, although they've already articulated the fact that they didn't write the report, they may be constrained in their perspectives. But you can call it anything you want to call it. It is the same thing, in my opinion, Councilman, that's why I was interested in the perspective of the people who actually work on LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 67 Law and Government/Licenses and Inspections this on a regular basis.

I raised it particularly because I was called by someone in the news media late yesterday afternoon. And that person, a very intelligent one, very well known, said, Ya know, the Mayor has moved away from clusterization. Everything he's doing is to strengthen scattered sites. And that sounded very good to me, as if maybe our hearings had some kind of impact on him. But when I read the report this morning, it seemed to contradict the impression that was given to the news media yesterday.

The scattered sites, Councilman, are all in just one building, that's all.

Go ahead, Councilman Nutter.

Thank you.

I have a question. In dealing with that same issue, we talk about clusters, we talk about issues that involve ADA, handicapped people, and other people LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 68 Law and Government/Licenses and Inspections who have the right to participate. How does that impact on this?

From a Section 8 -- I'm sorry, Councilwoman, I didn't follow the question.

When we talk about clusterization, we have to speak to the issues of disabled persons. As I understand, that is still an unresolved issue in your meetings between PHA and OSHA. And they have certain rights too. So if you talk about clustering people, how are you going to deal with all of those people who have rights, handicapped people, people with special needs, etc., who have certain other rights that this could impact?

May I suggest to the Councilwoman, I think that question would more appropriately go to the Mayor's representative.

I'm happy to hear that answer.

Yeah, because I don't think PHA would have jurisdiction to deal with that issue.

I only wanted LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 69 Law and Government/Licenses and Inspections PHA to admit that that is an issue.

Okay, all right.

I know they don't have jurisdiction.

All right, go ahead, direct question to them again, Councilwoman.

Because we deal with individual landlords on Section 8, the Section 504 compliance issues do not show up on the Section 8 side as they do on the public housing side generally because you're dealing with small numbers of units. But that is an issue on the public housing side, but I'm not aware that it's an issue on the Section 8 side as of yet.

Councilman Ortiz.

Thank you, Mr. Pernell, and I'm happy to see you after a long wait. Miss Costa and Miss Moon, how you doing. You know, during the last week, President Clinton has been going through a lot of stuff, and a lot of charges keep on flying back and forth that are generally unsubstantiated by fact. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 70 Law and Government/Licenses and Inspections And we from this side here about the Section 8 program, we ask questions, and we make statements many times that are not substantiated by fact. And we've had three hearings now on Section 8. And I would like to hear from Miss Costa, Mr. Pernell and Miss Moon, because the impression is -- and the Mayor's report says that the problem with Section 8 is a very small one, a few bad landlords and a few bad tenants. However, the impression that is given is that it is a program in chaos and it is causing an incredible amount of chaos out in the community. And that administratively, it is a shambles. And if it is administratively a shambles, that means that you guys have done a very bad job. And I know that HUD performs audits, is that true, on all of these programs?

Yes, yes, it is.

And they are very stringent audits because PHA has been a troubled agency, so they have been very, very -- they have been providing very careful oversight; is that LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 71 Law and Government/Licenses and Inspections true?

Yes, it is.

And these audits that they have taken, because the Mayor goes to give the impression that there are landlords out there that are gouging the system, gouging, not paying city taxes in terms of water and property taxes, but in essence, gouging the federal government by charging exorbitant rents and not providing services. Has any of the HUD audits caught that, any of the citings?

We are currently, and in our most recent audit, there were no major areas of concern cited by the local HUD office in the administration of our program, save one, and it is in concert with the national review of (unintelligible) Marks. We are required under the program guidelines to keep current data on the rental trends in the area. There was some question as to what "current" meant. In some cases, HUD meant yesterday. In a lot of cases, some of our data was at least two years, three years old. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 72 Law and Government/Licenses and Inspections There was also a recommendation around our increased number of staffing in certain areas, particularly in the Investigative Unit.

But in terms of landlords gouging the system, has there been any audit that has been established.

No. 9

Not that landlords have many properties and so on, because that's not gouging the system, they have properties. But that they have used the system in a wrong way.

No. 14

The audits haven't shown that?

Correct.

