I may need the Budget Director; I thought I saw him here.
Thank you very much. Could you kind of give us a general short synopsis of the City's current fiscal condition? 101 12/11/01 FINANCE COMMITTEE - BILL 010694 There's been some reports in the newspaper, I think, as of today, yesterday about obviously declining revenues, 9/11 effects, schools, Gas Works, various fiscal problems on the horizon. Could you just give us an idea of just where the City stands right now -- budgeted, what we anticipate happening?
Right now, the City ended Fiscal Year 2001 with a $230 million fund balance, but as you were alluding to, there are a number of threats to the City's budget, one being the economy. The slowdown of the company has led to a slowing of our revenues. There's the threat of what will happen with the School District, and we have added security costs. Our projection in our quarterly report was that our fund balance would go down to 170 million at the end of this fiscal year.
Could you give us a little discussion about the issue of debt limit. What is our debt limit how far away or close to our debt limit are we?
Under the State Constitution, our general obligation debt is limited to 13.5 percent of a 10-year average of assessed real 102 12/11/01 FINANCE COMMITTEE - BILL 010694 estate in the City. We've been getting fairly close to that limit. I think we have under $200 million left in debt-incurring capacity.
Okay. And despite the fact that some debt may be incurred, or has been incurred in the past through the City-related agencies, is it not true that the City itself as an entity is responsible for the payment of that debt, something -- even though other agencies have the ability to borrow (i.e., RDA)the City and its tax base is generally responsible for the incurrence of that debt. Is that accurate.
So have we been able to determine our debt limit issue as it relates to the outstanding debt incurred by other agencies, or is that all-inclusive?
What we have done is looked at what rating agencies say and what our financial advisors say is an appropriate level of debt and what would be a ceiling as a percent of revenues. And the numbers that we get range from 12 percent to 15 percent.
I guess the 103 12/11/01 FINANCE COMMITTEE - BILL 010694 question is -- I'll restate it. The number you've given us in the $200 million or so available, is that inclusive of the debt already incurred or currently being paid off by agencies that are able to borrow but are not necessarily the City proper?
When we talk to agencies, they're saying that 12 to percent is kind of an 15 appropriate ceiling for where we should be. If we -- including the projected debt service on these bonds and the stadium bonds and including our unfunded pension liability, we would be about 13 percent.
All right. So right now, we're in a range that's at least comfortable for rating agencies.
Going back just for one moment to the stadium bond issue, have you been 104 12/11/01 FINANCE COMMITTEE - BILL 010694 able to do any analysis or have you seen any analysis relative to -- what I believed when we negotiated that deal was that the cornerstone of the ability to pay back the debt was the issue of the car rental tax. Have we been able to see what the impact on the car rental tax has been since 9/11 and whether or not we anticipate -- we don't really know 'cause it's a federal government decision -- whether or not the FAA or some other homeland security office or whatever would require or suggest the removal of car rental agencies from airport property proper for safety purposes and what impact that would have on the revenues we anticipated to be able to pay the debt on the two stadiums.
I think the answer is no, we don't know yet. We've had only one month of real collections since September 11th on the car tax.
And, again, it's an obvious -- I'm asking you an obvious question. So if the Office of Homeland Security or the Justice Department or the FAA makes a decision to remove 105 12/11/01 FINANCE COMMITTEE - BILL 010694 those kind of facilities or those kinds of business from the airport proper because of security concerns, that would certainly have a devastating impact on our revenue collections and, therefore, our ability to pay that debt out of non-General Fund sources.
If they moved off the property, the potential, because of the location of the airport, is that they would move out of the City.
Okay. So we don't know the answer to that question, either.
And as of the other day, we got new information, which was somewhat surprising, that the Governor decided has on the advances for the School District, that he is coming up, I guess, with half of the $70 million anticipated advance and is expecting the City to come up with 35 million to make payroll on December 21st. Is that a correct understanding? 106 12/11/01 FINANCE COMMITTEE - BILL 010694
They've indicated the expectation is that either the School District or the City will make up the balance.
Well, either the City, out of the General Fund, or the School District, out of its resources.
My understanding is that the fiscal condition of the School District has not significant resources to draw from.
I mean, there are limitations. I don't know what their cash flow situation is, so I can't tell you how much they could -- it could contribute to making its December 21st payment.
And we don't have an answer to that question as we sit here today?
That's right. The City has previously committed $15 million. This is the annual grant that the City makes to the School District. That money is available and committed to that, but I can get you the most current information on that. There are people involved in conversations 107 12/11/01 FINANCE COMMITTEE - BILL 010694 with the State right now.
Okay. And the overall long-term approach is unknown right now on what the share is going to be in the overall solving of the schools' fiscal crises; that's an ongoing negotiation relative to potential privatization and what contribution the state legislature and the Governor may think we should be putting forward on the table. That's going on now, but we don't know the answer to that question either; is that correct?
That's correct. But our starting point in those conversations -- one fundamental principle is that we are unwilling to destroy the City's finances in an effort to offset some of the State's responsibilities to fund public education. I think what you're getting at is, you know, how can we afford to do this and also --
No, I'm not. Let me walk down the road here before we assume what I'm going to ask.
The State has the ability, as far as I understand, and maybe we need a 108 12/11/01 FINANCE COMMITTEE - BILL 010694 little help on this answer, but the State has the ability, even if the City refuses or claims that we don't have the money or we really don't have the money and we can't put up the share that the State has suggested or will suggest we put up, that the State has mechanisms through the legislative process to basically rearrange our money that's coming here and basically take it away from us, whether we want to have it taken away from us or not. I mean, is that an inaccurate possibility? I mean, if the State comes up with a number that we as a city deem we can't afford and we say we're not going to pay it and the State takes over the system, they have the ability really basically to take some money out of our own hide to pay for that bill.
