Committee Hearing, October 17, 2001

VOLUME II COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, October 17, 2001 1:00 p.m. - - - RESOLUTION 010562 - Authorizing Committe of the Whole to conduct hearings to examine why Philadelphia continues to lose population and to examine possible forces of action to reverse that trend, including a Neighborhood Transformation Initiative focusing on blight removal, improvements to city schools, job development, anti-crime initiatives, or other measures. - - - PRESENT: COUNCILWOMAN ANNA C. VERNA, Chair COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILMAN FRANK DiCICCO COUNCILWOMAN JANNIE L. BLACKWELL COUNCILMAN MICHAEL A. NUTTER COUNCILMAN DARRELL L. CLARKE - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center Plaza, Suite 600 Philadelphia, PA 19103 (215) 561-2220 223 I N D E X RESOLUTION 010562 Charles Pizzi, President and CEO, Greater Philadelphia Chamber of Commerce-----------224 Mark Allen Hughes, Resident------------------262 Jerome Mondesire, President, NAACP-----------302 Rick Sauer, Executive Director, Philadelphia Association of Community Development Corporations-------------------------------309 Andrew Toy-----------------------------------319 Sam Katz, CEO, Greater Philadelphia First----327 Michael Cunningham, Rep., St. Helena/Incarnation EPOP--------------------380 Maria Antonia, Rep., St. Helena/Incarnation EPOP---------------------------------------381 Claudia Sherrod, Executive Director, The Point Breeze Community Development Coalition & South Philadelphia H.O.M.E.S., Inc.---------------390 Dee Phillips, Special Assistant to President, PFT-----------------------------------------394 Gloria Guard, Executive Director, People's Emergency Center and People's Emergency Center Community Development Corp.----------412 Theresa Morris, Rep., ACORN-------------------419 Jeff Ordower, Head Organizer, ACORN-----------424 Melissa Weiler-Gerber, Executive Director, Women's Way---------------------------------425 Gregory Jenkins, Resident---------------------432 Todd Kimmel, Resident-------------------------437 John Chin, Executive Director, PCDC-----------445 Jovida Hill, Resident-------------------------449 - - - 224 RESOLUTION 010562 - 10/17/01

This is a continued hearing regarding Resolution No. 010562. Our first witness is Charles Pizzi, from the Philadelphia Chamber of Commerce. Do you have a panel with you, Charlie? CHARLES PIZZI: No, ma'am. It is just myself. Good afternoon, President Verna and members of the Council. For the record, my name is Charles Pizzi, and I am President/CEO of the Greater Philadelphia Chamber of Commerce. I appreciate the opportunity to come before you today to share with you the Chamber's perspective on the issues before us: Population loss, blight, and attendant problems in the City of Philadelphia. Unfortunately, the facts are clear and poignant. The city has lost approximately 400,000 people who were, generally speaking, middle-class residents who contributed to the tax base and 200,000 jobs since 1970. As they left, the percentage of our population who lives in poverty grew, which became more of a burden for the city. 225 RESOLUTION 010562 - 10/17/01 Why did this happen? Simply put, we have lost our competitiveness resulting from high taxes and a poor performing school system. So, ladies and gentlemen, today I come before with an analogy. Our house is not smoking, it is on fire, and it is time to put it out. That is why we are supportive of the Mayor's Neighborhood Transportation Initiative and pledged our support when it was first unveiled in April. To date, Joe Marks has done a good job and is to be congratulated on removing the abandoned vehicles and cleaning up the vacant lots in the city. I intend it specifically address the points you raised in your letter to me, Madam President. I have provided you with handouts from a report, as you may have already seen, prepared by the Metropolitan Philadelphia Policy Center, which is supported by the PEW Foundation an the Pennsylvania Economy League entitled Flight or Fright. These charts say it all. Out of 20 major cities, Philadelphia's 226 RESOLUTION 010562 - 10/17/01 almost at the bottom of the list for population and job growth. Vacant residential structures are rampant and go unchecked. We are no longer a competitive location for business. 29. 16. The burden is even worse on households. 60. And in this figure it does not include those residents who pay for private or parochial school tuition or car insurance. Unless we become more competitive, we will not see any major changes. After all, where are all the immigrants? They are not here, as in other American cities, because there are no jobs here. I am confident that we are going to see a plan issued by the City Controller to try to bring more equity to the current tax structure in this 227 RESOLUTION 010562 - 10/17/01 city, a plan that would encourage and promote business. To your second point, how should these issues be addressed, well, it will take lots of courage and good communication with our residents, of our neighborhoods, by letting them know if bold steps are not taken, they will continue to lose their savings, which primarily is in their ownership of their homes. We all have something to risk, whether it is an election or a life savings, which should drive us to do the right thing. What is preventing us from addressing these issues? In order to address the issue of high taxes, we have to talk about eliminating expenses in the city. And what is the number one expense in the city? Labor. Just as private employers are acting on this reality today, we need to take the same actions and to start eliminating nonpublic safety positions by scrutinizing all positions that are not public-safety jobs to test how essential they are in providing services to our citizens. I must tell you that, just as elected 228 RESOLUTION 010562 - 10/17/01 officials want to be reelected, so do CEOs of publicly held companies. However, those CEOs are making these tough decisions today because not to do so would neglect their fiduciary responsibility and allow their organizations to become noncompetitive and, therefore, nonexistence.

Another major issue is addressing the population loss of the Philadelphia school system. This, too, is an economic issue. As you know, people leave because they want to provide the best opportunity for their children. This issue is probably number one for middle class and lower class citizens because our young people are the most important people in our lives. And that's why some people had made the decision to relocate. The Chamber has been working to help bring parties together on this critical issue. I am aware of the Edison Report, as all of you are, and will be unveiled at the end of this month.

I'm sorry. Did you say that you are aware of the Edison Report, as we are? 229 RESOLUTION 010562 - 10/17/01

Yes; that the Edison Report will be coming --

I'm sorry. I just thought you saw it, the way you phrased it. Okay.

No; we are aware of it.

The upcoming Edison Report.

Right.

Thank you.

Thanks for the clarification, Madam President. The Chamber stands ready in its efforts to work in helping resolve the issues that will come out of the report by working with the Council, the Governor's Office, the Mayor's Office and the school district. We can turn things around. Look at our Center City today, as opposed to years ago. It 20 is actually so much better. In 1989 and '90, the Chamber was instrumental in founding the Center City District, another example of keeping Center City neat and clean and sending the message that Philadelphia is a safe place to live and work. 230 RESOLUTION 010562 - 10/17/01 The Chamber has worked with City Council and the Mayor's Office to help work with and end homelessness for many of our citizens and in helping the business community in dealing with homeless issues which provide more downtown citizens, as well as the opportunity for retailers looking for opportunities here from Delaware Avenue, to Independence Mall, to Broad Street. In an effort to stem the brain drain and attract and retain skilled workers in the area, and to utilize colleges and universities as economic engines, the Chamber has launched a very successful College President's Council. To date we have over 30 active members Chaired by Dr. Judith Roden. We must look upon our colleges and universities as the factories of the 1950s. Now, we, as like other cities, didn't do such a good job with our industrial base, but we have a great opportunity to exploit these new pillars of our society. Colleges and universities provide faculty and students and the necessary brain power to come up with urban solutions. They provide jobs 231 RESOLUTION 010562 - 10/17/01 for our neighborhood residents. They provide purchasing power from city businesses. And, most importantly, they can help rebuild neighborhoods by having housing in and around their campuses. I have found the presidents of these institutions to be concerned citizens who share our willingness to rebuild and revitalize our neighborhoods. There is an excellent report, as you may have already seen, by the City Planning Commission. The report, the New Century of Neighborhoods, provides a plethora of statistical information on population losses in the city. The report provides a blueprint for neighborhood initiatives, but several facts struck me. There was a lack of new construction going on in the city as far as moderately priced residential housing, even though city employees still must live in the city. Housing values have not kept up with the suburbs. In 1999, the medium home sale price in Philadelphia was only $55,000. The regional price 232 RESOLUTION 010562 - 10/17/01 was 117,000. This report should not be shelved, but it will take courage to implement it. We must make better use of our natural resources, like our parks and our streams and our rivers, to provide this new effort for middle-class housing. The City Council bill changing old, vacant buildings into apartments in downtown Philadelphia has worked and has been a tremendous success. I am convinced that the best social program is a job. And if we want jobs, we must provide a competitive environment. It is just that simple. We have been reading reports and studies for the last years. Now it is time for action. 19 This is a time for bold initiative, from 20 cutting city taxes, to the Mayor's Neighborhood 21 Initiative. 22 We can no longer afford to skirt the 23 issues. It is time to make decisions. 24 Why has the population decreased, yet 25 city government increased? We need to cut taxes. 233 RESOLUTION 010562 - 10/17/01 We need to become more competitive. We need to stem the middle class downward spiral. If we do not do so, we will all be culpable. I look forward to the City Controller's report outlining a plan to reduce taxes and bring people back to the city. Again, thanks for this opportunity. And at this time I would be happy to take any questions that you or your colleagues may have.

