Committee Hearing, December 10, 2001

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, 12/10/01 2:25 p.m. - - - RESOLUTION 010218 - Authorizing Committee on Commerce and Economic Development to hold hearings which investigate planning process, the 1997 HOPE VI application, and current proposed development plan for Schuylkill Falls Public Housing Authority site. PRESENT: COUNCILMAN MICHAEL A. NUTTER, Chairman COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DICICCO COUNCILMAN ANGEL L. ORTIZ COUNCILWOMAN BLONDELL REYNOLDS BROWN - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 12/10/01 COMMERCE & ECONOMIC DEVELOPMENT COMMITTEE I N D E X WITNESS Judith Robinson, Real Estate Broker......... Bryant Feggins, Schuylkill Falls Resident... 10 Prince Mohammed, " " " ... 11 Abbe Fletman, Esquire, Partner.............. 34 Wolf, Block, Schorr & Solis-Cohen Counsel for PHA Robert Totaro, Vice President............... 36 Penrose Properties, Inc Shaheid Dawan,Chief Operating Officer....... 36 Universal Community Homes Carolyn Sutton.............................. 87 East Falls Development Corporation 3 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Good afternoon ladies and gentlemen. The City Council Committee on Commerce and Economic Development -- this is a reconvened hearing from the original hearing regarding Resolution No. 010218. Attending today's hearing is Councilman DiCicco, Vice Chair of the committee; myself, Councilman Nutter, Chair of the committee. Other Councilmembers are on their way. We had established a quorum at the first hearing, so we'll continue with the proceedings. We have the names of a couple individuals who wish to testify. If we don't have your name and you wish to testify at today's hearing, please see the clerk of the committee, Miss Julia Chapman, who is seated to my left. Let her know of your interests at testifying and she'll get your name and put your name on the witness list. We have -- the first witness for today's hearing will be Miss Judith Robinson. (Witness comes forward.)

Good afternoon.

Please identify yourself for the record.

My name's Judy Robinson. I 4 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 am a licensed real estate broker, and I'm also a resident of North Philadelphia. I am here today to support the people of Schuylkill Falls in their efforts to have diversity in housing in their neighborhood. As a real estate broker, I know a choice piece of land when I see it; it's all about location. And I hope that -- and I encourage you to assist them in any way you can to get multi-use and diversity in housing in that neighborhood. And the reason why I really am quite concerned about this is because in North Philadelphia, where I live, PHA really contributed so much to the conditions that we find our neighborhoods in today. So I really am concerned about how PHA is developing new housing as they have imploded the units that were there in the past. I understood when this project was first put on the boards that things would change. I really am concerned that PHA is allowed to pretty much remain as it was before. And I'll give you an example. Raymond Rosen is the area in which I live -- I live in that area -- and they put in the 5 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 newer developments. It's about nine blocks now that PHA has been spread all over. And I brought along some pictures because I'm concerned about the fact that it's sort of like a concentrated area that these properties were put back into. In addition, I'm concerned about the workmanship and the materials. So I'm not proposing to be a major expert in construction, but when I look at what they put back up, the firewall, etc., it really concerns me that the quality of work and the material is not up to par. So not only do I support these folks getting diversity in housing, but I also am concerned that the condition of the housing that is put back there be of quality, because they're looking forward to trying to build home ownership in the community. So that's just one thing that I would just like you to keep an eye on too, Councilman Nutter, as these properties go back up. There must be some way for them to be mixed use and of quality so that the East Falls community can maintain the value that it has now. I'm sorry, I was looking for my photos 6 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 when I was rushing here to try get before you today, so I might have left them, but I can certainly get them to your office.

Okay.

Because I'm really concerned that because housing is subsidized that people tend to want to grab the money and kind of throw up anything and leave the community in need, is basically what it looks like will happen. And the firewalls were very thin in the Raymond Rosen units, and they just looked like they are built to house very low-income people that will not be concerned about the quality. In East Falls, I know what they're looking for as far as the mixed income, so people who are homeowners would be more concerned about the quality of material. So if these properties are put up and not put up with the quality that a homeowner would be looking for, I think you probably would have problems even selling them, even in the East Falls area. The bottom line is, I'm just here to support the people of East Falls 'cause I don't want their community to look as North Philadelphia does. 7 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 PHA has really been detrimental to us, as I live the Susquehanna area and PHA is putting up properties without really being concerned about the neighborhood, in my opinion. They're spread out in almost like a concentration camp-type area. So they went from high-rise to laying 'em across nine blocks. I just want to basically make sure that when we look -- talk about transforming neighborhoods and looking for best practices, etc., that we look very closely at PHA what they have become now. And I would just encourage you just to be a watchdog on the project, that any project that goes up, but particularly this project, because I think it's a great location, it's not too far from me in North Philadelphia, so I figure as they go, we can kind of get some of that positiveness too. So I'm just here today to encourage you, if at all possible, to assist them in any way possible to have diversity. And I thank you very much for your time.

Thank you for taking the time. (Applause.) 8 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Any questions?

Yes.

Miss Robinson.

Yes.

I'm sorry, I can't let you go so quickly. We've been joined at the table by Councilwoman Reynolds Brown, and the Councilwoman has a question.

Good morning. You mentioned in your closing comments that high-rises are unacceptable, residences that are spread out across or around the City are unacceptable. What is your preferred approach and/or appearance of PHA presence?

Well, I would suggest that, first of all, some of the people that live in PHA renting could possibly be homeowners. So instead of having everybody there with the same income, the same outlook, renting, that you could offer some of them to purchase. That's the first thing. So it's not so much the house being closely connected, but it's more so having people all of the same income, 9 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 same rental mentality sort of living in the same area, spread out all in the same area together. So I think it breeds sort of the same things that we found in the high-rise basically is what I'm saying because there's nothing really different as far as screening or opportunities to move up, so to speak.

Thank you very much.

Thank you. Any other questions for Miss Robinson? (No further questions.)

Thank you, thank you very much.

Thank you.

Councilman Ortiz has also joined the committee. I'm going to call the next witnesses together; that's the way the names were given to me. Mr. Jonakin and Bryant Feggins. (Witness comes forward.)

I apologize if I didn't get the pronunciation correctly, but please identify yourself for the record. 10 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Brian Feggins.

Spell your last name, please.

F-E-G-G-I-N-S.

Gotcha, okay.

I am here today to speak on behalf of Schuylkill Falls residents. I've been living there for probably 10 years, watching it grow up. It's a beautiful 11 environment. And until probably a couple months 12 ago, I was in the business of selling cars, and I 13 saw that my mom was dedicated into helping everyone 14 get back to the site as well as Mr. Jonakin and Ms. 15 Jonakin, so I decided to come aboard. I'm also a young entrepreneur from the site, in the process of starting my own business, and I would like to see that many more residents get back to work to the site, since this is what the money was, I guess, supposed to be delivered for, the residents; so, therefore, they can get back to the site and work and earn income and purchase, rent and/or both a part of Schuylkill Falls.

Okay, is that it?

Yes, sir. 11 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Okay, thank you. Please identify yourself for the record.

