COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FISCAL STABILITY AND INTERGOVERNMENTAL COOPERATION - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, October 28, 2009 10:35 a.m. - - - PRESENT: COUNCILMAN DARRELL L. CLARKE, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO RESOLUTION 090540 - Resolution authorizing Council's Committee on Fiscal Stability and Intergovernmental Cooperation to hold hearings regarding the City of Philadelphia's receipt, allocation and utilization of Federal stimulus funds... - - - 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. This is the Committee on Fiscal Stability and Intergovernmental Cooperation. Mr. Carter, would you please read the title of the resolution.
Resolution 090540, a resolution authorizing Council's Committee on Fiscal Stability and Intergovernmental Cooperation to hold hearings regarding the City of Philadelphia's receipt, allocation and utilization of Federal stimulus funds pursuant to the American Recovery and Reinvestment Act.
Thank you. We have established a quorum. Committee members here are Councilman Kenney, Councilman DiCicco, Councilman Jones, Councilman O'Neill and Councilwoman Tasco. Also in attendance are Councilman Green, Councilwoman Sanchez and that is it for -- I'm sorry, and Councilman Rizzo. 3 10/28/09 - FISCAL STABILITY - RES. 090540 Before we start with our first witness, before we start, I just wanted to say first thanks to everyone for coming. It's good to see the Administration brought its full team. We will hopefully get you back to work as soon as possible, because we know you got a lot of things to take care of for the City of Philadelphia. One of the things that we wanted to establish, so we're clear today, is, this is not a "got you" moment. We essentially would like to know where we are as it relates to our ability to maximize the opportunities that present themselves. As you know, the American Recovery Act is -- I'm now told we should call it not the stimulus bill -- probably has been the largest infusion of cash that's made available to municipalities across the country in history, and there is no guarantee that there will be a stimulus II. So what we want to make sure is that we're doing 4 10/28/09 - FISCAL STABILITY - RES. 090540 everything necessary. We as a Council want to make sure that we're here to provide assistance to the Administration and any other departments or quasi-government departments that have opportunities to implement programs and ultimately create much-needed jobs in the City of Philadelphia. So with that, I'd like to say that I would like to call the first witness. Mr. Joseph Casey from SEPTA. (Witness approached witness table.)
Good morning, Councilman Clarke and members of the Philadelphia City Council. My name is Joe Casey, General Manager for the Southeastern Pennsylvania Transportation Authority, otherwise known as SEPTA. Thank you for the opportunity to appear before the Committee on Fiscal Stability and Intergovernmental Cooperation to speak about the American Recovery and Reinvestment Act, ARRA, and SEPTA's 5 10/28/09 - FISCAL STABILITY - RES. 090540 stimulus work in Philadelphia. Our capital program focuses on improving service and customer amenities by modernizing our stations and infrastructure, some of which date back to the 1800s. Each year the number of projects SEPTA would like to complete exceeds available resources, so the federal funds were very much welcomed. In Philadelphia, SEPTA has nine stimulus construction projects, and we are purchasing additional hybrid buses that will operate on City routes. Our largest stimulus-funded project is the rehabilitation of the Girard and Spring Garden stations on the Broad Street Line. Originally constructed between 1924 and 1928, these stations will undergo complete modernization, including new wall, floor, ceiling finishes, energy-efficient lighting, improved safety and communication systems and elevators for ADA accessibility. Among the contracts awarded for these stations 6 10/28/09 - FISCAL STABILITY - RES. 090540 are six Philadelphia firms, including prime contractors for general, mechanical and the electrical work. The other Philadelphia projects include improvement to the nine Chestnut Hill East stations, improvements to seven Chestnut Hill West stations, improvement to the Fox Chase Regional Rail Station, a LEED-certified project, and track work at the end of the Broad Street Line in the Fern Rock Yard. Also, we are including upgrades to the trolley control systems on the subway surface cars. Each project is creating much-needed jobs in construction and manufacturing sectors. SEPTA stimulus work has created a range of contracts providing opportunities for large and small contractors with a multitude of construction skills and trades. To ensure participation of disadvantaged, minority and female contractors, in February SEPTA hosted a successful seminar and networking 7 10/28/09 - FISCAL STABILITY - RES. 090540 session, and bids to date have resulted in the DBE participation rate exceeding percent. 5 SEPTA is proud of its stimulus 6 program and our achievements to date. We 7 received a total of $191 million in 8 stimulus funds. In less than four 9 months, more than 75 percent of the 10 contracts were awarded, and currently 91 11 percent of those dollars have been 12 awarded, and by December, a hundred percent of the SEPTA stimulus projects will be let. SEPTA has demonstrated a longstanding commitment to build and strengthen Philadelphia and our region through delivery of transit services, investing in our infrastructure. I look forward to continue working with members of City Council to enhance the vitality of the City of Philadelphia. And I'll entertain any questions.
Thank you, Mr. Casey. Thank you for being 8 10/28/09 - FISCAL STABILITY - RES. 090540 available. Briefly, I just want to ask a question centering around the participation. I know during the course of the debate as it related to the availability of these dollars, there's been some question as to whether or not the federal regulations surrounding participation goals superseded local goals. SEPTA is a regional authority, we understand, state created. In terms of your goals, was it your understanding that the federal regulations traditionally guiding the GAO contracts superseded SEPTA's local or were you able to -- or did that --
Yes. These were federal dollars, so all the federal regulations applied, including purchasing regulations and the DBE percentages.
Yes. Yeah. We 9 10/28/09 - FISCAL STABILITY - RES. 090540 tried to -- again, we try to encourage DBE participation. That's why we had the outreach program. The program basically tried to partner the DBE community with the prime contractors, and we had well over 150 companies attend, and we plan on doing that semi-annually now. We had our second one last month. Basically not on stimulus projects, but on upcoming capital projects that will be starting in the next six months.
Okay. Great. Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Mr. Chairman. Good morning, Mr. Casey.
