Committee Hearing, December 16, 2002

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 696, City Hall Philadelphia, Pennsylvania Monday, December 16, 2002 10:15 a.m. - - - - - - Bill 020764 - Resolution amending the Neighborhood Transformation Initiative (NTI) Fiscal Year 2003 Program Statement and Budget PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS-BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, PA 19103 (215) 561-2220 (215) 567-2670 2 12/6/02 - NTI FY '03 Program Statement and Budget

Good morning, everyone. This is a public hearing of the Committee of the Whole regarding Resolution No. 020764. I would ask Mr. McPherson to please read the title of the resolution.

Resolution 020764, resolution amending the Neighborhood Transformation Initiative, Fiscal Year 2003 program statement and budget.

Thank you. Miss Smith, before you give your testimony, I believe some clarification as to exactly what is before Council would help. On June 13, 2002 Council approved an NTI FY '03 program statement and budget. The administration is now asking Council to approve amendments to that program statement and budget. Last week the administration circulated to all Council members a proposed new Exhibit A to Resolution No. 020764 which contains those proposed amendments. Some confusion has risen, however, because the Exhibit A circulated to members of Council appears to contain only changes and additions to the previously approved FY '03 program 3 12/6/02 - NTI FY '03 Program Statement and Budget statement and budget and does not include matters that remain unchanged from that previously approved statement and budget. I am assuming, therefore, that Exhibit A is not intended to replace the previously approved FY '03 program statement and budget in its entirety, but is simply a list of changes to that program statement and budget. If we approve Exhibit A, then one would have to read Exhibit A together with the previously approved program statement and budget in order to understand the overall program statement and budget. Can you please confirm that this is the case?

Yes, it is.

Well, that's a very easy answer.

Would you proceed with your testimony, please?

Good morning, President Verna and Members of the Committee of the Whole. My name is Patricia Smith, director of Neighborhood Initiative Transformation. I'm here today to testify on behalf of the administration on Resolution 020764, which amends the Neighborhood 4 12/6/02 - NTI FY '03 Program Statement and Budget Transformation Initiative fiscal 2003 program statement and budget. When the administration transmitted the $68 million FY '03 budget in May of 2003, we proposed a conservative budget for the first year because many of the planned activities were in the formative stages. The amended budget allocates a total of 102 million in bond proceeds to help eliminate blighting conditions in Philadelphia neighborhoods, create opportunities for redevelopment, invest in housing and neighborhood preservation and improve the City's housing and community development information technologies. The $34 million budgetary difference is due primarily to the demand for acquisition funding. 9 million. 5 million including related costs such as appraisals, legal fees and relocations, and, if I may, a hearing before the Rules Committee was held on December 9 with respect to that matter. 6. Finally, the Interagency Aquisition Review Team in January will begin to review requests for acquisition funding for the fiscal year 2003 spring cycle. If you have not already done so, the administration respectfully requests City Council members to complete a request for acquisition funding form and submit it to the RDA by December 23, 2002, and you can send that to the attention of Mr. Michael Kunz, who is the director of development. In addition, the administration has adjusted certain budget line items related to residential demolition costs. In this case the changes include increasing funding for emergency demolitions and project management while reducing the amount of funds allocated for contingency reserves and the wrap-up insurance program because the premium will be paid over five years. 1 million. Finally, the administration is allocating 1 million in bond proceeds for basic clean-and-seal activities. Clean and seal entails removal of debris from nuisance properties and boarding of windows and doors to prevent all unauthorized access and vandalism. The proper cleaning and sealing of a vacant property reduces the risk that it will become a public nuisance or a haven for criminal activity. The City will target clean-and-seal activities to support and enhance other NTI program activities. The administration has set many ambitious goals for fiscal year 2003 covering a wide variety of activities, and I am pleased to report that we have accomplished a great deal during the first half of this fiscal year. To date, the City has begun coordinating planning activities in Strawberry Mansion, Chinatown, Mt. Airy, West Powelton, Cecil B. Moore, Fox Chase, Lawndale/Lawncrest and along portions of the Amtrak corridor. We have also improved processes for 7 12/6/02 - NTI FY '03 Program Statement and Budget carrying out demolitions to assure that they are performed more efficiently and cost effectively. We researched and developed and prioritized a list of vacant industrial commercial properties for demolition with NTI bond proceeds over the next three to five years, and that preliminary list is appended to the amended program statement and budget. We transmitted, as you know, the package of bills to Council authorizing the condemnation of 2500 properties. We launched the community life improvement program, which has issued more than 5,700 violations and 2,600 trash and street-related violations in the Sixth and Tenth Districts. We resurveyed dangerous retaining walls and developed preliminary budgets for repair work using new technology. We completed the design specifications for the repair of three walls as part of a demonstration program.

We restructured the PHIL loan program to offer and percent home improvement loans and initiated marketing outreach efforts to promote the 12/6/02 - NTI FY '03 Program Statement and Budget expanded PHIL program. We issued RFPs and have completed the review of proposals for an Alternative Sub-Prime Home Improvement Loan product and other refinancing tools for victims of predatory loan activity. Similarly, we have issued and reviewed proposals for an intermediary agent to consult on the design and implementation of the employer assisted housing program that was contained in the '03 budget, and we have also completed a detailed data flow chart to document the acquisition and disposition process. This data flow chart will serve as the basis for the automation of component parts of the acquisition process. And we have developed and begun the immediate automating of a baseline system to track expenses and activities supporting the acquisition assembly and disposition of NTI-funded properties. Successful neighborhood development, as we know, requires careful and extensive preparation and I feel that we are well on our way to success. Thank you.

Thank you. Miss Smith, the pink bill that we have does not have 9 12/6/02 - NTI FY '03 Program Statement and Budget much of the detail. Are you going to be proposing the amendment?

Yes. I'm sorry. I forgot. What we are proposing is to substitute -- and this has been handed out again. It was distributed last Thursday, the amended what we call Resolution No. 8 020764, amended Exhibit A. The budget that was attached to the original resolution on the pink bill 10 was just the summary of changes. This provides the background detail with those parts of the program statement that we are changing. And, again, this is the approved program statement which contains all the detail that has been distributed to Council.

Thank you. Miss Smith, what program activities of the NTI program will require City appropriation power versus direct expenditures of the Redevelopment Authority?

All of the program activity with the exception of the acquisition and disposition of real estate requires appropriations in our City budget. At the time we put together the fiscal year '03 physical operating budget we included a little more than I think $40 million in 10 12/6/02 - NTI FY '03 Program Statement and Budget the grants revenue fund to cover the activities such as demolition and some of the other program activities in the housing and neighborhood preservation part. That does not include the specific acquisition-related activities because, as you know, any acquisition of real estate has to be approved by separate ordinances by City Council both under state law and also as outlined in the original authorizing legislation for NTI. So we come back to you with each package of acquisition bills for authorization and that includes budgetary amounts.

Thank you. On of Exhibit A is a revised projection of how the NTI bond proceeds will be used. The administration is now anticipating to exhaust all bond proceeds allocated to acquisitions in FY '03. Would you explain how future acquisitions will be funded and what the projected amounts will be in years FY '04 through FY '07?

In the initial budget for the Neighborhood Transformation Initiative program we allocated $50 million for acquisition costs.

I'm sorry. I didn't hear you. 11 12/6/02 - NTI FY '03 Program Statement and Budget

In the original NTI budget that was approved we envisioned spending $50 million of bond proceeds over five years to support acquisition. Based on the requests that we received and the requests that are in the pipeline just this fiscal year, we are close to 43.9 million. So that we don't delay reviewing and approving those acquisition budgets, we are allocating the entire 50 million in this fiscal year. For the outlying years the administration has been working with the Finance Department, Law Department, and the Redevelopment Authority to put into place what we are calling a recycling agreement. That recycling agreement, as is noted in the footnote on , that what we will do is use revenues generated by the NTI bond fund of condemnations to finance property acquisitions in the outlying years. Most of the property RDA will condemn as a part of NTI is tax delinquent and/or has other municipal liens recorded against it. When the RDA settles with an owner in the case of an abandoned property, pays the appraised value of the real estate property into court, the City collects the 12 12/6/02 - NTI FY '03 Program Statement and Budget outstanding delinquent property taxes and other municipal liens up to the appraised value of the real estate. On an annual basis the Mayor will include as part of the City's operating budget an amount equal to the projected share of delinquent real estate taxes and other municipal liens that will be collected for NTI bond-funded condemnations. I asked Mr. Wetzel to quickly put together what we could expect to raise, let's say, for FY '04 immediately, and we are looking at -- assuming about $8 million in real estate taxes that is generated by our condemnations that were approved just last week, or approved at the hearing level last week, we could expect about $3.6 million in funds that could be used for acquisition next year. That doesn't include projected condemnations that are in the pipeline. It is about, I would say, almost a 50 percent return conservatively because of the level of not only tax delinquency on much of this real estate, but a great deal of what we are condemning are vacant lots that have demolition liens against them.

That wouldn't 13 12/6/02 - NTI FY '03 Program Statement and Budget apply to the properties that have a tax lien?

Properties that were part of the tax, in that instance if we were to condemn those properties, we would be paying the appraised value of the real estate. For example, if it is a lot, usually lots we budget about a thousand dollars in most of the neighborhoods of the city, not all of them, but in that instance the tax lien servicer would be entitled to the appraised value and could collect that as their portion of the return on that investment. We are not required under the condemnation to pay the entire amount of tax delinquency to the tax lien person.

Thank you. Can you tell us how many residential structures will be demolished in FY '03 and what the original cost of demolition is for a residential property?

We have been in the process of readjusting our neighbors for demolition activity, taking into account that the pace is a little bit slower than what we anticipated last May so that we can assure adequate consultation with Council members as well as with community residents. 14 12/6/02 - NTI FY '03 Program Statement and Budget We are projecting now maybe in the area of 1500 demolitions this year. In addition, as I think you may be aware of, we are looking at based on the experience we have gotten now with the first two bid packages, one was a small one and the second one in the Third District in Mantua, the average cost being about 14.5, $14,500. So that is a little bit more than what we were originally projecting.

I was going to ask. What had the City been spending on an average residential demolition prior to the NTI program?

In many ways that's a difficult question to answer because it is not apples to apples comparison. In the past the City let several component parts of its demolition contract and we -- like, for example, the demolition, which is just the taking down of the building, I believe was around 7500. I can double-check that number. But that did not include things like asbestos removal, air monitoring, stuccoing and the like. When you add those costs, my understanding, we were in the area of about 10 to $11,000. That is what the original number was based 15 12/6/02 - NTI FY '03 Program Statement and Budget on.

Can we assume that the 14,500 includes stuccoing?

Yes, it includes everything including postdemolition treatments according to our new specs.

Removal of asbestos?

