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Minutes

Committee Hearing, April 13, 2004

Philadelphia City Council Committee HearingsApr 13, 2004

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Councilwoman Blackwell

Well, if it is acceptable --

Councilman O'Neill

Well, for starters, that means the number of graduates doubled in the last three years, who are going to college, even though it 394 Bill 040255 - 4/13/04 would only make sense that they would be the same three years later, so you didn't have to look at the information. And I'm paraphrasing, not quoting the Secretary. This raises... More questions are being raised than being answered, and they're kind of scary. We need a lot of work on this in a very short period of time. Thank you.

Councilwoman Blackwell

Well, we would like to suggest to the body that Secretary Kahn return at 9:30 tomorrow morning, when we are due to resume these discussions. And perhaps between now and then she can clarify some of the facts and reconcile the information that our colleague Councilman Ramos rose with the facts that she gave earlier today. So, that is acceptable. We can... Since we'll be recessing until tomorrow at 9:30, we can bring the Secretary back on before we hear the rest of the Finance 395 Bill 040255 - 4/13/04 Department and deal with tomorrow's agenda, if that is acceptable. That seems acceptable. Secretary Kahn, is that acceptable to you, 9:30 tomorrow a.m.?

Ms. Kahn

(Shakes head in the affirmative.)

Councilwoman Blackwell

Thank you. Thank you. We're trying to get you on. Please identify yourself again. Thank you.

Mr. Hanna

Good afternoon -- Good evening. My name is Kevin Hanna. I serve as Secretary of Housing and Neighborhood Preservation with the City of Philadelphia. With me to my right and your left is Scott Wilds. Scott serves as Deputy Director of Housing, and Rod Lyles, who serves as our Fiscal Manager. In the interest of time and in respect to your time -- In the interest of the hour and with respect to your time, I am not going to read the entire testimony. Hopefully everyone has had a copy provided 396 Bill 040255 - 4/13/04 to you. But I would like to highlight just a couple of paragraphs, and then after that, leave as much time as you all have. We have the rest of the evening, but as much as you all have for questions. The proposed operating budget for OHCD is $230.2 million in fiscal 2005, of which $146.4 million will be in the grants revenue fund, $83.4 million in the community development fund, and $400,000 in the General Fund -- or from the General Fund. This operating budget represents costs of all housing programs, as well as salaries for all OHCD Philadelphia Housing Development Corporation, as well as Redevelopment Authority, also know as RDA, staffs, rents, materials and supplies. Our Class 100 which represents OHCD salaries only... Our Class 100 expenses requests of $4.3 million reflects a decrease of $91,546 compared to fiscal '04 estimated obligations. 397 Bill 040255 - 4/13/04 This net decrease is due to a reduction of two budgeted staff positions, and does not include an allowance for any negotiated wage increase and/or support the funding of 77 requested positions. In Class 200, our fiscal year 2005 request is $225.6 million. Our Class 200 expenditures represent RDA-PHDC salaries as well as all programmatic expenses incurred by those agencies. Our Class 200 request does include the following award changes: A decrease in federal CDBG funding of $695,000, an increase in Federal housing opportunities for persons with A.I.D.S., also known as HOPWA funding, of $90,000. In addition, $1.3 million... I'm sorry. The HOPWA funding was $2 million. And an increase in Federal Home Investment Partnerships Funding of $90,000. In addition, $1.3 million was received for the American Dream Downpayment Initiative. In Class 300 our fiscal 2005 proposal obligations increased by a mere 398 Bill 040255 - 4/13/04 $12,000, as compared to fiscal '04 estimated obligations. The proposed operating budget under the Community Development Fund, grants revenue fund and General Fund also will be presented in the spring to the Finance Committee in its hearing on a Council Bill 9 on the Consolidated Plan, authorizing the Community Development Block Grant and other housing programs for fiscal year 2005, CDBG year 30. And with that, Madam Chairman, as a broad overview, I'd like to ask that the entire testimony be introduced into the record, but would open ourselves up now for any questions that Council members might have.

Councilwoman Blackwell

Excuse me. I'm trying to get ahold of CEO Vallas for the group for tomorrow. Let me ask one question. As you know, we've been dealing with issues that deal with appraisals. Do various housing departments have appraisals or just... You 399 Bill 040255 - 4/13/04 know, Redevelopment Authority?

