COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - BUDGET - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, March 25, 2008 10:15 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILMAN BRIAN J. O'NEILL COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO BILLS 080022, 080157, 080160, 080164 and 080165 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. This is a continued public hearing of the Committee of the Whole regarding Bill Nos. 080022, 080157, 080160, 080164 and 080165. I believe the first department will be the Board of Pensions and Retirement. (Witnesses approached witness table.)
Please identify yourself for the record and proceed with your testimony.
It's Gwendolyn Bell, Executive Director of the Board of Pensions and Retirement. MR. McDONOUGH: Chris McDonough, Chief Investment Officer.
Good morning. 3 3/25/08 - WHOLE - BILL 080022, etc. MR. McDONOUGH: Good morning.
Good morning, Councilperson Verna and members of City Council. My name is Gwendolyn Bell and I'm Executive Director of the Board of Pensions and Retirement, and Christopher McDonough, Chief Investment Officer, is here with me today. The Board of Pensions and Retirement has submitted a budget for Fiscal Year 2009 for $10,610,000, an increase of 305,000 from Fiscal Year 2008. This increase results from contractual salary increases and the addition of investment unit positions and fringe benefits. The next paragraph is just a breakdown by class of what those increases are. There are 79 employees in the Board of Pensions and it's actually a decrease of two positions from last year. The goal is to continue to reduce overtime and to improve services to 4 3/25/08 - WHOLE - BILL 080022, etc. participants. And the salary increases are $188,000 of the 305. The rest is our fringe benefits. There are currently 1,760 members in the DROP program, and last year was the largest year for DROP retirements with 989, and there are another 565 scheduled to retire this year. So we're averaging around 60 a month. And we have had an additional 230 retirements as a result of DROP for one month. So last year was a very busy year for us. There have been continued cooperation with Pension, Law and Risk Management to coordinate the overlap of benefits between Workers' Comp and Pensions. The progress has been made and been continuing through opening communications and reducing the need to recapture funds for repayment situations that occur when the Board of Pensions was not made aware of the person's eligibility for Workers' Compensation. A 5 3/25/08 - WHOLE - BILL 080022, etc. Pension Board staff member will be dedicated to work exclusively with obtaining medical records from the third-party carrier and Risk Management, as well as the participants' departments. This assignment will include a follow-up with the Board's Medical Panel Chairs. The number of specialists working with the Medical Panel has expanded to provide central locations for disability screening. That had been a problem because some of the specialists had moved out of central Philadelphia. Since Fiscal Year 2008, the two-day pre-retirement workshops have increased to 20, with the average attendance increasing from 44 to 60 participants. E. program has been in place for two years and continues to receive participation on an average of 40 persons per session. A recent assessment of the need of additional sessions has resulted in the addition of several one-day 6 3/25/08 - WHOLE - BILL 080022, etc. pre-retirement workshops, and these sessions target employees who are not eligible to retire, but who are vested. E. program is 35, and there's been a very positive response from the younger employees, who really need to get the information they need to plan for their futures. The Deferred Compensation seminars have expanded to include visits to off-site departments with existing and newly appointed employees. So when there's a new class with the Police and Fire Department, the office goes out and does orientation for them. The processing time for loans for the Deferred Comp has dropped from 11 days to four, and there are just currently over 13,000 active members in the Deferred Compensation plan. Total plan assets are 475,500,000, and that was as of January. The Fiscal Year 2009 goal is to increase the participation by 15 to 7 3/25/08 - WHOLE - BILL 080022, etc. 20 percent. The Board of Pensions is well on its way to becoming paper free and is now imaging all incoming mail as well as current files. The processing time for an application is now one half what it was last year because the Pension staff can now access file information from their desktops. Counseling sessions have been reduced by approximately minutes 12 per session.
13 The Mayor's Office of 14 Informational Services, MOIS, has 15 recommended that the current pension payroll system be replaced, and that system is now more than 16 years old. 2 million to purchase an off-the-shelf package, which should be 8 3/25/08 - WHOLE - BILL 080022, etc. Oracle based. And Pensions has worked closely with MBEC to ensure minority and women participation with the vendors that we're considering. MR. 9 percent for the fiscal year ending June 30, 2007. The return placed the Fund in the first quartile among all public funds. 9 percent and the funding ratio was 54 percent, up from 52 percent as of June 30, 2006. During the 2007 fiscal year, Board continued its efforts to increase the participation of minority and women-owned firms in the management of the Fund's assets. 1 billion, or 22 9 3/25/08 - WHOLE - BILL 080022, etc. percent, of total plan assets at the end of the fiscal year. During the second half of 2007, the Board approved a new asset allocation. The primary changes in the asset allocation are a substantial decrease in the exposure to domestic equities and an increase in both developed international and emerging market equities. Assets were also added to the fixed-income asset class. The Board continues to look for ways to diversify the Fund's assets while producing an attractive return at a reasonable level of risk.
It is the goal of the Board of Pension staff to continue to provide education and improved services to its members, and I respectfully request your approval of this proposed budget.
Thank you very much. For the record, can you tell us 10 3/25/08 - WHOLE - BILL 080022, etc. how the Board of Pension selects its money managers? MR. McDONOUGH: Yes. With the exception of private equity and real estate, all money manager opportunities are advertised on the City's website in accordance with the applicable law. Notice is posted for an opportunity for a minimum of days. After that point, 11 all responses are evaluated and a subset 12 of the list is presented to the Board for 13 consideration. The Board will select 14 several firms to interview, after which they'll select the manager they think is most appropriate.
What are the performance standards that you apply to your money managers? MR. McDONOUGH: We review the managers' performance in several ways. We compare their performance to the appropriate benchmark. We compare it to their peers, so other managers managing money in a similar style. We also 11 3/25/08 - WHOLE - BILL 080022, etc. utilize several statistics that measure the amount of risk the manager is taking in order to generate the return that they provide to us. And all those statistics are also compared to their peer universe as well.
Can you tell us what happens if they do not perform as expected? MR. McDONOUGH: Yes. We have a rating system, and the ratings are basically satisfactory, watch and probation. If a manager underperforms over a short-term period, they'll be placed on watch, which means basically that we're concerned about their performance and we're closely monitoring them. If their underperformance continues, they'll be placed on probation. At that point, a face-to-face meeting will be held either in our offices or in the offices of the manager. A report will be written for the Board by both the investment staff and the 12 3/25/08 - WHOLE - BILL 080022, etc. consultant, which we call a probation report, with a recommendation as to whether the manager should be retained or terminated at that point. If we're going to recommend retaining them, we'll provide an explanation of why we think that's the appropriate action to take. The Board will then make a decision. The manager will either be terminated or if they are retained, we will reevaluate the manager on a quarterly basis until they're either terminated or until they perform well enough to be removed from probation status.
Who are your money managers and how are they paid? MR. McDONOUGH: We probably have upwards of 80 managers. I'd be happy to provide a list of the managers.
I'd appreciate that. MR. McDONOUGH: Most of the 13 3/25/08 - WHOLE - BILL 080022, etc. managers are paid an asset-based fee. So they're paid a percentage of the assets they manage. That fee ranges from as low as two basis points for index fund management to as high as two percent for hedge fund management.
Is it paid through appropriations? MR. McDONOUGH: No. It's paid out of Pension Fund assets.
Wouldn't paying them through appropriations more accurately reflect the true cost of the pension system? MR. McDONOUGH: Possibly. We can document very well at this point exactly what we're paying all of the managers, so I don't know that the numbers would necessarily change if it was paid in a different manner.
But it wouldn't be reflected in the budget. MR. McDONOUGH: Correct.
Well, 14 3/25/08 - WHOLE - BILL 080022, etc. that's what we're trying to achieve. Would you look into that, please? MR. McDONOUGH: Absolutely.