So in terms of the other audits, in terms of the other inspections that you have done, in terms of -- because some of the problems of how many people reside in a home do not just pertain to Section 8; they pertain to any home because of zoning problems that says, you know, how many people per scare foot and so on. So it goes to that. But I want to base the record on fact, LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 73 Law and Government/Licenses and Inspections not on anecdotal recollections, and I want from your perception of how many of those tenants are problematical of the 11,000 certificates that are out there, would you consider problematical, or as the Mayor says. That we have a few bad apples here? If those bad apples are there, what percentage of it is less than -- I think it's probably less than one percent or something like that?

That would be almost impossible to answer, but we have prior to the hearings and leading up to the first hearing, PHA had been engaged in the process of attending certain town meetings around the Section 8 issues. And in a lot of cases, concerned citizens generated lists of problem units with problem tenants. In investigating a lot of those complaints, it became apparent that there was, in not all cases, where the identified problem people, participants in the Section 8 program. We have been able to deal with complaints as we receive them. As you might expect, because of all the furor around the hearings, the number of calls LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 74 Law and Government/Licenses and Inspections to the hot line went up. But I could not give you statistical breakdown as to how many people --

It's right here.

Oh, I'm sorry. My crack staff is able to do that, and I will defer to Miss Moon at this time.

Put those on the record. Because we want to base the record on facts and not anecdotes and not anything else that we may be thinking the problem is without any real substantive empirical proof.

We really began to keep track of calls that were coming into the telephone hot line, and that began on November the 6th, or is that the 8th? I'm sorry, it's hard to see these small figures, but it was either November the 6th or November the 8th. And we did that through December. And in terms of looking at the numbers of Section 8 complaints, and they range from subletting, damage to units, break-ins, percentage of drugs, broken windows, unauthorized individuals and the like. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 75 Law and Government/Licenses and Inspections Of the complaints that were received, -- it is really very hard for me to see this -- it appears that it was 63 percent of the complaints that were received were not Section 8 participants. And that is from us actually keeping track of the calls that were coming in.

Do you have a breakdown of where those calls came from and so on?

We do have it. It is not a part of this submission.

Could you submit that to us?

Yes.

After you give us the record and you put that on the record, could you give us a copy of that?

Absolutely.

Okay. So 37 percent were, then, Section 8 complaints?

That is correct.

So roughly two thirds were not; one third were. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 76 Law and Government/Licenses and Inspections

Yes, sir.

How many complaints were there in that?

There were 49 complaints.

There were a total of 49 complaints.

How many?

49.

49 complaints.

Well, had the Mayor not directed you not to come -- and I think Mayor's action was a very real disservice to the premise of people to Philadelphia -- you would have heard live testimony from people at the previous hearings from every point of view, and I think you would have had directly a much better appreciation of the kinds of problems that people in the community see, that they attribute to Section 8. It probably -- the statistics you have, I guess, were pretty much borne out by testimony. Many people testified in support of the Section 8 program, pointing out that when complaints were examined and locations pinned down, sometimes LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 77 Law and Government/Licenses and Inspections there were other tenants involved, not Section 8, sometimes there were homeowners that were the subject of the complaint; yet all of that had been attributed to Section 8. Then there were other people that had many different kinds of complaints about how the Section 8 proceeding went on. I think the same thing, Mr. Kromer, applies to you. I think a very valuable source of information was lost to the City by the Mayor's action in refusing to permit the City officials to participate in the hearing.

Excuse me. What period of time does it cover, November 8th to what time?

November the 6th through December the 4th.

December 4th?

Yes, sir.

And you have the same thing from December 4th to January?

That is correct. I do not have that here.

We would like to LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 78 Law and Government/Licenses and Inspections have that. So you had 49 complaints in a one-month -- I would say a one-month period, almost.

That is correct.

And 67 of those complaints were not PHA Section 8-related.

63 percent.

63 percent.

What happened with the 37 others? What was the follow-up, the 37 percent that was Section 8?

All the complaints we received were referred to the Investigations Unit. They -- some are already completed the investigation and the proper action was taken; others are still in the process of being investigated. And according to the result of the investigation, PHA will determine which action to take.

The majority of the ones that were PHA, could you characterize what the majority were like?

Yes, I can. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 79 Law and Government/Licenses and Inspections The majority of the complaints we received, they were for unauthorized occupancy.

For unauthorized occupancy?

Yes.

That means that some other individuals other than the Section 8 holder was living there.

That's correct.

How many of those were you able to prove that they were unauthorized, and how many of those were authorized?

