COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND MEETING BEFORE THE COUNCIL COMMITTEE ON APPROPRIATIONS - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, 12/6/01 8:58 a.m. - - - BILL 010662 Authorizing transfers in appropriations for FY '02 from Grants Revenue Fund, Director of Finance - Provision for Other Grants to General Fund, City Representative, and Director of Commerce. BILL 010663 Authorizing transfers in appropriations for FY '01 within General Fund from certain or all City offices, departments, boards, commissions to certain or all City offices, departments, boards, commissions. BILL 010664 Authorizing transfers in appropriations for FY '01 within Water Fund from certain or all City offices, departments, boards, commissions to certain or all City offices, departments, boards, commissions. BILL 010689 Authorizing City Solicitor to enter into multi-year contract with provider of codification and editing services to produce printed and electronic versions of eighth edition of Philadelphia Code. PRESENT: Councilwoman Joan L. Krajewski, Chair Councilman Michael A. Nutter, Vice Chair Councilman Darrell L. Clarke Councilman Richard T. Mariano Councilwoman Donna Reed Miller Councilman Brian J. O'Neill Councilman Angel L. Ortiz - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 12/6/01 APPROPRIATIONS COMMITTEE MEETING INDEX WITNESS BILL 010662 James Cuorato, Director of Commerce.......... Meryl Levitz, President...................... 14 Greater Philadelphia Tours and Marketing Corp. Mickey Rowley, Executive Director............ 18 Greater Philadelphia Hotel Association. BILL 010689 Evan Meyer, Senior Attorney, Law Department 12 BILL 010663 13 Rob Dubow, Budget Director................... 31 14 William R. Thompson, Chair of Litigation..... 38 15 City Law Department 16 Kevin Cross, Deputy Administrator for........ 47 Financial Services, First Judicial District 17 Ed McLaughlin, Commissioner of L&I........... 51 18 19 BILL 010664 20 Bernard Brunwasser, Deputy Commissioner...... 53 Philadelphia Water Department 21 22 23 24 3 12/6/01 APPROPRIATIONS COMMITTEE MEETING
Good morning, good morning. The Committee on Appropriations -- excuse me. The Committee on Appropriations is now in session. Will the clerk please read the bills.
Bill No. 010662, an ordinance 8 authorizing transfers in appropriations for Fiscal Year 2002 from the Grants Revenue Fund, the Director of Finance - Provision for Other Grants to the General Fund, the City Representative, and the Director of Commerce. And Bill No. 010663, an ordinance 14 authorizing transfers in appropriations for Fiscal Year 2001 within the General Fund from certain or all City offices, departments, boards, and commissions to certain or all City offices, departments, boards, and commissions. And Bill No. 010664, an ordinance 20 authorizing transfers in appropriations for Fiscal Year 2001 within the Water Fund from certain or all City offices, departments, boards, and commissions to certain or all City offices, departments, boards, and commissions. And Bill No. 010689, an ordinance 4 12/6/01 APPROPRIATIONS - BILL 010662 authorizing the City Solicitor, on behalf of the City, to enter into a multi-year contract with the provider of codification and editing services to produce printed and electronic versions of the eighth edition of the Philadelphia Code and periodic supplements, all under certain terms and conditions. (Witnesses come forward.)
Good morning Councilwoman Krajewski and members of City Council. My name is James Cuorato, and I'm the City representative and Director of Commerce for the City of Philadelphia. I appreciate this opportunity to submit testimony in support of Bill No. 010662, which authorizes the transfer of $18 million from the Grants Revenue to the General Fund for use by the Director of Commerce Also here with me this morning at the table is Mickey Rowley (ph.), who is the Executive Director of the Greater Philadelphia Hotel 5 12/6/01 APPROPRIATIONS - BILL 010662 Association. And also here with us this morning are: Tom Muldoon, President of the Philadelphia Convention and Visitor Bureau; Meryl Levitz, the President of the Greater Philadelphia Tours and Marketing Corporation. And we're also very pleased to have with us this morning a number of representatives of the hospital industry who are seated to your left.