Good morning. COUNCILMAN DiCICCO: Several months ago I believe you were here and we had a discussion at that time as it relates to either purchasing the hybrid buses or going with light rail trolleys. I think you may recall that conversation? 10 10/28/09 - FISCAL STABILITY - RES. 090540
Yes. COUNCILMAN DiCICCO: At the time, I had asked that you look into or have some conversations with people, maybe even in Washington, as a result of the new Obama Administration and its efforts to go green and create more sustainable means of transportation. We're still purchasing hybrid buses, buses run on fuels, different types of fuels. Where are we? Are we really looking seriously? I've been wasting my breath for the last ten years around here about getting more trolleys and replacing buses. Could you give me a sense of where we are with this stuff?
Yeah. One of the reasons why we purchased additional hybrid buses, because it was stimulus project -- it was stimulus money and we had an option on the current order. So it was easy for us to expand the fleet. As you're aware, last week we extended services throughout the region, 11 10/28/09 - FISCAL STABILITY - RES. 090540 including more frequent buses, so we were holding onto the older buses to expand the fleet, but this allowed us to infuse those buses. But in answer to your question, we are looking down that road. There was just a meeting Monday with Senator Specter and DVRPC talking about a trolley route down Market Street, and that seems to have some support. But we are continuing to look into that, and Rina Cutler is here from the Mayor's Office and I'm sure she can -- I don't want to put words in her mouth, but her intention is to put more trolleys out there. COUNCILMAN DiCICCO: And I just repeat from memory I think what I talked about is, when you do, using a trolley as an example, a lot of those substations that are throughout the neighborhoods have been shut down.
Yes. COUNCILMAN DiCICCO: Where those substations were supporting power 12 10/28/09 - FISCAL STABILITY - RES. 090540 to particular -- I use the 23 as the example.
Yes. COUNCILMAN DiCICCO: Those are opportunities where not only would we create immediate jobs to get those places back up to operations, but to become sustainable, because there are people going to be needed to be employed to maintain those, and I think that's what the stimulus was about, not just the infusion of money now and it goes away. In addition to the environment, environmental issues, do trolleys and the electric that is needed to generate the power for trolleys, does that environmentally impact this more negatively than buses? I don't think so, but...
I do not think so, no. 23 COUNCILMAN DiCICCO: So I just kind of want to reemphasize the importance of the trolley systems. And 13 10/28/09 - FISCAL STABILITY - RES. 090540 from my experience talking to people, ridership seems, from other municipalities who have purchased some of our trolleys over the years, ridership has gone up, because people --
Yes. COUNCILMAN DiCICCO: -- feel more comfortable on a trolley than they do on a bus.
That's correct. COUNCILMAN DiCICCO: But you are looking into that, aside from the market --
Yes, we are, and if you want, I can have a separate meeting with you as we progress. COUNCILMAN DiCICCO: If you think I could be helpful. And trust me, I know several of my colleagues represent the neighborhoods where the line goes 22 through, because, as you know, it goes 23 from one end of the City to the other, and if there's any community support that you need, I'm sure we'll be able to get 14 10/28/09 - FISCAL STABILITY - RES. 090540 that.
Thank you. COUNCILMAN DiCICCO: Thank you. No further questions.
Thank you, Councilman. Let the record reflect that Councilwoman Blondell Reynolds Brown has joined the Committee meeting. Councilman Jones and then Councilman Kenney.
Several months ago we had an opportunity to invite you and other utilities to a Caucus Room briefing. Deputy Mayor Cutler was kind enough to convene that group to give us a heads-up on the stimulus program and what was coming down the pike, and I want to thank you for staying vigilant in that regard, segregating a lot of the stimulus 15 10/28/09 - FISCAL STABILITY - RES. 090540 information impact and providing that kind of information to us, and I want to make that as a part of the record. The Chairman, who was kind enough to convene these hearings, stated early that this is not a "got you" moment, but what we are trying to do today is to see if we "got it" moment and to see if we can use best practices, similar to what you're doing to spread throughout government. And one of the questions I heard in your testimony and wanted to just reiterate it, as a result of the stimulus dollars, you've done regionally about 40 projects, is it safe to say?
It's a total of 32 projects. We started with 26. Because we were early with the contracts being on the street, we received very favorable prices, we were able to add additional projects. So it's a total of 32 projects.
How many of them are actually in Philadelphia? 16 10/28/09 - FISCAL STABILITY - RES. 090540
Nine of those projects. And out of the 32 projects, how many jobs were actually created?
We know how many construction jobs were out there. There's in excess of 300 jobs, construction, but that doesn't include the manufacturing jobs. One of the major benefitters of our stimulus program was track and steel manufacturing. A lot of that steel comes from Steelton, PA just south of Harrisburg. We purchased track work for the Media-Sharon Hill, the Fern Rock Yard and other projects. So a lot of that beneficiary, the manufacturing jobs, were not in that number. (Witness approached witness table.)
And also in conjunction with that, a lot of the construction projects are really starting this fall. So they are not in our 17 10/28/09 - FISCAL STABILITY - RES. 090540 number. So we expect to easily double that within the next month or so as far as construction jobs on the property.
Good morning. I'm Lillie Claitt. I'm the Director of the DBE program at SEPTA. SEPTA is working with the Greater Philadelphia Urban Affairs Coalition to collect data from the contractors on their jobs. And of the 12 active projects that we have, we 13 currently have a total of 331 people 14 working on the project. For the State of 15 Pennsylvania, we have a total of 215, and 16 in the City of Philadelphia there's 61 17 people working on these projects. 18
So are these 19 retained jobs, new jobs based on 20 construction? These are 21 construction-related jobs? 22
All right. How much participation by way of minority 18 10/28/09 - FISCAL STABILITY - RES. 090540 and female companies is associated with the stimulus money and these projects?
In terms of the companies or are we looking at the jobs; for example, minorities and female? I'm sorry.
The subcontracting/prime contracting opportunities created by the stimulus projects.
Yes. For minorities we have a total of 71 subcontracts that have been awarded so far, and of those 71, we have 48 DBE contractors that are participating. We have several that are working on multiple projects.
And what is the total dollar volume of those subcontracts?
A little over 14 19 10/28/09 - FISCAL STABILITY - RES. 090540 million.