My name is Prince Mohammed. I think you may have said Melvin Jonakin, so this is for a correction, a name change. This is Prince Mohammed.

Okay.

I'm here today to speak in reference of -- I was at the last hearing and I was disturbed greatly at the last hearing when we talk more about money for the top of the hill. (Speaker pauses.)

Go ahead.

I'm going to wait for Mr. DiCicco. Thank you. When we talk about money at the top of the hill as opposed to speaking towards the residents that were relocated from the site, I have a tremendous issue with us looking at this site other than for the residents of Schuylkill Falls that have been relocated from the site. My issues are, we now have these public hearings, but where were the public hearings when we were getting letters from PHA to relocate after they 12 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 said we could stay on site? Where were the public hearings when we were told down at City Hall, the same place, over a hundred residents to be relocated? Where was the support? Where was the public hearing when we had a pool on a map that was taken off? Where was the public hearings when we had a commercial property that was allocated to the developers based on the revitalizing Schuylkill Falls that was somehow -- that had a meeting and it was somehow removed. You know, when you speak about public hearing, last meeting, we were talking about bricks and mortars, but we didn't talk about the 236 head-of-household and over 700 Democratic African-Americans on that site that was voting over 80 percent turnout, that we had Councilman Ortiz show up and campaign in that area. We didn't talk about that same area that supported Mr. Nutter when he ran for City Council, that same area where the Tenant Council had gotten in the streets to stop drugs, the same area that had those people whose -- however many people that lived up there on that site, come together and take care of their neighborhood in order to be accepted for a HOPE VI 13 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 grant. They understand that they were denied the first time and they had to get they act together, and they did that and they were accepted this time. And every time I come to these public hearings, we don't talk about the interests of the residents; we talk about, Where Carl Greene at? the fiduciary. You don't talk to the developers; you talk at PHA. You don't talk to the Tenant Council; you talk and you ask about PHA. Ask the developers who were taking the opportunity to come forth and work with the Tenant Council and employ some of the residents from Schuylkill Falls so they can get the opportunity to work on that site and join the labor unions and earn some income to have a Christmas. We talk about the top of the hill -- we're not even at the top of the hill yet. We talk about the money for the top of the hill. " Notice Bryant and myself didn't come up here and say "former tenants of Schuylkill Falls"; We say "tenants of 14 12/10/01 COMMERCE & ECON. DEV. - RES. " In 1997, when this grant application was awarded, we were tenants. In the year 2000, we are still tenants of Schuylkill Falls. So this past election, when they told me that the redistricting of all these African-Americans, they now have to register where they've been located for the last year, I was appalled, 'cause they had no place to come back to vote. You can't just get rid of a whole ward of African-American Democratic voters and put 'em somewhere else. They don't have a place to work for on site. You want to send them down to South Philly where they're all the way up to the greater part of Germantown, you want to spread it all the way up to {indiscernible). They can't come back to East Falls, Schuylkill Falls -- they lived there for years, 19 30 years. Imagine taking your mom out her house and 20 relocating her somewhere else after she raised all of her kids there and she lived there through two mortgages. And we come down here and we try to grandstand and appease the surrounding community. We don't do it at the task force meeting, which is 15 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 scheduled the last Thursday of each month. There's no one there, there's no representation there. There's no one there taking our views back. Understanding where we're going with this project right here.

But yet, you take a few people who are able to sit and draw up legal briefs and were able to communicate with their friends and network, social network. You take their views, you take their complaints. You got folks here who are complaining about Schuylkill Falls, and they can't get Schoolhouse Lane fixed no matter what they try to do. Can't get that raggedly street fixed no matter what. And they don't even live -- their street says traffic's not allowed, private property. You can't even go down their streets, and they're here today campaigning that we should rebuild Schuylkill Falls, that we should have blue shingles as opposed to red shingles, that we should have a separation of a 50-unit building that's designed for some of the young grandparents in public housing, you know, the ones that are 40, 45, 50, 55, who have taken on a responsibility of their sons and daughters to raise the kids. That's not fair that's ridiculous. 16 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 And I sat here at the last public hearing, and I thought of all the times that we dealt with this issue, and we never dealt with the residents. We've always dealt with the bricks and mortar, always. And you guys got to support us in a way that we -- this is a subsidized project here, a subsidized, the whole thing is subsidized. This is not Beverly Hills. This project didn't become appealing to anyone at all until the HOPE VI grant had shown up. Now, all of a sudden, they want to make it Carnegie Hall. These folks want to make it Beverly Hills. Somebody just came up here and said, Well, we don't want it to be like Raymond Rosen. Well, Schuylkill Falls was never like Raymond Rosen, it will never be like Raymond Rosen. This young man, myself, about 10 other young men, came out of Schuylkill Falls and furthered our education, and we're back, standing strong. We settled down last year so the residents can work. We had asbestos training, we had pharmacy phlebotomy training. We had a night of candidates where Ortiz and Nesmith and all the other ones came up supported us and talked with us and shared with 17 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 us. State Rep Kathy (indiscernible) came up. So we're human beings. We care about our site, we care about the development of our site. We now have a working relationship with both developers. They may not have been our choice, but we are dealing with the cards that we have been dealt, and we will not allow anyone to shuffle the deck in midstream. They haven't asked us, Come to a task force meeting before you sit here and convene about what you going to do with Schuylkill Falls, as if those people are insignificant and irrelevant. Because, guess what, at this stage, we're not looking for it to stop, we're not liking for it to halt, we're not looking for a intermission, we're not going to take it, we're not going to let -- Surely, who are these people identifying themselves who want this project to stop? Who are the CDCs in that neighborhood? Who are the, all of a sudden, East Falls Business Community, East Falls Committee on Schuylkill Falls? Do they have board members, do they have board insurance? Who do we file a civil suit against when this project stops since they so adamant about stopping this project? And we're not going to let a few folks stop this 18 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 project. Now, do we have the opportunity? You guys know that there were far more residents at Schuylkill Falls than there are present right here. We may be represented by a Tenant Council, but surely, when we put the call out and get a hundred to 200 angry residents who have been forced to move out of their homes, who still have merchandise and items and stuff left in their houses of some kind of sentimental value, we'll get 'em all down here, and we'll be here all day, we'll have to reconvene till January sometime. And you guys have been blessed with not having an opportunity.

You just got a few elite people down here to speak about how the project shouldn't go on, how the blight should stop. This is the same blight that they live next to, this is the same blight area that these folks cleaned up and made it a better area. Have you taken a walk through East Falls lately? Take a look at the benches that they put in the park and all of the little Caucasian kids that sit on 'em and smoke marijuana and drink beer. Take a look at the destruction on Ridge Avenue that none 19 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 of them are telling that you about, that the Schuylkill Falls housing development has cleaned up in their own house. You got a worksite now without us being there than you have when we were there. So we're not about to sit up here and take it on the chin and lay down and let you ridicule and grandstand the developers and Universal and Penrose and keep calling for Carl Greene. He's merely the fiduciary for this project. If you want to know about this project and its success stories, then you ask it to the Tenant Council and you ask the residents. Thank you. )

Let me just ask a couple questions. I mean, obviously, things have gotten better, I guess, from your perspective than -- I seem to recall one time you were trying to access some opportunities up at the site. I think you may have been arrested. I think I had to be in touch with the police about that particular issue while you were in custody in an effort to get some job opportunities and turn things around up at 20 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 Schuylkill. So I think since that time things have gotten better?

