Committee Hearing, February 23, 2000

1742 COUNCIL OF THE CITY OF PHILADELPHIA BEFORE THE COMMITTEE OF THE WHOLE OPERATING BUDGET HEARINGS - CONTINUED - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, 2/23/00 9:50 a.m. - - - BILL 00005 - An ordinance adopting the Operating Budget for Fiscal Year 2001 PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 1743 I N D E X Civil Service Commission Nicholas DiPiero, Chairman. . . . . . . . . . 1744 Linda L. Seyda, Personnel Dept. . . . . . . . 1747 Water Department Kumar Kishinchand, Water Commissioner . . . . 1755 B. Brunwasser, Deputy Commissioner, Finance 1759 Richard Roy, Deputy Commissioner, Operations 1763 Denise Garrett, Water Revenue Bureau Chief 1796 Office of Housing and Community Development John Kromer, Director . . . . . . . . . . . . 1816 Personnel Department Linda Seyda, Director . . . . . . . . . . . . 1880 City Planning Barbara Kaplan, Executive Director. . . . . . 1914 Free Library Elliot Shelkrot, President. . . . . . . . . . 1942 Helen Miller, Director of Public Services . . 1951 Bill Fleming, Admin. Services Director. . . . 1966 Commission on Human Relations Kevin Vaughan, Executive Director . . . . . . 1987 Department of Commerce Mjenzi Traylor, Acting Executive Director . . 1996 William Hankowsky, President, PIDC. . . . . . 2002 Curtis Jones, President, PCDC . . . . . . . . 2021 Alfred Testa, Director of Aviation. . . . . . 2036 Philadelphia Civic Center James Coleman, Executive Director . . . . . . 2093 Mayor's Office of Community Services Gail Greene, Executive Director . . . . . . . 2096 Jane Golden, Mural Arts Program . . . . . . . 2101 1744 OPERATING BUDGET - BILL 05 - 2/23/00 P R O C E E D I N G S

Good morning, everyone. A delay, I'm sorry for the delay. This is the continued public hearing of the Committee of the Whole on the Operating Budget Bill No. 005. The first group to testify will be the Civil Service Commission. (Civil Service Commission come forward.)

Good morning. Please identify yourself for the record and proceed with your testimony.

Hi, good morning. My name is Nicholas DiPiero, Chairman of the Civil Service Commission, and I'm here to give you a report on our budget. And I want to congratulate you as president.

Thank you.

And I don't know -- I seen the Mayor and I never congratulated him, so I'll do it publicly to say congratulations. Do you want me to start? 1745 OPERATING BUDGET - BILL 05 - 2/23/00

Please proceed.

Sure. President Verna and Members of City Council, I'm Nicholas DiPiero, Chairman of the Civil Service Commission, and I'm pleased to testify on behalf of the Civil Service Commission in support of the Commission's budget request for Fiscal Year 2001. Our total budget request of $159,215 represents a 2,74 percent increase over our Fiscal Year 2000 appropriation of $154,957. This increase is reflected in Class 100 and provides for the negotiated salary increase for Civil Service employees. The remainder of our request is unchanged from the Fiscal Year 2000 level and will provide funds for training necessary, materials, and supplies in the purchase of minor equipment. Under the Home Rule Charter, the commissioners are charged with approving or disapproving a large variety of actions affecting Civil Service employees, and these include the establishment of job classes, position and pay classifications, residency waivers, personal 1746 OPERATING BUDGET - BILL 05 - 2/23/00 service contracts, Civil Service regulations and exemptions from the Civil Service. To date, in Fiscal Year 2000, the Commission has approved 38 classifications and pay actions, changes to the regulations, 7 personnel services contracts, and 125 exemptions 8 from the Civil Service. Most -- and there were 90 9 of the exemptions -- were for summer food programs 10 run by the Recreation Department. The Commission 11 also approved two specific residence waivers for 12 positions in the Health Department. 13 The major role of the Civil Service 14 Commission is to function as an appellate body to hear and decide on Civil Service employees' appeals on personnel divisions. Most appeals are regarding dismissals, suspensions of more than 10 days, and demotions, oral examinations denials of requests for leaves of absence, denials of injury on duty time, and appeals from back-to-work orders. Fiscal Year to date, the commissioners have received 114 appeals and have issued 92 opinions and orders resolving the appeals. And with this budget, President Verna and Members of City Council can continue its 1747 OPERATING BUDGET - BILL 05 - 2/23/00 important work of assuring the preservation of the Philadelphia merit system, as mandated by the Philadelphia Home Rule Charter. Thank you.

Thank you, Mr. DiPiero. You mentioned about two waivers that were mentioned in the Health Department. Is that for a year? Is the waiver for a year for residency?

Oh, let me get my mouth piece here. (Linda Seyda comes forward.)

Good morning.

Good morning.

I am Linda Seyda, and I am the City's the personnel director. The Civil Service Commission approved two specific residence waivers for the Health Department, and that was to facilitate recruitment for two positions. Those waivers were for the period of the probationary period and six months thereafter. The two individuals are required to move into the city. 1748 OPERATING BUDGET - BILL 05 - 2/23/00

Thank you. What were those positions, if I may ask?

They were both for research and information analysts in the Health Department.

Thank you. The Chair recognizes Councilman Rizzo.

Thank you, Madam Chair. Every time this residency issue comes up, someone just doesn't ask the question properly and the question never gets answered, in my opinion, properly. So I don't ask the question with any confusion, can you just tell me as of today anyone -- boards, commissions, housing authorities, or whatever organizations that the taxpayers of the City of Philadelphia support, can you tell me how many people don't live in the City of Philadelphia that are supported by the City government? And, again, I hope I'm asking the question right.

Are you talking under our Civil Service -- 1749 OPERATING BUDGET - BILL 05 - 2/23/00

Under civil service, and to Linda Seyda, for other employees. Because every time this question is asked, Well, you didn't ask the question right, this doesn't apply to the question that you asked. How many people that work for this government don't live in the City of Philadelphia?

Well, Councilman, I work very closely with the Personnel Department because, as you know, we only have three Civil Service commissioners and a secretary, and anything like that, I usually bring it to Linda's attention, but I just want you to know, so you guys will feel assured here, and if it sounds like I'm abrupt, but there was one case, and I don't want to get into it, and it's just an idea to give you of how serious we take that question. We had one woman who was getting away with it for 30 years, and we cracked down on it. And then the first thing you get is what happens in America today. Oh, my God, are you going to hurt that poor lady? You know, she didn't know. But we got rules and I adhere to the rules. 1750 OPERATING BUDGET - BILL 05 - 2/23/00

When you say you cracked down on her, what happened?

Well, I'll let Linda tell you -- we made her move -- she had to move into the city.

So, I guess, to Linda Seyda. Last week, I sat, and I'm having trouble recollecting, but there was a particular department that came and said that there was no 11 residency requirement, a quasi government department. Again, I ask the question: Of the whole global situation, how many people -- and even though there's a real extreme effort to try to correct it when it's discovered, how many people today, including the people that are six -- have the six months to move in, how many people do not reside in the City of Philadelphia that get paid by the City of Philadelphia or an outside agency that you're responsible for? I guess that's the. . .

Councilman, off the top of my head, I cannot give you that number. We can certainly provide that information. As you know, 1751 OPERATING BUDGET - BILL 05 - 2/23/00 there are a number of job classes where there is a waiver that permits individuals to reside outside the city at the time they're appointed, but they are required to move into the city. We can provide to you, or to Council, the names and classes of those individuals who are Civil Service Commission employees and also exempt employees. What we do not have the ability to provide for you would be individuals who are employees of quasi governmental agencies or authorities, 'cause we just simply don't have that information. But we certainly can get that information for you as it relates to the City government itself, both exempt employees and the Civil Service Commission employees.

So there's quasi agencies, your personnel department has no input, no control, no policy, nothing.

And we do not have the personnel records for the quasi governmental agencies, you know, such as the Parking Authority, the Redevelopment Authority.

What do you do when a person gets the six-month waiver? What does 1752 OPERATING BUDGET - BILL 05 - 2/23/00 your organization do, or the employing officer do, to verify that that person's moved in and not just provided with you a change of address? Is there any real look at that?

Enforcement of the residency requirement falls under the City Controller, and they're the ones who have the responsibility for monitoring compliance with the residency requirements.

And to end this, since this information is not readily available today, does that suggest that this might be a large group or a small group or just that you don't know?

I would believe that it -- it's a relatively small group because it's going to -- the people who are covered by these waivers are people who basically have one year to move in.

One year.

Yes. It's for the six-month probation -- it's for the probation period and six months thereafter, so it's actually a total of one year.

Well, if you could 1753 OPERATING BUDGET - BILL 05 - 2/23/00 provide because, again, just to go back to my opening remark, I constantly hear, Well, you didn't ask the question right and you didn't include this or -- I want a -- I would like to know that just to -- the big picture, with no 7 trick questions or trick answers.

Certainly. And certainly -- and the broadest group that -- for which we can provide information are those employees who are Civil Service Commission and exempt employees in the executive and legislative branch of government.

Thank you.

And what I also wanted to bring up too is, Miss Seyda, when I first came on the Commission, you know, the departments are responsible to tell us, we're not investigators.

Right.

And I'm not being, you know, wise on that. We don't have the people to do the investigating. The departments' responsibility to follow these things and let us know, and then they present a case against them in front of us. 1754 OPERATING BUDGET - BILL 05 - 2/23/00 And I'm going to say this: The last, I think, since I've been chairman, I don't remember one case coming in front of us about a residency waiver for somebody that's working, outside of the case that I mentioned. In the last couple of years, I haven't had one case. And why do I say that? I say that because we've got an alert Council here, and sometimes if you're interested in something, then somebody's not doing their job, so it should be looked into.

I appreciate that. Thank you. Thank you, Madam Chair.

Thank you. Are there any other questions from members of the committee of Mr. DiPiero?

(Off mike, inaudible.)

Yes. Thank you. Are there any other questions from members of the committee? (No further questions.) 1755 OPERATING BUDGET - BILL 05 - 2/23/00

Thank you very much, Mr. DiPiero.

Thanks a lot.

The Water Department. (Water Department witnesses come forward.)

Good morning, Commissioner. COMMISSIONER KISHINCHAND: Good morning, President Verna and good morning, Members of City Council. Would you like me to start my testimony?

Yes. We have a copy of your testimony, which will be given to the stenographer, and it will be typed in whole, but if you would simply summarize your testimony, we would appreciate it. COMMISSIONER KISHINCHAND: Thank you very much. I appreciate, you know, being brief on this and I appreciate the opportunity of giving you to testify on behalf of the Water Department for its proposed 2001 Fiscal Year 2001 Operating 1756 OPERATING BUDGET - BILL 05 - 2/23/00 Budget. With me today to help me answer any questions that you have are Susan Lior, who's on my extreme left, she's Deputy Commissioner for Information Technology; Dick Roy, who is Deputy Commissioner for Operations; and on my right is Bernie Brunwasser, who is Deputy Commissioner for Finance. We come before you to request an Operating Budget of $195.5 million, augmented by $232 million for other Water Fund activities, such as Water Revenue Bureau, Law Department, and other support agencies, as well as payment to the debt service. Generally, there are three issues that this Council is very much interested in, and those are: Is our drinking water safe? Well, I can assure you it's of the highest quality. In fact, the U.S. EPA has commended us for having finished Stage III of our Partnership for Safe Water. The other question that comes to mind is, is our water clean when we discharge it into 1757 OPERATING BUDGET - BILL 05 - 2/23/00 our rivers and streams? Our base water treatment plants have been treating water to the point that it's cleaner than the river water that we draw in for drinking purposes. In fact, the three waste-water treatment plants have won awards from the Association of Metropolitan Sewerage agencies consistently for over five years. One of our plans, in fact, had absolutely perfect compliance for five years in a row, and this year, we'll be getting a platinum award for that. The third area that I think the Council is very much interested in is the financial condition of the Department, and I can assure you we are in very stable condition. In fact, we will not be requesting any rate increase again for the fifth time in a row that I've come before. There will not be a rate request to this Council for Fiscal Year 2001.

I'm so happy to hear that. COMMISSIONER KISHINCHAND: Thank you very much, and I think with that, I'll start -- if you have any questions, I'll certainly answer them. 1758 OPERATING BUDGET - BILL 05 - 2/23/00 I do want to want to add that one of the reasons why we are in such a good financial condition is because of the great support we've had and consistent support that we've had from City Council, whether it was when we went to monthly billing or developing the cogeneration and standby facilities, which saved us millions of dollars, the automatic meter-reading program that you helped us with, and a number of other initiatives. And I thank you and I appreciate your support for that.