I don't have those numbers with me. I can provide them to you. We did investigate every single case. Like I told you, on some cases where we did prove that it was unauthorized occupants, the assistance was terminated. On the cases where we could not prove, of course, we take the proper action on those cases, which is continue the investigation.

May I ask, Mr. Pernell, that the responses that are going to come LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 80 Law and Government/Licenses and Inspections back to Council from this panel, that if you could coordinate them, put them all together and have ten copies. If they're all forwarded to me, to Room 6 588, City Hall, Councilman David Cohen, I will see to it that every member that is here today will get a copy of your statement with all of the information.

Councilman Cohen, following on that, the question -- it just follows up right here on this. Mr. Pernell, earlier you had responded to Councilman Kenney regarding the number of evictions from 1989 to the present. You said you were going to send all of these numbers. Just in relation to these numbers and complaints and then the number that were actually Section 8 housing, could you just put on the record what were the numbers of evictions of tenants in 1997?

So you would like to know the report --

You gave us the total number from '87 to the present, you said LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 81 Law and Government/Licenses and Inspections it was 3,000.

Right.

For last year, how many were there?

We will be able to provide that information. I believe Councilman Kenney requested it for a two-year period, but we can provide it for summations on the two-year period or on an individual year-period.

Oh, so you don't have it here with you today.

I don't have it here with me today.

Oh, okay.

They had notified us before. They have a six-year compilation. Councilman Ortiz.

Continuing on, you mentioned about the utilization of administrative fees. The administrative fees currently of Section 8, where do they go to?

We, in compliance with HUD regulations, are allowed to use excess administrative fees generated by the Section 8 LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 82 Law and Government/Licenses and Inspections program to support the operating budget of the Housing Authority, particularly in those cases where our operating budget has been subsidized at less than a hundred percent.

And that amount is currently how much?

It is approximately $1.5 million.

$1.5 million?

Yes.

And if you're going to use the administrative fees for something other than the operating budget, what is going to be the impact in terms of the other operations of Philadelphia?

Each year, PHA's operating budget --

By the way, I have something here like $3 million. Somebody said to me that actually, the administrative fees are around $3 million.

It fluctuates, depending on the number of certificates that are active in a program at any one time. It has been as high as LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 83 Law and Government/Licenses and Inspections 2, $2-1/2 million. What is generally the case, being "a troubled agency," as referred to earlier, PHA is also considered an operationally troubled agency, which means that our liabilities sometimes exceed or projected revenue.

So if you were going to use the administrative fees for something other than the operating budget, it may continue your troubled situation.

I believe that the only other use other than directly back into the Section 8 program is to support operating activities. But the answer is yes, we don't receive any direct state funding, we don't receive on an ongoing basis --

That is the money that the Mayor says should be used to provide some other social services.

Yes.

Sort of like robbing Peter to pay Paul, or pay Paul to rob Peter, whatever it is. But it does not augur well for a LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 84 Law and Government/Licenses and Inspections well-functioning agency.

No. We are dependent on the fees to sometimes balance our operating budget.

And you may have to lay off people; is that not true?

That is the worst case scenario, yes.

And that could happen. Because, I mean, you know, the Mayor puts these things out, and people don't think that there are consequences to the actions that are going to have to be taken, and this is one of the consequences that has to be taken. So that's where the money's coming from; is that correct?

Yes, it is.

That's it.

One or two more follow-up questions. The issue of clusterization has been discussed in this forum, and prior to this, in the media and in some of the community meetings. There's a couple different situations I would like LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 85 Law and Government/Licenses and Inspections your opinion on. My experience, when it comes to permanent housing situations and opportunities for either mentally ill or former substance abuse individuals that have an opportunity by choice to live in a communal-type setting with subsidized rental assistance, that in many ways, they flourish and are more stable and progress in a better way than people who were formerly homeless, who may be mentally ill or former substance abusers being kind of left on their own. And the issue -- and, again, it's one of my favorite places, but the 15th and Fairmount Project Home is a 32- or 33-unit permanent housing operation that provides dignified, decent housing for formerly homeless people who have experienced both mental illness, substance-abuse problems, and other types of conditions that have put them in that situation. What is your opinion when it comes to the issue of clustering by choice, those types of individuals, to create a support network for permanent housing?