In the aftermath of the September 11th attack, the hospitality industry faces one of its greatest challenges. The national hotel industry is now forecasting the worst financial performance in 33 years. It is estimated that the hotels in Philadelphia lost more than 170,000 room nights as a result of the tragedy, equating to more than $47 million in visitor spending. Prior to September 11th, hotels were anticipating concluding this year with a 59 percent average occupancy. Subsequently, the industry is expecting to end the year at a percentage rate in the mid 50s. Occupancy projections for next year 6 12/6/01 APPROPRIATIONS - BILL 010662 have also been significantly reduced from 62 percent to approximately 55 percent. This revised projection represents a loss of more than $100 million in visitor spending. Hospitality and tourism constitute the second largest industry in both the City and the State. 2 billion in wages and over half a million jobs. More than 43,000 of those jobs are here in Philadelphia and are held by residents of all sections of the City. Without the active intervention of the City together with the hospitality industry, it will difficult to reverse the negative economic impacts already being experienced by Philadelphia's restaurant and hotel workers. To help the tourism and hospitality industry respond to this financial crisis, the Administration has developed a $3 million campaign designed to support Philadelphia's $1 billion-a-year hospitality industry. The transfer of funding authorized by this bill is an integral part of this large hospitality industry support initiative. This initiative is designed to stimulate market demand by 7 12/6/01 APPROPRIATIONS - BILL 010662 creating a media campaign for a targeted audience and by establishing a comprehensive convention support program. The marketing campaign, entitled "Philly's More Fun When You Sleep Over," is being led by the Greater Philadelphia Tourism Marketing Corporation. The marketing effort includes television, radio, magazine, Internet, and other advertising media to reach the key drive markets within a 300-mile radius of Philadelphia. The campaign promotes a weekend hotel package to attract leisure visitors during that part of the week when hotel vacancy rates are highest. This marketing campaign will help Philadelphia maintain its competitive position with Boston, New York, and several other urban centers that have each announced aggressive strategies in response to the events of September 11th The second element of the hospitality support initiative is a multifaceted meeting and convention sales plan led by the Philadelphia Convention and Visitors Bureau. The plan includes three PCVB direct sales initiatives to provide short-term business opportunities in 2002 and 2003 for the Philadelphia hospitality industry. The 8 12/6/01 APPROPRIATIONS - BILL 010662 sales initiatives include direct sales, citywide convention promotion, and regional corporate sales. This initiative is the product of a strong collaboration between the hospitality industry and the public sector. It represents a combined effort of the City of Philadelphia, the Greater Philadelphia Tourism and Marketing Corporation, the Philadelphia Convention and Visitors Bureau, the Greater Philadelphia Hotel Association, and the Delaware River Port Authority, which has agreed to provide $2 million towards this effort. The success of the hospitality industry support initiative is critical not only to the many hotels and restaurants in the City relying on visitor spending, but to the thousands of City residents they employ. I, therefore, strongly urge you to support passage of Bill No. 010662. I would also respectfully request a suspension of the rules so that first reading can be waived and we can have this bill approved at the earliest possible time. As I said, Madam Chair, Mr. Rowley has a short statement that he would like to read, and then myself, Mr.
Rowley, Meryl, and Tom Muldoon will also been available for any questions that you may have. 9 12/6/01 APPROPRIATIONS - BILL 010662
Before we ask any questions, I would like to acknowledge a quorum we have Councilman O'Neill, Councilwoman Miller, Councilman Nutter, and Councilman Mariano and Councilman Clarke. Mr. Cuorato, could you tell this committee what types of marketing strategies other cities such as Baltimore, Boston, and New York are using in their response to September 11th.
Councilwoman, there are a number of other cities that are launching similar campaigns. And as I said, we feel we need to move ahead with this campaign aggressively in order to maintain our competitive position. New York City has -- and obviously since that was the site of the major attack, has suffered even more severely than we have. They have initiated a $40 million campaign that includes discounted hotel rooms, Broadway tickets, and contributions to a World Trade Center fund. Washington D.C. has begun an aggressive campaign called "The American Experience," which again includes packages based around hotel stays. Boston has begun a $6 million promotional 10 12/6/01 APPROPRIATIONS - BILL 010662 campaign. Miami is spending $2.2 million. And as with our program, all of these cities are leveraging public funds and attracting other sources of investments as well. So the actual expenditures will be much higher. But New York, Miami, Washington, D.C., Boston, and Baltimore all have begun very aggressive campaigns.
Do you think there are other cities allocating additional funds in an attempt to boost tourism?
Yes, Councilwoman, there's no question. And in some cases, not only are the cities contributing funds but the states are as well. And we are continuing to work with the Commonwealth to see if they will be a part of this program. Baltimore has launched a program that's being funded by the city and the State of Maryland. And New York, Miami, Boston, Chicago, all of those cities are contributing directly to their campaigns with the idea that the city's funds would leverage other funds, which is what we're trying to do as well. 11 12/6/01 APPROPRIATIONS - BILL 010662
Thank you. Are there any other questions from the committee?
Yes. Mr. Cuorato, I think the City of Philadelphia can be very proud of its hospitality industry and the leadership it took collectively on September 12th to start in motion what we are talking about here today. And the commercials have been cut, they're terrific. I think we're leading the nation in terms of the quality of our response to this. And I think the timing couldn't be better. I also think that the $3 million is going to be a part of what we eventually do, but we have to do it. And I think a lot of the response of those other cities is because of how quickly Philadelphia, with its mayor and with its entire united hospitality industry, responded to September 11th. So we may not be doing great, but we're doing as well as anybody in the country because of how quickly and how effectively we put this together. Thank you. 12 12/6/01 APPROPRIATIONS - BILL 010662
Mr. Cuorato, I recently saw some of the commercials that are being run by the some of the other municipalities, and I noticed they had some high-profile elected officials. So on behalf of the City Council of Philadelphia, if you would like to have any of us to appear in the commercials, please feel free to ask. Thank you. (Laughter.)
I wasn't in the commercial so I have nothing nice to say. He's taller than me. My main question here is, this is all a good thing and I'm voting for it, but I just want to 13 12/6/01 APPROPRIATIONS - BILL 010662 make sure that them chamber maids that are making $6 an hour are going to come back to work, you know, the people that really feel the impact of this.
Yes, Councilman. This really is aimed at not only maintaining Philadelphia's competitive position but retaining the jobs in the hospitality industry. And actually, Mr. Rowley can talk directly about that, the effect that this program will have on keeping people working in Philadelphia in every neighborhood of the City. And Mr. Rowley will be able to address that specifically for you.
