COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, November 4, 2009 11:20 a.m. - - - PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 090671 - An ordinance amending Section 16 17-109 of The Philadelphia Code, entitled "Local Bidding Preferences"... BILL 090672 - An ordinance amending Chapter 18 17-1600 of The Philadelphia Code, entitled "Economic Opportunity Plans"... - - - 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 hearing is called to order. This is a public hearing of the Commerce and Economic Development Committee on Bills No. 090671 and 090672. My name is W. Wilson Goode, Jr., Chair of this committee. I note that a quorum is present. To my left is Councilman Darrell Clarke, the primary sponsor of the bill. To my right, Councilman Curtis Jones, and to my far right is Councilman Frank DiCicco, and we expect other members to show up as the hearing goes on. The title of Bill No. 090671, amending Section 17-109 of The Philadelphia Code, entitled "Local Bidding Preferences," by providing for a local bidding preference for contracts funded by certain federal stimulus moneys, under certain terms and conditions. The title of Bill No. 090672, 3 11/4/09 - COMMERCE - BILLS 090671 & 090672 amending Chapter 17-1600 of The Philadelphia Code, entitled "Economic Opportunity Plans," by providing that Economic Opportunity Plans be included on all development projects or contracts bid pursuant to federal stimulus funds allocated to the City of Philadelphia pursuant to the American Recovery and Reinvestment Act. Our first witness will be Steve Agostini. (Witness approached witness table.)
I'll ask Councilman Clarke if he has any opening comments at this time.
Thank you, Mr. Chairman. Thank you for your leadership on this issue also, along with other members of the Committee. As you know, last week I believe during the stimulus hearings there were several conversations about participation, and actually Mr. Agostini 4 11/4/09 - COMMERCE - BILLS 090671 & 090672 and members of the Administration and I met yesterday to talk about some of these issues, particularly these two ordinances. I think one of the ordinances -- and you will hear through testimony that there is some questions about what aspects of the Recovery dollars City Council can impose its jurisdiction on; i.e., the City of Philadelphia. I think during the course of this conversation -- and I just want to say, Mr. Agostini, thank you for sitting down with me -- that as it relates to the action that will be taken today on that one particular bill, the bill talking about local preferences, at the end of that meeting, we said that we would hold the bill, but there's a strong likelihood that I may ask the members of the Committee to move it out of committee, with the understanding that we still have some work to do as it relates to the final -- as it relates to the conclusion 5 11/4/09 - COMMERCE - BILLS 090671 & 090672 of the bill and the ultimate language that we will put in there, but this will be determined by the members of the Committee as we proceed. Thank you, Mr. Chairman.
Any other comments from members of the Committee? (No response.)
Thank you, Councilmember. Councilmembers, good morning. I'm Steve Agostini. I serve as the Budget Director and Recovery Officer for the City of Philadelphia. I appear before you today to offer testimony in support of both Bills 090671, 090672, one to require local bidding preferences for contracts using Recovery funds and the other requiring Economic Opportunity Plans on all contracts pursuant to Recovery funds. The first bill, 090671, would 6 11/4/09 - COMMERCE - BILLS 090671 & 090672 amend The Philadelphia Code by providing a ten percent bid preference for local business enterprises who submit bids funded in whole or in part by the Recovery Act. As you know, a five percent preference already exists for LBEs who compete for City-funded bids. The second bill, 090672, would amend The Philadelphia Code by requiring EOPs, Economic Opportunity Plans, for development projects or contracts bid pursuant to ARRA. As you know, EOPs are currently required for Procurement Department public works bids over a million dollars as well as several other categories. As I mentioned to Councilmember Clarke, the Administration is supportive of the intent of both bills to encourage local and minority, women and disabled-owned businesses to compete for contracts funded under the Recovery Act. We recognize that small and disadvantaged businesses are significantly impacted by 7 11/4/09 - COMMERCE - BILLS 090671 & 090672 the recession. We believe that creating the Office of Economic Opportunity and placing it within the Commerce Department helps ensure that M/W/DSBEs are supported to take advantage of ARRA funds and other competitive opportunities. Nevertheless, we think that the intent of what you're trying to do makes a great deal of sense to us. As the Councilmember mentioned and what I committed to the Councilmember in the meeting that we had yesterday was that I would do some research on the existing grants that we have in place as well as potential grants that we may be eligible for, both on a competitive as well as on a formula basis, to see if indeed there are any stipulations, any provisions that would prevent the City from adopting these kinds of amendments as the Councilmember has offered. Along with that, we also committed to looking at what other cities are doing to see if there are indeed 8 11/4/09 - COMMERCE - BILLS 090671 & 090672 instances where those preferences are in place and to the extent that we can borrow or learn from those other communities to try and do that. And my hope, Councilmember, as I said to you yesterday, is to try to get you something preliminarily by the end of this week, and that's still my intent. Thank you for the opportunity to testify before you today. I'm happy to answer any questions. As I said and in the testimony, we're going to do the research to see if there's anything that the federal government has implemented that would prevent us. Again, I don't know what that might be, but I think it's important for us to know so that it does not potentially jeopardize our ability to draw down funds and keep funds while trying to pursue the intent of the legislation.