I know that I only speak for myself, but many of my colleagues. We think do you a fabulous job. Thank you. COMMISSIONER KISHINCHAND: Thank you.

On your testimony, Commissioner, you indicate that the Water Department provides drinking water to more than 150,000 residents of Lower Bucks County and treats waste water from approximately 700,000 residents of Bucks, Delaware, and Montgomery counties. What does it cost to provide these services, and do we receive -- and what do we receive for these services? 1759 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: Our contracts are long-term contracts for drinking water with Bucks County, and they're based on the cost of service and an administrative fee. I'll ask Bernie Brunwasser, our Deputy Commissioner for Finance, to help expand on it.

Thank you.

I'm Bernie, Deputy Commissioner for Water. The -- all of our suburban contracts are governed under actually ten separate waste-water contracts and one water contract, and they provide for the recovery of full cost of service, plus a 10 percent management fee, and this was passed under a 1987 ordinance by City Council, which allowed us to do that. So the actual cost may be somewhat below what we have figured in our rates, but the 10 percent management fee certainly makes us whole over and above all our costs.

Thank you. Commissioner, what are the functions and duties the of the Office of Water Sheds? And who are the key stakeholders that you refer to? 1760 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: The Office of Water Sheds was created a little over a year ago, and it was essentially in response to the direction that the whole nation is headed in terms of keeping the waters and the streams and the rivers clean. As you know, the Water Department and many of the waste-water agencies have spent millions and billions of dollars to clean up the environment by treating the water in the waste-water plants. Those plants, when they discharge into the river, are called "point sources." We've done as much as -- the municipalities have done as much as they can now to clean up their streams and rivers. Their remaining challenges really are for non-point sources. Non-point sources are the runoff of storm water, from farms, upstream areas, and even from our streets, which go directly into the river. And the Water Shed concept is essentially to look wholistically at where this pollution is coming from, not only from the waste-water treatment plants but all other places that cannot 1761 OPERATING BUDGET - BILL 05 - 2/23/00 identified as point sources. And in view of the fact that there are neighboring counties which have storm water being discharged into the streams like the Cobbs Creek or the Wissahickon, etc., we need to bring those stakeholders -- those stakeholder are essentially neighboring counties, and another stakeholder is the Department of Environmental Protection, the Pennsylvania Department of Environmental Protection. So those are the people that we need to bring together to address these issues, together because we as a city cannot take on the costs of all the effort that is required to clean up the streams to the point that the EPA wants them, which is make them fishable and swimmable.

Thank you,. Councilwoman Blackwell. Did you want to ask questions at this point?

I just wanted to thank you, Commissioner. You always do a great job for us. Thank you. COMMISSIONER KISHINCHAND: Thank you very much. 1762 OPERATING BUDGET - BILL 05 - 2/23/00

Thank you. The Chair recognizes Councilman Rizzo.

Thank you, Madam Chair. Commissioner, can you give us an update on the cross connection issue, the cross connections with the sanitary and the storm. Where are we with that, and just a little bit of an update, please? COMMISSIONER KISHINCHAND: Surely. As you know, we started the program sometime back, and essentially, the cross connection program right now requires us to correct the true cross connection -- in other words, the storm water going into the sanitary and sanitary going into the storm. Our focus has been to stop the sanitary flow going into the storm system because that goes directly into the river and it pollutes it. And because they are true cross connection and apparently erroneously for whatever the reason might have been, and in order to prevent pollution and to correct the situation quickly, the Water Department agreed to take on the costs of those repairs. 1763 OPERATING BUDGET - BILL 05 - 2/23/00 So we are doing those, we test -- and I'll ask Dick Roy, our Deputy Commissioner for Operations see give you a little more detail in that.

Yes. My name is Richard Roy. I'm Deputy Commissioner for Operations in the Department. In terms of the cross-connected lateral program, our consent order with the State requires us to do at least 2,000 screenings per year. We're well above that number. Screenings just give us an indication as to whether there's a possible or not. And then if we had indication there's a possible, we have to go back and do a final test on an individual property. Once that's determined, we issue an order to a plumber to make the abatement on that. We concentrated on four areas in the city. There's, I think, somewhere around 260 out-falls that need attention. We're taking each sewer shed at a time. We went after the top four. One of those we were able to divert dry weather flow to an interceptor and take to it a plant and we were able to move into another area. 1764 OPERATING BUDGET - BILL 05 - 2/23/00 The second area along Cheltenham Avenue, between approximately Seventh Street and Washington Lane, is a very large area. That has been totally completed. And we're working now in the Wissahickon area, the Roxborough-Manayunk area.

And this was all done at the expense of the Water Department and no 10 means or any reimbursement at all for the property owner?

Properties that had complied with the order, prior to our accepting responsibilities for the fixing, have all been reimbursed, and all the other costs have been at the Department's expense.

My final question is, in your main replacement projects, and the one that I think you're all aware of is the Lauriston Street project there, where there was a combination Streets Department and water main replacement simultaneously. In your contracts, in your contracts, when you let out a contract to do excavation and replace pipe, it appeared that that one job on 1765 OPERATING BUDGET - BILL 05 - 2/23/00 Lauriston Street -- and I don't know exactly who had the primarily responsibility, was it Water or was it Streets. But when you send out a contract, do you have time requirements in there where a contractor can't start a job and get another job and start digging a hole here, abandon that project, move on to another project, and not complete this one in a timely manner? What do you do in area project management? A perfect example is a job up on Hillcrest Avenue, up in Chestnut Hill. That honestly looks like a war zone up there, in my opinion. Whoever is the inspector is trying to do a good job, but the contractor, in my opinion, is not leaving the job in the condition it should be left in over weekends and things like that. And that bothers me because some person hits those holes and damages their vehicle, and it's all unnecessary, in my opinion. So, again, I'd like to know what we're doing to make sure these contractors get in, do the job properly, get out. And while these projects are being conducted, who's watching the job to make sure? Because the contractor put the 1766 OPERATING BUDGET - BILL 05 - 2/23/00 money into the deal to make sure of work area protection, the back filling at the end of the work day covering plates, and everything that they don't do is more money in the deep pockets. So I'd like for you to respond to that, maybe the Deputy Commissioner of Operations or the Commissioner. COMMISSIONER KISHINCHAND: I can respond to that. Essentially, that's handled by our engineering division, and we have an inspector at every job to make sure that the contractor's terms have been complied with. I don't know the specifics about the Hillcrest Street. I can look into it.

Lauriston Street. Remember, that's the street, Commissioner, where all the homes sank? COMMISSIONER KISHINCHAND: Lauriston in Roxborough?

Right off the ridge? COMMISSIONER KISHINCHAND: Sure.

And that -- apparently, that job was left open for months. 1767 OPERATING BUDGET - BILL 05 - 2/23/00 The people said the contractor came in there midsummer, and they didn't see him for months later. The job never got completed. COMMISSIONER KISHINCHAND: I'll look into that. And on both those contracts, I'll respond to you. But our general practice is to have an inspector onsite all the time that the contractor is in place working over there, and our inspector is supposed to make sure that he leaves the site clear at the end of the day. Now, to the extent that some of these things have fallen through, we need to follow up on it and make sure that the inspectors understand that for public convenience, they need to be more sensitive to the residents over there and to follow up and make sure that the doing what's required our contractor's doing what is required 'cause our contract requires the contractor to essentially leave the site clear and safe at the end of the day.

I only use those two locations as examples, and you're correct, I'm more interested in the big picture. And, again, 1768 OPERATING BUDGET - BILL 05 - 2/23/00 it's not like we're asking the contractor to do us a favor; the contractor is being paid. COMMISSIONER KISHINCHAND: Absolutely.

Those extras to keep that job site clean and neat and safe is something they're being paid to do. COMMISSIONER KISHINCHAND: Absolutely.

And if they're not doing it, they're stealing from us. COMMISSIONER KISHINCHAND: You're absolutely right. We do follow up and I'll follow up on that and make sure that this is done throughout the city. We do have, in fact, an engineer who oversees the inspector and does stop over. These engineers have multiple jobs that they go to during the daytime to make sure that the inspector is following up on it. If in this instance, something fell through the cracks, I'll take a look at it and I'll get back to you on it.

Thank you. Thank you, commissioner. COMMISSIONER KISHINCHAND: You're welcome.

Thank you. 1769 OPERATING BUDGET - BILL 05 - 2/23/00 The Chair recognizes Councilwoman Miller.

Thank you, Madam Chair. Good morning, Mr. Commissioner. COMMISSIONER KISHINCHAND: Good morning.

And your staff. I have two questions. One is regarding a block in my district that has had in the last 5 years 15 water-main breaks, and it's a block that's not too far from me, so I do ride through there a lot. It there appears to always be a little leak, a little water coming out here, a little water coming out there. And the block captain states that they put in plastic pipes 15 years ago but they did that at the request of the City. They had no 19 choice as to what types of pipes they would put in. And now they want them to pay again. And he restates that in 5 years, they've had 15 water- main breaks. This came up at the Town Meeting that we had with Mayor John Street, and I know that we have been calling and other people have been calling. 1770 OPERATING BUDGET - BILL 05 - 2/23/00 Could you forward to my office a report that has looked at the block East Walnut Lane. COMMISSIONER KISHINCHAND: Okay, yes, we will.

I know the Water Department's been there a lot. COMMISSIONER KISHINCHAND: I see.

But we're not quite sure, and this shouldn't be happening, so many in five years. COMMISSIONER KISHINCHAND: We will look into that. That's a pipe -- generally, we do not allow that pipe to be used. There are certain instances where we do use the plastic pipe to isolate the water main from any electrical conduction from the homes or from, you know, let's say, the street, cars, etc., because electric currents cause corrosion on cast-iron and duct line pipes. We try to protect them, but in some instances, the soil is so corrosive that there's really not much we can do unless we excavate and dispose of all the soil and replace it, which is a very expensive proposition.

Okay. 1771 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: And instead. We isolate the mains. Now, these plastic pipes are breaking and we need to take a look at them to see if they've met the spec requirements 'cause there a couple of different kinds of plastic pipes that are permitted for use. Some of them are high density, some of them are low density polyethylene. When this was started some 25, 30 years ago, initially the industry provided very low-density polyethylene, which did not hold up very well. So we need to take a look at this and see what's involved.

Mm-hmm, okay, okay. Thank you. COMMISSIONER KISHINCHAND: And then we'll get back to you on that.

Okay. One more question. In a part of my district, there are -- and I'm not talking about the Logan sinking homes area or Feltonville. There's another part where 55 properties have been cited by L&I for 1772 OPERATING BUDGET - BILL 05 - 2/23/00 structural damages. Their porches are leaning. Lots of the residents have fixed those porches. They believe that they're -- and I think your department believes too that there needs to be some water and sewage pipes. The ones that exist there right now are old, they're deteriorating. And we had a meeting, Risk Management, L&I was there. And after the meeting, we wrote to the Streets Department and your department about doing a good assessment of what's going on over there. We want to really determine whether it's homeowner responsibility or whether the City has some assistance in really creating this problem. COMMISSIONER KISHINCHAND: Mm-hmm. Okay, what was the address?

I have to give you a copy of the letter that we sent you. COMMISSIONER KISHINCHAND: Okay.

'Cause it's 5 blocks, 55 properties. COMMISSIONER KISHINCHAND: Okay.

And I just called my office and asked someone to bring it up so I could give it to you before you leave. 1773 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: Okay, Deputy Commissioner Roy says we do have the letter, and we'll respond.

Okay, all right. Thank you. COMMISSIONER KISHINCHAND: You're welcome.

Thank you, Madam President.

Thank you. The Chair recognizes Councilwoman Brown.

Thank you, Madam Chair. Good morning. Good morning, Commissioner. COMMISSIONER KISHINCHAND: Good morning.

You mention in your testimony on , and I quote: "Philadelphia's drinking water is safer than ever." And that's a good thing, given the work that you and your team are doing in the Department. 1774 OPERATING BUDGET - BILL 05 - 2/23/00 One revelation that we learned in the proceedings with the Health Department is that lead continues to be a problem, and recognizing that lead is not your primary responsibility, recently, we know that there was a write-up in the Philadelphia Inquirer that mentioned that lead is in the drinking water in Philadelphia public schools, and I understand that it is a pipe problem and not a water problem. COMMISSIONER KISHINCHAND: Correct.

