COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE Room 400, City Hall Philadelphia, Pennsylvania Wednesday, May 26, 2010 11:45 a.m. PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN BILL GREEN COUNCILMAN JAMES KENNEY BILLS 100129, 100305 and 100357 - - - 2
Good morning. We will now call the Committee on Finance to order, and we will ask the Clerk to read the bills that will be heard today.
Bill No. 100129, an ordinance authorizing the City Treasurer, on behalf of the City, to enter into an agreement with Wachovia Bank, N.A. for provision of payroll banking services to the City, under certain terms and conditions. Bill No. 100305, an ordinance 15 constituting the Tenth Supplemental Ordinance to the Amended and Restated General Airport Revenue Bond Ordinance; authorizing the Mayor, the City Controller and the City Solicitor, or a majority of them, to issue and sell one or more series of tax-exempt or taxable Airport Revenue Bonds of the City of Philadelphia; designating the obligations to be refunded from certain portions of such Airport Revenue Bonds; setting forth 3 5/26/10 - FINANCE - BILL 100129, etc. the use of proceeds; providing for the pledge of certain passenger facility charges solely for bonds which refund the City of Philadelphia, Pennsylvania, Airport Revenue Bond, Series 1998B; determining the sufficiency of pledged Amounts Available for Debt Service; covenanting for the payment of interest and principal; authorizing the Bond Committee to take certain action with regard to the terms and conditions of the Airport Revenue Bonds and related agreements and the elections under the Amended and Restated General Airport Revenue Bond Ordinance; authorizing the Director of Finance to take certain actions with regard to the sale of such Airport Revenue Bonds, the investment of the proceeds thereof and the City's continuing disclosure obligation; and specifying applicability of sections of The First Class Revenue Bond Act and the Amended and Restated General Airport Revenue Bond Ordinance. 4 5/26/10 - FINANCE - BILL 100129, etc. Bill No. 100357, an ordinance 3 authorizing the Director of Housing, on behalf of the City, to file applications with the United States Department of Housing and Urban Development (HUD) for a Community Development Block Grant (CDBG); to participate in the HOME Investment Partnership program and the Emergency Shelter Grant (ESG) program; and for a Housing Opportunities for Persons With AIDS (HOPWA) grant; and to file 13 applications with the Commonwealth to obtain grants under the Act of April 12, 1956, Public Law 1449, Section 4, as amended, to prevent and eliminate blight; authorizing the Director of Housing and Director of Commerce to file applications to obtain other grants from the Commonwealth; authorizing the Director of Commerce to use the Section 108 Loan Guarantee Program; and authorizing the Director of Housing and the Director of Commerce to enter into all understandings and assurances contained in such 5 5/26/10 - FINANCE - BILL 100129, etc. applications and take all necessary actions to accept the grants; all under certain terms and conditions.
Thank you very much. Please let me note that we do have a quorum in the presence of Councilmen Kenney, DiCicco, Goode, Green and Councilwoman Blackwell. I believe we're going to have the Airport come forth first, next we'll have Wachovia, and then the Community Development Block Grant program. (Witnesses approached witness table.)
Would you state your name for the record and begin your testimony, please.
My name is Rob Dubow. I'm Director of Finance. With me today is Mark Gale, Chief Executive 6 5/26/10 - FINANCE - BILL 100129, etc. Officer for the Airport; Tracy Borda, Assistant Airport Director; and Nicole Diorso (ph), Assistant City Treasurer for Debt Management. We're here today on behalf of the Tenth Supplemental Ordinance, Bill No. 100350. The bill would authorize the City to sell Airport Revenue Bonds in a principal amount not to exceed $605 million. That's exclusive of cost of issuance and certain other costs. The bill provides authorization for the issuance of new money bonds totalling $535 million to fund the cost of capital projects, which will be described in more detail later, and the remaining authorization of 70 million would be used to refinance a portion of the Airport Revenue Bonds, Series 1998B to generate savings through lower interest payments. The current plan of finance for these bonds is to issue fixed-rate bonds for both the new money and the refunded portions. 7 5/26/10 - FINANCE - BILL 100129, etc. The City's general practice is to issue refunding bonds when the debt service savings realized from a refunding would be at least three percent. Subject to market conditions, the City intends to refund a portion of the Airport Revenue Bonds, Series 1998B under this ordinance. Other portions of the 1998B bonds as well as the 1997A and 1998A bonds will be refunded based on authorizations that were provided in the Ninth Supplemental Ordinance, which was previously approved by Council. All revenues pledged to secure the payment of the bonds will be derived from Airport System revenues and not from the City's General Fund. As required by Section 8 of The First Class City Revenue Bond Act, the Administration has submitted its financial report demonstrating that the Airport System's revenues are projected to be sufficient to pay all costs and expenses of the Airport System and meet 8 5/26/10 - FINANCE - BILL 100129, etc. the debt service coverage tests for their proposed bonds and all outstanding bonds under the General Ordinance. I would like to request a suspension of rules for this bill to allow first reading at the next meeting of City Council. That concludes my testimony. Mr. Gale has some testimony, and after that, we'd be happy to answer any questions.
Good morning, Madam Chair and members of the Finance Committee. As Mr. Dubow has indicated, my name is Mark Gale. I'm the Chief Executive Officer at Philadelphia International Airport and I'm pleased to be before you today and have the opportunity to testify in support of Bill 24 100305, the Tenth Supplemental Amendment to the Amended and Restated General 9 5/26/10 - FINANCE - BILL 100129, etc. Airport Revenue Bond Ordinance of 1995. This bill will provide the City of Philadelphia with the authority to issue up to $535 million in, quote, "new money" airport revenue bonds; and, two, issue up to $70 million in refunding airport revenue bonds. 6 million passengers and close to one-half million aircraft operations in terms of takeoff and landings, making it the ninth busiest airport in the country. Last year, new non-stop service to Tel Aviv, Oslo and Birmingham, England has enabled international passenger counts to remain strong. Low fare air service has continued to positively impact domestic air fares, including next month's inauguration of five daily Southwest Airline flights to Boston, a route that has been plagued with high air fares due to the lack of airline competition. While new competitive air 10 5/26/10 - FINANCE - BILL 100129, etc. service has stimulated travel and economic vitality within the Philadelphia region, the additional activity places great demands on the Airport's facilities as they currently are. Consequently, the 2010 bonds are needed to fund several key expansion and rehabilitation projects to increase Airport capacity, enhance customer service and extend the useful life of our infrastructure. The expansion of Terminal F is one example of a capital initiative made essential by increased activity. Since the opening of Terminal F in 2001, passenger use of this facility has increased by over 60 percent. This key 2010 bonds project includes expansion of the security screening checkpoints and passenger hold rooms, expansion of the central hub to accommodate additional food and retail shops, and the construction of a new baggage claim along the Arrivals Road so that it would be consistent with other baggage claims in 11 5/26/10 - FINANCE - BILL 100129, etc. our other terminals. This new location should improve baggage claim capacity and eliminate some of the directional challenges that exist today in the terminal roadway use. The previously mentioned increase in the international service has prompted the need for additional gate capacity. To solve near-term capacity issues, we are in the midst of a major airline relocation project that will maximize gate utilization throughout the Airport and convert three Terminal A-East domestic gates to hybrid international -- or hybrid gates with international preference. However, future growth in international service looking down the road, particularly to remain competitive with other East Coast gateways, will require more international gate capacity. Therefore, passage of the 2010 bond ordinance also provides for an international gate expansion program to accommodate service for future 12 5/26/10 - FINANCE - BILL 100129, etc. international destinations from the Airport. S. airports, comprising only 2,300 acres. Our capacity enhancement program for which the Federal Aviation Administration has recently announced a preferred expansion alternative will both increase airfield capacity and serve to reduce aircraft delays. A key element of this capacity and enhancement program is the geographic expansion of the existing Airport boundaries. Therefore, the proposed 2010 bonds will provide for property acquisition that will assist in the effort to increase airfield capacity and that could also facilitate the creation of new international gates. The remaining 2010 bond projects are primarily designed to enhance customer service, improve airfield efficiency and complete the final phase of an infrastructure renewal 13 5/26/10 - FINANCE - BILL 100129, etc.
program that the signatory airlines at the Airport approved in 2007. These projects include, but are not limited to, a major restroom renovation project, terminal signage upgrades, new taxiways and rehabilitation of one of our major parallel runways, Runway Left-27 Right. 9 As indicated in the Finance Director's testimony, this bill also provides for the refunding of up to $70 million of the Airport's 1998B bonds. Subject to favorable market conditions, our intent would be to refund the 1998B bonds, along with the 1998A bonds and the 1997A bonds, as previously authorized by City Council. At the Airport, we place a high priority on the inclusion of disadvantaged businesses within our operating and capital programs. 6 percent, respectively. For federally funded projects, our DBE 14 5/26/10 - FINANCE - BILL 100129, etc. 1 percent, respectively. Please be assured we will make every effort to maximize inclusion levels for those specific public work contracts and professional service contracts that will arise out of implementing the 2010 bond projects. Finally, I'd like to take the opportunity to thank you again for the opportunity to present testimony in consideration of this bill. Over the years, through the passage of similar bills, Council has supported capital initiatives to improve the City's airports. In recent years, Council's support has led to the opening of a highly acclaimed new international terminal facility, the extension of Runway 1735, enabling it to handle additional aircraft jet traffic, and the expansion of Terminals D and E. We ask that City Council give us the opportunity today to continue this important 15 5/26/10 - FINANCE - BILL 100129, etc. progress. And I stand ready, along with members of my staff, Mr. Dubow, my Assistant Director here, to answer any questions that you may have.
Thank you very much. I see that you are going to expand Terminal F. Would you explain in more detail how you plan to alleviate the problem of passenger confusion about pickup?
Most certainly, Madam Chair. The expansion of Terminal F includes several different pieces to it. One piece that I mentioned was the expansion of what was referred to as the hub or the very center of where three concourses come together in Terminal F. That hub will be expanded with additional concession offerings, food and retail beverage shops and whatnot, but it will also be redone in such a way that it will be able to provide better signage and directional opportunities for passengers 16 5/26/10 - FINANCE - BILL 100129, etc. to either get on the airfield buses that run around to other terminals or direct them over towards the baggage claim facilities. The new baggage claim facility that we're looking to build will actually pick the baggage claim up where it is today and move it over on the other side of the roadway, which would be consistent with all of the other terminals, A through E, so that passengers -- or meeters and greeters rather that are coming down the roadway looking for parties where they would pick them up, the parties will actually be on the --
So a brand new baggage claim, along with the other project that's listed in the infrastructure here, not just Terminal F 17 5/26/10 - FINANCE - BILL 100129, etc. but Airport-wide, we're looking to do a major signage upgrade and restoration process from A to Z to take a look at our interior signage to improve wayfinding throughout the Airport for all passengers as well. The other pieces of the Terminal F project include: Today, you're able to go from Terminal A-West at the far end of the Airport up to Terminal E completely behind security by walking, if you had some time that you wanted to kill. But if you wanted to go to Terminal F, you would either have to exit out of security and come back in again, which can be obviously an inconvenience to passengers, or find your way backwards to get on the shuttle bus. This project will actually bring Terminal F in behind the secured lines so you'll be able to go from anywhere in Terminal F all the way through to A-West completely behind security without having to take a shuttle bus, and you can take a look at the 18 5/26/10 - FINANCE - BILL 100129, etc. Airport's artwork or take advantage of all the other shops and whatnot that we have in the facility.
Will this project be bid through the Procurement Department?
We anticipate that this project will be bid a public works bid. However, we are looking at various opportunities on how this project would be let loose, but we're still in the design stages right now.
We've done several projects at the Airport that have been implemented through an agreement with PAID in order to enact certain improvements at the Airport. The new international facility, for example, years ago was built under an agreement with PAID. Our recent expansion that we just opened up in Terminal E, that seven-gate expansion that Southwest is 19 5/26/10 - FINANCE - BILL 100129, etc. currently occupying, that agreement was done in agreement with PAID where Southwest was our developer on the project as the primary user. U.S. Airways was the primary developer and builder on the international terminal, because they were the primary user. We may do something similar to that with respect to Terminal F with U.S. Airways. The final decision has not been made yet, but we are looking at those things. But in any event, we'll be looking for U.S. Airways or ourselves to properly bid the work out.
In that case, if you go that route, would U.S. Air or some other airline be bound or PAID -- I know PAID would be bound -- to the M/W/DE -- the minority set-aside?
Yes, Madam Chair. We actually provide the DBE percentage levels to them for them to meet in any agreement that we do with them.
Is there 20 5/26/10 - FINANCE - BILL 100129, etc. ever any effort to go beyond 23 or 20 percent? It seems that OEO may say 20 percent and everybody gets stuck at 20 percent. Is there any effort to go beyond that?
Absolutely, Madam Chair. Whether we're talking on our professional service side or on a public works side of the house or even through our airport concession program, we're constantly striving to increase and better those numbers. A goal that is set at percent for us is not the top cap. 15 It really is the bottom level, if you 16 will, and we want to exceed those any 17 time we can. So through various outreach 18 programs to contractors, to consultants 19 and vendors, to match and team partners, 20 both major firms along with possibly 21 smaller DBE firms that can provide 22 certain services, we do that pretty 23 continuously on all sides of the house. 24 But, again, you would have our commitment 25 that we would look to exceed the goals 21 5/26/10 - FINANCE - BILL 100129, etc. whenever possible.
Thank you, Madam Chair. I have a question about the percentage of people involved in the bond offerings by the Airport that are domiciled in Philadelphia; in other words, underwriters, attorneys, et cetera. Do you have that percentage?
At this point, the members of the team that have been picked are only the bond counsel and the financial advisor. So the underwriters haven't been picked yet. So a big portion of the team has not been picked. The co-bond counsel are Saul, Ewing, which is in Philadelphia; Gonzalez, Saggio and Harlan. They have a West Chester office. And then there's the 22 5/26/10 - FINANCE - BILL 100129, etc. co-financial advisors is First Southwest. They're from Texas. And Frasca and Associates. They were from New York.
Can you explain that to me? We don't have qualified financial advisors within the City limits?
We have financial advisors for a number of our different issuers. So for a number of issuers, for example, we use Public Financial Management, and they are in Philadelphia, but we don't use them on everything. We go through a competitive process. We look at who we think is most qualified to help us with a particular issue. First Southwest has extensive airport experience. They have experience with us. So we thought they were the most qualified for this particular deal.
So with respect to financial advisors, you're saying that -- I don't know who submitted bids, but I understand people are 23 5/26/10 - FINANCE - BILL 100129, etc. encouraged or not encouraged to submit bids as part of this process often. Oh, you're not going to get this, don't submit a bid for that, you might get it for that. But, I mean, there are --
-- we get proposals from a number of financial advisors. We look at their capacity to help. If they're on three other of our issues, then we think that it might make sense to use someone else. We don't say, Oh, we're not going to use you, but it's something we consider.
Why is that, if they're qualified and they're in Philadelphia versus somebody qualified who is not in Philadelphia? Why do we have an objection to giving Philadelphia-based businesses as much business as possible? 24 5/26/10 - FINANCE - BILL 100129, etc.
One of the things we consider is whether they're from Philadelphia. We consider a range of issues, and for this -- for the Airport, First Southwest was the most qualified. It's not just about where someone is located.
So the point I was making before is, you asked why don't we use a Philadelphia financial advisor, and I was saying we do use Philadelphia financial advisors on a number of our issues. Just not on this one.
No. I understand. Okay. So with respect to Gonzalez, are they -- Saul, Ewing is not a minority or woman-owned firm.
So the 25 5/26/10 - FINANCE - BILL 100129, etc. suggestion once again is that there's not a qualified minority or woman-owned law firm in Philadelphia that could be co-bond counsel on this issue?
I wasn't involved in that selection process. I'm not involved in bond counsel selection. So Nicole Diorso will address it.
Nicole Diorso, Assistant City Treasurer for Debt. We go through the same process for bond counsel as we do for financial advisors. We have a number of bond counsels on deals now that are 5/26/10 - FINANCE - BILL 100129, etc. Philadelphia firms. So we have Gonzalez, Saggio and Harlan that does have very good airport experience and were qualified for this deal to do this work.
I mean, are we going to have to start setting specific percentages, which we can do for locally owned businesses as opposed to goals, with respect to locally owned businesses? I mean, there is a five percent preference right now for bidded contracts, but in terms of a specific percentage of locally owned businesses as part of each of these transactions, I mean, do we have to legislate that or is that something that you think when you look at the investment banks you choose in this deal, you can try to get, I don't know, 50 percent of the underwriters based in Philadelphia?
Well, I don't know whether it will be 50 percent, because, again, what we look at is who is most qualified, who can help us the most with 27 5/26/10 - FINANCE - BILL 100129, etc. a particular deal. We do look at where they're located and, like I said, for a number of issues, there's heavy Philadelphia involvement, but if we go through the process and the underwriter who is most qualified to help us is from New York, I mean, that's who we're going to choose. The team -- every one of our teams winds up having representation of firms who are from the City. I don't --
Do we require that of our New York underwriters, that a certain percentage --
We have co-bound counsel. We could require a co-book runner to be local to work with -- which would increase the compensation to the local investment bank?
The underwriters don't pick the rest of the investment 28 5/26/10 - FINANCE - BILL 100129, etc. banking team. We do that.
Do we ever require a local firm be co-book runner, which would give them much more of a compensation rather than just as --
Yeah. There are times when local firms are co-book runners. For example, for the Justice Center deal, PNC was the senior underwriter. So they ran the books for that. So, I mean, that does happen.
Okay. Would you have any objection to the law requiring even if you pick someone outside the City that at least one Philadelphia-domiciled investment bank be co-book runner with whoever is picked?
I would want there to be a test of their ability to actually deliver. I mean, if we had firms -- as long as there's some kind of restriction on their ability to actually help us, I think that's something we should consider, but I wouldn't want to get into 29 5/26/10 - FINANCE - BILL 100129, etc. a place where we were choosing senior book runners purely on location and not on ability.