You know, I think -- and it's ironic that you would bring that up because if you had a hand in this situation, what I had gone through as an advocate for Schuylkill Falls may not have ever happened, may not have ever happened. If you had had a public hearing prior to me standing up stopping work, then it may have never happened. What you're speaking about is an interesting issue.

Me having a public hearing wouldn't have stopped you from being arrested. I think --

No, what you're speaking about is an interesting issue.

-- that was between you and the police officer.

It would have stopped the process. It had nothing to do with me being arrested. You asked the question. Have things gotten better? And --

Obviously, things have gotten better and --

And we looked at the 21 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 situation as the glass being half full than half empty.

Mm-hmm.

Okay, half a loaf of bread is better than none, okay, and we've accepted that right there. And if it takes one --

But you didn't get the whole loaf.

And my understanding, if it takes one to get arrested, then this young man would have got arrested as well.

Okay.

And the other 12 that you were seeing me with would have got arrested, am I correct? Did you really see me as an individual traveling the way I traveled? Didn't you see me with about six other guys?

Sure.

I'm quite sure you did.

Yeah, yeah.

Right. So --

You had a whole crew. I mean --

Exactly. For me to take it 22 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 on the chin for the residents who can't defend themselves.

Mm-hmm, okay.

And if we're going to get jobs --

Right.

We hired people to do 9 asbestos removal -- 10

Mm-hmm. 11

-- after we sent them to 12 school, making $26 an hour. 13

Okay. Are they still 14 working at the site now? 15

Are they still working at the site now?

Mm-hmm.

No, they're not. There's no more asbestos except for the top of the hill

What are they doing now?

What are the residents doing now?

Mm-hmm.

Well, then this is a 23 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 question I wish PHA was here, because they're now working in the labor union and at various jobs with PHA 'cause they're certified asbestos lead-abatement individuals.

Okay. How many of the former residents are working there?

How many of the former residents are working at the site right now?

Mm-hmm.

I think about two.

Two?

Yes.

How many people live there?

Over 700. But let me ask you a question.

You have two?

I have two -- we have two at this time.

Who are they?

We have Michael Bennett and, I think, a Josh (indiscernible).

I thought Michael got terminated. 24 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Yeah, but, see, this is where -- in the two-week span from the last public hearing and the one prior to this, Michael was readmitted back to the site.

Do you think that was a coincidence?

Actually, I think it was a blessing, but let me help you out here.

Okay.

There was a meeting with Domus, he's the GC on the site.

Mm-hmm.

Okay, do you know that Domus had allowed us to do security on the site?

I don't talk to Domus on a regular basis.

Well, neither do you talk to us as well, but Domus had allowed us to do security on the site. We put a proposal in for X-amount of dollars.

Mm-hmm.

And now the same amount of residents -- the 12 who had worked with Social Security protecting that site and monitoring that 25 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 site, will be allowed to work up under Domus on that site.

Good.

You know, construction, there are different phases, different things are happening.

Mm-hmm.

So that means when the actual building begins, the residents are already slated to go on the site. Should we just put 12 residents on that site because what, what should 13 they do? 'Cause you would like them on that site 14 right now? 15

No, I think the residents should have an opportunity to do work at the development. That's why I asked the question.

And we agree with you, we agree with you, but you just made a statement that I got maced and locked up. Because I feel the same way you do, that they should have an opportunity to work on the site.

That was a long time ago. Your basic premise is that, as I took the testimony, everything is fine, things are going 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 well, the residents are working, everyone should pretty much be happy. And all I was saying was, there seemed to be a different point in time when there was a very different view by many of the residents that things were not going well and things were not right, things were not working out. There was a chain of events.

Right, but now you guys have forced us to take our own responsibility for our own residence in our own hands, and now we have to get out and politic, and now we can't leave it up to you to call public hearings when things aren't working right with PHA or the developers. So --

Well, the resolution 17 was introduced a while ago. But all of these things, as I best understood them, I mean, City Council does not run PHA.

Correct.

PHA is of its own entity, gets its money from the federal government.

That's correct.

But it was my 27 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 understanding that a number of people have a variety of opinions about this, both residents, as well as neighborhood people. And this is a forum that's been open to anyone. No one has been denied ever an opportunity to come here and speak. I think you were here at the last hearing, a couple of other residents were here at the last hearing, there wasn't that much notice. We said at that hearing that there would be another hearing. We are trying to get to the bottom of a whole host of issues. Some may be addressed by things that you have already done, some may not be addressed by those things, whether it's the Michael Bennett situation or others. It's a public hearing. But PHA --

That's correct, that's correct.

-- takes steps that it wants to take for its own purposes and also does not necessarily communicate with its own residents. We've had many, many conversations, you and I, about the actions of PHA and your direct request to even get PHA to meet with you or Miss Jonakin or other people. 28 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 So I mean, look, you have the right to jump around from time to time and be on whatever side you want to be on, that's fine. PHA, it is their development. They set up a self-sufficiency program. I think the last hearing, when you were here, there were complaints about the self-sufficiency program. I know over the years you have complained bitterly about the self-sufficiency program, but that's not a City Council program; that's a PHA program. And whether it's working or not, it's a PHA issue, and it's all transitioned from RHD to Universal, who has the information, who doesn't. I mean, all of those issues are really PHA issues.

Just for a moment, if I may interject.

But you're working on that program too, right?

You're making it seem like all of a sudden, you are -- you've been just privy to this information as well as you're able to recount the various entities that are involved. You've known both by correspondence and both 29 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 physically and both by phone call of these issues.

Right.

So let's not bring them up as if they happened yesterday and you just called a public hearing to resolve some of these issues.

Many of them have been going on for a while.

These issues -- you've left us -- you've left us out there and we had no other choice but to do what we needed to do for ourselves to service ourselves. So if you care to speak about issues, then speak about the current issue because this public hearing that you've designed for us surely wasn't for the residents at this time, because if it was, it would have been designed a long time ago to better service the residents. This was merely to discuss East Falls premise on finding money to get the top of the hill fixed up. But yet, East Falls does not speak for Schuylkill Falls. We are our own entity, so when they speak, they just want to see something happen for us. Please, please don't -- please --

Well, you're entitled to your perspective. It's impossible for you to 30 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 know why I do what I do. It's also impossible for you to know -- (Unintelligible; parties speaking over each other.)

-- from your perspective who the ultimate beneficiaries are of a variety of these options. It's not about top of the hill, bottom of the hill, or the side of the hill. It's about the entire site, what goes on over there and then how that relates to a much larger and broader community. If you want to take a perspective that it's only about the site, that it will stay an isolated site, that what happens there has no 16 relationship to what goes on in the neighborhood, then --

Not understanding the conversation --

-- you have a right to take that view.

