Committee Hearing, March 4, 2003

US Facilities. And they've been in place since January 1st.

Who is US Facilities?

It's a subdivision of a larger group whose name escapes me.

Are they from Philadelphia?

They're located in Philadelphia now. 1628 3/4/03 - FY '04 OPERATING BUDGET

But they weren't at the time of the bid?

They were. We first contracted with them when they won the bid for the new prison several years ago, almost five years ago. They competed in this round for the Triplex and were successful. The Philadelphia office is right up the street. And they had several other contracts in the area.

On -45 of the detail, you're requesting $98,752 for proposed leases. What will the space be used for? What leases are we referring to?

The proposed lease is for a field office. The Frankford Avenue lease is a field office for the CLIP Program. That's in place and ready to be occupied as early as next week. The next lease, the Department of Human Services is outgrowing its space and it's been necessary to contract for two to three floors of space. That lease was executed for the first year very recently and will come to Council for a long-term engagement as soon as we can get that ordinance on the schedule. 1629 3/4/03 - FY '04 OPERATING BUDGET And again, you heard Commissioner Martinez refer to the staffing problem. They've been successful in recruiting and staffing and they just don't fit. Their floors in the One Parkway Building are occupied as many as 180 people on a single floor and there's no room to expand within their space. We've already emptied out two floors and made room for them. And this is another expansion we expect to have fully in place by July 1st.

Thank you. Councilman Goode, this will be my last question. As a matter of fact it will be four questions in one. You state on of your testimony that you are proceeding with the design and construction of a City-owned Center City fiber optic network. Will you explain what this project entails, question 1; it's time line, question 2; what is the projected cost; and where is it in the budget?

I'll ask Deputy Commissioner James to respond.

Deputy 1630 3/4/03 - FY '04 OPERATING BUDGET Commissioner, would you explain the project?

Exactly what the project is --

What does it entail?

What the Commissioner mentioned earlier in his testimony, we have approximately identified between and Center 10 City buildings that are currently on a fiber optic 11 ring today that is being leased from Verizon. The 12 scope of the project is to place that leased ring by 13 installing our own fiber optics in the ground and connecting those buildings together and thereby providing our own network within those 11 to 13 buildings. What it entails is the actual mapping out of the routes in the City streets, identifying the actual conduits in the ground and determining where pieces do not exist have to be constructed and then the installation of the actual fiber in the ground with laterals into the buildings and connections to the infrastructure that's in those buildings today. Once that's all put in place, the physical part of that, we then go to the technology, 1631 3/4/03 - FY '04 OPERATING BUDGET the amount of networking capacity that is required on that ring for it to operate. The final piece of that is to connect that ring with the leased other two rings so that we have complete redundancy within our network and we have the ability to share traffic between the other two rings and the one that the City will own. The actual time line for that project is we're in design phase right now. I have a proposal -- I received a proposal from the company to do the design work and do the actual mapping out of the routes and doing the test runs of the conduits. We think that will take approximately four to six months to complete, depending on how difficult when we actually get into the ground when they find out how the routes are. The actual project should take about 18 months to construct from that point going forward. As far as the cost, we have the money, it's in our Capital Budget; it's not in our Operating. We have approximately 460,000, I believe, in the design cost and we have approximately 2.3 million for the construction of it. 1632 3/4/03 - FY '04 OPERATING BUDGET

I'm sorry, that's 460,000 in design.

And 2.3 million in the construction.

It's in the Capital Budget under Public Property, .

Which buildings are we referring to when we talk about 10 to 13 buildings? 11

The buildings that are being considered are, of course, City Hall, One Parkway, Municipal Service Building -- and I can provide this to you in writing as well. Municipal Service Building, Criminal Justice Center, 1234 Market, which is the data center for MOIS; 1101 Market Street; Fire Headquarters at Third and Spring Garden; 990 Spring Garden; Police Headquarters, 8th and Race; 34 South 11; and 100 South Broad I believe is the 11th. The other buildings that are being considered when I say 11 to 13 is going west to look at 1801 Vine and 1901 Vine and the Youth Study Center as it exists, the Free Library and the Youth Study Center as it exists today.

