COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, October 20, 2009 10:15 a.m. - - - PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN BLONDELL REYNOLDS BROWN BILLS 090570, 090661, 090663, 090687, 090688 and 090705 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. The Committee on Finance will come to order. Let me note that we have a quorum here in the presence of Councilman Bill Green, Councilman William Greenlee, Councilman Goode, Councilman Kenney and myself. We'll ask the Clerk to read the first bill.
Bill No. 090570, an ordinance amending Section 19-203 of The Philadelphia Code, entitled "Payroll Deductions," to add the United Service Organizations to the list of designated payees to whom an employee may direct payroll deductions; all under certain terms and conditions.
Thank you. Are there any witnesses to testify relative to this bill? Would you come forward, please. (Witness approached witness table.) 3 10/20/09 - FINANCE - BILL 090570, etc.
Sure. Good morning. My name is Catherine Paster and I'm the First Deputy Director of Finance for the City of Philadelphia.
Thank you. I'm here to testify in support of Bill No. 15 090570, which would amend Section 19-203 of The Philadelphia Code pertaining to payroll deductions. Section 19-203 of the Code, as approved by Council, authorizes the Director of Finance to deduct from salaries such sums as employees may request. The Code lists specifically those entities for which payroll deductions may be made. Bill No. 090570 would permit City employees to authorize 4 10/20/09 - FINANCE - BILL 090570, etc. payroll deductions to be paid to the United Service Organizations. Any authorization for payroll deduction is made voluntarily by the employee and may be revoked by the employee at any time. This concludes my testimony. I would be happy to answer any questions that you might have.
Thank you very much for your testimony. Are there any questions of this witness? (No response.)
There being none, is there anyone else here to testify on this bill? Please come forward to the table and identify yourself. (Witnesses approached witness table.) MAJOR GENERAL CRAIG: Hello, Madam Councilwoman. I'm Major General retired Wesley Craig. I'm the First 5 10/20/09 - FINANCE - BILL 090570, etc. Vice-Chair of the Liberty USO here in Philadelphia. And, if I may, just a moment of introduction, I spent 38 years in the Army and 31 of those as a part-time soldier in the Pennsylvania National Guard. My last five years of service, I was in full-time active duty and the Commanding General of the 28th Infantry Division. While a Division Commander, we deployed probably 6,000 Pennsylvania guardsmen overseas in the global war of terror, including many hundreds of Philadelphians. Many of your constituents are members of the Pennsylvania Guard. During this time of conflict is when I ran into the USO myself and was a recipient and customer of their services. When returning from Afghanistan, when you've been there in a dangerous place and you're dirty and you're tired and you're finally coming home, I left Afghanistan in my uniform 6 10/20/09 - FINANCE - BILL 090570, etc. still with dirt from the dust of the base where I was operating from, came home and my first place where I was able to get off an airplane and get a shower was the USO in Germany, and what a tremendous feeling that was to be in an oasis of America there in Germany. And that's what the USO does. And then again when the Division headquarters went to Egypt in the fall of 2005, we went through the same place in Germany. So when I retired, I joined the USO to see what I could do to help here in my local neighborhood. The USO here in Philadelphia runs a tremendous state-of-the-art center in the Philadelphia Airport. It is brand new. It's been operating for a year. It helps service all of the returning soldiers from the 56th Striker Brigade, which I'm sure you've all seen in the news as they returned from their year in Iraq. Both our operations at the Airport, the Willow Grove Naval Air Station and also at Fort 7 10/20/09 - FINANCE - BILL 090570, etc. Dix, New Jersey all support the soldiers and is a great way for the American public, Philadelphians and Pennsylvanians to reach out and say thank you and help to all the soldiers as they come back, because it's the personal touch that our volunteers give that really make the difference for all of us who have been in harm's way. And this amendment to this bill would allow Philadelphia workers to donate as they wish, or if they wish, to our organization, because we receive no 14 funding -- no federal funding at all. Our entire budget is dependent on the generosity of the American people. Thank you very much. If you have any questions.
Thank you so much for taking time to come in. MAJOR GENERAL CRAIG: It's my 8 10/20/09 - FINANCE - BILL 090570, etc. honor.
Thank you for the wonderful work that you do. I have noticed the office in the Airport, and I remember USO when I was a little girl in Greensboro, North Caroline, because the Army base was there. Anyone else to testify? Would you please come forward.
Good morning and thank you for your time. My name is Joseph Brooks and I am the new President and Chief Operating Officer for Liberty USO here in Philadelphia. My connection to the USO is, I would not be here without the USO. My mother and father met at a USO dance 50-some years ago. My mother was a senior at Little Flower High School and my father was a United States sailor from Northern California. Without the USO, I would not be here before you today. I just started this job two short weeks ago, and I came to it excited 9 10/20/09 - FINANCE - BILL 090570, etc. by the challenges and opportunities that I thought I would face, but I was also humbled by the experiences that I've had in a short time, humbled by the courage, sacrifice and dedication of the women and men in our armed forces and their families for whom I'm now working. Like most of the civilian population, I assumed the USO was a not insignificant line item in a multi-trillion-dollar federal budget. I could not have been more wrong. Our operating revenue is derived solely from contributions, whether they be corporate or private. These donations pay for the hot meals that we feed our young men and young women seven days a week, 365 days a year. The USO terminal in Philadelphia International is open Christmas Eve, Christmas Day, New Year's Eve, New Year's Day. If there's an American soldier that needs a hot meal, an opportunity to call home, a shower or 10 10/20/09 - FINANCE - BILL 090570, etc. a bed to sleep in, Philadelphia International's terminal at A-East is open for them, and it's staffed accordingly. The donations that we also receive also pay for many programs, two of which I want to point out very briefly to you. One is the Survivors Networking Weekend. It's where families of those soldiers killed in action are brought together, share and learn from each other, and the USO provides moral and spiritual support through counseling agencies that we engage and through United States military chaplains. The other program I wanted to point out that the USO specifically handles and Liberty USO specifically handles is our Helping Hand Fund, where we provide support for heating, electricity and utilities for families of service members who have been deployed. Frequently when a soldier is deployed overseas, especially if he's a reserve 11 10/20/09 - FINANCE - BILL 090570, etc. unit, he loses that opportunity to generate income and revenue for the family he's left behind. The USO is there to support them. All of this is down to a staff of only eight for all of Pennsylvania, all of Southern New Jersey, eight staffers. But our spine and our backbone is our volunteer team estimated at just over 500 volunteers. These 500 volunteers and eight staffers by the end of 2009 will have accommodated 200,000 soldiers and their families and will have logged in over 35,000 volunteer hours. Most of those hours occur while we're asleep or we're home with our families. So I'd like to say to you today, I urge you -- I urge your consideration of passing Bill 090570. This resolution's passing would be not only appreciated by those of us who have testified before you, but, most importantly, the tens of thousands of soldiers in harm's way and their families 12 10/20/09 - FINANCE - BILL 090570, etc. here in Philadelphia that we assist. So thank you for the opportunity to speak here today. You can count on Liberty USO to meet the needs of your friends, your neighbors, your nieces, nephews and sons and daughters for the years to come. Thank you for the opportunity today, and be glad to answer any questions you may have.
