COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, June 8, 2006 11:40 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILWOMAN MARIAN B. TASCO COUNCILMAN MICHAEL NUTTER COUNCILMAN JAMES KENNEY BILL 060499 - An ordinance authorizing the Director of Housing and Community Development (Housing Director), on behalf of the City, to file applications with the United States Department of Housing and Urban Development (HUD) for a Community Development Block Grant... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
We're waiting a few minutes to receive the language that amends the Executive Order dealing with the Housing Trust Funds. When we receive that language, then we will resume our Housing hearings. We have two Housing hearings and one Finance hearing on CDBG. So as soon as we receive the information, we will resume our Housing hearings. Perhaps, Madam Chair, we can have our Finance hearing. Sorry we had so many. This goes to the prior one. (Pause.)
City Council will now call into session our Committee on Finance. A quorum is present. Councilwoman Blondell Reynolds Brown, Vice-Chair, Councilwoman Marian Tasco, Councilman DiCicco, Councilman W. Wilson Goode and Juan Ramos. We are here. This is a hearing to consider Bill No. 060499. 3 6/8/06 - FINANCE - BILL 060499 We will ask the Clerk to please read the title of that bill. This is commonly called the Community Development Block Grant application.
Thank you, Madam President. We reported the last bill out, did we not, on the joint committee? So that's fine. The first one we didn't really call into session. We only talked about it. So we're now, for clarification, we're now in the bill 16 reading part of our Finance Committee. After this, we will go back to two housing hearings and then we'll be done. Is it clear? Questions on clarification? (No response.)
Thank you. Thank you. All right. The Clerk will please read the title of Bill No. 060499.
Bill 060499, an 4 6/8/06 - FINANCE - BILL 060499 ordinance authorizing the Director of Housing and Community Development, on behalf of the City, to file applications with the United States Department of Housing and Urban Development for a Community Development Block Grant; authorizing the Housing Director to file 9 applications with HUD to participate in the HOME Investment Partnership program and the Emergency Shelter Grant program; authorizing the Housing Director, on behalf of the City, to file an application with HUD for Housing Opportunities for Persons with AIDS grant; authorizing the Housing Director, on behalf of the City, to file an application or applications to obtain grants from the Commonwealth of Pennsylvania, under the Act of April 12, 1956, Public Law 1449, Section 4, as amended, to prevent and eliminate blight; authorizing the Director of Commerce to use the Section 108 Loan Guarantee Program; and authorizing the Housing 5 6/8/06 - FINANCE - BILL 060499 Director and the Director of Commerce to enter into all understandings and assurances contained in such applications and take all necessary action to accept the grants, all under certain terms and conditions.
We thank the Clerk for reading that. As soon as we conclude our hearings and enter into the stated meeting, we will submit an amendment that has just been circulated. Is there anyone who would like to speak from members of the Committee or in Council Chambers with regard to the application, with regard to the bill? (No response.)
Madam Chairwoman, I respectfully request about a five-minute break. Because of the last-minute negotiations, I've had to modify my testimony. That testimony is literally 6 6/8/06 - FINANCE - BILL 060499 on its way back up, but it's not here right now, so obviously I can't read it. It's literally being copied. But if anyone else would like to testify before that, I guess we can go ahead and get started.
It appears that we're still waiting for something to come up?
Yes. We're waiting for language. There was one line added to the amendment, and I assume that's what Mr. Hanna is waiting for.
I'm waiting for my 7 6/8/06 - FINANCE - BILL 060499 testimony.
That's fine, but we do have an amendment. I hope --
I hope this has been circulated. There are additional copies.
That's okay. Madam Chair, I'm not sure whether it's the Chair from her previous capacity having had much more in-depth discussions and conversations, the result of which appears to be the June 7th letter signed by the Mayor or Mr. Hanna at the table, but if either the Chair or Mr. Hanna or both could possibly explain the intricacies of this letter and its implications as relates to all of the 8 6/8/06 - FINANCE - BILL 060499 discussion and the various meetings that have taken place around reorganization, the ramifications of any actions that we might take this morning, since I think this is really the first hearing on the Consolidated Plan, which, mercifully, may be a little shorter than we've had in the past. Can you just -- what does this mean?
Thank you. Perhaps what we should do first is have the Clerk read the letter.
Date, June 7, 2006, letter from the Mayor to the Honorable Jannie Blackwell, City Council. "Dear Councilwoman Blackwell, this letter is to confirm our understanding of the attached amendment to Bill 060499 authorizing the submission of the Year 32 CDBG Consolidated Plan to HUD. 9 6/8/06 - FINANCE - BILL 060499 "Pursuant to the Amendment, the Administration will delete the discussion of reorganization on of the Consolidated Plan as well references to housing reorganization. References to 'OHNP' will be changed to 'OHCD.' These deletions are not intended to imply the Administration is abandoning housing reorganization. We intend to proceed with housing reorganization and will work with the union and members of City Council to develop an effective structure and process to accomplish the Administration's goals. "I also have agreed to amend the Housing Trust Fund Executive Order to include three additional Council appointees to the Housing Trust Fund Advisory Board. "With warmest regards, I remain, sincerely John F. Street."
Thank you very much. (Applause.) 10 6/8/06 - FINANCE - BILL 060499
Thank you very much. While we are waiting, perhaps Mr. Hanna can come forward and respond to questions, and we are happy to have anybody else testify with regard to the Community Development Block Grant applications and its reference. It has been suggested by one of the members of the Committee -- do you have your testimony now, Mr. Hanna?