So given that, what is or has been or will continue to be goals -- what do you mean when you say "safe drinking water"? COMMISSIONER KISHINCHAND: The Safe Drinking Water Act actually requires us to do an assessment of our drinking water and to put into place corrosion control processes that will protect the pipes, and that usually, for instance, the copper pipe that you have --

What kind of control did you say? COMMISSIONER KISHINCHAND: Corrosion control. 1775 OPERATING BUDGET - BILL 05 - 2/23/00

Corrosion control, okay. COMMISSIONER KISHINCHAND: Right. And we have done that. We are at the maximum, we are within the regulation requirements. What's happening in the public schools is, many of the those schools either have lead service lines, which may need to be replaced. Many of them have water coolers, which have mechanisms in them which has lead. There may be new copper in there, and new copper does corrode faster because there's no passivation. It takes about five years to passivate the inside of a tube before the lead dissolves. So it may be a combination of things. It's the type of materials that they're using in the water coolers, it could be the lead pipe that's coming in the system. The solution, the short-term solution, that would not be expensive is to flush any faucet or any point of delivery in the school for a period of time. They may need to test it. It may take two minutes of flushing, it may take five minutes, depending on the length of a pipe from 1776 OPERATING BUDGET - BILL 05 - 2/23/00 the street into the building. So that's the short-term solution. And the long-term solution would be slow replacement of some of these, you know, underground infrastructure that they have in the schools. They can work them from lead to copper, and of course slow replacement of water fountains etc., those that are particularly, you know, corroding much faster than they ought to.

Given your short-term solution, internally, do you have conversations, discussions with the School District on this type of matter? Would you consider in terms of follow-through and the recommendation you just put on the record to the appropriate parties within the School District to specifically address that issue? Because it remains a problem. COMMISSIONER KISHINCHAND: Right. In fact, we have had a number of conversations with them, and we've been helping to sort of bring in the EPA, which is essentially enforcing the corrective measures at the schools and the School Board folks to get together and resolve this. And 1777 OPERATING BUDGET - BILL 05 - 2/23/00 we've even, in fact, offered to assist the School Board and EPA in looking at the measures that they are taking to protect the children from drinking that water.

Just from my own knowledge base, as we look to the School District kind of before us, how long ago or how recent ago, what was the outcome of those conversations and discussions, to your knowledge? COMMISSIONER KISHINCHAND: The conversations initiated were several months ago and --

For the first time? COMMISSIONER KISHINCHAND: I'm not sure about that.

Okay. COMMISSIONER KISHINCHAND: Our Director of Laboratories, Jeffrey (unintelligible), who is not unfortunately here, really has a lot of detail on this. We can provide you that detail.

Please. COMMISSIONER KISHINCHAND: But he has been in touch with both the School Board personnel 1778 OPERATING BUDGET - BILL 05 - 2/23/00 who are responsible for this project as well as the EPA person who is responsible for enforcement of the consent decree that they, I believe are required to sign.

Okay. COMMISSIONER KISHINCHAND: Now, I'm not sure whether the Health Department signed that consent decree on behalf of the School Board or whether the School Board signed it.

Okay then. COMMISSIONER KISHINCHAND: But the Health Department is intimately involved with it. Commissioner John Domzalski is very familiar with it.

Repeat those names now. COMMISSIONER KISHINCHAND: Pardon? Oh, John Domzalski, he is the acting Health Commissioner.

Oh, sure, sure, okay. Secondly -- thank you. I'll do the follow-up on that on my end of it. COMMISSIONER KISHINCHAND: You're 1779 OPERATING BUDGET - BILL 05 - 2/23/00 welcome.

One thing we were enlightened about yesterday --

Councilwoman, Councilwoman?

I'm sorry.

Your time is up.

Oh, my.

We'll have to have a second go-around.

Okay, thank you.

Thank you. The Chair recognizes Councilman Cohen.

Thank you very much, Madam Chair. Tell me in a simple little matter, when water spurts out of the street, who do we call? COMMISSIONER KISHINCHAND: You call the Water Department.

The Water Department. Any particular unit? COMMISSIONER KISHINCHAND: The Customer Service Unit, 685-6300. 1780 OPERATING BUDGET - BILL 05 - 2/23/00

And will we get quick service? COMMISSIONER KISHINCHAND: Well, I think we've been monitoring the response time. And the latest numbers, if I recall, are about less than three minutes. This is on the phone call. I'm not quite sure if your question referred to the phone call or referred to the response time in the street.

To deal with the situation. COMMISSIONER KISHINCHAND: To deal with the situation. Well, as soon as the call comes in, as I said, in two or three minutes, we respond and then --

Do you usually reach the homeowner? Because when we see it, we don't know, you know, which house is involved, so we can only report a situation. COMMISSIONER KISHINCHAND: Exactly. So we don't really know who's calling when the call comes in unless the homeowner or the individual who calls gives us a telephone number that we can 1781 OPERATING BUDGET - BILL 05 - 2/23/00 reach, we don't. But what we do is, we dispatch an emergency crew out there to assess the situation, and particularly, if it's spurting out on the street, obviously, it's not a good situation. And we take immediate action to shut the -- either reduce the pressure in the pipes so that the flow is reduced, particularly if that water is going directly into the inlet. And if we see that there is no impact on the neighborhood, you know, as far as the safety is concerned, then we bring in a crew to actually repair it. Sometimes if it's really gushing out, we send a couple of crews out there to shut off that particular main and provide water through some other means.

All right, thank you with respect to that. COMMISSIONER KISHINCHAND: You're welcome.

With respect to something known by initials MTBE, I think it's methyl -- some substance, which, from an environmental point of view, causes concern 1782 OPERATING BUDGET - BILL 05 - 2/23/00 because, I think, in urban areas, it has an impact on asthma or other health conditions, and it is an additive to gasoline. In the Philadelphia area, for example, there's great concern with respect to whether it pollutes water or air, and I understand there are different groups of people who emphasize its adverse effects -- some on water, some on air. A few people think it's bad both ways. COMMISSIONER KISHINCHAND: Yes.

Now, I understand, and correct me if I'm wrong, that there is no 14 regular testing mechanism with respect to Philadelphia water, and that there's only been, I believe, from information I have, one test made. COMMISSIONER KISHINCHAND: Correct.

And that showed the water was not polluted, but that test has been some years ago. Could you give us some information on that? COMMISSIONER KISHINCHAND: Surely. MTB essentially is a gasoline additive that reduces the air pollution. It generally gets into the 1783 OPERATING BUDGET - BILL 05 - 2/23/00 water system through percolation through the street, etc., when there is unburned gasoline that gets spilled under the streets, etc. It has an impact on primarily ground water -- in fact, only on ground water. That is the only place where they have found MTB. We do not draw our drinking water from ground water. Our water comes from the rivers. We've checked MTB in the rivers, we've checked MTB in our plants. There is no indication that MTB is getting in there at all. Generally, people who live in the country side with no rivers close by, they dig their wells and they draw water from the wells, those are the folks that have an impact of MTB on their drinking water.

When was the last time that Philadelphia water was checked? COMMISSIONER KISHINCHAND: For MTB?

For MTB. COMMISSIONER KISHINCHAND: I'll have to ask our laboratories. It may have been a couple of years since we've done that test, yeah.

Is your feeling that it is something is of so little likelihood to ever 1784 OPERATING BUDGET - BILL 05 - 2/23/00 be a problem, for the reasons you've stated, that the water should not be checked? Or do you favor a policy of checking it over certain periods of time? COMMISSIONER KISHINCHAND: It's very unlikely that Philadelphia water will ever be impacted by it. We've done that. In fact, the EPA and all the regulators are focusing more on ground water issues than on the surface water issues.

Well, that I understand. COMMISSIONER KISHINCHAND: But we can certainly run a test maybe once a year on three plants just to give some level of comfort to the public.

Could you, if you arrive at a decision, notify the President of City Council so that she can notify us of when you plan to make a test? Or, if you plan never to make a test, just let us know that, too. And then if there is a test, give us the results. COMMISSIONER KISHINCHAND: Surely.

I understand that 1785 OPERATING BUDGET - BILL 05 - 2/23/00 there may be some shifting opinions, though I gather that at this point in time, it's a question of air pollution, which has an impact on conditions like asthma that are of concern. COMMISSIONER KISHINCHAND: Right.

But I also understand that the scientific community is not fully united on the fact that there can no adverse impact on water, so we'll be interested in whatever conclusion you make. COMMISSIONER KISHINCHAND: The scientific community pretty much together.

On the ground water. COMMISSIONER KISHINCHAND: They believe it does have an impact on water, but only on ground water, not on surface water, because it's a volatile compound, and it may very well have an impact for, you know, in the air because there -- when the engines don't have complete combustion, you're going to get some gasoline that comes out with the exhaust that is unburned gasoline, and that's going to have MTB to some degree. It's possible, and I'm not an expert on air, but it's possible that MTB could be in the 1786 OPERATING BUDGET - BILL 05 - 2/23/00 air, but I wouldn't know at what extent or whether it's below the threshold or whether it will have impact on folks or not.

Councilman, I'm sorry. Your time's up.

All right.

Thank you,. Councilwoman Brown?

Thank you, Madam Chair. My second question was related to a revelation we received yesterday during the hearings with Fleet Management, and that is that they have worked through an arrangement with District Council 33 whereby young people are learned with learning the -- are beginning a career path but actually starting it in senior high school. So I was wondering if your department has considered anything like that, if you have young people involved in any way, shape, form or fashion so that they can become familiar with all the particulars around the industry and possibly consider it as a career path as well. 1787 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: Right. In fact, we do have a program with the School Board where we bring in high-school students to work in our plants. We give them training for, I believe, electrician and heating and ventilation and air conditioning systems. And we do have a program with the School Board. We work very closely with the School Board in terms of sharing with them what our needs our so that their graduate students can then come into our organization and work effectively. As you know, hiring electricians, HVAC instrumentation technicians, mechanics, it's very difficult for the City to hire those because there's a great deal of competition out there and the private sector pay a lot more, and we've got many vacancies that we would like to fill in those particular categories, and the School Board is working with us to help us do that. I believe it's Mastbaum High School.

That was my next question. What schools are involved? COMMISSIONER KISHINCHAND: It's on in our testimony. It's from Mastbaum High 1788 OPERATING BUDGET - BILL 05 - 2/23/00 School that we had about nine or ten students who were working with us.

So my hope and expectation would be that that grows. That's ten students out of X-number of students that are at the senior high school level. COMMISSIONER KISHINCHAND: Yeah. We work with the School Board to encourage them to do that, and we also go out and work with a number of schools to make them aware of the opportunities that are available in the water environment. And, in fact, at Lincoln High School, we've been partnering with them to work with some of their students on water pollution control or testing of water.

So that's a standard operating effort practiced within the Water Department that you reach out to public schools so that there's a relationship there that runs deep within the school system? COMMISSIONER KISHINCHAND: There's a relationship; I don't know how deep it is. You know, there's always room for improvement. We can certainly try to see if we can interest them in 1789 OPERATING BUDGET - BILL 05 - 2/23/00 other areas of the Department like chemistry, chemical technicians. I am not sure, for instance, whether the schools in Philadelphia have enough facilities to, say, train chemical technicians. We hire a lot of chemical technicians to do the testing in our drinking water as well as waste-water treatment plants and also in our central laboratories.

The point is -- COMMISSIONER KISHINCHAND: There are a number of opportunities that are available. Chemical technicians, I think, requires a post-high school study to some degree because of the complexity of the jobs that they will have.

The point person on your staff that we could speak with for additional follow-up on the school partnership effort would be whom? COMMISSIONER KISHINCHAND: It would be Lorin Fields, who's our General Manager for Human Resources. Lorin, L-O-R-I-N. Fields is F-I-E-L-D-S. And Sheila Ireland. Sheila is the one who's the point person for training purposes 1790 OPERATING BUDGET - BILL 05 - 2/23/00 at Mastbaum.

Okay. COMMISSIONER KISHINCHAND: And Ireland is I-R-E-L-A-N-D, Sheila Ireland. I can have both of them get in touch with your office if you'd like.

I would certainly appreciate that. I thank you. COMMISSIONER KISHINCHAND: You're welcome.

Thank you, Madam Chair.

Thank you. The Chair recognizes Councilman Cohen again.

