COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON PUBLIC PROPERTY AND PUBLIC WORKS - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, January 22, 2009 10:10 a.m. - - - PRESENT: COUNCILMAN DARRELL L. CLARKE, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO BILL 080879 - An ordinance authorizing the Department of Public Property to enter into a franchise agreement with Verizon Pennsylvania... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning. This is the recessed meeting on the Committee of Public Property and Public Works to discuss the Verizon franchise. Would members of the Administration please come forward. (Witnesses approached witness table.)
Good morning, Mr. James. First, I'd like to apologize to the members and the individuals who are here for the public hearing that was supposed to start at 9 o'clock, but as you know, in City Council we rarely start on time, and today we had some very productive business that we had to take care of prior to this hearing. For the record, this is a public meeting. I'm sorry. I misspoke. This is a public meeting. We will not be taking testimony today. We did that in the two prior hearings and we then 3 1/22/09 - PUBLIC PROPERTY - BILL 080879 recessed the -- closed the public hearing and went into the public meeting and recessed the public meeting. The purpose of today's meeting, I understand that there will be one amendment offered by the Administration related to the EOP plan.
To the members of the Committee, we have circulated information relating to the earlier testimony in the two public hearings and the responses from both the Administration and Verizon relating to the questions that were raised of those particular issues. Mr. James, you want to offer the amendment informally, and I understand Mr. Bell is going to kind of go through the process of what this amendment will be as it relates to the EOP.
That's correct. Good morning, Councilman. My name is 4 1/22/09 - PUBLIC PROPERTY - BILL 080879 Joseph James. I'm First Deputy Chief Information Officer with the Division of Technology. On behalf of the Administration, I would like to introduce an amendment to Bill No. 080879. The amendment adds a new Section 3 and reads as follows: "Section 3. The Economic Opportunity Plan as required by Chapter 10 17-1600 of The Philadelphia Code is attached hereto as Exhibit 'B,' and shall be subject to such changes as the City Solicitor deems necessary or appropriate to protect the interests of the City."
Thank you. Mr. Bell, can you kind of walk us through the process. I know we've had significant conversations between the Administration, members of Council and Verizon about the process. Can you kind of talk us through.
I'm Michael Bell. I'm the Executive Director of the Office of Economic Opportunity. I've been -- I reviewed the 5 1/22/09 - PUBLIC PROPERTY - BILL 080879 Economic Opportunity Plan for Verizon approximately five to six weeks ago. We strengthened some of the language with regards to reporting and also the ranges for participation. We strengthened some of the language with regards to training and hiring during the execution of the contract. And then over the last couple of weeks, we've been in contact with Tabb Bishop, who has been a representative for Verizon. One of the aspects of the Economic Opportunity Plan that we actually implemented was the first phase of the outreach, which was for the various ethnic chambers, the African American Chamber, Hispanic Chamber, Asian Chamber, the Minority Supplier Development Corporation and the Greater Philadelphia Minority Strategic Business Alliance. We set a meeting up initially for February 18th, but then we moved that meeting up, because one of the first things that we wanted to do was make sure 6 1/22/09 - PUBLIC PROPERTY - BILL 080879 that the stakeholders that represent businesses and suppliers that would eventually want to be part of this contract would be notified. So we moved that meeting up until next week. And then also, too, because of the fact that we're going to be reporting every three months, we shared the same concern that you share, that there needs to be some kind of enforcement mechanism if we report back to Council that Verizon is not living up to the terms of the Economic Opportunity Plan. So we have a reporting form, and we will notify Council if we feel that, according to the intent of the Economic Opportunity Plan, that Verizon is not doing what it's supposed to do. So as of right now, we're going to sit down with Verizon, if the ordinance passes Council, and actually go over the scope of the project and make sure that we have MBE, WBE and DSBE firms that are actively engaged. 7 1/22/09 - PUBLIC PROPERTY - BILL 080879 We've already started the process of having firms complete Verizon's Supplier Diversity Profile, so once this project does start, we have people that are in their system. So we've already actually started, according to the intent of the Plan, the outreach effort.
Okay. So it's my understanding that the process will start, and hopefully and I'm assuming it's your intention to have, at a minimum, a process that will clearly establish an opportunity for any company, individual who wants to participate before the final passage of the bill?