If you say "isolated site" and you've clearly lived in that community for quite some time now, right?

I'm sorry? 31 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

You've clearly lived in that community for quite some time, right?

Mm, no. You may me mistaken with someone else. I don't live in East Falls.

There was two ways in and two ways out of Schuylkill Falls. Were you familiar with the site at that time?

No. 11

Of course, you wasn't, but we were.

Okay.

We knew that you could come out that side street and go down Calumet Street. When you talk about a isolated site, we didn't build those barriers up there on that site right there.

I didn't either. You're talking about the Calumet Street site. Sure, there's --

Of course. I'm talking about when you say "isolated," my residents isolated the folks in there like Brewster Place.

I'm sorry?

We had no choice -- we 32 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 didn't opt to have bars or poles put up to leave out of a property, which we thought it was unsafe because if someone had gotten sick at the top of the hill, the ambulance could clearly go up Calumet Street and be there.

Well, I didn't have them put there, but I did insist that in this development -- I said I didn't have them put there, but I did insist that in this development, as it was originally designed, it only had one way in and one way out. And I fought with the same people that you're complaining about to insist that there be two ways to get in and out. Now, maybe you don't know that, but there are now -- and it's because of what I did. I mean, we don't have to have a discussion about who did what to whom and how it got done.

We applaud you for that.

I didn't ask for the applause.

All right, then. So what's the point?

You asked me, did I know about the site when it had two ways in before, 33 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 and now it only has one? I mean --

But you say you advocated for two ways out; am I correct?

Yes.

It should have been that way all along. My point is --

I didn't draw the map.

My point is, we're on the same page.

All right.

If you want two ways in and two ways out, we're agreeable with that.

That's wonderful.

Right.

Thank you. I appreciate that. I'm glad we found a point of agreement. Thanks.

Have a great day.

You too. Can we have the representatives from PHA, please? (Witness comes forward.)

Please identify yourself for the record. 34 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

I'm Abbe Fletman, and I'm a partner at Wolf, Block, Schorr & Solis-Cohen, which is representing the Philadelphia Housing Authority in pending litigation with the East Falls community.

Okay. And why don't we establish for the record whatever you might like to tell us today about PHA, their presence or lack thereof, and why is it that the two -- I mean, not that you really need them, but just for-the-record purposes, you had two guys with you at the last hearing and maybe you decided that they didn't provide much worthwhile information at that particular hearing and kind of left them home, but there were three of you at the last hearing. Is PHA still not participate in the hearings?

Yeah, Councilman, our position has not changed since the last hearing; namely, that while there is pending federal litigation covering precisely the issues that your committee is investigating, that there will not be testimony. And we've offered to answer written questions. I mean, the position hasn't changed, and I 35 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 was here, frankly, to observe, I was not aware that you were seeking a PHA witness for this hearing.

Well, I mean, the request had been made for the previous one. I mean, I'm not necessarily surprised; I just want to make sure that we have a clear and consistent record at the second hearing that the agency is maintaining the same position that it had before. But, I mean, I didn't want to make that assumption on the record, and it's better if you put it on the record.

I appreciate that, Councilman. Our position has not changed since the last hearing.

Okay, all right, thank you.

Thank you.

Thank you, Ms. Fletman. Mr. Totaro, are you here to finish up our discussion from a couple weeks ago? (Witnesses come forward.)

Okay. Please, gentlemen, would you please identify yourself for the record and proceed. 36 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Good afternoon. My name is Robert Totaro and I'm Vice President of Penrose Properties, Inc., a partner with Universal Community Homes in the Schuylkill Falls redevelopment.

Okay.

And my name is Shahied Dawan. That's S-H-A-H-I-E-D; the last name, D-A-W-A-N. I'm the Chief Operating Officer for Universal Community Homes.

Okay, all right. Gentlemen, thank you Mr. Totaro, you sent me a letter recently with regard to some of the discussion that we had on income mix and rental versus housing. I know that -- I know that you want to try to be as helpful as possible. I don't know whether you were trying to keep it down to a two-page letter or just not have it kind of go on and on. I have to tell you that some of the parts of the letter were a little confusing, given the -- kind of the jumping around back and forth between the mixes and the numbers and the percentages. So why don't we try to walk back through some of that. 37 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Sure.

We had also had the discussion last time about some of the other aspects of the proposal with regard to timing of when different elements would be built around, again, kind of rental and home ownership -- I don't want to say "rental versus home ownership." But why don't you kind of refresh our kind of collective memories and then go through your piece as to what, at least by your understanding, Phase I represents and what will be built when.

I think I mentioned at the last hearing that the use of the concept "phasing" has been used in two different senses as applied to this development. The one has to do with the phasing of the development of the property, and essentially that property has been divided into an eastern portion and a western portion generally divided by the new Merrick Road, which is similar in path to the existing Merrick Road.

Are east and west divided by essentially that kind of circular road? I don't remember --

Yes. 38 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

In the middle?

Correct.

So if you're looking at the map, if you're to the right of that circle, you're in the east, and to the left is the west?

Generally so. And to the east, or right, has been referred to as Phase I of the site development; and to the left, or west, Phase II. But it's a little bit complicated because that same concept of phasing has been applied to the real estate development, and so Phase I housing development represents 135 units of rental housing, which is now under construction on the eastern portion of the site. But that is not the only housing that is being developed on the eastern portion of the site. As I mentioned at the last hearing, 28 sales housing units are also being developed on the eastern portion of the site. And then the western portion of the site, which is sometimes referred as "the top of the hill" --

Hold on for one 39 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 second. So that takes you 135 plus 28, so now we're in --

163.

163?

Yes.

Okay, in Phase I. Go ahead, Mr. Totaro.

At the top of the hill, or the western portion of the site, is to be developed for 107 sales housing units. So the two combined should total 300 -- though math is not my strong suit.

I get 270 out of it.

Oh, I'm sorry. Yeah, thank you. There are the 30 units of rental housing, which is purely, by everyone's definition, market-rate rental housing, which is on the lower portion of the site west of Merrick Road fronting on Ridge, and it is to be a mixed-use building, 30 units of rental housing, about 6500 square feet of retail commercial. And it will line up as a companion building to the 50-unit mixed-use building on the eastern part of the site, east of Merrick 40 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 Road. So that's the additional 30 units.

Okay. Was that the area of when you talk about the lower -- essentially the lower western side of the site, is that originally where the proposed swimming pool was going?

Yes, it is.

Okay. That issue was raised with me actually earlier today. Why don't you tell us for the record what happened with that.

When we were introduced to the development, there was still talk about the development of a pool building in that location, and we inquired about the availability of City funds and were advised that the estimated $2 million to construct that building was not available from the City. And we then began talking about an alternate plan for the development of that parcel.

So at that time, there were not 30 units designated for that particular area; the units were scattered somewhere else on the site?

There actually were several 41 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 different concept plans for that portion of the site. Some of them involved multiple buildings, some of which would have been residential in character and another a recreational building. And in one iteration, it was a pool building. I even saw concept plans for a single building incorporating 30 rental housing units and the pool itself, which would have been very difficult and expensive to construct.

