I didn't forget, and we have people working on it for you. But, again, as we discussed at our meetings, in some cases, like North Light Community Center, you have a group of people that are well-versed in what's going on in their neighborhood and things of that nature. What's tough for us in some cases is that we're not getting information quick enough from other areas sometimes. Some people see just kids moving into a building. It doesn't mean anything to them. But in some cases it's an indication of what is happening to the neighborhood. We have spoken to a couple other groups recently. And I'm not sure what their names are. 1399 2/20/01 OPERATING BUDGET I've spoken to them on the phone the other day. But we've been keeping in close contact. I did contact -- in reference to what we discussed, I had contacted the police district in surrounding North Light, and to give that a for instance, we're going to now get copies of any nuisance complaints against those properties sent directly to my office. We're going to compile a list of these nuisance properties and send out letters to the owners to make them be aware of the fact that there are these types of activities, parties, trash, debris. And, again, the use of the ticket, we don't -- we're going to give a ticket to not only the tenant of that location, which he'll probably throw it away since he's a student, we're going to send one to the owner on a daily basis for every day the trash is out there. So I think with stepping up those type of enforcement efforts and once that view gets around to these owners that they just can't do this and it's going to cost them out-of-pocket money, we should get some further results.
Okay. Commissioner, let -- MR. McLAUGHLIN: I think the advice also 1400 2/20/01 OPERATING BUDGET is to make sure that people have a sense that they're creating the record of the nuisance, and the way to do that is to call L&I, log in complaints at L&I, call the police, log in complaints with the police. That way we capture all that information and are able to establish that in fact this is a nuisance in the neighborhood.
Okay. Commissioner, I need you to provide me with a response later in a full report on what was found with regard to the incident that we had shortly before Christmas in the use and transportation of dynamite up in a portion of my district where a development was proposed, both what, if any, investigation has taken place or will take place, as well as what the findings were, any suggestions for legislative changes so that we can better monitor how those kinds of explosives are not only used but also transported in Philadelphia, notice requirements and an array of operational procedures that are automatically put in place, which naturally involve not only the department but the police department, fire department and other necessary agencies, as well as a public notice process. And I'd like to work with you on that, but 1401 2/20/01 OPERATING BUDGET I do need to follow up on that on behalf of my constituents. MR. McLAUGHLIN: We have been working on that, and we will give you a report.
You're welcome. The Chair recognizes Councilwoman Miller.
Thank you, Madam Chair. Good afternoon, Commissioner. MR. McLAUGHLIN: Good afternoon, Councilwoman.
And all your deputies and all your staff from L&I. I too want to thank you for being very responsive in helping to resolve many of the issues that impacts our constituents in the eighth councilmanic district. I have a couple of questions and some of them are -- some of my colleagues have identified some of the issues, but I have a couple follow-up 1402 2/20/01 OPERATING BUDGET questions. And I just want to start with, do you have the list of addresses that goes along with the survey of all the abandoned properties and lots for each council district? Do you have the addresses that goes along with that? We have the census track information, but there's some groups that are calling me wanting to take tours and they want to know if I can give them addresses of what's vacant, and certainly I cannot. MR. McLAUGHLIN: We are working on that. We will get that to you.
Do you know how long it's going to be? A month, two months, whatever?
Councilwoman, the managing director's office is -- my name is Bob Solvibile, first deputy commissioner, Licenses and Inspections. The managing director's office and us are working on a presentation to Council, along with the addresses by wards and maps and locations. So right now we could give you a list city-wide not broken down by councilmanic district, but not -- we couldn't give you a list broken down by district, 1403 2/20/01 OPERATING BUDGET but we could produce a list by city, by the city.
No. I think I'll wait. It's probably too cumbersome to try to get through and go through all the different addresses and put them in the council district. MR. McLAUGHLIN: We'll look into that and get back to you with an answer.
What do you mean by you and the managing director are going to present at the City Council? You mean we're going to have a hearing and you're going to come or you're going to come and give it to each Council person? Bob?
-- the administration comes. That is going to part of the presentation, mapping of where the vacants are.
And do you have a list of the imminently dangerous properties that you're proposing to demolish? When we get this list that you're referring to, will the list also contain information as to the imminently dangerous properties that are scheduled for demolition?