Mr. Hanna

I can't speak for all the departments, but certainly RDA has a couple of appraisers on staff which primarily or who primarily review appraisals provided to us by outside appraisers.

Councilwoman Blackwell

I mean, since part of the issue with us trying to move housing deals with the appraisal rate, I mean, do we have to have two appraisals for every property? And is that law or just policy, number one; and number two, can we consolidate or borrow appraisals from different departments to get our stuff done?

Mr. Hanna

As to the question of whether it's law or policy, I'd have to get back to you on that.

Councilwoman Blackwell

I think it's policy but I'm not sure.

Mr. Hanna

I do know THAT it is policy that our in-house appraisers review the appraisals that come from contracted 400 Bill 040255 - 4/13/04 appraisers. And that's a policy that I'd agree with very strongly, because like with doctors or lawyers or even politicians, you have good ones and you have bad ones. And it's important to... from our standpoint, to make sure that the appraisal that we get is relatively acceptable.

Councilwoman Blackwell

Exactly. I understand that. As you know, we've been trying to work on some way to get private developers who want to -- to increase the acquisition pot, to get them to give 50 to 75 percent of the fair market value of the property to the City in some kind of escrow fund. And so that you still have to get -- have these properties to be able to appraise, and all that. So I'm trying to impact on a process so that by the time you come back to -- for the -- your formal OHCD NTI hearings, we have some process in place. So I know that it includes that. It includes like 200 percent. It includes the 401 Bill 040255 - 4/13/04 appraisers, as well as the 200 percent issue.

Mr. Hanna

Let me do this: I will discuss that issue with the Chairman of the RDA Board and the Executive Director. Let me have that discussion with him, and I'll get back to you in writing, Madam Chairman -- Chairwoman.

Councilwoman Blackwell

Thank you. That's my issue they're working on. Do any of my colleagues have questions for you? Councilman Ramos.

Councilman Ramos

Yes. Thank you, Mr. Secretary, for coming here this afternoon, and for being so patient. I just have a general question. We're glad that you're in Philadelphia. And now you have been given the position to consolidate and group all of our housing initiatives in this government. Do you see this as part of an economic development strategy of this Administration or is this still housing by 402 Bill 040255 - 4/13/04 itself, although you brought in RDA and other components of our -- of our housing efforts in this City or do you actually believe that this is, you know, part of an economic development strategy? And if so, talk to me a little bit about it and how you see it.

Mr. Hanna

I absolutely, Councilman, look at this as consistent with the Administration's overall economic development policy. One of the goals of reorganizing the housing department is to be in a position... Well, two goals, I should say, of the reorganization. One would be to more efficiently and effectively deliver housing services. A third goal -- Our second goal, rather, would be to do that in such a way that it's more consistent, and then we use the economic development dollars that are available in a much more effective kind of a way. That's not to say that that kind of thing is not going on already. 403 Bill 040255 - 4/13/04 For instance, a part of the CDBG award that comes through the office, my office, ends up in the Commerce Department, ends up at PIDC, ends up at PAID to fund, for instance, a couple of small business lending programs administered by one or some combination of those three, Commerce, PAID or PIDC. So that there's some available already going on. But certainly once we are better organized, that would put us in a position to better coordinate our efforts with the efforts of the other economic development agencies throughout the City government.

Councilman Ramos

Because as the economic development of Philadelphia goes, an indicator or... Housing has always been an economic indicator in our country, to see if in fact the region is being uplifted. And, you know, I would sure hope that with consolidation of the different housing and housing-related programs of the City, that we can -- that we have a vision 404 Bill 040255 - 4/13/04 of how this consolidation actually moves us in the area of a better economic development forecast.

Mr. Hanna

And if you think about it, our office is the Office of Housing. And as I've stated, one of our responsibilities is the provision of housing services to the City. People can't buy houses if they don't have a job. So to the extent that what we do, what the other economic development agencies do, promotes the creations of jobs, promotes the maintenance of jobs, that only inures to our favor, from a housing standpoint. So, yeah, the two are inextricably linked, in the sense that as jobs are created, people are better able, again, not just to buy new houses, but are in a position to maintain their houses and avoid things like foreclosure. So, yeah, they're linked in a real big way.