Yes, good morning. I happened to be watching TV the other day. I don't watch TV a whole lot, but I did see the commercial about spending the night in Philadelphia. I thought it was very well done, and I looked up and I saw Mayor Street, and I said, Oh, this is new. Also, in comparing that commercial with the one that think Whoopee Goldberg does for New York, I thought it was really well done, and it would entice people to 14 12/6/01 APPROPRIATIONS - BILL 010662 Philadelphia. In reading some of the comments in the testimony, I continue to ask about the marketing strategy for the entire City to draw tourists here, and I'm particularly interested in continuing to gain information about how we include our neighborhoods, other than Manayunk, other than Chestnut Hill, which happens to be in my district, and I'm really interested in specifically what we are doing to advertise the flavor of Philadelphia out in the minority neighborhoods. So...
Councilwoman, I think I'll ask Miss Levitz to respond to that question for you.
Thank you, Councilwoman. And I think you've all come up with a great idea. We're going to ask you to all get together in bathrobes -- we'll supply them, and we'll take a great photograph.
We're trying to attract people here, we want them to come here. (Laughter.)
And we'll never stop. Councilwoman, it's a terrific question because one thing that we haven't been able to do 15 12/6/01 APPROPRIATIONS - BILL 010662 until this year was to sell the region to the region and highlight the richness of the neighborhoods. A few months ago, the Delaware River Port Authority apportioned an initial $2 million grant for us to be able to just do that. It will be "Be a Tourist in your Own Town" campaign. We were going to start working on that -- well, we had started working on that in August, and then September 11th happened, and so we've postponed the development of that campaign. That campaign, however, will launch in the spring. In the meantime, we've asked Patricia Washington, who's our Vice President of Grants and Development, who's here today, who has started working with the neighborhoods last year on a neighborhood initiative program and a heritage tourism program. Because increasingly, the visitors who come to Philadelphia like to start in Center City, but they are starting to branch out now, and we would like to help them every way we can. So starting in spring, you will see the launch of that program as well. And we're working with the DRPA to developing extended funding for that. Thank you. 16 12/6/01 APPROPRIATIONS - BILL 010662
Thank you, Madam Chair. Like my colleagues, I would like to commend all four of you for your great efforts on behalf of the City. For whoever is here or Councilmembers who are not here, whether we get to see TV very much, if you have maybe a promotional video -- I know a lot of times when you do these commercials, they can all come on one cassette, or maybe they're on DVD. It would just be helpful, I think, for all of us to have them and see them and know what's going. Second, I do want to commend Mickey and the hotel and hospitality industry directly for the efforts that you make for Philadelphia. We know that there has been a tremendous impact, and I think you had most recently -- was that the bed-making event? That was a little while ago, which I think I missed, although I was never good at that -- I still have no bed-making talent. But I do have a small thought, as Councilwoman Miller was mentioning, about different 17 12/6/01 APPROPRIATIONS - BILL 010662 types of promotions. Maybe as this campaign goes on -- and I know you're -- I think Councilman Clarke probably will be the next person in a commercial, but for those of us who are not as telegenic, when you have major events at some of the hotels, I might suggest that some of us could potentially be available if you have kind of those groups coming in at a particular time, and could just really be there to greet people, welcome them, thank them for coming, and they would know that the elected officials in the City really care about their presence here. And we could, you know, kind of participate in some of the activities. It's just a small way that we can kind of use ourselves, if you will, to further promote Philadelphia and let people know that we're very happy that we're here. So we're around. Thank you.
Just state your 18 12/6/01 APPROPRIATIONS - BILL 010662 name for the record.
Mickey Rowley, Executive Director of the Greater Philadelphia Hotel Association. It was the Housekeeping Olympics, by the way, Councilman Nutter. And we invite Councilman Clarke, if he's going to wear the bathrobe, to do so next year at our Housekeeping Olympics and could be with the Marriott, who won this year's bed making contest. To respond to Councilman Mariano's question-it's not chamber maids, by the way, it's room attendants and housekeepers. And it's not $6 an hour; it's closer to $12 an hour, which is -- and I'll address where those dollars go in our plan. Anyway, we represent 59 of the hotels that do business in Philadelphia -- that's all of the hotels in Philadelphia. We employ some 14,000 people in the City and about, as Jim said, 40,000 in the region. I thank you for the opportunity to speak. I'll be brief, as you've heard the particulars of the ordinance from Jim Cuorato. Of the 14,000 people that we employ in the 19 12/6/01 APPROPRIATIONS - BILL 010662 City, 80 percent of our employees live in the City of Philadelphia. And I don't have these numbers, but I'm guessing that of the private-employee industries in the City of Philadelphia, that's probably the largest percent of employees who actually live in the City of Philadelphia in your neighborhoods. Average wage is about 21, $22,000 a year. And last year, hotel employees in Philadelphia contributed $10 million to the City wage tax. That number, 14,000, today is double what it was in 1993, prior to the opening of the Pennsylvania Convention Center and the opening of many new hotels in the City. Obviously, ours is an industry that's experienced a rapid expansion of employment. That expansion, however, today is at risk. As you know, no industry has been hit harder by the tragic events of September 11th than the travel and hospitality business. Attached to our testimony* today is a pretty dramatic chart that shows the occupancy of our hotels in the month of September. (*Copy of Mr. Rowley's testimony not provided to 20 12/6/01 APPROPRIATIONS - BILL 010662 stenographer for attachment hereto.)