And I think Mr. Dubow is back there, so he would be able to assist you on that. And you are going to provide us with the money managers. I would like a listing of the managers and what they were paid in 2007 and their estimated payments for 2008. What is the Board's investment strategy? MR. McDONOUGH: In terms of the asset allocation?
Yes. MR. McDONOUGH: The asset allocation approved by the Board in the second half of 2007 is approximately 21 percent domestic equity, 23 percent 22 non-U.S. equity, 30 percent fixed income, 23 12 percent private equity, five percent 24 real estate, and six percent absolute return strategies. 15 3/25/08 - WHOLE - BILL 080022, etc.
Can you tell us how often it is reviewed by the Board? MR. McDONOUGH: Every three to four years the Board does a formal asset allocation study. On an annual basis we do a review of the asset allocation to identify any areas where we might be able to make small changes and take advantage of market opportunities.
If the City were to issue a pension obligation bond, how would the Board invest the proceeds? MR. McDONOUGH: We're currently studying that matter. Our plan is to do a full asset allocation study and develop a new asset allocation which will be suitable given the new funding level. Also, if the actuarial assumption rate were to be reduced in conjunction with the issuance of the bond, we would need to take that into account. Our intention is to have a plan 16 3/25/08 - WHOLE - BILL 080022, etc. for investing the proceeds of the bond approved by the Board well in advance of the receipt of the funds. Given the size of the bonds, the plan would likely include a final target allocation, asset allocation, as well as interim steps to ensure that the funds were invested in a timely manner.
Thank you. The Chair recognizes Councilman Jones.
During your 2007 testimony for FY08, you stated the Deferred Compensation plan had about 13,006 active members within the plan, representing about $470 million. At the time of the hearing, you projected a 20 percent increase plan participation. By 17 3/25/08 - WHOLE - BILL 080022, etc. your testimony today, I see it's one percent actual, and I wanted to get a sense of why that was. And we're up to about, what, 13,157 participating members and what was the falloff due to?
Some of it was due to the large number of people that left in DROP, and as a result, they roll their money out of Deferred Comp or cashed it in when they left. And I don't know if Chris has anything to add to that. But the numbers for DROP were extremely large last year. That resulted in the number of the Deferred Comp participants staying approximately the same as it was last year.
We anticipate that after 2008 the number of DROP retirements will be reduced greatly, and we do anticipate -- because the Deferred Compensation staff is out in the departments, we anticipate an increase 18 3/25/08 - WHOLE - BILL 080022, etc. for next year.
Can you give me some idea about what the financial impact is versus one plan versus them participating in the Deferred Comp? What impact financially does that have?
I'm not really sure of your question. The Deferred Compensation is a supplemental retirement.
So it doesn't have a financial impact if they participate?
The Deferred Compensation is individual savings. The amount that a person puts in is their choice, and it supplements our defined 19 3/25/08 - WHOLE - BILL 080022, etc. contribution plan. So it's very separate.
Okay. You stated that you have a new asset allocation plan? MR. McDONOUGH: Yes.
And I understand that it is allowing you to have greater investment in foreign investments; is that right? MR. McDONOUGH: Correct. We did increase our international equity allocation.
And are you planning to take advantage of that new freedom in that investment abroad? MR. McDONOUGH: We have. We are and we have started. The target allocation was increased from 12 percent to percent, and the actual allocation 22 today has increased from 12 percent to 19 23 percent, and we're in the process of 24 hiring several new managers to round out that allocation. 20 3/25/08 - WHOLE - BILL 080022, etc.
Well, according to the Wall Street Journal, international markets are down. For example, South Korea is down 13.3 percent; UK is down 14.9 percent; Japan is down 18.5 percent; France percent; 8 Hong Kong 24 percent; and China, with the 9 largest economy, down 27 percent year to 10 date. Why are we looking abroad for 11 investments and have we considered urban 12 markets like Philadelphia for good 13 investments? 14 MR. McDONOUGH: Well, in terms 15 of the recent performance, all equity 16 markets, both domestic and international, 17 have produced negative performance this 18 calendar year, and, in fact, the 19 international market has performed basically similar to what the domestic market has done so far this year. Last year, domestic markets, the domestic equity market, was up about five percent. International equity markets were up about 17 percent. So our 21 3/25/08 - WHOLE - BILL 080022, etc. allocation is based on longer term, our longer-term outlook. And I'm sorry. Your second part of the question had to do with urban markets?
All good investments should begin at home, and I was wondering, do you look at the local markets, Philadelphia in particular, Commonwealth of Pennsylvania, for good investments? MR. McDONOUGH: We evaluate all opportunities brought to us. We have to follow the exclusive benefit rules, so all investments must be made in the best interest of the participants. So we first must evaluate an investment on its investment criteria and potential return. All else being equal, yes, we would like to make investments that benefit the area if they produce an attractive rate of return.
Well, based on international markets, we can't be too 22 3/25/08 - WHOLE - BILL 080022, etc. much far off of some of the returns that they're producing right about now. So I'd be interested in what investments have you evaluated from the Commonwealth of Pennsylvania and even the City of Philadelphia, if there are any, if there are any. MR. McDONOUGH: We do look at real estate managers and private equity managers that focus on -- it's usually the Midatlantic region. We haven't come across any that are specific to Philadelphia or Pennsylvania, but we have invested with venture capital firms that focus on businesses located in the Midatlantic region. Several of our real estate managers do target the Midatlantic region as part of their investment strategy.
You also mention that 1.1 billion, or 22 percent, of the plan's assets are under minority and female management? MR. McDONOUGH: Correct. 23 3/25/08 - WHOLE - BILL 080022, etc.
Which are those firms? MR. McDONOUGH: There's approximately firms. Would you like 6 me to read the names of them? 7
You can 8 submit them to the President of Council 9 and she can distribute it to the members. 10 I think that is something of issue -- 11 MR. McDONOUGH: I'd be happy 12 to. 13
The 18 Chair recognizes Councilman Goode for a 19 point of information. 20
Is there any 21 one firm among them that stands out in 22 terms of the size? 23 MR. McDONOUGH: Yes. The 24 largest of them is a firm called 25 Rhumbline Advisors. It's 24 3/25/08 - WHOLE - BILL 080022, etc. African-American firm based in Boston. It manages approximately $500 million for us.
I understand that you also have an in-house investment personnel that actually looks at investment; is that correct? MR. McDONOUGH: We have an investment staff, correct.
And what's the size of that staff? MR. McDONOUGH: Currently, there are, in addition to myself, two full-time employees and one person that dedicates part of his time to the Pension Fund, and we're currently looking to fill two additional positions.
Are there any minorities or females in that configuration? MR. McDONOUGH: The two full-time are both females.
Thank you. 25 3/25/08 - WHOLE - BILL 080022, etc. MR. McDONOUGH: You're welcome.
Are you finished? Thank you. The Chair recognizes Councilman Green.
Just a quick question about one of the first -- the increased results from contractual -- the increase of $305,000 over our Fiscal 2008 estimated obligations, this increase results from contractual salary increases and the additional investment unit positions and fringe benefits. Have you entered into personal services contracts longer than one year?
Excuse me. Personal services contracts for staffing? 3/25/08 - WHOLE - BILL 080022, etc.
And you have outside advisors that do most of the investment work that I think you described. So perhaps maybe you could redescribe the process of choosing investments and evaluating portfolio managers and include what's done by your staff and what's done by outside contractors. MR. McDONOUGH: Okay. We work with several consulting firms to assist us in the selection and monitoring of investment managers. We consider them an extension of our staff because our staff is relatively small. We're not able to review all of the potential opportunities to us, so they help us narrow down the universe. We do not rely solely on the consultants. We do all of our own work 27 3/25/08 - WHOLE - BILL 080022, etc. and produce our own reports internally for the Board. We typically provide recommendations to the Board when it comes time to select an investment manager. The consultant will usually also provide a recommendation as well. At the end of the day, the Board makes the final decision about who is hired and when a manager is terminated. All of the managers have standard one-year contracts with three one-year renewals, although we always have the option of terminating at any time for any reason.