I think, Councilman, you LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 86 Law and Government/Licenses and Inspections hit it on the head when you said the support mechanism. In those cases where premise are identified that need a hands-on level of care from a strictly logistic standpoint, it is much easier to provide those services in a more concise area. That is exactly what some of the programs that mandate case management do. People don't go directly from a homeless situation to a totally free living situation. There is a transitional piece. And for those people who have those documented, identifiable needs, it is probably a very good way to approach it.

Under the current situation, as we see with homeless preferences available for Section 8 certificates bringing people to the top of the list, is it in fact fair for individuals who have these special needs to be put in a housing setting on own without prerequisite skills? We may try to provide them with those opportunities, but if they're rejected, we again, as prior testimony indicates, we have no way to LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 87 Law and Government/Licenses and Inspections force them to do that. Is that not a more detrimental situation in some cases, for either formerly homeless people, people with mental illness or people with substance abuse problems to be put on their own in a housing setting without the prerequisite support?

It is probably not the best use of the program. Again, in those cases where there are documented needs, there are transitional programs that that individual could be referred to.

But are they required to participate in those referral opportunities?

No, they're not.

The issue of clustering, it has been reported and testified to that multiple property openers, landlords who own more than 10 or 12, 20 properties, have on their own ways in many ways clustered Section 8 housing and poor tenants in one particular street or one particular area. Do you believe that decisions by LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 88 Law and Government/Licenses and Inspections landlords to accumulate multiple properties, 10, 15, properties on any given street and to 4 convert them to Section 8, in some ways, does that 5 also cluster the poor to the benefit of the 6 landlord, as opposed to what Mayor may have 7 suggested? 8

From the standpoint of 9 introducing a large number of low-income people to 10 a specific geographic area, yes, that would 11 probably constitute clustering as it's being 12 discussed today. 13

Do we do any 14 analysis on property owners, either corporate 15 property owners or individual multiple property 16 owners, that have speculated in various 17 neighborhoods because of the housing values that 18 make it financially attractive to do that, and 19 have created situations where people have been 20 ghetto-ized by landlords?

There currently exists no 22 cap on the limit of the number of units that a landlord can own. There also is not today a specific prohibition on any number of units on any specific street. As long as those units qualify LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 89 Law and Government/Licenses and Inspections and met HQS standards, they would be able to participate in the program.

Could you please, if possible, if you have the technical ability to do so, provide to the Committee a list of multiple property owners who have more, say, than five properties in a given zip code.

In a given zip code?

Can you break it down by zip code?

Yes.

For Any given zip code any given corporate entity that may own more than five properties in a given zip code, I would just be interested how it breaks down and what in what neighborhoods those concentrations occur. With all due respect to Council member Ortiz, and he's been very cooperative throughout the whole course of these hearings, he raised the issue about HUD audits. And the one thing I just wanted to comment on it is that it would be very difficult for a HUD to review audit to reveal a gouging or a situation because they are basing their analysis LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 90 Law and Government/Licenses and Inspections on established rent payment figures that may be too high to begin with. So that if we could to come, for sake of argument, an agreement that some of these prices that are being paid for two- and three- and four-bedroom houses are higher than they ought to be for the area to begin with, HUD, of course, would come in and do an audit, and they would find nothing wrong because they're basing that audit on the numbers that HUD has agreed to. And I don't mean there's anything nefarious about that, but the -- I'm sorry, could we do something about this sound system. (Interruption.)

I don't believe that there's anything nefarious about that, but I do believe that if you are basing your analysis on skewed fair-market rental rates to begin with, you're never going to find or put forth a position that people are getting more money for those properties than they should be.

If I might just comment on that. Part of the discussion that we had with LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 91 Law and Government/Licenses and Inspections Mr. Kromer when we started talking about working cooperatively with the City to do some analysis on the fair-market rent -- just for the record the fair-market rents are the maximum rents that are allowable. And I think one of the Council people did ask to see the numbers of units that were maxed out at the fair-market rent. But my sense is that when we really begin to do a comprehensive analysis, even though those fair-market rents are existing and are based on the jurisdiction, that when we break this down and begin to look at it more closely in relationship to the neighborhoods, that you will see some varying difference and not see the numbers of units that might be more closely tracked to the fair-market rents. I think you'll find that they will be lower.

You will find that the Section 8 payments will be lower?

