COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, 3/13/01 10:21 a.m. - - - BILL 010001 - Adopting Capital Program for the six fiscal years 2002 through 2007, inclusive. BILL 010002 - Adopting Fiscal '02 Capital Budget. BILL 010003 - Amending wage and net profits tax by decreasing the rates of the tax. BILL 010004 - Amending business privilege taxes by decreasing rates tax based on gross receipts. BILL 010005 - Adopting FY '02 Operating Budget. BILL 010011 - To further authorize Board of Ed. to impose tax on real estate within Philadelphia. BILL 010012 - To further authorize Board of Ed. to impose tax on net income from real property. BILL 010013 - To further authorize Board of Ed. to impose tax on use or occupancy of real estate within School District of Philadelphia. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 3/13/01 - FINAL FY '02 BUDGET HEARING I N D E X Office of Housing and Community Development John Kromer . . . . . . . . . . . . . . . . . 5 Debra McColloch . . . . . . . . . . . . . . . 52 Recreation Department Vic Richard, Commissioner . . . . . . . . . . 59 Carlton Williams, Deputy Commissioner . . . . 62 Josephine Mangano, Admin. Services Director 67 School District of Philadelphia Deidre Farmbry, Chief Academic Officer. . . . 81 Pedro Ramos, School Board President . . . . . 92 Rhonda Chatzkel, CFO. . . . . . . . . . . . . 101 Phil Goldsmith, Interim CEO . . . . . . . . . 105 Tom McGlinchey, COO . . . . . . . . . . . . . 109 Jennifer Plummer-Davis, Director of PCN . . . 140 3 3/13/01 - FINAL FY '02 BUDGET HEARING P R O C E E D I N G S
Good morning, everyone. This is the continued public hearing of the Committee of the Whole regarding Bill No.'s 010001, 010002, 010003, 010004, 010005, 010011, 010012 and 010013. I would ask Mr. McPherson to please read titles of the bills.
Bill No. 010001, an ordinance to adopt the Capital Program for the six fiscal years 2002 through 2007, inclusive. Bill No. 010002, an ordinance to adopt a Fiscal 2002 Capital Budget. Bill No. 010003, an ordinance amending Chapter 19-1500 of the Philadelphia Code, entitled "Wage and Net Profits Tax," by decreasing the rates of the tax. Bill No. 010004, an ordinance amending Chapter 19-2600 of the Philadelphia Code, entitled "Business Privilege Taxes," by decreasing the rates of the tax based upon gross receipts. Bill No. 010005, an ordinance adopting the Operating Budget for Fiscal Year 2002. Bill No. 010011, an ordinance amending 4 3/13/01 - FINAL FY '02 BUDGET HEARING Chapter 19-1800 of the Philadelphia Code, entitled "School Tax Authorization," by amending Section 4 19-1801 to further authorize the Board of Education of the School District of Philadelphia to impose a tax on real estate within the City of Philadelphia. Bill No. 010012, an ordinance amending Chapter 19-1800 of the Philadelphia Code, entitled "School Tax Authorization," by amending Section 11 19-1804 to further authorize the Board of Education of the School District of Philadelphia to impose a tax on net income from real property, tangible and intangible, personal property of residents of the School District of Philadelphia. And Bill No. 010013, an ordinance 17 amending Chapter 19-1800 of the Philadelphia Code, entitled "School Tax Authorization," by amending Section 19-1806 to further authorize the Board of Education of the School District of Philadelphia to impose tax on the use or occupancy of real estate within the School District of Philadelphia.
Thank you. Our first call-back witness this morning is John Kromer from OHCD. 5 3/13/01 - FINAL FY '02 BUDGET HEARING (Witness comes forward.)
Thank you, Madam President. Mr. Kromer, unfortunately I missed your testimony last time. I was down in South Philadelphia, in the Council President's District, on a universal tour with the HUD secretary, but I did have a few questions. First, I wanted to thank you for your inclusion of Bill No. 546 in the executive order within the preliminary plan and for your commitment to participation and commission. Last year at this time, as I began to raise issues of how we leverage private investment from our investment in community developed, I posed a question to you, How much private dollars are leveraged from our community block grant spending? I'm not sure we ever got an answer to that question. But as we begin to organize this 6 3/13/01 - FINAL FY '02 BUDGET HEARING commission and the commission takes form and begin to look at how to leverage private investment from depository banks and CDBG spending and land reuse plans and the creation of the Philadelphia CDFI fund, I have requested from the Commerce Department and PIDC and PCDC that they provide those numbers for me in terms of how much private money is leveraged. PIDC has already complied with that request and essentially has given me figures over the last 10-year period that say that they leveraged $6.01 for every dollar in public lending. They basically have said they have gone from a low year of $1.40 per dollar to a high year of $9.11 per dollar. I was wondering, do you track those type of figures on an annual basis at OHCD? And can you provide similar information for me over the last ten years?