Thank you very much. The Chair recognizes Councilman Ortiz.

Thank you, Madam Chair. Mr. Pizzi, have you read the Block Plan ?

I'm sorry?

The Mayor's Block Plan, have you read it?

Yes.

And within that one of the main pillars of it is 14,000 or 16,000 new housing units, with no explanation as to the cost of those 15,000 housing units or how they are going to be built. 234 RESOLUTION 010562 - 10/17/01 A great number of them are subsidized housing, which, in essence -- because if people have to subsidize, they are not going to leave the city. That's a population that is going to remain in the city. They are not going to go away. We are trying to attract. We cannot fulfill those 14,000 at a competitive pricing in order to bring that middle class into the city. What do you recommend and what is the Chamber willing to do to bring us into a competitive atmosphere in terms of building and construction in the city, so that we can compete with the suburbs?

I think that's a very important issue as we look at the costs of construction. And I think there will be a willingness to see -- the solution is, how do we cut our cost. And that entails from developer's fees, to construction cost, to payment of labor.

We understand that we have to cut costs. I mean, can you imagine if the construction costs that we bid for and that we are paying for, for the stadiums that we are going to 235 RESOLUTION 010562 - 10/17/01 build, were at the rate of, let's say, Cheltenham or some of the suburbs? I think we could probably cut a couple hundred million dollars off the stadiums. That could be funneled to somebody else.

When you look at that -- and I understand your issue of costs and competitiveness specifically as to relates to the bidding trades. And I think what you have to put within that equation is productivity versus cost, because the building trade does provide a great amount of productivity to their jobs. I also think that there is a vested interest by the building trades to try to want to compete in order to make this opportunity available. And everybody, you know, as I said in my testimony, everybody has to sacrifice. Everybody has to sacrifice across the board, if we want to fulfill this vision.

Do we begin with -- and you mentioned the schools. And I think we have to start with the schools. In order to keep a middle class, and bring a middle class into the city, you have got to 236 RESOLUTION 010562 - 10/17/01 have a public school system that is going to be not just viable, but one that is giving premium education. And that begins with funding. Jim Kenney and I signed onto the bill 6 proposed increasing our contribution by 75 million. We need funding for the public schools. It is, I think, has to be the pillar upon which we build any blight plan. What is the Chamber going to be doing in terms of securing, not Edison, but securing a public school system that is well-funded in the City of Philadelphia?

See, I think --

Given the nature that with Jim's bill, we are already trying to start the dialogue and the debate on proper funding and property cooperation from the city in this aspect.

Well, if you look at not just your bill, but there are other bills in City Council that have really helped change the face of our economy. Now, you raise the issue of school funding. You noticed that we all know that the population that are living in poverty has grown. 237 RESOLUTION 010562 - 10/17/01 How do we get those people out of poverty? It is very simple. We have to provide them a good education.

Right.

I think that this third-party report will come out and talk about the funding that's going to be necessary --

Mr. Pizzi, with all due respect, we know. I mean, we have had reports on public -- there is no secrets as to what is needed.

But my point is, we are going to support funding for the school system at both the state level. I mean, there is no question about that.

Thank you, Madam Chair.

You are welcome. The Chair recognizes Councilman Kenney.

Thank you, Madam President. On the issue of schools, just so it is mentioned already, I was honored Tuesday to get a call from the Governor, our new Governor Schweiker, 238 RESOLUTION 010562 - 10/17/01 who was extremely encouraging to me in asking that we continue to pursue this $75 million number that is on the table now. He felt that that level of commitment from Philadelphia would and is sending a strong signal to elements of the legislature, makes his job easier in trying to garner a significant increase or significant dollars, new dollars, for the schools. And I was honored that he called me personally and encouraged that he felt that that kind of effort or action would go a long way in helping this come to a fruitful conclusion. So I wanted to let you know that. And anything you can do to influence members of this body and/or the Mayor's Office to support such an initiative I think would go a long way in moving this fiscal crisis for the schools at least to some level of conclusion. And it won't ever be perfect, but it will be very helpful. So the Chamber and the respect that we all have for the chamber, I am sure the Mayor has, if you can articulate that to members of this Council and to the Mayor, it would be a big help in trying to get this accomplished. 239 RESOLUTION 010562 - 10/17/01 The Governor, who is obviously of a different party than me, agreed. And I talked privately yesterday while I was in Harrisburg talked to some people from various leadership staffs from leadership in the Senate and the House and were very much enamored and enthused about our potential in putting up significant amounts of money. Let me just --

If I can, Councilman, we are going to have, hold a public event on the Edison program and your Council bill once the report will be issued. So you can be certain that the signal that was sent and that the Governor's engagement of that plays a very important role in getting this to move forward. And I just, you know, I talked about political courage. I had never heard a Governor on his inaugural talk about the Philadelphia schools. And I think that was political courage on the Governor's part.

I think the opportunity that we have, however, and the Governor confirmed yesterday what he had said publicly, that 240 RESOLUTION 010562 - 10/17/01 he decided for family reasons, the age of his children and personal reasons, not to seek a full term as governor. I think that may be one of the opportunities that we have that political courage can also come not only from internal courage, but from the fact that you don't have to worry about being elected or reelected. And maybe this is the opportunity that we need, that window of opportunity, to begin to solve this problem. While I really do appreciate and respect you and am glad you are here today to focus attention on various reasons why people leave the city, but you were clearly supportive of the neighbor's NTI proposal. And while I recognize you have read all the documents that have been circulated, I want to approach this from a business perspective. You as a CEO of a company or a member of the Board of Directors of a company or a loan officer, president of a bank, who needed to review the documents necessary to determine whether or not your institution would lend $250 million for any project, whether it was a development project or 241 RESOLUTION 010562 - 10/17/01 whether it was an initiative like this which is very important. Wouldn't you need and demand all of the materials and documentation in writing necessary for you to make a decision on whether or not your institution should lend that type of money? Isn't that a prerequisite of any lending institution's consideration, due diligence, fiduciary responsibility in ensuring that the money that they lend in fact is going to be paid back in a timely fashion? And isn't that something that's just part and parcel of a normal business practice?

I think it is a fiduciary responsibility of this body to do so.

I am talking about just from a private-sector standpoint.

Absolutely. That's what you have to do. It is a fiduciary responsibility.

Well, there are a number of areas of this plan that I simply don't understand and have not been able to get an answer to. And the answers, frankly, are not forthcoming. And I consider myself on the Board of Directors of a 3 $billion company here. I think 242 RESOLUTION 010562 - 10/17/01 that is a pretty appropriate analogy. And I think the Mayor is the chief executive officer of that $3 billion company. And we do have a fiduciary responsibility. But when I read a plan that basically says, we are depending on significant amounts of unnamed amounts of money from the federal government, from the state government, and private investment, without being specific as to the levels of that investment, without being specific as to the source of that money, I find it difficult to understand how the United States of America, for example, engaged in a war at this point, has Afghanistan and Philadelphia's NTI program on the top of their agenda. I would think that what's going on in the Middle East now would take precedent, both from a brain-power standpoint and from a financial standpoint. Obviously the money we are spending to have our troops there, to have our forces there, to reinvest in keeping companies afloat, airline industry and tourism industry and other things, I think that perhaps money for the federal government, 243 RESOLUTION 010562 - 10/17/01 substantial sums of money for NTI in Philadelphia, might not yet be on the radar screen, if it ever gets there. The state, as we have mentioned here before, is talking about wrestling with the difficult issue of substantial new funding for the Philadelphia public schools. At the same time, I don't suspect that the Philadelphia's Neighborhood Transformation Initiative is high or anywhere on the radar screen in Harrisburg for funding, considering the fact that we will probably be coming back here not too soon in the future, too long into the future, suggesting that we expand our Convention Center, which I think we need to do. So there are certain priorities that other governments will establish as it relates to what we request from them for these kinds of needs. And, thirdly, the private investment -- I think you have talked about it in a roundabout way with Councilman Ortiz -- there has to be substantial changes in the way we build housing in Philadelphia from a cost standpoint, or the private investors that this NTI plan envisions coming in are simply 244 RESOLUTION 010562 - 10/17/01 not going to come. If the environment, if the cost of building houses, if the red tape and permit process and zoning process and all those land-acquisition issues aren't resolved, and we know how they are going to be resolved by having someone write them down and show them to us so we can read them and understand them, wouldn't that give you some pause as a president of a bank, if a company or an entity had come to you to ask to borrow that kind of money, with all those variable factors unanswered? Would that not make you pause?

I think the issues you raised are legitimate concerns. And I can --

I don't mean to interrupt you. I want you to give me the answer that you would give me based on a business decision. Look, none of us in this room, including yourself, the Council President, and every member of this Council is in favor of blight. No one is in favor of blight. All of us want to see blight eliminated and land put to use that makes sense. All of us do. 245 RESOLUTION 010562 - 10/17/01 The problem is getting from telling us to vote for it, and giving us the leeway we need to understand it, to document it, and to make sure that what is said is going to be done is in fact carried out. But from a business standpoint, as the president of that bank, would you loan that $250 million with those variables unattended to?

All business is done based on relationships, based on trust.

Based on documents, too.

Well, first based on trust. That's how business is done. It is based on trust. And then that's why we have lawyers, they make sure the documents are right. What there has to be is trust on both sides. Until that's done, I don't care what facts, nothing will get done.

I will be happy to quota a long-time member of this Council who sat in this very chair, respect here greatly, Councilwoman Augusta Clarke, who said, "Trust me is what little boys say to little girls." I don't think she was expecting me to 246 RESOLUTION 010562 - 10/17/01 quote her, but I think it applies.

There is no question about that, Councilman. It is about relationships and trusts. And what we have here is, you need to get questions answered. I think, though, in order to move -- like you said, we all want to improve our neighborhoods. There is no one in this body, in this chamber, who would disagree with that. I think what we have to do, though, is to put a date targeted out there that we are going to work to get this done by, provided these issues are answered.

The only thing on the table right, now, Charlie, with all due respect, is a request for a $250 million borrowing, with none of the details. The servicing agreement is not something that is going to be approved by us. The servicing agreement, basically, as I understand it, will allow one entity, the Administration of the City of Philadelphia, to award contracts, to monitor work, and to make sure that the work gets done. And the reason I raise the other 247 RESOLUTION 010562 - 10/17/01 variables that are still out there, federal, state, local investment, is $250 million is a spit in the ocean for the problems that we face in this city. We all acknowledge that. So if the other areas of those fundings, the funding is not forthcoming, what happens to the 250? Where does it go? How is it utilized? I mean, there are specific questions that we, as Board members of the Board of Directors of this, company need to ask. And that is, when we take down the 14,000 properties, how much time between the taking down of the properties and the redevelopment is there? What's the time frame there? How are those properties maintained? Are they fenced? Are they cleaned? Frank DiCicco will tell you, he has cleaned vacant lots in his district maybe 6, 7, 10, 12 times. They have become short dumping sites immediately after demolition. That's a specific issue. The collapsing of the housing agencies, the alphabet agencies, RDA, PHA, PCDC, all those agencies, what happens to those agencies when it is 248 RESOLUTION 010562 - 10/17/01 collapsed into one? What is the governance scheme of the agency it is collapsed in? What are the powers of that agency that's going to be the superagency for housing development in the city? What are the specifics of the land bank? How does the land bank work? Who sits on the bank? Who decides which elements of the city has property available to it so that they can give to or offer to developers? Question, after question, after question. And the only thing that's before us today -- or not even before us today, it is somewhere in the legislative netherworld -- is a request for $250 million bond authorization. Now, if I look at that and I add to that what we may have to contribute to the schools, what we are contributing to the stadiums, what we may have to contribute to our Convention Center expansion, what we may have to save in order to stave off what I believe now is a $25 million shortfall before September 11 on our wage tax projections, a flat line on our sales tax projections prior to September 11, I as a fiduciary, responsible person on this Board of Directors needs 249 RESOLUTION 010562 - 10/17/01 to have the leeway to say, "Wait a minute. Let's figure out the details of this plan before we cut loose this money. Because, guess what? " I will give you a good example, something I read the other day that I should have known about it, but it shocked me. Our debt service payments on the stadium deal is based very much on rental car tax. Nobody is renting cars at the airport because of September 11. Our rental car tax numbers are in the toilet. S. government decides to the FAA to remove rental car facilities from airports' main property and move them off site. We could forget the rental car tax because those companies will be in Tinicum, and they won't be paying the tax. So all of these things that happen as a result of things that are unforeseen to us leads me to at least want to say, let's just figure out the details of this, and not just give me the -- I know you are not making that argument, because you made very cogent arguments in a lot of areas, taxes, 250 RESOLUTION 010562 - 10/17/01 schools, and other things -- but some people who are advocating that we are slow or that we are not doing our job or that we are holding the Mayor back is simply saying, vote for this site unseen and trust me. Well, there is a level of trust and then there is a level of documentation and a level of law and a level of regulations.

And we need both the trust and the documentation, the trust and what the plan is. And until we get the plan, I am not a responsible person by voting for a $250 million bond issue. I mean, that's where we are. And that's where I am at, anyway. I don't know if that's where we are; that's where I am at.

Well, the only thing I would -- listen, I think that's a very cogent statement you made. It is very hard, you know, to take you to task on anything you said. I think it is very well thought out. It is not only looking at the cost today, but in the future. And yet on top of that, Councilman, I 251 RESOLUTION 010562 - 10/17/01 have to tell you, I would love to see you eliminate expenses, which is more scary when you look at what has to happen if you want to cut taxes.

Somebody's ox gets gorged. And that's a hard political decision to make. Don't expect it before 2003, either.

That's why I thought I would start early. I would just say to you that if we can play a role, any role, in facilitating this, we stand ready to do so.

Let me make one suggestion on the role you can play. Because I think your membership doesn't understand the clout that they have. I really believe that if business -- Council, all of us who have been in Council for a while, have been to community meetings. And I will go to a community meeting in South Philadelphia or Port Richmond or West Philly, and I will have people wag their finger in my face and tell me if they don't get this street sign done or this situation straightened out on their corner, I am going to throw you out of office. 252 RESOLUTION 010562 - 10/17/01 Well, you guys have to take the same tactics. That unless the taxes go down, unless the budget gets cuts, unless the expenses go down, unless the schools get fixed, we are going to throw you out of office or we are going to move. And I think you guys have more clout than you realize. Because you are the major employers in our city. And you make our city run by providing those jobs you talked about. And I am telling you, if you got in there to our offices and to the Mayor's Office and slammed your fist on the table and demanded that kind of action, I think you would get it.

I think our new chairman will take you up on your challenge.

Look forward to it.

Thank you. The Chair at this time recognizes Councilman DiCicco. COUNCILMAN DiCICCO: I really don't know if I have anything else to say.

It is a hard act to follow. COUNCILMAN DiCICCO: Except I will 253 RESOLUTION 010562 - 10/17/01 comment on your last statement about when we go to community groups and ask for services. I said I may be the only Councilperson who gets removed in office for providing a basic city service of cleaning streets in South Philadelphia. But that we will have to wait for. I do have one other comment, though, I will make, which is towards the end of Jim's statement. And I agree that you have probably more clout than -- maybe you realize it, but you may not want to use it because you are always in a sensitive, tenuous situation, where you don't want to be fighting with an Administration, when you are also trying to get something out of the Administration. But I think there is a gentle way of doing it, as opposed to a hostile way of doing it. And this morning by mistake I showed up at your breakfast meeting with the Small Business Association because it was a scheduling mistake on my part. And I mentioned the fact that there are a couple of bills that I have done, primarily with 254 RESOLUTION 010562 - 10/17/01 tax abatements and exemptions, that have proven to be very successful in attracting people and developers here. But there are other bills that I would like to do which we just can't seem to get done because of what I am told are constitutionality issues. One of the bills I was ready to introduce and I pulled it back had to do with offering first-time home buyers in the City of Philadelphia, whether they are existing city residents or nonPhiladelphia residents who want to move in, maybe a five-year wage tax abatement as an incentive to move in. And I am told that you can't do that because of constitutional legislation or statutes say that we are not allowed to do that under the Uniformity Act. We need your help at the state level, as well, in terms of some of the tax bills and legislation that we would like to do. We have done those which we can do within the power under the City Charter to do, but we need to go beyond that. 255 RESOLUTION 010562 - 10/17/01 And I think the Chamber could be very helpful. Because sometimes when we speak, as you know, as Philadelphians from this body, people in Harrisburg are not always listening to us. And they see it probably in a lot different light than either we present it or we would like for them to see it. So just as a suggestion, I would like to sit down and talk to you guys going forward, some of the ideas I have which may be helpful to all people. My developer hat, as one of my colleagues says, is on. I think it should be on. Because it is not us versus them -- and I said this the other day -- we have to do this together.

If you have developers, it means you also have people who want to -- COUNCILMAN DiCICCO: You have jobs. So I don't point my finger at developers and say, these are people -- because they are developers, there is this notion that because they are developers, these are people who are of wealth and lots of means, and that they should automatically give some return back to the 256 RESOLUTION 010562 - 10/17/01 community. Which they do, in a lot of different shapes and sizes, which most people don't even recognize.

Councilman, your bill 7 changing over -- COUNCILMAN DiCICCO: Converted buildings?

-- converted office buildings, you can see the benefit of that. We have so many more people paying taxes now who live in the city. It is incredible. I mean, and that's the kind of forward-thinking we are going to have to continue to do. So, I mean -- COUNCILMAN DiCICCO: Because I think what that does it actually fits in at some point into the blight plan, whatever that plan ultimately turns out to be.

Because we have been able to expand the households downtown. COUNCILMAN DiCICCO: Doing the market rate housing. In addition to building new homes and 257 RESOLUTION 010562 - 10/17/01 having some of the amenities that people want, there are other things we need to do to be competitive with the surrounding suburban communities in South Jersey, in addition to the garage and the side yard. That's a lot, but it is not everything.

What we have to do is continue to have our housing values appreciate, you know, in a competitive position, with suburban housing. And they don't do that now, and it is not fair. It is not fair for the people who live in the city, whose houses aren't appreciating the same. I mean, it is not fair for anyone. And it is up to us to really try to change that. COUNCILMAN DiCICCO: Thank you. Thank you, Madam President.

Thank you. The Chair recognizes Councilman Goode.

Thank you, Madam President. Good afternoon. I definitely understand the type of clout you have, so I want to thank you in advance for your support of 541. I think a lot of these issues come down, 258 RESOLUTION 010562 - 10/17/01 as I said before, the matter of private investment. And that's what 541 is about, about the business community, investing in it, community development corporations, and about government giving them the consensus to do that. I think, interestingly enough, if we were to even begin to discuss the issues of schools in the context of private investment, some people would have to realize and admit that the way you increase private investment in public schools is by building more houses. But getting past private investment, and actually beginning to focus just on the public investment, you are not only the head of the Chamber of Commerce for several years, but a former Commerce Director. If you could, for some of my colleagues and other people who may be in attendance, sort of demystify some of the major development project process that goes on by addressing two things. One, your impression as Commerce Director during the '80s, the investment of downtown versus neighborhoods, versus now; and, two, how a major project development deal is actually done. 259 RESOLUTION 010562 - 10/17/01

Well, when I was Commerce Director, that was really the last time we increased jobs in the city. We increased them by 40,000. We had 40,000 new jobs in the city from 1983 to 1987. And at that time it was equally directed between neighborhood development and downtown development. There was not one project that was more important. But what happens with a downtown project, or any major project in the city, now -- and I want to report one other thing. When you talked about neighborhood development, you know, people talk about Manayunk. And if you go to Manayunk, and you see all that, well, the original investment was made back in the early '80s in Manayunk. I mean, sidewalks, streets, lighting, fixtures, investment into restaurants and loans, that all happened in 1980. It took it ten years to really become the Manayunk of the new generation that we all know today, but it started then. But a development project takes place because there is a market for it. And in order for 260 RESOLUTION 010562 - 10/17/01 a market to be for it, there has to be buyers, whether there are residential users or whether there are retail users. Franklin Mills was done back in the '80s because of the great buying power of the Northeast and because it was on the axis of 95, where people could come from New Jersey, all the way up to the northern part of Pennsylvania. And why some development doesn't take place is because the households aren't making the incomes necessary to either buy products or to move in the housing. And that's the reason why we call it "market responsiveness." You are not going to find a developer saying, "Oh, gees, I want to go into a section of the city that the poverty level is really high." Well, there is nobody who can buy their product or services. So we can only attract those developers to areas that are doing well. And you can't be competitive unless we lower our tax rate. Because until we do that, we are not going to have the activity in the neighborhoods that we have done 261 RESOLUTION 010562 - 10/17/01 before. The only other way we have been able to attract people are through tracts of land. And hopefully the city and state's zones that they have committed, the Keystone Opportunity Zones. But even with Keystone Opportunity Zones, if they are not in an environment that provides for good, quality workers, you are not going to get them. So that's really the, I would say, simplistic reason for why some developments go forward. And on the project and the process, I think the city has done, and continues to do, a great job in streamlining the process once a development project is identified. Never had a complaint that the city moved too slow.

Thank you.

Thank you very much, Mr. Pizzi. We really appreciate your coming in to testify.

Thank you. Thank you for this opportunity. 262 RESOLUTION 010562 - 10/17/01

Thank you. Our next witness is Mark Allen Hughes. Good afternoon and welcome. MARK ALLEN HUGHES: Good afternoon, Madam President. I appreciate the opportunity, somewhat impromptu, to participate in these hearings. And actually let me begin by apologizing and saying that, as I believe you know, I have a class of students waiting for me at 2 o'clock. And if I am not there in about five or ten minutes, they will all start wandering off. So I just wanted to take the opportunity, though, to state very briefly how important these set of hearings are and how important this issue remains in front of the city, and make a couple of quick observations regarding NTI specifically. And before I do that, let me say by way of preface that I think it is important, as one begins to design an initiative like this, that one have a theory of the problem. And I think that some thought, reflection, discussion about a theory of the problem 263 RESOLUTION 010562 - 10/17/01 might well lead one to investigate questions like, why do people leave the city. And a question like that, quite naturally, leads one to very broad subjects like education, taxation, and so on. And these are certainly at the top of any list that helps to account for why we have had, in effect, 50 years of depopulation. But an argument that many people, and that I am persuaded by, have made, is that, after a half a century of depopulation, and in spite of the fact that the fundamental causes of that depopulation are certainly taxation, are certainly education, are certainly crime, are certainly a whole set of changes that have led to suburbanization, in spite of that fact, that derelict property and abandonment and vacant land and buildings are now sufficiently large in Philadelphia, sufficient scale in Philadelphia, that they have become a problem in their own right. And I think that the only way to make sense of both the policy possibilities here and the funding possibilities is to take in fact that somewhat narrower view of the problem and to say 264 RESOLUTION 010562 - 10/17/01 that, yes, we recognize that there are fundamental causes. But after a half a century of depopulation, derelict property has now become a problem in its own right that we need to address directly. Recognizing that by addressing it directly, we may not, in fact we certainly will not, address in the short run schools and crime and a whole host of other problems. But I think it is important to realize, and certainly I believe, that we are never going to be able to get any traction on those other problems until we address the problem of abandonment and blight itself directly. And I think that that is the best argument for a blight plan. Now, having kind of tried to narrow and set up the target to facilitate shooting, give us a target that's at hand, I think the questions in particular that Councilperson Kenney has raised, and the whole set of questions regarding the Mayor's specific initiative, let me just say briefly, those questions are answerable. 265 RESOLUTION 010562 - 10/17/01 It is almost as if there has been a debate about whether or not such questions are even answerable and about the propriety of asking them at this stage. And I would like to say that, in fact, those questions are very important to ask and are very important to answer before acting. On the other hand -- and I think this is something of a cross-roads issue for this body -- I find it quite compelling arguments regarding the fiduciary and political responsibilities of Council on this. I think I find it quite compelling. And I would be the last person to advise this body on, you know, the local politics of any particular issue. I am a student, not a teacher, of that, certainly in this room. But, I think it might be time perhaps to consider a somewhat alternative strategy here.

Which is, that if the Mayor cannot or will not provide you with reassurance at the front end in the form of a plan that makes you comfortable in meeting your responsibilities, then perhaps you might consider amending that plan in a way that grants you oversight responsibilities on the back end. 266 RESOLUTION 010562 - 10/17/01 Recognizing the difficulty of competing in the marketplace of ideas, with a Mayor's Office that can speak with one voice and a Council that by design has many voices in it, recognizing the possibilities for getting cornered into a situation that you find it quite difficult to make some decisions and resolve a bunch of tensions in a plan you have never seen and haven't been shown, that you might want to consider this other alternative. That is, an attempt to, in effect, fight something with something, and to amend NTI in a way that can allow you to meet your responsibilities at the back end of the process. And to begin a set of arguments that are not about the plan, because -- and this is something of an irony, right, for me to offer this advice. Because I have certainly been arguing about the plan for quite a long time. And I think these questions are answerable. But, if they won't be answered, then perhaps an alternative strategy is to simply amend the plan and make it possible for you to stay in the game after the release of the money. Now, I will tell you that, certainly in 267 RESOLUTION 010562 - 10/17/01 my own kind of research into the blight problem and what might be done to address it, that the presence of many hands is a big part of the problem. And certainly a large number of those many hands in the current way we deal with land acquisition and transfer are the hands of Council. And that in a streamlined process that was rational and agreed upon by all, it might be possible to remove those hands in a way that might remove lots of people from the decision-making process. But I don't think we are going to have an opportunity, at least from the NTI folks, to see such a plan and to vote on it. And, therefore, again let me just close, and leave some time perhaps for anyone to ask any questions that you might have, is that you might want to think about this alternative strategy and build for yourselves a role along, you know -- 90 percent, in spite of what many have suggested, 90 percent of what's necessary to deal with this problem is available, certainly when it comes to legislation and regulation. The RDA, I believe, is in a position to 268 RESOLUTION 010562 - 10/17/01 do much of what needs to be done. And, again, in my view, very briefly, should be the center around which the many fragmented public agencies that are now involved in this issue should be consolidated. But that's simply an example of the way much of what we need to do is already at hand. VPRC, for example, which is a place in which Council has a very important role. And you might think about amending that function in such a way that you can continue to meet your responsibilities after NTI is funded, if in fact it ever is. So, thank you.

Thank you so much. The Chair recognizes Councilman Nutter. Councilman, I just want to remind you that Mr. Hughes said he has a class at 2 o'clock. It is now 2 o'clock. So I would ask the Council Members to try to be as brief as possible.

Thank you, Madam President. It takes me five minutes to get my question together. I am only playing. Thank you. Professor, I appreciate your comments. And your suggestion of an alternative strategy, one, 269 RESOLUTION 010562 - 10/17/01 I think is something that we will have to, at the conclusion of these hearings, kind of grapple with. And I think there are a variety of ideas floating around. You have put out into the public space some of your own thoughts and ideas, so I appreciate your being here today. What I am struck by, and I think what we are grappling with -- and if you listen to your testimony and then previous testimony -- I began to think about other major projects that have come through the body. And the most recent one, which was at times contentious, but I think it was fairly clear what we were ultimately going to do, I wrote down a series of items to which we would, I think, like a fair amount of information. And when you look at what the program is in the briefing book, which is a part of the service agreement, on , and it has a listing of ten different items that compose what is called "the program." And I think what we are ultimately searching for is the where and the when, by whom, in 270 RESOLUTION 010562 - 10/17/01 what time frame, in what neighborhood, who is in charge, what's the budget, what's the role of City Council, what's the role of the local elected official, how much will these items cost, and what the contractual agreement and responsibilities are. And we never had to wonder about those things as related to the stadium projects. We learned more about that than we ever wanted to know. But there was never any question about those items. Now, we debated and discussed the components of those various items, but there was no 13 search, mad search, for information. It was delivered to us on a regular basis, some early, some at midnight, but at least you got the information. And I think part of the problem here is that at the moment there do not seem to be concrete answers that match up with the ten items that are listed in the program that would answer those questions and give people the comfort level that leads to the trust that was discussed earlier, but also, you know, as I think President Kennedy used to say, "Trust everyone, but cut the cards anyway." We would still like to see the documents. And that, so when you talk about this 271 RESOLUTION 010562 - 10/17/01 alternative framework or idea, it may be something that should be pursued. As Councilman Kenney said earlier, everyone wants to eliminate blight. And I don't think anyone particularly wants to stand in the way. I think primarily we would just like to know what's going on. And as we move toward getting something completed, there have to be a series of checks and balances set up. That is the whole reason to have an executive and a legislative branch. We don't necessarily work for each other. We do work with each other. But we are also supposed to watch what the other one is doing. There are no free rides or free checks in this particular place. So I appreciate your perspective. And any subsequent advice, analysis, suggestions that you might have, if you could get them to our Chair and our President, I think that would be very helpful.

Thank you. I would be happy to do that. You know, when he was asked about the 272 RESOLUTION 010562 - 10/17/01 U-boat threat in World War I, Will Rogers said, "Boil the oceans, and I think that will make all the subs rise to the top." Right? And when asked for details, he dismissed those as exactly that, just simply details. But I think to some degree you guys are being asked to boil the oceans. And that, as your examples illustrate far better than my kind of assertions before, the kinds of questions that are nagging you are completely answerable. They are answerable within a two-month time frame, certainly within a two-year time frame that we have had. And you didn't ask, but if asked to prioritize those, I think the most important of the who, what, why, when, where, how questions are probably the who question. Because if you get the who question right, at least you are more likely to make some progress on that. And for the executive to be less than clear about the administrative apparatus that they propose to replace the existing fragmented one is really no excuse for it. And without that, without that, at least 273 RESOLUTION 010562 - 10/17/01 that very assurance, I am not sure how you responsibly act.

Thank you.

The Chair recognizes Councilman Goode.

I will be extremely quick. I want to get away from the plan, because I am fine with passing your plan, if that's what we would consider. But what I want to ask two very simple questions. One, how long have you been doing policy work on blight, and why did you choose the issue of blight to do policy work on?

Well, let's see. In some ways I have been working on Metropolitan settlement patterns and where people live and work and why throughout my career for about years. 20 The reason why I chose to turn up the volume on blight, per se -- and that really started about three years ago with -- it really started publicly about three years ago with an op/ed opinion piece from 1998. And there has been many, many, many opinion pieces since then. 274 RESOLUTION 010562 - 10/17/01 But that decision was really informed by a considered opinion by myself and many others that depopulation was the most important issue facing the city, but for a very qualified reason. Which is that, after a half a century of decline, that the alternative to managing decline was to leave it unmanaged. And that we could simply not afford to do that anymore because we need to drain the swimming pool. We are treading water and slowly sinking. And damaged property, and the fact that the city becomes both formally for folks like you and I believe informally for people who live and work in the city, a growing sense that the city is simply ungovernable. And one of the things that most animates that feeling, that sense, and those real structural difficulties is the fact that we have built the city for two and a half to 3 million people, remember a city of 2 million people, now find the city of a million and a half, that's what they tell us, if that's even true. And that there is a reason why it feels 275 RESOLUTION 010562 - 10/17/01 like a fourth to a third of the city is missing, and in some neighborhoods like half of the city is missing, usually because it is, and that it is impossible to get traction on so many other issues until you have got control over what has always been the key input in the growth of all American cities, which was the control of its land. From boosterism, you know, when they used to do those fake bird's eye aerial views of Midwestern boom towns and showing 5,000 people living where there was nothing but Buffalo in order to generate development activity, we know how to manage growth. We have never learned how to manage decline. And we have suffered in this city more than anyplace else in the United States in the last half century because of that inability to talk about how do you manage decline? It is not going to get anybody happy, it is not going to get anybody excited. But until we get traction on this, we are losing the ability to address a whole host of other questions, accept things that allow us to go somewhere else, to other capitals and at other levels of government and ask 276 RESOLUTION 010562 - 10/17/01 for subsidy. But until we gain control of our land, I think prospects are dim with regard to our ability to deal with many other things.

So we have to do a blight plan?

I believe we have to do a blight plan. I believe that the alternative to doing a blight plan is not managing decline and continuing to decline.

Thank you. Thank you, Madam President.

Thank you. The Chair recognizes Councilman Ortiz.

Go ahead. That's fine.

I apologize for my schedule.

I read your op/ed pieces. I happen to agree with many of the plans that you propose. I do agree with you that we need to manage land and be able to put the priorities in 277 RESOLUTION 010562 - 10/17/01 place. Because it is not just demolition, but it is what goes beyond that and what are you going to do afterwards. And if you do not have -- and I begin again with the public school system. And you don't have a plan of job creation, and you are never going to have a return of a middle class, and you are not going to keep a middle class in the city unless you are able to control the cost of building houses and building new homes. Not subsidized homes, but homes for a working class, a middle class, and an upper middle class that will be attracted to move into the cities and to other areas of the city. Until we are able to combine all of these elements into a plan, then you don't have a plan, because they all have to work with conjunction almost, and almost simultaneously. You cannot have one without the other. And you cannot try to rebuild while having a school system that has been vulcanized. And West Philadelphia has one school system, and South Philadelphia has another school system, and Northwest Philadelphia has another school system. 278 RESOLUTION 010562 - 10/17/01 You will never be able to get to the point of structuring a school system in which people will feel comfortable sending their kids there. And unless we get to that point, we are not going to have what you consider a blight plan. Because everybody is against blight. I have never heard anyone say, "You know, I'm really for blight. I think blight really contributes to the city here."

That's right.

Everybody is against blight. It is how we get to the point of getting the schools, getting the jobs, creating the atmosphere, reinvestment and rebuilding in the city. And I don't think we are there yet. I don't think we have a message that motivates us to get there yet. I haven't heard it. So I happen to agree with you in several areas. But we are all for a blight plan. The key situation is, how do we mesh it all in.

Right. I think that's exactly right. The only distinction that I would 279 RESOLUTION 010562 - 10/17/01 make -- it is actually completely consistent with everything you just said -- is that, you know, the best strategy is a strategy in which all of the elements work in concert and hopefully creates some actual positive synergies, and become more than simply the sum of the parts. I think it is possible, or perhaps I would have to regretfully say, perhaps it was possible a year ago, and it might still be possible today, to have a coherent, focused blight plan that does not address all the other problems -- and let's talk about schools -- but that is consistent with it, that is informed by a vision that adds up and becomes a comprehensive vision of the city. But I think it is possible to not wait, to not let the best be the enemy of the good, and to not wait until we begin to address these other issues or even figure out how to address these other issues, to act on land itself, to act on the blight. In fact, I would go further, as I have, and say that solving some of your land acquisition and transfer problems, getting control again over land, is only going to help deal with many of these other issues. 280 RESOLUTION 010562 - 10/17/01 I think that -- and maybe this is just an egg-headed view -- but one of the things that we have lost in this last year is the chance to talk about some of the most interesting policy choices that are implicit, if not buried, in NTI. For example, there is a very real tension between demolition and construction, demolition and development. Right? There are a lot of very well-founded hopes for development, I would say, and I share those. But that I think it is important to add a dimension of time. And those are over the horizon hopes, I would argue. I think that we have a long way to go before we can build our way out of a depopulation problem.

But if you don't deal with the aspect of the cost of development --

Absolutely.

I just mention that we are spending a couple of billion dollars in terms of stadiums. And if the cost of building were not so high, we would have a couple of hundred million 281 RESOLUTION 010562 - 10/17/01 dollars to spend on something else.

I agree with you completely. I have also, you know, written on this very -- I mean, in fact, I think that, you know, that it is really not a -- there is not a -- what was the word that was used? There is not a kind of a -- this wasn't the word -- but there is not a quality or a performance issue between the A rate and the B rate. Right? We are not talking about using lower-quality workers and construction techniques; we are talking about having a lower wage scale. So it is to --

A competitive wage scale.

A competitive wage scale that's competitive in the more open markets outside the city than inside. Now, I agree with you completely that addressing some of those issues up front is very important. And we should do that from the beginning. I didn't mean to say that we shouldn't 282 RESOLUTION 010562 - 10/17/01 address those kinds of issues. Those kinds of issues I would put on this side of the horizon, not on the other side. But I think we need to be prepared -- and this is another thing that implicates the administrative apparatus, the who question -- we need to be prepared with this so-called land bank to build an entity that's got legs, political and financial, that's got legs to hold this land for a conceivably long time. And to make sure that that held land is not a negative externality, it is not a cost or a nuisance to adjacent property owners and so on. The story of -- and it is kind of a story with a very sad ending now -- but the story of Battery Park City in Lower Manhattan is the story of the State Urban Development Corporation, a state entity who held landfill for 30 years until the market was sufficiently strong that everybody got rich. There is an opportunity here for civic speculation in this land bank. And I think that, you know, it would be at best risky and at worse a great kind of urban-renewal-like mistake to talk too 283 RESOLUTION 010562 - 10/17/01 much about the big development pay-offs we are going to get from fighting blight. Right? Because the legacy of urban renewal is the legacy of those promises on that.

Never met.

Never met. Instead, what we need to do is think that there are going to be some short-run costs and short-run benefits, and they should accrue immediately to the people that are directly affected in the demolition and the consolidation of this land. And there is also going to be another thing that has gotten completely unspoken, I think, in this debate is the issue of relocation. And relocation, I would -- you know, have gone, I guess, so far, it is ink, is to say that to a large degree the benefits, certainly the short-run benefits, of a blight plan are derived from relocation. Now, we can talk, you know, unfortunately we have to talk quite a long time, about that. But there are, you know, people now 284 RESOLUTION 010562 - 10/17/01 living in the American dresden of some of our most depopulated neighborhoods, should be the first beneficiaries of a blight plan. And it is possible to implement such a plan in a way that improves the housing and neighborhood quality for everybody from the first day. It is possible to do that. But it has got to derive from some tough choices about relocation and consolidation of land and banking that land.

Thank you. Madam Chair.

Thank you. The Chair recognizes Councilman Clarke. I am sorry.

I keep thinking you are dismissing me.

Thank you, Madam Chair. Good afternoon. I came in kind of late, so I am not sure if you covered this issue. One of the aspects of the NTI program was the possibility of having a private activity bond. Are you familiar with that? And, if so, as it relates to the parameters of the ability to implement that program, and what kind of 285 RESOLUTION 010562 - 10/17/01 neighborhoods? Can you kind of talk to me about that?

Well, I know a little bit about private activity bonds. And that, as I understand it, essentially such, a bond, such a financing mechanism, allows you to disburse the proceeds of the bond to private entities. Usually it is used for commercial activities, commercial development activities and so on that. Is that the idea?

I am asking you about the NTI proposal that was put forth. Are you familiar with what --

Yes. And I think, for example, let me say this: That the private activity bonding financing scheme, and the things that the programming that that financing scheme attempts to finance, are an illustration of what I would consider to be a major miscalculation in policy terms by the Mayor's Office in its design of NTI. In that, in an attempt to be overly comprehensive and an attempt to address many, many, many economic and community development issues at once, in one plan, when really what you are doing is 286 RESOLUTION 010562 - 10/17/01 capitalizing years of the demolition budget into the new bond issue of the $250 million, and hoping for the balance in a variety of other funding streams to be kind of coordinated, that that's both a gambit in planning terms, but also I think comes at a real cost of diffusing the message and the vision in policy terms.

Let me go back to my 10 question. Are you familiar with what the private 11 activity bonds were proposed to do? 12

In NTI? 13

Yes. 14

Did you not like my -- 15

You didn't answer 16 the question. You started out, you said it was an 17 attempt to address other concerns. 18

That was after. That was 19 what I kind of went up. 20 The narrower answer was that it is designed to finance some commercial revitalization activities.

Solely? Is that your understanding of the proposal?

That's my understanding of 287 RESOLUTION 010562 - 10/17/01 the proposal, yes.

And you read it all?

I don't think I have read all of it, no. 6 I am actually am not here to defend the NTI plan.

Just answer the question.

No. And that's why. No, I have not read all of the hundreds and hundreds of pages transmitted. Nope. Nope. The ones that, for example, the web pages that were pulled off of the OHCD web site that were talking about five-year-old housing plans, you know, kind of basically lifting the names of existing programs from OHCD and repackaging them into the Housing Investment Strategy, the back end of the NTI, no, I did not reread those issues.

Okay. And I asked you that question for a reason. A big part of the discussion is centered around blight. The one thing that kind of caught my eye about this particular proposal is that it addressed the issues that I have heard concerns 288 RESOLUTION 010562 - 10/17/01 raised by members of Council and members throughout the City of Philadelphia in prior years about the inability to spend federal money in certain communities because they weren't HUD eligible, weren't CDBG eligible. Some of the members here consistently expressed their concern because they weren't in the targeted area under the HUD guidelines, and we weren't in the position to spend that money, although some of those areas were quickly becoming distressed or were having some fraying around the edges. And it was my understanding that that particular financing mechanism would hopefully be in a position to address some of those areas that prior to this date we have been unable to, at least in terms of government, be able to assist and maintain some of the fabric of those communities.

That would be a very subtle use, instrument of that. And given my understanding about the CDBG guidelines --

You say subtle.

Subtle, S-U-B-T-L-E. Because you could, I guess, circle 289 RESOLUTION 010562 - 10/17/01 around behind a problem and try to come into it that way. So, I mean, that would be a subtle instrument that you could maybe use to address that real concern.

I don't understand the reference to subtle.

I am saying that it seems like it might be an overly complex solution to the problem that you state.

So what do you think is the problem in some of those neighborhoods?

Well, that is a very big question. On the question that you stated about some of the boundary problems with the eligibility designation areas?

Yes. How do we, government, impose ourselves into a process that will allow us to assist those communities to both stabilize, and even in areas which we consider very good neighborhoods, to continue to enhance those existing.

That's back up to a very big and interesting question. I mean, that's a 290 RESOLUTION 010562 - 10/17/01 question that in the answering calls for a blight plan. And I would have to detail an entire blight plan to answer the question.

These are not what we would traditionally call blighted communities, as indicated by a couple of colleagues here.

That is correct. Then it would call for an even bigger plan. It would call for an entire community development plan, the city's comprehensive plan. And I can't give you all that. But on the specific question, on the specific question that I understood you to be asking, about some of the boundary problems that arise from the eligibility of certain federal funding programs, I would simply suggest that it might be kind of a list subtle, more direct approach to list that and all other barriers that are confounding the city's attempts to save and revitalize some of these neighborhoods, and address the boundary issues.

So we should change the HUD regulations?

You can -- I think you probably -- 291 RESOLUTION 010562 - 10/17/01

These guidelines are, unfortunately, not set by us. Because I think if we had the wherewithal, we would change the boundaries and some of the guidelines surrounding where we could spend money.

I think you would find that Secretary Martinez is a very sympathetic ear in removing from your, you know, from your yolk all of the things that are kind of reigning in and constricting your -- I mean, just as this Administration has done with its Office of Faith Based and Community Initiatives, five audits, one of which was of HUD, that was looking at a long list of detailed barriers that keep faith-based organizations from community development and other activities, I would respectfully suggest that you would find in the Secretary a very sympathetic audience for the discussion of specific regulatory barriers that are keeping you from doing what you want to do. (Councilwoman Blackwell assumes the Chair).

Let me understand. 292 RESOLUTION 010562 - 10/17/01 Do you think that we, Philadelphia, would be the only one that would get that designation from HUD?

That often happens.

You understand if they did that, it would probably have to be on a national scale?

Not if it is a demonstration. No. This happens all the time.

Do you think so? All right.

