Committee Hearing, June 2, 2008

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, June 2, 2008 10:15 a.m. - - - PRESENT: COUNCILWOMAN MARIAN B. TASCO COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 080500 - An ordinance authorizing the Director of Housing, on behalf of the City, to file applications with the United States Department of Housing and Urban Development (HUD) for a Community Development Block Grant (CDBG)... - - - 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. We're sorry we're late. We were present for the Mayor's press conference to announce the appointment of the Commissioner for the Department of Human Services. So we were there. The Committee on Finance will come to order and we will have the Clerk read the title of the bill.

An ordinance 12 authorizing the Department of Housing, on behalf of the City, to file applications with the United States Department of Housing and Urban Development for a Community Development Block Grant; to participate in the HOME Investment Partnership program and the Emergency Shelter Grant program; and for a Housing Opportunities for Persons with AIDS grant; with the Commonwealth to obtain grants under the Act of April 12, 1956, Public Law 1449, Section 4, as amended, to prevent and eliminate blight; authorizing the Director of Housing and 3 6/2/08 - FINANCE - BILL 080500 Director of Commerce to obtain other grants from the Commonwealth; authorizing the Director of Commerce to use the Section 108 Loan Guarantee Program; and authorizing the Director of Housing and the Director of Commerce to enter into all understandings and assurances contained in such applications and take all necessary action to accept the grants, all under certain terms and conditions.

Thank you very much. The Chair recognizes Andrew Altman, Department of Commerce, and Deborah McColloch, Acting Director of Housing. (Witnesses approached witness table.)

Good morning.

Good morning.

Would you please state your name for the record. 4 6/2/08 - FINANCE - BILL 080500

Andrew Altman, Deputy Mayor for Planning and Economic Development and Director of Commerce. Good morning, Councilmember Tasco and other members of the Finance Committee and members of the City Council. I am Andrew Altman. I'm the Deputy Mayor for Planning and Economic Development and Director of Commerce. I'm here today to testify on behalf of the Administration on Bill 080500, which permits the City to apply for the federal Community Development Block Grant, HOME Investment Partnership funds, Emergency Shelter Grant and Housing Opportunities for Persons with AIDS, HOPWA, funds and for state funds from the Department of Community and Economic Development. The bill refers to the Year 34 Consolidated Plan, which must be submitted to the United States Department of Housing and Urban Development, and which details our proposal for spending these and other related funds for affordable housing, 5 6/2/08 - FINANCE - BILL 080500 economic development and other activities. In order for the City to receive funding from HUD, the City is required to submit an approved Consolidated Plan to HUD no later than August 16, 2008. With me today is Deborah McColloch, Acting Director of Housing, who will present detailed testimony on the Consolidated Plan, and available to answer questions are representatives from the Department of Commerce, which administers funds allocated for community economic development, the Redevelopment Authority, the Philadelphia Housing Development Corporation, the Philadelphia Commercial Development Corporation and the Philadelphia Industrial Development Corporation. In past years, the Neighborhood Transformation Initiative Program Statement and Budget has usually been heard by City Council at the same committee hearing as the Consolidated 6 6/2/08 - FINANCE - BILL 080500 Plan. This year I expect that the required resolution approving the proposed NTI Program Statement and Budget will be introduced in Council on June 5th and that a separate hearing will be scheduled by City Council. Fiscal Year 2009, Year 34 of the Community Development Block Grant, will be a challenging one from a budgetary perspective. CDBG, the single largest resource that the City receives for housing and community and economic development efforts, continues to be cut by the federal administration. 7 million in new CDBG funds. 6 million. 7 million. HOME Investment Partnership funding has also been reduced for FY 2009. We are fortunate that several years ago City Council, working with 7 6/2/08 - FINANCE - BILL 080500 advocates, the Administration and the state Legislature, approved the Housing Trust Fund, which has served in some measure to mitigate the effect of declining federal resources. The current slowdown in the economy, however, has led to reduced earnings for the Trust Fund, which is funded through increased recording fees and real estate transactions. As you know, the Mayor and City Council have agreed to add $3 million in General Fund resources to the Housing Trust Fund in FY 2009. The Nutter Administration is committed to using our resources effectively and efficiently. As Deputy Mayor for Planning and Economic Development, I oversee departments that are responsible not only for planning but implementation. My office will act as an ombudsperson within City government to make the City's relationships with the public, developers and others more open, efficient and transparent, and I look 8 6/2/08 - FINANCE - BILL 080500 forward to working closely with members of the Council to create jobs and make Philadelphia an even better place to live and work. Deborah McColloch, Acting Director of Housing, will now present detailed testimony on the Consolidated Plan, and we will be happy to answer questions that you or members of the Council may have. Thank you for the opportunity to testify today. MS. McCOLLOCH: Good morning, Councilwoman Tasco and other members of the Finance Committee and members of City Council.

I am Deborah McColloch, Acting Director of Housing. As Deputy Mayor Altman stated, I will present more detailed testimony on behalf of the Administration on Bill 080500, which permits the City to apply for the federal Community Development Block Grant, HOME Investment Partnership funds, Emergency Shelter Grant and Housing Opportunities 9 6/2/08 - FINANCE - BILL 080500 for Persons with AIDS, HOPWA, funds and for state funds from the Department of Community and Economic Development. The bill refers to the Exhibit A, which is the Year 34 Consolidated Plan, the required HUD funding application. The Consolidated Plan also includes a budget for the Housing Trust Fund, NTI funds allocated for housing activities, and related funding sources. The Year 34 Consolidated Plan, the fiscal year which begins July 1, 2008, details our plan for spending monies from five primary federal sources. The proposed budget generally carries forward existing programs and commitments. The first source of funds is the Community Development Block Grant, which is still the largest source of funding for affordable housing, aside from the subsidies which the Philadelphia Housing Authority receives directly from HUD. 9 million from Year 33, or about four percent. Other CDBG-related resources include program income, such as the sale of land, and prior years' reprogrammed funds, which are funds which can be liquidated from prior years' budgeted activities. I am happy to tell you that despite the continued reduction in federal funding the Proposed Year 34 Consolidated Plan maintains core housing and community economic development initiatives and programs. The City remains committed to affordable housing production and other key housing services. Within the Consolidated Plan budget, continued funding is proposed for for-sale housing, including both new construction and rehabilitation. Continued funding is proposed for rental ventures financed in conjunction with the Low-Income Housing Tax Credit and special needs housing to assist the homeless and those with other special needs. 11 6/2/08 - FINANCE - BILL 080500 In addition, homeownership and rental housing production are proposed for funding using state Housing and Redevelopment Assistance funds and proceeds from the Housing Trust Fund. 308 million in FY 2009. 380 million in Fiscal Year 2009. Most of this decrease, however, is explained by the budgeting of NTI bond proceeds for rental housing in past years. Because of bond restrictions, these funds could not be used to support rental housing funded with Low-Income Housing Tax Credit and, therefore, were not available for rental developments. This NTI line item is proposed for reallocation to other housing activities, such as Settlement Assistance grants, the Adaptive 12 6/2/08 - FINANCE - BILL 080500 Modifications program and a new mortgage foreclosure prevention initiative. The mortgage foreclosure initiative will support Community Legal Services to expand assistance to low-income homeowners facing foreclosure and will also provide additional housing counseling services through OHCD's existing housing counseling agencies. These activities will support the Residential Mortgage Foreclosure Diversion Pilot Program. The Basic Systems Repair Program, BSRP, is proposed to receive a $400,000 reduction in CDBG funding in Fiscal Year 2009 due to the overall reduction in new CDBG entitlement funding. In addition, NTI resources are no longer available to support BSRP. Some of this reduction in funding for BSRP may be able to be made up through the increase in the Housing Trust Fund agreed to by the Mayor and City Council. Operating costs associated with 13 6/2/08 - FINANCE - BILL 080500 housing and community development are largely CDBG funded.

