COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, October 17, 2006 1:00 p.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JUAN RAMOS COUNCILWOMAN MARIAN B. TASCO COUNCILMAN DARRELL L. CLARKE BILLS 051089, 060261, 060620, 060627, 060687, 060688, 060690, 060692, 060693, 060696 and 060701 - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Thank you. Good afternoon. Thank you all for your patience. As we have a long calendar, we will begin our Finance hearing. The Committee on Finance will begin today, October 17th, our 1 o'clock hearing to hear testimony on the following bills: 051089, 060261, 620, 627, 688, 690, 691, 92, 93, 696 and 701. What we would like to say is, if you hear our friend Maya, we're trying to get a photographer so Councilpeople and some of our special guests may take a picture with Maya. Now, I did say to the zookeeper and Ken Woodson that the only thing I would like better is an elephant, but they told me that Maya came to City Hall on the elephant, who is parked downstairs. So I will let you know that I was certainly corrected. But, again, we thank you. We do have a quorum. All the other members of the Committee are expected here. To 3 10/17/06 - FINANCE - BILL 051089, ETC. my left is Councilwoman Blondell Reynolds Brown, Vice-Chair. To her left, Councilwoman Marian Tasco. To my right is Councilman W. Wilson Goode, and I obviously am Jannie Blackwell. That gives us a quorum for our Finance hearing. Since we have so many bills and we had some 50 people sign up for the last bill, I'm happy to hold my questions, but Committee members may do what they choose, and we are certainly happy to have those offering testimony to make it brief or not really give detailed testimony and we can move on. The Chair will ask the Clerk to read the six bills authorizing applications for Redevelopment Capital Assistance Grants as is in your packet. Clerk.
Bill 051089, an ordinance authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of 4 10/17/06 - FINANCE - BILL 051089, ETC. the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an amount not to exceed $6 million to assist in the development of the Point Breeze Performing Arts Center; and authorizing the City to enter into an agreement with PAID in furtherance of grants requirements; all under certain terms and conditions; and Bill 060261, an ordinance 13 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an amount not to exceed $250,000 to assist in the relocation of the Family Practice and Counseling Network; and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements; and Bill 060688, an ordinance 25 authorizing the Philadelphia Authority 5 10/17/06 - FINANCE - BILL 051089, ETC. for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $2 million to assist in the development of Simeone Automotive Foundation Education Center; and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements; and Bill No. 060691, an ordinance 14 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $1 million to assist in the development of Woodlands Arboretum and Botanical Gardens Revitalization Project; and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements; and 6 10/17/06 - FINANCE - BILL 051089, ETC. Bill 060693, an ordinance 3 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $5,150,000 to assist in the development of Germantown YWCA and Morris Arboretum; and authorizing the City to enter into an agreement with PAID in furtherance of grant requirements; and Bill 060701, an ordinance 15 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget, Commonwealth of Pennsylvania, under the Redevelopment Assistance Capital Program, in an aggregate amount not to exceed $7 million to assist in the development of North Philadelphia Health System, the Old Metropolitan Opera House and Progress Plaza; and authorizing the City to enter into an agreement with PAID 7 10/17/06 - FINANCE - BILL 051089, ETC. in furtherance of grant requirements.
Thank you very much. With regard to Bill No. 060687, all of you received copies from and we also gave you additional copies today of a letter from the bill sponsor, Jim Kenney, who asked that this RCAP be held, that this legislation be held. It calls for $500,000 to go to Philadelphia University Center for Community Fitness. We talked with Mr. Deegan, who I'm sure can mention that today, and we also talked with the head of the University to see if that was what he wanted this Committee to do, and he was happy to hold it in addition, too. So we'll ask Paul Deegan to also repeat that, and he said that he was happy to hold it, that a few months wouldn't matter in terms of they would still be able to finish doing the work they're doing, and if there was further problem, he'd certainly let us know. 8 10/17/06 - FINANCE - BILL 051089, ETC. Having said that, we now call on Ms. Krista Williams of PIDC and our friend, Paul Deegan. And thank you both for being here.
Good afternoon. My name is Krista Williams. I represent PIDC. I'm here today to testify on behalf of PIDC and the Philadelphia Authority for Industrial Development, PAID, in support of Bill Nos. 051089, 060261, 060688, 060691, 060693 and 060701. Bill No. 051089 is for the Performing Arts Center, and the Performing Arts Center will be developed in a location central to the Point Breeze Commercial core. It's the Point Breeze Performing Arts Center. The new location 9 10/17/06 - FINANCE - BILL 051089, ETC. will create a critical mass of activity to boost the revival of economic growth in the Point Breeze area. The Performing Arts Center, a mixed-use development project, has become a cornerstone in the effort to revitalize the Point Breeze neighborhood. " The project entails acquiring a new site and increasing practice and performing space for the Performing Arts Center. The approximate project cost is $12 million. Bill No. 060261 authorizes PAID to apply for a RACP Grant from the Commonwealth of Pennsylvania in an amount not to exceed $250,000 to assist in the relocation of the Family Practice and Counseling Network facility. The project seeks to improve the healthcare center by relocating from a 3,000 square foot facility at 58th Street and Kingsessing Avenue to a 12,000 square foot facility at 61st and Woodland Streets. The 10 10/17/06 - FINANCE - BILL 051089, ETC. project will consist of a complete renovation of the 12,000 square foot facility. The total project cost is approximately $500,000. Bill No. 060688 authorizes PAID to apply for a RACP Grant from the Commonwealth of Pennsylvania in an amount not to exceed $2 million to assist in the development of the Simeone Automotive Foundation Education Center. The Simeone Automotive Foundation will complete a three-phase project, including construction fit-out and exhibit design and installment for an interactive educational museum. The total project cost is approximately $10 million. Bill No. 060691 authorizes PAID to apply for a RACP Grant from the Commonwealth of Pennsylvania in an amount not to exceed $1 million to assist in the development of the Woodlands Arboretum and Botanical Gardens Revitalization Project. 11 10/17/06 - FINANCE - BILL 051089, ETC. The Woodlands Arboretum is a National Historic Landmark of 54 acres that includes the federal style William Hamilton Mansion, its accompanying carriage house and stable and an 1840's continually active rural cemetery. It will undertake capital improvement work on the entire property. 6 million, and there's a $1 million RACP. Bill No. 060693 authorizes PAID to apply for a RACP Grant from the Commonwealth of Pennsylvania in an amount not to exceed $5,150,000 to assist in the development of the Germantown YWCA and the Morris Arboretum projects. Germantown YWCA will rehabilitate facilities located at 1244 East Chelten Avenue for the purpose of housing, recreational and educational activities for the community. The total project cost is expected to exceed $1 million. The RACP Grant award is $500,000. 12 10/17/06 - FINANCE - BILL 051089, ETC. The Morris Arboretum will construct a 20,000 square foot center for horticulture, education and facility support on approximately 67 acres. The horticultural center facility will provide needed workspace, meeting space, locker space and common space for members of the horticultural department and will include a luncheon room, kitchen and gathering area. The facility will also provide maintenance space and storage for all equipment that support the 167-acre public garden. The public area of this new facility will include a large meeting space that will allow the Arboretum to hold conferences and lectures for 200 people or more. 5 million. The RACP Grant award is $4,650,000. Bill No. 060701 authorizes PAID to apply for a RACP Grant from the Commonwealth of Pennsylvania in an amount 13 10/17/06 - FINANCE - BILL 051089, ETC.
not to exceed $7 million to assist in the development of the North Philadelphia Health System project, the Old Metropolitan Opera House project and the Progress Plaza project. North Philadelphia Health System will renovate an existing building in multiple phases. The first phase will include expansion of the existing building to house health system operations. The second phase will include construction of a new emergency room. 5 million. The RACP Grant award is $1 million. The historic Old Metropolitan Opera House located at 858 North Broad Street will undergo renovations and expansion to the Holy Ghost Headquarters Church, the North Philadelphia Community Development Corporation and commercial retail space. The project is expected to be completed in November 2008. The total project cost is approximately $10 14 10/17/06 - FINANCE - BILL 051089, ETC. million. The RACP Grant award is $1 million. Redevelopment Assistance Capital Program Grants are funded by the State's capital budget and sponsored by the local State legislator. The recipients of these grants are typically non-profit organizations such as colleges, museums, hospitals and social service providers. The State provides the funding through each county's industrial development authority. In this case, it's PAID. The recipient of the grant must at least match the grant amount with funding from non-State sources. After the legislature approves the capital budget, the Governor, through the Office of the Budget, authorizes PAID to submit applications on behalf of recipients. I request the Finance Committee's favorable consideration of these bills and that the rules of Council 15 10/17/06 - FINANCE - BILL 051089, ETC. be suspended to permit first reading at the next regularly scheduled session of City Council. Thank you for the opportunity to testify today. I will be happy to answer any questions.
Thank you very much. Mr. Deegan, would you respond and repeat the information I received with regard to Bill No. 060687, because I don't know if we've ever done this before.