Before the final passage. We've already identified approximately 20 companies that could provide service, either fiberoptic cabling, electrical contractors or also cable providers. So we've identified a minimum of 20 that we've outreached. And then once we meet with the various 8 1/22/09 - PUBLIC PROPERTY - BILL 080879 chambers, I'm quite sure there's people that are part of their teams that we don't know about that we can also refer to Verizon. So, like I said, I think the best way for us to reach the goals is to extend the net as wide as possible before the project begins.
And what process will be utilized to alert companies, individuals or professional services that this opportunity is available?
We can do e-mail blasts and, like I said, the fact that we're meeting with the chambers. All the chambers represent various businesses. If we need to engage the support of Council, we're willing to do that, because I think all of you have a network of people that you're connected with. But with the Office of Economic Opportunity, we start with our list of certified firms. We could start with 9 1/22/09 - PUBLIC PROPERTY - BILL 080879 firms that are in the process of becoming certified and then create an outreach effort. Because, like I said, the best way to reach the goals are to leave no 6 stones unturned with regards to notifying people about the opportunities. And I think there are a number of people that are already talking about, Okay, how can we get in? And, like I said, we're open to meeting with anyone, but the biggest thing is, you need to register with Verizon's Supplier Diversity Profile. This is a very big project. Your finances need to be in order. Like I said, we already have a team of people that we've been working with from PIDC and PCDC. So if you're coming in and you're not ready, we're also going to refer you for technical assistance to get ready for this opportunity.
One recommendation, because Verizon is not testifying, because we're not taking testimony today, but can you recommend to 10 1/22/09 - PUBLIC PROPERTY - BILL 080879 them that similar to the commercials that they are running on TV and the radio and in the newspapers asking people to talk to their Councilmembers to vote for FiOS, we suggest that they run similar ads to alert people to opportunities to participate in the build-out of this project.
Thank you. Any questions by members of the Committee? (No response.)
One point of clarity with respect to the build-out, because that was an earlier issue in the last hearing. We wanted to make sure -- well, one of the concerns was that the build-out across the first phase was done in a simultaneous way, and, Mr. James, it's my understanding that that issue has been resolved.
Councilman, that 11 1/22/09 - PUBLIC PROPERTY - BILL 080879 issue has been resolved, and that was in the testimony at the previous hearing that Verizon will be building out simultaneous in all the areas in the first phase.
So a designated area in Phase 1 will not be in a position where they don't see any activity until Year Four of the first phase; it will be across the board.
That's my understanding, Councilman. Again, in response to the competitive nature of it, for them to move in a linear fashion would just be counterproductive to their efforts to be as competitive as possible.
Councilman 12 1/22/09 - PUBLIC PROPERTY - BILL 080879 Green, I know you had a question.
Thank you very much for the opportunity to ask just a couple of quick questions. At the first hearing in November and then again on December 11th, I asked for a chart that summarized the material terms of the contracts that Verizon has entered into with other cities, and I just received this chart. I think it contains material information of import to this Committee and would suggest that the Committee take the time to review this information prior to agreeing to a contract. There are terms that are very different in Philadelphia's contract versus other contracts, and I just note one of them, which is that, it seems to me, in every other circumstance, there is equal annual revenue to the Public Access support, and our Public Access support does not start until Year Six, with most of the money coming in seven, nine and eleven. I'd like an 13 1/22/09 - PUBLIC PROPERTY - BILL 080879 explanation from the City why it believes Public Access should not be similar to funding in other cities that Verizon has done business with and also spread evenly across the entire terms of the franchise agreement. I don't think we should be approving a contract that doesn't provide support for Public Access. And I'd like you to answer the question of why we don't want equal spread of revenue.
Councilman, to answer the question about Public Access support, in the franchise agreement for Verizon, there is financial support for Public Access. It is --
Mr. James, the question is why it's not spread evenly across 15 years, why it doesn't start until Year Six, when in every other city it's spread evenly across all the years.
In answer to your question, Councilman, in each of the 14 1/22/09 - PUBLIC PROPERTY - BILL 080879 other cities, the difference between Philadelphia and the other cities is that those cities have had Public Access in place for some time and had existing obligations already built into the franchise agreements of wherever the incumbent operator was. So when Verizon entered into those agreements, they met the terms of whatever the incumbent was offering. So if the other cities already had financial commitments in their 15-year agreements and the incumbent was paying those financial commitments, then Verizon met those. In Philadelphia, the difference and the distinction in our agreement is that Comcast has a 15-year agreement, started 2000, expires in 2015. In the first seven years of that agreement, we did not have Public Access, which means they never paid any money to the Public Access Corporation.