We're looking at those issues. There is State grant money that comes to the City that it would have the discretion to take away.
Okay. And I won't even get -- 'cause I think we'll be getting too far afield, I won't even get into the issue of the Gas Works because that's a whole maybe weekend worth of hearings. 109 12/11/01 FINANCE COMMITTEE - BILL 010694 The question I guess I'm getting to is that considering all of these issues, considering all of the unknowns, considering the School District's unknowns, considering the issues of what our revenues are going to be in the future, and in my opinion, and I think in the opinion of some members of this Council, many of them, the major reason for flight and blight and loss of taxpayers and the inability to retain businesses and jobs has got more to do with the condition of the schools and the tax structure than it is with any other factor facing the City. Having said that as my opinion, why aren't we waiting until we get the final bill on the schools before we encumber $20 million over the next 30 years that could potentially be going to the schools and that may really -- all of these unknowns may put us in a situation where we're, by approving the $20 million before we leave for the holidays, before we approve this bill and leaving for the holidays, are we not putting ourselves in a position of fiscal concern into the future of 2002-2003?
I think there are a couple of parts to the answer. One is that the City -- the 110 12/11/01 FINANCE COMMITTEE - BILL 010694 City, the Mayor, believes that our challenge is a challenge that we have to meet on a number of different fronts. We can't just do the schools, we can't just do tax reform, we can't just do neighborhoods. That we have to move the City's total economy forward on a number of different fronts. And it is for that reason that we maintain our commitment to providing $20 million annually in support of this initiative. I think that we're going to end up spending money anyway. We have 8,000 properties in this city that are falling down on a haphazard basis. And the challenge for the City is, do you deal with that by paying out 13, 14, $17 million annually on a haphazard basis, or do you acknowledge that you've got that expenditure and try to capitalize it into a program that can turn around some of these neighborhoods? I think that, you know, there are questions out there, no doubt about it, but the Administration's position is that we can afford the program, that we -- that it does not prevent us from maintaining a steady path of tax reduction, and Mr. Dubow can talk more about that, and that we can 111 12/11/01 FINANCE COMMITTEE - BILL 010694 fulfill what we believe to be our responsibility to fund public education. There have been a number of numbers thrown out there. None of the numbers thrown out there for the City's share of funding schools even come close to addressing the School District's funding needs. The School District needs fundamental tax reform at the State level in order to adequately address its needs. The City does not have the capacity to do that on its own.
While I may agree with you on the fundamental need for tax reform statewide, we do have the immediate problem of housekeeping that we need to deal with here, and anticipating that happening anytime in the next year, two or three years, I think, may be wishful thinking. I would argue that probably the fixing of the schools and the fixing of our tax structure would probably create a better environment for investment, residential housing construction, commercial housing construction, and job attraction than probably any of the two things we could possibly do. 112 12/11/01 FINANCE COMMITTEE - BILL 010694 Now, I'm not saying that certainly with the right controls and with the right oversight and the right input that we won't move this bill 5 forward, but I could say to you on a philosophical level that if we could fix the schools and if we could fix our tax structure, probably this program wouldn't be necessary because we'd have an environment that would look for and attract that private-sector investment on its own.
I would only add that one of the things that I have learned, you know, is that it's alarming how quickly some of these neighborhoods are deteriorating. And I think if the City doesn't intervene in the short term in a very aggressive way, we're going to turn around five years from now having to make an investment that far exceeds even the $300 million that we're talking about now. (Applause.)
So as we move forward, I think that the entire city has to be engaged in the 113 12/11/01 FINANCE COMMITTEE - BILL 010694 careful husbanding of resources. I mean, I appreciate your comments.
Well, you know, I don't disagree and I'm not saying that this won't move forward. I just think it's important in this public hearing and in this forum for the record to be clear that when we step off this cliff, you know, we've stepped off. And there are other things coming down the track that at some point in time, we're going to have to deal with probably sooner than later. Of the 14,000 or so properties that have been mentioned, how many are owned by the City, by RDA and by PHA? I had heard that there were a large number of properties that have been in our possession and in our control for quite some time, and it's not a private-sector abandonment problem but could be a government abandonment problem.
To be quite frank, we don't have an accurate number because of all of the reasons that Herb talked about in terms of how we've maintain information and data about property ownership. Based on BRT records, which also include, you know, recreation centers and libraries, 114 12/11/01 FINANCE COMMITTEE - BILL 010694 the guestimate is between 30 and 40 percent maybe in public ownership, but sometimes you don't know if that's coming in and going out just temporarily.
But we should know at least our -- what we own, what the City owns, what RDA owns and what PHA owns. I don't think there's an index card with those on 'em, but I'm sure there's some computer run somewhere with our properties.
The best that we have is the BRT information which classifies it by City of Philadelphia or some sort of public ownership, and then you don't know the distinguishing characteristics.
Miss Smith, you had indicated and made some statement about open, inclusive, and transparent procedures that would be clearly identifiable when they are seen. Could you discuss some of those mechanisms on what that would entail and how it will be made knowledgeable about what's going on?