Operating costs for the Office of Housing and Community Development, the Redevelopment Authority, the Philadelphia Housing Development Corporation, the Commerce Department, the Philadelphia Commercial Development Corporation and the Philadelphia Industrial Development Corporation will be reduced by three percent in Fiscal Year 2009 from anticipated actual expenditures in Fiscal Year 2008. The year-to-year comparison of these costs shown in the Proposed Consolidated Plan appears to be an increase. In previous years, however, the budget for operating costs was understated and underfunded. This year the budget is aligned with actual anticipated expenditures and resources. Major delegate agencies such as PHDC and the Redevelopment Authority will be held to the amounts budgeted in the Consolidated Plan. The Administration does not anticipate any 14 6/2/08 - FINANCE - BILL 080500 layoffs of staff due to the three percent funding reduction. The second primary source of funding for Year 34 is the federal HOME program. 8 million in new HOME entitlement funding in Year 34, a decrease of $478,000. While CDBG funds can be spent for a variety of activities, including economic development, HOME funds are restricted to housing activities, including construction and rental assistance. In addition, in Year 34, the City will receive $81,000 in HOME funds specifically identified for the American Dream Down Payment Initiative, a 60 percent reduction from Year 33. The City uses these funds for downpayment and settlement grant assistance to make more affordable for lower income households homeownership projects which it supports in areas of rapid appreciation or where the appraised value of the houses being sold makes affordability difficult for 15 6/2/08 - FINANCE - BILL 080500 low- and moderate-income families. The third source of federal housing funding which is included in the Year 34 Consolidated Plan is the Housing Opportunities for Persons with AIDS, HOPWA, program, which the City of Philadelphia administers for a five-county metropolitan region, including Philadelphia, Bucks, Chester, Delaware and Montgomery Counties. The federal formula for HOPWA funds is based on the historical and contemporary AIDS caseload in the region. 052 million in HOPWA funds for the five-county region, an increase of 402,000 from Fiscal Year 2008. Rental assistance to allow persons with AIDS to rent their own apartment or home is the largest single expenditure of HOPWA funds. The fourth source of federal funding for housing in Year 34 is the Emergency Shelter Grant, ESG, program. 311 million in 16 6/2/08 - FINANCE - BILL 080500 ESG funds in Fiscal Year 2009. These funds, which support emergency shelter activities, will continue to be administered by the Office of Supportive Housing. In the past, another major source of funding for housing has been the Section 108 loan program. Under the Section 108 loan program, the City is allowed to borrow funds against future CDBG entitlement grants. In the past, the City used the Section 108 loan program to provide debt financing for economic development ventures and to support specific housing development ventures. While economic development Section 108 loans are self-sustaining through the repayment of debt, subsidies for housing funded with Section 108 loans must be repaid from the CDBG entitlement funding. The City has nearly reached its Section 108 loan program borrowing capacity and, therefore, in Year 34, no 25 new Section 108 loan authority will be 17 6/2/08 - FINANCE - BILL 080500 sought for housing activities and budget authority for a relatively modest loan of up to million is requested for 5 economic development activities 6 administered by PIDC. 8 million 8 in proposed funding from the state 9 Department of Community and Economic 10 Development's Housing and Redevelopment 11 Assistance program.

These funds will be 12 used to support home repair grants 13 through the Heater Hotline and Tier 14 parts of the Basic Systems Repair Program 15 and to support large-scale new 16 construction homeownership opportunities. 17 The City looks forward to continuing to 18 work with the Rendell Administration and 19 DCED to bring critical resources for 20 housing to the City. 21 The Plan also contains a 22 recommended budget for funds from the 23 Philadelphia Housing Trust Fund. Line 24 items in the Consolidated Plan reflect 25 the priorities recommended by the Housing 18 1 6/2/08 - FINANCE - BILL 080500 Trust Fund Oversight Board, as agreed when Council passed the Trust Fund legislation three years ago. The budget in the Proposed Plan includes the allocation of $1 million in General Fund revenue initially proposed by the Mayor. It does not include the additional million in General Fund revenue, for a total of million, as adopted by City Council in the City's Operating Budget. This additional 2 million will be allocated to specific line items through an amendment to the Consolidated Plan based upon recommendations from the Housing Trust Fund Oversight Board. Since Housing Trust Fund earnings from recording fees are down because of the slowdown in the economy, the additional General Fund support is most timely and welcome. We, therefore, encourage passage of this Proposed Plan. In order for the City to receive funding from HUD, the City is required to submit an 19 6/2/08 - FINANCE - BILL 080500 approved Consolidated Plan to HUD no 3 later than August 16, 2008. In order to permit expeditious submission of the Consolidated Plan to HUD, suspension of the rules to permit first reading at the next Council session is requested. Thank you for this opportunity to present this testimony. I will be happy to answer any questions that you or other members of Council may have.

Thank you very much. I have several questions to ask. On of your testimony, you talk about the reduction of the funds for affordable rental housing. What do you see the impact of that being on the City and people who need rental housing? MS. McCOLLOCH: That reduction in funds was from the NTI bond proceeds budget and those funds, although they were budgeted to support rental housing, they were never able to be used because of the restrictions on the bond proceeds. 20 6/2/08 - FINANCE - BILL 080500 They could not be matched with low-income housing tax credits. So by reallocating those funds to other programs, we'll be able to spend them and we'll be able to continue to move forward with the Low-Income Housing Tax Credit developments that have received funding and will apply again. There will be another round of tax credits in the fall and I assume that there will be another set of applications from Philadelphia in the fall.

Well, since you mention the NTI, let's just go there, because it may answer a number of the questions I have. Although we're going to have a separate hearing on the resolution for the NTI Program Statement, can you outline the key areas in the Consolidated Plan that were funded with NTI funds in prior years that will not be funded this year? And how long were they carried in the Community Development Block Grant 21 6/2/08 - FINANCE - BILL 080500 plan? MS. McCOLLOCH: Last year -- well, let me answer the first question first. They were carried in the Plan for the last five years, since the initiation of the NTI bond proceeds. Last year, we had approximately $12 million in NTI funds in our Con Plan and this year we have 2.4, I think is the number, and the funds this year are supporting programs in part that could not be supported with federal funds. That includes the Settlement Grant Assistance program and the Tangled Title program. It also provides funding for the Adaptive Modifications program and then support for the new initiative for mortgage foreclosures. It allocates a million dollars for that. Funding in past years for NTI that did not appear in the budget this year was funds that were used for the Basic Systems Repair Program and then some other programs that were listed last 22 6/2/08 - FINANCE - BILL 080500 year that did not move forward, such as the Equitable Development Strategy that's being rethought and will be presented in the NTI Program Statement and Budget when that's brought forward to City Council, the 1.9 that we just mentioned, 1.9 million that was allocated for affordable rental production but could never be used, and then some funds that were allocated for the Employer-Assisted Housing program, and I think that's all.

Let me just kind of figure this out. If the money could not have been spent for the rental housing, why was it appropriated? MS. McCOLLOCH: It was allocated to that budget because there was an expectation that NTI bond proceeds could support rental developments, but it could not be used with Low-Income Housing Tax Credits and then there were not other rental developments that met the requirements of the NTI bond proceeds. So the funds were allocated, but could 23 6/2/08 - FINANCE - BILL 080500 not be spent.

Well, did we know that at the time? MS. McCOLLOCH: We knew at the time that they couldn't be committed to Low-Income Housing Tax Credits, but there was an expectation that they could be used for other developments with criteria that were outlined in the FY08 NTI Program Statement and Budget. There were specific neighborhoods and they were to be used in neighborhoods with, I believe, rapidly appreciating values. There was a whole set of criteria by which we thought we could spend it, but it turned out we didn't have development deals that were brought forward that met that series of criteria.

We'll have a further discussion about this in more detail at the time we have that hearing. MS. McCOLLOCH: Okay.

You talk about a Residential Mortgage Foreclosure 24 6/2/08 - FINANCE - BILL 080500 Diversion Pilot Program. Explain that, please. MS. McCOLLOCH: That's the program that was suggested by Judge Darnell Jones and Judge Rizzo to assist families whose properties have been scheduled for foreclosure. So far two months of foreclosures have been held. Each of those families is being offered the opportunity to receive additional housing counseling and to try to assist them in coming to some understanding to avoid the foreclosure. There's an entire process that's been established through work with the judges that we're working with them -- in consultation with them and with our housing counseling agencies to be able to provide additional assistance to avoid the foreclosure.

Thank you. Councilman Goode. I have other questions, but I won't monopolize it. 25 6/2/08 - FINANCE - BILL 080500

Thank you, Madam Chair. Good morning, Mr. Altman.

Good morning.

During the Operating Budget hearings, of course, I raised several times the issue of the Small Business Loan Guarantee Fund, and one of the responses was that there may be a use of both operating and Community Development Block Grant resources to launch that program. I received -- actually, the Council President received a letter from Clay Armbrister, the Mayor's Chief of Staff, saying that that program would be launched now strictly for the use of CDBG funds that were already going to be allocated to PIDC. Can you confirm that on the record?

I just wanted to check on the source. Yes, that is indicated here and I can confirm that for the record that those funds are in reserve for this program and... 6/2/08 - FINANCE - BILL 080500

And is there a need to reprogram funds or will those funds be available -- is there a need to do an amendment to the CDBG budget or will those funds be available as soon as the program can be up and running?

I believe, and let me just confirm, I believe they would be available as soon as the program is defined, and we've been working, Councilmember, since the Commerce Department hearing, we've taken a number of steps that you're probably aware of in terms of working with the banks to further refine that program. We've actually come up with some different loan criteria, the size of the loans, the credit range, the equity, the age of the businesses. We actually have some proposals that have been going back and forth. We've actually spoken with PIDC about taking a lead role in the administration of that program. So we've had a number of 27 6/2/08 - FINANCE - BILL 080500 conversations to define it, but the funds would be there and would be available as soon as that's finalized, and we'll work with you on that.

Thank you very much. Just one question for Ms. McColloch and just for the record as well. The Proposed Plan is in compliance with Bill No. 000716 allocating the funds for economic development by community development corporations? MS. McCOLLOCH: Yes, it is.

Thank you. Thank you, Madam Chair.

The Chair recognizes Councilman Greenlee.

Thank you, Madam Chair. Good morning. MS. McCOLLOCH: Good morning.

Ms. McColloch, in your testimony on the top of , you talk about state money 28 6/2/08 - FINANCE - BILL 080500 that can be used for the Heater Hotline and Tier 1 part of the Basic Systems Repair. How does that translate into -- are more people going to be able to be helped through that for next year, or how does that compare with the money we've spent before? MS. McCOLLOCH: The state funds?

Well, just generally. I guess what I'm looking at is, are we going to be able to help more people through that program with this state money or does that replace something, if I'm making sense here? MS. McCOLLOCH: As budgeted by the state, it is an increase over last year's funding from the state. Last year we got 6.5 million, and we're expecting 6.8 million this year. So that's a slight increase in state funding. So it would be able to serve some --

A little bit more. 29 6/2/08 - FINANCE - BILL 080500 MS. McCOLLOCH: A little bit more, yes.

