COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, December 16, 2009 11:00 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN WILLIAM GREENLEE COUNCILMAN JACK KELLY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO RESOLUTIONS 090890, 090891, 090892, 090893 and 090918 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. This is a public hearing of the Committee of the Whole. I would ask Mr. McPherson to please read the Resolution Nos. 090890, 090891, 090892, and 090893. MR. McPHERSON: Resolution 9 090890, appointing Stephanie Wall to the Board of Directors for the Old City Special Services District. Resolution 090891, appointing Arthur Holst to the Board of Directors for the Old City Special Services District. Resolution 090892, reappointing Sheryl Bar to the Board of Directors for the Old City Special Services District. And Resolution 090893, reappointing Harvey Spear to the Board of Directors for the Old City Special Services District. (Witnesses approached witness table.)
Thank 3 12/16/09 - WHOLE - BILL 090890, etc. you, Charlie. Good morning. Kindly identify yourself for the record.
Good morning. I'm Cynthia Filo, President and CEO of the Old City District. To my left is Harvey Spear and then to his left is Arthur Holst.
Madam President, Councilman DiCicco and other members of Council, good morning. As I said before, I'm Cynthia Filo, the President and CEO of the Old City District, and I want to thank you for the opportunity to present for your consideration these four members to the Old City District Board of Directors. I have testimony here today that I prepared for you, but I'd like to kindly go through it rather quickly, because I know you have a very full schedule today. 4 12/16/09 - WHOLE - BILL 090890, etc. As I said, I have Harvey Spear and Arthur Holst here with me today. The other individuals for your consideration, Stephanie Wall and Sheryl Bar, were unable to attend today due to scheduling conflicts, but they send their apologies as well as happy holidays to all of you. As you know, the Old City District is a business improvement organization that has been doing great things for Old City since 1998. These individuals will help us continue to improve our neighborhood. Stephanie Wall is a Senior Vice-President with Wells Fargo-Wachovia Bank and is a Community Relations Executive. She's very excited to work as a Board member of the District. Wells Fargo-Wachovia has a presence spanning the block of Market Street from 4th to 5th Streets of Old City, and we look forward to Stephanie working with us. Sheryl Bar has been a Board member for the past number of years. She 5 12/16/09 - WHOLE - BILL 090890, etc. heads our Marketing Committee. Through her efforts, she's brought together the District, the Old City Civic Association, Old City Arts Association and the Old City Business Collective to work as one to promote Old City. That task, in and of itself, is a feat. She is also a resident of the Old City area. Harvey Spear is also a current Board member. He owns E-Z Park Parking and Central Associates. Both have locations within Old City. He is the head of our Clean, Safe and Public Spaces Committee. Additionally, he has worked tirelessly to keep Old City safe from nuisance businesses by participating in the Old City District Task Force. Additionally, he is waiting to hear any moment when he becomes a grandfather for the first time.
So if he has to get out of here, please accept his apologies. 6 12/16/09 - WHOLE - BILL 090890, etc. Arthur Holst has been involved with the District since its inception. He has served on our Board and he's also served in positions of leadership on our Executive Board. He is coming back to our Board of Directors, and we really look forward to his assistance. He is the Business and Government Affairs Manager of the Philadelphia Water Department. He has also been the head of the Betsy Ross House in the past and has worked with many of you here as a Chief of Staff in City Council. All four of these individuals will work hard to fulfill the mission of the District to make Old City prosper. I thank you for your time today. Arthur, Harvey and I would be more than happy to answer any questions that any Councilpeople have. Thank you.
Thank you. So the two newly appointees 7 12/16/09 - WHOLE - BILL 090890, etc. would be Stephanie Wall and Arthur Holst?
And Arthur Holst, that's correct. And then the reappointments are Harvey and Sheryl.
Great. Are there any questions from members of the Committee? (No response.)
Thank you. Certainly all of us know Harvey Spear and all of us thank them for their investment in the City, but I would be remiss if I didn't mention Arthur Holst and all the exciting, creative and well-thought-out information we have received from him over the years, and we do thank him.
Thank 8 12/16/09 - WHOLE - BILL 090890, etc. you.
Any other questions or comments from members of the Committee? (No response.)
Thank you very much. Have a nice holiday and a happy new year, everyone.
You do the same. I would ask Mr. McPherson to please read the title of Resolution 17 090918. MR. McPHERSON: Resolution 19 090918, approving the annual Program Statement and Budget for the expenditure of the Neighborhood Transformation Initiative Bond Proceeds for Fiscal Year 2010, and our first witness is Clarence Armbrister. (Witness approached witness 9 12/16/09 - WHOLE - BILL 090890, etc. table.)
