COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON LAW AND GOVERNMENT - - - Room 696, City Hall Philadelphia, Pennsylvania Wednesday, April 23, 2003 1:25 p.m. - - - BILLS 020076, 020621, 030016, 030097, 030098, 020810; RESOLUTIONS 020084, 030034, 030106, 020817. - - - PRESENT: COUNCILMAN DAVID COHEN, Chair COUNCILMAN ANGEL ORTIZ, Co-Chair COUNCILMAN DARRELL CLARKE COUNCILMAN FRANK DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN MICHAEL NUTTER COUNCILMAN FRANK RIZZO COUNCILMAN JAMES KENNEY - - - V A R A L L O, INCORPORATED LITIGATION SUPPORT SERVICES 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 I N D E X BILL 030115, RESOLUTION 030119 PAGE WILLIAM GAMBLE, Procurement Commissioner .... LOUIS CRUZ, Hispanic Chamber of Commerce .... 21 BILL 030016, RESOLUTION 030034 COUNCILMAN MICHAEL A. NUTTER ................. 27 BILL 030097, BILL 030098, RESOLUTION 030106 JAMES CUORATO, Commerce Department .......... 38 RICHARD FEDER, Law Department ............... 94 BILL 020621 COUNCILMAN MICHAEL A. NUTTER ................. 52 NANCY KAMMERDEINER, Revenue Commissioner ..... 74 BILL 020076, RESOLUTION 020084 COUNCILMAN MICHAEL A. NUTTER ................ 100 BILL 020810, RESOLUTION 020817 COUNCILMAN JAMES KENNEY ..................... 113 3 04/23/03 - LAW & GOVERNMENT
Good afternoon. I'm Angel Ortiz. This is the Committee on Law and Government. Councilman Cohen is slightly delayed, but we have a very big Calendar to take care of, and we have present with us today Councilman Rizzo to my right, Councilman Clarke is here, Councilman Nutter. I would like the Clerk to please read the titles of the Bills on the Calendar into the record.
Bill 030115, an Ordinance 12 providing for the submission to the qualified electors of the City of Philadelphia of an amendment to Section 8-200(2) and 8-201 of the Philadelphia Home Rule Charter, relating to contracts and concessions for which competitive bidding is required, as approved by Resolution of the City Council; fixing the date of a special election for such purpose; prescribing the form of ballot question to be voted on; and authorizing the appropriate officers to publish notice and to make arrangements for the special election. Resolution 030119 is a Resolution 24 proposing an amendment to Section 8-200(2) and 8-201 of the Philadelphia Home Rule Charter, relating to 4 04/23/03 - LAW & GOVERNMENT contracts and concessions for which competitive bidding is required, and providing the submission of the amendment to the electors of Philadelphia. Bill 020076 is an ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to Section 8 2-102 of the Philadelphia Home Rule Charter, relating to the redistricting of the City to revise the boundaries of the councilmanic districts after each decennial census, as approved by Resolution of the City Council; fixing the date of a special election for such purpose; prescribing the form of ballot question to be voted on; and authorizing the appropriate officers to publish notice and to make arrangements for special election. Bill 020621, entitled an Ordinance 18 amending Title 2 of the Philadelphia Code, entitled "City-County Consolidation," by abolishing the Board of Revision of Taxes and reassigning its powers, functions and duties to three newly created City agencies to be known as the Board of Property Assessment Appeals and Review, the Property Assessment Oversight Board, and the Office of Property Assessment; providing for submission of 5 04/23/03 - LAW & GOVERNMENT such amendment for the approval or disapproval of the qualified electors of the City of Philadelphia; fixing the date of a special election for such purpose; prescribing the form of ballot question to be voted on; and authorizing the appropriate officers to publish notice and to make arrangements for the special election; all under certain terms and conditions. Bill 030016, an Ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to the Philadelphia Home Rule Charter relating to the composition of the Board of Pensions and Retirement, as approved by Resolution of the City Council; fixing the date of a special election for such purpose; prescribing the form of ballot questions to be voted on; and authorizing the appropriate officers to publish notice and to make arrangements for the special election. Bill 030097, an Ordinance amending Title 17 of the Philadelphia Code, entitled "Contracts and Procurement," by adding a new Section 17-109, entitled "Local Bidding Preferences," providing for the establishment of a bidding preference on City 6 04/23/03 - LAW & GOVERNMENT contracts for Philadelphia businesses, under certain terms and conditions. Bill 030098, an Ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to the Philadelphia Home Rule Charter to establish that a bid preference can be allowed in the awarding of public contracts to Philadelphia first, and that the extent and nature of the bid preference shall be provided by ordinance. Resolution 020084, a resolution 13 proposing an amendment to Section 2-102 of the Philadelphia Home Rule charter, relating to the redistricting of the City to revise the boundaries of the councilmanic districts after each decennial census, and providing for the submission of the amendment to the electors of Philadelphia.
Resolution 030034, a Resolution 20 proposing an amendment to the Philadelphia Home Rule Charter relating to the composition of the Board of Pensions and Retirement, and providing for the submission of the amendment to the electors of Philadelphia. Resolution 030106, a Resolution 7 04/29/03 - LAW & GOVERNMENT - BILLS 030115, 030119 proposing an amendment to the Philadelphia Home Rule Charter to establish that a bid preference can be allowed in awarding of public contracts to Philadelphia firms, and that the extent and nature of the bid preference shall be provided by ordinance. Bill 020810 is an ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to Section 11 6-400(c) of the Philadelphia Home Rule Charter, relating to authorized audits by the Auditing Department of certain agencies performing services or receiving funding from the City, as approved by Resolution of the City Council; fixing the date of a special election for such purpose; prescribing the form of ballot question to be voted on; and authorizing the appropriate officers to publish notice and to make arrangements for the special election. Resolution 020817, a Resolution 22 proposing an amendment to Section 6-400 of the Philadelphia Home Rule Charter, relating to authorization for City Controller audits of agencies receiving appropriations from, or performing 8 04/29/03 - LAW & GOVERNMENT - BILLS 030115, 030119 services for the City, and providing for the submission of the amendment to the electors of Philadelphia.
Thank you. We will hear first Councilman Darrell Clarke's Bill.
Is there anyone to testify for that from the Administration? Commissioner, you know the drill. Identify yourself for the record. I hope your statement is not very long because we heard it this morning already, right?
Good afternoon, Mr. Chairman and Members of the Law and Government Committee. My name is William F. Gamble, Procurement Commissioner. I'm here today to offer testimony for Resolution 030119, which would offer a potential Charter change in place on the ballot in 9 04/29/03 - LAW & GOVERNMENT - BILLS 030115, 030119 November, allowing the qualified electors to vote on a ballot question to amend the Home Rule Charter to exempt contracts involving expenditure of $25,000 or less from the open bid procedure as required by Section 8-202A to 2F. The Procurement Department is in agreement with this proposed amendment. We view this change as a step in the right direction. Effective this past January 2003 in order to increase the use of businesses and suppliers, the Procurement Department developed a program to provide bidding opportunities to small businesses. The Department now limits solicitation of bids of small purchases to small companies. Increasing maximum amount of smaller purchases from 13,000 to 25,000 will assist us toward our goal of increasing the number of small businesses receiving contracts. This concludes my testimony. Thank you for the opportunity to appear before you. I will be happy to answer any questions you have regarding this testimony.
Commissioner, if I may, before I turn it over to Councilman Clarke, could you explain to me how increasing it from 10 LAW & GOVERNMENT - BILL 030115, RES. 030119 $13,000 to $25,000 will assist us in getting more small business individuals and corporations to receive contracts from the City? Is making it bigger not a bigger impediment than a smaller contract? I just want for the record for you to explain that.