How are the consultants compensated? MR. McDONOUGH: They are compensated with a flat fee per year.
A flat fee based on? MR. McDONOUGH: The services they provided. We negotiate a fee at the start of their contract for the services they will provide to the Board. 28 3/25/08 - WHOLE - BILL 080022, etc.
And that contract is renewed annually? MR. McDONOUGH: It's one year with three one-year renewals at our discretion. At the end of that four-year term, if it lasts that long, an RFP process is undertaken to do a new -- before a new contract is executed.
Rather than going through names here, will you please provide the Chair who those people are and what their responsibilities are and their annual compensation? MR. McDONOUGH: Yes, I will.
Thank you. I note that the Board of Pensions in your testimony, you say that it's well on its way to becoming paper free, which is an issue of mine and I commend you for it. You mention that processing time for an application is now one half that of last year. How many people are involved in processing applications on your staff? 29 3/25/08 - WHOLE - BILL 080022, etc.
There are positions. We currently have three vacancies. Unfortunately, I have to admit that we're still calculating pensions by hand, and so the proposal -- the programs that we've looked at would allow us to not only bring over information from payroll and Personnel to feed into the system, but it would also allow us to do our calculations and take leaves of absences and credited services into consideration.
Yes, we have. Yes, because we're able to go on desktop and pull up a person's file, look at their payment history, look at their employment history online rather than flipping through a folder. So it's been a tremendous savings of time for us.
I note that the filled positions as of 12/07 were 71. The budgeted positions are 79. Are any 30 3/25/08 - WHOLE - BILL 080022, etc. of those positions people who process applications?
Yes. We currently have three open positions for counselors. We'll have another vacancy at the end of the year. We're losing a lot of experienced people due to DROP.
I guess that confuses me a little bit, because if you've cut the processing time down by half, why would you need to fill positions? And especially if you're implementing new technology that will automate processes that are currently done by hand, it seems to me that we could maintain those reductions in that staffing level and get those efficiencies.
We are losing another three people to DROP, so these positions that we're filling now will eventually level off, because it takes approximately four years to train a counselor. There's a counselor trainee 31 3/25/08 - WHOLE - BILL 080022, etc. for one year, counselor for two years, counselor for two years. So we're losing supervisory staff. Those people have in excess of eight to ten years of experience. When they drop out, these people will be fully trained.
I understand what you're saying. Have you begun redefining your workflow processes to take advantage of the fact that it's half the processing time and are you going to do a workflow process study as you implement new technology to determine whether or not these positions are really necessary?
Yes. And we think that once we have the new capabilities of doing these calculations online, as people leave through DROP we will not need to replace some of the staff.
Okay. You mention that people are doing things by hand and calculations, which means that there's no connection between your 32 3/25/08 - WHOLE - BILL 080022, etc. computer system and the payroll systems that would allow you to directly check facts and get information one way or the other.
Unfortunately, not yet, and programs that we're looking at will be Oracle based and they will be tied into the new Oracle personnel system that was recently purchased. And so we hope that we will have the capacity to interact with Personnel. Payroll is still going to be -- payroll has not been replaced. So we will still have to pull over payroll information, and our hope is that within the next couple of years, we'll be able to more readily access information from payroll. But the systems that we're looking at can feed us payroll information, bring it into the off-the-shelf packages that we're looking at. So that will streamline the process.
Great. I'm sure Terry will get to payroll 33 3/25/08 - WHOLE - BILL 080022, etc. eventually. So it's my understanding that there's not currently an audit trail within your systems. In other words, somebody could enter someone's salary who has been with the City for five years as having been with the City for years. 9 They could have made 55. Somebody could 10 change that number to 100,000, and 11 there's really no way for -- if that's 12 done, there's no way for you guys to 13 catch up to that without doing a manual 14 check of each person and going back and 15 checking that against the other records. 16
We're checking 17 manually. We have a counselor that does 18 the calculation. We have what's called 19 peer review, a second person that checks 20 the calculation, and before any payment is made, the Controller's auditor, who is housed in our department, signs off. So there are three checkpoints before payment is made.
But after 34 3/25/08 - WHOLE - BILL 080022, etc. that initial thing, someone could go back in the system, change the information and there would be no way to catch up to it.
No, because there are only certain people allowed to adjust benefits. I don't believe --
Anyone with access to the system or a password that could get in could do that; is that right?
There are a handful of authorized employees within the department that can go in and adjust, and those are people at the supervisory level. I would say there are five people in the office that can adjust it.
-- a database recording what the old number was and what the new number was and who made the change?
We have a record of 35 3/25/08 - WHOLE - BILL 080022, etc. who made the change, because an employee has an ID number that's associated with the change.
Do you know what the old information was or is that deleted from your system?
No. That would have to be done by a report. But those changes are still subject to peer review. It would be the person making the change and then it would be the person checking and then the Controller's Office as well.
That's workflow processes, though, that is before they go into the computer system. So someone can go into the computer system and make that change and just skip the whole peer review process. Now, they would be violating your workflow processes and your rules, but that could happen. And so -- is that correct?
I don't believe it's correct, because there are -- there's what's called a preliminary run done. 36 3/25/08 - WHOLE - BILL 080022, etc. Before the preliminary is signed off, it has to be peer reviewed. So I would say that we have a system that kind of does checks and balances against those things happening.
I'm sure if Terry is buying an off-the-shelf system, what's going to be put in is a system that will provide security and an audit trail so that you can know the old information and the new information.
I think it's very important to do that, and I also would suggest perhaps that once you can get the payroll records automatically, that you do so for some past years and perhaps have the City Controller do or somebody do a forensic audit to make sure that -- because you were doing things manually, make sure that things didn't get messed up.
We're subject to an audit by the Controller's Office on a 37 3/25/08 - WHOLE - BILL 080022, etc. yearly basis and we contract an independent auditor to come in, and they do check --
I understand that, but you can't go through every record.
And the only way to do that is to automate it. What I'd like to suggest you do is, once you get this new system in, that you take data from some older years and cross-check it to make sure that there's nobody in the system with an incorrect amount.
If you do that, please provide the information to the Chair when that's completed. Last year you mentioned was the highest retirements in DROP with 989 people. Could you tell me what the average retirement age was prior to 38 3/25/08 - WHOLE - BILL 080022, etc. DROP's implementation and what the average retirement age is today?
It's my understanding that the average retirement age has dropped two years.
If you knew that, why did you have to get me that information?
Okay. For the Chief Investment Officer, could you please describe the last pension obligation bond, what happened with the money and how long it took us to recover that loss? 39 3/25/08 - WHOLE - BILL 080022, etc. MR. McDONOUGH: I don't have all of the details, but I'll provide the best that I can now, and if you'd like more, I can do more research. But the bond was issued -- the proceeds were received by the Fund in February '99. They were invested immediately in what was called the Liquidity Fund, which was a group of index funds that the Board had set up to manage the inflow of the City's annual payment and the pension obligation bond and outgoing monthly benefit payments. The Fund continued to grow from -- I think it was maybe 3.5 billion before it was issued. The bond took the fund to 4.6 billion. The Fund continued to grow through August of 2000 and reached 5.2 billion at its peak. That happened to be the time that the bubble burst, and the fund declined in pretty much a straight line from August of 2000 through March of '03, is when things started to turn around. 40 3/25/08 - WHOLE - BILL 080022, etc. I believe -- I don't know how far down the Fund went offhand. I believe back down to approximately the 3.5 or so that the Fund was before the bond was issued. Late last year in 2007, we did cross the $5 billion mark again in terms of total fund assets, and based on recent market performance, we're slightly below that today. We're at about $4.8, $4.9 billion.