That was part of the talked-about how do we do planning within the City and how do we engage communities and neighborhood 115 12/11/01 FINANCE COMMITTEE - BILL 010694 residents and CDCs in a planning process. And we wanted to make it clear that, again, the intent is that planning is not done by government, that it's done in partnership with elected officials, with community representatives, with CDCs, and developers, that, you know, that we go systematically throughout the City and plan, that we acknowledge that sometimes we don't plan in areas because there isn't an active CDC to help drive a process. So that's a part of it. If you want more detail, I guess Maxine Griffith can talk more about the process. Attached to her testimony, which is much longer than my few remarks, were some of the specifics about what we call "the process," and it specifies steps within that process from how you do needs assessment and asset mapping and things of that nature.
Is there someone with the Administration here or the team who's taking notes on questions for requests for information?
'cause I'd like to make just a couple before I finalize this round of questioning. 116 12/11/01 FINANCE COMMITTEE - BILL 010694 I'd like to know who the City dealt with at K-Mart in the potential North Philadelphia and West Philadelphia superstore development. And if you can provide me with the name or names and phone numbers and who the Commerce Department official was that was responsible for negotiating or trying to get that deal done and the date -- the dates and when that discussion was going on, okay? I'd also like to know -- I would like a list of all for-profit, nonprofit developers, housing advocates, bankers, community development intermediaries that have been involved with this process. If I could get specific names and associations -- I don't need phone numbers necessarily.
Just one final question on this round. I was very intrigued by your comment on , Ms. Smith, that says "Effective housing investment cannot be determined by who someone knows or what influence they have. Instead, it must depend on clearly-articulated objective criteria that the private-sector individuals and the community can rely on and 117 12/11/01 FINANCE COMMITTEE - BILL 010694 trust." As you know, or may not know, I have been attempting to do substantial campaign finance reform in this city for quite some time. As a matter of fact, I have a bill sitting on the calendar now that would limit the amount of contributions that individuals and PACs (political action committees) could make to elected officials -- the Mayor, City Council, the City Controller, the District Attorney. I would be interested in knowing whether or not the Administration would be interested in supporting an amendment that would prohibit the acceptance of campaign contributions on the part of the Mayor, City Council, and other City officials for anyone who's a vendor, a contractor, a law firm or developer that deals in any way, shape, or form with the execution of NTI from the time we pass it forward.
No? Well, how does that then jibe with the testimony that we're not interested in people's -- who they know or what influence they have if we're not willing to do something very, very representative, very symbolic, 118 12/11/01 FINANCE COMMITTEE - BILL 010694 and very accurately should be done to keep the influence of money and political campaigns out of this very important public project?
Because I don't believe that campaign contributions have to dictate how investment decisions are made in Philadelphia neighborhoods. One of the things that the Administration has tried to do is articulate a set of principles so that there can be some standard against which decisions are made. I think that that is a process that can operate regardless of, you know, the fact that people may choose to participate in the democratic process by making contributions.
You do not believe that the appearance of favoritism as a result of large campaign contributions to people like myself and others on Council and the Mayor have any ability to give people an attitude that it's not what you know, it's who you know? And that in the past, development processes have gone forward in this city, whether they're involved with TIFs or bond deals or anything else, has always been tainted in some way, at least in the public's way and in the 119 12/11/01 FINANCE COMMITTEE - BILL 010694 media's view, by the fact that people are actively writing large checks to elected officials?
We've tried to manage the decision-making process by setting up a transparent process. It's not just political contributors that pick up the telephones; it's community development corporations, you know, it's some of everybody. I think that in order to try to set up a transparent system that people can rely on that will encourage developers to come into Philadelphia, you need to have clearly-set criteria. I think that by chasing, you know, campaign finance reform -- it's something that can be debated, it may or may not have merit, but I think by trying to use that as the lever --
That's not my suggestion. My suggestion is that we voluntarily, all of us and the Mayor's Office, voluntarily say that we're not going to expect anyone to participate in any campaign; we're going to select people on the merit, not on how much they give to anybody's campaign. And I'll tell you what, I'm including myself and every member of Council here.
We will commit to 120 12/11/01 FINANCE COMMITTEE - BILL 010694 selecting people on the merit in a way consistent with the transparent criteria but --
But you won't accept a refusal to accept campaign contributions from those people.
Thank you, fine. It's pretty clear, your answer. Thank you.
Thank you, Madam Chair. Good afternoon, Ms. Wilkerson, Ms. Smith and Ms. Griffith. Ms. Smith, I wanted to ask a couple questions about some of the items in your testimony, and then I have some other questions based on the materials that have been supplied over the past few months. Let me start with the testimony. On 12/11/01 FINANCE COMMITTEE - BILL 010694 6, under the heading of "Clearing the Way for Change: Aggressive Code Enforcement," your testimony indicates -- you say that the Administration has begun to beef up our code enforcement efforts in the area of the number of citations issued and the number of enforcement actions taken. Can you share a little more detail about this beefed-up enforcement and what actually is going on?
A couple of things have happened. For example, under the auspices of the Police Department, they've created a task force to start identifying and surveilling specific sites throughout the City which may be known for short-dumping, and as a result of that increased surveillance activity has begun to make some increased arrests as a result of that.
Well, we can get back to you with that specific list. I think I have a summary list but not by address and location.
So I will get back to you with that specific piece of information. Second, the other thing that's been happening on another front is beginning to look at maybe some preventive measures around trash and litter issues, how we might be able to launch a anti-litter campaign tied to some of our recycling campaign efforts. There's been conversations looking at whether or not it's realistic to increase the number of drop-off sites for citizens. I think we have three, that number, can we increase that. Some of that work is being led by the Streets Department.