A combination of, I mean, in one building a pool and the residential?

(Nods head.)

I think the residential was going up above?

Correct.

I mean I remember seeing it. Okay, let me -- let me skip for one second and try to get a little bit of information, 'cause I think we didn't get as much as we probably should have the last time. Mr. Dawan, can you tell us what is going on with -- it's my understanding, and it's the reason I'm asking you the question -- and if I'm 42 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 asking the wrong person, you'll tell me. It's my understanding that the self-sufficiency program is primarily being run by Universal; is that correct?

That's correct

Okay, can you tell us a little bit about what's going on with that, what its various times elements are, level contact with the residents, what the programs are, and that kind of information?

Okay. Currently, we have a couple of people from the Resident Council as staff. We have case workers assigned to form a unit to deliver the services --

I'm sorry. To form a what?

A delivery service unit for the residents.

The case managers, are they former Schuylkill Falls residents?

No. 22

Are these just general employees of Universal?

That's correct, just general employees of Universal. 43 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Okay.

And they are currently located -- they have office space in the Universal Workforce Development Center located at 1427 Catharine Street in South Philadelphia.

Mm-hmm.

Also in that particular facility, we have our Center for Employment and Training, and we have other service-providers located in that facility -- drug rehab, health. And the process is that we reach out for the particular resident. Once the resident is contacted, we develop a plan for the resident.

Go ahead.

And depending on the level of need of that resident, they will enter the process either for training or employment -- placement and employment, GED. Whatever services are required, we begin the action of the plan for the residents.

Now, how many of the residents are participating actively in the self-sufficiency program or how many have been contacted?

I didn't bring the exact 44 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 numbers with me -- we do have the numbers. I would say during this year, roughly about 150 residents.

150?

Yes.

And how many residents were on the site?

Total -- all of the family members, about 700.

Okay. And what happened to the other 550 or so?

Well, as you know, very well know, early on, we had a problem with transitioning from RHD over to Universal with the case files, which meant we had to start from the beginning, we had to start all over.

Why?

Why? Because a lot of the residents had already had their plans developed. And to develop a plan, you have to do an assessment of the family, and it's a very long process, and a lot of residents -- once you do this particular type of plan for a person, they don't want to go through the process again. So --

Why can't they get the 45 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 information from the previous provider?

We were not able to get the information because PHA would have had to obtain the information and provide it to us because it was owned by PHA. They had contracted with RHD for --

Well, why didn't PHA do it then?

They were not -- from what I understand, they were not able to obtain the information.

They were not able to obtain the information from the contractor that they had hired to do this work?

Exactly, that's what I understand.

So working with the 150 people and --

Well, what I was -- of course, as the people come in, obviously it's not the same people, so you continue to build your case files, and that's what we're doing. And as a matter of fact, we have even planned to pick up the pace because we want to be able to get to where we need to be to help the residents get back on site. And 46 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 the things that we are required to do -- our development partnership is required to do, we know we have to increase the pace. And that's what we're currently doing now.

Tell me about the contract a little bit. Is it a set sum of money, is it a per-person fee?

It's per activity, it's per activity. If we don't perform, we will not get paid. So in other words, if we do not case-manage households, if we do not place people in jobs, if we do not improve people's education, if we do not get people in housing counseling -- so each activity basically has a payment associated with it, and so it's not a flat fee.

Has PHA provided you with the total list of the 700 people and where they were located to?

We have it now.

So you were able to contact them on your own?

Yes, that's correct. With the help of the Resident Council.

But you're saying that 47 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 some are reluctant to go back through the process 'cause they did it once already?

Well, some people are reluctant to do it, yes.

Now, of the -- let me make sure I get on the record that Councilman Clarke is here. Now, of the 700 people, how many are relocated relatively near to where you're located?

I don't have that information with me.

I'm sorry?

I don't have that information with me.

Okay. Well, I'll just ask the natural follow-up question. Of the 150 that you're working with, how many of them live relatively near where you're located?

I wouldn't have that level of knowledge. I have a vice president at Workforce Development who would have that level of knowledge.

Okay, can you get us that information?

Sure. You want to know how 48 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 many people are close to us?

Yes, the Universal people who are relocated, that's one group; and within that subgroup, how many of the people that you're actually working with, the 150 that you mentioned. I do need you to clear up one thing, if you can just so that, again, we have it on the record. I mean, we get all kinds of information and all kinds of statements are made, and I try to work with facts. Are there any services that you provide that any of the residents have to pay for?

Absolutely not.

There's no payment required for anything?

Mm, no. I think there might have been some seminars, business seminars, where we had outside contractors come in and there might have been a $10 fee for something like that, but that's the only thing I can even think of where there would be any kind of charge. And a lot of times, if a resident is attending it, the fee is waived.

I'm sorry?

If a resident is attending 49 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 that, the fee is waived. So, if we have -- well, Of course, we serve a lot of people in the community, so if we just have regular business people come in, they might pay the $10 fee. But for residents, there's no fee.

Okay. And how do you deal with transportation issues. If a person doesn't live, you know, kind of somewhere in South Philadelphia and they have to get there --

Generally, we provide tokens, we provide transpasses. And so the Resident Council even has a van and they will transport people occasionally to the site.

Mm-hmm. And tell me about some of the -- maybe not everything, but give us some examples of what the self-sufficiency program is about.

Well, the way we see the self-sufficiency program is taking someone who is either under-employed or unemployed, their level of education is not good enough for them to earn a living wage, and that living wage, as we see it, is $8 plus benefits. And to take those people and increase their capabilities to a level where they 50 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 can earn that living wage. That's part of it. The other part of the self-sufficiency program for HOPE VI projects is to be able to develop these individuals in a manner where their creditworthiness, their income, and their knowledge about home ownership is increased to a level where they can return to the site mainly as homeowners. So even we know to return to the site as renters, they have to meet certain qualifications that we have as developers. And so it's the same criteria we use for all of our developments as we return people to the sites.

And how many of the former tenants -- I'm sorry, how many of the residents who are presently not at the site -- because, obviously, no one lives presently at the site -- how many do you anticipate will be in a position to return?

I can't give you a number on how many right now, I can't give you that number right now. That's a very difficult question to answer, very difficult.

Because...? 51 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Well, because, first of all, some of the people that have moved off the site don't even want to return to the site, some of them are purchasing their own homes, they're comfortable where they've been relocated to at this time. The other part of it is really getting people to participate in the self-sufficiency program. It's a very arduous task to get people to participate, so --

Why is that?

As I mentioned earlier, people are kind of worn down, they get worn down in the process. They were relocated, and at this particular site, some people have been relocated twice. The trust diminishes, you have to reestablish the trust; that's why it's very important that the Resident Council works with us on this issue, because there's a level of trust there. So there's a lot of issues involved with getting people just in the process. And the other part of it is, they have to see something built. So we're just starting to construct the site. So as they -- this will build their hope back up, their faith back up as they see 52 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 something constructed at the site, that, okay, something is really going to happen there because there is a lot of -- there's a loss of hope as people get moved away from their homes like this.