Councilman Ramos

Thank you, Mr. Secretary. 405 Bill 040255 - 4/13/04

Mr. Hanna

Thank you.

Councilman Ramos

That's it, Madam Chair.

Councilwoman Blackwell

Thank you very much. Councilwoman Tasco is on her way down to ask a question or two. Are there any other questions from members of this Committee? Councilman Rizzo.

Councilman Rizzo

Madam Chair, I believe I heard you say you're working on getting Mr. Vallas for us here tomorrow sometime?

Councilwoman Blackwell

Oh, yes. They have the SRC meeting tomorrow. He wasn't in just when I called. But we did talk to Mr. Spitzer. And if not, the head of the scholarship committee will be in. We'll get one or the other, but we will get some response tomorrow.

Councilman Rizzo

I would love to see Mr. Vallas because I have a feeling he will just -- those numbers will just flow 406 Bill 040255 - 4/13/04 from his tongue.

Councilwoman Blackwell

Oh, absolutely. He's always prepared. I told him it was about scholarship and inclusion and all of that. But I'm sure that he will... I'm sure that before our meeting he will hear about all the issues that are involved and be prepared to respond; absolutely.

Councilman Rizzo

Thank you. After he hears about today, I think you couldn't keep him out of this place. Thank you.

Councilwoman Blackwell

Thank you, Councilman. Are any other questions? Councilman Clarke.

Councilman Clarke

Thank you, Madam Chair. Actually, I have some questions that probably would be better answered going to Community Block Grant hearings, some of the operational questions with respects to the office and consolidation claim. 407 Bill 040255 - 4/13/04 I heard some of that asked by Councilman Ramos, and I assume he dealt with that in depth. So I don't want to... Excuse me for my absence. I was meeting with other members of the Administration to discuss the closure of facilities, so I probably shouldn't be in the best of mood, but I won't take that out on you, sir.

Mr. Hanna

Thank you.

Councilman Clarke

One of the issues that we talked about earlier was the concern about the... I guess the continued depletion of the block grant from the Federal government, and I understand this year that it actually... the operational capacity of the agencies. Have you talked about that?

Mr. Hanna

No, I haven't. It is contained in a paragraph in my testimony, but in the interest of time I didn't read the entire thing into the record. But that is a very important and a very realtime kind of an issue. 408 Bill 040255 - 4/13/04 What I did not say, Councilman, was that this year, this current fiscal and CDBG year, we were cut by $5.3 million in our CDBG aware, the City of Philadelphia was. That's no fault of anybody's. It had a lot to do with the formula that HUD uses to award different cities their block grants. And for the first time year 2000 census numbers were used, as opposed to 1990 census numbers. And because the City of Philadelphia lost population between '90 and 2000, our block grant got cut by a commensurate amount. That was Year 29, this current fiscal year which ends in a couple months. We've been notified -- In fact, we were notified after this information was submitted to Council that we were due to be can you tell by another $695,000 in our block grant. What needs to be taken in consideration is the fact that the Office 409 Bill 040255 - 4/13/04 of Housing made ends meet this year or is making ends meet this year by virtue of the fact that we are selling off or RDA is selling off certain assets, a couple of parking lots, in particular. Had it not been for the availability of those assets and the sale of those assets, it would have been very difficult for us to meet or to provide ourselves a balanced budget this year. That's the good news. The bad news is that the revenue that had been provided by those assets are gone away because we no 15 longer own those assets. The worst news is the assets have gone, and we don't have another opportunity in Year 30, upcoming fiscal year '05, to take those same kind of steps. That having been said, we are looking at a pretty substantial operating budget deficit. This is outside of the General Fund because our offices for the most part are funded by CDBG. We're looking at a pretty large 410 Bill 040255 - 4/13/04 budget -- operating budget deficit for '05 which is going to require us to make some pretty difficult, and will probably end up being pretty painful decisions, relative to how we do what we do.

Councilman Clarke

Well, shouldn't that enhance your need to complete the consolidation plan?

Mr. Hanna

Yes, absolutely.

Councilman Clarke

Let me say that in a serious way.