Commissioner, one other question on the Water Department. Is there any arrangement -- do hospitals pay anything for the use of water? COMMISSIONER KISHINCHAND: Hospitals do pay but they get a percent discount. 23

But they pay on -- 24 COMMISSIONER KISHINCHAND: The 25 nonprofits. For instance, Tenet, when they took 1791 OPERATING BUDGET - BILL 05 - 2/23/00 over the hospital, we converted them to a full 100 percent payment. It's the nonprofit hospitals that get percent discount, but they do pay. 5

So that the amount 6 of water they use somehow reflects on how much 7 they have to pay? 8 COMMISSIONER KISHINCHAND: That's the 9 amount of water they use? Yeah, we -- 10

The reason I raise 11 it is, in my natural course of events, we do, you 12 know, we do a lot of hospital visitation of 13 people, and I've just noticed that hospitals 14 universally seem to have dripping faucets. 15 COMMISSIONER KISHINCHAND: Mm-hmm. 16

And I may report it 17 and they say they'll take care of it. And if I 18 visit there again three weeks or maybe even two or 19 three months later, the faucets are still 20 dripping. It's as if it doesn't mean anything. 21 And it's kind of universal. It isn't 22 an occasional one, it's constant and pretty 23 universal amongst all the hospital, as if no one 24 is paying any attention, and I thought maybe 25 they're doing it -- 1792 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: There's really not too much incentive on our part to do that.

-- because they pay a fixed fee or no fee. I would appreciate it if something could be done as a notice to hospitals particularly. I know they're busy with a lot of other things, but it seems to me that there must have a great deal of waste of water. COMMISSIONER KISHINCHAND: I think the hospital administration should take a look at that, not only for the purpose of conservation but expenses. To the extent that they use that water, to the extent that it is going through the meter and it is being metered and we are billing them, I don't know that we have too much more incentive to go back there and correct that. But I would encourage them to do so, yes.

All right, thank you very much. COMMISSIONER KISHINCHAND: You're welcome.

Thank you, Madam 1793 OPERATING BUDGET - BILL 05 - 2/23/00 President.

Thank you. The Chair recognizes Councilman Nutter.

Good morning, Commissioner. COMMISSIONER KISHINCHAND: Good morning.

I wanted to ask -- and technically this might be more of a Water Revenue question, but I know you'll do your best to respond. People -- I mean, it's very easy, I guess, to complain in many instances about the various utilities -- water, electric, PGW in terms of the gas, you complain about the phone company and the like. And from time to time, you know, we certainly get some calls. But I wanted to get a sense from you in your billing operation on the water side, the call center operation. I just -- I don't seem to get anywhere near as many complaints about that operation as we do about some others that, you know, may be getting some attention here recently. And I guess I wanted to know how the place runs, 1794 OPERATING BUDGET - BILL 05 - 2/23/00 what the level of calls are, the average wait times, if you monitor and track that kind of stuff. Do people get, you know, lost in the phone loop or voice-mail loop, can you talk to a live person when most people call, those kind of issues. And how is the Water Department set up to deal with that as compared to some other entities? Because all of you basically serve pretty much the same number of people. COMMISSIONER KISHINCHAND: We, in fact, have a call center, which has the technology embedded in it that measures the time that it takes us to answer the phone call, the number of phone calls that come in, the number of phone calls that we answer, the number that is abandoned. We track every bit of that. You may or may not know, in the last year, the combined both the Water Revenue Bureau call center with the Water Department call center, because when a customer calls, they really don't know that those are two different agencies and they're under two different heads.

Right. 1795 OPERATING BUDGET - BILL 05 - 2/23/00 COMMISSIONER KISHINCHAND: And we wanted to make them very seamless. And Denise Garrett, who's, I believe, over here, she is the deputy in charge of Water Revenue Bureau, and she and our department have worked very hard to make this thing as seamless as possible and be as responsive to the customer as we possibly can. That is not to say that there may not be occasions where there are a few people that may not get a response as quickly as they would like because there are a few calls that are abandoned. I do not have the numbers with me but we can provide those for you.

Okay. Has this particular system been in place for some period of time, or was it upgraded to deal with all the Y2K issues and those kinds of. . . COMMISSIONER KISHINCHAND: With your permission, I'd like to ask Denise Garrett to answer that question, please.

I'd love to have Denise Garrett at the table.

We call her enough. 1796 OPERATING BUDGET - BILL 05 - 2/23/00

Absolutely. I know her phone number by heart. (Denise Garrett comes forward.)

Good morning, Councilman. I'm Denise Garrett. I am the Bureau Chief of Water Revenue Bureau. The system that we have in place is a citywide system, of which the Water Revenue Bureau and the Water Department is a partition off of that system. The system is a system provided by Lucent Technology. We installed that system in 1996. The Water Department installed the system in 1998, and at that time, we began the consolidation process in order to have our customers contact one central number in order to receive services from both operations. When we installed that system, we also began a project that involved monitoring in conjunction with the development of our strategic plan, which set specific goals for performance from the system, from our employees. Right now, we have met the majority of those goals. One of those goals was to increase the number -- increase the number of employees who 1797 OPERATING BUDGET - BILL 05 - 2/23/00 respond to the calls. That was one goal, and we did that by combining our systems. We also developed staff support around the system, what we call quality-assurance personnel assistance, administration support personnel. We retrained our supervisors. We also had a goal of reducing the customer wait time, which went from, in some cases, as high as 25, 30 minutes, to less than 3 minutes. We've accomplished that. We had a goal of reducing our abandonment rate. At some point, it was as high as 40, sometimes 50 percent. We reduced that, I'm happy to say in my last reports, to under 7 percent. We also have a goal of reducing our talk time so that we could handle more calls when they came in. And our talk time was in excess of 18 minutes at one point, and we've reduced that to under 4 minutes so that we could get more calls in. In addition to that, we've done some backroom operational support issues in terms of changing our operations around so that when 1798 OPERATING BUDGET - BILL 05 - 2/23/00 customers -- not only our call center, but also when the other operations, when customers respond to us either in writing or in person, that we reduce those times as well to eliminate repeat calls coming into the operation, so that if you come in and visit us and you're not satisfied, then you're going to call us. So we reduce the repeat-call activity as well.

Do you recall when those systems were installed? And I know this was a few years ago, '96 and '98. Do you recall what the cost was for those --

Yes.

-- two systems?

In 1996, the hardware cost of our system was under $250,000. The hardware cost for the Water Department system was under $150,000.

Councilman, Councilman?

Was that --

Councilman.

Was that beeping for me? 1799 OPERATING BUDGET - BILL 05 - 2/23/00

Councilman, your time is up. But we will have you ask this last question and then we'll have another go-around please.

Thank you. This will probably conclude my questions for the Water Department. The $250,000 and $150,000.

Yes.

At some relatively recent point in time prior to that, had you made some other significant investment in either computer systems or hardware or --

Yes, we made -- that's the call center system proper. The City purchased the actual infrastructure of the system, so we only had to purchase a partition. The switch was actually purchased by the Revenue Department.

Okay.

So rather than duplicating that type of -- that technology in every department, we partitioned off. So we have a call center that seats approximately 40 people, the Water Department has a call center that seats 1800 OPERATING BUDGET - BILL 05 - 2/23/00 approximately people. And so combined, we have a call center that seats approximately 56 people. The system actually, I believe, supports 1,000 seats.

Supports a 1,000 7 seats? 8

Yes. 9

Interesting. 10 Okay, I was just somewhat surprised at 11 the numbers given, some of the dollars that we've 12 seen or heard about with regard to the call center 13 and computer operation and upgrade for PGW, which, 14 I think, is running now in excess of possibly 15 $25 million. And I was just trying to understand 16 how you guys do what you do and what's going on in that operation. COMMISSIONER KISHINCHAND: Well, I'm afraid I can't answer that.

I wouldn't try it. That would be your best answer for the day. Just let it go by. (Laughter.)

Lastly -- and I'm taking advantage of the Chair having a 1801 OPERATING BUDGET - BILL 05 - 2/23/00 conversation. (Laughter.)

Just seeing if she's paying attention. Commissioner, let me thank you for the tremendous level of service during the course of this year. Hopefully, you'll spare the District any further water-main breaks for the year, we've had enough. But your -- the question was asked earlier about response time, and I'm not exactly sure of what examples Councilman Cohen may have been raising, but I can say that whether it's myself reporting or my constituents or whomever, the response from the Water Department -- and we, unfortunately, get a lot of water-main breaks in the District, but whether it's yourself, Dick Roy, and any host of other people in the Department, we have received tremendous response and reaction to situations out there. Not that from time to time, there aren't problems or unique circumstance. But overall, the Water Department has been very good to us, and the men and women that are out there in 1802 OPERATING BUDGET - BILL 05 - 2/23/00 the field late at night, cold, dark, early in the morning, whatever the case may be, they do a tremendous job out there to either get the water turned off, to stop the flow, get it turned back on so that people in their homes have water, and then get the situation cleaned up and cleared up. And the employees out there, I greatly appreciate what they do. And if you could share that with them, I'd appreciate it. COMMISSIONER KISHINCHAND: We certainly will. And thank you so much. I'm sure comments of this nature are really very helpful in getting their morale up, and that's essentially what has helped us. As I said earlier, this Council have been very supportive, and our staff up and down the line understands that, and I think that helps a great deal in their performance.

Sure. COMMISSIONER KISHINCHAND: Thank you.

Thank you.

Thank you. The Chair recognizes Councilman Rizzo. 1803 OPERATING BUDGET - BILL 05 - 2/23/00

Thank you, Madam Chair. Commissioner, I'd like to go back just to two points. Could you go back over the services that your department provides the suburban communities in the area of waste treatment, and also where specifically you supply water service again? COMMISSIONER KISHINCHAND: Okay. The water service is -- the drinking-water service is provided to the Bucks County Water and Sewer Authority. That Bucks County connection comes from our Baxter Water Treatment Plant, and I believe that it's at State Road, the connection, but there's a 45-inch pipeline that goes at -- the border of Bucks County and Philadelphia County is where we measure the amount of water that is supplied. And we bill them on the basis of the amount of water that is supplied.

And that's the -- Bucks County, is that the only county that we -- COMMISSIONER KISHINCHAND: For drinking-water services.

That must be one of 1804 OPERATING BUDGET - BILL 05 - 2/23/00 their lures, Commissioner, to attract Philadelphians to Bucks County. COMMISSIONER KISHINCHAND: Absolutely, absolutely.

That they can continue to drink Philadelphia water. (Laughter.) COMMISSIONER KISHINCHAND: Absolutely. That's the biggest attraction in Bucks County and that's why it's exploded in population.

I'll remind Charlie Martin, one of the commissioner up there, of that. And you indicated -- and we'll get to the waste treatment in just a second. COMMISSIONER KISHINCHAND: Sure.

You indicated that -- was it in 1987? -- Council approved that agreement to sell water, the ordinance? COMMISSIONER KISHINCHAND: The ordinance that governs that particular contract was approved then.

When will we be able to renegotiate that? Since '87 -- will we be able to renegotiate and make that a little sweeter, or 1805 OPERATING BUDGET - BILL 05 - 2/23/00 is -- COMMISSIONER KISHINCHAND: I believe that contract was through 2019, I believe? No, 2011, 2011 is the contract period. But that doesn't preclude our changing their rates because as we, you know, as the inflation impacts our costs, our rates need to increase, and we make adjustments over time.

So you are permitted to adjust that rate and you consider that a good business arrangement? COMMISSIONER KISHINCHAND: At this time, yes, it is a good business arrangement. Could we sell it for even a higher price? I think as the supply diminishes in this area, the water supply diminishes, as more population, you know, goes into these suburban areas, perhaps we can get more, you know, favorable rates. But, yeah, we work on it, but at this point, we are working with some other utilities to see if we can sell more water, and it may be at a higher rate than Bucks.

This business arrangement, during the summer when we hear the 1806 OPERATING BUDGET - BILL 05 - 2/23/00 Water Department, we hear Commissioner Hairston warn the public about open hydrants and things like that, does this business arrangement at all contribute -- is there any negative impact on your customers when we sell these thousands of gallons of water during the summer to Bucks County? Does this take away from the available water here in the City of Philadelphia? COMMISSIONER KISHINCHAND: No, it doesn't, that has no impact, because we have a capacity to treat a lot more water than, you know, the public needs. What happens is, when you open a fire hydrant, no matter how much water you produce at the plant, the water main itself gets emptied very quickly, the pressure drops, the pressure may drop greatly in that area. And what you're essentially doing is reducing the pressure and diminishing the firefighting capability of the Fire Department. And that is one of reasons why we actually try to educate the public not to open the fire hydrants. In fact, in areas where the hydrants are being abused, we've put in locks on them to prevent this kind of activity from going on. 1807 OPERATING BUDGET - BILL 05 - 2/23/00 And there are two other issues that relate to the open fire hydrant. Number one, it can create the water (unintelligible) that can break the water main, and that can do a great deal of damage to the street, to the residences. And in addition to that, sometimes it creates a suction in the main because of the sudden opening of the fire hydrant, and if there are any cross connections, you can get -- there's some contaminants going into it.