Okay. And just a couple last questions, at least for myself. How many of the former tenants -- how many of the residents work for Universal?

We have -- we have two that work directly for us.

Okay. And what do they do?

They are what we consider to be our outreach personnel in the HOPE VI office at our site in South Philadelphia.

And this is to basically try and track down the 700-plus residents and get people to --

And also to establish the resident-owned businesses. And they're their two main jobs: To contact former residents and to establish resident-owned businesses and to help us with the employment issue, getting former residents back employed -- as many as we can at the site. 53 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 So it's issues like that.

What are the job opportunities at the site?

Currently -- right now, because there's just infrastructure work going on, a lot of dirt being moved around, it's not a lot of opportunities there. As we begin to build, we do expect to have some opportunities during the construction, opportunities during the security. Those are the two main areas for onsite jobs.

Just for my own information so I can have a better understanding of it, what did happen in the Michael Bennett situation? Why was he terminated?

Well, Michael was -- we had an issue with Michael not being on PHA's Section 3 list. And because the contractor in his agreement needs to meet certain Section 3 requirements and Michael was not on the PHA list for Section 3, so this conflict arose like that. And they decided that -- well, they weren't going to be able to count Michael in that matter. What they decided was, they would be able 54 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 to count Michael just as being a minority former resident of the area. So they took him there.

Okay. At the last hearing, we heard a fair amount about a newsletter and other ways of contacting or staying in touch with residents. What's going on with that?

Well, the newsletter is being revamped. PHA wasn't really that happy with the quality of the newsletters that were going out; they felt as though it wasn't enough base information in the newsletter about the CSS. So they --

Who is in charge of that?

Say that again?

Who was in charge of the newsletter, Universal?

It's a combination of the Resident Council and Universal staff. So we have come up with a new process for issuing the newsletter. As we develop the newsletter, we'll draft it, we'll send it out to PHA for review and comments. And then before we distribute the newsletter, we'll get kind of like their approval. 55 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Get...?

Their approval.

PHA's?

PHA's approval, yes.

Okay, all right. So why don't you kind of at least wrap up this part. What is your assessment of how self-sufficiency is going at this point?

I think we got a slow start, but right now, we're doing good. And with our current plan to really pick up the pace, we're hiring two new case workers to specifically bolster the team for Schuylkill Falls. They will be dedicated directly to Schuylkill Falls. Then we'll have a stronger team and we plan to pick up the pace.

Just one last item. I received these materials in the mail, and I'm just trying to understand how they relate to these other activities. One is about a basketball tournament and barbecue over at Gusteen Lake apparently this summer, which, I guess, was from 12 to 8, but apparently from 6:30 to 8, there was going to be a presentation. 56 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

That's correct.

And I guess it costs something to put your team in or play or something like that. I mean, is that a part -- what exactly is that about?

The only thing we did as a part of supporting the Resident Council for that particular activity was to make sure that we had at the site -- at this particular event the presentation about what was going on at the site. So that whoever came to participate in that event, the former residents would be able to see something of substance at the event. Basically, we had the presentation boards there for the development at the site.

What's the $10 for?

Um, I'd have to ask the staff person at Resident Council what happened to the $10.

Okay. The other thing that seemed a little unusual was a flyer regarding the opportunity for Schuylkill Falls residents to get to purchase cell phones. What is that about?

I have no knowledge of that. 57 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Okay.

Does it say "Universal" on there?

Well, it says, "Contact Schuylkill Falls Family Support Center Program," and that any Schuylkill Falls resident -- employed, unemployed, retired, good credit, no 9 credit, bad credit, whatever -- that there's a cell phone for them.

I don't have any knowledge of that.

Okay.

Excuse me. On that particular flyer that you have, does it say "Universal," or does it say "Schuylkill falls Family Support Center"?

It's all a part of a big package. It says "Schuylkill Falls Family Support Center."

I really don't know who sent you the package, but let me explain. We negotiated with Sprint.

Who's "we"?

Schuylkill Falls Family 58 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 Support Center negotiated with Sprint in order to reestablish or construct some credit for those who did not have credit in Schuylkill Falls. Sprint had allowed us a program that will do -- that will allow them, if they purchase the phone, they would do a waiver of credit, meaning if they had good credit, bad credit, or no credit, to restructure, to establish some credit, they could get connected. And that was a program that we had went and sought out, and we had long meetings and we discussed with Sprint. And they allowed us this program, this pilot program, for about three months. So that way, part of the criteria is to have some kind of identifiable credit when you come to purchase a home when this site was revitalized and redone, which I think was -- we should be saluted for. It was remarkable that you could go out there with a big phone entity like Sprint and negotiate a deal like that to reestablish some credit for those folks who do not have credit at all. So -- and if it does not say "Universal" and it's part of a package, you would probably have to reveal the whole package so we can identify each 59 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 piece for you. Thank you.

I appreciate the update.

My question is to the last gentleman. I'm not clear on that. You were looking -- correct me if I'm wrong, but you were looking for a way in which to establish a credit history for folks who live in the Schuylkill Falls area to -- by way of renting a phone or leasing a phone, what have you, and if they continue to make payments and they make payments on time, that that could be used as a credit history?

We didn't say lease a phone or rent a phone. They would be responsible for a phone bill, which will show up on their credit history as part of their credit history. That is correct.

Well, I think, whether it's to lease or rent, whatever the proper term is, so if you get a phone from Sprint in your name and you make your payments and you're current, that would be a part of the credit history so that 60 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 when you make application for -- whether it's a home purchase or you're purchasing a car or something --

That's correct

-- you have some established credit.

Yes.

Is there anything beyond the use of a phone that would be helpful to those folks to look into, or is it just the phone? And how did you get to Sprint, who came up with the idea of Sprint?

Well, actually, we were looking at a couple of 'em -- Nextel, 'cause folks like the way that the two-way radio works and stuff like that, but for low-income public housing, there's not many folks that will allow someone on a fixed income or allow someone on SSI or no income to purchase a phone, meaning on public assistance, would be considered no income, although it is an income. And this opportunity was afforded to us, and it's a benefit because, once again, one of the criterias [sic] for buying a house or buying a car or something like that is to have some established 61 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 credit. And, as you know, no credit is worse than bad credit.

Are these folks who already have a phone, a hard-line phone, if you will, in their home or residence?

I think when we had done our survey, we had a population of over 65 percent using prepaid. A prepaid phone is minutes -- $25 10 for like 100 minutes per month, in our survey. So 11 now we offer them 3500 minutes for $39.99 per month. 12 In our survey that we had done, they just have to 13 purchase the phone and that will allow them to get a 14 bill per month, no matter how bad they credit was, 15 no matter if they messed it up when they were young 16 or somebody else messed they credit up. 17

I can understand the 18 opportunity for maybe a better deal as far as the 19 amount of time you get to use a phone, but if you 20 already have a hard line coming into your home for a 21 phone, whether it's Verizon, whether it's this 22 prepaid phone payment plan, what have you, isn't 23 that sufficient enough to establish a credit 24 history? 25 Why cell phones? I always think of cell 62 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 phones -- with no disrespect -- as basically a luxury. I mean, I don't think it's something you have to have.