Quick summary. How much stimulus money came in through the various sources to SEPTA?
Based on these awarded projects that I'm looking at for the construction contracts only, we're looking at $114 million, a little over $114 million, and of that, 12.42 percent of that, or the 14,193,000, for example, is for DBE, the DBE participation.
So that's 20 10/28/09 - FISCAL STABILITY - RES. 090540 the purpose of the stimulus money?
Thank you, Mr. Chairman. First let me say for the record that I think you guys have been really doing an excellent job in running the system. As a regular user of the system, mostly in South Philadelphia, it is on time, it is clean as possible, considering the negligence of some of our riders and their habits, but anyone who goes to the sports complex and doesn't take the subway is crazy. It runs every eight minutes or less, and it's really been just a pleasure dealing with it. I want to go back to Councilman DiCicco's comment relative to -- I like trolleys. He loves trolleys. And I live on the 23 route. 21 10/28/09 - FISCAL STABILITY - RES. 090540 What is the situation relative to your inspections of your emission systems? Because one of the biggest complaints I will get, even in my own household, is that it's difficult to keep the windows open, because I'm at the end -- I'm three-quarters of the way down 11th Street at Tasker. So when the bus is idling and starts back up again, sometimes you get this big puff of black emission that is really -- is what the problem is, from my perspective, because it does create a real breathing issue and a dirt issue, and I'm wondering how often you guys inspect and repair or replace those emission systems. Some buses do it and some don't.
We do it all the time, and obviously as we get the new hybrids, you'll see less and less of that. But I will tell you, since buying cleaner fuel and changing the filtering system on the vehicles, that black smoke has really dissipated, almost 90 percent 22 10/28/09 - FISCAL STABILITY - RES. 090540 reduction in particulate matters since the late '90s.
And, again, if you're driving behind a bus or you're outside and a bus goes by, it's not every bus. It just seems on an occasion you get that, and I usually call it in to Frances to see if they can get something done with it, because I just -- so you think at some point in time with the replacements and with some of these improvements that that's going to go away?
It has to be a carryover, some of the old buses that are still on the route.
The other issue that's been raised over the years, and it's something that you see when you live along a route, obviously in the morning or rush hour, the is jammed 23 with people sitting and standing. In the evening when it's coming back down south, it's jammed on 12th Street with people 23 10/28/09 - FISCAL STABILITY - RES. 090540 sitting and standing, but a lot of the day, midday, early or late evening, that bus will go by with one or two people on it. Has there been any look-see at buying smaller buses that work on the off-peak hours, both for maneuverability and fuel efficiency and all the other factors?
Yeah, we have, and as a matter of fact, we're actually -- we did that in the mid '90s, purchased some smaller buses. What we found is, they were not as reliable.
Yes. And we just didn't get the benefit of it that we thought we would. And especially with the price of gases going up in the last couple of years with the increased 24 10/28/09 - FISCAL STABILITY - RES. 090540 ridership, we found that we really didn't have the need for those buses on most of the routes.
Have you seen a drop in ridership relative to the gas price fluctuation? I'm talking about the regional rails, too.
Not necessarily the gas prices, but we're seeing with the economy. And we were strong, very strong, through March, and since March, April, it's been down. We're currently about five percent less than --
Mr. Casey, briefly, if you can, can you talk to me 25 10/28/09 - FISCAL STABILITY - RES. 090540 about the process? Like you heard about the stimulus program, as it was called at that time.
Can you kind of walk us briefly through the process? What was SEPTA's response? Did you put together a team or did you direct certain --
A lot of the credit for our program really should be extended to our engineering group and to our purchasing group. We knew the federal regulations still apply. We still had to solicit bids and proposals. But when there was talk about a stimulus program in October and November, we started. We started the engineering. We cleaned up some of the projects that had to be completed at the engineering before the ARRA funds --
Well, we already 10/28/09 - FISCAL STABILITY - RES. 090540 had subcontractors. We have some open contracts that we allowed the contractors. And we took a risk. We took a risk that perhaps there wasn't money, but we thought it was worth the risk, so we got those projects ready to go. So as soon as the bill was passed, we more or less hit the street running.
So let me understand. The engineering firm put together the process for responding to the NOFAs?
Getting the projects ready on the street. We got the purchasing department ready to hit the street running.
As soon as we got the bids, we had the DBE and getting the partners together, and we put the bids on the street, and, as I said, within four months, 75 percent of the contracts were awarded. 27 10/28/09 - FISCAL STABILITY - RES. 090540
Did that firm -- it may be a little -- let me ask this question: In terms of the grants that were made available to SEPTA, were they competitive or were they grants that came to the --
It was a fixed amount. We actually had projects, and we were preparing for a program that was really double that, 400 to 450 million.
So it was essentially you figuring out how to get that 191 --
Well, they always said, use it or lose it, and one of the things that -- my goal, we're certainly not going to lose any money, and if someone did lose money, we were going to be first in line to grab it up for the region. 28 10/28/09 - FISCAL STABILITY - RES. 090540
In terms of the money flow, are you involved in a reimbursement program or invoice program? This is a question about the money flow, because I've heard on CNN sometimes some municipalities and other entities saying that we're ready -- actually, even in the junker, the car junker deal, that people say they haven't gotten their stimulus money. How is that working with you guys?
We're working fine. The FTA, the regional FTA, was very cooperative with us. That's the other partner in here where they really got the grants approved very timely for us.
I'm sorry. 29 10/28/09 - FISCAL STABILITY - RES. 090540 I forgot before I ended my conversation with you prior, I wanted to congratulate you also. Yesterday you guys, I think you're aware, that you won a General Building Contractor Association Award for design. I think it's 63rd and Market Street Station.
I was a judge for the award ceremony. But it's a beautiful station and it's all environmentally sustainable and it really is attractive, and it's a nice piece for the community out there. So I just wanted to congratulate you on that.