Thank you so much for your testimony. It's nice to see you in that position. Are there any questions or comments? Councilman Kenney.
Just one comment. I think it's important for the record to reflect that many of the people who are deployed to Iraq and Afghanistan are our own City employees, police officers, firefighters and people from all through the government, men and women, who leave their families. And 13 10/20/09 - FINANCE - BILL 090570, etc. we've done some other legislation in the past to help them with their wage tax by having the wage tax waived and some other issues that keep coming to our attention as a result of this ongoing battle against terrorism in our world. So thank you for your testimony, and it's a pleasure to have you here.
Thank you both for your testimony. Let me recognize Councilwoman Brown and Councilman DiCicco, who have joined the Committee. Are there any other comments or questions? (No response.)
Bill No. 090661, an 14 10/20/09 - FINANCE - BILL 090570, etc. ordinance amending Section 19-201 of The Philadelphia Code, entitled "City Depositories," by authorizing the City Treasurer to deposit funds in M&T Bank, under certain terms and conditions.
Is there anyone here to testify on behalf of this bill? (Witnesses approached witness table.)
Good morning. Thank you for being here. Would you please identify yourself, please.
Sure. I'm here to testify on behalf of Bill No. 090661. Bill No. 090661 amends Section 25 19-201 of The Philadelphia Code, entitled 15 10/20/09 - FINANCE - BILL 090570, etc. "City Depositories," by authorizing the City Treasurer to deposit funds in M&T Bank, under certain terms and conditions. M&T Bank meets the requirements to become an authorized depository. Therefore, the Administration supports this bill. This concludes my testimony. I'm happy to answer any questions.
I'm here obviously to ask that M&T be given an opportunity to provide retail and commercial services to both City employees and the City of Philadelphia. I want to ask you to support the bill 19 090661, please.
Would you please tell me who you are and give me a little information about M&T Bank.
Okay. My name is Joseph Madison. I'm employed obviously with M&T Bank in the M&T Government 16 10/20/09 - FINANCE - BILL 090570, etc. Banking Division. I particularly support the Philadelphia market. M&T Bank is headquartered in Buffalo, New York, with several branches stemming from Buffalo, New York right through Baltimore, Maryland. In the Philadelphia market alone, we have over branches, and, most importantly, we do 10 have an outstanding rating, CRA rating, 11 which stands for Community Reinvestment 12 Act. It's a federal policy that M&T 13 since 1982 has reached an outstanding 14 rating for all those years. 15
We have a branch right around the corner at Rittenhouse Square, is one of our branches, which is less than a mile away. We also have two other branches within the three-mile radius. 17 10/20/09 - FINANCE - BILL 090570, etc.
Yeah, we do. We do have branches in Horsham. We also have branches in surrounding areas near Horsham and in the market in Philadelphia. I don't have the exact names. I apologize.
So the one in Rittenhouse Square is the only one in Philadelphia?
The M&T Bank in Rittenhouse Square is the only one in Philadelphia proper, in the City of Philadelphia?
Okay. Thank you. Are there any other questions? 18 10/20/09 - FINANCE - BILL 090570, etc.
Excuse me. We also have a Port Richmond branch. I apologize. And a Woodland Avenue branch.
Thank you, Madam Chair, and thank you for coming and considering Philadelphia. I have a few questions. I'm not on the Committee, but as a courtesy, they allow other Councilpeople that are impacted by this move to say a few words. Could you help me to understand when you say that you have an outstanding CRA participation record, what does that mean in your mind? 19 10/20/09 - FINANCE - BILL 090570, etc.
Well, it's a rating passed by the federal government and it's a rating that all banks have, and what that rating stands for is -- or assessment of that rating is what the bank does in the community, what type of loans, does it lend to small businesses, to low-to-medium-income areas, what does the bank do to financially support those low-to-medium-income neighborhoods. And so that assessment, coupled with a lot of other different criteria, the bank is assigned that rating.
I'm familiar with the Federal Reserve's definition of CRA. I'm trying to get a better sense of how that translates to Philadelphia and your bank here in River City.
Well, M&T, since we've had a presence in the Philadelphia market, has continually sought ways to offer our financial support, along with our volunteer support, in different community volunteer situations. I don't 20 10/20/09 - FINANCE - BILL 090570, etc. have the list in front of me, but I can tell you that we're certainly supportive of different advertisements, monies that would go to help these foundations survive and operate. We're also -- in the local branch area, our volunteer support, anything we can do to help that community achieve its goals.
Let me ask some more specific questions. How many loans have you done in Philadelphia to small businesses?
And how many branches did you say you had in 21 10/20/09 - FINANCE - BILL 090570, etc. neighborhoods other than Center City?
I don't have the actual location at Woodland. Rittenhouse, of course.
Okay. By way of your contracting -- and what I mean by that is procurement opportunities -- do you keep statistics on minority and female participation in contracting opportunities offered by your bank?