Okay. That's certainly true. Thank you. I have a question for the Airport, and, that is, does this bond offering and the refinancing in any way encumber assets owned by the City of Philadelphia at the Airport or is this a general obligation bond?
It is not a general obligation bond. In terms of the encumbrance, no. 16
Specifically I'm referring to the parking structures. There's a ten-year deal which is about to be up with the FAA and the City of Philadelphia. That is a strategic asset of the City of Philadelphia and I want to make sure that those lots are not going to be encumbered by this offering specifically such that the City can look at its strategic assets and decide what 30 5/26/10 - FINANCE - BILL 100129, etc. it wants to do with them.
They are not. It's just pledge revenues from the Airport. There's no facility pledge.
First, provide a few examples of majority minority partners that are already in place at the Airport.
Yeah. You indicated in your testimony that you do have examples where you have majority 31 5/26/10 - FINANCE - BILL 100129, etc. minority partners participating in contracting opportunities at the Airport.
The first one that comes to mind I believe would have been Daroff Design, is one. We have a list for you, Councilwoman. If I may, Councilwoman, I'd like to ask our Acting Director for Compliance, Caleb Gaines, to respond to the individual companies. (Witness approached witness table.)
Good morning. My name is Caleb Gaines, Acting Director of Compliance for the Philadelphia International Airport. Councilwoman Brown, one of the companies that come to mind would be, of course, as our CEO, Mark Gale, said --
-- Daroff Design. Another company we would have multiple contracts, has bid as a prime as well as 32 5/26/10 - FINANCE - BILL 100129, etc. a sub, would be Aurora Engineering, would be another company. Carter Hayes would be another company that's been involved like in construction management, cost estimating.
She's actually both. She's actually both. The owner is an African American female. So she's actually both. Those are several where we -- contracts where we've actually had minorities bidding as prime as majorities at the Airport, as well as subcontracting opportunities.
On the issue of financial advisors, would there be opportunities -- would it be appropriate to have majority minority financial advisor relationship on matters of this scale? I'm asking. When I hear you say that --
One of the 33 5/26/10 - FINANCE - BILL 100129, etc. financial advisors is a woman-owned firm. We have two financial advisors on the deal, and Frasca is a woman-owned firm.
To Councilman Green's concern shared by many on this Committee when it comes to the -- oh, it's for bid. The record needs to reflect that we do care a lot about opportunities that go to residents of the City of Philadelphia. So when you say that, and I quote, you look at -- you say you look at residency. And then what happens after that?
Well, it's one of the criteria we look at in selecting 34 5/26/10 - FINANCE - BILL 100129, etc. participants in our bond teams.
Things for underwriters, ability to sell the bonds. Financial advisors, experience in the relevant area. So in this case, for example, one of the financial advisors is First Southwest. They have extensive airport experience, so understanding of the deal that we're doing. So there are a lot of different criteria we use in looking at who to pick.
What type of outreach does whatever the designated department -- I don't know if that should be the Airport or OEO or Finance, but what type of outreach is done to grow, if you will, financial advisors that are capable, that will have the ability to deliver, which is your quote, and local?
We have kind of a regular meeting process with financial advisors where we talk through kind of 35 5/26/10 - FINANCE - BILL 100129, etc. what our requirements are, what we look for with people. We try to make sure they get in on deals with firms that are more experienced so that they can learn, with the goal of ultimately having them be able to be the senior financial advisors.
When we look at the fact that the Philadelphia Airport's budget, based on Minority Business Enterprise Council 2008 listing of budgets, your department is the biggest at 170 million in 2008. So it really does matter that you seek to exceed the goal of 20 percent since that is the largest department, and I would submit going the extra mile is required to help financial advisors be available for these huge opportunities at the 36 5/26/10 - FINANCE - BILL 100129, etc. Airport.
Recognizing that this is $170 million. So to hear that other departments are getting opportunities to use financial advisors that are minority or women doesn't go a long way, when the Philadelphia International Airport's budget is $170 million.
The choice of financial advisors really comes from the Treasurer's Office and the Office of Director of Finance.
The choice of the financial advisors really comes from our office or the Finance Department and the Treasurer's Office. So that's why I said who would make the decision is the Finance Department and the Treasurer's Office. It's not the Airport who is really picking the financial advisors. 37 5/26/10 - FINANCE - BILL 100129, etc. We consult with them to make sure they're okay, but --
And if my memory serves me correctly, the Treasurer's Department fell short when it came to opportunities for MBE, WBEs based on testimony from last year.
I didn't think so. I think our participation in bond deals we did pretty well.
I thought so. I thought our numbers were good for our participation in deals.
So state again for the record all of the partners on this particular bond deal and where they come from.
Well, so far most -- all that's been picked so far have been the financial advisors and the bond counsel. The underwriters have not been picked yet. The co-bond counsel are 38 5/26/10 - FINANCE - BILL 100129, etc. Saul, Ewing, a Philadelphia firm; Gonzalez, Saggio and Harlan, which actually has a Philadelphia office, they're a minority-owned firm; First Southwest, which is from Texas; and Frasca and Associates is from New York, and they're a woman-owned firm.
What is the composition of the personnel, the professionals of those companies you just identified?
I don't know. I'd have to get back to you on the composition of their personnel.
So let me say going forward that for any and all deals tied to the Airport, be prepared in your testimony to tell us where they come from, the diversity mix at the top, as well as the composition of staff.
That will become a standard operating ask of this Committee going forward forever. 39 5/26/10 - FINANCE - BILL 100129, etc.
The Chair recognizes -- let me just follow up on that. We'd like to have that information before we pass this bill.
Mr. Dubow, what you described was somewhat an informal rotation system in terms of you may have a qualified firm working on several different projects and so you may go to another firm, but there was not a rotation system necessarily for Philadelphia-based firms or for firms owned by women and people of color. In the past, the City has used a rotation system for those purposes. Isn't it just possible to pre-qualify firms and then 40 5/26/10 - FINANCE - BILL 100129, etc. take Philadelphia-based firms and minority-owned firms and women-owned firms through a rotation system?
Well, for underwriters, that's what we do. We do a pre-qualified pool and then we pick from that pool.
So if you have a pre-qualified pool of Philadelphia-based firms, minority-owned firms, women-owned firms, then you can actually institute a rotation system, so that we know that we have Philadelphia-based firms and disadvantaged firms that are qualified that continue to get work and continue to gain experience.
Right. And we do have -- I mean, we do have Philadelphia firms and DBE firms on every deal as underwriters --
Point of 41 5/26/10 - FINANCE - BILL 100129, etc. information.
We hear clearly that there are women and minority-owned firms on every deal. We care equally about growing to capacity women and minority-owned firms that live in Philadelphia, that have residency in Philadelphia. We care about putting Philadelphians to work.
Right. I understand, and we have Philadelphia firms on every deal, too.
Simply put, if you have a pre-qualified list, you can increase participation of Philadelphia-based firms and disadvantaged businesses beyond what you have.
Thank you 42 5/26/10 - FINANCE - BILL 100129, etc. very much. Any other questions? (No response.)
Yes. Come forth, please. (Witnesses approached witness table.)
Thank you, Madam Chairwoman. I want to restate for the benefit of the Airport leadership, to the Airport leadership, Mr. Rob Dubow, I do not want it to go unrecognized that we do expect to see in writing the makeup of the diversity of all those firms on this bond deal.
That's what we're talking about right now. 43 5/26/10 - FINANCE - BILL 100129, etc.
Thank you. Good morning. Well, it's good afternoon right now.
Would you please state your name for the record and proceed with your testimony.
Thank you, Madam Chairperson. My name is Robert Archie, members of the Finance Committee. I'm a partner in the law firm of Duane Morris and I am here today as special counsel to Wachovia, a Wells Fargo company, also known as Wachovia. I'm here along with Donn Scott to my left, an Executive Vice-President; Stephanie Wall to my far right, Senior Vice-President; and Shelley Metz-Galloway, Vice-President, also a Vice-President. We're here to testify on behalf of Wachovia in support of Bill No. 25 100129. This bill authorizes the City 44 5/26/10 - FINANCE - BILL 100129, etc. Treasurer, on behalf of the City, to enter into an agreement with Wachovia Bank for provisions of banking services to the City, under certain terms and conditions. Let me state some historical background, if the Committee will permit me. City Council in 2005 --
Can I just ask for the record why Wachovia/Wells Fargo is presenting testimony?
We had a hearing on April 22nd. The City Treasurer's Office offered testimony. I had some questions of Wachovia/Wells Fargo at that time. Wachovia/Wells Fargo 45 5/26/10 - FINANCE - BILL 100129, etc. chose not to testify on April 22nd, to offer testimony on that date. So my question is, why have you chosen to offer testimony today?
My question is, Wachovia/Wells Fargo chose not to testify on April 22nd. This was a recessed hearing. So my question is, one, why did Wachovia/Wells Fargo choose not to testify on April 22nd, and then why did you choose to testify today?
If you'll let me go through my testimony, that will perhaps give you the explanation why they chose to testify today.
It really was a simple question of why, first. I'm not bothered by the testimony. I'm just wondering what the testimony -- the purpose of the testimony is.
There is some uncertainty as to the questions which 46 5/26/10 - FINANCE - BILL 100129, etc. were posed to them at the hearing on April the 22nd. They're now back to augment and supplement that testimony from that day.
They did not offer testimony from that day. They offered responses to questions.
Well, those questions were not understood on April 22nd and that's why they came back today, to answer those questions.
Can I just ask an additional question before you do that?
This is Shelley Metz-Galloway, Vice-President, Home Mortgage Disclosure Act, CRA Manager, Wells Fargo Home Mortgage. 47 5/26/10 - FINANCE - BILL 100129, etc.
Ms. Metz-Galloway, I gave you a copy of the transcript from April 22nd, specifically where you said that lending to African Americans in 2010 I think at the percentage rate of 8 percent is, I believe, is accurate for 9 this point in time. The markets continue 10 to contract, and we actually expect that 11 lending overall will in 2010 decline year 12 over year from 2009. So I think the 24 13 percent is likely to be an appropriate 14 peer average for 2010. 15 Is that accurate? 16
Can you 19 explain that statement for the record in 20 context? 21
Yes. I'm first asking her whether it's accurate, 48 5/26/10 - FINANCE - BILL 100129, etc. then I'm asking her to explain it for the record.
Councilman Goode, the statement that was made as of that date is accurate per what is in the letter of the record. I would respectfully submit that I'm not sure that I fully understood your question and would like to request, please, clarification of your question so that I can confirm whether or not my response was accurate, please.
I believe that you were responding to questioning regarding the strategic plan and Wachovia's response to disparities that were found in the lending study and what that response was and what the peer average was with regard to home purchase loans to African Americans. And so I believe in addition to Ms. Wall's testimony, that both of you stated that you sought to match or exceed peer lending performance in the area of home 49 5/26/10 - FINANCE - BILL 100129, etc. purchase loans to African Americans, as is required under the City ordinance, and that you believe that that peer average would be percent of loans to African 6 Americans in 2010. Is that correct? 7
I'd like to 8 clarify that as it pertains to the 9 strategic plan, that there were no 10 previously established goals for the 11 African American community in the 12 strategic plan. 13
I'm asking 14 you about in the transcript and 15 whether you could explain what your 16 statement meant on that day. 17
May she confer 18 with me? Because I think I have an 19 understanding of your question and her 20 response. 21
I'm not sure 22 she needs to confer with legal counsel in 23 order to answer whether her words were 24 accurate what she has and, two, to explain what she meant. 50 5/26/10 - FINANCE - BILL 100129, etc.
You may answer the question. The question is -- may I restate it? The question is, is your response accurate?
The second question was, could she explain her statement in context, what she meant by the statement.
So, Councilman Goode, the statement here as recorded in the document is what I did say. In terms of accuracy around the percentage of lending to African Americans for 2010, I would submit that that was purely an estimate. I have no 25 way of knowing what lending to the 51 5/26/10 - FINANCE - BILL 100129, etc. African American community will be for the City of Philadelphia or for the nation. It was purely an estimate based perhaps on prior lending within the City of Philadelphia.
Again, it is an estimate of what I suspect may be peer averages, but I have no way of confirming with any level of accuracy whether or not that is true or correct.
Were you suggesting that if that is the peer average for 2010, that that should be Wachovia and Wells Fargo's goal as relates to the City ordinance?
No, that would not be my statement. I would not state that.
I was stating that it would be my estimate that 52 5/26/10 - FINANCE - BILL 100129, etc. based on prior years' performance, that may in fact be the rate of lending in the City of Philadelphia for 2010.
And should Wachovia/Wells Fargo aspire to that rate or not, according to the City ordinance?
Wachovia/Wells Fargo is not permitted by law to establish any particular goals that are race or ethnicity based, so --
So what is your understanding of the City ordinance 14 as it relates to disparities that are disclosed in the annual disparity study? Are you not supposed to develop a strategic plan that addresses those disparities?
According to the City of Philadelphia ordinance and the annual community reinvestment plan, is that your question, sir?
According 53 5/26/10 - FINANCE - BILL 100129, etc. to that document, it is my understanding that we are intended to or we are expected and required by the ordinance to develop goals that target low- and moderate-income neighborhoods within the City of Philadelphia.
That is not correct. Let me read you the section of the ordinance. 19-201 reads, "Each depository shall provide the City with an annual statement of community reinvestment goals, including the number of small business loans, home mortgages, home improvement loans and community development investments to be made within low- and moderate-income neighborhoods in the City of Philadelphia. Each depository shall also certify compliance with Section 17-104 of The Philadelphia Code and provide the City with a long-term strategic plan to address disparities in its lending and investment activities. The strategic plan shall 54 5/26/10 - FINANCE - BILL 100129, etc. address how the depository will match or exceed peer lending performance and target capital access and credit needs disclosed in disparity studies commissioned by the City." The original provision in the Code laid out community reinvestment goals within low- and moderate-income communities. We added a section that deals with fair lending. We require an annual disparity study and we require a strategic plan in response to that annual disparity study with regard to any disparities that are found. Those disparities are not just limited to low- and moderate-income communities.
So does the strategic plan address disparities by race and ethnicity?
May I answer that? The ones which were submitted? The ones which were submitted for 2006 to 2009 does not. It only addresses low- and 55 5/26/10 - FINANCE - BILL 100129, etc. moderate-income communities.
Should it have addressed disparities by race and ethnicity?
So are you saying that the City ordinance is unenforceable?
What we -- based upon the package of laws that I handed up, it indicates that you cannot use race and ethnicity to set goals, but what you can do retroactively, you can look at the number of loans made based on race and ethnicity. So you can find out exactly, but it's always retroactively. It can't be prospectively, because if you set a goal based on race and ethnicity for Asian Americans, African Americans and Latinos and you fail to meet that goal, what you've done is given a right -- a cause of action against those minorities whose goals you didn't reach. 56 5/26/10 - FINANCE - BILL 100129, etc.
That's really not the question I'm asking. The question I'm asking is whether the City ordinance is enforceable with regard to state and federal law or is it preempted?
Okay. Not hard and fast quotas. You can set aspirational goals.
So let's skip through all of it and let's not play the low- and moderate-income game. There were disparities with regard to lending 57 5/26/10 - FINANCE - BILL 100129, etc. under the City ordinance --
Those are two -- the connection or the correlation has to be there. You must first determine the disparity.
Then in order to remedy that disparity, you can set aspirational goals.
If the disparity has been determined by the disparity study and is done so on an annual basis.
And the OCC regulations with regard to preemption in terms of local and state law clearly says that what we cannot do is set terms. We cannot tell you who to lend to. But with regard to -- specifically with regard to 58 5/26/10 - FINANCE - BILL 100129, etc. areas that may deal with lending discrimination, local and state laws are not preempted.
Correct. I don't differ with you over that. But aren't we getting to the same point?
What's the aspirational goal? Is the aspirational goal percent? 14
Based upon the 15 testimony that you refer to, that was an 16 estimate -- that was the bar, the 24 17 percent. 18
The question 19 is -- those were her words. Is the 20 aspirational goal 24 percent or not? 21
24 Ms. Metz-Galloway, in of the transcript, you said what you said. I 59 5/26/10 - FINANCE - BILL 100129, etc. gave it to you in writing. Were you inferring that the aspirational goal was percent? 5
So what were 8 you saying, which was my original 9 question? 10
I was 11 trying to say that I would expect the 12 industry, the mortgage lending in the 13 African American community in the City of 14 Philadelphia to continue at the rate of 15 lending in the African American community 16 that it had previously demonstrated. 17
We know the 18 other banks are going to do it. We're 19 asking whether you're going to do it. 20 Mr. Archie, maybe we can save a 21 lot of time and save the presentation if 22 you can just advise your counsel that it 23 is legal to set aspirational goals. 24
And let's 60 5/26/10 - FINANCE - BILL 100129, etc. just skip all of this and continue this on June 9th.
Well, if you are asking me whether I can advise my client to set aspirational goals --
No. I'm asking you to advise them that it is legal to set aspirational goals.
Right, but can I finish my testimony and then perhaps you can?
If it relates to low- and moderate-income communities and does not address disparities within other demographics, then it is insulting to me and the work that I've done over several years.
It's not an intent to insult you in any way, Councilman Goode.
It's not an 61 5/26/10 - FINANCE - BILL 100129, etc. intent by you. We are friends.
I consider you a mentor. But you were hired by them, and I know the games they play.
Let me say this: It's not a game. I think it's perhaps a misunderstanding.
Let me finish my thought and statement for a moment. What we have in front of us are basically three documents which are basically utilized to set goals, or at least they're stating goals. One is the community reinvestment goals, which are required by all the City depositories, which I've handed up, which sets goals on an annual basis June of that calendar year. You also have in front of you a strategic plan which was put together by Wachovia setting another set of goals for 2006 to 2009. What we had at the last 62 5/26/10 - FINANCE - BILL 100129, etc. hearing was questions from you in particular, and they weren't sure what goals you were referring to, the goals in the strategic plan or the goals in the community reinvestment goals which were set. I understand looking at the testimony now --
No, no. 10 They only wanted to do a strategic plan that was based on low- and moderate-income neighborhoods. They only wanted to set goals which were based on low- and moderate-income neighborhoods, and what happens in that case, they tend to lend to white borrowers in moderate-income neighborhoods, and if you track the data, you will see that people of color, their lending has not increased. If you track the data, you will see that low-income areas have not been increased in terms of lending, but that it has been increased in terms of white borrowers in moderate-income areas. That's why it's a game. 63 5/26/10 - FINANCE - BILL 100129, etc.