I think you're correct, that there's no deadline for this. They haven't submitted an application, so that the ordinance can hold over for several weeks or until the end of the session. I think as long as we pass it by the end of the session, we'll be able to submit the application to Harrisburg and the project can go forward. It's kind of the last piece of 16 10/17/06 - FINANCE - BILL 051089, ETC. the project. They're already under construction. They've had previous RACP Grants, and so this is not a critical piece of the project. That's my understanding.
Thank you very much. The Chair notes that to my right is Councilman Frank DiCicco, also a member of this Finance Committee. Thank you. Are there any questions from members of the Committee? (No response.)
We'll now ask the Clerk to read the title of Bill No. 060627 adding Local 22 FIREPAC to the list of designated payees. Mr. McBride, President of IAFF, please come forward. Thank you. 17 10/17/06 - FINANCE - BILL 051089, ETC. Clerk, please read the title of the bill.
Bill 060672, an ordinance amending Title of The 6 Philadelphia Code, entitled "Public 7 Employees Retirement Code," by amending 8 Section 22-1303, entitled "Exemption from 9 Attachment," by adding Local 22 Fire 10 Political Action Committee to the list of 11 designated payees to whom a member may 12 direct deductions from benefits payments, 13 all under certain terms and conditions. 14
Thank 15 you very much. 16 Welcome. Good afternoon. We 17 welcome you to Council, and you may make 18 your statement. 19 MR. McBRIDE: Good afternoon. 20
Good 21 afternoon. 22 MR. McBRIDE: My name is Brian McBride. I am a Fire Lieutenant and proud 31-year member of the Philadelphia Fire Department. I am also honored to 18 10/17/06 - FINANCE - BILL 051089, ETC. serve as President of IAFF Local 22, the union that represents the over 4,000 active and retired firefighters and paramedics who risk their lives every day in order to serve the citizens of Philadelphia. I appear today before this honorable Council to request that Council amend Section 22-1303 of The Philadelphia Code to permit retired firefighters and paramedics to authorize voluntary payroll deductions from their pension checks for contributions to FIREPAC, which is a political action committee that is intended to promote public awareness and support of issues related to the health and safety of the City's firefighters, paramedics and other citizens. FIREPAC is funded primarily through voluntary contributions made by active and retired Philadelphia firefighters and paramedics, which activities are protected under the First Amendment of the United States 19 10/17/06 - FINANCE - BILL 051089, ETC. Constitution. This freedom of expression was confirmed in federal court as a result of litigation initiated by Local in 2002. 6 City Code Section 22-1303 7 currently permits retired City employees 8 to make voluntary contributions via 9 payroll deduction from their pension 10 checks to a wide variety of 11 organizations, including labor 12 organizations, relief associations, 13 credit unions, pension funds and 14 insurance companies. Section 19-203 of 15 the City Code already permits similar 16 deductions by active City employees for 17 contributions to political action 18 committees. Thus, the proposed amendment 19 would simply provide retired firefighters 20 and paramedics with the same payroll 21 deduction privilege that is already 22 provided to active firefighters and paramedics, as well as other City employees. It is the union's position that 20 10/17/06 - FINANCE - BILL 051089, ETC. amending the Code to add FIREPAC is only a matter of basic fairness to the firefighters and paramedics. We also believe that amending the Code will improve the level of public discourse on issues related to emergency services in our City by facilitating the involvement of the men and women who actually provide these services to the City's citizens. We believe that such involvement will result in a more informed and hopefully better-served public, and we ask that this honorable Council help to improve this public discourse on these issues by passing the proposed amendment. This completes my testimony. On behalf of over 4,000 retired and active members of IAFF Local 22, I wish to thank each and every Councilmember for your time and attention to this matter of considerable importance to us, as well as for your longstanding support of the men and women of the Philadelphia Fire Department who risk their personal safety 21 10/17/06 - FINANCE - BILL 051089, ETC. each and every day in order to protect the lives and properties of Philadelphia citizens. Thank you.
Thank you very much. We note that you have one of the greatest of old time, Les Yost, with you, and we love Les and we thank him for always being active. Any questions? (No response.)
We're proud to have you here and to support you. Next we'll consider Bill No. 23 06 -- before I announce that, let me note that to my right is Councilman Juan Ramos, the final member of this Committee 22 10/17/06 - FINANCE - BILL 051089, ETC. who is also here. So only one person is not here. We thank you all for your attendance. Next we'll consider Bill No. 6 060696 for AFSCME District Council 47. We understand that they could not be here. We will ask the Clerk to read their statement, a one-page statement. Thank you very much.
Please read the title of the bill as well. Thank you.
Bill 060696, an ordinance amending Title of The 18 Philadelphia Code, entitled "Public 19 Employees Retirement Code," by amending 20 Section 22-1303, entitled "Exemption From 21 Attachment," to add AFSCME District 22 Council 47 to the list of designated payees to whom a member may direct deductions from benefits payments, all under certain terms and conditions. 23 10/17/06 - FINANCE - BILL 051089, ETC. AFSCME District Council 47, testimony for City Council hearing October 17, 2006, amending Title of 5 The Philadelphia Code, entitled "Public 6 Employees Retirement Code." 7 AFSCME District Council 47 is 8 in support of this addition because many 9 of our retired members have been wanting 10 to have a deduction taken from their 11 retirement benefits which would be 12 directed to the political action arm of 13 our union job. 14 When these men and women were 15 active members of the union, they 16 believed in the desirability of 17 involvement in the political system. 18 They saw that their actions and 19 contributions made a difference in the 20 type of people who were elected to 21 office. 22 As retired senior citizens, they want to continue their political involvement and understand that by contributing a portion of their pension, 24 10/17/06 - FINANCE - BILL 051089, ETC. they will maintain their voices in the political process. Our support of this amendment is both an example and the result of a concerted grassroots demand from our retirees to continue to have their views heard and recognized by those in power.
Thank you very much. The Chair also notes that the sponsor of the legislation is a part of this Committee, and that is Councilman Ramos. Any statements or questions? (No response.)
Thank you very much. We will now consider Bill Nos. 060620 and 060690 authorizing the new issuance of $325 million in Water Revenue Bonds to fund the Capital Project Program during the next two years. That's 620. 690 authorizes refinancing of bonds. Will the Clerk please read the 25 10/17/06 - FINANCE - BILL 051089, ETC. title of the bills.
Bill 060620, an ordinance constituting the Eleventh Supplemental Ordinance to the Restated General Water and Wastewater Revenue Bond Ordinance of 1989, as supplemented; authorizing the Bond Committee, or a majority of them, to issue and sell either at public or private sale in one or more series or subseries, Water and Wastewater Revenue Bonds of the City of Philadelphia; authorizing approval of the form or forms of Bonds; providing that the Bonds shall bear interest at a prescribed fixed rate or rates or at variable rates which may be payable in different modes, and authorizing agreements to provide credit enhancement or payment or liquidity sources or swap payments, or any combination of the foregoing, for the Bonds and certain other actions; authorizing the Director of Finance of the City to take certain actions with regard to the sale of such 10/17/06 - FINANCE - BILL 051089, ETC. Water and Wastewater Revenue Bonds, the investment of proceeds thereof and the City's continuing disclosure obligation; setting forth the use of proceeds and providing for the application of interest and income earned on such proceeds; determining the sufficiency of the Project Revenues; covenanting the payment of interest and principal, including the payment of any Qualified Swap payments; and supplementing the Restated General Water and Wastewater Bond Ordinance of 1989; and Bill 060690, an ordinance 16 constituting the Tenth Supplemental Ordinance to the Restated General Water and Wastewater Bond Ordinance of 1989, as supplemented; authorizing the Bond Committee, or a majority of them, to issue and sell, from time to time, either at public or private sale in one or more series or subseries, Water and Wastewater Revenue Refunding Bonds of the City of Philadelphia; authorizing approval of the 27 10/17/06 - FINANCE - BILL 051089, ETC. form or forms of Bonds; providing that the Bonds shall bear interest at a prescribed fixed rate or rates or at variable rates which may be payable in different modes, and authorizing agreements to provide credit enhancement or payment or liquidity sources or swap payments, or any combination of the foregoing, for the Bonds and certain outstanding bonds and certain other actions; authorizing the Director of Finance of the City to take certain actions with regard to the sale of such Water and Wastewater Revenue Refunding Bonds, the investment of proceeds thereof and the City's continuing disclosure obligation; designating the obligations to be refunded from the proceeds of such Water and Wastewater Revenue Refunding Bonds and setting forth the use of proceeds and providing for the application of interest and income earned on such proceeds; determining the sufficiency of the Project Revenues; 28 10/17/06 - FINANCE - BILL 051089, ETC. covenanting the payment of interest and principal, including the payment of any Qualified Swap payments; and supplementing the Restated General Water and Wastewater Revenue Bond Ordinance of 1989.
