Committee Hearing, December 11, 2001

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, 12/11/01 10:14 a.m. - - - BILL 010694 - Re Neighborhood Transformation Initiative PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILWOMAN MARIAN B. TASCO, Vice Chair COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCIL PRESIDENT ANNA C. VERNA - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 I N D E X WITNESS Morrow Family Presentation....................... 5,6 Joyce Wilkerson, Mayor's Chief of Staff.......... 7 Pat Smith, Director, NTI......................... 17 8 Maxine Griffith, Executive Director.............. 74 Philadelphia City Planning Commission 9 Herbert Wetzel, Executive Director............... 83 10 Redevelopment Authority, City of Philadelphia Diana Neff, Chief Information Officer............ 90 Rob Dubow, City Budget Director..................100 Donna Mouzayck, First Deputy City Solicitor......124 Deborah McColloch, Director of Housing...........154 Dr. Jeremy Nowak, President, Reinvestment Fund...258 Charles McPherson, City Council CFO..............264 Rick Auerbach, Council Staff.....................265 - - - 3 12/11/01 FINANCE COMMITTEE - BILL 010694

Good morning, good morning, everyone. Thank you. We welcome each and every one of you to this public hearing before the Finance Committee dealing with the blight/neighborhood transformation initiative, commonly known. So the Finance hearing is now called into session with regard to Bill No. 010694. The clerk will please read the title bill.

Bill No. 010694, an ordinance 12 authorizing and approving: (i) The execution and delivery of a service agreement between the City of Philadelphia and the Redevelopment Authority relating to a comprehensive neighborhood transformation program for revitalization, renewal, redevelopment, and transformation of blighted areas within the City of Philadelphia and other activities to promote the health, safety, and welfare of the residents of the City of Philadelphia; (ii) The issuance by the Redevelopment Authority of bonds, notes, or other evidence of indebtedness in one or more series to pay the cost of the Neighborhood Transformation Program; and 4 12/11/01 FINANCE COMMITTEE - BILL 010694 (iii) The obligation of the City of Philadelphia to pay in full when due the service fee and other amounts payable under the service agreements authorizing certain City officers to take certain actions required to issue bonds covenanting that the City of Philadelphia will make necessary appropriations in each of the City's fiscal years to provide for service fee and other amounts due under the service agreement and covenanting that the City of Philadelphia will make payment of the service fee and other amounts due, all under certain terms and conditions.

Thank you very much. The opening remarks this morning will be made in a different form. We wanted to give you a little background, a little tone to set the record straight before our president makes the opening remarks. And with us this morning, we have the Morrow family. But one moment, before I introduce them, let me say that we do have a quorum. To my left is, of course, the President of City Council, Anna Verna; to her left, the Vice President of this 5 12/11/01 FINANCE COMMITTEE - BILL 010694 committee, Marian Tasco; to her left, Frank DiCicco; to my right, Councilman Kenney; to his right, Councilman Nutter. So, again, we thank you for a quorum and it is my pleasure to present to you to talk about blight/neighborhood transformation the Morrow family.

Good morning. It's an extreme pleasure to be here to present this demonstration. Picture this with me: (Mr. Morrow sings song.) (Applause.)

Picture this with me: Redeveloped housing, clean neighborhoods, new windows, new roofs, no more broken-down shacks, demolition everywhere, blight turns into blight, and celebration's in the air. New mindset, friendly and happy neighbors, everyone's a brother's keeper, the whole village is involved. So listen to Councilwoman Jannie Blackwell and the Neighborhood Transformation Initiative and let it become part of the City's plan. Come on and catch the vision and let us celebrate in one voice. It's already all right. 6 12/11/01 FINANCE COMMITTEE - BILL 010694 (Applause.) (Morrow family members do interpretive dance.) (Applause.)

Thank you very much, thank you. (Applause.)

Many of you will recognize Reginald Morrow. We've seen him at the Academy and Black Nativity. Renee Morrow, his wife, was honored in this Council as Teacher of the Year, a teacher from Masterman, a few years ago. And it's just a family that I could go on and on about their musical dance and tell you about the fine things that they do in and for the City. I'm proud to say they're from West Philly, my district. In fact, Reggie's one of our committeemen. And we thank you, thank you, thank you for setting the tone 'cause it's all right, as you said, it's all right. Thank you, thank you. (Applause.)

Thank you very much. The Chair will then yield to the President 7 12/11/01 FINANCE COMMITTEE - BILL 010694 of Council, who will make an opening statement.

Thank you very much, Madam Chair. Since Bill No. 010694 was introduced, there have been discussions among members of Council and with the Administration concerning this bill. In those discussions, some concerns have arisen about some conditions of the bill. In response to some of those concerns, I am offering amendments to the bill. A copy of the amendments was circulated to all members of Council and the Administration yesterday. Let me summarize briefly what those amendments would do. First, the bill, as introduced, capped the amount of borrowing at $250 million. The amendments would lift that cap, provided the total amount of bond proceeds that could be used for demolition would be capped at $160 million. That $160 million figure is consistent with the Mayor's pledge that amounts over $250 million would be earmarked for non-demolition activities. The second provision would be made to permit start-up expenditures of up to $20 million before approval of the first annual line item 8 12/11/01 FINANCE COMMITTEE - BILL 010694 budget. Next, the requirement that the land bank be approved prior to the expenditure of any bond proceeds would be deleted. Instead, Council's approval of the land bank would be required only before land acquisition could be made with bond proceeds. In addition, an exception would be made for land acquisitions expressly approved by Council so that any current procedure under which land acquisition takes place with Council approval could continue even before approval of the land bank. Next, the Council President's representative on the Project Review Team would be required to give affected District Councilpersons an opportunity for review, comment, and recommendation prior to approving or disapproving an amount. Also, the exhibits to the bill would be changed. Technical amendments would be made to Exhibit A, the service agreement, to conform to changes made in the Mayor's form of service agreements. Exhibit B, the summary project budget, would be deleted in its entirety. Finally, since the proposed amendments were distributed yesterday, further discussions have 9 12/11/01 FINANCE COMMITTEE - BILL 010694 revealed the need for one additional clarifying amendment. That amendment would make it clear that the Project Review Team's approval of bid packages and contracts would apply only to work funded by bond proceeds. Those are the changes that would be effected by the amendments which I am offering today. A copy of the amendments has been distributed to each member of the committee and all other Councilmembers. And that version includes the additional amendment, which was not included in the materials distributed yesterday. Thank you very much.

Thank you, Madam President. If anyone has an opening statement, I'll entertain that. If not, we'll begin our testimony immediately. Pat Smith, the Director of the Neighborhood Transformation Initiative is first. Joyce Wilkerson, Chief of Staff, is accompanying her. (Witnesses come forward.)

Welcome. Please 10 12/11/01 FINANCE COMMITTEE - BILL 010694 identify yourself for the record after you've unloaded and begin your testimony. Thank you.

Good morning. My name is Joyce Wilkerson. I'm Chief of Staff to Mayor John F. Street. I'm joined today by women and men representing departments throughout City government. This is as it should be because transforming our neighborhoods is, in many ways, about transforming how we in government conduct our business. The Administration believes Bill No. 12 010694 can be the starting point for a new day in neighborhoods across the City of Philadelphia. We believe --

Could we have copies of your testimony? Thank you.

The testimony was passed out yesterday in your packet.

We didn't have it.

Mine is simply an overview. It's more responsive to the amendments than it is to the nature of it and it's substantive information. We believe the modest amendments -- 11 12/11/01 FINANCE COMMITTEE - BILL 010694

Excuse me one moment, Ms. Wilkerson. On the information we passed out yesterday, it had an overview of strategy and growth or investment testimony to be supplied at the hearing by Pat Smith. So that you received yesterday but we have that today.

Yes.

The other testimony from Ms. Wilkerson was passed out yesterday afternoon. We gave you everything that we received.

What we've tried to do is --

One point for the record, if I could be recognized for a moment. Thank you, Madam Chair. I think it's been the tradition since I've been here, on the insistence of the last Council President, that testimony be in at least hours in 21 advance. And I would think that an issue as 22 important as this and as long as the planning has 23 gone on for this, that we could have had this 24 information prior to the morning of the hearing. I think it's difficult to read, go through 12 12/11/01 FINANCE COMMITTEE - BILL 010694 the documents, and listen to people's testimony, and, I mean, just for the record, I think we should have had this at least yesterday.

Certainly I agree that the earlier you get the testimony, the better. I think the bill was advertised on Thursday and -- which would have left maybe Friday and yesterday. But, you know, I agree, there wasn't a lot of time. The earlier we have it, certainly the better for a detailed issue like this, but we certainly hope that would not forbid us from moving forward.