Let me ask you this question: Do you have a cell phone?

Yeah.

Okay. And I'm sure Councilman Ortiz and Councilman Nutter has a cell phone. Is cable considered a luxury?

Is cable? I would think so, yes.

Most people in public housing have cable.

I consider it a luxury.

So is that a luxury we should take away from 'em?

I keep thinking that -- well, no, it's your choice. If you can afford it, you get cable. I keep thinking about discontinuing 'cause I don't get a chance to use it, but that's my choice. But if I didn't pay the bill, obviously, they would cut it off. 63 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 If I had to make a choice between cable and --

But no, you're correct, though.

-- between cable and electricity and heating, I would certainly opt for electricity and heating.

You are correct, it is your choice. And what we are doing now in public housing that has not been done before is offer them that choice to purchase that phone. As the flyers say, you have an opportunity. Good credit, bad credit, or no credit, you in public housing have a choice to get a cell phone. Now, I have a cell phone. You don't think my mom would like to contact me? You don't think I'd like to contact her if she's outside of that hard line? I think she would -- I know she would. I want to know where she is, I'm concerned. And I think my outreach worker and I think my mom's girlfriend, and I think the vice president of City Council, when they're in a meeting, they need to be picked up. Down Raymond Rosen or Johnson Homes or somewhere else, they can pick up that cell phone 64 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 just as well and use it. So it's their choice.

Well, personally, I wish some days I didn't have a pager or a cell phone, but I wonder how we all got in touch with each other before.

Two-way pigeons, pigeons.

I could go back to party lines but I'm sure you're too young to remember that. Thank you.

You're welcome, thank you.

Thank you. Thank you, Mr. Dawan, with regard to the self-sufficiency issues. Mr. Totaro, let's talk about -- in the discussion we had a couple weeks ago, you and I had a Q and A with regard to market-rate issues, subsidized housing. You indicated, and you raise in your letter as well, that basically there's not much difference between the proposal up at Schuylkill Falls and the development at Society Hill as well as the development in Rittenhouse Square. And do you take it that there is no particular definition now of "market rate"? 65 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

It's clear to me that there is not one to which everyone involved in this effort can agree.

Well, what does it mean to you?

It means what a willing buyer or renter will pay to a willing, knowledgeable seller or landlord without duress in the open marketplace.

Right. And how do we know what the market rate is, whether for rental or for sale in that general neighborhood at that particular site is?

The conventional way to determine that is to have a qualified real estate appraiser undertake a market study.

Mm-hmm.

And we have actually done that a number of times. And it is only good for a given period of time until that analyst can project market conditions going forward, which is, of course, part of their trade. And some are better at it than others.

Now, when you say that 66 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 you've done that, are you talking about by way of the Delta report?

The Delta report is the latest report, yes.

Okay. And just so I understand this, did you participate in the development of -- I don't know whether it was a scope of services for Delta or --

I participated in a number of discussions with the East Falls community and former Mayor Rendell and Schuylkill Falls residents and developer representatives in which the need for an updated market study was discussed. I had no direct input in the formulation of the scope of services.

Okay.

And it was an interesting scope. It was fairly narrowly tailored.

That's what I wanted to ask you about On , this is -- well, it's not of the report, it's of a letter. I guess it's a transmittal letter to my good friend Miss Fletman in the back. They talk about the project parameters. 67 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 This is Delta's work parameters. And they said that there are certain given that we have been instructed to accept at this HOPE VI-funded project: 1. Delta associates work hereunder focuses on 50 townhouse units. 2. The general layout of the project is set as shown in Exhibit B. 3. The site features and amenities are fixed as planned. 4. A total of 300 market-rate and non-market-rate housing units are planned for the site. Do you have any information as to who determined that those four criteria were kind of set in stone, if you will?

I have no direct information.

Do you have any indirect information?

My understanding is that the former mayor pretty well laid out the scope.

Okay. They go further in that same letter, the next paragraph, to say: "We understand that their configuration cannot be altered. The remaining 165 units are planned as 68 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 follows: 50 market-rate for-sale townhouses, 30 market-rate for-rent apartments, 85 non-market-rate for-sale units. Is it also your understanding that none of the configuration can be altered?

Again, it is my understanding that the market analyst was engaged to determine the marketability of that particular development scheme. That is not the development scheme that has been approved by the PHA, the community, and HUD for this development. It is --

What are the differences or what was approved by --

There are --

-- that group that you just mentioned?

In the approved revitalization plan, there are no unsubsidized sales housing units, and I believe the description that you just read posits the development of 50 unsubsidized sales housing units.

Well, there's been a lot of discussion about that. Is that a topic that's still under active discussion, or has that 69 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 disappeared?

It's still under active discussion from the developer's point of view.

Okay. Is there a way to do that?

We continue to search out a way to do that.

Mm-hmm. Have you come up with any good ideas recently?

We have determined that if a source of funding that has no strings that would limit the beneficiary of that funding being a home buyer by reason of income, then the difference between the value of the completed property, the market value of that property, and the actual cost to develop that property could be covered or funded from that source. The unit could then be sold at market value without regard to the income of the buyer.

Let me ask this question about configuration: Have you explored any options by way of the discussion again that we had a couple weeks ago on the record and some other discussions that you and I have had and I think John 70 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 Rosenthal from the past and also Mr. Raheem -- do you know of any way that the present configuration -- I hate to use the same word in the same sentence but in a different way -- that the present configuration could be reconfigured such that there would be more of a mixing between the rental units, whether subsidized or unsubsidized, and the for-sale units, whether subsidized or unsubsidized in -- you gave me a new description of the property today. You're now talking about Phase I being on the east, Phase II being on the west. And in the past, the discussion was always kind of Phase II closer to Ridge Avenue -- I'm sorry Phase I closer to Ridge Avenue and Phase II a little farther away. However you describe it and whichever it is -- whether it's north, south, east, or west -- have you given thought to a way to change the various units around?

The rental housing development of 135 units is fixed. We have closed on the financing and started construction. There is really no way without suffering extraordinary financial loss of reconfiguring or 71 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 restructuring transaction. The balance of the units --

You're saying that moving -- 'cause no one's -- I mean, for the most part, you're really not talking about not building them. You're saying that the mere changing of location of where different types of units are on the same site causes fiscal distress?

Yes.

Because...?

There are some odd requirements of these various programs. The rental housing units are being developed in part with financing from private activity, tax-exempt bonds. Counsel tell us that the properties that are subject of such financing must literally be contiguous, one to the other, in a specific bond issue. The properties on the site as it is currently delineated --

If you know, you'll tell me; if you don't know, you'll me. Why?

It's a provision of the Internal Revenue code, I am told. I don't know why.

So that the folks of 72 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 the IRS care one way or the other whether one unit -- one type of unit is next to the other type of unit in terms of, you know, their involvement in what is, in essence, a tax credit deal?

I don't know the rationale, sir.

Okay, all right. Go ahead. What other factors come into play here?