Thank you. We note that the Bill 690 authorizes the refinancing of these bonds in an amount not to exceed $350 million. Thank you. And to all who are here for the $150 million bond issue for cultural institutions and commercial corridors, this is it and then we're on. Okay? We've been moving it quickly. You notice we're up to ten bills already. So we're moving quickly so we don't hold anyone up. So these are our last two bills. So that will let our guests know they can be quick and summarize, and my colleagues, we can ask questions or we can kind of keep it to a minimum so we can move along 29 10/17/06 - FINANCE - BILL 051089, ETC. quickly. Thank you. Good afternoon. Please identify yourself for the record.
Good afternoon, Councilwoman Blackwell and members of the Finance Committee. I'm Vince Jannetti, Acting Director of Finance for the City. With me is Water Commissioner Bernie Brunwasser and Deputy Water Commissioner Joe Clare. We are here to testify on behalf of Bill Nos. 060620 and 060690. Bill No. 060620 authorizes the City to sell Water and Wastewater Revenue Bonds up to $325 million. This bill 16 provides authorization for the Water Department's Capital Program. It is estimated that this financing will fund the Water Department's Capital Program for approximately two and one half years. The proposed new money ordinance is required to provide the Water Department with continued funding authorization for its Capital Budget, as approved by City Council, and to 30 10/17/06 - FINANCE - BILL 051089, ETC. replenish the Water Department's Construction Fund, which will be drawn down over the coming months. The current '07 to '10 Capital Program emphasizes the renewal and replacement of the Water's vast infrastructure, including repair and replacement of water mains and sewers, storm flood relief projects and the maintenance of our six water and wastewater treatment plants and associated facilities, to ensure that our drinking water continues to be safe, that our rivers and streams continue to become cleaner with each passing year. Bill No. 060690 will authorize the City to refinance outstanding Water and Wastewater Revenue Bonds, including, but not limited to, the Series 1997A, 2001A and the 2005A bonds in an amount not to exceed $350 million. The City will not execute this transaction unless we can achieve net present value savings of at least three percent of the principal amount of the bonds to be 31 10/17/06 - FINANCE - BILL 051089, ETC. refunded. Today this level of savings could not be achieved under current market conditions, but we're hopeful that as we move forward, this will happen. All revenues pledged to secure the payment of the new money refunding bonds will be derived from rents, rates and charges imposed by the Philadelphia Water Department. None of the bonds that will be issued under these ordinances will have any recourse to the revenues of the General Fund. Finally, as required by Section 16 8 of the First Class City Revenue Bond Act, as the Acting Director of Finance for the City of Philadelphia, I will be transmitting my financial report regarding the financial viability of the City of Philadelphia Water Department and its ability to repay this additional debt prior to the passage of these ordinances. At this time, I would also like to propose amendments for each of the 32 10/17/06 - FINANCE - BILL 051089, ETC. ordinances, which each amendment is identical. The amendments intend to grant the ability to utilize derivative financial instruments only as approved by the Bond Committee and as part of the general plan of finance for each bond issue. For Bill No. 060620, the current plan of finance includes the City entering into a forward rate lock agreement in order to capture today's historically low interest rates. It is intended that the City will enter into such an agreement prior to the issuance of these bonds. For Bill 060690 refunding bonds, the current plan of finance is to refund the bonds as soon as possible, depending on market conditions. At this time, we would prefer to issue traditional fixed-rate bonds, and in order to do so, however, the ordinance 24 provides the flexibility for the City to utilize a derivative financial instrument 33 10/17/06 - FINANCE - BILL 051089, ETC. in order to conduct the refunding. I would also like the suspension of the rules for Bill No. 5 060620 and Bill No. 060690 to allow for a first reading at the next session of City Council. This concludes my testimony. I would happy to answer any questions Council may have.
Thank you very much. I'm going to hold my questions in the interest of time. Are there any questions, concerns from members of the Committee? (No response.)
Thank you, gentlemen, very much. We will now finally consider Bill No. 060692 authorizing the City to enter into a Service Agreement with the Philadelphia Authority for Industrial Development and authorizing PAID to issue up to 150 million in bonds to support cultural institutions and commercial 34 10/17/06 - FINANCE - BILL 051089, ETC. corridors. We ask Ms. Stephanie Naidoff, Director of Commerce, and Mr. Vince Jannetti, who thought he was finished, Acting Director of Commerce, and we recognize various cultural institutions. Thank you very much. And we want you to know that Maya is having a great influence on our time and Maya will be one of the early people we will call forward. Earlier "people" isn't quite the right word. She will cause people to come earlier. Thank you very much. Please identify yourself for the record and begin your testimony. To all who are here, let me note that we have just completed the ten bills. We did the RCAP bills. We did the Water Department bills. We did the District Council 47 and Local 22 firefighter bill. So if any of you are here for that, feel free to stay, but we've already considered those. The only 35 10/17/06 - FINANCE - BILL 051089, ETC. thing left for those is the vote. We are now on the bill that brings most of us here, and that is the bill for cultural institutions and commercial corridors. Clerk, would you please read the title of the bill.
060692, an ordinance authorizing and approving the execution and delivery of a Service Agreement between the City of Philadelphia and the Philadelphia Authority for Industrial Development relating to a comprehensive program to improve and enhance the City of Philadelphia's cultural and commercial corridors for the benefit of the residents of the City of Philadelphia; the issuance by the Philadelphia Authority for Industrial Development of bonds, notes or other evidences of indebtedness in one or more series, to finance or refinance, for debt service savings, the costs of the cultural and commercial corridors program; and the 36 10/17/06 - FINANCE - BILL 051089, ETC. obligation of the City of Philadelphia to pay in full when due the Service Fee and other amounts payable under the Service Agreement; authorizing certain City officers to take certain actions required to issue bonds, notes or other evidences of indebtedness; covenanting that the City of Philadelphia will make necessary appropriations in each of the City's fiscal years to provide for the Service Fee and other amounts due under the Service Agreement; and covenanting that the City of Philadelphia will make timely payments of the Service Fee and other amounts due under the Service Agreement; all under certain terms and conditions.
Thank you very much. Again, welcome. Please identify yourself for the record and begin your testimony.
Good afternoon, Committee Chairwoman Blackwell and members of City Council's Committee on 37 10/17/06 - FINANCE - BILL 051089, ETC. Finance. My name is Stephanie Naidoff and I'm the Director of Commerce and City Representative for the City of Philadelphia. I'm here today to present testimony in support of the Philadelphia Authority for Industrial Development, or PAID, Revenue Bonds for the City of Philadelphia's Cultural and Commercial Corridors Program. Also with me in support of this bond issue are Vincent Jannetti, Acting Director of Finance, and Eva Gladstein, Director of Neighborhood Transformation. This $150 million bond issue will help to fund many capital improvement projects for City cultural institutions and public amenities mostly within cultural corridors. Bond proceeds will also fund the City's ReStore Philadelphia Corridors Program, a program designed to revitalize commercial corridors throughout our City's neighborhoods, many experiencing a 38 10/17/06 - FINANCE - BILL 051089, ETC. renaissance in part as a result of investments in connection with the Neighborhood Transformation Initiative. We believe that with this new City funding, cultural and commercial corridors will have the ability to leverage state, federal and private investment. In so doing, the City has a tremendous opportunity to enhance the impact these cultural and commercial resources can play in the City's expanding economy. The City proposes to enter into a Service Agreement with PAID under which the City will agree to pay in full when due the service fee and other amounts payable under the agreement. The Service Agreement provides that the proceeds of the bond shall be spent only in accordance with the ordinance and the approved budgets. The City will submit annual reports to City Council summarizing program expenditures and will seek Council approval for any budget 39 10/17/06 - FINANCE - BILL 051089, ETC. modifications. We are very pleased to be here today to testify in support of the City's Cultural and Commercial Bond issue because we believe that this investment in the City's future is fully consistent with the Mayor's vision of a vibrant urban center that can benefit all neighborhoods. Our efforts to make funds available to the arts and culture communities and to our neighborhood commercial corridors will enhance the City's image for our visitors while enhancing the quality of life for our residents. Consistent with the City's Economic Development Blueprint, the Cultural Corridors Program is part of a comprehensive strategy to build on the strength of our diverse arts and culture organizations to support the growth of our creative economy. The necessary first step in achieving this objective is to address the capital needs of our 40 10/17/06 - FINANCE - BILL 051089, ETC. cultural community. Investment in capital projects will increase both the visibility and accessibility of the City's major cultural corridors, preserve and strengthen the City's arts and culture organizations, and leverage private and public funds to support these efforts. We are proposing to allocate $60 million to cultural organizations for capital improvements within five identified cultural corridors. These corridors were selected because they contain significant concentrations of cultural organizations and activities that together generate a critical mass of economic opportunity. The corridors identified are Avenue of the Arts, Benjamin Franklin Parkway, Centennial District, Historic District and El Centro de Oro and other emerging corridors. Funding will be targeted to City-owned buildings and infrastructure and to other selected institutions within the areas 41 10/17/06 - FINANCE - BILL 051089, ETC. identified with a concentration of cultural organizations.