Thank you, Mr. Agostini. Councilman Jones. 9 11/4/09 - COMMERCE - BILLS 090671 & 090672
Thank you, Mr. Chairman, and I want to thank Councilman Clarke for introducing this legislation and you for having the hearing promptly. My concern would be -- and also thank the Administration, you in particular, for responding well to the hearings that we had on the stimulus. I'm encouraged by the communications with Clarke's office and with my office and other members of Council. I am -- I have to restrain my optimism, but I am very optimistic about our progress and what we're going to be able to achieve on behalf of the Philadelphia business community and institutions. So I'm excited, and I'll say it on the record. My concern is having, in another life, served as the Director of the Minority Business Enterprise Council that we adhere to or at least examine those procurement laws carefully. I think there are some state laws that may 10 11/4/09 - COMMERCE - BILLS 090671 & 090672 govern this process, and I'm going to wait to find out from you what your due diligence suggests. I think there's some things that we can do, and we have to carefully craft that as not to violate any of those procurement laws and fair practices. The other concern I would have -- and I'll probably wait for Director Dow. You have a new title and I'll get it on the record -- All-Things-Commerce Dow to give us an idea of the potential for reciprocity from other municipalities that try to kind of penalize us for doing that. And I want to go on the record saying early that barring any major revelations today, I'm for this legislation, but we need to be careful not to wind up in court over it and take one giant step forward and three backwards. So we need to do that due diligence. Thank you, Mr. Chairman.
Thank you, 11 11/4/09 - COMMERCE - BILLS 090671 & 090672 Councilman. Any questions for this witness? (No response.)
Our next witness is Jackie Hill from the Pennsylvania Minority Business Enterprise Center. And let me note for the record we've been joined by Councilman Bill 14 Green.
Good morning, Ms. Hill. We have copies of your testimony. Please feel free to summarize it, if you'd like.
Okay. S. Commerce Department to make sure that throughout the State of Pennsylvania minority businesses were included in the 12 11/4/09 - COMMERCE - BILLS 090671 & 090672 ARRA dollars. When Mrs. Clark was here last week, Councilman Clarke asked us a specific question that I'm not sure was answered in regard to the leverage that we had in terms of being able to get some support to get things done. I report as the Director of the program to David Hinson, who is the national Director of Minority Business Development Agency. He in turn reports to Secretary Gary Locke and Vice-President Joe Biden. In turn, on Mondays there is a conference call with governors across the country and the issues, concerns that we have around municipalities, cities, authorities who are not working with us and responding to our concerns are discussed in those conversations. If it narrows down to a particular state or a particular city, then, of course, that would not be one of the conference cold calls. That would be more of a one-on-one type call. So we do have ability to make sure that the 13 11/4/09 - COMMERCE - BILLS 090671 & 090672 information is properly communicated. One of the things too that I want to make sure that people become more aware of and that we become more progressive in our thought process, almost 60 percent of businesses in the City of Philadelphia are comprised of either white females or ethnic minorities. We are looking at a database -- and, Mr. Dow, you can correct me if I'm wrong -- of about 1,269 minority businesses that are certified with the City of Philadelphia. If that is the universe from which we are pulling minority-owned businesses for contract opportunities, we are leaving out most of the businesses that are -- the majority of businesses that are operating in the City. Now, I have heard, I think like everyone else, the rumor mill about the OEO Office changing its certification process and opening up to take on other certifications not just with the City of 14 11/4/09 - COMMERCE - BILLS 090671 & 090672 Philadelphia. But I think when you think about the shift in demographics, that our country will be 50 percent minority, 50 percent non-minority by 2040, and if you drill down to the non-minority, white females will be the majority of that segment of the population. So you're looking at 80 percent of America -- a classification of people falling into a minority category. If we do not position ourselves to engage these companies in business opportunities, how do we intend to grow the City of Philadelphia and the United States of America, because this is going to impact us. We are there now. If we're almost 60 percent minority business ownership with a combination of females and ethnic minorities, we are there now. And the average-sized business in Philadelphia from the research we've done is about $100,000. That's not a large operation. The work of the Enterprise Center is to grow existing businesses, to 15 11/4/09 - COMMERCE - BILLS 090671 & 090672 take them to the next level. Our new model -- most of you are aware of the Enterprise Center as an incubator. In 2004, we changed that model and we do what we call business acceleration. We provide services to grow businesses that are generating a quarter of a million dollars or more in revenue and that have the capacity to grow, create jobs and generate tax revenue. So I would hope that we would use the stimulus opportunity as an opportunity to fix what has been a broken system, which allows for more inclusion of minority businesses, because that is going to be the backbone of the economy. It is the backbone of the economy for our city. So even if the economy were to take a shift in a positive direction and we have excluded the majority of businesses in the City who are not participating in some grand scale, then we still don't have job creation and a tax revenue base that we can pull from.