On Monday night, September 10th, hotels were running at 95 percent occupancy. Within a week and on Monday night, September 17th, our hotels were running 29 percent occupancy, which is as dramatic a drop in demand as I've ever seen, and I've been around for a few years. We finished the month of September at 50 percent. September was to have been our strongest month of the year. Most of the hotels were anticipating an 80 or 82 percent month. I don't need to tell you that our 14,000 employees were not very busy that week. There have been large and necessary reductions in labor at some of the hotels. Some have reduced managers hours by percent, and 18 others have just asked employees to be on a stand-by 19 or on-call business. 20 Unfortunately, most of our industry's recent hires were folks coming off of welfare rolls. You may have read the article in yesterday's Inquirer about the woman from the Wyndham Hotel, and that's a typical story. So when Mayor Street called us together to 21 12/6/01 APPROPRIATIONS - BILL 010662 see what it was that the City could do to help our industry, our response and message to him was very clear: Do something that will generate business -- what we call "room nights" -- so that our employees can return to full employment. The program, as designed by the hard work of the Greater Philadelphia Tourism and Marketing Corporation and the Philadelphia Convention and Visitors Bureau, entitled "Philly's More Fun When You Sleep Over," was launched just three weekends ago, November 16th, and has already had a terrific response. By the way, one of the reasons the response has been so good is the value offered by the hotels, which is two nights for the price of one at incredible rates, has made for a very strong offer. Through this past weekend, our ads have pulled 415 of the two-night packages and 207 one-night specials, for a total of 1,037 room 22 nights, just after three weekends. And in response to your question, Councilman Mariano, if you divide just in housekeeping alone, room attendants, if you divide 22 12/6/01 APPROPRIATIONS - BILL 010662 the numbers of rooms they clean by that number of room nights, that would be some 65, 70 days of work for our employees. And that's why we're urging that you proceed with this transfer of funds at the Administration's request and bring our industry back in Philadelphia. Thank you.
Thank you very much. Councilman Nutter and then Councilman O'Neill. Oh, Councilman O'Neill?
Just two things. One, you didn't mention the parking, but that is something that I think is important, that the hotel parking has been complementary as part of this promotion?
It is a public-private partnership, and the hotels are contributing to this quite substantially, so are the parking lots. And one thing I would like to mention -- I don't know if they're in the room, but USAirways, which has Philadelphia as its major city, its major 23 12/6/01 APPROPRIATIONS - BILL 010662 airport, is launching a campaign we just learned about last week that is tying in directly to this promotion, and that is, they are specifically lowering fares to Philadelphia to tie into this program, and I think they should be congratulated. But it really ties the ribbon around this completely by bringing in USAirways, and they should be congratulated as well. Thank you.
Of the 14,000 employees, how many are full-time and how many are part-time? If you don't know now, you can get back to me later, but I'd be interested in knowing that.
Okay. We measure full-time equivalents, so we measure a 40-hour work week. We could probably get close to what the answer is of full-time hours versus part-time hours.
Thank you, 24 12/6/01 APPROPRIATIONS - BILL 010689 gentlemen.
I believe that we'll hear testimony on Bill 010689. (Witness comes forward.)
Good morning. My name is Evan Meyer, and I'm a senior attorney in the Law Department. One of my responsibilities has been arranging for the publication of the Philadelphia Code of Ordinance and the periodic supplements of the code. I'm here to testify as to the need for Bill 010689, which would give Council's approval to a multi-year contract to publish the Philadelphia Code. As you may know, the Home Rule Charter requires that Council approve any service contract that has a term of more than one year. A multi-year contract is needed because it is most efficient to have the same publisher produce the main Code edition as well as the supplements for the next three years. A new edition is produced every four years. Our contract with the current vendor, 25 12/6/01 APPROPRIATIONS - BILL 010689 American Legal Publishing, expires with the 2001 supplement, which covers bills enacted through August 2001. That supplement has just been printed and is scheduled for delivery this week. An RFP has been issued requesting proposals for a contract for the next four years, which will include the next full edition of the Code, and periodic supplements, which will probably be published at least twice a year. We are now you publishing the Code and its supplements on a regular, predictable schedule, with considerable savings for the City both in time and money. We would like to continue with this record, and the bill before Council will help in that effort. The Law Department respectfully requests Council's favorable conversation of this ordinance 19 before the end of the year so that we can make the necessary arrangements to continue to publish the Code on a timely basis. As an addition to my prepared testimony, I would like to add that we also respectfully request a suspension of the rules on this bill. Thank you for the opportunity to appear 12/6/01 APPROPRIATIONS - BILL 010689 before this committee. I will be happy to answer any questions at this time.
Thank you. Mr. Meyer, how often are these supplements distributed? And who is eligible to receive them? I know the last copy I have is from 1998. I don't remember receiving any of the supplements. Are there yearly supplements distributed or just updated on the Internet or what?
There are semiannual supplements. The -- you should have a 2000 printed supplement. And the 2001 printed supplement, as I said, was supposed to be shipped this past Monday. The -- we just changed the distribution of the printing so that formerly Procurement distributed the forms and publications, including the Code. It's now going to be done by the prisons through PhilaCorps, it's my understanding. The different departments of the City purchase these documents just like they purchase other forms through -- formerly from Procurement. And, you know, I don't believe that it's furnished free. If your staff could check with the prisons and with Procurement for past issues, perhaps they 27 12/6/01 APPROPRIATIONS - BILL 010689 could come up with those.
Yes. PhilaCorps is now going to be producing the paper-bound books.