All right. Thank you. Thank you, Madam Chair.

Any other questions? Let me just recognize that we have a quorum in the presence of Councilwoman Blondell Reynolds Brown, Councilman Bill Greenlee, Councilwoman Jannie Blackwell, Councilman Wilson Goode, Jr., Councilman Jim Kenney and Councilman Frank DiCicco. Mr. Altman?

Councilwoman, I just wanted to say I may need to excuse myself. The Mayor had asked his cabinet to come to the service at the Basilica this morning 30 days marking the -- since the death of the officer. So I may have to leave in about 15 minutes. And I'll come back if it's still in session, but if there's anything for me, I'd be happy 30 6/2/08 - FINANCE - BILL 080500 to...

Okay. Thank you. Councilman Clarke, you have questions?

Yes.

Your light is on.

Yes. Is it okay?

Yes.

Thank you. Real briefly, I was going to wait, and I understand you have to leave. Mr. Altman, with respect to -- and I know we're here to talk about the Comp Grant, CDBG budget, but in a general sense, the housing market. We obviously are in a slump. Not as bad as other cities, but we are experiencing some downturns, as witnessed our reduction in funding for recording fees and the transfer tax. Are we going to look at any local initiatives that can conceivably, to some degree, 31 6/2/08 - FINANCE - BILL 080500 stimulate the housing market as we move forward or are we simply going to allow the national market to dictate how we are in the City of Philadelphia?

Well, I think we'd like to look at some initiatives to see what we can do to stimulate the housing market. One of those that actually is something, I guess, we will speak a little bit more about at the Neighborhood Transformation, the NTI budget hearing, for example, is employer-assisted housing. It's an area where there's been some success in terms of what the University of Pennsylvania has done. Temple University has now launched a program putting funds in to actually help give assistance to potential home buyers for major employers who match those dollars, so we can actually generate some more demand for the housing product that's out there. I think we also want to look carefully at some of our zoning and 32 6/2/08 - FINANCE - BILL 080500 regulatory incentives. We're right now undertaking a review of that, what are some of the barriers to housing and where we can create some more incentives for developers, either through expediting processing of certain kinds of projects, whether they're sustainable development projects or in certain areas of the City or a certain number of units. I think we want to look at that. So I think we have to look at a number of things in order to help the housing market. Like you say, we haven't had the dramatic impact that other markets have had, but nonetheless, there is a slowing, and I certainly hear from the development community, both small and larger developers, a lot of concern and anxiety they have now about the freeze in the market, so to speak.

Right. I know in earlier hearings I had asked you a question about the Administration's position on the inclusionary housing 33 6/2/08 - FINANCE - BILL 080500 policy, and at that time you say you weren't sure, you wanted to look at a number of things, because all of those recommendations or proposals cost money, the sustainability issue and green housing initiatives and all of that. What you just said as it relates to looking at some things to help stimulate the market, could that be a part of a discussion as it related to inclusionary housing possibly? Because when we had our testimony, all the developers said, Well, it's going to cost money.

That's right.

So we were looking at beyond just providing the affordable component. We want to figure out a way to stimulate the market, because if nobody is building houses, then inclusionary housing doesn't matter. So I'm hearing that you guys are looking at that?

Yeah. I think, Councilmember, what we need to talk about 34 6/2/08 - FINANCE - BILL 080500 is a broader look at the housing policy. So what I mean by that -- which is what you're suggesting. I mean, that we don't just look at the inclusionary issue. We have to look at the whole question of how to stimulate the housing market. So you don't just look at that in isolation, because, as you know, as you say, there are significant costs right now in terms of the development of housing. The market is not what it was. There is some price declines that we've seen in different areas. So I think we want to undertake a kind of broader look at housing stimulus.

Okay. So as we hopefully move forward on our inclusionary housing issue, we did Part 1 in the last Administration. In Part 2, who should we be working with in the Administration?

I think right now you work with me, and we will have a team of people. I mean, everyone in the 35 6/2/08 - FINANCE - BILL 080500 Mayor's Office, Wendell Pritchett, Deborah is here. We'll have the Planning Department. The Commerce Department will put together a team to look at the whole issue. And, again, I would say not just the inclusionary housing, but the whole housing policy issue, housing production issue across the board.

Yeah. I understand.

But absolutely, you can look to me.

Actually, Councilman DiCicco and Councilwoman Blackwell, we've had several meetings with the developers, the market-rate developers, and we got a good sense of the fact that we needed to look at a broader strategy to help them generally and then they'd be in a better position to help us. If there is -- and I can tell you here, there's going to be a proposal coming down the pipe to stimulate the 36 6/2/08 - FINANCE - BILL 080500 local housing market. Should that go directly to you or -- let me cut to the chase.

Yeah.

I'm going to be coming up with a proposal to stimulate the local housing market, and I think it has some merit. We'll see. At the end of the day, it's going to cost money, but I think it's a process that will allow us to at the end of the day, worst-case scenario, even itself out in terms of revenue to the City and possibly even make a little money. So should that go directly to you?

Yeah. I think two things. One is I think to the Mayor. I think sitting down with the Mayor and the Mayor, me and others in the Administration. But certainly it's something I'm sure the Mayor would like to hear about directly, and I'd be happy to be the point for him on that.

All right. 37 6/2/08 - FINANCE - BILL 080500 Thank you. Thank you, Madam Chair.

Thank you. Let me just ask this question. I'll come back to another one. Ms. McColloch, what happened to the PHIL Loan program? MS. McCOLLOCH: The PHIL Loan program is still in operation. It's carried out through the Redevelopment Authority. It offers low-interest loans to homeowners to fix up their house. It's a Title I Home Improvement Loan program.

And who administers it? MS. McCOLLOCH: The Redevelopment Authority.

Who at the Redevelopment Authority? Has that always been administered by the Redevelopment Authority? MS. McCOLLOCH: Yes.

We had 38 6/2/08 - FINANCE - BILL 080500 some discussion about the issue with the Greater Philadelphia Urban Affairs Coalition and their contract to oversee the operation of that program. Would you tell me what happened? MS. McCOLLOCH: That was -- I apologize. That was what was called the Mini-PHIL program.

The Mini-PHIL program, right. MS. McCOLLOCH: And that program was administered through the Greater Philadelphia Urban Affairs Coalition. That was a program that, with additional NTI bond proceeds, was designed to help folks with lower credit scores than would otherwise be eligible for the, what I'll call, the standard PHIL Loan program, and that program over time had such a small number of loans that were executed and had high administrative costs, that the decision was that it wasn't an effective way to continue to use our scarce resources for 39 6/2/08 - FINANCE - BILL 080500 that program because we had so few loans. I'm not sure if there's anyone here who has a report on that.

Do you have somebody who can answer the question? Because that's not the information that I have about the Mini-PHIL Loan program. MS. McCOLLOCH: I'm sorry. I don't have the number here today, but I can provide that information to you.

What I'd like to have are the number of loans that were granted through the program, the administrative costs and why it was discontinued and what happened to the money that was used to support that program. MS. McCOLLOCH: Fine.

Were there any -- you said there were NTI dollars for that? MS. McCOLLOCH: It was all supported with NTI funds. 40 6/2/08 - FINANCE - BILL 080500

Okay. MS. McCOLLOCH: Those were the funds that were used to write down what we were calling the Mini-PHIL.

We'll come back to that when we have the hearing on the NTI funds so you can have that ready. Councilman Jones.

Thank you, Madam Chairman. Ms. McColloch, Mr. Altman, good morning. I just want to say on the record that you and your staff of the RDA and PHDC have been very helpful in providing information to my office to get us up to speed on what's going on, particularly in our district. I am particularly grateful about the Mortgage Foreclosure Diversion Pilot Program that there is some money being committed to. During the hearings on predatory lending and mortgage foreclosure, Brian Hudson of the state made a bold commitment that if this 41 6/2/08 - FINANCE - BILL 080500 Administration put up a million dollars towards the Trust Fund, that they would match it with a million dollars. This Administration has put up $2 million towards that, and I just don't want that commitment from the state to be forgotten and for us to follow up and make sure he gives us at least our million dollars and hopefully he would be generous enough to give us $2 million to match it, because those dollars are needed, and I wanted to know, have we followed up on that at all? MS. McCOLLOCH: I have not spoken with Brian. Have you?

No. 18 MS. McCOLLOCH: But we will.

Please do, because those kinds of dollar commitments tend to get, A, forgotten and then, B, reappropriated to some other useful cause, and I can't think of a better cause than the Housing Trust Fund. So we'd like you to take a look at that, if 42 6/2/08 - FINANCE - BILL 080500 you would. Thank you, Madam Chairman.

Thank you very much. Let me just ask you one more question. About a year or so ago, there was a press announcement that $24 million was coming into the City for the homeless. Whatever happened with that? Did that materialize? MS. McCOLLOCH: That is the McKinney funding, which comes from HUD, and, yes, that's received by the City for specific projects. We submit a specific application -- the City submits a specific application every year. The application is actually prepared by the Office of Supportive Housing, and then HUD reviews it and awards the funds and then they come to the City and we --

Were there new dollars or just -- how much of it was new dollars? MS. McCOLLOCH: Some of it is a 43 6/2/08 - FINANCE - BILL 080500 continuation of existing programs and some of it is new. Is there anyone from OSH that can answer that?