You know, where you can take, I guess, like, bulk trash and things like that. Instead of waiting for your trash day, there are apparently three sites in the City, and can we increase the number of what they call "citizen drop-off sites."
As a way of preventing short-dumping. People dump trash 'cause they don't have legal ways of -- 123 12/11/01 FINANCE COMMITTEE - BILL 010694
I think there's also additional activity. There's been additional training that was conducted by, I think, the Law Department for L&I. Donna Mouzayck with the City's Law Department is -- (Witness comes forward.)
I would venture to say that I don't necessarily know -- I mean, I've called in a few short-dumping sites from time to time and some of these other things. I don't necessarily know that those are at the top of the list in many of our neighborhoods when you talk about code enforcement.
Okay. I think that there's no one kind of activity that is going to meet all of the code enforcement.
I think one of the problems with the code enforcement is --
I'm sorry. Good afternoon. My name is Donna Mouzayck, and I'm the First Deputy 124 12/11/01 FINANCE COMMITTEE - BILL 010694 City Solicitor for the Law Department. One of the problems with code enforcement seems to be that even if you could get the property cited with the violation and follow it up, that actually seeing something happen to that is either time-consuming or it doesn't happen.
In one regard, I think that the courts are a little bit reluctant to enforce some of the violations that are in place; there's continuous allowances for people to come back, or in the end, the fines are forgiven, and that means there's not a whole lot of impact. I think there's something that we can do about that. I think that we need to, one, increase the fines; two, we need to start having conversations with the court to let them know that NTI is a serious situation. But we haven't done that yet, and I think that the reason we haven't done it yet was because we wanted to get our own house in order. We've begun that. With L&I, we've had training sessions to educate them on the things that the court really would require for -- that would permit the 125 12/11/01 FINANCE COMMITTEE - BILL 010694 enforcement order to go forward. And I think we took six days to do that training and trained about, I think, 193 inspectors. And that will cut across different agencies and I think ot will help provide a more coordinated approach to enforcement.
Well, I appreciate those efforts, and I would say that, yes, there have been at times problems on the court's side, but I also have to share with you that I'm often left with the impression that part of the problem is within the government and how seriously we take enforcement in the first place. Before the case ever ends up in court, which oftentimes it takes forever -- it sits around in some place that no one knows seems to know where it might be in terms of what the current status is, is it going to court, and is someone actively pursuing it. So, I mean, issues of coordination -- I'm under the impression from the hearing just last week that the Department still doesn't have a fully computerized system, a question about the number of inspectors that they have to do all of this kind of work. And so it seems to me that there are some Departmental issues or intergovernmental issues that 126 12/11/01 FINANCE COMMITTEE - BILL 010694 prevent us from showing a face to the public that we actually will do what the sheet of paper says, which is aggressive code enforcement.
There's been one major obstacle, and that is the computer system. Currently we have enforcement authority spread out through a number of City agencies, and we don't have a mechanism in place so that those agencies can connect, so that if you have property with multiple violations, with multiple addresses, with multiple names, and everybody keeping their data in a different format, it's difficult to link up, as the testimony has provided -- been provided to Council. You know, that new information system will be in place, but clearly we're hampered until that happens. The second thing that I think would make it a little bit more efficient is actually the handheld computer, where the inspectors will be on the street and be able to plug it in. It goes into that database and it will then cut across, you know, the multiple agencies, get in there, and then connect tax information --
Look, I love a 127 12/11/01 FINANCE COMMITTEE - BILL 010694 computer as much as the next person, I love a little handheld technology as well. The question is: After you have the data, what are you going to do with it? Who's actually going to take that violation, take it seriously, and make it go from their computer into a system for enforcement? That's what people want; they want enforcement.
I think that currently we're having monthly meetings which involve all of the agencies so that priorities can be set. I think, with the computer information coming in, L&I currently, I think, is in a position to spearhead that activity. For the time being until we get there with the computer information not being available, we're actually just having monthly meetings so that we can set the priorities. There are a number of other programs that we've looking at that are not in existence in the City. An example might be the Minneapolis Citizen Inspection Program; the idea here is to expand the arms of L&I on enforcement matters. Minneapolis had used the program and found a 70 percent success rate with it. 128 12/11/01 FINANCE COMMITTEE - BILL 010694 Basically we call upon community leaders that are already well known in their area, basically designate in advance two of them who are well-respected to plea upon members of the community to fix their neighborhood, so that if you had a home with tall weeds, you could ask for -- the community leader would then send a letter asking for that situation to be remedied. There also would be included a suggestion list. You know, if you're eligible, you know, for assistance from a program, that would be included in an accompanying memo. They report that 70 percent of those violations do get rectified. If they're not rectified after reinspection by the citizen, it's referred over to the Department of Licenses and Inspections for further enforcement. We are also putting together something we've been calling a "Quick Response Team," and this would involve high-level people from the multiple agencies to respond to more the difficult situations. We're Talking about people with repeat violations -- maybe there might be mental-health issues going on, an inability for a particular citizen to reach a permanent resolution of that 129 12/11/01 FINANCE COMMITTEE - BILL 010694 situation. So that we can have high-level people come together and use all of the tools that are in the bag as opposed to piecemeal approach, you know, one after another. Use 'em all at once and get a coordinated approach to fix that problem in the neighborhood.
Okay. On , Ms. Smith, let's talk about the investment dollars. You have approximately $140 million for demolition of dangerous buildings. Now, are all of those buildings presently vacant?