Although projects within these corridors have not been fully identified, our preliminary analysis has identified projects that can benefit the City with the potential to leverage other funds, especially for those projects that are ready for development. The Administration, for example, proposed funding for security measures, sewer improvements and other infrastructure improvements that are not likely to receive private donor support. Levels of funding to each organization will be based on individual project status and the ability to leverage local, state, federal and private money. For those projects not owned by the City, funding will be provided to eligible non-profit 501(c)(3) organizations where projects have a clear public benefit. In addition to the $60 million for cultural corridors, $5 million will 42 10/17/06 - FINANCE - BILL 051089, ETC. be allocated to capital funding for smaller cultural organizations throughout the City. These organizations are defined as creating, preserving or exhibiting visual, literary and performing arts, architecture, science and history. Funding for these smaller cultural organizations will be available City-wide, including, but not limited to, those organizations within the identified cultural corridors. The purpose of this funding is to support capital projects that are necessary, yet traditionally more difficult to fund. Project funding for each of these smaller organizations will not exceed $250,000. A process for accessing these funds has been established whereby the Commerce Department will request expressions of interest from Philadelphia-based cultural organizations and will be responsible for creating a five-person committee comprised of 43 10/17/06 - FINANCE - BILL 051089, ETC. interagency representatives in addition to the Chairman of City Council's Finance Committee and the Chairman of Council's Special Committee on Parks, Recreation and Cultural Affairs. The Committee will identify grantees based on set criteria. We will be reviewing each organization's leadership and ability to meet goals, financial capacity and ability to leverage other funds, their planning and project readiness as well. These projects will be smaller capital improvements for the betterment of the organizations and the public good. Eligible projects will include, but are not limited to, HVAC improvements, disabled access improvements, sprung flooring, lighting grids, electrical wiring upgrades, as well as roof renovations and facade restorations. The second major program initiative to be funded with the bond proceeds is the City's ReStore Philadelphia Corridors Program. ReStore 44 10/17/06 - FINANCE - BILL 051089, ETC. Philadelphia Corridors implements the Economic Development Blueprint objective of sustaining advances in neighborhood economic development by revitalizing neighborhood commercial corridors throughout the City and re-establishing their historic roles as central places to shop, to work and to meet neighbors. The ReStore Philadelphia Corridors Program will increase attention to and investment in neighborhood commercial corridors. ReStore Philadelphia Corridors builds upon the successes and experience of the Philadelphia Empowerment Zone and the Neighborhood Transformation Initiative, taking advantage of the lessons that we've learned in implementing both neighborhood revitalization strategies. It marries the EZ's focus on the neighborhood-based economic development with NTI's guiding principles of using planning as an investment tool, investing public funds to stimulate private market activity and 45 10/17/06 - FINANCE - BILL 051089, ETC. maximizing private capital while minimizing public dollars. ReStore will direct significant funds to streetscape enhancements and capital improvements to neighborhood commercial corridors.
The program will be carried out through three main strategies: Focus planning and data analysis on strengthening corridors, align and leverage community economic development resources, and develop a system to attract and retain businesses on corridors. The Cultural and Commercial Corridor Bond will fund seven ReStore Philadelphia Corridors Program activities. Bond funding for the first three program categories discussed below will be directed in consultation with District City Councilpersons towards selected corridors throughout the City based upon analysis of existing conditions, neighborhood trends and the level of planning and resources 46 10/17/06 - FINANCE - BILL 051089, ETC. available. Number one, we propose that the largest amount of funding, $34 million, be dedicated to streetscape enhancements and capital improvements. These will include items such as lighting, street paving and striping, public signage, sidewalks, curbs, crosswalks and curb cuts, bump-outs, greening and trees, pedestrian furniture, public art, planning, and design and engineering studies. Two, a $6 million acquisition pool will enable the City to acquire key blighted properties on corridors for commercial, mixed-use or open space development. Targeted demolition on commercial corridors will remove blighted properties and help create parcels for commercial, mixed-use or open space development. We propose that $2 million be allocated for this purpose. Bond funding for the remaining 47 10/17/06 - FINANCE - BILL 051089, ETC. four categories will also be focused on neighborhood commercial corridors, but will be allocated based upon demand and in accordance with program criteria. Some program categories, such as the acquisition pool for non-profit entities, may be managed by non-City entities in order to provide the most effective administration. Eight and one half million dollars is proposed for Targeted Redevelopment Grants that will fund pre-development and development activities for commercial, institutional and cultural facilities that will draw people to the neighborhood commercial corridor. Second, a $2 million acquisition pool for non-profit entities will enable CDCs and other non-profit entities to acquire properties on commercial corridors for commercial or mixed-use development. Three, four and a half million 48 10/17/06 - FINANCE - BILL 051089, ETC. dollars will be made available for business support to fund facade renovations to storefronts, fit-out expenses for commercial tenants, energy conservation improvements to commercial properties on corridors, and equipment for corridor security programs. Four, support for technology improvements will enable the City to upgrade information systems to collect and manage data on commercial corridor characteristics and to evaluate the benefit of City investments on commercial corridors. This category will receive $2 million. In addition, the ordinance 18 authorizes the City to finance a $6 million Small Business Loan Guarantee Pool through non-bond sources. This guarantee pool will be designed to improve access to mainstream financing for small businesses on corridors with impaired credit by providing a guarantee. In addition to the funding 49 10/17/06 - FINANCE - BILL 051089, ETC. provided specifically for cultural and commercial corridor revitalization, $15 million will go towards other projects that are consistent with and supportive of the efforts on cultural and commercial corridors and with the overall objectives of the bond issue. The remaining $5 million is being reserved within the Bond issue for administrative fees for the issuance of the bonds. At this would, we'd like to propose some amendments to the ordinance. Most importantly, we are providing a copy of the Economic Opportunity Plan drafted as a supplement to the successful NTI Economic Opportunity Plan. 9 percent to women business enterprise firms. 9 million in demolition 50 10/17/06 - FINANCE - BILL 051089, ETC.
contracts to emerging minority demolition contractors. Significant workforce participation goals were achieved as well. The percentage of minority employees hired under the NTI-funded demolition contracts is 68 percent, and the percentage of female employees is two percent of the workforce. Philadelphia residents constitute 79 percent of those employed and account for 82 percent of the hours worked. This supplement will use a variety of strategies designed to maximize the participation of minority, female and disabled vendors and to maximize the workforce participation of Philadelphia residents, minorities, females and disabled persons. We will provide an annual report to City Council on the Economic Opportunity Plan. We would also like to propose expanding the designation of the El Centro de Oro Cultural Corridor to include other emerging corridors. We are requesting this particular change to 51 10/17/06 - FINANCE - BILL 051089, ETC. allow for the inclusion of other emerging corridors, such as Chinatown, Kensington, Germantown or other neighborhoods where cultural institutions act as anchors that serve as major community cultural centers and as catalysts for change. A more inclusive title better reflects this trend throughout Philadelphia and allows the City to fund additional projects under the Cultural Corridors Program theme. The last three proposed changes address modifications to the program budget. The first is a correction of a typographical error in which one of the budget's subcategories was included twice. The second is a technical change to correct dollar amounts in two subcategories. The third is to propose that amounts in each subcategory may be reallocated by increasing or decreasing such subcategory by ten percent only once each fiscal year. We have proposed this to ensure that there is some limited 52 10/17/06 - FINANCE - BILL 051089, ETC. flexibility within these categories for unforeseen issues that may surface once we begin to allocate funds. Thank you for this opportunity to testify on this very important matter. Vince Jannetti, Eva Gladstein and I are here. We're happy to answer any questions that you may have at this time, and we kindly request a suspension of the rules for Bill No. 060692 to allow for a first reading at the next meeting of City Council. Thank you.
Thank you. We would like to change our schedule, because we're going to lose our photographer that we just called. Since we are surprised with Maya, we're going to ask the Zoo to come forward, and would you please remain so that we can take questions, and then we'll continue on with our list of speakers, if you don't mind. Again, we thank you all for 53 10/17/06 - FINANCE - BILL 051089, ETC. being here. My colleague mentioned the elephants. I did mention that, but they told me the elephant transported them here and is parked downstairs. Thank you very much. Welcome. Please begin your testimony and then we'll see what our photographer can do to include us in these lovely pictures. I guess Maya spoke first. Welcome. Please identify yourself to the record and begin your testimony.
Good afternoon, Councilwoman Blackwell and honorable members of the Committee on Finance.
Good afternoon. We're trying to get in this picture with Maya, as you see. Thank you.
