COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, 12/6/2000 3:20 p.m. - - - BILL 000581 - Permitting certain City employees to authorize additional payroll deductions, under certain terms and conditions BILL 000703 - Authorizing payroll deductions for certain benefits, including deductions payable to American Family Life Insurance Company and the John Hancock Life Insurance Company. BILL 000707 - Authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget for the Commonwealth of Pennsylvania under the Capital Redevelopment Assistance Program in an aggregate amount not to exceed $57,327,600 to assist in the development of 14 named projects. (Full text of all bills contained herein.) PRESENT: COUNCILWOMAN JANNIE L. BLACKWELL, Chair COUNCILWOMAN MARIAN B. TASCO, Vice Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DAVID COHEN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 /00 FINANCE I N D E X Bill 703 and 581 Linda Orfanelli, Deputy Director of Finance Pete Matthews, President. . . . . . . . . . . AFSME District Council 33 Municipal Employees Bill 707 Robert Fina, Senior Vice President, PIDC 3 12/6/00 FINANCE - BILL 703, 581 P R O C E E D I N G S
Good afternoon. We are sorry for the delay, and certainly, the Finance Committee would like to call this hearing into order with regard to three bills: Bill No.'s 581, 703 and, 707. We do have a quorum present: Councilman Cohen to my left, Councilman Kenney to my left, and Councilman Nutter to my right, I'm Jannie Blackwell. And we're ready to begin. Certainly we want to first ask the clerk to read the title of Bill No. 703.
Bill No. 703, an ordinance 15 amending Section 19-203 of the Philadelphia Code, entitled "Payroll Deductions," by authorizing payroll deductions for certain benefits, including deductions payable to American Family Life Insurance Company and the John Hancock Life Insurance Company.
Thank you very much. Would those who would like to testify -- I understand Linda Orfanelli is here, Pete Matthews, please come forward. 4 12/6/00 FINANCE - BILL 703, 581 (Witnesses come forward.)
Thank you very much. Again, we're sorry for the delay. Would you introduce yourself to the record and begin your testimony.
I'm Linda Orfanelli, Deputy Director of Finance for Accounting and Administration, and I'm here on behalf of the Administration to discuss our position on Bill No. 15 703. I'd like to mention that we are also -- my testimony is basically the same for both this bill and for Bill No. 581. So if you -- I don't know how you want me to proceed, but I'm not going to say -- basically nothing -- I'm not going to say anything different about this one than if I --
All right. Then maybe what we will do is have the clerk, then, to read the title of Bill 581 as well because your testimony will refer to both. 5 12/6/00 FINANCE - BILL 703, 581
Bill No. 581, an ordinance 5 amending Section 19-203 of the Philadelphia Code entitled, "Payroll Deductions," by adding a new subsection permitting certain City employees to authorize additional payroll deductions, under certain terms and conditions.
Let me also note that Councilman Goode and Councilwoman Blondell Reynolds Brown are here.
I've been before this august body before to discuss payroll deductions. This is not something new. I think you all understand how they work. Employees choose, they sign up, they can revoke their decision at any time, and we make a change in our system. And this is -- this amendment is to add additional deductions, as listed in the Philadelphia Code, under Section 19-203. We are prepared to handle these deductions, as we have in the past, and the only 6 12/6/00 FINANCE - BILL 703, 581 thing I really need to bring to your attention is that because of certain legal requirements and our workload at this time, we're not going to be able to deal with these or work with these companies until the fall of 2001. And I actually -- I have a list of -- to give you an idea of what we're doing so that you have a sense of why we don't have -- we don't have the resources at this time. In the fall, we will, and we will work very diligently to get everything on board as quickly as possible, but I don't have the people, even in the Mayor's Office of Information Services or our Payroll Division, who can handle our current list of jobs and these additional three deductions.
All right. 7 12/6/00 FINANCE - BILL 703, 581 Then we would certainly -- and in fact, we will confer with the Mayor again at 3:30, as soon as this hearing's over, and we will certainly bring the matter to him to see if we can't have something worked out where District Council 33 can have their requests honor.
