I would encourage you to do both. Ms. Smith, you talked about you anticipate the first offering that you're going to borrow somewhere between 120 and $150,000.
120 to $150 million. And you anticipate funding two years of demolitions?
Approximately, yes. 159 12/11/01 FINANCE COMMITTEE - BILL 010694
Well, we're using as a budget number an average of $10,000 per property, and that represents what we feel is a realistic number. Some properties will be involved -- hand demolitions. I think we've run some numbers where past experience can indicate that that can be around or 12,000. 10 We've done (indiscernible) or mechanized 11 demolitions, and that's around 6500. We're also budgeting conservatively because there's other enhancements to the specs that we want to make sure that we'll be able spend. So that's how we got that number.
I understand. My question is: If you plan to borrow 120 to $150 million, what's two year's worth of demolition worth?
How many demolitions do you expect to do? And what else are you doing with those dollars?
Okay. Well, as I said, 2500 160 12/11/01 FINANCE COMMITTEE - BILL 010694 at 10,000, and then it's 3,000 is our Year 2... (Ms. Smith consults with colleague off record.) (Witness comes forward.)
And there is 3,000 in the second year, so that's probably million and 8 30 million, which is a total of 55 million, so 9 that's of 55 million. 10
Looking at, I believe, you 12 know, putting in maybe approximately 20 million to 13 support land assembly acquisition activities. We 14 also have to make sure we have enough money on hand 15 to fund commercial/industrial, particularly in the 16 event after fire. So I would, you know, want to 17 make sure we have a couple million of those dollars. 18 And then the encapsulation dollars, we do 19 it at a budget of 7500. 20 Jim may be able to do the numbers faster 21 than I, or I'll have somebody else do the math. I 22 apologize. 23
Okay, who's Jim? 24 (Witness comes forward and 25 starts to introduce himself.) 161 12/11/01 FINANCE COMMITTEE - BILL 010694
Hold on for a second. Councilman Goode has a point of order.
I am sure that -- I have down certainly Councilman DiCicco next. But, Councilman Goode, we're going to recognize you now. Then Councilman -- yes, for a point of order, we're going to recognize Councilman Goode. But I wanted my other colleagues to know the order. We have Councilman DiCicco next, and then after this point of order, Councilman Ortiz, Councilman Clarke, and Councilman Goode. But, Councilman Goode, your point of order? Thank you.
Yeah, a quick point of clarification. You just referred to commercial/industrial properties, and the original documents referred to $20 million going into commercial/industrial properties. Then in the latest documents we've received, only industrial properties are referred to. Is this program now limited to industrial properties for the 20 million? And why are the properties listed now only industrial properties? 162 12/11/01 FINANCE COMMITTEE - BILL 010694 Was that a decision by the Commerce Department and PIDC? 'cause those people usually do industrial development. Or does this money actually go toward neighborhood commercial development as well?
I just use it as a collapse for both commercial and industrial to show non-residential. I apologize.
But the more recent documents just say "industrial" and they've dropped the term "commercial."
I know I just -- it wasn't an intentional drop. Commercial and industrial buildings are included. We've always envisioned the million to be for larger buildings, you know, not 16 your four-story type things. 17
Well, which commercial 18 properties are included? The list I saw had all 19 industrial properties. 20
The list that was put together by the Commerce Department was looking at where giving priority -- again, this is an idea to give priority.
Those are 15 industrial properties; is that correct? 163 12/11/01 FINANCE COMMITTEE - BILL 010694
As of now, they are only industrial properties included in terms of economic development.
Yes, yes. The list that was preliminarily developed, I believe, includes a number of large industrial properties.
My question's real simple. If you're going to continue to refer to commercial and industrial, are there going to be bond proceeds available for commercial development? Or are they only going to be available for industrial development?
Oh, I -- the million was -- 16 is demolition dollars and not development dollars 17 for either commercial or industrial. 18
(Not completely 19 audible.) 20 ... The properties that are being demolished under the recent plan are all industrial properties, but you continue to refer to commercial and industrial when referring to how bond money is going to be spent, but there is no focus on commercial; the only focus is on industrial. 164 12/11/01 FINANCE COMMITTEE - BILL 010694
We can change that. I really think it's just a question of semantics.
I'm not asking you to change what you're saying; I'm asking you what you're going to do.
It's not a question of semantics; it's a question of whether bond proceeds are going to be available for commercial properties or just available for industrial properties.
Did Jim decide not to stay with us, or he doesn't like us anymore?
No, no, I'm just -- I'm just -- he was giving me a number for encaps -- can I get back to you and just have a few minutes to do the numbers? Again, the idea was 2500 demolitions in the first year, 3500 in the second year. About 20 million for acquisition, 7.5 million for encapsulations, about 20 million to go into neighborhood preservation-type activities. And I 165 12/11/01 FINANCE COMMITTEE - BILL 010694 don't quite remember the MIS breakout. And my number was an estimate over the two years, a two-year borrowing. So I'll get back with the numbers. So about 120 million is probably closer to reality.
Okay. And do you know how you will spend those dollars in the first or second year?
That was my breakout. The idea to fund demolition, two years' worth of demolition activity.
Right, that's a global explanation. Can you tell me where those dollars are going to be spent throughout the City in the first year or two?
For the demolition and encapsulation activities, as we said, we're putting in place the process and the mechanisms to work with Council in developing the master schedule. We will do runs, working with Councilpeople, thinking about how do you -- which should be given priority among the dangerous buildings. 166 12/11/01 FINANCE COMMITTEE - BILL 010694 So we don't have a final master demolition schedule by address. What we want to do is make sure we get input from the various stakeholders, including Council, about what are the appropriate properties to demolish within their district on a priority basis. Again, all of them will be dangerous, but we have to prioritize among the dangerous.