I would like to finish by saying that I would appreciate your sending to the Chair the Water Department's conservation effort. Maybe I'm not reading all of the things that you put in the bill as carefully as I should, but I don't really see a significant effort to suggest water conservation. I just recently saw an insert from another water company where they were suggesting a water circulator in the hot water line on new construction, where all of us experience, when you turn hot water on, you have to wait four, five, maybe two minutes, a minute and a half -- it seems forever when you're waiting for hot water. But 1808 OPERATING BUDGET - BILL 05 - 2/23/00 there's technology now that the water is always circulating in the pump, and during new construction, it's very inexpensive. The minute you turn the water faucet on, you have hot water. So I would like to see maybe more of an effort, like Councilman Cohen said, to conserve the water that we have, and maybe the Water Department being out front a little bit more, on trying to suggest to developers, architects, contractors that water is something that should be taken -- should be handled very carefully and preserved, but I'd like to see exactly what you do in the area of your conservation effort.

Thank you, Councilman. COMMISSIONER KISHINCHAND: The environmental --

Did you want to respond to that, Commissioner? COMMISSIONER KISHINCHAND: If I may just very quickly. The conservation effort pamphlet that you saw probably came from one of the suburban counties where they have a limited supply of water 1809 OPERATING BUDGET - BILL 05 - 2/23/00 because of the ground water. They rely heavily on ground water, they need to conserve that, and they make a great deal of effort to do so. And when they do conserve that, their rates go up because they need to charge a certain amount for the infrastructure that's already there. If you look at the suburban counties and their water rates, they are three times the water rate that Philadelphians pay, three times. And -- but, you know, if we were to start conserving, let's assume we conserve 10 percent further, we would have to come to you -- go to the public and get a 10 percent rate increase.

I'm not -- COMMISSIONER KISHINCHAND: And I'm not sure that this is being wasted because we are putting it back into the river. We are taking it out of the river and putting it back into the river, so we are not really --

Commissioner, I'm not suggesting that we don't suggest five-minute showers, but I'm suggesting that when something's being wasted, when you walk into a public building 1810 OPERATING BUDGET - BILL 05 - 2/23/00 or here in City Hall and you see a faucet just leaking, leaking, leaking, there's just something about waste that just doesn't go right with me. And again -- COMMISSIONER KISHINCHAND: The Water Fund reimburses us for that.

I think that waste is waste, and if it can be stopped, I think it should be. COMMISSIONER KISHINCHAND: I agree with you, I agree.

Thank you, Madam Chair.

Thank you. The Chair recognizes Councilman Kenney.

Thank you, Madam Chair. Quickly. Commissioner, we've heard some wonderful things about your department, and I agree with all of them. You are a utility, you deal with loads and loads and miles and miles of pipe. You deal with street breakages and street openings and closings, fixing facilities. You collect your -- what's due and owing to you. 1811 OPERATING BUDGET - BILL 05 - 2/23/00 Did you ever, like, lay in bed at night or in the weekend on the couch and fantasize about taking over the Gas Works? (Laughter.)

I thought at some point it was like silly even bringing it up, but the more I sat here and thought about it, I'm saying, it's a utility that does all the things the Gas Works is supposed to do, and you guys do it right and you're in the same city, dealing with the same population base, dealing with the same weather problems and your distribution network. To me, it may be something worth pursuing. I mean, you guys do a great job and maybe you can straighten that place out. COMMISSIONER KISHINCHAND: Uh, I'm not going to recommend anything like that.

You mean you don't want it? (Laughter.)

Just one question, and this is not an issue of criticism, but Councilmember Ortiz, I think, was intending to be here today, on an issue of -- he was going to ask 1812 OPERATING BUDGET - BILL 05 - 2/23/00 a question about bilingual customer service representatives, and there apparently is some lack of them. And from time to time, his office gets calls forwarded to his office for translation relative to people who have problems with water service and water bills. And I'm wondering if there's any recruitment effort or where our situation is as it relates to not only Spanish speakers but to other ethnic groups that speak different languages in our city. COMMISSIONER KISHINCHAND: An excellent point. And because we have a population that is a mix of various different languages -- Spanish being, of course, the majority of the non-English- speaking people -- what we find more effective is to contract out to services, to translation services, so that when a call comes into our customer service and the individual is unable to communicate, we take advantage of that particular service that we have. And Denise Garrett was responsible for initiating that effort, and I believe it's working very well. If you don't mind, I could ask her to 1813 OPERATING BUDGET - BILL 05 - 2/23/00 explain --

Yeah, just to get something on the record. I was really asking the question at the request of the staff. COMMISSIONER KISHINCHAND: Surely.

Good morning, Councilman.

Good morning.

Good morning, Council President. Yes, we've contracted with Bell Atlantic for a service called "Language Line," which provides for translation services for -- I believe it's about 144 languages. But we have been speaking with a representative of Councilman Ortiz's office in trying to recruit Latino representatives as well as supervisors, because sometimes there's a language barrier, even in the management process. I did request that as our vacancies come up, that we make an attempt at trying to fill them with -- at this point, our goal is to hire two Latino representatives and one Latino supervisor. The positions that we're hiring them in are customer collections representative and 1814 OPERATING BUDGET - BILL 05 - 2/23/00 customer collections representative supervisor. They are quick turnover positions, so we still have an opportunity to attempt to hire them. We don't get as many responses, and his office has offered his services in helping us to recruit people into the organization.

Does it make any sense to maybe take some of our more seasoned employees in customer service and offer them the opportunity to become bilingual?

We have done that, we have done that, and we have gotten some basic sort of bilingual skills as a result of it. But we also have employees who are hired, not as bilingual, who provide bilingual services for us within the Department. So it's not like we don't have these services or we are not communicating. We think we can do better. If we have an employee who is hired as a bilingual, what -- some of the feedback that I get is that the multi-language employees want to be paid more because they're providing additional services besides customer services. That's not something I can control, but when you look at the 1815 OPERATING BUDGET - BILL 05 - 2/23/00 job specification, it doesn't pay -- there's no 3 pay difference between being an English-speaking representative and being a bilingual representative. However, you may be called off of your job to provide bilingual services and then you still have to go back and provide your job. So there needs to be some equity in looking at that, and that could be some of the barrier to being able to hire --

But it's a priority for you guys, and you're working on it.

Yes, it is, it is a priority.

Okay.

In fact, I was approached again about two months ago, and I have approached our personnel director over at the Water Department to ask him what his progress has been in being able to recruit members from the bilingual community.

Thank you very much. I have no further questions.

Thank you. Are there any other questions from 1816 OPERATING BUDGET - BILL 05 - 2/23/00 members of the committee? (No further questions.)

Thank you very much. COMMISSIONER KISHINCHAND: Thank you very much.

Next is the City Planning Commission. Oh, I'm sorry, I'm sorry. The Office of Housing and Community Development is next. (OHCD witnesses come forward.)

Good morning.

Good morning, President Verna. I'm John Kromer, Director of Housing. With me is Roderick Lyles and Raymond Cesario from the Office House of Community Development Fiscal Unit. I believe you have my written testimony.

Yes.

And, as in prior years, I anticipate that the proposed consolidated plan for the coming fiscal year will be heard before the Finance Committee this spring. 1817 OPERATING BUDGET - BILL 05 - 2/23/00 Briefly, however, I wanted to indicate that the proposed operating budget for OHCD is $139.1 million proposed for the coming fiscal year. Of that amount, 74.8 million is proposed for the Grants Revenue Fund, 60.1 million in the Community Development Fund, and 4.1 million in the General Fund. This funding pays for the staffing for the Office of Housing and Community Development as well as the two other primary housing agencies -- the Redevelopment Authority and the Philadelphia Housing Development Corporation -- and for all program costs. The testimony that I have submitted also describes the proposed use of general funds for traditional housing services. These are services that have previously been administered through the Office of Emergency Shelter and Services, but transferred to the Office of Housing and Community Development as part of their divisional responsibility that has been in place for several years, in which transitional housing is handled by OHCD, while OESS continues to maintain the emergency shelter system. I'll be happy to answer any questions 1818 OPERATING BUDGET - BILL 05 - 2/23/00 that Councilmembers may have at this time.

Thank you. Mr. Kromer, when will you be presenting your Consolidated Plan authorizing the Community Development Block Grant for Fiscal Year 2001?

The federal government, the U.S. Department of Housing and Urban Development, requires that an initial plan, a first draft, called "the Preliminary Plan," be published and made available for public comment. We expect that that preliminary plan will be published within a month. Within three or four weeks, there will be public review of that document. And then I would anticipate that in April, the so-called Proposed Consolidated Plan, which is transmitted by the Mayor to City Council, would be available, so that that hearing could be scheduled in May.

Thank you. The Chair recognizes Councilman Goode.

Thank you, Madam President. Good morning, Mr. Kromer. 1819 OPERATING BUDGET - BILL 05 - 2/23/00

Good morning.

I sent a letter to your office asking a number of questions on Monday, February 14th, we've had a discussion this morning about the information being forthcoming, but I wanted to ask you a few questions on the record. You recently cited a lack of change in economic conditions of low- and moderate-income neighborhoods through CDBG spending. I think it was in response to your book. Could you please elaborate?

At the end of last year, I made some remarks here in City Hall in a conversation in connection with -- sort of summing up the Community Development Block Grant Program. And I think it's very encouraging what has been accomplished. We're the envy of other cities in a number of respects -- housing counseling and settlement assistance, the development in lower North Philadelphia, the homeless and special-needs housing. We've really come a long way, and we have a lot to be proud of. But at the same time, if you look 1820 OPERATING BUDGET - BILL 05 - 2/23/00 around the city, there is no neighborhood that has been decisively turned around that was declining and falling in 1990 and that is a success story or even measurably on the way up in the year 2000. And, of course, you could say, Well, it's the economy and we're still recovering from a long history of the disinvestment. And, yes, that's part of the problem. But my purpose in stating that was to say that we need to do even more in the future. And by "more," I mean digging in deeper and producing more value for these neighborhoods so that we can have some success stories when critical issue is continuing to integrate the City-sponsored housing programs with the Philadelphia Housing Authority programs, and we've come a long way in doing that. And Carl Green has been very responsive to that and has initiated some new ideas, which have been very constructive, but we've got to show a lot more progress in that area. Just quickly, one other area where I think we need to improve is in the area of workforce development. We need to be actively 1821 OPERATING BUDGET - BILL 05 - 2/23/00 involved in training neighborhood residents for the good jobs in the metropolitan economy, not just the Work First jobs or the public service jobs, we've got to get them into quality jobs, and we've shown that that's doable.

But in terms of actually reversing economic conditions and economic decline within these neighborhoods after years of Community Development Block Grants 11 spending, in your opinion, is low-income housing 12 production more important in small-business 13 development as an anti-poverty strategy? 14

I think you can have a 15 very valuable housing program and a very valuable 16 small-business development program. I think this 17 is the time, rightly so, when every program needs 18 to be scrutinized. 19 There are many worthwhile activities 20 that we'd like to fund, but I think this first 21 year of the new administration is a great time for 22 a reevaluation, to ask questions like those that 23 you're asking, about the relative weight that 24 should be given to housing versus -- 25

But historically, 1822 OPERATING BUDGET - BILL 05 - 2/23/00 OHCD has used only approximately 10 percent of CDBG entitlement funds for economic development. Can you tell us why the City historically has used such a small percentage of block grant money for economic development.

The area historically -- and I'm not speaking for Street Administration, because the proposal for the coming fiscal year has not yet been prepared, but historically, the argument has been that unlike other cities -- New York and Baltimore and Boston, for example -- there's been little or no funding from the city budget or from the state to support affordable housing. The Community Development Block Grant is the only real resource to support affordable housing and, therefore, the vast majority of block grant funding should go into affordable housing. That's been the argument in the past.

Okay. Although everything seems to be on the table for discussion while we're still in a period of transition with the new administration, after serving as housing director for eight years, could you tell us, do you yourself have any plans to increase his 1823 OPERATING BUDGET - BILL 05 - 2/23/00 allocation particularly for neighborhood small-business development or commercial corridor revitalization?

I think -- I've had some discussions with Mjenzi Traylor, and I think we need to have more discussions and that there needs to be the kind of reevaluation that I mentioned. I'd be delighted to work with you and staff in completing that evaluation.

Okay, thank you. I appreciate it. I have no further questions, Madam Chair.

Thank you. The Chair recognizes Councilman Kenney.

Thank you, Madam Chair. Mr. Kromer, good morning. And gentlemen, good morning.

Good morning.

Again, this is -- I mentioned this the other day, and I've had the opportunity over the last eight years to raise these issues a number of times, and I think maybe 1824 OPERATING BUDGET - BILL 05 - 2/23/00 this is the third time I've raised this issue, and I want to point to something that concerns me. PHDC's annual report about their activities during 1999 indicates to me -- unless I'm reading or adding it up wrong -- that all of the projects listed in that particular report created 258 new homes in Philadelphia in Philadelphia for low- and moderate-income people, at a total cost of $38,300,000, an average of $148,000 a house. Now, ten years ago, I bought my house in South Philadelphia for about $80,000. Probably I paid a little too much, but we wanted to move and we went -- the average person in Philadelphia is not living in a house that's worth $150,000. That is, the average working person, middle-class, blue-color taxpayer is not living in a house of that value. How do we justify spending that kind of money to house low- and moderate-income people when middle-class taxpayers are not able to find a program or a house of that value with amenities unless they move into Washington Township or Springfield, Delaware County. I mean, are -- 1825 OPERATING BUDGET - BILL 05 - 2/23/00 where's the emphasis and? Why are we spending this much money for unit?

Most of the housing that is produced or made available through the program costs substantially less per unit. The Settlement Assistance Grant Program has been widely publicized. The cost per unit through that program is $1,000 per house. It's a sales housing program that's linked to the private market. We have a very successful moderate rehab program for recently-vacated houses. The top subsidy is $25,000.

What's the deal with this group?

The deal with that program is that on the other end of the scale, there is higher-cost rehabilitation, very higher-cost rehabilitation that we have supported. And we have supported that on a limited basis while trying to keep costs as low as we can, because a part of the mission of OHCD, as we've seen it in the past, has been to rebuild neighborhoods in North Philadelphia, west and south and elsewhere that were previously industrial. 1826 OPERATING BUDGET - BILL 05 - 2/23/00 And frequently, that means acquiring land that was broken up into small parcels, correcting environmental problems at great cost, producing and building new streets, removing lead from older houses to comply with federal regs. And that's very costly. And in some cases where we felt that the development has value as an anchor for community, we've supported higher-cost rehabilitation while trying to support an underwriting that squeezes every dollar. The result is a still very high cost.

How do you explain -- or how do I explain to the family in Mayfair or Mt. Airy or South Philadelphia, the Northeast, who lives in a rowhouse, who wants to move up to a $150,000 home but can't find it because they work and pay taxes under any program but wind up being forced out the door to find a house, a single- family home with a garage, and a lot of these projects that are done that I've seen are $150,000 rowhouses.

That's right.

They're not even the single-family, better-amenity house that you 1827 OPERATING BUDGET - BILL 05 - 2/23/00 would find in the suburbs. We're doing $150,000 rehabs on rowhouses. I mean, how can we justify that in the spending of tax dollars? Now, granted, a lot of this money may not be coming directly from the General Fund, if any of it's coming from the General Fund, but it's coming from their taxes. And when they get paycheck and go down that line that takes out federal taxes and state taxes, that money comes back to programs and agencies like yours and we wind up spending exorbitant amount of monies on stuff that they don't even have an opportunity to buy themselves. I mean, it. . .

Exactly. Well, I believe that a number of families in Mayfair have been assisted through the Settlement Grant Program and have moved up to a higher-priced, better-quality house. Your question --

Where are they doing that at? What higher-priced, better-quality house are they moving to?

I can give you the statistics, but I believe the answer is, in 1828 OPERATING BUDGET - BILL 05 - 2/23/00 neighborhoods like Fox Chase, there is a movement to the Northeast that we've supported through the program. But the question remains, how can we justify this? My response has been, and it may not be a response that plays well out there, that housing production of this type, in strategic locations to rebuild older industrial communities, is a part of the City's economic development policy. It's just as important in its way as the Convention Center, which cost $30 million per acre. How do you justify that? You don't go around --

I justify it in the number of jobs it's produced, in the number of tax revenues those jobs have produced. And my problem is, and this is what I've been asking for now for three years now, what is our program to invest either state, federal or local dollars into providing projects that appeal to people who make 50, 60, $70,000 a year, 150,000 of which have left the City over the last eight years? Now, I mean, talking about economic development issues and rebuilding North 1829 OPERATING BUDGET - BILL 05 - 2/23/00 Philadelphia or other areas, that economic development loss of taxpayers and their families and their contribution to the City because we haven't paid one iota of attention, in my mind, to anything that their needs are about, and that's why I have had people who have moved out of the City who said, I never wanted to go, but my wife drove me crazy for a house with a garage and a family room, and I couldn't find it anywhere in Philadelphia, so I had to move to Washington Township. I would love to have stayed in the City.

Mm-hmm.

So when I have low- and moderate-income people living in $150,000 homes and we don't have one program to build new construction for people who want to stay in the City and who are making 50, 60, $70,000 a year, we're going to lose that tax base, we're going to have wonderful homes for poor- and moderate-income people, but we're not going to have much of a tax base left to pay for anything else. And that's one of my real disappointments in the last three or four years, 1830 OPERATING BUDGET - BILL 05 - 2/23/00 is that I don't think we're doing anything to approach that cohort of people, and I think we're going to continue to lose them as long as we don't give them choices.

Just a couple of comments. The "Come Home to Philadelphia Program," cosponsored with PNC Bank with the Economic Stimulus Program, is aimed at just that income level and has produced many settlements for middle-income people. Stimulus Funding, of course, is supporting the Jefferson Square Development, which is specifically designed to address that problem, and a major commitment of funding Spring Garden venture, which is a mixed-income development. Clearly, it's not enough. But if I could just add, with respect to the North Philadelphia, middle-income people who make up to 120 percent of the City median are now moving into the 18th and Oxford area, the Cecil B. Moore area, and they're delighted to do that because we made a substantial investment in upgrading that area at a very, very high cost, but we've got a mixed-income community there and we've 1831 OPERATING BUDGET - BILL 05 - 2/23/00 got a middle class there that was not moving into that area for or 30 years. 4

And I'm not 5 contending that we stop doing that. What I'm 6 contending is, we've got to find a project or 7 program somewhere that takes vacant available 8 land, turns it over to a private suburban-style 9 developer, and then offers housing stock for 10 people who want to pay for a house between 120, 11 130, 150, 160, who can't forward to be 12 participants in any of the other programs that 13 come with low- and moderate-income requirements. 14

Absolutely. 15

But I can't point 16 to one of those projects that we've taken and 17 we've segregated some money and said, Let's take 18 40 acres, 50, 80 acres somewhere in Philadelphia, 19 let's find out about the environmental concerns, 20 turn it over to a Toll Brothers or somebody like that and say, Build a suburban community here in Philadelphia so that I don't have to have people who are leaving the City. And what we could wind up with is a middle- and upper- middle- community that's integrated, that's ethnically diverse, that 1832 OPERATING BUDGET - BILL 05 - 2/23/00 has the same income levels that are not now spread all over Maple Shade, Turnersville, Springfield, and everywhere else. I mean, we have try to in some way deal with that cohort of people, and I don't think we're doing it. I think we're making some particular developers rich who are involved in low- and moderate-income housing development, and I think that's where all the emphasis has been. And I think it's a huge mistake, and we've overlooking that group of people.

I think we'd probably agree that Jefferson Square is the kind of venture that we need to see more of on a larger scale. Two points with regard to that. To do more Jefferson Squares, we need more non-federal money. We can't support a Jefferson Square with the HUD money because of the income limits that go with it. Secondly --

Have we attempted to deal with the federal government or a Congressional delegation with some of these issues for some potential waivers or anything like that?

It's a statutory 1833 OPERATING BUDGET - BILL 05 - 2/23/00 requirement which would take an act of Congress to change, and I don't see --

Have we approached any committee any Congressional people to change any of these regulations or to give us a special opportunity to deal with on a waiver situation some dollars to deal with this kind of project? Or do we just assume, Well, these are the rules, and this is all we can do?

We have inquired into that, but consistently, the response that has been "no way."

Okay.

Secondly and more important to me strategically is, where is the site? As you know, with Jefferson Square, a lot of discussion has taken place with regard to relocation and the fact that we don't have 40 acres of cleared land but --

There is land that I can identify for you privately. I don't want to do it publicly --

Yes.

-- 'cause the 1834 OPERATING BUDGET - BILL 05 - 2/23/00 prices will start skyrocketing, but there are parcels of vacant area available along our waterfront, in parts of Northeast Philadelphia and other places like Southwest Philadelphia, that we could deal with, but we're not even paying attention to that.

I think it would be very worth while to have that discussion so that we can start doing some homework regarding those parcels and see if we can't pursue them.

Thank you very much. And I'm sorry I went overtime. Thank you.

Thank you. The Chair recognizes Councilman Nutter.

Thank you, Madam. Chair good morning Mr. Kromer.

Good morning.

I was looking at your testimony, and in the third paragraph on the first page, you lay out that the Operating Budget for OHCD is $139 million, and then you go through what the major components are in the 74.8 and the 1835 OPERATING BUDGET - BILL 05 - 2/23/00 60.1 and the 4.1 million in the General Fund. Now, my recollection from last year's CDBG hearings, CDBG Year 25, was that for the Consolidated Plan, it showed administrative costs and program costs of a total, I believe, of $29 million. Is that your recollection?

That's right.

Can you explain the difference between administrative costs and program costs. And if your General Fund support is $4.1 million, where does the rest of that money come from?

Yes. The basic division that is set forth in the Consolidated Plan is between general administration, the salaries of people like myself and these gentlemen, who carry out the overall administration of the program, and so-called program delivery, in which a person's -- an individual's job is directly related to the production of housing or the delivery of services. Program delivery would include, for example, the construction inspections that the Redevelopment Authority staff undertake, or the 1836 OPERATING BUDGET - BILL 05 - 2/23/00 architectural work that the Authority's staff architect completes. That's a -- there's basic link between the work and the production of housing.

And those positions are not funded by General Fund dollars; they are funded by what pool of dollars?

Most of those positions are funded through the federal dollars, the Community Development Block Grant. The General Fund enters into the picture only in connection with these programs that are listed in my testimony. These are programs, the transitional housing programs that have always been funded by the City but had previously been administered through the Office of Emergency Shelter and Services. So the administrative funding associated with those programs, the Voucher Program and the Homelessness Prevention Program, continue to be funded through the General Fund, and only those programs. All of the other programs are proposed to be funded through the Community Development Block Grant. 1837 OPERATING BUDGET - BILL 05 - 2/23/00

All right. So let me make sure I understand this. The total cost to really run the operation, Housing, RDA, PHDC, PIDC, there's even smaller sums of money for like the Law Department, Planning Commission, other entities, that total is $29-plus million.

That's right.

4.1 of which is covered by the City General Fund.

Yes.

Which is for the various Housing operations.

That's right.

So $25 million in essence comes off of the top --

Exactly.

-- of the federal funding in either CDBG funds or home funds or any of those --

That's right.

-- other federal sources?

Yes.

All right. So the 1838 OPERATING BUDGET - BILL 05 - 2/23/00 City, rather than using General Fund dollars to support, in most cases, the salaries of City employees, is off-loading those costs onto the federal programs whose primary purpose is to provide low- and moderate-income people with a wide variety of services, whether it's housing or any of the various eligible items, according to the federal regulations; is that correct?

That's right, yes.

And if that's the case, then is it accurate to say that for whatever dollars the City might substitute in the cost of administration and program services, those dollars would then go into -- the substituted dollars would then be able to provide more service or more housing to low- and moderate-income people; is that correct?

That is correct.

Now, why is it done that way? Why are we off-loading our mostly public employees, City of Philadelphia, or quasi Authority people, why are we off-loading their salary costs onto the programs that are supposed to support low- and moderate-income people? 1839 OPERATING BUDGET - BILL 05 - 2/23/00

I think the rationale in Philadelphia and in other cities in the past has been that the administrative costs are ineligible program expense, and that it makes sense to organize the program, complete with program costs and administrative costs, as a single entity, as a single unit, in the consolidated plan.

Was it always done that way?

Yes, yes.

It's always been done that way?

Yes, but it that doesn't mean that it has to be done that way in the future. But I think the feeling was that there's a finite grant program that comes to the City from HUD, and that that grant should pay for both the program and its administration. It doesn't mean that that is the only way that it can be done but that, I believe, has been the rationale.

But you would, in fact, have more dollars available for the population for which the funds are sent to the City. I mean, as I best understand this, the 1840 OPERATING BUDGET - BILL 05 - 2/23/00 federal government has some kind of formula, they figure out how many low- and moderate-income people are here in the area, based on census data, or however they figure it out, and they send the City of Philadelphia a proportionate share?

Yes.

Isn't it true, then, that to the extent that the City of Philadelphia increases its support for administrative and programmatic costs on the General Fund side, you can then provide more services to the people for whom the money was sent here in the first place?

