Mr. President, that is not, I believe, either during my time or prior to my time, when I tried to pay attention to what was going on around here, I don't think that that is precedent-setting. I think other people have come. And, I mean, for the amount of time that we have spent on this, it would seem to me, especially now, with amendments to amendments to a Venture Agreement, and they know that backs are to the wall, that they would have themselves here. Now, Mr. Hawes has come. And he has tried to apologize for them, which I do not expect. Mr. Hawes found himself in a position 284 RESOLUTION 970806 of having to apologize for one of his own people not being here at a critical moment. We will deal with that later. So, I mean, I hate to have you in that kind of position. But it makes no sense to me at this point. And if they were in town last night, that unless they are having a meeting with the President of the United States, this seems to be fairly serious business, they should have themselves over here. Because you can't always answer all of their questions. And it is unfair, in my view, to our own City Solicitor to have to not only explain what you guys are doing, and then explain what we are doing, but also have to defend a for-profit company who doesn't have the common sense enough to bring themselves in here and explain what it is that they want to do. That makes no sense to me. The last time they had somebody over here, we gave them one sticky issue about a no-compete clause, we had a ten-minute break, and the guy never came back. 285 RESOLUTION 970806 I mean, they can do it, not do it. But I don't see why they have to be so mysterious about it, and then want to fly off to somewhere elsewhere, where maybe they are working on another deal. Well, God bless them. We are here. I am ready to do some business. But it is difficult to deal with someone who only wants to negotiate through our own people.
Well, Councilman Nutter, just sitting on the call last night, I believe -- and I really don't want to. The QST people are grownups. I don't want to be put in a position of speaking for them.
But I believe, in listening to discussions with the City Solicitor last night, I believe that they believed that they were responding to the issues. And I believe that they believed that because of the number of issues we started with, and the fact that we were down to one fairly sizable issue, I guess I would say that their position they thought was represented through discussions with the 286 RESOLUTION 970806 City Solicitor and, therefore, there wasn't a need to be here. I don't know. But the City Solicitor may want to respond to that. That was my view.
All I can tell you, Mr. Hawes, is, my father used to tell me, "Don't assume, because we know what 'assume' means."
Thank you, Mr. President. I wanted to ask the City Solicitor, in your opinion, is there any possibility of QST changing its position on this subject matter to come closer to what City Council is thinking about? I just don't want us to just be wasting our time with QST. If this is their final position, then we have got to consider whether we want to go ahead or not. I assume that this matter is before us in City Council not because we are interested in helping QST, but because we are interested in helping PGW. 287 RESOLUTION 970806 And I think the decision we have to make is whether the whole situation, including whatever risks that may exist, are of sufficient nature to warrant their saying no or, on the contrary, to warrant our reaching a decision, yes, it is good for Philadelphia. That's the only decision we had. I agree with Councilman Nutter. We are fed up to our necks with people not showing up, whether it is the Mayor of the City or whether it is QST or anybody else. But, yet, the decision we have to make is, is this good for Philadelphia. And if we are unhappy about QST, but if, nonetheless, it is good for Philadelphia, I think we ought to make a decision along that line. Now, I have asked you two questions. One, I have asked you, is there any possibility of any further change in QST. And the subsection to that would be, would QST define the way you have defined the areas where they are seeking to eliminate themselves from liability? Would they, for example, say, what we 288 RESOLUTION 970806 have in mind is, and then to use the examples you did, about they don't want to be responsible for PGW taking action? Something that would help guide a Court if it ever had to make a decision. And, secondly, I would like to know, would you be willing, as the City Solicitor, to write a legal opinion as to what you believe the extent of risk is to PGW under the circumstances of the current language, if there is no possibility for change in that language?
You have to say it to the city. Councilman, you have to say it to PGW and the city.
Councilman Cohen, as to your first question, it is my personal opinion, after conversations with the President of QST and with their General Counsel, as Mr. Hawes indicated, through last night and early this morning, that from QST's perspective, this is their final position. We did attempt to discuss possible ways that we could reach a compromise between the 289 RESOLUTION 970806 position that Council intended to take and where QST is currently. We talked about a variety of things. They were not acceptable, primarily to QST. This reflects their final position. And I think that may be at least a factor in their thinking that they have put forth their final position on these liability issues. As to my assessment of risk on what I am calling the category of contingent liabilities, in materials distributed to Council previously, we spent a lot of time, as you may recall, looking at all of these potential types of claims. That's why I can say to you, based on the analyses that we have already done, that through a combination of factors, through the passage of time, through some new events, like PGW receiving its license from the PUC to engage in the electricity business, through our research and analysis, I believe that as to the category of these risks, which we have discussed at length in legal memoranda distributed to Council previously, that our risk assessment is that we are not likely to be sued. Even if we are sued, it is likely 290 RESOLUTION 970806 that we are going to be successful on the merits because we have strong legal defenses. I can't say to you that we would never be sued. I can't say to you that there isn't at least a possibility that we would expend money defending. But it is certainly the kinds of claims that the Law Department would, at least in the first instance, assume an aggressive defense. Because these go to the heart and soul of the city's authority under state law and the Charter and so forth. So we would, obviously, assume a strong posture in the defense. But, on balance, you are correct, the decision for Council today is one of cost benefit analysis. As the Council President pointed out, the Mayor, the Board of PFMC, PGW management have looked at these proposed changes and reached the conclusion that the benefits of PGW participating in this program outweigh what we are characterizing as a minimal contingent risk. The question is whether or not it is 291 RESOLUTION 970806 an acceptable business risk. And at least the Mayor, the PFMC Board, PGW's senior management, based on at least input from the Law Department as to the strength of our legal defenses, believe that, on balance, the benefits outweigh this risk.