Good morning, Council President. How are you this morning?
Good morning, Council President Verna, other members of the Committee on the Whole. I am Clarence Armbrister, Chief of Staff to Mayor Michael Nutter, and I am here today to present the Nutter Administration's Fiscal Year 2010 Program Statement and Budget for the Neighborhood Transformation Initiative, otherwise known as NTI. NTI was an effort started by former Mayor John Street in 2001 to 10 12/16/09 - WHOLE - BILL 090890, etc. rebuild and restore Philadelphia's neighborhoods. Since its first bonds were issued in 2002, more than $259 million has been spent to demolish vacant and unsafe buildings, clean lots, repair and renovate housing, and acquire land and buildings for redevelopment. Eighty-seven million dollars was budgeted for land acquisition, 34 million of which has already been spent, with an additional $11 million legally committed. Two years ago, City Council appropriated funds for an audit of those land acquisition funds to determine how money had been spent to date and how much money remained for future property purchases. In the spring of 2008, the Nutter Administration joined Council's request for an audit. That summer, the City Controller's Office, with support from the accounting firm of WithumSmith+Brown, began to examine the accounting and property transaction records maintained by the Philadelphia 11 12/16/09 - WHOLE - BILL 090890, etc. Redevelopment Authority, the agency overseeing all acquisition and sales transactions. The Controller's Office issued its final report on October 14, 2009. The audit found that there was significant lack of oversight by the City on NTI land acquisition programs and that there were major accounting and reporting deficiencies at the RDA. Since last year, new leadership at the RDA has taken steps to resolve the issues raised by the City Controller. It has engaged WithumSmith+Brown to help develop an internal accounting and reporting system that will accurately and efficiently track all land purchases. Moving forward, the Nutter Administration wants to make sure the problems identified by the Controller never happen again. We are confident that once those new systems are in place, land acquisition can restart. The $45 million in land 12 12/16/09 - WHOLE - BILL 090890, etc. acquisition bond funds remaining to be drawn down represents the largest line item in the Administration's proposed FY2010 budget. The remaining $13 million has been distributed among a number of worthy programs that should look familiar to Councilmembers. Given the success of these programs over time, we believe the proposed allocations to be the best use of remaining tax-exempt bond proceeds. We propose that tax-exempt money continue to fund programs such as Basic Systems Repair, or BSRP as it's often described, and Adoptive (sic) Modification, which have been so successful over the years. The dollars spent to date on BSRP have provided City homeowners with heating system replacement, plumbing and drainage system replacement, wiring, roof replacement and structural systems repairs. Weatherization costs of up to $2,000 per house are also covered, helping to lower heating and cooling costs for the homeowner. Thousands of 13 12/16/09 - WHOLE - BILL 090890, etc. families have been helped through this program. The Adaptive Modification program has helped more than a thousand elderly homeowners stay in their houses. Currently, the program has a waiting list of more than 230 homeowners. Demolition and vacant property stabilization will also continue under this proposed budget, which allocates more than $3 million for these purposes. Finally, the Administration proposes a new initiative that would bring weatherization and other home repair dollars to those neighborhoods targeted in HUD's Neighborhood Stabilization Program, expanding the reach of this effort. Let me now move to the issue that is probably of greatest interest to City Councilmembers - land acquisition funds.