16 11/4/09 - COMMERCE - BILLS 090671 & 090672 So at this point, I'd like to stop and answer any questions that any of you may have.
Thank you, Mr. Chairman, and thank you for that testimony. I was intrigued by the conference call with the governors.
And did I understand you to say that the average participant like yourself or a subcontractor or people providing technical assistance listen in and participate in that conference call with the governors?
Yes. We've had the opportunity to do that on one occasion, but we have a regular call with the Commerce Department team, minority business development team to push the information up, provide reports on a regular basis. That's how we found out 17 11/4/09 - COMMERCE - BILLS 090671 & 090672 who was responsible for the City of Philadelphia in terms of them giving us information of people that we can contact and reach out to. We own the relationship with Secretary Creedon, who is the Chief Implementation Officer for the State of Pennsylvania, and we -- because our contract is for Pennsylvania, not just the City of Philadelphia. And so they have been providing us with the information that the City is providing them with in terms of who point people are and what activities have occurred.
On that conference call, do they discuss both the formula side of the house and the competitive grant side of the house? Are both issues discussed?
We're not in on that part of the conversation as much as what our self-interest is.
Okay. What are some of the top issues or impediments that were discussed in those conference 18 11/4/09 - COMMERCE - BILLS 090671 & 090672 calls, just to give us a heads-up not to be able to repeat some of the problems other municipalities have had? What were some of the recurring issues or barriers to participation that stuck in your mind?
The City of Philadelphia I don't think is unique in not being able to have a system to get the money out in a timely fashion. I think the thought process was there, but the ability to actually implement is a whole different ball game. So I think getting the money out. Now, the downside of getting the money out was that there was no 17 legislation, executive orders, whatever steps people have taken to ensure that the dollars that President Obama's intent, that it would help low income, small business and minority communities, there was nothing there attached to it on the front end. So you have prime contractors. Eighty-eight percent of Pennsylvania's dollars in construction 19 11/4/09 - COMMERCE - BILLS 090671 & 090672 have been let. It's out there on -- it's been awarded.
Eighty-eight percent of construction dollars for the State of Pennsylvania have been let.
Under construction, that's right. So now we're running behind people, because we only got the Governor to sign the Executive Order last week to say that you're required to have a minimum of ten percent participation, and these are private-sector businesses versus the City or some other body where we have people like yourselves who can hold folks accountable. So that's one of the challenges. So that's probably not a unique one, but the whole minority inclusion piece and making sure that those dollars trickle down to the ground level for the people in our neighborhoods 20 11/4/09 - COMMERCE - BILLS 090671 & 090672 and communities is where the challenge is, because the channels don't go that deep.
So we let the contracts and then said, Oh, by the way, participation is required, no 8 regulations?
That's exactly right. And even in fairness to them, you know, you gave me the money, now you're kind of pulling me back in. Whereas, even though the City of Philadelphia has not let a lot of the money out, the 157 million, and when you look at the pitiful website, it says we spent $773,000, I guess in this case that's a good thing, because if we can attach the goals on the front end for the departments, that at least allows us to capture them and not chase them.
Is there a special certification required for companies dealing with Recovery dollars?
No. What we've seen 21 11/4/09 - COMMERCE - BILLS 090671 & 090672 is they've been -- certifications in general have been accepted across the board.
Yes. Because we actually have with our national Director's goal is -- one of our initiatives is to identify five companies in the Philadelphia market and take them to a hundred million dollars. We are cross-pollinating with other cities and areas to get whatever it is we need to bring those resources to bear to be able to make those kinds of things happen. So it is not limited, and if there's a company over there that has the capacity, as long as they agree to mentor and match Philadelphia-based companies, we will help them get to the table to get them engaged.