My name is Vikram Dewan and I am the new President and CEO of the Philadelphia Zoo. Joining me today is Kenneth Woodson, Senior Vice-President of Government and Community Affairs for the Philadelphia 54 10/17/06 - FINANCE - BILL 051089, ETC. Zoo, and on behalf of the Zoo Board, staff and I must say on behalf of Maya, our owl, and our nearly 1.2 million children and families who visit us each year, we thank you for allowing us to testify today in support of Bill 060692, a bond to enhance Philadelphia's cultural and commercial corridors. As you know living in our great City, the Zoo is an integral part of the City of Philadelphia and the region. We fulfill a multitude of important missions as a member of a robust cultural community that drives the convention and tourism industry. We are an invaluable educational resource for over 200,000 school children and educators each year. We are a leading environmental advocate whose world-class staff works tirelessly here and around the globe to save endangered species, and, of course, we are a significant taxpayer and employer of choice for many City and area residents. 55 10/17/06 - FINANCE - BILL 051089, ETC. With nearly 1,300 animals, from five-ounce toads to 500-pound tigers and 5,000-pound rhinos, the Philadelphia Zoo brings the world and its wonders to our Philadelphia region, its residents and visitors every day. Sadly, not every family will visit Africa, Australia or South America to experience native wildlife, but every family can visit our Zoo. We're looking forward for new ways to make the Zoo even more accessible, and I am delighted to report that just three weeks ago, we welcomed our one-millionth Zoo visitor for 2006. We are equally proud that during this past year we have provided more than 80,000 free field trips and educational programs for students, most of whom attend the Philadelphia School District schools. Importantly, our Zoo is very much engaged in our neighborhoods, and we are one of the pioneering forces behind the proposed Centennial District. We are active members of the East Parkside 56 10/17/06 - FINANCE - BILL 051089, ETC. Historic District Corridor Coalition and the Girard Avenue Coalition working to create a better West Philadelphia neighborhood. We recently completed a neighborhood beautification project jointly sponsored by the Mantua community and the Mural Arts Program. We installed a wonderful mural on the 34th Street bridge, and I invite all of you to come for the dedication and children's events that we will host tomorrow.
Thank you. I will tell you, I heard absolutely none of your testimony. But we do support you.
Councilwoman, our animals at the Zoo have that effect on a lot of people.
But it is wonderful. We did work on getting our pictures with Maya and that's all that concerns us. We do love our zoo.
Thank you so much, 57 10/17/06 - FINANCE - BILL 051089, ETC. Councilwoman.
The only complaints anybody has is everybody is worried about losing the elephants. We do thank you. Thank you very much. Are there any questions?
Councilwoman, if I may just conclude, I have just a few more words to say.
As I had indicated before, we're an integral part of the neighborhoods, and our goal is to improve access to the Zoo by residents of every neighborhood, from our next-door neighbors to those across town and across all cultures. That is why we have hosted Parkside Day at the Zoo for the past four years and the Echoes of Africa event, which has broadened our appeal to the African and Caribbean immigrant communities. While we're most often thought 58 10/17/06 - FINANCE - BILL 051089, ETC. of in terms of our wildlife, we are quite proud of our role as a vibrant part of the region's economic success. For example, over these past three years, the Zoo has supported 951 full-time equivalent jobs and paid nearly 38 million in wages. 5 million in City wage taxes, and our parking operations generate another 430,000 in City taxes. 5 million. While our value to the community is generally acknowledged and applauded, there's no question that we are a capital-intensive entity with significant financial needs at a time when we are brimming with worthy new projects. It is also a time when even the most generous donors are stretched to 59 10/17/06 - FINANCE - BILL 051089, ETC. their limits. Our $20 million Bank of America Big Cat Falls exhibit which opened in May is a major success and the epitome of the kind of visitor experience our guests have come to expect. The near term calls for building two more exciting new exhibits, a $17 million aviary and a $19 million children's zoo and educational center. Like Bank of America Big Cat Falls and PECO Primate Preserve, these projects will feature up-close-and-personal opportunities to interact with wildlife, to literally feel the rush of the wind as feathery wings take that flight -- I think we got an experience of that today -- and as well as to smooth a gentle hand over the soft wool of a barnyard friend. It will also provide some of the best opportunities to take conservation action in their own backyards and experience firsthand results. 60 10/17/06 - FINANCE - BILL 051089, ETC. As noted on the chart that we have submitted ahead of time, the City has provided capital support for the Zoo infrastructure. However, that support has not kept pace with our need to maintain critical systems. It also falls well short of the level of support for capital improvement needed and provided at comparable zoos in other cities. million capital budget from local government. million capital budget. million. We share this only as context, as an expression of hope and willingness on our part to be the 61 10/17/06 - FINANCE - BILL 051089, ETC. best possible partner for our City and its residents. Without question, this proposed bond comes at an opportune time. We would use this new source of capital estimated at approximately $2 million to upgrade critical infrastructure such as those required by our storm water management systems, pathway paving, roofs, fire and security systems, the kind of investment that is hard to raise from private donors. With your understanding and support, we will also continue to submit capital funding requests as part of the annual capital budget process. The return on this overall capital investment can only increase with the growth of the proposed Centennial District in West Fairmount Park, Philadelphia's new family-focused destination comprised of the Zoo, the new Please Touch Museum, the Mann Center, Japanese House and Gardens and the 62 10/17/06 - FINANCE - BILL 051089, ETC. Horticultural Center, and, finally, we're proud to tell you that next year Philadelphia and your Zoo will proudly host nearly 2,500 zoo and aquarium professionals at a national conference to be held here in Philadelphia. It will be a wonderful opportunity for us to showcase our Zoo and other world-class attraction and generate an economic impact for the region of this five-day conference of approximately $12 million.
On behalf of our Philadelphia Zoo Board and staff and our owl, Maya, who is here today, thank you all for the support and guidance that you have provided us over the years and thank you for considering Bill 060692, the bond to enhance Philadelphia's cultural and commercial corridors. Mr. Woodson and I are available for questions, Councilwoman.
Thank you very much. Certainly I am so proud of the fact that you're technically in 63 10/17/06 - FINANCE - BILL 051089, ETC. the Third District. That's the best district in the City. And certainly we do thank you for all that you do in partnerships with the community, including the Mural Arts Program, all that you do for the children in Mantua, the schools in the area. We thank you for the Parkside Day at the Zoo and for including Echoes of Africa in a big way, a City-wide way for this next year, and we're just very, very proud of the leadership team that the two of you are really shepherding and spearheading, and we look forward to doing what we can to support you. I open the floor. Any questions? (No response.)
I'd just like to say welcome aboard. We certainly congratulate you on your appointment and 64 10/17/06 - FINANCE - BILL 051089, ETC. wish you well as you move to take the Zoo into the 21st century.
Thank you. You're doing an excellent job. Thank you both. Thank you very much. Are there questions for Ms. Naidoff and Mr. Jannetti?
Yes. Please come back forward. The Chair acknowledges the presence of Councilman Clarke. Thank you for being here.
We also thank my colleagues for allowing us to change our agenda a little bit and bring on the Zoo. Thank you. I'll defer to Councilwoman Blondell Reynolds Brown and then 65 10/17/06 - FINANCE - BILL 051089, ETC. Councilwoman Tasco.
Good afternoon. First let me say thank you. I join the many members on Council and our arts and culture community who were both excited but anxious about the now roll-out of this major initiative. My first question is, to your best knowledge, is this unprecedented? Is this the first time in the last 30 years that this City has made a serious commitment to providing what I would call an injection into the arts and culture community that deal specifically with capital programs?
I know of no 18 other time when such a thing was done, and I'm very proud to be here representing the Administration in proposing this, because we think it's a very important initiative for a very important segment of our economy.
Knowing that it is a first then, do you believe 66 10/17/06 - FINANCE - BILL 051089, ETC. you've adequately covered your bases in making sure that the specifics of this resonate both this way as well as to the reach of the arts and culture community?
We've tried very hard to do it in all directions, as you suggest. I would say that in looking at the needs of the arts and culture community, which we've done now for quite some time, it's quite clear that the needs are extensive and the amount of funding that's available to them to cover the costs of these capital projects is, of course, limited. So the amount of money that the City is proposing to invest in this will not cover all of the needs. It's a very painful thing. They're all worthwhile projects. We'd love to be able to do them all, but that's the reason that we tried very hard to devise a theme, a concept, that would help leverage the money and create the greatest possible impact for the City, for the economy and for the quality of 67 10/17/06 - FINANCE - BILL 051089, ETC. life of our residents.
It is a fine balance we have to find and recognizing the fact that this measure cannot be all things to all of the arts and culture community and that we're going to have to be very, very thoughtful in ways in which I think you've begun to do already. The timing of this is interesting, in that it falls at the time that the Greater Philadelphia Cultural Alliance has released what I believe to be a comprehensive prescription for how we can move and look forward in further strengthening the arts and culture community base. Has there been any thought given to any threads that may already exist between what you rolled out here and some of the recommendations given in the report that's just been received by this community?
We found the report very helpful and obviously have 68 10/17/06 - FINANCE - BILL 051089, ETC. been having conversations with many of the organizations, with the Greater Philadelphia Cultural Alliance and with many other organizations that represent the arts and culture organizations, as well as the organizations themselves. I think we're all on the same page, and what we all are proposing is that we need to seriously consider the needs of the arts and culture community because of its importance as an economic engine and the impact that it has on the quality of life but also on the economy, the economic vitality of our City.