I understand that. How will you determine your priorities? I mean, how will you ultimately decide how to spend the 120 to $150 million on a citywide basis, getting input from 10 of us, 17 of us, whoever it is you're going to talk to? What's the first- and second-year budget going to look like in terms of the actual spending and what the priorities are and where the dollars will be spent during the course of those first two years?
Basically, I was going to -- we had talked about a GIS decision support model that had various criteria in it. And in one of the handouts attached to the testimony of the Capital Program Office, and Lance Rothstein -- I can bring Lance up to answer specifics. 167 12/11/01 FINANCE COMMITTEE - BILL 010694 We set out criteria looking at the condition of the property, the density of vacancies on the block, the location and proximity to schools. There were general criteria. Each one of those 6 criterias can be assigned different weights. And 7 what the computer enables you to do is, you could 8 sit at a computer and weigh one thing over the 9 other, and it spits out a list. 10 And so that's the tool we want to use with Council to help set the first year and the second year's schedule within those broad production goals. And then once we've done that, then the technical people will put together, you know, the master schedule. An example would be -- to do the demolition, we may have to plan eight weeks out, you know, with community notices and community meetings and a series of other activities before we even begin demolition. But the input for the 10 criteria, they are in your testimony -- I don't have one in front of me -- is called the GIS support model, the decision support model, and it sets out 10 broad criterias within it. 168 12/11/01 FINANCE COMMITTEE - BILL 010694
Yes, right. I saw the picture of the computer screen on that. when you get all of that information in and you've received it from all of us and we tell 6 you whatever our -- or, again, all 17 of us and we 7 tell you what our various priorities are, like most 8 budgets, invariably, there will be more requests, 9 the demand will be greater than the supply of 10 dollars to take care of that.
How will you decide what actually gets done, where it gets done? And what is your anticipation of how the money will be spent throughout the City?
You know, the honest answer is, we have to have a lot of conversations. We don't have, you know, a -- I can't sit up here and tell you we're going to do, you know, three packages over here, four over there. I think there are a lot of different considerations. Some of them link into capacity. You know, one of the things that the project manager is helping us with is looking at the demolition 169 12/11/01 FINANCE COMMITTEE - BILL 010694 capacity in the construction industry in Philadelphia, we're looking at landfill capacity, we're looking at where we have projects that are funded in the pipeline. So there are a lot of considerations that go in, and I think what we have to do is develop the ability to have a dialogue about these issues so that, you know, so that folk know where we're going. Our plan is to have everything on this Web site so you'll be able to know, you know, what the thinking is, how it's evolving, what the packages are looking like, what the time schedule is projected at. We've put a lot of emphasis on trying to use the technology because it helps in disseminating information and spreading out the decision, you know, making.
I understand. I have two last questions based on what you just said. Is it an accurate statement that at the moment, in the course of this hearing, you do not know how you would spend the first $120 million and where it would go and what it would be used for?
It's accurate to say we don't have exact addresses at this point, that's 170 12/11/01 FINANCE COMMITTEE - BILL 010694 correct.
Addresses for either demolition or housing preservation or -- I mean, Pat has listed four or five components --
-- of how the dollars would be spent. So there is no budget at this point and there's no plan of how those dollars would be spent; is that accurate?
No, that's not entirely accurate. That we have a plan for spending the demolition dollars. We will -- we expect the final work product from our project manager in --
Well, let me just make sure I understand the terminology. When you say that you have a plan for the demolition dollars, what is the plan?
The plan is to demolish dangerous properties. The exact location of the properties will be, you know, developed as a result of dialogue with Councilmembers, dialogue with community organizations. 171 12/11/01 FINANCE COMMITTEE - BILL 010694 At the end of that process of dialogue, there will be developed a list of addresses. Those addresses will become the exact locations, the exact sites of the demolition that will be funded out of the bond proceeds. The encapsulation will go through that same kind of dialogue process. We will, you know, at that point have specific addresses.
I was going to say with respect to the land assembly, what we're doing is looking through that pipeline of existing acquisition requests, particularly those that, if not funded, they have the potential of jeopardizing the project. We have acquisition requests, for example, MLK, west of Broad, or, I think, Jefferson Square Phase II. So we want to -- we're pulling together the entire list of existing acquisition requests that are tied closely to development projects. That's like the next priority on that. With respect to housing preservation programs, we do have some programs that are already 172 12/11/01 FINANCE COMMITTEE - BILL 010694 in place that we can augment, and kind of indicated that in the preliminary budget. For example, the Home Ownership Repair Program that CDCs use to do moderate rehab.
I think that, you know, if the legislation as -- that's in front of Council, though, would forestall those decisions until we go through the whole budgeting process.
I'm just saying that under the legislation, my understanding of the legislation as proposed, there is money that will be available in the near term for dangerous demolitions. You were asking, how are you going to spend money on the other activities?
And what I'm saying is, that is subject to a budgeting process. That is my understanding of the structure laid out in the --
You're saying as -- because of the legislation? 173 12/11/01 FINANCE COMMITTEE - BILL 010694
Well, what's the difference between that budgeting process and the budgeting process and vision of this legislation?
You asked me, where are we going to spend the money? We won't have the authority to spend the money anyplace until it's submitted to City Council and reviewed.
I understand that, but, I mean, whether you have the authority or not, you can certainly put together a budget that says, This is what we would do and this is where we propose to do it, and these are the locations where we would have demolition versus encapsulation versus home mortgage versus a wide variety of things.