Mr. Hanna

Let me say a couple of things about consolidation while we have a couple of minutes here. I sat -- not here -- but sat downstairs at last year's Finance Committee meeting and said to, I remember specifically, Councilman Nutter that I thought the consolidation process would take about 12 to 18 months. I stand by that statement. However, after having made that statement and after having gone back and looked at some things, not the least of which was the content of 411 Bill 040255 - 4/13/04 the union contracts that we operate under -- And remember, one union represents -- or each -- One union represents each of the three organizations. Each of those three organizations have a separate distinctive contract. So we have three different contracts, one for RDA, one for PHCD and one for OHCD. After having gone back and reviewed those contracts, it became apparent to me that there was no way we could effectively substantively consolidate and reorganize the three departments under those contracts. To give you -- And I don't want to -- certainly don't want to negotiate --

Councilman Clarke

When do those contracts terminate?

Mr. Hanna

This year. All three come up for air this June.

Councilman Clarke

That's the time, then.

Mr. Hanna

That is why I decided last fall to wait until this spring, 412 Bill 040255 - 4/13/04 basically now, to really jump in with both feet into the exercise of reorganization. The thought was it would make a whole lot more sense to go ahead and renegotiate the contract, and as a part of the renegotiating of the contract put together a reorganization. Otherwise, as I said, I'll give you just a quick example. Under the current contracts, if there was a need in RDA, for instance, for a Clerk Typist II because the work there is just busting at the seams and there's more work than all the Clerk Typists could do, if there's a need for a Clerk Typist II in RDA and a Clerk Typist II who's perfectly qualified to do the work existed at PHDC, and let's say her department or his department wasn't doing very much, the contract -- the provision of the contracts forbid me from moving someone from PHDC to RDA because in the eyes of the RDA contract, that would be tantamount to subcontracting that work out to some outside agency. 413 Bill 040255 - 4/13/04 That's why I say it's impossible under the current contracts to consolidate. We need to change that, among a number of other provisions, and build into the new contract some flexibility that would allow us to reorganize as we come up with a better way of doing what we're looking to do.

Councilman Clarke

Under the formula that HUD uses to determine the words per county, right not per municipality...

Mr. Hanna

Yes, that's correct.

Councilman Clarke

... don't they also take into account the income of a particular county? And I asked that question because while the population has dropped considerably in the City of Philadelphia, the per capita income has also dropped. And I'm wondering, do they also take that into account? Because a substantial amount of this money is for people who are under -- utilized for people with income 414 Bill 040255 - 4/13/04 eligible guidelines. So while we're reducing our population, we're also reducing --

Councilman Clarke

-- our per capita income. And I would think that to some degree --

Mr. Hanna

That was the exact same point that I had made to the regional HUD director. And his response was, well, Kevin, yeah, that makes logical sense. But that's not the way it works. I'll let Scott, Mr. Wilds, speak more specifically to the former. But that's a point that I brought up to HUD, and was basically told, Kevin, if you want them to get that kind of change, you're going to have to... Well, it would take a literal act of Congress.

Councilman Clarke

Right. In the discussion -- Not to cut you off. I know Scott will respond to that specific question. 415 Bill 040255 - 4/13/04 But in your earlier conversations during the course of the last of couple years, in talking about the distribution of resources, particularly from PHFA, talking about other counties, rural, suburban counties that are now receiving tax credits and other resources from some of these agencies, I was told that that's happening because there is more low income and moderate income individuals in those particular counties. While the per capita income was dropping for the City, it was also dropping statewide. So now there had to be a more equitable distribution of resources across the state. So that suggests to me that that in fact should have some bearing on the allocation from the Federal Government

Mr. Wilds

The formula for the Block Grant is based on several factors, one of which is overcrowding, one of which is incomes, one of which is population, and the last is age of housing stock. This is weighed nationally, so that we compete, in 416 Bill 040255 - 4/13/04 effect, with Detroit and Houston and San Diego, and large places like those. The impact of the age of housing stock question has been very, very intense because of the shift from '90 to 2000 housing numbers. The age of housing stock question relates to houses over 40 years old. The building boom after World War II has suddenly come to mean that lots of suburban places now have older housing stock. Of course, so do we. But you have the whole ways of the inter parts of the suburbs that are now counted as older housing stock. And that factor alone, HUD states, has resulted in eight percent cut to our grant, simply by changing to this latest census data.

Councilman Clarke

Let me ask a question on older housing stock issue.

Councilman Clarke

Does older housing stock, is that determined by vacant 417 Bill 040255 - 4/13/04 housing stock?