What we've attempted to do in Ms. Smith's testimony is simply shorten the other testimony that was provided to Council yesterday. When we went through the testimony of each one of the individuals, it took over two hours. It was painful to us listening, and we thought that it would probably not be helpful in this format. So Ms. Smith's testimony presents in a more concise form the information that was presented in testimony format yesterday. And, again, all of that information simply summarizes a lot of material that's been provided to City Council since April. 13 12/11/01 FINANCE COMMITTEE - BILL 010694 My comments are more directed at the amendments that were transmitted yesterday. I am trying to articulate the Administration's position on the bill as it is in the subsequent amendments. And I apologize for not getting it to you late yesterday, but I didn't get the amendments until 5. We believe that with modest additional amendments, the adoption of the program statement transmitted in April, a clarification of the budget and oversight bill, this bill can serve as the legislative structure for the City's Neighborhood Transformation Initiative. I will present some preliminary comments. As I said, Pat Smith's testimony addresses critical components of the transformation plan. Rather than having everybody give their individual testimony, it's summarized in Pat's. NTI was born out of a very conflicted reaction you have when you drive throughout some of the City's neighborhoods. We have daunting challenges. At times, a very haunting feeling sets in when you pass through some of Philadelphia's neighborhoods. Trash litters the streets and vacant lots, paint is peeling on some homes that were once 14 12/11/01 FINANCE COMMITTEE - BILL 010694 immaculately maintained. Commercial strips that once were the hubs of activity are now largely vacant. Yet, a scintillating Center City that boasts a 98 percent occupancy stands in stark contrast to neighborhoods experiencing a 46 percent increase in vacancy. What was once a problem in North Central Philadelphia is now a problem in virtually every City Council district. Although the challenges are daunting, we are presented with wonderful opportunities. We have wonderful neighborhoods in Philadelphia, each with a unique character, with residents willing to work for their communities. Because of the scale of the City, Philadelphia's not an overwhelming place to be; instead, it can be very welcoming. We are located strategically along the East Coast, we have great assets. NTI is born out of a belief that if we act smart, if we are willing to be bold and decisive, there are wonderful opportunities for renewal in communities throughout Philadelphia. This plan has not been in developed in a vacuum; it was built upon the wisdom of hundreds of 15 12/11/01 FINANCE COMMITTEE - BILL 010694 City employees who work every day to deliver quality service to our fellow residents. It is built on the work done by individuals and organizations that served on the Mayor's Transition Committee before he took office. It reflects the input of City Councilmembers at hearings, meetings, briefings, and as shared with the Mayor during his more than 70 hours of tours across the City last summer. It reflects dialogue with Realtors, unions, bankers, suburban home buildings, community development corporations, university presidents, and foundations. When good ideas appeared in plans offered by PIA, the Pennsylvania Horticultural Society and others, we've appropriated them shamelessly. While creating a $300 million fund to enable the City to move forward aggressively against the conditions that have taken root in our neighborhoods is fundamental, it is not the key. Even $300 million is woefully inadequate to the challenge at hand. The key to NTI, what makes it more than a blight plan, is its acknowledgment that if we are to save our neighborhoods, we must do business 16 12/11/01 FINANCE COMMITTEE - BILL 010694 differently.

NTI addresses the challenges associated with physical development of our neighborhoods. It is simply one of the plans that must be put in place. We must continue to fight for quality public education for our children, we must provide them with supportive environments in which to grow. We have to maintain our commitment to rebuilding our economy and neighborhoods as well as Center City. And we must work to better link neighborhood residents to job opportunities in the region. The Neighborhood Transformation Initiative is a plan to change how we do business in City government and in neighborhoods across Philadelphia. The Administration's plan does not set forth details for addressing specific issues in neighborhoods across the City. There are no maps, no 19 architectural plans, there are no development budgets. The Administration's plan is different from the plans already developed by communities across the City. It's different from the plans being put forth by members of this City Council. The Administration's plan has to articulate a 17 12/11/01 FINANCE COMMITTEE - BILL 010694 vision, set goals, and identify strategies and resources. More importantly, it must be a framework that can accommodate the challenges presented in our wonderfully diverse City. NTI acknowledges that the role of government various from community to community. Sometimes government must be prepared to invest hundreds of millions of dollars; other times, communities simply need for the government to get out of the way. The plan has to be flexible and durable. Our neighborhoods have been unravelling for decades; they won't be made vibrant overnight. They will, however, become better places in which to live. We must be in this for the long haul. Is the plan perfect? No. Will we make mistakes? Yes. But there's only one thing that we know for sure: If we do nothing, we will continue to fail. I'll introduce Pat now to present the overview of the other testimony.

Good morning, Councilwoman Blackwell and members of the Finance Committee and members of Council. I do believe that my summary 18 12/11/01 FINANCE COMMITTEE - BILL 010694 testimony has been given to the clerk for distribution. We also -- my testimony will also be accompanied by a PowerPoint presentation that emphasizes high points in the testimony. Again, I want to stress that this is a summary of the essence of the testimony that was presented in writing that goes in further detail from various members of the Administration, the City Planning Commission, the Redevelopment Authority, the Law Department, and others who've worked on this initiative. What is NTI? Simply put, NTI is comprehensive citywide change. It is planning differently. It is clearing the way for new homes by eradicating blight and assembling land. It is protecting the quality of life for families and children, with aggressive code enforcement. It is market-driven, investing public dollars in neighborhoods to attract private capital. NTI is not a singular program, it is not a demolition project; it is a five-year strategic plan, a framework, if you will, to preserve and build healthy neighborhoods throughout the City. My presentation today will describe the essence of NTI. 19 12/11/01 FINANCE COMMITTEE - BILL 010694 Our past. Philadelphia prospered during the first half of the 20th century. Fueled by the rising manufacturing economy, the City grew to meet the needs of an expanding population. Increased population spurred private investment, particularly in the housing market, producing sufficient stock to house 2.5 million people. City government reformed and expanded services. Some thought the boon times would never end, but for many workers, for many families, and ultimately for many neighborhoods throughout the City of Philadelphia, the good times did end. Government did not respond well to changing times. We did not streamline, we did not look for efficiencies, nor did we plan for the population that resulted in increasing vacancies. Shrinking tax revenues and cuts in federal funding created a vicious cycle of decline. While losing nearly 6,000 residents and a strong tax base, Philadelphia gained more than 26,000 vacant houses, nearly 31,000 vacant lots, and 3,000 vacant industrial buildings. An estimated 8,000 vacant buildings are in danger of collapse. The numbers are staggering. One out of 20 12/11/01 FINANCE COMMITTEE - BILL 010694 every 50 homes, nearly 10 percent of Philadelphia's real estate, is vacant. Right now, Philadelphia has the dubious distinction of being first, the national leader, if you will, in per-capita vacant property rates. For decades, the City has struggled with these dramatic changes. Government and citizens overwhelmed by the problems associated with blight have grown disheartened and cynical. One thing is for certain: We cannot maintain the status quo. We have all heard the horror stories. We have to act boldly. We can no longer afford to do things the way we've been doing them. (Applause.)

We cannot keep property records on index cards. We cannot let three housing agencies spend nearing 30 percent of housing dollars on administrative costs. We cannot afford another summer like the summer of 2000, when houses were collapsing almost every day. (Applause.)

We cannot let children playing in debris-filled lots be the community norm. Six years to acquire property for developers who want to 21 12/11/01 FINANCE COMMITTEE - BILL 010694 build today is just not acceptable. The City of Philadelphia must act now. (Applause.)

As I said, the Neighborhood Transformation Initiative, NTI, is about change. With NTI, we can set the new standard for creative land management and open-space planning and effective code enforcement. We can lead the nation in new-housing construction and housing rehabilitation. (Applause.)

And loan products and grants to help homeowners and home buyers. Philadelphia can design the best information technology systems to manage City business and streamline the acquisition process. In the past, City policies aimed at eradicating blight were, for the most part, reactive and unprotectable, addressing issues as they arose rather than responding in a thoughtful, proactive, and comprehensive way. With NTI, the Administration has crafted a five-year strategic plan to systematically correct problems and start Philadelphia on a well thought-out journey down a 22 12/11/01 FINANCE COMMITTEE - BILL 010694 carefully mapped-out road to a better future. NTI's mission is simple: To make Philadelphia neighborhoods vital and safe places to live, to work, to learn, to play by eradicating blight, preserving healthy communities, building new homes, and creating a wealth of redevelopment opportunities. How are we going to do things differently? First, we're going to plan for a change. It may be stating the obvious to assert that if you do not know where you are going, it is not likely you will get there. It is also true that without a plan to reach one's destination, one is unlikely to get there in the most efficient and cost-effective way. Visioning, goal-setting, planning are necessary precursors to development and revitalization efforts, but in many neighborhoods, success in creating and implementing a community plan has been uncertain and uneven. Community plans were often unconnected to an overall investment strategy, to a City framework of capital and operational support, to a shared vision of what our city should be. 23 12/11/01 FINANCE COMMITTEE - BILL 010694 In some communities, where there was no 3 strong community development organizations. neighborhood planning simply may not have existed. Concerned citizens and elected officials had difficulty in generating positive and lasting revitalization. The City Planning Commission will coordinate community planning activities. The planning process will be open and inclusive. It will be understanding and transparent, relatively uniform across all neighborhoods, and it will be predictable, given the differing circumstances. Developed within the context of neighborhoods, the planning process will reflect district and citywide vision, and the process will provide a link between planning and implementation. Clearing the way for change. This is at the core of NTI. It is rooted -- the NTI plan is rooted in this administration's solid commitment to improve conditions in every neighborhood. We said early on that a critical goal for NTI is to eradicate blight in order to protect the public health and safety. Already the Administration has shown how serious we are about 24 12/11/01 FINANCE COMMITTEE - BILL 010694 keeping this commitment. We have taken more than 90,000 abandoned cars off the streets of Philadelphia. (Applause.)

We are cleaning 31,000 vacant lots in a planned and orderly fashion. This marks the first time the City has made a commitment to clean lots in this way. We will cut down dead and dangerous trees and raise money to plant new trees and create green open, spaces. But basic housekeepings are just the beginning. The NTI commitment to Philadelphia is much greater. NTI is committed not only to making neighborhoods cleaner but safer. The NTI demolition stabilization program will eliminate up to 14,000 dangerous buildings over 5 years. (Applause.)

Why so many demolitions? The answer is public safety. Vacant buildings demoralize community residents, provide havens for criminal activity, and are a hazard for young people. Over time, the 8,000 buildings that are 25 12/11/01 FINANCE COMMITTEE - BILL 010694 dangerous today will add about 1,00 to 2,000 vacant houses a year and become dangerous, and that -- and for that reason, we expect that we need to demolish approximately 14,000 buildings over 5 years. That's where the number comes from. Public safety requires planned, orderly removal of these dangerous buildings. Good government action requires anticipating problems, not haphazard responses driven by individual complaints. To prevent future demolitions, the City is pursuing a neighborhood preservation strategy through encapsulation and stabilization of vacant buildings. The objective is to stabilize and preserve vacant properties on relatively stable blocks for rehabilitation and future occupancy. It is anticipated and encapsulation can cost us between 5 and 15,000 per vacant structure. We've tested out this strategy, it is working well. We hope to stabilize between 1,000 to 2500 properties over the next 5 years. People have been begging government to do something about these unsafe houses. It is time for us to act now. 12/11/01 FINANCE COMMITTEE - BILL 010694 (Applause.)