All I'm asking you is, show me a piece of paper that has $120 million of spending on it, what the individual categories are -- pat has started to do that. And then on a 174 12/11/01 FINANCE COMMITTEE - BILL 010694 separate piece of paper, show me where the money's going.
The last question is, on the budget I have that says FY 2002 to FY 2006, on the government purpose bonds, I have been able to figure out that's $195 million of that particular type of bond. What I can't -- at least on this document -- there are many documents. There's $100 million that is split up between 50 million for land assembly and 50 million now, with the increase from 250 to 295 going into housing an neighborhood preservation programs, but both of those lines are listed as private activity and taxable. What's the breakout for the $100 million between the private-activity bonds and the taxable bonds?
That will be determined in part by the interest rates by which we buy because private activity -- and determined in part by how much State allocation that we can get against the Commonwealth of Pennsylvania volume cap. And that would be the type of number-running that the underwriters would do in helping to structure the 175 12/11/01 FINANCE COMMITTEE - BILL 010694 specifics of the financing.
But doesn't that have an impact on what you do? Because, I mean, I thought I read in another document that you'll do something things by way of the private-activity bonds because of the either restrictions or lack of restrictions in that area versus another amount for taxable. So, I mean, when you put this together -- again, not for the moment holding you to anything -- what was the breakout between private activity and taxable?
I would have to get back to you because we did do some preliminary runs at one time, I would just have to get the numbers back. I just want to emphasize our intent. The reason why I say private-activity bonds and taxable bonds to fund things like land assembly, to fund things like our housing preservation programs, is that by blending the money to a degree, we'll have the maximum amount of flexibility. The downside of using taxable bonds is that it's the most expensive type of debt, but we don't want to be hamstrung in launching a program or 176 12/11/01 FINANCE COMMITTEE - BILL 010694 doing something because maybe we don't get enough allocation out of the Commonwealth of Pennsylvania to issue the level of private-activity bonds. And so those would be the type of things that I sit down with people like at Payne Weber and with bond counsel to get the right mixture. I do have some early runs. I apologize for not having that because they're based on interest-rate yields and all other types of variables, but we will get that for you.
Thank you very much. And certainly the Chair requests that when the information is submitted that you do it through the Chair. Thank you. Also, let me announce for all of those who are here on panels, we have some 11 panels, but it appears to me that we're not going to be able to get to them today. This hearing is going to be recessed at 3 until tomorrow morning at 8:30, and it appears to me that we are going to be able -- Councilman DiCicco was next, then Councilman Ortiz, Councilman Clarke, and Councilman Goode. My guess is that in 177 12/11/01 FINANCE COMMITTEE - BILL 010694 the next hour, we're going to deal with the rest of the questions from the members of the committee and the Council, and then we will begin the testimony for the panels tomorrow at 8:30. Now, I do apologize, but obviously, every Councilperson has the right to ask whatever question he or she has on this very, very important issue that really certainly changes the direction of housing in our city forever. So it's very, very important that we try to give each person the respect that he or she deserves, and so we do apologize for holding all of you up. But nonetheless, we wanted to be fair just to give you an idea of our time frame. So we're going to go until 3, and we'll get all of the testimony in from members of the Committee and members of City Council. And then tomorrow morning at 8:30, we will try to begin with the panels and go right through. Again, thank you for your patience. Councilman DiCicco, then Councilman Cohen, Ortiz, Clarke, and Goode, okay? And the Chair also notes that Councilwoman Blondell Reynolds Brown is here. Thank you. 178 12/11/01 FINANCE COMMITTEE - BILL 010694 Councilman DiCicco?
Thank you, Madam Chair. Good afternoon, panel. My question goes to the panel, and I think Mr. Wetzel may want to get involved in this as well. It's two questions. The first part of the question has to deal with demolition. The system or the process today as it exists when there's a request for a building to be demolished -- and I will cite an example in my district as one, and I'm sure there are many -- I know there are several in my district. Three or four years ago, a request was made by my office to the Department of Licenses and Inspections to have a number of buildings demolished, two or three buildings at the intersection of 12th and Elsworth, back through 12th and Peter Street, in South Philadelphia. Two of the buildings were demolished. The third building, which was 1202 Peter Street, the owner of that property, upon notification, made a plea to L&I to suggest that he was going to do something with the building and needed a little bit more time, and that's understandable. 179 12/11/01 FINANCE COMMITTEE - BILL 010694 Since that three- or four-year period, there probably have been a minimum of two or three personal visits to that cite with myself, Deputy Commissioner Bob Solvibile, and Deputy Commissioner Dominic Verdi. Each time that the owner of that property at 1202 Peter Street was given notification that the property was about to be demolished, he almost within a week of that notification began to do something. Generally, it's laying one or two (indiscernible) of cinder block in the back of the building. So over a four-year period, we may have six layers or seven layers -- and it's no 14 exaggeration -- six or seven layers of cinder block, but the rest of the building remains the same. The building was encapsulated either by the Department of L&I or by the owner -- I'm not sure who did that. But it's encapsulated, and it's really preventing what we're trying to accomplish on the back -- on the north side of the properties that are on Elsworth Street to provide maybe a backyard, a side yard, or what have you. What, if anything, will be different in your plan to address those kinds of problems, where people are literally playing the system out for 180 12/11/01 FINANCE COMMITTEE - BILL 010694 years to come? And I'll just lead into my second question, which may give you a sense of where I'm going. Earlier this morning, Mr. Wetzler, you talked about Act 94 when you were addressing the Council President's questions on that, and you spoke about -- and correct me if I'm wrong -- about how we will be able to take properties once the municipal liens reach the 150 percent or something of the value of the market value of that property; is that correct so far? Well, my guess is that the owner of 1202 Peter probably has one initial violation, but there's not been any action. My guess is, he probably hasn't been paying real-estate taxes, which probably don't get to the 150 percent of the market value. My question, which is the second part of the question into the first is, what are we doing about that? In this Council, I sponsored a bill 22 about a year ago and this Council unanimously passed a bill that said, once you're given a certain amount of time to make the proper repairs to that property, if do you not do it within a specified amount of 181 12/11/01 FINANCE COMMITTEE - BILL 010694 time, you will be penalized on a daily basis, a fine will be imposed on a daily basis. And the intent of that legislation was to get the municipal liens up quickly enough so that we can do something about it even before we thought about NTI. Now, I don't know if there's any enforcement. Are we doing any of that enforcement? And what number of properties today exist in the City of Philadelphia that reach that threshold of 150 percent of the market value that will enable us to do some of the things we all would like to see done in this plan or in the proposed plan from the Council or what have you?