Mr. Wilds

No. It's simply the age of the date the house is built.

Councilman Clarke

So the houses that have been rehabbed factor into that...

Councilman Clarke

...category?

Mr. Wilds

It's the original date of the house.

Councilman Clarke

So my question is, by the policy shift towards reconstruction, by -- particularly by subsidized housing, does that then diminish our ability to say that we continue to have older housing stock, although the --

Mr. Wilds

In the long term, as we change the ratio between older houses and new construction ones, it's going to affect that. Now, it's affecting every place as well. But the impact has really been at a place like Atlanta in its suburban area which boomed after World War II, those first set of suburban houses are counted 418 Bill 040255 - 4/13/04 now as older houses. And so, Atlanta got a boost up. And the pie is the same size, so we get hurt

Councilman Clarke

So with respects to the income...

Mr. Wilds

It's a minor part of the... It's the number of people who live in the City.

Councilman Clarke

So it's more census driven than...

Mr. Wilds

Right. So we've had a reduction -- a small reduction but an absolute reduction -- in the number of people who live in the City from 1.5 to 1.4 million people, and that's made a difference, too.

Councilman Clarke

Yeah, but... I find it hard to believe that money that traditionally comes to counties, that in most instances to provide subsidy for mortgage write-downs or whatever, whatever type of program, puts so little emphasis on... in terms of the allocation, so little emphasis on the income, per capita income 419 Bill 040255 - 4/13/04 of the individuals living in the City. That makes like no sense to me. If you look purely at population, as opposed to the income levels of the residents in that City, that makes like no sense.

Mr. Wilds

I'm happy to share with you a report about this thick (Indicating) that HUD did a year ago, that looked at this, the impact census on the distribution of block grant. And it goes into depth into this. And it sites us as an example of an urban poor place that has been hurt by the application of this unchanging formula.

Councilman Clarke

All right. Getting back to earlier conversations, I don't think you gentlemen were here. We talked about a lobbyist from the Mayor's Office and their ability to lobby Federal Government. Do they have any interaction with your agency, as it relates to changing policy? Because that policy to me makes no 25 sense whatsoever, that, you know, 420 Bill 040255 - 4/13/04 population to the largest degree drives the allocation strategy, as opposed to cities of most need, i.e., income. That just makes no sense to me. And I don't understand why we --

Mr. Hanna

Councilman, it makes no 8 sense to us. In fact, if you think about it intuitively, it's illogical to penalize, especially a large urban city when it loses population. It would seem that that's where you need to put more federal resources, to kind of arrest that... those decreases in population. Scott works with a group that sits with our lobbyist and others on a periodic basis. I guess you can speak to what we've done. I don't know that that particular issue has ever been brought up to them

Mr. Wilds

Well, we meet regularly with the Washington, D.C. firm Paten & Boggs. And they represent the City. And they have a special expertise in housing. We have raised with them this 421 Bill 040255 - 4/13/04 question. And it's very tough to change because it has to be done at the point that program as a whole comes up again for reauthorization. The current block grant program has some time still to run. And of course, once you start to change the formula, you could get hurt as well. So we have to be careful in making sure that we've got our ducks in a row, in the current environment in D.c., to be able to get to the place that we would like to go.

Councilman Clarke

Well, I understand, you know, once you open up the can of worms. But the reality is we've been receiving I think like a $5 million reduction in subsidy on a yearly basis for the last several years. I would think that, you know, given the fact that we have a strong Congressperson who happens to sit on the Appropriations Committee, at a minimum we should focus our efforts on utilizing, you 422 Bill 040255 - 4/13/04 know, the tools that we have, Congressman Fattah, the work towards, you know, shifting that policy. To be concerned about it, frankly speaking, becoming worse, if we decided to entertain the issue -- I don't know how it could get any worse. Every year you can count on a reduction in contributions from the Federal Government; no understanding that your population, as the trends have shown, will continue to decrease the per capita income. I mean, you know, I don't even know why we're even concerned about that. I mean, personally I would be very aggressive to change that policy because it apparently is somewhat detrimental to us. Okay. Thank you. Thank you, Madam Chair.

Councilwoman Blackwell

Councilman, I'm sorry I've been distracted. I was focusing again, too, on this $5.3 million cut, and agree it's been very trying that we've been cut every year. 423 Bill 040255 - 4/13/04 In addition to that, we got a $695,000 cut, even after $5.3 million for our CDBG application coming in; am I correct?