What we're attempting to do, Councilman, is that we realize that when the awards to small businesses and minority businesses have actually decreased over the years, so we're trying to find a way in which to increase that participation number. So we devised a program that allows small businesses to compete against small businesses under 13,000, which the Charter now requires. So we're looking to increase that to 25,000 which would -- we'll increase that amount so that way we'll increase the dollar amount that we make to these small businesses.
How many contracts right now do we have at the $13,000 level that we give out? How many $13,000 contracts? And this is with no bid contracts?
No, it's not a no bid. What it is is that it's not an advertised bid. The 11 LAW & GOVERNMENT - BILL 030115, RES. 030119 process is that departments will solicit three companies to do business with, get their prices --
Without advertising, that's correct. And then they will go to the suppliers and request a quotation. Then those quotations will determine which will receive the award.
Could you give me some examples of the contracts that are included in this category?
For example, let's say that the Department wants to buy a refrigerator and it's between 500 and $1,300.
What you would do is that you will solicit from three small companies asking 12 LAW & GOVERNMENT - BILL 030115, RES. 030119 them what they would charge you for that refrigerator. And then instead of opening up to everyone, we're now limiting it to small businesses only so that small businesses will compete against small businesses, which we feel equitable and fair in that when you have small businesses competing with each other, then --
There's a bidders list that we have. We require them to use that bidders list.
It's basically our bid list, the number of vendors. And also we have sent out notice to vendors to ask them to re-certify it or send us more information if they're small companies so we make sure when the department solicits from this company, they are using small companies in their solicitation.
Are most of the small companies that we're using, are most of these 13 LAW & GOVERNMENT - BILL 030115, RES. 030119 companies African American, Latino? Are they minority companies?
There are some minority companies, but what we're doing is not race and gender specific. But we would assume that a lot of the small companies are minority companies, yes. But it's not just for minority companies, but it's for small businesses.
Small businesses per se, but I'd like to see if you have it available -- I would like to see how that has been distributed in terms of the companies and so on; how many Latinos, African Americans, and so on have received and have made themselves available of these contracts that have been accessible and a listing of the number of contracts that are available in that area currently and a list of the contracts under the new heading of $25,000. The list of contracts that will become available under the new $25,000 range, okay.
Thank you, Mr. Chairman. Mr. Chairman I would just like to thank 14 LAW & GOVERNMENT - BILL 030115, RES. 030119 Mr. Gamble for bringing this issue to our attention at a recent forum that we had in the community meeting with small contractors. One of the issues that continued to come forward was their inability to receive small contracts interacting with larger companies on competitive bids and they just simply didn't have the wherewithal in terms of resources to submit a reasonable successful bid solicitation. And I want to thank Commissioner Gamble for working with us on this. And hopefully, we'll get this passed and give you the ability to enter into some of these no bid contracts for our small contractors out there and small businesses. Thank you, Mr. Chairman.
Good afternoon. My mind is racing here, so I have a couple questions. I'm always concerned -- you know we have a problem with the Charter saying that you're supposed to come to Council with contracts beyond a year. Explain to me the possibility of loopholes here. If you want to purchase four items and the items are $100,000, I envision this contract will come back at 24,999 four 15 LAW & GOVERNMENT - BILL 030115, RES. 030119 times.
What happens is this, before the use department can enter into agreement or receive the merchandise, they must send it to us to take a look at. We make sure that no one is trying to -- first of all, we do not split awards and we make sure that departments cannot use this system to procure four different times. If that happens, what we do, we will competitively bid that because we realize that that skirts around what the intent is. The intent is not to bypass the City Charter.
Commissioner, with all due respect, there's a lot of skirting around going on.
The skirting around on the issue that I mentioned when I started my remarks. In my opinion, that's skirting around. Some day when you're not the Commissioner and a new 16 LAW & GOVERNMENT - BILL 030115, RES. 030119 Commissioner comes in and wants to skirt around, there's nothing there in writing, there's nothing in the ordinance that specifically says that if Public Property wants to buy 200 water coolers and they're $300 apiece, that there is the potential to buy those water coolers without a contract, without competitive bidding.
As I explained to Councilman Ortiz, what we do is that it's a bidding process. The only thing different is that we don't advertise. We don't go out and advertise in the newspapers. They have to receive at least three quotes from small companies. So it's not where a person just can go out and just arbitrarily decide they're going to buy from this company without any kind of competition.
If I may, Councilman. I think the question is, since you don't advertise and you have a list, who selects them? And are they rotated? I remember Wilson Goode when he became Mayor, because of the exclusion of minorities in the area of bonds and work with bonds and all of that area that we give huge contracts to, Mayor Goode set 17 LAW & GOVERNMENT - BILL 030115, RES. 030119 up a -- put out a call for minority firms to bid on or subcontract on several different -- and demanded that minorities be included in the bond work. And then he made a list of minority firms and he put them really in a rotation basis. So that almost every minority that was certified and everything else at one point or another became part of the contracting process. I think Councilman Rizzo is saying, how do you avoid that the same or a favoritism emerges and some firms get preferential treatment from others in this venture? Because they're not publicly bid. You submit three and it could be the same three every time.
Before they can procure anything, those items must be sent to the Procurement Department for the buyer to take a look at and scrutinize. They have to show they went out and solicited from vendors on the bid list to make sure that everyone is given the opportunity in which to compete.
Commissioner, would you be open to a cap per business that after they reach a certain dollar amount somebody else has to have shot at this? Because, again, Commissioner, 18 LAW & GOVERNMENT - BILL 030115, RES. 030119 I've been around this City business a long time. And you used the word "skirting around." I just don't like what I'm hearing.
Councilman, let me say this. We're not really doing anything that we aren't currently doing now. The only thing is that we're changing. Instead of opening it up to large companies competing against small companies, we're now saying that small companies will compete against small companies. They have to still go through a process, a process of making sure that the company selected is giving you the lowest cost. Again, it's still based on the lowest cost. It's not professional services. It's still a procurement item that they have to go to the lowest bidder.
So in order words, if the Public Property, the electricians need to buy circuit breakers, wires and things that they use for maintenance presently today they can go out and spend $13,000 --
No. Items like that is on the contract that we will competitively bid that. The 13,000 limit 500 to 13,000, right now it allows the departments the flexibility or allows them to 19 LAW & GOVERNMENT - BILL 030115, RES. 030119 procure or to go ahead and basically do the leg work that we would have to do. From that standpoint, then they will send it to us because they've already done the leg work based on the bid list that they have and based on all of the vendors that are identified in that particular commodity. And then we in turn will look at that. And then if we find that -- if a company is not the lowest bidder, then we're not going to make that award.
Commissioner, tell me about another type of contract. Tell me if we have this. Public Property needs to buy items, maintenance items, where they have like an open contract where they can just walk in and pick up 10 boxes of circuit breakers. Tell me about that kind of contract where I know that there are various departments that have contracts with automotive parts or they have contracts with electrical supplies or refrigeration supplies, janitorial supplies where there's no limit of $13,000, there's just an open deal. What's the difference?
Well, first of all, those type of items have been advertised and been publicly -- they've been bidded. These are bid items that we 20 LAW & GOVERNMENT - BILL 030115, RES. 030119 will go out and solicit an invitation to bid for those items. Public Property does not go out on their own and solicit that.
But there are contracts out there that have no dollar constraints.
No, that's not true. All of our contracts that we issue, there is a dollar limit on all of them. Keep in mind also that the limit is basically based on a guesstimate because we actually don't know what we're going to use until we actually use it. So there's a dollar cap on all of our contracts. So there is no contract that we issue that has no dollar limit on it.
Thank you, Mr. Chairman. With respect to my colleague's comments, I just wanted to mention the fact that the reality of existing process as it relates to capping small businesses under this particular provision, the reality is that a lot of the larger companies continue to get contract renewal year after year. I 21 LAW & GOVERNMENT - BILL 030115, RES. 030119 think the City of Philadelphia has been buying Ford vehicles for the last -- for as long as I've been here. So I'm more concerned if there's going to be a cap on companies continuing to get contracts with the City that we look at the larger contracts as opposed to smaller contracts. Our intent on this particular Bill was to give the small business person more of an opportunity to, hopefully, build capacity if they continue to get contacts, we assume based on their performance. I, frankly speaking, don't have a real problem with a small business continuing to do business with the City of Philadelphia and hopefully build the capacity that one day they will no longer be able to receive one of these no bid contracts and they will then have to bid along with the big boys. So that's the intent of this particular Bill. Thank you, Mr. Chairman.
Is there any other member of the Committee that has any questions? (No response.)
If not, is there any other witness on this Bill? (No response.) 22 LAW & GOVERNMENT - BILL 030115, RES. 030119
Hearing none, that will end the public discussion on the Bill and the Resolution. Please identify yourself and spell your last name so the reporter can have it.
Louis Cruz, I'm the President of the Hispanic Chamber of Commerce. I think this Bill is great, as Councilman Clarke mentioned. Just would like to be able to know a little bit more information on qualifications because I think that the businesses here in Philadelphia need to get the information on these types of contracts. The structure is great, but if the information isn't given that these types of contracts exist for businesses in Philadelphia to be able to qualify themselves or to be able to apply for them, then it's really not going to do any of our businesses in the City any good. So whether the information is given through the different Chambers or whether the information is posted some kind of way that we could have our businesses apply and note all the services under the codes or how the classification may be. But I think an important thing to put into that Bill 25 would be that there's sufficient advertisement for 23 LAW & GOVERNMENT - BILL 030115, RES. 030119 businesses in our City to be able to apply to qualify for this.
Yes, Mr. Chairman. Currently, what we're doing is that all of our advertisements is on-line. Phila.gov that will list all of the planned activities or planned purchases under 13,000 for the entire year. And this is updated on a monthly basis. It lists the departments, the contact person, and the item that they will be procuring. So that does exist on our Website.
Doesn't the City take some extra steps to make sure that all businesses are notified of opportunities?
These opportunities, Councilman, these are small orders so we don't advertise per se, but we do list them on our Website so that we tell vendors to go to our Website and it will list all of the small order purchases that we anticipate doing for the entire month. And so, again, it will list the commodity, the person that they need to contact, and how much we think we're 24 LAW & GOVERNMENT - BILL 030115, RES. 030119 going to spend, basically. But it's under $13,000 though.
But, sir, it seems to me if the City were genuinely interested in promoting the role of small business, it would go out of its way, it would not say, "We do so-and-so and it's up to small business to learn about it." It would seem to me the City would take extra steps to make sure that everyone in the City that might be interested would know about the opportunity. It's nothing personal, the criticism, but the Mayor brags about this Business Action Team. I know there's a Small Business Committee, yet we continue to hear these refrains from small business that somehow or other are left to scurry on their own, and many of them are in no position to do that. You know, a small businessman's got many problems to think about just to maintain himself and in the business of being a small businessman. So I think everything the City can do to make it easier ought to be done. And so I'm wondering what step could we can take? Do you have any suggestion, sir?
The one suggestion would be if notifications could be sent out to the different 25 LAW & GOVERNMENT - BILL 030115, RES. 030119 Chambers.
And have the Chambers then accept an additional responsibility of notifying their membership? Well, that would certainly be one step.
We would be more than happy to send it to anyone. You know, we're trying to get the word out as much as we possibly can. We're looking as a first step of trying to do that. In the past, we didn't have it. So we are trying to reach out, and any suggestions you have in order for us to broaden that, it would be appreciated.
See, small LAW & GOVERNMENT - BILL 030115, RES. 030119 businessmen don't have the opportunity to be at the large campaign affairs where word seems to get booted about so you need special steps because small businessmen often can't afford the ticket price of the large campaign affairs. So I think you've got to do something to compensate for that. And we know that business generally is healthier the more we promote small business, and in every way it's going to afford the minority population and the population in generally more job opportunities if we get small business as healthy as possible. Look, I'm sure the Commissioner will be receptive to any other ideas you have. Councilman Clarke, was there anything you wish to add on that?
Is there any other witness to be heard on this matter? (No response.)
If not, the public hearing on this Bill and Resolution will be concluded. The committee will be taking action on this matter later this afternoon. 27 LAW & GOVERNMENT - BILL 030115, RES. 030119 The next Bill before this committee is -- would you read the number and title of the next Bill.
Bill No. 030016, an ordinance providing for the submission to the qualified electors of the City of Philadelphia of an amendment to the Philadelphia Home Rule Charter relating to the composition of the Board of Pensions and Retirement. And Resolution 030034, a Resolution 12 proposing an amendment to the Philadelphia Home Rule Charter relating to the composition of the Board of Pensions and Retirement.
The first witness in that matter. Councilman Nutter, do you wish to make a statement on that? You're going to undertake the trepidations of being a witness, Councilman? We offer you no quarter, you know, once you become a witness. Councilman Nutter, the Committee is pleased to have you appear on behalf of the Bill and Resolution you've authored.
Thank you, Mr. 28 LAW & GOVERNMENT - BILL 030016, RES. 030034 Chairman. My name is Michael A. Nutter, N-U-T-T-E-R, Councilman for the 4th District. I do appreciate the opportunity, Mr. Chairman and Members of the Committee, to provide some testimony on this Resolution and the Bill. I would say off to the side, Mr. Chairman, that there are apparently a growing number of people who have expressed an interest in the opportunity to ask me questions. I will do my best to get through this as quickly as possible, but it is an unusual circumstance. Mr. Chairman, very briefly, the original Resolution and Bill as introduced would provide for two new members to the Board of Pensions to be appointed by the Council President. The primary motivation behind this was twofold: One, as we know from our recent budget hearings, our pension system, not unlike almost all pension systems across the country, have suffered as a result of a variety of circumstances, severe decline in assets which concerns all of us, as we are all public employees and we're members of this pension system. The Board of Pensions, I know, is very concerned about this issue as well. The Council has multiple responsibilities here, not only as members of the 29 LAW & GOVERNMENT - BILL 030016, RES. 030034 system, but also we are asked when the system under-performs for whatever reason to make additional contributions to maintain pensions for current retirees as well as future retirees. So Council has a clear interest in what goes on with the pension system. In addition, although we are a small part of the government in numbers, certainly as a Legislative Body we are an independent branch of the government. And in that regard, we are actually not represented directly on the Board of Pensions, unlike members of the Executive Branch of the government, as well as appropriately the four unions that represent our municipal employees, as well as the City Controller. And so it struck me at the time that Council should increase its involvement and concern about what goes on with our pension system that serves all of us. I've also had conversations with the heads of the four municipal unions, Police, Fire, DC 33, and DC 47, who expressed interest in this legislation, wanted to know the motivation behind it, which I shared exactly what I just said. They had their own concerns, which were understandable 30 LAW & GOVERNMENT - BILL 030016, RES. 030034 and quite honestly, Mr. Chairman, their concerns had not -- I had not anticipated their concerns. I've had a meeting. I've talked to every leader of the four municipal unions and I've had a meeting subsequently with their representatives just early this week. We have reached, I believe, an acceptable compromise, which I would propose in the form of an amendment to the Resolution and naturally to the Bill. The Bill 11 contains the question that would go on the ballot. And the compromise here is that the Council President would appoint one non-voting member to the Board who, other than the power to vote, shall have all rights, powers, and duties of other members of the board, including but not limited to the right to attend any Executive Session of the Board. One of the concerns, Mr. Chairman, and I certainly understand it, presently you have a nine-member board perfectly split in terms of representation between the Executive Branch and unions and then an additional member as the City Controller who often in many instances serves as a tie-breaker. The concern with the original proposal 31 LAW & GOVERNMENT - BILL 030016, RES. 030034 was that adding two new members, increasing the Board to could significantly change the dynamics 4 of the Board of Pensions as well as some of the 5 votes, quite honestly, and how matters are decided.