Can I interrupt you? Because I think that it is unfortunate that these people are not here. But I would like to ask the City Solicitor, in conjunction with Mr. Ericson and some of our staff, to consider further language. And I would like for them to consider some language that further defines what it is and how it is you interpret the general principle of what's caused by whose responsibility. For example, I would like some language that says, where there has been a claim of injury to someone's person or to someone's property that grows out of the provision of electrical service pursuant to this agreement, and where, for example, among the numerous claims are a claim that we weren't authorized to do this, and all of those kinds of claims that we are now talking about, that 292 RESOLUTION 970806 QST agrees that, where there was such injury, it could not have been caused simply because we weren't authorized to be in this activity. And I give you an example. And I want you all to think about this a little bit, and get us some language. If a person is driving an automobile and gets in an accident, and doesn't have a driver's license, then you are not guilty of negligence simply because you didn't have a driver's license. You know what I am talking about? And if there is an injury that resulted from the provision of electricity, and one of all the claims is that they shouldn't have been in the electricity business in any event, then I don't want anybody to now be able to say, "You should be responsible because you didn't belong in the electric business," and then I have to get in a fight with QST and these people about apportionment of responsibility. I want language. Now, if some ratepayer somewhere decides to file some class action and say, "You shouldn't be in it," there wasn't any physical damage, no fire or anything, but just raises the 293 RESOLUTION 970806 theoretical question that we didn't have a right to be in this business and that PGW was using its existing personnel and using its existing facilities to provide electricity in conjunction with this, and shouldn't have been doing it, and, therefore, you know, asks the Court to adjoin the activity, and we end up having to -- because we would have to defend that suit. Now, I could agree that maybe QST shouldn't be responsible for that, because we all decided to enter into that Venture Agreement. I could live with that part of this issue. And I am cutting it just a little bit finer. It is like an onion. I am trying to peel this thing back a little bit. That kind of case, we can accept the risk for. The kinds of cases that I do not wish to accept the risk for is, there is a big fire, and there is a big problem, houses burn down, the whole block burns down. Somebody says, "Oh, a fire. PGW is in this agreement, in this, and should never have been there," and then we end up having to defend ourselves and hire batteries of lawyers and get into all kinds of experts; that's QST. 294 RESOLUTION 970806 And I wouldn't care about whether or not we had -- just because they say we didn't belong in the business, that doesn't in any way make us liable for anything that resulted in that incident. Do you get a feel? Does everybody here get a feel for where I am on this? And what I would like for somebody to do is to work on some language that covers us in that respect, and that amends these various amendments, and that requires these people to agree to this. But I am very uncomfortable with the situation the way it is right now. I want more. And I want these people to certify that they should have been, or they weren't here. I want them to acknowledge the notes of testimony here, and what's going on, and agree to that language, so we have some defense against them.
And I also want them to agree that, in these situations, if there is a situation like this, where these defenses, you know, these allegations are made, that there aren't any circumstances where we end up having to pay any 295 RESOLUTION 970806 expense of any kind associated with these incidences. And if we can get that kind of language, maybe we can get comfortable enough to be able to do something here. But right now I am very uncomfortable. Because I think what we are asking for is a little bit of a can of worms. And the problem is that, after a while, the cost of litigating the thing is such that you just end up throwing in the towel and giving them money anyway. And I don't really want to have to be doing that in this case.
Can we get them to put in language the kind of thing that the President is speaking about?
Councilman Cohen, let me tell you what my feeling is on this. If we can get language that sort of mirrors what we have been talking about here, if these folks can get on the phone and find somebody from QST, fine. If they can't, and if we think that this is what we need in order to be able to pursue 296 RESOLUTION 970806 this, then we amend it into the agreement, and then they have a decision to make. I mean, I have some small sympathy, albeit very, very tiny. Councilwoman Tasco is going to owe me big on this. She is looking at me shaking her head. I have tremendous respect for the people on the Gas Commission who are our representatives, who think this is a good idea to do this. And I am going to do everything I can to work with Councilwoman Tasco and Councilwoman Fernandez, as our representatives on the Gas Commission. Because they are the people that we rely on to try to do something within the limits of what it is we can do here. But I would like to have some further language, because I think we can do better than what's in front of us. I need a point of clarification. It was originally said to me -- and I know it was said to Councilwoman Tasco at one time -- that QST is objecting to this agreement because it somehow imposes on QST the responsibility and liability to 297 RESOLUTION 970806 indemnify the city and PGW against liability, I guess, for actions of PGW employees in the provision of gas. And my understanding is that that's not in this. Is that in this?
I didn't think it was in this. We are now only talking about QST's responsibility to indemnify and hold harmless the City of Philadelphia and PFMC and PGW under the pilot project?
Okay. Now, aside from this discussion that we just had, are there other areas of relief from our previously imposed requirements under the agreement that we you are seeking to relax by these amendments? Are there other changes that we haven't talked about? The Chair recognizes Councilman Nutter.
Thank you. Just 298 RESOLUTION 970806 a quick point of information. Madam Solicitor or Mr. Hawes, is there a time issue involving these amendments? Is there a time pressure issue here? I recall in the October hearings, the time issue at that time was that the pilot program was starting on November 1, and that we needed to get the bill at that time, and the subsequent Venture Agreement, which was being approved, I believe, by a resolution, they needed to get done prior to November 1 so that PGW/QST and, really, QST could get into the pilot program. We have done all that. Now we are back for amendments. Now the President has asked for language. I have raised, very strongly, an issue with regard to lack of presence of QST. What are the time constraints, if any, other than the general interest in getting it done as soon as possible? Are there any statutory time issues that we are dealing with here?
If the amendments are adopted, the Venture Agreement will be signed as amended, and the effective date of the 299 RESOLUTION 970806 Venture Agreement is November 1. So it would cover the intervening period. So from that standpoint, we would still be in the same position.
What, if any, impact is there on PGW during this time that we, apparently, have an unsigned Venture Agreement, we have had some back and forth between the company and/or the city and QST, now we are talking about potentially making changes to these amendments based on legal discussions between yourself and Tom Ericson, and responding, in essence, to QST with, this is it, from our side, and then Mr. President said they have to make a decision? What, in all of this, is the impact, if any, on PGW?
Councilman Nutter, from an operational standpoint, which is what I believe the question is, we literally can do nothing of any magnitude in terms of the marketplace and going 300 RESOLUTION 970806 after customers without the approval of these documents from this Council. We have at this point 8600 customers that are available. Part of the reason for doing this -- and if you look back at some of the performance criteria that we agreed to, report to you on each month -- most of those we can't even impact right now because we can't go after these customers. And time is getting away, and we have made, I think, a relatively good showing up to this point. Now that these 8600 customers are available, we would like to be able to go out and get those customers as a part of the trial. And at this point we are unable to do that, or anything else, related to the marketing and testing of strategies that we had agreed to some months ago.