The original budget for land purchases was $89 million. That amount included $72 million in Qualified Redevelopment and taxable bond proceeds, 14 12/16/09 - WHOLE - BILL 090890, etc. $10 million in Community Development Block Grants and $5 million in Pennsylvania Department of Community and Economic Development funds. Over the years, money has been spent, interest on the bonds has been earned, and land sale proceeds and collected tax liens have been recycled back to the budget. In addition, some Councilmembers reallocated the monies available to spend in their district. 5 million remains un-obligated in the acquisition line, distributed among the Council district and City Significant budgets. The Controller's audit confirmed two things that I want to emphasize. First, the previous Administration spent down the most flexible pot of acquisition funds, the taxable bond funds. And, second, Qualified Redevelopment Bonds, or QRBs, are the major source of land acquisition funds that remain. 15 12/16/09 - WHOLE - BILL 090890, etc. Before I move on, let me quickly put some definition behind the sources of acquisition funding. QRBs can only be used in those areas of the City designated by City Council in 2005, and any property acquired using QRBs must ultimately be sold at fair market value. NTI has approximately $45 million remaining in QRB funds to be drawn down and spent. In sharp contrast, however, taxable bonds could be used anywhere and land acquired could be sold below fair market value. Fortunately, land sale proceeds and recycled liens enjoy the same flexibility as taxable bonds. 2 million in flexible monies existed. This figure includes funds reallocated from the Equitable Development Strategy program. Another source of NTI land acquisition funds was the Commonwealth. Two separate programs provided money - Community Development Block Grant, or 16 12/16/09 - WHOLE - BILL 090890, etc. CDBG, and the Department of Community and Economic Development, or DCED. CDBG monies must be spent on fundable, eligible activities in accordance with federal regulations. Such activities may include affordable housing and community economic development that creates jobs for low-moderate income residents. The future use of land acquired with CDBG funds must comply with federal regulations. Ten million dollars in CDBG dollars remain. Land acquired with DCED funds must be used for specific affordable housing ventures that are approved by DCED. Therefore, DCED funds cannot be used for side yard acquisitions or to support individual commercial developments. The acquisition must be part of a strategic development reviewed and approved by DCED. 9 million left in DCED funds. Given the fact that very few 17 12/16/09 - WHOLE - BILL 090890, etc. flexible dollars remain relative to QRB, I want to emphasize to all of you that the Nutter Administration is eager to identify additional flexible dollars for land acquisitions as you are. To do so, RDA staff is taking the following steps: Number one, the staff has spent the last six months examining the 1,500 properties for which a Declaration of Taking has been made to the Court. It has been determining which of these are located in QRB areas and whether CDBG or DCED funds could be used to make the required payments into Court. Preliminary work indicates that a significant amount of the more than $11 million owed to Court could be covered by these three sources. This means that not all of the remaining flexible dollars will be needed to fund acquisition commitments already made. RDA staff has also been reviewing all land acquisition expenses already funded using taxable bond 18 12/16/09 - WHOLE - BILL 090890, etc. proceeds to see whether any of those might be reallocated to QRB bucket. The staff has made a preliminary assessment that approximately $3 million of these previous transactions might be QRB eligible, which would allow taxable dollars to be freed up.
Staff is now examining each individual property sale more closely so that a more definite determination might be made. When it finishes this work, we will share the details with City Councilmembers. Just to repeat, the Nutter Administration is doing all that it can to identify these past land transactions where QRB dollars could be used. We realize that some Councilmembers have no 19 QRB areas in their districts, so the only way to provide them with acquisition funds is to free up flexible dollars. We are as eager to spend these funds as you are, and we want to do so in a thoughtful way that ensures every Councilmember has the opportunity to 19 12/16/09 - WHOLE - BILL 090890, etc. bring economic revitalization to his or her district. My final point on the acquisition budget is this going forward: We all have to be more careful than our predecessors about how the more flexible acquisition dollars are spent. One of the reasons that the City got into this situation was a lack of coordination and policy oversight. As you know, that is why my office was designated to be the final point of contact on NTI and one of the reasons that we're working very closely with the Council Oversight Committee. Thank you for your time this morning. I'll be happy to take any questions you might have for me.
Thank you very much. Mr. Armbrister, from your testimony, I realize that staff has been examining properties for which a Declaration of Taking has been filed to 20 12/16/09 - WHOLE - BILL 090890, etc. determine whether CDBG or DCED funds could be used to make the acquisitions and that they are reviewing all land acquisition expenses funded by taxable bond proceeds to determine whether any of those expenses might be reallocated to non-restricted uses. At this time, can you summarize the source of all funding that is clearly available for the acquisition of property that must be sold at fair market value?
I could tell you where we are to date, but pending the resolution of that analysis, it may change. I mean, so I can give you a number as to where we are as part of the Program Budget and Statement, but we are not in a position that we can tell you where the most flexible dollars are, because we haven't completed that analysis of the 1,500 properties.
Further, can you tell us of all funding that can clearly be used for the other 21 12/16/09 - WHOLE - BILL 090890, etc. eligible purposes.
Again, I can give you where we currently stand, but subject to the analysis that's being done by the RDA, those numbers could change slightly depending on our ability to substitute properties out as I described in my testimony.
When do you anticipate that this information will be available in order for City Council to make an informed decision regarding the proposed budget?
Council President, I think that that analysis should be done certainly by the beginning of the new calendar year. So probably by the end of this month, first week of January.
Thank you. Has the City been placing liens on properties that have been demolished or stabilized with NTI funds? 22 12/16/09 - WHOLE - BILL 090890, etc.
I don't know, Council President. I know that that was an issue that was raised very recently, that we may have discovered that during the course of the demolitions, there may have been properties which might not have been liened. We are currently investigating that assertion.
If the properties have not been liened, what can we do about it, or is it too late?