Well, again, this 22 10/20/09 - FINANCE - BILL 090570, etc. information you're asking all is coupled with our CRA rating. So we are doing well. That's one of the reasons we continue --
When you say "well," I mean, for me "well" is relative and the specifics of "well" is what I'm asking about. Finally, by way of hiring practices, your upper management, is there adequate representation of females and minorities in your management, and what specifically is that ratio?
I don't have the ratio in front of me. I can tell you from a personal standpoint. I can't speak from the bank. I can tell you I think we do. That's not typically a comment an employee will tell you. I mean, those views and opinions can be varied. I can tell you that M&T strives to hire people of all races. We look for the best qualified employee.
Well, I'm 23 10/20/09 - FINANCE - BILL 090570, etc. going to preempt Councilwoman Blondell Reynolds Brown by asking that, and I'm sure I'll hear it again, but could you provide that to the Chair and particularly what SBA deals and PIDC deals you've done in Philadelphia that tend to be more urban-based deals?
I'd like to know about that. And then, finally, who begot whom by way of mergers? Are you a product of a merger? Who begot whom in the bank mergers world?
M&T has never been bought. I can tell you right now within the last six years we've merged or acquired First Bank, and just recently in 2009, we just acquired two banks in Baltimore-based, Maryland. One, Provident Bank, and that acquisition was completed May 21st of this year. And we are in the final stages of acquisition of 24 10/20/09 - FINANCE - BILL 090570, etc. Bradford Bank, which is also based in Baltimore.
Well, as we get past the subprime meltdown that we've experienced in the City, these questions and many more would be helpful for me at least to understand who we are giving some large deposits to. And I'm sure the spirit of what they're talking about is adequate, but the specifics of what they can demonstrate under CRA is something I'd be interested in seeing, Madam Chair.
So you commute every day? 25 10/20/09 - FINANCE - BILL 090570, etc.
My region, I cover the Lehigh Valley, Berks and Philadelphia.
Okay. We have a Councilman here who requires a lot of information from banks that we're doing business with. Evidently you're not familiar with this City Council and our effort to require extensive diversity in employment and investment and outreach, and so that's why you're getting these questions. And I think it would be -- if you provide all the information that you've been asked to provide to my office so that we can share it with the members of this committee, it would be quite helpful.
I'd love to. Be happy to. 10/20/09 - FINANCE - BILL 090570, etc.
Is this your first opportunity speaking to a legislative body of this type?
Is it customary for you to speak to others where you're building a case and not have back-up documentation?
In this instance, some of the information regarding the CRA and minority-owned type of businesses really haven't come up before.
Okay. I need to underscore the remarks of the Chairwoman, that there's several members 27 10/20/09 - FINANCE - BILL 090570, etc. of this body who really look to those expectations as expectations in terms of information we need to have.
City Treasurer, what type of advice, communication, recommendations, suggestions do you provide to testifiers who are coming before this legislative body and specifically to this committee on bank-related matters?
In this case, the ordinance came from City Council, so what we did, I mean, in the Treasurer's Office, we just check to make sure that M&T Bank met the minimum requirements to become an authorized depository. We did not have any communication prior to this.
There's three requirements: That the bank must be established for five years, must have profitability for the last two years, and 28 10/20/09 - FINANCE - BILL 090570, etc. must have a minimum of 100 million in net assets.
And so none of the requirements speak to Councilman Goode's priority issue when it comes to banks with CRA ratings or rankings?
Well, once the bank becomes an authorized depository, then it has to meet very strict requirements annually in terms of providing community reinvestment goals, providing a strategic plan each year that highlights disparities in lending and how they're going to improve. So once they're on our authorized depository list, that information needs to be provided annually, and that's all detailed in the City Code for the banks.
Councilman Goode. 29 10/20/09 - FINANCE - BILL 090570, etc.
Thank you, Madam Chair. Mr. Madison, you've referenced your CRA rating several times. Are you familiar with how that rating is obtained?
So what percentage of those financial institutions that are monitored receive an outstanding rating?
Would it be fair to say that almost all financial institutions that are monitored receive an outstanding rating? In other words, there's no teeth to the whole federal CRA system.
Well, you know, I 30 10/20/09 - FINANCE - BILL 090570, etc. can't comment to that. I can really comment just to what M&T receives, and I can tell you that our track record since 1982, we've received an outstanding rating.
And so has just about every other bank that is monitored. What we do locally is, we specifically require community reinvestment goals in terms of how many small business loans, how many home mortgages, how many home refinance loans, how many home improvement loans you would make to low-and-moderate-income neighborhoods, and require that on an annual basis as one of our requirements. So, for instance, Wachovia Bank has committed to 477 small business loans in low-and-moderate-income neighborhoods and 2,323 home improvement/home mortgage/home refinance loans in low-and-moderate-income neighborhoods. Bank of America, 620 loans and 595 home 31 10/20/09 - FINANCE - BILL 090570, etc. loans in low-and-moderate-income neighborhoods. PNC, 500 and 285. Citizens Bank, 150 and 950. Commerce Bank, 100 and 329. And Citibank, which actually came into the City system of depositories after we passed this legislation, has committed to 2,135 small business loans in low-and-moderate-income neighborhoods and 1,300 home mortgage/home improvement/home finance loans. So we take this very seriously. The first year we required this was 2003, and we had commitments for slightly over 5,000 loans in low-and-moderate-income neighborhoods. This year we have almost 10,000 loans committed in low-and-moderate-income neighborhoods. When we started this process, one of our focuses was absolutely small business, and about 40 percent of the lending was being done in low-and-moderate-income neighborhoods. When 60 percent of the neighborhoods are 32 10/20/09 - FINANCE - BILL 090570, etc. low-and-moderate-income, we are now between 55 and 60 percent, almost at parity. If we choose to authorize you, not only will you have to fulfill this annual requirement, we will ask the question of how many loans you're going to make the following year. It won't be as easy as to say that your CRA rating is outstanding. You will actually have to give us a number. And if the amount of loans you've made in low-and-moderate-income neighborhoods is currently zero and you know it's zero, don't expect to come before this body again, except maybe if you're getting axed from the list of City depositories, and simply say that you have an outstanding rating. Thank you, Madam Chair.
