Don't you have to have a plan before you acquire? 391 BILL NO. 050388 - 6/6/05
Before you disposition it. And, again, I am not the expert; Mr. Wetzel isn't here. But clearly, I believe, on the front end, it could be a little bit more general, you don't have to have a specific project in hand. I believe it has to meet things like blighted and other criteria in order to exercise the power of eminent domain. And then when you dispose of it, it needs to be in accordance with specific redevelopment plans.
So almost two-thirds of the land that's been acquired is for land banking purposes for which there is no plan of disposition at this time?
Other than getting hold of title. And I think that's important with vacant property, particularly we are experiencing some of the development pressures that are taking. That enables us to more proactively to market that property for development activity. 392 BILL NO. 050388 - 6/6/05 One of the consistent complaints that we heard in early days is, if we waited for a developer to come to the door and ask for the property and then begin to assemble that land, we end up taking several years, and the development opportunity may have gone. By land banking, the intent here is to be able to more -- say we have land in hand, and then put that out to the development community. That was the intent of our ability to do some land banking.
And as a result of that process, I would take it -- I mean, I have been in a few of these hearings -- people have been relocated under that scenario with no known intention?
Not for land banking. All of our acquisitions that involved relocation was for specific projects and, in fact, for affordable housing development projects. Two last questions. The earlier discussion with regard to -- which one of these programs is it? Is it the affordable 393 BILL NO. 050388 - 6/6/05 rental or is it the equitable development strategy? Mr. Hanna, you talked about utilizing funds to write down the interest on development. Which of these initiatives?
Can you explain how exactly will we use these dollars to, quote, unquote, write down the interest on someone's purchase of their home?
We actually used a similar initiative in my previous life in a big city in Georgia. The city -- well, the city could issue bonds, take those proceeds, to subsidize a payment.
The debt service would 394 BILL NO. 050388 - 6/6/05 be the payment from the homeowner.
I thought the homeowner was getting a mortgage for their house?
This is out of the 1.9 million. Are we talking about the same program?
1.9 million to support the equitable development strategy. So you got the $1.9 million. So what do you do with it?
In this situation, PHFA -- because PHFA is the only entity that issues single-family mortgage bonds. PHFA would issue the debt. These $1.9 million would be leveraged by a PHFA bond -- would be leveraged by a PHFA bond issue. 395 BILL NO. 050388 - 6/6/05 The $1.9 million would, essentially, be used to help pay an individual's mortgage payment. I mean, there is a way that the money is actually used to buy down the interest rate. But the net effect is that the individual's mortgage payment will be less with the help of this $1.9 million on, obviously, a per-mortgage basis.
So was the $1.9 million being used to somehow support the PHFA bond issue?
Yes; specifically those bonds issued in the City of Philadelphia.
So no individual will actually -- the $1.9 million never -- none of that money is ever given to an individual?
Well, the Pennsylvania Housing Finance Agency, as you know, issues single-family mortgage money constantly. That's their bread and butter. 396 BILL NO. 050388 - 6/6/05 What we're in the process of doing through the Redevelopment Authority is having a conversation with them. There was two options, either the state could give the City of Philadelphia volume cap to issue our own residential mortgages through the Redevelopment Authority. We haven't done that in a good 10 years. Because what we would issue would be, 11 you know, relatively small and probably not 12 efficient in the marketplace. 13 So PHFA has indicated a willingness 14 to create as part of one of their mega 15 single-family mortgage bond programs a 16 targeted program for the City of Philadelphia 17 that has certain characteristics. 18 And among those characteristics 19 would be, say their mortgages are 6 percent, 20 then one of the characteristics with these 21 mortgages would be 3 percent. And the way 22 we -- 23
Let's say that you are one of the probably like the luckiest persons in the either the 4th or the 9th Councilmanic District. And you decide, I guess, what, to buy a new house?
You buy a new house. And you shop around, and you look around. And after, you know, the 20th house that you have seen, you pick the 21st house. And earlier you used the number of $175,000. So now I found a house. So tell me from the day I find the house, decide that I want to buy it, how does this program affect what I do and what I ultimately pay in my mortgage?