6 And I think the primary concern by our municipal 7 unions was that in some instances on important 8 matters, they are faced with 5 to 4 votes on issues 9 that are important to the membership, and under this 10 proposal could find themselves in a situation where 11 the vote potentially could be 7 to 4. Let me say clearly, Mr. Chairman, I have no interest in interfering with those dynamics. And I'm sensitive to our unions and the leadership and the members on the very serious issue of pensions. You've been the Chair in this Committee's hearings around the pension issue, so we know how serious this matter is. So I think in the spirit of cooperation and compromise and respecting the interests of the unions, I would like to put forward this particular amendment. A couple of the unions do have representative here, but I would also, with the Chair's permission, add to this record a letter of support for this particular amendment from Mr. 32 LAW & GOVERNMENT - BILL 030016, RES. 030034 Robert Eddis, President of the Philadelphia Lodge No. 5 Fraternal Order Police; Mr. Thomas Cronin, President of AFSCME District Council 47; and there is a correspondence from the Philadelphia Fire Fighters Union. Mr. Reilly is here. He may also be testifying. He and I have had a conversation. I don't wish to characterize his position, although I believe it is a positive one. And I've had conversations and I am anticipating a letter of support from Mr. Pete Matthews, President of District Council 33, for this same measure. So with that, Mr. Chairman, when we reach the public meeting portion, I'll formally put forward the amendments. They will be circulated during the course of --
Sure. The Resolution as introduced, very simply, added two members appointed by the Council President. The amendment would strike that and add the following language to Section 3-803 of the Home Rule Charter: One non-voting member of the Board appointed by the President of Council who other than the power to 33 LAW & GOVERNMENT - BILL 030016, RES. 030034 vote shall have all rights, powers, and duties of other members of the Board, including but not limited to the right to attend any Executive Session of the Board. The end result of that, Mr. Chairman, is that the member appointed by the Council President, while not having the right to vote, would be a full participant and would have a right at the table of the Board of Pensions and Retirement to participate in all of the sessions and meetings, receive all documents; data and information naturally would be able to report back to the Council but have a rightful seat at the Board of Pensions, which certainly is an open entity and I'm sure in its public sessions welcomes anyone to come, but we also know, Mr. Chairman, that, first, there are a variety of matters that are discussed in Executive Session to which even a present Councilmember would not be able to attend. And secondly, rather than having our participation by way of professional courtesy, I thought it important at a minimum to have our participation as a matter of right in all the discussions that take place around the Board of Pensions. 34 LAW & GOVERNMENT - BILL 030016, RES. 030034 I'm sure that there may be a variety of differences of opinion on this particular issue, but I thought as at least a start --
Well, let me ask because I'm still not clear. Does the amendment substitute in place of two voting members, it substitutes one non-voting member?
So there will only be one member added instead of two and that member would have all the rights of membership except the right to vote?
Thereby maintaining the present voting strength of the different parties that compose the Board now?
And that means that basically the change is more of permitting wider participation and discussion rather than changing 35 LAW & GOVERNMENT - BILL 030016, RES. 030034 the dynamics of the voting forces.
Exactly. You would at least have active participation in the discussion around what's going on in the pension system from a Council perspective. And whoever is appointed would then naturally have the responsibility to report all of that information back to us --
I suggest that whoever suggested that be proposed for a special auxiliary membership on the United Nations. It took a lot of skill and creativity to come up with that proposal. Sounds very interesting to me.
Are there any questions by Members of the Committee? (No response.)
Does everybody understand the effect of this amendment would be to cut the number that the President would appoint to the board from 2 to and have that person be a full 23 member except not be able to participate in voting, 24 which would maintain the present voting strength and 25 dynamics of the different partisans? 36 1 LAW & GOVERNMENT - BILL 030016, RES. 030034
I think it sounds very good because it gives us a voice which is what we really want. I don't think Council at this stage since we have a power to vote on pensions, we have the ultimate word. I don't think we want to do more than make sure we know what's going on and participate and have an opportunity to present our point of view. And that seems to me to be the purpose of the amendment. It sounds very good to me. We'll see how it is when it comes to votes.
That's always the final test. Mr. Chairman, while I'm here -- and again this will be read into the record during the public meeting. Naturally, with this proposed amendment to the Resolution, the question as originally introduced in the Ordinance was written to comport with the Resolution. Naturally, the question that the voters would be asked to vote on would have to change as a result of the proposed amendment. The new question in Bill 030016 would read as follows: "Shall the Home Rule Charter be 37 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 amended to provide for one non-voting member of the Board appointed by the President of Council who, other than the power to vote, shall have all rights, powers, and duties of other members of the Board, including but not limited to the right to attend any Executive Session of the Board?" That makes the question in concert with the proposed amendment to the Resolution.
Those will go into the record during the public meeting.
Any questions any of the Members of the Committee have of Councilman Nutter? (No response.)
I have none. Thank you very much. Are there any other witnesses to be heard on this proposal? (No response.)
If not, that concludes the public hearing on that Bill and Resolution. May we move to the next item on the 38 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 agenda?
There's a Resolution and a Bill coming up next. The Resolution is 030106, a Resolution proposing an amendment to the Philadelphia Home Rule Charter to establish that a bid preference can be allowed in the awarding of public contracts to Philadelphia firms and that the extent and nature of the bid preference shall be provided by ordinance. And with that is Bill 030097, an Ordinance amending Title of the Philadelphia 13 Code, entitled "Contracts and Procurement," by 14 adding a new section 17-109, entitled "Local Bidding 15 Preferences," providing for the establishment of a 16 bidding preference on City contracts for 17 Philadelphia businesses, under certain terms and conditions.
Is there anyone here from the City Solicitor's department?
No. There's Jim Cuorato, and we have an opinion on this particular Bill.
I think it might be well to advise the Law Department they ought to be prepared to send somebody over on this matter. I 39 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 think they ought to be prepared. I suspect I will have a number of questions.
Mr. Cuorato, would you come forward, please? Identify yourself for the record and then proceed.
Good afternoon, Mr. Chairman and Members of City Council. My name is James Cuorato, and I'm a City Representative and Director of Commerce. I appreciate this opportunity to submit testimony in support of Bill No. 030097 and Bill No. 030098. Bill No. 030097 is an ordinance that would provide for local bidding preferences in City contract awards. Bill 030098 is a related Bill that would allow for an amendment to the Home Rule Charter to permit this bid preference. Whenever we award contracts to firms outside the City, the direct and indirect economic benefits of these Public Works investments are significantly reduced.
Mr. Cuorato, I 40 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 apologize for interrupting. Do you have any copies?
Yes, Councilman, I do. I'm sorry. I thought they had been distributed.
Mr. Chairman, I might note that the testimony that's being distributed also contained some language related to testimony that had just previously been given by Commissioner Gamble, so I will not repeat that. I'll just skip over that in my testimony.
All right. Let me ask you as a point of information. When you talk about City contracts, are you being precise? You mean only those contracts which carry the name City of Philadelphia? How about Philadelphia Housing Authority? How about PIDC, PAID, and every other agency which for all purposes is the same as the City of Philadelphia except the authorities were organized under a state law instead of a city ordinance but otherwise are as fully controlled by the Mayor of the City of Philadelphia as are the City agencies? What do you mean by we in the City of Philadelphia?
Mr. Chairman, I am 41 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 referring -- and I believe these ordinances refer specifically to contracts issued by the City of Philadelphia. So my understanding is they would not cover contracts by the Philadelphia Housing Authority. For some of the other departments that you mentioned, I cover those in my testimony and I can either answer the question now for you or just state it as part of my testimony.