Thank you. Mr. Hanna, please make your testimony. Thank you.
Good morning, Councilwoman Blackwell, other members of the Finance Committee and members of City Council. My name is Kevin Hanna. I serve as Secretary of Housing and Neighborhood Preservation for the City of Philadelphia. I am here today to testify on behalf of the Administration on Bill 25 060499, which permits the City to apply 11 6/8/06 - FINANCE - BILL 060499 for the federal Community Development Block Grant, HOME Investment Partnership funds, Emergency Shelter Grant and Housing Opportunities for Persons with Aids, commonly as HOPWA, funds, and for state funds from the Department of Community and Economic Development. S. Department of Housing and Urban Development and which details our proposal for spending these and other related funds for affordable housing and other activities. By no 16 later than August 16, 2006, the City is required to submit to HUD the Consolidated Plan, which combines the formerly separate CDBG Final Plan and Statement, the HOME Program Description, Emergency Shelter Grant application, the HOPWA application and the Comprehensive Housing Affordability Strategy. With me here in Chambers are Deborah McColloch, Director of Housing, 12 6/8/06 - FINANCE - BILL 060499 Anthony McIntosh, the Executive Vice-President of the Philadelphia Housing Development Corporation. I don't know that Herb Wetzel is in the room, the Executive Director of the RDA. Eva Gladstein, Director of Neighborhood Transformation Initiative, as well as other members of my staff and that of NTI. The Year 32 Consolidated Plan for the fiscal year which begins July 1, 2006 details our plans for spending monies from the five primary federal sources. The proposed budget carries forward existing programs and commitments to reinforce NTI activities. The first source of federal funds is the Community Development Block Grant, still the largest source of funding for affordable housing, aside from the subsidies which PHA receives directly from HUD. In Year 32, the City will receive $53,718,000 in new entitlement funding, a reduction of just over $6 13 6/8/06 - FINANCE - BILL 060499 million, $6,004,000 to be exact, from Year 31, or about a ten percent cut. Other CDBG-related resources include program income, such as that derived from the sale of land, and prior years' reprogrammed funds, which are funds which can be liquidated from prior years' budgeted activities. Overall, the total CDBG resources which are available for Fiscal Year 2007 are $67,669,000, $5,049,000 less than in Fiscal Year 2006. The Proposed Year 32 Consolidated Plan builds upon initiatives and programs from prior years, consistent with the Neighborhood Transformation Initiative's housing development strategies. Year 32 is the fifth year of implementation of the NTI program. 8 million reduction in federal funds for Year 32. While the City will receive ten percent less CDBG funding, the Proposed Plan seeks to keep as much money in programs and projects as possible. 14 6/8/06 - FINANCE - BILL 060499 The City remains committed to affordable housing production and other key housing services. 8 million, the bulk of which will be made up by reprogramming prior years' funds from PCDC, and small reductions in a variety of other programs. Within the CDBG budget continued funding is proposed for for-sale housing, including both new construction and rehabilitation. Continued funding is proposed for rental ventures financed in conjunction with the Low-Income Housing Tax Credit application and special needs housing to assist the homeless and those with other special needs. In addition, the homeownership and rental housing production are 15 6/8/06 - FINANCE - BILL 060499 proposed for funding using state Housing and Redevelopment Assistance funds, proceeds from the Housing Trust Fund and NTI bond proceeds. Including all proposed sources of funds, the budget for affordable homeownership development will remain level at $10,308,000 in Fiscal 2007. 783 million in Fiscal 2007.
This decrease, however, is due to the reallocation of NTI bond proceeds to support Settlement Assistance grants and the Adaptive Modification Program. The reduction in available CDBG funding has forced very difficult choices among competing and worthwhile initiatives and programs. Many worthwhile activities have been reduced by approximately ten percent. More significantly, in order to continue to fund our core housing programs at level or near level amounts, significant 16 6/8/06 - FINANCE - BILL 060499 reductions have been made in total funding for the operating costs for the existing housing agencies: The Office of Housing and Community Development, the Philadelphia Housing Development Corporation and the Redevelopment Authority. 151 million for Fiscal 2006 can only be achieved if the proposed housing agency reorganization is accomplished. 1 million would need to be identified in CDBG resources and taken out of the housing programs in order to maintain the current personnel complement and agency configuration. 1 million in the upcoming fiscal year. The savings allows us to continue to invest in housing programs. These savings are achieved by 17 6/8/06 - FINANCE - BILL 060499 consolidating redundant functions and activities, streamlining processes and reducing the cost of delivering housing services. The proposed changes have been forced upon us by federal budget cuts. However, the shortcomings of the current structure, together with these cuts, dictate that the Administration pursue change now. The reorganization includes the following: Consolidated administrative services; that is, the merging of back-office functions, including fiscal office services, information technology and audit; organizing agencies along their core business lines. By this, we mean the broadening of the mission of the Office of Housing to support the provision of housing for all Philadelphians, strengthening our planning capacity, consolidating our land disposition activities, streamlining our development activities and expanding our traditional monitoring role to focus on 18 6/8/06 - FINANCE - BILL 060499 continually assessing and improving the publicly supported services. We will focus RDA's efforts on eminent domain and bond refinancing activities. We'll redefine PCDC to serve as the entity which delivers all of the City's housing preservation programs, and we'll seek to negotiate new contracts at OHCD, PHDC and RDA. The second primary source of funding for Year 32 is the federal HOME program. Philadelphia has been told that it will receive $15,375,000 in new HOME entitlement funding in Year 32. That's a decrease of $919,000. While CDBG funds can be spent on a variety of activities, including economic development, HOME funds are restricted specifically to housing activities, including construction and rental assistance. In addition, in Year 32, the City will receive $201,000 in HOME funds specifically identified for the American Dream Down Payment Initiative, ADDI, a 50 19 6/8/06 - FINANCE - BILL 060499 percent reduction from Year 31. The City uses these funds for down payment and settlement grant assistance to make more affordable for low-income households homeownership projects which it supports in areas of rapid appreciation or where the appraised value of the houses being sold makes affordability difficult for low- or moderate-income families. The third source of federal housing funding which is included in the Year 32 Consolidated Plan is the Housing Opportunities for Persons with AIDS program, which the City of Philadelphia administers for a five-county metropolitan area, including Philadelphia County, Bucks, Chester, Delaware and Montgomery Counties. The federal formula for HOPWA funds is based on historical and contemporary AIDS caseloads in the region. For Fiscal Year 2007, we will receive $7,083,000 in HOPWA funds for the five-county region. That's a reduction 20 6/8/06 - FINANCE - BILL 060499 of $253,000 from Fiscal Year 2006.