We can definitely provide the information. We don't track the performance in the same way, but I don't see any problem with providing the information for the last five or so years. It would be easy to do. I'm not sure how we would it with regard to the information from 7 3/13/01 - FINAL FY '02 BUDGET HEARING ten years ago, but I think we could do reasonably well. As you know, the Community Development Block Grant funds a whole range of housing activities. Some of them don't leverage any dollars. For example, a basic systems repair grant to replace a heater, no leveraging at all. Other programs leverage quite a bit of funding. Every settlement assistance grant of $800 leverages a mortgage, and the median is 35,000 or so. So that's a good leveraging. And there are a variety of other forms of leveraging. I think we could quantify that fairly readily, meaning, you know, next two weeks, and give you a response to that inquiry.
Okay, thank you. If you could provide that information through the Chair for Community Development Block Grant programming in general and then specifically for housing programs.
Secondly, pursuant to Bill No. 716, I have made this request, and as you know, OHCD currently spends approximately 8 3/13/01 - FINAL FY '02 BUDGET HEARING 10 to 15 percent of its Community Development Block Grant budget on economic development activity, and you know that the Philadelphia Code reads that we cannot spend more than percent on 6 economic development activity that benefits low- 7 and moderate-income people. You know I seek to 8 expand that. 9 For the record, in light of the 10 Neighborhood Transformation Initiative and as we 11 are revisiting all of our community and economic 12 development policies, what portion of community 13 development funding or strategy do you think 14 should be dedicated toward economic development 15 activity? I know in your book that you released, 16 you talk how about after 25 years of massively 17 investing in housing activities, we have not 18 changed the economic condition of the people or 19 neighborhoods in many of the places that we've 20 invested in. 21 How do you think we should revisit that 22 strategy in terms of percentage of economic 23 development activity? 24
I think the -- of course, 25 this question is one for the Mayor and the 9 3/13/01 - FINAL FY '02 BUDGET HEARING Commerce Director and others to resolve. Let me say first, I don't think the amounts spent on economic development currently is excessive; it certainly is in line with what other cities are spending in terms of making a division of the block grant between housing and economic development. And this year, with the proposed Neighborhood Transformation Initiative, there appears to be an opportunity to bring substantial new resources into the housing picture. So I don't think that the current division is unrealistic and frequently is unreasonable, and frequently there are good opportunities to make linkages between the housing piece and the economic development piece, and I feel those linkages are being made effectively now.
Well, beyond public resources that might be available, my real question is as a matter of strategy, where should we be investing if we're seeking to leverage dollars from both private housing and economic activity? Do you really believe that we should be invested in housing development activity at a 10 3/13/01 - FINAL FY '02 BUDGET HEARING ratio of 10-to-1 or 8-to-1 or 6-to-1? Or should it be something around 3-to-1 in terms of housing versus economic development activity?
I guess at this point, I could say that I think the allocation of resources is appropriate now for a city like Philadelphia. A reassessment of the overall housing policy and strategies is currently being conducted by the reinvestment fund at the request of the Mayor's Office, and I'm expecting that some commentary and recommendations will emerge this month as a result of that analysis. But to me-- and clearly, there are a number of ways to allocate to different activities, but I think we've shown, and can show, that the funds that are allocated to housing are being used in a way that is responsive to the market opportunities that you've been focusing on and that we're pursuing those opportunities well and also leveraging non-public dollars pretty effectively.
This is the last thing. I guess what I'm saying is, even as look 11 3/13/01 - FINAL FY '02 BUDGET HEARING at reinvestment funds analysis that's forthcoming, you can also look at the reinvestment fund and how it's changed its own operations in terms of being massively invested in housing to diversifying. I believe that they are the leading funder of charter schools, a leading funder in day-cares, a funder of small businesses, and now even provide venture capital. They have expanded what they do tremendously in terms of diversification, and I might suggest that probably their recommendation is going to be an increase in economic development activity.
Thank you. The Chair recognizes Councilwoman Tasco.
You know, we've talking about this whole issue of predatory 12 3/13/01 - FINAL FY '02 BUDGET HEARING lending for some time, and I hear there are some efforts in your office to fund some programs for predatory lending abatement?
There's been a lot of discussion about the numerous issues that are a part of the predatory lending concern, and a lot of the discussion that has concerned -- has been conducted has focused on the issue of financing for home improvement loans.