Thank you, Mr. Chairman. I'd like to follow up on questions you were asking about the 30 10/28/09 - FISCAL STABILITY - RES. 090540 process within SEPTA. Mr. Casey, you have done quite well compared to other transportation authorities around the country, and I think you have even won some kind of award for or a lot of national recognition for the fact that you were ready and prepared and got a lot of money up front before anybody else knew what was happening. You talked about hiring an engineering firm and getting them to identify shovel-ready projects, put them on the list, have the grants -- but can you describe the other internal processes? Did you have a team within SEPTA that you put in charge of it? How many staff people did you assign to this?
You know, if I can, I'd like to introduce Bob Lund. He's the Chief Engineer. He was the man behind the program, if you will, for these construction projects. And, Bob, can you address that, please. 31 10/28/09 - FISCAL STABILITY - RES. 090540
So you appointed from your process, you appointed Bob to be in charge of this and --
He was the stimulus master. (Witness approached witness table.)
Good morning, Council. Our Chief Engineer and Assistant General Manager Jeff Knueppel had -- he knows the system very well. He knows the needs of SEPTA. He's long-range planning. When this first was identified as a possibility, he set up what are the key areas that SEPTA needs to address that we didn't have funding for, and then he came up with the list. And as Mr. Casey said, it was about a $400 million list. We were trying to think positive. 32 10/28/09 - FISCAL STABILITY - RES. 090540 Of that, I was assigned to get all the engineering done. And it was a combination of doing engineering with both our in-house forces as well as our general engineering contracts with various tasks. And it was a push where everybody, through the Christmas holidays and into January, worked around the clock to get the projects ready to hit the street for bidding.
Bob, that's my question. Who is "everybody"? How many SEPTA staff people were involved in this project? How many external consultants were involved in this project? How much time, resources, money did you devote to making sure you were ready?
We had four engineering firms that did various tasks depending on -- probably a dozen people for each engineering firm. In-house we had three or four engineers and architects, as well as our contract 33 10/28/09 - FISCAL STABILITY - RES. 090540 procurement officers and our project controls, and that would be another dozen.
-- devoted to this? Does that include grant writers or other people?
Well, we had the purchasing and probably about four or five purchasing people.
And two grant writers. But these are all people, staff, that did this up and above their 34 10/28/09 - FISCAL STABILITY - RES. 090540 normal --
I understand, but within SEPTA, you had, it sounds like, internally at least 6 people working on this, between grant 7 writers, internal engineers, purchasing 8 people -- 9
-- people 11 supervising the external engineers. And 12 you had upwards of 45 external engineers 13 getting you ready? 14
Thank you, 23 Councilman. 24 Any other questions for these 25 witnesses? 35 10/28/09 - FISCAL STABILITY - RES. 090540 Councilwoman Brown.
During budget hearings, SEPTA showed, in a very serious way, how serious you are with regards to MBE/WBE participation, and as I look at new information that I have and what you have done in a very strategic and thoughtful way around the stimulus dollars, it's my estimation that you have set a gold standard. So our hope and expectation would be other entities, both governmental and non-governmental that will have access to these dollars, will listen carefully to how SEPTA has skillfully figured out how those dollars are spread across the board for women and people of color. So we need to acknowledge that and wave the banner that we have a major enterprise organization in Philadelphia 36 10/28/09 - FISCAL STABILITY - RES. 090540 like SEPTA who figured it out. And as we listen to forthcoming testimony, many of us here will be looking to see how close they have come in making sure that women and people of color have access and opportunity to those stimulus dollars.
Thank you. I will say, Lillie Claitt was largely responsible for that, but I think it's important -- I mentioned earlier when we had this bringing the contractors and the DBE community together and the prime contractors together, it was very successful. And it's not only for the DBE for the opportunities, but also for the primes to develop relationships for bidding on future projects. And that's been very successful, and I do plan on doing that twice a year as we go forward.
And please continue to keep members of Council informed of those opportunities for those dots to connect, because we have individuals and organizations and 37 10/28/09 - FISCAL STABILITY - RES. 090540 businesses that come to us often looking to see how they can penetrate and access large organizations like SEPTA.
Thank you, Mr. Casey. Thank your team. Thank you very much for your good work and continue.
Our next panel will be from Philadelphia Housing Authority, Mr. Clarence Mosely and Monique Delapenna. (No response.)
Okay. I think we waited long enough and we are here able to determine that the Philadelphia Housing Authority is not here at this moment. They've indicated that they will be here, so we'll wait. Mr. Michael Masch from the School District had a pressing matter. He has actually forwarded his testimony. 38 10/28/09 - FISCAL STABILITY - RES. 090540 We will not read it here today, but it will be entered into the record. Right now we will have Panel II, Mr. Tommy Massarro and Ms. Barkha Patel. Did I screw that up? Barkha. I'm sorry. These are individuals that City Council had gotten to do some research on some of the programs for us. There is a book, a work product, from that that can be made available. Right now we don't have enough copies to make them available to everyone. We wanted to make sure the Committee members had them. So if you can briefly just give us information on some of the findings. (Witnesses approached witness table.)
My name is Barkha 39 10/28/09 - FISCAL STABILITY - RES. 090540 Patel.
Please pull the mikes a little closer to you guys. Thank you. Please proceed.