We won't belabor this discussion with what the intent of the hearing is, but we're going 22 11/4/09 - COMMERCE - BILLS 090671 & 090672 to look forward to drawing upon your experience with these conference calls to give us some guidance locally, particularly when it comes to rule changes, reg changes, different opportunities that are on the horizon, best practices and worst practices so that we don't repeat those mistakes, but take advantage of their experience in this.
And there is an additional document which I didn't circulate publicly, but I did make available for each of you. This is a plan that was laid out by the U.S. Commerce Department and Minority Business Development Agency that was provided to us in July in terms of what the national plan is for minority inclusion. So I would appreciate if you take a few minutes to kind of go through and understand what -- it's a much larger goal and there are people at a national level having the right conversation. 23 11/4/09 - COMMERCE - BILLS 090671 & 090672
Just final question. In your conference calls, did it sound like there's a second round coming or the possibility?
Thank you, Councilman. Any other questions for this witness? (No response.)
Let me note for the record we've been joined by Councilwoman Blondell Reynolds Brown, the 24 11/4/09 - COMMERCE - BILLS 090671 & 090672 Vice-Chair of the Committee, to demonstrate this is not an all-male committee, but there is gender inclusion. Our next witness is Liberty Biomass. (Witnesses approached witness table.)
My name is Henry L. Neese Smith and this is Ms. Vionace Martin from Liberty Biomass.
Henry Neese Smith from Liberty Biomass of Philadelphia, a renewable energy company that has a mission to provide alternative and renewable energy and coordinate that to the disadvantaged neighborhoods of Philadelphia. This project allows us to provide jobs, job training and other type of conservation initiatives for the 25 11/4/09 - COMMERCE - BILLS 090671 & 090672 neighborhood of Mantua and other neighborhoods of the City. First of all, I'd like to thank Councilman Curtis Jones for his cooperation, along with Councilwoman Jannie Blackwell, who assisted us in trying to develop our proposal. And we have submitted a proposal to almost all of the City agencies, and we have not been able to get definitive cooperation from them, and what we're asking this morning is what must we do and how must we -- how must we -- what must we do to access some of the stimulus advantages that would be put forth in the next few weeks or so for this project.
Vionace Martin. We were promised an RFP through 11/4/09 - COMMERCE - BILLS 090671 & 090672 the Sustainability Office. In December of 2008, we met with Mark Alan Hughes. Prior to that, we already had a relationship with Bill Toffey from -- he was the Energy Manager. He recently retired. Prior to that, he was with the Water Department. But we were promised an RFP. Our stance was that we are a minority business who is small, and if we are not a Gamesa or one of the other big companies, renewable energy companies, how do we obtain some of the funding. And an RFP seemed to be an appropriate way, and the stimulus dollars at that time was new and everyone was hopeful. Since that time, we've had follow-up with those offices, and the response has been an RFP has been drafted. However, it's not going to be released because the City does not want to be responsible for the separation of any waste streams. As you know, Biomass deals with municipal waste, wood waste or 27 11/4/09 - COMMERCE - BILLS 090671 & 090672 any type of crop waste and we would like to convert that into energy. But the short answer is, no, there is no RFP. There has not been an RFP. There will not be an RFP. And we will be very happy and pleasantly surprised if an RFP is released.
Thank you for your testimony. Are there questions from members of the Committee? (No response.)
Is there a volunteer from the Administration? (Witness approached witness table.)
When you put it that way. Councilmember, Steve Agostini, Budget Director and Recovery Officer. I will go and look into this as soon as I get back to the office. I am not aware of it. I will ask some questions and try to get a response back 28 11/4/09 - COMMERCE - BILLS 090671 & 090672 to you and to the individuals to my left. I don't know about it. I know that we've had some issues getting RFPs out, primarily because the funding hasn't arrived. For the energy block grant, we received notification of that, I believe, September 28th or September 29th that we actually had an award. I know the dollars have not materialized. But I will go back and check and report back to you.
Thank you. Mr. Agostini, we have a problem also in award versus available revenue.