We would, in partnership with the housing financing agency, probably put out some special marketing materials that would go to their originating lenders. I am not sure of all of their originating lenders. But I am quite sure banks like Citizens and Wachovia and Sovereign, they probably 398 BILL NO. 050388 - 6/6/05 originate these. Because the way I understand the market, the bank issues the fund and then PHA buys, you know, that back. They issue the mortgage. So what PHFA would tell their originating lenders, for any individual who is in Philadelphia, in one of these neighborhoods that meet these characteristics, we will buy that mortgage from you. So to the customer, it shouldn't make a difference, the way I understand these programs work. They won't know.
Okay. And all they know is that their monthly payment is lower than the original conversation started to be versus going out on the open marketplace and never participating in the program. Okay. Last question. Now, tell me, why 399 BILL NO. 050388 - 6/6/05 did you decide -- this is along the lines of where Councilwoman Tasco is -- the map, based on what I understand the goal to be, trying to deal with gentrification issues, the map down the bottom, the smaller one in the middle --
Excuse me, Councilman Nutter. If you don't mind, Councilman Clarke would like to be recognized just for a minute, if you don't mind. Councilman Clarke.
I just wanted to recognize, we have one of my constituents from Francisville, Ms. Penelope Giles from the CDC. She was actually at the first hearing last week, had to leave, and she is here today. And she wanted to submit her testimony for the record.
I did submit it. I have attachments that were given with the testimony.
We will make 400 BILL NO. 050388 - 6/6/05 certain that the stenographer has a copy and it will be made part of the record. Thank you for your patience.
I just wanted to apologize for your having to stay so long.
Thank you. So the goal here is to help in neighborhoods that have experienced this somewhat explosive growth in values?
How does the program -- I mean, in most instances gentrification is about rapidly rising property values; people who are long-time owners find themselves pressed trying to deal with their property tax problem, and often get pushed out of the neighborhood. Is that fairly general?
Specifically the aspect 401 BILL NO. 050388 - 6/6/05 that we are trying to address here is the fact that, in certain neighborhoods, it becomes impossible for new residents, for teachers, for policemen, for firemen to buy in a neighborhood because prices are so high.
Or as Ms. Smith points out, people who were tenants before who are looking to graduate to their first home purchase.
So you write down their interest. But, I mean, is the theory here that, since you are now not paying a particularly high interest rate, that the savings you can now use to pay your somewhat excessively high real estate taxes? I mean, what's a person getting out of this?
If a typical mortgage payment is PITI, principal, interest on that loan, taxes, and insurance, the interest component of PITI is what we're looking at trying to decrease. And to the extent that that 402 BILL NO. 050388 - 6/6/05 component of that four-part equation is less, than obviously the mortgage payment is going to be less, no matter what happens with -- given that taxes and insurance --
So you attack the interest component. Obviously this doesn't do anything to the tax component. I mean, is the person going to find themselves in the situation where they can, at least by way of their income afford, a house that might have been a little beyond their reach? But, I mean, if the taxes keep going up, then what happens?
We can't speak to that. But what we are trying to address, as I said, is that first part of that PITI equation.
If that's the goal, what made you decide not to use the map in the middle that just deals with the whole sales price greater than 25 percent issue? 403 BILL NO. 050388 - 6/6/05 Which obviously has a much greater distribution throughout the city.
Because what we were trying to do, again, was to look at -- identify those areas of the city that were -- in 2000 could be considered low/mod areas; but because the real estate prices were jumping up, most likely our assumption is that in low/mod areas you may have low and moderate renters who may be interested in buying a house, that kind of a thing. So we were trying to -- and, again, as with always, this isn't a big pot of dollars, even with -- we probably, as I said, will only be able to leverage 10 to 11 more million dollars out of this. It is a little bit, I know.
I grew up in West Philly. $10 million is still a lot of money.
Again, this was, as I 404 BILL NO. 050388 - 6/6/05 said, Councilman, this was, you know, our effort to come up with, you know -- focus a targeting strategy that took into account where low and moderate income families currently live. They tend to be neighborhoods that people -- where you are hearing more and more concern about either the rental market or the home ownership market being priced beyond existing residents' means.