We're clearing the way for change through aggressive code enforcement. Code violations affect our neighborhoods' quality of life by depressing property values and creating a perception that neighborhoods aren't clean, safe, or suitable for children. Preventing and correcting code violations is, therefore, crucial if we are to convince businesses and residents to stay and invest in Philadelphia. The Administration has begun to beef up our code enforcement efforts in a number of areas. For example, we have, over the last year, issued more than 33 code violation notices related to trash and illegal dumping activities. We've made more than 200 arrests, and we've removed a significant amount of graffiti and other waste violations. NTI envisions a code enforcement system that emphasizes prevention and citizens' participation, encourages voluntary compliance, 'cause after all, as the Mayor says, it is a shared responsibility between government and residents. It is not government that trashes lots; it's people. (Applause.) 27 12/11/01 FINANCE COMMITTEE - BILL 010694

Clearing the way for change means assembling land for development. What happens after demolition? Where will we be 5, 10, years down the road? These are important 6 questions, questions those of us involved in the 7 planning of NTI discuss on a regular basis. City 8 Council has had, and will continue to play, a 9 significant role in the redevelopment process. 10 Many Philadelphia neighborhoods lack large 11 supermarkets and other kinds of retail stores. 12 Developers need large, clear tracts of land to build 13 on. Recently, K-Mart expressed an interest in 14 building two new Super K's in North and West Philly. 15 Unfortunately, the City could not find a clear parcel of land large enough to accommodate their needs. The result: K-Mart went elsewhere, Philadelphians lost the opportunity for more convenient shopping, and the City lost revenues. Vacant land in Philadelphia must be transformed From ugly, burdensome and into a valuable and easily-marketed asset. We also know that vacant land -- that not all vacant land will be redeveloped, nor should it. We are, after all, a smaller city. People do want more space. Some land 28 12/11/01 FINANCE COMMITTEE - BILL 010694 will remain open space and will become parks and recreation areas and green ways. We are partnering with the Horticultural Society to create a strategic plan called the "NTI Green city Strategy," in keeping with William Penn's vision. The NTI plan also outlines a multi-part solution to the City's land acquisition problems. That is much detailed in the testimony of Herb Wetzel, but we want to point out that one of the key aspects of this acquisition and disposition reformation will be the creation of a land bank. More than years ago, the City of 14 Cleveland made an affirmative strategic decision to 15 assemble all vacant land and make it readily 16 available for development, and within a 90-day 17 period. The City, as a result of that -- as I said, 18 the City of Cleveland can transfer land to developers quickly. We want to replicate that success story. (Applause.)

NTI is about rebuilding neighborhoods. The causes of blight are varied but its effect are the same: Blight demoralizes people, it causes housing values to stagnate and decline, 29 12/11/01 FINANCE COMMITTEE - BILL 010694 and it encourages additional abandonment and deterioration. NTI's neighborhood investment strategy is rooted in four housing strategies: Facilitating economic growth by encouraging market-rate investment; preserving existing housing stock by directing resources to strong neighborhoods and blocks that show the beginning of decline. Historically our bread-and-butter working-class neighborhoods have not been the customers of our Community Development Block Grant Program. The bond proceeds will enable us and give us more flexibility to be responsive to these neighborhoods. We want to build new urban communities from the ground up, where we're going to have large amounts of vacant land, and we want to, and will continue to, promote equity by providing affordable housing for our most vulnerable citizens: The poor, the elderly, the homeless, the disabled. In pursuing these housing investment strategies, the City housing agency will follow four mutually-reinforcing principles: First, we will use planning as an investment tool, and we can see when planning is 30 12/11/01 FINANCE COMMITTEE - BILL 010694 done well as in Eastern and North Philadelphia by CDCs like APM or in the Northwest by organizations such as GHDC that we can see change in neighborhoods. Our second principle is to develop and publicize clear and predictable administrative procedures and criteria that guide our funding decision. Effective housing investment cannot be determined by who someone knows or what influence they have; instead, it must be clearly-articulated, objective criteria that the private sector, the nonprofits, the CDCs, and neighborhoods residents can rely on. The third principle is to stimulate an increased investment in neighborhoods by attracting private actors. We have interest in private developers and CDCs who want to pursue rehabilitation throughout the City. There are those who -- employers and universities who are interested in helping their employees to buy homes in areas nearby. Finally, our fourth principle is to link our housing investments with other public activities. Rebuilding Philadelphia neighborhoods 31 12/11/01 FINANCE COMMITTEE - BILL 010694 requires a comprehensive strategy that promotes cooperation between public agencies, community residents, and the nonprofit sector. The Administration is working with for-profit and nonprofit developers, housing advocates, bankers, community development intermediaries, and others who have a stake in creating rational and productive housing neighborhoods programs. (Applause.)

I've been asked to slow down a little bit. Just one thing. One of the things we're most excited about with NTI is changing systems. Using technology, improving technology is an essential part of this plan. An NTI core value and principle is to use the best technology and the most up-to-date information systems to improve the way government provides services to neighborhoods. To assist the Administration with determining the priority of demolition for approximately 14,000 dangerous buildings, we're using a GIS technology which will allow the decision-making process to be expedited by integrating variables with other objectives such as 32 12/11/01 FINANCE COMMITTEE - BILL 010694 redevelopment and community responses to our plans. We want City services for neighborhoods and land acquisition and code enforcement to be dependable and efficient, and we will be putting in place an information technology system that will help us in this regard. NTI is working to create a single integrated property-tracking system that Councilmembers and City managers can view at their desktops and know if a deed has been prepared or a title report has been ordered, and at the same time, be able to verify liens and make sure that L&I violations have been corrected. The City will use information technology to facilitate communications with City Council. For example, we will create a Project Administration Web site that is accessible to all of City Council. Changing systems also is about reorganizing how we deliver our housing and community development resources to neighborhoods. The envisioned organizational structure for a new Office of Housing and Neighborhood Preservation will focus on these critical activities speeding up the acquisition and disposition of vacant land, 33 12/11/01 FINANCE COMMITTEE - BILL 010694 emphasizing and creating incentives for private housing development, assuring the quality of publicly-subsidized housing construction, instituting performance measures for achieving specific housing goals, including the development of 16,000 new housing units, monitoring and evaluating existing programs, and financing preservation and stabilization of existing housing, and facilitating access to City housing programs by the public and private developers. An integrated approach would generate other benefits as well. Each of the three agencies currently have Personnel, Purchasing, and Fiscal Operations. Eliminating unnecessary redundancy in administration could free up several million dollars a year for relocation to direct housing and neighborhood preservation. The reorganization will require an intensive effort of at least 18 months to design, implement, and streamline processes, define the size and complexity of workloads, and determine the number of staff and the skills needed to handle the work. One of the Administration's greatest 34 12/11/01 FINANCE COMMITTEE - BILL 010694 concerns is ensuring the fair treatment of the 359 OHCD, RDA, and PHDC employees who may be affected by reorganization. We are committed to assisting them in every way possible for smooth transitions to new positions within the organization or opportunities elsewhere in government. Although none of the employees are covered by the civil services system, they are represented by District Council 33, Local 1971. We will be meeting with their union leaders to discuss the table of organization and get their perspective and ideas on improving program processes and outcomes. Investing in change in communities. The bond financing structure of NTI is groundbreaking in approach, and I really want to complement an exemplary financing team that helped us think through how do you finance a complex plan. Unlike stadiums or convention centers or criminal justice centers, this is not a single construction project.

What we are doing is bringing together a variety of different types of tax-exempt and taxable financing with varying degrees of Internal Revenue Code restrictions and putting them together, weaving them together, so that we can 35 12/11/01 FINANCE COMMITTEE - BILL 010694 achieve these objectives. The spending of the bond proceeds, which is at the heart of the NTI program, will be divided up this way: Approximately 140 million for the demolition of dangerous building; million for the demolition of 9 industrial properties that are imminently dangerous; 10 50 million for land-assembly activities to 11 support redevelopment; 12 50 million for housing-preservation 13 activities to help stabilize and preserve our strong 14 communities and strong blocks throughout the City; 15 30 million to stabilize vacant properties; 16 and 5 million for vacant land management 17 system. 18 The total is $295 million, and this is the 19 amount that we believe that we can raise in today's 20 market with current interest rates. But as we know, the economy is shifting and changing quickly and, therefore, we cannot predict with a certainty that three months from now, six months from now, we will find ourselves with less money. By tying this to debt service, we will have the flexibility to 36 12/11/01 FINANCE COMMITTEE - BILL 010694 respond to a changing market and economy. I want to say that NTI at its core is about working together. It's about working with a new vision, it's about employing team work, it's about embracing the technology and promoting cooperation amongst stakeholders, it's about anticipating problems and seeking solutions, including everyone, including City Councilmembers citizens and civic and business leaders and foundations and the state and federal government. What our fundamental principles and core values is the involvement of stakeholders. In Keeping with this basic principle, the Office of the Mayor is committed to working with the City Council of Philadelphia on the planning and implementation of NTI. And we talked a great deal about some of the ways we see and envision the way of working with Council in an oversight role in our program statement that was submitted as a part of the Administration's bill. Through NTI, Philadelphia can set a new standard, as we said, for doing a variety of things. Through partnerships and team work we can -- through 37 12/11/01 FINANCE COMMITTEE - BILL 010694 partnerships, solid partnerships, and team work, we can get it done. All of the progress so far -- the cars removed, the lots cleaned, the dead trees removed -- have been achieved through extraordinary cooperation and team work within the Administration. Hundreds of individuals and groups provided both the Administration and City Council with their ideas, their advice, and their input. City employees in many departments and agencies have worked heroically to help us achieve some of our early successes. I would like to take a minute to thank everyone and to express my personal appreciation for all those members of the Administration who have made these successes possible. In conclusion, I would like to leave you with one final thought. Philadelphia is at a critical crossroads. As a government and as a community, we have big decisions to make. The scale of the problems dictates the scale of the solution. We are faced with a choice: Either we take risks to prepare our city for growth or we allow decline and decay to continue. We must fight the war on blight on many fronts, but with one 38 12/11/01 FINANCE COMMITTEE - BILL 010694 well-coordinated central command. )

I believe that NTI can lay the foundation for change, and Philadelphia can gain a new distinction the: The city with the most successful revitalization plan for the 21st century. Thank you. (Applause.)