That was going to be my next question. And I guess those properties, most of those, were identified by the helicopter?
A lot of them were, Councilwoman. We worked in the Sussex tracks, the 100 Sussex tracks, with the most dangerous buildings in it were all surveyed by helicopter, along with our building inspectors on ground. And by using the helicopter provided through the managing director's office and obviously the police department, we were able to pick up an additional 800 buildings that we could not determine from ground level that were imminently dangerous. So it was a pretty successful program for us. But to answer your question -- I believe Council President Verna asked it. We will be able 1405 2/20/01 OPERATING BUDGET to identify, along with the vacants, next to a vacant address we will tell you if it's imminently dangerous or dangerous within your councilmanic districts, yes.
Okay. Moving on down, of your testimony about the encapsulation program. Just to follow up on Councilman Nutter's question, it's just amazing to me that out of 26,000 vacant properties only at this time 100 will kind of fall in the category of being described as one that needs to be or can be encapsulated. I'm sure there are hundreds more. MR. McLAUGHLIN: Well, again, the whole concept of encapsulation is not to spend money in areas that would get treated in some other way, but to find properties on a block that is otherwise a strong block. I sent an encapsulation job down to a street in South Philadelphia where the person who had called me called me back and told me that if getting elected mayor meant getting all the votes on that street, then I'd be mayor today. So it's that type of urgency that exists with an otherwise viable block when you got one or two houses that are tearing that block down. 1406 2/20/01 OPERATING BUDGET So, happily, where we have stronger blocks in Philadelphia, we don't have that problem. They're usually taken on by investors or owners who are willing to spend the money, but in those cases where that doesn't happen, we should be called, and that's something that we really invite Council people to help us in that, because it is something that is relegated to knowledge within the individual neighborhoods. So it's harder for us to see that kind of stuff.
Councilwoman, I'm sorry, can I just follow up on that, please?
Because I don't think that this is very clear in my mind. Once you encapsulate this building, would you put it up for sheriff's sale? What will the procedure be? I'm sure liens will be put against the property. MR. McLAUGHLIN: Yes.
Will it be put up for sheriff's sale at that time if it's 1407 2/20/01 OPERATING BUDGET delinquent or would you put it up for sheriff's sale prior to? How is this being done?
Every property, Council President, that we encapsulate, we forward the address to Office of Housing and Community Development for them to put into their programs in working with CDCs to start the process of having it acquired and eventually rehabilitated. The encapsulation hopes to buy several years, so the property does not further deteriorate and become dangerous for the various programs that would make it get rehabilitated work or take place.
Now, say you have encapsulated the property. It's tax delinquent. Give me the process of what you're going to be following from then on.
We would further put an 1408 2/20/01 OPERATING BUDGET additional lien for the encapsulation and the Office of Housing and Community Development would follow through on having various agencies acquire it or work with community development corporations to acquire it and get it into the rehab system. The encapsulation is meant to stop deterioration.
Somebody has to own the property before we can give it to anyone. Who will own the property? Is it going to be put up for sheriff's sale and the city will then acquire the property and then it will be given to the community development? MR. McLAUGHLIN: I think the issue for us is, you're outside of L&I and we don't have a good answer for you in that regard. We can find out.
Well, with the 100 properties that you intend to do or the amount that you have done in FY01, give me the process of what you followed heretofore. MR. McLAUGHLIN: Our process is what we've said. It's we do the mechanical stuff. We fix the building up and we make sure the lien gets put on it. We notify the agency that should get the 1409 2/20/01 OPERATING BUDGET next notification on that. Beyond that, all -- my involvement in this has been John Kromer or somebody else calling me and saying, We're trying to sell this property, will you authorize waiving this amount of money or that amount of money. We usually don't like to waive the demolition money, because that money goes back into the pot for us to use -- not demolition. The encapsulation money, because when we get that money back, it goes back into the pot to use again, and that's a best case scenario. If that happens, it makes a whole lot of sense to do this.
I'm sorry, Councilwoman Miller. I just wanted to try to get something clear in my own mind.
That's fine. MR. McLAUGHLIN: We'll get that answer for you.