So we borrowed 1.25 billion, put it in the market and the market immediately went down? MR. McDONOUGH: Right, but the decrease in the Fund wasn't attributable solely to the investment. About 700 million of the 1.1 billion can be attributed to the fact that the Fund was paying out more in benefits than they were receiving from the City over that time period. So there was a funding deficit during that time period.
Well, you 41 3/25/08 - WHOLE - BILL 080022, etc. would apply that to the whole fund, not just to the extra money. MR. McDONOUGH: We don't separate the extra money for any type of reporting purposes. It was considered part of the total Pension Fund.
So it was 700 million of the entire fund, not the 1.1 that came in? MR. McDONOUGH: Correct. So if the Fund lost 1.1 billion, 700 million of that was attributable to the deficit between the amount the City was paying in and the amount the Fund was paying out.
Can you tell me what the minimum mandatory obligation would be just leaving the Pension Fund status quo and having us put cash in every year? So, in other words, taking a look at the current system, what the MMO would be in 2019 and then again give me 2020 and then again in 2026. MR. McDONOUGH: I do not have that information with me today. 42 3/25/08 - WHOLE - BILL 080022, etc.
Will you please provide that to the Chair? MR. McDONOUGH: Yes.
Can you tell me what the purpose of -- is one of the purposes of the DROP program to retain experienced employees longer?
That is the concept of DROP payments. Initially when they started throughout the country, that was the concept, because it allowed departments to plan and replace employees and to train, yes.
Would you say given that that's one of its main purposes, that the DROP program has been an extraordinary failure for the City and for the pension system?
I don't believe it's a failure. I think in some instances it's more neutral. I wouldn't --
The retirement age has gone down two years and the purpose of the program is to keep 43 3/25/08 - WHOLE - BILL 080022, etc. experienced employees longer. Is that success? (Witness approached witness table.)
Rob Dubow, Finance Director. The retirement age that we're talking about that went down is retirement age for pension purposes, which means the date at which they go into the pension plan, not the date they leave City employment. So if they stay in the DROP plan for anything more than two years, they're actually staying a little longer. If they stay for the full four years, they're staying longer than they would have if they hadn't been in the DROP. So merely looking at that retirement date for pension purposes doesn't answer the question you were trying to get to, which is are people actually staying longer before they leave. 44 3/25/08 - WHOLE - BILL 080022, etc.
Sure. How much of the 700 million during the period sort of from 1999 to now that has gone out in extra payments were DROP payments?
Were DROP payments at the end of people leaving. In other words, how much has gone out of the fund in DROP payments?
How much had been DROP payments? We would have to get back to you -- we'll get back to you on that.
From the time DROP was inputted to today in terms of extra payments -- payments that would not have gone out of the fund if we had not had a DROP program. And can you tell me what the cash flows would be over the period if we had no DROP program since 1999 and provide that to the Chair, please?
There aren't 45 3/25/08 - WHOLE - BILL 080022, etc. additional payments because of the DROP program. It's a timing issue. Any payment that someone is going to get is part of the pension that they've earned. It's just a matter of when they get it.
Would you agree that if DROP causes a change in behavior where people are retiring when they otherwise would and that it actually costs the program money because they get up-front payments versus all those payments over time and that they have to live a really long time in order to sort of have that be a neutral decision for them essentially?
I mean, this gets to kind of the philosophical question of whether DROP changed behavior and -- I guess take a step back. One of the things that we're doing right now is having our actuary do an analysis of what's happened and how those cash flows look, and then we would layer over kind of assumptions about 46 3/25/08 - WHOLE - BILL 080022, etc. behavior on that. I don't want to pre-judge his results since he's an actuary and he knows how to do this analysis better than I do. So I think when we get that report back, we can give you a better answer to what you're trying to figure out.
That's great. Would you please provide the Chair with information about the assumption that the actuary is making with respect to whether or not behavior changed? Because that basically determines the outcome of that study.
Right. I think the latest conversation we've had with him is he's going to give us -- he's going to show us what this would look like if -- what the cash flow change was and give us the ability to determine if you -- what the cash flow was, what the change in retirement age was, and then we'll be able to say, Okay, if all of this is because of the DROP, this is how much 47 3/25/08 - WHOLE - BILL 080022, etc. DROP would cost. If none of it was because of DROP, this is how much it would cost, and then it's probably somewhere in the middle. But what he's been telling us is, he can't give us a definitive answer on behavior, and that will be something that we'll have to kind of hash through. He can give us what the range of impacts of behavior are.
And I assume we're going to look at the average retirement age for, say, the Midatlantic region over the same period to see if that's increased or decreased in general.
Yes. That makes sense, yes. We didn't talk to him about that, but we will, because that makes sense.
Thank you, Madam Chair. Those are all the questions 48 3/25/08 - WHOLE - BILL 080022, etc. I have for now. If other people have questions, I may have a few in a minute. Thank you.
You're welcome. Are there any other questions from members of the Committee? (No response.)
Thank you very much. The next department to testify is the Sinking Fund Commission. (Witness approached witness table.)
Good morning, Madam President and members of City Council. I am Carl Coin, Executive Director of the Sinking Fund Commission, and I am here to testify on behalf of the Commission on 49 3/25/08 - WHOLE - BILL 080022, etc. our Fiscal Year 2009 Operating Budget request. The Sinking Fund Commission budget supports the Mayor's public safety initiative through the timely payment of debt service for capital projects at Police, Fire and Prison facilities. It promotes jobs and economic development by financing projects, including the stadium construction and improvements to Philadelphia's airports. It promotes healthy and sustainable communities by funding water and sewer infrastructure improvements and renovations to health centers, transit facilities and neighborhood parks. It promotes customer service and a high-performing government through projects that enhance energy efficiency and allows for improvements to community facilities, including recreation centers and libraries. 8 million. The 50 3/25/08 - WHOLE - BILL 080022, etc. 1 million for debt service and other debt-related expenditures. The Class 200 request provides for payments on leases for facilities such as the Municipal Services Building, the One Parkway Building and certain correctional facilities. This line item also provides for lease payments on the stadiums as well as the Neighborhood Transformation Initiative borrowings and the Cultural and Commercial Corridor program. 4 million increase, mostly due to a rise in the estimated obligations for the 2003 Justice Lease Revenue Bonds. 2 million and provides for the General Fund's portion of the interest and principal payments on the City's general obligation bonds. These 51 3/25/08 - WHOLE - BILL 080022, etc. 4 million from the Fiscal Year 2008 estimated obligations, mostly due to provisions for a new general obligation series to be issued in 2008. In order to meet the City's annual temporary imbalance between the payment of obligations at the beginning of the fiscal year and the receipt of taxes and other revenues early in the calendar year, it is expected that the City will issue tax revenue anticipation notes early in July 2008. These notes would mature prior to June 30, 2009. 1 percent on these short-term notes, estimated to be for 275 million. The Sinking Fund reserve payments, Class 704, provide payments of guarantees on economic development bonds of quasi-governmental entities. 3 million 52 3/25/08 - WHOLE - BILL 080022, etc. in this line item provides for payments on the Philadelphia Parking Authority Series 1999A bonds. 3 million, all in Class 700, for payments of debt service on water and sewer revenue bonds and general obligation bonds. 3 million decrease in the Water Fund request from Fiscal Year 2008. The Commission request from the Aviation Fund for Fiscal Year 2009, 114 million, all Class 700, is to provide for payments of regularly scheduled Airport revenue bonds. The increase of 17 million over Fiscal Year 2008 estimate is due to the provision for a year's debt service on new Airport borrowings in 2008 to fund improvements at the Airport. The total amount of these borrowings will be 285 million. The Commission's 2009 request of $5 million in the Car Rental Tax Fund 53 3/25/08 - WHOLE - BILL 080022, etc. is to provide for lease revenue bond payments on the sports stadiums from the vehicle rental tax revenues. This concludes the written portion of my testimony. I would be glad to answer any questions that Council may have relative to the 2009 Operating Budget. Thank you.
Thank you. For the record, can you tell us what are the projected borrowings by the City in FY2009?
The projected borrowings, there will be a general obligation borrowing of 184 million and a temporary revenue anticipation note of 275 million.
I'm sorry. What is the projected amount to be borrowed for TRANS?
What 54 3/25/08 - WHOLE - BILL 080022, etc. is the projected interest cost of the TRANS?
The cash flow for FY09 reflects a pension payment of $347.1 million in August 2008; is that correct?
How does the pension payment impact the size of the TRANs borrowing?
Well, we need to borrow enough money in order to cover that pension payment, along with the other revenues that are received. So if we don't borrow enough, we may not be able to cover those pension -- that pension payment. Along with the other revenues that the City combined with the TRAN amount, we would be able to pay that amount, the pension.
So in fact, as I understand you're saying, is that the $275 million that we're 55 3/25/08 - WHOLE - BILL 080022, etc. borrowing in the TRANs may not be enough money to cover for everything? (Witness approached witness table.)
Madam President, good morning. Steve Agostini, Budget Director. I believe that our plan is, we were moving forward to your questions, which I think are very pertinent. Depending on when we would issue the pension obligation bond will have an impact on exactly the size of both the TRANs and the payment that would be required to the system. In our planning estimates currently, we don't anticipate that we would have to make that payment if we are indeed doing the pension obligation bond before the end of the calendar year. However, if for some reason we are unable to complete the deal before then, then we would have to have a re-estimate of the size of our tax and revenue anticipation note so that we 56 3/25/08 - WHOLE - BILL 080022, etc. could make up for our cash flow needs in the beginning part of the year before revenues are actually received, as well as make the payment to the system. And in part, one of the reasons we want to make the system payment early is so that we would not incur interest penalties for not making the payment on a timely basis.
Thank you, Steve. Steve, you might as well wait there, please. If the City proceeds with the proposed pension obligation bond, shouldn't the amount of the TRANs be reduced?
Madam President, I think -- that's a very fair question. I think that we need to go back and look at cash flows at that point in time when we have a plan in front of us to move forward with the pension obligation bond. It's conceivable that we will not need a tax and revenue anticipation note of that 57 3/25/08 - WHOLE - BILL 080022, etc. size that Mr. Coin just mentioned to you, because we will not need to make that very large payment in the first year. That is an option before us.
Thank you. Thank you, Steve. The Chair at this time recognizes Councilman Goode.
And is any of that for the purchase of goods and services from non-governmental entities?
And none of that was for purchase of goods and services from non-governmental entities?
And was any of that for the purchase of goods and services from non-governmental entities?
Okay. Were 59 3/25/08 - WHOLE - BILL 080022, etc. you told that as part of the budget process you should submit information on the purchase of goods and services and the participation of disadvantaged businesses in that?
I don't remember being told that, or if I was, if I did, it wouldn't apply.
That's supposed to be a request made to every department and agency.
Madam President, Councilmember, you are correct, that request was indeed made. If it is not here, we will bring that forward to you as soon as we can.
And in the last fiscal year for which we have information, which is Fiscal Year '07, the Sinking Fund is listed as zero percent participation, but not because zero dollars were spent. The information says at least $4,500 were spent. 60 3/25/08 - WHOLE - BILL 080022, etc.
There is a miscellaneous purchase order that we have with our disseminating agent that --
So it was the purchase of goods and services from a non-governmental entity?
Thank you. Are there any other questions from members of the Committee? (No response.)
We will now hear from the City Planning Commission. (Witnesses approached witness table.)
Good morning. Please identify yourself for the record and proceed with your 61 3/25/08 - WHOLE - BILL 080022, etc. testimony.
Good morning. My name is Gary Jastrzab. I am the Acting Executive Director of the City Planning Commission. Good morning, Council President Verna and members of City Council. Thank you for the opportunity to appear before you today and present the City Planning Commission's proposed Operating Budget for Fiscal Year 2009. The City Planning Commission's proposed Operating Budget of $4,500,671 is comprised of three components: A General Fund request for $3,328,054, a Community Development Fund request for $172,097, and an appropriations request for $1,000,520 in the Grants Revenue Fund. This is $251,557 less than the Commission's Fiscal Year 2008 estimated obligations due to decreases in two of these components, $250,000 in the General Fund for the purchase of consultant and 62 3/25/08 - WHOLE - BILL 080022, etc. technical services due to the elimination of a one-time increase for comprehensive planning services and $11,236 in the Community Development Fund. These decreases are offset somewhat by a $9,679 increase in requested appropriation in the Grants Revenue Fund. In regard to grants, I'd like to mention that the Philadelphia City Planning Commission staff aggressively pursues opportunities for competitive planning grants in cooperation with the Mayor's Grants Office. Since 2002, the City has received grant awards 16 totalling $1,752,000 for transportation 17 and land use planning studies, more than 18 any other county in the greater 19 Philadelphia region. We have also lent 20 our support for many more similar grants awarded to non-governmental organizations. With this level of funding, the City Planning Commission staff will remain stable, supporting a total of 53 63 3/25/08 - WHOLE - BILL 080022, etc. positions: 49 General Fund positions, three Community Development Fund positions and one Grants Revenue Fund position. The City Planning Commission staff consists of planners, architects and urban designers supported by Geographic Information System, administrative and clerical personnel. The agency staff provides the City Planning Commission with information and recommendations on an increasingly wide range of planning and development-related issues and is often called upon to undertake special projects by the Mayor, Managing Director and City Council members. During the current fiscal year, we have also provided the staff support for the work of the new Zoning Code Commission created through a Home Rule Charter change in May 2007. Under the Charter, the City Planning Commission duties include the preparation of a comprehensive plan and 64 3/25/08 - WHOLE - BILL 080022, etc. its modifications, the Capital Program and Budget, proposed zoning ordinances and amendments, and regulations concerning the subdivision of land. The Commission is also charged with reviewing and making recommendations concerning the School District's proposed Capital Program. These duties directly address the City's Strategic Plan by creating a framework for public and private investment that promotes jobs and economic development, enables healthy and sustainable neighborhoods, and supports the capital facilities necessary to provide municipal services in the areas of public safety, education, community services, and an efficient and high-performing government. With regard to jobs and economic development, the City Planning Commission's objective is to create conditions that will support an increasing, diverse and upwardly mobile 65 3/25/08 - WHOLE - BILL 080022, etc. population. Progress towards these objectives can be measured through an analysis of population, immigration, employment and income trends. Similarly, creating healthy and sustainable neighborhoods has long been a continuing objective of the Commission. Improved housing affordability can be measured using an index of median sales prices and rents to median household income.
In addition, increasing walking, bicycling and transit use can be measured by cyclist and pedestrian counts and transit ridership data. Finally, providing improved access to neighborhood parks, recreation sites and other green open space can be measured by monitoring the service area coverage and capacity of these facilities to serve nearby residents. The City Planning Commission staff has always prided itself on the ability to provide fast and efficient services to individuals and community 66 3/25/08 - WHOLE - BILL 080022, etc. organizations seeking planning-related information, property owners seeking review of development plans, and City departments and City Council data requests. In this regard, we will continue to assist visitors to our office within five minutes of their arrival and respond to requests for more detailed information and map sale requests within three business days. Our department has contracted with 13 non-governmental entities in Fiscal Year 2008 totalling $765,753. 8 percent African-American, 13 percent women, and ten percent in multiple categories, such as Asian female-owned firms. This concludes my testimony. I appreciate the opportunity to appear before you this morning, and I would be happy to answer any questions that you may have.
Thank 67 3/25/08 - WHOLE - BILL 080022, etc. you very much. The Chair recognizes Councilman Jones.