We don't know. That's one of the other things that we're looking at as well, as to whether or not there is any reason that we can't go back and subsequently lien those properties. But that's something once we determine whether or not that assertion is correct, we'll also examine our ability to go back and lien those properties, if possible.
So we have no indication as to what the total value of properties have been or should have been liened? 23 12/16/09 - WHOLE - BILL 090890, etc.
At this point in time based on the assertion that was made, I can't say that we do. That's correct.
Do we have any indication as to how much money has been collected, how much may we still be able to collect?
Well, I know with respect to liens, in the Program Statement and Budget, we've identified both tax sales and recycled lien sales. I couldn't give you a breakout, but the combination of both of those that are in the Program Budget currently is about $4.5 million between tax sales and liened properties that have been recycled. But, again, not knowing whether or not the assertion about properties that may not have been liened is true, we will have to go back and make a determination as to whether or not that is exactly correct.
Mr. Armbrister, City Council was sent a 24 12/16/09 - WHOLE - BILL 090890, etc. report dated February 22nd, 2008 that summarized NTI encapsulations by City Council district. Is it possible to have these properties listed by address so that it would be helpful to us in order for each Councilmember to determine the final disposition of these properties?
I don't know, but I could certainly find out. I'll check and find out if that's possible.
Because I know that I had made several requests for encapsulation. It took so long that by the time anybody got around to it, the property had to be demolished.
All right. The Chair recognizes Councilwoman Krajewski. 25 12/16/09 - WHOLE - BILL 090890, etc.
Thank you. The Chair recognizes Councilman Clarke.
Thank you, Madam President. I'll have a number of questions, but I'll just be brief on -- I'll just ask a couple. I know a number of members have an interest in this and will be --
With respect to the bonds themselves, is there a timeline on when they must be spent?
With respect to the tax-exempt bonds, there's generally an expectation that they'll be 12/16/09 - WHOLE - BILL 090890, etc. spent within a certain period of time, or if you don't have reasonable expectations about that, then you could subject them to losing their tax-exempt status.
I think with respect to the QRBs, my recollection is that it's maybe March of 2011, I believe, or something like that. I'll check. Yeah, it's March 2011.
The tax-exempt bonds I would expect have -- if they were issued around the same time, they should have a similar date.
I just 27 12/16/09 - WHOLE - BILL 090890, etc. wanted to get some clarity on that. In your testimony in the last paragraph on the first page, you reference the remaining $13 million that are available and more flexible dollars. The tax-exempt money continues to fund programs such as Basic Systems Repair and Adaptive Mod. In the initial program, was there a formula associated with how much money, how much of the tax-exempt money, should go towards those programs? What I'm trying to get at, because the tax-exempt dollars are, from our perspective, dollars that can fix the problem, some of the problem, particularly the problems associated with those two Council districts that have no 20 QRB-eligible areas and a couple of other districts that have limited QRB dollars. So is it the proposal to spend all of the tax-exempt for these particular programs or a small portion? Because it's not quite clear. 28 12/16/09 - WHOLE - BILL 090890, etc.
In the Program Statement and Budget on, I guess it's Figure -- 5
It's . At , there are a number of proposed expenditures with respect to the tax-exempt bonds, many of which include the kind of programs that have been part and parcel of the NTI program. So, for example, there is $489,000 for retaining wall reconstruction, if I'm reading this correctly, another $925,000 for the employer -- no; the targeted -- the Employer-Assisted Housing program. It's hard to read. These don't have lines across them. So there are a number of uses 29 12/16/09 - WHOLE - BILL 090890, etc. for the tax-exempt bond proceeds that have been proposed as part of the Program Statement and Budget, which total almost the $13 million that I described in my testimony.
-- my concern is that if we are targeting all of that money for those particular programs, it will limit our ability to fix the problem in those non-QRB-qualified areas.
It could. I mean, if you're saying could that be a source of funding --
I guess I'm asking the question. In terms of priorities, Council obviously has this 30 12/16/09 - WHOLE - BILL 090890, etc. priority. Our priorities are fixing the problems associated with those areas that don't have QRB-qualified areas and those Council districts that have limited. And I guess from our perspective and, to some degree, our priorities are making sure that those Councilmembers are made whole based on the commitments from a dollar perspective, but, secondly, most importantly, the ability to spend those dollars. So if the thought is to spend all of the 13 million on programs that are worthy programs, but it will reduce dramatically the ability to fix the problem in those Council districts, where should the priority lie, from your perspective, the Administration?