Well, our current contract with American Legal Publishing is finishing right now so what we need to do is to -- it was a four-year contract and it's at its end. So we now have an RFP out for proposals to see what kind of deal we can negotiate for the next four years. I anticipate that American Legal will be one of the proposers, but, you know, we'll have to see. We will then have -- we anticipate negotiating a four-year contract first to produce a main whole new edition of the Code in approximately 28 12/6/01 APPROPRIATIONS - BILL 010689 September of 2002, and then on a regular basis, probably every six months a supplement to that. Although it kind of depends on what proposals we get in. If people propose some terrific way of updating the Code on a more frequent basis and we think that's a good idea and cost-effective, it's possible we could do that.
All right. I guess I got somewhat confused, which, I mean, isn't that hard to do. So what's the prisons doing? I missed that part. What's their role in this?
The publication of the printed Code is actually in two steps. The contract that we're talking about today is the contract for editing and codification services. In other words, we give the company that we're contracting with the ordinances, and we say, Put these into the Code. So they have to figure out how to take an ordinance and put it in Code language, where it fits into the Code, put in the necessary footnotes, you know, do the proofreading, and make sure that they -- you know, we have to -- sometimes there's already footnotes in it or a section has been amended 29 12/6/01 APPROPRIATIONS - BILL 010689 several times, and they have to add on to the end of that.
But the actual printing of a book is producing a product, so that's usually competitively bid, as opposed to a personal-services contract.
Okay, I understand now. So that putting it together is done by one outfit, which will be the ultimate winner of the new RFP. Presently, that work was done by American Legal Publishing, and then they're going to shift that boilerplate, or that plate, I guess, if you will, now to the prisons, and they will actually do the production work?
Okay. With regard to getting copies, I actually had the same question that the Chair had. It seems, at least from, I think, our collective 17-person experience here, it 30 12/6/01 APPROPRIATIONS - BILL 010689 seems to be a rather hit-or-miss kind of situation. Sometimes you know, sometimes you don't know, sometimes it's a function of whether you have good friends over the in the Law Department or not or you're on good terms at that particular time. I also know that there is also a disk that's produced presently; is that correct?
That's correct. The Code is available on CD. We provide that CD to MOIS, and it's also linked to the City's Web site. There is a procedure for downloading the City Code to City-user computer from the MOIS disk. You may be familiar with the periodic newsletter that the Law Department puts out called "Client News" -- we have one on the Philadelphia Code with the detailed instructions about how to download the Code. You know, I'd be happy to provide that to anybody.
Well, I appreciate that. I think having the disk is certainly helpful. Richie Feder actually tried to assist me in doing the download, but it's -- apparently, our computers may be slightly different than yours or there was some problem in the downloading, or I was just too 31 12/6/01 APPROPRIATIONS - BILL 010689 dumb to do it. But in any event, it would seem rather obvious, but I'll just put it on the record, but it would certainly be helpful if the legislative body of the government would have all of those kinds of materials on a regular basis, and if, you know, that's an issue with the President's Office -- I mean, whoever has to buy it, certainly it would be good that they bought it and then there were 11 copies of it made available to all of us and we got 12 it on a regular basis, it would help us. 13
I don't know why that hasn't 14 worked, but I will look into it. 15
Thank you. We will now hear testimony on Bill No. 19 010663. (Witness comes forward.)
Good morning. My name is Rob Dubow, and I serve as Budget Director of the City of Philadelphia. I appear before you today to offer testimony on Bill No. 010663, which makes Fiscal 32 12/6/01 APPROPRIATIONS - BILL 010663 Year 2001 budget appropriation transfers between and among classes and departments in the City's General Fund. The bill is required for the 2001 year-end closing of the financial records of the City. As you know, transfer ordinances are introduced in City Council every year. Once each fiscal year ends, the Accounting Bureau and the Office of the Director of Finance close the books on that year's financial transactions and begins to compile the annual financial report of the City covering that fiscal year. In the course of preparing the City's annual financial report, the Accounting and the Budget Office identified reconciliations which need to take place between the total to be shown in the financial report and the appropriations for each department included in the City's operating budget. Once the report is completed, it's audited by the City Controller for the Controller to give a favorable opinion regarding the financial report's legal appropriations for each department, and each fund must be consistent with the report. Enactment of the FY 2001 year-end transfer 33 12/6/01 APPROPRIATIONS - BILL 010663 ordinance will make possible the reconciliation that's required in order to permit that favorable opinion. The transfers in the bill are shown in Exhibit A, which is attached to the testimony. There are 29 transfers, and I'll summarize the reasons for the major transfers included in the bill. Fourteen of the transfers involve a change in total appropriations for a particular department or cost center, eight of which are increases. 4 million. 1 million for the Police Department. Transfers to Class 100 largely cover higher-than-expected overtime costs related to court appearance, the Republican National Convention, and slower-than-anticipated attrition. That increase is offset by small surpluses in other classes. 8 million is requested for Licenses and Inspections for demolitions appropriations for imminently dangerous buildings deteriorated as a result of strong rain and wind. 5 million requested for the Streets Sanitation Division personal services appropriations. The 3 million is needed to cover street reconstruction and resurfacing work. The Sanitation Division increase is needed to cover additional overtime resulting from snow-fighting efforts. Those increases are also offset by decreases of $446,000 in Streets' other classes and Class 200, 300, and 400 appropriations in the Sanitation Division. An increase of $2 million is requested for the Board of Trustees of the Free Library material, supplies, and equipment appropriation to cover the cost for new books that were scheduled to be delivered and funded in FY '02 but were mistakenly delivered in FY '01. An increase is offset partially by a $137,000 decrease in appropriation for personal services and purchase of services. 6 million to cover the higher-than-expected cost of outside counsel 35 12/6/01 APPROPRIATIONS - BILL 010663 resulting from the significant number of high-profile legal matters requiring technical expertise not found within the Department. 5 million. An addition $386,653 is requested in the Department of Revenue appropriation to cover additional overtime in the mailroom and the repayment of a productivity bank loan. The final significant increase of appropriation of $178,786 is requested for the Sheriff to cover overtime costs and expenditures related to State-mandated training. That increase is partially offset by a decrease in appropriations in purchase of materials, supplies, and equipment, and there's a net increase of $152,971. Those increases in appropriations are made possible through reductions in six different appropriations. 8 million for fringe benefits. 5 million in savings in disability payments and Workman's Compensation.