I think you will find that as do the analysis that the approvals that are coming into landlords, even though they may be requesting the higher fair-market rent, if the neighborhood and the jurisdiction does not support LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 92 Law and Government/Licenses and Inspections that, those requests will not be processed. And that is, in fact, one of the issues that has been communicated to us from HUD, that need to take a closer look at the fair-market rents, and we are prepared to do that.

Okay. Are there any other questions from the Council members? (No further questions.)

Thank you very much for your patience and your participation. (Short break taken.)

We are now going to reconvene our hearing, and the Chair recognizes Mr. John Kromer. Councilman Cohen is on his way, so we'll wait till he gets here.

The next witness will be our good friend, John Kromer, Head of the Office of -- what do you call it? You've got so many different titles the Mayor's given you over the years.

The Office of Housing and Community Development. We haven't changed the name for several years. I think we should LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 93 Law and Government/Licenses and Inspections consider it this year.

But I think he calls you "the Housing Czar," among other things. John, we're very glad you're able to be here today with us. We'd like to ask you to go ahead and make whatever statement you would like to make. You can either give the statement that we have seen in writing; or, having given, it will be made a part of the record. And you can, if you choose --

Tell him to read it, if he can. Tell him to read it.

I'd like to run through it. I'll be quick.

Okay, because we got it so late perhaps maybe you'd better go through it.

Thank you I'm John Kromer, Director of Housing for the City. I'm pleased to have this opportunity today to present the Mayor's policy statement on the Section 8 rental assistance program to this City Council hearing. Mayor Rendell is unable to participate today due to a prior commitment to the U.S. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 94 Law and Government/Licenses and Inspections Conference of Mayors, which requires him to be in Washington. And I appreciate having the opportunity to speak this afternoon. In addition, I want to thank Fred Pernell, who has been consistently helpful and supportive in support of -- in response to questions and inquiries that I made during the course of participating in the drafting of this policy. It is correct that this was not a joint effort between the City and PHA.

Yeah, I'm just curious, why wasn't it?

Because of that, I'm a little more appreciative of --

It was not a joint effort.

No, he said it was not a joint effort, right?

Yes. If I could answer the questions answer after my testimony, I think I could be --

Well, just this first. Why was it not a joint effort?

The Mayor's decision was LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 95 Law and Government/Licenses and Inspections to prepare the policy paper with the support of his staff and with some participation from my --

Okay, I just wanted to have an answer on the record.

To prepare the policy paper, in essence, without the facts or something like that?

No, without the participation of PHA. And this would not be the first instance in which he had done that; it's his choice. He has undertaken housing policy initiatives, some of them, without the participation of me and my staff. The City/State/Philadelphia Plan is one example; his staff organized it, and the result was very effective. One particular --

You don't think it will have the same result in this case as far as being effective?

Clearly, there's much more to come. This is a policy statement; it is not a fully fleshed-out insured policy program. And we have much more to do together to get to that LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 96 Law and Government/Licenses and Inspections point.

All right, go ahead.

One broad objective of the Mayor's program is to bring together two housing resources, which can provide substantial benefit to the Philadelphia citizens and to neighborhoods across the City. S. Department of Housing & Urban Development funding made available to the City. The other is Philadelphia's Public Housing system, supported with HUD funding made available to the Philadelphia Housing Authority. In light of the onset of welfare reform and the decreasing level of federal and state funding available to Philadelphia, it is essential that these two resources be combined more effectively. Fortunately, the present is an excellent time to pursue opportunities to combine City and PHA resources. The Mayor and City Council president are chair and vice chair, respectively, of the PHA Board. City housing agencies, including the LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 97 Law and Government/Licenses and Inspections Office of Housing & Community Development, Philadelphia Housing Development Corporation, and the Redevelopment Authority have successfully collaborated with PHA on a number of mutually supported activities, from the use of Redevelopment Authority eminent domain powers to assemble public housing development sites, to the engagement of PHDC's Development Division to redevelop vacant, scattered-site public housing units. City Council has become more actively involved in addressing public housing issues, from the authorization of City support for Hope 6 Venture, such as the Schuykill Falls Development Plan, to the public hearings on Section 8, which continue today. The Mayor's program is based on several key principles. First, citizens of Philadelphia deserve the best possible access to decent, affordable housing. And to uphold this principle, the City and PHA must ensure that people seeking affordable housing have access to two things: first, the broadest possible choice of housing types and LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 98 Law and Government/Licenses and Inspections neighborhood locations, this is the issue of housing choice; and, secondly, the highest quality, best managed housing available. The private real estate market does not provide sufficient affordable housing possessing both of these characteristics. The City and PHA need to work together to combine housing choice and outstanding property management in order to promote fair housing and provide the best possible living environment for our citizens. The Section 8 program in its current form doesn't provide unlimited choice of housing types and neighborhood locations. Some neighbors have many rental units under Section 8 contract, while other neighborhoods have none. Nor does the Section 8 program necessarily provide the highest quality, best managed housing available. Some Section 8 units, such as those located at Brentwood Apartments, on Parkside Avenue, the site of yesterday's press conference, at which Mayor Rendell released this program, combine a terrific neighborhood location and an extraordinary level of management, including supportive services for residents. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 99 Law and Government/Licenses and Inspections Other Section 8 units in less attractive locations, however, are placed under contract to absentee owners represented by rental agents who have no commitment, nor capability to assist residents in need of supportive services. Second principle. Many low-income individuals and families, particularly those leaving the City's homeless shelter system require the best possible access to supportive services and case management. For formerly homeless people in particular, a housing unit alone is not enough. The City and PHA needs to devote their best efforts to providing residents with access to an array of supportive services, accompanied by case management. Our ability to deliver this support is limited by the declining level of resources available.