Well, I think the Administration has proposed what we think is a balanced approach to at least continuing programs that have proven to be successful. We do note that the acquisition issue remains to be solved, 31 12/16/09 - WHOLE - BILL 090890, etc. and what we're trying to do is expand the ability of all of us to have as much flexible taxable dollars and other resources as possible. So, I mean, we're going to have to find a balance somewhere between those two issues.
But don't you believe that the CDBG dollars can be used for those programs that were mentioned earlier?
Within the restrictions that CDBG and DCED, yes, it's very possible that those could be used, but, again --
So I guess my question is, why wouldn't we look at those possibilities for these programs as opposed to using all of the tax-exempt dollars for these programs to make these Council districts whole?
Give me one second. I'm sorry. Could you repeat the question, Councilman? I'm sorry. 32 12/16/09 - WHOLE - BILL 090890, etc.
Understanding -- and I'm not sure about the retaining wall, but most of the other proposals as it relates to these programs are CDBG eligible. So the thought would be that we may look at future CDBG dollars to address those particular issues, particularly since my understanding in both this calendar year and future calendar years it's anticipated that the Obama Administration will increase the Block Grant allocation to counties and cities and states across the country and focus on the tax-exempt to resolve the problem in those Council districts, because --
Well, there are limitations with respect to tax-exempt, your ability to use them for acquisition, which I assume you're aware of those limitations, our ability --
But you can't 33 12/16/09 - WHOLE - BILL 090890, etc. use them for acquisition. The tax-exempt proceeds I don't think can be used for acquisition.
Correct. But I'm saying in those two Council districts that we're speaking of -- and I'm sure there will be questions by the members representing those areas -- that there are proposed uses for those dollars that are not acquisition related. So I'm saying, why wouldn't we just focus on fixing those issues where tax-exempt dollars would be eligible expenditures, fix those areas, those problems, based on the commitment to those Council districts and then proceed from that point? And obviously that's Council's perspective, because we want to resolve --
Understood. That's something we can certainly look at, but --
Instead of committing the 13 million to worthy programs but programs that don't address 34 12/16/09 - WHOLE - BILL 090890, etc. those problems in those Council districts.
Right. Because the limitation on the use of those tax-exempt dollars is such that we can't use them for acquisition. But I understand your point in terms of trying to utilize the --
I'll be more specific. If there's a district that preferences to use the tax-exempt dollars on a publicly owned facility, which I understand is an eligible expense --
-- would it make sense to look at these tax-exempt dollars?
So the 13 million as it relates to the commitment to the worthy programs, again, I reiterate, is not set in stone in terms 35 12/16/09 - WHOLE - BILL 090890, etc. of --
You asked what the Administration -- we propose that we use them in the way we did, but it's certainly something that the Council will have some say about how we utilize those funds. So I think that's a fair statement.
Okay. I won't beat a dead horse. One quick question and I'll move on, because I know the other members have questions. In terms of the flexibility in some of the bond dollars upon recycling, just for the record, it was our understanding, based on bond counsel's opinion, that QRB dollars that are recycled for various purposes have extremely flexible terms so that they could be spent in non-QRB-eligible areas; am I correct?
You mean once the sale proceeds -- once the proceeds 36 12/16/09 - WHOLE - BILL 090890, etc. from the sale --
Yeah. They don't have the restrictions that the original proceeds have, that's correct.
So in an instance of a Council district that has limited areas -- and I, again, won't specify the Council district; I'm sure that Councilperson will do that -- that if there are QRB dollars spent in that particular area, the recycling agreement that I understand the Administration is supporting, those dollars can then be spent in other portions of the district that are not QRB?
One last question on this round. With respect to areas, QRBs must be used for market-rate purposes?
The properties 37 12/16/09 - WHOLE - BILL 090890, etc. disposed have to be sold at fair market value, that's correct.
So if -- and I just want to get clarity, because I thought I heard something a little different. If a property is acquired, they must pay fair market value obviously to the owner of the property upon condemnation. If the property is then sold to an entity that will build, say, senior citizen housing and the senior citizen housing is obviously affordable, is restricted to affordable residents, therefore, low-income residents, that will lower the value of that property; am I correct?
If what you're saying, if there are restrictions that are placed on the redevelopment of the property that might affect its value, my understanding is those things can be taken into account with respect to determining the value of the property. 38 12/16/09 - WHOLE - BILL 090890, etc.
So because you were kind of -- your volume went down a little lower.
So the sale of the property can be reduced based on the reduced value of the property because of the restrictions on the sale?
Right. I state that -- I think we've gotten clarification from bond counsel that that is an appropriate analysis.
So the ability to fix that particular problem is lessened? Say if we wanted to swap out or if OHCD wanted to put additional subsidy to basically pay for the acquisition of the land, it would be diminished dramatically by virtue of the lower value of that property?
Well, obviously whether it's diminished dramatically or not is a function of the particular circumstances, but those 39 12/16/09 - WHOLE - BILL 090890, etc. factors are taken into consideration in determining the value of the property, is my understanding based on information I've seen from bond counsel.
Okay. All right. Thank you. Madam President, I have some other questions, but I'll defer to other Councilmembers at this time.
Very well. The Chair recognizes Councilwoman Miller.
Thank you. Thank you, Madam Chair. Good morning, Mr. Armbrister.
Can you explain exactly what a Qualified Redevelopment area is and what determines that qualification?
I will do my best. I'm going to look to see if I have 40 12/16/09 - WHOLE - BILL 090890, etc. any help, because I wasn't here when the original statute was written. But a Qualified Redevelopment area was established at the time that the original ordinance was established, and it, based on tax law restrictions and policy decisions that were made I guess by this Council, limited the areas in which those proceeds could be used. I think Terry Gillen has joined me at the table, who can give you a much more detailed explanation of what the Qualified Redevelopment Bond areas are.
Yeah. This is Terry Gillen. It's exactly what Clay just said, which is that in order to get the tax exemption from the IRS, the City agreed that it would limit its spending to certain essentially blighted areas, and that seemed to be the thinking behind the Administration and Council when it set up the QRB map. And so the City and Council designated what it considered 41 12/16/09 - WHOLE - BILL 090890, etc. certain blighted neighborhoods that were eligible for this, and that was part of the terms on which the bonds were issued.
Well, it's interesting that it would be determined by blighted areas, because in my district, I have a lot of blighted areas that are not QRB qualified, and I'm just trying to figure out what makes an area QRB eligible and not.
Councilwoman, we would agree. We weren't here when the metric -- my recollection was there was some metric that was used to determine the areas. I'm not --
Back when it was originally done in 2002, I guess, when the ordinance was originally adopted. But as Terry said, once we made a commitment that we would issue the tax-exempt bonds based on those areas, we are held to that commitment. And so the 42 12/16/09 - WHOLE - BILL 090890, etc. areas are what the areas are, and that was a policy determination that was made with the Council and the then-Administration at that time.
Okay. Well, one of the things that I guess we could do in City Council is to amend the ordinance to include whatever it is we need to to expand our QRB areas.
That may be one thing that you cannot do based on the tax-exempt nature of the bonds. We can't now, subsequent to the issuance of the bonds, go back and amend the area. So that's one of the limitations that we have, unfortunately, in this program.
All right. I still don't know what a QRB area is, but...
Well -- okay. I mean, it's basically, as Ms. Gillen said, it's based on some pre-determined policy decisions that were made by the Council and the then-Administration about 43 12/16/09 - WHOLE - BILL 090890, etc. what was a blighted area, and in order to issue bonds to resolve blight pursuant to the tax-exempt -- if you wanted to get a tax-exempt financing, you had to commit to spend bond proceeds only in those areas that were identified at the time.
So those areas are maybe one of our areas in our district that we stated was a redevelopment area?
I don't know the actual criteria, but I think there was some metric that might have been used that had to do with the number of abandoned housing or things like that, but we can certainly go back and dig up the history and try to provide you with that.
You're welcome. The Chair recognizes Councilman 44 12/16/09 - WHOLE - BILL 090890, etc. O'Neill.
Thank you, Madam President. Mr. Armbrister, Councilman Clarke was having a question and answer with you that is still ongoing about districts that have been shorted by mistake, I hope --
-- in terms of the calculations. It's clear that a mistake was made. I'm not really concerned with who made it. I'm concerned with it being corrected. I don't think there's any question that the 10th District started with a million 850 approximately, 1.450 in land acquisition, 410 in -- what's the other one called?
The demolition and encapsulation. The 1.450, 250,000 was spent on 45 12/16/09 - WHOLE - BILL 090890, etc. a project, a senior project, leaving a million two. That was the land acquisition money. You have and hopefully Redevelopment Authority has always had a copy of the Council resolution moving that money to the demolition side, getting it out of land acquisition from my district. So that was a million two. That money, when the report was done on land acquisition, showed that the money had been spent. It was not spent. That million two is still unspent. So I'm hoping that when a mistake was made, however it was made -- it's real money. It was real money assigned to the 10th District. It was not spent. When you're making your recommendation, you're making it thinking the money was spent. I understand that.