Would someone else have for the City of Philadelphia a breakdown in volume? It's my understanding -- it may be inaccurate or accurate -- that only about half of the contracts that are let out are let out technically by the City of Philadelphia. And I think we ought to know whether or not half of the volume is being permitted to remain in the discretion of the Mayor. And then I would like to know if that's the case, how do we intend to enforce this provision or do we have some purpose in mind in limiting this just to those that deal directly with agencies defined as City of Philadelphia. Because we have had the experience in the past where authorities who are generally more free with money than City agencies go and hire the 42 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 most expensive lawyers in the City to explain why, although their work is limited to City work, they have a gilt edge covering wrapping them around and immunizing them from control of ordinary City agencies except perhaps the appointing authority who in all these cases is the Mayor. So I would like to have a full understanding as to the purpose of this amendment.
Two things. Could you possibly repeat that last phrase? What was that, a gilt edge covering wrapped around -- I'll have to check the notes of testimony on that one. That was a good one.
But you'll have to remember what I said was copyrighted.
I'll give you credit if I ever repeat it. With regard to the initial question that you had asked Mr. Cuorato first, Mr. Chairman, this is not an Administration Bill. This is a Bill that 43 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 I offered and am the sponsor of. Specifically, on of the Bill in 17-109(5), the Bill talks about award of City contracts. So this Bill is specific to this group of contracts. A, on any City contract for which the City secures competitive bids pursuant to Section 8-200(1) of the Home Rule Charter. The Commissioner shall award a 5 percent bid preference to any local business entity that submits with its bid, and then it goes on. So I believe, Mr. Chairman, that this Bill only applies to those contracts that meet the requirement under Section 8-200(1) of the Home Rule Charter which require a competitive bidding process and procedure. This Bill would only apply to those particular bids. And I think what you were getting at, which is certainly a very serious issue and we've had concerns about that on many instances, are, one, the professional services contracts which by definition are not subject to competitive bidding; and then your other question about PHA and other semi, quasi, sounds-like-government, looks-like-government, must-be-the-government, I believe that they are not subject to Section 8-200(1) of the Home Rule Charter. They may be subject to other requirements, 44 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 but they're not subject to that section and, therefore, I do not believe that those contracts by those semi, quasi-governmental units would be covered by this particular Bill.
I was either negligent or not smart enough to figure out how to get those under this provision. But for the moment, I was primarily looking at City contracts because we're looking to amend the City Charter.
All right. I understand the limitation. And what you're saying is, let's get a half of loaf if we can't by the whole loaf.
I'm very much interested. I think it's outrageous that the various authorities are not covered by the City's Ethics Board, for example. Because the authorities say they're not City agencies. And if they're not City agencies, I don't think we ought to recognize them as having any rights to deal with City problems. But that may be for another day. 45 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 With the explanation of Councilman Nutter, we'll go forward on this Bill today. But the other issue remains a very live area of questioning. Go ahead, Mr. Cuorato.
Thank you, Mr. Chairman. Just continuing with my testimony, whenever we award contracts to firms outside the City, the direct and indirect economic benefits of these public works investments are significantly reduced. I know that you share this frustration, not just with multimillion-dollar development projects, but also with professional services, equipment, and supplies. In addition encouraging them to locate and remain in Philadelphia, creating local jobs and increasing tax revenue, these bills help offset the cost of doing business in the City. Philadelphia businesses operate at a competitive disadvantage due to the higher taxes, wages, and insurance burdens they face. By providing for a local bidding preference, these ordinances address those additional costs that often force businesses to relocate to outside the City limits to remain competitive. Businesses that make a commitment to 46 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 locating and doing business in the City of Philadelphia deserve our full support when we make purchasing decisions. It is for this reason that I have implemented a policy that, all things being equal, Philadelphia firms be given contracts for professional services by agencies or departments under my jurisdiction such as the division of aviation and PIDC. I should also note that local bidding preference is not only a commendable policy for the City of Philadelphia, it is a practice that has been implemented in cities such as Washington, D.C., Boston, Detroit, and Miami, Dade and Clark Counties. For these reasons, I would respectfully urge you to support No. 030097 and Bill No. 030098 and the accompanying Resolution. And I thank you for this opportunity to testify.
Thank you very much for your testimony, Mr. Cuorato. And I'm pleased that we have an opportunity to work together on something.
I am as well, Councilman. 47 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 Thank you.
It sounded as if something was intended that is not clear on the record, that last comment.
Mr. Chairman, Mr. Cuorato and I, the last time I think we were together, had a bit of an intense back-and-forth on another Bill of mine, which is the economic impact statement. He had a very strong position, which I respect. I had a very strong position, which he respects. And we did not have an opportunity most recently to work together on something. So I was just expressing the appreciation to have a recent matter to work on together.
Okay. Very good. Let me ask you one question. The issue that I raised which -- would the City have any objection to an amendment that would be proposed that would require that in any contract arranged between the City and an authority doing business on behalf of the City will be required to abide by the these kinds of provisions? It's my understanding, for example, that all the authorities in order to do their work have 48 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 to enter into contracts with the City of Philadelphia; is that correct?
Councilman, I don't know that that's the case all of the time. I can tell you that I unequivocally support the concept behind Councilman Nutter's Bills. I do, however, think there may be legal questions in taking it that next step further and having it apply to authorities. I know even with these two Bills, and I think Councilman Nutter will concur, they had to be very carefully crafted and reviewed by the Law Department to ensure that they were legal and fit within Constitutional guidelines. And even with that, the Law Department made it very clear that without an amendment to the Home Rule Charter we could not enact this legislation. So I think there are legal issues. And I, again, will defer to Councilman Nutter as the sponsor of the Bills, but I certainly would like to see -- as you characterized it, Councilman, I certainly would like to see the half of loaf, see these bills approved, and then if there are ways to take it even further, I think we can certainly look at that.
But you're not 49 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106 prepared to express an opinion as to whether you think the second half would be as tasty as the first half for the City's appetite?
Apart from the Constitutional questions that may exist, that's a separate area and, of course, we would want to make sure that legally they pass muster. But my question is, assuming they pass muster, would the City as a matter of policy prefer to have the full loaf rather than the half loaf?
I would support the concept of any contracts that are within our jurisdiction to award go to Philadelphia companies.
Mr. Chairman, just a brief mention. There will be technical amendments to both the Resolution and the Bill. Most of these Charter measures that I have here today, Mr. Chairman, when they were introduced, they were written with the anticipation that the measures would possibly be on the May ballot.
Optimist. 50 LAW & GOVERNMENT - BILLS 030097, 030098, RES. 030106
Yes, well, I'm the eternal optimist. But time and reality took over, and so there will be amendments to most of these to change the date from May 20th to November 4th.
Very good. Are there any other witnesses to be heard on the Bill and Resolution before us on that particular Charter change giving Philadelphia businesses a small preference to make up for the disadvantages of their location in Philadelphia? I think that's a crude but rough summary of the amendment.
It is. And as I indicated, Mr. Chairman, at your request, a member of the Law Department who worked on this matter will be coming over. And you know we have the --
He's not here yet, but I'm sure you'll put him on at the appropriate time.
And we do have an opinion from the City Solicitor on these three 51 LAW & GOVERNMENT - BILL 020621 matters laying out their legality, but also indicating the kinds of hurdles that we had to get over and why we did it this way.
All right. Is there any way of extracting the opinion with respect to this particular Bill and Resolution?
It has been distributed, Mr. Chairman. If this works for you, if there were a question, I would certainly seek to go to the appropriate section of the opinion and seek to answer that question. But I'm reluctant as a non-lawyer to try to make a full argument.
Well, there are two Bills and there's one Resolution in this particular situation. So the two Bills are 030097 and 030098, and the Resolution is 030106.
All right. I think that would be sufficient at this point. 52 LAW & GOVERNMENT - BILL 020621
I could just explain why there are two bills. One is the authorization for the ballot question to be on the ballot on the Charter change, and the other is the Bill which would actually implement the Charter change which is going to be the subject of the ballot question. So you're seeking to actually implement the Charter change. Would that be effective as of the date of the approval of a Charter change?