3 is requested in the appropriation from the Department of Revenue Sinking Fund Commission resulting from lower-than-anticipated interest rates and the postponement of a new debt issuance. An additional reduction of $6 million in appropriations from the Department of Public health is requested, savings that resulted from the low resident census but which are completely offset by a reduction in revenue from medical assistance and Medicare subsidies. The Administration also requests a reduction of $5 million in the Director of Finance indemnities appropriation. Funds were transferred to the Indemnities Fund in anticipation of making payments to Osage Avenue residents, and while some payments were made, not all of the residents exercised their payment option. The two other reductions in appropriation proposed in the bill include a $2 million reduction in the Department of Public Property appropriation 37 12/6/01 APPROPRIATIONS - BILL 010663 primarily due to reimbursements from prior-year bill 3 overpayments, and a $267,939 decrease in the Licenses and Inspections appropriation in Classes 1, 3, and 400, primarily due to delays in filling positions. The other transfers in the bill are 8 between classes within departments and do not result 9 in any net change in Fiscal Year '01 departmental 10 appropriations. 2 million for the First Judicial District. As in 13 earlier years, the First Judicial District realized 14 a Class 100 surplus. This ordinance would transfer 15 the surplus to Class 200 to provide additional monies to the administrative office of the Pennsylvania Courts for renovations to the First Judicial District occupied space as well as technology and telecommunications upgrades, consistent with the ongoing agreement of understanding between the City and the AOPC. I hope these comments have been helpful in describing the content of the ordinances before you. On behalf of the Administration, I respectfully request your favorable consideration of the bills 38 12/6/01 APPROPRIATIONS - BILL 010663 and suspension of the rules to permit consideration of these ordinances on the first-reading calendar of City Council's next meeting. I'd be happy to answer any questions, and I know representatives from the various departments are here also.
Thank you. I'd also like to acknowledge Councilman Ortiz. Mr. Dubow, how much of this allocation is being used to fund outside legal counsel for the stadiums? I have about three questions.
Okay, why don't I ask Bill 15 Thompson from the Law Department to come up and answer those questions. (Witnesses come forward.)
Good morning, Councilwoman. I am William R. Thompson, Chair of Litigation in the City Law Department. During the month of November, I also served as Acting City Solicitor. With me as well is Christopher Lane, our Director of Administration and Management of the Law Department. I'd be happy to try and answer your 39 12/6/01 APPROPRIATIONS - BILL 010663 questions.
How much of the allocation is being used to fund the outside legal counsel for the stadiums? And while I'm at it, how much of this allocation was made to Mr. Martin? The other question -- one more. Could you provide this committee with a breakdown of funds paid to the firms that were involved in the deal, in the stadium deal?
The numbers that I have, Councilwoman, total approximately $656,000. The breakdown I have for that is: Payable to Montgomery, McCracken in FY 2001, $161,000. Payable to Pollino & Lance -- that is the law firm where Bill Martin is -- I have $283,018. Payable to James Prendergast, who is a contract lawyer working for the Law Department, $50,000. And payable to Wolf, Block is $183,259.
What was 40 12/6/01 APPROPRIATIONS - BILL 010663 Mr. Martin again?
Pollino & Lance, the number I have for Pollino & Lance is $283,018.
Could you submit that in writing to me so I can --
Thank you. Any other questions? Yeah, Councilman Nutter.
Just one question on that question. You're saying that all four of these firms did work on behalf of the City or City-related agencies connected to the stadium transaction?
Okay. And what was the general scope of work? What is it that these firms were doing?
Well, I think that this is a very complex deal, as you might imagine.
Okay. And there's a whole 41 12/6/01 APPROPRIATIONS - BILL 010663 panoply of services being provided -- from extensive document drafting, negotiation, representation in a number of transactional circumstances. I don't have the complete breakdown here. But as you might imagine, it is very thorough, all-encompassing, and very complex.
There are a number of things involved. As I understand it, there is a --
There are a number of separate real-estate deals in terms of real-estate acquisitions that have taken place. There are a number of leases drafted, a number of proceedings involving eminent domain proceedings, contract negotiations with respect to a number of other transactions.
Okay, all right. I'll come back to that area. I would say, Mr. Thompson, that I didn't mean to chuckle, but Mr. Dubow certainly knows that you probably took advantage of being Acting City Solicitor, because he would never be able to get 42 12/6/01 APPROPRIATIONS - BILL 010663 away with "It's just a very complex situation" as an answer to any question.