This is based on the vacant properties survey list, yes. So there is a possibility on the dangerous buildings list that there can be occupied dangerous buildings. I must admit I would have to get back to you because we would probably have to pull that out. But this number was generated off of the 14,000 -- off of the vacant property survey that was conducted back in 2000.
Actually, on the Internet, and I'll get -- the way you can access is both the list 130 12/11/01 FINANCE COMMITTEE - BILL 010694 of dangerous properties, which is updated routinely because of ongoing field inspections, as well as the snapshot photo of what was vacant in 2000 is available over the Internet. And there's a way that you can access that, but we'll get you that information. Again, it was also in some correspondence that we had transmitted earlier.
The actual list. You can go onto, you know, the city's Internet service and those lists are there.
Okay. Is it possible to just give me in the traditional form, a pile of paper?
I like a pile of paper I really don't have much time to sit at my computer.
Now, when people are located as a result of demolition, whether it's because there's of a lot of demolition on the block and they may live in a legitimate property but you need to start moving people, where are they going to 131 12/11/01 FINANCE COMMITTEE - BILL 010694 go?
First of all, we want to emphasize there's possibly, as a matter of public safety again, the need to temporarily move someone as a part of the taking-down of a building if we're concerned about the property becoming unstable or, you know, for public safety and health reasons. You know, that work will be coordinated by the Office of Risk Management -- you know, it would be temporary. If there's permanent problems to the occupied property, then we have to, you know, respond to those with respect to claims. There's also -- the Redevelopment Authority historically has also done some, what we call, strategic relocations where we've assembled land in connection with a redevelopment project. I think one of their most successful examples was the work that was done in the 1st District around Jefferson Square, and Herb can talk to you a little bit about how that process works and what resources, you know, that you have to provide to the individuals. Herb, you might want to talk about relocation when it's carried out with a 132 12/11/01 FINANCE COMMITTEE - BILL 010694 redevelopment project
Yes. In the traditional form of land assembly using urban renewal condemnation, which is the one that triggers the federal Uniform Relocation Act, the process is that if properties are occupied either by tenants or by owners, they're given what's called a "general information notice." If they're the owner of the property, they also receive an offer letter, which is the estimated just compensation or the fair market value of their property. They are then -- an initial interview is taken to --
I'm sorry, go back to the beginning of that. How do you end up in this?
If we go back to the beginning of the process, before the Redevelopment Authority has the power to condemn, we must come to 133 12/11/01 FINANCE COMMITTEE - BILL 010694 City Council with an ordinance that results in a public hearing. The passage of that ordinance with the specific addresses in it allows the Redevelopment Authority Board to proceed with what's called a "Declaration of Taking."
So the power arises as a result of the ordinance process of City Council. When a declaration of taking is approved by the Redevelopment Authority's board, then the owners of properties are noticed of the condemnation, and they receive what's called an "offer letter," which is the estimated value of their property. In many cases, these properties aren't necessarily owner-occupied so that -- the second letter they receive is called a "general information notice" and --
Well, at what point -- I mean, what would cause you to be involved in something like this?
I'll give you an example. The Sharswood project, which was a 71-unit new townhouse construction project, there were only two occupied structures left on an entire city block. 134 12/11/01 FINANCE COMMITTEE - BILL 010694 There were three structures; two were occupied. In order to assemble the entire block for the project, it was necessary to condemn those three structures and relocate two households.
Are you saying that you get involved because there is a project, not because --
Well, in this proposal, with the $140 million for demolition, I understand that's going to be for dangerous buildings. Ms. Smith has said that you expect almost all of those to be vacant. In the case of -- I mean, we've had a little bit of this conversation: A bunch of vacant houses on the block, many of them are dangerous, a bunch of vacant lots and a couple occupied. Where you need to clear the entire block, are you saying 135 12/11/01 FINANCE COMMITTEE - BILL 010694 that you won't do that until you know what you're going to do on that block?
I think when you would look at it -- and we think it's very important that there's some potential for redevelopment if we're going to be incurring the significant costs related to relocation. And historically there are -- you know, usually there's been historically been expression of a developer's interest. Again, it's a matter of settling priorities and what you do first, second, or third.
And so we do, as we said, I think, in one of our presentation, you know, it's also looking at the confluence or the coming together of a couple of things. And one of them is looking at the immediacy of the development opportunity because there's an expression of interest.
In the proposal, tell me what happens after all of the demolition takes place.
Well, I think a lot will -- there's no one answer to that question, but I think 136 12/11/01 FINANCE COMMITTEE - BILL 010694 a lot will be tied and rooted to what community plans, say, should be happening, whether or not there's a pre-existing request in the pipeline for financing to do development. Again, it will be, you know, anchored again into, you know, a planning process at the neighborhood level, working with community leaders, working with the Council. And to me, it's -- it will vary from circumstances to circumstances. You know, we do acknowledge that not every parcel is going to be redeveloped immediately. What we want to do is, we want to create the opportunity for development in some instances. And that's an important principle, by making sure -- and at the same time, protecting the public's safety.
Right. Well, what is the City's plan for doing all of the demolition and then activities to be conducted afterwards?
A development, 137 12/11/01 FINANCE COMMITTEE - BILL 010694 redevelopment, whatever you want to call it.