The actual ordinance 13 implementing the local bidding preference, Section 14 2, of the Bill is "This ordinance shall become effective 90 days after adoption of an amendment to the Philadelphia Home Rule Charter permitting local bidding preferences." So it's a 90-day lead-in time.
We're next considering Bill 21 020621. An Ordinance amending Title 2 of the Philadelphia Code, entitled "City-County Consolidation," by abolishing the Board of Revision of Taxes and reassigning its powers, functions and duties to three newly created City agencies to be 53 LAW & GOVERNMENT - BILL 020621 known as the Board of Property Assessment Appeals and Review, the Property Assessment Oversight Board, and the Office of Property Assessment.
This is a straight ordinance implementing the current provisions of the Home Rule Charter?
Michael Nutter, N-U-T-T-E R, Councilman for the 4th District. Mr. Chairman, this is a slightly unusual situation. There's one ordinance, and this involves utilization of the City-County Consolidation Act which allows City Council to legislate with regard to the Board of Revision of Taxes as well as a number of other agencies that are covered by the City-County Consolidation Act. The requirement here is that in order for City Council to be able to legislate with regard to the Board of Revision of Taxes, the voters have to approve a question giving us that authority, 54 LAW & GOVERNMENT - BILL 020621 and that's required under the City-County Consolidation Act as passed by the State Legislature. Once the question is approved, Council is then within its legislative right to legislate as it relates to the Board of Revision of Taxes. In this particular Bill, 020621, we've incorporated what the amendments would be to the Code as well as in the back of the Bill in a separate Section 2. We've also incorporated the actual question. So it is not a Charter change. But the City-County Consolidation Act requires us to utilize the process and procedure of Charter change with regard to at least putting a question on the ballot. It's not something we do every day, but --
The question would appear on the same ballot as that which may contain the proposed changes of the Home Rule Charter?
Yes, Mr. Chairman. So it would be a question, like all the other questions that are on the ballot. Those questions -- and you are right and you hit on the point. Those question would be asking voters for approval of actual changes to the Charter. This question is 55 LAW & GOVERNMENT - BILL 020621 not asking for a change to the Charter; it's asking voters to give their approval to our ability to legislate as it relates to the Board of Revision of Taxes. And at that point, the BRT would then be covered by the Philadelphia Code.
In order words, the Charter is already in shape enough to absorb this change without the voters having to specify that they're changing the Charter, but what is missing is one additional election step relating to the consolidation of County and City requirements? It comes from the fact that the City of Philadelphia geographically is the same area both for the County and for the City?
But as of now, the Board of Revision Taxes is a County position rather than a City position?
In essence, yes. Although it only covers the same area as the City. It only provides services for the City. There were a series of offices, as you well know, that did not completely make it into the City's purview under City-County Consolidation Act. And we may have the 56 LAW & GOVERNMENT - BILL 020621 Act handy. There are other offices. If at any time we wanted to have those offices within our purview, we would go through the same process.
Councilman Nutter, I don't know whether you know the answer or not; but if you do, I'd appreciate it. Do the paychecks, for example, received by the people who are in general but not specifically covered by the Charter but are authorized to be covered if Council ever takes the Consolidation Act, what kind of paycheck do they currently receive? Say, BRT employees, Board of Revision of Tax employees.
I believe the BRT employees are paid by the City of Philadelphia.
Even though they're technically not yet fully part of the City of Philadelphia to the same extent, at least -- I see Mr. Fader is here. Perhaps he'll be able to give us more official explanations. Thank you, though. I think you're very clear on that. 57 LAW & GOVERNMENT - BILL 020621
Thank you, Mr. Chairman. First, Mr. Chairman, there are a number of items that I need to put in the record here. This Bill comes as a result of a number of issues that have been raised over the course of the past year. You are well aware, and the entire Committee is well aware that this City Council has been involved in a process dealing with property assessments for many, many years. This is not a new issue. And there have actually been, prior to my service in Council, discussions about bringing the Board of Revision of Taxes closer to the government, not for the purpose of inappropriately influencing what they do, but ensuring that there is accountability in how the system functions and operates. We all know many of the horror stories from last summer's assessment process, which I think is not -- at least from my perspective, is not so much a comment on how the Board of Revision of Taxes functions or the Board members or the staff, but that there is a system that is slowly deteriorating and somewhat out of control. 58 LAW & GOVERNMENT - BILL 020621 The model for this particular legislation is primarily from Allegheny County and how they broke up administratively the different functions of their then similar Board of Revision Taxes agency. What you have right now, Mr. Chairman, is a system where everyone works for the same entity under the same roof. The taxpayers are left with, certainly, the impression, wrong as it may be, that the Board of Revision of Taxes is in the revenue-generating business, which they are not. They're in the assessment business and evaluation of property business and the appeals business. Board members are presently appointed by the Board of Judges to ensure a certain level of independence, but as you even indicated, all of the members receive their paycheck from the City of Philadelphia. They are not strangers to us. They are not foreign to us. We know many of the members well, and we have extensive contact with them. But out of last year's assessment process, the issue of how the Board functions and operates, should there been a separation, should there be greater lines of accountability between the 59 LAW & GOVERNMENT - BILL 020621 Board and its functioning similar to almost every other department, board, or agency of the government was raised; and I started looking at this particular issue. The Bill in front of us today comes as a result of discussions with the Board of Revision of Taxes and a variety of other people who are much more expert in this particular area than myself, although I've tried to learn as much as possible about these issues in a relatively short period of time. I have also a set of proposed amendments to this Bill which come as a result of more extensive conversations, input, advice, and suggestions actually from the Board of Revision of Taxes and specifically Chairman Glancey as well as Mr. Robert Nix. What I would like to do, Mr. Chairman -- I believe the amendments have been circulated -- is to walk through the amendments, answer any questions in general on this particular provision or on any of the amendments and then, naturally, at the time of the public meeting seek to move these amendments. If you look at of the proposed amendments, some of these amendments are purely 60 LAW & GOVERNMENT - BILL 020621 stylistic in nature or trying to keep a certain level of order of the listing of what -- the Board of Revision of Taxes would essentially be broken into three different entities. There would be a Property Assessment Oversight Board which would have overall responsibility for how the system functions and operates. There would be a Board of Property Assessment Appeals and Review, which essentially would be your appeal side of this issue. And there would be an Office of Property Assessment, which would be the people who actually conduct the assessments and determine market values on the property.
In time, in the chronological order that an assessment would take place, could you place those three groups? Would the Office of Assessment come into the picture first to make the assessment subject to review by one of the two other boards that would examine it before an appeal, before the notice became official? And would the final Board be the Board to which a taxpayer would appeal if he or she were unhappy with the result of the assessment?
Exactly. What would 61 LAW & GOVERNMENT - BILL 020621 happen, Mr. Chairman, is naturally all of the entities, should this be approved by the voters, all of these entities would come into being simultaneously. But what you were asking was the order of things. The Office of Property Assessment would conduct the assessment process, send that information to the Property Assessment Oversight Board who would have to determine that the Office of Property Assessment had conducted the assessments in accordance with actually a standards ordinance that this Council would have to approve to ensure that the Office of Property Assessment actually conducted the assessment process in the proper fashion. And then there would be a certification process. Property owners would receive their notice similar to the way they do now. I believe that pretty much the same cycling would carry forward where you would receive your new assessment notice in the summer and a certain date, which is actually set by statute -- it might be the first Monday in October -- by which time you have to file your appeal. You would then file your appeal with the Board of Property Assessment Appeals and Review. 62 LAW & GOVERNMENT - BILL 020621 So you would have the same cycling and process, but it would be done by separate entities which would be apart from each other, and you would know that you were only dealing with one entity at a time.
And currently, the three entities are all grouped together in the same agency?
Yes. And what you have in essence is the assessors making an assessment as well as setting a market value which is approved, in essence, by the same people, the Board of Revision of Taxes, who have to also hear your appeals. And so the same group of people are setting the figures and also listening to appeals all under the same roof. So it creates a certain level of confusion within the taxpaying public on the issue of how do you grade yourself under this particular circumstance?
It certainly sounds like it's a more basic, fairer approach to have different people involved. But we'll hear the testimony on it. I just wanted to make sure I understood the basic structure. 63 LAW & GOVERNMENT - BILL 020621
Let me go through a description of the Bill. I'm sure there will be a variety of questions. The main aspects of Bill 020621 are as follows: The BRT would be abolished after it has made assessments in Calendar Year 2003 for the purpose of the 2004 real estate taxes. And so the current BRT would still do the assessments for this summer, would issue the notices, would certify the assessment process. Taxpayers would receive their bills, appeals would be taken, and the BRT would stay in business until the entire appeals process was completed, which would be sometime in 2004. Starting with the 2004 assessments, which would generally be the summer of 2004 made for 2005, a new system would be established involving three new entities: The property Assessment Oversight Board, the Office of Property Assessment, and the Property Assessment Appeals and Review. The Oversight Board would be composed o three members. One would be selected by the Mayor, with the advice and consent of Council. The last member would serve a four-year term. 64 LAW & GOVERNMENT - BILL 020621 The Oversight Board would submit a proposed Assessment Standards and Practice Ordinance 4 to Council, setting forth a recommendation for how Council should impose standards for application of assessment standards. The Assessment Office would be created within the Managing Director's Office. The Managing Director would appoint a Chief Assessment Officer to run that office who would only be removable for cause, and all the other employees of the office. The ordinance also sets forth certain minimum qualifications of the Chief Assessment Officer and other employees of the office. The Assessment Office would make all property assessments in the City starting in 2004 for application in 2005 pursuant to the Assessment Standards Ordinance set forth in an ordinance to be adopted by Council. The Assessment Office would make recommendation to the Appeals Board regarding the tax exempt status of property. It would also have certain other functions, including providing certain information to the Oversight Board and the public making recommendations to City Council, et cetera. After assessments are made by the Assessment Office, 65 LAW & GOVERNMENT - BILL 020621 the Oversight Board would be required to certify that such assessments were made in accordance with the ordinance establishing assessment standards adopted by City Council. The Appeals Board would be composed of seven members who would be required to have certain backgrounds and training. The members would be appointed by the Mayor with the advice and consent of Council. They would be removable by the Mayor only for cause. The Appeals Board would provide hearings in all appeals made from the assessments and decide the appeals in accordance with the Assessment Appeals Standards and Practices Ordinance 15 adopted by Council. The Board would make a recommendation to Council regarding the contents of such an ordinance. There's a provision in here, although not presently within our system that we could also have Hearing Examiners who would be required to have certain qualifications and would be required to provide findings to the Board which would then make a decision on the appeal. Those are the basic descriptor items within the Bill. 66 LAW & GOVERNMENT - BILL 020621 Mr. Chairman, with regard to some of the amendments, I'll detail or, at least, highlight some of the more important ones which I think will also be of concern to some Members and possibly other members of the public. Again, to ensure a certain level of independence, the members of the Board of Appeals shall be appointed by the Mayor with the advice and consent of a majority of all the members of the Council. The initial members of the Board of Appeals shall consist of the seven persons who serve as members of the Board of Revision of Taxes on the date this section becomes law.
That will ensure, not only continuity with our present Board members in terms of making a transition, but also allows for the present Board members to serve out their present terms. They all have certain terms of office which actually start expiring in 2004. Each initial member shall serve until his or her term as a member of the Board of Revision of Taxes would have expired had the Board been abolished pursuant to Section 2-113 and until his or her successor has been appointed and qualified. The first seven members who are 67 LAW & GOVERNMENT - BILL 020621 appointed to succeed an initial member, either upon the expiration of the term of an initial member or because an initial member failed to complete his or her term, shall be appointed to terms ending as follows -- and then there are a series of term dates which, again, ensure a staggered and fixed term provision -- January 1, 2009; January 1, 2010; January 1, 2011; January 1, 2012. And the term of the seventh such member shall end December 31, 2012. The Mayor is also required to forward proposed appointments to Council for its advice and consent at 30 days before the expiration of any term. Council will then be able to keep track of where things are in the process. The Board of Appeals shall retain an Executive Director and such other employees as are required to conduct the work of the Board. That helps to ensure that the Board actually has the staff that it needs to conduct its job. The Board of Appeals shall perform such administrative duties for the Board of Review as had been performed by the Board of Revision of Taxes. That provision ensures that Board of Review's duties and responsibilities stay in place. 68 LAW & GOVERNMENT - BILL 020621 An additional amendment is regarding the Chief Assessment Officer. Again, to ensure independence and a certain level of security in that particular position as well as lessening the subject to influence on that person, the following amendments are proposed: The Managing Director shall appoint a Chief Assessment Officer who shall direct the work of the Office of Property Assessment for a term of five years and who shall be exempt from Civil Service but who may only be removed for cause. Additionally, before the Chief Assessment Officer may be removed prior to the expiration of his or her term, the Managing Director shall provide the Chief Assessment Officer with a written statement of the reasons for removal and shall give the Chief Assessment Officer an opportunity to a hearing before the Managing Director. If the Managing Director, following such hearing, determines that the Chief Assessment Officer shall be removed from office, such decision shall be final unless the Chief Assessment Officer within seven days after being notified in writing of the Managing Director's final decision, appeal such 69 LAW & GOVERNMENT - BILL 020621 decision to the Property Assessment Oversight Board which shall, following a hearing, make a final decision as to whether the Chief Assessment Officer shall be removed from office. Now, that's a somewhat circuitous process, I will acknowledge. But the purpose of that process is to ensure that the Chief Assessment Officer is able to do his or her job not subject to influence by anyone, including any of us presently here or a Mayor or anyone else, and provides a certain level of security in that job such that if the Managing Director for whatever reason makes a decision to try to fire that person for cause, they have to be notified in writing, they have to have an opportunity for a hearing before the Managing Director. If the Managing Director reaffirms the decision to terminate, the person has an opportunity to then appeal to the Property Assessment Oversight Board before any final decision is made. And all of those decisions have to be detailed in writing. I would like to think that all of those parties would think very long and very hard before making such a decision.
The other significant amendments or 70 LAW & GOVERNMENT - BILL 020621 proposed amendments as follows: On , Section 2-209, the transfer of existing employees. That provision was written in to give a level of security to the present employees over at the Board of Revision of Taxes, many of whom are Civil Service, some of whom are not. Those persons employed by the Board of Revision of Taxes on the date the Board of Revision of Taxes ceases to exist shall become employees of the Property Assessment Oversight Board if they are regularly occupied in connection with the functions and duties transferred to that Board; the Property Assessment Appeals and Review if they are regularly occupied in connection with the functions and duties transferred to that Board; or of the Office of Property Assessment if they are regularly occupied and in connection with the functions and duties transferred to that office. What that all means is that wherever those employees work today and whatever function they're providing today, they are going to end up in one of those three entities and continue to perform the same job under the same circumstances in that particular unit. If you're an assessment person, 71 LAW & GOVERNMENT - BILL 020621 you go with the Assessment Board. If you're an appeals person, you go with the Appeals Board. And if you are more administrative staff working with the current Board of Revision of Taxes in an administrative capacity, more than likely you're going to go with the Property Assessment Oversight Board. Councilman DiCicco.
Thank you, Councilman Nutter. Does it have any impact on their pension benefits? Are they moving from the School District payroll to the City payroll or vice versa? Is there any impact on that?
There's a subsequent provision about that. Again, if a person is presently a School District employee, under this particular Bill, one, they will stay a School District employee and they will stay in that particular job classification and continue to receive that particular pay. If they're a City employee, they're going to remain a City employee in our pension system and the like. This does not change that. But there is an additional provision here now written in to the Bill. 72 LAW & GOVERNMENT - BILL 020621 "Similarly any School District employees who are assigned to the Board of Revision of Taxes on the date the Board of Revision of Taxes ceases to exist shall be resigned to the Property Assessment Oversight Board, the Board of Property Assessment Appeals and Review, or the Office of Property Assessment, as appropriate." So what that means is if you happen to be a School District employee who is now working over at the Board of Revision of Taxes, whatever your job is presently, you will go to one of those three entities and continue to perform that service. Let me also take this opportunity, Mr. Chairman, to make mention of the fact that there has been some discussion in public and during School District budget hearing about the issue of the School District employees who are assigned over to the Board of Revision of Taxes. There has been a series of meetings and discussions around this issue and leadership provided on the issue by our Council President Anna Verna. It is my understanding that with regard to the School District employees assigned to the Board of Revision of Taxes that City Council will engage a -- for the purposes of a study 73 LAW & GOVERNMENT - BILL 020621 of this particular issue and how to best utilize these employees in their current function and also analyze the financial impact to both the School District and the City of Philadelphia on how we ultimately deal with the cost factors associated with their service, which is a dual service; they work for the School District, but they're also assisting in the collection of revenues for the School District. I understand that there are fiscal implications to the District and there is certainly fiscal implications to the City of Philadelphia. But that study will be conducted during the course of the year to try to reach some decision with regard to how these costs are covered or shared in the future. But I believe for the moment, based on that agreement for a study of this issue, that those employees of the School District will continue to work over at the Board of Revision of Taxes and maintain their School District status. Lastly, there was a need again for a date change. When this Bill was introduced, it was hoped that it might be on the May ballot. The dates have been changed to make it ready for the November election. 74 LAW & GOVERNMENT - BILL 020621 I'm available for any questions, Mr. Chairman.
I've got a feeling there are no questions from the Committee here.
Thank you. Is there anyone else here who wishes to testify? Good afternoon.
Good afternoon. I do have copies of testimony here if someone would like to get them. I'm Nancy Kammerdeiner, Revenue Commissioner. I'm pleased to be with you today to present testimony regarding Bill No. 020621. As you've already heard, this Bill would abolish the Board of Revision of Taxes and replace it with several new boards and offices, subject to voter approval by referendum. On behalf of the Administration, I'm here to respectfully convey our opposition to this legislation. While I understand that many Philadelphians were dismayed by the size of their 75 LAW & GOVERNMENT - BILL 020621 recent assessment increases, I do not believe that this legislation represents an appropriate response to their concerns and would likely make the situation worse. Our greatest fear is that, if implemented, this Bill could profoundly politicize the tax assessment process in a manner that would lead to public mistrust of the entire assessment process. I believe it's fair to say that the BRT, particularly under its current leadership, has been largely immune to and free from outside political pressure that would affect either assessments or appeals from those assessments. Despite the recent outcry over this year's assessments, I believe that the public perception is still that the BRT'S fundamental processes are not politicized. This Bill would turn that perception on its head in two distinct but equally disturbing ways. First, Bill 020621 would create an Appeals Board whose members would be appointed by the Mayor with approval of a majority of Council. Second, the newly created Office of Property Assessment would be placed within the Managing Director's Office with the Chief Assessment Officer to be appointed by the Managing Director. 76 LAW & GOVERNMENT - BILL 020621 With these structural changes, the Bill 3 would dramatically increase the public perception and possibly the reality that the BRT would be subject to political pressures and persuasions in future years. I recognize that the intent behind these provisions is to create enhanced accountability, but the unintended result is the opening of a Pandora's box of political opportunity to influence assessments and appeals. The people making initial assessments and the people hearing appeals from those assessments would be directly beholden to future Mayors or Members of Council for their jobs. This dramatically enhances the potential for political intervention in the assessment process. More importantly, it destroys the degree of independence that the BRT currently enjoys from both Mayoral and Councilmanic politics and insulates both the Mayor and Members of Council from responsibility for each and every assessment decision made. I'm deeply concerned that the public will lose any remaining faith they have in the assessment process once it's clear that the people who do the assessments report to the Mayor and the 77 LAW & GOVERNMENT - BILL 020621 people who review the appeals of those assessments have their positions thanks to the Mayor and Members of Council. This would far overshadow the benefits from requiring that the incumbents in those offices hold certain professional qualifications. Indeed, requirements for professional qualifications currently exist for the BRT evaluators and could be added for some or all Board members without changing the organizational structure. No part of government can or should be completely isolated from politics. But the current system under which the BRT members are appointed by the Board of Judges creates a degree of separatism from executive and legislative politics that's desirable and that has proven to be effective. It is my impression that year after year, the BRT calls them as they see them. You've heard from David Glancey as he's testified here, and I've heard him as well, say that during his tenure he's never been approached by anyone in the Administration with a request to increase or limit assessments.
Do we really want to risk surrendering that element of independence from the real estate taxation process? 78 LAW & GOVERNMENT - BILL 020621 The current method of appointment, while less visible than the one proposed in the Bill, has been working effectively to neutralize considerations that should have no impact on the setting of assessment or the adjudication of appeals. I'm also concerned that the language of Section 2-204 of the Bill opens up the possibility of dramatically increasing the number of exempt employees carrying out the assessment function. Currently, employment at the BRT is subject to Civil Service requirements, and the number of exempt employees is limited to the Board and Executive Director. That does not count the School District employees who were referenced just a short time ago by Councilman Nutter. And a concern that I had in my original testimony that they weren't considered in this legislation has been dealt with in the proposed amendments. However, under the wording of Section 22 2-204 and also because the new Office of Property Assessment would be located in the Managing Director's Office where additional exempt positions are permitted under the City Charter, there's every 79 LAW & GOVERNMENT - BILL 020621 possibility that assessors or other workers in the Office of Property Assessment would be exempt employees. In the realm of taxation governance, one must view this as a giant step backward, pulling us further away from desirable independence and professionalism into the potential realm of political pressure, or at least the perception of such politicization. Next, I'd like to address the Bill's intention to separate the assessment function from the appeals function by creating two distinct entities, the Office of Property Assessment and the Board of Property Assessment Appeals and Review. If we were starting from scratch and without the benefit of past experience, it would arguably make sense to separate these two functions with the goal of ensuring a measure of public confidence that the appellate function would not somehow be contaminated by being too close to the assessment function. But we do have the benefit of experience. It's my opinion, based on years of observation and interaction with the BRT, that the appellate function of the Board is not biased or otherwise compromised despite its location within the BRT. On 80 LAW & GOVERNMENT - BILL 020621 the contrary, for those of us who see the assessment and appeals as part science, part art, the fact that the day-to-day head of the BRT who's intimately familiar with the assessment process also sits on the seven-member Appeals Board has made it possible for the kind of sensitive give and take that results in the administration of justice. People walk away from their appeals hearings before the Board of Revision of Taxes feeling that they've gotten a fair hearing before a knowledgeable entity. That is in large measure a credit to Mr. Glancey personally, but I think it's also a credit to a governance arrangement currently in place. The current governance arrangement works. Can it work better? Yes, it can. In part by giving the BRT some additional resources to continue the modernization of thier processes and in part by continuing to shine the bright light of public scrutiny on the BRT. Instead of abolishing the existing BRT structure, this Council should consider enhancing it by requiring the BRT to develop and implement administrative regulations that establish assessment standards and public reporting requirements and by 81 LAW & GOVERNMENT - BILL 020621 requiring appropriate access to public records regarding assessments in order to ensure that the Website and other procedures adopted voluntarily by the current Board continue in the future. Make the current Board more accountable to the owners of the properties they access. Don't change the structure of the organization in ways that will make it inappropriately vulnerable to politicians.