Right, but, Councilman Goode, what you cite at the ordinance that you read from, which is required to be submitted, the goals, the reinvestment goals, specifically it says set goals for low- and moderate-income areas. I mean, that's a part of the ordinance.
And that's why we added the annual disparity study that goes across several demographics and asked for a long-term strategic plan to address all of those disparities disclosed in that annual disparity study.
Have all of the depositories -- let me ask a question. Have all of the City depositories submitted a strategic plan for year 2009 and 2010?
All of those that had disparities that were disclosed in the annual disparity study, one, and if they did not, I removed them from the list. 64 5/26/10 - FINANCE - BILL 100129, etc.
Okay. But all the other City depositories submitted a strategic plan?
And those who do not by June 30th, they cannot receive City money. They have to give back the City money. But I take the extra step of actually wiping them off the list. Now, the question is whether the strategic plan that's been submitted actually was devised to do what it was supposed to do under the law, which is address all disparities. And when I pulled the transcript of this hearing, it will say the strategic plan did not address anything but low- and moderate-income communities. It does not address all disparities found in the disparity study, and that's wrong.
Right. Our understanding, the low- and moderate-income communities are comprised of those three racial and ethnic groups 65 5/26/10 - FINANCE - BILL 100129, etc. that are set forth in the disparity study, African Americans, Latino, as well as Asians. And based upon the information that we have, loans were -- between 80 and 100 percent of loans made in that area went to that group --
Mr. Archie, if low- and moderate-income lending remains steady or increases and lending to African Americans and Latinos decreases, what does that mean?
No. What it means that there is -- let me take that back. And lending to not only African American and Latino borrowers has decreased but lending to low-income borrowers has decreased, what it means is that they're actually lending more to 66 5/26/10 - FINANCE - BILL 100129, etc. white borrowers in moderate-income areas. It means that they are still skimming from the top in terms of borrowers and are not digging down deep enough to address disparities that actually exist. That's what it means.
Well, but there are other factors that sure go into lending other than race, and you know that.
They don't lend to lower-income communities either. The low- and moderate-income communities' numbers are higher. The lower-income numbers are not.
When you 67 5/26/10 - FINANCE - BILL 100129, etc. combine low income with moderate income, those numbers may increase because of lending may have increased in moderate-income areas.
But the City is asking for them to give goals based on low- and moderate-income areas.
That's the goal. We're not talking about the goals. We're talking about the long-term strategic plan, which is separate. That's separate.
As my client has advised me, and I'm in agreement based upon what we handed in, is that you are not permitted to develop a long-term strategic plan based on race and ethnicity. What you -- unless you determine that there is a disparity. And you have concluded based upon the disparity study that there is a 68 5/26/10 - FINANCE - BILL 100129, etc. disparity.
But, Mr. Archie, furthermore, not only do we believe we've determined there was disparity, when we walked through the formulation of the strategic plan with Wachovia, what they claimed was they were doing things specifically within that strategic plan that was going to target certain demographics within low- and moderate-income communities to make sure they addressed all the disparities. Is that not true, Mr. Scott?
The question as posed -- but you have the strategic plan there, so you know --
I'm talking 69 5/26/10 - FINANCE - BILL 100129, etc. about the formulation of the strategic plan as was discussed as it was being developed. Mr. Scott, is it true that Wachovia at the time said that it was developing a strategic plan that while on the surface may look like it just addressed low- and moderate-income communities, that the strategic plan was meant to address all the disparities among several different demographic groups. Is that true or not?
Identify yourself for the record and speak into the mike, sir.
Donn Scott, head of Government Banking Group for Wachovia/Wells Fargo. The only strategic plan, Councilman Goode, that I am aware of is the one that Robert Archie referred to, which is the one from '06 to '09, which 70 5/26/10 - FINANCE - BILL 100129, etc. is contained in the report that we gave you, which goes back many years ago, and we pulled the plan together to address certain issues, but I also believe that that plan dealt with low- and moderate-income communities.
Was the plan supposed to deal with the fact that only percent of home mortgages went to 11 African Americans at the time? That's a 12 question, Mr. Scott. 13
Was the 16 strategic plan that was submitted to the 17 City, was it supposed to -- 18
Based upon your recollection, did that plan provide for that, the discussion leading up to the development of that plan? Is that your question?
No. The question is whether the plan was supposed to address other disparities beyond those 71 5/26/10 - FINANCE - BILL 100129, etc. within low- and moderate-income neighborhoods, and specifically was this plan supposed to address the fact that at the time only percent of home purchase 6 loans were going to African Americans? 7
Councilman Goode, 8 my recollection is that when we look 9 back, we were certainly aware of the fact 10 that we had not done an excellent job in 11 terms of meeting the needs of the African 12 American community. 13
Mr. Scott, 14 let me be more specific. A significant 15 portion of the City a few years ago was 16 well aware of the fact that Wachovia only 17 gave 18 percent of its home purchase 18 loans to African Americans. I made sure of that. Was the strategic plan supposed to address that, yes or no?
Yes or no? Was the strategic plan supposed to address that, yes or no? 72 5/26/10 - FINANCE - BILL 100129, etc.
Councilman, let me state, I have the plan in front of me. Let me give the other members of the Committee an opportunity to understand what the plan stated.
Mr. Archie, I think what you might want to do is be prepared to respond and make that presentation on the 9th.
We're going to recess this hearing until the 9th and you'll have an opportunity to answer and make that presentation at that time. I think it would be better for you to do that. 73 5/26/10 - FINANCE - BILL 100129, etc.
Thank you. Okay. Thank you for your testimony and your time.
We are now going to call on Ms. Deborah McColloch to testify on Bill 100357 and anyone else accompanying her to make this presentation to come forth. (Witnesses approached witness table.)
Would you please identify yourself and present your testimony. MS. McCOLLOCH: Good afternoon, Councilwoman Tasco and members of the 74 5/26/10 - FINANCE - BILL 100129, etc. Finance Committee and other members of City Council. I am Deborah McColloch, Director of Housing. I will present testimony on behalf of the Administration on Bill 100357, which permits the City to apply for federal Community Development Block Grant, HOME Investment Partnership funds, Emergency Shelter Grant and Housing Opportunities for Persons with AIDS, known as HOPWA, funds and for state funds from the Department of Community and Economic Development. The bill 14 refers to Exhibit A, which is the Year 36 Consolidated Plan, the required HUD funding application. In order for the City to receive funding from HUD, the City is required to submit an approved Consolidated Plan to HUD no later than August 16th, 2010. The Consolidated Plan includes a budget for the Housing Trust Fund and related funding sources. With me today are Alan Greenberger, Acting Deputy Mayor for Planning and Economic Development and 75 5/26/10 - FINANCE - BILL 100129, etc. Director of Commerce, and representatives from the Department of Commerce, which administers funds allocated for community economic development, and related agencies, including the Redevelopment Authority and the Philadelphia Housing Development Corporation. The Year 36 Consolidated Plan for the fiscal year which begins July 1st, 2010 details our plan for spending monies from five primary federal sources. The proposed budget generally carries forward existing programs and commitments. The first source of federal funds is the Community Development Block Grant, which is still the largest source of funding for affordable housing, aside from subsidies which the Philadelphia Housing Authority receives directly from HUD. 326 million in new entitlement funding, an increase of nearly $3 million from Year 35. Other CDBG-related resources include program income such as 76 5/26/10 - FINANCE - BILL 100129, etc. the sale of land and prior years' reprogrammed funds, which are funds which can be liquidated from prior years' budgeted activities. In Year 36, based on resources available, we are anticipating an increase in prior years' reprogrammed funds and in program income. 652 million in Year 36. This $4 million increase in CDBG resources, however, is more than offset by the loss of the one-time federal funds from the American Recovery and Reinvestment Act, known as the CDBG-R funds, which were awarded and budgeted in Year 35. 9 million in Neighborhood Stabilization Program 2 funds in Year 35. These funds are budgeted over three years. 829 million less than in Year 35. So 77 5/26/10 - FINANCE - BILL 100129, etc. we have essentially $12 million less going forward. I am happy to tell you that despite the reduction in available resources, the Proposed Year 36 Consolidated Plan maintains core housing and community economic development initiatives and programs. The City remains committed to affordable housing production, housing preservation programs, mortgage foreclosure prevention and other key housing services. Within the Consolidated Plan budget, continued funding is proposed for for-sale housing, including both new construction and rehabilitation. Continued funding is proposed for rental ventures financed in conjunction with the Low Income Housing Tax Credit and special needs housing to assist the homeless and those with other special needs. The Basic Systems Repair Program, BSRP, is proposed to receive level funding in total funding in Fiscal Year 2011. The City proposes to replace 78 5/26/10 - FINANCE - BILL 100129, etc. CDBG-R funding used in Year 35 for BSRP and for mortgage foreclosure prevention with CDBG funds in Year 36. Program funding is maintained for the Adaptive Modifications Program. 655 million in Fiscal Year 2011. The increase supports the Mayor's job creation initiatives.
The objective is to create economic opportunities by assisting new and existing businesses, investing in neighborhood commercial areas and supporting community-based organizations which are engaged in economic development. The Consolidated Plan budget exceeds the requirement of Council Bill 000716 that at least five percent of CDBG funds be allocated to economic development activities carried out by community development 79 5/26/10 - FINANCE - BILL 100129, etc. corporations. The second primary source of funding for Year 36 is the federal HOME program. 445 million in new HOME entitlement funding in Year 36, a decrease of $100,000. HOME funds are used primarily to support housing production programs. The third source of federal housing funding which is included in the Year 36 Consolidated Plan is the Housing Opportunities for Persons With AIDS, HOPWA, program which the City of Philadelphia administers for a five-county metropolitan region, including Philadelphia, Bucks, Chester, Delaware and Montgomery Counties. The federal formula for HOPWA funds is based on the historical and contemporary AIDS caseload in the region. 786 million in HOPWA funds for the five-county region, an increase of $70,000 from Fiscal Year 80 5/26/10 - FINANCE - BILL 100129, etc. 2010. Rental assistance to allow persons with AIDS to rent their own apartment or home is the largest single expenditure of HOPWA funds and is proposed to receive an increase in Year 36. The fourth source of federal funding for housing in Year 36 is the Emergency Shelter Grant, or ESG, program. 296 million in ESG funds in 2011, an increase of $7,000. These funds which support emergency shelter activities will continue to be administered by the Office of Supportive Housing. In the past, another major source of funding for housing has been the Section 108 loan program. Under the Section 108 loan program, the City is allowed to borrow funds against future CDBG entitlement grants. In the past, the City used the Section 108 loan program to provide debt financing for economic development ventures and to support specific housing development 81 5/26/10 - FINANCE - BILL 100129, etc. ventures. While economic development Section 108 loans are self-sustaining through the repayment of debt, subsidies for housing funded with Section 108 loans must be repaid from CDBG entitlement funding. The City has nearly reached its Section 108 loan program borrowing capacity and, therefore, in Year 36 no 10 new Section 108 loan authority will be sought for housing activities, and budget authority for a relatively modest loan of up to $20 million is requested for economic development activities administered by PIDC. The plan identifies $4 million in proposed funding from the state Department of Community and Economic Development's Housing and Redevelopment Assistance, HRA, program. These funds will be used to support home repair grants through the Heater Hotline and Tier parts of the Basic Systems Repair Program and to support affordable housing development. This budget allocation is 82 5/26/10 - FINANCE - BILL 100129, etc. based on the actual amount of HRA funds received by the City in Year 35. The City looks forward to continuing to work with the Commonwealth and DCED to bring critical resources for housing to the City. The plan also contains a recommended budget for funds for the Philadelphia Housing Trust Fund. The recession limited Housing Trust Fund earnings in Year 35, which are based on recording fees from deeds and mortgages. 5 million in new earnings, up from 6 million in Year 35, but approximately half the amount earned in Year 33. Line items in the Consolidated Plan reflect the priorities recommended by the Housing Trust Fund Oversight Board, as agreed when Council passed the Trust Fund legislation three years ago. Thank you for the opportunity 83 5/26/10 - FINANCE - BILL 100129, etc. to present this testimony.
In order for the City to receive funding from HUD, the City is required to submit an approved Consolidated Plan to HUD no later than August 16th, 2010. In order to permit expeditious submission of the Consolidated Plan to HUD, suspension of the rules to permit first reading at the next Council session is requested. My colleagues and I will be happy to answer any questions that you may have for us today.
Thank you very much. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam Chair. Unfortunately, I will have to leave this hearing. I have to deal with the Lucien E. Blackwell Community Center and so my heart and my commitment are split, but we are asking that in addition to the other two bills that this one be 84 5/26/10 - FINANCE - BILL 100129, etc. held until the 9th, because many of us have issues with the overall housing strategy, some issues that don't narrowly affect OHCD, but they do affect the RDA and other issues. There are other issues my colleagues have with the NTI plan. And so I regret missing testimony from all these interested and committed and involved people, but there are issues to which we need answers, and, again, we're asking, Madam Chair, that this bill, in addition to the other two, be held until the 9th. Thank you very much.
Thank you very much. Thank you for your testimony, Ms. McColloch. We've come to calmer days than I think when I first came here and this room was filled to the rafters with advocates for one issue or another. It seems either we solved the problems or we don't have enough money to solve them and people are out there trying to find other 85 5/26/10 - FINANCE - BILL 100129, etc. ways to deal with it. Just let me ask you a couple of questions. According to Bebashi, the HIV infection rate in Philadelphia is higher than New York City and rivals the infection rate of some African nations. In addition, and during the public testimony on this year's budget, we heard from constituents with AIDS that it was safer from a health perspective to be homeless than in City shelters. Considering this information, is the $70,000 increase in HOPWA funding for the five-county metropolitan region in FY11 sufficient to address this issue? Because all of that money does not come to Philadelphia. It's only $70,000. MS. McCOLLOCH: That's the amount of the increase. The HOPWA funding is based on a formula from HUD, and so we're simply told by HUD what the amount of money that we're receiving based on the formula that HUD has is. Of course it's not enough money to address 86 5/26/10 - FINANCE - BILL 100129, etc. all the needs in Philadelphia or in the counties, but the formula amount is simply given to us by HUD.
And what is the -- how does HUD determine -- you have a five-county region. How is the division -- the money allocated based on those five counties? What's the criteria for the distribution of those funds? MS. McCOLLOCH: I'll let my colleague answer the question.
Good morning, Councilwoman. My name is Scott Wilds, Deputy Director of Housing. The formula that determines what we get from HUD does not speak to the way we spend it here in the region as a whole. We try to match the approximate caseload within the counties with the way we spend funds. So about 80 percent of the folks with AIDS living at this time live in the City, and we spend about that same amount on folks in the City through contracts. There are also rules that HUD 87 5/26/10 - FINANCE - BILL 100129, etc. mandates that everyone who lives in the region must be able to access funds that we spend in the whole region. So that if you live in the City and there's a Bucks County rental assistance slot, you are able to use that as well as the ones in the City.
So it's not just allocated to those residents of those counties?
Okay. Interesting. Is there ever going to be an effort to increase the funding for HOPWA?
Let me, if I could, speak to that. Nationally, there's several advocacy groups that work on that. HUD did increase the amount last year. The Obama Administration has 88 5/26/10 - FINANCE - BILL 100129, etc. proposed increase for next year. The formula that drives what we get is complex and messy. It's volatile. It's based on a combination of current caseload and historic caseload. The current incidence rate, sometimes called the bonus amount, which is hardly a bonus since it depends on higher infection rates, gets us additional funds, but that portion, a quarter of the national award, bounces around a lot, because it depends in part on reporting and when people happen to walk in to a doctor's office and things like that. Two years ago, we got a substantial increase based on the bonus amount, and we have sustained that amount. At the time, we weren't sure we would be able to keep the amount of the grant that high and we were cautious in putting new rental assistance slots out. Because we've gotten this increase sustained, we're going to be able to add about 60 additional rental assistance 89 5/26/10 - FINANCE - BILL 100129, etc. grants to persons with AIDS in the new fiscal year. At the present time, that will cut into our waiting list substantially.
What is the amount that you receive for this program?
So how many sites can you fund with that, are you able to fund with that? How many patients can you accommodate?
Well, we fund a variety of different things. Last year we, between HOPWA, rental assistance and shelter plus care, which is administered by the Office of Supportive Housing, and some HOME funds, which we also use for rental assistance, we served about 800 households with direct housing assistance. They either received a rental assistance voucher, they received an emergency grant to allow them to stay 90 5/26/10 - FINANCE - BILL 100129, etc. in their apartment or they lived in a housing group living arrangement of some kind.
Okay. You know, State Representative Jewell Williams had a press conference and we got some information, I guess, from the state about the increase in HIV/AIDS epidemic. What is our role here in developing the advocacy? Like I said before, we used to have a lot of people in this room advocating for everything, particularly funding for HIV/AIDS and housing for those patients. Are we doing anything to strengthen and increase that advocacy in Washington?
We're obviously not allowed to advocate in certain ways as the grantee, but I think we do make -- the Administration makes its needs known 91 5/26/10 - FINANCE - BILL 100129, etc. to its Washington representatives and congressional office about the needs here.
Okay. Thank you. Ms. McColloch, according to of the budget detail of the Con Plan, $60,000 has been allocated for anti-predatory loan products. Can you explain how these funds will be used and how does this funding level compare to previous years? MS. McCOLLOCH: The $60,000 that you refer to is funding that is provided to Greater Philadelphia Urban Affairs Coalition, GPUAC, that supports the activities, that supports staff and operations at GPUAC to carry out the program that's providing Mini-PHIL loans, and that is the same funding that it received last year and I believe the year before -- and also the year before. So it's continuing to support GPUAC's efforts to assist us in providing 92 5/26/10 - FINANCE - BILL 100129, etc. anti-predatory loan products.
One of the concerns we've raised over and over and over again about this issue about the PHIL-loan program is the lack of advertising and information given out to the public, because I carry the little pamphlet in my car, because when you talk to people about it, they look very puzzled. So given the need for support and you can see the discussion around the banks need to put more money into the community to help these families who may want to buy housing or probably need home improvement loans, which we really find a lot of these predatory loans in Philadelphia are associated with home improvement or second mortgages to do home improvement, is there any way that we can get the level of increase for this program so that we can let our citizens know? Because they still are in a vacuum, a quandary to know what exists out there to help them. And the banks do 93 5/26/10 - FINANCE - BILL 100129, etc. participate in -- I think some of them -- in the program, but certainly we need some money to provide information to the community. MS. McCOLLOCH: Yes. We have -- through our housing counseling agencies, they provide the information and filter clients from the housing counseling agencies to GPUAC, and we've also done water bill stuffers that come in everyone's water bill once a month. There's almost always a stuffer every month advertising something. And we've done water bill stuffers for the Mini-PHIL program as well, and that's been an effective way to get the word out.
But you need to do more, and I'm going to keep talking to you about that, because it's not enough. We have 1.5 million people in this City, and if I see it in one-tenth of the City in my district and very narrow portions of my district where 94 5/26/10 - FINANCE - BILL 100129, etc. a lot of the predatory lending has taken place, the information is not getting out to the community. MS. McCOLLOCH: Okay. I'd be interested to talk to you about some ideas you may have.
Considering the need for anti-predatory lending products and the wait list for BSRP and similar services, has there been any consideration towards using the banks that partner in the anti-predatory lending program to expand the flow of bank capital into low-income communities for needed home repairs and improvements? MS. McCOLLOCH: I'm sorry. I didn't understand. I just didn't understand the question. Have we been working with the banks?
Do you work with the banks at all to expand their involvement or lending to communities for Basic Systems Repair? MS. McCOLLOCH: Well, the Basic 95 5/26/10 - FINANCE - BILL 100129, etc. Systems Repair Program is a grant program, so the --
No, but I'm saying because we don't have enough money -- MS. McCOLLOCH: Because our demand is so great for BSRP, are we trying to expand the banks' participation? Well, the banks participate in both the Mini-PHIL and the PHIL-loan program, and there's a standing committee that we meet with that GPUAC chairs -- GPUAC is the administrator -- chairs that has bank participation on it, and so we continue to try to work with the banks to expand the number of banks that participate.
Do you give them a sense of urgency? MS. McCOLLOCH: I'm sorry?
Do you provide a sense of urgency to the banks? It seems that Wachovia could use some help. 96 5/26/10 - FINANCE - BILL 100129, etc. MS. McCOLLOCH: We'll try to reach out to Wachovia.
Thank you, Madam Chair. Good morning. Madam Chair, my first comment is off topic. I need to do a rewind back to the first panel with Mr. Rob Dubow and correct the record that it was not the Treasurer's Department. They had in fact exceeded their goal. My misstatement was that it was the -- or it is the Pension and Retirement Board that does abysmal performance when it comes to MBE, WBE participation, and I've shared that with Mr. Rob Dubow and corrected the record. I needed to do that.
Yes, yes, yes. Back to the topic we're in. 97 5/26/10 - FINANCE - BILL 100129, etc. First, Deborah McColloch, let me say thank you for your leadership and willingness around the Child Care Facilities Fund since its launch in 2003, and I know -- (Applause.)
Yes, there are many who pay attention to what the City is doing in this area.
See, we do have some advocates in the room, right? Thank you.
I know also that you had the tough job of considering competing fragile interests in communities, as has been already stipulated by Councilwoman Tasco with the community badly affected by AIDS and predatory lending. So I'm just asking that you keep in mind going forward during this as we come to closure around the budget, that you remember when you make your decisions about the budgeting of this particular community, that -- and 98 5/26/10 - FINANCE - BILL 100129, etc. let me just read it so that I don't misstate it. Typically when your professionals step in to look to see how much money has been spent, there's a difference -- there's now a difference in organizational models and accounting procedures, because the City's contracting process and review takes up to two years. So do you understand that the Facilities Fund advances the money to grantees to make capital improvements. When the City looks at the balance sheet for the project, it appears, it appears that you don't often consider that that money has been obligated and, therefore, the Facilities Fund isn't using all the money they have asked for, hence the smaller amount. So it's important to me that you understand that peculiarity, if you will, and as you look to make the decisions around this pocket of dollars, you'll keep the Facilities Fund whole for 99 5/26/10 - FINANCE - BILL 100129, etc. what that can mean in the crisis that we're in. Do I make myself clear? MS. McCOLLOCH: Yes. And I do understand the problem to which you're referring, and I've had many meetings with my colleagues at the Child Care Facilities Fund, the folks from NFF and others, to try to help them and support them in carrying out this program. The City supports the Child Care Facilities Fund. They're in the budget for $650,000 this year, no small amount, and there is always this, I'll use the word, discrepancy between the funds that have been drawn down and the funds that NFF, Non-Profit Finance, who carries out the program, has obligated, and that is a problem that is systemic because they need to obligate the funds, they need to make the commitment. They make the commitment of funds, do the work and then they draw them down. So there's always a difference between what our records show as the amount spent and the amount in 100 5/26/10 - FINANCE - BILL 100129, etc. their minds that they have obligated, and that is -- that's ongoing because that's the way the program --
Is set up. MS. McCOLLOCH: Is set up. But I just want to reiterate that OHCD is cognizant of the good work that they do, as evidenced by the fact that they're in the budget for $650,000.
Yes. Well, we thank you again for that, and the only other factor, benefit that comes with this particular community is that where you have those type of activities, it supports neighborhood revitalization and jobs. So in no way -- in never no 18 way to diminish the competing fragile communities, but always looking for that one added benefit or edge that a particular community brings, and in that case, the Child Care Facilities Fund. I need to put that on the record, and I thank you again for your leadership. Thank you, Madam Chair. 101 5/26/10 - FINANCE - BILL 100129, etc.
Thank you all for coming. We appreciate it very much. Councilman Clarke.
Thank you, Madam Chair. Good morning, good afternoon, whatever it is. MS. McCOLLOCH: Good afternoon, Councilman.
Couple of quick questions. One, a follow-up on Councilwoman Brown's question with respect to the concerns -- and I understand that you have very difficult decisions that you have to make, although in this particular case, not declining funds but in moving dollars around in very difficult times and the possible reduction in the aforementioned program. You reference in your testimony 102 5/26/10 - FINANCE - BILL 100129, etc. the fact that you did not receive an infusion of cash from the stimulus in this particular year, although there is an increase in funding from the prior year on the general CDBG allocation; am I correct? MS. McCOLLOCH: Yes. There's an increase in the general CDBG allocation of approximately 3 million, but that's offset, because last year we got an additional million in Recovery 13 Act -- in CDBG money from the Recovery 14 Act that we call CDBG-R, so that the total effect is a reduction in funding.
From that year, but it's not a reduction in funding from the prior year. I mean, that's a one-time funding source. MS. McCOLLOCH: That was a one-time funding source, yes.
So my concern is that -- and, Deborah, I know you a long time. I know this is not where you're going -- is that it implies 103 5/26/10 - FINANCE - BILL 100129, etc. that for a layperson says, Well, there's a reduction, a significant reduction, in almost $10, $11 million, because we got whatever we got last year, 22, I don't know the exact figure, but -- so, therefore, we have to make difficult decisions in reducing programs, when in reality that million or 14 million, 10 whatever it was, was actually a one-time 11 number that should not be reflected in 12 the general allocation of funding from 13 the general CDBG budget. So that should 14 not be the basis for impacting the Child 15 Care program, because that has nothing to 16 do with it. 17 MS. McCOLLOCH: I understand 18 what you're saying, Councilman. Although 19 I would point out that two years ago the 20 Child Care Facilities Fund didn't receive 21 any additional funding. The funding that 22 the Child Care Facilities Fund has been spending up until now was $5 million of CDBG funds that were awarded in 2003. So they've been spending down that 5 million 104 5/26/10 - FINANCE - BILL 100129, etc. since 2003. So for this particular program, this infusion of 650,000 is something that hasn't appeared in our budget for many years.
All right. Thank you. Thank you for correcting me. I should have known that you were on top of it. Couple of quick questions. Are you familiar with the Growing Greener program, a state program that's allowed -- it's apparently a significant amount of money that's made available by the state that can be used by municipalities for purposes of site preparation, curbs and sidewalks, infrastructure in the event that it's a watershed community, which I understand Philadelphia is significantly a watershed community. It's my understanding that there's a significant amount of money returned to the state each year because it's not utilized by eligible areas.
We'll find 105 5/26/10 - FINANCE - BILL 100129, etc. out about that.
Could you, please? And I actually found this out on following a couple of candidates on the state election -- legislative election campaigns. I just happened to hear it, and actually there is a legitimate program. Could you please check that out, because we need all the money we can get. Okay. Getting to the meat of my question. My understanding is that you have a number of contracts that you let with external agencies such as the RDA, PHS, PHDC, those various agencies. In terms of your ability as it relates to those contracts, what level of authority do you have in terms of directing their activities that come as a result of funding from your agency? MS. McCOLLOCH: Well, we negotiate a contract with, as you say, a variety of entities. It's a negotiation. So we -- 106 5/26/10 - FINANCE - BILL 100129, etc.
Could you speak into the microphone. MS. McCOLLOCH: I'm sorry. I'm trying to look at him.
Well, turn the mike. MS. McCOLLOCH: I'm in an awkward position. Obviously because the City or OHCD is the funder, we have some ability to -- we work with the agency, whichever it is, to outline the activities that will be included, activities that we're going to fund. They have to be fundable, eligible activities following federal guidelines and so forth. And then we negotiate a contract about what activities we want to support and how those programs will be carried out. It's detailed in the contract. So, yes, we have a lot of latitude about what goes into the contract.
In terms of your process of determining what outside 107 5/26/10 - FINANCE - BILL 100129, etc. entities you contract with, what is that process? Is there a request for proposals or is it a solicitation of potential entities that can comply with that contract? How do you decide who gets the contract? MS. McCOLLOCH: In some cases, for some activities we issue a request for proposals; for example, housing counseling agencies. We issued a request for proposals this spring. We will enter into a series of contracts with agencies to carry out that activity starting next fiscal year. For some entities, such as the Redevelopment Authority or PHDC, we don't issue a request for proposals. We simply engage in a contract with each of those public -- well, quasi-public agencies to carry out the activities that we want to have carried out.
Are there no other agencies that can carry out those functions? MS. McCOLLOCH: There is no 108 5/26/10 - FINANCE - BILL 100129, etc. other agency besides -- well, the Redevelopment Authority has the power to acquire property through eminent domain, and so that's one of the -- that is an activity that we fund, that we carry out through the Redevelopment Authority, because that's the entity that is state chartered to be able to do that.
My question was, are there any other entities that can carry out those functions? MS. McCOLLOCH: For that particular function, I believe that the Philadelphia Housing Authority could carry out that activity and I believe the School District can, but those are the only three.
So there are other agencies that can do that? MS. McCOLLOCH: They're all that same sort of level of public agency.
All right. What are the other ones? MS. McCOLLOCH: Philadelphia 109 5/26/10 - FINANCE - BILL 100129, etc. Housing Development Corporation, Pennsylvania Horticultural Society. Those are agencies that we contract with that we don't issue a request for proposals. We simply put it in our Consolidated Plan that that's the agency that we intend to contract with. Through the Commerce Department, the Philadelphia Industrial Development Corporation, PIDC, is another such example.
Why don't we put out request for proposals for those, all those agencies? MS. McCOLLOCH: Well, again, in the case of certain activities, there are only certain agencies that can carry out those activities. Putting out a request for proposals would not serve any purpose.
Like the Horticultural Society? MS. McCOLLOCH: Well, I was thinking more of the eminent domain. For the Horticultural Society, that is the 110 5/26/10 - FINANCE - BILL 100129, etc. main agency in the City that carries out the kinds of greening programs that we want to have done, the vacant land management and the other urban greening programs.
My question is centering around -- you made a decision that those are the only agencies that can carry out that function, without giving any other agency an opportunity to show that they can or respond to a request for proposals to carry out that function. MS. McCOLLOCH: Yes, we made that decision and that's why it's in the Consolidated Plan.
But it's -- MS. McCOLLOCH: It's based on the experience that we have with the Philadelphia Housing Development Corporation carrying out the largest Basic Systems Repair Program in the City. It's based on the experience we've had of working with the Pennsylvania 111 5/26/10 - FINANCE - BILL 100129, etc. Horticultural Society to carry out a greening program, both community greening and the vacant land management program, that we know that it can carry out that program. In the case of --
But other than that, you don't know that there's anybody else that can carry out that function, other than the fact that that's who you've always dealt with. MS. McCOLLOCH: I don't know that --
Because actually we've heard that -- not to get off track, but when we talk to entities as it relates to construction and when we do major projects and I interact with contractors and I say, Well, why can't you reach out to X or Y contractor to give them an opportunity, and they tell you, Well, this is who we've always worked with and we feel comfortable with them. MS. McCOLLOCH: Well, in the 112 5/26/10 - FINANCE - BILL 100129, etc. case of both PHDC and Pennsylvania Horticultural Society, each of those agencies in turn issues RFPs or RFQs, whichever, to get the contractors that do the work. So PHDC issues a series of RFPs to get the contractors that actually pound the nails and repair the roofs and install the plumbing and so forth. So that PHDC doesn't have that --
I understand what they do. MS. McCOLLOCH: And the same with PHS. PHS, Pennsylvania Horticultural Society, issues an RFP to get the contractors that do the community land care and do the vacant land stabilization. So the openness, the competition to participate in those programs is issued at the next level down.
I understand that, but there's no 24 competition and there's no openness on the first part; is that correct? 113 5/26/10 - FINANCE - BILL 100129, etc. MS. McCOLLOCH: Right; that we contract with PHDC or we contract with PHS.
All right. Part two of the question. In terms of -- and let's pick RDA out of the hat. The Redevelopment Authority, you contract with them for acquisition and, more often than not, using Block Grant dollars, right? So a property is acquired, it's in the inventory of the Redevelopment Authority, and then the Redevelopment Authority contracts with somebody through a redevelopment agreement or whatever. That entity that they've contracted out doesn't comply with the timeline or whatever the Redevelopment Authority called for. There's a default notice issued. Under my understanding, the Redevelopment Authority believes that it has the authority to reassign, change or do certain things related to that parcel 114 5/26/10 - FINANCE - BILL 100129, etc. or that property. Before they do that, is it your understanding, given the fact that they use money from OHCD that was contracted with to acquire that property, that there has to be an authorization as it relates to the reassignment or the change in the development plan before they do that? MS. McCOLLOCH: The Redevelopment Authority has changed the redeveloper of a particular parcel?
Correct. MR. McCOLLOCH: I believe the Redevelopment Authority has the authority to do that, but I think my colleague is here that could answer. (Witness approached witness table.)
Good afternoon. Would you state your name for the record, please. 115 5/26/10 - FINANCE - BILL 100129, etc.
Sure. I'm Terry Gillen. I'm the Executive Director of the Redevelopment Authority.
Hi, Councilman. So my understanding is your question is the same issue that your amendment -- your ordinance earlier this spring went to, right?
Which is this, I think, request by Council that if there's a default or change in the redeveloper, that it come through City Council, and I think that's --
The question is properties that -- this relationship was between OHCD and the Redevelopment Authority, which in earlier testimony it's witnessed that there is a 116 5/26/10 - FINANCE - BILL 100129, etc. contractual relationship. So the question is, if the OHCD contracts with the Redevelopment Authority to acquire a property utilizing Block Grant dollars or whatever dollars are available for that purpose and then the Redevelopment Authority issues a default notice on the redeveloper because they don't comply, either time or whatever reason, and before the Redevelopment Authority decides to dispose of or change the redeveloper or change the plan, is there a requirement or an obligation to go back to the original funder who has a contract with you to determine the disposition of that property?
So let me make sure I understand. So the question is should we go back to OHCD either, A, because they funded -- they provided the funding for the land acquisition or, B, because they're funding the Redevelopment Authority?
Both? Okay. Yeah. I don't know. I think -- I don't know. I'd have to think about that. We should get back to you and get you an answer to that question. I don't know.
Yeah. I mean, I just haven't thought -- as you know, this is a relatively new thing for the Redevelopment Authority to do, to be doing these defaults, and we're kind of at the early stage of it. And I, frankly, haven't thought about categorizing it in either of those terms, but we can do that and we will do that.
The Chair recognizes Councilwoman Brown. 118 5/26/10 - FINANCE - BILL 100129, etc.
Thank you very much. Good morning. Who handled defaults in the past? What's the formal practice or the history?
When you say RDA has not handled defaults historically.
Well, until this Administration came in in '08, it had never been done.
I see. Councilman Clarke. Thank you for your testimony.
I was not going to follow up, but since Councilwoman Brown is requiring that I follow up. And I guess I kind of get into this whole default, because I, frankly speaking, I think it's illegal. 119 5/26/10 - FINANCE - BILL 100129, etc. I'm not a lawyer, but the whole premise that, correct me if I'm wrong, Ms. Gillen, please, is that the Redevelopment Authority sells a property for market value to a redeveloper. That redeveloper does not comply with the redevelopment agreement, so there's a default notice issued to the redeveloper. You have not complied, we're defaulting on your redevelopment and we're taking the property back. But there is no 13 requirement to give the entity, the developer, the value that was paid by the developer at that time, and even at the time when that requirement comes about, there's no requirement to sell -- to reimburse that person for that amount. It's only a requirement, according to the Redevelopment Authority law, to reimburse that entity or that person for the amount that the property can be sold for in a subsequent contract or a subsequent transaction. I know that was a long -- 120 5/26/10 - FINANCE - BILL 100129, etc.