And my final editorial comment is to underscore the economic vitality that it brings. I have to say when I pursued coming to this legislative body ten years ago, arts and culture was viewed by some as a very "soft" issue, and now we fast forward ten years later and all of us recognize that it is a major, major, major anchor and engine for our City. So it's a ripe, 69 10/17/06 - FINANCE - BILL 051089, ETC. R-I-P-E, time for what you've presented. Thank you very much for your testimony.
Thank you very much. While Councilwoman Tasco asks her question, we're going to ask the Clerk to get ready to read a letter from PICA and then we'll ask you to respond to that. Councilwoman Tasco.
Well, I would like for him to do that before my questions.
All right. Clerk, would you please read the letter dated October 16th that we received from PICA.
Pennsylvania Intergovernmental Cooperation Authority, October 16, 2006, Anna C. Verna, 70 10/17/06 - FINANCE - BILL 051089, ETC. President City Council, Jannie Blackwell, Chair City Council Finance Committee, Philadelphia City Council, City Hall, Philadelphia, PA 19107. Dear Council President Verna and Councilwoman Blackwell, I am writing to express PICA's opposition to the Administration's proposed $150 million borrowing through a bond issue, which is the subject of Tuesday's Finance Committee hearing. The Administration proposes to use the borrowing for arts and culture, commercial corridors and administrative costs, the bulk of which is to be spent within the next year. PICA believes in the importance of investing in arts and culture and commercial corridors. The proposed borrowing, however, would exacerbate the City's long-term obligations challenge and make it more difficult for the City to invest in its infrastructure. For the past year, PICA has consistently emphasized that the City 71 10/17/06 - FINANCE - BILL 051089, ETC. must address a series of long-term fiscal challenges that threaten to undermine its financial health. Two of the key challenges are slowing the rapid growth in long-term obligations and reversing the trend of substantially underinvesting in the City's core infrastructure. In order to explain why PICA believes that it would not be fiscally prudent to commit to this borrowing, it is important to explain why the City's growing long-term obligations and underinvestment in infrastructure are such big issues. The City's increase in long-term obligations has been substantial. The FY07 budget for the Sinking Fund is just under 192 million. In FY01, the Sinking Fund's expenditures were just under $131 million, $61 million lower. That means that the City will have to put $61 million more into paying debt service in FY07 than it did just six years ago. 72 10/17/06 - FINANCE - BILL 051089, ETC. The problem is expected to intensify further as the projected Sinking Fund expenditures for FY11 are nearly 220 million, which means that by FY11 the City will be paying almost $90 million more in debt service than it did in FY01. To put that $90 million increase in context, it is more than the combined amount the City will be spending in FY11 on the Free Library, the Recreation Department and the Fairmount Park Commission. Unfortunately, the ballooning debt service costs come at the same time as the City is providing less than half the amount that the City Planning Commission says is necessary to appropriately maintain City facilities, including police stations, fire stations, health centers and City streets. The City Planning Commission recommended that the City invest $185 million annually in its facilities. The most the FY07 through FY12 Capital Program invests in 73 10/17/06 - FINANCE - BILL 051089, ETC. infrastructure in any single year is just under $71 million. The dramatic underinvestment, $110 million in the year with the heaviest investment, makes it inevitable that City facilities will continue to deteriorate and will need more, not less, investment in the future. The proposed $150 million borrowing would not meaningfully address that dramatic underinvestment, but it would exacerbate the City's debt problem. The FY07 budget assumes that the City will begin paying debt service on the new borrowing during this fiscal year. 2 million and remain at that level until FY31. 2 22 million less each year to pay for things 23 like police officers, street repair, 24 investment in infrastructure or other 25 essential services. 74 10/17/06 - FINANCE - BILL 051089, ETC. In its papers on the City's long-term obligations and infrastructure, PICA urged that the City take a number of steps, including establishing a debt policy and utilizing pay-as-you-go financing.
Until the City has established that debt policy and determined how it will fund its core infrastructure, it would not be appropriate to proceed with this proposed borrowing. Any increased investments in arts and culture should be made through the operating budget and should be determined as part of the FY08 budget process. Sincerely, Rob Dubow, Executive Director.
Thank you very much, and to Councilwoman Tasco's concern as well. COUNCILMAN DiCICCO: Point of order, Madam Chair, before you recognize --
Yes, 75 10/17/06 - FINANCE - BILL 051089, ETC. Councilman DiCicco. COUNCILMAN DiCICCO: Is anyone from PICA here today to testify or do we just have written testimony? (No response.) COUNCILMAN DiCICCO: No one is here. Thank you.
While it is clear that the City's infrastructure needs help, the cultural institutions, the commercial corridors, things that spur the economy in the City, also need help. We believe that to do this through the operating budget would not have that much of an impact and it would not be very immediate. So that by doing it in 76 10/17/06 - FINANCE - BILL 051089, ETC. this fashion, we would have a larger impact, a much faster pace. As to the City's debt, the rating agencies have rules of thumbs on our ratio of the City's debt service to revenues somewhere between five and 8 percent. The calculation for our debt, 9 including this 150 and other issues that 10 are not yet done; for example, the 11 juvenile justice bonds, would put us at 12 around in FY07, the current year, about 13 9.2 percent, which is kind of in the mid 14 range of where the rating agencies would 15 see this. So we believe that this is a prudent thing to do at this time.
Let me ask you a question. What about the City's ability to borrow money for infrastructure of our facilities? Where are we on that?
The City's ability to borrow money today, we have on 77 10/17/06 - FINANCE - BILL 051089, ETC. the General Fund, general obligation, on general obligation bonds, we have the capacity of about $172 million.
I'd have to have someone from the Capital Program Office to speak to that, Councilwoman. I can do that. I think that Mr. Tustin is here.
In your testimony, Ms. Naidoff, you talk about fixing sprung flooring. COUNCILMAN DiCICCO: What is sprung flooring?
I don't know what that means, but it seems that I have a sprung floor.
I have a sprung floor at a firehouse at Germantown 78 10/17/06 - FINANCE - BILL 051089, ETC. and Carpenter Lane which has yet to be repaired. I certainly think it's appropriate for the City to support the arts and culture community because they provide much-needed services to the City. Our Charter mandate is for the health and welfare and safety of the citizens of the City of Philadelphia, and as you know, we have not been able to maintain the infrastructure of some of our fire stations, police stations, rec and ball fields. I mean, they can go unattended because we don't have the money to repair them. And so my question is, how can we afford to spend the debt service to pay for this when it seems to me that an overall plan to be inclusive of the arts and culture community on an ongoing basis would be better? You have $150 million, of which this is a one-time infusion, and once that money is gone, it's gone. And the question also becomes, how do you satisfy -- all these groups in this room 79 10/17/06 - FINANCE - BILL 051089, ETC. are not going to be satisfied. They're not going to be helped, just a few. So when their turn comes, how do we help them without an overall plan to provide continuous support to these organizations? Because you've pretty much appropriated $60 million to Avenue of the Arts, Benjamin Franklin Parkway, Centennial District, the Historic District. They're all very large projects, and don't take into account the $2.5 million you're going to give to the cultural fund, smaller organizations, and they can get up to $250,000. How many groups can you fund with that?
Well, we're hoping for $5 million. The 2.5 is the first year. But let me address the larger question that you're asking. I don't think anybody would dispute your characterization of all of the important services that any city must provide to its citizens. I think the difference is that we look at the 80 10/17/06 - FINANCE - BILL 051089, ETC. investment in arts and culture as that, as simply an investment. It is a way of stoking the economic engine that produces a lot of good things for our community, including not only, I should say, the quality of life enhancement but, most particularly, the economic vitality of our City and the ability to increase the revenues as more and more people move to our City, as businesses move to our City, as more tourists come here, and we believe that's the kind of investment we need to generate those kinds of revenues that will allow us to do many more things in the future as our City continues to prosper, as we continue to have a more and more vibrant community that is attractive to, as I said, businesses, residents and visitors.
And that may be true and it sounds very good, but it doesn't help the firemen at Carpenter Lane and Germantown Avenue who needs a floor. 81 10/17/06 - FINANCE - BILL 051089, ETC.
Thank you, Madam Chair. Mr. Jannetti, this is not a general obligation bond, is it?
So it in no 13 way affects our debt limit in terms of other capital projects, does it?
No, it doesn't, but we do have to pay the debt service. While the debt doesn't go against our General Fund bond obligation, it does --
Point 82 10/17/06 - FINANCE - BILL 051089, ETC. of information, Councilman Goode.
Mr. Jannetti, once again, this does not affect our debt limit?
Therefore, we are not pulling from the same pot of money for this bond issue as we are for fire stations?
All right. So if we wanted to float a bond for the City for the general capital bonds, would we have the dollars to pay the debt 83 10/17/06 - FINANCE - BILL 051089, ETC. service?
Yes. We have projections out through the Five-Year Plan. There's a projection for a new borrowing in Fiscal '08 of about $170 million. There's a projection of a new borrowing in '10 of about $100 million to fund the Capital Program.