Could you come to the table, please, and testify. (Witness approached witness table.)

My name is Joe Savage. I work in the Office of Supportive Housing. I'm new to the City. I just started working managing the McKinney grant in October of 2007. Our McKinney grant was received and it was in the amount of $25.2 million. Of the $25.2 million, $5.6 million went towards new projects, which will fund approximately 90 new units of housing, and the remaining balance of the McKinney funding is going towards existing projects.

Now, was the $25.2 million, was that new money or was that just a continuation of the money 44 6/2/08 - FINANCE - BILL 080500 that you normally get from the McKinney fund?

What happens is, projects that are funded through the McKinney program, if they receive an initial coming, they come in for renewal funding at that same amount on a yearly basis. So of the 25.2, only 5.6 went towards new projects, because we bring in new projects and then they get funded and then they come in for the renewal process every year.

So you actually got $5.6 million new money.

New money, exactly.

Not 19 million. 20

Not 25. 21

Okay. 22 Thank you very much. 23 Ms. McColloch, of the 108 loan 24 money that is provided to housing 25 development ventures, how much of that 45 6/2/08 - FINANCE - BILL 080500 money is repaid to the City? MS. McCOLLOCH: That's --

Or if we use it for economic development, how is it paid, what's the rate of return on the payment and all of that? MS. McCOLLOCH: For housing ventures, the Section 108 money is used as a grant and it's not repaid to the City by the developer that receives it, and, therefore, we have to use part of our Community Development Block Grant each year to repay the 108 loan from prior years. It's detailed in our budget.

Back to HUD? MS. McCOLLOCH: Back to HUD. For economic development ventures, the funds are given out as loans for each deal that's outlined, and then those developers repay the City, because for economic development deals, the 108 loan money is actually loaned and 46 6/2/08 - FINANCE - BILL 080500 the folks repay it.

So how much of the appropriation is provided for loans and how is the money being returned? MS. McCOLLOCH: For the economic development loans --

Economic development. MS. McCOLLOCH: You may want to answer better than I, but it's loaned out as an actual loan for the housing. That's why I mentioned --

No. I'm clear about the housing. I'm talking about the economic development, the loan fund for economic development.

In terms of how much is loaned or the --

What is outstanding and how much would we receive if everybody paid us back?

I would have to get back to you. I can put that together 47 6/2/08 - FINANCE - BILL 080500 and work with Philadelphia Industrial Development Corporation, which administers much of that. Many goes to -- there are a number of hotel development projects and they have different terms in terms of the return of those loan proceeds. I can do an accounting of that.

Is that a revolving fund?

That's right.

Do we keep that as an ongoing revolving fund to loan to somebody else?

That's right.

That's what I'd like to know, what is the pot, how much has been lent, how much on hand and how much do we look forward to in the future. Thank you very much. There are no other questions, but we hope that -- I think most of the questions will be related to the NTI program when we have 48 6/2/08 - FINANCE - BILL 080500 that hearing.

On that hearing? Okay. Then I'm going to excuse myself, if that's okay.

Councilman Clarke.

Madam Chair, are we winding down? I was just reserving my questions.

No. You can have some more questions.

Do you all have more? Are we winding down with the testimony?

From these two people.

Okay. I just wanted to ask a couple more questions. We don't normally get done this quickly. I'm like a little --

I was just excusing myself because I was going to the ceremony.

I 49 6/2/08 - FINANCE - BILL 080500 understand. Yeah, I had a couple questions of this panel. Real briefly, on these staffing level operating dollars, I needed to get a little clarity on the dollars associated with staffing. My understanding, that there have been a number of individuals who were either laid off or reassigned or whatever from the various housing agencies during the course of the attempted reorganization, but there's an increase requested in the staffing levels for this Comp Grant year? I think it was like one year it was at one point, then it went down, and now it's going back up, and I'm trying to understand why the reduction in staff is not reflected and why we're asked for additional operating dollars, if you can just explain that to me. MS. McCOLLOCH: The increase that is requested for this year is actually a decrease over actual 50 6/2/08 - FINANCE - BILL 080500 expenditures from previous years. The budget appears to have an increase of about $3 million, but that's because last year's budget was understated and underfunded and the actual expenditures for last year were higher than what was reported in the Consolidated Plan budget.

You say they were understated, meaning at last year's Comp Grant, initially the budgeted amount was understated and we -- MS. McCOLLOCH: What was actually needed, yes.

Right. So I think the issue is that in this year's budget, again, coming in new to this, but that the true cost, the true operating cost in terms of staffing is reflected up front. So it's not an actual increase. We're actually showing what the cost was same as -- what last year's would have been. It's just that funds were then sort of reallocated at a different part of the year in order to fund those operating 51 6/2/08 - FINANCE - BILL 080500 costs, but the true cost at the end of the day is what we're now reflecting.

So where did that money come from to pay for the additional staff -- or not staff, but to reallocate to pay for the operating costs? Where did that money come from? Did it come from programs?

We'll get that for you. MS. McCOLLOCH: I'm sorry, Councilman. The funds were -- it was either program income that had not been reported and so it was used for those purposes or it was reprogrammed prior years' funds that we had anticipated using for something else but that we used for operating costs.

Program income that had not been reported. MS. McCOLLOCH: Program income that had not been anticipated or reported. So let's say there was a land sale that had not been initially 52 6/2/08 - FINANCE - BILL 080500 budgeted. We used those funds to fill the gap in the operating costs.

Was any of that money used to fill the gap in development or did we spend all of the unanticipated income for staffing levels? Because I know we always have a shortfall on development and services, Basic Systems grants dollars. We didn't spend all of that unanticipated income on staffing levels, did we? MS. McCOLLOCH: I don't know if we spent all of it, but we spent more than was -- the actual expenditures were greater than the amount that was budgeted, so we had to reallocate funds to cover the operating costs.

And will the reduction in staff levels be reflected in this year's? MS. McCOLLOCH: They are reflected in this year's budget. The budgeted amounts for this year are what we anticipate are the actual expenditures 53 6/2/08 - FINANCE - BILL 080500 for OHCD, PHDC, Redevelopment Authority and the other agencies that are listed there.

And the split between the administrative portion of the CDBG or the budget versus the development side or the service delivery side is what in terms of percentage? How much did we spend on staffing levels? MS. McCOLLOCH: Well, the Community Development Block Grant is higher -- it's a high percentage if you only look at the CDBG portion, because CDBG funds can only -- are the main source of funding for operating costs.

I understand. MS. McCOLLOCH: Whereas, the other sources, HOME, HOPWA, so on, all the sources that we just detailed, which all contribute to the development side, are not used for -- or only a very small amount are used for operating costs. So CDBG in that sense takes a larger hit of 54 6/2/08 - FINANCE - BILL 080500 the operating costs than other funding sources.

Can you get -- because I know there's some belief that we're spending a significant portion more as it relates to percentages on staffing levels versus actual development, service delivery. So can you get to the Chair or the Council consolidating all of the resources above, I guess, the CDBG dollars and above and beyond that as it relates to delivery? Because there's this belief somewhere that we're paying like 60, 65 percent goes toward staff. MS. McCOLLOCH: Well --

And less than 40 goes toward -- MS. McCOLLOCH: The reason why one thinks that is because if you are only looking at the CDBG resources in the Consolidated Plan, the CDBG resources for operations are about 29 million, but the total overall budget is -- I'm reading 55 6/2/08 - FINANCE - BILL 080500 the pages from the budget -- 152.8 million. So if you looked only at the total CDBG resources and the amount being spent for operations, the number is high, but when you look at the CDBG resources over all of the resources, it's not that high.

Okay. Okay. Do I have more time, Madam Chair?

Yeah. We have plenty of time. Mr. Altman has to leave, but Ms. McColloch will be here.

Actually, this is pretty much Ms. McColloch's --

Any questions of Mr. Altman before he leaves? (No response.)

We have Ms. McColloch as long as you'd like. Thank you so much.

Thank you.

56 6/2/08 - FINANCE - BILL 080500 Ms. McColloch, I spoke to you about it briefly last week. I just wanted to - the ECA grants, energy center grants that we support through various organizations, and I had raised some concerns about the fact that I know we cap the organization at a certain amount in terms of delivery, but there are a number of organizations that are basically servicing up to that level and beyond because they're not turning people away and we have organizations that are not servicing people up to the level that they should, but yet there's the same amount of money going to those organizations, and I was wondering if we can look at some sort of fairness. If an organization exceeds their capped amount in terms of servicing people way beyond the money that's given to them to do that, could it be a possibility that that could be shifted -- I guess it would be more relating to the level of service that you provide -- 57 6/2/08 - FINANCE - BILL 080500 MS. McCOLLOCH: Yes. The neighborhood energy centers are carried out through a contract with the Energy Coordinating Agency, ECA, and since I spoke with you last week, Councilman, I discussed this with my staff and I was informed that, yes, ECA is in the process of reallocating some of the funds that were committed to specific neighborhood energy centers who had underspending in order to allow other neighborhood energy centers that essentially spent more than their contract, because it's all based on fee for service. So they'll try to balance that out, and we will work with them going forward for next year to try to have a more, if you will, equitable balance at the beginning of the year so that those neighborhood energy centers that are doing more services will have more funding than those neighborhood energy centers that are carrying out less services.

Okay. 58 6/2/08 - FINANCE - BILL 080500 Thank you. Thank you, Madam Chair.