Well, let me ask this last question, because I interrupted the President on a point of information. What's been the impact, if any, on QST? What are they doing? 301 RESOLUTION 970806
I think they suffer from the same thing we do. We could have bigger numbers. But the supply of electricity hasn't suffered.
I thought my understanding was that whoever it signed up is presently a QST customer?
So what's been the impact on QST, other than having a whole lot of customers, or some customers?
I was saying that they are in the same boat that we are, as we talk about the 8600 customers unsigned. There's been no impact at this point. Because the customers that have signed up, the almost 3,000 customers, or whatever the number is, are ones who have signed up on the strength of the fact that I believe the majority of them saw the PGW connection in the joint venture. 302 RESOLUTION 970806 So I don't think QST has suffered a great deal up to this point.
Can I interrupt you, Councilman? Wasn't there a mailing just recently?
You mean who signed? I signed the letter, and Craig signed the letter. It was to the new customers that PECO made available because of all of those who did not sign up from the first group.
So, to that extent, anybody who signed up as a result of that mailing believes that there is an existing Joint Venture Agreement between PGW and QST?
Yes; but no different than the first mailing. 303 RESOLUTION 970806
I understand that. But the first mailing was done prior to all of our discussions on all of this ordinance; right?
Why was there a mailing? I mean, if there is no Venture Agreement, why was there a mailing? And wasn't the fact that there was a mailing in violation of the authority, or lack of authority, of this Council?
Well, I can assure you, we didn't view it that way. The mailing was a requirement, I believe, of the PUC. Is that correct? President Street, we did not view it as a violation.
Look, we said that unless and until QST and PGW agreed on a Venture 304 RESOLUTION 970806 Agreement in compliance with an Ordinance that we passed, there was no agreement. And there wasn't any. Because there was a resolution here, there was a pending Public Hearing. In spite of that, notices were sent to all of the pool of customers saying, PGW and QST, select us as your provider. Is that what it said?
I guess my view, as I think back on it, was, we sent the letter out to the new customers, which we had to do.
Hold on just a minute. I mean, if we were going to go after the customers. I think my point, President Street, is that, in terms of the agreement, I thought that we were in compliance, in that, first of all, the expenses were covered by QST, we invoiced them for the cost of the mailing. And I guess I thought that that was consistent with the agreement.
Well, there is no 24 Joint Venture Agreement. You don't have a Joint Venture Agreement with QST. 305 RESOLUTION 970806 And as far as I am concerned, I don't know how anybody could believe that there is a Joint Venture Agreement. Because if there was, we wouldn't be here having this discussion. We just wouldn't be here. And I would like to ask the City Solicitor what her position is on this. I mean, there is no Joint Venture Agreement. Isn't QST authorized to go after these customers on its own? I mean, couldn't QST have just sent them notice saying, "Pick QST"? And if this doesn't happen, if this agreement doesn't get modified, won't QST just proceed to go after those customers outside of this Joint Venture Agreement? And if nothing happens here, if this thing doesn't get done today, and then maybe in January we authorize this, after some more study, then won't you all then just proceed to work as a joint venture team? I guess in some ways the fact that you sent out all those letters sort of moots this whole process because you are acting as QST's joint 306 RESOLUTION 970806 venture partner. Let me hear from the City Solicitor.
Council President Street, I have not had an opportunity to look at the letters. But I would say that if the language changes that we're discussing, if Council favorably approves the amendments to the Venture Agreement, and the Venture Agreement is put into place, as I stated previously, it is effective as of November 1. So to the extent you could argue that somehow PGW was acting without authorization, all of that is cured by putting the Venture Agreement into place.
I am not talking about what is cured now. I don't need you to answer a question I didn't ask. In your judgment -- and I know you are in a funny position here, because you are, in some respects, everybody's lawyer in this room. In your judgment, was a letter by PGW and QST to attract customers within the letter and the spirit of the Ordinance that we passed? 307 RESOLUTION 970806 I mean, what difference does it make if we have an Ordinance? Because if it wasn't, then there is no reason for us to do this. We could do this when we come back in January. Because if you say that doesn't matter, then PGW or QST can do another mailing next week and do another mailing the next week and do another mailing the next week. And I need to have your ruling on that.
Mr. President, may I ask something in reference to what you are saying?
To, I think Mr. Hawes, this whole process is being affected because of the market and the PUC, and their position of the market --
Councilman, I need you to move that microphone up or speak a little louder or do something, because we are having trouble hearing you.
First of all, I 308 RESOLUTION 970806 think there was a supposition that this thing was going to have a quick approval today. That's what I hoped that it would. But are the mailing and the other aspects motivated because of the PUC decisions and the marketplace that is opening up?
Councilman, you are asking a whole different question. I need to hear from the City Solicitor about the propriety of the mailing. Because if she thinks the mailing is okay, then I don't know why we are having this discussion.
Mr. President, if I may, in line with that, my memory is that Council, late in October, indicated that PGW would not have any expenditures on the joint venture. Last week when PGW came in for their budget, Gregory Martin indicated that PGW had made no such expenditures. And I'd like to know, have, since last week, things changed? Who paid for the mailing of this? Was it PGW?
I think the 309 RESOLUTION 970806 earlier question was, they invoiced the company, QST, for it.
That goes to the heart of Council President Street's question.
Let me try to answer, Councilwoman Verna, the question of the QST expense. We, I think, under the agreement, have a letter anticipating that -- not for this reason, but we wanted to be covered in that situation. We wanted to make sure that we were covered. We have an invoice to QST for the work that we did. And we have a letter from QST making sure that they understood that they would be billed for that as an out-of-pocket expense. We think that is consistent with what we have agreed to. It results in no out-of-pocket 310 RESOLUTION 970806 expense to PGW, none whatsoever.
I don't think that was our understanding, Mr. President, at all.