Thank you, Madam Chair. 33 10/20/09 - FINANCE - BILL 090570, etc. It's apparent that in preparation for your attendance here, you were not aware of the depth of the questions and you didn't have the information that you probably should have had to paint a picture of your bank that you think should be painted in this Chamber. So knowing all these questions are being asked now, perhaps maybe the next time you come you can do a better job since you know what's going to be asked of figuring out where the Council is going and where Councilmembers are interested in putting our City money into. So maybe next time you come back you can kind of lay out better what you guys do, what you have done and what you intend to do.
Councilwoman Brown. 34 10/20/09 - FINANCE - BILL 090570, etc.
Yes. Thank you. I would offer a friendly amendment, and that I believe also that the Administration has a responsibility in making sure that on bank-related matters, anybody who steps to the table is made fully aware of what the expectations are going to be in terms of questioning from members of this committee so that you do not come before us somewhat unprepared and unaware of what our interests are. Because it's not the first, second, third, fourth or tenth time that we've had banks at the table with the City Treasurer and the very same consistent questions are posed every single time. So that would be the ask to the Administration, to help our citizens come fully prepared, especially on matters related to those institutions like banks who want to do business with the City of Philadelphia. 35 10/20/09 - FINANCE - BILL 090570, etc.
Thank you. Any other questions or comments? (No response.)
Thank you very much. Would you please see that you get that information to the Chair. We don't know what's going to happen with this bill at this point. The Committee will decide whether to report it out of committee. If it is reported out of committee, then you should get that information to the Chair prior to the bill being brought up for a vote. Thank you.
All right. Anyone else to testify on this bill? (No response.)
090663, an 36 10/20/09 - FINANCE - BILL 090570, etc. ordinance amending Chapter 19-200 of The Philadelphia Code, entitled "City Funds - Deposits, Investments, Disbursements," by revising the list of City depositories because of non-compliance with certain provisions of that Chapter, under certain terms and conditions.
Would you state your name for the record and proceed with your testimony.
Rebecca Rhynhart, City Treasurer. I'm here to testify on behalf of Bill No. 090663. Bill No. 090663 amends Section 19 19-201 of The Philadelphia Code, entitled "City Depositories," by removing Advance Bank, Mellon Bank and Sovereign Bank from the list of authorized depositories. These three banks are not in compliance with Section 19-201(2)(f), which requires each authorized depository to provide the 37 10/20/09 - FINANCE - BILL 090570, etc. City annually with a statement of community reinvestment goals, including the number of small business loans, home mortgages, home improvement loans and community development investments to be made within low-and-moderate-income neighborhoods in the City. In addition, each authorized depository must provide a long-term strategic plan to address disparities in its lending and investment activities. The City Code requires the City Treasurer to withdraw all City funds from any bank or institution that has not complied with these requirements. Bank of New York Mellon, previously called Mellon Bank, currently provides the City's pension banking services. Because Mellon did not provide either of the above requirements, the City Treasurer's Office began the process of replacing it in March 2009. An RFP was issued and Bank of America was selected to provide these services. The process is currently underway to move 38 10/20/09 - FINANCE - BILL 090570, etc. these funds to Bank of America. This is expected to be completed in November. There are no City funds in Advance or Sovereign Bank at this time. The Administration has no 7 objection to removing Advance Bank, Mellon Bank and Sovereign Bank from the list of authorized depositories. This concludes my testimony. I'm happy to answer any questions.
Thank you very much. Are there questions from members of the Committee? Councilman Goode.
Thank you, Madam Chair. I don't have a question. I will be offering an amendment that simply clarifies the bill. The version that was introduced did not show which banks were being eliminated. The amended version does.
Thank you 39 10/20/09 - FINANCE - BILL 090570, etc. very much. Anybody else here to testify on that bill? (No response.)
There being none, the Clerk will read the next bill. Boy, it's a tough meeting today.
Bill No. 090687, an ordinance amending Bill No. 090212, approved May 27, 2009, entitled "An ordinance to adopt a Capital Program for the six Fiscal Years 2010 through 2015 inclusive," by revising and adding certain projects, amounts and sources. Bill No. 090688, an ordinance 19 amending Bill No. 090213, approved May 27, 2009, entitled "An ordinance to adopt a Fiscal 2010 Capital Budget," by revising and adding certain projects, amounts and sources. (Witnesses approached witness table.) 40 10/20/09 - FINANCE - BILL 090570, etc.
Good morning. Thank you for coming. Would you please state your name for the record and begin your testimony.
Good morning, Chairwoman Tasco and members of the Committee on Finance. My name is Alan Urek. I am the Director of Strategic Planning and Policy at the City Planning Commission. I am here today representing our Executive Director, Alan Greenberger, who was unexpectedly not able to attend, and I'm here to present for your review and consideration amendments to the Fiscal Year 2010 to 2015 Capital Program and Fiscal Year 2010 Capital Budget as approved by the City Planning Commission at its meeting on September 15th of this year. And with me is Chris Donato, Deputy Budget Director from the Budget Office as well. As you know, the Philadelphia Home Rule Charter stipulates that the City Planning Commission prepare and 41 10/20/09 - FINANCE - BILL 090570, etc. submits to the Mayor a Recommended Capital Program and Budget. The Capital Program is a six-year plan for investing in the City's physical infrastructure, community facilities and public buildings. The Capital Budget is the first year's spending recommendation. You'll recall that the Administration introduced the recommended FY 2010 to FY 2015 Capital Program and the Recommended FY 2010 Capital Budget, which were known as Bills 090212 and 090213 respectively, in the spring of this year, and City Council subsequently adopted both the Capital Program and Budget on September 17th, 2009. Since Council's adoption of the Capital Program and Budget, we have made minor changes to seven projects within four departments necessitating amending the previously adopted bills. I would like to emphasize that none of these changes stipulates additional City general obligation funding whatsoever. 42 10/20/09 - FINANCE - BILL 090570, etc. There are three basic reasons for the changes. First is the addition of new state appropriations to projects in the Departments of Public Property and Water that we became aware of after the Recommended Capital Program and Budget were complete. The second reason is the reassignment of sources of funds for certain projects within the Water Department from federal to self-sustaining, previously believed to be direct American Recovery and Reinvestment Act or stimulus funds, but are instead low-interest Pennvest loans. And the last reason for the change is inclusion of two projects in the Health and Streets budgets that were identified in the six-year program ordinance, but inadvertently excluded from the budget-year ordinance, although these projects were included in the totals for those departments in the budget year. 43 10/20/09 - FINANCE - BILL 090570, etc. I have attached to the written testimony the changes with more detail for your information. Overall, these changes amount to an increase of $10.4 million in state funds to the FY 2010 to 2015 Capital Program and FY 2010 Capital Budget, which now total $7,964,291,000 -- and I want to point out that's a correction to the written testimony; it's 291,000 rather than the 491 -- and $2,552,629,000 respectively, the latter number being for the budget. Thank you and I'm happy to address any questions that you may have.