But this scarcity of resources makes it all the more important that the City and PHA do more to link affordable housing, supportive house service and case management. The Mayor's program proposes to address this priority through the following actions: Ending the policy of restricting access to the Section 8 program exclusively to tier-one LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 100 Law and Government/Licenses and Inspections applicants so that the PHA Board can admit tier-one applicants based on need and on the availability of supportive services and case management for these residents. Secondly, providing more funding. A million dollars in Section 8 administrative fees made to PHA from HUD for supportive services and case management. Third, directing PHA, OACD, and the City's Office of Emergency Shelter & Services to coordinate their efforts to link individuals and families in the Section 8 program with available resources. And, finally, by giving PHA the opportunity to increase the number of site-based Section 8 certificates, bringing the Section 8 program more developers with the capability to offer the best combination of affordable housing and accessible services. Although limitations of resources will continue to be a problem, the Mayor's program represents a significant improvement over current practices and provides $1 million to link housing and services. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 101 Law and Government/Licenses and Inspections Third principle, high-quality, affordable housing can be made available effectively within a single building, on a single block, or at scattered-site, dispersed locations. As the Mayor's program narrative indicates, subsidized housing, including Section 8 housing, can be produced through either consolidated-site or scattered-site approaches. Development proposals authorized for funding through the CDBG program approved by the Mayor and City Council annually produce outstanding affordable housing ventures; some are consolidated, others are scattered-site. These ventures occupied by many residents supported with Section 8 rental assistance are located in many different areas, from Chinatown to Mount Airy, to Port Richmond. During the past six years in which I've been Housing Director, no City Council member has indicated concern that CDBG-funded rental ventures involve an excessive concentration of subsidized housing at certain locations or create a barrier to fair housing or a limitation on housing choice and housing opportunity. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 102 Law and Government/Licenses and Inspections The Mayor's opposed to two kinds of clustering, of grouping subsidized housing units together: First, the grouping of public housing residents in inefficient, poorly designed, high-rise projects; and, second, the grouping of an excessive number of Section 8 units within a single block or a single building. Better coordination between the City and PHA can help determine how best to deal with excessive concentrations of Section 8 housing; just as recent coordination between the City and PHA has led to responsible decision-making about which public housing high-rises should be demolished, such as the Raymond Rosen and Schuykill Falls high-rises, and which should be modernized, such as the recently completed Blumberg Apartments. City and PHA staff developers, communities organizations, and housing advocates need to exercise good judgment and common sense in determining what level of Section 8 housing density is appropriate for a particular location. The Brentwood Apartments an award- winning rental venture sponsored by a nonprofit LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 103 Law and Government/Licenses and Inspections organization, with close community ties and widespread community support and developed with funding authorized by the Mayor and City Council. A total of of the 44 unit in this venture are 6 under Section 8 contract.

7 The Section 8 support has enabled the 8 Brentwood to be maintained as an intergenerational 9 housing site, combining Section 8 units for 10 elderly people, with non-Section 8 units for 11 families in the same building. No one has 12 complained that this level of Section 8 density is 13 inappropriate. 14 In contrast, a concentration of 20 15 Section 8 units on one block of Leidy Avenue 16 behind the Brentwood would, in my opinion, be 17 excessive for this small street. 18 An extreme policy of total 19 consolidation or a total dispersion of subsidized 20 housing would not be beneficial to Philadelphia residents and Philadelphia neighborhoods. Instead, we need to take responsibility for finding a combination of subsidized and market-rate units that work best for each site, in each community. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 104 Law and Government/Licenses and Inspections Let me just add one word with regard to the issue of people with disabilities. My understanding of the HUD regulations is that tenant-based certificates have no association with the issue of people with disabilities, and there's no requirement to accommodate people with disabilities in any special way in the tenant-based certificate program, in terms of developing accessible units. The site-based certificate program, however, has attached to it very specific requirements about making some of the units accessible to disabled people. And this is important because, in part for lack of Section 8's for disabled people, we have set up reserve funds and made a policy of setting up reserve funds from the community development block the shrinking community developing block grant, to support disabled people and make our rental housing affordable to disabled people. With more site-based certificates, we could more effectively address this issue of rental housing for disabled people. The Mayor's program does not call for LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 105 Law and Government/Licenses and Inspections the displacement of the Section 8 certificate holders who are currently complying with the program requirements. The Mayor's program does not dictate standards of landlord and tenant conduct that are more restrictive than or different from the standards imposed on landlords and tenants in CDBG-supported rental housing authorized each year by City Council, as part of Council's approval of the annual CDBG consolidated plan. To the extent that Council may be interested in pursuing a broader geographic dispersion of subsidized housing throughout Philadelphia neighborhoods offering broader housing choice and greater housing opportunity, this interest can be pursued much more readily if the PHA Board is given the opportunity to increase the number of Section 8 site-based certificates available each year, as recommended in the Mayor's program, rather than remaining subject to existing federal limitations on the proportion of Section 8 fund available for Section 8 certificates. To achieve broader geographic dispersion, Council could authorize CDBG funding LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 106 Law and Government/Licenses and Inspections for rental housing production, the line item, and the CDBG budget for rental housing that appears each year supported with Section 8 rental assistance to be made available on a priority basis, to specifically designated census tracks that currently have no subsidized housing. The way we could implement this would be to have our rental requests for proposals that are issued to developers say, In these census tracks, which currently have no subsidized housing, we will give preference to otherwise eligible rental development proposals over proposals for areas that currently have subsidized housing.

Meaning that we could say, you know, in the far Northeast --

Absolutely.

-- we have no 20 subsidized housing.

And the result of that would be that we see proposals, I believe for --

We could -- you mean that we could start building subsidized housing up there? LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 107 Law and Government/Licenses and Inspections

I believe we would see proposals for --

I would like the Mayor to begin putting that forward.

I think the result would be that proposals would come in for properties in Overbrook, Wynnefield, Manyunk.

You know that I'm talking about the Northeast?

I'm getting there. Roxborough, the far Northeast, West Mt. Airy, and other areas of the City. And we're not talking about putting projects in those areas. You're familiar with the rental development that we support. The developers are outstanding, they work with the neighbors, questions that are raised get resolved, and the results are real community assets. So this is one policy that we could consider --

But the conversation today is different, you see, because Section 8 has taken a whole different picture.

We can make it different. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 108 Law and Government/Licenses and Inspections And I think the Brentwood Apartments is an excellent example of how a community asset can be created through that combination of the CDBG development funding and the Section 8 site-based certificates. I'm almost done with my testimony, sorry to digress. The result of this priority designation would be CDBG funding of high-quality housing ventures produced by the outstanding private, nonprofit, and community development corporation developers currently participating in the program. The Congressionally mandated distinctions between public housing programs and other federal programs, such as CDBG, really make it possible for participants in discussions of this kind to engage in finger-pointing and assigning blame for past shortcomings of public programs. These Council hearings, along with responsible program proposals by Councilman Kenney the Tenants Action Group and others represent a step in the right direction, away from finger- pointing and towards constructive change in LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 109 Law and Government/Licenses and Inspections Philadelphia Section 8 approach. Mayor Rendell and I look forward to working with Council to engage PHA and City resources to provide greatest benefit to Philadelphia citizens and neighborhoods. Thank you.