But you see from your own map, I mean, obviously, the 14 percent increase issue is spread across what, 15 you know, quote, unquote, are considered even 16 some upscale neighborhoods. 17 And you cannot ignore the fact that 18 there are some either low- and moderate-income 19 younger people or certainly older people who 20 live in those same neighborhoods who then buy, 21 when you put the additional CDBG screen on it, 22 for a program that has no criteria whatsoever 23 and is not a CDBG program, knocks out a 24 significant portion of the population in some 25 neighborhoods that I think, all things being 405 BILL NO. 050388 - 6/6/05 equal, you might want to help. I mean, how do you attach criteria to a program that is not governed by another program?
This was our best effort in that regard. And, again, in the conversations that we were having in a relatively short period of time, we also were concerned, well, what happens to a neighborhood? Yes, there may be a low-income family in Chestnut Hill. But, you know, there's not probably likelihood of a lot. So we were trying to come up, you know, with a targeting criteria to get to that.
When the program was introduced, though -- we talked about this a while ago, not in this level of detail -- it did not have this criteria attached to it. So when did that come into play, and why?
Because we thought we were trying to be responsive to this body that were saying because we didn't have enough 406 BILL NO. 050388 - 6/6/05 detail before, there were lots of questions being asked. So we tried to be responsive to the body and hearing testimony from Wednesday.
Not the specific criteria. But it was clear, in my opinion, that this body was concerned that we didn't say enough, that it was too open-ended.
Knowing this body, do you think we want a program that has more coverage or less coverage? You have been around for a little bit. You might want to think about that question. What's your best guess on that?
Generally, I think we have demonstrated an interest in more coverage.
You are just trying to get to July 1. I understand. Like, why am I sitting here. Okay. Well, I have the same expressed concerns about -- 407 BILL NO. 050388 - 6/6/05
-- about coverage and attaching criteria. I mean, as many -- not you and I, but the young lady to your right -- as many battles as we have had about who is CDBG eligible and who is not eligible, part of the framework, part of the allure, part of the marketing of NTI was city dollars that are flexible, that are not as restrictive as any of the programs around that exist. That was one of the key sales features. And here we come back five years later and use criteria that are some of the most restrictive in the United States of America. I mean, only here. I mean, I don't get it. For new programs. I mean, we haven't even gotten to -- I mean, as you laid out, it is a pilot program. So, I mean, if you started out with the open-ended situation, and then found after a few years that, well, maybe we do need to kind of contain this thing a bit, we might be 408 BILL NO. 050388 - 6/6/05 having a different kind of conversation. But, I mean, you went from no 4 criteria, to extremely restrictive, and now a whole bunch of people are left out. And I mean, they are all paying the tab on the bonds. That's my concern. Thank you, Madam Chair.
I guess, Madam President, we can go around and around on this until tomorrow morning. But I suggest that since this is a resolution and we have some time to vote on it, that they go back to the drawing board and try and figure out how to implement these programs without these restrictions, because I don't think the people in my district will be too happy with this.
Thank you. I think that you heard what the concerns of several of the Council members are. So, Councilwoman, do you want to 409 BILL NO. 050388 - 6/6/05 continue this until Thursday?
Yes. Our concern is that the issues addressed by Councilwoman Tasco several times this afternoon and Councilman Nutter toward the end of this hearing be addressed. They're concerned that the income criteria meet various areas in their district, since this is NTI, and NTI is a city-created program, and they feel that they should be able to, and rightly so, access the program for various members of their district. I don't know if you are able to respond to that issue today. If you are not able to respond to it, then certainly I suggest we continue this hearing until Thursday morning. The choice is yours.
Can I get a second? We haven't had a chance, as I said in response, I would like the opportunity to confer with my colleagues, just to make sure that we are all on the same page. Can we have just a short break to talk about this? 410 BILL NO. 050388 - 6/6/05
And I think another concern that has been brought to the floor is with the four new programs that were initiating in '06. Come '07, we don't have two pennies for the same programs, and I don't know where the money would come from.