I'll try to break it down. Let's use real people. You sell me a parcel of land, $50,000. I'm supposed to build something. I don't build it in the timeframe associated with the redevelopment agreement.
You say I'm issuing a default. We're taking the land back.
But, A, I'm not required to give you $50,000. I'm required to give you only what I can sell the parcel for. So if I can only, in a separate and secondary transaction, sell 121 5/26/10 - FINANCE - BILL 100129, etc. the parcel for $25,000, that's all I'm going to give you. I don't think that that would withstand a court challenge at all. I just don't see -- not being a lawyer, I don't understand how that's legal.
Well, I hear you, and because we haven't done this in the past, it's certainly a new -- an issue of first impression, as lawyers would say. What I will say is, we've had -- the Redevelopment Authority has had outside counsel look at this, and outside counsel have advised that it is indeed legal. That's why we're doing it, because we've been advised that it's legal. I think the question of the monetary recoup is what -- we have a theory that we're entitled to getting -- the public is entitled to get its money back. It's not my money; it's the City's money.
Well, hold 122 5/26/10 - FINANCE - BILL 100129, etc. on.
How is it the public's money if the person bought the property for market value?
It depends on what the economics are. So let me just say two things. In some cases, we've given this property to developers.
I'm talking about I buy a parcel. You say the market value is whatever, your appraisal. I buy this market value, and then you say I'm issuing a default notice and I'm taking this property back and I'm not required to give you back what you paid for it.
Well, I think that's the question, or are we required to pay back what they paid with an inflator, number one? So is there an inflation number and --
I'm not talking about inflation. You're not required under your, what I understand 123 5/26/10 - FINANCE - BILL 100129, etc. your regs to be, to pay that person back the amount that they paid for that parcel. I don't understand how that's legal and how in the world that passes any court challenge.
But let me just say that the other consideration in a lot of these cases in many times the developer has been making money off the parcel and in many cases, for example, they have a parking lot and they've made money. So I think it's an open question as to whether the public should share in those proceeds as well.
I'm not talking about that. That may be one out of a million, because more often -- 124 5/26/10 - FINANCE - BILL 100129, etc.
One out of a million. Because more often than not, if there's a default -- and you've indicated that this is -- this is a parcel where nothing has happened on that parcel. That's why you've issued the default. So this is not something that somebody has made money off of. If anything, they've paid taxes on it.
Oh, Councilman, I beg to differ. In fact, in many of the cases where there are large sums of money at stake, in fact the developer has been making money off of them. Absolutely. We should sit down.
Since you're making the statement in the public, I'm going to ask you to give me that list.
And I also want you to give me the list of default notices that you've issued and I want to 125 5/26/10 - FINANCE - BILL 100129, etc. see the percentage of properties where you've issued default notices where people or entities or companies have made money off of those parcels versus the ones who have not made a dime and have actually paid taxes on the parcels during the course of their ownership.
Actually, Madam Chair, I understand that there was a request that there would be a recess on these bills, and if you're going to do that, I'll just hold my questions until -- because there's some interaction we probably need to have before the next hearing. Is that the understanding, that there'll be a recess on the bills?
All right. 126 5/26/10 - FINANCE - BILL 100129, etc. Thanks. I'll just withhold my questions until that time.
Thank you. These questions are for Ms. Gillen. In the spring of 2008, my office sent a letter requesting a list of all properties that were assigned by the RDA that were in default. We received several responses that you had begun, based upon that letter, looking at all contracts to try to figure out what you own, what you didn't own, whether or not there was a contract that would have put it back in the RDA or not. We received partial responses to that spring 2008 request. It's now spring of 2010. Have you completed that work, and, if so -- or if not, when are you going to complete it?
We have not completed it because it's, as I've described it, sort of like an 127 5/26/10 - FINANCE - BILL 100129, etc. archeological dig for us that we're going back into the files. We've started with the most recent agreements, and the files at the Redevelopment Authority are not in great shape, especially the further one goes back. So we're working our way through it, and we can and will share what we have up until now.
If you could do that and let us know how far you've gone back, how many properties you've looked at, give us a list of the properties you've looked at and what you've concluded about them, whether that's in a spreadsheet form or whatever it is --
-- in your current form and provide that to the Chair prior to the next hearing. Thank you.
Well, since you're here, I have a question. 128 5/26/10 - FINANCE - BILL 100129, etc. And it's not a big one. You don't have to answer specifically to this issue, but we've had some discussion with your office about the disposition of properties to individuals, and then -- without the knowledge of the Councilperson, and then an ordinance 9 comes to us to complete the process. What happens if we decide not to deed the house over or pass the resolution giving that property to someone? What happens to that property and what is the relationship between you and the person that wanted the property?
Yeah. Well, we hold it, and we have held it in several cases when a Councilperson has said no, I don't want to move forward with it. I think what we try to do is figure out whether it's a fixable problem or not a fixable problem. Sometimes if it's a fixable problem such as they need -- the Councilperson needs more information or needs to meet with the neighbors or 129 5/26/10 - FINANCE - BILL 100129, etc. something, we try to fix it. If we decide it's not a fixable problem and it's just that this is a use that the Councilperson doesn't want, we, I guess -- I don't -- I think in those cases, we just have to go back to the developer or to the purchaser and say that we're not going to enter into the contract with them, and then the property will either go back onto the website list or go back for sale. At that point, we'd have a better understanding of what the issue is. So, for example, I think there may have been a case in your district where there was a property and the neighbors didn't want it multi-family, and so we'd go back and we'd make sure that the next purchaser who purchased it but not for multi-family purposes. Do you know what I mean?
Well, wouldn't it be better if you contacted us first since we have the relationship with 130 5/26/10 - FINANCE - BILL 100129, etc. the community and know the community? Because if you had said to me this guy is interested in this property for multi-family, we would have told you no, and that would have saved whatever energy or time your office put into dealing with this gentleman. That would have saved it, because we have -- and I don't have a lot of these, but certainly I pretty much know -- we all pretty much know our district and where things are and how we worked with zoning changes and things of that nature. I would appreciate it that I get notified first that the person is interested in purchasing it, so at least we could talk to them about what they're going to use the facility for.
Because sometimes it doesn't meet with the plans or it's not in the interest of the community to have that facility used the way that the developer might want to use it. 131 5/26/10 - FINANCE - BILL 100129, etc.
Right. I understand that, and we are trying to do it earlier, but we have to do a certain amount of due diligence just to get a sense of whether the thing is real at all. You know what I mean? So we try to balance moving it along a little bit. In that case, yeah, we probably -- we for sure should have talked to you earlier. There's no 12 question about that. So we are trying to strike that balance. There's no 14 question, Councilwoman, that that's what we're trying to do.
Thank you, Madam Chair. Ms. McColloch, let's go back to the Child Care Facilities Fund for a second. You said that there was $5 million put into that fund that was meant to be spent down over several years? 132 5/26/10 - FINANCE - BILL 100129, etc. MS. McCOLLOCH: Well, it was put into the Fund in 2003. It was allocated through this process, through the Consolidated Plan, in 2003, and it has taken until this year to spend that down to -- by the end of the year. There's currently a balance on our books of a little over 400,000, about 430,000, but the Non-Profit Finance folks who carry out the program have indicated that that $400,000 is committed to specific projects, but they're not at the point of drawing the funds down yet.
So there has not been any more money put in since that 5 million in 2003? MS. McCOLLOCH: Last year an additional $200,000 of General Fund money was added, not Community Development Block Grant funds.
And there was no CDBG-R money put into it? MS. McCOLLOCH: No. 25
And this is 133 5/26/10 - FINANCE - BILL 100129, etc. done through RFP? MS. McCOLLOCH: This was not done through an RFP. It was added at the discretion of City Council in 2003.
I'm saying more recently was there an RFP for any additional money? MS. McCOLLOCH: No. The $200,000 of General Fund money was not --
I'm not referring to the 200,000. MS. McCOLLOCH: I'm sorry. The current -- the 650 of this year, no, we did not do an RFP. We put them in as a line item in the Plan.
So how was the 650,000 determined? MS. McCOLLOCH: The amount?
Yes. MS. McCOLLOCH: We received a proposal from Non-Profit Finance Fund requesting $1.1 million. So I asked them to submit it. We knew that we wanted to continue to support the program, and they 134 5/26/10 - FINANCE - BILL 100129, etc. submitted a proposal for $1.1 million.
So you asked them to submit a proposal. So there wasn't a request for proposal, so to speak? MS. McCOLLOCH: Yes. There was not a formal request for proposal, but I asked them to -- yeah, I asked them to submit a letter.
And they said the figure that was necessary was 1.1 million? MS. McCOLLOCH: That's what they requested.
So why is the number $650,000? MS. McCOLLOCH: Because we have other programs that we're -- because we have $11 million less than we had last year and we have other programs that we're supporting.
You have $11 million less than last year, but the $5 million that was put in in 2003 was being 135 5/26/10 - FINANCE - BILL 100129, etc. spent down. There was another $200,000 added in terms of General Fund. There was no stimulus money put in. So just in terms of prioritization, particularly since you decided to even request that it be submitted, it seems that 1.1 million is the figure that is actually needed, and our CDBG allocation is in fact higher moving forward than it was if you subtract the stimulus money. MS. McCOLLOCH: It is -- there's currently $3 million more in CDBG funds, but we're trying to replace CDBG-R, the Recovery Act funds, in other programs that were supported last year that we want to continue to support, such as the Basic Systems Repair Program to keep that level and the Mortgage Foreclosure Prevention program to keep that level. Those are priorities, and we made -- those are decisions about how we decided to set the priorities of the funding.
And the 136 5/26/10 - FINANCE - BILL 100129, etc. $650,000 is supposed to cover what period of time? MS. McCOLLOCH: The next fiscal year.
And how much has been spent on an annual basis on average? MS. McCOLLOCH: On average? Well, again, it goes back to the discrepancy between what they have asserted has been allocated and what has been drawn down. In any given year, what's been drawn down is around $650,000 or $700,000, but it's always because there is this lag in when funds are drawn down. It's really a cash management issue, and I think in the same way that they've managed the funds up till now, that system could continue, because there are still funds available that haven't been drawn down. So what hasn't been drawn down going forward is about a million dollars. The 400,000 that's there and the new 650. 137 5/26/10 - FINANCE - BILL 100129, etc.
So what do you believe the $1.1 million request was for if they were only going to draw down an additional $600,000 or $700,000? MS. McCOLLOCH: I believe it's to allow them to continue to make commitments even though they won't draw down that much money.
And you don't believe they can draw down that much money? MS. McCOLLOCH: I'm just saying historically they have not drawn down that much money in a year.
One last question, Madam Chair. Just real quick. Can you tell me -- and I know the answer. Can you tell me the status of the Year '10 NTI program? 138 5/26/10 - FINANCE - BILL 100129, etc. MS. McCOLLOCH: The Year '10 --
Is that the one we just passed? MS. McCOLLOCH: Year '10 is the one you just passed. What I would call the program funds of that, which are funds that are committed --
What's the status? MS. McCOLLOCH: The status is that City Council passed it recently.
We know that. MS. McCOLLOCH: And we're moving it forward. That's what I was --
So when do you anticipate the ability for Councilmembers working with both your office and the Redevelopment Authority to identify acquisition and other pertinent issues with respect to -- MS. McCOLLOCH: That's what I was just going to answer.
Like is 139 5/26/10 - FINANCE - BILL 100129, etc. that going to happen soon? MS. McCOLLOCH: Yeah. Can I answer the question?
Because there's this March deadline looming that a certain reporter keeps calling me about, and I don't want it to be somehow thought that we're the ones that are not prepared to proceed. MS. McCOLLOCH: Okay.
I'm sorry. MS. McCOLLOCH: Can I answer? There are two pieces of the Year '10 Program Statement. One is what I would call program funds, which are funds that are being committed to the Adaptive Modifications Program, the Basic Systems Repair Program, that sort of thing. Those funds are moving forward. We've directed PHDC to proceed. We've informed them. This money that was on hold is no 23 longer on hold, and that it can go ahead and let contracts with contractors to spend down the BSRP and Adaptive 140 5/26/10 - FINANCE - BILL 100129, etc. Modifications Program funds. So that's one piece of it. The second piece is the land acquisition funds, to which you're referring, and we need -- as you know, last fall, I and my colleagues met with each Councilmember to review the acquisition requests. From those meetings, there were a series of questions. Some Councilmembers have responded to those. We're going to do one more circle back to confirm what the list of priorities is, and then once those funds are ready to be released by the Finance Director, we can move it forward.
When those funds are ready to be released by the Finance Director? MS. McCOLLOCH: I believe that will be soon.
Just one last thing, Madam Chair. I'm sorry. I just want to -- I'm sorry. I know that's why you hate for me to come to these hearings when I'm not on the committee. I seem to ask more questions when I'm out here. Real quick. With respect to the contractual relationship with outside entities, I just want to make note that there is a difference between PHDC and the Redevelopment Authority, because they are quasi-government agencies as opposed to PHS, which is not a quasi-government agency. MS. McCOLLOCH: Yes.
So there is a difference in those two decisions to make -- I mean, those two entities as it relates to the ability to contract with them without an RFP. I just want to acknowledge that -- well, say that then. I do recognize the difference. All right? 142 5/26/10 - FINANCE - BILL 100129, etc. MS. McCOLLOCH: Okay.
Thank you. Thank you, Madam Chair. Thank you for being so patient with me.
Thank you very much. Thank you, Ms. McColloch. We're going to have a list of people come before us to testify. We hope you will stay in case there are questions. We will now call on Mr. James White from the Association of CDCs. (Witness approached witness table.)
Good afternoon. Would you state your name for the record, please.
Good afternoon, and thank you for the opportunity to testify. My name is James White and I am the Policy Coordinator of the Philadelphia Association of CDCs. PACDC is a citywide association of more than 80 community development corporations and other 143 5/26/10 - FINANCE - BILL 100129, etc. organizations with extensive experience working with housing and community development in Philadelphia. My testimony today focuses on three issues that are critical to meeting the needs of Philadelphia's residents and fostering successful revitalization of our neighborhoods. And I'm going to just summarize.
Thank you. First is restoring and expanding funding for affordable housing through the City's Housing Trust Fund. While we applaud the efforts of this esteemed body, the City Council, and the Mayor to support an increased dedicated revenue for the Housing Trust Fund through the approval of a local ordinance 23 last December, the state authorizing legislation necessary to implement this increase has been stalled in the House 144 5/26/10 - FINANCE - BILL 100129, etc. Appropriations Committee at the State Capitol for over ten months. We urge you to do two things to address the shortfall of resources for affordable housing in our city: Engage the City's active support to advance state authorizing legislation to expand dedicated funding for affordable housing through the Housing Trust Fund and restore the full 3 million per year commitment from the City's General Fund to the Philadelphia Housing Trust Fund made two years ago by this body. Issue 2: Improve the City's property acquisition and disposition process. We commend the City, in particular the RDA, for beginning a process to reform its system to acquire and dispose of vacant and abandoned properties and to facilitate putting vacant properties back into productive use and also to help benefit growing the City's tax base. Given the acquisition pipeline has been frozen for nearly two 145 5/26/10 - FINANCE - BILL 100129, etc. years and a number of our members have reached the point where they do not have the site control needed to advance development projects critical to addressing resident and neighborhood needs, we urge the City to do the following: Move quickly to utilize remaining acquisition funds to accelerate the acquisition and disposition of property to support planned development projects that will not be able to leverage outside resources without site control. Two, implement the Recycling Agreement to generate additional funds from these payments to support future acquisitions. The last issue, mitigate impact of property tax increase on low-income residents. We understand that the City is in a difficult financial situation and is faced with hard choices of how to balance its budget. Given the planned 9.9 percent increased property taxes, it 146 5/26/10 - FINANCE - BILL 100129, etc. is critical that measures also be put in place to limit the impact on low-income homeowners and renters. We urge the City to pursue implementation of two specific property tax relief measures for low-income residents: Create a homestead exemption that would exempt the first thousand of assessed value of residential property from property taxes and implement a deferral of property tax increases over X percent until the sale of the property. While this will have some impact on revenue collected in the short term, it will ensure a more equitable solution to the City's budget challenges, especially for many low-income homeowners who do not itemize deductions on their taxes. We look forward to the opportunity to continue to work with the City Council and the Administration to strengthen the City's neighborhoods and residents' needs. 147 5/26/10 - FINANCE - BILL 100129, etc. Thank you.
Thank you very much for your testimony. I want to say thank you for your vigilance on behalf of the Association. We appreciate your attendance to Council hearings and information you provide to us. Thank you. Any comments or questions?
Let me underscore the remarks shared by Chairwoman Tasco. You state on the first page, second paragraph of your testimony, you indicate at least that state authorizing legislation in Harrisburg has been 148 5/26/10 - FINANCE - BILL 100129, etc. stalled in the House Appropriations Committee. Share with us what the Association has done collectively in terms of activism around that.
Myself and the Executive Director, Rick Sauer, have both made several visits locally as well as in Harrisburg to our Philadelphia delegation and reached out to address the issue of moving the bill out of committee. We've had numerous conversations here and in Harrisburg with legislators to advance the issue. We've also enlisted the help of several Councilmembers and fallen on their leadership and knowledge and experience to help us as well. Madam Chair as well as Councilman Clarke and Council Lady Blackwell have also been assisting us, as well as a number of staff members, Mr. Wetzel, for one.