Mr. Hanna

That's... Well, for the current fiscal year for the current CDBG year we were cut by $5.3 million. In fact, what was the hard number in Year 28? Was it 58?

Mr. Wilds

It went from $68 to $63 million.

Mr. Hanna

So that... For '04, that's where we're starting. Fiscal '04 we're starting at $63 million. On top of that there was another $695,000. And the Councilman's point is very well taken, in the sense that unless this formula is changed, then that number isn't going to change for another eight, nine, ten years or so, until there's a new census and a new way or new opportunity for the Feds to take a look at that formula. But my point is, we don't keep getting cut by $5.3 million. We will never 424 Bill 040255 - 4/13/04 see that $5.3 or this $695,000 again, unless some change is made on a federal level.

Councilwoman Blackwell

Thank you. I know that you mentioned work rules. And I think that's an idea whose time came some years ago, about flexibility and people doing assignments. I think that's... Given our whole work environment, that people do a lot of different things now than they did before. Listen, I don't think people will complain so much about it if they could keep their benefits and their health package. Am I right, Councilman Ramos. But let me ask you another question. We've been talking about demolition. And in fact, I talked to Councilman Clarke about this the other day. The legislation that we were dealing with in the past for Committee of the Whole and the Housing Committee on demo, did that not include residential and commercial properties? 425 Bill 040255 - 4/13/04

Mr. Hanna

I'm sorry.

Councilwoman Blackwell

Because I had this discussion with Councilman Clarke where he questioned whether or not some commercial areas were considered -- Neighborhood commercial districts, I'm talking, not just... I'm not talking major.

Mr. Wilds

Councilwoman, I believe it did. I was not at that hearing, but that's my -- my understanding, that it was both.

Councilwoman Blackwell

Councilman Clarke asked me about that issue the other day.

Mr. Hanna

It had to have included residential and commercial because part of the money was going to go towards the demolition of the Westrum property. And all of that stuff there was commercial stuff; so, yeah, it did.

Councilwoman Blackwell

And I think that's all of my questions at the moment. I'm really concerned about how we go from here. As I said, I'll be focusing on 426 Bill 040255 - 4/13/04 acquisition dollars, if we got that in place. And then, I really understand NTI, the heart of it and how it's a leveraged program. And I think as long as we keep our minds open so that we can do that... We only get frustrated when we understand there's some leverage, and then when you come up with something... So I'm thinking out of the box. Then, you know, you kind of get stopped and you're saying, well, we don't -- can we do it that way. But that's what NTI is. That's what makes it an exciting and creative program.

Mr. Hanna

Councilwoman, speaking on behalf of NTI and our department, we appreciate yours specifically, your willingness and ability to come to us with innovative, out-of-the-box type ideas. And as is typically the case, when those kinds of ideas are presented to an entity or an individual, the natural 427 Bill 040255 - 4/13/04 inclination, reaction is to say, well, wait a minute. Hopefully we've gotten past that, and are more willing to consider and try to figure out ways to implement it, as opposed to figure out ways not to do those kinds of things. So thank you again on behalf of NTI, for your willingness to come to us. And we encourage you -- not that you'd stop if we didn't, but we encourage you to continue to come up with those types of ideas.

Councilwoman Blackwell

Thank you. Did you have questions, Councilman Ramos?

Councilman Ramos

Yes. Thank you, Madam Chair. Secretary Hanna, you mentioned how you wanted to consolidate, and I asked a couple questions about your consolidation approach and its ties to economic development with this City. And you brought up a very interesting and very serious concern of how 428 Bill 040255 - 4/13/04 you would like to get -- correct me if I'm wrong -- that you would like to get... you would like to get your shop, all the different parts of it, under one union. Is that a fair assessment of what I heard?

Mr. Hanna

That's a fair assessment. Let me offer one caveat. And I don't know what's coming next from you, but let me offer one --

Councilman Ramos

Reading minds is a difficult thing.

Mr. Hanna

Yes, my goal is to have all three under one contract. What I don't want to do, however, here in this forum is talk in any -- at any level of specificity about those negotiations with the unions. I mean, I'd certainly hate for them to negotiate their contract in the press, and I'm sure they'd hate for us to negotiate ours in this particular forum.