Okay. Have we cost out the bond deals that have not gone -- we haven't approved two budgets, Capital Fund budgets. They haven't gone to the public yet.
Okay. For the past few fiscal years, City Council and the Administration have been at an impasse with regards to allowing District Councilmembers to spend capital dollars in their district. When will this issue be resolved and why should we support 84 10/17/06 - FINANCE - BILL 051089, ETC. this bond when the City facilities in our district are on the verge of an infrastructure crisis and we just talked about the PICA letter? What are we going to be doing to help our City infrastructure?
Again, I think the way we look at this, it's an investment in our future. It's an investment in the kinds of organizations that we believe will make the City a better place to live, will make us more attractive to businesses, more attractive to tourists and in the long run will make our economy much sounder, much more prosperous in the years ahead.
Has the Administration assigned target reduction numbers to any City agencies? After we passed the budget, did you go back to the various agencies and give them a targeted budget?
We do have targeted budgets for all across the City, 85 10/17/06 - FINANCE - BILL 051089, ETC. Councilwoman.
What are some of the areas that you asked the departments to decrease?
I would have to have the Budget Director speak to that. I can get that for you.
Would you agree that DHS was cut by a million dollars?
Fairmount Park by 128,000? The Sheriff's Office by 203,000? The Library by 394,000? L&I, a very important office, for 182,000? Once we passed the budget this past June and gave the departments their dollars, then you all went back and asked them to cut more, right?
Well, the target budget is a budgeting tool we use to hold down expenditures until at least later in the year. 86 10/17/06 - FINANCE - BILL 051089, ETC.
In light of the recent layoffs at the City's housing agencies and department budget cuts, why are we increasing the City's annual debt service for decades when we are reducing vital staff that is needed for NTI projects like property acquisition, urban renewal areas needed for L&I inspections?
The layoffs in the City's housing agencies were as a result of reductions, and there will be many more to come in future years from federal resources that are allocated specifically to those activities. The kinds of investments that we're talking about today are capital investments, again, designed to spur our economy and improve quality of life and infrastructure, frankly, in many of these same neighborhoods.
I am not in support of what you say about the various -- about this product and about 87 10/17/06 - FINANCE - BILL 051089, ETC. what you want to do, but it seems to be that the timing -- we've been talking about this for a long time, and the timing now for me is very interesting. Particularly in light of the PICA letter, how do we move forward to do this, given what we don't have in terms of the City infrastructure we need to support?
I think one of the things to point out -- and I didn't do this earlier -- is that much of this investment that I've been talking about is going to be for public infrastructure. I think it's quite clear, and I assume we all feel the same way about this, we wish we had an endless supply of money to do everything, but in truth, that's what we have to do. We have to make hard choices, and in our view, in the view of the Administration, this kind of investment, much of which will go for public infrastructure, is something that will have great payoffs down the line, which will allow us to do even more in 88 10/17/06 - FINANCE - BILL 051089, ETC. other areas.
None of you can probably answer this question, but I just raise it as a rhetorical question. You keep talking about the commercial corridors, and certainly I support the revitalization and stabilization of commercial corridors, but what is missing for me in all of this is how do we help those people in the neighborhoods, too. We didn't do it through NTI to some measure. I have a neighborhood where the residents are calling out for just some help to help them repair their driveways. They don't want the City to pay for the driveways, but how do we help them develop a mechanism? We've come up with a mechanism to help them repair their driveways, and which we can't get the people in the commercial corridors to support, by the way, because they don't believe they have to spend the money to help repave the driveways, but we can't 89 10/17/06 - FINANCE - BILL 051089, ETC. get a response from the Administration, because we only need about $250,000, and these are for taxpayers in the City of Philadelphia. So my frustration is not with your program. My frustration is about trying to get something for people. When I go to a meeting tonight up at the Leeds School, the top question on the list will be, When are you going to come up with the program to help fix our driveways? And it's the only program we asked the City to fund, and no response.
I will respond only because I know that this conversation has been going on for a long time. And as you acknowledge, it is difficult because these are the responsibilities of those residents and yet you're looking for some way that the City can assist really with project management of that. I think it's a little bit -- I understand you're connecting them, but 90 10/17/06 - FINANCE - BILL 051089, ETC. it's a little bit apples and oranges, but --
Well, I understand that. All I'm saying to these people in this room so they won't think I'm against them getting some funds for their organization, I have 154,000 people in my district and a number of them are homeowners who have asked the City just to help us help ourselves, and we get no 12 response to a letter. We get no response to those people in the Ninth Councilmanic District who have constantly asked whenever I go to a meeting, How do we help ourselves repair these driveways? So I'm sorry to you people in the audience. You have to hear my frustration, because if I asked how many of you lived in the Ninth and how many of you have asked me about driveways, you might raise your hand, because that is a problem, too. So when we look at how do we treat our citizens overall, that is a 91 10/17/06 - FINANCE - BILL 051089, ETC. question for me, and how do we fix the firehouse at Germantown Avenue, and PICA says that we can't afford it, how do we proceed forward when we can't take care of the infrastructure items in the City of Philadelphia?
Well, again, I would point out that much of this money is being dedicated to public infrastructure, and I would also go back to my original point, which is that we believe that it is an investment that will pay off in the future and allow us to do a whole lot more as the years go by, as the additional revenues come online.
Thank you very much. And the Chair would like to note that every week in Council -- and we've been dealing on the issue of housing, of reorganization, and we have ongoing discussions and I've had weekly 92 10/17/06 - FINANCE - BILL 051089, ETC. meetings on that subject. So I'm really, really concerned about the people who work in the housing agencies, where they are. We've gotten a promise of a specific review. We're really concerned about people who are up to 53 to 55 years of age and more than 30 years of service and what happens to them, who is allowed to come back, where the jobs are and so forth. So I want Council to know we're still dealing with that and we will still be responding to that issue again, as we always do, Thursday after Council when we have an opportunity to speak. Councilman DiCicco. COUNCILMAN DiCICCO: Thank you. Thank you, Madam Chair, and good afternoon. You have answered most of my questions in your response to Councilwoman Tasco's questions. Because I do think it's an economic tool. I 93 10/17/06 - FINANCE - BILL 051089, ETC. mean, I'd look at it that way. And certainly I believe that the rec centers and other of our public facilities need more attention and more money. There's a way of getting there. Again, I look at this pretty much as an economic tool. In that regard, are there any projections, any analyses, of what we think the return on the investment might be? I'm looking in the back of the room 12 and I know when the Philadelphia Art Museum, as an example, comes forward and asks for additional funding, they use a formula for every dollar that's invested at the Art Museum, correct me if I'm wrong, the City gets a $4 return on that investment. So in the context of what we're talking about here, are there any projections of what we anticipate? There's not an exact science to this, I understand, but given our history and what we've done in other areas, can someone speak to that? 94 10/17/06 - FINANCE - BILL 051089, ETC.
The best answer I can give is to rely on others who are much smarter about this than I am, and the Pennsylvania Economy League a number of years ago in a study called the RACE study, which stands for Regional Arts and Culture Enterprise, found that every dollar invested in the arts supports $2 in regional spending. Now, that would probably be consistent with what you pointed out about the Art Museum, because if you spread it across a lot of organizations with a lot of different revenue and expense pictures, it probably does even out to something like $2. COUNCILMAN DiCICCO: But does that take into account increase in jobs? Because if these facilities are making improvements and attendance, as an example, to a museum or an arts theatre or a dance theatre were to have more activities, it certainly would probably necessitate an increase in employment. I don't think it takes into consideration 95 10/17/06 - FINANCE - BILL 051089, ETC. those dollars. It's probably just the money that's being spent.
I think it's just spending. COUNCILMAN DiCICCO: That's an unknown that is obviously a positive.
I'm sorry? COUNCILMAN DiCICCO: On the job side, that certainly can be a realization here, that we would see additional jobs.
But I think that the other important point to mention when you talk about jobs -- and Councilwoman Reynolds Brown mentioned this earlier -- the Portfolio report found that there are 14,000 people employed in the arts in this community at this point. So that's a lot of jobs even now, and if you add the additional jobs -- COUNCILMAN DiCICCO: That we would retain, and then possibly additional. That's where I was going with this.
If I may add, 96 10/17/06 - FINANCE - BILL 051089, ETC. there are also direct leverage and outcomes that we anticipate from the commercial corridors component. Obviously in a number of cases we're looking to leverage our money either one-to-one or in some cases at a greater ratio in terms of redevelopment grants, in terms of the Small Business Loan Guarantee Pool, in terms of acquisition resources, as well we can project with the accumulation of all of the activities new businesses moving onto corridors and their job-creating activities as well. It's an art, not a science, but we have some numbers. COUNCILMAN DiCICCO: I've always said when I speak at community groups about investments and development that is being proposed in their neighborhoods, if you lose the commercial corridor, you're going to lose the residential community and vice versa. So they kind of go hand in hand. I don't have any further 97 10/17/06 - FINANCE - BILL 051089, ETC. questions. Thank you, Madam Chair. Thank you.