Councilman, those are excellent questions. Let me sort of start from the last and work my way back. The first and most powerful tool that we can use to deal with the issues you're talking about -- and ultimately land assembly is urban renewal condemnation. And that obviously requires a redevelopment area and an urban area. That issue of the 150 percent is irrelevant in an urban renewal area. We have the absolute power to condemn 182 12/11/01 FINANCE COMMITTEE - BILL 010694 properties in an urban renewal area. They can be up to date in taxes, they can be vacant, they can be occupied. If the objective is to assemble land, whether that's for adding backyards to individuals or creating a site for a development, that is our most powerful tool. And, as we did in the Jefferson Square area, we created a new urban renewal area just to use those tools because we would have been frustrated with Act 94. The reason we wanted to change Act 94 is, it can be used outside of urban renewal areas. And there's a lot of areas in the City -- let's take the lower northeast -- that you don't want to create -- you don't want to do a blight certification up there because there's not that many vacants, but we want to be able to go on those blocks where that first or second vacant appears on those blocks and aggressively go after them. In many of those cases, we found that those properties are significantly behind in the their real-estate taxes. So the changes in Act 94 are to be used in non-urban renewal area acquisition. But the answer to your question is, the most powerful tool we have is the urban renewal 183 12/11/01 FINANCE COMMITTEE - BILL 010694 condemnation, and we should use that in -- it is our most effective tool to plan and assemble land. Now, to the issue of enforcement ad building up the municipal liens, I think L&I has to respond to that, but we already have thousands of properties in the City of Philadelphia where there's already a demo lien on the land. It would mean that we could take that property quickly, 'cause it's already, you know, from previous years' demolition, those liens are sitting on those properties. We don't have to do anything other than to exercise the law to take them. So it's a way to speed up acquiring land that is not in urban renewal areas. I'm not sure if I'm exactly answering your question.
Those properties that you just spoke to, do they need to meet that 150 percent criteria if they're not in an urban renewal area?
Guess what, some of them are properties that are clean and are just sitting there. Neighbors have cleaned them up, and guess what, if they're clean, under Act 94 currently, we can't condemn them 'cause they're not a public 184 12/11/01 FINANCE COMMITTEE - BILL 010694 nuisance. The fact that the next-door neighbor keeps that lot up prevents us from condemning under Act 94 'cause it is no longer a public nuisance if it's kept clean.
But what about in the case where they're not kept clean, like in this instance at 1202 Peters Street?
I mean, you know, it's encapsulated, and I have a problem with encapsulation personally because sometimes I think a building with boarded windows is just as bad as a building without any windows sitting there. It says something negative about what's going on there. So what do we do? Would not enforcement of that bill that we did a year or so ago help us get to some of these properties more quickly?
Absolutely. If you can ratchet up the municipal liens on the property, you know, and if you have the capacity to daily fine, yes, there is the possibility of using that as a tool, that over a period of time, you do reach that 150 percent threshold.
Maybe this isn't for 185 12/11/01 FINANCE COMMITTEE - BILL 010694 you, maybe it's for L&I, but why are we not doing that?
I'll try to get you an answer. I'll go back and survey the ranks, or else I'll get you a written response.
My signature building is that building at 23rd and Arch.
I spoke about that -- don't get nervous about wall wraps. I mean, that building deserves to be wrapped in something, but we're never going to do wall wraps, obviously because, we never did 629, but that's a matter for another hearing. (Laughter.)
But my point is that that's a building that has to have a minimum of 3,000 windows, and if it were $300 a day per window, something would have happened with that building. The owner would have probably sell it at a reasonable price rather than gouge it.
Or we would have been able to take the building. 186 12/11/01 FINANCE COMMITTEE - BILL 010694
And it's a gateway into the City of Philadelphia and we let it sit there. And it goes to some of the questions earlier and responses about enforcement. We're not even enforcing what we already have, so what are we going to do differently in the future that will assure us that we will be getting proper enforcement?
Councilman, I just want to -- the question -- what I would like to add is, why hasn't it been done to date? What's kept any agency from the City from writing those violations notices, $300 a window times 3,000 windows and move into -- what is it about NTI that's going to make anything different from what we haven't enforced in the past? I mean that's, I guess -- I mean, the same thing with the lot. If the lot's clean, we can't condemn it under -- for what reason?
Because if it's not in an urban renewal area, it has to be a public nuisance. 187 12/11/01 FINANCE COMMITTEE - BILL 010694
And L&I says, You know what, that's a public nuisance.