During the testimony of Mr. Pernell, I raised the question of, Isn't it a fact that the Mayor's report yesterday -- and I criticized it then and do again -- somehow the media seemed more important to the Mayor's office than the City Council with respect to getting information as to what the Mayor intends to do? I raised the question as to whether or not the Mayor's report will permit clusterization -- that's a big word and I always have difficulty remembering it. That clusterization would become much more possible than it currently exists? Isn't that true.

I don't think so.

Why?

Because, as the report points out, decent rental housing with support services can be produced in a consolidated LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 110 Law and Government/Licenses and Inspections location that can be a real neighborhood asset, or through a scattered-site approach. And, again, Dignity Housing is a model of the scattered-site approach.

Well, we had the buildings that were torn down recently, they were real good examples of site locations, weren't they? You know, there, if the City wanted to, use some concept of maximum economy at large groupings of families, that didn't seem to work.

Everyone that I hear from on this issue seems to be in agreement that high-rise development is not the way to go, that low-rise, low-density, and especially mixed-income, a mixed kind of development is the way to go. And, again, the Brentwood is an example of how this can happen. And this is part of the Mayor's approach.

Well, one can always use one good example. We're not talking about a single example; we're talking about City-wide policy. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 111 Law and Government/Licenses and Inspections Incidentally, did the Law Department go over this report?

Pardon me?

Did the Law Department go over the Mayor's report?

I don't know whether the Law Department reviewed it or not.

Well, because it seems to me that it's a direct violation of federal laws that exist. It seems to me that you're trying to get permission to exempt certain neighborhoods and to inundate other neighborhoods.

Well, as I pointed out --

Just as many neighborhoods have fought for years against having too much of any kind of housing in their area, but a sort of representative distribution of housing of all kinds, whether it's for homeless, whether it's for people who need special services, it seems to me this flies directly in the face not only of law but of every traditional forward-thinking program seeking to develop diverse neighborhoods with cross sections of population. LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 112 Law and Government/Licenses and Inspections

I think you could really achieve the opposite effect and achieve greater housing choice and greater dispersion of subsidized housing through the approach that I outlined. And I think we can use the community development block grant, which Council can influence as a tool for doing that. We can call the shots.

All right. I don't -- I see I have --

Just one other point regarding one of your earlier comments. Brentwood is one venture. Again, I've been around for six years, and I don't know of a rental development financed through the CDBG program which has been a subject of controversy or complaints about landlord negligence or bad tenants. And there's a reason for that. These developments are carefully underwritten and they're carefully monitored, not only by us but by the state and federal authorities. And they're much more reliable because of that.

My last comment LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 113 Law and Government/Licenses and Inspections before I recognize the other Council members. Has there been anything recently that prevented the making available of services to homeless people who had come from the shelters into Section 8 housing?

Not that I know of, and that's why we have a big opportunity here.

Well, why should we believe that the City that, as far as I know, abdicated its responsibility in providing those services, even though, as I understand it, it had gotten funds for the offering of those services? Why should we believe now that the City would provide these services when it has had the opportunity all along and never has done it?

The opportunity really is to get together the City agencies and PHA to make sure that this -- that the issue of service delivery does get addressed effectively. But the City --

But nothing's ever stopped the City from doing that before.

In prior years, some of the funding that the City anticipated was federal LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 114 Law and Government/Licenses and Inspections McKinney money, and the City was subsequently told by HUD, after repeated attempts to change HUD policy, that McKinney money could not be used for supportive services. All of the funding that the City has received for supportive services and case management has been used for that purpose. Clearly, it's not enough; and very clearly, the coordination between agencies is not sufficient to use the existing resources effectively. We need more.

Councilman Nutter.

Thank you. Good afternoon Mr. Kromer. I'm just going to ask a couple preliminary questions. Prior to your taking on this current assignment, both articulating the Mayor's policy with regard to Section 8 -- or I assume you were a participant in the December 10th meeting or group.

Yes.

What has been, in your tenure as housing director, your contact or experience with the Section 8 program?

I was acting director of LAW AND GOVERNMENT/LICENSES AND INSPECTIONS 115 Law and Government/Licenses and Inspections the Philadelphia Housing Authority for four months during 1993. And in both that capacity and in my role at OHCD, the issue of tier-one applicants, how to use Section 8 rental assistance and supportive services for formerly homeless people and others was a recurring issue. And concern about that issue really was the basis for a lot of my recommendations, some of which were adopted here.

During your tenure, I guess, you were considered interim executive director.

That's right.