This reduction will be absorbed by a small reduction in funding for the new construction of AIDS-related housing. Unexpended funds for AIDS housing construction remain from prior years' allocations. In addition, we will reprogram an additional $250,000 in prior year HOPWA funds for which activities have been completed and contracts have been closed out. The fourth source of federal funding for housing in Year 323 is the Emergency Shelter Grant, ESG program. We anticipate receiving $2,297,000 in ESG funds in Fiscal Year 2007. These funds, which support emergency shelter activities, will continue to be administered by the Mayor's Office of Emergency Shelter and Services, OESS. In the past, another major source of funding for housing has been the Section 108 loan program. Under the Section 108 loan program, the City is 21 6/8/06 - FINANCE - BILL 060499 allowed to borrow funds against future CDBG entitlement grants. In the past, the City has used the Section 108 loan program to provide debt financing for economic development ventures and to support specific housing development ventures. While economic development Section 108 loans are self-sustaining through the repayment of debt, subsidies for housing funded with Section 108 loans must be repaid with or have been repaid with CDBG subsidies for housing funded with Section 108 loans. The City has nearly reached its Section 108 loan program borrowing capacity and, therefore, in Year 32, no 18 new Section 108 loan authority will be sought for housing activities, and budget authority for relatively modest loan of up to $15 million is requested for economic development activities administered by PIDC. The Plan identifies $5,750,000 in proposed funding from the State 22 6/8/06 - FINANCE - BILL 060499 Department of Community and Economic Development's Housing and Redevelopment Assistance program. These funds will be used to support home repair grants through the Heater Hotline and Tier I parts of the Basic Systems Repair Program and to support large-scale new construction homeownership opportunities. The City looks forward to continuing to work with the Rendell Administration and DCED to bring critical resources for housing to the City. The Plan also contains a recommended budget for funds from the Philadelphia Housing Trust Fund. Line items in the Consolidated Plan reflect the priorities recommended by the Housing Trust Fund Oversight Board as agreed when Council passed the Trust Fund legislation a year ago. Up to 15 percent of total Trust Fund money can be used for administrative costs, and the City is proposing to use the full 15 percent in Fiscal 2007. Madam Chairwoman, that 23 6/8/06 - FINANCE - BILL 060499 completes my written testimony. I and members of my staff will be happy to entertain any questions you or the other Committee members or Council members may have at this time.
Thank you. Are there any questions? We've worked hard to try to forge some kind of compromise. Councilwoman Tasco.
On of your testimony, you talk about the Section 108 loan program. Do you know how much debt is out there, how much has been lent through this program and how much is due to come in?
I can't tell you off the top of my head, but if I could have a copy of the Consolidated Plan brought up, I can give it to you in just 24 6/8/06 - FINANCE - BILL 060499 a couple of seconds.
I can tell you from memory from having looked at that a couple of months ago that a couple of loans, a couple of those loans made during the Rendell Administration will burn off, pay off in the next, I want to say, months or so. And so the level 11 at which we're servicing debt right now 12 will show a significant drop-off in about 13 two years or so. 14 MS. McCOLLOCH: Good morning. 15 I'm Deborah McColloch, Director of 16 Housing. 17
Good 18 morning. MS. McCOLLOCH: The question was how many total loans have we taken?
How much are we owed from the 108 loan program? How much money have we loaned out and how much is due back or has been paid back? MS. McCOLLOCH: Okay. I don't 25 6/8/06 - FINANCE - BILL 060499 have those figures for you right now. Overall, we've taken out about $80 million in Section 108 loans over the 30 years of the program.
How much of that -- well, we know 35 million went to Logan. MS. McCOLLOCH: Right. And the list in the back of the Consolidated Plan, there is a list of all of the Section 108 loan activities.