If the owner's not around -- see, I think what happens is that we take the absolute letter of the law to the point of ridiculousness. I mean, if L&I's intention is to turn that lot over for useful purpose or that property or whatever, and the owner says, Well, you know, geez, we have to follow this exactly to the letter of the law to the point of ridiculous? I mean, that's one of the reasons -- and what's going to -- I guess his question is, what's going to change if we're not doing over types of aggressive measures to do things differently than we're doing? What's going to make it any different if we're following the same law?
We all want it to change, we all want it to change. 188 12/11/01 FINANCE COMMITTEE - BILL 010694
We want the -- we have provided the House of Representatives with legislation that would expedite this particular process. Let me back up to your point.
I understand. (Unintelligible, parties talking over each other.)
Prospective, retrospective, what's stopped us from doing it? Did the -- the owner of that 23rd and Arch property would sue us for writing him up every day? I mean, The owner of that vacant lot, even though the neighbors cleaned it, would come and take us to Federal Court to keep from us condemning the property?
Let me sort of try to respond to that. At least in the past 20 years, the policy of the City was not to acquire any property unless there's an end-user that was identified. That has 189 12/11/01 FINANCE COMMITTEE - BILL 010694 been the driving force of all decisions regarding assembling land. So we only went after land when there was an end-user. And in many cases, using Act 94 -- I'll just give you an example. We have tried to assemble properties in West Philadelphia for a developer for a tax credit project, for example. Under Act 94, when we first surveyed the area, we came up with 40-some vacant structures. Between the time that we did the original survey and did the declaration of taking, five of those structures became occupied by individuals, whether unauthorized or authorized. We had to then remove those five from the list as an example. Then somebody paid the taxes --
Well, we can't necessarily do it, but have we tried to do it and have the courts told us that we can't?
No, but let me -- (Inaudible, parties talking 190 12/11/01 FINANCE COMMITTEE - BILL 010694 over each other.)
But then some of those individuals paid their property taxes and they were no longer tax-delinquent anymore, so we removed those from the list.
So you start out with 40-some and then you end up with, like, properties as a 10 result of the quirks in the system. We want to 11 overcome those, but as I said earlier, though, the 12 most power tool that we can use is the urban area 13 because it's a no-ifs-ands-or-buts tool, there are 14 no excuses when we proceed with condemnation in an 15 urban renewal area. That is the tool. 16 And I'll answer it this way: The City of 17 Pittsburgh, in our discussions with them, made a 18 very clear and conscious decision of where they 19 wanted to aggressively assemble land. If they 20 didn't have an urban renewal area, they created one, 21 because it is the State's most powerful tool that it 22 gives to localities. 23
Wouldn't it make sense, or is it too ridiculous to suggest that we identify the whole city as an urban renewal? because 191 12/11/01 FINANCE COMMITTEE - BILL 010694 that's kind of where we're going anyway in the end, and then we decide where we're going to do it 'cause once it's done, it's done.
I think what we should do is take the map of the existing redevelopment areas, and you'll find it covers a significant part of the City of Philadelphia now, but I don't think you want to go designate areas as blighted that aren't blighted.
We did that in the original plan. There were areas in the original NTI plans that were identifying neighborhoods as blighted or in distress that weren't -- one of my -- I think my neighborhood was distressed, if I remember.
That's because of your street-sweeping. So what's the designation? I mean, the 1600 block of South 11th has been designated as distressed, and it's no different than it was when I moved in 10 years ago, but it's distressed now. I mean, what would be the difference in characterizing 192 12/11/01 FINANCE COMMITTEE - BILL 010694 it as an urban renewal area? I mean, why can't we just be a little less letter-to-the-law and more creative in our approach as opposed to saying, Well, you know what, we can't get there from here, let's not try it.
I don't think we're really saying that. I think what we're --
Well, listen, our proposal is 12 to turn that on its head. I mean, we do not want to 13 continue to assemble land only when somebody knocks 14 on the door because no matter what improvements we 15 make to the system, we're not going to be able to 16 deliver the land in 90 days like Cleveland does 17 unless we own it the day they knock on the door. We 18 have to go out and get this land and put it into 19 single ownership. 20 And let me just say another reason for the land bank is --
Why have we been 193 12/11/01 FINANCE COMMITTEE - BILL 010694 waiting for two years to start this process? Why didn't we start acquiring this land two years ago or four years ago?
The fact is, we need the financial resources of the bond issues to go aggressively --
Let me tell you, I just went through -- as we said, I heard you on the box when I was in there getting something quick to eat. We've been acquiring some properties lately. I mean, we're told on one hand that we don't have any money to acquire things, we're told on one had that Universal Homes can't get started 'cause we don't have acquisition money and that Jefferson Square can't get started 'cause we don't have money available and then we passed four or five pieces of legislation last week acquiring property. Now, I understand, you know, it was pre-funded -- we don't even know what's over there to be funded, and that's why I made that request to you that day of the hearing.
But I mean I think that we've been wasting time waiting for this "magic 194 12/11/01 FINANCE COMMITTEE - BILL 010694 NTI" to happen; I think we could have been doing this for the past two years.
I think one of the other things that we're trying to do is to put systems in place so that when the land is in the public inventory, there are the systems to provide some level of maintenance. It is not our goal, you know, to be the owners of trash-strewn lots and whatever. And so NTI, you know, to the extent that it involves fixing how government does business doesn't move along as quickly as, you know, as folk might like, but I think, you know, that is why.