Thank you. 1633 3/4/03 - FY '04 OPERATING BUDGET Councilman Goode. That was five questions instead of four. I'm sorry. The Chair now recognizes Councilman Goode.

Thank you, Madam President. Good afternoon Commissioner.

Good afternoon.

The question by the Council President about the transit lobbyists, you said you did not know what the transit lobbyists were in your budget for specifically. By that, did you mean what they were specifically lobbying, or why transit lobbyists would be in your budget?

No. I meant -- I don't know why they were labeled "transit" lobbyists. They engage in a number of activities on behalf of the City. Historically, I've had a transit unit in my budget, which is now part of City Planning. But I know why they are there.

The reason I asked the question, you also cited a communication expenditure related to SEPTA, the capital budget, there are several line items that deal with fixed rent. I am extremely interested in understanding what public transportation infrastructure is 1634 3/4/03 - FY '04 OPERATING BUDGET actually owned by the City.

At one time, the City owned the Philadelphia Transit Company, PTC. That was subsumed into SEPTA organization when it was created 30 years ago.

Subsumed? Who retains the infrastructure? What infrastructure do we own and what infrastructure does SEPTA own? My understanding is that it's under master lease agreement.

There's a master lease agreement which will expire within, I believe, two years, perhaps three years.

Actually, I was told a year or two ago that it would expire within two or three years. Can you tell me the term and status of any lease or leases we have with SEPTA regarding infrastructure? If there is master lease agreement, the expiration of that lease agreement. Also, I'm very interested in knowing who negotiates the next agreement or the terms of the next agreement.

We'll have the appropriate group put the information together and submit it to Council in response to your question, to your 1635 3/4/03 - FY '04 OPERATING BUDGET overall question. I have asked the Law Department to assign personnel to begin developing the new agreement. Obviously, that agreement is really going to be dictated by the requirements of the Managing Director's Office, the Mayor's Office and the Planning Group. Public Property is coincidentally the owner of some of the property involved under the operating agreement.

Can you give me a general description of what we own in terms of infrastructure?

A few subway cars. Most of the neighborhood transit locations, we own the land.

By transit location, do you mean bus stops?

Bus stops, subway stops.

What do we own related to elevator systems, Market Street?

We own it all.

So the improvements that are being made on Market Street are actually improvements to our infrastructure?

Yes. They're federally and state funded. 1636 3/4/03 - FY '04 OPERATING BUDGET

Thank you. No 3 further questions. Except I would ask if you could forward to the chair the status of that master lease agreement and the other lease agreements that may exist between SEPTA and the City regarding infrastructure. And specifically, I'd like to know what we own and what we don't own in terms of infrastructure related to public transportation.

We'll try to provide those details. And the only reason why I say that hesitatingly, Councilman, is that SEPTA has floated a number of bonds to acquire its own equipment. So as they sell off Public Property owned rail cars, buses, they're replaced with bond finance, SEPTA-owned rolling stock equipment and other types of infrastructure.

I'm confused by that response. They sell off things that they are leasing from us?

Yes.

How can they sell off things that they're leasing from us?

It requires our approval.

So we're selling it? 1637 3/4/03 - FY '04 OPERATING BUDGET

Yes. We're allowing them to sell it on a case-by-case basis.

Excuse me, Councilman. If we're selling, who gets the money? Does the money come back to the City?

We'll have to get back to you. I know it doesn't recycle back into Public Property's budget, but it's probably addressed in the agreement how the funds are allocated and used.

Commissioner, whatever responses you're going to give us, would you make certain that we get copies, please? 15

Yes. 16

One last question, 17 Commissioner. With regard to negotiation of the new 18 master lease, is it true that SEPTA wants to buy us 19 out? 20

I've only heard rumors. There's no substantive fact behind that from our side. I have not been involved in any meetings relating to that. I've tried to -- from a manager's point of view, I have a collection of real estate that I've got no control over on a day-to-day basis. 1638 3/4/03 - FY '04 OPERATING BUDGET That real estate is tied up in this agreement. And how that real estate gets used, managed, repaired, replaced should absolutely be clearly addressed in the forthcoming new agreement. It's only purpose -- in most cases, its sole purpose is for the convenience of City residents and their transportation requirements. There's no other public facility use for it other than probably occasional neighborhood parking where it's convenient. In addition, there are areas that support the suburban rail system for those locations that are in the City of Philadelphia which is also real estate that I don't use it, I have no effective control over it on a day-to-day basis. And a new agreement should really itemize what that infrastructure is and delineate role responsibilities.