I guess the question I'm asking, what is the pay-back rate? Aren't these loans supposed to be paid back to the fund? MS. McCOLLOCH: Yes. We pay them back to -- these are actual loans, so we pay them back to the borrowers that -- they're actually bond sold, so we have to pay it back to the bond holders. And we have certain amounts that are budgeted each year to pay back in accordance with how the bonds were sold, and that's listed in the budget. 6/8/06 - FINANCE - BILL 060499
Some of the loans, Councilwoman -- there are really two types of loans that have been made with 108 loan funds. One type was for economic development projects. For the most part, those economic development projects, we loan the money to the developer, the developer does what he does, pays us back and then we pay, as Deborah said, the bond holders. So that's how that portion of 108 loans are repaid. Another type of 108 loan is made or were made on behalf of residential, housing deals. Those deals because of their nature cannot repay the loans back to the City, and so the way the federal government structures 108 loans is, for those loans that are not repaid by the development itself, the federal government takes its repayment off the top of our CDBG allotment. So before we get our CDBG dollars at all from the federal government, they take 27 6/8/06 - FINANCE - BILL 060499 what's owed pursuant to those projects that aren't making payments on their own.
Okay. MS. McCOLLOCH: Based on a specific schedule. So for this year, for example, those loans that Kevin was just describing, what we call the housing Section 108 loans, which are given out by OHCD as grants, that loan payment for this year is $10,027,000 as listed in the budget. And each year we make payments on those loans, but as Kevin just testified, the old ones are being dropped off, and we can provide you with the complete schedule of repayments.
Thank you very much. Are there questions from other members of the Committee? (No response.)
Any of our colleagues in Council? 28 6/8/06 - FINANCE - BILL 060499
I want to ask a question about -- you read your testimony relative to the reorganization, but the amendment here that we have speaks to the fact that there will be no 10 reference to the reorganization in the Plan. Could you tell me how you interpret what this means and what does it mean in terms of future negotiations on the reorganization?
My name is Joyce Wilkerson, Chief of Staff to the Mayor. There's a letter from the Mayor to Councilwoman Blackwell that I believe was circulated --
-- that confirms the Mayor's understanding. We will be amending the Consolidated Plan to delete references to reorganization, but 29 6/8/06 - FINANCE - BILL 060499 it's the Administration's position that we still need to pursue housing reorganization, that there are efficiencies that will benefit the City and will also enable us to deliver programs more efficiently. So we're going to continue to work on that, work with the unions, consult with City Council in hopes of striking an accommodation that works for the City as efficient and also will enable us to deliver programs more cost effective. We're cognizant of the fact that the operating budget, not the consolidated budget, but the operating budget has moved money out of OHCD Class 100 to Class 200 so that, in any event, we'll end up back in City Council to discuss any plan for reorg when we would have to seek a transfer ordinance. So we're going to be working over the course of the summer. We're gathering information, trying to develop job 30 6/8/06 - FINANCE - BILL 060499 descriptions, trying to figure out what the impacts might be on individuals and what we might be able to offer individuals to minimize any kind of impact.
Excuse me. Let me understand it. In the operating budget, you have to come back to Council to move the CBGD dollars --
Yeah. We have a problem with Class 100/Class 200, and so most of the OHCD dollars are currently in Class 200.
So you would have to come back, once you decide what you're going to do relative to reorganization, come back to Council --
To the members of the Finance Committee and our colleagues and those who are here for this hearing, we tried to work hard to make sure that people who received layoff notices July 1 through their unions with the 30-day notification regulation do not fear that that's going to happen, and the references to have the Consolidated Plan deal structurally with Office of Housing and Community Development gets us where we need to be, in that reorganization is not accomplished. So we fought hard to take us back to, as we've done Year to 31, to now have Year 32 have Office of Housing and Community Development so that we retain our former structure so that we 32 6/8/06 - FINANCE - BILL 060499 can slow down any plans to have a process happen that is not even spelled out or organized or communicated to and with us by members of the Administration, the unions or people who work in our City. So this is what we tried to do. So if the Consolidated Plan still lists the Office of Housing and Community Development, we still have the structure we've always had, not a new structure, Office of Housing and Neighborhood Preservation, which is what we've been opposing all this time. Is that clear or not clear, Councilman? Question, Councilman Nutter?
Possibly along the same lines as Councilwoman Tasco, I think I'm just trying to work between or among the letter from the 33 6/8/06 - FINANCE - BILL 060499 Mayor, Mr. Hanna's testimony and the discussion about the operating budget, the amendments that we made in the operating budget, and I think the dollars were moved out of Class 100 to 200?
So out of all the things that have happened over, I guess, the past couple days, and the Councilwoman has had, I think, either seven or eight hearings about reorganization, the solution today is the letter from the Mayor saying that OHNP will be deleted from the Consolidated Plan, replaced by OHCD, which I guess in previous years that's what that had been.
Well, it's not exactly the same. In previous years, the City really hadn't tried to address market-rate housing through its housing organization, and so OHNP involves more 34 6/8/06 - FINANCE - BILL 060499 than just what OHCD was. But everything that was in OHNP is now, pursuant to the agreement, going to be part of the Office of Housing and Community Development. We'll no longer reference an OHNP. With respect to Mr. Hanna's testimony, that was more of a practical problem. We probably would have testified or had completely different testimony, but the arrangement worked out came late in the day and we didn't have adequate time. I think the references of what it says about housing reorganization continues to reflect the Administration's best thinking on housing reorganization. The commitment is to continue to work through the process, both looking at structure and function, all of those issues, with the goal towards developing a more efficient and effective and cheaper housing delivery system. We understand that there was not enough in place to arrive at a level of comfort. We will continue to work 35 6/8/06 - FINANCE - BILL 060499 through the summer. We understand that at the end of the day, we have to come back to City Council for a transfer ordinance. We did not challenge that in the budget. We needed a budget. We could have fought deep into the summer over these things, but I think we recognized that we had more information we had to develop. I think it's probably not until we get more information that we will successfully be able to garner the level of support that we need.