I think there's been a number of challenges in 149 5/26/10 - FINANCE - BILL 100129, etc. Harrisburg. For someone new to Harrisburg, they've been kind of mind-boggling at first, but most of them have centered around a little bit of confusion, because when our bill was introduced, there was also a statewide Housing Trust Fund bill that we had been working in partnership with the Housing Alliance of Pennsylvania that had been in committee and had been confusing folks clearly, because when you say Housing Trust Fund, we had to differentiate what we were talking about. Also, there seemed to be a little bit of misunderstanding as to how our control of what we do here in Philadelphia and how we seek to raise funds to support our affordable housing needs was kind of being misunderstood, that other entities outside of Philadelphia kind of saw it as us trying to raise taxes or that it might impact first-time home buyers and frighten them from seeking to purchase homes in 150 5/26/10 - FINANCE - BILL 100129, etc. Philadelphia, when in reality the price of homes in Philadelphia is quite lower than the surrounding counties. We enlisted Econsult's help in doing a study of that, and we shared that with our state legislative delegation. We've since had some favorable response, especially from the delegation's Chair, State Representative Williams, Jewell Williams, who has been very helpful, as well as a number of other members of the state delegation to Harrisburg. So we hope that we will be moving forward and the bill will be on the floor as the session progresses and out sometime this summer. But this is what I'm estimating. I may come back to you a couple of months from now. But I think in the short term, we still have to address the needs of thousands of Philadelphians, particularly renters, who can't seem to find adequate, quality, affordable housing within their means, and this is quite disturbing to us, as 151 5/26/10 - FINANCE - BILL 100129, etc. I'm certain it is to you, Madam.
Well, thank you very, very much. As -- thank you very much. Thanks. Thank you, Madam Chairwoman.
Thank you. We thank you for your testimony. It is true that they are struggling in Harrisburg with this, and you might want to expand your advocacy and education to other members of the Legislature who may not be on that committee but who are part of Philadelphia but not specifically in the areas that we're talking about. So you need to expand your discussion with all state legislators from Philadelphia.
Thank you. The Chair recognizes Mr. Rowe, John Rowe. Next we have Allison Hughes, 152 5/26/10 - FINANCE - BILL 100129, etc. Jason Greenaway, Philip Fitzgerald, Cynthia Roberts, Joan Reilly and Bob Grossmann, in that order. (Witness approached witness table.)
Thank you, Madam Chair, members of the Finance Committee. I have written copies of the testimony here.
Thank you for the opportunity to testify and thank you for the continuing support of City Council to the Utility Emergency Services Fund. UESF provides emergency financial assistance to vulnerable families to restore utility service or to prevent utility shut-offs. Each grant that we provide is matched dollar for dollar by PECO, PGW or the Philadelphia Water Department. We are the last resort for families, and we work with families to 153 5/26/10 - FINANCE - BILL 100129, etc. completely zero out their utility bill. We refer families to other services. And we have expanded our approach to more fully address those root causes of why families come to us for utility assistance. Of the 23,950 families we assisted over the last five years, over 90 percent did not return to UESF for additional UESF assistance. In the Year 36 Plan, OHCD is proposing to cut $200,000 in funds that are targeted entirely for grants to low-income families. This cut will adversely affect about 500 families. Since we are the last resort, especially when LIHEAP is closed, these families will either get their utilities terminated or will not be able to have their utilities restored. Additionally, since each grant is matched dollar for dollar by the utilities, the City will lose the opportunity to leverage the $200,000 into $400,000 of assistance. We are requesting that this 154 5/26/10 - FINANCE - BILL 100129, etc. $200,000 is reinstated in the Year 36 Consolidated Plan. Now, these funds are crucial. PGW is projecting 30,000 shut-offs this year for non-payment. PECO is projecting 82,000 shut-offs this year. We see the immense need. During the brief three weeks before this year's LIHEAP season, UESF provided $750,000 in financial assistance in three weeks, a quarter of a million dollars a week. As of today, our funds are just about exhausted. The need is growing. The electricity rate caps will expire on December the 31st. Lance Haver recently delivered testimony in City Council stating that in every other place where rate caps have come off, the bill went up shockingly high. In Delaware, electric bills went up 50 percent; in Baltimore, 70 percent; in Maine, 100 percent. Vulnerable families need help now more than ever. UESF is an essential part of 155 5/26/10 - FINANCE - BILL 100129, etc. the safety net structure. The cutting of $200,000 deeply affects other areas, such as housing stabilization, children's health and homelessness. We know some families may pay their utility bills, but at the expense of their not paying rent or mortgage. Families will decrease their food purchases to pay for heat. Many families will cut back both food and heat. Utility terminations and homelessness are intertwined. Providing utility assistance over the short term is simply less expensive than the $2,000 to $3,000 a month necessary to pay for homeless shelter stays over the longer term. The Self-Sufficiency Standard for Pennsylvania, a study commissioned by PathwaysPA every two years and just released about a week ago, stated that a family needs $60,000 annually to survive in Philadelphia without subsidies. The average income of a family receiving UESF assistance is $12,800. 156 5/26/10 - FINANCE - BILL 100129, etc. On behalf of the 500 families who would be without utility assistance this coming year, I ask that the $200,000 is restored. The $200,000 will be leveraged into $400,000. Problems would be prevented before they occur, and Philadelphia communities would have long-term and measurable positive impacts, both socially and financially. Thank you for the opportunity to testify.
Thank you very much for your testimony, and thank you for the work that you do to help our families. And I agree with you, we can cut off $200,000 and spend -- because if people can't pay their utilities, they move. We have a vacant house and then we have them in a homeless shelter. So, Ms. McColloch, we got to find that money. Thank you.
Thank you 157 5/26/10 - FINANCE - BILL 100129, etc. very much. Allison Hughes. (Witness approached witness table.)
Good afternoon. Again, my name is Allison Hughes. I'm the Executive Director of the Homeownership Counseling Association of the Delaware Valley, a trade association for housing counselors. We provide training, technical assistance, mentoring and a certification program for our area's housing counselors. I greatly appreciate this opportunity to be a voice for our members and other housing counselors who are providing critical services to thousands of families and individuals each year. In my testimony today, I really want to concentrate on 158 5/26/10 - FINANCE - BILL 100129, etc. the foreclosure crisis, which is partially a by-product of unregulated predatory lending practices, in addition to the current economic conditions and unemployment. Currently, the City's housing counselors, which I'm sure you're well aware of, are working every week with the residential Mortgage Foreclosure Diversion Program, seeing more than 250 new cases per week each Thursday down in Room 676. Not only has this caused a huge increase in the number of clients and cases that the counselors have to manage, the foreclosure cases are far more complex and require a greater amount of knowledge, including understanding legal processes, legal terminology, new foreclosure guidelines, such as HAMP and HARP and RESPA, and foreclosure proceedings. So our counselors are really navigating and balancing a lot of demands from clients, from lenders, from attorneys and certainly from their own 159 5/26/10 - FINANCE - BILL 100129, etc. organizations and funders. It's important that agencies are funded in a manner where they can adequately provide compensation to the housing counselors and be able to attract and retain well-qualified candidates to do the counseling. Many of our counselors tell us thank goodness they have an HCA, homeownership counseling association, to provide guidance to them, training and support. For many of our counselors, we're fulfilling a function that is crucial. We create a network of skilled housing counselors and we've played an essential role in the last two years in responding to the foreclosure crisis, many times going above and beyond the call of duty to ensure that the housing counselors are competent and possess a strong knowledge of foreclosure intervention, foreclosure laws, procedures, loss mitigation options, as well as relevant state, local and federal laws. We've made a tremendous drive to 160 5/26/10 - FINANCE - BILL 100129, etc. encourage consistency in the quality of foreclosure counseling in order to better serve homeowners. There are a list of our accomplishments over the last year, which I'm just going to highlight a couple of them. We've offered over six training sessions for housing counselors on topics from basic housing counseling, which is more for first-time home buyers and pre-purchase counseling certification, as well as foreclosure intervention to more than 139 housing counselors. We launched a mentoring program where we've mentored 17 housing counselors in foreclosure prevention. And in the mentoring program, we provide the counselors not only with training but hands-on support. We bring them in for case reviews. We meet them at court to go over their cases and offer them support. We take them on excursions. So we've taken them to the Sheriff's sale so that they can actually 161 5/26/10 - FINANCE - BILL 100129, etc. learn the process, learn the people and be able to explain to the families that they work with the best ways for them not only to avoid foreclosure but in those cases where inevitably a family has to lose their home, what their options are beyond staying in the house. We've also administered the City's Diversion Outreach Program, which is under partnership with OHCD, the organization formerly known as ACORN and PUP to go out and provide door knocking to families to encourage them to attend their diversion hearings on Thursday, and an increase in participation has been about percent.
18 However, HCA has accomplished 19 these things with very limited resources. 20 The contract we received from OHCD 21 provides a partial subsidy for the work 22 that we do. We have to raise significant 23 private-sector dollars in order to 24 complement this contract, as well as we 25 have to earn income through workshops 162 5/26/10 - FINANCE - BILL 100129, etc. outside of City-funded training. The ability of the private-sector dollars is really diminishing significantly given the economy. We have still been successful in seeking some new resources, but we also need to keep the training affordable for the non-profit agencies that we service. That leaves us between a rock and a hard place. The current funds we receive don't cover the actual cost of what we do, especially research development and data -- updating our curriculum. Moreover, though funding for our training contract has remained level for the past several years, the number of counselors that we have to train and the frequency of the training that we have to do has increased twofold. HCA has found some ways to expand its course offering and offer the mentoring program, as well as launch the new certification program. However, with these new program areas, both of which 163 5/26/10 - FINANCE - BILL 100129, etc. were established at the request of OHCD, come new responsibilities, new staffing needs and ultimately new costs. It's quite one thing to design and pilot a program and another one to run it for a long term. HCA needs to be able to hire more staff to continue these high demands, but we cannot plan for the long term when we do not have committed funds. Without the contract that HCA relies on, it would be extremely difficult for us to provide the quality of service or the quality of service for which we've become known. We've also realized that an RFQ is going to be listed for housing counseling training in the next fiscal year. We believe HCA is highly competitive for such a proposal. However, we would need to have a clearly defined scope of services, and in the future, we hope that we receive earlier communication when such changes will take place in advance so that a small agency 164 5/26/10 - FINANCE - BILL 100129, etc. such as ours can have time to plan for such a contingency or look for funding to fulfill a gap so that we won't have to severely reduce our services. I thank you for this opportunity to speak today.
Are you saying that you're going to have to bid on your contract next year?
Ms. McColloch, why is that? Is this a new process and who will it cover? (Witness approached witness table.) MS. McCOLLOCH: Deborah McColloch, Director of Housing. This was the year that we had all of the housing counseling agencies bid on housing counseling contracts, and so as part of our effort to make everything at an even keel and issue an RFP, we decided we were also going to ask for proposals to provide the training for 165 5/26/10 - FINANCE - BILL 100129, etc. housing counseling services, as we have put out an RFP for providers of housing counseling services, that we have some activities that we want to have carried out. We want to make sure that we're reaching the broadest possible group that might be able to provide those services.
How many other groups in the City provide the service? MS. McCOLLOCH: I don't know. We haven't issued the RFP yet. We're about to.
Has anybody ever contacted you to provide this service? MS. McCOLLOCH: There have been expressions of interest of other agencies to provide services, yes.
So when did you notify the agencies that there would be an RFP process? MS. McCOLLOCH: We notified them at the time that we issued the 166 5/26/10 - FINANCE - BILL 100129, etc. preliminary Consolidated Plan, which was in March.
So you think that gives them sufficient time, especially this program -- they've been in business for so long -- to comply and compete with other agencies? MS. McCOLLOCH: I'm sorry. I just didn't hear you.
Is that enough time for them to prepare to bid on a program such as this, including the consideration to be given to an agency that has been providing this service for a long time? MS. McCOLLOCH: I believe it gives them -- we have not yet issued the RFP. So we're about to issue that, and there'll be time for this agency and other agencies to respond.
What other agencies -- MS. McCOLLOCH: Could we have informed them earlier, we might -- 167 5/26/10 - FINANCE - BILL 100129, etc.
What other agencies have expressed an interest? MS. McCOLLOCH: In responding to this? The Consumer Credit Counseling Agency of Delaware Valley and Unemployment Information Center.
Okay. What is the comparable size of these groups in comparison to this agency? MS. McCOLLOCH: Hold on. I'm going to ask my staff member who works on this most. (Witness approached witness table.)
Good afternoon. I'm Laura Taylor, Contract Administrator at the Office of Housing and Community Development. Those two agencies are significantly larger. As we know, Consumer Credit Counseling is one of the largest housing counseling agencies in the area, and Unemployment Information Center, which has offices here in Center 168 5/26/10 - FINANCE - BILL 100129, etc. City, does have significant number of staff as well.
Are you going to put them in a pool -- they're an association of counseling -- Homeowner Counseling Association of Delaware Valley. So they counsel the housing counseling agencies, which would be --
They provide counseling, too. So it would be a different perspective. Yes, you're correct.
See, I got a problem with this kind of stuff and especially at a short period of time, because there's always something going on in the background and we don't know what that is. We don't know what that is. So you take an agency like this that's provided service for a long time and you put them in the pot with two larger agencies, who do you think is going to win? You going to put them out of business, and we don't like that. 169 5/26/10 - FINANCE - BILL 100129, etc.
That is not our plan to put them out of business, because we consider --
When these ideas come up, there's always unintended consequences that you all never think about. This is the first I've heard of it, so I'm getting mad and I don't even know the details. So we're going to talk about that. Okay? MS. McCOLLOCH: Okay.
Please, I do have a follow-up to the professional. The other two again are the Credit Counseling of -- help me out.
Consumer Credit Counseling Association of the Delaware Valley.
Which I'm very familiar with. 170 5/26/10 - FINANCE - BILL 100129, etc.
And Unemployment Information Center. John Dodds is the head of that. You probably know him.
Those are the three that have expressed interest, but, of course, we haven't issued the RFP yet.
Okay. To underscore Chairwoman Tasco's concern, we saw this also with a group of agencies on the social service, DHS, side, and the history has been that the smaller agencies lose out.
Always. And you're the professionals; I am not, 171 5/26/10 - FINANCE - BILL 100129, etc. although I used to do what you do. And comparing agencies whose missions are the same but whose sizes are obviously different, for me, triggers or signals that there has to be some weighting of the criteria, particularly if they are delivering the product. And so as you move to roll out the RFP process, we want to be kept informed of what that is and how that happens. So what's the timeframe? What's the timetable?
Okay. So walk that through. Walk through the process.
For them to write the proposals and to apply. So we're looking at a July due date for the 172 5/26/10 - FINANCE - BILL 100129, etc. proposals.
Got it. And is that a committee review or a professional review, or what? MS. McCOLLOCH: It's a committee. There would be a committee of -- it's generally OHCD staff with some other staff members from other agencies who may have some other perspectives, other input. The proposal review committee reviews the proposals, scores them based on the criteria that are established in the RFP, and then they would make a recommendation to me and then the contract would be awarded.
I see. Okay, then. Well, we'll be paying close attention. Thank you.
And I'd like to have a meeting with you to talk about this first. 173 5/26/10 - FINANCE - BILL 100129, etc. MS. McCOLLOCH: Okay.
Before the 9th. MS. McCOLLOCH: Before the 9th. Okay. Fine.
All right. Jason Greenaway. (Witness approached witness table.)
Yes, Councilmembers and all those who are in attendance. My name is Jason Greenaway. I have some copies for you to take a look at as well. My name is Jason Greenaway, as I said. I'm the Executive Director of Timothy Academy. We're located in North Philadelphia, and for well over 53 years, Timothy has been committed to servicing 174 5/26/10 - FINANCE - BILL 100129, etc. the children of the area, with a mission to assist families by providing a quality, Christ-centered education. At Timothy, a well-rounded education includes challenging academics supplemented with extracurricular activities that together encourages a spiritual, intellectual, personal, social and physical growth. We currently serve approximately 240 children on an annual basis by administering a child care program, K to 8th grade education and after-school and summer programs. We serve primarily African American children and Latino children. 1 million level. Let me first begin by sharing -- I'm very grateful for this opportunity to speak regarding the 175 5/26/10 - FINANCE - BILL 100129, etc. importance of this increase, and I can speak firsthand, as three years ago our child care program was in dire need of a playground area. Our program equipment was dilapidated and presented significant health and safety concerns. Fortunately for Timothy, our organization, with the assistance of the Child Care Facilities Fund initiative, we were able to secure the necessary funding to complete the completion and the installation of new playground equipment. Through this initiative, our children were given the chance to play in a safe environment where they were able to interact with their peers, develop their gross motor skills and further develop socially, emotionally, physically and mentally. The initiative helped us to address the serious playground safety concerns we were facing at the time in 2007 and had been facing for many years. The initiative was also a major catalyst in the maintenance and attainment of 176 5/26/10 - FINANCE - BILL 100129, etc. Keystone Stars standards and the improvement of our programmatic offerings. As a result, our children as of today continue to enjoy the playground in a safe and fun environment. While our school boasts a very strong child care program, Timothy Academy has extremely limited resources to assure that its curriculum and, most importantly, the facilities, since that's what we're talking about today, and resources remain current. Coupled with the recent economic downturn, local municipality and state budgetary constraints, increase in our utilities and operational expenses, our organizational challenges have reached its apex. To combat these myriad of challenges, Timothy Academy drastically reduced its fixed and variable costs during the past two school years, and this is not an uncommon practice by most organizations. In addition, 85 percent of the families we serve receive some 177 5/26/10 - FINANCE - BILL 100129, etc. form of subsidy to enable their child to receive an early childhood education. Subsequently, it is nearly impossible to reach out to our families for charitable contributions in support of our capital projects. We realize a high-quality, early learning environment can be only achieved by maintaining a safe, healthy center and strong programmatic focus. Unfortunately, funding opportunities are extremely limited, particularly to address pressing capital needs. I don't necessarily speak today just for Timothy Academy, but I speak on behalf of the many child care facilities located in North Philadelphia, South Philadelphia and the Greater Philadelphia area. The need is great. The need is pressing. Many funders are reducing the scope in which they fund non-profit agencies. Today, the need for funding is greater than it has ever been. That is why your decision is crucial as we plan for the 178 5/26/10 - FINANCE - BILL 100129, etc.
future of our city and the future of our children, the children not only at Timothy, but the children of the Greater Philadelphia area. 1 million in support of the Child Care Facilities Fund for the 2011 fiscal year.
Thank you very much for your testimony. Councilwoman Brown.
I also thank you for your testimony, and let me urge and suggest that you go to the Philadelphia's Foundation website, pull up the Children's Fund and look to see where additional opportunities exist for dollars to fund what you're doing already. Given what I've heard about your program and your testimony, there's a neat fit there. So you want to seize the moment and go to that website.