Thank you. Are there any questions on behalf of the Committee? Councilman Green.
Thank you, Madam Chair. I'd like to understand where the additional -- exactly where the additional $8.4 million in state funds came from from the communication system 44 10/20/09 - FINANCE - BILL 090570, etc. and what they were specifically -- what categories or projects could they have gone into.
The 8.4 million is for the 800 megahertz system upgrade, which is part of communications projects, and we have a representative from the Division of Technology that can answer your questions.
Okay, because it's not -- there's a contract with Motorola for that project, which we approved, which has certain dollar amounts in it. This is an increase, and I want to understand where the money came from and where the money is going. (Witness approached witness table.)
Good morning. My name is Joseph James. I'm Deputy Chief Information Officer with the Division of Technology. Councilman Green, as I understand the question you're asking 45 10/20/09 - FINANCE - BILL 090570, etc. about is the $8 million that was appropriated through the public safety interoperability grant. It was a federal grant program that was established to allow municipalities throughout the country to invest money through this program for interoperability projects like our 800 megahertz radio system. It is a reimbursable grant, where the City has to invest the money initially and reimburse themselves. As I understand from the information that I have obtained, the grant money has been used to purchase radios for the 800 megahertz projects. The initial down payment for the project is funded through the reimbursable portion of the grant, as well as money has been used for purchase of radios for the School District, which will be joining the City's radio system, as well as the Port Authority.
When did we apply for this grant? 46 10/20/09 - FINANCE - BILL 090570, etc.
I don't have the actual grant application when it was submitted. It seems the grant was approved in 2007. The money was appropriated shortly thereafter through PEMA. It was about 35 million was in the statewide program and we received $8.3 million.
Pennsylvania Emergency Management Association. I apologize for that.
That's okay. So we are spending these dollars on things that were specifically requested in a grant written in 2007?
As I understand it, there was specific details of the grant. I don't have, like I said, the application, but it appears that we were allocated money for projects around interoperability, including the 800 megahertz system, and it appears that we 47 10/20/09 - FINANCE - BILL 090570, etc. have projected in the upgrade project for the 800 megahertz system to spend the money, you know, to purchase the new radio system.
So the grant was not written for radios. The grant was -- you don't know what the grant was written for?
As what I could see from what I found so far is that the grant is broad enough to say it's for the 800 megahertz for interoperability projects. It's also for the use of portable repeater systems, and it appears that it has an allocation that would allow us to invest some of the money if we wanted to do anything with the underground radio system.
It appears that it's broad enough to any, yeah, interoperability projects.
And the 48 10/20/09 - FINANCE - BILL 090570, etc. original Capital Budget and Plan included all the money you needed for the contract with Motorola, didn't it?
Okay. I would like a complete, before I vote on this bill, I would like a complete list of what you actually intend to spend it on, because there are lots of interoperability projects. I have an interest in some; other Councilpeople may have interests in others. I don't know. But without knowing specifically what you're going to spend the money on, it is found money. I don't want to authorize it and have it go to things that I didn't know about or approve of. I think it's a 49 10/20/09 - FINANCE - BILL 090570, etc. reasonable request to say, Here is exactly how we're going to spend this extra $8.4 million for interoperability.
So I'd like to hold this bill until we have full details so that we know where the $8 million is going before we move it out of this committee. I don't see any reason to just sort of approve things willy-nilly without actually knowing how the money is being spent. That would be irresponsible of us, don't you think?
Right, but I understand the way the grant has been managed is that we have projects that are approved through the Capital Program and that we identify them as something that would be able to be reimbursed from the PSIC grant, and then we seek reimbursement from the PSIC --
And I'm asking what projects those are so that I 50 10/20/09 - FINANCE - BILL 090570, etc. can know whether or not I approve of those priorities with my vote or have an opportunity to talk to the Administration about different priorities that would also be eligible for this funding. And you can't tell me today what those projects are?
I can only tell you the projects that I understand that have already been earmarked for reimbursement from the grant, and that's for the 800 megahertz.
I understand, and it's no disrespect to you, but what you're asking us for is a blank check, and you don't know where the money is going to go yet, but you're going to use it on some kind of interoperability things. And I don't want to give you a blank check. I want to know where the money is going, which I 51 10/20/09 - FINANCE - BILL 090570, etc. don't think -- frankly, it would be irresponsible of us to not know where the money is going.
Is anyone here from the Water Department? (Witness approached witness table.)
Good morning. My name is Brian Mohl, Capital Program Manager for the Water Department.
Could you just explain the three areas where you're reassigning funds and what that means to us? You're reassigning approximately 42.8 million of federal funds to City self-sustaining new loans for projects, 73 improvements to collector system. 52 10/20/09 - FINANCE - BILL 090570, etc. Does that mean that you were looking for $42 million and you're not going to get it, so now we have to pick it up through the City's capital borrowing?