Let me finish. But once you realize that that 46 12/16/09 - WHOLE - BILL 090890, etc. money wasn't spent, I don't know what other action the Mayor can take, because I know he's a fair person, than restore that money and redo your budget, because there was a mistake made, plain and simple. Then you go to the demolition/encapsulation money from the beginning --
I just want to make sure the record reflects what the Budget -- or the Program Statement reflects, is that there was certainly a reallocation made of those funds, that your land acquisition budget was reduced. I'm not aware, just as you are not aware, of any place that it says it was in fact spent someplace else, the $1.2 million that was moved. 47 12/16/09 - WHOLE - BILL 090890, etc. What we do know is that of the proceeds that were spent for land acquisition, $13 million or thereabout, $11 million more than we had taxable funds for, were spent in that area.
I understand, but you would agree my money was not spent, my million two?
You think there's a question possibly that the million two was spent? Aren't we clear at least that it wasn't spent?
You guys have been working to make me whole for a month at least since you knew this and you don't know yet that it wasn't spent? 48 12/16/09 - WHOLE - BILL 090890, etc.
You still don't know that? Is there anybody here from the Redevelopment Authority?
Could I have them up here? Because I really want to know that at least the Redevelopment Authority knows that that million two was never spent in the 10th District. There's another smaller fund that the same question is going to be asked that, but the question was --
Spent, period. It was moved -- the money was moved by Council resolution. What I want to know, does the Redevelopment Authority believe that the money was spent or do they correctly know that it wasn't spent? Because I can 49 12/16/09 - WHOLE - BILL 090890, etc. guarantee you, it wasn't spent.
Sure, Councilman. I mean, I'm just going to tell you that we are aware of your concern and we're looking at it. I can't tell you --
I've had assurances from the Mayor that everything has been in the ongoing process of being done to straighten this out. The easy part of it is that it wasn't spent. The Redevelopment Authority would have to 50 12/16/09 - WHOLE - BILL 090890, etc. know if the money was spent in the 10th District. It wasn't spent. Can you at least agree on that today, one of you?
I'm not asking whether it was stolen or whether there was a mistake made or anything else.
Just whether it was spent in the 10th District. We still don't know that today?
So there could be a million two spent in my district that I wasn't aware of and the Redevelopment Authority is still checking? This four days of the Inquirer showing an abominable situation in our 51 12/16/09 - WHOLE - BILL 090890, etc. criminal justice system, this is worse, because this was either spent or it wasn't. There's a whole lot of detail involved in those discussions about the DA's Office. This is, was the money spent in the 10th District or not. If the Redevelopment Authority doesn't know that today, we've got some real problems on our hands, because it's not like this came up today. I've been asking since the Mayor took office when this money could be spent. Consistent answer, which I understood, not until the audit is finished. Okay. Then the money disappeared. But it doesn't disappear. Someone made a mistake saying it had been spent. And we today, having hearings on NTI that I know the Mayor was very concerned about, the Administration was very concerned about, and I'm told everything is being done to make the 10th District whole, because it was clearly not spent, we still don't know. You can't not know if your 52 12/16/09 - WHOLE - BILL 090890, etc. agency -- they either spent the money or they didn't. I can't -- I heard some bad things about the RDA. I didn't think that incompetence was one of them. I thought maybe people didn't think the service was good, a little slow, snowballing sometimes, but not incompetent in all those areas. Very competently doing or not doing those things. Just find out before the end of the day -- it doesn't take long -- whether the money was spent in the 10th District. Another discussion is how do we deal with it, but if you guys at RDA and in the Mayor's Office haven't yet determined that the money hasn't been spent -- because that's an absolute fact that it hasn't been spent. Two hundred and fifty thousand dollars was spent before the money was reallocated, but nothing else was spent. Then there's a $400,000 pot of money from the very beginning. There was no changes had to 53 12/16/09 - WHOLE - BILL 090890, etc. be made in my district, and there's a sheet of paper that shows -- and there's other places -- that 48,100-some dollars were spent for encapsulations. That money is also now apparently missing. It's 350, 60 thousand dollars. So you're talking about almost a million six. This is serious stuff. I don't know if this is where the integrity officers should be spending the integrity officers' time, but something is wrong here if the heads of these departments still don't know, having been put on notice -- I'm being generous saying only a month ago -- that this is inaccurate and they still don't know where the money went. It's not $10. It's almost a million six hundred thousand dollars. I don't -- I'm just beside myself. I did not expect this response at all, Mr. Armbrister. I thought --
-- we were 54 12/16/09 - WHOLE - BILL 090890, etc. all clear that there was a mistake made.