Thank you 179 5/26/10 - FINANCE - BILL 100129, etc. for your testimony.
Thank you very much. Mr. Philip Fitzgerald. (Witnesses approached witness table.)
Good afternoon. My name is Philip Fitzgerald. I have some testimony for you. In the packet also is a list of grants we've made around the City by councilmanic district, testimony from one of our grantees, Settlement Music School, as well as testimony by Gina Koo, Manager of the Child Care Facilities Fund. As I said, my name is Philip Fitzgerald. I work for Non-Profit Finance Fund, working directly with non-profit child care and after-school programs supported through the Child Care Facilities Fund. I am joined today by my 180 5/26/10 - FINANCE - BILL 100129, etc. colleagues and their early childhood sector, Public Citizens for Children and Youth, United Way, Anti-Drug and Alcohol Crusaders, CORA Services, Parent-Infant Center, Settlement Music School and Timothy Academy, in support of the Child Care Facilities Fund. Over the past three and a half years, I have offered front-line support responding to inquiries for grant funding, managing applications, providing project planning support and giving practical financial advice. I have traveled this city from Southwark to the far Northeast, from Old City to Kingsessing where my parents still reside, and have come to know the names, faces and struggles of the women and men who work diligently in the service of this city's most vulnerable citizens. The Child Care Development Lab at St. Joseph's University is preparing a third-party evaluation of the impact of the Facilities Fund since its inception. 181 5/26/10 - FINANCE - BILL 100129, etc. As part of that study, the researchers conducted interviews with a random sample of non-profit child care centers. In Philadelphia, the study found that over 60 percent of the centers surveyed currently have HVAC and/or playground renovation needs. The average cost of all facility projects is approximately $50,000, and many capital projects are deferred for an average of five months due to cost. St. Joe's noted that even projects which are deemed critical by centers must be deferred, which has multiple and additive effects, impacting the usability and functionality of the program space. Anecdotally one of the center directors reported paying money out of her own pocket in order to make bathroom renovations to her site. Helping child care center operators has taught me two things. One, not many people like numbers as much as I do. Two, there is no room in a child 182 5/26/10 - FINANCE - BILL 100129, etc. care center's budget for capital repairs. The tuition and fees many programs charge only cover basic operating costs. Money for large facility projects is hard to come by, especially for sites in poor areas that can't raise their prices and don't have the donor base for a capital campaign. Programs end up spending money every year on short-term fixes like playground wood chips instead of longer lasting, more durable safety surfacing because they lack the capital to invest in quality equipment. One child care provider told the St. Joe's research team, quote, "These projects are crucial to running a child care facility. In order for children to develop and grow, the environment plays such a key role. It's not that we're trying to build mansions. We just need to operate," end quote. The early childhood programs we work with not only strive to serve all families, but also to run a quality 183 5/26/10 - FINANCE - BILL 100129, etc. center. There are more than 200 non-profit child care centers in the City of Philadelphia that have not accessed grants or services through the Facilities Fund. 1 million to the Office of Housing and Community Development for Fiscal Year 2011. Funding at this level would allow us to award as many as to capital 13 grants in the coming year. OHCD has 14 currently budgeted $650,000 in CDBG funds 15 for the Facilities Fund, an amount that 16 we are grateful for but which would allow 17 us to support no more than seven grants.
18 While we understand the tight budget 19 constraints that the City is facing, we 20 hope that OHCD can find room to increase the CDBG allocation so that more working families can be served. I am honored to play a small part in what the Child Care Facilities Fund has achieved and know that we owe a 184 5/26/10 - FINANCE - BILL 100129, etc. great deal of our success to the public-private partnerships with our funders and City agencies like OHCD. And as a native Philadelphian, I am proud that our great city is home to this dynamic program. Thank you for your time today.
Thank you very much for your testimony. Thank you for the information. You sent this out earlier, right, but you didn't have the Council districts in there, right?
No. This is my testimony. It's new. The other one was from Gina Koo, the Manager of the program.
I thought for the sake of time, it would be better just to submit a written to you all.
Would you 185 5/26/10 - FINANCE - BILL 100129, etc. identify yourself for the record, please.
Yes. This is Gina Koo. I'm the Manager of the Child Care Facilities Fund at the Non-Profit Finance Fund. I just wanted to reiterate a little bit about what Ms. McColloch had said earlier pertaining to Councilman Goode's question about the discrepancy in the contract amount, if it would be helpful to you. I wanted to kind of make the point that the contract term for us currently ended January 31st, 2010. It started in February 1st, 2009, and we were allocated about a little over $800,000 to commit to providers in the form of grants for capital needs. To date, we have actually committed everything, with the exception of $50,000, and the only reason that we haven't committed the last 50,000 is because all of the grant requests in our pipeline right now exceed that amount. So all this to say that we do 186 5/26/10 - FINANCE - BILL 100129, etc. historically have a track record of being able to commit anywhere from 850,000 to about 1.3 million if you add in all the leveraged resources we bring from private funders as well. And so on that basis and it's on that premise that we submitted the $1.1 million request to OHCD when Ms. McColloch had requested us to do so. So I just wanted to clarify that point, that by the end of this fiscal year, June 30th, 2010, we will have spent down everything that the City has allocated to the Child Care Facilities Fund.
Thank you. Let me ask you a question. I'm looking at the list by Council district. What is the minimum amount a child care facility can apply for?
The minimum amount is $10,000. The max amount is 75. And we probably range anywhere between $40,000 and $75,000 as our average grant amount. 187 5/26/10 - FINANCE - BILL 100129, etc.
Okay. All right. Thank you very much. We appreciate that. Councilwoman Brown.
Thank you for the breakdown by district. This matters to all of us, quite frankly, and District Councilpersons like to see how their district is faring. What I care about in addition to that is when you look at the fact that most of the -- that's group homes. I'm reflecting on group child care. I know when it comes to group child care, at least in 2004, 2005, most of them sat in Councilwoman Tasco's district and Councilwoman Jannie Blackwell's district. So my thinking is, is there -- where you have the greatest need, are we indeed making sure that these dollars go to 188 5/26/10 - FINANCE - BILL 100129, etc. where there's the greatest need? If the need is not there in district X, yet most of the dollars are going to district X, that's a problem, number one. Number two, if there is not -- what would be helpful to know is where you see grant award, it would be helpful to know what is the dollar size of that agency, for obvious reasons, and then beyond that, you mention that the 200 have not ever applied for these dollars?
So what's the flip number? What's the total number of agencies, child care providers, who have applied for these dollars?
And of that 150, I'd be curious to know the breakdown by size, from number of children to the total amount of dollars used to run that center. Because all of that plays into ensuring equity and the 189 5/26/10 - FINANCE - BILL 100129, etc. access of these dollars, and it goes back to an earlier point. Most often because smaller child care centers, smaller arts and cultural organizations, smaller CDCs don't have the capacity in terms of staff to go out and go after these dollars, and so what do we do as a government to create a level playing field so that the smaller arts and culture emerging organizations and the smaller child care centers also have access to these dollars. And so going forward, the request is that you show us the entire -- the total budget for that agency as well as what the grant award is, number one. And, number two, be prepared to tell us what outreach, what extra effort is done to go after that small child care center at Stenton Avenue, that small child care center at 52nd and Haverford Avenue, A, who might not know about it, but, B, need it as much, if not more than, some of these large organizations over here, like Trustees of the 190 5/26/10 - FINANCE - BILL 100129, etc. University of Pennsylvania.
I just wanted to comment, because I'm glad you said that. We actually have an after-school provider from 52nd and Haverford who has a small agency, as well as a large agency such as CORA Services here. So we do understand your point and we do make that outreach.
Thank you. I hear that you understand it, but what I need to know is what considerations in terms of action is going to be done to ensure a level playing field with access to opportunity for these dollars.
Because it becomes difficult to advocate, period, if there that is not -- if the issue of equity is not being seen across the board.
I think that's a great point that you make. I'll just follow up to Phil's point on two things. 191 5/26/10 - FINANCE - BILL 100129, etc. One is, we're absolutely concerned about geographic dispersion, but based on need. And so it's kind of a two-pronged effort. One is, we want to make sure obviously that in areas where we have not invested, we do invest, especially with the smaller organizations that you're speaking about. The second piece is, we are -- for the past few months, we have been trying to plot out on a map where the quality centers are located throughout Philadelphia, and I think that's a really important point, because we want to make sure that every neighborhood has access to a high-quality center, not just a center that's open, open for business. And so as we plot out where these high-quality centers are located, we are trying to make targeted investment, so that where we see just a lack or a desperate need for a high-quality center, that we are actually in that neighborhood somehow. And so, again, we are working 192 5/26/10 - FINANCE - BILL 100129, etc. to map these things out, and we'll hopefully get that to you. It should be a very good visual to show you how the investments are being made and what assumptions are being made.
And I will add that that's a step in the right direction, but that doesn't get us where we need to be. That becomes added information, and seeing a mapping of that is very, very, very useful, but at the next step and request and what I'm urging you after that is to at board level or staff level, figure it out, figure out a way where small child care centers who do not have budgets like University of Pennsylvania get opportunity.
And you understand the ask to be what? 193 5/26/10 - FINANCE - BILL 100129, etc.
That we will be able to show you on that list the operating budget side for each of the organizations that we're considering, as well as the number of children being served and to show by way of their operating budget, that we are working with organizations that have less capacity than someone like University of Pennsylvania.
And this is in no way to discredit the enormous value University of Pennsylvania brings to the City, being the number one private employer.
And I will say that name is a little bit misleading, only because they are on the University's campus and they do partner with the University, but, again, child care businesses across the board are low margin, and so to date, we have not held any biases against child care centers 194 5/26/10 - FINANCE - BILL 100129, etc. that are affiliated with these university partners. But I do hear your point.
And I would not use the word "biases," because that sends a different message.
And when I look at this list and look at these large institutions on here who have enormous capacity and staff personnel to just chase money, I think that that is unfair.
So I need to know beyond consideration and beyond the map what you are going to do as an agency to fix that.
I think that, first off, the one thing that we can commit to is that we will partner directly with the Council districts so that we can actually 195 5/26/10 - FINANCE - BILL 100129, etc. do some neighborhood trainings. I think one of the best ways that we've received referrals is through the Council offices, and I think we'll go ahead and continue to do that. So we will commit to doing that.
My last ask would be then, having done recruitment and outreach in trench warfare, what do you do internally from a proactive sense to inform and make aware this Fund to child care centers universally across the City?
We attend many meetings -- there are collaboratives of child care providers around the City, and I go to a lot of them, talk about the Fund. I participate in citywide boards with child care providers. We're out there in the community. We make sure that the Child Care Facilities Fund has a face, that they know that they can call us, that they know that we're there. We partner with organizations 196 5/26/10 - FINANCE - BILL 100129, etc. like Child Care Information Services, and we do outreach and we try to inform not just our providers in the area, but also their specialists who handle cases of child care providers, and we also partner with people like Keystone Stars and we make sure that their specialists take our information out when they do their site inspections. We reach out to the Department of Public Welfare. We try to reach out to as many partners as possible, as well as are in the community.
Okay. So in terms of your own timeframe, have you put up a window, an end window, on when you plan to complete the mapping?
We think that -- the mapping is actually done. We just haven't had a chance to put it in the narrative form and publish it. So we're working with Gervasi as a partner on that.
At some 197 5/26/10 - FINANCE - BILL 100129, etc. designated hour determined by you and the board, if you would please submit that to the Chair.
Thank you, Madam Chair. I wasn't going to say anything, but Councilwoman Brown started off, I hit my switch, and then she covered just about every point I was going to cover, so I feel like I'm piling on. But to be clear, what have you mapped?
We've mapped the number and the locations of high-quality -- what are considered 198 5/26/10 - FINANCE - BILL 100129, etc. high-quality centers in Philadelphia.
So why did you limit it to high-quality centers and how did you determine what a high-quality center was?
That's a good question. We actually didn't limit it. That was just one of the maps. The other maps show licensed centers --
Right, which may not be high quality. The high quality is determined by the state's Keystone Star Quality Rating System, which is a one to four star rating scale.
So you have a list of every licensed child care center in the City of Philadelphia?
Yes. All of our 199 5/26/10 - FINANCE - BILL 100129, etc. mailings go to about 650 providers.
So you do do some outreach to let everybody know that these funds are available?
I mean, the smallest grant I think I saw was 14,000, but they seem to average 40, 50, 60, a hundred thousand dollars. What do you do -- do you not get applications from the smaller providers?
No. We do. We actually get a pretty good mix, I would say. Our typical size would be anywhere from about 350 to about a million.
And it's not that we don't get the applications. Renovations have either been deferred for years and they cost a lot, or if they need to replace a playground, for example, that could be up to $75,000 or a hundred thousand dollars. So these requests are large when we get them, so it's not just that agencies have tons of 200 5/26/10 - FINANCE - BILL 100129, etc. money and they've been hoarding money and this is why they make the request. It's a timing issue. It's they've leveraged it with other private money. They've done some fundraising.
So you've got the ability then to look at the number of children, say, in a census tract, the number of providers, say, in a census tract and to do the kinds of needs analysis that Councilwoman Brown spoke about?
And then directly target providers in that area so that there are more high-quality centers in that area because you helped create the high-quality centers in that area rather than lending only to high-quality centers that already exist in areas where there might or might not be a need. You have the ability to do that?
Yes. As of this spring, we do now. 201 5/26/10 - FINANCE - BILL 100129, etc.
Okay. So if you could provide the information that Councilwoman requested that you already have prior to June 9th, which is when this will be recessed to.
Next year the questions that you'll be asked, assuming there's any funding for you, will be about the needs analysis that we'd all like to see.
You have something to say, young lady? (Witness approached witness table.)
Yeah. My name is Christie Balka. I'm the Director of Child Care and Budget Policy for Public Citizens for Children and Youth and I'm also a member of the Stakeholders Council for the Child Care Facilities Fund. And two points that I think would be helpful 202 5/26/10 - FINANCE - BILL 100129, etc. to this very constructive discussion are, one, the City of Philadelphia, unlike Pittsburgh and other major cities around the country, has no comprehensive child care policy. This fund addresses capital needs and needs for deferred maintenance for child care programs that meet a certain quality threshold, but there are many other things that we can be doing and there are many other ongoing pieces, but they're not coordinated into any comprehensive strategy, and they probably should be. We've been having talks with the Administration about this, but really I think it's placing a burden on the Child Care Facilities Fund to say they need to do it all. One of the reasons that the Fund works well is that they have a limited focus. Second, when the Fund was established, they received a lot of calls from home-based child care providers for assistance, and they said that's beyond the scope of what we're doing, but we're 203 5/26/10 - FINANCE - BILL 100129, etc. going to create a one-stop shop for child care licensing to get them into the pipeline, to bring them out from underground, get them into the pipeline to the point where some day they'll be able to apply for funds from the Child Care Facilities Fund. So right now -- and that was initially funded using some City funds, some OHCD funds. It's not funded through OHCD anymore, but it is ongoing. So right now we have something that works at the very, very grassroots level with home-based providers, simply trying to get them licensed, and we have something that helps quality providers maintain that quality and some get up into that top tier. But we're really lacking a strategy for moving the ones that you all are speaking about toward greater quality.
Well, this fund was set up some years ago and what my thinking was that the purpose was to 204 5/26/10 - FINANCE - BILL 100129, etc. work with those home-based child care facilities or daycares to bring them up to code so that they could come out of the closet and be full time. So when I looked at this list and I saw all the large amount of grants, I was looking for the smaller grants to neighborhood-based programs. Because while Councilwoman Brown said I have a lot of daycare, well, I only have three large quality care centers on the list. But if you look at the Ninth District, I mean, every week or so we're going to zoning about a home daycare, and there are some that are fairly large that I don't see, maybe they didn't apply, and that's why I'm going to set up a meeting with you to talk about that. So that was my understanding as to what the program initially was designed to do.
So some years ago, about 10, 11 years ago, there was a fund that was set up at the initiative of the 205 5/26/10 - FINANCE - BILL 100129, etc. City through the Women's Business Development Fund to help some of those home-based providers that are operating underground become licensed. That was discontinued two and a half, three years ago. And the other resource that we had in place was the one-stop shop for child care licensing, which, as I said, grew out of the Non-Profit Finance Fund's experience, just being flooded with phone calls, probably from the same providers that call your office, for help with zoning. So the one-stop shop for child care licensing is up and running. It's being successful. It's more of a technical assistance, coaching, capacity-building operation. It doesn't make the loans, but it did initially grow out of this project.
Thank you. I recently issued a paper on 206 5/26/10 - FINANCE - BILL 100129, etc. education in the City of Philadelphia, and one of the things we focused on there was early childhood education, child care and the need for experiments like happened in Harlem's Children Zone where there's an entire community focused on the child from the time its born until the time it ends up in school. So that we can change -- fundamentally that's the number one thing we have to do. I don't know whether what you're talking about with the Administration is tangential to that or is something that could be interwoven into a larger strategy about early childhood care and education in a sort of not just a care comprehensive strategy, but in an early childhood comprehensive strategy for the City of Philadelphia. So my office has done some significant work on this. I'll get you a copy of the paper, and I'd like to be involved in any discussions in this regard. 207 5/26/10 - FINANCE - BILL 100129, etc. Thank you.
The Chair recognizes Cynthia Roberts and next Joan Reilly and Bob Grossmann. (Witness approached witness table.)