One final comment. Sorry to take time from Councilman DiCicco, but -- (Interruption in audibility due to sound system malfunction.)
We have actually. There are a number of things that began over a year ago. We have removed 93,000 cars. In the process of doing that, we've changed some of the laws and the constraints that made that a problem. We've cleaned over 10,000 vacant lots. We've already begun, you 195 12/11/01 FINANCE COMMITTEE - BILL 010694 know, the land acquisition disposition system development. So, you know, to the extent that we can, we've started making these improvements without waiting for this bond funding. NTI involves a lot more than just this bond funding. And so to the extent that we're able, we actually have begun making changes.
There are worthwhile projects waiting for this bond funding.
There is no end to worthwhile projects, you know, and I think --
How old is yours, Councilwoman? Four? NTI wasn't even on the horizon then, was it?
I don't have any further questions. Again, it wasn't in a hostile way; I'm 196 12/11/01 FINANCE COMMITTEE - BILL 010694 just trying to figure out how we get there and if there's something dramatic that's going to be in this plan that's going to make us be able to do that, aside from my question again about why we are not enforcing it now. Because, you know, I worked it out with John Kromer, I spoke to him about it when he was the head of OHCD, and he said this is something we really need to get those municipal liens up so we can get these properties up quickly, and we're not doing it yet. Thank you.
Along the vein of condemnation I think that sometimes the City could almost be accused of causing blight, and I say that because two years ago, we were having hearings, and I tried to ascertain how many properties one individual owned in a certain area. He owned 20 properties, owed approximately $43,000 in property 21 taxes, and owed $82,000 in his water bills. How do we allow that to happen? Recently, I guess, in the past several months, there was a building that collapsed in my district and we found out that the owner owned about 197 12/11/01 FINANCE COMMITTEE - BILL 010694 five, I think -- I think it was five other properties in the community and was tax-delinquent on every one of them. Somebody owes $82,000 in water bills and yet you give a senior citizen a call who owes $200 and she's being threatened with a shutoff. How do we allow something like this to happen? And how are we going to prevent it from happening in the future? Can anybody answer that? Because at budget hearings, I have asked the Revenue Commissioner, why isn't something being done about this? and I said, Why don't we put it up for sheriff's sale? And her response was that it would cost more money in paperwork than the property was worth. Well, then I think we're being very short-sighted.
But how are we going -- because don't you -- wouldn't you agree that in a sense, we're causing some of this blight by allowing this to happen?
That's right. I think, you know, in some respects it's no different from 198 12/11/01 FINANCE COMMITTEE - BILL 010694 the code enforcement issue -- why don't you catch the problem early on and impose penalties as opposed to waiting and letting it become, you know, something that's clearly a sign of abandonment. I will get back to you. I don't know what the procedures are or what triggers, you know, us moving towards a sheriff's sale.
Are we stIll going to be having sheriff's sales, and how are we going to be expediting that process? Because it takes forever, as far as I know, to have a sheriff's sale.
Yes. One of the re-engineered processes that we're looking at -- or the process we want to re-engineer is the sheriff's sale process. And one of the things that we're doing as part of that is getting an understanding of if we ramp up sheriffs sales significantly, what kind of impact is that going to have on the number of employees? For example, the Sheriff's Department's going to need additional employees to handle that. Also, the Law Department -- the sheriff's sales originate in the Law Department, so the 199 12/11/01 FINANCE COMMITTEE - BILL 010694 question there is, if we move from our current level to doubling or tripling the sheriff's sales that what we want to undertake, what we're looking at is, what's the impact on staffing? Even with technology, we're going to need additional people. So we're looking at how we can re-engineer and speed up the sheriff's sale process.
So none of the plans that you're referring to have really been completed. You're still working on acquisition and how we acquire, about sheriff's sale, about any way of expediting acquisition. We're really not there yet, are we?
No. This is a work in process. You've got two dynamics going on right now. One is, we need to acquire land to fulfill the development opportunities that are already in the pipeline. We don't want to shut that down while we re-engineer the system itself. So part of this is the need for resources to continue the condemnation and land assembly process while we re-engineer it. We need to do both.
While we 200 12/11/01 FINANCE COMMITTEE - BILL 010694 re-engineer what?
While we re-engineer the land assembly process, we can't afford to shut it down. We have projects that --
I don't think we're asking you to do that. I'm talking about the sheriff's sale process. How are we trying to expedite that. It truly annoys me that somebody could owe the type of money that I'm referring to and we sit back and say, Oh well. Are we trying to expedite sheriff's sales? Are we going after people who are not paying their property taxes and water bills and we let them really slide by, while other people, particularly seniors, are being asked to pay or they're shut off.
We will get back on the specifics of that one. But just generally speaking, I think one of the things we don't do a good job at is prioritizing. A lot of things come in -- the first thing in, the first thing out. And we're not looking at, you know, if it's the biggest problem or the smallest problem. One of the things people talk 201 12/11/01 FINANCE COMMITTEE - BILL 010694 about --
Do we have any indication as to how much is owed in delinquent property taxes, how much is owned -- owed in delinquent water bills, gas bills? What are we doing to prevent that from happening?
I will get you a report on that. I don't have the information right now.
Well, getting the report is fine, but I think what we have to do is address the issue. I don't think anybody should be allowed to literally make money in some instances on the backs of other people. I think that's terrible, Joyce, I really do. That bothers me to no end.