In order to review and assess the efficacy of the City's efforts to solicit, secure, execute and accurately report federal state Recovery dollars and projects, I interviewed and conferred with the following sources: 14 members of the Council, senior members of the City Administration and their Recovery team, federal executive and legislative officials, state officials, executive and legislative, actual or prospective private or non-profit applicants or prospective partners for the stimulus, and a variety of individuals in the public and private sector who were involved in economic development or the 40 10/28/09 - FISCAL STABILITY - RES. 090540 Recovery. The status of Recovery funds in the City is in the report, Mr. Agostini's report and also a report that I prepared for the Council that's in your package. You asked me, Mr. Chairman, to focus on a summary of the key findings, the challenges and problems that face us and some of the strengths that are in front of us. I'll start with the challenges. There are several serious impediments to a more effective solicitation, formulation, evaluation, submission, lobbying, receipt, execution and reporting of federal Recovery dollars. More importantly, there are significant inauspicious indicia that the City's Office of Economic Opportunity efforts substantially lack significant strategic insight and administrative potency. The most serious challenge that I encountered in interviewing an array of people is that there has been a lack of a 41 10/28/09 - FISCAL STABILITY - RES. 090540 consistent, clearly identified Chief Recovery Officer. There are several serious impediments to a more efficient and bountiful solicitation of federal Recovery dollars, but all of them germinate in the fact that the Administration admits its eight months of appointments, resignations, vacancies, acting appointments, interim officials and/or unannounced appointments to this critical post. It was troubling to conduct over 50 interviews, members of Council, civic and corporate leaders, members of the Mayor's Administration, senior staff to our Senators and Congressmen, City Hall reporters, leaders in the construction and capital finance industries, state Recovery officials and current or prospective Recovery grant applicants and find that not one person knew who was or who has been the City's Chief Recovery Officer. There's been a series of 42 10/28/09 - FISCAL STABILITY - RES. 090540 people. I identify them in my report. And this lack of consistent leadership, the lack of a clearly identified point person has been the largest impairment to the City's effort. The best analogy I could offer is, the City gets some money by formula, but the bulk of it is competitive. Other cities have had one person on the track, eyes fixed in front of them, sprinting ahead. We've been keeping our eyes down, passing batons four or five times. That slows you down. So if we could get one person, continuous focus, build up a snowball of knowledge, snowball of relationships in Washington, we think that's the critical element to improve the City's effort. Second major finding is, there's a lack of a transparent interdepartmental central Recovery team under the direction of the Chief Recovery Officer, and their entire job is to oversee and manage, to solicit 43 10/28/09 - FISCAL STABILITY - RES. 090540 prospective applicants, to help formulate prospective applications, to analyze them, to submit them, to advocate and lobby in Washington, to execute them, to maximize the retention of Philadelphia residents and Philadelphia firms, and to adequately report to the federal government. We are eight months of the City's Recovery efforts, and various City officials have been or still are unilaterally formulating, submitting, expending and reporting on our projects without the prior review, knowledge or consent of top City officials and the Chief Recovery Officer.
This chaotic diffusion of responsibility increases the prospect of administrative conflict, erroneous fiscal accounting, duplicative managerial effort or the debilitating impression of chaos to critically important federal and state officials from both branches. The ongoing failure to compose such a central group, 44 10/28/09 - FISCAL STABILITY - RES. 090540 centrally led, has meant the lack of a uniform, consistent and experienced enriched application review. The third principal finding -- and this is really job day one. The reason there is a stimulus from the local point of view -- from the federal point of view, it has two objectives - to restimulate the federal economy and to strengthen this country environmentally and economically. Locally, there's only two objectives for the federal stimulus money. The objective is not to help even the recipients. There's two objectives. The first objective is to hire local residents and to retain local companies. That's the whole reason for the program. That's the only way this city will grow out of its decline. We've spent the last year balancing, rebalancing diminished resources. The stimulus is the opportunity to expand your resources to 45 10/28/09 - FISCAL STABILITY - RES. 090540 grow. So job one, day one, the first time someone mentions, I'm interested in talking to the City about a project, the first thing is, we're very interested to see how your project will retain Philadelphia residents and how your project will engage Philadelphia companies, and the extent to which you do that well means you will be very high on our priority list. The extent to which you are indifferent to that or don't address it, you will be lower on our priority list. So the third -- and this is -- again, it's the heart and the soul of the stimulus, the retention of local residents and the retention of local companies, particularly women and minorities and people who are disadvantaged in the economy. I could not find one project where the City's OEO Office took a prospective application, prepared or reviewed a takeoff of labor, material or 46 10/28/09 - FISCAL STABILITY - RES. 090540 contractual needs and then matched it with the City's database. Okay, you need concrete, you need excavation equipment. Here's a list of Philadelphia companies that do concrete. Here's a list of ten jobs they did, this site, that site, the amount of the contract, this site, that site, the amount of the contract. To give that information, day one to start giving that, to put that in the mind of the sponsor. Achieve and focus the objective of your institution, your museum, your school, whatever it is, but keep in mind the purpose is to retain Philadelphia residents as employees and as companies. That has to be day one when an applicant comes in. First stop has to be the central team in the OEO Office. What kind of things are you going to need in your project, and we'll start to identify Philadelphia firms, particularly ones owned by women and minorities that have been left out. 47 10/28/09 - FISCAL STABILITY - RES. 090540 Of the major building trades unions, I could not find one where the City has started negotiations, submitted a proposal to these unions to maximize the assignment of unemployed Philadelphia residents from the membership base of these unions. It's a regional membership base. They have between and 40 10 percent of their men and women out of 11 work. So what we have to do is say, 12 Okay, you have 100 of your union members 13 out of work. Forty of them may be 14 Philadelphia residents. Fifteen of them 15 may be female or minority. If we are to 16 submit a proposal with you, we want you 17 to give us preference that you will send to this site in Philadelphia Philadelphia workers. That's what we're asking you to do.