Thank you very much. The Chair notes that Councilman David Cohen is here. Also in attendance at this hearing, Councilman W. Wilson Goode Jr., Councilman Angel Ortiz, Councilman Darrell Clarke, and Councilwoman Donna Reed Miller. We thank everyone for their attendance We would like to, if possible, ask the members of this committee if we can have the Administration witnesses make their testimony and then ask questions, if that would be acceptable to the committee.

Just one question, Madam Chair. The list -- some seem to be Administration witnesses, some seem to be private, 39 12/11/01 FINANCE COMMITTEE - BILL 010694 you know, in some respect. It seems to be there's, like, witnesses prior to the opportunity to ask 4 any questions of the two main individuals who are -- 5

No, no. We're 6 talking about the City Administration witnesses. 7

Well, there are people 8 here on the list from labor unions and other things 9 that -- 10

That's not the 11 Administration list. We have about, oh, five or six 12 other individuals. 13

Okay, when you gave me 14 this list, I thought you were going to include them 15 all first. 16

No. 17 All righty. Thank you very much. We will 18 ask that you two remain for questions. 19

We were not going to have 20 the other individuals run through their entire 21 testimony. If there are specific questions, either 22 Pat or I will respond, or if we need additional 23 information, they are available to provide the more 24 detailed testimony. 25

Thank you. 40 12/11/01 FINANCE COMMITTEE - BILL 010694 Then I will mention their names for the benefit of the committee: Maxine Griffith, Secretary of Strategic Planning and Executive Director of the Planning Commission; On predevelopment strategy, Lance Rothstein, Project Director, Capital Program Office; On land assembly and the redevelopment process, Herb Wetzel, Executive Director of RDA; On encapsulation and other housing/neighborhood preservation strategies, Deborah McColloch, Director of the Office of Housing and Community Development; For housing agency reorganization, Linda Berkowitz, Deputy Secretary of Financial Oversight; Management information systems, Diana Neff, Chief Information Officer; Financing structure ordinance and service agreement, Rob Dubow, Budget Director; And code enforcement, Donna -- let me see if I can say your last name -- Mouzayck, First Deputy City Solicitor. All of those individuals, as has just been noted by the Chief of Staff to the Mayor, are available for any questions or for any point of 41 12/11/01 FINANCE COMMITTEE - BILL 010694 references where there may need to be clarification. If that's all right with the committee, we'll go on with the first panel. (Committee Chairperson confers with committee members off the record.)

All right, prior to our first panel on the general overview, we will now entertain questions with regard to the testimony from Pat Smith, Joyce Wilkerson or questions that refer to any of the individuals I just mentioned. All right, I won't be first since I've already had my folks from the Morrow family, so I'll defer my questions. Madam President, do you have any questions first?

Yes, but I'll yield.

I'll yield as well. Councilwoman Tasco?

I do have questions.

Yeah, so do I. 42 12/11/01 FINANCE COMMITTEE - BILL 010694

Good morning.

Good morning.

Thank you for your testimony. I have asked this question before. In your discussion about planning, have you any thought to what the City would look like at the end of the day after the expenditure of $250 million, $295 million. We have the City and how it looks today, but if you put a overlay on -- over it, how do you envision the City to look at the end of the day, at the end of this project?

I would envision the City being a much cleaner city. I think that we will have in place systems that allow us to take and address the everyday problems of blight and deterioration in our neighborhoods. I think we won't have the proliferation of dangerous properties in our communities. We will have some vacant -- vacancy, but I think it will be managed vacancy as opposed to vacancy that's out of control. I believe that we will begin seeing vast tracks of land in the City redeveloped. I think 43 12/11/01 FINANCE COMMITTEE - BILL 010694 that if you were to assemble all of the abandoned properties and land in the City, you'd have a land mass that's as large as Center City itself. I think that because we have an articulated strategy, we will have much more public-sector involvement in Philadelphia, so I think that we will have some private development. In neighborhoods, I believe that we will see a slowing-down of the abandonment. I think that we're putting in place strategies that will allow us to us get on top of abandonment when it occurs. We have moving through Harrisburg legislation that would shorten the acquisition process. We are putting together strategies that will allow us to provide mortgage support for people who are not traditionally served. So I think we will see a decline in the rate of abandonment in neighborhoods. I do believe, though, that this is a long-term process. Philadelphia population began declining in 1954. We're almost a half century later. Rebuilding Philadelphia neighborhoods is going to take time. I also think that we're going to see the 44 12/11/01 FINANCE COMMITTEE - BILL 010694 City capitalizing on assets that have been abandoned for about 40 or 50 years. In the 6th Councilmatic District, for example, there's a strategic plan to redo the North Delaware Waterfront. And I think that Philadelphia has assets that compete with those of any other city in the country, and I think that we're going to begin seeing some of those areas open up to development. Later on in the testimony, you'll hear from private developers who have their own ideas about what might happen in Philadelphia and where the potential opportunities are. So I think what we're going to begin seeing is a city tackling and stabilizing some of the decline at the same time we open up avenues for new development.

For an example, you talk about $15 million for encapsulation. Do you have an inventory of those houses in the City that need to be encapsulated? And in the overlay, would you be able to pinpoint those communities where encapsulation has taken place and where encapsulation needs to take place? And how do you plan to determine which houses are to be 45 12/11/01 FINANCE COMMITTEE - BILL 010694 encapsulated?

One of the things that's really exciting about NTI is that it is data-based, and so we've been working with the reinvestment fund and all the City departments to integrate into our technology system information about all the vacancies, all of the home loans that have been made by the City. We have fed into our database all of the developments that have been funded by the City of Philadelphia. And so when we go on line with our project manager, you'll be able to generate maps that show vacancies, show where the only vacancy in a block as opposed to, you know, a part of string vacancy problem. One of the things we've not had the ability to do in the past is really have a large enough snapshot about what's going on in the neighborhoods, and so we haven't been able to ask critical questions. We had a meeting probably a month ago where, you know, for the first time, we've, you know, for our own benefit, put up on a screen the kind of information we have available now. And we 46 12/11/01 FINANCE COMMITTEE - BILL 010694 began asking the questions, what kind of investments should we make in a neighborhood? so we were able to see all of the home loans that had been made, the BSRP loans that have been made in the neighborhood, we knew where all the schools were, all the anchors. We are now in a position to begin making those investment decisions that will in the long run help stabilize neighborhoods as opposed to simply dropping money here and dropping money there. The system we're designing is a system we're designing to be available to Councilmembers. Part of our vision is establishing a partnership with City Council. So as we begin first going into a neighborhood, we can share with you the information that we have. And that's the project Web site that Pat talked about in her testimony so that, you know, we can give to you or you can access on your own computer what the neighborhoods look like, what is the vacancy rate. You can be involved with the Administration and community groups in deciding what properties ought to be encapsulated. So it's not just us back in an office someplace generating a list. We envision an iterative process where we 47 12/11/01 FINANCE COMMITTEE - BILL 010694 sit down and we look at the vacancy rate and we look at what's going on in a neighborhood and plan strategically for the kind of investments we need to make.

Point of information. Excuse me, point of information. If I could have a microphone. Thank you. Just a point of information on that request and on Ms. Wilkerson's testimony about the availability of the information now. Can we have what's available now?

Yes.

All the information that you talked about and all of the City investment, all the loans, all those projects?

Yes.

How long have you had it?

If I may, we began -- I believe it was in October -- we sat down in September and October. We began to sit down with individual Councilpeople with the maps that showed the BSRP investments, the settlement grants. We called them "Council indicator maps" as a part of 48 12/11/01 FINANCE COMMITTEE - BILL 010694 the briefing. In addition, we transmitted to the Council that the current vacant property survey is available to all members of Council over what is known as the "Intranet" for the City, and we have transmitted on a couple of occasions how you can access that information.

Since October, have you met with all District Councilmembers?

Those who responded to our invitation to meet. I believe we didn't have the opportunity to meet with you, Councilwoman Tasco, but other than that, I think we sat down with every District Councilperson.

Well, as an at-larger member, I would request that all members of Council, regardless of district or at-large status, be provided with all of the information at your fingertips as we speak today. I recognize that there's an ongoing process of input and collation of the information, but whatever you have today, I think it would be appropriate, considering our timeliness in voting on 49 12/11/01 FINANCE COMMITTEE - BILL 010694 this, that we have that information as soon as possible.

I think one of things that has been a challenge for the Administration is, this is an ongoing process and so the reinvestment fund began probably three, four, five months ago, doing a drill-down. And so it's information that's continuously coming on board. We will provide all of the information to you. Our long-term vision is to have it so it's immediately accessible for everybody, but there's not a problem with that.

Every now and then, I click on to the NTI Web site; I'm waiting for something to come up on it.

That's not the project, the Administration Web site. That's just sort of like the City's Web site.

It says "NTI."

I mean, it's -- you know, like, we have all of the City departments. What we will be creating is very specific, and we even have some sheets from it with very specific, what we call a "project administration Web site." 50 12/11/01 FINANCE COMMITTEE - BILL 010694 It will be tied to the City server and compatible, but it will be maintained and the information input through the program manager in the Capital Program Office. Right now, outside of the Web, you can get the list of vacant properties that was based on the survey, the list of dangerous buildings. All of that is available to Council. One of the things I want to stress is --

I don't mean to interrupt 'cause I don't want to keep on taking away time from Councilwoman Tasco.

Yes.

If we could just get whatever information you have available from you today in our office --

Yes.

-- I would be appreciative.

Okay. One of the things I wanted to also point out that's been one of our challenges, and it's why we really talk about the idea of technology and changing systems, is that, unfortunately, our 51 12/11/01 FINANCE COMMITTEE - BILL 010694 property records literally are kept on index cards. So when we went to collect the information about where we've done past investments, you know, again, data was kept in different formats, information was spread out among three different agencies. So what we have, I just want to emphasize, is a work in progress, but we're more than happy to provide, you know, what we have today, because it does begin to paint a picture of where investment has taken place in the past.

Thank you.

Thank you. Back to my question. We have $50 million for encapsulation. I think the technology is crucial to being able to identify the houses and all of the information associated with the house what, what has gone into the house, what money has been spent, what could be spent, what will be spent. You have all of that information and you have $50 million. You look at the City in terms of where the encapsulation should be, where these houses are, where do you begin? How do you begin?

Okay. In our program 52 12/11/01 FINANCE COMMITTEE - BILL 010694 statement, we kind of outline what we consider some principles for prioritizing around encapsulation and stabilization. One of the things we thought were three guiding principles. The intent here is, you know, where we know we got good market activity and we can quickly get the property back into private hands. Particularly, we can avoid this acquisition process. So for example, over the past year, the City, working with the Department of Licenses and Inspections and with the Philadelphia Housing Authority crews, has encapsulated about, you know, somewhere in the area, I would say, of about 50 properties. They tend to be where we only have one or two vacancies on the block, 'cause what we want to do is to avoid having to demolish that building and then create what we know is to be "the missing-tooth demolition." We've also been sharing on a regular basis the list of encapsulated properties with people, like, from the Boards of Realtors and housing investors to do programs. So the other important thing I want to emphasize is that we don't want the stabilization 53 12/11/01 FINANCE COMMITTEE - BILL 010694 and encapsulation work to be the end-game; it's just the beginning. To be effective is to get the property back into private ownership and rehab.

I think there are also other examples. Councilwoman Krajewski, for example, has proposed an encapsulation strategy that works with community development corporations or community organizations in her district. One other additional resource, we've had meetings with representation of the AFL-CIO who are interested in doing a repair program that would really target these types of properties for their members. They would also provide financing support. And so, you know, we are trying to -- we are working hard to begin augmenting the capacity to implement some of these initiatives. I think that has been a constraint in the past. And some of the work that we're doing both in terms of how we meet and how we outreach to the broader community is an attempt to increase the capacity within the City of Philadelphia.

How many of these encapsulations do you think you can do with $50 million? 54 12/11/01 FINANCE COMMITTEE - BILL 010694

Actually, the budget for the stabilization work is 30 million. We are estimating -- that budget is based on 2500 units at an average cost of about 7500. That's just the stabilization work. The $50 million we also include as private activity and taxable bonds to support the rehab part of the equation. And then some of the land assembly money will support acquisition where we have to take public action. So all total, our housing preservation strategy -- encapsulation, stabilization, acquisition of vacant properties where we need public action as well as the repair money -- will total $80 million, all total.

I was looking at the community development block grant budget, and I see that a lot of the private activity bond money is placed in OHCD. Am I correct that it's in that budget for the Year 27?

What we did was -- that budget just shows how we're -- the City agency -- OHCD is our, you know, budget agency for housing and community development. They don't necessarily 55 12/11/01 FINANCE COMMITTEE - BILL 010694 undertake the activity directly, but that's where the money shows up, you know, in that department's budget. What they will do is, for example, OHCD routinely issues RFPs for redevelopment projects and fund them. They will continue to do that. They fund acquisition requests, you know, they give money to the RDA so they can do Act 94 condemnation and eminent-domain condemnation. So our intent is to basically use the same mechanisms, if you will, to spend the bond proceeds, and it's our intent to reflect the bond proceeds alongside the other money the City receives from the federal government or from state government. And by doing that, then we are painting, again, a whole picture and we're just not looking at the bond proceeds itself, but it really shows all of the resources for neighborhood development and preservation.

I think that's critical because --

Are you saying the money would be in their budget, the OHCD budget?

Yes. It -- 56 12/11/01 FINANCE COMMITTEE - BILL 010694

The question is: What restrictions, then, would that money have relative to -- for instance, in my district, we don't require a lot of demolition. We are for neighborhood stabilization and preservation. I have been told over and over again in the past that that area does not qualify for community development block grant dollars because of the income. Now, will we be restricted because that money is in that budget?

No, you will not. Basically what we do is, we use the block grant plan that's showing all the resources available. The only restrictions that will apply with respect to income or type of neighborhood would be those that are in the tax code. And the type of financing we will be using for housing preservation will be a combination of private activity and taxable bonds. Private activities on certain types of programs do cap income at about 115 percent, but that's still higher than the 80 percent that's used for CDBG. Taxable bonds will have no restrictions. And, again, it's not -- even though it's 57 12/11/01 FINANCE COMMITTEE - BILL 010694 reflected in the plan, we just want to show Council and Council have the opportunity to have a hearing and look at all of our resources together. It's not -- it does not marry the restrictions of the federal program to this money. It won't tie those restrictions together.

Point of order, point of information.

Yes, Councilman.

Councilwoman Tasco?

Am I finished?

I don't have a timer today. I just wanted to ask a question related to the question that you just asked.

Mm-hmm.

I thought your question was concerning CDBG and restrictions on those dollars. Was that your question?

Well, as I looked at the budget, I saw that this money is in that budget. And my question is: Since it's in the community development block grant budget, what restrictions would be on there?

I understand. It will not 58 12/11/01 FINANCE COMMITTEE - BILL 010694 have the federal community development block grant restriction. The only restrictions would be those that are imposed by the Internal Revenue Code on the expenditure of bond proceeds. We're just reflecting it as a budget, but it does -- by putting it in the budget, you do not marry those federal restrictions to the bond proceeds.

So where does the money for demolition go? I mean, what role does redevelopment play in this?

The demolition money in the budgets will be reflected in the City's operating budget as part of the Department of Licenses and Inspections, because the Department of Licenses and Inspections is the City agency responsible for overseeing code enforcement and demolition activities. So the RDA will issue the bonds, but the money will basically come back to the City. They're more of a conduit, an issuer in this sense. And the money will be appropriated through for demolition activities through the L&I budget. And then for any housing and land assembly redevelopment activities, it will be reappropriated through the Community 59 12/11/01 FINANCE COMMITTEE - BILL 010694 Development Block Grant plan. And, again, I want to emphasize that by showing it in that budget, it does not become limited by the same federal rules and regulations. We will still have a great deal of flexibility. We could do a program like It's Your Turn with bond proceeds. You will just see the It's Your Turn Program in the block grant plan.

One of the things that Council has requested is that Council have the right to approve annually the use of the bond proceeds, and we think that's probably a good thing. The reason it's reflected in last year is because we had anticipated a more aggressive schedule, but we really want to begin showing all of the dollars that are coming into the City. There are huge amounts of money that are coming to the Philadelphia Housing Authority, for example. When we begin developing housing strategies, our strategies shouldn't be constrained by the type of funding. We ought to be looking at the entire set of resources available to us. We have -- you know, I keep talking about this meeting we had. It was an epiphany, and it 60 12/11/01 FINANCE COMMITTEE - BILL 010694 really was bringing together a lot of City departments in different parts of the City that are not normally engaged in planning together what ought to be hang in the City. And so it was an opportunity to sit with the information in front of us and figure out how best to fund a project, you know. So it wasn't just, Let's do it with CDBG money. You know, it was, Well, what really makes sense? You know, perhaps there's something that's in, you know, the Housing Authority's line item. Or, you know, perhaps there's something in the Water Department. There's a project that's happening in Councilwoman Blackwell's district that addresses water-sewer issues, and so some of the funding for that project is actually coming from the Water Department because they will have to go in and redo some of the water lines. So we're trying to take a more comprehensive look at how we fund things, and what we find is, there's more money at the table. It's not just $250 million; if we use all of our resources strategically, you end up being able to do 61 12/11/01 FINANCE COMMITTEE - BILL 010694 more at the end of the day.

And you say that there's additional dollars coming in from PHA from the federal government?

Mm-hmm.

So then PHA -- none of the 50 million, 30 million neighborhood stabilization money should come out of the bond proceeds if that could be done through PHA.

None of the -- it depends. I mean, when you look at some of the development transactions, they still have gaps, and so you begin trying to figure out how best to fund it. There's another development that, for example, you know, you end up saying, Well, does it make sense to bring tax credits? Tax credits happen to be a resource that's available now. There was a time period when they were very constrained and developers in Philadelphia competed vigorously for access to the tax credits that are funded through the State. There's not that same demand for tax credits. And so when we look at funding some of the Housing Authority's developments, it's like, Well, 62 12/11/01 FINANCE COMMITTEE - BILL 010694 let's pull in proceeds from a tax credit deal. That frees up other dollars. And so it's always, you know, it is always a process of us sitting down and trying to figure out how best to leverage the dollars available, how best to stretch the resources that we can get our hands on. Sometimes, it may be a PHA development, you know, and a lot of times, it won't be because they do have so much money. PHA, though, is not developing in the same way that it developed over time. PHA has the ability to co-develop with private developers, and so it's becoming a much different investment game out there.

I'm going to ask this one last question. I'll come back again, but I want to get back to my initial question of planning. In planning how you get the job done so that there will be a picture of a difference in the City of Philadelphia, at what point -- who is at the table to determine where you will target those dollars for encapsulation or preservation? And how does one access those dollars and at what point? And who determines who gets what first and when? 63 12/11/01 FINANCE COMMITTEE - BILL 010694

Okay, as we indicated in the program statement that we submitted as part of the Administration's bill, with respect to the decisions around demolition, encapsulation, and stabilization we envision working with the District Councilperson on identifying, selecting, and prioritizing the buildings that are either demolished or encapsulated. We also said -- and I want to reemphasize that because we have this GIS model, you don't have to look at reams of paper and addresses. I mean, you will have ways to say -- for example, suppose you -- 'cause the children just came in. Suppose in your neighborhood or in your district, you think it's very important to encapsulate vacant properties that are close to schools. Well, with this GIS model computer station, you could input -- you, as a Councilperson, could input a priority for schools and a priority for where I know a private developer is currently working and is interested in working. And then that computer will spit out the addresses that would meet that criteria. In another part of your district, you may have a different priority. Your priority may be 64 12/11/01 FINANCE COMMITTEE - BILL 010694 more on demolition, let's say, and there you might want to look at -- say you have a developer who's interested in doing a project and you've already completed a development project and you want to make sure you reinforce that new development by demolishing the dangerous buildings around it, so again, you can say in this area, I want to prioritize where we got the greatest amount of dangerous buildings and they are close to my past investments, like a particular project. And then the computer will spit that out. So -- and we also see the process steps that begin first with the District Councilperson. What are the areas and the issues? 'cause you're closest to the ground. You may know where the crackhouse may be that's causing problems. And if you take that dangerous building out first, you know, that's the type of working relationship we envision. And we did expressly state that and commit to that as part of our program statement. And the way we envision then program statement, which is the description of NTI, is by incorporating -- if we were to incorporate that into the ordinance now and 65 12/11/01 FINANCE COMMITTEE - BILL 010694 approve it, then we can't make any changes to that without Council's approval.

Point of clarification, yes. May we have Councilman Goode's mic on, please?

Just a point of clarification and a follow-up to Councilwoman Tasco's question. You added a whole 'nother layer of things too, which is now talking about the District Councilperson's input. This has been touted as a market-driven strategy, which means that you're still responding to the private market, where things can be redeveloped, where people are going to invest. At the same time, it's obviously a place-based strategy, 'cause you're going after blight and deterioration. I think there's some conflict there already between how market-driven it is and how place-based it actually is. I think to the extent that it's actually place-based, where you know where the blight is, you know where you want to encapsulate. 66 12/11/01 FINANCE COMMITTEE - BILL 010694 What Councilwoman Tasco is asking, where are you going to see the change on a map of Philadelphia if it's place-based? Now you add a whole new dimension to it by saying the District Councilperson can have input based upon if they want to put something near schools or whatever. That's not market-driven, based upon investors, and it's not based upon -- place-based in terms of where the blight is necessarily. She's asking how decisions are going to be made? To the extent that this is place-based, based upon blight, and based upon physical deterioration, do we know what it's going to look like in the end?

I think an example of, you know, how those factors join together would be in a neighborhood that, for example, has 40, 50 percent vacancy. There's a property that, you know, that is in the middle of perhaps a row of two or three. We would say that that is not an appropriate property for an encapsulation strategy, because there's -- there is not a chance of creating a market. You know, it would be a dialogue with the Councilmembers, and we would look at a lot of other 67 12/11/01 FINANCE COMMITTEE - BILL 010694 factors. There may be other assets there that say, no, wait a minute, there are assets there, it's worth investing there. So it's not an easy analysis, but I think that, you know, what the market-based strategy does tell you are some indications where an encapsulation may not be the appropriate strategy. It may be something else that we need to do, but it may not be encapsulation that is --

Is it market-driven based upon where there's blight and deterioration? Is it also going to be driven by District Councilpeople, driven by the Administration? I'm asking how decisions are going to be made so that we know before we approve this -- the map looks like this now. There may be different options on how it may look, but obviously, to the extent to which it is place-based, based upon blight and physical deterioration, do we know where the money is going to go?

The short answer is actually both, in my opinion.

Work it out for me.

It's both place-based and it 68 12/11/01 FINANCE COMMITTEE - BILL 010694 will look at how markets are operating. And we've always said -- I think the phrase we used when we unveiled the plan in April was that it's almost like two sides of the same coin. We have to eliminate blight for public safety, but we want to do it in such a way that we are creating opportunity for the development to the extent that we can do that. And development in some instances could be, you know, the stabilization and rehabilitation of a house. I'm not just talking new construction-type development. I mean, that also is market-based. And sometimes there's tensions there, but I don't want us to lose sight of the fact that there are issues of public health and safety that's in the form of the blight.

Is there a place-based strategy beyond what's imminently dangerous?

Well, our challenge here is that the overwhelming majority of our required demolitions are dangerous buildings from what we're budgeting.

Is there a place-based strategy beyond what is imminently dangerous? 69 12/11/01 FINANCE COMMITTEE - BILL 010694

I -- I can think of one area, for example. You know, I talked about the North Delaware. You know, you might say that's a place-based strategy beyond what's imminently dangerous. So, yeah, place to some extent does matter. You happen to have a resource there, an asset there in the river. But I want to comment on one other point you made. I don't equate Council input with decision-making that's solely place-based and not necessarily market-driven. I think a lot of the Councilmembers working in their district are looking at the same kind of issues when they try to decide how to build. When you look at what's going on in, you know, the 5th Council District or the 3rd Council District, they're building off of markets that are stable, and so you see, you know, the Mill Creek is an extension off of some of the activity going on at the University of Pennsylvania. So I think you -- you know, I think we're making market decisions although they have --

The question I think 70 12/11/01 FINANCE COMMITTEE - BILL 010694 the Councilwoman was asking is: In terms of place-based strategy, going where there's imminently dangerous buildings, you will knock it down. You can map that and show us what's going to be knocked down because it's dangerous. Beyond that, is there a place-based strategy map where something has to happen, you intend something to happen?

And where it's not imminently dangerous. I think the example that Joyce talked about --

I'm asking, is there a place-based strategy beyond what's imminently dangerous? Do you know if you're going in places beyond where the properties are just dangerous?

And the example that Joyce just cited, I think, is a good example. The riverfront, the North Delaware Riverfront project is something where there are resources being put in place to bring about the redevelopment of the riverfront for -- and creating basically possibly a new urban community.

Is there something that you can map for the Councilwoman's purposes? 71 12/11/01 FINANCE COMMITTEE - BILL 010694

Pardon me?

Is there something that you could map for the Councilwoman's purposes?

Oh, sure.

She wants to know where the money is going beyond what's imminently dangerous. Is that something you could map for her personally?

Yes, we could do that.

Thank you.

I guess the bottom line is, who is going to do the planning, who is going to put the plan together?

The planning is going to be led by the City Planning Commission. I think the planning is happening in a lot of different ways. There are community organizations across the City that have plans that are being reviewed by the Planning Commission now, and Maxine Griffith can come up and talk to you a little bit about the planning process and how it's envisioned that that will work.

And in the end, will we be able to look at a map and see at the end of 72 12/11/01 FINANCE COMMITTEE - BILL 010694 the day where we spent $295 million-plus and see a visible difference?

Yes.

Will I be able to look at the 9th Councilmatic District at the end of the day and see that there has been a marked difference? Or do I have to stand and compete with nine other Councilmembers for $50 million for encapsulation or $30 million for stabilization? That is my question. I always have the street lighting analysis. When I first came to City Council, we voted alley lights, we voted for alley lights, and there was a plan to put alley lights throughout the City. And when it got to the 9th District, we had run out of money for the alley lights. So I'm very basic here.

I understand.

I want to know, at the end of the day, will the groups or the organizations in my community have to compete with other groups in the City for the dollars? Who will determine who will get them? Where will the dollars be spent? Who is determining that? And it's not a 73 12/11/01 FINANCE COMMITTEE - BILL 010694 lot of money, there are not a lot of houses. And it goes back to what -- my very first question is, who will determine what the plan will be?

Okay.

I know the general philosophy, I know overall what you want to do in strategy, but for those of us who represent people in a district, they're going to ask me, what is coming to (indiscernible)? What is coming to Olney? What is coming to Logan?

I understand.

I mean, those are the kinds of questions people want to know. And I don't want to have to continue to -- I don't want to have to look up and tell my people, Well all the money was gone before it got to the 9th District, 'cause I think that having an overall map with an overall overlay, so at the end of the day, you can't do the whole city, but you might want to do a little bit in each of the parts of the city. And I know that's not what you all want to do, but at the end of the day, we've got to have something to show for $295-plus million that have 74 12/11/01 FINANCE COMMITTEE - BILL 010694 been spent on this whole initiative. (Witness comes forward.)

If I can add to the conversation.

Please identify yourself for the record.

My name is Maxine Griffith and I'm Executive Director of the Philadelphia City Planning Commission and Secretary for Strategic Planning for the City. One of the things that we've been doing over the last, I guess, month is reviewing existing plans. In other words, we're not starting from scratch here. There are hundreds of community development corporations and other community-based organizations across the City that have been toiling in the vineyard, sometimes without support, and have developed neighborhood-based plans. Joe Leonardo and the folks from our Community Planning Division have been reviewing those plans -- we're up to about 32 now -- and vetting them through the NTI guidelines. In other words, looking at the policies and procedures that you have before you with regard to the NTI, looking 75 12/11/01 FINANCE COMMITTEE - BILL 010694 at the plans, and making a preliminary judgment. The planning effort itself will be coordinated by the Planning Commission, but we will head a task force. And one of the exciting things about NTI is for the first time, planning will be linked directly to implementation. We will chair the task force, but at the table will be OHCD, RDA, PHA, etc. So we will be looking at plans within the context of real dollars, within the context of funding and financing strategies. So instead of developing a wonderful plan which everybody applauds and it sits up on the shelf, the plan will not come forth unless there are dollars attached to it. Now, it would be easier in a way if these dollars were not leveraging other dollars, because if we were just talking about the bond money, we could probably apply it in some fair way, given need, etc. But each dollar, in a certain sense, leverages other monies, some of the leveraging strategies that Joyce and Pat have talked about up until now. So until we look at a specific plan and 76 12/11/01 FINANCE COMMITTEE - BILL 010694 until we look at the Water Department's budget or possible federal dollars -- we're looking at one project now where we think EPA dollars might be applicable. We did a tour yesterday. They were mentioning North Delaware, where the Department of Defense dollars might be available. So it's not a linear process. We have to look at each plan, we have to look at what the plan proposes, whether that makes sense in terms of the very transparent NTI guidelines, look at where we can apply bond funds appropriately, but also look at where that money can be leveraged not only with private sources but also with public sources. And until we process that, that question can't be answered. Now, what will happen as those decisions are made, they will go up on the map. And what we are positing is that part of this digitized electronic communication that Joyce and Pat talked about earlier will also be residual place for all of this information as the plan goes through the various stages.

If I may, I just wanted to add another juncture in which decisions around the 77 12/11/01 FINANCE COMMITTEE - BILL 010694 spending of the dollars get made. Again, every year when we do the Community Development Block Grant Program, we show what type of monies we're spending and in what places and some of our reasons for those decisions. And so there's another opportunity based on the community plans that we'll be funding out of bond proceeds or block grant or other resources. Council will get to review and pass on that as part of the block grant process. So there's that budgetary oversight. You mentioned -- I think you started your questioning with, you know, Will people be able to see a difference in neighborhoods like yours in the 9th District. And my answer is unequivocally yes. I mean, we've already begun, and I think the It's Your Turn Program is a perfect example of what we talk about the leverage of public dollars. Sometimes things come to us from the outside. It's not we in City government planning. For example, the opportunity through the Local Initiative Support Corporation receive a major grant or resources from Nationwide Insurance Company. They wanted -- it was actually, I think, the outcome 78 12/11/01 FINANCE COMMITTEE - BILL 010694 of a settlement case around redlining and insurance nationally. As a result of that settlement, Nationwide began to work with lists to identify neighborhoods to fund home-improvement loans and grants. Now, that was something not initiated within the City. What they did is they brought together Nationwide, they brought GMAC, the mortgage company, to provide loans. They structured a program and a plan for investing within a particular neighborhood within your district. And then they came to the City and said, you know, We can serve 300 people, households. There's a CDC with a capacity that has a track record with this type of work. We;ve begun to prequalify developers, here's an opportunity, City. And what the bond proceeds will enable us to do is to respond to that opportunity. They say we have a gap of this amount of money in this program and now we can scale it back, but if we scale it back, we can't serve as many people and have as much impact. So that's when we say, Aha, you know, all of our principles have been met, number one, leverage resources. Number two, this is 79 12/11/01 FINANCE COMMITTEE - BILL 010694 a plan that came out of the community and other actors and stakeholders. There's a developer with a track record to actually carry out the program. So it met all of the kind of general principles of NTI. So it was easy for us to say, you know, this does make sense. There were meetings with your office and others around the molding of that program to its final solution. So I want to emphasize, I think a lot of times the impression is that the Administration is going to sit in a room and do all of the planning. No. I mean, we believe firmly that plans grow out of communities. Communities know what their wants and desires are. Sometimes they far exceed our resources, and that has been a major challenge to us, but we hope to have more resources and just do a better job at coordinating other resources so that we can be more responsive to those concepts and ideas. And we can cite a lot of different types of projects like that throughout the City, from the MLK project in South Philadelphia to, you know, the work that APM is doing in Eastern North Philadelphia, as examples of communities planning. 80 12/11/01 FINANCE COMMITTEE - BILL 010694 And then the role of government is to say, How can we fit these resources to advance that plan?

Thank you. Madam Chair, I will yield to someone else for the moment.

Well, we do thank you because everyone has questions. The President is next.

Thank you. Very early on, we had heard that acquisition monies would not be available till the year 2004. We understand that that has been moved up somewhat. Can you tell us when acquisition monies will be available?

In our response to City Council questions, I believe, on July 17th, when we broke out a budget, there was an error -- it was fundamentally a typographical error, where the private-activity bonds didn't show up until Fiscal Year 2004. It should have started in 2002. The fact of the matter is that the City historically has funded our acquisition out of Community Development Block Grant, and we are still sort of like honoring past acquisition commitments. 81 12/11/01 FINANCE COMMITTEE - BILL 010694 We have no new dollars for new acquisition until such time that we receive the bond proceeds. And it is our intent to prioritize among the existing requests. There's a pipeline of acquisition requests connected to real live development projects that we want to fund. So that would even take priority in funding over beginning just to do acquisition for land assembly. I apologize for that error, I'm sorry.

Okay. And you would have the information as to where a particular project is in the pipeline? Who would have that information?

That would be the Office of Housing and Community Development working with the Redevelopment Authority based on numerous, as I said, requests that have come in over the past year. We're also working with the Local Initiative Support Corporation to really find the ones that are kind of like in critical places in the pipeline 'cause they're a big supporter of CDCs.

Thank you. Can you tell us what, if any, progress has 82 12/11/01 FINANCE COMMITTEE - BILL 010694 been made regarding changes to Act 94, regarding spot condemnation?

I can speak generally to that. Okay, basically, what we've -- one of the things the City has done was to take a very in-depth analysis of all of the powers that we have to take in property, from sheriff's sale to Act 494 to eminent domain, and that work is under the leadership of the Redevelopment Authority. In fact, they've put together a vacant property task force, and Herb can tell you much detail. As a result of that work and working with the Law Department, there are two or three statutory improvements that we're seeking that we think will help shorten the process. We have tendered or presented legislation to -- I think it's Representative Kenny, who chairs the House Urban Affairs Commission. We've touched base with our sister redevelopment agencies because a change in State law will also impact them, and Herb can give you the outcomes of that conversation. So we're very, I can say, positive that we can move that fairly quickly through the legislature. 83 12/11/01 FINANCE COMMITTEE - BILL 010694 (Witness comes forward.)

Good afternoon. My name is Herbert Wetzel. I'm the Executive Director of the Redevelopment Authority of the City of Philadelphia. We had -- as Pat mentioned, we met with the House Urban Affairs Committee several weeks ago when they had a session at Temple University, and we presented them with legislative changes in Act 94, and I'll just briefly cover them. The first change is, there's no clear definition of "vacancy" in the Act itself. Therefore, a property that is occupied by unauthorized persons is not a property that can condemned under Act 94.

So we're talking about scatters?

Yes. If anybody is in that property -- and they can be there illegally -- it is considered occupied under the current law. And we're asking that the law be changed so that if it's occupied by unauthorized persons, it's still considered a vacant property for the purposes of the Act itself. The second piece is, the current act 84 12/11/01 FINANCE COMMITTEE - BILL 010694 requires that L&I certify the property as blighted and as a public nuisance, which requires a series of notifications, possible appeals to the L&I certification of that. We're asking the State to allow us to certify a property as blighted under two conditions that are very objective conditions. One is, if it's vacant land and there's a municipal demolition lien on the property, it would automatically be considered blighted under that law and, therefore, condemnable. Or if the municipal liens on a property that has both land and structure exceed 150 percent of the fair market value of the property -- in other words, the municipal liens are one and a half times the value of the property, it would also be condemnable under Act 94. This would result in the fact that we would not require L&I to issue the blight certification or the public nuisance aspect of the current law, which would cut about two months off the time it takes to acquire property under Act 94.

How long does it normally take us to acquire property under Act 94 presently?

It all depends on the time of 85 12/11/01 FINANCE COMMITTEE - BILL 010694 the year we start because of the timing of the necessity of certain hearings, etc. In general, it's somewhere between and months to acquire 5 under Act 94. 6 The difficulty -- and Pat mentioned it and 7 I've been talking with the Pittsburgh Urban 8 Redevelopment Authority. They told me that they 9 stopped using Act 49 about eight years ago just 10 because they were so frustrated with it. 11 To give you an example, it could be a 12 vacant property that L&I cites as a public nuisance. The owner then goes and takes out a building permit and starts to repair it. Then we can no longer condemn that property. But the owner then, after a couple of weeks of work, can decide to walk away again. And we may not be back, we don't know that as a fact. So the problem here is, we don't want to be able to have simply the issuance of a nuisance citation and blight. We want to be able to aggressively go after these properties that are seriously delinquent in municipal liens, irrespective of the owner going for a building permit. 86 12/11/01 FINANCE COMMITTEE - BILL 010694

One of the things, if I may add, that I guess was a bit of a revelation for me coming into city government was that not only were there -- you know, we can get savings in time as a result of statutory and legal changes, but the basic fact of the matter is that we're a manual system. I don't know how else to put it. And as a result of being a manual system, for our land assembly and acquisition activities, there really is no real accountability in the system. And we all like to pick on the Law Department 'cause, you know -- we always say what if there -- we don't know how long -- when a deed could have been transmitted to a Law Department for write-up, how long it's been there. And so that's why a major portion of the proceeds will be dedicated for management information system, one of which is what we're calling the "Vacant Property Management System" so that we can begin to track what's happening by IT.

Well, let me ask a question, if I may. Putting Act 94 aside for the moment, what, if anything, are we doing to more expeditiously 87 12/11/01 FINANCE COMMITTEE - BILL 010694 acquire properties?

Well, NTI has looked at the land assembly system in the City of Philadelphia, and there's four critical areas that are a part of the improvement process. The first itself is re-engineering the system. We established a Vacant Property Transaction Task Force, which includes the leadership of all of the City agencies that's involved in land assembly. And just even at the initial stages, we were uncovering the fact that people throughout City government are looking up the same information over and over again, logging the same information into different computer systems that aren't compatible with each other, and literally duplicating their efforts. So the first step is to re-engineer the system itself to eliminate the duplication of effort, which will inherently speed up the system The second piece is that 98 percent of the work done in the land assembly system, as it exists today, is done manually, and only 2 percent of that work is automated. We need to turn that on its head so that 98 percent is automated and maybe only 88 12/11/01 FINANCE COMMITTEE - BILL 010694 2 percent is not automated. So by creating a information technology system that allows the data to be input in the beginning and shared throughout the network of City agencies involved in this, it will in itself speed up the system. The third element is legislative reform, which we've talked about previously. And the forth element is a significant change in the City's policy. The Cleveland Land Bank was mentioned earlier as a model for the fact that they could dispose or properties to citizens in Cleveland in 90 days or less. Well, that's because they made a fundamental decision a little over 16 years ago to aggressively acquire land on a 17 consistent basis. 18 For over 20 year, it's been this city's policy to only acquire land when an identified party has come forward and said they want it and have shown they have the resources to use the land. So we have always waited until somebody knocked on the door to start the process of acquiring. In Cleveland, they turned that on its head and said, We're going to go after the land and put 89 12/11/01 FINANCE COMMITTEE - BILL 010694 it in a land bank so that when someone knocks on the door, we can get it to them in 90 days or less. So the fourth element is a fundamental policy change to aggressively acquire land and put it in the bank itself and make it ready so that when the citizen or the developer knocks on the door, we already own it and can dispose of it in 90 days or less.

Okay. Can you tell us how far such re-engineering has progressed, and when will it be completed?

The steps of engaging a consultant to document the existing systems and procedures, that started around the first of October. We expect that person's report around the middle of January. And then that's the start of the beginning of the reengineering process. You know, first we want to document everything that's happening now and then look for ways to improve the system by getting rid of the redundancies that are in the system.

So can you tell us approximately when this will be completed?

Are you talking about this 90 12/11/01 FINANCE COMMITTEE - BILL 010694 phase or the whole re-engineering process?

I thought we were talking about the reengineering process that you referred to.

Right. This particular process will probably be -- the first phase of this, which is the documentation of existing systems, will be about mid-January. Then we will probably take several months on the re-engineering of the system itself. And then a contract will be let for the development of the software necessary to have a shared database throughout the system. I'm not an expert in information technology. Regarding the length of time it's going to take to build this software, maybe Diana Neff may be able to answer that question for you.

If you want more detail, Diana Neff, the City's CIO, is here. She talk about the acquisition system and some of the other... (Witness comes forward.)

Good afternoon.

Good afternoon.

My name is Diana Neff. I'm the Chief Information Officer. 91 12/11/01 FINANCE COMMITTEE - BILL 010694 In today's systems, when we're doing re-engineering, we usually look at about an 18-month window to be able to go through the processes and then to do the acquisition and implementation to begin a process, depending on the complexities, but between and months is a fairly good benchmark 8 to use with automated systems. 9

Thank you. 10 Okay, in your testimony, you indicated 11 that it would take approximately 18 months to 12 consolidate the housing authorities. Have you begun 13 to meet with the unions to discuss this 14 reorganization? 15

No. We haven't had those 16 conversations yet, we haven't had them. What we've 17 spent time doing is trying to analyze what the 18 constraints are in designing a model. And so we've 19 had the Law Department looking at the various 20 pension issues. We've looked at the State law that 21 authorizes the Redevelopment Authority. We've 22 looked at the labor agreements that are outstanding. 23 We've looked at some of the personnel issues and 24 have proposed a reorganization plan for the City's housing agencies. 92 12/11/01 FINANCE COMMITTEE - BILL 010694 We envision in the weeks going forward that there will be extensive conversations. The labor issues and challenges are substantial. And so there will have to be a lot of dialogue. I think one of the things I learned from the PGW experience is, you know, we had this huge problem with our call center and, you know, there was all this finger-pointing that went on -- it's the labor agreement, it's the workforce, you know, it's the supervisors. And what we found is that it's some of everything and that we really had to spend a lot of time talking back and forth before we could understand how it is that the systems really needed to operate and put them together in a way that has enabled PGW to come up to industry standard. And I think it's that same kind of conversation and dialogue that's going to have to happen. What we've presented is what is our first cut at a reorganization plan. I think there need to be extensive conversations before the Administration would say, Yes, this is what we want to go forward with, but we put it out there. 93 12/11/01 FINANCE COMMITTEE - BILL 010694 City Council, almost a year ago, nine months ago, had asked that we take a hard look at reorganization, and we've tried to do that. I think what we've found is that it's not just a matter of moving people around, but that we have no systems in place, you know, that we don't have procedural manuals that the Redevelopment Authority. Herb Wetzel has with him the last manual that was developed at the Redevelopment Authority and it goes back to 1974. It's got all of these yellow pages associated with it. So when we talk about rebuilding the housing agencies, we need to, you know, take a look at job descriptions, we need to make provisions for training for people. People in our agencies want to do a good job. We as managers have not done a good job in providing them with the tools they need and with the training they need in order to do development in neighborhoods. The way it happens in 2001, the financings nowadays are extraordinarily complicated -- even CDCs are syndicating tax credits. And we have not done what we need to do to develop a workforce that can respond to these issues. 94 12/11/01 FINANCE COMMITTEE - BILL 010694 You know, we've had a lot of conversations, but, you know, we're talking about rebuilding systems from the ground up, not simply moving desks around.

Thank you.

Can I at this point indicate that I understand there are going to be representatives of the workforces of the Redevelopment Authority District Council 33 here generally on a panel later this afternoon, but there are a large number of people very much concerned about their jobs that are here now, and I hope the Chair would recognize them. (Applause.)

And could I ask just one question quickly on that? Is there any way you have of assuring the folks who are here from District Council 33 that as a result of your reorganization plans, there will be no loss of jobs?

We do not intend to move anybody out of government. The new streamlined housing agency, we don't anticipate, will be staffed the same way, but there are going to be other opportunities in government, and we would anticipate 95 12/11/01 FINANCE COMMITTEE - BILL 010694 making provisions for everybody so that nobody at the end of the reorganization process is without a job. We've built housing organizations that, you know, some of the work done isn't even housing work. We have workforce development work, for example, that's done out of PHDC that is a part of a completely different system, you know, and so we would look to realign some of the divisions within the housing agencies. But at the end of the day, we anticipate people will still be employees of the City of Philadelphia or someplace in the government.

Well, based on that answer, I think it's very good that the workers are here to protect their jobs because I think they're going to need protection.

And they're fundamental to the process. This isn't going to work unless we can have employees buying on this, and so they have to be intimately involved in talking about how these jobs really work. As Herb indicated, when we're putting together the re-engineered system, it starts by 96 12/11/01 FINANCE COMMITTEE - BILL 010694 figuring out what it is that we do now, and that's information that men and women working in the departments across the City know. This is not something some consultant knows. When we talk about how things need to fit together in the future, nobody has a better perspective on it than some of the men and women that are working in the City's Redevelopment Authority Office of Housing and PHDC. (Applause.)

Well, to the honorable (indiscernible) staff, I would just like to let you know that workers recognize that kind of language as a real danger sign to them that their jobs are threatened. (Applause.)

And they're going to want to get insurance to protect them.

Let me say to my colleague that during a briefing, we mentioned this very issue, and we say this to all of the union members here that we were assured, as was in the opening testimony that you should have documented, that had the workers will be protected. So the Administration knows that that is a priority in this 97 12/11/01 FINANCE COMMITTEE - BILL 010694 Council. And we know we've had problems in the past, but certainly we are looking forward councilman, and to all of the ladies and gentlemen who are here, to making sure that everyone is protected. As was just said, you know, the workers are always -- you are what makes it run. We have to protect everybody who lives in the City. We can't help develop neighborhoods without having people who live and work there protected so we're all one. (Applause.)

And certainly we thank you for coming.

Pat, you talked about encapsulation earlier. Can you tell me what the criteria is for encapsulation? More importantly, have we been doing encapsulations heretofore? We have? I found it very interesting 'cause you said it was very important to encapsulate, particularly around schools. Didn't I understand you to say that? And that you thought that that was one of the priorities in encapsulation?

What I did was cite an example 98 12/11/01 FINANCE COMMITTEE - BILL 010694 of how we could work on making decisions around which buildings get encapsulated, and that there may be some who would say if there's a --

How many properties have been encapsulated in the last year?

It's about 50 properties, basically using a variety of proceeds that's in the L&I operating budget. And that has been done primarily to kind of test out this concept. We've worked primarily in areas where there may be one or two vacants on the block in making those determinations. But getting back to your question about schools, I wanted to just clarify that we said that there maybe a District Council --

Excuse me one moment, Miss Smith. For all of those who would like to sit down, the balcony is open now as well. Thank you.

As an example a district council or a community group who we're working with around the planning may say, We want to give priority to houses that are located on blocks near schools. Someone else may, for other reasons, have 99 12/11/01 FINANCE COMMITTEE - BILL 010694 other priorities. I was just emphasizing --

I was just curious to know whether encapsulation was being done now, because directly across the street from one of the schools in my district, I guess last year in spring, there were two vacant properties. I had asked that they be encapsulated. I don't believe that was ever done, and I never got a reason why it wasn't done or if it could or could not be done. And as we speak, there are probably 10 vacant properties on that block today.

Mm-hmm, mm-hmm.

I just don't understand if some properties can be encapsulated -- and these properties are directly across the street from a school -- why we could not have addressed that.

To be honest, I think this is an example where in the past, we were more responsive to complaints, and some of the decisions were made on a complaint basis.

I think I had made a complaint last year about the two properties.

Okay, what I'll do is follow 100 12/11/01 FINANCE COMMITTEE - BILL 010694 up on that. I'm not sure why. I wasn't involved in that particular decision.

Well, I think there were two requests made, and I don't know that anything was ever done. And if it could not be done, I think that it would have been nice for someone to tell us that it was impossible to do and why.

Mm-hmm.

Thank you.

Thank you, Madam President. Councilman Kenney.