In the same area but a different question, Mr. Thompson, the other $900,000 in additional costs, because I'm taking it that -- the testimony here says that you have 43 12/6/01 APPROPRIATIONS - BILL 010663 $1.5 million-plus to cover higher-than-expected costs of outside legal counsel resulting from a significant number of high-profile legal matters. Are we to take it that the $656,000 that you mentioned is a part of the $1.57 million?
Okay, tell us about the other $900,000. Why did you have such an unanticipated cost close to a million dollars?
There are a number of other matters in which the City Law Department -- high-level officials in the City Law Department would be witnesses with respect to lawsuits that could not have been anticipated at the time of the budget submission; for instance, the Testa litigation. Another case of that ilk would be the RNC litigation. These are cases which would not have been anticipated at the time that the budget was prepared, but there are averments in the lawsuit which would make a number of --
Averments, okay. I thought we had to call the Health Department or something. (Laughter.)
There are allegations in the lawsuit that will result in high-level officials with the Law Department being witnesses with respect to the defense of those lawsuits. And of course, under those circumstances, we need to make every effort to avoid the appearance of any impropriety. Those are the kinds of cases that have to go to outside counsel. And Testa and RNC, for instance, fall into that category. There are other like the Parking Authority litigation, for instance -- again, litigation that could not have been anticipated at the time -- that would have involved some unanticipated need for tremendous resources that we do not normally staff for at the Law Department. 45 12/6/01 APPROPRIATIONS - BILL 010663 The need to deal with pleadings and exigent hearings on a short-time basis that require the help of outside-counsel larger firms who have the resources to be able to throw out those cases in a moment's notice, that's another kind of case. The Silverberg case, which is on your list, is also a case, for instance, unanticipated at the time --
I'm sorry. There's a case involving allegations again with respect to --
I'm not asking you about the case. You said "on our list." What list?
I'm sorry. I have before me a list with respect to unanticipated matters.
I was unaware that it was not brought into the committee. It is a case involving allegations against the Law Department to some extent that require the Law Department's lawyers to appear as witnesses.
Okay, all right, I gotcha. Thank you. 46 12/6/01 APPROPRIATIONS - BILL 010663
Thank you. Mr. Dubow, on the question again, regarding the First Judicial District, has there been any change in the courts regarding funding from the State to cover the funding?
I believe last year, the State was funding positions, according 10 to testimony that was given before this committee. 11 Can you give us an update? 12
Well, the background is that there were a couple of court decisions that said the State is responsible for funding a unified court system. In the second decision, the court appointed a special master to do a report recommending how the transition from county to state control should happen. The special master issued a report and suggested a four-stage transition. The first stage was the stage that covered those 12 employees. That stage happened. The succeeding stages, which covered a much larger number of employees, have never happened, have not been implemented by the State. 47 12/6/01 APPROPRIATIONS - BILL 010663
Could you tell us how much money the First Judicial District has in surplus in the court improvement account and in the other account?
I'm going to ask Kevin Cross from the First Judicial District to come up and provide those details. (Witness comes forward.)
I am Kevin Cross, Deputy Administrator for Financial Services for the First Judicial District. Your question concerning the court improvement account, we have approximately $20 million in that account but have various --
And that would include the proposed transfer that is in the works right now. We have various projects that are scheduled against that account, and they include upgrades to our criminal-case processing system, our 48 12/6/01 APPROPRIATIONS - BILL 010663 LAN software system, and our network. They include enhancements to City Hall and renovation of space for courtrooms and also the e-filing applications in the Trial Division and Municipal Court. So we have projected expenditures that are almost equal the amount or maybe even exceed the amount that we have in our current court improvement account.
Well, how long has the First Judicial District been stockpiling these funds?
This agreement has been going on for almost ten years, since the beginning of the Rendell Administration, when the Supreme Court intervened, and we were allowed to do our own purchasing. And it was a part of the zero-growth budget agreement. And the zero-growth budget agreement has capped our position level and our Class 100 funding. So we don't come to City Council or the Administration for additional funds for personnel costs or -- we stayed within zero-growth for almost 10 years.
Thank you. Any other questions from members? 49 12/6/01 APPROPRIATIONS - BILL 010663 (No further questions.)
Any other questions regarding any of the other departments?
Thank you, Madam Chair. Just a couple. Mr. Dubow, on, I guess, Page, maybe, 3 of your testimony, you said that there's a reduction of $6.3 million, which was requested in the appropriation from the Department of Revenue Sinking Fund Commission resulting from lower-than-anticipated interest rates and the postponement of new debt issuance. What new debt was not issued that anticipated?
When we constructed the Fiscal Year '01 budget, we anticipated issuing our new general-obligation debt for various improvements, like the Recreation Department's improvements and the Streets Department's (indiscernible) our General 50 12/6/01 APPROPRIATIONS - BILL 010663 Fund debt in July, we actually ended up issuing it in January, which meant that it was a full six months later.
Instead, the bonds were issued in January, so there was a half year less of debt service on these bonds.
Yeah, that's the delay in issuance that we were talking about.
That's the one delay, okay. I have a question for the Department of Licenses and Inspections -- actually two questions. One involves computerization and the other involves costs of demolitions for these commercial buildings. Do you have any information about that, or is it easier for you to --
Why don't I ask the commissioner to come up. 51 12/6/01 APPROPRIATIONS - BILL 010663 (Witness comes forward.)