And if the City can collaborate constructively with the building trades, we will get more of these grants, which will help the building trades, and we will have more of our people back to work. 48 10/28/09 - FISCAL STABILITY - RES. 090540 It doesn't require getting into the longstanding debate in this town about the membership components of the building trades. We will accept the membership as is, but of the members of the union that are sitting home unemployed that live in Philadelphia, I believe this city should only submit applications where there's an agreement that those people will be given priority for assignment to these jobs. If we do not work to focus on the engagement and the retention of Philadelphians and Philadelphia companies, there is no reason for this money to come to the City. It will not benefit. It will not replenish our tax coffers. It will not lower our unemployment rate. I take exception to the belief or the assertion of some prominent Recovery officials that it's too early to get into that. It's a lot closer to being too late. I'll give you an 49 10/28/09 - FISCAL STABILITY - RES. 090540 example. The Art Museum, they've applied for a very important project. I believe it's 35 million of stimulus money. They have about 58 people apply for money. A lot of it is transit improvements between the new Pearlman Annex and the Museum. That's a great potential project - excavation, concrete, curbs and sidewalk, landscaping. We have Philadelphia companies. We have Philadelphia minority companies. We have Philadelphia women-owned companies who have done that work and have a great track record. They need to be alerted first. They're going to plant a lot of trees and shrubs. We have a beautiful program with Philadelphia Green in the prison to train men and women to do landscaping. Let's engage them there at the Art Museum. And we have young people in the City, Youth Build. It's a great program. I hope the general contractor there will reach out to Youth Build and 50 10/28/09 - FISCAL STABILITY - RES. 090540 see how we can engage some of our young people. I hope the landscape architects will reach out to CHAD, the Charter High School for Architecture and Design, and engage some of the students there. So there's a whole range, there's a myriad ways to engage Philadelphians. We have to stretch our minds. We have to find ways to do it. So once we get this money, I feel the most compelling challenge we have is to maximize the engagement, the employment of Philadelphia residents and Philadelphia companies. In reviewing the Administration's efforts, there are also many positive and substantial elements which can enhance the City's capacity to solicit and secure this money. There is a lot of good thinking going on, as well as some deficiencies. The most salient observation I might make is that there's a lot of thoughtful inclusion in designing these 51 10/28/09 - FISCAL STABILITY - RES. 090540 project components to enhance environmental quality and sustainability. If I talked to eight people in the Administration, seven of them, that's one of the first things that they mention. They're focused on that, sustainability, environmental enhancement. That's a good thing, and that's the kind of consciousness we really need in terms of employment the same way. There's a very high consciousness of the imperative of timely, accurate and transparent reporting to the federal government. The Mayor's appointment of Steve Agostini reflects a recognition of the absolute imperative of compiling and submitting accurate, timely and transparent reporting to the federal government. When I speak to the staff, not the Deputy Mayors, their own staff people, they're very, very conscious of that, and that's a very important thing. If we don't have good reports, the spigot 52 10/28/09 - FISCAL STABILITY - RES. 090540 can be closed. Three, one can observe increasing horizontal collaboration among City departments and agencies.
While I feel there's a problem vertically in terms of bringing this from the disparate elements to a central place, there's very good working relationships horizontally in the government. With the passage of time, some effective mechanisms are evolving or are already in place to thoughtfully collaborate across City departments. In the last month in particular, there's been a discernible increase in the level of collegial interdepartmental collaboration, especially in regards to Rina Cutler of Transportation, Parks, Health and Human Services, Don Schwarz. They're really coming up with a lot of good projects. While I feel there's a significant deficiency so far in the outreach from the OEO Office, there's also some very hopeful signs. Some 53 10/28/09 - FISCAL STABILITY - RES. 090540 public agencies, particularly SEPTA and PHA and the Enterprise Center, are working effectively -- and I'll say that again, they're working effectively -- to identify economic opportunity for Philadelphia residents, Philadelphia companies and Philadelphia entrepreneurs. Joe Casey, General Manager of SEPTA, and Carl Greene, Executive Director of PHA, have been working proactively. They're not waiting until the end. They say it from day one, that's job one, engage Philadelphians. They've really been beacons, not only here but around the country, and I really want to commend them. We took a real vigorous look. We didn't look at the press releases. We looked a lot deeper than that. They've been working proactively in multiple venues to identify employment, corporate and entrepreneurial opportunities for Philadelphia-based residents and corporations, especially minority, female 54 10/28/09 - FISCAL STABILITY - RES. 090540 and disabled owned. While contracts have largely yet to materialize, there are credible incipient signs that this professional proactive outreach can successfully match Recovery opportunities with those persons and companies in need of those opportunities. The Enterprise Center, led by Ms. Della Clark, recently sponsored a Connect to Federal Recovery Opportunities Conference. It was very thoughtfully planned. It was clearly presented, with an abundance of technical information on these contractual opportunities. I was impressed. There's a widespread belief, though, amongst those companies and residents in search of these opportunities that the City's OEO Office has not yet provided productive leadership or energetic involvement for a clear path to results.
Thank you, sir. 55 10/28/09 - FISCAL STABILITY - RES. 090540 We're going to get to you. Do you want to talk about the charts briefly?
Thank you, Mr. Chairman. My name is Barkha Patel and I'm a Drexel co-op student working at Councilman Bill Green's office. Over the past month I've been working in conjunction with the staff from Councilman Bill Green's office and other Council offices and Mr. Massarro, and I've been researching Philadelphia's stimulus funding, including the efforts of other cities. I've prepared three charts for the Committee. One is formula grants, one is competitive grants, and one is showing specific competitive grants that I was able to find more data of comparable cities and their numbers. I compiled this information by 56 10/28/09 - FISCAL STABILITY - RES. 090540 talking to different budget and finance offices in other cities, reviewing materials on those city websites and federal websites, and through other research on the Internet. For the Philadelphia information, I reviewed the information on our phila.gov website and consulted staff at the Recovery Office. I just want to make clear that any blank spaces that you see in the charts, it shouldn't be assumed that we haven't applied or that Philadelphia hasn't sought into that competitive or formula grant. It's just that there's been some miscommunication or I wasn't able to find that data on the Internet. So if there are any incorrect numbers or any blank spaces where there shouldn't be, my apologies. And if you do have any questions, I'll be happy to answer them now. Thank you.
Thank you 57 10/28/09 - FISCAL STABILITY - RES. 090540 so much. Very good report. Councilman Jones and then Councilman Kenney.
Thank you again, Mr. Chairman, for pulling this together in this hearing. It's very worthwhile. Specifically, I took a ride on my way to work. I stopped at 54th and Berks Street in my district, I stopped at 57th and Lansdowne in my district, and I stopped at 60th and Market in my district, just to remind myself why we're having this hearing today. For my colleagues on this committee and people that are listening, there wasn't one lunch pail, hard hat, construction, blue-collar kind of job guy going, or woman, Blondell, going to work early in the morning to a job that I could visibly see. I could see some of the same remnants of some of the problems that when I ran for office why I came here. And the whole idea of a stimulus package 58 10/28/09 - FISCAL STABILITY - RES. 090540 for them is the hope that some of that trickled down after the bailout of the auto industry, Wall Street, banking, would eventually get to them. So my question and the line of my question is in context to that truth. How do we rank, simply put, compared to other cities? And compare apples to apples, if we can.