'Cause I have a OHCDer at this table, and it goes to all of the questions that have been asked about code 202 12/11/01 FINANCE COMMITTEE - BILL 010694 enforcement and what will be different under NTI from now. Because one of the serious problems we have in my office is the issue of code enforcement. And one of the most blighted, I guess, visible areas of blight is along the Boulevard, where we have just about completed the demolition of all of the homes in the Logan sinking-home area, but there are homes there where individuals have been told that the houses are imminently dangerous, that they should move, and L&I will not get them out of the properties, so they sit there and we still have a couple of rows of houses that should be demolished if the residents were not in the imminently dangerous houses. We have eligible people where we have submitted a plan to settle with them, to move them out, and it was done -- the plan was based on the dollars that were appropriated by Senator Santorum of 300,000 -- that's why I wanted to ask about this $300,000 when I heard that a million came in. I was not aware that the money had come in; I was told that we had not applied for the money. And the money was to be used to get those people out who 203 12/11/01 FINANCE COMMITTEE - BILL 010694 were ineligible, but they still sit there on that land, it's been at least three years. And, therefore, we still have this blight along the Boulevard so that when people drive through Philadelphia, they see rundown houses, want to know why these poor people live there, and it's because we are dragging our feet on taking an initiative or dealing with the plan that has been submitted. And I want to know what's going to be different under NTI for the area of Logan. And secondly -- and when Herb Wetzel talked about urban renewal being the most powerful tool to assemble the land, we've had that conversation about the possibility of doing that so that not only could we look at the vacant land, but also look at the targeted area where we might be able to acquire properties through the condemnation process. If we had developers who wanted to come in and rehab those houses, it would be a way that we could use the condemnation process to help with the acquisition. But when I asked what the status of my request is, I get gobbledy gook, and I really don't know what the status is. So I want some comfort level for me 204 12/11/01 FINANCE COMMITTEE - BILL 010694 that -- it hasn't happened yet. Now, what's going to happen under NTI? because I don't see any movement over there, despite all of the efforts that we have made to deal with that community. So I want to know what's going to be different for the Logan area from the Boulevard to Rushcomb and from Seventh Street to Old York Road that we haven't dealt with prior to this? 'cause I've had documentation and letters trying to move a process and it had nothing to do with NTI, and I don't know what happened. So I want to know what's going to happen now under NTI. Is that place going to look any better? Is that part of the overlay that's going to look any better? 'cause we don't have to have those properties on that boulevard, 'cause there's a process in place to tear those houses down, one, if L&I would enforce the code and move those families out; two, if OHCD would use the money to get those people out who are ineligible and get them moved. And I want to know about the $300,000 from Santorum? Have we gotten it? have you applied for it? if you haven't applied for it, why haven't you applied for it and when are we going to apply for 205 12/11/01 FINANCE COMMITTEE - BILL 010694 it?
The money is available. The application has not gone in yet; it's in my office. We will -- I won't give you a time sitting right here. I'll talk with my staffing so I can get you an accurate deadline on getting back -- on getting the application in. I think with respect to Logan as a whole, what I would envision happening with NTI is a final decision about how we ought to develop that site. One of the challenges with that parcel are all of the subsurface conditions. I think what NTI presents is an opportunity to make a decision about whether or not it's going to be some kind of interim strategy, whether or not -- I know there have been plans for commercial development on the parcel, but I think it provides a framework for making a decision about how to move forward. There are also additional resources that are needed. One thing that happened at Logan, as you know, is that we did not do the kind of condemnation that we should have done. So we have 206 12/11/01 FINANCE COMMITTEE - BILL 010694 all of these blank checks out there where we've committed to people that we would pay them fair market value for their properties, and so there's this big unfunded obligation that's outstanding. I think we will have the resources to make a decision about how we ought to tie that up. I think there's also a series of questions about, you know, what happens to the community that brings the vacant parcel. I think that NTI offers the possibility for actually pursuing real strategies there. It is an enormous area. It's going to be costly, but I think for the first time, we'll have an opportunity to go in and make strategic investments moving forward.
Well, when we had this conversation, Herb, about the periphery of the -- not the sinking-home area, but between Louden and Rushcomb. We talked about the possibility of the urban renewal process being used that would give us some leverage in acquiring properties that would cut the cost of redevelopment. We do have people who are interested in working in that community but, you know, unless we get some help from the City to help move that process along, we'll lose those 207 12/11/01 FINANCE COMMITTEE - BILL 010694 people. I don't have any comfort level that there's any interest in helping us over in that Logan area.
Just to respond to the meeting that we had, it was your office and the Planning Commission and the Redevelopment Authority. And as we indicated to you, we cannot do the blight designation or the blight certification. I think your staff is working with the Planning Commission -- that is the entity under State law that does the blight certification. Once that is done and an urban renewal area is created, that's when the powers are derived that the Redevelopment Authority can use to condemn land. I think we also talked about the need to condemn even those parcels that were previously purchased because we want to clear all of the title issues as well. I think that was a part of our discussion.
I'd like to hear Ms. Griffith tell me what's happening with the urban renewal discussion. 208 12/11/01 FINANCE COMMITTEE - BILL 010694
First, Councilwoman, let me apologize. I know that someone contacted your office yesterday on my staff to see if you had any questions in general about NTI planning and development, and the response was that you were waiting for a letter from me responding to your inquiry. And I stayed late last night and we did that get that letter to you this morning, and I can give you sort of a (indiscernible) of what it said. We have two issues: One is that we have a backlog, frankly, or urban renewal and urban renewal expansion requests in our office. And we are, as has been said today, looking to prioritize those requests around the NTI paradigm. The other issue also relates to that. RDA staff and ourselves have been working on a process to review and move forward projects, again, within the context of the NTI program. What we are grappling with is this new connection where we do not make, frankly, independent decisions. There's a citywide strategy, there's a citywide investment strategy that's coordinated by NTI leadership. And in a way, our ministerial functions, the administrative functions that we do in our office 209 12/11/01 FINANCE COMMITTEE - BILL 010694 and that we link to RDA to do are a part of that overly strategy. So that's where we are. We did suggest in the letter, however, that in terms of the immediate opportunity that's before you for the commercial development, there may be some more targeted ways that we can help with the acquisition of properties so that we don't lose that opportunity. But for the larger urban piece, we are now committed to this process that's being discussed today, and we are not making decisions independent of that process.