And we thank you for bringing your problems to our attention as well.
Thank you. Mr. Matthews, would you identify yourself to the record and begin your testimony.
Yes. Good afternoon, Madam Chairperson. My name is Pete Matthews, President of AFSME District Council 33 Municipal Employees. Madam Chairperson, members of the committee, thank you for this opportunity to present testimony on behalf of the membership of our union. As you know, our union was able to settle a fair contract with the City of 8 12/6/00 FINANCE - BILL 703, 581 Philadelphia last July, without going on strike. Part of the reason why we are able to make this settlement was because the City agreed to withdraw its demands for concessions in the area of health-care benefits. It was our objective in these negotiations to settle a fair contract that would be fair to the City as well as to our members, and we think that's what was accomplished. I am here today to inform the Council that our union has entered into an agreement with the AFLAC Insurance Company to provide our members with a voluntary supplemental benefits plan that will enhance the benefits package already provided by the City under the terms of our collective bargaining agreement. I want to stress that the enrollment in this program will be strictly voluntary for our members. All we're asking for the City is that our members be permitted to purchase the plan through the use of payroll deductions on a pre-tax basis. The voluntary supplemental insurance policies we want our members to be able to buy has three specific advantages: 9 12/6/00 FINANCE - BILL 703, 581 One, they will provide a source of funding for our members to use to cover medical expenses related to serious illnesses and injuries left over after the coverage provided by the contracted benefits are exhausted. It would also help with their ongoing monthly expenses regardless of the loss of earning power. Two, by purchasing these plans on a group payroll deduction basis, our members will receive up to 50 percent savings in the cost of their premiums over what it would have cost them if they were able to buy the coverage as individuals. Three, when offered on a pre-tax basis, our members would be able to benefit from a tax break which would result in an additional saving of to 30 percent, depending on the level of 19 coverage they opt to buy. 20 The plans we want to offer our members include: personal catastrophic critical-event coverage covering costs associated with cancer, heart disease, organ transplants, neonatal and intensive-care confinement, personal accident expense coverage to address accidents and injuries 10 12/6/00 FINANCE - BILL 703, 581 on and off the job, as well as dependent children coverage for single parents, personal short-term disability coverage to offset the gap in our current contracted income replacement. In addition, the City will benefit because the programs offered through AFLAC also reduce the FICA contributions the City must match on our membership's payroll. 65 percent. It seems to me that a voluntary supplemental benefit package that improves the coverage and the quality of life for our membership at the same time that it saves the City money is a win/win for both management and labor. You should also know that District Council 33 is in the process of investigating options that will allow us to offer our members long-term care and coverage, which would help them to deal with the problems and costs associated with advancing age for them and their families. We are confident in AFLAC's ability to handle all aspects of communicating, enrolling, and servicing these programs in conjunction with the City in a 11 12/6/00 FINANCE - BILL 703, 581 way that will minimize any disruption in the workplace, while maximizing the membership's understanding of the benefits being offered. This is why I'm at City Council today, to urge the Administration to work with the union and AFLAC to implement this payroll deduction plan on a voluntary pre-tax basis. Thank you for this opportunity to present this information for your approval.
We also note that Mr. Bernard West is here and representatives of AFLAC and representative from John Hancock. Are there any questions from members of the committee? (No questions.)
And now we will have the clerk will read the title of the last bill. 12 12/6/00 FINANCE - BILL 000707
Bill No. 707, an ordinance 3 authorizing the Philadelphia Authority for Industrial Development to file an application with the Office of the Budget for the Commonwealth of Pennsylvania under the Capital Redevelopment Assistance Program in an aggregate amount not to exceed $57,327,600 to assist in the development of Philabundance Hunger Action Center, Manayunk Canal, the Pennsylvania Port of Technology, Cobbs Creek Environmental Educational Center, People's Emergency Center, West Philadelphia YMCA Annex, International House, Christian Street YMCA Center, Association of Puerto Ricans on the March, House of Umoja, Chelten/Wayne Development, Dorothy Emmanuel Recreation Center, Academy of Fine Arts, and the National Constitution Center.