We took a look at two things in terms of looking at other cities. We took a look at what their structure was, how they made a point person, what kind of committee or organizational structure they set up, and we reviewed that. That's one of your handouts, this chart. I don't know what number it is in your binder.
Give us a number. As good as we are, there's no 22 way we can see that from here. Just give us -- you don't have to come up.
If I can just jump in to answer Councilman Jones' question. 59 10/28/09 - FISCAL STABILITY - RES. 090540
If I can just jump in and answer the question to the best of my ability. If you go to New York City's website on their stimulus track or their tab, they have specifically listed the amount of jobs that they've created due to the economic Recovery funds, and I think it's around 3,700, if I'm not mistaken. Of course, New York City is a lot bigger city than we are and, of course, they've received a lot more funding than we have, but their website specifically discloses how many jobs they've created and in which fields. And if you've seen our website and read some of the -- especially the Daily News article today that was published, we've created about 52, I think it says. So I guess we are not up to date according to other cities.
Okay. I just want to say that I want to 60 10/28/09 - FISCAL STABILITY - RES. 090540 acknowledge that I had a conversation with Mr. Agostini yesterday about some of the website issues and some of the other issues, and he will be testifying that there will be some changes. The Administration has acknowledged that there are some issues related --
Yeah. I mean, so that's a part of my not wanting to be a "got you" moment, but I think the most important thing is that all of us, we recognize where there may be shortcomings and we're taking corrective action. So I think that's the most important as we move ahead. But it's good to point out those issues, and what I would like to see, as I'm sure all my colleagues, to make sure that we work in a cooperative spirit. We have some talent among Councilmembers and their staff. We look to be as helpful as possible as we work through all of this. 61 10/28/09 - FISCAL STABILITY - RES. 090540 And so I think that's important, if we continue in the spirit of working together, making sure that we maximize our opportunities, because at the end of the day, we all represent the same citizens of the City of Philadelphia.
In that spirit, I was trying to figure out by way of -- and we had a spirited debate outside of these Chambers by way of our competitiveness by way of formula grants versus competitive grants. You remember the spirit of that debate late into the evening. But how do we stack up by way of formula and by way of competitive grants? Specifically, formula and then competitive.
We've identified some of the deficiencies, but it is also clear that there's been a steady increase in some of the momentum in the program. They've been more effective at identifying opportunity, more effective at applying for opportunity in a more 62 10/28/09 - FISCAL STABILITY - RES. 090540 efficient way. There's been particular progress in the last month. That's readily discernible. It's palpable. So I think the other cities -- at some point we stopped trying to quantify it because we were really focused on what Councilman Clarke says, identifying constructive elements to try to move it ahead. So we were clearly behind. We surveyed or cities. We were 13 significantly behind most of them for the 14 reason we gave, is that while these other 15 people were running a sprint, we passed 16 the baton four, five or six times. 17
Then very 18 briefly I'll segue and say, in those 19 researches, did you identify best 20 practices that we might be able to -- 21
I think if you look 63 10/28/09 - FISCAL STABILITY - RES. 090540 at the green tab again.
My green is different than his green. It's different than his.
There's a specific, I guess, divider in the binder that has the best practices that a staff member has researched of different cities, and it says the Chief Officer, their team members and who they've been consulting and their meetings and things like that.
There's two principal factors here that are really salient. The first is, we surveyed -- of the cities, 23 of the 25 had one 17 person in charge. That's a tremendous 18 advantage to us. 19 The second salient feature is, 20 all of the cities have had this central 21 working group where you snowball your 22 capacity, your experience and your 23 knowledge. Philadelphia has gotten good 24 ideas horizontally from housing, 25 transportation, energy, but has not done 64 10/28/09 - FISCAL STABILITY - RES. 090540 as well putting it back into central form for a central evaluation and disbursement back. So the other cities I think have had the advantage of being a repository over time for knowledge and experience. We put together this application and that application. You learn. There's things you could use to be more efficient. There's problems you could solve. And then one of the things we've missed by not having the same person is, even in my own conversations with members of Senator Casey's staff, Senator Specter's staff, Congressman Brady's staff, Congressman Fattah's staff, you can build up a relationship and they can point you, because they're dealing with a multiplicity of applications from other jurisdictions and they'll tell you, if you have the relationship, this is what's working, this is not working, this was received well at HUD, this wasn't received well at 65 10/28/09 - FISCAL STABILITY - RES. 090540 HUD, here's a good idea that someone else had that was funded, they told us they didn't fund you now, but maybe you could modify the application in another category later. So I think that if Philadelphia can have continuity of leadership, if they can assemble a central team that will be in charge of this to vet them, even if they then delegate it out to one particular department, I think we'll build up the momentum. And then if we can take some of the exemplary agencies, like PHA and SEPTA, and have them work constructively with OEO -- I know the OEO people want to get this right. I think it's a matter of a learning curve and building some relationships. I think we can start -- if we identify our goal, our principal goal, as the retention of Philadelphia companies and the employment of Philadelphia residents, if we make that the salient feature, I think it will be in the consciousness of people and 66 10/28/09 - FISCAL STABILITY - RES. 090540 there's mechanisms to work it out. And I think Penn has done some good work. In some instances they worked with Councilwoman Blackwell's office, and I think we can take some of these singular models around the City and come together and have a template for how to do this.
My final point is -- and thank you for this information. As municipalities make decisions, this program versus this program or this application or category, I'd be curious to know how they kind of came up with that maximizing benefit ratio. And I guess I'll say that for Mr. Agostini as to in the future -- and this is, as the Chairman said, creating and getting it right going forward -- how we make that determination. Curious to me is if -- I have 160 vacant properties owned by PHA in my district. To me, shovel ready means I'm ready, we can start shoveling. And so I don't understand how we decide which has 67 10/28/09 - FISCAL STABILITY - RES. 090540 maximum benefit versus others and what that formula kind of will be, and I guess that's a question that I'll put a pin in and look to an answer from the Administration.