While you don't use it, it has value.

It certainly does.

Do you have any estimation of what that value might be?

No, I don't. That would be a pretty monumental undertaking. 1639 3/4/03 - FY '04 OPERATING BUDGET

I plan to have a discussion with SEPTA when they come before us. Thank you, Madam President.

You're welcome. At this time the Chair recognizes Councilman Clarke.

Thank you, Madam President. Good afternoon, gentlemen and lady.

Good afternoon.

With respect to the transit concourse below 15th, 16th, JFK, does the City of Philadelphia, i.e., Public Property, own the entire concourse?

The answer is no. There's a mixed ownership primarily between us, SEPTA, and some portion of it by PATCO further down on South Broad Street and Suburban Station.

What portion do we have?

There are pathways in Suburban Station that are our responsibility and there are pathways that are the underground frontage 1640 3/4/03 - FY '04 OPERATING BUDGET of privately owned buildings. And that's the mix of ownership. SEPTA has some jurisdiction; we have some responsibility and jurisdiction; owners, individual owners, have some responsibility.

But I'm saying the actual thoroughfare that leads us to the trains and various shops, the City of Philadelphia owns that?

The closest parts -- those parts that are closest to City Hall, for example, the tiled area going to the post office, that's Public Property. And right where the tile line ends, so does our jurisdiction.

So we don't own anything beyond that?

We do. You turn right and when you go back toward the Municipal Services Building, you walk across SEPTA land and you come back to Public Property owned land when you get to the pillars and the entrances to the 15th Street and 16th Street gateways down into the lower part of the concourse. It's a mixed bag which some of it we've leased to SEPTA and they maintain and use. Some of it is left entirely in our responsibility, two large 1641 3/4/03 - FY '04 OPERATING BUDGET sections are, the two that I just referenced.

So you're saying some of the areas are leased to SEPTA?

Yes.

Are there areas that SEPTA owns outright?

Yes.

Where is that?

Most of the public areas of the concourse, Suburban concourse, are SEPTA which they inherited from the railroads that used to own and operate it. The pieces that we own tend to be the parts that come down from the street connecting into the concourse. So we own a number of stairwells and the base of the stairwell. But the main concourse area --

So the areas where there is currently the renovation taking place to where there are going to be some vending opportunities, that's all owned by SEPTA?

It's not all owned by SEPTA, but they are using some of our spaces to support the construction. They need staging areas and storage areas while that renovation is going on. When you 1642 3/4/03 - FY '04 OPERATING BUDGET walk down there and you see enclosures, some of those enclosures are Public Property areas.

To what degree are we involved in the development process?

Well, there's two answers. They've been working on that plan since I was in Managing Director's Office as a deputy. And to that extent, plans have been presented over and over again. As they've evolved -- although funding was not there until very recent. So whoever the incumbent public property commissioner is, the transit unit which is now in City Planning, they've participated in design development meetings where all the issues are thrashed around, design issues are thrashed around. I participated in some directly. The point at which they actually go to construction, however, is something we tend to find out really at a late hour, last minute, as is the case with the area you're talking about.

In order to get these specifics of the development scenario, I would have to deal with the transit unit?

Transit unit and SEPTA's capital group. 1643 3/4/03 - FY '04 OPERATING BUDGET

City Hall. Public Property, City of Philadelphia owns City Hall?

Yes. So far.