Mr. Fina, would you introduce to the record and begin your testimony. Thank you.
Thank you. Good afternoon Chairwoman Blackwell and members of the Finance 13 12/6/00 FINANCE - BILL 000707 Committee. My name is Robert Fina. I'm a Senior Vice President of the Philadelphia Industrial Development, PIDC, and I'm appearing on behalf of the Philadelphia Authority for Industrial Development, PAID. Here with me is my PIDC colleague Tim Roseboro (ph). I am here today to testify in support of Bill No. 707, authorizing PAID to apply for a redevelopment assistance grant from the Commonwealth of Pennsylvania in an aggregate amount of $57,327,600. This will be used to assist in the development of projects. These 14 projects are: The Philabundance Hunger Action Center, Manayunk Canal, Pennsylvania Port of Technology, Cobbs Creek Environmental Education Center, People's Emergency Center, West Philadelphia YMCA Annex, International House, Christian Street YMCA Center, Association of Puerto Ricans on the March, House of Umoja, Chelten/Wayne Development, Dorothy Emmanuel Recreation Center, Pennsylvania Academy of Fine Arts, and the National Constitution Center. Bill No. 707 would authorize PAID to enter into agreements with the City to apply for 14 12/6/00 FINANCE - BILL 000707 the State funding, enter into a grant with the Commonwealth's Office of the Budget to carry out the purposes of City Council's ordinance, designate the City and/or the project recipients to assume the requirement of the full match for each project respectively, designate the City and/or the project recipient to reimburse the Commonwealth for its share of any expenditure found to be ineligible by the Office of the Budget, and obligate the City/and or the designee to complete the projects within a mutually agreed upon timeframe between the Office of the Budget and PAID, including reasonable extensions requested by the City, or the City will reimburse the Commonwealth for any State funds expended for the projects respectively. Exhibit A of the ordinance provided project descriptions for each of the 14 projects seeking funding from the Commonwealth; therefore, I will not include such in my testimony. However, I will again briefly identify each of the projects and also state the amount of State funding, Commonwealth funding, being sought and the process by which the Commonwealth accepts applications for 15 12/6/00 FINANCE - BILL 000707 funding from PAID. Philabundance Hunger Action Center, located at Galloway Street, near the corner of Pattison Avenue, seeks $227,600 of State assistance. Manayunk Canal, located near Lock Street, seeks $3 million of State redevelopment assistance. The Pennsylvania Port of Technology, located at 3701 Market Street, seeks $5 million of State redevelopment assistance. Cobbs Creek Environmental Education Center, located in West Philadelphia, seeks $1 million of State redevelopment assistance. People's Emergency Center, located on the 4100 block of Lancaster Avenue, seeks $1,800,000 of State redevelopment assistance. West Philadelphia YMCA Annex, located at 1520 Chestnut Street, seeks $2 million of State redevelopment assistance. International House, located at 3701 Chestnut Street, seeks $2,700,000 of State funding. Christian Street YMCA Center, located 16 12/6/00 FINANCE - BILL 000707 at Christian Street, seeks $750,000 from the State. 5 million of State assistance. The House of Umoja, located at 1410 North Frazier Street, in West Philadelphia, seeks $850,000 of State redevelopment assistance. The Chelten/Wayne development, located at Chelten and Wayne Avenues, in Germantown, seeks $1 million of State redevelopment assistance. Dorothy Emmanuel Recreation Center, located at Gowen Avenue and Pickering Streets, in Mt. Airy, seeks $1,500,000 of State redevelopment assistance. The Pennsylvania Academy of Fine Arts, located at Broad and Cherry Streets, seeks $15 million of State redevelopment assistance. And the National Constitution Center, located at Sixth and Race Street, seeks $22 million of State redevelopment assistance.