But it still gets back to, I think, day one, the first day. Whether it was SEPTA, whether it's the University of Pennsylvania, whether it's a non-profit, when they contact the City that they have an idea for a prospective stimulus project, whether they're the sponsor or partner, we have to start to get them on the track to deal with Philadelphia companies. I mean, Councilman Kenney could tell you that most of the time an architectural firm is retained a year, two, three years before they break ground, and that's what's going on now. So we can't say, Well, when these firms might get an award, we'll start to work to engage them with Philadelphia companies. It's got to start as soon as possible. 68 10/28/09 - FISCAL STABILITY - RES. 090540
Thank you, Mr. Chairman. I know it's been said twice before in this hearing that this is not a "got you" hearing, but the testimony of the witness is pretty much "got you." And I don't know what the process is relative to the next witness, but I would make a request that Mr. Agostini be the next witness so he can refute or explain or elaborate on some of the charges, I guess, that have been made of their inability to do anything in the last eight months, which it seems -- I mean, other than a short section of the testimony about a couple good things they did, pretty much all of it was non-productive. So I would really like to hear from a records point of view, keeping the 69 10/28/09 - FISCAL STABILITY - RES. 090540 record intact, this testimony and then after that, what they had to say in response to that. So I don't know what you had in mind in the way of witnesses, but I don't want to see two or three witnesses after this talking about other things and then we lose track of it. The other thing is, you had mentioned -- we had extensive hearings that Councilman DiCicco sponsored a resolution a couple years ago, I guess, relative to employment practices and employment numbers and demographics of the construction trades. It was not a very productive hearing, if I remember correctly. They were not willing or able to give us numbers relative to where their members lived and what the demographics, race, gender. Your testimony indicated that you had some idea as to how many of these folks lived in Philadelphia, because this is all about creating Philadelphia jobs or 70 10/28/09 - FISCAL STABILITY - RES. 090540 retaining Philadelphia companies. Were you able in your discussions with them to figure out of their employment complement how many live in the City, what their race and gender is and why doing projects particular with an individual union would create jobs for Philadelphians if we don't know how many members live in Philadelphia?
Well, I took actually some of the testimony from those hearings. There were some records given to Council, some estimations of the percent of their members that lived in Philadelphia, but I don't believe we really need to know that exactly. We do know that they have, depending on the trade, they're reporting between 15 and 40 percent unemployment.
What I am saying is, of the people who are unemployed, a percentage of them are Philadelphia 71 10/28/09 - FISCAL STABILITY - RES. 090540 residents and we would ask that they be assigned.
This goes back to Councilman Jones' point, that if we were to engage in that process -- and I don't want anybody to be unemployed, but if some guy in New Jersey is unemployed, I care a little less about that than Councilman Jones' constituents. I mean, unless -- did you interview them? Did you find out from them what their numbers are?
Just in terms of what was submitted on the Convention Center discussion two years ago.
I don't know, Councilwoman Brown, if you would agree that that hearing was less than fruitful.
It was that, and because it was that, I should mention that I am now in the process of drafting a resolution to invite those parties to report back to us what their 72 10/28/09 - FISCAL STABILITY - RES. 090540 progress has been since that hearing. And so you raise it. The end of the sentence hasn't been completed, and it's my expectation that during those hearings, we will get an update on what our requests were and what they've done to meet that request and what their numbers are now.
Thank you. Mr. Chairman, I just reiterate my request that -- I don't want to have you do something different than you want to do, but I really want to hear after these witnesses what the Administration's responses to those allegations are. Thank you.
Thank you. I just want to note for the record that I think the report that was put together by my intern, Barkha Patel, and others with respect to the competitive grants and others, actually if you look at it in 73 10/28/09 - FISCAL STABILITY - RES. 090540 terms of pure quantity, we're behind, but we're not that far behind, and I don't think that we were suggesting that in terms of the quality of dollar of grants applied for that that's the case. So I didn't want it -- I mean, you characterized the report. It certainly isn't our view, having participated in it, that we were, from a quantity perspective, necessarily behind or anything else. I do think that the report identified some best practices which, while they seem obvious, we weren't in fact doing them.
No. I haven't read the report. I'm basing my comments based on the testimony.
I would say probably 75 percent of the testimony was that they weren't doing things right and maybe percent were doing right. So 25 I'd like some illumination as to what 74 10/28/09 - FISCAL STABILITY - RES. 090540 they think they're doing right.
Councilman, I agree with you. I look forward to hearing from Steve.
Thank you, Councilman. Any other questions of these witnesses by members of the Committee or members present? (No response.)
There being none, thank you very much for your testimony. I understand that the Philadelphia Housing Authority had some misinformation about the time, so they will be available, but what I'd like to do now is to bring, I guess, 75 10/28/09 - FISCAL STABILITY - RES. 090540 Mr. Agostini, who will be testifying on behalf of the Administration, and anyone else that he so chooses. (Witness approached witness table.)
First, I'd like to say that -- and I want to say this in a way that I am not critical of anyone who had any role or responsibility of the Recovery dollars prior to now, but I do want to say that I'm happy that you are now in charge. I feel a little more comfortable, given your budget background, because at the end of the day, this is about the money. I know that you have divided interests, because you still have to be the Budget Director, but I think that that perspective that you bring to the table actually will be 76 10/28/09 - FISCAL STABILITY - RES. 090540 helpful in ensuring that in the instance where I know that we're not supposed to supplant certain dollars, that is the case, but at the end of the day, I think that your ability to understand revenue streams and understand the budget from the perspective on the local level -- and actually you worked other places, I'm sure you have somewhat of a national perspective on other things -- that we will be much better served by having you in charge at this time. So, again, we in Council look forward to working with you. At the end of the day, I'd really like to see this be a cooperative effort with consistent conversations on an ongoing basis, not the Committee on Fiscal Stability having to have a hearing to have this type of dialogue. This should be happening every week or in a consistent basis that allows us an opportunity to have a free-flowing level of conversation and input and solicitation. 77 10/28/09 - FISCAL STABILITY - RES. 090540 So with that, I say good morning.
Good morning. Steve Agostini, Budget Director for the City of Philadelphia and Recovery Officer. Councilmember, thank you very much. Those are very generous remarks. I appreciate that.