I'm a very fast reader. My name is Cynthia Roberts and I am the Director of the Parent-Infant Center in West Philadelphia. We provide child care for 135 children ranging in age from six weeks to five years and after-school care for another 80 children from kindergarten to grade 6. We are nationally accredited and we are a four star Keystone Star site. 208 5/26/10 - FINANCE - BILL 100129, etc. We've been providing child care for more than 30 years at 42nd and Locust Streets, and in the past few years, the Child Care Facilities Fund has provided real, tangible support to help us improve quality and safety of our buildings, which were built in the 1950s and early '60s, and I want to just tell you two examples. One was a grant that paid for two really important safety improvements. One was a $17,000 upgrade of our electrical system and a $10,000 upgrade of our telephone and intercom system. Before the electrical upgrade, on a day like today when it was really hot and we had the room air conditioners on, if you flick a switch in another part of the building, the circuit breaker would go off and we would all be in the dark. Our communication system before that was improved, we had some classrooms that were newer to the center and they weren't tied into our communication 209 5/26/10 - FINANCE - BILL 100129, etc. system. So this meant that in an emergency and, worst-case scenario, if there was an intruder in the building, we literally would have had to call outside lines to let that classroom know that there was someone in the building. With the communications upgrade now, we can instantly intercom every classroom and let them know what's going on, and that's really reassuring to our families and to our staff. Last winter we received another grant that helped us completely renovate a second building to expand our child care capacity. We've added 50 new child care slots, and this includes new infant and toddler rooms, and this is the kind of care that's the hardest to find, especially in terms of quality. The cost of the sprinkler system for that renovation, that cost alone was $68,000. So I hope that you see that this type of support from the Facilities Fund is really critical when a center embarks on 210 5/26/10 - FINANCE - BILL 100129, etc. major renovation that requires compliance with the current building codes. Non-profit organizations across our region have been hit, as you know, by the economic downturn, and that's especially true for child care centers. Funders have, I think, understandably shifted their dwindling resources to programs, but that makes the dollars for the bricks and mortar a lot harder to find. One source that two years ago helped us out and provided $29,000 for capital improvements last year cut our support to $2,900. And as I searched other foundation and corporate sources to support our renovation, I found that many had simply stopped funding capital projects or they were limiting their funding to the projects that had already been approved. Without the Child Care Facilities Fund, centers are really hard-pressed to fund improvements that support quality care, and this becomes even more important because the state is 211 5/26/10 - FINANCE - BILL 100129, etc. increasing their standards for facilities and especially, it's been mentioned before, playgrounds. You know as Councilmembers that it costs about at least $100,000 to do a really quality playground, and without financial support to meet these kinds of mandates, I think that some centers might just keep children indoors because they can't afford the upgrades, and then that would put the centers in violation and possibly maybe have them shut down. And that would really be a tragedy for youngsters who need to, as you know, jump and run and climb as much as they need to learn their numbers and their A-B-C's.
And so I would encourage you to increase the CDBG support for the Child Care Facilities Fund in the next fiscal year, and I thank you for your investment.
Thank you. And I 212 5/26/10 - FINANCE - BILL 100129, etc. have copies of it here.
Good afternoon, Councilwoman Tasco and Councilwoman Blondell Reynolds Brown. We're very happy to be here. I understand it's been a very instructive, informative day for me over here and I know you want us to wrap up, so I am going to give you a turbo version of our testimony, but we've submitted it for the record so you can have that. But we're very happy -- I am Senior Director -- my name is Joan Reilly. I'm Senior Director of Philadelphia Green, which is the urban greening division of the Pennsylvania Horticultural Society, and I'm here with my colleague, Bob Grossmann, who is a Director with the Philadelphia Green program. In urban areas, green spaces 213 5/26/10 - FINANCE - BILL 100129, etc. offer aesthetic, economic, environmental and social benefits. Public spaces filled with thriving greenery create a more appealing urban environment, and green spaces enhance a city's economic prospect by increasing property values, stimulating business activity and attracting reinvestment. Trees and other living plants improve air quality, absorb storm water and, in addition, evidence points to the power of greening to reduce crime, promote social interaction and improve health. And I know Councilwoman Blondell Brown is a huge champion of the greening work and understands it all, so I'll just skip down to say that over the next fiscal year, our work will continue to help achieve the goals of Philadelphia Greenworks, which is the Administration's initiative to create a greener, more sustainable city. And we're going to do that in our work with vacant land management, planting trees, creating quality landscape, streetscapes and 214 5/26/10 - FINANCE - BILL 100129, etc. neighborhood parks as a critical component of the City's efforts to become a more prosperous, competitive and sustainable city. I'm going to go into a little detail on the vacant land, because I think there have been some questions about that today. So, number one, we're going to do that through manage vacant land as a community asset. That's turning blighted, vacant liabilities in communities into amazing neighborhood assets. Since Fiscal Year 2004, over 5,000 vacant and blighted parcels of land have been cleaned and greened with grass, trees and fencing and are being maintained on a regular basis. In addition, Philadelphia Green's Community LandCare project has contracted with over 15 community-based organizations to perform regular housekeeping on an additional 2,500 lots. This project engages community organizations in the process of land management and has added 215 5/26/10 - FINANCE - BILL 100129, etc. the benefit of employing over 100 neighborhood residents through the program. In Fiscal Year 2011, we plan to maintain the existing 10,000 square feet of managed land and clean and green an additional 250 parcels -- million. 8 Excuse me. Ten thousand wouldn't be very 9 impressive, would it? So we're going to 10 maintain the existing 10 million square feet of managed land and clean and green an additional 250 parcels and create employment for over 100 community residents. The second thing we do is with our work with community gardens, and we have -- there's over 400 community garden in the City of Philadelphia, and in their next chapter, they've not only been a way to repurpose vacant land, but they're supporting our local food economy and providing, through our City Harvest program, food to people most in need of access to locally grown fresh produce. So since its inception, the City Harvest 216 5/26/10 - FINANCE - BILL 100129, etc. program, which is a partnership with inmates up at the Philadelphia Prison System and our network of community gardeners, SHARE and the Health Promotion Council, we have grown over 55,000 pounds of organically grown produce, and that's being distributed through the food cupboard and soup kitchen system through 900 families per week.
The third way we want to work with you is promote and invest in localized approaches to storm water management. You heard earlier today testimony about that storm water problem, and we are very excited to partner with the Water Department and the community in finding green solutions to that problem. So we're using our vacant lots, we're using our landscapes and parks and our tree planting and gardens as a way to mitigate that problem. The fourth way is to revitalize neighborhood parks. We began 16 years ago with three neighborhood parks and now 217 5/26/10 - FINANCE - BILL 100129, etc. work with over 104 friends of park groups around the City and partner with the Department of Parks and Recreation and any number of other public and private entities to reclaim and revitalize neighborhood parks in districts throughout Philadelphia. There was a question earlier about the Growing Greener funds, so I do want to say that the City of Philadelphia applies every year. That's money that is managed largely through the Department of Conservation and Natural Resources. The Department of Parks and Recreation is the main applicant for those funds every year, and at the moment actually that money is at an all-time low. So that money has dwindled down over these eight years and there's a new campaign, and we hope the next Governor and that Administration will invest in building up that Growing Greener funds. Supporting and developing the City's urban forest. We support 218 5/26/10 - FINANCE - BILL 100129, etc. Greenworks' initiative to want to plant 300,000 trees by 2015, and we're doing all we can with citizens and again in other public-private partnerships to take care of the existing canopy. We have a geriatric tree canopy here that needs care and it also needs replacement. And, finally, we invest in the civic landscapes. I think you're all familiar with what we did at Logan Circle a few years ago in partnership with Fairmount Park. And most recently we're working with the Rodin Museum, with the Art Museum, Fairmount Park, Olin Partners and, again, a host of other investors to rejuvenate the landscape outside the Museum and the interior garden. So, again, the Horticultural Society is grateful for the long-term support provided to its Philadelphia Green Program through OHCD. I think Philadelphia distinguishes itself by using CDBG money, among other things, to support greening, and we look forward to 219 5/26/10 - FINANCE - BILL 100129, etc. continuing our public-private partnerships to create safe, attractive, healthy neighborhoods as a way to contribute to the City's prosperous future. The one point I did forget to mention is, the money that we do get through OHCD, we work very hard and very successfully every year to leverage. So that money really helps us get additional money, federal money, state money, money from foundations, the corporate community and individuals. It's the combination of all of that investment in those partnerships that we believe help to make the City a green, wonderful place to live, work and play. Thank you very much.
Thank you, and thank you for your help with Shevchenko Park.
Thank you 220 5/26/10 - FINANCE - BILL 100129, etc. very much. Any questions or comments? Councilwoman Brown.
Thank you also for the testimony and the continued enormous impact that your organization has across the City. It's just priceless in many ways. You mentioned that you do use CDBG dollars to leverage federal dollars, correct?
Well, I probably spoke too broadly. I guess what I'm saying is, PHS leverages dollars from the federal government. We understand CDBG money is federal money that comes through the City. But what I'm trying to say is that the money -- whatever money we get from investors, we are successful at leveraging and growing that money to get additional monies to do the work. So the work of Philadelphia Green gets a portion of its money from CDBG and then we bring in other money. 221 5/26/10 - FINANCE - BILL 100129, etc.
Okay. Is it correct that PHS was the recipient of Recovery Act dollars?
We received some money through Pennvest, a $1.6 million grant for tree planting in this past year, and we used that to plant 8,000 trees in the City and the region. We've just completed that. So I believe that was Recovery Act dollars that -- usually Pennvest gives loans to municipalities, and for the first time with this Recovery Act money, they were able to give grants and to allow non-profits to apply. Our grant was part of the very first round of funding that allowed money to be used for green solutions to the storm water problem as opposed to gray solutions, which are typically pipes and tanks.
I see. You may have observed that one prevailing, continuous concern and interest of members of Council is finding ways to make sure in this case Recovery 222 5/26/10 - FINANCE - BILL 100129, etc. Act dollars find their way to communities, folks living in communities, in neighborhoods who are unemployed. With that said -- and I believe it was Councilman Clarke who actually called for hearings on how those dollars would be spent, principally in government, but we think that rule should apply across the board for City agencies or agencies providing Recovery Act-related work across the board. What type of procedures, considerations, plans does PHS consider along those lines?
That's a wonderful question. I'm going to let my colleague talk about something we're working on right now. I would say that that money that we got through Pennvest had so many requirements and qualifications --
-- that smaller companies, start-up companies or smaller 223 5/26/10 - FINANCE - BILL 100129, etc. businesses were not able to qualify. So we experienced that firsthand. And I'll have Bob comment on something that we're working on right now to address that for the future, because we are applying again for Pennvest money.
Right. In this first grant that we were just discussing, a good amount of that money went for trees, just paying for trees, which were planted by volunteers, some in riparian areas and some in the City. We just planted over a thousand trees with volunteers throughout the City utilizing that fund. We intended to go back, because we had -- in this first go-around, we were told that non-profits could apply for this money. When we went back, we found out that was a mistake and that while they're rejiggering things to make sure non-profits can apply in the future, that at the present time, they're only considering -- 224 5/26/10 - FINANCE - BILL 100129, etc.
-- for municipalities and utilities. Now, this is from Pennvest now. It's not Recovery Act money in the future, but Pennvest has its own state funding to do the kind of green infrastructure work that we do, and they have been mandated to see that to 12 percent of their funding goes to green 13 infrastructure work. So we are 14 collaborating with the Parks and 15 Recreation Department to submit a 16 proposal this year that is basically 17 surrounding recreation centers with trees 18 in North Philadelphia, and that will 19 be -- it's a submission that's headed by 20 Parks and Rec, which we collaborated on that submission, and we're providing the management for that.
But I'm talking about with the OEO and that workshop that we're going to offer. 225 5/26/10 - FINANCE - BILL 100129, etc.
Yes. And in preparation for all of this, we're working with MBEC to provide a workshop for minority contractors to build their capacity so they can meet the requirements of any of these either state or federal kind of programs that have more restrictive requirements, and we're going to have a workshop in June on that working with MBEC.
We'll be delighted to hear when that happens so that we can share that with contractors, in this instance, landscapers and others, who look for -- who are in neighborhoods, some of whom do have capacity but for whatever reason cannot connect the dots to the work that PHS does.
So that's the other thing we do, particularly through the vacant land work. That is work where we have a number of minority contractors and community-based organizations applying. We do a lot of capacity 226 5/26/10 - FINANCE - BILL 100129, etc. building prior to the RFP being issued so that people are in good shape to apply for it and can be competitive, but we found that their ability to apply for more complex work and to access any of these federal dollars required that they have some level of insurance, any number of other certifications that they don't have, and that's the workshop that -- so understanding that, we're collaborating with the Sustainable Business Network, as well as MBEC to create this symposium. So we'll make sure that you all know about it in advance. We have a pretty good list of people we're sending it out to in our side of the green industry, but if you have additional people to recommend, we'd be glad to let them know that. And we believe you have to be very proactive, one, maybe struggle to change some of those requirements that the federal government has, and that's a whole other advocacy and policy path, but, two, given that that's what it is 227 5/26/10 - FINANCE - BILL 100129, etc. now, what can we do proactively before the RFP is issued to do all we can to ensure people have the proper information, they meet with people who already have those qualifications who can help them see like a ladder of how they can move from where they are to where they want to be. So we're deeply committed to that.
Absolutely. And just let me offer a friendly amendment. MBEC are the days of the past. The new world is OEO, Office of Equal Opportunity. So I share that with you just to let you know that going forward, number one. And, number two, it is very distressing when I see workers working on the City Hall Courtyard and their company name is from one of the suburbs, from one of the counties. I believe in some ways that is -- it's not right. So those are the kinds of changes we want to begin to see, 228 5/26/10 - FINANCE - BILL 100129, etc. particularly when it comes to dollars, federal dollars or the like.
Let me just say that we've always believed the same thing, and that in our -- in the contracts that we manage through the Office of Housing funding, say, for the maintenance contracts of the stabilized land, the fences and the trees, we have presently contracts in the 2010, last 12 year's work, and of the 14 contractors, 13 ten are either minority-owned businesses 14 or community-based minority-owned businesses that are non-profit, and the only -- we only have one contractor who is not based in the City doing all the work that we do. And so we've always given priority to City-based contractors and especially minority-owned contractors, and have worked hard to develop the capacity of those contractors who may have started out mowing lawns in the neighborhood and now are building their 229 5/26/10 - FINANCE - BILL 100129, etc. capacity to do more and more work.
And that's part of what we see our function, and it makes us a little bit different than maybe a contractor just doing a lot of lawns all over the City.
Well, we appreciate the commitment, because it's not in what you say, it's always in what you do that illustrates how committed you are. So we thank you for that. And please remember to forward to us the announcement of that upcoming June effort.
I just have one comment to make relative to the storm water. I've gotten a number of 230 5/26/10 - FINANCE - BILL 100129, etc. calls from churches. Are you trying to develop a relationship with the churches? They have all this land and sometimes a large parking lot, and often some of our parking facilities downtown, how do we work with them? Certainly they're going to have to have a certain amount of concrete to park a car, but maybe the surrounding site or some way you all could work with them during this whole issue of --
Absolutely, because their water bills -- their water rates are going to be affected now not only by their usage, but the amount of green space or hardscape they have around. So people who have lots of hardscape that they own around their facility, their rates are going to go way up, and people that have more green space or permeable surfaces, regardless of the usage, their rates are going to go down. So the Water Department is doing a big education campaign right now, and, of 231 5/26/10 - FINANCE - BILL 100129, etc. course, we're on the green solutions side of this, and we'd be very happy if your office wanted to refer anyone over to me who is having questions or issues about this. Of course, it always requires resources to make these changes, but we have a pretty good handle on that storm water system right now. So we would be glad to help them navigate it and put them in touch with the right folks, and potentially there's a partnership with you with some of these folks in your district and Philadelphia Green. We look forward to that. I would also say that this Community LandCare that employs 100 folks seasonally, we were very excited to work with the Commerce Department and the Mayor's Philly Works initiative, so that some of them had work beyond the landscape season with corridor cleaning. That was the first time that happened this past year. We look forward to more of that going on. And when I mentioned 232 5/26/10 - FINANCE - BILL 100129, etc. our City Harvest program that grows food for the hungry essentially, up at the prison the inmates grow these seedlings, we've created a job readiness program for them, and understanding that it's not enough just to do job readiness but where's job placement, it's small but significant that we've expanded that program to not only be at the campus of the prison, but then when those who are eligible for work release, we will be graduating our first small but mighty class of five inmates who went for another eight weeks of training at Bartram's Garden and they will all be receiving jobs. So our commitment is do job readiness, job training and job placement to support reentry efforts using the green side of the business, which is both, you know, ancient wisdom. You work on the land, it's healing in and of itself, it's restorative. These participants get to give back to 233 5/26/10 - FINANCE - BILL 100129, etc. communities where their families live. They're the little engine that creates the seedlings that turned into the 55,000 pounds of food that feed people they care about. And then in addition, for those who have an interest, an affinity for landscape work, we've now partnered with a private landscape firm, as well as Bartram's Garden, the prison and PHS to expand that program on the Bartram's Garden campus, so they're making a difference there, and that's an under-resourced treasure that needs a lot of help, and we're working on that Part C, that ever-important job placement. So we feel like not only in what we say but what we do, we have a very deep commitment to this, and understand that that's key to our shared vision for the City. It's essential. So we applaud Council's interest in this, and you should count on us as a partner. And we'll furnish all the data and information you need for 234 5/26/10 - FINANCE - BILL 100129, etc. that case making.
I need to congratulate you. I clearly remember a prison officer who sent my office a summary about this very program, and we advised that they need to talk to you or the Fairmount Park, and here we are X number of years later and it's real.
Thank you. Yeah. It was hard, but I'll invite you all -- we're still trying to confirm with the Mayor the exact date and time of graduation, but it will be June 17th or 18th. And we want a graduation where people are not only recognized for what they've accomplished, but that their employer will be there to offer them a job. 235 5/26/10 - FINANCE - BILL 100129, etc.
So we hope, if your calendars permit, you will be there that day for that celebration.
It was really inspiring and informative. I'm sitting here with a lot of ideas. I will contact you, because I do have a lot of churches in my district.
We need to talk about what advice we could give them, how they may want to partner with you, but we'll get back to you on that.
Much like Shevchenko Park. We're eager to make 236 those connections.
Is there anyone else here to testify on this bill? (No response.)
There being none, we will recess this hearing until June the 9th at 11:30 a.m. Thank you very much. (Committee on Finance adjourned at 3:25 p.m.) - - - 237 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on May 26, 2010, and that this is a true and correct transcript of same. -------------------- MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)