Yes, that would be correct.

What percentage of the federal dollars that come are, in my terminology, "off-loaded" to pay salary costs for public employees?

I can provide the exact amount later, but the amount is roughly one-third of the total grant, including both the administrative and the program delivery.

Do you know of any 1841 OPERATING BUDGET - BILL 05 - 2/23/00 other cities across the country that do it that way? I mean, in an era of either stagnant dollars, and when they increase its -- and you may need a magnifying glass to see the increase, I mean a third of the dollars that come never reach the people that they're sent here for because they're off-loaded on salaries. I mean, isn't that a significant percentage?

I think the distinction between admin. and program delivery is important here. Program delivery, for example, includes the salaries of the Redevelopment Authority's Home Ownership Rehab Program staff, the Moderate Rehab Program staff. That program is a very good entry program for nonprofit groups that are just starting, and the Redevelopment Authority staff literally work with a new group on the first deal. They package the deal together and they spend a substantial amount of their time working directly with the group to build that capacity. So there are other kind of parts like that in which the salary is being paid but there's a substantial value that's being rendered to the community. 1842 OPERATING BUDGET - BILL 05 - 2/23/00

Well, your response raises another interesting question, then. The CDCs that make their application, you know, they're going to great work and they want to rebuild their communities and the like, and they put forward, I guess, a budget proposal for whatever it is that they want to do, how much of the dollars that they receive from the City are they allowed to show or account for administrative costs of their work?

The only dollars that they receive for -- through contracts, for example, for housing counseling or for neighborhood advisory committees, are dollars to deliver services or administrative dollars --

I'm talking about if somebody's going to build something.

Yes.

They're going to do, you know, 50 units of housing, Councilman Kenney was talking about some of those per-unit costs, we don't need to have that discussion.

Right.

We're going to do 1843 OPERATING BUDGET - BILL 05 - 2/23/00 50 units of housing and we're going to develop it and it's a CDC that's either doing it on their own or they're doing it with a third party, maybe a for-profit entity. What amount of that money is allowed to be used for administrative costs for that project?

Well, there really isn't any set-aside for administrative costs. All of the development that is supported through the program --

So does that mean zero?

-- is awarded on a performance basis, and the underwriting allows for a 5 percent developer fee, which has to cover everything -- you know, all of the overhead. And that fee is released as the construction gets completed. But there's no separate breakout for admin.

I understand, but admin. has to be covered by this 5 percent. So in essence, at the most, it could be 5 percent for what the CDCs do but the government is allowed to use up to a third of what it gets to cover its 1844 OPERATING BUDGET - BILL 05 - 2/23/00 costs, one, because part of it is allowed; and, two, because the City government, then, gets to not fund those public employees through general tax fund dollars as opposed to the federal dollars. Is that correct?

That's the approach that's been taken. Again, as with the division between housing and economic development, everything can be reevaluated, and if this is a good time -- this is an excellent time to do that reevaluation. Philadelphia devotes a lot more of its funding to contracts with community-based organizations. And if we didn't have so many contracts, we'd have a much lower cost -- much less administrative overhead, but we'd have less program delivery going out to the community and less work being done by community people rather than City employees.

Councilman, I'm not talking to anybody now, and I do know that you've gone way beyond your five minutes, so we'll have to recognize you with the next go-around. The Chair recognizes Councilman Cohen.

That cost of around 1845 OPERATING BUDGET - BILL 05 - 2/23/00 $150,000 per house that came up in the interplay of question and answer between you and Councilman Kenney before, is that $150,000, is that the cost just of building that house, not -- I'm trying to eliminate the other items you mentioned, about taking care of environmental problems, building streets, doing other things that you have to do when you deal with a badly polluted neighborhood, polluted in a very broad sense, physically polluted as a result of the neighborhood being run down for many, many years and basically deserted by most of its population? What does that 150,000 represent? Does it represent the total cost of putting everything in order so that you can build? Or does it, in fact, represent the cost of building a house?

That figure represents everything, including land acquisition, infrastructure, environmental work, and so on. The actual construction costs are under $100,000 for the most part, and in some cases, substantially lower, down to 80,000 or so. But really, Councilman Kenney's point is still well taken, that's still a lot of money, 1846 OPERATING BUDGET - BILL 05 - 2/23/00 there's no question about that.

But it's not 150,000 per house.

For the house only, no. 6 It's the house plus all this other stuff.

I mean, as Councilman Kenney is pointing out to me, he's not -- he did not develop that figure, he is using the figure that PHDC used in its own report, and I think it gives a misdirection. I think there ought to be a figure -- I'd like to know it and I think we'd all like to know, what does it cost? And why does it cost so much? Because the common language is that it costs many those thousands dollars more to build a residential unit in the City than it does outside the City, and I would like to know, why does it do that and are their City policies to blame for it? And if there are, let's find out what they are and address those problems. I don't think the people that live the in the homes ought to be seen as the beneficiaries of large sums of money that they're not, if it costs 80 to $100,000 to build a home, and I agree 1847 OPERATING BUDGET - BILL 05 - 2/23/00 that's more than it ought to cost if the house has a market value, say, of 45 to $50,000. Now, we all know one imbalance that exists that nobody seems to be able to do anything about, and that's what Realtors generally refer to as a three-word slogan -- "location, location, location," that the identical house in the City will cost much more than outside the City. And within the City, different areas will cost much more. Fairmount, near the Art Museum, the houses are far more expensive as well as other parts the Center City. We can enumerate many areas where the houses cost much more than similar structures, maybe just as good structures, maybe better structures in other areas of the City. That, I don't know how you resolve. But I think there is a need to address middle-class needs in the City, and there's also the need to address low-income needs. And I would like the City to approach it in a way that doesn't pit one group against the other. Because both groups together, I think, form the bulk of people in the City. We haven't convinced corporations to 1848 OPERATING BUDGET - BILL 05 - 2/23/00 whom we contribute in all kinds of funding to induce them to come in, we contribute many millions of dollars to them, but apparently, the City either hasn't bothered to or has been unable to convince them to give certain advantages to their workers to live the City. I'm not sure that it's just the wage tax. You know, they say you lose 5 percent to your wages as soon as you come into the City. It seems to me if we give corporations many millions of dollars and different kinds of benefits to come in, maybe those benefits ought to increase an automatic 5 percent increase to the workers to make up for the loss, you know, in some fashion or another. But I think we need it. As a City, we need every income level, and I think Philadelphia physically houses and has sites that would accommodate almost every conceivable need except maybe -- well even, the super mansions, we have many super mansions in the City. I don't know how many of them still survive. So I would like to see a breakdown. Now, is PHDC under your general jurisdiction? 1849 OPERATING BUDGET - BILL 05 - 2/23/00

Yes. They produce that housing under contract with us. And I will submit to the Chair a breakdown.

Would you do that so we can all get it.

Yes.

And then we at least will have, I think, a basic comparison, though I say we ought to find a way to address the needs of every element of the population.

Mm-hmm.

Maybe the fault lies in the fact that when we cut the top levels of the federal income taxes from 90 percent to 39 percent, maybe that's what has to be reconsidered again, because the beneficiaries of that may be able, if that condition were restored, to provide the kind of income necessary to help level the housing stock for everybody in the City.

Yes. I will also reopen, based on your comment and Councilman Kenney's, I will reopen with the Mayor's staff the issue of, can we go to Washington, can we get some of the policy raised, is there an opportunity to -- 1850 OPERATING BUDGET - BILL 05 - 2/23/00

Yes. I think we could develop a sound program that unites all groups in Philadelphia. I think there certainly ought to be programs for middle-class people because I find in every community that there are a lot of people who kind of don't understand why they're excluded from so many governmental programs because maybe they don't make -- I heard the figure of 40, 50, 60,000, sometimes the exclusions begin at and $30,000 in certain 12 programs. 13 I think we've got to -- and we're 14 looking for your office to suggest programs, 15 because you're the ones that are most familiar 16 with what exists now in the way of federal and 17 state regulations. But if you could come up with 18 the other kind that unite instead of pit one 19 element against another element, I think you could 20 get a lot of unified support. 21 And I sense the beginning in 22 communities throughout the country, I think the 23 election results are showing, there's something 24 going on in the country that none of us quite 25 realize. And I think what it basically is an 1851 OPERATING BUDGET - BILL 05 - 2/23/00 awakening of interest by people in political activity. For many years, they were satisfied the economy seemed to be meeting all of their needs. I think they're beginning to want to participate, and I think we have a new opportunity to raise the kind of issues that we're discussing this morning. Thank you, Madam President.

Thank you, Councilman. The Chair recognizes Councilman Ortiz.

I go along the same way, the same route, because I've been in most of these houses that we, you know, I've attended most of the openings, I supported most of the programs that have gone. And the thing that shocks me about it is that these houses are not worth $150,000, and the rooms is too small, the materials that seem to be used are not of the quality that seems -- for $150,000 you can get two fireplaces up in Mt. Airy, East Oak Lane, and so on, you can get nice, sturdy, big homes across the City. And the cost of it, you know, for a very, very small quantity. . . 1852 OPERATING BUDGET - BILL 05 - 2/23/00 The question Jim Kenny asks is very real. It has a sound to it because we all worry about the cost. This is money that perhaps can build more than one house. If we're going for low-income housing for the cost that we're spending, you know, and because the market value of the house will never reach $150,000. The person who will move into that house will not be able to sell that house for $150,000. Is that true, right?

That's true, but that doesn't mean that market values won't go up at a higher rate in neighborhoods than in other areas of the City -- Yorktown has proved that -- and in areas like Germantown, where we've made consistent investments for more than a decade. The Greater Germantown Housing Development Corporation is now pricing some of its houses at more than $100,000 per house. It's a breakthrough.

Mr. Kromer, one of the things that I've asked you across the years is, as we build these developments and we spend these huge amounts of monies in these neighborhoods, minority contractors, what is the 1853 OPERATING BUDGET - BILL 05 - 2/23/00 participation of minority contractors, one, in the jobs that are created through these developments, in the contracts that flow down to them? What is the level of contracts that go to minority contractors? And what is the level that goes to the contractors that come in, the big contractors the majority contractors that get the monies?

There's really a wide variation in the level of neighborhood resident and minority participation in the program. But I expect, as we've discussed in the past, that Council would not be satisfied, as I am not satisfied, with the level of participation that we see. In some developments, it's more than others. Overall, I don't think we have reason to be satisfied. As I indicated in a memo that I circulated to Council at the end of last year, we've got a problem, a workforce problem in terms of minority participation in the building trades and in the prevailing wage and --

We've had that problem with the building trades for 30 years.

That's right, and it's 1854 OPERATING BUDGET - BILL 05 - 2/23/00 being alleviated somewhat, but I don't think anybody would be satisfied with the rate of progress that's being made, and I think that's one of the issues that we'll need to confront this year, about either mixing up the prevailing-wage jobs or getting --

I'd like -- I'd like -- I'd like it to see writing, for instance, the amount of jobs and building that has gone on in the last four years or five years and who has had the majority contracts, the companies, and how many minority contractors across the City. You know, how many minority contractors have participated and what has been the level of participation of minority contractors in terms of thousands of dollars or whatever? Okay? The question, Councilman Goode asked you before is, I think, a discussion we've had about, how do we create jobs so that people can then create the market, so that people can go in and build homes and they can buy them? And it's a question that has never been answered to our satisfaction because job creation, business development, for instance, up in the Fifth Street 1855 OPERATING BUDGET - BILL 05 - 2/23/00 corridor, has not been what it should have been, and I don't think any corridor, any neighborhood corridor has gotten that type of development. That is a discussion, I think, that is overdue. But a shift in priorities has to begin sometime, because it is the job market, the entrepreneurial aspect, and if we can help rebuild, housing will pop up around those neighborhoods if people are working.

On the other hand, if an aggressive housing development program will produce more retail, as the APM experience shows, with a supermarket having opened only because a critical mass of housing development produced new families in the neighborhood. I think the other question too is, does more public money make a difference? Is more public money going to be decisive in substantially increasing small-business development expansion? I just don't know, because that's not my area of expertise, but I think part of the discussion should be, what is the value, what is the result that we get out of a housing dollar compared to an economic development dollar? And we've got time 1856 OPERATING BUDGET - BILL 05 - 2/23/00 to have that discussion, and I'd certainly welcome that.

Thank you.

Thank you.

Thank you, Madam Chair.

The Chair recognizes Councilman Kenney.