This is the Pennvest applications that we submitted. Under the -- when we first put in for these applications through Pennvest, through the state, it was our understanding that these would be federal stimulus dollars, grants, when we put in the applications. So it was a federal source code. We found out that that is not the case, that these are low-interest loans. All of the grants that we -- or all of the applications that we put in, we put in a loan application or a grant application for our water piping and our sewer piping and our treatment plants. After the loans -- or after the grant -- or the application was approved, we found out that only $100,000 of the water piping application is federal stimulus and $100,000 is the water 53 10/20/09 - FINANCE - BILL 090570, etc. treatment plant stimulus. The loans totaled $184 million, or the applications were put in for $184 million. So that's...
Well, we were granted a loan instead of grants. So these are low-interest loans, one to two percent loans, as opposed to under the federal stimulus grants, which would have been zero. It would have been a grant.
Thank you, Madam Chair. In an extensive hearing earlier this year, we did a Water Department briefing on infrastructure repair, and one of the things that we found out -- and I don't know if it's fair to characterize it as that the state viewed the financial condition of the Water 54 10/20/09 - FINANCE - BILL 090570, etc. Department as being better than most, so they only made them eligible for loans as opposed to the grants that other departments were able to get. And that's a generalization, but from what I've been able to garner, they said, You're doing so well that this money, this stimulus money, could be better served in departments' projects that were in less of a financial condition, so we're going to make you apply for a low-interest loan to pay us back this money. And if that's a fair characterization of it?
Well, I don't know that for a fact. I believe that to be the case.
Just one more quick question about the interoperability funds. I don't know whether you can answer it or Mr. James 55 10/20/09 - FINANCE - BILL 090570, etc. can, but have these priorities been discussed with Allan Frank, the City's Chief Technology Officer? Has he been involved?
Let's finish with water. We'll come back to technology. I can't go that fast. I can't think that way. I'm having a problem with the water. Okay. I have some more questions about that, but I think we need some one-on-one and someone who can answer these questions about the loan, what does it mean when you go from a grant to a loan. Does that increase the cost to the project and have you accounted for that? Have you calculated the cost of repaying the loan?
Well, of course, if a grant is a zero loan basically or 56 10/20/09 - FINANCE - BILL 090570, etc. forgiveness, then we don't have to pay it back.
That's if it's a grant. But if we're going from a grant to a low-interest loan, obviously we have to account for those payback costs. Now, keep in mind that these were projects that were deemed shovel-ready, and that's why we put them in the application. We would have paid for these projects out of our Capital Program anyway at our regular bond rate, which was substantially higher than the Pennvest loan rate. So we are actually saving I believe on the order of three to four percent.
Okay. Thank you. Any other questions? Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair. 57 10/20/09 - FINANCE - BILL 090570, etc. Is this time sensitive? Do you have to get approval from this committee to move on this legislation by a certain time or would you -- then would you lose the ability to make the low-interest loans?
No. I don't think one is tied to the other. We have settled on the loan on Friday. We have actually issued approximately $106 million worth of projects that are out the door and contractors are working right now, thanks to Councilman Kenney. He was a big help on that. So those projects are out and are moving forward right now. COUNCILMAN DiCICCO: Okay. Thank you. No other questions. Thanks.
Okay. Thank you very much. Any other questions? (No response.)
Thank you. 58 10/20/09 - FINANCE - BILL 090570, etc. The next bill, the Clerk will read the bill.
Bill No. 090705, an ordinance amending Bill No. 090325, entitled "An ordinance approving the Fiscal Year 2010 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works (including the supplying of funds in connection therewith) subject to certain constraints and conditions, and acknowledging receipt of the Forecast of Capital Budgets for Fiscal Years 2011 through 2015" by approving a revised Capital Budget for 59 10/20/09 - FINANCE - BILL 090570, etc. Fiscal Year 2010. (Witnesses approached witness table.)
Thank you. Chairwoman Tasco, members of the Committee, I'm Janet Parrish, the Executive Director of the Philadelphia Gas Commission.
Good morning. I'm William Gallagher. I'm Director of Budget and Reporting for the Philadelphia Gas Works.
Good morning. I'm Doug Moser, Vice-President of Gas Management.
Mr. White, who was scheduled to testify, the Acting Chief 60 10/20/09 - FINANCE - BILL 090570, etc. Operating Officer, was unable to be here today.
Thank you. We're very pleased to be here today to have the opportunity to testify in support of Bill 9 090705, which proposes that Council approve a $2.5 million amendment to Philadelphia Gas Works' approved Fiscal Year 2010 Capital Budget, and the bill 13 does embody the recommendations of the Philadelphia Gas Commission, which were adopted at its meeting on September 22nd of this year. You have attached to my written testimony the copy of the Resolution and Order duly issued by the Commission and reflecting that action. We are here today to recommend that Council support this amendment to enable PGW to complete a Consolidated Fire and Hazard Protection/Detection System at its Richmond liquid natural gas facility. It's a project that's already 61 10/20/09 - FINANCE - BILL 090570, etc. in process and will require additional funding in order for it to be completed in accordance with the requirements of engineering consultants. So we do ask for your approval, as well as if you would report the bill out of Committee today with a favorable recommendation and a suspension of the rules so we may have first reading at the next session of Council.
Please speak to the process by which you went through to identify your engineering consultants.
An RFP was 62 10/20/09 - FINANCE - BILL 090570, etc. prepared and put out on the street, and bids were obtained and are evaluated and we made a selection.
Just to add to that, if I may, Councilwoman, Philadelphia Gas Works does follow the City's procedures for non-competitively bid contracts. So those RFPs are typically posted on the Philadelphia Gas Works website in a process that is parallel to that used by the City. My understanding is that that was done in conjunction with an agreement with the City Law Department.
Okay. Could you attach a timeframe to what you just stipulated, sir?
For the bids went out, you reviewed the bids, you made a selection. Just attach a line, a timeframe to that.
I don't have that specific one. We can provide it for 63 10/20/09 - FINANCE - BILL 090570, etc. you.
I don't believe so. I think they're Jersey based, Flemington Construction.
We'll double-check. I don't believe so. I mean, this is specialized work as far as that's concerned. It was a large project. I'll check who was the bidders, but I think there was only two bidders that responded to this.