Good morning, commissioner. COMMISSIONER MCLAUGHLIN: Good morning Councilwoman and members of the committee. My name is Ed McLaughlin, Commissioner of L&I.
Good morning, Commissioner. COMMISSIONER MCLAUGHLIN: Good morning, Councilman.
Could you give us a very brief update on -- you've been here on a couple of different occasions -- computerization of your office operations. And in your testimony, you talk about 32 large commercial structures demolished at an average cost of $127,000. What I want to ask you about that is: One, why does it cost so much to demolish these buildings? and two, what, if any, active program do we have to try to recover any of these costs on the commercial building side? COMMISSIONER MCLAUGHLIN: As far as the computerization, we're in the same boat as everyone else, with the new director of MOIS doing a study to 52 12/6/01 APPROPRIATIONS - BILL 010663 determine the needs of the City. So -- but we're very hopeful that --
I thought you had already put together a proposal for your department. COMMISSIONER MCLAUGHLIN: We did. But that -- I still have hopes that that proposal that we put together will come through. It's just that the new director has to have time to get her feet on the ground and find out what the needs of the -- the complexity of a department like ours is that very many people have to hook into us to -- for it to work properly. And that's what she's concerned over.
Yeah, okay. Tell me about the commercial buildings. COMMISSIONER MCLAUGHLIN: The commercial buildings cost more because they're bigger, because the -- we have asbestos, heavy-duty asbestos removal responsibilities and because of the stepped-up State involvement in environmental issues regarding just where that debris can be disposed of. So that just adds onto the cost.
Okay. Are you aware of any efforts to aggressively pursue cost recovery 53 12/6/01 APPROPRIATIONS - BILL 010663 from these very expensive demolitions? COMMISSIONER MCLAUGHLIN: We lien every property before we do a demolition, and, of course,, the Law Department does pursue those liens. I understand a part of the Mayor's blight initiative would be to step that process up also.
Thank you, Commissioner. Are there any other questions? (No further questions.)
Are there any other questions from members of the committee regarding Bill 010663? (No further questions.)
Now we'll have testimony on the last bill, which is 010664. (Witnesses come forward.)
Good morning, gentlemen. Please state your name for the record.
Good morning, Councilwoman Krajewski. My name is Bernard Brunwasser. I am Deputy Commissioner for the Philadelphia Water Department. With me today is 54 12/6/01 APPROPRIATIONS - BILL 010663 Joseph Claire, who is the Department's Administrative Services Director. I am here before you today to present testimony on behalf of the Water Department for Fiscal Year 2001 year-end transfer ordinance within the Water Fund. The Department is requesting an increase of $704,884 to cover a shortfall in its Class 100, or personal services funds. This shortfall was related exclusively to the unbudgeted payment of a one-time bonus of $1500 per employee for approximately 2100 Water Fund employees on August 11, and August 25, 2001, after the ratification of the District Council 33 and District Council 47 labor contracts, which became effective July 1, 2000. The total amount of the bonus paid by the Water Fund was in excess of $3.1 million. The balance of the bonus was absorbed by the existing Fiscal Year 2001 personal services appropriation. The transfer will be coming from funds budgeted for electricity in Class 200, and that totals $492,112, and funds budgeted for chemicals in Class 300, in the material, supplies and equipment 55 12/6/01 APPROPRIATIONS - BILL 010663 category, and those funds are $212,772. I would also like to request the suspension of the rules to permit a speedy review of our request by the full Council. Thank you for the opportunity to present this testimony. I'm available to answer any questions you may have.
Thank you. Are there any other questions? (No further questions.)
I believe that this will end our committee in the public hearing. - - - 56 12/6/01 APPROPRIATIONS - PUBLIC MEETING
Now we'll go into our public meeting You're requesting a suspension of the rules, right, Mr. Dubow?
Thank you, Madam Chair. Madam Chair, I move that Bill No. 010689 be reported out of committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
All those in favor? Those opposed? Therefore, Bill 010689 will be reported out of this committee with a favorable recommendation with the suspension of the rules so as to permit first reading at our next session of Council Councilman Nutter?
Thank you, Madam 57 12/6/01 APPROPRIATIONS - PUBLIC MEETING Chair. I move that Bill No. 010662 be reported out of committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
All those in favor? Those opposed? therefore, Bill No. 010662 will be reported out of this committee with a favorable recommendation with a suspension of rules so as to permit first reading at the next session of Council. Councilman Nutter.
Madam Chair, I move that Bill 010663 be reported out of this committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
All those in favor? All those opposed? 58 12/6/01 APPROPRIATIONS - PUBLIC MEETING Therefore, Bill 010663 will be reported out of this committee with a favorable recommendation and the rules of Council be suspended so as to permit first reading at the next session of Council. Councilman Nutter.
Thank you, Madam Chair. I move that Bill No. 010664 be reported out of this committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)
All those in favor? All those opposed? Therefore, Bill 010664 will be reported out of this committee with a favorable recommendation and the rules of Council will be suspended so as to permit first reading at the next session of Council. Thank you all very, very much. (Proceedings end at 10:07 a.m.) 59 CERTIFICATE I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia's meeting of the Council Committee on Appropriations of Thursday, 12/6/01, 2001, are contained fully and accurately in the stenographic notes taken by me upon, and that this is a true and correct transcript of same. RE: Ordinance No.s' 010662, 010663, 010664, 010689 _______________________________, Josephine Cardillo Registered Professional Reporter and Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)