Councilman Ramos

Doing a fairly good job of reading minds there for a 429 Bill 040255 - 4/13/04 minute. Are you directly involved in bringing up this issue? I'm a former Labor Standards Director for the City of Philadelphia, and so I know a little bit of this business.

Mr. Hanna

Probably more than me.

Councilman Ramos

Are you directly addressing this concern of yours for these negotiations and this contract that's up at the end of June or are you doing it through the Office of Labor Relations, which I probably assume that -- I can assume that's how you're going about it. They were here with us this morning. We're coming towards that day at the end of June where we have to, unless we get an extension, have to come to some agreement with our municipal unions. So are you directly involved or are you leaving this up to the Office of Labor Relations?

Mr. Hanna

The answer to your question is all of the above, plus some. 430 Bill 040255 - 4/13/04 We are, in fact, working with the Office of Labor Relations. I am directly involved. In addition, we're working with the City's outside labor counsel, the counsel that is helping Labor Relations to negotiate the overall City contract. More specifically, I've had meetings with our local union leadership. We plan, in fact, to have a follow-up meeting next week, because at our last meeting I basically told them what I just told you, that we're looking at a pretty substantial deficit. And we asked them to come back to us with their recommendations as to how we might plug that deficit. That's what next week's meeting is going to be about. But yeah, we had engaged our unions locally. And we've also asked for and have been provided help from our side by the Office of Labor Relations, as well as the City's outside counsel.

Councilman Ramos

Well, I am very glad you're doing that, because I had a 431 Bill 040255 - 4/13/04 particular question this morning, because an answer I got about how the negotiations were going was that one of the unions had not presented a proposal to the City. And my response was, well, how about if they decide not to give you a proposal until mid June? What's going to happen then? And you're right around the corner from a contract expiration date. You should definitely consider going to them and asking them for that proposal or getting things moving. So I commend you for being proactive on this because that's what it's going to take, because as you probably know, these -- there are certain things within union structures that are very -- you know, very dear to leadership and to its members. And that's probably one of then, probably not as high up as self-insurance, health and welfare, and pension matters. But I'm quite sure restructuring is up there, as well. And I'm glad you're 432 Bill 040255 - 4/13/04 tackling it with your personal involvement, and make sure you let your -- our negotiators over there at the Office of Labor Relations know where you stand, and utilize your authority as a Secretary in this government to push that, because I agree with you that if you're going to be able to be successful in restructuring and consolidating all the housing departments of this City, that you're probably going to have -- you're going to probably need, you know, the flexibility to do so with a work force that's under, you know, one union or one labor umbrella.

Mr. Hanna

And flexibility there is a key word, because one of the other things I'd like to try to accomplish in this union negotiation is the ability to work... the ability to position the Department of Housing to more quickly, more adroitly adjust to the market. I mean, it's been at least 15 years since the last reorganization, and things have changed an awful lot over the past 12 433 Bill 040255 - 4/13/04 to 15 years. I mean, these things (Indicating) weren't available 12 to 15 years ago. People were basically just discovering fax machines. Lots have changed since then. And for us to just now reorganize or do things to adjust to certain changes, I think it's good. But it's also late. So one of the things I'd like to negotiate in the contract is to somehow position the Department of Housing to be in a position to, as I say, more adroitly, on a more timely basis, change as the market changes. Thank you for your encouragement

Councilman Ramos

Thank you. Thank you for your response. Thank you, Madam Chair.

Councilwoman Blackwell

Thank you very much. Are there other questions? (No response.)

Councilwoman Blackwell

Then let me 434 Bill 040255 - 4/13/04 say thank you very much. We thank you for your patience. We'll see you next month sometime.

Mr. Hanna

We'll be here.

Councilwoman Blackwell

And thank you. And this hearing will be recessed until tomorrow morning at 9:30. (Council concluded at 5:37 p.m.) 435 Bill 040255 - 4/13/04 CERTIFICATE I HEREBY CERTIFY that the proceedings and evidence are contained fully and accurately in the stenographic notes taken by me upon the public hearing of The Philadelphia City Council, taken on April 13, 2004, and that this is a true and correct transcript of same. _____________________________ DAVID A. DEIK, RPR and Commissioner of Deeds (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)