I believe it is only two new programs, that's the equitable development and the commercial corridor. We have the affordable rental development.
That's not new. It was, initially, a fund in '05. We just brought the money forward and changed it.
We initially funded it in '05, but we didn't use any of those 411 BILL NO. 050388 - 6/6/05 dollars. So I represented it to Council as part of this budget. But we can -- I mean, affordable rental was something that was actually at one time --
-- we don't know what that is and how that will be funded next year. The commercial corridor support initiative, again, there is nothing for '07. And then, of course, we have the homeless prevention, that's a million dollars. And I don't know how we would fund that next year, or in '07. So I am suggesting that if you cannot address the issues that were brought to the floor today, that we continue this and you could get back to us.
I just was asking for a short break to confer with my colleagues, 412 BILL NO. 050388 - 6/6/05 specifically around the criteria of the CDBG eligibility.
Thank you. I just wanted to actually bring up an issue that has been discussed by Councilman Nutter and Councilwoman Tasco as it relates to retaining walls. I don't know where we are going to go with that. If we proceed and that particular issue is addressed in some, quote, unquote, new money, I do -- when we originally talked about this, I didn't physically technically represent areas that had a substantial amount of retaining walls. But I do actually have a ward, in Councilwoman Tasco area, in one portion along the Roosevelt Boulevard, the 42nd ward to be exact, that they have a number of retaining walls; and on the south side in, I guess you would call it the 23rd ward Northwood, where they have a number of retaining walls. So I may want to have some levels of discussion with them. I am just not familiar 413 BILL NO. 050388 - 6/6/05 with how the program is operating, how the money is being allocated, how those areas are being determined. So if we agree to proceed, to some degree I would like to be a part of that discussion with some of the newer areas.
Before we talk about a break, I see Councilman Nutter's light is on. Did you want to be recognized?
Yes, Madam Chair. Just a technical or logistical issue. Two things. One, I don't know that we ever actually got to the proposed amendments that were in front of us which involved adaptive modification, BSRP, and all of those issues. That's one. Second, I believe any change that we make to the NTI program requires a similar change to that particular line item in the CDBG bill which is coming up for second 414 BILL NO. 050388 - 6/6/05 reading and final passage this Thursday. So we would need to amend that. Whatever the numbers are going to be and whatever the agreements are, they probably have to get done this week, no later than Thursday, so we know what's going on with NTI. And then we can make an amendment on the floor for CDBG this Thursday in order to be able to vote all of this the following Thursday. So I think we are in a need-to-get-it-done-by-Thursday situation because the NTI number has to be consistent with the resolution as compared to what's already in the bill for CDBG. So my only other recommendation was that, whatever we do -- and I know Wednesday this week is not exactly totally wide open -- but if we at least recess until some time on Wednesday, the representatives from the Administration and Council members and the two Chairs will work out whatever we are going to work out, reach an agreement on Wednesday, and then all of that gets taken care of the next 415 BILL NO. 050388 - 6/6/05 day on Thursday. Because if we don't amend the CDBG bill on Thursday, there is no time.
Exactly. MS. DEBORAH McCOLLOCH: Just as a point of information, the Community Development Block Grant consolidated plan can be amended following the criteria that are in the con plan. There is an amendment process in the con plan. So that can be amended separately.
But CDBG is a bill, and it has a schedule in it. All I am saying is, any changes that we have to make to CDBG have to be done this Thursday. You are saying there is a process after that? MS. McCOLLOCH: Yes. There is an amendment process to the con plan, to the consolidated plan, that we are allowed during the year to amend the consolidated plan. And those criteria and that process are in the consolidated plan that was approved the other day. It is in the appendices. So 416 BILL NO. 050388 - 6/6/05 we can amend that consolidated plan.
But you have NTI as a line item, I am assuming, in the con plan; right? MS. McCOLLOCH: The NTI budget is included in the con plan, yes.
Right. And if we are proposing to either shift dollars or -- presently this amendment, which we never got to, takes the NTI line item from about $31 million to 36; right? MS. McCOLLOCH: Yes. Yes. For this fiscal year, yes.