Forgive 64 10/20/09 - FINANCE - BILL 090570, etc. me. There were only two?
So the stipulation and the request and the expectation will be the same as the preceding witnesses going forward. In instances where we're being asked to do business with any entity in government or out of government where Philadelphia, this body, our Mayor, is being asked to put X number of dollars on the line, we want detailed information with who we're ultimately going to do business with.
Because the concern remains local businesspeople. I believe the former Councilman introduced a measure around that. People of color and women. If we are putting out whatever the amount you just stipulated, Blondell Reynolds Brown is not comfortable with seeing those dollars go to a Jersey firm. And it's helpful to 65 10/20/09 - FINANCE - BILL 090570, etc. bring the back-up documentation, because I have come from a school of thought, if it's not written, it doesn't exist, wherein we have to rely purely on verbal testimony with no back-up documentation.
Understood, ma'am. I'll make sure that happens next time and we will --
Is this your first time speaking before this legislative body?
Is this your first time speaking before this legislative body?
So it's not a surprise that we are going to be very, very consistent with this information, or else the downside becomes I won't act on the bill in a favorable manner. Thank you, Madam Chair.
Fair enough. 66 10/20/09 - FINANCE - BILL 090570, etc. Thank you very much.
Let me just say this, and I appreciate your concern, Councilwoman Brown. Certainly we at the Gas Commission, two of us serve on that Commission and are mindful of minority participation. Recently PGW was cited for their record of minority participation. A lot of the contracts that are let are highly technical and you will find a limited number of companies doing business in this area, because it is related to pipes and all that kind of stuff. But to the extent that they can, I have to give PGW credit for being very mindful of diversity. Councilman Kenney. But they will when they come next time to testify, particularly when we have the Capital Budget -- they're in the process or will be in the process of presenting the Capital Budget to the Gas Commission. Once that -- and that 67 10/20/09 - FINANCE - BILL 090570, etc. process is vetted very thoroughly and then we bring it to the Council. Usually when we come to the Council, we've kind of chewed it up, spit it out about 6 times, especially with Janet sitting over 7 there giving them a hard time. But she 8 is cooperative and she's very mindful of 9 what we talk about here in the Council. 10 But it would be helpful the 11 next time just to add that information to 12 your testimony about the effort to reach 13 out, what happened and who got the 14 contract and all that, because that is 15 what this committee is interested in. 16 So it's not that they don't 17 have it, that they don't try to do it. 18 We'd like for you to put it on 19 the record when you come to Council, 20 particularly, Janet, when we do the Capital Budget.
Yes. I think that will be the place that will pick it up, and that way it will carry right through to the recommendation over here 68 10/20/09 - FINANCE - BILL 090570, etc. to Council, and we can comment if it is a very highly technical or specialized area, where perhaps the options may be more limited than with respect to other contracts, but we can lay that out and ensure the identity of all the applicants is there.
Sometimes if the companies are able, we'd like to know who they subcontract with and who else they do business with could be helpful and if their track record is a track record that includes diversity.
When the PFMC Board approves their contracts, that's one of their major concerns that we outline, if there's any participation, before we do have a contract. So it is a major issue with the company as well as the PFMC Board.
Right. The PFMC Board has to approve the budget before it comes to -- so it's a lot of oversight. But they understand that. 69 10/20/09 - FINANCE - BILL 090570, etc.
Let me comment as a follow-up. That back story, that backdrop in context is extremely important, that you've already made it through a couple of levels prior to us asking those type of important questions. So I thank you for that, Madam Chair.
By the time they get here, they've been vetted. They've been asked so many questions that -- certainly you know Sharmain Matlock-Turner, David Seltzer, other members are on that PFMC Board, and they really are committed to inclusion at PGW, so they ask the questions. Janet is our Executive Director of the Gas Commission. They have to present their budget to the Gas Commission. There are days of public hearings where all kinds of questions are 70 10/20/09 - FINANCE - BILL 090570, etc. asked. Then the Commission has to have a briefing and then we vote on it, and by the time we get it here, it's pretty much done. But it doesn't stop you from asking your question. Councilman Kenney.
Thank you, Madam Chair. Just a comment relative to my experience in private sector with architecture and engineering over the last eight years. If you have a large project where you have two bidders, it is extremely specialized work. Usually you'll have a large number of engineering firms and architecture firms bidding on public work like that. If it is only two bidders, it's probably very specialized. The other issue generally is -- and I've come across this in an effort to put a team together to go after public-sector work trying to find women and minority-owned businesses that are in the engineering and architecture field. 71 10/20/09 - FINANCE - BILL 090570, etc. It is very, very difficult. One of the things we've not done a good job on as educational institutions go is getting more women and minority engineers and architects, because it is very difficult to find them to team with, because they don't exist. And I think from -- I mean, I've spoken in front of architecture classes at Philadelphia University, for example, and there's not one person of color in the class. We really need to do a better job in urging our kids out of high school to go into college and to get into those specialized careers of architecture and engineering, because the opportunities there are astounding. There's always public-sector work going on, especially even in the down economy, the governments are investing in capital projects, and for young people of color, women who are architects and engineers -- and we need to urge more of them to go there -- the opportunities will be endless. 72 10/20/09 - FINANCE - BILL 090570, etc. So that's one of the things we maybe should look at with some of our educational institutions in the region, to try to urge more activity when it comes to kids, young people looking at architecture and engineering as a career.