Mr. Hanna's testimony on lays out you can save upwards of $5.1 million in the upcoming fiscal year as a result of the reorganization. He lays out in three large bullet points the kinds of things that you want to do. First, is it correct that the dollars that you need to put that plan in motion presently are not available to you because of what happened in the operating budget or you can go ahead and do these 36 6/8/06 - FINANCE - BILL 060499 things anyway?
We could not deliver on the whole reorg because the dollars are not appropriately authorized in the operating budget.
How will you do what you want to do if you don't have the dollars?
We can't. July 1 we will not, for practical reasons and a whole lot of other reasons, July 1 we will not be setting up new organizations, in part because we've got a commitment, in part because in order to actually move people around, you have to have -- there are discussions with the union that have to move further than they have presently. Their job descriptions, you have to look at what the potential impact would be on everybody. We're simply not ready to set up a new organization on July 1. We 37 6/8/06 - FINANCE - BILL 060499 don't have funding in the appropriate line items in order to support a year's worth of reorganized housing agency.
If the dollars had not been transferred in the operating budget, do you believe you would have been ready on July 1?
So will anyone either be transferred, laid off or lose their job come July 1st?
No, I don't anticipate that at all. Like I said, we have made a commitment that we will continue to work closely with Councilwoman Blackwell and the other members of Council concerned about this. We'll work with the people who are most directly -- through the representatives of the union. There's a lot of work that has to get done, and we hope through the agreement made, that we will begin to correct some of the dynamics so that we 38 6/8/06 - FINANCE - BILL 060499 can have the kind of exchange that you need to have to make this work effectively so that individuals don't fall through the cracks and so we don't end up putting up an organization that doesn't reflect everybody's best thinking.
Last question. I see what the savings are. Are there any costs to implementing the reorganization?
Sure. One of the things that the housing organizations haven't done effectively in the past is train effectively, and so there's a lot of employee training that probably needs to happen. The housing organizations haven't had the procedural manuals that they ought to have. I think I remember testimony where the last procedural manual at the Redevelopment Authority was done in the '70s. It was on a mimeograph machine. And so part of what you want to do is not simply move people's desks 39 6/8/06 - FINANCE - BILL 060499 around; you want to create systems that make sense and you want to have those systems and those processes documented. We've spent over $5 million to date for the IT system. That also is a part of housing reorganization -- that's a part of creating a new housing delivery mechanism. We are probably going to -- I'm sure there are other costs. I can get you a more complete budget.
So for the moment, the start of the reorganization is on hold, people stay where they are, you're going to continue to negotiate and at some point come back for a transfer ordinance to put into place whatever has been agreed to?
Thank you very much. We've tried to work diligently 40 6/8/06 - FINANCE - BILL 060499 to make sure that no housing reorg begins. I know the Mayor is committed to it, but we're on the opposite end of that. We've fought against it from the beginning. We have our eighth hearing at 1:00 as soon as Council concludes, and certainly we've been fighting hard to get to this point. Are there further questions? (No response.)
Does anybody else need to testify? We still have two more hearings. Thank you very much. Come forward, Ms. Christian. Thank you very much. Alisa Orduna-Sneed. We all know her a little bit. Please identify yourself for the record and welcome and begin your testimony.
Good morning. I'll shorten it. I have written testimony for the record.
Good morning, Madam Chair Blackwell and members of the Council Finance Committee. My name is Alisa Orduna-Sneed. As Executive Director of the Partnership CDC, I'm here to express our support of Bill No. 060499, the Year 32 Consolidated Plan, with a few recommendations. Specifically, I would like to request on behalf of our organization the following items: Restoration of our housing counseling budget to its original level of 120,000; reallocation of our remaining $19,000 in our Targeted Basic Assistance Program; granting our request of 250,000 from the NTI Commercial Corridor program for the West Philadelphia Job Training and Technology Center; and to maintain, despite potential cuts, our core operating funding for Economic Development Department, particularly given the many challenges that businesses in our service 42 6/8/06 - FINANCE - BILL 060499 area face with the SEPTA Market Street El Reconstruction Project. In addition, I would like to make the following policy recommendations that would enable organizations such as the Partnership CDC help the City resolve its current housing crisis for low- to moderate-income families. The first is to execute a recycle agreement between the RDA, Water Department and Revenue so that innocent homeowners are not foreclosed upon due to unresolved liens that were placed on properties acquired through public processes; create buyer focused subsidies that empower low- to moderate-income home buyers and allow them choices of housing products and geography; legislate inclusionary zoning to balance the current push for market-rate and inflated sales prices when market-rate sales prices at the level that the median-income households in the City can afford, particularly in light of increasing housing foreclosures; 43 6/8/06 - FINANCE - BILL 060499 reduce the land acquisition process to enable non-profit developers and community associations a chance to acquire properties within our service boundaries through lobbying for enabling state legislation; remove the 200 percent bond requirement to acquire targeted vacant and tax delinquent properties for non-profits building affordable housing; expand the role of the Vacant Property Review Committee process to maintain an open, transparent and equitable land distribution process to allow local residents and community organizations the same opportunity as out-of-state speculators; and also to delay the implementation of the housing reorganization until the next Administration to allow existing pipeline projects a chance to come to fruition; and a plan now on how to recapture new tax dollars for affordable housing when the first wave of the ten-year tax abatement ends in 2011. 44 6/8/06 - FINANCE - BILL 060499 That concludes my testimony at this time. Thank you. (Applause.)