The question is, there is no signed Venture Agreement; isn't that correct? And if you don't have a signed Venture Agreement, what actions is PGW allowed to take as it relates to the pilot electric program, in an environment or under a circumstance in which they don't have a signed Venture Agreement with QST? What are they allowed to do?
So you are saying that the letter was not authorized pursuant to this Council's process?
There is no 20 signed Venture Agreement. The authorization that Council granted to PGW and PFMC to engage in the pilot program specifically relates to engaging in the program through the Venture Agreement. So if not -- 311 RESOLUTION 970806
And, presently, there is no venture, because there is no Venture Agreement. Therefore, you cannot --
There should not have been a letter. There should not have been a letter.
Mr. Hawes, Councilwoman Verna has a question I think you can answer.
Who authorized this letter to go out to the customers?
Craig Sheppard and I signed the letter. And I think when we did it, it never even crossed my mind that we were in violation, as is becoming clear we did. No disrespect was intended. The letter was simply in line with the requirements. When PECO authorized the new customers, we had to send a letter out to those 312 RESOLUTION 970806 customers telling them that they were customers as a part of the agreement. That is all we thought we were doing. We thought that we had covered the contract piece of it by making sure that we were reimbursed for those expenses. At least that was the intent.
I want to go back and ask the Solicitor now, who is PGW, under this circumstance, responsible to as it relates to anyone requiring them to do anything, whether it is PECO or whether it is the PUC, in the environment and under the circumstance that they have no signed Venture Agreement? If a requirement by the PUC comes down telling them that they must do X, can they do X, given the fact that they don't have a signed Venture Agreement, and there is no venture? And, what should they do?
The short answer is that PGW, PFMC's authorization to engage in activity in this pilot program, derives from City 313 RESOLUTION 970806 Council.
So notwithstanding a ruling by the PUC, no matter what PECO says about notification or anything else that has to be done, if you don't have a venture, which you can't have if you don't have a signed Venture Agreement, you can't do those things; is that correct?
The Chair recognizes Councilman DiCicco. COUNCILMAN DiCICCO: Thank you, Mr. President. My question is not germane to what is being asked, so I will hold off on my question. It is a question to Mr. Hawes regarding personnel at PGW.
The Chair recognizes Councilman DiCicco. You might as well get it now. COUNCILMAN DiCICCO: Thank you. 314 RESOLUTION 970806 Mr. Hawes, I was just wondering if you could bring us up to date on the status of Mr. Collins and his employment, or his decision whether or not he wishes to stay as an employee of PGW, and wishes to remain as a resident of whatever county he was, or is he moving into Philadelphia?
Mr. Collins -- I can address that. Mr. Collins' decision is that if the current policy of PGW around residency is the prevailing policy going forward, he will comply by moving into the city in compliance with that policy, and establishing a residence where he would stay in the evenings.
That's nice of Mr. Collins. COUNCILMAN DiCICCO: So his family would remain in Buckingham Palace, or whatever that was, and he will come to Philadelphia?
Yes. COUNCILMAN DiCICCO: Which means he is going to continue to do what he has been doing since he has been employed?
Yes. 315 RESOLUTION 970806 And I think the -- but to clarify, and I think this is where -- this is what I think is really germane in this case. That was the first part of it. I am prepared to support and recommend to the PFMC Board a domicile policy. If that, in fact, becomes the law, then it will supersede the current residency issue. And, therefore, anybody not in compliance would not be eligible to work in the Philadelphia Gas Works. COUNCILMAN DiCICCO: Correct me if I am wrong. That means he would not be grandfathered in?
What? COUNCILMAN DiCICCO: Would he be grandfathered in? You are saying, "supersede."
See, I don't know what decision the Board would make. But I think one of our recommendations would be that we have got roughly 500-something employees who are currently grandfathered prior to March of 1983. I don't know what the Board would decide, but it would not be my recommendation that 316 RESOLUTION 970806 we impact those. But beyond that, I don't know what the Board's position would be, but that would be the only strong feeling that I would have at this time, that those be grandfathered, the ones prior to.
What about the rest? COUNCILMAN DiCICCO: The rest of the employees.
Well, the only thing I can do is, I would recommend and I would support the grandfathering -- I mean, the continuation of those 500-and-something employees that are already grandfathered.
And what about the others who are now under the residency provision, as opposed to the domicile provision, after '93?
It's 83. '83 was the grandfather. '93 was the change of the policy from domicile to residence. I can't tell you what the Board's position would be. But I would be prepared to 317 RESOLUTION 970806 support some language that would suggest, at least in general, that everybody be under the same policy, other than those already grandfathered. COUNCILMAN DiCICCO: Another question. Mr. Sharbutt, I believe his name is, do you know, could you give me his title?
Mr. Sharbutt is the Chief Financial Officer. COUNCILMAN DiCICCO: Do you know what his salary is?
175. COUNCILMAN DiCICCO: More than City Council, I assume. About 175,000?
Right. COUNCILMAN DiCICCO: Would you happen to know Mr. Sharbutt's address?
I don't know the exact address, but it is in East Falls. And I don't know exactly the absolute address. COUNCILMAN DiCICCO: So it wouldn't be 800 West Montgomery Avenue? 318 RESOLUTION 970806
No; that's the Philadelphia Gas Works. COUNCILMAN DiCICCO: I don't have that in front of me, but I was informed earlier today that that was the address he was using. If that's incorrect, I would apologize.
That's incorrect. COUNCILMAN DiCICCO: But he is a Philadelphia resident?
He is in the room 15 today. COUNCILMAN DiCICCO: Are you a Philadelphia resident, sir? It is not 800 West Montgomery?
Can we ask the witness to come to the witness table, identify yourself.
I am Ramon Sharbutt, Chief Financial Officer. I reside every night of 319 RESOLUTION 970806 the week as a resident of Mr. Nutter's district. And the address is on Timber Lane in East Falls. COUNCILMAN DiCICCO: Is that along with your family, Mr. Sharbutt?
Yes. COUNCILMAN DiCICCO: Thank you. It is good to know we have some people.
Well, why did you put your address down as over there at the PGW office building?