So we can just give you a call and say, We're recommending for encapsulation. Where are the 37 buildings that you have encapsulated to date this year? 1410 2/20/01 OPERATING BUDGET MR. McLAUGHLIN: City-wide.
City-wide, okay. And most of those were initiated through CDCs or just individuals or your people in the street doing surveys? MR. McLAUGHLIN: That's absolutely right.
Some were initiated by the commissioner himself taking community tours, you know, going out, or any deputy here or any employee. MR. McLAUGHLIN: Or the mayor.
We have let our employees know that we want them to tell us, especially our inspectional force, where we have buildings, one vacant on a block, let us know if they think it's good for encapsulation, be proactive on it.
Moving on to of your testimony, I guess I have not so much -- well, I do have a small question, but just more of a statement around the pier safety project. Deanne White that was one of the young women that was killed in Pier 34 happened to be the sister of a very dear friend of mine, and I saw that 1411 2/20/01 OPERATING BUDGET family suffered the pain and whatnot that we all go through when we lose someone that we really love, and I'm glad to see that the department is doing or making the owners of the piers do an engineering report about structural integrity. Once those come in, they're actually saying whether the pier is sound and doesn't propose a danger or a threat to injury or loss of life? Because I had lots of friends on that pier that day, as a matter of fact, lots of friends. In fact, a couple of my committee people -- I'm a board leader -- a couple of them were also attending the birthday party for Deanne White, and so this is something that I'm really kind of concerned about. MR. McLAUGHLIN: The engineering report does address the structural integrity of the pier and it schedules any maintenance work into the future that would be necessary to maintain that level of safety.
I'm just really concerned that no other Philadelphians would lose their life or have serious injury as it relates to whatever happened there at Pier 34, because it just appeared to me that the owners were just real shoddy 1412 2/20/01 OPERATING BUDGET people, because they were just trying to cover up things that were wrong there, and too many lives were impacted by this whole tragedy. So I'd be interested in knowing when the other piers -- and 6 if they don't respond, what are you going to do, 7 shut them down, if they don't respond at all by June 8 1st? 9 MR. McLAUGHLIN: We're going to be 10 taking them to municipal court. We've had a couple 11 of them already go to court, and the judge orders 12 them to protect their piers against public access. 13
Which means? 14 MR. McLAUGHLIN: We issue a certificate 15 of restricted use. That means you've posted it both 16 from land and water and marked it against trespass 17 so that the police then can arrest for violation of 18 that trespass notification. 19
Okay. Thank you, Commissioner. To follow up on a question on as it relates to code violation notices, I get a little bit confused here, because Streets Department also has operation sweep that will come out in neighborhoods and give people tickets for trash and 1413 2/20/01 OPERATING BUDGET for putting out debris and all that kind of stuff. And so you're saying you do the same thing, L&I does the same thing, or do you kind of combine it? What happens?
In most cases, Councilwoman, our violations are written within the property line. We can write certain violations on the sidewalk if it extends into the sidewalk. We work within the property line and most of the times rear yards and front porches, front yards, things of that nature.
So then if people aren't cutting their weeds and their grass is growing too high, you take care of that; Streets Department does sidewalk trash and all the other stuff?
Because one of the problems I know in my district -- and I think it's what Councilman Nutter didn't want to say -- it relates to the animal feces. People constantly get cited for that, but they just ignore it. They just tend to ignore it. And we constantly get constituents that call us back, and L&I goes out there and you issue a citation, and people just kind 1414 2/20/01 OPERATING BUDGET of ignore them. So I would like to see more aggressive or forceful enforcement. I mean, maybe the next step would be MC court.