Can you for the record kind of articulate that and then any ideas how we address that issue, because it's nice to get an award letter, but --
Councilmember, that has become probably the most 29 11/4/09 - COMMERCE - BILLS 090671 & 090672 significant issue for us, because it's one thing to have an award letter and be told that either on a formula basis or on a competitive basis you've been awarded some dollars from the Recovery grants. It's quite another thing when the dollars don't materialize into the City's treasury that then gives us the ability to spend those dollars. As I mentioned once before and I think I mentioned this to you specifically, on average we're waiting almost two months between the actual award being proffered to us and the receipt of funds, and in some cases, we're still waiting. There's one grant, I believe it's the COPS grant, that would give us the additional 50 officers where we are about to break four months in terms of waiting from the award date to the delivery of funds to the treasury. It's one of the things that I hope we can get addressed. It is a subject of a draft e-mail I have that's 30 11/4/09 - COMMERCE - BILLS 090671 & 090672 going to the Recovery Office in Washington and Mr. DeSeve, and I'm happy to provide a copy of that to you so you can see. I am asking and I'm trying to find out. I don't have a good answer as to why there's that holdup.
Also, having talked to both members of -- well, at least two members of the Philadelphia delegation to Washington, it's on their radar screen as well to try to figure out a solution to that problem so that we can get to implementation quicker with some type of --
Any more questions or comments from this panel? (No response.)
Thank you. Mr. Agostini, please spend some time with our witnesses before they 31 11/4/09 - COMMERCE - BILLS 090671 & 090672 leave.
Thank you. Our next witness is Hanford Jones. (Witness approached witness table.)
Members of the Committee, good morning. My name is Hanford Jones. From '77 to '89, I ran the Maryland Minority Contractors Association. From 1990 to 2007, I worked for the City MBEC and retired in '07. I just came from Procurement this morning and looked at 28 contracts. The 609 review of stimulus-let contracts by the Water Department shows that black contractors aren't faring well with stimulus monies. And that's nothing negative to say about the minorities and/or women who have gotten the DBE awards under stimulus, but in addition to a ten percent advantage for the majority of firms who win City contracts by 32 11/4/09 - COMMERCE - BILLS 090671 & 090672 which -- when I say "majority," the white firms who are currently winning 99 percent of all City-let public works contracts are now at another advantage to keep that dynasty of awards by having a ten percent higher number than somebody who is not a local business enterprise. So be it. However, I would hope that this Administration also looks at what it can do to advantage black businesspeople who are in construction, because I don't want to read it now, but out of 28 contracts, over of them have no black 15 subcontractors. 16 Now, when I worked in MBEC, my 17 superiors would always tell me, We can't 18 guarantee that they could be black. 19 Well, but how many contracts do we have 20 to watch go without black participation 21 before it becomes a civil rights lawsuit 22 or some negative adverse thing that black 23 people have to do to survive? 24 I would hope that this Council 25 itself embarks upon reviewing the 33 11/4/09 - COMMERCE - BILLS 090671 & 090672 Procurement-awarded information as I've done and see how we're getting left out. Not only by blacks who live in the City. Most of these contractors who are meeting the DBE requirements aren't even from Philadelphia. So you're losing out on local subcontractor dollars and you're losing out on an actual culture of businesspeople, because in another five years, with these kinds of reports, there's no need to have a business if you're black and try to get work with the City as a sub, because these contractors are using everybody else but blacks. And, again, that's not the issue. The issue is who is not getting utilized. And I would hope that this honorable Council takes this very seriously, because at some point, equal opportunity becomes a dream still.
Thank you for your testimony. Are there any questions for this witness? 34 11/4/09 - COMMERCE - BILLS 090671 & 090672 (No response.)
Thank you very much. Is there anyone else here to testify on either of these bills? (No response.)
Seeing none, we will move from our public hearing into a public meeting to consider Bills No. 11 090671 and 090672. The Chair recognizes Councilman Clarke for a motion on Bill No. 090671.
Thank you, Mr. Chairman. I move that Bill No. 16 090671 be reported out of committee with a favorable recommendation. (Duly seconded.)
Bill No. 35 11/4/09 - COMMERCE - BILLS 090671 & 090672 090671 is reported out of committee with a favorable recommendation. The Chair recognizes Councilman Clarke for a motion on Bill No. 090672.
Thank you, Mr. Chairman. I move that Bill No. 8 090672 be reported out of committee with a favorable recommendation and a request for suspension of the rules to allow reading at the next session of Council. (Duly seconded.)
Bill No. 20 090672 is reported out of committee with a favorable recommendation and a suspension of the rules to allow for first reading at our next Council session. This concludes our public 36 11/4/09 - COMMERCE - BILLS 090671 & 090672 meeting. Thank you very much.
Thank you. (Committee on Commerce and Economic Development concluded at 11:50 a.m.) - - - 37 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 November 4, 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.)