I've been here for a while. I still don't understand -- and I guess this is somewhat personal in nature -- of the distribution of space. I know years back when the criminal justice facility was built, it was my understanding that all of the court-related activities were going to move out and City Council and other government related agencies that remained were going to get extensive redo, space, whole nine yards, we were going to get additional space. That didn't happen and now I understand a number of the judges are coming back. I guess my question is, who makes the decision on the distribution of space in City Hall. And I must admit this is somewhat personal because I have a decent size staff and we're kind of sitting on top of each other. From time to time, I've gone to the Council President and tried to get some additional space, but there's always this entity or person who makes the determination of the ultimate distribution of space. I can't find out who that is. 1644 3/4/03 - FY '04 OPERATING BUDGET

The best way to characterize it, and I'm going to take a shot at it only because I've been around so long as Commissioner through several aerations of space changes, is that it's a collaborative among independently elected officials that reside in the building. City Council is one of those entities. Public Property happens to have control of a number of portions in the building. The First Judicial District of Pennsylvania, they have the largest single collection of space which they've had historically. The significant changes that occurred were Council gained 10,000 square feet, believe it or not. There was a day when all of you were in one room with one anteroom. So the 10,000 square feet allowed virtually everybody to have two anterooms, two interconnected offices, although it still is a tight fit. A number of offices were renovated and new offices were created. I think three new offices were created and several conference rooms were created all within that 10 to 12,000 square foot growth. We did that as we approached the migration of criminal court from this building to the Justice Center. We tried to plan our way through that the best we could. The point 1645 3/4/03 - FY '04 OPERATING BUDGET person for Council was always the Council President's office. We did not really engage with individual Councilpersons in office scenarios. That is the only significant expansion that took place.

The reason I ask that question -- the Council President assisted me in securing some space in the building, and I thank her for that. It was necessarily in close proximity to the primary office. From time to time on the wing in the corridor that I sit on, I would always see space becomes available, a judge leaves and the judge may be gone for six months, a year, and that space remains vacant. And every time I inquire about that space, I'm told it's not available. And I was just trying to get a sense of what -- is the space permanently designated to the Judicial District? Is there wherewithal to be flexible. If the judge leaves and he's going to be gone or she's going to be gone --

You won't find a document that codifies that and there's no code that provides that detail. But the practice has been that the space they've had is the space they get to keep as changes occur within the judicial activities. We 1646 3/4/03 - FY '04 OPERATING BUDGET knew that shortly after the migration to the Justice Center, that's 600,000 square feet of judicial space, that several rented areas would in civil court come back into City Hall. So there's a two-year, three-year period where the court engaged in renovation of various spaces, more on an individual basis except for one long corridor that they did, and that allowed them to get out of some expensive leases which was a general benefit to the budget, of course. That was done, again, collaborating with the Administration, Budget Office, and accounted for in the year-to-year allocation of capital monies and funding for the courts. I believe that is substantially complete, that migration is just about done. The 6th floor corridor is the last big move that I'm aware of. I'm not aware of any future planning for the First Judicial District. And any spaces that become available that we know of, they end up -- if they come to our attention, if we know someone's got a request for space, we will try to make the marriage and we'll try to get the agreements made to work it out. Unfortunately, most of the empty space 1647 3/4/03 - FY '04 OPERATING BUDGET in this building is in the areas where you can't have public access because of the cost of extending elevators, escalators, and making it accessible.

So if I see some available space in close proximity to my office, I contact the Council President, she calls you, and then we work out an arrangement; is that what I'm hearing?

It's probably better if there was direct dialog with the First Judicial District.

And we've done that. We have done that any number of times, and it just doesn't work. And we do need additional space.

We kind of have the smallest offices out of all government. I hate to be personal, but it seems like the Council offices are the smallest offices as compared to all the other government agencies, and I don't understand why that is.

I don't have a good answer for that.

What does the City Charter say? Who actually is in charge of this 1648 3/4/03 - FY '04 OPERATING BUDGET building?

I don't know. I don't want to represent a fact --

We are very serious about this.

The Charter requires the Department of Public Property to provide the courts --

Does it say City Council?

I believe it's the same reference. It doesn't say square footage.

When you are looking for space for courts, look for room for City Council also.

We'll certainly be glad to let you know of anything that might be useful to you.

Immediately let us know, so nobody gets the room before us.

Certainly.

Madam President, I just want to ask that question again. Maybe it will be a different answer this time. I see some space 1649 3/4/03 - FY '04 OPERATING BUDGET available on the 4th floor. I contact the Council President. She calls you --

No, he said I shouldn't call him, I should be in touch with the First Judicial District.