Councilwoman, the tickets that we're issuing, if there's a problem and our inspectors are aware of a major problem in respect to which you just mentioned, this ticket allows -- that CVN allows us to write one ticket every 10 hours for a $25 fee. So by the end of the week, at 11 $125 dollars, if you don't want to clean your yard, 12 then we might want to be taking you into court. 13 MR. McLAUGHLIN: These are the same 14 people that handle your parking tickets. So it's 15 not like municipal court, a lengthy process. It is 16 the same outfit that handles the parking tickets. 17
Down at 9th and 18 Filbert? 19 MR. McLAUGHLIN: Right. So the 20 complaints you got about L&I where L&I would go out 21 and issue a 30-day notice or a ten-day clean-up 22 order or some other paper-oriented thing where 23 people said, This is just another city notice and 24 threw it away, now they're getting a ticket. So we should start -- we've only been 1415 2/20/01 OPERATING BUDGET doing this a year, a little less than a year really. We're getting up speed in doing it. The whole objective is just that area where people have not been complying with the code. We're trying to make people comply to the code.
Well, that's really good. On as it relates to code enforcement for -- people that own these multi-family dwellings -- and you know that I guess for the last four years that I have problems in my district with many troubled buildings and landlords that appear to just think that they can just skate by and do the bare minimum to stay out of court. And, finally, we do have one in equity court and it's a situation where we can probably end up in equity court five more times with the other five buildings that these people own. So I guess in this area, I want to set up a meeting so we can figure out what we can do. How many people work for L&I, how many employees are there? You have hundreds of employees, I imagine. MR. McLAUGHLIN: 445.
Right. Well, I 1416 2/20/01 OPERATING BUDGET have eight staff people. I cannot afford to have one of my staff people just dedicate so much time to these troubled buildings. I'm personally very tired of them. We spend a lot of time dealing with these shoddy landlords. We will fight them. I mean, if we have to dedicate the time, we will. In fact, I've recruited some other people to help my staff kind of stay on top of these landlords, because this takes a lot of time. One person can spend all day out at one of these apartment complexes that doesn't have any heat or the plumbing is bad or the ceilings are falling in. And when you have one landlord that owns six troubled buildings in your district, it's a lot of work. So I need to figure out a more aggressive way to deal with these people. We have been satisfied pretty much with what's happening in equity court, but we turn around and we can continue to go to equity court five more times for all of those other five buildings. And I just want to make a statement today for the record that this is very time consuming. We will fight them as long as we have to fight them, but I guess we need some direction from your department, from the law department, and we're going to get community 1417 2/20/01 OPERATING BUDGET legal service involved to see what we can do. I mean, we went through two years of long hard work to deal with the Manheim Gardens, which is now Cricket Court Commons, which you all know, you guys know, it took two years' worth of work. And, quite frankly, I'm just a little tired of it. And these are important issues that really impacts the quality of life. We're not talking about apartment buildings that are in blight-ridden neighborhoods. Some of these apartment buildings in my district -- I mean, we have one building that we're dealing with now in equity court, it's two blocks from Lincoln Drive, two blocks off of Lincoln Drive. And you know and I know that that's a very fair market rent neighborhood. So these owners, it's my understanding, live in New York, have lots of money and they just do a little bit of this and a little bit of that, but that's not good enough. We just need to do something to be more aggressive, and I'd want to find out what happened with that state law as it relates to putting these type of buildings into receivership. I don't think it was passed in the Senate last year, but that's something that I'd like 1418 2/20/01 OPERATING BUDGET us to really seriously look into. Okay? Thank you. MR. McLAUGHLIN: Yes, Councilwoman.
Thank you. The Chair recognizes Councilman Goode.
Thank you, Madam President. Good afternoon, Commissioner. MR. McLAUGHLIN: Good afternoon, Councilman.
Last week I spoke with the managing director briefly about the issue of streamlining business regulations. I told him that my office had intended on doing a policy report related to that and offer our involvement, which we will forward formally through the President's office, but I wanted to ask a little bit about that process. In addition to the managing director's office, the commerce department, the city 1419 2/20/01 OPERATING BUDGET solicitor's office and whatever involvement City Council will have, what involvement is expected from the private sector in terms of chambers of commerce or small business development centers who often deal with business start-ups and know what they would face in terms of regulatory burdens? MR. McLAUGHLIN: I know that we're very open to participation with those groups. I mean, we currently meet with various business groups to hear their concerns, to better understand how we can relate and make our practices better for them. An example that I might give you is that instead of us just creating regulations out of our heads in regard to these piers that we have just been talking about, we called a representative group of small pier owners and large pier owners together. We're working on regulations that we would implement for the future on how people would care for their piers and what L&I's relationship to them would be. And for that particular draft copy of those regulations, those folks were all in agreement that that would be a business-friendly thing for them.