The only other constraints on reconfiguration of the development would be the limitations deriving from the source of funds for each component as it is currently approved and the physical approvals issued by the City in planning, zoning, and permitting. They would be, as I see it, as I sit here this afternoon, the only real constraints on some reconfiguration of the remaining buildings.

Well, between and among those various agencies, I would have to think -- I mean, I can understand that the City is never, you know, a stroll in the park to deal with, but between the City, PHFA, the IRS, HUD, and PHA, I'm assuming that we've got to be about the easiest 73 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 folks to deal with in the context of what unit goes where. I mean, I don't know that we have --

I would tend to agree.

Yeah. I mean, other than general zoning and what you're allowed to put, the site is already -- well, we won't go into the -- zoning of a site -- discussion. Okay. What have you looked at by way of -- I mean, there are generally two ways to solve a financial problem. I mean, you either increase the revenues available or decrease the costs.

Correct.

If you take a look at the other side of the equation, which is some options on the decrease the cost, size, keep your expenses down, keep the same amount of revenues that you have and increase your margin that way.

Correct. One consideration, an obvious one, is in the size of the units, the type of materials, the type of construction, the amenities. And we have discounted any --

Well, let me -- I'm sorry, I don't mean to interrupt you. I was not talking about in ways that would in any way, shape, 74 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 or form be detrimental to the actual unit or the living space.

Right.

If anything, I think we're trying to make sure that the -- I mean, I couldn't necessarily tell you the exact sizes of any of the particular units; it's in the material. But, I mean, the size will certainly stay the same, every possible effort should be made to have quality construction, design, and materials so that the look and the actual infrastructure of all of the units, whether they're, you know, rental, for sale, subsidized, unsubsidized -- I mean, again, as I best understood the concept here, everything was pretty much supposed to look the same except for some different shapes, if you will, of certain units, as well as interior amenities that go with them. But, I mean, I want to make sure that we're crystal-clear here on the record. I'm not talking about reducing the cost of the development by basically shortchanging or cutting corners in design, materials, and what the units look like. What I was asking was, given the -- what is this, 40, $50 million of development? 75 12/10/01 COMMERCE & ECON. DEV. - RES. 010218

Yes

Maybe close to 60? Whether there were other elements within a fairly large budget that give you any leeway in terms of reducing overall costs and, again, increasing the margins that you have available to do other positive things at the site.

I was about to say we had rejected any consideration of reducing quality. As I earlier testified --

Good, good.

-- we were committed to building all of the units the same.

Mm-hmm.

What we have considered is -- our current plan and the cost associated with it involves the use of a commercial union contractor for the construction of the sales housing units. (Interruption.)

Go ahead, Mr. Totaro. I'm sorry.

I was saying that our current plan and the costs associated with it involve the use of a union commercial contractor to construct 76 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 the sales housing units. You may know that that is not the conventional mode by which sales housing units, even though it's exceeding a million dollars in costs, are constructed. An alternate approach could in fact reduce the cost, and we have explored that, to answer your question. Rather, our principal focus has been on the source side of the dilemma. And we have explored, at least in conversation with some, the potential use of Neighborhood Transformation Initiative funds in a rather modest amount, which could serve to write down part of the excess capital cost; that is, that cost which exceeds the market value of the completed unit. And being derived from proceeds of a general obligation bond, it is my understanding that there would be no strings associated with that source of funds, that there would be no limitation, therefore, on the income of the buyer who would purchase a unit developed through that mechanism. So that certainly is something that we have explored as well.

Mm-hmm. How far has that discussion gone or what -- I mean, how much 77 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 exploration has there been and just where is that?

We have certainly talked about it internally, we've talked about it with PHA officials. We haven't taken it any further until this moment.

Mm-hmm. You still hold to the basic premise, though, that -- and I appreciate your updated information -- 135 rental and now you're saying 28 for sale in Phase I. The 28 are in what configuration, and 4? 12

I'm sorry, sir? 13

Go ahead. Tell me 14 about the 28 for sale. 15

They would be for-sale 16 housing units developed with support from the Hope 17 VI Program. And, therefore, buyers would be limited 18 to those with incomes not more than 115 percent of 19 median income. 20 But they would be generally three-bedroom 21 units, identical to the three-bedroom townhouse 22 units that are in the 135-unit rental development in 23 the same location. 24

I thought if you used the HOPE VI money, you were restricted more by 78 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 the --

Public housing limit?

It was -- I know for the 103 rental, I thought it was a third at 40 percent or lower, a third between 40 and 50, and a third between 50 and 60. How do you end up at 115?

There is a different limitation on the sales housing units, and it varies by program year in which the HOPE VI grant was awarded. This particular award is eligible or permitted to develop sales housing units with HOPE VI funding and make them available to households generally at not more than 100 percent of median, but 15 percent of the units can be sold to folks having incomes of up to 115 percent of the median.

So of the 28, what's the breakdown on that? I mean, how many fit into which category?

They would all be middle-income individuals.

Mm-hmm. And you're saying that because you have -- and they all get paid for out of the HOPE VI dollars?

A portion of the cost to 79 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 develop those units would be written down with HOPE VI dollars. The balance, which would be equivalent to the market value of the completed unit, would be financed in the private marketplace. The buyer would put down deposit money as equity investment, and the buyer would obtain private mortgage financing to finance the balance of the purchase price.

Mm-hmm. Have you been able to mark up a site map and lay out both from a Phase I, Phase II, 135 rental, 28 for sale, where these different units would be on the site?

Yes.

Okay. Could you get me one of those?

Certainly.

Okay. And in this scenario, would the buyers just be out kind of those 28 or so people after they maybe saw a sign and called up and said, Hey, I'm interested in what's going on over there, and you tell 'em, We've got 28 for-sale units? Would they just go wherever they're going to go and try to get their mortgage, or are you working with them on that? I mean, how does 80 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 that happen? And what's the sale price of these houses?

The sale price is currently projected at $115,000. And to answer your question, it would likely be a combination of approaches, depending upon the people who might be interested. Former residents would be working with Universal Community Homes in the self-sufficiency program, preparing to purchase a home. They would have a much greater level of assistance in locating mortgage financing; and, in fact, may have special programs available to them.

Right.

But others who qualify by income coming off the street will likely contact the broker and make their interests known and enter into an agreement to purchase the home. So it would not be very much different from the purchase of a conventional home.

Mm-hmm. Okay. The map would be helpful. And what I did not understand in what would be, I guess, your letter -- but it's after the letter, it's an 81 12/10/01 COMMERCE & ECON. DEV. - RES. 010218 attachment -- the chart that says "Income-Mixing Matrix."

Yes.

For the rental units, I took it that the and 17 is probably the 40 7 percent or less? 8

That is correct. 9

The 35, is that 40 to 10 50? 11

41 to 50, yes. 12

But then you have 60 13 in what appears to be the 50 to 60. 14

The 51 to 60, that should be 15 66. That's a typographical error. It's 66 units. 16

Well, that's -- I 17 guess that's where I kind of got lost a little bit.

Sorry about that.

So 103 rentals was a third, a third, and a third.

Correct. Let me run you through it. The 103 rentals are the public housing units.