What we anticipate is before the demolition starts, that we begin engaging people in conversation about what ought to happen on the parcel and that the plans for reuse come out of that planning process and conversation with Councilmembers, with CDCs in the area. That's what dictates the end-use. In some situations, the end-use may be something that we can't accomplish in the short term and so we're putting together resources that would allow for some interim strategies. We've been seeking in the City's operating budget funding so that we can maintain -- I forget what the phrase is about the quality of maintenance that the City is prepared to fund out of the operating budget, but we're also trying to identify resources for greening. Senators Santorum and Specter helped the City get $300,000 from the federal government that's matched by a William Penn grant of $300,000. It doesn't begin to address the challenge, but I think that once you have the program in place, it puts you in a much better position to aggressively pursue 138 12/11/01 FINANCE COMMITTEE - BILL 010694 resources that can support some of the greening strategies that may be used on an interim basis. But I think the decision is a decision that comes out of planning with Council and the community.
I believe there was a total $1 million that came to the City as a result of that grant of which 300,000, I think, did include Logan. This was separate and apart from that.
Councilwoman, did you have -- okay. When will all of the -- I'm sorry. When will all of this planning activity start?
Again, as Maxine Griffith talked about, this isn't starting -- in many instances, this isn't starting anew, that there are already existing plans on the books, CDCs with some very specific plans, community-based organizations with some other plants. That's one group. 139 12/11/01 FINANCE COMMITTEE - BILL 010694 We also realize and understand that there have been many communities, as she pointed out in her testimony, who haven't had the benefit of a neighborhood community planning process. In terms -- again, in terms of priorities in one instance and in one hand, we have the planning driven from the outside. People kind of know what they want to do, why they want to do it. And our challenge is to begin to link and prioritize money to get to those objectives. In other places --
Outside, like a community development group. I'm saying there are plans, you know, City Planning Commission has done other plans from like from Lancaster Quarter and working with groups. There are CDCs who have developed strategic plans with private resources. But then at the same time, there are community groups that haven't had the benefit of a community planning process or neighborhoods. There, one of the things we're excited about is having enhanced the Planning Commission's capacity so that 140 12/11/01 FINANCE COMMITTEE - BILL 010694 they can put more people on the street to kind of seed the planning or help facilitate it and support it.
And one thing the Planning Commission always makes clear when they talk about a planning process that is not government creating a plan, that our role is to help support and facilitate neighborhoods planning.
I would just add that we would do that within an overall framework and vision for the City. And one of the things we're doing now in reviewing --
Well, for instance, one of the problems that we've seen just technically just technically is, you have a community development organization that's built an excellent plan for a four- or five-plaque block area. It would make sense perhaps to cross the street and continue that plan, it would make sense to link it with public transportation, it might make sense to change a bus route, it might make sense to increase the capacity 141 12/11/01 FINANCE COMMITTEE - BILL 010694 of a local community facility. They don't have the wherewithal to do that. So one of the things we want to do in this planning process is not only support the specific objectives but also to support an overall framework of infrastructure, development of capital appropriations, of operational support so that we don't have an isolated circumstance unsupported across the board by a vision that City government owes communities something other than simply moving the paper through the process.
So is there an assembly somewhere of all of these plans?
Right now, it's in Joe Leonardo's office. We've worked with -- what has happened is usually when a community organization develops a plan, at the end at that planning process, they submit it to us to check zoning, to take a look at other actions that might be needed. So we have those plans. We also worked with PADC to see whether there were plans that we might not be knowledgeable about. Obviously, Council also made sure that plans got to us that we might not have known about. 142 12/11/01 FINANCE COMMITTEE - BILL 010694 So those are now being tracked. They're being vetted for NTI protocols. They're being added up in terms of the funding that they've requested, etc.
Well, you'll see them in your -- as far as planning goes, you'll see them attached to my testimony. They're the general principles that have been talked about, maybe ad nauseam here, in regard to collaboration and transparency, etc. But they also talk about a process which involves review by Council, review at the community level, review at the citywide level, and those reviews are actually already a part of the process; we're simply acknowledging them. We have monthly Planning Commission meetings that are open. Every community plan that's a part of sort of the sort of normal regulatory process gets vetted there and reviewed and discussed. Unfortunately, very few community representatives come to these meetings. We need to think through ways --
Why do you think that 143 12/11/01 FINANCE COMMITTEE - BILL 010694 is?
Well, we've been talking about it at staff level. One of the things we've been talking about is having more meetings out in the community at local schools and community centers. The other issue is perhaps having some of these sessions in the evening, when people can attend. So it's not a change in the process but it's trying to accommodate community-based organizations and neighborhood residents to the process that's already in place, and then augmenting it with the collaboration amongst City agencies, which I think is the big piece that's been missing.
Well, why don't you walk me through a little bit of the process in what I'd like to think will be the real world of NTI. And, for instance, we've participated in one -- I mean, maybe I was participating in a planning process and I didn't know it. But the Lancaster Avenue project, I know we got a very nice, colorful book out of that. We've also had some discussion about Lansdowne Avenue. Now, since those discussion, I haven't heard a word about either one 144 12/11/01 FINANCE COMMITTEE - BILL 010694 of them. So maybe you'd like to tell me about that.