If it's clearly court space, that's where the decision gets made. We can bring it to their attention on your behalf. You could bring it to their attention on your behalf. And the bargaining goes on from that point.

When you say court space, meaning what?

First Judicial District rooms and offices.

I'm saying, but what's the contractual -- and I know we're in an governmental agency. I mean, what's the arrangement in terms of -- because you say there's nothing codified, this is kind of a person's agreement.

Yes.

So that basically determines the ultimate disposition of space?

When it comes to space that's being used for court purposes. 1650 3/4/03 - FY '04 OPERATING BUDGET

You're going to have to let me know what space you're referring to.

It's the space across from me, it becomes vacant like every three months and it sits there vacant and then a new judge appears a few months down the line.

We may have to become squatters.

Thank you, Madam President.

You're welcome. The Chair recognizes Councilman Kenney.

Thank you, Madam President. Commissioner, I would like to go back for a moment for an area that Council President Verna had dealt with about 15, 20 minutes ago. The maintenance of the Triangle and the new contract that was awarded in January of this year.

Triplex, yes.

Triplex. I'm sorry. You indicated -- and I didn't hear you say it. What 1651 3/4/03 - FY '04 OPERATING BUDGET was the reason why the contractor or the vendor was changed?

As you know, there is a four-year rule on contracting. We had passed that with several amendments to the existing vendor. We had --

Explain to me the four-year rule.

I believe there's an interpretation in the Charter that doesn't permit us -- or through the Law Department that does not permit us to contract with a vendor beyond four years at a time, in a single contract.

Maximum?

Yes.

So once you get a contract for four years you're done.

We typically re-bid it, re-propose it, whatever the case is.

I understand that. But you're not precluded after four years of getting a contract again?

No. 25

You undergo a 1652 3/4/03 - FY '04 OPERATING BUDGET process.

Yes.

You guys don't do four-year contracts anymore anyway. It's all one-year, three one-year options.

That's the way they're done.

That's been the term of art of days in order to circumvent the City Charter and the Council in any input they may have. But that's another whole discussion. In this particular case, the four-year rule was in effect and you re-bid it, correct?

Yes.

And the former vendor was not chosen.

No. 18

And what were the reasons why?

This was professional services contract, not a bid. So a judgment was made that the current vendor would be able to deliver the same services, presumably at the same quality with the same effectiveness, hopefully, at a lower cost. 1653 3/4/03 - FY '04 OPERATING BUDGET

Is it at a lower cost? What's differential, if so?

The differential at this point I think is $400,000 in the first year. In between the implementation of the RFP and the actual finalization of an agreement, several of the labor unions involved with the primes had new deals and those costs were passed on to us.

Does the new contractor have similar deals with or similar union jurisdictions to deal with?

No, they're done with. Those were the major ones and --

I'm saying, the company, the Philadelphia Facilities, is that the name of the company?

US Facilities.

US Facilities. They won the contract. They don't have union workers?

Yes.

So what's the difference between the issues surrounding Elliott-Lewis and US Facilities?

There was no issue with 1654 3/4/03 - FY '04 OPERATING BUDGET their workers and their union. The issue was with the unions representing subcontracted services. There's a significant amount of subcontracting, such as security and custodial.

And US Facilities use different subcontractors?

Actually, there's a different security contractor. It's the same custodial contractor. A slightly different agreement. And the delay in the award pushed us right up against an expiration of the agreement. And that was renegotiated.

Where is US Facilities located?

I forget the exact address. But it's a couple blocks up on JFK Boulevard.

Are they a Philadelphia company?

They're a Philadelphia company now, yes.

What were they before they got the contract?

They were a subsidiary of a Maryland or Washington company. They are now owned 1655 3/4/03 - FY '04 OPERATING BUDGET by PRWTT. I don't remember what the letters stand for. It's a minority-owned silent partner. It's a freestanding division which is contracting with us for the services.

Well, is this one company or a group of companies?

I believe they're one of several companies owned by the larger group.

Do you know what the names of those companies are?

The other companies? No, I don't. But it was probably in the materials submitted for financial review.