Mr. James, that makes absolutely no sense. Verizon 15 1/22/09 - PUBLIC PROPERTY - BILL 080879 is paying money this year and through the end of their term, and if we renew their franchise in 2015, they'll pay it through ever. I don't understand why we would not require the same obligation from each franchise provider. It doesn't matter what happened in the past. There is Public Access in Philadelphia this year that Comcast is paying for. Verizon should have the same equal obligation to Public Access.
Councilman, to answer your question, that is what's in the Verizon franchise agreement. Verizon is paying eight years of the 500,000. Comcast is paying eight years of the 500,000. They're the same.
Verizon is 16 1/22/09 - PUBLIC PROPERTY - BILL 080879 committed to paying eight payments, the same eight payments --
Well, this is 2009, so this is the start of the franchise. So they have an eight-year obligation that starts in the seventh year.
And how much is Comcast paying this year for Public Access?
How much is Verizon paying this year for Public Access?
Until they get a franchise agreement, Councilman, they're not paying anything.
Assuming they get a franchise agreement, how much will they pay --
They will not be paying anything, but at the same time -- 17 1/22/09 - PUBLIC PROPERTY - BILL 080879
Excuse me, Mr. James. Next question: 2010, how much will Comcast pay in Public Access?
And 2010, assuming this franchise agreement is approved, how much will Verizon pay?
I don't understand any rationale for that inequity in franchise agreements going forward through 2015. It's a mistake, and if this bill gets out of Committee, I will be offering an amendment to require Public Access once it hits the floor.
Councilman 18 1/22/09 - PUBLIC PROPERTY - BILL 080879 Kenney.
I would just like the opportunity, from a housekeeping standpoint, to offer the amendment that was described by Mr. James and the Administration, if you would permit that.
Mr. Chairman, I'd like to offer an amendment adding the Economic Opportunity Plan to Bill No. 080879. (Duly seconded.)
I'm sorry. It has been moved and seconded. Those in favor? (Aye.)
Those approved -- those opposed? I'm sorry. (No response.)
Thank you, 19 1/22/09 - PUBLIC PROPERTY - BILL 080879 Mr. Chairman.
Thank you. I have lots of other questions based on the chart that I have here. I would recommend that the Committee understand fully the deal that Verizon got in other cities prior to passing this out so that we can avoid potential amendments, but I don't really have any further questions today. Thank you.
Thank you. Councilman, I know that you had some issues relating to some of the information that was requested. We're going to be asking for a written response before the final passage of those bills. This franchise agreement, if you have any other questions at that time, we'll make sure that you get a response.
Thank you very much. My follow-up question was actually related to the amendment around the EOP plan, because you used the word "strengthened," that the language has been strengthened to reflect X. So my question was going to be, one, has that been circulated to the Committee and the Committee is okay with the strengthened language, whatever that is?
Councilwoman, the strengthened language was, when Verizon first submitted the Plan, they wanted to report 60 days after the close of a calendar year, and we feel that that's unacceptable from the Office of Economic Opportunity. So they are now going to submit on a quarterly basis. That will give us time to react and then to recommend any deficiencies, that they be 21 1/22/09 - PUBLIC PROPERTY - BILL 080879 addressed, because we cannot wait until the end of months for Verizon to 4 report and then give an update on their 5 MBE/WBE participation. So we're going to 6 monitor -- we're going to create an 7 oversight committee, and at the end of 8 three months, we'll do an assessment in 9 terms of their outreach efforts and what 10 contracts they've actually signed. And 11 then that's the only way we can be 12 effective in monitoring and oversight, is if we get timely reports. And, like I said, one of the parts in their training language was saying they "may" offer training opportunities. We took the "may" out and said you will offer training opportunities to the local individuals, local people that will benefit from this EOP. So it was a few tweaks that we had to make, but the most important part is, after three months -- and Councilman Clarke was adamant about this -- if 22 1/22/09 - PUBLIC PROPERTY - BILL 080879 they're not reaching out, we need to have a hammer to let Verizon know that the City of Philadelphia is very serious about actually implementing the Economic Opportunity Plan.