That doesn't cover the entire issue of predatory lending, which frequently, as I understand it, also relates to credit card debt and other kinds of personal debt. But what a number of participants in the dialogue, including people from CLS and ACORN and others, have said is that if we could find a way to create a vehicle that provides home improvement financing to people whose credit, for whatever reason, doesn't qualify them for a Title improvement loan, who are attracted by the opportunity to borrow quickly to address, in many cases, a critical need, that would be great. So can't the City do something to address that 13 3/13/01 - FINAL FY '02 BUDGET HEARING opportunity.
And currently, there is a program, the Phil Loan Program, which is perfectly good and has provided a lot of benefit around the City, but it's not fast enough, it can't compete with the products that are out on the market now.
And it's not available to people with the level of credit that gets them into trouble with the predatory lenders. So as part of the discussion is focused on, Can we create something that's like Phil Loan, except faster, possibly a City-insured program, possibly something that's linked to Fannie Mae or the secondary market so that people who are now experiencing a need for home improvements can come to this program that we support, that involves lenders that have taken the pledge to comply with the standards that we think are appropriate, that provides them quickly with the money that they need. So that's one piece, and that discussion is ongoing. The other discussion is about the more 14 3/13/01 - FINAL FY '02 BUDGET HEARING immediate need to help people out of a jam, people that have been victimized by predatory lenders, who need a work-out plan and looking at the models in other cities, which you've heard mentioned repeatedly, and determining whether the Chicago or the Boston program or some other program could be replicated here, again, in collaboration with Fannie Mae or some of the others in the secondary market to help people get out of the jam that they're in now.
So those two issues are currently under the focus of discussion of financing. There is no program that's been mapped out, but we, along with the advocates and the agencies that have been involved, as well as the Law Department, have committed to working on both of these issues in the hope that by the start of the fiscal year, we'll have a couple of programs in place or something much more tangible to present to you possibly -- and possibly to link some of this financing with the Neighborhood Transformation Initiative funds.
Well, when we were 15 3/13/01 - FINAL FY '02 BUDGET HEARING doing Bill 715, and you had representation on the drafting committee, we talked about your department being the department that would enforce the bill. And, of course, the Law Department wrote back and said, Well, we can't set up an entity like that. But we weren't setting up an entity; we were just giving you the responsibility for overseeing whatever enforcement powers came out of the bill. I mean, how do you view position of the Law Department.
I think the last time I was here testifying on the bill, the draft of the bill, which I think has been unchanged, was responsive to all of the concerns that OHCD had raised. So the bill, as written, I believe, is something that we can deal with.
I can't answer for all of the other issues that may have been raised by the Law Department and others.
I was only asking as it relates to your department, not the --
That's right, yes. Speaking for my department, we're on board. 16 3/13/01 - FINAL FY '02 BUDGET HEARING
What we can do, and what I think we need to do, is move ahead in coordination with you and your staff and all of the others to do as much as we can now and not to sit and wait for the bill. I think that would support the spirit of the bill to try to move on issues like these financing issues and get them in place as quickly as we can, given the urgency of the problem.
Maybe you haven't seen the letter, and I'll talk to you about it, the Law Department letter.
'Cause the portion where we wanted you to be the enforcing agency does not create a new department; it would just be a new responsibility for your department, but we'll talk to you about.
Thank you. 17 3/13/01 - FINAL FY '02 BUDGET HEARING The Chair recognizes Councilman Clarke.
Mr. Kromer, a couple years ago, actually in the last administration, and I think Mr. Basillon, from the Redevelopment Authority, he was the Chair at the time, was very concerned about the cost of housing. And I think either informally or formally, there were some meetings initiated to discuss how to get those housing costs down because they continued to go up 125, 150,000 per unit, and we were selling them for, like, 40, 45, and it just didn't seem the appropriate thing to do. What came out of that?
The policy that the Redevelopment Authority adopted -- and we can provide the written form of this -- I think was very effective. It called for development proposals that don't meet the federally- established 221(d)(3) cost standards, which are the standards that HUD uses for some of its 18 3/13/01 - FINAL FY '02 BUDGET HEARING program and the PHFA also uses for the tax credit financing. Ventures that exceeded those standards would have to be bid out or offered to other contractors, offered competitively so that there would be an opportunity to look at other qualified contractors' bids to see if there was an opportunity to select another contractor other than the one proposed to get the cost down. I think that's worked reasonably well in terms of in some cases getting the price down, and in other cases, where the price can't come down, showing that the effort was made to do that and that the effort was unsuccessful. Frankly, in the 5th District, but not only in the 5th District, there is an overriding problem of big, older buildings with large bedrooms and a history of vacancy and deterioration, and there is a limit to what any cost control policy can do with respect to those buildings. If the building is strategically located, if it's an anchor on a block or in a neighborhood, then the City has to make a decision about whether to pay a high cost per unit to rehabilitate or whether to let the building go. 19 3/13/01 - FINAL FY '02 BUDGET HEARING
Well, I think as a result of that, the older, rehabilitated types of initiative, we had kind of gotten away from that wherever we could, and we started with this new construction policy, and those prices continue to escalate. And I'm wondering, is there things other than simply rebidding the particular job to get the cost down or other things that we can do associated with that. As an example, I know in some of the units that we did, the simple fact that we made a decision to do make basements as opposed to building on slab escalated the cost, not only initially, but we had to actually come back because there were water problems. In our policy, as it relates to new construction as we move ahead, will there be any thought given to the possibility of not doing basements in some of these areas, particularly areas where we know we have a high water table such as the Cecil B. Moore area, but yet, we've made a decision to go ahead and build basements anyway? Are we looking at those types of things? 20 3/13/01 - FINAL FY '02 BUDGET HEARING
I think deleting a basement is an excellent opportunity. I think in terms -- frequently, costs get reduced in the process of underwriting; that is, through the process in which the Redevelopment Authority staff just scrutinize every single item and argue some of those items down. One thing that I could do would be to show you how that underwriting process has been applied to several projects around the City and show you the resulting cost changes to give you a sense of how that's worked in practice. I do think the eliminating the basement opportunity is one of a few larger opportunities we've got.
Mm-hmm. With respects to modular housing, have we looked at that again seriously? I know when the former mayor came in, there was a serious discussion about modular housing. A couple of these suppliers wanted the City to guarantee a number of units, we said we couldn't do that. Are we looking at that again as we move ahead, particularly with this Neighborhood 21 3/13/01 - FINAL FY '02 BUDGET HEARING Transformation program that will potentially clear acres and miles and miles of land, the possibility of looking at modular housing, and even the possibility of doing a modular housing factory in the City of Philadelphia so we can, in fact, have some control over the --
From OHCD's standpoint, I haven't looked at the issue recently, partly because OHCD isn't anticipating funding large-scale development anytime in the foreseeable future. I think the shorter-term large-scale development opportunities are at the Philadelphia Housing Authority, and that there might be an opportunity to consider the economic benefits of taking a modular housing approach. Even in looking through the Mayor's proposed Neighborhood Transformation Initiative, I see a lot of funding for preservation, which I think is great, but I don't see a big opportunity for large-scale housing development. That's not to say we shouldn't look at it again, and there may be a combination of public housing, a limited amount of OHCD housing, and 22 3/13/01 - FINAL FY '02 BUDGET HEARING some market-rate housing that might make the case for modular convincing this time around, but I haven't look at it recently.
You say that you're not looking -- OHCD is not looking to do any large-scale housing developments in the foreseeable future?
What do you call "large-scale"? I mean, is it 150 units, 75?
More than 50 units of housing is large by OHCD's standards, although there are, as you know, 70- and 75-unit ventures. The majority of the CDBG-funded ventures are fewer than 50.
When you say "foreseeable future," are you talking about this this fiscal year?
I actually have a couple of them at least planned in my mind that I would like to do above 50.
Mm-hmm. I'm not going to 23 3/13/01 - FINAL FY '02 BUDGET HEARING say we'll never consider it, but for the way things look now, the opportunity seems limited. Again, we should come back to issues like that, and I haven't recently, and I'd be glad to reopen that and have some further discussion of that.
Thank you. The Chair recognizes Councilman Nutter.
I'm sorry I didn't have the pleasure of the opportunity to be with you when you were here originally during the first part of the budget process, so I'm grateful to have the opportunity today. What is -- at the moment, could you give us an overview or an explanation of what is the City's housing policy?
The City's housing policy is described in the Consolidated Plan, which has 24 3/13/01 - FINAL FY '02 BUDGET HEARING been published in its first version as the Preliminary Plan last month. And in the Consolidated Plan, there is a description of the policy bases for assigning the Community Development Block Grant funding and the home funding that is really the major resource that the City has available for housing. And various goals and priorities are specified in the plan.
Okay, but I mean, again, I guess, in somewhat brief terms, I mean, overall, what's the goal, what's the mission of the office? What's our basic game plan and strategy in dealing with housing throughout the City of Philadelphia?
The basic mission of the Office of Housing and Community Development, which has served as the City's housing agency, is to strengthen -- stabilize and strengthen the Philadelphia neighborhood economy, and what that means from my perspective is, where there are opportunities, build new housing, rehabilitate vacant housing, but also where there's need and opportunity to preserve existing housing through home repair programs and through programs which 25 3/13/01 - FINAL FY '02 BUDGET HEARING promote the private real estate market, such as the counseling and settlement assistance programs.
Okay. And would you say that we have a variety of direct services and outreach programs pretty much spread throughout the City in its various neighborhoods and the socioeconomic characteristics of a variety of places throughout the City?
We have a variety programs. Some would say the variety isn't wide enough. For example, we don't fund public facilities as some other cities do. And we have a reasonable geographic distribution for many of the major programs. The basic systems program, for example, the settlement grant program, for example, are relatively well-distributed geographically. Other programs don't have that level of geographic distribution. As we have discussed previously, a lot of the low-income housing tax credit development is focussed in areas such as North and West Philadelphia, primarily the 5th and the 3rd Districts. On the other hand, the City, through OHCD, has increasingly been making commitments to 3/13/01 - FINAL FY '02 BUDGET HEARING Hope Six development by PHA. And we made a major commitment in the 1st District for King Plaza and have committed, through the Capital Program, to Schuylkill Falls. So in some respects, it's an even distribution; in others, it's not even.
What's our policy, again, throughout the City with regard to preservation and maintenance? And how well do we, I guess, promote and market and inform people of the variety of programs that we have, again, throughout the City?
The preservation and maintenance programs, I think, are critical to the future of the City's neighborhoods. The level of Community Development Block Grant funding for these programs has increased substantially over the years, and I believe there is a lot of community awareness of these programs. There could be more. And, again, as we discussed last year, there could be a more concerted outreach on the part of my office and other agencies that are involved to get more people involved in the planning process and let them know about these 27 3/13/01 - FINAL FY '02 BUDGET HEARING programs. The really critical problem associated with the preservation programs is a lack of, or limitations of, resources. The basic system repair program, for example, has had its funding cut in half as a result of decreases in State funding to the City. And that resource problem, I think, is really central to preservation and maintenance. That's why I'm very encouraged to have seen in the initial material about the Mayor's Neighborhood Transformation Program a substantial amount of funding that will be used for just purpose that purpose -- preservation and maintenance.
Let me go back for one second. You said that the basic systems program was cut as a result of what?
That program was funded by the State? I thought it got all of its funding from the CDBG.
The Tier component of 28 1 3/13/01 - FINAL FY '02 BUDGET HEARING the program, which is the most active component of the program, has been funded for most of the past decade from the State Department of Community and Economic Development. And the reason for that is that the State does not require the level of documentation from a person applying for the program that is associated with the City -- with the Community Development Block Grant funding.
Let me just try to understand this. We have, I guess, the opportunity, if you will, to get these dollars from the State for a particular part of the program.
Okay. Now, if that resource wasn't available, I'm assuming then you would then use CDBG funds for that part of the program?
And so, I mean, that was a policy decision to use that particular funding source to fund -- what is it? Is it Tier or Tier 1 and 2. 25
So we made a policy decision to use a particular funding source to fund Tier 1.
And so whatever happens with that funding source, although we're not apparently required to use that funding resource for Tier 1, whatever happens with that funding source, therefore, happens to Tier 1? Is that the way this works?
Why don't we make up the shortfall with the CDBG funds that we're not using because we're accessing some other funding source?
Why would we cut, or allow for a cut, in the most used component just because a particular funding source, which we are not required to utilize, happens to make that 30 3/13/01 - FINAL FY '02 BUDGET HEARING cut to the City? Why would we do that?
Well, that's just what we have done in the years in which the cuts began. Four or five years ago, we filled in the gap with CDBG funds or Section 108 funds. This year, we had hoped to get a little bit more State funding; we weren't successful. And there will be a proposed approach to filling that gap again during the coming fiscal year that I'll be presenting to Council.
The cut was in the allocation of funding from the State's Department of Community and Economic Development to cities -- Philadelphia, Pittsburgh, and other cities. Traditionally, Philadelphia has received percent of that allocation. That is a 19 guideline, not a requirement. And the 20 Commonwealth has chosen to reduce the amount of the State allocation made available to Philadelphia. In addition, the State has --
Well, I understand that, but just tell me what the numbers were. I 31 3/13/01 - FINAL FY '02 BUDGET HEARING mean, it's all kind of relative. You tell me that it was cut in half. I don't know what's half and what was the result.
Five years ago, the funding from the Commonwealth was $4 million, all of which went into the basic system repairs program. In this year's budget, the funding line item, which I think reflects what's been proposed in here Harrisburg, is 1.6 million.
And so are you saying that you're going to put 2.4 from CDBG to get it back to where it was? Or, I mean --
I think there are several opportunities. One is to reallocate from other portions of the CDBG budget. Secondly, we've proposed -- and this is summarized in the preliminary plan. We've proposed drawing down CDBG float loans to create a zero-interest construction loan fund. That will save a lot of funding from developers of CDBG-funded projects that are currently borrowing on the private market at 9.5 percent and more. And our intent is to put that savings into BSRP. First deal, coincidentally, will be one 32 3/13/01 - FINAL FY '02 BUDGET HEARING phase of the Cecil B. Moore Home Ownership Zone, which PHDC is developing, and the attempt intent is to take the savings and construction interest that PHDC will achieve, which will be over $200,000 just for that one deal and put it right into BSRP. We have some other opportunities to supplement BSRP through the private activity bonds, which are proposed as part of the Neighborhood Transformation Initiative as well.
Well, I appreciate that information. If you could give us a schedule of the funding, both sources and uses, for the past ten years on the BSRP program, who the various funding sources were, how much they put in, how much we put in, and what the result of the budget or the resulting budget impact has been, I would appreciate that. I'm sure we'll have more of this discussion at CDBG time. Now, I seem to remember from your original testimony a few weeks ago that there was, either in your testimony or someone else's someone testimony or in some larger packet testimony, reference made to $500,000 for curb and sidewalk replacement, which, given the fact that we've been 33 3/13/01 - FINAL FY '02 BUDGET HEARING talking about that for almost ten years, I was certainly intrigued by it, although not in any critical way. I was wondering about the $500,000 figure. And so can you shed a little more light on that? What is that about? how did you arrive at that figure? what would you do with $500,000? and how did this all happen?
I believe the testimony you're referring to was my testimony during the Capital Program hearing, and I think you had mentioned that that funding would be designated for the 4th District, which I remember hearing.
I had proposed that this line be added to the Capital Program, despite the questions and problems that nearly everyone here is aware of because I felt that there might be an opportunity to link curb and sidewalk reconstruction with some of the block improvement programs, the model block-type programs that have been operating, that are being proposed for expansion during the coming year as part of a 34 3/13/01 - FINAL FY '02 BUDGET HEARING neighbor preservation effort. I've mentioned to the Controller in formal discussion, not in a full program review with all of our staffs involved, but I've mentioned that some of these block improvement programs could be structured so that most of the properties, or possibly all of the properties, on a particular block would receive various exterior improvements, including roof replacement, painting of wood trim, porch repair, step repair, and so on that would be funded through the Community Development Block Grant in combination with the private activity bonds, and have questioned whether this kind of approach, which would not be full new construction or full rehabilitation, but would certainly touch every single property on the block, or the majority of properties on the block, might not meet the eligibility question that had been raised by the Controller in the past. And the response I got was that would be considered and could be considered. And on that basis, the line item was proposed. Clearly, a lot more discussion has to take place regarding the program detail and the 35 3/13/01 - FINAL FY '02 BUDGET HEARING issue of whether this meets the standard or not. But particularly in light of the discussion we've had during the Community Development Block Grant hearings about this issue and the need to do something about it, I felt that this was a constructive way of moving us on to the next step.
All right. So I guess at the end of the day for that particular item, there's a lot more work that needs to be done. We are now apparently going to be blessed to get some further insight from the Budget Director, who has very stealthily moved his way up to the witness table. Mr. Dubow, would you like to enlighten us about something?
I'd like to talk to Mr. Kromer for one minute and then -- (Messrs. Dubow and Kromer confer off record.).
Thank you. The issue is somewhat easier in that, as part of some funding reallocations that were made this month, that $500,000 will be funded through the Neighborhood Transformation Initiative 36 3/13/01 - FINAL FY '02 BUDGET HEARING rather than through the Capital Program, so I would expect that all of the control issues would -- we would not have to deal with any of the Controller issues.
All right, so there's been a change in the, well, funding situation.
That's right, which apparently means that we could proceed without having to deal with some of the issues that we were concerned about.
Okay, all right. You've made reference on a couple of occasions that you were looking through the preliminary materials of the Mayor's Neighborhood Transformation Initiative program?
The materials I was referring to were the materials that were presented to Councilmembers at a session held last November at the University of Pennsylvania. Those basic materials have been reprinted as an appendix 37 3/13/01 - FINAL FY '02 BUDGET HEARING to the preliminary plan, and I know that questions have been raised about the detail of the Neighborhood Transformation Initiative. But in broad terms, looking at the information that has been presented, there is a lot of funding for the kinds of preservation activities that we've discussed and if and when combined with the --
Are you talking about after the -- I mean, I thought, like, $190 million of it was primarily for either demolition or encapsulization.
Yes, but I'm really speaking of the private activity bond funding, which is a part of the program but separate from.
The private activity bond funding that could be linked with the CDBG and home funding amounts to $35 million extra. And, again, we've included this in the preliminary plan 38 3/13/01 - FINAL FY '02 BUDGET HEARING as an additional column, so that $35 million combined with our existing effort really would be the biggest year of preservation in the history of the program.
Now, to your knowledge, with regard to the private activity funds, do you know they're being floated this year or over some period of years? Our current understanding is that of the $250 million, it's only anticipated that about 50 million is actually going to be floated this year. So where would the 10 million private activity bonds come in the series of financings?