In this particular case, I mean, is there already anticipated 1420 2/20/01 OPERATING BUDGET involvement from the Greater Philadelphia chamber of commerce, the African-American chamber of commerce, the warden small business development center, LaSalle small business, all those groups that in the end deal with business start-ups, deal with really defining whether this is a business-friendly city or not? I mean, is there really anticipation of their direct involvement in this process. MR. McLAUGHLIN: Absolutely.
How so? MR. McLAUGHLIN: I mean, we do things now for people, bring them in ahead of time, set them down at a table. If doing your business is a simple matter of just getting a couple of licenses and setting up in a property that's already there, that's pretty simple, and that's the kind of help that we can get through our permit directories and the printing that we've done in the past and are actually working on right now to make that process more easy to comply with. Also, we spoke earlier about the Internet. You can find a lot of the information on what you have to do to start a business on the Internet. So we're reaching out now. And if 1421 2/20/01 OPERATING BUDGET there's a suggestion that you could form something that we could buy into and find out more that we could do --
I guess I'm not being fully clear. The conversation I had with the managing director last week talked about beyond just the automation of licenses and permits. Actually when we would get down to the business, actually taking regulations off of the books. The fact that businesses feel overburdened, not so much by particular regulations but by the whole wealth of regulations that exist and what business groups you're going to work with to make sure that at the end of this process, at the end of supposedly streamlining business regulations, that we are in fact considered a business-friendly city.
Councilman, I'd just like to add something. I've been working on this for a number of years. We've looked over the years at what regulations and laws we have. From a revenue standpoint, licenses generate the bulk of the 23 city's fee revenues. We would very much like to see 24 a streamlining of all the various licenses so that, 25 for instance, as the Commissioner mentioned to you 1422 2/20/01 OPERATING BUDGET before, if we have a restaurant, one restaurant license covers seven or eight different required activities, and the idea would be that if there's information we need from a restaurant for different things they're doing, put that all on the form, but only have them get one license. Information is one thing. Having all these different myriad of licenses people have is another, because then we constantly are rebilling people for different licenses at different times. Most of the amounts are relatively small, but it's bothersome to the business. It's cumbersome to have to get all these different things. So we're very much in tune with that. One of the things that we have to keep in mind is that we're dealing -- L&I enforces the general code of ordinances. They're your ordinances. We want to work with City Council to try to streamline those ordinances down to a minimum number of licenses, and we're going to be coming to Council and looking to the help of City Council, yourself particularly since you're very interested in this, to see what we can do to make it very easy for people to come into Philadelphia and do business 1423 2/20/01 OPERATING BUDGET here.
I appreciate that. I look forward to working with you. I guess my last question is, we were looking forward to producing a policy report and then initiating this as part of the legislative agenda. It's my understanding from the mayor's speech at the chamber luncheon that he's looking for a report I think by the fall for a fall legislative agenda. I guess my last question is, is this going to be an ongoing process beyond whatever we discover can be taken off of the books and can be simplified between a time? Is this going to be a process that goes beyond this year legislatively from your angle in terms of what you're looking to do?
I can say that we're prepared to go. We have eliminated a number of licenses over the years. I guess right now in the last session of Council, we eliminated, I believe, something like 16 different licenses. We're prepared to eliminate more. You have to recognize, many of the licenses -- we issue 200 different licenses and permits. Some of those we issue maybe one or two 1424 2/20/01 OPERATING BUDGET licenses per year. I mean, we really have to question whether or not there's any impact or any good really being served by those licenses. And we're perfectly willing and want to get this thing moving as quickly as possible. I'm in the drop program, courtesy of City Council. I'll be leaving here in a few years. I would love nothing more than to see the city issuing licenses a year when I leave. 11
Thank you. I look 12 forward to working with you. 13 Thank you, Madam President. 14
Thank you. 15 Are there any other questions? 16 (No response.) 17
Gentlemen, 18 thank you very much. 19 MR. McLAUGHLIN: Thank you. 20
The Board of 21 L&I Review. 22 Mr. Felgus, are you going to testify on 23 this? 24
Yes. Counsel President 25 Verna, members of Council, I am Richard Felgus. I'm 1425 2/20/01 OPERATING BUDGET here to testify on behalf of the Board of Licenses and Inspection Review. We are requesting a budget for the board of $207,877, an increase of $168 over FY01 estimated obligations. This budget will support three employees of the board, along with six board members. During the past year, the board rendered decisions in 857 cases. This board does have a very important role in city government, particularly now with gun permits. So that it is a -- they do perform a very significant function for the City of Philadelphia. I'd be happy to answer any questions anyone may have at this time.