Thank you, Madam Chair. I would echo two things. One, that President Knutzen actually came to the MBE firm and DBE firm MED Week celebration and didn't just stay as a jester, but stayed the entire workshop and then met with firms afterwards. So as a Commissioner on the Gas Commission, I understand your commitment, but let me just speak to for a second Councilwoman Brown's comments and why they are particularly important. Councilman Kenney is absolutely right, that we don't place a high enough emphasis on recruitment of minority 73 10/20/09 - FINANCE - BILL 090570, etc. engineers and in those particular disciplines, but if the question doesn't get asked by Councilwoman Blackwell -- I mean Reynolds Brown -- I'm so used to Blackwell being the champion of it. But if you don't ask those tough questions, there won't be a demand that people won't recruit to bring to those institutions. So it's important even though they have a good record to keep asking that hard question of everyone that comes before this Council. But having said that, my question is more of a technical one, and I raised this as a Commissioner. I'll put it on record here in Council. In this engineering agreement, is there ever in the present or the future going to be a study done on our infrastructure to see if hydrogen energy can go through the same infrastructure that the natural gas goes through? Because every time I hear that it can be done and that this could revolutionize 74 10/20/09 - FINANCE - BILL 090570, etc. and put the Gas Works in a position to be a profitable organization, if we could just get the answer to that question. And part two is, did anyone ever get back to Councilman Kenney on the natural gas that could be found in the Poconos? Did anybody ever get back to you on that?
Believe it or not, it's right on the edge of Marcellus Shale. There's nothing under there. There may be some, a little bit, but it would be so expensive to pull it out. So it's sad, but it's not true.
On your first 75 10/20/09 - FINANCE - BILL 090570, etc. question I would defer to Mr. Moser, the Vice-President of Gas Management to respond to that. I believe that Mr. White has responded to that question previously in these Chambers. Mr. Moser.
The question of the hydrogen being able to go through our piping, we did some initial studies on that. Where it stands right now is, the hydrogen is a very speculative proposition. It's a discussion that if indeed the country moves to a hydrogen-based energy, then it would be something that would be looked at closer. But what we'd have to do right now is due to our system, we don't think it's the appropriate thing to do. We have some infrastructure issues with the cast iron piping and the joints that are there. Basically what you're doing is converting from a natural gas system over to a hydrogen-based system. It's not that you can transport both products through the 76 10/20/09 - FINANCE - BILL 090570, etc. same pipes.
I am not an engineer, nor do I ever intend to be, but there are several engineers that have said to me and to in particular Mr. Knutzen that in fact that infrastructure can be dual-purposed, that natural gas and hydrogen can go through it at the same time, and, in fact, it can improve the movement of natural gas more efficiently because it compacts into a smaller space and they can co-exist. I do not know all of the engineering answers to that, but it is something that is worthwhile us exploring, because if in fact we get ahead of the curve and if in fact this country goes in that direction, we go overnight into a more favorable financial situation by being able to provide dual energy to a source such as the private sector.
Could you provide contact information for those engineers 77 10/20/09 - FINANCE - BILL 090570, etc. perhaps after the hearing to Mr. Moser --
Sure will. Because there was, dare I say, some speculation about getting rid of the Gas Works, which I would never vote for, by the way, but if we could overnight make it profitable, that would make a lot of our citizens happy. Thank you, Madam Chair.
That's a whole discussion for the Gas Commission. Thank you very much. Any other questions of these witnesses? (No response.)
I think they are all the bills that we have before us today. We will now adjourn our 78 10/20/09 - FINANCE - BILL 090570, etc. public hearing and go into our public meeting. The Chair recognizes Councilman Kenney for an amendment to Bill 090570.
Thank you, Madam Chair. The amendment I think has been circulated to the Committee. It's a technical amendment adding actually verbiage, the United Service Organizations of Pennsylvania and Southern New Jersey, Incorporated, also known as Liberty USO. It's the addition of those words, and I move the amendment. (Duly seconded.)
It has been moved and seconded that we adopt the amendment to Bill 090570. All in favor will say aye. (Aye.)
There being none, the bill is amended. 79 10/20/09 - FINANCE - BILL 090570, etc. The Chair recognizes Councilman Kenney to move Bill 090570 out of Committee.
Thank you, Madam Chair. I move that Bill No. 7 090570, as amended, be reported out of this committee with a favorable recommendation and a request made for rules suspension to allow for first reading at our next Council session. (Duly seconded.)
It has been moved that Bill No. 090570, as amended, be reported out of Committee with a favorable recommendation and a recommendation that the rules of Council be suspended so that this bill can be heard at Council's next session. All in favor will say aye. (Aye.)
There is no opposition. The motion is carried. Bill 090661, I'm asking Councilman Greenlee to report that bill 80 10/20/09 - FINANCE - BILL 090570, etc. out of committee.
Thank you, Madam Chair. I move that Bill 5 090661 be reported out of this committee with a favorable recommendation. (Duly seconded.)
It has been moved and seconded that Bill 090661 be reported out of committee with a favorable recommendation. All in favor will say aye. (Aye.)
There being no opposition, this motion is carried. Councilwoman recognizes Councilman Goode for an amendment to Bill 19 090663.
Thank you, Madam Chair. An amendment has been circulated to members of the Committee. The amendment simply shows which banks are being deleted from the authorized list of City depositories. I move the 81 10/20/09 - FINANCE - BILL 090570, etc. amendment be approved. (Duly seconded.)
It has been moved and seconded that Bill 090663 be amended. All in favor? (Aye.)
There being none, the bill is amended. The Chair now calls on Councilman Goode to report the bill out as amended.
Thank you, Madam Chair. I move that Bill 090663, as amended, be reported out of committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next Council session. (Duly seconded.)
It has 82 10/20/09 - FINANCE - BILL 090570, etc. been moved and seconded that Bill 090663, as amended, be reported out of committee with a favorable recommendation and that the rules of Council be suspended so that this bill can be heard at Council's next session. All in favor? (Aye.)
There being no opposition, the motion is carried. Let the record show that Bill 14 No. 090687 and 090688 are being held. The Chair recognizes Councilman Green to report out Bill 090705.
Madam Chairwoman, I move that Bill No. 090705 be reported out of this committee with a favorable recommendation and with a suspension of the rules so that it may be heard at our next meeting of Council. (Duly seconded.)
It has been moved and seconded that Bill No. 83 10/20/09 - FINANCE - BILL 090570, etc. 090705 be reported out of committee with a favorable recommendation and that the rules of Council be suspended so that this bill can be heard at Council's next session. All in favor? (Aye.)
There being no opposition, the motion is carried. This will conclude our public meeting. Thank you. (Committee on Finance concluded at 11:25 a.m.) - - - 84 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on October 20, 2009, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-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.)