Thank you, Madam Chair. I just want to go back won't be one more time to the PHDC report on developments. If my numbers are correct of $38,300,000 expended in 1999, $22.1 million seemed to have gone into one particular section of the City, which left 16.2 for the rest of the City. What process is employed to determine that that level of available dollars in this particular program goes into one section of the City as opposed to the housing needs in southwest or northwest or South Philadelphia or West Philadelphia? How do we determine that that bulk of that $38.3 million got put into one section of the City as opposed to anyplace else? 1857 OPERATING BUDGET - BILL 05 - 2/23/00

During recent years, PHDC has been assigned by me, by the Office of Housing and Community Development, to take responsibility as a developer in areas where we have no community development corporation, and we have either an existing commitment to a community or a need to produce some housing as part of the City's overall strategy. One example, the home ownership zoned area and the Cecil B. Moore area was planned out by the National Temple Non-Profit Corporation in the 1980s. The group went out of business, PHDC was assigned by me to take on that role, and the result is, roughly, a $20 million commitment of development funding to PHDC to carry out. That was true in a number of other smaller cases. And in addition to those assignments, PHDC takes responsibility for a relatively smaller program, the Home Start Program, in which within half a dozen target areas around the City, vacant houses are rehabilitated. But the basic PHDC activity over, the past five or six years, has been the Cecil B. Moore area and lower North Philadelphia area. 1858 OPERATING BUDGET - BILL 05 - 2/23/00

What's the rationale for that? And do other sections of the City have less housing needs, less problems?

The Home Ownership Zone --

And -- I'm sorry -- is there a board that makes that decision, is it you who makes that decision?

The decision is really made by the Office of Housing and Community Development, and PHDC carries out the assignment, and the priorities and funding allocations by area are a part of the consolidated plan, which is submitted to City Council. In the Cecil B. Moore area, we had an opportunity to secure a substantial amount of additional federal funding, more than $12 million, as part of a national competition, and that area was the only area that was available in Philadelphia, because we had a neighborhood plan, we had some cite control, we owned some real estate there, and it was the only area where we could show the federal government that we were ready to go, and we won that wared and --

Just so I 1859 OPERATING BUDGET - BILL 05 - 2/23/00 understand how the process works, that is a decision made by you?

That's right, based on --

Is there some board or is there some process, I mean, or is that just soley the decision or at the discretion of the housing director?

The discussion is mine, but it is, in every case, based on the Consolidated Plan, which is authorized by the Mayor and City Council.

What do we expect to happen in various other sections of the City in the future as we move forward into the future? I mean, since we've put in such an emphasis on housing development in one area, have we neglected or in some way not done some of the work we needed to do in other areas, and will that emphasis be swinging back at some point in time?

Again, this is a good time for reevaluation, and the answer is yes, because a good deal has been accomplished in areas like lower North Philadelphia. I think a good example of going to 1860 OPERATING BUDGET - BILL 05 - 2/23/00 another area is the substantial commitment that's been made to the King Plaza Revitalization Program. Which not only includes demolishing the high-rises and building on site, but implementing a very, very ambitious program of housing rehabilitation east and west of Broad Street so that there's a total improvement on either side of the Avenue of the Arts. The Community Development Block Grant is funding a substantial amount of that have area-wide improvement, and the result will be a substantial improved real-estate market reinforcing the middle- and upper-income neighborhoods that surround that area and a completed community that will be successful for generations.

I'm just trying to get an idea of how the process works. Thank you.

Thank you.

The Chair recognizes Councilman Nutter.

Thank you, Madam Chair. Mr. Kromer, let me just go back to 1861 OPERATING BUDGET - BILL 05 - 2/23/00 where I was and I will hopefully finish up in that area. In response to one of my questions, you said that what seemed to be driving the high level of administrative or administration in program costs was the large number of contracts that you have with the various CDCs. Now, is that accurate? Is that what you said?

That's a substantial piece of the program delivery element, yes.

So I mean, I took from that in the last round, and then I had to relinquish. I mean, that's almost, in essence, saying that it's the CDCs' fault or comes as a result of, Well, if we didn't have so many CDCs, then our admin. and program costs wouldn't be so high, but it's always been my impression that we have actively kind of encouraged and promoted CDC activity in Philadelphia. I must have sat through a half a dozen budget hearings over the years where it was proudly stated that Philadelphia has a high proportion, maybe the highest in the country, of CDC activity, and we like them and we love them. So I mean, now they take on the added 1862 OPERATING BUDGET - BILL 05 - 2/23/00 responsibility that even though we pushed and encouraged you and supported you to do things, it now causes us to spend a third of our money that comes from the feds on admin. costs to monitor you and what you do. I mean, is that the deal?

It's well worth the expenditure, and I think we can be proud of the accomplishments we've achieved, and I believe we should continue to support the role of CDCs. Thinking, however, from a strictly --

That doesn't mean, though, that we then have to add on that as a part of that, we will also spend a disproportionate share of the funding that you would normally get to feed the government beast. Because the government can be fed from somewhere else, right?

If "somewhere else" means the General Fund, in theory, yes, if the money's available.

Well, more than in theory; in fact. I mean, you do factually have some General Fund dollars that support your operation.

That's right. 1863 OPERATING BUDGET - BILL 05 - 2/23/00

You have a $139 million total budget, million from the 4 General Fund.

That's right.

There is nothing to stop, other than my good friend back there who monitors the purse strings, there's nothing to stop the City of Philadelphia from increasing its share of covering the cost of these public employees and not off-loading those costs out of CDBG funds. There's no prohibition on that, correct?

That's correct.

So if the City decided that it could cover all of its public employees as it normally covers all of its public employees out of its money and not the federal money, there's no prohibition on that, correct?

That's correct.

And if we did something like that or changed the percentage mix, we would, in fact, increase the amount of funding that's available out on the street to do low- and moderate-income housing, to do all of the items 1864 OPERATING BUDGET - BILL 05 - 2/23/00 that are eligible by the way of CDBG guidelines; isn't that correct?

That's right.

Okay. Let me ask Mr. Dubow a quick question. (Rob Dubow comes forward.)

Good morning.

Good morning. How are you today?

Okay, how are you?

Very good. Mr. Dubow, why does the City, in its budget process, deal with OHCD and the various other agencies and have such a small percentage of funding from the General Fund to cover the regular administration and programmatic costs of our various housing programs and choose, rather, to utilize the scarce federal dollars that are sent here on the benefit low- and moderate-income people, and pay public employees with those dollars? Why do we do that?

We do it because the -- those employees work exclusively on projects funded with those dollars, and we do that with a 1865 OPERATING BUDGET - BILL 05 - 2/23/00 number of grants.

Mm-hmm. Well, isn't it true that when we revitalize housing or put new housing in place, that eventually those properties get on the tax rolls, and then the Board of Revision of Taxes, I guess, send its assessors out and they figure out what the taxes are for that, and somebody starts paying property taxes, whether it's on the home ownership units or even on the rental units, I assume someone must be paying real-estate taxes on those properties; is that correct?

Yeah, that's correct.

And where do those tax dollars go?

To the General Fund.

Okay. So we have money from the feds to do housing, we off-load from that money to pay public employees to help with the production of that housing, the City puts a very small amount of its General Fund dollars to cover those costs. The houses then get built, and taxes are generated, which only go to the General Fund. Is that the circular process? 1866 OPERATING BUDGET - BILL 05 - 2/23/00

Well, they go to the General Fund or they go to the School District, but yes.

You understand.

Yes.

Okay. Well, why don't we at least at some proportionate level increase the amount of General Fund support for OHCD, given the fact that we know that what those people do, and in the production of housing, we're actually going to make money off of that? Isn't that true?

It is. And I don't think we've ever done the economic analysis to see what level of revenues we generate out of that, so I don't know whether it's a substantial amount of real-estate taxes. It's probably an analysis that's worth looking at.

Well, let me more formally make the request. Why don't we go back over the last six CD years and take a look at all of the housing that was produced during that time, look at what the tax level was for that particular property before it came on line, look at the tax 1867 OPERATING BUDGET - BILL 05 - 2/23/00 assessment on that particular property when it became occupied, and calculate what we've received in the General Fund, the real-estate taxes from the now-developed properties that were done primarily with the federal dollars. And even if it's not some incredibly huge number, wouldn't it just be a better show of the City's support for housing and housing production services if the City paid its public employees who do that work, and put the maximum amount of low- and moderate-income dollars that come to the City out on the street for the benefit of the people that it was sent here for in the first place?

Again, the theory is that those employees work on those projects so it's justified to pay them out of the those revenues. And also to the extent that --

I understand the theory.

And to the extent that we shift those employees to the General Fund, it replaces other General Fund dollars for other services. 1868 OPERATING BUDGET - BILL 05 - 2/23/00

Were many of those employees already on the General Fund payroll in the first place, and don't some of them do other things beside the housing activity? All of the people in that budget only work on CDBG-related projects?

There may be a small number of Redevelopment Authority staff who work on downtown projects, but the vast majority are exclusively CDBG.

I understand, okay. You can do that kind of study?

That analysis?

Yes.

I think so yes.

Okay, I'd like to see that. If you could forward it to the Chair, I'm sure she will get it to us. Lastly, Mr. Kromer, can you -- did it go?

Oh, a long time ago.

Madam Chair, I'm having hearing problems over hear. 1869 OPERATING BUDGET - BILL 05 - 2/23/00

Go ahead, be our guest.

Mr. Kromer, can you get some data on the top cities in the country 6 and find out how they utilize their CDBG funds and 7 deal with the issue of the admin. costs and the 8 programmatic costs and what support those cities 9 provide for the comparable agency to the Office of 10 Housing and Community Development here in 11 Philadelphia through their own regular tax 12 dollars? 13

Yes, I'd be glad to do 14 that. 15

Okay, thank you. Thank you, Madam Chair.

Thank you. The Chair recognizes Councilwoman Tasco.

Good morning.

Good morning.

You know my interest in the whole area of housing is in preservation and maintenance.

Yes. 1870 OPERATING BUDGET - BILL 05 - 2/23/00

And I would like to see in terms of dealing with middle-income neighborhoods, which we have quite a number, and to help those homeowners maintain their homes, to cut down on future blight.

Mm-hmm.

So my interest would be in providing more money for systems repair and going beyond that, in terms of maybe paint up or some of those kinds of services that could help senior citizens as well as middle-income people. We have a program in the northwest, as you know --

Yes.

-- where we took an entire block, we got some money from the State to do this, and we surveyed the block and had a meeting and asked the individual homeowners what would they need. We replaced doors, we replaced lighting, did some sockets, just some general maintenance work, and which was greatly appreciated. And, you know, we didn't do it all over the place. I mean, it was a targeted area so you could see the difference. Some of it was 1871 OPERATING BUDGET - BILL 05 - 2/23/00 repainted, a house that needed painting. And that's the kind of support we can give those individuals who live in neighborhoods where people are staying, that are paying taxes. And in a lot of these neighborhoods, there are single heads of households that could use the support. We didn't ask for an income guidelines 'cause we could do that, but we were looking for private money. And also part of it with sweat equity.

Yes.

But it's important that we look at a new way of spending the money. And I know that in other cities in some parts of this country, Community Development Block Grant dollars have been used to create golf courses and boat marinas, so it's just not geared to low-income neighborhoods. It can be appropriated for the community in general. I just think our money has been targeted to probably those areas that require -- that have the greatest need, but I don't think that we can continue to exclude the surrounding communities that require some support. And I'm 1872 OPERATING BUDGET - BILL 05 - 2/23/00 going to continue to seek that support for those programs, which I do believe you support, but we've got to put some dollars in the budget for programs like that.

Great. I think this would be a good time just to get back to the Councilwoman, and I will, through the Chair, with regard to the issue of eligibility, so that we can comment on what other cities have done. And I believe where community development funding has been used for marinas, for example, the kind of pretext has been, Well, this is really job creation so it's okay. I don't know of any instance in which the CDBG funding has been used for middle-income housing, but we'll look at that and get a report to Council through the Chair. The resource question really is critical because unless we can get a waiver, as Councilman Kenney indicated, or find a loophole in the federal regulations, the only other sources of funding are the City's General Fund, which is a limited resource that hasn't been used in the past to any great extent. The Economic Stimulus 1873 OPERATING BUDGET - BILL 05 - 2/23/00 Program, again, is very limited, and the State, which has not been very receptive to affordable housing, our State funding was cut in half from a fairly meager 4 million to 2 million. So I don't think the State is a potentially big resource. So the issue of what is the funding base for this middle-income housing support is critical. There's no question that we haven't done enough an that we need to do a lot more.

Okay, thank you.

Thank you. The Chair recognizes Councilwoman Blackwell.

Thank you, Madam President. Good morning again, Mr. Kromer.