I have some, 133 03/31/04 - FISCAL STABILITY - RES. 040276 but I think we're going break and I'll have them later.
The Committee will stand in recess until 1:30. (Recess taken from 12:30 p.m. to 1:30 p.m.) - - - -
The Committee on Fiscal Stability and Intergovernmental Cooperation is now back in session. The Chair recognizes Councilwoman Tasco.
Thank you. I'd like to go back to the $125 million stimulus fund. Could you tell us again what is the funding source of these funds?
The funding source are the reserves that support the water bonds. And the proposal that Janice can talk about in more specificity is to replace the cash reserves with a surety bond. Ms. Davis is going to be here 134 03/31/04 - FISCAL STABILITY - RES. 040276 momentarily. I'm sure she can go into it in more detail.
I want to talk to you along that line of the stimulus dollars. What would the rest of the money be used for?
As I tried to indicate earlier, the detail programing for the money hasn't been complete. We hope that will come out of the economic stimulus. I can talk to you about the vision and the need that we see that is currently unmet. We have over miles of waterfront 18 in the City. Back in the first term, the 19 Administration completed a strategic plan for 20 North Delaware. We had international competition for planners. They came up with a strategic plan for the more than 10 miles that we have from the Ben Franklin Bridge. It's land that was historically industrial and now just sits there largely unused or 135 03/31/04 - FISCAL STABILITY - RES. 040276 underutilized. A lot of the parcels have environment problems. There's really no 4 infrastructure there. But when you look across the river, when you look elsewhere in the United States, you see other jurisdictions that are making use of this kind of riverfront, both for residential, recreational, and retail and commercial development. And so the vision is to be able to mobilize sufficient resources to re-tool these unused assets in the City. If you look at the naval yard, it's the same thing. The federal government abandoned it. It's some of the largest acreage that the City has. It has problems. It does not have the infrastructure, it doesn't have the roads, it doesn't have the water system to support residential or even commercial development. If the City is ever going to be able to take advantage of these assets out there, we're going to have to be able to provide some kind of infrastructure. Values in the City are not sufficiently high that the private 136 03/31/04 - FISCAL STABILITY - RES. 040276 sector is going to support all of it. And we have a need for roads --
Excuse me. Councilman Goode has a point of information, please.
How different is that than the industrial park strategy that didn't work?
I think that one of the things that these assets have that other areas of the City haven't had is the waterfront exposure. I think that what we're seeing across the City is more developer interest in the City than we've seen historically. This is something that we see out of NTI. We put a request for proposals for developers for development opportunities in the middle of North Philadelphia and have seen people come to the table who historically have not come to the City at all.
Can Mr. Deegan speak more specifically to how that compares with the industrial park strategy and how 137 03/31/04 - FISCAL STABILITY - RES. 040276 successful the industrial park strategy was?
Good afternoon. Paul Deegan representing PIDC and PAID. Good afternoon, Councilman, Members of the Committee.
The question really is, when was the industrial park strategy developed? How much money was pumped into preparing land within industrial parks and how much of the industrial parks are still vacant?
I don't have the exact numbers of how much money has gone into the industrial parks. It's been --
First question was, when was the industrial park strategy created?
I think originally we started off in 1960s around Northeast Philadelphia Airport and moved on to Byberry. We sold over 1300 acres in 20 years. But I'm not sure what the exact cost would be.
Is a majority of 138 03/31/04 - FISCAL STABILITY - RES. 040276 the industrial park space still vacant?
I'm not talking about in the Northeast, I'm talking about City-wide in terms of American Street --
How long did it take to fill the majority of the space?
Well, it took us around -- I guess you'd have to say we sold about 1300 acres in 30 years, so that pretty much tells you what the absorption rate is.
That's okay. In terms of the waterfront where you have received proposals for development, were there City funds invested in preparing that area for development?
The parcel down 139 03/31/04 - FISCAL STABILITY - RES. 040276 on the waterfront where the proposals have been submitted by the various developers to develop. We had someone from -- Councilman DiCicco brought someone in to do a big development down there, and that didn't come though. Now we have Bart Blattstein and other people putting in proposals to develop the waterfront. Did we have infrastructure money going into projects?
I can't say I'm familiar with those projects. I'm more familiar with the navy yard. We haven't been, I don't think, as active in the central Delaware riverfront or the South Philadelphia riverfront.
I can get you the 140 03/31/04 - FISCAL STABILITY - RES. 040276 exact dollars that have gone into Penns Landing. We've made 108 dollars and UDAC (ph) dollars possible there. The City has annual subsidy dollars it gives to Penns Landing directly. I think we've had capital expenditures that we've made along Penns Landing. I know that we periodically have to do infrastructure support to support the riverside, but I can get you a breakdown of the dollars that have gone into Penns Landing over time.
And we still haven't really developed too much down there yet, have we?
No. The City has spent decades trying to come up with a proposal for the limited area of Penns Landing. What the City has tried to do is focus on retail development almost exclusively and are now, as you know, looking at proposals that require mixed development, in part because of some of the challenges.
Does the City have a plan for the development of Penns 141 03/31/04 - FISCAL STABILITY - RES. 040276 Landing, or we just have the land and tell people to come and present what they think it ought to be?
The City has controls that it put out for Penns Landing. The City to the north of Penns Landing specifically has a fairly comprehensive plan that sets out a mixture of recreational, residential, and commercial use.
Well, is there development north of Penns Landing? Are any plans for development north of Penns Landing?
There are proposals for residential housing that I think some of them should be announced. Some of them have City involvement, some we're not involved with at all. I think that I can bring the Housing or the Community Development people who can give you more detail on the kind of development that's planned for North Delaware who are also working on creating a River Road. Part of the issue with North Delaware is access, and Maxine Griffith and some of the planning people can talk to you in 142 03/31/04 - FISCAL STABILITY - RES. 040276 more detail about the kind of infrastructure they've been working on. The City's been working with the military. There's a military installation that the federal government is looking to get rid of. We've got $10 million in support that Congressman Hoeffel helped us get to enable the government to demolish the federal installation, and that's a project that will be put out for development. In connection with that, the Administration has been working with the District Councilpeople on rezoning the area so that as the development interest increases, it happens in a way that is consistent with the strategic plan. What I'd like to do is have the opportunity to have the development people and planning people come and talk about the entire vision, what the strategic plan is, what kind of steps have been taken and what the challenges are moving forward. We can also have members of the development community come and talk to you about what it is they see as 143 03/31/04 - FISCAL STABILITY - RES. 040276 opportunity in Philadelphia.
Well, would the ratepayers be paying for the improvements that are historically paid for by the developer?
The money's coming from the bonds from the Water Department?
It's coming out of the reserves. Janice is supposed to be on the way over. She can talk about how the financing works and how that --
We'll come back to that. I think Stephanie Naidoff talked about an economic summit to figure out how to spend the rest of money. Wouldn't it seem a better idea to have had the summit to determine what the needs are and then determine what the budget would be rather 144 03/31/04 - FISCAL STABILITY - RES. 040276 than --
I don't think we propose spending the money until after the summit is over. One of the challenges -- and the summit is actually a lot broader. Its mission is a lot broader than simply talking about River City. One of the problems that we've heard both through the 21st Century Forum and that you hear in the City over time is nobody knows what the City's economic development strategy is. Councilman Goode asks that all the time, you know, what's the strategy for neighborhoods? Where are we going with all of this? We commit to TIFs and KOZs, you know, is that better than an abatement strategy? This City really doesn't have a comprehensive, agreed-upon economic development strategy. And so we want to have the summit in order to try to develop something that's clear that, hopefully, will build consensus so that every time a project comes along we're not throwing money at it, but we're doing things that are calculated to 145 03/31/04 - FISCAL STABILITY - RES. 040276 grow the jobs and businesses. What we do know is that we have wonderful opportunities and that some of these opportunities are going to take additional resources. The private sector is not going build a road, so there are additional resources that are going to be needed. What this Administration has tried to do is identify resources. And it's hard because our financial situation is what it is. But we have identified what we believe is a viable first installment. We don't have detailed plans on how to invest it. We hope that would come out of the planning in a summit and future --
Well, it seems to me that once we do the summit and have the plan, that's the point when you should ask for the money. It may not be 500 million; it may be something higher in that. So in the meantime you get the 500 million, what happens to it? It just sits someplace?
We have not transmitted legislation that would be required 146 03/31/04 - FISCAL STABILITY - RES. 040276 in order to make the money happen. What we want to do is have an economic summit -- one of the other challenges that the City faces is once you have a strategic plan, how are you going to implement it? These are the kinds of operational questions -- some of them operational, some of them strategic -- that we hope would come out of the summit. This is not a proposal, the first 125 million does not have a financial impact on the General Fund and the Operating Budget. We have it in our Five-Year Plan because it is part of the Administration's strategy to capture the value of the assets that we have scattered around the City. It is not unlike some of the NTI. We had enough vacant land and abandoned land in Philadelphia that if you aggregated it, it would have been the size of Center City, but for decades it just simply sat in neighborhoods and we really didn't have a way of taking control of it. The riverfront land in some ways is analogous to that. People look at it, they say it's along the river, they see what's 147 03/31/04 - FISCAL STABILITY - RES. 040276 happening in New Jersey; and if we don't do something, it's just going to sit there.
Well, what is your strategy then for the neighborhoods? For a District Councilperson like myself, which probably didn't get too much in terms of NTI given the nature of our district and what our needs are, now we look at floating money for the waterfront, and still in my neighborhood we have needs to support plans that we have put together for the development and improvement along our commercial corridors, and it's just very hard to even access a street light or a banner from the City. So it's kind of hard to say I can do this because I don't see any resources channeling into the community for any economic development.
And what I would offer are two things: One, that the Mayor would envision that some of the $500 million would also go into neighborhoods; but secondly, that this strategy is not envisioned as one that pits neighborhoods against the 148 03/31/04 - FISCAL STABILITY - RES. 040276 riverfront. What we have to do is grow the overall economy. And if we don't grow the overall economic, we will forever be working with the same shrinking pot of dollars trying to tackle mounting challenges in our neighborhoods.
I think if you have the economic summit and you generated a program and a plan that has input by people that you could sell, then you could grow the economy. But because you don't have an economic strategy, you don't know what you're doing and everything is piecemeal. And at that point I think it drives the interest of developers that want to come into the City if they see an economic incentive. But right now when they can't see that the Penns Landing is being developed, it's been 10 or 15 years that that's been trying to be developed, I mean, I don't know if they see just putting in some infrastructure is going to help motivate or generate any economy on the northern end either.
What I'd like to do, 149 03/31/04 - FISCAL STABILITY - RES. 040276 hopefully, during the course of these hearings is to bring the economic development group in to talk about the plans. There's been a lot of work that's been done over the last several years with respect to the naval yard, with respect to North Delaware, and have people make a presentation and also talk with you about what's envisioned to come out of the summit and how that syncs with the proposal to put additional capital resources on the table. I think you're right. I think that before we start spending dollars, we need to have a strategy for spending them. And in putting this in the Five-Year Plan, I think it's -- what we don't intend to say is that come July 1st we're going to start writing checks; that's not the intention at all. We intend to have the summit. Hopefully, there will be a final product shortly after the end of the summer that would have the kind of consensus that would guide the spending of dollars and the future development.
When is 150 03/31/04 - FISCAL STABILITY - RES. 040276 the summit to take place?
I don't have the exact dates. We're trying to schedule it so that we don't preclude a lot of participation because it's over the summer months.
I'll have to find out where she is or have somebody else come over who can explain that.
Thank you, Madam President. Ms. Wilkerson, getting back to the effectiveness of your investment strategies but moving away from NTI and economic development but talking about how the stock market has hit the pension system and the need to replace those dollars, how does your investment performance compare with the other cities among the top 10?
I can get you a report on that. Rob can provide an answer at 151 03/31/04 - FISCAL STABILITY - RES. 040276 a high level. What we do normally is track the City's investment against benchmarks for each different type of investment.
And our earnings have been better than that benchmark. But your question is what do we look like against other cities, and I haven't seen that analysis, so we'll get you that.
My question is, everyone has been hit hard by the stock market, but that still doesn't excuse whether Philadelphia is performing worse than other large cities. And I don't know that it is or it isn't. So my question just is how is it performing in comparison to comparable cities.
Right. And we'll get back to you. I know this is a big issue for governments across the country. But we'll get the detailed information for you.
Ms. Wilkerson, if the City is planning on closing facilities, cutting the arts and cultural 152 03/31/04 - FISCAL STABILITY - RES. 040276 facilities and the Community College, why would you propose at the same time that you're doing these cuts to move forward with the central library expansion?
The central library expansion is a project that is probably years away still. What we have done is identify a strategy for --
We have in our budget resources in support of the library. When you talk -- and Stephanie Naidoff or some of the library people can talk to you in more detail about what their development timeline is. The actual construction will await the development of funds for the library. There's a lot of private sector fund-raising that has to go on.
What do we have in the five-year budget for the central 153 03/31/04 - FISCAL STABILITY - RES. 040276 library?
We have debt service beginning in FY '06 for the central library. We don't have anything in '05.
We have -- I think it's still the 60 million. I'd have to get back to you. We have 3 million in debt service, we have 3 million a year in debt service in '06 going on now.
Is this the same type of proposal that was presented to Council last year?
No. I believe this is a debt service that would support a tax exempt financing.
My recollection is pretty good on the numbers from this one last year. There was a $60 million lease purchase, whatever. But only 30 of it was for the library. And I'm wondering also is the borrowing -- are we going to now borrow 60 million for the library? Are we still 154 03/31/04 - FISCAL STABILITY - RES. 040276 committing 30?
We're still committing 30 to the library. I think during the process last year we committed to find other funding sources for after school so that would come out of the issue which would make the issue smaller. And then I guess we would work with the School District on their funding piece.
Would you detail the cuts to the arts and cultural institutions that you have included in the plan and your rationale?
The Administration has, I believe, a $2.5 million cut for the Art Museum. Rob, you want to walk down the balance of the --
We have two and a quarter million dollar cut to the Art Museum 155 03/31/04 - FISCAL STABILITY - RES. 040276 which eliminates its subsidy, a $292,000 cut to Atwater Kent which also eliminates its subsidy. We propose taking the Cultural Fund down from 2.4 million to 1 million; Historic Philadelphia from 386,000 to 320,000.
Historic Philadelphia from 386,000 to 320,000; the African American Museum from 301,000 to 270,900; the Mummers Museum from 62,000 to 55,000; Robin Hood Dell East from 389 to 350; and the Avenue of the Arts from the 96.5 to 80,000. And that comes to 4 million in total. And then we also eliminate the Arts and Culture Office in the Commerce Department, and that's about $140,000.
Well, what impact do you think these reductions will have on the cultural institutions as well as the local economy to the extent that they will be forced to cut back on many of their exhibitions?
We are mindful of 156 03/31/04 - FISCAL STABILITY - RES. 040276 the fact that these are going to be painful cuts to the organizations. We are working to try to elicit corporate and foundation support to supplant some of the City's withdrawal of financial support.
Excuse me. I'm sorry. And in eliminating the arts component of the Commerce Department, one of the things that we've tolerated over the years is an overlap. The Redevelopment Authority, for example, also has a public arts component to it. What we're looking at is trying to make more strategic use of the dollars that we're investing. We don't need to have the work done in a number of different places within the City. And so with respect to the cuts in the City staffing or the City's programming, we think that there probably wouldn't be any real substantial change in our ability to address those issues.
However, since the Administration is curtailing its 157 03/31/04 - FISCAL STABILITY - RES. 040276 support for the arts and culture, does that mean that the City no longer wants the Barnse Museum to move into the City?
With would encourage them? With the Art Museum, haven't we in the past contributed 2.5 million? And are we actually cutting them off totally from our contribution?
We are cutting operating support for the Art Museum. We'll continue capital support and paying their utility cost.
The utility costs are about $2 million a year and the FY '05 capital budget is 2.2 million for the Art Museum.
So 158 03/31/04 - FISCAL STABILITY - RES. 040276 actually, what we're cutting would actually be providing for what, security, maintenance?
That was the -- the original contract was that it was for security and maintenance. I think it really goes into their General Fund much the way revenue goes into our General Fund and they probably use it for a variety of things.
Mr. Dubow, is that the same security and maintenance that the Rendell Administration privatized and the Art Museum agreed to that? They were City employees before?
And had great savings in the privatization and reduced what we were really paying through the privatization?
So these are 159 03/31/04 - FISCAL STABILITY - RES. 040276 basically the in-place-of City employees that are no longer even in place of City employees in terms of the City end of it?
Have they pretty much said to you that that's what they'll do, they will get rid of their security and maintenance force? So we're leaving the Art Museum without security and maintenance? I don't understand.
I have not said that. We've had a couple of conversations with them. They haven't been real specific about what they're going to do in response to the cut.
But that is our building; we're supposed to maintain it. The Chair recognizes Councilman Kelly.
Well, with those cuts in security and whatnot, would that have a direct impact on the hours of operation? In other words, a lot of these exhibitions, for instance, would have to 160 03/31/04 - FISCAL STABILITY - RES. 040276 closing a day earlier or whatever?
I don't think the museum's made any decisions on those kinds of issues.
Well, I want to follow-up on the President's line of questioning, and that's the impact on tax revenue that's produced by these cultural intuitions. I mean, your savings of $4 million is one thing, but perhaps you have to realize that those cultural intuitions bring in tax revenue probably somewhere around $12 million. Whereas, our sports stadiums and whatnot bring in around $4 million. So I think you have to look at the impact on, of course, our hospitality industry and whatnot. This is going to impact them greatly, I think. It's going to have a very, very negative effect because I think what we're doing is we're cutting down on certain things, but I think in the end it's going to hurt us because it's going to hurt us drastically in the hospitality end. They're going to have to be closing down; at least 161 03/31/04 - FISCAL STABILITY - RES. 040276 they're not going to have the same types of exhibitions that we presently have. And I think this is going to be a step in the wrong direction.
The City is making a substantial -- continues to make a substantial investment in the hospitality industry. We have our ongoing obligation and support the Convention Center. That's an obligation that's increasing on an ongoing basis. What the City needs is for other players to step up to the table. We appreciate and value the role of art and culture in the City.
Well, that's what brings people into the City. I mean, these people are staying for one, two, three nights in our hotels and they're spending at restaurants, they're doing a lot of things.
That's right. And some of what we're saying is that we need to have a different strategy for doing this. When you look at what other jurisdictions are doing, they have dedicated revenue for the 162 03/31/04 - FISCAL STABILITY - RES. 040276 arts, they have substantial philanthropic and corporate support of the arts. And while we have some, what we're going to have to do in the coming years if we want to be in a position to cut taxes and to maintain core services is bring other players to the table. The City no longer has the capacity to absorb these costs on its own.
Comparing to Philadelphia, you have a lot of cities, smaller cities, that do much more for their cultural institutions than we do for Philadelphia. And presently, the attendance in Greater Philadelphia's tourist 16 attractions is somewhere around 11 million. 17 So I think that what you have to do here is 18 you have to really study the effects that this 19 $4 million tax cut is going to have on really 20 bringing in tax revenue to the City. Seems 21 like we're going in the wrong direction. 22
And I 23 recall very vividly when Cezzane was here, 24 people came from over all to see the 25 exhibition. I know people that came in from 163 03/31/04 - FISCAL STABILITY - RES. 040276 California and certainly stayed for at least three nights.
They have some very interesting programs that will be coming in. Ms. Wilkerson, the Art Museum really is a City-owned building, and when we ask people to contribute, they're not going to contribute to the operating expenses.
We will get back to you with more detail on -- we'll continue to work with the Art Museum. The Administration values the significance of it and will continue to work with the museum and the other organizations that are facing cuts.
I just have a follow-up question on that. It's more or less a statement to knowing that there's over 11 million people come in for our cultural institutions when you have to look at the sports teams that we have, I'm talking about the 76ers, Phillies, the Flyers, the Eagles, 164 03/31/04 - FISCAL STABILITY - RES. 040276 their grand total is million people. And 3 that doesn't produce not even a third of the revenue that our cultural institutions bring in here. So I think we really have to take a real hard look at that, if I may. Thank you, Madam President.
Thank you. The Chair recognize Councilwoman Tasco.
Do you have a strategy for going out to raise dollars from corporations and other foundations to fund these? Are you putting it on the institutions to do?
When the Commerce Department comes, I'd like to have them address it more directly. Stephanie has begun conversations with some of the partners that we would be looking to, but I'd like to have her address it more directly when the Commerce Department gives its testimony.
I think I agree with the rest of the Councilmembers. The 165 03/31/04 - FISCAL STABILITY - RES. 040276 cultural part of our City is what keeps us going. It's the vibrancy of Philadelphia. Since the Administration is curtailing its support for the arts and culture, does it mean that the City no longer wants to Barnes Museum to move into the City?
The Barnes has never anticipated operating support from the City. And I think part of what the Administration has been doing for the last several months is going through and re-screening the budget trying to identify where it is that we were going to propose cuts. None of these cuts is easy. But this is a City that for more than a decade has been closing things, saving money, and we really are down to bone now. This year is bad. It's going to be bad again next year. After we get the results of the labor negotiations, there's going to be more pain to parse out. 166 03/31/04 - FISCAL STABILITY - RES. 040276 None of these proposals the Administration has developed come easily. If we decide to put money into the arts, something else is going to have to get cut.
But where has been the planning all these years in trying 8 to figure out how we generate more income from 9 the assets and the value that this City has? 10 Every year we have to start the strategy, but when does the strategy begin and how do you develop the strategy and who's included in the discussion about the strategy; and have we gotten any answers yet? I mean, what is the Commerce Department doing? Just what is the planning for the ongoing sale of Philadelphia in terms of the wonderful values that we have here? Who is out there creating a market to say we have all these wonderful assets that bring people into the City and that we ought to capitalize on them and start from that base and generate dollars from that base that you could use to generate some other kind of development. We're just like all over the 167 03/31/04 - FISCAL STABILITY - RES. 040276 place.
And I think your last characterization is correct. There's a lot that's going on in the City, but it's not knit together in a coherent strategy.
But we talked about that over and over and over again. When is the strategy going to begin? When are you going to develop the strategy?
And that's what the economic development summit is about. What you will hear during the course of these hearings is a lot of the pieces that are already in the works. And what is missing is really the clear strategy that hasn't been in place for decades now. And other people from outside the City, inside the City -- I mean, when the Mayor made his Chamber of Commerce speech and talked an economic development summit, there's actually been a very rewarding response from people interested in neighborhood economic development, from corporate players large in this City saying, this is something whose time has long since 168 03/31/04 - FISCAL STABILITY - RES. 040276 been due, that this is something that the City desperately needs. We all have a sense that we have wonderful assets, but nobody can talk about them in a coherent way. And that is what we hope to accomplish out of the economic development summit.
It would have been nice to talk about all of that when we were talking about the NTI because it all ties in together in terms of the neighborhood initiative and the economic development. To talk about them in separate terms or program them out into two separate entities just doesn't seem to be worthwhile. We're just throwing good money after bad. And that would have been a nice discussion to have during the course of the discussion with the NTI whole thought or idea. I'm not sure that we're going to go anywhere with this either.
I think I know the answer to this question. The Art Museum, I know, has questions both with economic 169 03/31/04 - FISCAL STABILITY - RES. 040276 development, maybe legal responsibility as owners, but there's one that's sort of a civic embarrassment if what I believe to be true is the case. Isn't the Atwater Kent Museum the City's museum? Didn't they agree during the Rendell Administration to go from a hundred percent City funding to one-third over a period of time and make up the other two-thirds by actively going out for private funds? And now after they've taken the Historical Society's collection that was going to leave the City, we're cutting them out completely? That, to me, is more civic embarrassment than -- I mean, you can tell me there's other cities that have their museums that they don't fund, but I don't know if there is one. It is this City's museum. Have there been in discussions with them? If I was with that group, I'd walk. I wouldn't -- they're not the high profile, everybody wants to get on the board, as the 170 03/31/04 - FISCAL STABILITY - RES. 040276 Art Museum where they have a lot of importance. It's a very important museum but it doesn't have the profile or the economic development aspect of the Art Museum. But, to me, it's vitally important to the City to have a museum that is the City's museum. Have there been discussions with them about this? There's nothing left there in terms of our funding.
Yes, I think that's right. It's another place where I guess we pay their utilities.
So we don't care if they shut down, this City's museum?
We care about all of these. We're going to be working with them to develop strategies.
Did you have any discussion prior to this, say, "what's the impact of this? Can you absorb it in a period 171 03/31/04 - FISCAL STABILITY - RES. 040276 of time?" It's just the demoralizing factor. It's worth having the conversation up front.
We did have a couple of discussions with them as we were developing the budget.
You told them that there was a likelihood that they wouldn't get any money?
Obviously, they weren't happy and they said they were going to go back and look at their options.
They haven't responded? Nothing? They'll be in at some point and we're going to ask them.
The follow-up was a letter describing the benefits they provide 172 03/31/04 - FISCAL STABILITY - RES. 040276 but not necessarily what they would do in response.
Not necessarily whether they can stay open without 33 and a third percent of their funding?
On this same line of questioning, I believe Councilman Goode has a question or statement.
Aside from the benefits that arts and culture bring to the economy, do the museums give you any damage estimate in terms of what they may lose in terms of collections? For example, does the Art Museum have any collections that might be lost if they can't maintain their operations?
We didn't get anything like that and they didn't mention that in the discussions as even a possibility.
I was told of a Johnson art collection that may be lost to New York. 173 03/31/04 - FISCAL STABILITY - RES. 040276
Ms. Wilkerson, I think we had recessed our hearing until 1:30. I think we're waiting for Janice Davis and someone from Commerce.
I've asked for Ray Zies, her deputy, to come over to explain the water revenue transaction. We had someone from Commerce come before the break. If you need for them to return, if there's an additional line of questioning --
All right. MR ZIES: Ray Zies, Deputy Director of Finance. And I believe there was a question on where the $125 million came from for the economic development fund?
Yes. 174 03/31/04 - FISCAL STABILITY - RES. 040276
When the City issues revenue bonds, they are required to either put up a reserve which covers the highest debt service for all of the bond issues or to buy a surety policy which guarantees that they will pay the debt service. The City in the past has used the reserve fund and those monies either come from the bond issue or from the Water Fund. What Ms. Davis is proposing is to purchase a surety policy that would be a one-time cost in the neighborhood of 3 to $4 million, leave some of the reserve fund in there, and take out 125 million to use for water or sewer-related projects.
What's the motivation for this? Someone had to think of some need to have this money.
When the Commerce and PIDC people come back over, they can talk 175 03/31/04 - FISCAL STABILITY - RES. 040276 to you in more detail about what's envisioned, the kind of needs they're seeing in projects like the naval yard, like along North Delaware.
Is the $4 million paid for by the Water Fund or by the General Fund?
Let me ask a question if I may, Councilwoman. Is there a bond or some financial statement that will have to be secured in order for you to take these funds?
And you're saying that would cost 3 to $4 million?
What's the impact of the Water Department losing these funds on their current rate structure?
So we, the taxpayers, would not be seeing an additional amount of money added to our water bills for this?
What does the impact of the rate increase -- -is there a relationship between the water rate increase and this whole --
No, ma'am. That money is just sitting in an account earning interest.
Who's going to control the funds? Who will control the $125 million? Who will control the expenditures?
Is that something the Commerce Department can answer?
You can ask them. 177 03/31/04 - FISCAL STABILITY - RES. 040276 My understand is it's not been developed to that extent at this point.
They can talk to you about what the needs are that they've identified. They can talk to you about the kind of opportunity they expect to leverage. I didn't know you wanted that level of detail or I would have kept them over. I thought --
And so who keeps us informed how the money is being spent? How do we know it's being spent for what you have appropriated it for?