Councilman Jones.

Thank you, Madam Chairman. Real quick question. Of the sub-recipients of CDBG allocations, how many of the job descriptions are for housing inspectors and/or appraisers? MS. McCOLLOCH: Well, I don't know that number off the top of my head. Fundamentally we fund housing sections through PHDC for the inspectors for the Basic Systems Repair Program and we fund --

Could you speak into the microphone, please? Pull it up. Pull it up. Pull the mike up. Thank you. MS. McCOLLOCH: Sorry about that. It's not on. Sorry. And we fund housing inspectors at the Redevelopment Authority to inspect 59 6/2/08 - FINANCE - BILL 080500 those homeownership and rental developments that are financed through the RDA. There may also be some -- and I can get you those exact numbers. I don't know them off the top of my head. There may also be inspectors at community development corporations which hold contracts or loan documents with the Redevelopment Authority to carry out the particular developments, homeownership and rental, that they have their own staff people that they pay in part with the developers' fees that they earn through their contracts and loans with the Redevelopment Authority. But at that level, we wouldn't see the makeup of all of the staff members at each CDC, each community development corporation, because they're receiving a fee, a developer's fee, and then they spend that on their staff as they choose. But the RDA and -- Redevelopment Authority and PHDC, I can provide you with those numbers. 60 6/2/08 - FINANCE - BILL 080500

Those are the stats or statistics that I'm concerned with, and here's why. Also, do you pay for the -- who does the housing inspections for the Vacant Property Review Committee? MS. McCOLLOCH: That is an inspector that is hired at OHCD.

My concern is that I've gotten a number of -- and you don't have to know this now, but we'll get to this in June, later part of June, that are we allocating inspectors in an efficient manner to, A, process the Basic Systems Repair Program, because a component of that is making an assessment of whether the homeowners' estimates are within the ball park allowing the contractor to complete the work. So there are backlogs in the citywide program and in particular the Fourth Councilmanic District because of lack of inspections of properties. If that is also true for the 61 6/2/08 - FINANCE - BILL 080500 Vacant Property Review Committee and properties being appraised at a particular value and/or inspected, is there a way that if we have a surplus of inspectors at one level, that they can be put on loan to other departments so we can ease some of the backlog of these programs? And if in fact an option might be to utilize some of the CDCs' inspectors to at least give us a review of some -- I just want to get if we are backlogged because of the lack of inspectors, that seems to be a management adjustment that can be made to ease the backlog. MS. McCOLLOCH: Well, certainly at PHDC, inspectors are cross-trained so inspectors can inspect whatever of the different programs and -- I'm sorry. I was just handed a note. We have 18 housing inspectors at all three agencies, RDA, PHDC and OHCD. So the question of whether we could employ outside inspectors, and by 62 6/2/08 - FINANCE - BILL 080500 that I mean inspectors that are not at PHDC, Redevelopment or OHCD, I think that would be problematic --

I'm not sold on that solution. MS. McCOLLOCH: Right. I'm just saying for that particular one, that would be difficult, but in terms of trying to have cross-training for each of the programs, we are working on that.

As I look at inspectors, it seems to me that we 14 might be able to deploy them differently 15 to gain greater efficiency. If an 16 inspector is going to be in the West 17 Philadelphia area anyway, he might be 18 given a couple of extra properties to go out while he's there in an efficiency move that crosses over different programs. But lack of inspectors shouldn't be a reason why people can't get a roof or a heater. So if we can tackle that problem, and I'll defer until we talk again, to see if there is some 63 6/2/08 - FINANCE - BILL 080500 solution that can be found. MS. McCOLLOCH: I understand your concern.

Thank you, Madam Chair.

Thank you. I just want to come back to the question that Councilman Clarke asked about the 2008 budget and the 2009 budget, and I just need you to explain to me, in 2008 you have an annual operating cost of the Community Development Block Grant, Year 33, 30 million 712, and this year, 2009, is 33,756. MS. McCOLLOCH: Correct.

So was it 33,756 in 2008 also, if there is a decrease? MS. McCOLLOCH: In 2008 our actual projected cost will be 35,565,000. So we actually have costs in 2008 greater than -- almost $5 million greater than the budgeted amount. And so the Year 34 number, although it shows that we're -- 64 6/2/08 - FINANCE - BILL 080500 although it appears that it is an increase, it is in fact a reduction from the FY08 operating costs.

Well, how much did we file with the federal government? What was the total for the Plan? MS. McCOLLOCH: The total for the Plan was the number that appears in the budget. I mean, if you look on your resource page --

Okay. MS. McCOLLOCH: Okay?

So just explain to me, what did you do about the $5 million that you didn't have? MS. McCOLLOCH: That's where I said we will be using program income generated from the sale of land and it's also reprogramming other funds from prior years to fill the gap between what was budgeted and what the actual expenditures are.

So what 65 6/2/08 - FINANCE - BILL 080500 were the actual expenditures on? MS. McCOLLOCH: They're the operating costs for the agencies, PHDC, Redevelopment Authority, OHCD, and the other smaller amounts -- we spend Community Development Block Grants at Commerce, L&I, the Planning Commission, the Law Department and so forth.

Are you allowed to spend more than you appropriated? MS. McCOLLOCH: Well, it's not more than we appropriated. It was more than what was presented in the budget, and we'll have to do an amendment to the budget. But we didn't spend more than was appropriated from HUD.

Okay. So you spent it on again? What did you spend the extra dollars on? MS. McCOLLOCH: It's on the operating costs of the agencies.

In what areas? 66 6/2/08 - FINANCE - BILL 080500 MS. McCOLLOCH: What were -- it's mostly staff and the general operating expenses to run the agencies.

So what happens this year? Is it 35 million or is it 33 million? MS. McCOLLOCH: It's 33.7 million, and we're achieving that reduction in part by not filling some vacancies that exist and by -- which is the main thing. We're not filling vacant positions that were budgeted, but we're not filling them. That's how we're going to achieve those savings particularly at OHCD. And the agencies are being told they need to live within their budgets, that we will not make up the difference at the end of the year if they exceed their budgets.

Does any of this have anything to do with the housing reorganization? MS. McCOLLOCH: Do the expenditures have anything to do with the 67 6/2/08 - FINANCE - BILL 080500 housing reorganization?

Yes. MS. McCOLLOCH: Well, the budget was understated last year in part because there was expected to be savings generated by the housing reorganization that were not achieved.

Well, I think you all told us there would be no -- there wouldn't be anyone laid off or it wouldn't have any impact, the reorganization, on employees over there. Was there an impact? MS. McCOLLOCH: Well, some people were laid off, but for the most part, those people have been brought back. At this time, of the total number of layoffs, there were altogether through all three agencies, there were 73 employees who were laid off, including employees who were bumped down to lower levels. And so of those 73, actually 58 were laid off, because some people bumped down, they weren't laid off. So 58 were 68 6/2/08 - FINANCE - BILL 080500 laid off. And of those, there are only really nine that are still not employed. Four had opportunities to be rehired and chose not to come back and two others found employment elsewhere -- excuse me; three others found employment elsewhere and two people are still out on layoff.

Okay. So let's just go back. I'm real slow about this stuff, because I don't really -- I'm just real slow, just a little slow here. Tell me how you paid for your expenditures, how you plan to pay for them out of not completing some projects? Could you just explain that to me? MS. McCOLLOCH: No, no. No, no. We're not filling it out of not completing projects. We're still talking about the operating costs, right?

Yes. MS. McCOLLOCH: We're generating additional program income from the sales of land, primarily through Redevelopment Authority. 69 6/2/08 - FINANCE - BILL 080500

And that's ongoing? MS. McCOLLOCH: Yes.

That's ongoing? MS. McCOLLOCH: Yes.

It has nothing to do with the NTI sale of land, does it? MS. McCOLLOCH: Well, this would be previously -- land that was previously acquired a long time ago by the Redevelopment Authority and is being sold for development, and those developments generate program -- those sales, excuse me, generate program income, and that program income is then used for Community Development Block Grant eligible activities. In this case that we're talking about, it's for operating costs. And so program income is one part of it. Reprogramming other prior years' funds that had been budgeted for something that didn't go forward, 70 6/2/08 - FINANCE - BILL 080500 that could also be a source. So it's a combination. It's not just one thing. It's a combination of funding sources to make up that gap in operating expenses.

What is the current state of the reorganization and is it anticipated that the housing local of DC 33 will be included in the upcoming labor contracts? MS. McCOLLOCH: Our local is 1971, and Local 1971 will be part of the general collective bargaining negotiations between the City and the union.

So the reorganization is completed? MS. McCOLLOCH: The reorganization is completed.

Okay. Any other questions? (No response.)

Thank you very much. Don't go away. Let me mention that Councilman 71 6/2/08 - FINANCE - BILL 080500 O'Neill is here. Thank you. The Chair calls up John Rowe, Utility Emergency Services Fund. (Witness approached witness table.)

Good morning, Councilwoman Tasco, members of the Finance Committee, members of City Council. Thank you for the opportunity to submit testimony on behalf of the families we serve at the Utility Emergency Services Fund. I want to extend my sincere gratitude to the Philadelphia City Council and to the Administration for its overwhelming support for UESF to assist families in need. The recent allocation of funding to UESF in the City's FY 2009 budget will result in an additional 3,000 Philadelphia families keeping their utilities turned on. And thank you for the continued support of OHCD over the past years. 25 OHCD continues to play a major role in 72 6/2/08 - FINANCE - BILL 080500 our work to help solve the energy poverty problem in Philadelphia. By way of a very brief background, UESF provides utility assistance to low-income families. We leverage every dollar we provide with a dollar-for-dollar match from PECO, PGW and the Philadelphia Water Department. Since 1938 we've served 131,000 families to resolve over $55 million in utility accounts in termination status, and we have assisted these 131,000 families to achieve new starts. We are year round and we are the last resort for many, especially when the federally funded LIHEAP and Crisis programs are not operating or close prematurely as they did this past year. We have been able to double the number of families we serve from 3,000 to 6,000 due to the leadership of City Council and the Administration. The rising cost of fuel is a hardship for all of us, but for 73 6/2/08 - FINANCE - BILL 080500 low-income families it is devastating. Utility expenses take an increasingly bigger and bigger bite out of already small incomes. The Pennsylvania Public Utility Commission just released its report on the number of utility terminations from January to April 2008 as compared to the number of utility terminations for the same period last year. Statewide utility terminations rose 51 percent. For PGW, there were over 6,000 terminations, up a staggering 91 percent compared to the same period last year. For PECO, there were 8,585 terminations, up 55 percent compared to the same period last year. Of these, approximately 5,000 were low-income families, families under 150 percent of the federal poverty level. That amounts to $26,400 for a family of three. The need for UESF assistance is particularly great today given the 74 6/2/08 - FINANCE - BILL 080500 state's early closing of LIHEAP and Crisis on March the 21st. This was the earliest closing in five years. Over 37,000 Philadelphia families did not receive LIHEAP/Crisis assistance due to the early closing. This is compared to last year when LIHEAP remained open for three weeks longer, until April 16, 2007. The consequences of not addressing utility terminations are dire. The link between terminations and homelessness and between terminations and increased housing abandonment has been firmly established. UESF is working closely with the Children's Sentinel Nutritional Assessment Program known as C-SNAP. This is a national research center of pediatricians and public health experts whose research has determined that emergency utility assistance is crucial to protecting the health of our youngest and most vulnerable children. When low-income families do not 75 6/2/08 - FINANCE - BILL 080500 receive energy assistance, the families must make stark choices, heat or eat, heat or be able to afford safe and healthy housing. These choices have devastating effects upon our children. A recently completed project by C-SNAP tracked children under two years old who received emergency care at Boston City Hospital during the cold months of the year. The differences between families who did and did not receive emergency utility assistance was startling. Babies and toddlers in low-income families who did not receive assistance were more likely to be underweight and 32 percent more likely to be admitted into the hospital.

Overall, unmanageable utility costs cause in children poor school attendance and poor school performance. This directly impacts upon the City's objectives of decreasing the school dropout rate and increasing the graduation rate. Unmanageable utility 76 6/2/08 - FINANCE - BILL 080500 costs cause in children behavioral disorders, mental and physical problems, depression and anxiety. When UESF provides low-income families with needed utility assistance, it has a direct and positive impact upon our community, contributing to the achievement of the City's stated high priority areas of education, public safety, economic development, and healthy and sustainable communities. We are working closely with the University of Pennsylvania to measure the impact of our work within the community by mapping our outcomes in relation to multiple community variables, such as poverty rates, vacancies, sheriff sales and others metrics. For example, earlier this year due to the leadership of City Council, UESF successfully implemented a special program to assist 3,000 low-income PGW customers. Assistance was provided to almost every residential zip code in the 77 6/2/08 - FINANCE - BILL 080500 City. The highest concentration of assistance was provided to those zip codes with the highest concentration of poverty. I include in my testimony two maps. The map on the left shows the distribution of UESF assistance by zip code and the map on the right shows the need, the density by zip code of poverty, families under 200 percent of the federal poverty level. The maps are strikingly similar. The goal of UESF is to assist families in achieving self-sufficiency and independence. This year we will have served 6,000 families by the end of June 2008. These families will have had access to many self-sufficiency services ranging from LIHEAP grants, energy education and weatherization workshops to other services such as default and delinquency counseling. Families do not come back year after year. Our numbers show that over the last five years, 75 78 6/2/08 - FINANCE - BILL 080500 percent of the families we served have not returned for additional UESF assistance. We are very grateful for UESF to be part of the City's effort to assist those of us who are the most vulnerable. We are grateful for being part of the Consolidated Plan to receive $525,000 in CDBG funds. And we are very grateful to be included in the City's budget for $1 million. When these amounts are matched with utility credits, we will assist 6,000 Philadelphia families. But about 220,000 Philadelphia families could qualify for our services. Assisting these families would help to prevent problems before they occur and would have long-term and measurable impacts upon Philadelphia communities in those significant areas important to the City: education, public safety, economic development, and healthy and sustainable communities. Thank you. With that, I would 79 6/2/08 - FINANCE - BILL 080500 welcome any questions.

Thank you very much for your testimony. Are there any questions or comments? (No response.)

Thank you very much for your hard work and we are proud to support you.

Thank you, Councilwoman.

Next is John White, Philadelphia Association of CDCs. (Witness approached witness table.)

Good morning, Councilwoman Tasco and members of the Finance Committee. My name is James White and I am the Policy Coordinator of the Philadelphia Association of CDCs.

Would you speak into the mike, please.

Yes, ma'am. 80 6/2/08 - FINANCE - BILL 080500 We greatly appreciate the agreement reached by the City Council and the Mayor to appropriate $3 million annually in supplemental funding from the City's General Fund for the Housing Trust Fund over the next five years. This is an important first step in enabling the City to keep pace with the ability to address Philadelphia's need for affordable housing and neighborhood revitalization, especially as the Trust Fund's deed and mortgage recording fee revenue has declined by percent over 15 the fiscal year. 7 million in available funds, there is a real housing need, especially when development projects are stuck in the pipeline, and this funding will help to 81 6/2/08 - FINANCE - BILL 080500 address those. In addition, there's a huge waiting list for repairs and an increasing number of residents who are at risk for losing their homes. We need an increased and long-term investment in the Housing Trust Fund that will provide the City with substantial revenue from state and federal matching funds. We look forward to working with the City Council and the Administration to identify additional funding sources for the Trust Fund, such as the revenue that will accrue to the City as the ten-year property tax abatements expire. Two, improve the City's property acquisition and disposition process. The inability of the City to be able to assemble and make available vacant and abandoned property to outside entities in a timely manner continues to be a major obstacle in putting properties back to productive reuse in our communities. The Administration's recently announced freeze on the 82 6/2/08 - FINANCE - BILL 080500 acquisition activity could jeopardize financing or cause substantial delays for proposed developments awaiting the transfer of properties from the City. While we agree with the need to ensure that the correct resources are used to support acquisition the City has committed to for nominal consideration, it is critical that the proposed audit of NTI acquisitions be carried out in an expeditious manner. We also believe it is important to prioritize acquisitions for properties that will enable projects in the development pipeline to move forward. Clearly, the City needs to ensure that it is an effective system in place to track property acquisition and disposition and implement a clear property disposition policy. Such a policy would enable the transfer of property below market values as needed for development of affordable homes and utilizing existing City-owned land more 83 6/2/08 - FINANCE - BILL 080500 strategically to support the development of affordable homes and appropriate neighborhood economic development in appreciating neighborhoods to help ensure mixed-income communities that can be sustained over time. To help improve the City's process to acquire and dispose of vacant and abandoned properties, we urge City Council to work with the Administration to develop a Unified Land Bank to consolidate ownership of the properties to facilitate their reuse. As a first step, the City should consolidate ownership of existing surplus properties already owned by a number of different local public entities so that the project sponsor does not need to negotiate a different process with each agency. The City should also explore how it could modify the existing sheriff's sale tax foreclosure process to make it a more effective tool for reuse of blighted abandoned property. 84 6/2/08 - FINANCE - BILL 080500 The Year 34 Proposed Consolidated Plan identifies no new funds for property acquisition. Without resources for acquisition, planned housing developments and neighborhood revitalization initiatives will literally fail to get off the ground. With the commitment of nearly all NTI acquisition funding, there is an immediate need to develop and identify resources to support the significant ongoing acquisition needs in our neighborhoods.

As a first step, the City should begin to pay into the court for acquisitions already committed and to implement the recycling agreement for NTI bond funds used to acquire properties that were projected to generate at least 15 to million for 20 future acquisitions. Creating an abandoned property management system and bringing together stakeholders to work toward two common goals can enable Philadelphians to make the most of limited resources and legal 85 6/2/08 - FINANCE - BILL 080500 tools. Lastly, we believe that Council should further strengthen neighborhood commercial corridors. Through the ReStore Philadelphia Corridors initiative, the City is making significant capital investments in strengthening neighborhood commercial corridors and small business to better address the need for local access to goods, services and jobs. To effectively implement a corridor revitalization strategy at the neighborhood level, there's a need for a local entity to manage many of the tasks that are needed, as well as leverage resources and impact. These tasks include facilitating physical improvements, coordinating the cleaning and safety strategy, marketing to new businesses and customers, and assistance for local businesses. Many CDCs are already engaged in commercial corridor revitalization as part of their neighborhood strategic plans and should 86 6/2/08 - FINANCE - BILL 080500 be supported through flexible funding such as the CDC Tax Credit Program. We also encourage the City to work with the CDC industry to strengthen local neighborhood economic development systems, as well as to maintain and develop a policy for a more friendly pedestrian lighting in the corridors, which would better enhance the ability of commercial success, as well as improve the public safety of the customers and neighbors and residents in the community. Thank you for your time. Questions? Any questions?

Forgive us. Are there any questions? (No response.)

Thank you very much for your testimony. Beth Goodell, Community Legal Service. (Witnesses approached witness table.) 87 6/2/08 - FINANCE - BILL 080500

Good morning.

Good morning.

Good morning, Madam Chair and City Council members. We've come today to show our appreciation for the support in City Council and the proposal by the City to fund Community Legal Services to do foreclosure prevention work. My name is George Gould. I'm the managing attorney of the Housing and Energy Units at Community Legal Services, and Beth Goodell is here, who is also a managing attorney of our Consumer Housing Unit. And what I wanted to say and I think most Councilpeople know the gravity of the foreclosure problem in our city right now. Councilmembers are aware that the Court of Common Pleas has established a pilot foreclosure diversion program, which hopefully will result in the prevention of a large number of people who otherwise would be foreclosed because they 88 6/2/08 - FINANCE - BILL 080500 unfortunately entered into either a predatory or subprime loan which was unaffordable and there was no way they could pay. The need here is great. The ability of our program to be able to represent the folks who are in this process is very difficult. There now has been created a pro bono effort to get the private Bar involved, but there is still a substantial need for our program to continue to receive funding and additional funding so that we can provide attorneys to be involved in foreclosure prevention work. And what I'd like to do is to have Beth talk a little bit about the need. She is up in our North Philadelphia office, where a large number of folks come in who are involved in the foreclosure process and also involved in the planning to deal with the substantial number of people who will be coming into the office. 89 6/2/08 - FINANCE - BILL 080500

Thank you. Madam Chair, I noticed you perhaps were looking for written testimony. We did not prepare written testimony. I just wanted you to know that. The court program is unique. It's the first of its kind in the country. Other municipalities are looking to us now as a role model. It's groundbreaking. The key piece for homeowners going through foreclosure is to get an advocate as early in the foreclosure process as possible to help them put forward the best kind of proposal for them to save the house. These days foreclosures have skyrocketed all over the country. In Philadelphia, there were 2,300 foreclosures filed in 1995. That jumped to 6,300 by 2002. So that was an annual increase average of about 30 percent. It held steady from '02 and started climbing 90 6/2/08 - FINANCE - BILL 080500 again in '06 and '07. We are looking at a jump from around 6,500 cases, foreclosure cases, filed in 2007 to over 8,000 filed in 2008. So it's a 6 percent jump just between '07 and '08. 7 In response to this crisis, the 8 court has instituted this new program, 9 which will allow homeowners to have a 10 court-supervised hearing with their 11 mortgage company. It's very, very hard 12 for homeowners to get through to their 13 mortgage companies before foreclosure 14 starts, let alone after foreclosure 15 starts. So now the court will be 16 supervising each foreclosure filed on a 17 residential owner-occupied property. So 18 each homeowner will have an opportunity 19 to come into a court hearing. 20 We are trying to assign lawyers to as many of those cases, as many of the moderate- and low-income homeowner cases as possible, because it's still, even with court supervision, it's going to be hard for a homeowner to hang on to the 91 6/2/08 - FINANCE - BILL 080500 house without a strong advocate. The City has a terrific network of housing counselors, as you know, and those counselors are going to serve as advocates for as many homeowners as possible. Lawyers will be there also in as many cases as possible. The Consolidated Plan has a $3,000 line item for legal services for homeowners --

300,000.

300,000.

I was going to say.

300,000, thank you, dollar line item for legal services for homeowners. And, again, I can't emphasize enough what a unique step the City, the Administration and the court is taking with the prompting, frankly, of City Council to set up this program. So we thank you for that, and we are going to try to live up to the promise of this program over the next couple of years. 92 6/2/08 - FINANCE - BILL 080500

The program is scheduled at the moment to go to at least -- this is the court program -- December 2009. So this is an ongoing process. While immediately we're dealing with the properties that were scheduled on the April and May sale, this will be an ongoing process. So every homeowner will have the opportunity to have this conciliation hearing in the effort for them to come up with some kind of an affordable plan so they'll be able to remain in their home.

The funding for the legal services is for one year only, the $300,000, and so we would hope that that would be extended. The court program itself goes through December of '09, and we hope that that will be continued as well, that it won't sunset at the date originally scheduled in the court program.

Okay. Thank you. Thank you very much. We're 93 6/2/08 - FINANCE - BILL 080500 real pleased that the court has agreed to do this, to help with the whole foreclosure issue. It's very painful to see families lose their homes. And we thank you for your hard work and thank you certainly for being supportive of what we tried to do in this Council around predatory lending in the early years.

Madam Chair, I would like to say that I think the resolution that you authored and passed here in City Council was really the impetus to create this whole process calling for a moratorium on sheriff's sales, and the sheriff did go ahead and do that and then the court stepped in to create this program, which was extremely important. So we thank you.

Thank Council. Thank you. Next we have Stephanie Wall, People's Emergency Center. (Witness approached witness 94 6/2/08 - FINANCE - BILL 080500 table.)

Let me just announce that we are not going to vote this bill out today. We will vote it out on June the 12th at 9:30. We will recess this hearing until that time. So if anybody is waiting for a vote, we'll let you know that now. We will just recess until then. Yes. Stephanie?

Good morning. My name is Stephanie Wall and I represent People's Emergency Center Community Development Corporation. Thank you for offering me the opportunity to testify today and to discuss the importance of supporting ongoing funding for affordable housing and neighborhood economic development. On behalf of PEC CDC, I'd like to make the following comments on the Year 34 Plan. First, we thank the City for continuing to set aside CDBG funding for 95 6/2/08 - FINANCE - BILL 080500 homeless and special needs housing to better serve homeless individuals and families and people with physical disabilities. The set-aside has been instrumental in ensuring new housing units for the homeless, increasing the development capacity of special needs providers and increasing the federal dollars for special needs projects in Philadelphia. Additionally, the set-aside has enabled the City to fund critical permanent supportive housing without draining resources from other components of the homeless continuum of care. Second, we appreciate that the City has maintained its commitment to both affordable homeownership and affordable rental housing. We especially thank City Council for agreeing to expand the Philadelphia Housing Trust Fund. For the growing need for affordable housing, continual declines in federal funding and reductions in fee revenue for the Housing 96 6/2/08 - FINANCE - BILL 080500 Trust Funds, this boost is crucial to meeting the City's affordable housing needs. Third, thriving commercial corridors are critical to the overall health of Philadelphia neighborhoods. PEC CDC applauds the City's commitment to neighborhood economic development as evidenced through the ReStore bond, and we urge the City to continue to support the efforts started through these funds. Additionally, we appreciate the City's continued partnership with the Commonwealth of Pennsylvania to support the Main Street and Elm Street programs, as they provide valuable operating support for commercial corridors and the surrounding residential blocks. Fourth, the Basic Systems Repair Program provides valuable service in preventing vacancies by helping homeowners make important home repairs. Building upon past investment, this home improvement program creates community 97 6/2/08 - FINANCE - BILL 080500 wealth and helps to eliminate blight, and we recommend that the City continue and expand its support for this program. And, finally, acquisition is essential to the revitalization of neighborhood commercial corridors and surrounding residential communities. Without a source of funding for property acquisition, redevelopment will not be possible. We urge the City to identify new resources for acquisition to ensure that critical developments continue to flow through the pipeline. I greatly appreciate the past support that the City Council and other City agencies have provided to PEC CDC and the CDC community, and we believe that we have consistently provided an important return on this investment. Thank you again for this opportunity to provide comments.

Thank you very much for your testimony and thank you for the good work that the People's 98 6/2/08 - FINANCE - BILL 080500 Emergency Center provides to the citizens of this city.

Thank you.

Thank you. The Chair calls on Allison Hughes, Homeownership Counseling. (No response.)

It's unusual she's not here. Anyway, Liz Robinson, ECA. (No response.)

Is there anyone else here to testify on this bill? (No response.)

Well, I just -- where did Deborah go? She's in the back. I have a question to ask you. MS. McCOLLOCH: I apologize.

I just want to ask you a question about information I got regarding that Mini-PHIL Loan program, and I was told that the City gave money to the state for 99 6/2/08 - FINANCE - BILL 080500 their program to provide assistance to homeowners; is that -- MS. McCOLLOCH: The state has a program. The acronym is HERO, Homeowner Emergency Repair something. It's the HERO Loan program. It's administered by PHFA, and NTI bond proceeds are being committed to that program to be combined with the funds that PHFA has put into that program. So, again, this is -- it's being funded with bond proceeds, not out of the Block Grant. But, yes, we're supporting the PHFA HERO Loan program.

What I'd like to know is, why would we take the money from the City residents that was used to administer the Mini-PHIL program and give it to the state when we have a large number of foreclosures in the City and that -- the program was set up as a result of the whole predatory lending issue that we had in 2000 to give counseling and to provide low-income loans for those people with less than 100 6/2/08 - FINANCE - BILL 080500 perfect credit, and the report from that program indicated they gave over 240 loans, it could be more, and there was no 5 problem with the program. I have a hard time trying to figure out why we're giving money to the state, which the funds will be diluted because they're given out statewide and not concentrated here in Philadelphia, because the NTI bond program funds were to be for Philadelphia. Has the money gone to the state yet? MS. McCOLLOCH: Let me just answer the first question. The funds -- the NTI bond proceeds that are being committed to the HERO Loan fund are only for Philadelphians. So it's not being diluted across the whole state.