Thank you. Are there any questions from members of committee? (No response.)
Thank you, Mr. Felgus. The Board of Building Standards.
Again, Council President Verna, members of Council, I am Richard Felgus testifying on behalf of the Board of Building Standards. I'm here to request an FY02 budget of 1426 2/20/01 OPERATING BUDGET $117,236, an increase of $111 over the FY01 appropriation. This funding will support two full-time employees and four board members. The Board of Building Standards considers variances from requirements of the Philadelphia Building Code and approves new materials and things of that nature. During the past year, we had 180 cases presented to the board. And, again, we feel this board performs a very useful purpose to the City of Philadelphia.
Thank you. Any questions from members of the committee? (No response.)
Mr. Felgus, can we now address the Zoning Board of Adjustment?
Yes. Council President Verna, members of Council, I am Richard Felgus here on behalf of the Zoning Board of Adjustment. We are requesting a budget for this board of $517,670, an increase of $408 over the FY01 estimated obligations. The budget for the board will support a full-time staff of six employees and five board 1427 2/20/01 OPERATING BUDGET members. The Zoning Board of Adjustment is probably the most active of all city boards. It conducts 250 meetings per year. Approximately 1,980 cases will be heard in FY02. The board has a tremendous impact on the City of Philadelphia, its economic well-being, and we believe the board does an outstanding job, and I'd be happy to answer any questions you may have at this time.
Thank you. Any questions from members of the committee? (No response.)
Thank you. In fact, I heard you say that you're under the drop program. How many years have you been with the city?
Thank you. The stenographer has to put new tape in her machine, but the Water Department is next, so I 1428 2/20/01 OPERATING BUDGET would suggest they do come up to the witness table. Good afternoon. Mr. Roy, we have a copy of your testimony. It will be given to the stenographer and it will be transcribed in full. We would request that you summarize your testimony.
Good afternoon, Council President Verna and members of City Council. I am Richard Roy, acting commissioner for the Water Department. I am here to give testimony for the Water Department's operating budget for FY02. Joining me here at the table today are Sue Lior, deputy commissioner for information science and technology; Michael Hogan, deputy commissioner for operations; and Bernie Brumwasser, deputy commissioner for finance. million for all the water fund activities, including Water Revenue Bureau, debt service payments and central agency support. percent. This budget request for the first time since 1992 will require a rate adjustment. In the years past, the department has shared many of our successes in cost containments and revenue enhancements with you. These efforts have saved the Water Department and its rate payers many millions of dollars in operating costs. Virtually all of these savings have been maintained in the proposed FY02 budget. 1 percent increase in chemical costs. 4 percent. During this same period, the customer base has shrunk from approximately 503,000 accounts in 1992 to approximately 476,000 accounts today. In addition, state and federal drinking water in pollution prevention regulatory programs are requiring more sophisticated water treatment and greater collection of storm water and treatment of 1430 2/20/01 OPERATING BUDGET that storm water. 23 per month per year for the typical residential customer and even less for senior citizen households. These rates will keep us well below the rates in the surrounding area and below many of the major cities throughout the country. We continue to operate our wastewater treatment facilities in award-winning fashion. This is important to the continued economic development of the riverfronts, and we have been able to achieve greater flows throughout the wastewater facilities during storm events without interfering with treatment goals. This, along with utilizing our in-place sewer infrastructure, will allow us to attain requirement of our long-term storm water control plan without spending the hundreds of millions or even billions of dollars that other cities have had to spend. Over the past three years, we have been able to attain research data from our water treatment pilot plants that have allowed us to move 1431 2/20/01 OPERATING BUDGET forward with capital improvements and process modifications to the water treatment plants. With these improvements and modifications, we will meet the requirements of the federal interim enhanced surface water treatment rule. The cost of these improvements are millions of dollars less than we had anticipated when the rule was first announced. Additional research at the pilot plans will allow us to contain costs as the requirements become more stringent in future years. Over the past several years we have seen many service improvements. This will continue as we increase our technological ability. We have completed a strategic plan for the department's GIS, or geographical information system. Our base system is in place and we're beginning to develop applications to provide productivity increases throughout the department. The computerized maintenance management system that was introduced at our southwest water pollution control plant has been expanded to all seven treatment plants, our pumping division and our building maintenance unit. We will be working with the same 1432 2/20/01 OPERATING BUDGET software company to develop a street-side system that will allow us to capture and utilize much of our current stand-alone databases. This will give us a much more powerful tool to schedule maintenance, react to customer complaints and service calls and maintain valuable information. We are presently utilizing a computer modeling technique for the evaluation of our sewer system that will allow us to make better decisions on capital improvements.
We have been able to use these techniques in managing our storm water program leading to lower cost solutions to capture and treatment problems. In the near future, we will be looking to model the distribution system as well. Once in place, we will be able to manage adequate flows throughout the city while downsizing our piping infrastructure. Please be assured that I have no great pleasure announcing today that a rate adjustment is pending. For the last five years, I have been able to sit here with my predecessor, Mr. Kishinchand, and feel good about being able to say, Again, we will not need a rate increase this year. My staff 1433 2/20/01 OPERATING BUDGET believes that the modest increases that are sought are necessary to maintain the fiscal viability of the Water Department. At this time, we will be happy to answer any questions that you may have.
Thank you, Mr. Roy. What are the water rate assumptions contained in both the FY02 budget and the five-year plan?
Before we begin, may I just say that in the adjustment rate process, the responsibility for adjusting rates fall onto my shoulders. There is a process that goes forward with this, and to keep myself out of the ongoing process, my staff -- we're divided into two parts. One is recommending the rate adjustments, and then the one side has to make this final --
--rate. The process begins with a letter to you announcing that we have to go forward with this. Then a hearing examiner is selected by the Council President, mayor and the city control room. Once that's in place, then there will be a series of hearings, public hearings, and 1434 2/20/01 OPERATING BUDGET testimony given that supports and/or questions the need for a rate increase. And then once that's in place, those recommendations then come forward to me and it becomes my responsibility to make those final rate decisions. To keep myself from becoming prejudiced during that hearing process, I would defer those questions to my deputy for finance.
Good afternoon, Madam President. I guess the question is -- my name is Bernard Brunwasser. I'm the deputy water commissioner for finance and administration. I believe the question was what are the department's assumptions for rates for the next --
-- FY02 and the five-year plan. There is a table in the five-year plan where we have something called a projected revenue and requirements table or Table 11. That table indicates that we believe that revenues must increase by 6 percent in the coming fiscal year, 02, 1435 2/20/01 OPERATING BUDGET and increase by approximately 7 percent for the remainder of the plan. Those higher revenue levels, however, are not indicative of what a residential customer will be paying. What we believe a typical residential customer will be paying is approximately $1.23 more per month or about a 3.1 percent average increase over each of the next three years. A typical senior citizen would be paying an average increase of about 1.9 percent per year, and those seniors, with a percent discount, their average 13 increase of 1.9 percent per year is indicative of 46 14 cents a month increase. 15
What is the 16 average bill that this is based on? 17
For a typical 18 residential customer, $38.47 a month. 19
Okay. When do 20 you project the new rates will become effective? 21
It's the department's 22 intent to make these new rates effective on July 1st 23 or shortly thereafter. The hearing process itself 24 is expected to take four to five months. 25
What are the 1436 2/20/01 OPERATING BUDGET projected revenues to be generated by the proposed increases?
We project to -- the three proposed rate increases are projected to raise $134.8 million in revenue over the three-year period.
The projected rate increases are meant to raise $134.8 million over the next three-year period.
Thank you. At this time, the Chair recognizes Councilman Rizzo.
Thank you. Commissioner, I won't go back over the areas that we already covered last week, because I assume those questions that were asked will be responded to the Chair.
So we won't go back there. Just out of curiosity, were you planning to reveal that there's going to be a rate adjustment 1437 2/20/01 OPERATING BUDGET today? Did you plan that two weeks ago or did you just decide to reveal that because of the conversation we had last week? Did you plan to do that today?
It was revealed in the five-year plan. It was revealed when we submitted our budget. I certainly would have hoped to have had word out before today, but it certainly has to come out today.
I'd like to talk a bit about a question that we had discussed maybe two, three -- maybe two years ago about the fact that we sell water to some of our suburban communities, and I believe one of those communities buys water. I wish our citizens could buy the water as cheaply as those companies do. And at that time, it was stated that, I think I can recollect, that we should look at that to see if that rate that we charge these suburban companies, maybe we ought to adjust the price upward. I understand Bucks County buys water from Philadelphia. What do they pay? Because there was some concern that maybe they're getting too good a deal. 1438 2/20/01 OPERATING BUDGET
Councilman, we do sell water wholesale to Bucks County and the price is about 45 cents a thousand gallons.
What does a commercial customer pay for a thousand gallons of water?
Well, it would be probably a bit higher than that. Some of our large commercials, their rates probably are in the area of 80 to 90 cents per thousand gallons, off the top of my head. Now, one of the things you have to remember is that the way we charge, they distribute the water. A large component of our cost is the distribution through 3,300 miles of water main and pumping stations, et cetera, that we have to have in place in order to provide the water. The water itself is not all that expensive for us, but I should point out that the 45 cents per thousand gallons to Bucks County has up until now recovered all of our costs, plus a 10 percent management fee. 1439 2/20/01 OPERATING BUDGET
You would think these contractual deals wouldn't be tied to a rate increase. What's the relevance of a rate increase when you're talking about a commercial deal like a contractual deal like this?
What happens is that we determine rates when we decide that we are not recovering adequately, and we have commissioned a rate study which indicates now that rates are going to have to go up beginning this July, and it will certainly go up for Bucks County water. And we will -- we can raise rates to them under the contract with 90 days' notice.
So you feel as though we'll be recovering more than 45 cents per thousand?
We have recently, this past June, signed a second wholesale water agreement 1440 2/20/01 OPERATING BUDGET with DELCORA -- excuse me; not DELCORA. With Philadelphia Suburban Water. And we're going to be supplying them with up to six and a half million gallons per day when their pipeline is complete. They're supplying water to a power plant that's being constructed in Eddystone, Pennsylvania.
Wait until the suburbanites that fleed Philadelphia find out when they turn on their water in Chester County and Montgomery County that they're drinking Philadelphia water. That should really please them.
The reason for this discussion is the fact that I've been led to believe that this is one deal that may be too good a deal, so I'm hoping that we revisit the fact that -- I've gotten a couple of letters from people that are in this business and know a little bit about this pricing and they said you're basically giving it away. 1441 2/20/01 OPERATING BUDGET
The contract that we've negotiated with Philadelphia Suburban is quite a bit higher than the contract with Bucks. Bucks' contract goes back to 1966, I believe.
And I would continue to add that we do have excess capacity in our three water treatment plants, and it is our intention to continue to seek ways of selling that water wholesale outside the city. We have discussed this with the mayor, and I think we're going to try to push this effort a lot more. I mean, New Castle County in Delaware certainly has water problems. In New Jersey they certainly have water problems with their wells, and we have the capacity to supply them, so we will pursue these so that we can help contain the rates for our customers here in the city.
Thank you. Are there any questions from members of the committee? (No response.) 1442 2/20/01 OPERATING BUDGET
The Committee of the Whole will be in recess until tomorrow, Wednesday, February 21st at 9:00 a.m. Thank you very much. (Hearing adjourned 5:05 p.m.) - - - 1443 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, February 20, 2001, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE ON FY02 OPERATING BUDGET _____________________________ CARMEN J. BUCCA Professional Reporter and Commissioner of Deeds ______________________________ MICHELE L. MURPHY RPR-Notary Public