Since this was a professional service contractor, there's a lot more subjectivity and leeway than there is in a bid; is that an accurate statement?

Yes.

So what other factors enter into the decision-making process in addition to the overall cost of the contract?

We look at how long they've been in the business, track record, which is actually more important with a new bidder than it is 1656 3/4/03 - FY '04 OPERATING BUDGET with the ones who are re-bidding because we already know what the incumbent vendor can or can't do. We look at the debt chart that's offered by way of the management team. That's part of the proposal. We require them to specify their anticipated team leaders, their managers. In this case, we as a department actually had experience with both. We had Elliott-Lewis as a vendor for several years. We also had US Facilities as a vendor when we were responsible for the Curran-Fromhold building.

And that was the same consortium of people, the same consortium of companies?

No. At that time, it was a division of the out-of-town agency.

Out-of-town company?

Yes, out-of-town company.

Do you know who that company was?

Halifax Corporation.

You said that US Facilities now has an office in Philadelphia. How many employees are located in Philadelphia, do you 1657 3/4/03 - FY '04 OPERATING BUDGET know?

No, I don't.

Were you aware of Elliott-Lewis' Philadelphia roots and Philadelphia headquarters and the number of people that were involved? I think it was 1200 employees in the City of Philadelphia.

Yes.

So it becomes difficult for me to understand why a company that has had a wealth of experience in dealing -- has there ever been any problems with Elliott-Lewis' performance that you know of, other than the normal?

There's always -- somebody misses something here and there and we're allowed to penalize them for it.

Any big problems?

Not really.

So a pretty reputable company located here in Philadelphia, 1200 employees, and we give the contract to a firm from Maryland.

Let me clarify. They had been in Philadelphia for a couple of years at the 1658 3/4/03 - FY '04 OPERATING BUDGET time that they put their proposal in.

But this is certainly not the history that this company has, that Elliott-Lewis has.

No. 7

So we decide now to give this work to -- let me go back for a second. I understand on a bid process, there is really no 10 choice. I mean, we get to a point on the bid where you open the bids, they are what they are, and we're stuck. We can't give Philadelphia preference, we can't give local preference, and whoever wins the bid wins the bid. But when we are in a situation where we have a longstanding Philadelphia company with 1200 employees who have been loyal to the City, have not abandoned the City as many other companies have, and we decide the way we repay them is to subjectively -- and subjective, we can argue the level of subjectivity -- to give it to someone else as a result of a process that is, again, in my opinion subjective because professional services pretty much is subjective as to how you choose lawyers, stockbrokers, other types of professionals, accountants. I mean, a lot of it is done 1659 3/4/03 - FY '04 OPERATING BUDGET politically, if not all of it. And I just think that -- and what happened to Elliott-Lewis at the airport, I think -- which I understand you're not part of; is that correct?

Right.

That's all procurement in the airport?

Right.

What happened to them, what happened to Rosenbluth Travel at the airport is another example of this Administration not really caring too much about taking care of what's here at home and making decisions based on politics that I don't think is in the best interest of the City. So I want the record to clearly reflect that this company has been a longstanding company, Elliott-Lewis in Philadelphia, has 1200 employees, has been loyal to this City, has paid their taxes, has not run to the suburbs like many other companies have, and this is how we repay them. I don't need you to comment. I think I've commented enough. But I just think that it is disgraceful the way in which we are handing out these subjective personal service 1660 3/4/03 - FY '04 OPERATING BUDGET contracts and ignoring long-term Philadelphia companies that have been loyal to the City. Thank you. Thank you, Madam President.

Are there any other questions or comments from Members of the Committee? Councilman Kenney.

I forgot. How long is the contract with US Facilities?

They're four years, a year at a time. So we have an option. And we've exercised the option in the past not to continue into the second or third or fourth year.

Why then did we contract for four years with Elliott-Lewis?

It was the same way, year to year.

Did that contract come to this Council for approval as per the Charter?

No. 24

Why is that?

It's year to year. 1661 3/4/03 - FY '04 OPERATING BUDGET

You told me it was a four-year rule.

On a year-to-year basis.

Oh, this was a one-year with three one-year options.

Right.