When I first moved here, I didn't have an address, and that was when I filled out the forms. I didn't have an address at that time. And I didn't realize that nobody changed it. I bought a house about a month after --
Please continue, Councilman. COUNCILMAN DiCICCO: I am through with my questions. 320 RESOLUTION 970806
President Street, could I comment? COUNCILMAN DiCICCO: I am not clear on that yet, but...
Let me just comment. You said it is good that somebody lives in the city. I think all of the people, other than Mr. Collins, who have moved into the city, since we have been here, have all bought houses in the city who are under my direct reporting staff. COUNCILMAN DiCICCO: I am going to be asking of you, as I have done with some of the other agencies, Pennsylvania Convention Visitor's Bureau, as an example, and Pennsylvania Convention Center a list of the employees and their addresses.
Sure. COUNCILMAN DiCICCO: And, for your information, just as an example. The latest report, which I received about a week ago, of the 64 employees at the Pennsylvania Convention and Visitor's Bureau, 30 of them live outside of the City of Philadelphia. Their salaries amount to $1.5 million. And one employee lives in Fairfax, 321 RESOLUTION 970806 Virginia. The rest of them live in New Jersey. So understand I am not just picking at PGW. It is a very important issue for me, and I think for the citizens. That when we are asked to do things that we are asked to be doing today, to keep PGW in the ballpark, to make it competitive, which will employ people and pay people's salaries, my first and foremost obligation, I believe, is Philadelphians first. So I have to continue to monitor residency in not only PGW, but in all of the departments.
And I think, as I said before, even without the domicile policy, for people who report, the leadership of PGW who report to me and who have moved in since I have been here, I can assure you that they all have bought houses in the City of Philadelphia, each one of them. COUNCILMAN DiCICCO: Thank you. Thank you, Mr. President.
I need a further clarification. It is my understanding that prior to 322 RESOLUTION 970806 1983, are employees who were at PGW prior to 1983, a substantial amount of them, over a thousand of them, were grandfathered in, they are still there. We are not talking about them. Between 1983 and 1993, there was a domicile requirement. So people who came during that period of time should have to live in the city, domicile requirement. It is my understanding that in 1993, the domicile requirement was changed to a residency requirement. So at that time, there were certain people who could be hired to be in Mr. Collins' position. And our position -- and I think this is pretty much a unanimous position of this Council -- is that we would like for you to lead the charge and support a change in the policy from a residency to a domicile policy, and require that all employees that may have come in after 1993, between 1993 and now, have a domicile in the City of Philadelphia where they and their family lives. And not this residency stuff, and some nights I sleep here, and some nights I am over there, and all of that. That doesn't work for us, 323 RESOLUTION 970806 not at PGW. And that's where we would like for you to be. And can you give us the comfort that that's where you are, and that's the recommendation you will take to that Board?
Thank you, Mr. President. Mr. Hawes, I did not completely understand your explanation in response to Councilman DiCicco, specifically to Mr. Collins and what he thinks or what he feels or what he plans to do. And it seemed to be tied to, if somebody else does something, then I will do something. If somebody doesn't do anything, then I am not going to do anything. And I was confused by that.
Let me try to be clearer. Under the policy that is in place 324 RESOLUTION 970806 today, and that has been in place since 1993, Mr. Collins would be required to move in the address that he mentioned before in Wissahickon, get a voter registration card, register his vehicle, stay there at least during the week, during the work week. That is what he said before he did not do. That would be what he would be required to do under the policy that is in effect today at the Philadelphia Gas Works.
I am sorry. Under the policy in effect today, he would be required to do what?
The policy in effect today in the Philadelphia Gas Works, since 1993, is, he would be required to establish a residency, not a domicile.
First of all, living there at least continuously during the week.
And we have changed recently a number of our monitoring programs and internal control programs to make sure that people are doing and complying with that policy. But I think that those are the policy requirements as they exist today.
Okay. But now Mr. Collins' testimony, when he was here with us on October 29, states that he does not live at 5450 Wissahickon Avenue, he does not stay at 5450 Wissahickon Avenue, he does not sleep at 5450 Wissahickon Avenue, his family is not there, his car is not registered there. I would hope that he would get a voter registration card, because he is in my district, also. Although, at this point, also, he would probably not be voting for me. So, I mean, he is not in compliance with the current residency policy. 326 RESOLUTION 970806
And gives no 4 indication, at least in his last appearance here, that he had any intention of complying with the residency --
What I said earlier was that he was given an X amount of time to --
Originally it was December 1. But he was having some appraisal work and so forth on his home, trying to look at all of the factors that you have to take into consideration in this kind of situation. As of last week, he told me that he was prepared to move and comply with the residency requirement that is in effect today at the Philadelphia Gas Works. I think the point is that, as we move now beyond that to domicile, that would become a moot point. But at this point, you asked me what 327 RESOLUTION 970806 his decision was; that was the original question. And my answer was and is that he has agreed to comply with the policy that is in effect today and has been in effect since 1993.
Okay. Thank you. (Councilwoman Verna assumes the Chair.)
Councilman DiCicco, just looking at you, I know there is something you are dying to say. COUNCILMAN DiCICCO: Madam Chair, the object here was, hopefully, that he would make a decision to move himself and his family into the City of Philadelphia. And, with all due respect to 328 RESOLUTION 970806 Mr. Hawes, I mean, you can't answer for what decisions he and his wife and family make. But I think he came from -- where is it?
Tulsa, Oklahoma. COUNCILMAN DiCICCO: Oklahoma. I mean, he traveled across this country to take the job at PGW. And he has had --
No. He came here to work for Sun Oil. COUNCILMAN DiCICCO: Well, at some point he made a decision to move halfway across this country to take a job in the Philadelphia area. Subsequently, he makes application for a job at PGW. My point is, it had to be much more difficult, I would assume, for he and his family to make the decision to move from Oklahoma. And it has to be a lot easier to make a decision to move from Bucks County, into Philadelphia, I would think, than from Oklahoma to Philadelphia. And for some reason, I guess -- and I wish he were here today -- I always want to ask people, why is it you find it so difficult to live 329 RESOLUTION 970806 amongst people like us who are trying to make PGW have an opportunity to compete, continue to work and pay the high salaries that people like Mr. Collins are making today. It is a look of frustration. I fight this fight, and I have probably said this a dozen times, and my colleagues are probably tired of hearing me. When we go out in the community, we talk to people who are thinking about leaving. We ask them to stay and fight the fight, and you can't run away from your problems. But for some reason people just think that it is beneath them. And that's the impression I get, that it is beneath them to live with people in the City of Philadelphia, people like us. You know, I am a neighborhood guy. I went to high school. I raised two sons. One is a dentist today, born and raised in the heart of South Philadelphia, in a little old row house, whose father only had a high school education, played hockey in the street, played stick ball in the schoolyard, did all the things that everybody else does in the city. 330 RESOLUTION 970806 And I am so proud that my son is a dentist. And my youngest son is in the second year of law school. Do they think that -- thank you. More confusion in this world, another lawyer. That's what we need, right.
We both have one second-year law students. COUNCILMAN DiCICCO: Present company excluded, Miss City Solicitor. It just drives me nuts. And I look at this in every department. And we keep making an excuse. Are there not any qualified people here? And I have no reason not to like Mr. Collins. I am sure he is a decent guy, and he is a good family man. But why do they do this? Registering to vote, which may or may not be good for Mr. Nutter or the rest of us, and registering a car in Philadelphia, really gets me nowhere, as far as I am concerned. It doesn't help me. I want him to be really a part of our community. I want his kids to be able to interact with kids in our city, the kids that we are trying 331 RESOLUTION 970806 to help out and make a better life for, and all the things that are important to us, why most of us took this job.
Right. I guess I don't want to speak for Tom. But I think for the rest of us who do live in the city, we do understand that, and we do support that. And we do have children who live and go to school here. And we do love living in the city. I can't speak for Tom. I know that Tom was already where he is. And I think there was some economic reasons, which we were not able to help him with, that would have perhaps caused him to do some of the transition. But I am having to speak for too many people, and I don't want to do that. I can tell you that our view, I think, Deborah, who lives in Center City, I think Ray, who lives in East Falls, I think Bud, who lives in Mt. Airy, I think myself, who lives in Mt. Airy, I think we all agree with that. But I don't necessarily believe that Tom isn't a good person because he wants to say 332 RESOLUTION 970806 where he was and because he wants to keep his children where they are. I don't want to make excuses for him. I don't want you to think it is a prevailing situation. COUNCILMAN DiCICCO: I don't expect you to make excuses. And it is kind of sad that it is one person we are centering on. But it is one person in a universe of many people. The School District, over 5500 employees have gotten waivers over the years, they don't live here. And Philadelphia Convention and Visitor's Bureau, they don't have people that live here, but are paid by our tax dollars or the hotel tax. The Pennsylvania Convention Center, they have 10 or 15 employees who live in New Jersey. Again, it is our tax dollars. We have to deal with tax issues, raising taxes, liquor by the drink tax, all these things that pay their mortgages. And if we are not good enough for them and their families to live with us, then maybe 333 RESOLUTION 970806 they ought to go find a job in the counties and states where they reside. Let those Commissioners figure out a way of getting the tax revenue to pay for their jobs. We have enough people in Philadelphia who need jobs, enough qualified people who need jobs. And I know I get in trouble with the Mayor. Because he always says we are trying to encourage regionalization. Well, I don't know if that will happen in my lifetime. God bless us, if it does. But, in the meantime, my responsibility is to the city. Thank you, Mr. President. Thank you, Mr. Hawes.
DiCicco said everything I was going to ask. But this is what boggles my mind. Why do we even actively recruit people, so he has to 334 RESOLUTION 970806 do that 20-minute scenario there, so I have to sit here and listen to it again? Aren't there enough people that live in the city, that were educated here, that could possibly do a job? $175,000? I mean, it is amazing. I mean, not to pick on you or Mr. Collins -- and Frank just went through the whole scenario, the School District -- why are we here and doing all of this? This is like dental surgery without anesthesia. I am looking for Councilman Nutter. He must have stepped out. He asked the questions. We are doing things that are making it hard for us to help out the Gas Works. The Solicitor is sitting here, and we are beating the crap out of her. Why are we paying her to stick up for them?
Let me say a couple of things about all of this. And sometimes when we have these discussions, I start feeling very old in local government. Because if I had this discussion one 335 RESOLUTION 970806 time, I have had this discussion one hundred times. And Councilman Longstreth will tell you, I have had this one hundred times. Philadelphia Home Rule Charter requires different things of different people. The Charter requires and authorizes people who are recruited into this government by a Mayor, the Charter says you get six months to move into the city. Because it is unrealistic to expect that we are going to find all the people to run this big government who all live in the city. And it is not unusual to do national searches for a variety of different searches. We did a national search to find Mr. Hawes, and to find the City Solicitor and Mr. Hayllar and all. And that is not unreasonable. And what the Charter says is that you have to live in the city. You get six months to move in. But you have to live here while you are an officer of the City of Philadelphia. But what it does is, it allows them to maybe maintain a house someplace else. Because they are here. And the average person who comes 336 RESOLUTION 970806 into Administration stays probably between two and three years, not four years, not five, not eight. It is a rather short period of time. The City Council of Philadelphia imposes by way of ordinance the domicile requirement on city workers. If a majority of the members of this Council wanted to, we could say that people who work for the City Council of Philadelphia do not have to live in the city. We would never say that. We will never, ever say that. Because people who work in the police department, the fire department, the recreation department, and all these agencies, ought to live in our neighborhoods. And they just ought to be here. We had a terrible problem with a former Police Commissioner who wanted to say, "I live in the City of Philadelphia," but wanted to have his wife and children someplace else. But that's not the situation we have at PGW. Because it is assumed that people who come to work for PGW are making a commitment to this city, not to an Administration. It is a commitment 337 RESOLUTION 970806 to the city. And we want them to live here. We want them to do the kinds of things that we do, to feel the pain that we feel, and to feel the joys that we feel. And it is unreasonable to think that people will come to work for a wholly owned subsidiary of the City of Philadelphia, and then live someplace else and have an apartment in the City of Philadelphia. Now, those situations ought to be distinguished from the Kvaerner situation, where we are creating jobs, we are spending money, and we know that all the people who have those jobs are not going to be residents of the City of Philadelphia. We have terrible problems with the situation that the Councilman has mentioned, where we have a convention and visitor's bureau, that gets paid out of tax dollars that's raised by the hotels in this city, and live all over the region. The Convention Center Authority now, again, is a little different. Because its Board members are appointed from people all over the Commonwealth, because the Governor has appointees 338 RESOLUTION 970806 and everybody has appointees. But, the source of the revenue is the bed tax, the hotel tax in this city. So this is not a simple proposition. But my bottom line is that the situation at PGW seems to me to dictate work over there, live in the city. Live in the city. Now, we don't say you have to live in the city at the time you take your job over there, like we say, city workers, you have to live in the city a year prior to the time you can even be eligible to take the Civil Service test. We say, you can get hired, but you have to move into the city. Councilman. COUNCILMAN DiCICCO: Mr.