Is there anyone else to testify? This is Councilwoman Tasco. Councilwoman Blackwell had to leave the chair for a moment. Would you please proceed with your testimony.
Good afternoon. My name is Alicia Christian and I'm Executive Director of Dignity Housing. Thank you for this opportunity to testify on the Office of Housing and Community Development's Year 32 Plan. We commend the extensive planning effort and laudable goals presented in the Plan. However, we have a specific concern about OHCD's elimination of all contractual support for Dignity Housing. We anticipated that at least $100,000 would be allotted to our agency in Year 32, the 45 6/8/06 - FINANCE - BILL 060499 final year of such requested support. So, in essence, I'm here to testify about and request restoration of an amount that equates to less than a fractional percent of a fractional percent of the overall CDBG budget. Dignity Housing provides transitional affordable housing and social services that are designed to facilitate the self-sufficiency of homeless families and individuals. The agency currently serves over 300 men, women and children who entered our program primarily from the City's emergency shelter system. Over the years, we've helped more than 1,700 low-income adults and children. Dignity, established in 1988, works and works well. Issues of our spotlight newsletter provided for review by Councilmembers today attest to the exemplary achievements of tenants in the program. of the OHCD Plan speaks 46 6/8/06 - FINANCE - BILL 060499 to a continuing need for a wholistic anti-poverty strategy. In fact, on that page, Dignity Housing is noted as one of several agencies that include vitally needed self-sufficiency supports and services in their programs. However, of the OHCD Plan eliminates all funding support for Dignity. We are incredulous that in a year when the Mayor unveiled the ten-year plan to end homelessness OHCD summarily eliminates a final year commitment of $100,000 for our agency, as indicated earlier, a fractional percent of a fractional percent of the overall CDBG OHCD allocation. Dignity's services design are viewed as effective, and its mission embraces major goals in the ten-year plan to end homelessness. Dignity contributes to the availability of high-quality affordable housing. We developed 30 units in the Germantown and Oak Lane communities between 2000 and 2003. These 47 6/8/06 - FINANCE - BILL 060499 efforts helped to stabilize the Germantown and Oak Lane neighborhoods in which they're based and have in fact spurred other residential development. The overwhelming majority of the tenants who complete our two- to five-year program do not end up in the shelter system again. Our life skills component encompasses, as noted previously, a number of the goals in the ten-year plan and the Neighborhood Transformation Initiative. Our Scholarship Fund has assisted 80 tenants secure trade certifications, Associate degrees and Bachelor degrees. Dignity graduates includes individuals who are now teachers, social work professionals, police officers, an Internal Revenue Service supervisor, retail industry workers, two electricians, a phlebotomist and other health technicians, a Ph.D. and one medical doctor. One of our tenant graduates here today now administers her own affordable housing program. 48 6/8/06 - FINANCE - BILL 060499 (Applause.)
A significant number of former tenants are now homeowners and viably employed Philadelphians that contribute to the City's tax base. Our agencies work and achievements encompass, as noted previously, the NTI goals. Yet, each year we struggle to secure the support we need to implement our social service design and institute capital repairs to our inventory. Dignity appreciates members of City Council who have stopped every short-sighted effort to dramatically end support of our agency. It often feels as though Dignity must work three times as hard to get a fraction of what we need to operate. Nevertheless, we're still here. The Section 8 monthly rents assigned to our program by PHA are way, way below prevailing market rents. In fact, $200 to $400 per unit per month lower than other developers in area 49 6/8/06 - FINANCE - BILL 060499 Section 8 rental unit owners secure. Dignity has an inventory of over 100 scattered site rental homes, but until September of last year, two-thirds of our inventory was owned by the RDA, the Redevelopment Authority. An analyst from the Penn Hudson Financial Group determined that Dignity Housing had over a ten-year period in expenditures to repair these RDA-owned units spent $3 million. We had in fact subsidized the City of Philadelphia. This kind of commitment over time has placed strains on resources that we need for social services and general operations. Dignity has consolidated and downsized our inventory. We are pursuing effective debt management. We've reduced an inventory from 160 to 100 units at a time when so many people in the shelter system still have their noses pressed up against the windows of our offices and are calling us desperately in need of affordable housing, but downsize we did 50 6/8/06 - FINANCE - BILL 060499 to survive. We simply request a final year $100,000 commitment in the Year 32 contract to complete our recovery. It's a shame that in reality -- I'm sorry. A number of local government plans give lip service and accolades to interconnected strategies that provide services, fight poverty, promote neighborhood stability and support affordable housing. But in reality, when resources must be allotted, these multi-faceted needs are pitted against one another, forced to choose either social services or housing, one or the other. Both are equally needed if we are to help families move up and out of poverty and rebuild their lives. Both are equally needed if we are to truly rebuild and stabilize our neighborhoods. Thank you. (Applause.)
Thank you, Ms. Christian. Ms. McColloch. 51 6/8/06 - FINANCE - BILL 060499
With all due respect, and I apologize for saying this, but it's a session day today and we're seeming like we're having a full-blown policy discussion on housing, which I think is absolutely needed, but certainly should be done on another day and another forum. I mean, we normally have CDC testimony over a three-day period, and they're very lengthy hearings. I just would recommend if we could get moving with our session, it would be very helpful.