Well, I think you've hit on a key deficit, if I might say so, Councilman, which is, we are a planning agency, we're not an implementation agency. And the meetings that you talked about came as a result of the Planning Commission sort of trying to jump-start the implementation process, but there was really no 10 framework to do that. Folks came to a meeting, they were very courteous, but there was no way for the Commission to help prioritize the implementation so --
Um, um, absolutely. So under this new regime, so to speak, the planning task force which we had would actually give birth, so to speak, to a plan that already had agency buy-in. We wouldn't be trying to figure out at the end of the process how do we fund this piece, or how do we move this piece forward, or let's get the Streets Department to try to re-prioritize the way they do business. They would be a part of the planning process. 145 12/11/01 FINANCE COMMITTEE - BILL 010694 Now, there still might be a visionary process, something that we would look to in the future where we might not have funding obligated. I mean, that's a part of that strategic -- long-term planning is a part of the planning process as well. But for those projects that we hope to implement, we would be sitting at the table with the operating agencies from the very beginning, and then at the end of that process, when the plan was established and we had buy-in, we would turn chairmanship, so to speak, of that task force over to the lead implementation agency, and the NTI steering committee's entire leadership would monitor that through, hopefully, the computerized process that was mentioned earlier. And you would be able to, Councilman, see that project move through the process on a computer screen -- or on paper if you prefer -- and be able to communicate with your constituents around that. We would be able to see where perhaps other planning data was needed, etc. And that's a part of the transparency we're talking about.
Well, who makes the 146 12/11/01 FINANCE COMMITTEE - BILL 010694 decision as to whether the project gets funded or not?
One of the things proposed by City Council that's a part of the ordinance that the Administration supports is an annual budget that would be reviewed by City Council, and I think that's appropriate. So I think, you know, we'll be working through projects, coming forward with proposals. You know, we'll be able to give, you know, information like, This is fundable now, or, you know, This is not ready now, there's no creditable developer associated with it. So that when come to City Council for final review, there would be, you know, developed information on it, but the ultimate decision about what gets funded and what doesn't get funded out of these bond proceeds, out of CDBG resources as well, you know, out of the capital budget all rests here.
City Council. 147 12/11/01 FINANCE COMMITTEE - BILL 010694
That's the proposal by the City Council President. The Administration has said from the beginning -- you know, and that's why you see some of the bond proceeds reflected in last year's CDBG program, is because we always anticipated that we'd look at all of the resources. I think it's appropriate that City Council ought to be involved in deciding how the monies are spent. I think that, at the same time, we've raised questions with the level of oversight that City Council proposes. City Council has proposed line-item budget oversight over the bond proceeds and referenced the Criminal Justice Center or the Convention Center. I went and pulled out those old documents and, you know, saw foundations and plumbing, you know. So I don't know that that's, you know, the appropriate analogy, but I think that we ought to develop some kind of way so that the Administration is coming forward with a proposal that City Council -- you know, that would be developed after all of this, you know, back-and-forth, but that would 148 12/11/01 FINANCE COMMITTEE - BILL 010694 reflect what we think is the appropriate strategy for moving forward, but it is City Council that would review finally the proposed expenditures.
How much would you expect the first bond offering to yield? And how many bond offerings do you expect to do?
We had originally done some preliminary planning based on the 250, and we had envisioned funding about two years of demolition activity, coupled with enough money to fund the outstanding acquisition requests tied to projects that are in the pipeline, and then to be able to have enough resources to put into what we call the home repair preservation type programs and activities with the bond issue. And my complete memory is failing me, but we were looking at sizing it between 120 and 150. And, of course, all of that varies and changes, depending on yields and interest rates. One of the things that we acknowledge with the bond proceeds that are called governmental or essential-purpose bonds is that there are time limits on spending, and this is -- one of the challenges that we're looking at is the capacity of 149 12/11/01 FINANCE COMMITTEE - BILL 010694 government to spend the money in a timely way so that we don't, you know, run afoul of our Internal Revenue codes. Right now, the preliminary plans envision, you know, 2500 during the first year, which represents a good more than 1,000 properties more than what we do now. We do around -- I think it's around 1213 a year. In addition to that, encapsulating, you know, about 500 properties. That goal may be a little -- very aggressive in the first year. And, again, it would be tied --
The first year, 500 in Year 1 of the encapsulations. We budgeted based on 500. Again, we're getting the operations, so we probably would stagger that over time to --
For example, like instead of doing, say, 3,000 a year in demolition or 500 a year in encapsulation, we're doing a ladder -- you know, like 2500, then 3,000, then 3500, and then you start tapering down. That's the type of refined work -- decision-making that we're being helped with by the 150 12/11/01 FINANCE COMMITTEE - BILL 010694 program manager.
You made mention of the acquisition dollars for projects in the pipeline. What did happen to those acquisition dollars? I mean, why aren't projects being funded now? And where did the money come from before?
In the past, we historically, I believe, have been funding acquisition at a level of about to million a year out of Community Development Block Grant funds. Some developers, you know, do non-assisted condemnation where they pay, you know, basically for the condemnation, but publicly-assisted historically have been funded out of block grant money, but here's the expert.
Can I assume you're talking about the most recent condemnations before Council last week, why those are moving forward?
I wouldn't make any assumptions. Ms. Smith said that you were going to use some bond proceeds to fund acquisitions of projects in the pipeline. I asked what those projects were and why don't you have any money presently?
The situation now -- the 151 12/11/01 FINANCE COMMITTEE - BILL 010694 current condemnations that are being conducted are mostly privately financed or financed by PIDC. There are some older condemnations that were in the pipeline, for example, for Cecil B. Moore Home Ownership Zone, and that money was funded to the City at least five years ago by the federal government, so that's money that's been there, waiting for the Cecil B. Moore project to move forward. The reality is, there isn't enough CDBG funds to continue funding acquisition and fund projects at the same time. So the choice is now we have to fund the projects that are ready to move, and as we do that, there isn't sufficient CDBG sources to continue an aggressive acquisition program. And clearly with the understanding now --
I thought we didn't designate -- what are we in, Year 27?