And what does HERO do? MS. McCOLLOCH: HERO gives people an opportunity to refinance their mortgages and -- let me see if there's someone here who can answer this 101 6/2/08 - FINANCE - BILL 080500 question.

Who made the decision to transfer the money to the state? MS. McCOLLOCH: Hold on. I'm going to have someone who knows more about the HERO program.

It troubles me so badly that this happened. MS. McCOLLOCH: Through the HERO Loan program, it allows someone to refinance their mortgage and it also can provide funding for repairs to the property. So it's a refinancing tool.

Well, what happened to the loan to help people if they wanted to do a home improvement? And that was what the Mini-PHIL Loan program was for, for those people who had less than perfect credit, and we had all the banks participating in the program, had local support. Why would we give the money to the state? (Witness approached witness 102 6/2/08 - FINANCE - BILL 080500 table.)

Good morning, Councilwoman Tasco, Committee members. Andrew Frishkoff, Neighborhood Economic Development Director for the Commerce Department. There are two programs with the state, the HERO program and the Repair and Renovate. On both cases, the City dollars would be available exclusively for City homeowners, and the state, through the Housing Finance Agency, is committing its resources to Philadelphia. So we are getting significant leverage, millions of dollars. I believe this was the reference that Councilman Jones had made earlier when Deputy Mayor Altman was here, that in fact we have leveraged more than a million dollars from the state by entering into this partnership. So that we are seeing significantly more resources than were ever available when we were simply running our own program without any additional state dollars 103 6/2/08 - FINANCE - BILL 080500 coming to the City.

Are you saying that the state set up a program to help citizens of the state and did not include Philadelphia?

They included the City of Philadelphia, but in fact by the City of Philadelphia putting up its own funds to match, the state has increased the funds available specifically for Philadelphia.

So I'd like to know how much the City was going to get from the state initially and I'd like to know how much more do we get because we committed our NTI dollars to the program.

Okay. We will get that information to you.

Thank you very much. Councilwoman Blondell Reynolds Brown.

Thank you, 104 6/2/08 - FINANCE - BILL 080500 Chair Lady. The answer to the Councilwoman's question regarding who made the decision and is that a common practice in the department when we know that there appears to be an opportunity to leverage state dollars with City dollars, we seize the moment and do that. So there's two questions. Who made the decision and is that a common practice in the department? MS. McCOLLOCH: Who made the decision? I don't know the answer to that question. I'm sorry. I don't know the answer to that question. I can -- it was made at the end of the last Administration as we were putting NTI funds under contract to various and sundry contractors, and the decision was made to support with the state -- to use the opportunity of having state funds committed to this program, that we could have a match with them. So it was essentially as you just described it, 105 6/2/08 - FINANCE - BILL 080500 seizing the moment, seizing an opportunity to leverage the funds that we have with the state funds that were being offered through PHFA.

And in the leveraging came the chance to increase the number of families that would be impacted? MS. McCOLLOCH: To provide the opportunity for refinancing. That was really one of the critical elements of the HERO program, that we didn't really have an ability for families that were facing foreclosure to give them a financial vehicle that would let them get out of the fix they were in by giving them another opportunity to refinance -- giving them an opportunity to refinance their mortgage in a way that they could then live with that mortgage, because so many of the loans that were in existence were predatory loans or if not legally predatory loans, not a good deal for the homeowner. This was an opportunity to 106 6/2/08 - FINANCE - BILL 080500 allow them to get out from under that huge debt and refinance it in a different way.

So would it be fair to say that that program could be viewed as a safety net for families in that circumstance? MS. McCOLLOCH: Yes.

Let me ask you a question. What is the amount of the dollars committed to the state program from NTI? MS. McCOLLOCH: $1.5 million.

$1.5 million. We had about four or five banks that participated in this program. I'd like someone to do an analysis of the number of banks, local banks, that were a part of this program that provided the loans to the families in the City to see if you got more from the state or if you got more from the local banks that provided the product. But the products were developed with the banks to help 107 6/2/08 - FINANCE - BILL 080500 people with less than perfect credit to get home improvement loans or whatever they wanted to get or to borrow money. And I certainly would think that having four or five banks participate in a program would certainly give you more leverage, because when the $1.5 million runs out, then what are you going to do when you don't have the support of the local banks to fund this program? MS. McCOLLOCH: Okay.

So I think it was not a wise decision. I think it was for other reasons, and before I pass this budget, I want to figure out what -- have an idea of what's going on before we pass this budget, because I'm not happy with that decision. MS. McCOLLOCH: Okay. I understand what you're looking for.

Thank you very much. Is there anyone else?

How were 108 6/2/08 - FINANCE - BILL 080500 the families identified? Through the housing agencies or through housing support programs, like HADV and others? MS. McCOLLOCH: In the Mini-PHIL program? It was through housing counseling agencies. Housing counseling agencies made referrals.

I see. To OHCD? MS. McCOLLOCH: Well, not to OHCD. GPUAC, Greater Philadelphia Urban Affairs Coalition, was managing it, and so referrals were made to GPUAC, who did a review, and then they were in turn referred to banks to get assistance.

Okay. And so as with most scenarios like this, it's difficult to follow the dot. So in addition to Councilwoman Tasco's request, if you could start with a family and how they would end up with HERO or PHCD -- MS. McCOLLOCH: Oh, I'm sorry. What I just described was the old Mini-PHIL program, not the HERO program. 109 6/2/08 - FINANCE - BILL 080500 I apologize. The way the Mini-PHIL worked -- I just misunderstood your question. The way Mini-PHIL worked, clients went to the housing counseling agencies and then they were referred --

They were referred to a local bank. MS. McCOLLOCH: Right, but GPUAC did a review first. The housing counseling agency met with the client, reviewed whatever his or her issues were, put together a package that was then -- that was recommending what the refinancing would be, and then that was given to GPUAC for review, and then that family, after that review was completed by GPUAC, was referred to the participating bank, and then the bank accepted or declined the loan application.

All right. This is a footnote, not a part of the discussion. It's very difficult for Blondell Reynolds Brown to follow what 110 6/2/08 - FINANCE - BILL 080500 you just described. So from a constituent service perspective, imagine how intimidating that process is for a family who is in a dire situation and fearful of losing a home. And it's a rhetorical statement. I don't know how we answer or fix that, but it's symptomatic of how we need to think from where constituents are when it comes to the mammoth possibility that they may be losing a home.

Councilwoman, if I could also clarify. The Mini-PHIL and PHIL-Plus were not foreclosure assistance loan programs. They were specifically home improvement loans for people who had less than perfect credit, but they were not designed at all for the situation you just described for where somebody is in that crisis situation. What the housing finance agency is offering the City is two products, the HERO loan, which is more specifically geared for the situation that you just 111 6/2/08 - FINANCE - BILL 080500 described and where we will give you the process that is used for that situation, and then the Repair and Renovate, which is more similar to the Mini-PHIL and PHIL-Plus, for those homeowners who need a home improvement loan and who can't get it through the traditional bank channels, and we'll give you both of those outlines.

Thank you very much.

Are you saying that you're going to have a program for people with less than perfect credit? Because if you're talking about the PHIL Loan program, it does not deal with that category of resident. The Mini-PHIL Loan program was designed to help those people who had less than perfect credit who were subjected to the predatory lenders in this city and got themselves in the position where they ended up in foreclosure. Not to refinance their property, but to help 112 6/2/08 - FINANCE - BILL 080500 those people who may have less than perfect credit obtain a loan to do home improvement that would keep them away from the predatory lenders. That was the purpose of the program, not to help with refinancing. MS. McCOLLOCH: Correct.

Because it would keep them out of the foreclosure. So the intent of the program was to address the issue of predatory lending. MS. McCOLLOCH: Right. The intent --

Now, the PHIL Loan program, you have to have good credit to get that loan. MS. McCOLLOCH: The intent of the Mini-PHIL was to offer a different product to repair properties so that families would not have the need to get predatory loans. Absolutely. And we can give you a report, a fuller report, on the Mini-PHIL program which we will prepare. And I apologize. I didn't 113 6/2/08 - FINANCE - BILL 080500 realize that that was going to be a topic today or I would have been more prepared with more information about it. But one of the issues that we discovered as we were implementing the program was that in fact although the banks were participating, the banks did not really offer, although they sort of said they would as a practical matter, the number of families with less than perfect credit, the target population that we were trying to address, they weren't really being served even though -- because the banks weren't approving those loans, and one of the things that we need to give you and the other members of Council is that information about how many loans were submitted to the banks, how many were declined and for what reasons, how many were accepted and for what reasons. We have those data. I just don't have them with me today, but we can prepare those.

Well, we 114 6/2/08 - FINANCE - BILL 080500 know it's not going to be 100 percent. MS. McCOLLOCH: Right.

You know that. But they did help about 240 families. They did help -- now, would it have been 242 or 243? But we got 240. MS. McCOLLOCH: Okay.

So I'm just telling you, it was not based on anything but being just mean spirited and vindictive. And it's not you. Okay? So I'm just not happy with that at all. MS. McCOLLOCH: Okay.

Thank you very much. There being no further testimony, this meeting is recessed until June 12th at 9:30 a.m. (Committee on Finance adjourned at 12:00 p.m.) - - - 115 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 June 2, 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.)