I have a couple of questions. I read recently that there is going to be the Office of Strategic Planning and I wanted to get a sense of how their function differs from the Planning Commission and how you guys work together.
The Office of Strategic Planning was an entity that was created in the past Administration. It was known formerly as the Mayor's Office of Transportation. It had been kind of attached, in a sense, to some of the operations of the City Planning Commission, and previous Executive Director of the City Planning Commission, Maxine Griffith, was designated as the head of that office. That office really no longer 68 3/25/08 - WHOLE - BILL 080022, etc. exists as a budget entity and instead Mayor Nutter's Administration has recreated the Mayor's Office of Transportation headed by Deputy Mayor Rina Cutler. The one staff person remaining in the Office of Strategic Planning is now assigned to Ms. Cutler's office.
So you will be working with the Deputy Mayor for Transportation on planning issues regarding --
The Great Expectation Group did a whole series of meetings throughout the City of Philadelphia and one of the major subsets of those meetings is transportation. One of the things that I -- and I attended one with Councilwoman Blackwell. One of the things that was prevalent was that there was a disconnect between mass transportation as a means of travel as opposed to a way of life integrated with 69 3/25/08 - WHOLE - BILL 080022, etc. a society. And I draw attention to cities like New York or Washington, DC, which is more mass transportation oriented, and how are we planning for that?
Well, we've long been supporters as professional planners of transit services. We think it's very important to the City and region. One of the factors that makes us a very competitive region with other cities, states throughout the world is our extensive transit system, and we believe that transit lines should be improved, enhanced and extended in various ways. We are currently supporting PIDC in a grant study that they received looking at extending transit options to the Navy Yard, and that could include -- although conclusions I don't think have been reached yet -- extending the Broad Street subway, but there may be other transit options as well. We're -- 70 3/25/08 - WHOLE - BILL 080022, etc.
Absolutely. We're participating in discussions with PATCO for both the extension of their lines in New Jersey. We participated in some initial meetings on the New Jersey extension and are very interested in their alternatives analysis study for extensions on the Philadelphia side.
Currently, they're talking about just to the Navy Yard. I'd hope you would encourage them to at least do a study that would continue that line all the way to the Airport. It just makes sense to go an extra mile as an option as well.
I'd like to take two neighborhoods, one being Manayunk, and East Falls, increased 71 3/25/08 - WHOLE - BILL 080022, etc. density there. Are you working with them on traffic studies and how to use mass transportation as a means to ease some of the traffic, vehicular traffic, congestion that they experience particularly on the weekends? Are you working with any of those --
We've long had a very good working relationship with the East Falls neighborhood organizations and business communities. At the present time, we're not specifically looking at those issues, but we are kicking off a pedestrian and cycling plan that would address issues in that part of the City.
I'd like you to go beyond that to consider some of the challenges that residents have there because of the prosperity, the popularity of the neighborhood. They're faced with traffic problems and mass transportation problems that we'd like you to take a look at. Let me take you to another part 72 3/25/08 - WHOLE - BILL 080022, etc. of my district, which I share with Councilwoman Blackwell, which is Market Street. They've suffered over the last half a decade with construction or reconstruction of the El line. Has there been a study done as to what comes after the construction?
Yes. One of the grants that we pursued and were awarded a couple of years ago was essentially a transit-oriented development study of the West Market Street corridor and how those areas might be developed at the conclusion of the reconstruction of the El, increasing density and promoting mixed uses around the various stations along that line.
I would love to have you give us an in-depth -- we can't do it today -- understanding of that study. I know Councilwoman Blackwell, who shares that border between my district and hers, would be interested in that as well. 73 3/25/08 - WHOLE - BILL 080022, etc.
We certainly can provide you with copies of that study that was done.
A couple other quick questions, if you would, Madam Chair. In parts of my district, I have the tale of two cities. Roxborough/Manayunk versus the lower end of West Philly north of Market Street, you have two different worlds, but the same problem, the increased number of renters versus homeowners. Has there been a study that deals with that problem? In Manayunk there is a community that has a town and gown issue, meaning a lot of young people seeking an education in one of our universities move into a community and they've experienced upwards of 93 percent of the people in the community are renters, and there's a unique kind of set of problems that come with that migration in/out/seasonal based 74 3/25/08 - WHOLE - BILL 080022, etc. on the opening and closing of the universities, and I don't know if there's any studies that have been done to look at communities that are besieged with those types of town and gown growth issues.
While we monitor statistics, the population and housing statistics in neighborhoods throughout the City, we haven't really performed a specific market analysis of the areas around major institutions. A number of them throughout the City experience the same problems, but we have not at this point conducted a special analysis of those kind of issues.
Well, particularly in those areas I'd like you to look at that, in and around St. Joseph's University, in and around Philadelphia University, PCOM and others, Drexel Medical. We have a huge student population, and we welcome them. I hope they will consider being long-term 75 3/25/08 - WHOLE - BILL 080022, etc. Philadelphians, but in the meantime, some of the existing residents have some issues. We could use that study to look at how we can deal with those issues.
Similar on Market Street, we have the flip side of that coin. The increased amount of sheriff's sales in the area have created an investment opportunity for people from as far away as Japan and China that are coming into communities looking at cheap real estate. And they're not looking at it to move in as primary residents. They are using it as investment opportunities. Councilwoman Tasco and Councilwoman Blackwell have long been advocates for fighting some of the impacts of predatory lending, but has the Planning Commission done any in-depth analysis as to the impact of the high rental communities caused by some of these outside investors creating an 76 3/25/08 - WHOLE - BILL 080022, etc. increased rental market versus homeownership?
We have not really conducted market studies for that area recently. It's actually been a number of years since we've conducted in-depth market studies, but we can certainly take a closer look at that issue.
As we start to look at zoning and we have a lot of people interested in revamping the Zoning Code, these types of studies, these types of data that can be provided can make us a little more efficient and a lot more effective in our reconfiguration of zoning classification and overlays. If we look at areas of great prosperity that increase the number of renters, then that's an important statistic that can be used to guide. If we look at what's happening with the subprime lending market and increased sheriff's sales, that's another piece of information that 77 3/25/08 - WHOLE - BILL 080022, etc. can be used to design better neighborhoods and increase services where needed. So this data becomes good information, becomes great City planning. Thank you, Madam Councilwoman.
Thank you. The Chair recognizes Councilman Green.
Who under the Charter is in charge of the orderly development of the City of Philadelphia?
Who under the City Charter, what department, is in charge of the orderly development of the City of Philadelphia?
The City Planning Commission is responsible for 78 3/25/08 - WHOLE - BILL 080022, etc. that.
Do you believe that you're currently in charge of the orderly development of the City of Philadelphia?
Yes, sir. We certainly recognize that the development world is always changing and new proposals are coming in and that there are tools that we have that need revision, such as the Zoning Code, but in terms of having a good handle on development opportunities and the future development of the City, we believe we have a good handle on those issues.
Do you have any say about the orderly development of the City of Philadelphia?
Through the Planning Commission's review of development proposals, we are an advisory agency, so we're able to make recommendations to the Mayor and City Council members regarding specific 79 3/25/08 - WHOLE - BILL 080022, etc. development proposals. The Planning Commission -- the City Planning Commission is, I think, a very knowledgeable and informed group of individuals who make good judgments on those development proposals. In addition, one of our responsibilities is preparing a recommended Capital Program and Budget for the City, and as part of that function --
I'm not asking about the City's Capital Program. I'm asking about private development. So when was the last time or how often does the Planning Commission say no to a proposed zoning change or proposed overlay that's come to you from City Council or the Administration or elsewhere? When is the last time you gave a negative recommendation?
We often times will attempt to work with a developer so that a proposal is acceptable to the community in a way that blends in well 80 3/25/08 - WHOLE - BILL 080022, etc. with the context of the surrounding area. So often times when the staff is opposed initially to a proposal, we'll try to work with that developer to have a development that both the staff and the Commission can agree to.
I understand your answer to the question. When is the last time you said no?
Thank you. So do you have suggestions for how the Planning Commission can be empowered to be once again in charge of the orderly development of the City of Philadelphia?
We have a new and very activist Commission that I think is beginning to assert some of its 81 3/25/08 - WHOLE - BILL 080022, etc. advisory authority on development proposals, and the staff is undertaking a project called Imagine Philadelphia, which attempts to lay the foundation for developing a new comprehensive plan. I think with the new Commission and some of the staff efforts --
Can you make specific changes that we could make in the law or the Charter that would give the Planning Commission more power to be in control of the orderly development of the City? Do you have any, for example, requirements as to who can serve on the Planning Commission in terms of architects, planners?
Right, as was done with the last Charter change, yes. One area might be in terms of design review to establish a formal design review function within the City. Right now that design review function is dispersed.
What do you 82 3/25/08 - WHOLE - BILL 080022, etc. mean by "dispersed"? Who is responsible for it?
Well, for projects that involve the Redevelopment Authority, there is an Advisory Board of Design that will review projects and make recommendations to developers on Redevelopment Authority land, and those recommendations are binding recommendations. For other developments, we can just -- the Planning Commission can attempt to persuade developers to make changes to their design, but it's not a requirement.
In the typical process where there's a zoning change or overlay or something, at what point is the Planning Commission brought in?
The Commission is brought in when a bill is introduced in Council primarily for a zoning change or overlay.
So why do 83 3/25/08 - WHOLE - BILL 080022, etc. you think developers don't come to the City Planning Commission in the first instance?
Well, we actually believe that they should, and I think the practice as it's developed over the last number of years has been such that developers will approach the community often times first, but they really should be approaching the City Planning Commission staff for feedback on their designs before they approach the community.
Do you think if there was a policy of the Planning Commission of saying no and coming and testifying publicly as to the reasons for rejecting things rather than compromising, that developers would come to the City Planning Commission first?
I make that suggestion to you. 84 3/25/08 - WHOLE - BILL 080022, etc. Okay.
Can I follow up on that, Councilman, just for a second, just on that point?
Not actually, but it's on that same point of yours, that the continuity may be -- it's up to you.
Because it's one of the main things I wanted to talk about today, and you hit it right on the head. Gary, this is no reflection on you personally, but it is a reflection on the Planning Commission institutionally. I've been hearing the same thing for over 28 years, that we just don't have any teeth, in many forms, but what you just enunciated is one of those we-don't-have-any-teeth moments. 85 3/25/08 - WHOLE - BILL 080022, etc. I have said to Planning Commission staff and directors, You'll have a welcome year in City Council, just give us the legislation that gives you the teeth. We want the best design. We want the zoning interpretation to be interpreted by the people that wrote the Code, not the people sitting in L&I, who are inundated with many other things. Every time I've been told, We can't do anything like that because the Commission won't approve it. In other words, the Commission itself has to make that decision, which usually means the Mayor has to make the decision because the Mayor appoints the Commission. This is a new day, a new way of dealing with planning. We got the Zoning Commission. I mentioned this at their very first Zoning Commission meeting in some detail. It's been six months since that day. I still have not seen any legislation. I don't want to wait three or four years to at least have basic 86 3/25/08 - WHOLE - BILL 080022, etc. fundamental provisions in our Code that require design review by professionals, not by community groups who are overwhelmed. As I heard Councilman DiCicco say last term when he was putting this together, I don't have these kind of projects, by and large, in my district. They're big projects, but they're much easier to figure out for communities. They're not design issues as much as density and other things. How long would it take you to get us that kind of legislation? One, that the burden of interpreting the Code -- because I usually get a good interpretation when I talk to the Planning Commission staff on the zoning, the one that makes sense, the one when I talk to outside lawyers who deal with zoning. Where I have the problem is at L&I. And when one of your predecessors said to me -- or two of them, actually -- We wrote the Code. We should be the ones interpreting it. If it just came to us 87 3/25/08 - WHOLE - BILL 080022, etc. first, 90 percent of these problems would go away. If we made the -- so the first stop for zoning function isn't L&I, it's Planning. Secondly, design review has to happen before anything else happens. I may disagree with you on whether a development should happen, but whatever that development is, it should have the best design possible. If you lose the argument, Planning Commission, about whether a project happens, you recommend against it, we still support it, the Zoning Board still supports it, there should be no question that this is the best design possible. Whatever it costs in the long run, those dollars are very, very well spent. How long would it take you, just those two things? Because I don't want to wait four years for these things that everybody has agreed on for so many years. And Councilman just hit it right on the head. Get us that. It will go 88 3/25/08 - WHOLE - BILL 080022, etc. through the Rules Committee and City Council so fast, because it doesn't take a lot of argument or thought because the argument and the thought is already there to get this in place. Instead of having excuses, then you come in next time and I can put your feet to the fire and I can say, How did that lousy design, how did you interpret that Zoning Code that way? But you won't say to me, Oh, it was that clerk at L&I, they don't have the proper background and yet they're doing the -- you guys at Planning and you women know what you're doing in this area. You've never had the teeth. You've never had the you know what to get it, but you can. We want to give it to you. I know the Mayor wants to give it to you.
I've read all of the reports on the Planning and the changes. Some of these things we can do now. We can do it before the budget is finished. How long would it take you to get us that? Because I know this new 89 3/25/08 - WHOLE - BILL 080022, etc. Planning Commission has to be dying to do the same thing. They didn't get into this just to be rubber stamps for somebody. A week? Two weeks? Three weeks?
Right now, as I mentioned before, we're in a position where if a design comes in that the staff feels is subpar, we need to use our ability to take it to Commission as leverage to getting a better design, and we recently did that with a proposal in Old City.
See, I'm talking about something different, and maybe you didn't get my little point about how much it costs. If we have to have an independent design review board, 90 3/25/08 - WHOLE - BILL 080022, etc. as other cities have, with community members, architects and others, and if it slows the process down a little bit, I don't care. I want buildings that we can be proud of, not buildings that I have to open the Inquirer and wonder what we're building when we're worried about where the garage was, but the whole thing turns out to be ugly. And with the right review required by Law that has to get past them, there's no variance that you can go and say, I want to get a variance, I don't want this design review. You've got to do it. We can argue all we want about whether it's the right building and the right place or the right number of units, but the design of it we can all be proud of. And we've never had that. We should. Other cities had it for a long time. That's what I'm talking about. Not just the Planning staff going to the Commission, but having --
A formal design 91 3/25/08 - WHOLE - BILL 080022, etc. review process.
I want something that gives Council and the Mayor the ability quickly to evaluate whether it's a good idea to have the zoning function separated from L&I and put in City Planning. Because other cities do that. I know it. I've talked to predecessors of yours, and it's a real problem. A lot of things wouldn't get to the Zoning Board either if we had that happening. I'm looking at Mr. Kramer. I know he's shaking his head, but he doesn't want to smile too much. Get it to us. I want you guys to be excited -- when I say "guys," generic. I want you to be excited when you get to work in the morning, not to be, Oh, God, all this stuff and we got 92 3/25/08 - WHOLE - BILL 080022, etc. nothing, no say in it. Anyway, that's my -- thank you, Councilman.
You're welcome. Please include in that how we can, either by force or by practice, have developers come to the Planning Commission first.
But that's when you're going to have your biggest impact.
If the goose is cooked, all you can do is compromise or say no. And you're civil servants, so say no. Nothing can happen to you.
Design review comes first. Zoning review comes 93 3/25/08 - WHOLE - BILL 080022, etc. first. They both happen at the Planning Commission. Zoning Board doesn't get it. We don't get it. The community can be talking about it during that time, but the ultimate design review rests with the design approval.
Right. In last Friday's article by Inga Saffron, she suggested that perhaps the Planning Commission have design review committees that include people from the neighborhoods that you can hear as you're going through a process so that that process is done where you -- in the first instance, with you having input and having input from the neighborhood.
At earlier Zoning Commission meetings, this was gone 94 3/25/08 - WHOLE - BILL 080022, etc. over as far as what other cities do. So I know we can actually have the Zoning Commission make a positive recommendation to Council in the interim, not waiting three years, to get these kinds of fundamental things done right now.
Well, I think you asked a question, Councilman, and I don't believe it was answered. When can Council receive the ordinance that Councilman O'Neill is requesting?
We'll begin working on it today, and within three weeks we'll have an ordinance to you.
There's two things. Design review required, not optional, not just you making a recommendation. The design review is final. You don't get around it. Secondly, zoning interpretations start with Planning, not with L&I. 95 3/25/08 - WHOLE - BILL 080022, etc. Thank you. So two separate issues.
Good. Thank you. Councilman Green, I believe you were still asking questions.
Yes, ma'am. Thank you. One of my staff members attended a recent 3-1-1 PhillyStat meeting that you were at, and it was clear from the presentation that you have just a plethora of GIS-type data about the entire City, neighborhoods, what's where.
Does your budget include plans to create an online tool whereby the public, including neighborhood groups, researchers, developers, could access this information easily?
Access this information online? 96 3/25/08 - WHOLE - BILL 080022, etc.
We have via the City Planning Commission website kind of static maps that can be downloaded from our site.
But that's very different from the kind of data you presented at the PhillyStat meeting that is -- it's a ton of data. It's impressive. And I would suggest that it would help with the orderly development of the City if you could work with Terry Phillis at MOIS and have that data accessible by citizens, neighborhood groups, developers, et cetera.
Yeah. We can certainly work with MOIS on that. We have talked about it at the staff level.
Could you please provide the Chair maybe in three 97 3/25/08 - WHOLE - BILL 080022, etc. weeks and just before the end of the budget process an idea of what the plan would be for that and how much it would cost?
Thank you. I apologize because I think Councilman Jones touched on this, so if you answered this, I'll go back and read the transcript, but have you performed an analysis of residential and commercial density around existing transit hubs in the entire City?
We have done that in parts of the City. We've done it along the Market West corridor, the stations along the Market West El. We're currently concluding a study looking at similar issues along the commuter rail stations along the North Delaware. Part of the earlier West Market Street El study also included the Frankford Terminal area, and we recently received 98 3/25/08 - WHOLE - BILL 080022, etc. some grant funding to conduct a similar transit-oriented development study around the Broad and Erie transit node in North Philadelphia. So we are looking at those issues at specific locations. We are generally interested in the notion of promoting transit-oriented development throughout the City.
Which means potentially rewriting the way we do our business in terms of requiring certain number of cars for density, parking, things like that?
Changing regulations, zoning regulations, around transit stations that would allow additional density, perhaps less parking. Yes, we're investigating options for that now, in addition to doing these very specific site studies.
Imagine Philadelphia, how much is budgeted for the project in FY09 and over the 99 3/25/08 - WHOLE - BILL 080022, etc. Five-Year Plan?
And then it's about the same out or is it a one-year project?
Well, these were grant funds, so depending upon the way -- depending upon the source of the grant, there may be different time periods in which that money has to be spent down. So for Imagine Philadelphia right now, we're talking about a total budget of about $290,000.
Is that effort redundant with the public charrettes and other neighborhood stuff that the Zoning Code Commission is going to have to undertake to rewrite the Zoning Code in the entire City?
No, it's not redundant. I think that the public outreach by the Zoning Code Commission, while it may deal with some of the same 100 3/25/08 - WHOLE - BILL 080022, etc. general topics, would really have to be much more specifically focused on the Zoning Code itself; whereas, Imagine Philadelphia as we conducted our nine public meetings throughout the City, we were urging participants in those meetings to think big and to give us big ideas for how the City can grow and develop over the next years. 11 So there's an intersection of 12 issues and concerns, but I think the 13 Zoning Code public outreach, when that 14 occurs later this year, will be much more 15 specific. 16
I know we're 17 not testifying about this today, but how 18 much does the Planning Commission expect 19 will be required to fully fund the Zoning 20 Code Commission through the end of its 21 mandate? 22
Well, in other 23 cities, this has been a process that's 24 taken anywhere from three to five years 25 or longer and has cost several million 101 3/25/08 - WHOLE - BILL 080022, etc. dollars. We are currently in the process of or just about to --
If you could provide the Chair with Chicago, Miami, other cities that have undertaken similar processes and compare the complexity of what they're doing to what we're doing so we can get a true sense of what the cost is.
I think the budget currently reflects 250 a year for the next two years.
And does the Planning Commission's budget include the funds necessary to undertake the rewrite of the Zoning Code that's the mandate of 102 3/25/08 - WHOLE - BILL 080022, etc. the Zoning Code Commission?
Okay. Are there enough funds in the Five-Year Plan to undertake a rewriting of the Zoning Code?
Okay. Those are all the questions I have, Madam Chair. Thank you.
Thank you. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. Often I know my office does a lot, as do other offices, requests a lot of maps, and I understand that there's 103 3/25/08 - WHOLE - BILL 080022, etc. been some concern about ink and the money and how that need translates into budget dollars so that we can have the service. Can you enlighten us or let us know what it would require? Because really we can't afford to lose or not have the service as we need it because of budget items, and I'm sure that's something that the Council would support.
Thank you for asking that question. We do strive to serve City Council members and other City departments with mapping requests. We do find that we are continually running short of supplies, ink and paper primarily. We have a very good mapping staff, and we've estimated that in order to maintain our existing level of service, providing maps to City Council members and other City departments, that about 20,000 additional dollars would be necessary.
Madam President, he says they need $20,000 to 104 3/25/08 - WHOLE - BILL 080022, etc. do our maps.
I know. We'll probably have Mr. McPherson write a note.
Thank you. Are there any other questions or comments from members of the Committee?
Thank you, Madam President. Could you please just briefly 105 3/25/08 - WHOLE - BILL 080022, etc. describe "decentralized planning"?
Could you elaborate on the question a little? I'm not quite sure what you mean.
Are you familiar with the Development Cabinet which exists?
Yeah. It's an initiative of the Nutter Administration under Deputy Mayor and Commerce Director Andrew Altman to better coordinate the activities of the various departments and agencies, both within municipal government as well as quasi-public agencies, to coordinate development activities.
And was this concept in use in any previous 106 3/25/08 - WHOLE - BILL 080022, etc. Administrations?
I believe that the Rendell Administration in the '90s also had a Development Cabinet.
Yes. I believe it also existed during those Administrations as well.
Why did that disappear under the previous Administration? Do you have any sense?
I don't, actually. I think that some of the functions of the Development Cabinet were intended to be housed in what had been known as the Office of Strategic Planning and some of that coordination occurred there by designating the Secretary of Strategic Planning as a Cabinet member. Previously City Planning Commission Executive Directors had never sat at the Cabinet level. So --
If you don't 107 3/25/08 - WHOLE - BILL 080022, etc. know, that's fine. So what I just want to ask is if you think that there's any part of that concept that can be useful in giving you more teeth, just to consider that as you're writing the legislation that Councilman O'Neill has asked you to get us.
Absolutely. It's a good concept and an important initiative of the Administration.
Thank you. Any other questions or comments from members of the Committee? (No response.)
This Committee will stand in recess until 108 3/25/08 - WHOLE - BILL 080022, etc. tomorrow, Wednesday, March the 26th, at 10:00 a.m. Thank you very much. (Committee of the Whole adjourned at 11:55 a.m.) - - - 109 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 March 25, 2008, 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.)