You are not saying that if we don't change the CDBG line item from 31 to 36, that you can somehow go and still spend the money and you don't have in the con plan the right number, are you?
The other option we have is to amend -- after Council approves it, to amend the plan to represent all the changes to the NTI budget. Because that's submitted to HUD, you know, afterwards. So we are saying there is a process 417 BILL NO. 050388 - 6/6/05 that, if we so chose to choose it, we could. Or we can get everything wrapped up and amend by Council on the floor.
If the body is willing to give them ten minutes, then all the issues that were raised would have to be addressed or else we would have to recess until a date certain to deal with the issues.
Madam President, I think they ought to take time to look at this, and that we recess until Wednesday. If we don't finish, we come back Thursday.
They would have to prepare the necessary amendments, and I wouldn't want to do it verbally this evening. What time on Wednesday?
The joint committees will stand in recess -- Councilwoman Miller.
Okay. Before we recess, I have one question about the 418 BILL NO. 050388 - 6/6/05 homeless prevention program. And I just want to know, with the new program -- under the old program, you helped people with security deposits, mortgage assistance, rental assistance, utility assistance. Is that still going to be happening with the new program?
I can't answer that. But Mr. Hess is here, and I think he ought to come to the witness table and address it.
Or will services just be added, other types of services?
My name is Robert Hess. With respect to homeless prevention, I would say that the final pieces of that program have yet to be designed. However, I think we can be clear, after taking a close look at the former program and working closely with advocates, providers, and a number of local and national scholars, that we have the foundation of a solid program that would be similar to what 419 BILL NO. 050388 - 6/6/05 you described and target people that are most likely, individual and families that are most likely, to end up in our shelter system but for this assistance.
Would you mind explaining what type of assistance? Because I'm not truly that knowledgeable.
With respect to the former program, it was, as was described by the Councilwoman, rental assistance, utility assistance, and basic eviction prevention dollars that were also tied to counseling. The question of the former program was, did it really target people that but for that support would end up in the shelter system. And we were unable to determine that. So we needed to do a better job of targeting people that are most likely to end up in the shelter system once they received that support. And I think we are well-positioned to do that at this point in time.
As the program develops, I guess we would all like to get 420 BILL NO. 050388 - 6/6/05 further information. Because I really want to know how you would actually -- how you want to target, I mean what factors will you use to measure or predict whether someone will actually end up on the street or maybe doesn't -- I think I heard you said maybe some of the people that you serviced in the past really didn't need the help? Because they would not have -- they would not have been homeless?
Councilwoman, I think there is a distinction between people -- I think all these folks that received that support needed the help. They were poor folks that were just trying to hang on. The difference is that some of those poor folks, if they didn't receive this assistance, would still not end up in the shelter system. And some other folks, if they didn't receive the assistance, would end up in the shelter system. In terms of homelessness prevention, we would like to kind of focus on, to the extent possible, keeping as many people as 421 BILL NO. 050388 - 6/6/05 possible out of the shelter system and provide them that support. Now, that's not a perfect science. But I think there are some indicators and scholars, Professor Culhane at Penn and others, have given us some -- a lot of food for thought in this area and have done some research that can help us better target these resources.
I think what we would do, if funds were available to proceed with this kind of program, is we would RFP it, we would lay out the basic criteria, let organizations across the city respond to that RFP, and then we would make those decisions based upon those responses. So I don't know that we have an answer today as to how long an individual or a family could benefit from those services. But the hope would be that they would benefit adequately not to end up needing to come into our shelter system. 422 BILL NO. 050388 - 6/6/05
Well, I would be interested in getting information as the program develops and as they figure it out.
We would be delighted to come back and share that information and have that discussion.
Are there any other questions or comments from members of the committee? Seeing none, this committee will stand in recess until Wednesday, June the 8th, at 11:30. Thank you very much. (Hearing adjourned at 6:45 p.m.) - - - 423 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Monday, June 6, 2005, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COMMITTEE ON HOUSING, NEIGHBORHOOD DEVELOPMENT AND THE HOMELESS _________________________ DEBRA A. WHITEHEAD