Councilman, as you know, this audit was asked for by this Council because there were a lot of concerns and questions about how the program was being administered. We joined in that request at that time because we had similar concerns. It took the Controller a lot more time than any of us would have expected to try to get to produce an audit, and there was massive, massive record-keeping problems over at the RDA. So we can't tell you with a certainty every dollar was spent in which area. I didn't want to give you an incorrect answer about how those monies have actually been spent. What I do know, and if you'd let me, what we do know is that your 55 12/16/09 - WHOLE - BILL 090890, etc. allocation was reduced by $1.2 million. Where those dollars were spent, I don't know. I don't know where those dollars were spent.
I don't care where they were spent for purposes of this discussion. I want you to at least know where they weren't spent. They weren't spent in the 10th District. Then you move on to another discussion about how to make the 10th District whole.
And we are trying to figure that out, Councilman. That's what we're trying to figure out.
But it is a basic competency to know whether the money was spent in the 10th District.
The hard part is to find out where it might have been spent.
And we agree 56 12/16/09 - WHOLE - BILL 090890, etc. with that, and that's why we've been trying to work through the report.
But you still don't know that it wasn't spent in the 10th District. That's the absolute --
And that's a function of the poor record-keeping that was at the RDA, and we're working on that. We're working on it.
Well, how long does it take to find out that money wasn't spent? I thought a month, two months was enough time. How long do we need to find out that almost a million six was not spent in the 10th District? Because once you find that out, it really doesn't matter with the other. You find out a way to make it up and make it whole. It's like a capital budget. If a 57 12/16/09 - WHOLE - BILL 090890, etc. capital budget for a district was somehow lost, we'd find it or we'd find, as long as there was other money around, ways to replace it. It isn't a question of where all this money was spent. It's where it wasn't spent. That's the simple discussion. It wasn't spent in the 10th District. Deborah McColloch knows it wasn't spent in the 10th District. They know -- she's up on everything. Herb Wetzel talks to them all the time. They know there's only been a couple discrete projects that were ever spent in the 10th District. This money was not part of it. Whether somebody moved it to the wrong place or not, that's correctable, but what's not even understandable is that you can't say today you know it wasn't spent in the 10th District. I'm just -- I'm beyond flabbergasted, because this is not something I'm springing on you today. I mean, if that's -- just give me a time 58 12/16/09 - WHOLE - BILL 090890, etc. when you will know whether the money was spent in the 10th District. Could we ask Ms. McColloch to come up and just ask if she's aware --
-- of any money beyond the 250 and the 48 for -- 250 for the FOP retirement home on Byberry Road and the $48,000 for three encapsulations that were ever spent out of a million eight in the 10th Council District? (Witness approached witness table.) MS. McCOLLOCH: Good morning. I'm Deborah McColloch, Director of Housing. I agree, Councilman O'Neill, there were no funds spent on a housing development through OHCD other than the FOP senior center that we're familiar with and the -- whatever the number of encapsulations is. Those are the only 59 12/16/09 - WHOLE - BILL 090890, etc. expenditures that I am aware of.
Okay. While I have you, though, could you answer a smaller question? Were liens placed on the encapsulations? MS. McCOLLOCH: I don't know the answer to that.
Could you check on that and see if the monies ever got back into the -- if the liens were ever -- MS. McCOLLOCH: I just don't know, but I'll check it.
Thank you. Well, I can tell you -- I don't know how long it's going to take, Mr. Armbrister, but I hope it's short, because this is not complicated. When you're talking about money that wasn't spent somewhere, it's a lot easier than trying to figure out where money was spent when there's 268 other million dollars out there that was spent. I understand that. But this is much 60 12/16/09 - WHOLE - BILL 090890, etc. clearer, much more definable. And there are approximately 150,000 people, as far as I'm concerned, that are out a million six until this gets straightened out, and I know the Mayor would want that to be taken care of and for fairness to enter into this process, not just in terms of the fact that it's a clean audit and all that, but that we don't do anything, anything, there's no movement, there's not even a program that comes before this Council until we know whether there's really $13 million that we're talking about or 13 million less than a million six that the 10th District has to get back because somebody moved it to the wrong place, and that's the only reason there's 13 million today. It isn't complicated. It's just whether there's a will to do it, and I hope the will is there. I wish it were there prior to today at least to determine that the money hadn't been spent. I thought that was a given. 61 12/16/09 - WHOLE - BILL 090890, etc. Thank you.
Any date yet? I mean, I heard early January for one thing. Hopefully you can figure out by early January whether any money was spent in my district from NTI funds.
I know a little bit about my district. It wasn't spent.