Thank you. And certainly we agree and we have two more housing hearings where we need to make motions, so hopefully if it is in agreement, we will try to keep this as brief as possible and perhaps people who would normally testify would be willing, 52 6/8/06 - FINANCE - BILL 060499 in the interest of time, to allow us to conduct our business so that we can have our Council session.
I'm sorry. Is there a Housing Committee scheduled for 1 o'clock?
No. 9 We have two this morning we didn't do yet. We didn't complete the -- we have two issues. We can do it quickly, but we just need to certainly move on.
Yeah. Ms. McColloch, could you tell us what the issue is with Dignity Housing? We have supported this organization since its inception and we believe that they've done a good job. I think her testimony shows that. And we've been working for many years trying to continue to keep them to receive funds, but it's always a 53 6/8/06 - FINANCE - BILL 060499 struggle. What is the struggle? Why is there a struggle? MS. McCOLLOCH: Why is there a struggle? There's no struggle specifically with Dignity more than any other organization. The agreement that we had was part of the sale of the Redevelopment Authority houses, which Alicia discussed, that the agreement was when those properties were turned over, that would end our commitment of operating support for Dignity Housing. And so that's what we put into the Consolidated Plan, was that we had committed funding through Year 31, the year that will end June 30th as part of the agreement to transfer the properties from the Redevelopment Authority to Dignity Housing.
I beg to disagree. That was not my understanding, and that interpretation is like when finally low-income people win elective 54 6/8/06 - FINANCE - BILL 060499 office and inherit empty City Hall treasuries. These properties have been online over years. The capital repair 5 needs have been extensive, and over a 6 ten-year period, Dignity poured its own 7 resources because we didn't want to see 8 people on the street. We poured over $3 9 million into this program. It cannot be 10 viewed as some sort of windfall for the 11 agency. But nevertheless, we are saying 12 that the $100,000 that we have requested 13 for this Year 32 Plan is the last time 14 we're coming back, the last time. 15 We have downsized our agency 16 and we are diversifying our income base 17 and we are pursuing debt management, and 18 I doubt if very many community development corporations or agencies that have been in the OHCD funding system for ten years or 15 years or 20 years would make a comparable statement.
Ms. McColloch, we are requesting that you review her application for $100,000, 55 6/8/06 - FINANCE - BILL 060499 review that of the Partnership CDC for the $120,000. We're also asking you that you get back to the Chair and members of the Committee with regard to their issues. We've met with Dignity and they've said this is their last time they've asked for this amount of money. It's not a lot of money. Obviously we know the job of Alisa Sneed, who used to be my Director of Projects person and who is head of the Partnership CDC, neither is requesting a lot of money, but we hope that you would review those issues, get back to this Committee to see what you can do to honor these requests. MS. McCOLLOCH: Okay.
Again, we are requesting, if possible, patience. We have not two housing hearings, one 56 6/8/06 - FINANCE - BILL 060499 housing hearing -- thank you, Councilman Goode -- with two issues. We would like to do that and get our Council session underway, because we do have a housing reorg hearing scheduled for 1:00. So we're really hoping that people would be willing to consider that, forego your testimony. It's taken us a long time to forge an agreement with the Administration. We'd like to move on so that, as Councilman Kenney suggested, we can have our Council session. Thank you. Please identify yourself and please abbreviate whatever your testimony is. Is there anyone else or would you be willing to hold your testimony so that we may complete our agenda? (No response.)
Thank you. So this will be the final individual, and we'd appreciate it if you would summarize.
Thank you. My 57 6/8/06 - FINANCE - BILL 060499 name is Ruth Burchett and I'm here -- and I will abbreviate my testimony. I'm here to highlight a problem with homeownerships that utilize CDBG funds. I have with me a letter of intent which I submitted to purchase a home with the Cecil B. Moore Homeownership program. Unfortunately, this project was marketed to the public prior to the Redevelopment Authority tending to the needs of people who would be dislocated, and so I have with me my returned deposit. The problem that that creates is that there is -- I was hoping to be a part of the American Dream Down Payment program, and now I am left without a home to purchase. It has tied up my funds for a number of months. And it's not just me, there are other people as well. The problem that this creates even further is that the humongous vacant lots that are surrounding the home I already live in have created a problem 58 6/8/06 - FINANCE - BILL 060499 with the water table being changed and there's an overflow of water into the basements. I'm asking that the City, through OHCD or whomever, enlist the help of the Army Corps of Engineers or someone who can survey our areas, because the clearing of all these mass vacant lots to convey the land to RDA to build homes has compromised long-term residents' safety and structure of their homes.
Thank you very much. Certainly we will ask, through Councilman Clarke -- you mentioned Cecil B. Moore area, and he's involved in that. I'm sure you're working with him and Deb McColloch, too, and ask them through the District Councilperson to get back to this Committee. Thank you, Ms. Burchett.
But I think there's a greater process. I mean, there needs to be a process -- the RDA and OHCD or whomever needs to handle their 59 6/8/06 - FINANCE - BILL 060499 obligation to people who are dislocated prior to these projects being marketed to the community at large.
Thank you very, very much. Is there anyone else or will you folks permit us to move forward? Mr. Sauer.