I don't have the answer to that now, but my understanding is that some additional detail will be provided this month.
Okay. What's our policy in the areas of the City in certain neighborhoods where you only have maybe one or two vacant houses on the block? Who steps in if there's not an active CDC or kind of a neighborhood, homegrown developer? What do we do with those houses?
The opportunity that we're 39 3/13/01 - FINAL FY '02 BUDGET HEARING pursuing in recent years effective in areas of that kind is a program the Home Ownership Rehabilitation Program. It's limited but I think it has been effective in areas of that kind. It's a moderate subsidy program year-round that is available year-round that is available to turn around houses that were recently vacated frequently on good blocks of the type that you described. And in this moderate rehab program, a developer can come to the Redevelopment Authority, submit a proposal to rehabilitate a house with an up to $25,000 subsidy, get an approval if the proposal is complete within 30 days, and move ahead with the rehabilitation. That program has been very effective in some of the outlying that have not been the focus of a lot of Community Development Block Grant Program activities. One of the limitations of the program up till now has been that it has been restricted to nonprofit groups and community development corporations. Part of the proposal for the coming year is to open the program up to private developers. And, again, with the private activity 40 3/13/01 - FINAL FY '02 BUDGET HEARING bond financing, there will be an opportunity to use this program citywide and to increase the income levels associated with the home buyers.
Could you provide to us, through the Chair, a listing, then, of all of the projects and activities that have taken place citywide over the last eight years by address and Council District?
I think we could. We've done some detailed reporting to Council by address during most of that period. So I believe we could do that.
Okay, great. What are we doing in the area of senior housing and senior housing with services and that kind of activity?
The ongoing programs that have been funded through the Community Development Block Grant, I expect, you're familiar with. The Home Repair Program, for example, is used to a great degree by elderly homeowners whose houses need repair.
I'm sorry, I may not have been crystal-clear with the question. I 41 3/13/01 - FINAL FY '02 BUDGET HEARING was speaking more of housing for seniors in, you know, units, 30 units, 50 units, some have no 4 services, some may have services, you have 5 assisted living types of facilities, continuum of 6 care, those kinds. Do we have any particular 7 policy, or are we looking forward with regard to 8 aging population and how we house people after 9 they're kind of no longer able to take care of the 10 house and paint and get out on the roof and all of 11 that kind of stuff? 12
We've tried to use the two 13 programs -- the Low-Income Housing Tax Credit and 14 the Federal Section 202 Program -- to leverage 15 federal funding in combination with CDBG funding 16 for elderly housing development. I can provide 17 you with a listing of what has been funded. It's 18 an ongoing process and something that's being 19 funded or being completed every year. 20
Okay. But, I mean, are we -- is it on an as-people-come-in-and-ask- about-it basis? I mean, do we have any particular strategy or policy as it relates to the production of senior housing based on our population and demographics? Or is it, you know, 10 people come 42 3/13/01 - FINAL FY '02 BUDGET HEARING in the door and 9 want to do one kind of thing and one happens to want to do senior housing and so we just fund 'em 'cause they asked for it?
As a policy, we work with developers to get as much of the HUD 202 funding, which is exclusively for senior housing as we can every year, and that's good for something every year.
In addition, although there isn't a formal set-aside, we see to it that funding linked to the low-income house tax credit is made available every year for senior housing as well.
Okay. What is the review by the reinvestment fund of the CDBG Program about, when do you expect that it will be completed, and where does it fit in in terms of future policies and strategies on the utilization of CDBG funds?
I don't have a scope of work for the reinvestment fund project, and I'm not sure whether one exists, but my understanding is that the Mayor's Office asked the reinvestment 43 3/13/01 - FINAL FY '02 BUDGET HEARING fund to look at the City's overall housing policy, how that related to the condition of Philadelphia neighborhoods, and to suggest ways in which the City could consider making policy changes or possibly realigning funding allocations to various neighborhoods or realigning City housing agency responsibilities. And I expect that a number of those recommendations will be forthcoming this month. How long the entire project will extend, I don't know.
Okay. I think this is probably my last question. Can you get on a year-by-year basis for, say, the last ten years all of the work that's been done on either new construction or rehab in the residential market, separating out the special needs housing? I think there are three programs. Isn't there -- there's the neighborhood home ownership, neighbor rental.
Special needs. And 44 3/13/01 - FINAL FY '02 BUDGET HEARING there was one other that seemed to be geared toward either rehab or new construction. Was that HRP?
All right. Why don't we just do, on the residential side, the rehab and new construction. I think they're primarily covered by home ownership and rental?
For those for the past ten years, can you provide us with data regarding every property that was done and when it was done. And is there a reasonable assumption that within a relatively short period of time of when one of those rehabs or new construction is done that it's pretty much occupied shortly after that?
Okay, all right. So you can tell us on a year-by-year basis the 45 3/13/01 - FINAL FY '02 BUDGET HEARING actually the actual address of each one of those per program on a year-by-year basis.
Right, okay. And if you can -- again, it would be a lot easier to keep track of them keep them together probably in Council district.
Okay. And my last question is, what -- do you have any way of determining for all of the programs and project activities that OHCD funds -- we get reports from time to time that indicate the number -- the total number of people working on the project, a certain percentage were Philadelphians, a certain percentage were non-Philadelphians. Now, do you have that for all of the CDBG funds or all of the programs and activities that OHCD funds?
We have that for all of the production activities, new construction and vacant rehab, yes. 46 3/13/01 - FINAL FY '02 BUDGET HEARING
Okay. So without a tremendous amount of detail but, again, on a year-by-year basis, let's say, for the last six, seven years, if the total amount of dollars coming in, I mean, between all of the various pots, and I think there are primarily four major funding sources, adds up to usually about 100, 102, 105 million dollars, could you tell us out of that for any program a year what percentage of those funds was spent primarily in the area of, I guess, kind of union-related projects versus -- I guess we have some that are nonunion? Do we?
Basically everything -- all of the major activities are union -- are prevailing wage.
Okay, all right. If you could break that out, that would be helpful.
Take $100 million. 47 3/13/01 - FINAL FY '02 BUDGET HEARING I mean, I know it's more or less a couple of other hundred million.
But within the pot, I'd like to see the break-out between what's spent on a dollar basis for union-related projects and then anything else.
All right. And could we define "prevailing wage" versus other --
Thank you. The Chair recognizes Councilman Ortiz.
Following up on that, I would like to see that done in terms of how many minorities are in each of the projects and the hours in terms of -- your breakdown of project in terms of skilled labor and you put down the hours of skilled labor by nonresident, 48 3/13/01 - FINAL FY '02 BUDGET HEARING minority, non-minority, and so on. And I would also like to see how many apprenticeships have been given per project or in each project and those, again, broken down to minority, non-minorities, resident, nonresident. And, obviously, also the breakdown of the monies that are spent in terms of contracts and how many of those contracts or subcontractors are local Philadelphia contractors and which are not. So we find out how much of the money that is coming in for the federal government is really being spent outside of Philadelphia and not inside of Philadelphia that we give.
And if you can do that for -- well Mike asked for the last seven. I think that will be fine.
But up to the year 2000 and if you have anything for --
And if you have any information in terms of other projects such as the ones that we give loans to such as hotels and -- that come through CDBG.
And those projects that get that type of loan, and I would like to see the same type of breakdown.
In terms of minority participation and apprenticeships, subcontracts, skilled labor by hours, how many hours, what percentage of the hours, for example, because sometimes we get a statistic that says 40 percent minorities, but when you get down to it, the hours are like 10 percent of the hours.
So if that could be done because, as you know, we've been working on a report along those lines. We have it up until 1998, and we'd like to see it all across the board for Center City projects and the other ones. And if you have that information, we really would appreciate it. 50 3/13/01 - FINAL FY '02 BUDGET HEARING
I don't know. I'll have to let you know, but as you know, a lot of record-keeping has been done.
So, obviously, you started the process along those lines. For the last few years, we've been asking for this information so -- because we want to be able to -- you saw the census.
And we didn't lose as many people as we thought we were going to lose. However, the joblessness rate among the majority of Philadelphians remains the same, and we have to be able to see how we use those federal monies so that jobs are created within Philadelphia and we put those individuals to work. And everybody keeps saying about creating a new middle class; well, we have to create a new 51 3/13/01 - FINAL FY '02 BUDGET HEARING middle class, and this is the way to do it. So if you can make that available to us, I'd really appreciate it.
You're welcome. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. Mr. Kromer, can you give us names for people who applied -- low-income homeowners for the Tier and and services as well as those who are involved for the basic system repair program? Can you give us those people?
We -- yes, we can. We currently report through PHDC on the cases completed through the program. I don't know if there would be a confidentiality issue or any type of issue for people that have applied but have not yet been approved, but I'm sure we could find a way to give you the data, and then if there was 52 3/13/01 - FINAL FY '02 BUDGET HEARING specific inquiry about addresses and so on, we could help you with that. So the answer is yes.
Thank you. How many Section 108 loans have been granted in the last three years -- '99, 2000 and 2001? Section 108's, how many have we gotten?
In each of the past three fiscal years, I believe we have done Section 108 borrowing for housing and for economic development, so I believe it's -- (Mr. Kromer privately confers with colleague off the record.)