Well, strategically, I don't think that we can take an area of the City and say that we are not going to move forward with revitalization strategies, not at all. But the concept --
So the people who will make the decision will determine, based on all of this other stuff that you have to talk about, whether or not Logan would be a viable place to do redevelopment. 210 12/11/01 FINANCE COMMITTEE - BILL 010694
But that would also include you, Councilperson, as well as the people you see here. They're not strangers. As a matter of fact, they're the same people you would be talking to anyway. We're just making that decision in a coordinated fashion so that when we make it, we know there's acquisition funds, we know that Commerce is on board with needs to happen, we know that Water's on board, we know that the Streets Department is on board. The idea is to coordinate the decision-making process so that when projects move forward, they really do move forward. That's the way I understand the framework.
I usually believe that best blight program is a good school and a job, and 211 12/11/01 FINANCE COMMITTEE - BILL 010694 I'm interested in how we're going to achieve those two things, but I'm also interested in how is it that we break down the housing units that are going to be rehabbed, rebuilt, newly built? We have, according to Pat, she describes a new urban community from the ground up. Is that the right phrase?
And is that going to be a subsidized unit, or is that going to be a unit that is going to be market-driven? And what are the costs that are going to be involved in that?
If you may recall, in April, when we unveiled the strategy for growth and investment, we anticipated over five years facilitating the development of about 6,000 of what we call "unsubsidized market." It's kind of like what's happening --
6,000 unsubsidized market properties by facilitating doing things -- cleaning 212 12/11/01 FINANCE COMMITTEE - BILL 010694 up, building permits, zoning, stuff of that nature. New urban communities represent what we call "critical-scale new construction," and there's a couple thing we're looking at. What we envision is --
Well, one of the tenets we put forth is that in some of our most distressed neighborhoods, we're going to have the greatest amount of vacant land after demolition, that in order to really begin to create the opportunity for development. You're going to need to do development at a large scale, new construction at a large scale. And in today's day and age, it may look differently, it may be a mixture of home ownership and rental, it could be both market-rate and affordable housing mit could be mixed-income communities. What we've begun to do, as Joyce talked about in her comments, we've been talking with the development community, both for-profit and nonprofit, about what this can mean for the City and how can we, government, attract development into areas where people may be reluctant to develop now 213 12/11/01 FINANCE COMMITTEE - BILL 010694 because of the blight. So it is not -- but the principle is new construction and --
Pat, I understand that you're talking about, but how do we make it competitive so that a developer can come in into the City of Philadelphia and build a house, or a CDC corporation -- let's say (indiscernible) for example -- can enter into the market aspect of construction and make it competitive vis-a-vis the suburban areas and so on.
How are we going to bring the cost of construction down?
I mean, that's a major -- it has been a major barrier to development in the City of Philadelphia, along with our antiquated land acquisition system. Joyce can talk about how we're approaching some of the labor cost and union issues.
I think the Mayor has made initial approaches -- you know, I can't confirm that -- to some of the labor unions. We have ideas about that project, labor agreements that would establish a residential rate and some other 214 12/11/01 FINANCE COMMITTEE - BILL 010694 strategies for trying to get a handle on some of our construction costs. I know that the labor community in Philadelphia has already begun conversations with private builders about getting a handle on those costs. Our cost are -- we don't have a residential rate, I believe, in Philadelphia, and it makes our cost of construction substantially higher. They're, I think, you know, testifying later on, you know, maybe some of the people who are from the private community who have to tackle that issue, but I think, you know, the labor community understands that it's not serving their purpose, that it's discourages construction opportunity rather than encouraging it because we don't have a bifurcated wage rate. So, you know, we're looking at trying to put that in place.
And given the nature of the expenditures that are going to be done, how do we leverage so that by the end of this process, I think Marian asked, how is it going to look down the way that we may have within the City of Philadelphia residents that are a part of these building trades, 215 12/11/01 FINANCE COMMITTEE - BILL 010694 the unions, and so on, that -- and we make up a good number, that we're more than single-digit numbers, that we are into the double digits and the high aspects of it, so that this process doesn't go by, buildings take place, construction takes place, and the African-American and Latino community of this city five years down the road find ourselves in the same situation that we're in today. Because one of the problems we have is that we may have new housing in several areas -- and you put us an example APM, for example. We have new housing that APM has done very well, but the fact -- and the nature of it is that within the neighborhood, our unemployment rate has either stag -- remained constant or gone up. So the issue is that we need to be able to combine the economic development together with home ownership and people within those neighborhoods that have jobs. And that takes me to the other aspect, the one that Wilson brought up. PIDC concentrates more or less on industrial parks. I want to know how are we targeting, for example, the area of Fifth Street all the way up to the Boulevard, Front, all the way 216 12/11/01 FINANCE COMMITTEE - BILL 010694 up, these commercial areas, so that they are targeted? and where is the money coming from in terms of economic commercial development that can create a job basis so that the housing that is built is not built just subsidized but that we bring people into the neighborhood and we repopulate the City?