Removal. It includes everything from soup to nuts. Under our revised specifications we are requiring the prime contractor to be responsible for everything and that in part was based on some of our experience where we had received complaints from neighbors that the demolition may be completed, the taking down of the building, but because a separate contract was responsible for stuccoing or the hauling away of debris, there could be gaps, and we all know the stories when something came down, then three weeks later or four weeks later something would show up.

And I think at one point in time the City had a very difficult time trying to get contractors to do stuccoing and I recall several years we were told at a budget 16 12/6/02 - NTI FY '03 Program Statement and Budget hearing that we only had one person doing stuccoing, so I'm glad to hear that this is an entire package.

Yes, it's an entire package.

Can you tell us what is the amount budgeted for relocation in FY '03?

Thus far, based on the approved acquisitions that just went through Council, I believe it was around 6 million, $7 million all totaled.

Can you project how many people will have to be relocated?

I don't have the numbers for that, but I was correct, it is about $6 million for this fiscal year. That would include relocation costs that would be related to several ongoing projects. I believe at our last hearing we were looking at about, I think it was 26, maybe around 40 total that have been approved, and then depending on the acquisition process I would suspect we could do probably another 50 to 60. It's also difficult to answer the exact number because based on preliminary surveys we may not be aware of the fact of how many individuals -- 17 12/6/02 - NTI FY '03 Program Statement and Budget how many households may be in the house, so these are conservative estimates. For example, you could have a rental property that houses three households, but from when we do sort of like the street surveys in our budget we base it on one. And that's why it is really important as we come with each specific ordinance we provide those details.

Thank you. I don't want to dominate this. I have a few more questions, but I see Council members have their lights on. At this time the Chair would like to recognize Councilwoman Tasco.

Thank you. Good morning.

Good morning, Councilwoman.

I was looking at . I was just looking at the calculation for the housing and neighborhood preservation. In the first column it totals 14 million and in the second column you deducted 500,000, but nothing else changes and you still come up with 14,500.

What we did is vacant property stabilization, which was what we call the high-level treatments of stabilization, since we are 18 12/6/02 - NTI FY '03 Program Statement and Budget running a little bit slower in that, we took out 500,000 and then in clean-and-seal activities we allocated a million, so the differences of the 500,000 is because we added a new million dollars. And what the intent there is to do more basic clean and seals in support of the NTI work.

So on at the top you are striking those items, the side yards?

It is not so much that we are not going to do them. What we found based on our experience reviewing the first set of acquisition requests and looking at the pipeline was that we found that these became artificial numbers and it made more sense to look at it from a monetary standpoint, so that's why I rewrote the section 17 beginning on to encompass all the acquisitions, different types that we intend, and that would include landbanking, assembly for specific development projects and acquiring stabilized buildings for rehab, and under landbanking we include as a part of that vacant lots that we consider suitable for disposition as side yards.

So the items you 19 12/6/02 - NTI FY '03 Program Statement and Budget have stricken are picked up someplace else?

Yes. It is more, I feel, like a language change because the numbers were based on the experience of the first half of this fiscal year. They were artificial numbers.

In your testimony you talk about the design and specification for the three retaining walls and one that you have done -- resurveyed dangerous retaining walls and developed preliminary budgets for repair work using new technologies. What does that mean?

As you know, included in the FY '03 program budget was the allocation of a million dollars to look at how do we deal with the issue of what we have been calling private infrastructure, which includes everything from retaining walls, driveways, curbs and sidewalks. At the time we envisioned thinking about how to do retaining walls, which can be very expensive propositions, in a different way, and there has been a lot of research done on how we can design and repair walls in a less costly manner. So we have completed all that work. We went back out and looked at all the known dangerous 20 12/6/02 - NTI FY '03 Program Statement and Budget retaining walls, imminently dangerous retaining walls, and have categorized those. The managing director's office is in the process of prioritizing that list, and I don't remember the exact number. I believe it was around 20? I'm sorry; around 70 walls altogether that we went and looked at to look to determine to what extent they were dangerous, and then we selected three walls to actually use the million dollars to repair and that's what the design work has been completed on.

So three walls will cost you a million dollars.

I'm not sure of the exact number on the cost of that. I will ask Paul. So far the three walls would cost us $370,000.

I'm sorry. Whoever answered that, come up to the witness table and identify himself and respond to the question.

I'm sorry, Council President. My name is Paul Loney, representing the Department of Streets. What we did is we looked into these and in a pilot program we are designing the three walls 21 12/6/02 - NTI FY '03 Program Statement and Budget that are going to be done. Now, the approximate cost of that is around $370,000 we are assuming. We have not gone out to bid yet, but our best engineers are on this and that's what they assume for these three walls. A lot of the other walls are not as expensive, but these are ones that are very problematic and very big and are very expensive, and that's why these are a little more expensive than the general wall would be in the future.

Could you tell me where they are?

There is one wall that is located in the Fourth Councilmatic District, one in the Eighth Councilmatic District and one in the Ninth Councilmatic District. There is one on Mascher Street, I believe that is in your Councilmatic District. There is one that has been isolated at Nedro Avenue in Councilwoman Reed Miller's district, and there is one at 62nd and Berks that has been identified in Councilman Nutter's district. They are under design now. That should be finished by the end of the year and we are looking to go out to bids in the spring. 22 12/6/02 - NTI FY '03 Program Statement and Budget

Has there been any investigation into the use of the new interlocking brakes that are being used now?

Our instructions to our design engineers were to use this new technology. That is part of the design. We are designing these walls with our own structural people and they have been instructed to use these new materials that they feel very comfortable and confident in using, and that is the design. If anybody is interested, I have one of the designs right here with me. If anyone would like to see that, I would be glad to share that with anyone on Council.

Thank you very much. Let me ask you about your RFP process for the Sub-prime Home Improvement Product. Where is that? What has been the response and where are you in terms of moving this program along?

In September we issued an RFP and received responses from, I believe it was, four respondents. I'm looking for my little note. There's a lot of information to keep.

Yes, big program. 23 12/6/02 - NTI FY '03 Program Statement and Budget

I can read from my writeup. On the antipredatory lending proposals, OHCD received five proposals in response to the RFP, two to provide home improvement financing for sub-prime ballot bar, two to provide a program for refinancing predatory loans and one for strictly community outreach services. We have not yet awarded the contracts but are requesting additional information from the Greater Philadelphia Urban Affairs Coalition regarding their proposal for a loan product that would involve, I believe it was, four banks in terms of putting together financing, and the structure of that program was essentially taking the City NTI bond proceeds and using it is as a loan loss reserve or guaranty so the banks would be more willing to use their funds to do the actual lending and so it is not a program that will be run out of, say, government. It will still be operated by the banks and we would be playing, say, this role of a guarantor. In addition, there was a proposal --

Let me back up on this. I think what you might want to do is check with the urban coalition on that statement because 24 12/6/02 - NTI FY '03 Program Statement and Budget I'm not sure that is a correct situation. In terms of their being requested to provide additional information, I understand that they are waiting to hear the results of the process.

The letter I believe went out this week, or last week. I'm sorry.

To the urban coalition asking for additional information?

Yes. And essentially after the proposals were due we had several inhouse meetings reviewing all the proposals and meetings ranking the proposals and that took us about 45 days in total, and so based on those reviews we just requested some clarification and additional information, but we expect to go to contract by the first quarter of 2003. So I feel really good. This was a new program design and I feel like we are moving along well on that. The second part, revision, the refinancing of existing victims of predatory loans, in there we are looking at selecting the Home Ownership County Association, ACORN, and an existing program run by the reinvestment fund. It is anticipated again that the contracts will be made 25 12/6/02 - NTI FY '03 Program Statement and Budget following our meetings to nail down some specifics in the first quarter.

What about the PHIL loan program?

The PHIL loan program, we are really excited about that program. It has been restructured so that it now provides and percent loans. We, in fact, unveiled the new marketing campaign. I believe it was in October of this year. PNC Bank in particular has been at the forefront of bringing marketing resources to help promote the program. We are in the process of designing a web page specifically for PHIL loan. We have gotten donation of billboard space from Clear Channel to promote the 3 percent loan. The 3 percent loan is available to homeowners whose incomes are approximately up to 115 percent of medium, which is a change from the old program, and that is about 70, 75,000 for a family of four. A 5 percent loan is available to anyone without income restriction because we really want to use this program to help stimulate people investing and improving their homes.

And you will begin 12/6/02 - NTI FY '03 Program Statement and Budget marketing that when?

We have already done marketing through some of the traditional ways. The City has done that. That's including mailers in our water bill and we are going to start including that in PGW. We are talking about looking at an insert with something like the Metro as a way of getting the word out and then, as I said, the donated space on billboards.

Thank you.

At this time the chair recognizes Councilman Goode.

Thank you, Madam President. Good morning, Miss Smith. How do faith-based groups access NTI programs, churches that have been involved in housing development for years who in many cases have made the largest real estate investments within their neighborhoods and want to look out to do maybe some spot development?

Again, usually the starting point for any development activity, as you know, is the assembly or acquisition of land, so if there is an organization or a faith-based community group 27 12/6/02 - NTI FY '03 Program Statement and Budget that's interested and has a development proposal, the first step would be to complete the request for acquisition funding that's with the Redevelopment Authority. It is my understanding that the disposition of land to a faith-based organization, not a 501-C-3, a faith institution, has to be at fair market value. So that's one difference then. Sometimes we dispose of it for less than fair market value.

I'm actually thinking about churches that have formed community development corporations and more specifically about a project in West Philadelphia, Councilman Nutter's district, called the Phoenix project which involves maybe seven or eight churches that are looking to do spot development.

Again, we ask -- for specific development projects we have a form now. It's not a complicated one. It really asks basic information about the project, about what property specifically they seek the City to acquire, and then we ask them very preliminary information on what we call your financing scenario so that we know that 28 12/6/02 - NTI FY '03 Program Statement and Budget the resources are there to carry out the project. That can be obtained from the Redevelopment Authority by calling Mr. Michael Kunz for this.

So Councilman Nutter and myself should probably put in a request form by next Monday.

The 23rd. It is the same form that we have been using. We have kind of been out with it since May. We tweaked it a little bit based on experience in the first round of reviews.

Thank you. Second question is do you have any minority participation numbers to date for the NTI program?

I can get that. We looked at some numbers on the Strawberry Mansion demolition that took place with 31 properties and I can get back with you with the specifics, but we did, I believe, meet our goals both on work force participation including neighborhood residents. It was close to 70 percent.

I'm interested in the percentage of contracting and work force.

And on the contracting side 29 12/6/02 - NTI FY '03 Program Statement and Budget we met our goals also. One of the advantages of using the strategy of doing everything soup to nuts as part of the demolition package is that it offers more subcontracting opportunities, everything from the asbestos to hauling away of debris to stuccoing. There's more opportunities. Someone just handed to me -- we are 70 percent participation on contracting. You have to come up.

Lance Rothstein from the capital program office. We have a monthly report from the GPUAC which we could share copies of with the exact percentages. On the employment side, the equal opportunity plan side, we are just over 70 percent minority participation, and when you look at the zip code breakout, we are at about 10 percent participation from the Strawberry Mansion neighborhood itself. On the subcontracting side, I haven't seen those numbers in the past couple days, so it's not fresh in my mind, but it is about 45 percent total participation on the subcontractors' side.

And that was our goal I believe? 30 12/6/02 - NTI FY '03 Program Statement and Budget

Yes. Thank you, Madam President.

Thank you. Mr. Rothstein, aren't we and Council supposed to be getting monthly reports based on participation? It was in the original ordinance.

I remember as part of the original ordinance we are to submit a quarterly report on the expenditure of proceeds and we are in the process of finalizing that.

I direct you to of the original and it does say, "Over the initial five-year period of the NTI the City of Philadelphia through its departments and agencies will prepare monthly reports and update of employment and contracting activities for NTI which summarizes the following: Utilization of MWDBS, commitments made with such businesses, the hiring and employment of minorities and females, the training programs utilized and the placement rates."

As I said, we just received the GPUAC report. I apologize that we didn't do any reports in the interim and that was on the Strawberry Mansion one. 31 12/6/02 - NTI FY '03 Program Statement and Budget

We look forward to seeing monthly reports from here on in, please.

Okay. Thank you.

Councilman Goode, are you finished?

Yes.

Councilman DiCicco.

Thank you, Madam President. Good morning. Miss Smith, during the process of demolition and cleaning and sealing, one of the concerns that we have expressed in the past, or I know at least I have, is the cost of that service or the cost involved to perform that activity. Generally it should involve a lien against that property; am I correct? There has been some legislation that was going around in Harrisburg some time ago and we have discussed it in this chambers about being able to accelerate the time in which we can acquire those properties because these are people that basically you have abandoned properties left to deteriorate 32 12/6/02 - NTI FY '03 Program Statement and Budget and for the most part help cause or accelerate the blight of most neighborhoods and now the City comes along and we have to pay taxpayers' dollars basically to remove the blight that was caused by private individuals. Where are we in that process?

My name is Michael Kunz. I'm director of urban renewal activities at the Redevelopment Authority. I'm assuming you are talking about the bill that was sponsored by Representative Keller in Harrisburg?

Yes.

What we have been able to accomplish so far is to put a limit on the amount of time that the money has to actually sit in court before we can withdraw that money. We reduced that down to a year as opposed to five years.

When you say "money," what money?

When an owner is absent and we can't contact the owner after we condemn this property, we pay the money into court. Heretofore before this legislation we actually had to wait five years to see if anyone came forward before we could withdraw the money. We reduced that down to a 33 12/6/02 - NTI FY '03 Program Statement and Budget one-year period.

Does the amount of a lien against a property have any bearing on that process or any other processes in terms of the City being able to take ownership quicker?

As far as speed, no, it doesn't.

I see Miss Smith was shaking her head in the affirmative, so...

I look at it, what it does is that -- what it means is that an owner who has not maintained their property and if we condemn it, we get the right to deduct both the demolition liens which we file as a matter of course plus our administrative costs plus any delinquent taxes. That comes back to the City so that you don't have an owner who has neglected their properties for years and years and years benefitting from that because of the appraised value, and in most instances our --

Excuse me. If I may interrupt, that is because in some cases -- and correct me if I'm wrong -- either the taxes and back taxes or the cost of cleaning and sealing, as an 34 12/6/02 - NTI FY '03 Program Statement and Budget example, are less than the actual value of the property?

Yes. That is because -- yes, they are higher than the value of the property.

They are higher.

The demolition lien, any other activity that we have taken to eliminate blight, to stabilize the property, we convert that into a municipal lien and put it against the real estate, and when the fair market value, which is what you have to pay in the court, that is generally less than all our outstanding liens, so we get our money back in effect. In terms of the timing, how long it takes, what we have been successful at, thanks to the work of the Philadelphia delegation and leadership of Representative Keller, is to secure the passage of legislation that took out some of the administrative requirements both on the eminent domain side of taking property as well as the Act 94 side, and that was passed I believe almost unanimously in October of this year. And we introduced the legislation last year.

The other question 35 12/6/02 - NTI FY '03 Program Statement and Budget I have is in the same area and I have raised this several times over the last few years. This Council passed legislation I think maybe three years ago -- it might have been a little bit longer, maybe two years, anywhere from two to four years ago. Basically what it says is that the department of L & I has the authority to fine a property owner. Every day after the amount of time that the property owner is given to either replace the windows and doors, as an example, to the amount of $300 per door and window. I know Mr. Sibibley is in the audience today and I have asked this question time and time again. It is my understanding that we are still not enforcing that and I think that would act as a great deterrent. The purpose of the bill was to put the owner of the property in the position where they would have to do one of a few things. One is you would fix up the property; two, you would sell it; or, three, if you didn't think there was any value, you could turn it over to the City. That was really the genesis behind my thinking when I introduced that bill some time ago, and what's happening is I think we are allowing these properties to sit there 36 12/6/02 - NTI FY '03 Program Statement and Budget until we get around to cleaning and sealing them and the irony of this is the bill requires the property owner not to board up the doors and windows but to replace the doors with a door, replace the window opening with a window. We, in effect, are going back and doing exactly what we are saying to the property owner they should not be doing and we are going to fine them if they do. Do you have any knowledge -- or I don't know if Mr. Sibibley is in the room -- where we are in this process? I keep talking about my signature building at 23rd and Arch where the owner of that property is probably asking an excessive amount of money for the sale of that property and it has been sitting there vacant for about 15 to 20 years, and if you are going to go out and hit him with a lien -- first of all, we are not going to be in a position to clean and seal that building. We are going to spend most of the money we have allocated for the other things we have to do. Where are we in that process?

Good morning. I'm Robert Sibibley, Department of Licensing and Inspections. Councilman, the ordinance reads 37 12/6/02 - NTI FY '03 Program Statement and Budget accessible windows and we have worked with NTI and the managing director about having the language changed to windows plural, period. Let's take 22nd and Arch Street. The windows on the first and second floors I believe and in some areas of the third floors are in fact sealed. Another big building similar to that in Councilman Clarke's area is at Broad and Lehigh, the old Botany 500 building, where the windows on the upper floors are open to the elements and the bottom floors are sealed. We have suggested and it is being I believe worked through Council in an ordinance that all doors and windows have to have doors and windows in all openings and then that is an enforceable bill 16 for us.

I certainly had every intention of that kind of legislation. If it passed me, I apologize, but I wish I would have known sooner. The blight is what you see obviously.

I agree. And when we read it after a Council hearing two years ago -- maybe a year ago. I forget right now -- we saw that the word "accessible" was in there which would eliminate the upper floors. If you look at 22nd and 38 12/6/02 - NTI FY '03 Program Statement and Budget Arch as an example, on the railroad in the back we have the windows sealed two floors above that in the back and in the front it's only the first and second floor that it is wide open.

You say you are working through Council on amending that bill?

The Law Department sent over a revisement of the bill, which I believe there was going to be a committee hearing last week and it was delayed I believe for a week.

To what committee, L & I?

I'm not sure. Councilman Clarke I know was on it, is involved. I'm not sure if it is the L & I committee or not, Councilman. Probably the L & I committee. They are shaking their heads in the back. It is the L & I committee, to have all windows and doors included, and as we saw going around with --

The Chair recognizes Councilman Mariano.

It is tomorrow 10 o'clock in this building.

The benefit that I see 39 12/6/02 - NTI FY '03 Program Statement and Budget in the neighborhoods is the mom and mop stores, mostly you see doors and windows on the first floor and it's sealed above it. That creates similar problems for L & I in that you don't know the condition of the roof because they seal it and it is painted like with ugly colors usually and it makes it difficult for us to inspect. We found some of them when we were using the helicopter to see the rooftop conditions of vacant buildings with roofs who have holes in the roof and we would be able to enforce it, so the big benefit will be when we go to mom and pop stores and order them to have doors and windows on all openings.

But, again, I understand most of the properties -- and I will use the 22nd because it is such a visual eyesore, one of the gateways into the city, and it is so prominent -- is the majority of the properties that I know of in not only my district but throughout the city that are vacant are boarded up on the first floor as well as the upper floors. I don't see many properties where you have doors and windows on the first floor that are accessible and in good condition and the floors are -- I'm sure there are 40 12/6/02 - NTI FY '03 Program Statement and Budget some exceptions. So we have not done any enforcement in that area either?

That's probably correct.

When the commissioner was here either at hearings or in private conversation, he mentioned that L & I has been -- and I'm not trying to condemn L & I, but I'm trying to figure out why is it still taking us three or four years to enforce this law that has been on the books all this time when I look at the Jefferson Square area where we are doing our housing development, and because of the efforts that we have made in demolition and our plan basically to start housing construction the end of January, beginning of February of 2003, property values are going up and those properties that are going up are vacant, boarded-up properties, which really contributed to the blight that government has to invest millions of dollars in now to correct. Why should not these owners be penalized? I guess that is really in a nutshell what I'm trying to get to. Why are we still not penalizing property owners for allowing their properties to deteriorate or lead to deterioration or help the deterioration of 41 12/6/02 - NTI FY '03 Program Statement and Budget neighborhoods. I think we have been too lenient for decades and this bill has been on the book for three to four years and we still haven't done anything with it.

I will follow up with the commissioner on that, Councilman.

Well, again, with all due respect, I think this is probably the fifth or sixth time I have raised this since the bill has passed and it has to be at least three years. What I'm suggesting, I think this could be helpful to what we are trying to do here. All too often people are sitting around inheriting buildings or whatever it is and they sit there and speculate for years. No regard or respect for the community in which those properties are in. We basically allow them to do it. And then somebody who lives in a home, has a cracked pavement, we are out there in five minutes citing them for a broken pavement. There's something wrong, and I thought we were correcting that when we did this bill. I have no further questions, Madam President. 42 12/6/02 - NTI FY '03 Program Statement and Budget

The Chair recognizes Councilman Rizzo.

Mr. Sibibley, I would like to follow up on Councilman DiCicco's question. When we have a building that the first few floors are sealed and the remainder of that billing is open, what occurs to the integrity of that building? What kind of a hazard are we allowing to develop when the elements, the rain, the snow, have the ability to penetrate that building? Are we talking about a building that eventually, if not sealed, could collapse?

It further deteriorates the structural members of the building by the weather. The floors become soft. The wood rots. Absolutely correct. It deteriorates the structural integrity of the building.

So if we had a fire in a building like that, our firefighters would be dealing with an issue that is not as obvious to them as could be. We could have a building that after a fire begins, they try to fight that fire, we could have a building that could collapse a lot faster than normal? 43 12/6/02 - NTI FY '03 Program Statement and Budget

Possibly, yes, yes. What we do with the Fire Department, though, we do share a list of buildings that we have identified as having structural problems and I'm almost positive that they make their district fire stations aware of what the list is, and we work with them in identifying and demolishing buildings that may be of particular concern to the fire department. We work very closely with them.

I would assume that as professional firefighters, when they arrive on a location like that, they are pretty aware of the potential of a collapse, but basically what you are saying is that an open building like that, that process is accelerated because of it being open to the elements?

That's correct. The structural integrity as far as collapse, the fire can cause collapse issues, yes.

Thank you. Thank you, Madam President.

You're welcome. Actually, aren't we simply ensuring that 44 12/6/02 - NTI FY '03 Program Statement and Budget demolition will have to take place if we are only sealing the first floor of the building?

We seal all openings where it's safe enough to go -- if you can get to the third floor or the second floor from the interior, we seal all openings. It's where the buildings are too dangerous for the men and women to walk upstairs that they leave the upper floors open and then with that our clean-and-seal crews forward that information to contractual services and we declare the building dangerous because of that and put it on the list of buildings to be demolished. We found that our best inspectors are in fact our clean-and-seal personal as far as what the interior looks like.

I couldn't hear what you said. I'm sorry.

Our best inspectors are our clean-and-seal personnel as far as the condition of the interior of the properties.

I just feel if the second floor is not sealed it's an insurance that we are going to have to demolish.

Pat Smith. 45 12/6/02 - NTI FY '03 Program Statement and Budget One of the things that we are going to be looking at as part of the clean-and-seal program is the whole issue. As I think Mr. Sibibley pointed out, sometimes there is pros and cons. If you do everything, does that make it more difficult to find things like missing roofs? Do we have to do more overflight review of vacant buildings so that we can coordinate that? So, as with many other methodologies that we are using, we are going to be looking at the clean-and-seal program so that it is much more consistent with the NTI principles.

The Chair recognizes Councilwoman Miller.

Thank you, Madam President. I just have a few questions. I just wanted to get a few more details regarding the relocation plan and I understand it's three categories, emergency, temporary, permanent, and that is going to be handled by risk management? I was actually looking for the page, but I couldn't find it, where I read that, regarding residential demos.

In regard to regular demolition -- starting on , and this is still 46 12/6/02 - NTI FY '03 Program Statement and Budget the same language that was in the original bill, generally speaking sometimes as a result of either demolition activity or the condition of the buildings next to an occupied property, the City in the past has worked with the Licenses and Inspections through the Office of Risk Management and the office of OESS for any what we call emergency or temporary demolitions, and in some instances, if for some reason the demolition activity of the City caused permanent damage to someone's house, that's why risk management is involved. Sometimes there is the need as a result of that claim to do a permanent relocation. That work is coordinated out of risk management, but key partners are L & I as well as OESS.

I understand that. Have we had to use the temporary relocation plan for people that are getting buildings demoed either for the emergency demolitions or NTI demolitions?

Thus far we have not used any of the NTI bond proceeds, but I do believe that on a routine basis, because there is also resources in the general fund, we had to temporarily relocate people on an emergency basis. Again, there has been 47 12/6/02 - NTI FY '03 Program Statement and Budget much activity in connection with our emergency demolitions.

Can you describe temporary? Actually what services do you offer? Because I have had a couple constituent calls regarding that.

Generally speaking we find temporary housing usually in a hotel type of situation. There's contracts with people like the Red Cross and Salvation Army to find temporary housing for individuals.

But it's always offered, correct, if it is needed?

Yes.

As far as temporarily out of the home, that's very rare. Usually the temporary implies that people are being asked to leave their property because it's imminently dangerous and we temporarily put them in a living arrangement while the OESS works and makes -- finds permanent housing, alternate housing for them. It's very rare that we would temporarily take somebody out.

We had that 48 12/6/02 - NTI FY '03 Program Statement and Budget situation, Bob, if you recall in my district where the wall was threatening to fall on a property. Until you took the wall down, you wanted the neighbors to temporarily move out.

Yes, in that case.

So that is one of the rare cases?

That was one of the rare times that we have that. That was very unusual in that there were so many sides to that building that it was so long that we had that problem with that building.

Only because we have gotten a few calls from people where maybe we have been on a blight tour and then we go back and we are going to do some demos and I had one person calling me regarding someone told him that he needed to leave the house for a day or so and I pushed him to say that I know that the City offered you some services here, so it is just the same, usual, customary, goes to risk management like we worked together on many occasions with people that had to be temporarily placed for emergency placement.

That's a scam. We put a 49 12/6/02 - NTI FY '03 Program Statement and Budget press release out about that several weeks ago that people are using the name Robert Hawthorne as working for Robert Hawthorne and the demolition is going to start tomorrow and asking people to leave and Robert Hawthorne no longer exists as a company in Philadelphia and it's just a scam to get people out of their homes. About a month or two ago we put a press release out and I will share that with -- I will get a copy of it and share it with Pat to give to the committee, or the managing director's office to give to the committee. But it is definitely a scam that if a person comes to their house -- we don't send contractors. Neither L & I nor will NTI have a contractor tell people to leave. It will be City officials that will be working with that family, not just telling them to get out temporarily like that.

I would appreciate getting that information. I'm sure all Council members would. I have a couple more questions. Earlier, Pat, you stated that you would make a determination on whether a vacant lot is suitable for a side yard. You used the word "suitable." So 50 12/6/02 - NTI FY '03 Program Statement and Budget what makes a vacant lot suitable or unsuitable for a side yard?

If you turn to what we have outlined in the program statement on , the City will prioritize side yards for the disposition from a condemnation activity. There are other side yard programs, as you know, that currently exist. Abutting or adjacent properties occupied and that person living next door behind the property expressed interest in taking title to the property in a residential neighborhood. The number and the size of the vacant buildings or the lot in the area does not make it inappropriate. For example, it would not be appropriate in some instances to dispose of a property as a side yard when there is a significant amount of vacancy and we may want to assemble that land for developmental purposes, and then if we have an interest expressed by a community organization, a school, institution of faith or other business in maintaining and taking title to lots. So these are the type of things that we will look at for side or acquisition requests from a condemnation. And then individuals can still initiate some side yard 51 12/6/02 - NTI FY '03 Program Statement and Budget acquisitions through the sheriff sale process. There are a number of councilpersons who are beginning to put a hold on or a moratorium on side yard acquisitions and dispositions until we have finalized more of the land assembly work so that we won't be working in conflict with the two objectives.

That makes sense. Going back to the question on the cost and what is included in the costs that a contractor receives to do demolition, and I guess I'm talking more emergency curbside demolitions, not where we are doing a whole block or whole string, because I'm leading to the question regarding fencing. Now, I know for the larger demolitions you try not to do fencing. You are trying to do natural things, bushes or whatever, but what about the individuals; is there a line item in the budget for fencing? For example, I know of a demolition that just occurred. It was curbside, and it's next to a club, an Elks Lodge actually, and so now the people that live near and about that demolition are asking me if there is going to be a fence put up. But I believe the contractor did tell someone that there is going to 52 12/6/02 - NTI FY '03 Program Statement and Budget be a fence put up. So does that come out of the contractor's money if a fence is needed, or where in the budget is fencing?

In the original NTI program statement we indicated that we will look at requests for fencing connected to demolition activity, so on a case-by-case basis that is generally funded out of the operating budget as opposed to our ability to use NTI proceeds for that type of activity as part of the demolition work, and that goes -- those decisions are generally made by L & I on a case-by-case basis in consultation with the managing director's office. So we have not yet programmed regular fencing as a part of this. In addition to that, we have begun treating larger vacant lots using privately raised money that, for example, the eight kick-off sites where we have done lot cleaning, we did greening and tree planting activities that was with privately raised money by the Pennsylvania Horticultural Society and then the empowerment zone has a program where they are able to fund the treatment and stabilization of large vacant lots out of their dollars for that. 53 12/6/02 - NTI FY '03 Program Statement and Budget

But there is money for fencing?

It's on a case-by-case basis. There is not a lot of resources available for that in the operating budget.

One more question. Mr. Loney, what happens to the other retaining walls? We sent you a list. So the million dollars is gone.

Well, it's not gone yet. Again, Paul Loney from the Streets Department. I would like to share one more thing with you. What we have decided to do was take the next step with all the walls and we are going to go out again, and because walls are constantly changing, this year they tend to lean and everything like that, we have developed a rating sheet that we are going to send -- every year we are going to inspect each and every wall and we are going to see the dangerousness or the problematic area of the wall and then every year or every few months we are going to submit the list of the most problematic walls to Council, and it is really Council's responsibility to decide which ones of these are going to be repaired because 54 12/6/02 - NTI FY '03 Program Statement and Budget when you get to a point where most of them are extremely problematic, then it's really a decision that should be made by an elected official, which ones get done first and which ones get done second. It's a very difficult issue to say that since we are -- if we had the amount of money to repair all the walls, we could make that determination ourselves and do it in a logical system, but since we don't, we're looking for some help in determining of the most problematic walls, which ones should be done first.

Point of information.

The Chair recognizes Councilman Rizzo.

You know, I understand what you are saying, but this honestly isn't a political decision. You are talking about an issue that professional engineers have to make a decision which is a dangerous and hazardous condition first and I think for you to put the burden on Council to decide which one has to be done before another is, first of all, unfair because we don't have those technical -- at least I don't -- those technical abilities, so I would hope that if 55 12/6/02 - NTI FY '03 Program Statement and Budget you have a list that an engineer or some professional has said "This is really bad," that that would get some priority over one that is not so bad.

Absolutely, absolutely, Councilman. That is what this sheet is for. We are going to rate every single wall, but what we want to do is we know that we don't have the amount of money to do all the walls, so which walls get done first, it is a Councilmatic responsibility to set that budget.

Let's talk about that for a minute. You have some money now to start the process. How much money do you have and how much do you need to do them? Because when you are talking about a dangerous condition that's life-threatening at the least, what do we need to do to get them all going? In other words, there's enough contractors I assume out there that many of these tasks could be put on track at the same time. It's not like they are tripping over each other. You have 70 different locations. You have X dollars. How many more dollars do you need to get the whole program rolling to get these dangerous conditions taken care of? 56 12/6/02 - NTI FY '03 Program Statement and Budget

When we approved the NTI '03 budget we allocated a million dollars. At that time we were not yet absolutely sure, using some of the new technologies that the Streets Department has already described, what it would cost. Based on the three which were my understanding some of the largest and most dangerous ones, it looks like that is going to take up about $400,000, plus or minus $400,000. The next piece of work that we have done is part of the resurveyings to go out there and rank. Some walls, only a portion of it may be a dangerous condition and only requires a small amount of money, and other walls it may be the entire wall, so what we need to do is to prioritize, and what has to drive this is a public safety issue and it has to be imminently dangerous even for us to use the bond proceeds, and what we like to do is work in consultation with the district Council people as we have always said throughout NTI as with the demolition so that we are not making decisions in isolation. Often there may be information that we are not aware of that can help us with the prioritization, but, as with anything, if a wall goes and it is an emergency, the resources are 57 12/6/02 - NTI FY '03 Program Statement and Budget there. We hope to be in a better position to put a budget together for '04 based on the surveying work, and that was part of the plan, was to use this year to begin to gather enough information so that we can systematically look at what resources it would cost for the retaining walls. In addition, it is the intention of the administration, we are also beginning to look at what other resources we might be able to bring to the table. We feel that the issue, what we call private infrastructure, because legally this is still the responsibility of the homeowner, that these types of issues are probably shared issues throughout the state and whether or not there may be opportunities for some sort of statewide private infrastructure fund to help support this type of work. So we are intending to look at that as a priority in terms of a statewide agenda.

I appreciate that, but a quick question. I'm sure you have thought about this. If there was an accident --

Excuse me. Are 58 12/6/02 - NTI FY '03 Program Statement and Budget you still on your point of information or are you trying to --

Let me just stretch it one more second and I will be done.

Okay.

If there were an accident and a person was killed, wouldn't the City -- who is responsible for it? You are telling me that it is a property owner.

Yes. Retaining walls, curbs and sidewalks and driveways are titled to the individual property owner under Pennsylvania law. They are not considered the responsibility of the City, but what we worked out is if it is an imminently dangerous condition and we need to take some sort of intervening action, we will make that repair, but we can -- we are also looking at a program where the owner -- I think it was under an ordinance passed by Council -- contributes up to I think it is $50 a square foot -- a linear foot, so that is a shared responsibility. So we are trying to put all of those pieces together so that the homeowner would be contributing, the City would be contributing and we 59 12/6/02 - NTI FY '03 Program Statement and Budget are going to look at other resources to help fund this type of work.

Thank you. Councilwoman Miller, I apologize for extending that point.

Apology accepted, Councilman Rizzo. Two quick questions administratively, things that have happened, you know, recently. Some of the demolition contractors have left and abandoned dumpsters, in my area anyway. Bob knows about this. And I mean the City moves it, but it then becomes a headache for our office because the neighbors constantly call. It becomes a dump site. So I just want to make sure, are you putting mechanisms in place to perhaps not use those contractors anymore, maybe only give them half their money. I just want to make sure it is being addressed. And, also, we haven't had a lot, but it does happen, damage to a home from a demolition, from a demo. Are people having to wait forever to get money back through the risk management claim process?

I can check with risk 60 12/6/02 - NTI FY '03 Program Statement and Budget management to find out what is the process and the time line for resolving claims. But anyone who feels that their property has been damaged as a result of demolition activity should contact and work through the office of risk management.

We, of course, have instructed them to do that and send them out the forms. Most recently it was one where people were not securing -- the contractor was not securing a tree so consequently the trees -- there were a lot of trees in this yard, so the trees kept falling on the other building. It is not a twin, but it is not a whole bunch of space between buildings, so they have their form. They are going to submit their form, but I know we just hope -- we will probably get more of those kinds of concerns and I just don't want people to have to wait a long time to get money if we need repairs.

I will check with risk management as to what is the general time to process when a claim -- I'm quite sure it varies, but they should be able to give me an average.

And, of course, the abandoned dumpsters, that becomes a real 61 12/6/02 - NTI FY '03 Program Statement and Budget headache. I had one in my district not too far from my home.

I'm not familiar with this particular situation. I will take a look at it.

L & I is familiar. Streets is familiar and PHA is familiar.

I will take a look at that.

Bob, why are people abandoning dumpsters?

What, Councilwoman, is a fly-by-night contractor will get a dumpster to interior demolish a house, a demolition, prior to rehab and then run out of money and the dumpster company will not remove it until they are paid. It's about $500 roughly on an average per load and like in your case we couldn't even get the company that -- the company that owned the dumpster was owed about $5000 and wouldn't move it without the $5000 and we convinced them the error of their ways.

What happened to that? The Acme up on Castor Avenue, there are three dumpsters out back. The dumpster company doesn't return your calls. They are out of business. The dumpster is loaded with trash and it becomes a 62 12/6/02 - NTI FY '03 Program Statement and Budget dumpster for everyone. It is behind the Acme on Castor Avenue that went out of business. The dumpster company is no longer there. What happens with that? Do you physically remove -- does L & I remove that dumpster?

We hire a company that does that and let them pull the load, as they call it, and then we pay for that and we lien the property for that.

I have three for you when it's over.

I figured that.

Thank you, Councilwoman.

Thank you. Thank you, Madam President.

The Chair recognizes Councilman Nutter.

Thank you, Madam Chair. Good morning, Miss Smith.

Good morning.

I would like to go back over some of the questions in a different way 63 12/6/02 - NTI FY '03 Program Statement and Budget than some of my colleagues have asked, but I did want to, I guess, ask the first question, which is tell me a little bit about what happened between May, I guess it was, or maybe it was June, when we approved the FY '03 NTI budget. Was that May, June?

It was approved by Council on June 13, 2003. We sent the budget over, as required by the ordinance, on May 1.

I take it it may have been our last or next-to-the-last session. What happened between then and now to cause the $34 million either difference or additional requests? What happened?

In the budget that was transmitted and approved by Council, we allocated based on -- you know, this was a budgetary process -- about $14.5 million to support land acquisition activities, envisioning money for landbanking, specific development projects, side yard acquisitions, acquisitions of stabilized buildings. At the same time we began to work with the Council by asking them to begin to submit requests for acquisition funding or for projects or 64 12/6/02 - NTI FY '03 Program Statement and Budget landbanking activities. We also reached out to the various City departments like OHCD, Commerce.

I don't mean to interrupt. Then when you put the initial budget together for the $14 million, if you are saying subsequent to its passage you started talking to Council members about their requests or their concerns, how did you get to the $14 million in the first place?

Based on our understanding of what was currently in the pipeline, it was a timing issue. As you know, the ordinance wasn't passed until March. We had to quickly turn around and put together our preliminary program statement and budget and final budget, so it was our best estimation of what the demand for acquisition would be, you know, for the upcoming fiscal year, and, to be honest with you, with what we processed thus far, we are pretty much on top of it.

I always appreciate the honesty.

We are pretty much on target, but we also see -- and that is what's outlined in the very back -- for example, what we 65 12/6/02 - NTI FY '03 Program Statement and Budget transmitted, the 2500 properties were transmitted, is about $12.5 million, but we know based on the requests that came in over the summer and continue to come in that as of November they were 6 appending another 30 million -- yeah, about $30 7 million in acquisition requests. It was a budget. 8 It was our best estimation at that point in time. 9

My recollection -- 10 and I don't think it's -- as you can see, I'm 11 traveling a little light today. I only have two 12 small piles of paper. My recollection of the 13 original NTI program, the five-year plan for it, I 14 thought had a number of $50 million for acquisition. 15 Is that correct?

Yes. We envision allocating 50 million out of the bond proceeds to support acquisition activities.

So now should I understand that based on the bill in front of us -- and I think there is a new budget on one of these many pages -- you are anticipating in now the first year spending upwards of -- is it 43 of the 50?

That's what we have requests pending totaling that amount. We have not reviewed 66 12/6/02 - NTI FY '03 Program Statement and Budget all the requests, nor are all the requests in. That's why we very much wanted to remind Councilpeople that if there are additional projects, et cetera, that need to be part of the pipeline, trying to make this a more routine way of getting that information.

So on it is $46.5 million; is that right?

Yes.

Do you have any particular concern --

Plus we still have some dollars left in the aquisition of stabilization of properties. So it shows up in two places in the budget.

Where is the second one? Are you talking about under neighborhood preservation? Are you talking about vacant property stabilization?

Yes, the acquisition of --

$3 million?

Yes.

The acquisition of stabilized properties, 3.5? So is that the whole 67 12/6/02 - NTI FY '03 Program Statement and Budget 50?

It should work out to 50.

I know those two numbers add up to 50. Small numbers I'm pretty good on the math. So that is the 50?

Yes.

So all $50 million -- from the original budget we are anticipating spending $50 million on acquisition and that 50 is now being captured in the first year's budget?

That's the change, yes.

Why are we doing that?

Appended -- because right now, as of November 15, including the ordinances that were approved and those that are being prepared to be sent over to City Council, we are looking at $43.9 million in acquisition requests. That is on the last two pages.

43,9.

Uh-huh.

Okay. Now, all the properties that are listed on here are all the -- in some instances it is not so much properties; it 68 12/6/02 - NTI FY '03 Program Statement and Budget seems to be more neighborhoods or designated development areas. I mean all dollars are I guess kind of spoken and accounted for. We know what the project is or we know why we are acquiring the properties?

The last group of properties which ordinances have not been prepared for, the last group actually represents properties that we will start reviewing January.

When you say "the last group," are we talking about down at the bottom, the group that starts with approximately 61 side yards? Is that what you are talking about?

Yes. Those are requests that we have not completed reviews on.

Well, if almost all the acquisition money is accounted for or designated to go somewhere by way of this last sheet, then it would appear that there is not much left for anything else; is that correct?

That's correct. And as we acknowledge this fact, one of the things that we are looking to do is to create this funding mechanism, what we have been calling the recycling, acquisition 69 12/6/02 - NTI FY '03 Program Statement and Budget recycling, fund, and the intent of that is since we are taking NTI bond proceeds to condemn property, most of which probably either have delinquent taxes and/or demolition, other liens, when we condemn a property, when RDA condemns the property, the City gets to collect its delinquent liens first, and so what we envision with the approval of Council is to appropriate -- budget how much we project to collect in delinquent taxes as well as municipal liens on an annual basis and then appropriate that to fund acquisition outlying years.

How much do you anticipate collecting next year?

We have not finalized those budgets because we have not finalized the condemnation costs, but my estimate on $12 million, that we can probably collect 4 or 5 million.

Where did the $12 million figure come from?

What we approved thus far. The 12.4 is what we --

The next-to-the-last page?

That is what has been 70 12/6/02 - NTI FY '03 Program Statement and Budget transmitted to Council and approved at a hearing.

What's the basis for your anticipation of $4 million in taxes or outstanding municipal liens? What is that based on?

Just based on past experience. Unfortunately, Mr. Wetzel had to go to Harrisburg, but based on past experience he says that we get somewhere in the area of about three-quarters or two-thirds of the property that has been condemned has been tax delinquent. We can put together a finite budget, but we have to complete the research on all the tax delinquencies on the properties that are listed for this to get an estimation. But the intent here is to reappropriate each year an amount of money that is equivalent to what we collect. Because the intent here is we are basically taking -- but for the fact that we were condemning these properties, the tax delinquency may never have been collected. And I tried to describe that in the footnote to the five-year budget.

Yeah, I saw that. Well, let me go back then to the question that is I guess a combination of question and statement that Councilman Goode had raised with 71 12/6/02 - NTI FY '03 Program Statement and Budget regard to a particular project, for instance, that we have, that both of us share an interest in West Philadelphia. If -- what's the number? If basically $44 million is already spoken for out of the 50 -- right?

We have requested.

$43,959,300.

We have requests in for that. million of those requests we still haven't 11 completed the review on. So things could drop off. 12 You know, circumstances change. We will begin that 13 process in January. 14

But you know 15 generally your experience with us is it is a fairly 16 rare instance that anything ever drops off any of 17 our lists as opposed to we just add on. 18 The $44 million is spoken for. Then 19 if -- whether it is a faith-based organization or a nonfaith-based organization or any kind of organization that has the appropriate paperwork and designation, has its own CDC or 501-C-3, if in the first year 44 million out of the $50 million is already spoken for, what is the true likelihood that additional requests are actually going to be 72 12/6/02 - NTI FY '03 Program Statement and Budget approved? From the next-to-the-last page it would appear that half of the City has no money allocated for it.

Again, it is our proposal and plan to take the revenues generated as a result of the condemnation activity by the repayment of delinquent taxes and municipal liens and then appropriate -- ask Council for Council's approval because it would require an appropriation by Council as part of the general operating budget or a separate ordinance to appropriate that amount in fiscal year '04.

Right, but that is -- I mean, the 50 we know is solid because we have that.

Yes.

All we are asked for is extra that we are going to hope for based on payment of these delinquent taxes. I guess are we in some way, shape or form -- you are going to take NTI bond proceeds, condemn the property, and if I'm understanding kind of the following the money, basically you are going to, in essence, transfer NTI funds back over to the City to compensate us for our 73 12/6/02 - NTI FY '03 Program Statement and Budget outstanding municipal and real estate tax liens; is that what's going to happen?

Under the current redevelopment laws of the state, if there are any outstanding real estate taxes and/or municipal liens, they were kind of like a priority interest, so the authority under state law either has to pay into court the appraised value of the property. Let's say, for example, it is $5000 on that property, and since most of this is abandoned and vacant property, there is usually outstanding tax delinquencies and/or municipal liens and sometimes they exceed even the actual appraised value of the real estate. So the City then -- that's repaid back into the City's --

General fund.

-- general fund, but what we are proposing is then allocating that money as part of an acquisition fund to fund going forward.

Now you are talking about a designated or segregated account for these repayment of NTI bond-proceed-funded acquisitions and you are now -- is there a statute or ordinance 74 12/6/02 - NTI FY '03 Program Statement and Budget that allows or requires those real estate tax dollars to be separated and segregated from the general fund to now go back into this recycling fund. How are you going to do that?

The way it would work is that Council as part of -- the administration would propose in our annual budget, let's say, $10 million because we have looked at what we expect to collect as a part of the operating fund, so it is really two separate, I guess, roads that are being traveled, but we are trying to keep them cognizant of one another so it won't go into like a specialized fund.

I understand that. That would be my concern.

It would have to be appropriated and approved each year by Council.

But you said at the moment you don't know with any specificity what you're anticipating collecting in the next fiscal year?

I can have the Redevelopment Authority come up with a preliminary number.

If you could give us the five-year schedule, I would be very interested 75 12/6/02 - NTI FY '03 Program Statement and Budget to see what that looks like. I'm assuming for the properties in the first -- whether it is the $12 million group or the $11 million group or the $19 million group, I'm assuming we can know now --

The tax delinquency.

-- what the outstanding tax dollars are and match them up --

And other liens.

-- based on these categories, right?

I will do that.

So now when the group from West Philadelphia identifies their properties and fills out the new easy-to-fill-out form, give me a sense of the timing of when something will actually happen.

As we described in our program statement as well as in hearings before Council, we are trying to set up a mechanism where we look at acquisition requests twice a year, so that we are kind of in sync with other funding resources, so the next group is going forward. I would imagine it would take us between January and 76 12/6/02 - NTI FY '03 Program Statement and Budget March, looking to introduce ordinances or transmit ordinances to Council around March; hearings held sometime between March and the end of the fiscal year. If Council approves --

We are talking about a process somewhat similar to the 2500?

Yes, the same way, and what we have talked about is what we are calling the fall cycle and a spring cycle, taking into account Council's legislative agenda. One of the things that we are learning or had learned is that a lot of times people come forth with an acquisition request late in the spring and we are not in the position to process it because of the recesses and often they felt they were disadvantaged for applying, for example, for tax credits. But having this kind of predictable schedule when we are looking at things, our objective is to have ordinances passed twice a year, one in the wintertime and one in the summertime, and then it's about another 60 days to file the declaration of taking.

The last package, or I guess the first package, but this most recent round, when did you put together that list? 77 12/6/02 - NTI FY '03 Program Statement and Budget

We began reaching out and requesting information in the summer, around June of this year. We reviewed it -- if I remember correctly, I think we had about eight meetings, some of them three hours long, in August and September. Then it went to the Redevelopment Authority board in October, and then it has to go through Planning Commission approval, and we transmitted ordinances in November, so it's basically a three-month process.

The reason I was trying to get a sense of the timetable is I have had a number of meetings with a variety of individuals including yourself. I had actually sent a request over during the course of the summer, but it did not make the fall package. I have had some followup discussions about it, and while there may be a need for I think it is urban renewal designation, that I learned most recently, so can you tell me why if a package -- and I think with a form -- was sent over during the course of the summer, why it would not have been a part of this past winter's round?

I'm not specifically familiar with all the details, but I think maybe one 78 12/6/02 - NTI FY '03 Program Statement and Budget of the issues is maybe the properties were outside of an existing urban renewal area. That's my assumption. Okay. It was outside an existing urban renewal area. One of the things that --

Does that stop them from getting on the list?

Well, one of the things that we would suggest as a first step is the creation -- particularly if you are going to be taking large numbers of properties within the area, the creation of an urban renewal area and redevelopment plan and proposal gives us the power to do eminent domain. Otherwise, we are doing individual Act 94 condemnations and that's much more from a management standpoint difficult to manage, so it is my understanding the RDA will probably be working with your office around the creation of an urban renewal area. I'm beginning to remember some of that conversation. And then once that is in place -- and that also I believe requires Council approval. The creation of an urban renewal area requires Council approval too, and then we have the broadest possible condemnation powers to deploy in support of the 79 12/6/02 - NTI FY '03 Program Statement and Budget project.

I understand that and I appreciate the additional explanation. My question I guess was more at the heart of when things come in, when do they get in the process, and if there are other processes that we have to pursue, does that stop our ability to get a certain number of parcels in a round of acquisition, and I guess it is not clear to me, short of having an urban renewal area created, why those properties could not have been a part of this first round of 2500 while we are simultaneously working on an urban renewal, since you were looking at properties during the course of the summer?

Mr. Kunz will answer that question.

Councilman, all of the requests that you submitted last summer except for the Phoenix project, none of them were actually inside an urban renewal area, so they fell outside. Once we committed to doing the acquisitions that we briefed you on, we then -- actually they became -- they didn't go into the list of 2500 properties. There is a separate list for Act 94 properties, but 80 12/6/02 - NTI FY '03 Program Statement and Budget those properties are being taken -- they are in the process of being taken through a separate process. The 2500 referred to is strictly urban renewal, which requires Council approval.

The Chair recognizes Councilman Goode.

According to the old program statement, at what point do you notify the Councilman that has made a request that their request is not moving forward?

We have briefings after the individual -- after the IR committee has reached decisions, then we brief each district Councilperson.

I didn't use the term "district councilperson." According to the program statement as it is, before we make these amendments to it, if we choose to make these amendments, according to that process, at what point do you tell the Council member that has made a specific project request that their project request is not moving forward? And I will refer you to of the program statement, the part that is being stricken.

What we did was we meet with 81 12/6/02 - NTI FY '03 Program Statement and Budget each Councilperson with a request and in, I believe it was, late September, early October we sat down with each district Councilperson that had a request.

I will refer you to .

I'm reading it. We say, "Each Councilperson that requests acquisition funds to support a specific development project."

Then it says "On a quarterly basis the administration will meet with the Councilperson requesting the funds, discuss any problems that are delaying acquisitions."

That's correct.

My first question is, was that done with regard to properties in the Phoenix project? And the second question is why is this part being stricken and what is it being replaced by?

We actually had discussions last fall about the Phoenix project. I had discussions with Councilman Nutter last fall concerning the Phoenix project. We received that request actually late last spring from the Office of Housing and Community Development that we go out and 82 12/6/02 - NTI FY '03 Program Statement and Budget do research on this project. Our concerns in the fall dealt with the development of the properties, who would actually do -- who would be responsible for developing the projects.

My question is really centered around whether the Council member who made the request was notified within a quarterly basis.

We are just completing the first quarter, which was in October, so we did meet that --

October was a couple months ago.

Right, and we just haven't had -- I mean part of this has been going through. This is the second quarter, and my understanding through the Redevelopment Authority, there is ongoing conversations.

Under the program statement as approved it says "On a quarterly basis the administration will meet with the Councilperson requesting the funds, discuss any problems that are delaying acquisitions." Did that happen within a quarter?

Within the second quarter 83 12/6/02 - NTI FY '03 Program Statement and Budget I'm not aware of that. In the first quarter we did because, as I said, it is part of the review process. In the second quarter, which ends the end of this month, we haven't had the opportunity.

The second question is why is this part being stricken and what is it being replaced with?

I refer you to .

I read .

And it says, "On a quarterly basis the administration will meet with the Councilperson requesting the fund to discuss any problems that are delaying." I just carried that section over.

Where is that on 27?

On right above the interagency acquisition review team. Because that's new language. I just carried the language over, trying to make it all one --

It doesn't carry over the same way.

It says, "On a quarterly basis the administration will meet with the 84 12/6/02 - NTI FY '03 Program Statement and Budget councilperson requesting funds to discuss any problems."

Now it is situated -- it comes after the point at which acquisitions are funded. So it doesn't read the same way and it doesn't mean the same thing.

I'm happy to make that adjustment. It wasn't something intentionally done. I was just trying to rewrite the document.

I guess part of my question -- I'm sorry to take so much time from Councilman Nutter --

No, I love a good point of information, Councilman.

On it says "On an annual basis the administration will request from City Council members, meaning all members district and at-large, a list of properties from which acquisition funds are requested to assist specific development projects within their respective districts." I'm assuming that means the at-large district as well. On it say, "The administration will meet with each Councilperson that requests 85 12/6/02 - NTI FY '03 Program Statement and Budget acquisition funds and supports specific development projects in order to discuss the projects development strategy. On a quarterly basis the administration will meet with the Councilperson requesting the funds, discuss any problems in delaying acquisitions." The language is very different in the new version of the program statement and I think you know what my specific problem is.

I'm willing to make the adjustment.

Whether you have inadvertently or on purpose eliminated the role of at-large Councilpeople.

It was not on purpose.

As long as we correct it, I don't have a problem with it, and as long as projects that district Council members may have interest in and at-large members may have interest in as well, we are notified within a few months, as the original statement said, I don't have any problem with that either.

Okay. My apologies.

Thank you. 86 12/6/02 - NTI FY '03 Program Statement and Budget

Councilman Nutter, are you about finished?

No, Madam President, unfortunately. Members, I have a fair number of questions. I would like to at least get through the first one and then I can come back. I know other members may have a few questions, but Miss Smith or Mr. Kunz, I guess what I am still trying to understand is given the requests made during the summer -- and I have no complaint about the number of meetings that we have had -- if it was clear during the summer that an urban renewal area needed to be created, which I am fairly certain I did not know in the summer, I believe we could have upon our return in September sought to create such an area, have that moving through the process, and at least -- and I don't know what your definition of large is. I know that there are -- I have seen in the bill that we did for the 2500 properties there were some very large acquisition components put together. This particular one involves Allegheny West. It's 20 properties, which I think is probably on the low side in terms of anyone's comparison of large number of acquisitions versus a small number. 87 12/6/02 - NTI FY '03 Program Statement and Budget I want to better understand how we can do things in as timely a fashion, if not simultaneous fashion, as possible so that we, or at least I, don't end up in a situation where the train is moving out of the station and I don't particularly want to be standing on the platform, at least by myself. If people have things that they are trying to get done, if there are other processes or steps that we need to take, I would at least like to know about them in a timely fashion, and if we can legislatively address them, I would like to be able to do that, but in looking at at least the last two pages, which tell a fair amount of the story, if $44 million is already out the door or on its way out the door out of 50, I don't necessarily know that that leaves a lot of prospect for many of us that have nothing at the moment.

Councilman Nutter, with respect to the forgotten blocks project in Allegheny West, we had originally scheduled those properties to go through what we would call the administrative process, which would be Act 94.

Is this the other process that you were mentioning in our earlier 88 12/6/02 - NTI FY '03 Program Statement and Budget round before the point of information? Is that what you are talking about?

Yes.

Are there dollars allocated for that?

Yes, the project is budgeted. That's not the issue. We have the funds for that. What we are trying to do now, the reason we are creating the urban renewal area, is that we believe that we can take these properties within six to nine months. Our hope is to have the properties acquired and conveyed prior to the summer recess. With Act 94 we don't believe that we can do that. It is a much larger process right now. If we had started the urban renewal process in the fall, we probably wouldn't be much further than we are now simply because the City Planning Commission would have to recertify -- would have had to certify the areas blighted and go through a very long process to get to where we introduced the final ordinance in the Council. And given the number of properties, we really didn't have the manpower to do lots of these things, not simultaneously, and neither did the Planning 89 12/6/02 - NTI FY '03 Program Statement and Budget Commission. The projects of which urban renewal areas had to be recreated or had to be created are just coming out of City Planning now for blight certification, Frankford Creek being one of them.

Where does that leave us?

That leaves us with anticipating acquiring the property. We have the budget. We have the funding. It leaves us with the properties being acquired and conveyed by the summer.

And with regard to the earlier project that was discussed, which is the project in West Philadelphia primarily centered, or at least one of the main participants is the Mt. Carmel Baptist Church, that does have its own CDC, is that in an urban renewal area? Do we need to create a new one? Where does that go in terms of the number of properties that are involved and the timetable that actually makes some sense and are there dollars allocated for that, or do they have to come out of the 50, of which 44 are already spoken for? 90 12/6/02 - NTI FY '03 Program Statement and Budget

Good morning. My name is Debra McCullick. I'm the director of housing.

Good morning.

I just wanted to answer the question specifically about the Phoenix project. The Mayor and some other folks met with representatives from the Phoenix project earlier this fall and we gave them five potential sites of publicly owned land to look at in West Philadelphia which would not -- which are currently in public ownership, would not need condemnation or need to go through this process at all, and I'm actually awaiting a response from them about which of those sites they think would be the best ones to move forward with and then we can begin the process to convey those.

Did you say five?

There were four or five sites that were given to them. I think it was five, but it might have been four.

As in four or five properties?

No; larger parcels, development parcels. 91 12/6/02 - NTI FY '03 Program Statement and Budget

For new construction?

Yes, to build or 5 units, in that range, and they are reviewing those 6 and I'm waiting for a response on that now. 7

Madam Chair, I will 8 relinquish, but I would like to have the opportunity 9 to come back. 10

The Chair 11 recognizes Councilman Mariano. 12

On , and this might go on to what Councilman Nutter was talking about, the Fourth District and the Ninth District under the stabilization of the general fund, besides my deep affection for those two Councilpeople, why is theirs so whacked out? Why is one 500,000 and another 600 and everyone else is 250,000? Is that because of these projects that were already budgeted or projects that aren't budgeted?

This budget that is the original budget that was in the program statement approved is not changing and basically the way we allocated resources for stabilization, which is a 92 12/6/02 - NTI FY '03 Program Statement and Budget higher level of treatment to a building with the intent to acquire for rehabilitation, we tried to look at it in comparison with the number of dangerous buildings within that district and then also in reverse of the demolition activities, so that's how we derived that budget back in May.

Miss Smith, if you add up the dangerous buildings, the total number of dangerous buildings, the one with the most is the Fifth Council District and then it is the First Council District, I think, or the Third, the Third and the First.

Essentially what we do is the reverse of that, and that was in part -- the intent of the stabilization program was to look at neighborhoods throughout the City where there was lower vacancy where it didn't make sense nor would we want to try to demolish a vacant building but we wanted to stabilize it, acquire it, and get it through a rehab program like our home ownership rehab program, so it was kind of like the reverse when we did the budgeting for that.

Thank you.

President Verna, may I ask 93 12/6/02 - NTI FY '03 Program Statement and Budget for a five-minute break?

Sure. We will stand in recess for five minutes. (Short recess.)

Councilman Mariano, are you finished with your questioning?

Yes, Madam President.

Miss Smith, in looking at the original ordinance, Council was supposed to be getting reports on activities. We have never gotten a report to the best of my knowledge.

We are in the last stages of finalizing what is going to turn into the first and second quarterly report. I apologize. The staff person that was part of my unit who would have been responsible for that left and it took a while to replace them, so we are working on that. I hope to have it to you by the end of this month.

Please. Let's not forget about the monthly reports.

I won't. We are actually working on them and I apologize for that. 94 12/6/02 - NTI FY '03 Program Statement and Budget

Let me ask one question, if I may. Will this amendment to the NTI budget require the RDA to issue any additional bonds this year and, if so, when and for how much?

Yes, we would be issuing additional bonds to help finance the acquisition activities. We have just begun to even think about a timetable and what that would mean in terms of how much depending on some of the outcomes of our acquisition. We want to put together a draw schedule and a time schedule that, you know, made sense. I would suspect we could be -- when Council reconvenes in January, that we will be in a better position. We will work with Mr. McPherson and your office and make sure that he is part of any financing meetings that we are having, but we are just in the very preliminary stages of thinking through what that would look like.

Thank you. The Chair again recognizes Councilman Nutter.

Miss Smith, earlier there was some discussion about minority and female either employment or business opportunities, and I 95 12/6/02 - NTI FY '03 Program Statement and Budget think you had in response to a question that Councilman Goode had asked indicated that NTI had met its goals or projections. Is that your response?

I was speaking specifically to the first report that we have gotten that was in relationship to the demolition of approximately 30 properties in Strawberry Mansion. So, yes, and we did meet that.

At the moment that's the measurement, 30 properties in Strawberry Mansion?

The economic opportunity plan set goals of I believe it was 45 percent for contracting opportunities and I believe it was around 70, 80 percent for employment participation, so I'm just saying with respect to that specific activity for demolition.

Say that again. 45 percent for what?

Let me look at the book. It's 47. I'm sorry.

45, 47, whatever, but I don't know what that is of. What's the 96 12/6/02 - NTI FY '03 Program Statement and Budget category?

For minority and female, disadvantaged and disabled business opportunities.

And you said something about 70 percent for employment?

Employment work force including neighborhood residents.

You have a budget presently for $68 million for NTI for this year; is that right?

Uh-huh.

How much of the $68 million has been spent?

Actually spent, I have a report, and it is just not -- thank you.

It is really good to have people like that sitting next to you, isn't it?

I have a new staff person. There's a lot of detail to keep. It is about $8 million that has actually been drawn down from the trustee. That is some of the information that we are including in the quarterly reports that I owe.

What did you spend the $8 million on? 97 12/6/02 - NTI FY '03 Program Statement and Budget

So far it has been primarily spent on things like the titles, market studies and title reports connected with the acquisition. Emergency demolition activity is funded out of that line item. It also includes the wrap-up insurance costs and program management costs.

Tell me about that wrap-up insurance. What's the story? We're paying for the insurance for the demolitions?

Right. If you recall, when we approved the original program budget, in it we talked about what we call owner control insurance program, and the way I explain this in the most simplest way is that basically the City is a third-party insurance. We go out -- because we can buy it at bulk and therefore reduce the costs, we buy the insurance for the demolition contractors as opposed to in the past where they went out and then they had to provide proof of insurance. There were two motivating reasons for that. One is that one of the barriers to smaller business and minority contractors participating had been the cost of insurance per project and then even after 9/11 some of it just wasn't even available. 98 12/6/02 - NTI FY '03 Program Statement and Budget The insurance market did change significantly. And then, secondly, it was related to being both costs -- we felt that we would get a better cost overall by buying like a group insurance as opposed to individually.

This wrap-around insurance program, I mean I'm going to assume -- you will correct me if I'm wrong -- all the properties in the City that are being demolished on pretty much a daily or every-other-day basis, they are not all driven by NTI activity or funded by NTI bond proceeds, are they?

At this point we are.

So all demolitions in the City are being funded by NTI bond proceeds?

Yes. In the initial general operating budget I believe there was about $2 million in general operating funds for emergency demolitions and then we also programmed 2 million out of the NTI bond proceeds, basically replacing the demolition budget, and I believe in the first quarter we expended the general operating dollars, so now we are using the NTI dollars.

So we are taking 99 12/6/02 - NTI FY '03 Program Statement and Budget care of the insurance issue for the companies. They don't have to worry about insurance because there is a wrap-around insurance product available.

Yes. Mr. Rothstein can explain it.

He has been wanting to jump up to the table for a while.

Lance Rothstein, capital program office. The wrap-up insurance program does not cover the standard curbside program. The contractors under curbside still have to provide the regular insurance that has historically been required by the City.

When you refer to curbside, you are talking about emergency demolitions?

Emergency demolitions, the day-to-day demos that you are talking about, yes.

Let me ask this question: If we are covering the cost of insurance, and I'm not sure what other costs we may be covering, why does it appear that the cost of 100 12/6/02 - NTI FY '03 Program Statement and Budget demolitions is increasing?

First of all, inflation. It's a nice easy answer, but if you look at the requirements in our specification package, an example that I can cite is that on the party wall repairs, for example, at the top of the party walls we now have a very nice detail that was implemented at L & I about a year ago and we are using that now as part of our standard spec. That costs some extra money to be able to seal the top part of that wall properly. Other examples are --

We weren't sealing them in the past?

We were using just regular sheet metal wrapping over the top, sealing it with a little bit of muck and a couple nails, and now what we are doing is a standard roofing detail which includes barge, boards, wrapped aluminum, a couple of bolts. We are doing it right so that these properties can withstand the test of time after we are gone.

What is the average demolition cost these days? 101 12/6/02 - NTI FY '03 Program Statement and Budget

The average demolition cost at Strawberry Mansion -- in fact, our experience just the past few weeks is showing that we are hovering just over the 11,500 mark in Strawberry Mansion. One of the bids that we recently opened, those prices were coming in more, as Miss Smith indicated earlier, about 14,000 plus, so we are seeing that range in the bids that we have received recently.

You are not attributing all of that to inflation, are you?

No, absolutely not. We have a spec package, like I said, that includes certain pieces that were hitherto not necessarily requirements. Another one that I haven't mentioned, six inches of fertile topsoil with grass seeding. That was not something that we were requiring of our demolition contractors in the past and now it is. We also have wrapped in -- the all-inclusive nature of it now is that all of those costs include asbestos, party wall, post site treatment, any fencing in the rears. There is some fencing; it's a very limited amount, but it is to seal off the rears of the properties that we end up 102 12/6/02 - NTI FY '03 Program Statement and Budget leaving exposed. So these are all kind of little things that we have been adding to the package that make the finished product much more acceptable in the neighborhoods.

I must commend you. There are not many hearings where we hear the word hitherto utilized in the course of public testimony, and I want to recognize you for that. The package in Strawberry Mansion, was that a bit of a gap tooth demolition, or was that a string?

One thing that we had hoped when we first started looking citywide at all the demolitions was that we would be able to identify more strings. What we have discovered is that L & I in fact has done a good job over the past several years of taking care of many of the larger strings that were available for demolition and the vacancy pattern that we have seen as we have gone into several of these neighborhoods is much more diffuse and you end up having a couple of vacant buildings and then an occupied building and then a couple of vacant buildings and an occupied building 103 12/6/02 - NTI FY '03 Program Statement and Budget and clearly in that instance we can't afford to do all the relocation that would be required in order to make it a string. So part of what's driving our costs right now is the revelation that a larger percentage are going to be hand demolitions than had been previously thought at the beginning of the program.

Am I reading this correctly then on of the new statement you're anticipating spending $34 million to demolish approximately 2000 dangerous and unsafe residential properties throughout the City? And even without my calculator, I think that comes out to $17,000 a property? Is that the new number?

Yes, but it also includes the other soft costs, contingency fund, things of that nature.

I understand that, but they go with the cost of the demolition, right?

They do go into the cost of demolition, but we are maintaining those as separate line items.

Maintaining those what? 104 12/6/02 - NTI FY '03 Program Statement and Budget

The soft costs such as the wrap-up insurance is still being shown as a separate line item instead of wrapping it into the overall cost of demolition.

I understand that, but you wouldn't have the line item unless you were doing the demolition; is that correct?

That's correct.

That's correct.

It goes with the demolition.

So with the soft costs we are up around 17.

The original budget I think, I seem to recall, had it at 11.

That was just on the hard side. I think we added the soft costs in. I think we are at about the same per unit. We are not that different off the original budget.

Is there nothing that can be done to drive that cost down? There is a fair amount of supply out there. Did I read a story in the paper where we have people reluctant to bid on our demolition packages? Is that for the 105 12/6/02 - NTI FY '03 Program Statement and Budget purpose of driving the costs up further?

I think it is fair to say we are early enough in the program so that there are a fair number of potential bidders out there who are waiting on the side lines to see how it plays out on the first couple of packages. They want to know are we really going to stick by what we say we are going to do and are we really going to have an inspector out there full time? Are we really going to make them cross their Is and dot their Ts on all their paperwork, and the answer is yes, by the way, and that's what they are trying to see. And once they learn the ins and outs of how the contract is being handled, we hope to see more bidders. One positive note is that as a result of that article last week we were contacted by three additional interested contractors, one of whom in fact was outside the City of Philadelphia and that contractor had indicated to me that he thought the package was a fair package. He had looked at it and he was interested in coming into the City and building on the work as well, that he thought we had a concise specification package and he looked forward to bidding against some of the other 106 12/6/02 - NTI FY '03 Program Statement and Budget bidders.

Well, as this governmental game of NTI chicken proceeds, if the contractors, for whatever reason, don't show up or continue to hang out on the side lines waiting to see if you are going to implement what the bid package says, how do you get any demolition activity going on if you don't have any demolition companies?

We believe and we are confident as we move further along the process that we will get more responses. The administration feels that -- and this is in part responses from letters and complaints that we received over the year that we really did need to rethink how we package and bid out our project. Instead of having a lot of separate projects bid packages going out where it would have been more difficult to coordinate the timing of it, everything is in one package to make things more accountable. Our payment in the demolition specification packages came at the end of the process so that a person -- so now we will have a unit per house cost. The contractor is paid when the project is completed. What we have heard and we 107 12/6/02 - NTI FY '03 Program Statement and Budget are in a continuing conversation with the contracting community, can we break it into a dual payment instead of having everything at the end for each house so that they can build a little bit earlier in the process. So we are making those type of adjustments, but we always felt from the beginning that this was an opportunity to put in place a demolition program and methodology to address many of the concerns that we often heard from communities.

How many demolition companies do we have that are based in Philadelphia?

We did a regionwide search about a year ago, came up with about 600 contractors in the entire region, that's a multistate region, and something like 150 to 200 within a 20-mile radius of downtown, and of those, probably at least half actually City of Philadelphia contractors.

So what is that, 50?

That would be about 75.

150 in a square 25 mile radius. Okay, 75. And how many of the 75 have 108 12/6/02 - NTI FY '03 Program Statement and Budget bid on any of these packages?

To date we have, I believe it is, 12, maybe as of late last week 5 contractors who are qualified to bid on this work. 6 Of those 13 it is a little less than half who are 7 from the City of Philadelphia who are potential 8 bidders. Of the couple of bids that we have 9 received, we have typically seen four to six 10 bidders, and of those four to six bidders about 11 half, maybe even more, have been Philadelphia 12 bidders. 13

There are a lot of halves going on here. Is the final number like 3?

No; actually the one that is coming to mind, which is the Mantua project, I'm pretty sure that four out of the six bidders -- I don't have the information in front of me. I can get it for you if you like, but four out of the six were local bidders and two were out of the state.

Have any sense of why so few Philadelphia-based companies are bidding on this work?

Again, I think it comes back to the fact that we have repackaged our 109 12/6/02 - NTI FY '03 Program Statement and Budget specifications. It is something that looks new to them even though by and large what's contained in it has been around for a while and they are honestly, from what I have heard, waiting to see how the first few come out.

I hear you. Can you forward to the Chair, the committee, a very easy-to-read, maybe in bullet point fashion, layout of what the general specifications are for demolition and what you should see if you were to go out to the site or what the remaining constituent who is living next to the now demolished building, vacant lot, what they should expect in terms of what the site should look like and how their house should be treated when that demolition is completed?

Yes. So if I understand you correctly, what you want is kind of a bulletized version of what they should expect to see when it is done, not necessarily how it is done, not the process of demolition, but am I supposed to see a clean edge on the front of my building, am I supposed to have cracks in my sidewalk, that kind of thing?

What should their 110 12/6/02 - NTI FY '03 Program Statement and Budget house look like and what should the vacant lot look like when it is all done. That's what I would like to know.

Absolutely. And we can even provide pictures as documentation for you.

That would be good. Let's talk about market rate housing. Where does that come in in the whole scheme of things? When does that part start?

In the overall NTI five-year plan we talked about facilitating -- let me explain. When we use the phrase "market rate housing," we are referring to housing that are not receiving direct public subsidies in connection with the construction of that project. So it includes sort of like the sale that takes place in the general marketplace. It will include a number of new construction projects that are coming -- that will be coming on line like the Kaypart project and others that people are beginning to look at. And then, as we indicated in the overall five-year plan about NTI, it is an important part of our housing strategy. So how does that tie into some of the things that we are doing? One thing we think that 111 12/6/02 - NTI FY '03 Program Statement and Budget could be a very important stimulus to the regular real estate market functioning and functioning well are employer-assisted housing programs. Just based on the experience of the employer-assisted housing program that the University of Pennsylvania developed and funded with the support of, I think it was, Fannie Mae, that became a very good catalyst I think in the real estate market in and around the institution, so we would like to design and put into place a program that will reach out to other large and smaller employers to do something similar and then to find the role that the City plays. So we issued an RFP around that. Secondly, in terms of, let's say, larger-scale, new-construction development we meet regularly or fairly regularly with developers who are interested in opportunities in the City. A major piece is land, a sufficient amount of land, where they can carry out a market rate project at a cost that is -- I wouldn't call it high end, but it would be more probably in the range of 200,000. In some instances they are looking at older industrial parcels to see if they can secure land on their own and where necessary. We entertain the request to 112 12/6/02 - NTI FY '03 Program Statement and Budget support any land assembly activities. So, again, as a part of the plan, I think as we get more land in public inventory is an opportunity to go out even more through our RFP process or proactively market land for redevelopment at market rate.

So is there a plan for market rate housing for the City?

When you say "a plan," initially we have been putting our focus on land assembly work and facilitating, meeting with developers, talking about opportunities in Philadelphia, hearing what their requirements are, what parts of the City they are interested in, those types of questions. A lot of times what I would call market rate nonsubsidized housing developers tend to go out and assemble land or attempt to assemble land on their own where they think the economics of the project would work. The most active person who has been pursuing this, as everyone knows and has been reported, has been the Westrom companies. They have been looking at numerous sites throughout Philadelphia and doing their own due diligence with 113 12/6/02 - NTI FY '03 Program Statement and Budget respect to that.

There was recently an announcement actually out of New York City about new housing proposed I believe in lower Manhattan and a plan had been assembled in New York. So we don't have a plan per se for new market rate housing. We have a lot of discussions and we have had some meetings?

I think one of the things -- and I don't know the specifics. I just heard about the New York program, but I think one of the specific differences -- and Cleveland is another City that has benefitted a great deal from what we call market rate middle income housing -- is that they already had the land in hand. New York goes back to the '70s, always aggressive in public ownership land which they can proactively market, and I think what they are doing is putting together a variety of different types of mortgage products to help facilitate the sale of those properties.