Very brief. Thank you. I'll be very brief. My name is Rick Sauer and I'm the Executive Director of the Philadelphia Association of CDCs. I just wanted to make three points. One, around property acquisition. It's a critical issue for our members and many others in the City. There are a lot of properties in the pipeline right now that are being committed to being acquired. We need the City to move forward and get those 60 6/8/06 - FINANCE - BILL 060499 through the pipeline so projects can proceed. So we'd appreciate your support on that. Secondly, neighborhood economic development is critical into the recovery of our neighborhoods, in particular commercial corridors, and we want to voice our support for the proposed bond funds to support commercial corridor revitalization. And then, thirdly, I just want to commend Council for reaching an agreement with the Mayor to allow the Housing Trust Fund to move forward. We're very appreciative of that and of the transfer ordinance coming out of Committee today. I just want to make one brief comment on the Executive Order. We welcome the increased involvement of City Council on the Oversight Board. We look forward to working with you on that. When the makeup of the Oversight Board was negotiated between the 61 6/8/06 - FINANCE - BILL 060499 Administration, a couple representatives from City Council and the advocates, it was agreed that there should be a balance between public officials and committee representatives. So while we welcome three additional seats for City Council, we think that should be balanced with three additional seats for community representatives. Thank you.
Thank you very much. We would now like to -- all right. SISTER ALI: Very brief.
Please. We really have a Council session. We ask you to please summarize. We really fought hard to come to a compromise, but certainly -- and this is a Community Development Block Grant application hearing. SISTER ALI: Thank you, Madam Chair Blackwell, Council. Good 62 6/8/06 - FINANCE - BILL 060499 afternoon. I will acquiesce to Nora, because I understand the time limit, and perhaps when you reconvene on this matter, I will have a chance to speak.
My name is Nora Lictash. I work for the Women's Community Revitalization Project, and all of us are part of the Philadelphia Affordable Housing Coalition. When we worked together with Councilwoman Blackwell and Reynolds Brown, it was clear that many, many hundreds of constituents who needed affordable housing were part of this work, and we really appreciated your including us in it, and we demand a continuation of the spirit of that where we work together to decide who was going to be on the Oversight Board and that there would be parity --
This is a Community Development Block Grant 63 6/8/06 - FINANCE - BILL 060499 application hearing. We're not to the Housing Trust Board yet.
So there is going to be a time to speak to the Housing Trust Board?
Well, if you allow us to get this bill out, but it will still be just as brief, because we have two bills before that committee. But this is not that forum.
Thank you. If there is no one else to speak with regard to Bill No. 060499, this will end our hearing and we will enter stated meeting. There is an amendment that has been circulated, I believe, if I'm not mistaken, that we have read the amendment. We've talked about the paragraph that does make sure that -- and we are going to ask the Clerk, since we 64 6/8/06 - FINANCE - BILL 060499 did receive a change, to read in the proposed amendment to Bill No. 060499. Again, we are in the stated meeting. Please start from No. 1 and read through. Then we will vote and we will have completed our Finance hearing.
Proposed amendment to Bill No. 060499. One, delete all Section 8 of the bill and replace it with new Section 8 to read as follows: Section 8. The applications for CDBG, HOME, HOPWA and ESG funding which the Housing Director is authorized to file 15 shall be substantially in the form set forth in Exhibit A hereto and known as Year 32 Consolidated Plan, with the following changes. (A), all references to housing reorganization listed in the section of the Plan entitled "Strategy for Improving the Institutional Structure" beginning on shall be deleted in their entirety, as shall any other references in the Plan to the reorganization of housing agencies as 65 6/8/06 - FINANCE - BILL 060499 described in that section. The Plan shall be revised so that the housing agencies the City will use to administer housing programs shall be the same agencies that were used to administer housing programs during Year 31, and all references in the Plan to the "Office of Housing and Neighborhood Preservation" or "OHNP" shall be changed to "Office of Housing and Community Development" or "OHCD." The Year 32 Consolidated Plan, if changed in accordance with this Section, is approved and incorporated herein. The provisions of this Section 17 making Council's approval of the Year 32 Consolidated Plan contingent upon the changes to the Plan set forth in this section are not severable from the remainder of this ordinance, it being Council's intent that it would not have approved the Year 32 Consolidated Plan or authorized its filing with HUD if it were not first changed in accordance with this 66 6/8/06 - FINANCE - BILL 060499 Section. The Chief Clerk of the Council shall keep copies of Exhibit A on file 5 and make them available for inspection and review by the public.
Thank you very much. Are there questions with regard to the amendment? (No response.)
The Chair recognizes Councilwoman Reynolds Brown and ask that the amendment be adopted.
Thank you, Madam Chair. I make a motion that the amendment for Bill No. 060499 be adopted. (Duly seconded.)
It has been moved and seconded that the amendment to Bill No. 060499 be adopted. All in favor will say aye. (Aye.)
The 67 6/8/06 - FINANCE - BILL 060499 ayes have it and so the amendment is adopted. The Chair recognizes Councilwoman Tasco for a motion with regard to Bill No. 060499 as adopted that this be reported out of Committee and for a suspension of the rules.
Madam Chair, I move that Bill 060499 as amended be reported out of Committee with a favorable recommendation and that the Council rules be suspended so this bill 14 can be heard at its next session. (Duly seconded.)
It has been moved and seconded that Bill No. 18 060499 as amended be reported out of Committee and further that the rules of Council be suspended so as to permit first reading at our next session of Council. Thank you very much. All in favor? (Aye.) 68 6/8/06 - FINANCE - BILL 060499
The ayes have it and so the bill as read and amended is reported out. That concludes our business with regard to the Finance Committee. (Committee on Finance adjourned at 12:50 p.m.) - - - 69 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on June 8, 2006, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)