Okay. I thought Year 27 didn't have specific funding allocated to particular projects -- that was my recollection from CDBG hearings earlier this year. 152 12/11/01 FINANCE COMMITTEE - BILL 010694
No, what I'm talking about is, though, Year 27 had -- the preliminary Year 27 plan had a $7 million line item in there for acquisition to be funded out of private activity bonds, and because we were not able to issue the bonds, that $7 million was not a part of the final plan. That was where the funding was going to come for acquisition, but I'll let Deborah McColloch speak directly to the OHCD budger.
Well, are all of the CDBG funds accounted for or spent for Year 27? (Witness comes forward. MS. McCOLLOCH: Good afternoon, Councilmember Nutter.
Good afternoon, Ms. McColloch. MS. McCOLLOCH: I am Deborah McColloch, Director of Housing. The Year 27 budget, which is the current fiscal year that we're operating in, did not allocate community development block grant resources for acquisition. All of the funding --
Why? MS. McCOLLOCH: Because at the time we 153 12/11/01 FINANCE COMMITTEE - BILL 010694 prepared the budget, we anticipated having NTI funds for acquisition, and then as we moved forward with the budget process, it became clear that we would not have the NTI bond proceeds during this fiscal year. But at that point, we had already prepared the budget, allocating those funds for development of projects in the pipeline.
Let me just make sure I understand. You're saying that when you did the preliminary plan, which, I think, gets done in January or February. MS. McCOLLOCH: Yes.
And when the final plan came over -- and I think the hearings for CDBG were in very late June. MS. McCOLLOCH: In June, correct.
You were still somehow anticipating that you were going to have $7 million of NTI funds and we had never had a hearing on NTI? MS. McCOLLOCH: No, the budget -- I'm sorry if I wasn't clear. The preliminary plan budget that was prepared in January --
Right. MS. McCOLLOCH: -- included acquisition 154 12/11/01 FINANCE COMMITTEE - BILL 010694 funding from NTI. By the time this budget -- that budget came to this Council for review and approval in June, those funds were not in there because it was clear to us that there were not going to be NTI proceeds during the fiscal year.
Thank you. MS. McCOLLOCH: So at that point, the budget that was reviewed and approved by this Council did not include any new funding for acquisition.
Well, why didn't you change some of the budget categories to make sure that you had acquisition funds available for projects already in the pipeline, knowing at that moment that did you not know when you might have NTI funds available?
But I think the other challenge here is that we also committed these funds to specific projects that were in the development, we used it for the development side, the capital subsidies for the projects. So, you know, it's like the hard choices in budgets. You know, do you 155 12/11/01 FINANCE COMMITTEE - BILL 010694 un-fund a development project that was ready to go in order to re-fund some of the acquisition piece. And we made the commitment to keep the development projects funded.
So are you saying that the information that I have on the community development block grant Year 26-27, where it shows $7 million from private activity bonds at $7 million, that -- MS. McCOLLOCH: The budget that you're looking at is the preliminary plan budget that was published last January. The budget that came to you in June that Council reviewed and approved and then we forwarded to HUD did not have the column -- at the top of that page, there should be a column that says P-A-B, and that's for private-activity bonds.
Mm-hmm. MS. McCOLLOCH: That column in the budget that was presented to you in June did not exist, we didn't include it at all. So anything that's listed in that preliminary budget that you have from January -- and there were things that included acquisition, there 156 12/11/01 FINANCE COMMITTEE - BILL 010694 was some additional funding for the home ownership rehab program and some other things. None of that funding was included in the budget that you passed last June.
And, Councilwoman Tasco, one of the reasons why I pulled that piece of paper and shared it with members of the Finance Committee and Council was, in our conversations with members of the -- staff of the president's office, one of the things we wanted to show was that we, the Administration, always envision a process, a budget process that would approve the bond proceeds as part of the block grant plans. So we had always envisioned an active role with Council in terms of the oversight, as Joyce said, in the appropriation of these bond funds for housing and community development program. So that was an example where, back in January, we're still trying to look forward and cover our bases, then things changed and took it out of the final budget that was approved. But we are very committed and think it's appropriate that how we spend private-activity bonds and taxable bonds for acquisition and land assembly, 157 12/11/01 FINANCE COMMITTEE - BILL 010694 for housing preservation programs and things that go into communities, that that should be a part of the Community Development Block Grant process. And the other thing os that by linking that onto the block grant process, we also are linking it into a well-established citizen participation process. In fact, I believe today, there's a process for comment or review on the last year's budget. There's a process, an established process for citizen participation to comment and review on preliminary plans and the like. So we're buying into some well-established procedures.
Well, I mean in that are regarded, it seems that that kind of well-established process -- I mean, I know that on at least one occasion, I went to a preliminary plan meeting -- I think you hold them over at 1234 Market Street. Maybe 30, 40 people came, and probably the same 30 or 40 usually come to the City Council hearing process. Do you think that that is particularly representative of the larger community's interest? Or do you plan to have another mechanism to get 158 12/11/01 FINANCE COMMITTEE - BILL 010694 information out so that people know -- I mean, now it sounds like we're talking about not only CDBG dollars but other dollars that could be spent in neighborhoods. Do you have a proposal for how we're going to get more information out and better educate the public about what's available? MS. McCOLLOCH: We don't have a specific plan other than what we've been doing in the past, but we could certainly expand it. We have a mailing list of over 1200 names of individuals and organizations that we notify about the plan hearings and about the availability of the plan, and we could certainly expand -- we could expand that list or expand the hearings.