I actually have a whole lot of questions of PICA, but unfortunately, they're not here, so I'll ask the questions of you that I have for your body. Can you -- and I don't know what member of the panel can speak to this -- talk to me about the structure and the percentage of participation for any applicants or any City initiatives as it relates to commercial corridors or any of the facilities that will seek this funding?
Before you came into the room, Councilman, we did pass 98 10/17/06 - FINANCE - BILL 051089, ETC. out -- I'm not sure if there's an extra copy -- an Economic Opportunity Plan.
You just like to put it on the record. Fine with me. We're looking for an overall participation rate of 35 percent participation among minority vendors and five percent of women. On the workforce --
When you say "vendors," you mean contracts and suppliers?
Actually, let me take that back. I was starting with employment. So I'm talking about hours worked. So on the hours worked in terms of actual employment within those contracts, we're looking at a goal of 35 percent minority persons having work hours and five percent for women as one overarching goal for the program. 99 10/17/06 - FINANCE - BILL 051089, ETC.
Right, work hours on the employment side. And on the vending/contracting supply side, we're looking for 35 percent participation for minority businesses, percent 9 participation for female and two percent 10 for disabled business enterprises. 11
Normally our ability to get higher numbers on employment exists throughout most of the government-sponsored or funded projects. I'm going to ask -- and I don't know if I can do this procedurally, but I'm going to ask that we increase from 40 percent to 50 percent on the job hours.
That's why 100 10/17/06 - FINANCE - BILL 051089, ETC. I want it on the record.
I think that you have to do that procedurally, but if I could speak to the notion for a minute. What we did was look at our performance under the Neighborhood Transformation Initiative, which was focused on really demolition contracts, and our performance there was very good, but it still did not hit that 40 percent. So we thought that given the nature of the work in streetscapes, which is going to require --
Wait a minute. Excuse me, Ms. Gladstein. You're telling me that we didn't hit 40 percent on employment?
We hit 72 percent hours worked for minority and female two percent on the hours. 101 10/17/06 - FINANCE - BILL 051089, ETC.
But when we looked at the skills associated with that work, they were primarily -- virtually all of it came from demolition, and most of the trades there were laborers, and we think that given the trades that would be involved in this program, which is streetscapes, that it may be harder to hit those numbers. Obviously Council can do as it chooses, but I just want to explain our rationale here.
Well, realistically if you don't push the envelope, people are only going to meet or come close to the number that you set. We did a project at Broad and Cecil B. Moore, which you're very familiar with, and we said 50 percent. Now, it came in at 42, but I have to believe had we said 40 percent, it would have came in at 32. So respectfully, I'm asking you 102 10/17/06 - FINANCE - BILL 051089, ETC. to consider 50 percent. And there's a reason, because I understand that the reality is under the NTI we essentially use Local 332 and Local 57, Councilman, which are laborers, who traditionally are and unfortunately are probably the only trade that has a majority of minority individuals. At some point, that cycle has to stop. At some point, we have to come up with a strategy that increases minority participation in all of the trades, and if we take this approach that we couldn't do it before, then we shouldn't expect to do it now, we'll never get there. So I take the position as a Councilperson and as a layperson that if you want to use the citizens' money -- I was getting ready to say our money, but if you want to use the citizens' money, then you should make best efforts to comply to reach numbers that are comparable to the makeup of the City. And right now I think the City is around 103 10/17/06 - FINANCE - BILL 051089, ETC. 50 percent -- and I hate to use the word in this context, but minority and 50 percent non-minority. So I think it's reasonable to request an aggressive strategy as it relates to that. So I'm going to respectfully ask again that you reconsider pushing that envelope to probably 50 percent to more reflect the population and the demographics of the City.
And we'll certainly take that into consideration. I think we are with you looking very hard at ways to maximize participation, particularly on the employment front. We think it may be harder in this case than it was with the demolition contracts, but we've been looking at size of bid contracts, working with training and apprenticeship programs and other kinds of -- and simply having the requirements at the time that the contracts are bid so people are well aware of what the expectations are, as well as having a 104 10/17/06 - FINANCE - BILL 051089, ETC. rigorous enforcement mechanism and monitoring mechanism. So we have spent a lot of time trying to look at this and would be happy to work with you to do that.
All right. I don't so much want you to work with me. I just want --
I just want you to do 50 percent, and then we'll figure out a way to get there. But if you don't put 50 percent, you're not going to get there.
The Chair agrees with my colleague, Councilman Clarke, and we would hope that before this is voted on, that we might increase those numbers.
Thank you, Madam Chair. 105 10/17/06 - FINANCE - BILL 051089, ETC. COUNCILMAN DiCICCO: Point of order.
Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Madam Chair, on that very point. You say it may be more difficult in this project, and I think your rationale is because traditionally minorities are not heavily engaged in the trades, carpenters, electricians, cement masons, et cetera, so it was easier in the NTI because primarily, as Councilman Clarke pointed out, demolition, which is traditionally minority heavy in the unions. But by making that statement, I know you don't mean it the way it came out, that we're actually letting them off the hook, saying, Well, it's going to be more difficult because. And that's the reason we are where we are today, because we have never set those standards. And since this is public money, I think we probably have a better opportunity now. 106 10/17/06 - FINANCE - BILL 051089, ETC. When we talk about streetscape improvements, we're talking about infrastructure, sewer systems, electricity for lighting. Those are the unions that traditionally have pretty much closed the door on minority participation. And this may not be the forum to debate it, but since it's out there, I think at least for the record, we may now need to set the standard for those folks to say not only do we want minority participation, because what they traditionally do when they try to reach those levels, they'll take people from the suburbs and South Jersey who happen to be minorities and bring them into the City and then let the suburb work be all white. But we're looking for Philadelphians to get some, Philadelphia citizens to be part of this process, to be able to get a job, get employment and benefit as a result of what the City's taxpayers are putting into this project going forward. 107 10/17/06 - FINANCE - BILL 051089, ETC.
Agreed. I should note that we are also looking at Philadelphia residency requirements of 60 percent. COUNCILMAN DiCICCO: Thank you. Thank you, Madam Chair.
Just a follow-up on that. And it's my understanding that we will aggressively look to participate in some of the apprentice programs, some of the former ones we used? What are we using?
We had worked with a group called DAP, but we've also reached out and talked to the Housing Authority, which has a program, to a group called TOP/WIN. We'll look at youth build programs. I think one of the issues is, if we're pushing as Councilman DiCicco stated, we also have to be trying to fill 108 10/17/06 - FINANCE - BILL 051089, ETC. those positions from the other side as well and encouraging the labor unions to take on apprenticeships. So I think we have to push from that area.
Certainly we agree, and I'm sure I speak for the Committee when I say that we agree with the Councilman's assessment and also what has been said by Councilman DiCicco about public dollars. COUNCILMAN DiCICCO: I'm a minority sitting at this table.
You're a majority minority, though. And certainly we've even begun with the University of Pennsylvania, Drexel and other universities in the Third District. We've begun a Lucien E. Blackwell Apprentice Program that we've 109 10/17/06 - FINANCE - BILL 051089, ETC. been working on. So if there's a will, there's a way. If we decide we want to make it 50 percent in the City, we don't feel there should be a debate about it, and we would hope you would consider that. We're trying to work with you, we're trying to work for our citizens, but we need you to meet us there by agreeing to do 50 percent.
Councilwoman Tasco on the same subject and then Councilman Wilson Goode.
Right. Just lesson learned through the NTI process, we had to stage a demonstration at the site in Logan to get the contractor to, when you talk about hiring local residents, to hire local residents. Who will oversee this Economic Opportunity Plan? This program, will it come from your office?
We're looking at creating an oversight committee that 110 10/17/06 - FINANCE - BILL 051089, ETC. will include the agencies that you see here, City Council. We anticipate that or intend to continue to work with GPUAC, which has been monitoring on the NTI side, to do this. And I guess just to add to your point, that was an important lesson learned, in that somebody was stating some of the workers were Philadelphia residents and they were not. We were able to identify the problem and correct it, not that it was painless, but we're also going to be working with the Office of Labor Standards to work with them in terms of their reporting systems and monitoring systems.
And in increasing whatever number you request, how do you determine to get the compliance across the board?
Are you asking about the overall average compliance or the compliance per contractor or project?
We're going to be looking at it. We're going to include requirements in the bid document itself that will state for the expectations, review that at the bid meetings, and then be requiring paperwork submissions. And, again, we have had folks who have gone out in the field to check the information and to report back when it's inaccurate, and I think the language in here is to use persuasion and negotiation to work with the contractors to achieve what their commitments were, and we will do that.
Thank you, Madam Chair. 112 10/17/06 - FINANCE - BILL 051089, ETC. First, a couple more questions on this issue. You do realize we're not asking you to exceed the 40 percent goal but asking you to increase the 40 percent goal to 50 percent?
That can be achieved by just striking the numbers and adding new numbers before we pass it out of Committee today; is that correct?
Yes. That is how it could be achieved. I literally don't have a copy left in my possession, however, but they're all up there.