President, just for clarification, the Pennsylvania Convention Center Authority, somewhere between 10 and 15 of the employees don't even live in the Commonwealth; they live in the State of New Jersey.
Just let me 339 RESOLUTION 970806 finish this. It is not these three at the table here. I look around the room, I see two Civil Affairs cops here. The one over there on the left, Eddie Maynor, he grew up four blocks away from me. So I know when I ask him a question about the police or Civil Affairs, he has sort of a mindset how it is to have grown up in Philadelphia. Now, we all can't be fortunate enough to have grown up in Juniata Park or even Philadelphia. I understand that. We are glad to bring talent from other cities and other neighborhoods. We are glad to have them. But if it is good enough to be a Philadelphia policeman, to sit there for a year before they do anything -- I understand we need all these big, high-priced talents. And maybe the next Mayor will think about, when he starts recruiting people, that maybe a little regionalism or that a little city experience is something to add into the mix. We went to Boston looking for somebody who is in charge of the Parking Authority, 340 RESOLUTION 970806 and we have probably 30,000 people here who could do the job. And it is not intended as a shot for Miss Cutler or these people. We have to start looking at the talent we have here. We sit here, and we are putting kids through public school and parochial school. We have people that can do these jobs. And you are welcome to them. They weren't handed anything. They were certainly qualified. But if it is good enough for the Police Police department and Eddie Maynor, it is good enough for us. That's what it is all about. It is Philadelphia. We were here. We were here long enough. And I am going to go out on a limb here. If everybody wants to live in New Jersey, they can continue to live in New Jersey, but they just can't work here. It is simple. They can bring their company here and work here, but they are not going to get paid the tax dollars that people do. Eventually that's going to change. Thank you, Mr. President. 341 RESOLUTION 970806
Thank you very much. No lights are on. The Chair recognizes Councilman Nutter, wherever he may be.
I would like to recommend we take a couple-of-minute break.
I may want to go further than that. I need to ask the City Solicitor as to whether or not there are any other parts of this agreement where either the amendments to the original QST/PGW agreement or the proposed amendments to the amendments take anything away from what we put in the original ordinance?
The only additional change, Mr. President, I would like to point out to members of Council, it is in the section on indemnification, but it has to do with who controls the defense of the potential claims.
Originally the language provided that the city would direct and manage the defense of any claim through Council 342 RESOLUTION 970806 selected by the City Solicitor. The changes proposed by QST provide for that to occur only in the event that QST in the first instance fails to undertake the defense. So, in other words, we would have the right to assume, direct, and manage the defense of any claim, only in the event that QST fails to undertake the defense of any such claim or proceeding. So it does not relate to the reimbursement obligation; it relates to who actually directs how the claim is handled.
But why did we put that in there in the first instance? That was your amendment. That was your amendment. And if it was good enough for you then, why are we being asked to change that? I mean, don't we want to pick our own lawyers and don't we want to direct our own defenses?
I think that 343 RESOLUTION 970806 this change corresponds with the other changes that QST has made. So QST is still reimbursing us, assuming the liability for claims related to their activity. And their position is, they should then be in the position to manage and direct how that claim is defended. That is not unreasonable.
Is the last statement, that it is not unreasonable, based on the fact or the supposition that whatever judgment or damage that comes out of that case, they would have the responsibility for paying?
There is no 16 change to the fact that QST can't settle a claim without our consent. This simply relates to who between QST and the city would actually call the shots in terms of how the claim is handled, how we defend it. It doesn't change the fact that, at least in terms of the scope of their indemnification obligation, they would pay for it. It doesn't change the fact that as 344 RESOLUTION 970806 far as claims arising out of their activity, that they would have the liability for it. It simply goes to the question of who is going to be in control of how the claim is managed. But it can't be settled, no money can go out, without our consent. And the only change there --
Since it relates to -- it ties to the scope of QST's indemnification obligation. So, again, here the context is that QST is indemnifying us, they are assuming liability, they are indemnifying the city in connection with anything that arises out of their activity, the provision of electricity. So this relates to, in any of those claims or actions, they still have the indemnification obligation. They can't settle the claim or action without our consent, but it simply shifts as between QST and the city who actually manages. 345 RESOLUTION 970806 And it says, we still have the ability, if between QST and the city we mutually agree that this is something that we should assume, then we would assume and direct and manage the defense.
Okay. Back into the general area of liability, Madam Solicitor, while we are talking about this kind of issue. Would you, subsequent to the hearing, be able to address the proposal, I guess, that I made earlier about some kind of hypothetical, $5 million claim, and be able to lay out to us -- this is when we were having the discussion about, I think it was, nonpersonnel, nonproperty damage claims, but this other thing about somebody coming after us because we weren't supposed to be in the business at all, according to their view or opinion, or the view of their lawyer, and you provided layers, in your view, of defense, ranging from insurance, to political subdivision, Tort Claims Act, deductibles, and a wide variety of things that seem to cover us all around. And then I said, and that all of 346 RESOLUTION 970806 those things should, on that chart, show City of Philadelphia, zero. Would you be able to provide us with such a chart or a document or something that we would be able to see for this example, the hypothetical $5 million claim against us, or lawsuit against us, or something?