To apply for state redevelopment assistance, three actions must occur. First, the Commonwealth House of 17 12/6/00 FINANCE - BILL 000707 Representatives and Senate must have included the project by name and amount of State funding in the currently-approved State capital budget. Second, the Commonwealth's Office of the Budget, or the Governor's Office, wants in writing authorized PAID to submit an application to the Office of the Budget. And, third, the City Council must approve this proposed ordinance. The State funds must be matched dollar for dollar with non-Commonwealth funding. Prior to PAID submitting a preauthorized application for State funds through the Office of the Budget, 50 percent of the non-Commonwealth funding must be committed to the project. The Commonwealth will fund a project only after the application has been approved and all funding necessary to complete the project has been verified to be available. The Office of the Budget reimburses PAID, which, in turn, reimburses the designated project recipient for construction acquisition costs, after proof that the funds have been expended by the recipient. The Office of the Budget also requires 18 12/6/00 FINANCE - BILL 000707 many other procedural actions that are too numerous to recount here, but that PIDC, on behalf of PAID, monitors for compliance. It should be noted that under the previous administration in Harrisburg, Governor Casey, and under the current administration, Governor Ridge, similar requirements were imposed by the Office of the Budget for 31 projects, with $170 million of redevelopment assistance approved, with a combined total project cost of approximately $1 billion. I am pleased to advise that, although demanding and time assuming, that all 31 projects were completed or are presently under construction or are bound to commence construction, in accordance with the Commonwealth requirements. I again request the Finance Committee's favorable recommendation of Bill No. 000707 and that the rules of Council be suspended to permit the first reading at the next regularly session of City Council, which I assume will be tomorrow. I thank you for your consideration, and should you have any questions, I would be pleased to answer them to the best of my ability. 19 12/6/00 FINANCE - BILL 000707
I think so too. Are there any questions from members of the committee? (No questions.)
If not, we will close our public hearing and enter our stated meeting.
I'm sorry. I did want to ask one question. Mr. Fina, on the last page of your testimony, it talks about similar requirements were imposed by the Office of the Budget for 31 projects with 170 million in redevelopment assistance, with a combined total project cost of approximately $1 billion. The only thing that caught my eye here 20 12/6/00 FINANCE - BILL 000707 is that there is, in another transaction away from these, there is a $170 million figure that is the topic of a fair amount of discussion, which, naturally, would be the money from the State for the two stadiums. Are these coincidental figures? Does one have something to do with the other? Can you tell me what that's there for and what it means.
Thank you for that question, Councilman. They are absolutely coincidental. This represents projects that have been approved with grant funds, and I have a list of those 31 projects, including the 14 that we're looking at today, which includes the $170 million.
And, in fact, my figure may be slightly wrong. When I'm looking at my total now, it looks like it's 220 million of grants.
Okay, that's all right. If it's a coincidence, it's a coincidence. That's fine. I believe in coincidence.
Thank you very much. Are there any other questions from members of the committee? (No further questions.)
If not we will end our public hearing part of our deliberations and enter into our stated meeting - - -
Would Councilman Nutter entertain a motion with regard to Bill No. 581.
Madam Chair, I move that Bill 581 be reported out of this committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permit first reading at our next session.
I need a second. (Duly seconded.) 22 12/6/00 FINANCE - PUBLIC MEETING
All in favor? Opposed? All right. The ayes have it and so it's passed. Councilman Nutter, would you give me a motion with regard to Bill No. 703.
Madam Chair, I move that 000703 be reported out of committee with a favorable recommendation and a further recommendation that the rules of Council be suspended so as to permanent first reading at our next session of Council. (Duly seconded.)
All in favor? Opposed? The ayes have it and so it's carried. Councilman Kenney, would you give me a motion for Bill No. 707.
Madam Chair, I move that Bill No. 707 be reported out of this committee favorably and that a request be made for a rules suspension to allow for first reading at our next Council session. (Duly seconded.) 23 12/6/00 FINANCE - PUBLIC MEETING
All in favor? Opposed? The ayes have it and so it's carried. Let me thank everyone for their patience. Thank you for coming to this hearing, and it is adjourned. (Adjourned at 3:40 p.m.) - - - 24 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, December 6, 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON FINANCE BILL NO.'S 000581, 000703, 000707 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter