COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, February 25, 2010 1:10 p.m. - - - PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN BILL GREEN COUNCILMAN CURTIS JONES, JR. COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 100009 - An ordinance amending Section 16 19-2604 of The Philadelphia Code, relating to tax rates and credits for the business privilege tax, by amending the credit for contributions to community development corporations to allow a business that terminated a contribution agreement to remain eligible for future tax credits... - - - 2
Good afternoon. This hearing is called to order. This is a public hearing of the Commerce and Economic Development Committee on Bill No. 100009. My name is W. Wilson Goode, Jr., Chair of the Committee. I note that a quorum is present. To my immediate left is Councilwoman Blondell Reynolds Brown, the Vice-Chair of the Committee. To her left is Councilman Darrell Clarke, and to my right is Councilman Frank DiCicco. The title of the Bill No. 16 100009, an ordinance amending Section 17 19-2604 of The Philadelphia Code, relating to tax rates and credits for the business privilege tax, by amending the credit for contributions to community development corporations to allow a business that terminated a contribution agreement to remain eligible for future tax credits under the provision that permits two businesses to apply jointly 3 2/25/10 - COMMERCE - BILL 100009 for the tax credit, under certain terms and conditions. Our first witness is Frank Breslin, Deputy Revenue Commissioner. (Witness approached witness table.)
Good afternoon, Mr. Breslin. Please state your name for the record and proceed with your testimony.
My name is Frank Breslin, Deputy Revenue Commissioner. Good afternoon, Chairman Goode and members of the City Council Committee on Commerce and Economic Development. I'm Deputy Revenue Commissioner Frank Breslin. I am here to testify on Bill 19 No. 100009, amending the credit for contributions to community development corporations to allow a business that terminated a contribution agreement to remain eligible for future tax credits under the provision that permits two businesses to apply jointly for the tax 4 2/25/10 - COMMERCE - BILL 100009 credit, under certain terms and conditions. As you know, the Department of Revenue administers this program, which provides an annual $100,000 business privilege tax credit for ten years to firms that donate $100,000 per year for ten years to a community development corporation. A recent change to the ordinance allows two firms to partner with each CDC jointly making the $100,000 contribution. The Department of Revenue has worked with the Philadelphia Association of Community Development Corporations to complete draft regulations necessary to implement this change. These proposed regulation amendments have been submitted to the Law Department, as required. Once they are approved by Law, the Department of Revenue will submit the amended regulations to the Department of Records. The Administration supports the further amendment sought in Bill No. 5 2/25/10 - COMMERCE - BILL 100009 100009, which allows a company that has previously participated on its own to be a part of a partnership. We continue to support the provision that firms may not completely drop out of the program and then return. The amendment allows firms that are able to partner with another taxpayer to continue their participation, and we believe that this is appropriate. Thank you. I am happy to answer any questions.
Thank you for your testimony, Mr. Breslin. Are there questions from members of the Committee? (No response.)
Our next witness is James White, Philadelphia Association of Community Development Corporations. (Witness approached witness 6 2/25/10 - COMMERCE - BILL 100009 table.)
Please state your name for the record and proceed with your testimony.
Good afternoon. Thank you, Chairman Goode and members of the Committee, for the opportunity to testify today. My name is James White and I'm the Policy Coordinator of the Philadelphia Association of Community Development Corporations. First, I would like to express our gratitude to Councilman Goode and the members of the Committee for their leadership on this program and to articulate PACDC's strong support for this bill. The CDC Tax Credit Program sustains economic opportunities in disadvantaged neighborhoods by continuing business development, job creation and neighborhood improvements, which are critical components of our City's fiscal vitality. As you're aware, PACDC has 7 2/25/10 - COMMERCE - BILL 100009 worked with you on the past legislation last May that expands access to the program for businesses and CDCs by allowing a CDC to partner with up to two businesses that would share the annual hundred-thousand-dollar contribution and related tax credit. The legislation before you today will clarify that a business currently participating in the program at a hundred-thousand-dollar level could remain involved in the program at a reduced funding commitment by partnering with a second business to jointly contribute a hundred thousand and share the tax credit on an appropriate basis. This clarification is given more importance given that the program's authorizing legislation currently states that a business that terminates a contribution agreement will not be eligible to apply for future credits under the program. Given the downturn in the economy, several businesses 8 2/25/10 - COMMERCE - BILL 100009 participating in the program no longer have a City business privilege tax liability and access of a hundred thousand per year, and thus it may no 6 longer make financial sense for them to continue in the program even though they would like to do so. In fact, some businesses have already opted out of the program. This bill will assist CDCs currently in the program who are at risk of losing their business partner, as well as CDCs and businesses that are interested in renewing the participation in the program when the current ten-year agreements begin to expire. We believe that the bill before you today, combined with proposed amendments to the regulations governing implementation of the program, will advance the impact of an essential program that should be an integral part of our overall economic development strategy. We urge the Committee on 9 2/25/10 - COMMERCE - BILL 100009 Commerce and Economic Development to report this bill from Committee today with your full support and to work with us to ensure the program's continued successful implementation. Thank you.
Thank you for your testimony, Mr. White. Let me note for the record we've been joined by Councilman Bill 12 Green and Councilman Curtis Jones as well and that we also have written testimony from Gina Snyder of East Falls Development Corporation, who is not able to make it, but her testimony will be incorporated into the record. Are there questions for this witness? (No response.)
Seeing none, our next witness is from the Delaware River City Corporation. (Witness approached witness table.) 10 2/25/10 - COMMERCE - BILL 100009
Good morning. I'm James Donaghy. Today I am representing the Delaware River City Corporation. Good morning, Chairman Goode and members of City Council. My name is James Donaghy and I'm here as the Vice-Chair of the Delaware River City Corporation and also to pass on the regrets of Mr. Bob Borski, who is our Chairman and was unable to attend today. I'm here to present testimony in support of Bill No. 100009, which would allow former business sponsors to reapply to participate in the Community Development Corporation and Business Privilege Tax Partnership Program. Allow me to begin by giving you some background information on our non-profit. The Delaware River City Corp is a 501(c)(3) which was founded with the help and approval of Councilwoman Krajewski to guide and facilitate the implementation of the North Delaware 11 2/25/10 - COMMERCE - BILL 100009 Greenway Plan. The plan, when implemented, will enhance the City's quality of life, support investment in economic growth and new community development, provide recreational opportunities and public open space, and a sustainable riverfront environment. The North Delaware is a valuable and virtually untapped resource for the many neighborhoods of Northeast Philadelphia along the riverfront and for the entire City of Philadelphia. Our city began at the banks of the Delaware, and over the centuries, we have used and abused this resource. Today, we are working to reclaim the riverfront and provide access for our citizens. With over 700 acres of vacant and underutilized land, the riverfront has enormous potential for the greenway and trail development in concert with both present industrial uses and proposed mixed-use, commercial and residential development. 12 2/25/10 - COMMERCE - BILL 100009 A properly developed continuous greenway and trail system can provide significant public recreation, open space and economic development assets for the City, for the region and the Commonwealth of Pennsylvania. This revitalization or renaissance of the Delaware riverfront has not happened overnight. The Pennsylvania Environmental Council and elected city and state officials began meeting with community leaders in 1996 to discuss this important initiative. Philadelphia has a great opportunity to transform the Delaware riverfront into a place where industrial, recreation, commercial and residential uses all co-exist. Federal and state funding has been allocated for design and construction of several sections of the greenway and trail. Twenty-three million dollars in federal transportation money will be used for the construction of the greenway and trails from Allegheny Avenue in the south to Grant Avenue in the north 13 2/25/10 - COMMERCE - BILL 100009 at the county line and for the new River Road, which will run from Lewis Street in the south to Buckius Street in the north. An additional $1 million in State Department of Conservation and Natural Resources funding is being used for the construction of a trail in the Pennypack on the Delaware Park and for a new park at Lardner's Point, which is just south of the Tacony-Palmyra Bridge. The trail in the Pennypack on the Delaware Park was completed in November of 2000, and Lardner Park is projected to begin construction this spring. Where we lack financial wherewithal is for administrative purposes. In 2005, the organization was privileged to be named one of the 20 organizations recognized by the City for 21 inclusion in the Community Development 22 Corporation and Business Privilege Tax 23 Partnership. However, this partnership 24 was terminated by our sponsor in 2008, as 25 the corporation could no longer meet the 14 2/25/10 - COMMERCE - BILL 100009 threshold of the business privilege tax partnership. For the past years, DRCC has 5 been diligently seeking another sponsor, 6 and while many corporations have been 7 interested, we have been unable to 8 finalize an agreement.
DRCC recently 9 learned that its original corporate 10 sponsor would like to rejoin the program. 11 If the City ordinance can be 12 amended to allow reentry into the program 13 as outlined in the bill before you today, 14 the Delaware River City Corp would once again partner with its original corporate sponsor, as well as another. The amendment would allow this very worthy community development project to move forward by relieving its financial constraints. The long-held vision for a riverfront greenway is taking shape. With the availability of corporate partnership funds from the Business Privilege Tax Partnership Program, 15 2/25/10 - COMMERCE - BILL 100009 Delaware River greenway and trail will not just be a vision, but will become a reality in the near future. I would urge you to support this change in legislation, and I would be happy to answer any questions you may have. Thank you for your time.
Thank you for your testimony, Mr. Donaghy. Are there questions for this witness? (No response.)
Seeing none, is there anyone else to testify on this bill? (No response.)
This concludes our public hearing. We will move to our public meeting. The Chair recognizes Councilwoman Reynolds Brown for a motion on Bill No. 100009.
Thank you, 16 2/25/10 - COMMERCE - BILL 100009 Mr. Chairman. I move that Bill No. 3 100009 be moved out of Committee with a favorable recommendation and further move that the rules of Council be suspended so as to permit first reading at the next scheduled session of Council. (Duly seconded.)
Bill 100009 is reported out of Committee with a favorable recommendation and a suspension of rules to allow first reading at our next Council session. Thank you. This concludes our meeting. (Committee on Commerce and Economic Development concluded at 1:25 p.m.) - - - 17 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on February 25, 2010, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)