Yes, I could try to put something together. Yes, I can do that.
As most of you know, the Council session of today, December 11, is in recess, and we are now conducting a Public Hearing on Resolution No. 970806. What I would like to do -- and if I could have your attention -- lawyers are working on the language that I requested earlier. What I would like to recommend that we do, because they are taking a long time, and I am not surprised about that, what I would like to recommend we do is, go into recess on the Council Committee of the Whole. We have a whole calendar here to do, 347 RESOLUTION 970806 with a lot of bills and all on it. And that we do the calendar for today, complete our Council session, of course have the Committee of the Whole stand in recess. And if we can work out some language, I will, of course, make it available to every Councilmember. We can discuss it. And if people are satisfied with it, then we can consider it. If there is, you know, no agreement, then we can decide then what it is we want to do about that. But can we put the Committee of the Whole in recess? And we will say we will be in recess, I think it will take us probably, if we could do a consent addenda, Mr. Cohen -- just kidding. Maybe we could stand in recess until 4 o'clock for the Council Committee of the Whole, and then do our Council session, and then come back into session here, and then go back into session, if it is necessary. With your agreement, this committee will stand in recess. 348 RESOLUTION 970806 I think maybe we could just leave the table here and move the box, so that we could quickly move back and forward. And let's just see if we can get this. There is one other item, though. Just before we do that, it is my understanding that today the PUC took an action that probably didn't make PECO very happy, i.e., it rejected by a three-to-two margin their proposal, PECO's proposal. And I further understand that that doesn't affect the pilot, and we really don't need to worry about this as it relates to this discussion. Is that true?
We do not have to worry about the Public Utilities Action today, as it relates to this transaction. I know everybody got it, got the copy of the press release. You didn't. Okay. Can we distribute it? I thought you had it. The PUC did something today. But I 349 RESOLUTION 970806 understand it has nothing to do with what we are doing here. And, therefore, we don't have to bother ourselves about it. The Committee of the Whole will stand in recess until 4 o'clock. We will now reconvene the Council session and continue our Council business. (Public Hearing stands in recess.)
This is a reconvened Committee of the Whole, and we have under advisement Resolution No. 970806. At this time I would like to ask the Sergeant At Arms to distribute this to the members of Council. If I could have your attention, please. Do all the members of Council who are here have the proposed amendment to the amendment? And at this time I would ask that the City Solicitor read the proposed amendment to the amendment.
Mr. President, the language distributed would add a sentence to the end of Section 10(a). The sentence that's underlined, for 350 RESOLUTION 970806 your convenience, the preceding sentence was retyped so that you could view the change in context.
So that if a member of Council takes the black-lined, indicating changes to the Venture Agreement, and looks on the first page under 10, you will see the underlined language, "As between QST and PGW, QST assumes sole and absolute responsibility and liability resulting or arising out of the provision of electricity," as described in a couple of other paragraphs. And after that, we propose to add the language, "The liability described in the previous sentence shall in no event be limited, denied, expunged, or otherwise circumscribed as a result of any degree, holding, or finding by any agencies, commission, or Court that PGW, the city, or PFMC is or is not authorized to engage in the activities set forth in this agreement"?
Does every member see where we are? Now, would you tell us why this is important to us? What does it have to do with all the other stuff that we said earlier? 351 RESOLUTION 970806
This change makes it absolutely clear that in the event there is a lawsuit, and we are sued along with -- and by "we," I mean the city, PFMC, PGW -- we are sued along with QST, and the claim arises out of QST's provision of electricity, its activity, and there is a count or some part of the Complaint that also raises the question or alleges that PGW has no 10 authorization to enter into the Venture Agreement, that QST, nonetheless, remains responsible for any liability arising out of its activities, and that liability is not limited in the event it is ultimately determined that we do not have authority to engage in the activities.
So, Madam Solicitor, you are saying that if we are sued, QST cannot then turn to us and say, well, but, you know, Count No. 5, out of a 20-count charge, is that you shouldn't have been in this business in the first place, and, therefore, you have to go and defend yourselves on that particular count. And, if that were found to be the case, you, the city would have 352 RESOLUTION 970806 to go and pay for it? Even if someone said that, that QST is still responsible?
What it means is that QST could not take the position that, if all of the allegations in the Complaint, except one, related to the property damage that arose because of their provision of electricity, that simply because of that one count, that they no longer are responsible for paying for any liability. It does not mean -- its liability. It does not mean that, in that context, we would not defend that count. So, in other words, QST --
For liability, correct. Or liability arising out of the fact that we don't have authorization. But QST cannot back away from its responsibility. And what would happen in that situation, as a practical matter, let's assume we're talking about a Complaint where all of the allegations except for one count relate to the 353 RESOLUTION 970806 building that blows up because of the provision of electricity. QST will defend the city on all of those other counts. They will have the liability. They will reimburse us for any liability that we have that is related to that activity. As to the count that relates to our legal authorization, while theoretically we would have to pay the costs of outside counsel, because, practically, they are assuming the bulk of the defense -- and I would personally be interested in the outcome of an allegation of that nature -- the Law Department would defend and work closely with QST and cooperate in the defense of that Complaint. So that, as a practical practical matter, we may not incur any expense of outside counsel in defending the city and PGW in that situation.
Thank you very much. Is there any other member of Council that has any questions about this amendment? 354 RESOLUTION 970806 So that you will understand, what we will be doing is, amending this language onto the black-lined set of amendments, to the proposed set of amendments to the Venture Agreement. And all of it gets merged into one agreement. Is there any question that anyone else has? Any question that anybody wishes to ask of anyone at the table? Anybody have any more residency questions? Just kidding. I think we beat that residency thing. Councilman Nutter.
Mr. Chairman, I have a question of Mr. Hawes. Mr. Hawes, you responded very definitively on the question of Mr. Collins. In light of the bill introduced by Councilwoman Tasco, that was introduced during the earlier Council session regarding domicile, your statement was that you would ask, I guess, the PFMC Board to adopt its own domicile requirement. The question is, when would you expect that to happen?
I would make the request at the December Board meeting, which is a week from today.
And when would you expect the PFMC Board to take action?