That's very, very helpful. Is there language which speaks to should Verizon run into difficulty or hurdles with regards to recruitment and orientation, that the City can be helpful with that particular challenge? Because that has been customary in past agreements like this.
Right. Well, the language calls for them to reach out to the various chambers, and we actually were going to set up a meeting on February 18th, but we pushed that up. So, like I said, we have the African American Chamber, the Hispanic Chamber, Asian Chamber, Pan Asian Chamber and a number of other entities that represent businesses that we're going to meet with next Wednesday, and we're going to allow 23 1/22/09 - PUBLIC PROPERTY - BILL 080879 them to then disseminate information to their members, because our biggest issue is to make sure that we have qualified people that are filling out Verizon's Supplier Diversity Profile. And then we're not going to give Verizon too much of a choice about not contracting, because, like I said, we have a reporting form that we're going to use to monitor their progress, and at any given point in time, we're going to need the support of Council. If we see that they're not living up to the terms of the Economic Opportunity Plan, we're going to notify the members here.
We thank you for that, because there are too many instances we can look to where but for provisions like that, a year later we get surprise that the contractor is having unfair, undue challenges. So thank you for that. Let me also thank you for this chart, which is useful. My last and final question, 24 1/22/09 - PUBLIC PROPERTY - BILL 080879 speak to this educational access support. What is that? What does that mean?
The grant that's in the agreement provides for a certain amount of dollars for an undefined program at this point in time, but to be used for educational and technical training, relates to the technology. But it has not got a structure yet, but it's similar to where in the Comcast agreement there was money for PCDC to have the commercial development. So in this time, instead of putting money there, we put it in educational, where we think is very important right now, is to educate people, as Mr. Bell talked about. To get them into that program, they're going to need the basic strong educational foundation around technology, and that's where we hope that this money is going to be used to support.
I see. Okay, then. Thank you, Mr. Chairman. 25 1/22/09 - PUBLIC PROPERTY - BILL 080879
Thank you, Mr. Chairman, for the opportunity to speak to this, and providing it as a chairperson is gracious.
I've been told I had a little flexibility in the public meeting, so I wanted to take the opportunity.
Thank you. Could you give me a little better definition of the hammer that you talk about that in case we find that there is not a good-faith effort? What is that hammer that you speak of?
We were discussing that this morning and we were talking about the public bond and there were some other issues, but in terms of the Economic Opportunity Plan being part of the ordinance, then it's a material part of the contract. And, like I said, we're 1/22/09 - PUBLIC PROPERTY - BILL 080879 going to need the support of Council, because the Office of Economic Opportunity, we're going to monitor the progress, but if they're not meeting it, then we need to come back to Council. We look at it as a breach of contract if they're not doing what they're supposed to do. So the hammer needs to be defined, but I know we had some discussions early this morning that if Verizon is not living up to the Economic Opportunity Plan, it's not going to be a year from now that we're going to come back to Council and notify you. We're going to put you on notice after 30 days or after 60 days or after 90 days. And then Verizon needs to understand that if the Economic Opportunity Plan is part of what you're doing, part of this agreement to get the franchise, then if you're not abiding by that, there needs to be some consequences. Now, I can't inflict all the consequences, but in terms of us 27 1/22/09 - PUBLIC PROPERTY - BILL 080879 monitoring, we can let the powers that be know that if they're not doing what they're supposed to do, then we're going to point that out. We're going to document all of our meetings. We're going to document our outreach efforts, and then at the end of three months, if there are no commitments made to MBE/WBE firms, we need to bring that back to Council's attention.
You're welcome, Councilman. Any other questions? (No response.)
Councilman Kenney, can I ask for a motion on Bill 24 No. 080879, as amended.
Thank you, 28 1/22/09 - PUBLIC PROPERTY - BILL 080879 Mr. Chairman. I move that Bill No. 3 080879, as amended, be reported out of this committee with a favorable recommendation. (Duly seconded.)
It's been moved and seconded. Those in support? (Aye.)
The ayes have it. Bill 080879 will be reported out of Committee with a favorable recommendation. Thank you all very much. (Committee on Public Property and Public Works adjourned at 10:35 a.m.) - - - 29 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 January 22, 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.)