And, in fact, I have been a small part of several demonstrations that let you do exactly the kind of thing that you and I in this colloquy are talking about. That lets you, in effect, experiment for the benefit of the country on the returns to removing certain kinds of onerous regulatory or other kinds of barriers. And if there was a list of ten things that matter, I am optimistic -- and in fact I would even suggest that rather than going in-debting yourselves to try to work around such barriers, the front door might be better.

With respect to the pilot program that you talked about changing some of 293 RESOLUTION 010562 - 10/17/01 the existing guidelines, we actually had one of those in the City of Philadelphia, it is called the Home Ownership Zone. And we actually got a percent waiver 6 of the number of homes that were built in that small 7 Home Ownership Zone that amounted to around 30 8 houses. 9 We have not been able to get HUD to 10 agree to extend our ability to add additional 11 percentages to that number. 12 I guess I am just not as optimistic, 13 given the history of our ability to change HUD 14 guidelines, you know, particularly now. You are 15 talking about potentially on a national scale, or at 16 least on a city scale, as optimistic as you are. 17 And it would be great if Secretary 18 Martinez would be willing to look at the entire city 19 and allow us to distribute our funds a little more 20 liberally. But at the end of the day, you are still only talking about approximately $100 million coming from HUD. Which we already consider not enough for where we currently spend it. So I am just a little concerned if we 294 RESOLUTION 010562 - 10/17/01 stress that pot a little further, it really wouldn't --

It is amazing what Chicago has actually been able to do. I mean, the CHA and the exactly the specific regulatory relief that they sought in negotiations, extended negotiations, with both HUD and, actually, they brought the White House Domestic Policy Council into those negotiations. The relief that they sought and were granted for a set of a long list of regulatory barriers that is, you know, I think perhaps instructive here. I mean, Chicago is in the midst of -- and no one is proposing this -- but Chicago is in the midst of relocating 70,000 public housing residents as it completely reinvents the CHA. And there are dozens and dozens of regulatory relief issues that they had to get permission for. You are right, there is a process, and it can be onerous on the local government side. But I think that when you go in -- and this is not to criticize any past efforts that have 295 RESOLUTION 010562 - 10/17/01 not worked -- but what the Chicago experience demonstrates is that when you go in with a plan that makes sense, and you stick to it in the negotiation, and you go in, and, in effect, in the front door, that at least in that example they got what they needed.

I am familiar with the public housing initiative. My understanding, it is probably around years in running. 11 I am a little concerned in terms of 12 time, that I don't think that realistically we need 13 to enter into a process that could take us 14 potentially 15 years from now. Our clock has been 15 ticking a little longer.

I should correct --

I remember the Cabrini Green.

No. No. That is different. I am sorry, I am not being very clear. There is a control policy at Cabrini Green and so on, and a deseg ruling, that's much older. I am actually talking about something that happened just a couple of years ago that was 296 RESOLUTION 010562 - 10/17/01 called Moving to Work. And it is a different -- in fact, it is a national program that Chicago aggressively participated in. The program still exists. It is designed to generate the most innovative and flexible possible locally generated plans in the country. And it did not take years to do what 10 I am referring to in CHA. 11

I mean, we are 12 actually here in the City of Philadelphia actually 13 embarked on a substantial demolition, relocation 14 strategy associated with public housing, rebuilding. 15 So I think we are actually a part of what you are talking about. But I am just concerned that our ability to be creative and to be able to assist communities outside of the traditional HUD-regulated areas, if we don't do something sooner than later, then, you know, our ability to negotiate 40, 50 houses at a time will just leave us in a position where we will be extremely behind. I think we need it on a larger scale.

I agree with you. 297 RESOLUTION 010562 - 10/17/01

Thank you, Madam Chair.

Councilman Kenney.

Just one issue. I know Councilman Clarke raised the issue of private activity bonds. And perhaps you don't have a strong opinion of them. I think that's one of the flaws of the plan. I mean, if we can't create an environment through the implementation of this plan which will allow for private investment from the private sector, without the city borrowing at higher interest rates its own money, paying the debt service with its own money, to create an environment of private investment, the whole concept of the blight initiative and redevelopment is to create a tax environment, a neighborhood strength environment, a school improvement environment, so that we don't need private activity bonds. Private sector will step in and invest. That's what I understood as one of the cornerstones of the second phase. First phase is easy. First phase, you 298 RESOLUTION 010562 - 10/17/01 take $250 million and you knock down 14,000 properties. The second phase is maintaining those properties, assembling those properties, parceling those properties out for development, and creating an environment that allows for private investment. And for me, private activity bonds in a certain way, although it is a unique, interesting way of doing things, is kind of a signal of defeat that somehow we can't create an environment in the city that will allow for private investment; we have to borrow money at higher interest rates, take the sparse $250 million that we have to go around as it is, and pay debt service on higher interest rates in order to incentivize the private sector to invest. If we can't create an environment that allows the private sector to step in and want to invest, we might as well not pursue this proposal. Because that's the end result, as I see it, to NTI, is that the city puts in resources, creates an environment that the private sector wants to step into. And that's, as I understood, the vision of this to be. Private activity bonds to me is just 299 RESOLUTION 010562 - 10/17/01 simply the government borrowing money at a higher interest rate to do private-sector work that the private sector should be doing.

That's an even less subtle response.

Councilman Clarke, are you done speaking?

I just wanted to respond. That's why I had asked Mr. Hughes if he read a particular aspect on some of the potential of private activity. And I agree with Councilman Kenney, in that this should in fact create private investment in the community. And one aspect of at least what my understanding of this particular program was, to do just that. In positions where you do not have HUD-eligible or CDBG-eligible areas, this private activity bond could essentially acquire properties and put properties back on the private-sector market, potentially at a profit to the City of Philadelphia, or whatever community development corporation was involved, or whatever entity was involved. 300 RESOLUTION 010562 - 10/17/01 Whereas now, we simply sit by and allow the community to deteriorate because it is not a HUD eligible area, because we don't have that aggressive CDC or OHCD or the Redevelopment Authority going out and putting properties back online, back on the tax roles, in the private activity bonds, as a result of the ability to go beyond the traditional parameters will allow us to do that. And that's one aspect of that particular private activity bond. So I agree with Councilman Kenney, that that's in fact what we should be doing.

That's not quite the way I heard it. But, anyway, it is not my job to arbitrate. But particular instruments, folded into a coherent plan, would be an interesting and productive conversation. But I don't think we have the context for that conversation.

Thank you. Thank you, Madam Chair.

Thank you. Excuse me. Thank you very much.

Councilman Nutter. 301 RESOLUTION 010562 - 10/17/01

Not for him. Thank you.

Thank you very much. Thank you.

I was listening to all of the exchanges going on. And, actually, Councilman Clarke's question of Mr. Hughes sent me on a little bit of an information search. And what I have not been able to find in the materials that we received, I guess, earlier this year was a complete budget with kind of a sources and use of funds for the $250 million broken out in the three categories. Councilman Clarke mentioned one of them, which is the tax-exempt private activity bonds. There is also the tax-exempt governmental purpose bonds. And then there is expected to be a series of taxable bonds. So I just kind of have a general question. Which is, does anybody have a chart or a document among us that indicates the amounts of these three different bond series? (President Verna resumes the Chair.) 302 RESOLUTION 010562 - 10/17/01

It is in the book.

Because I cannot find that.

I believe the private activities fund is $45 million, and that would take effect in 2004.

All right. Okay. Do we all have this? Okay. I will track mine down. Thank you.

Professor, thank you again. We appreciate your coming in. I am sure your students also appreciate your coming in. Our next witness Mr. Mondesire. Good afternoon and welcome. JEROME MONDESIRE: Good afternoon. My name is Jerome Mondesire, and I have the privilege to serve as the President of the Philadelphia Branch of the NAACP. I want to thank the Council President and the members of this body for taking a few minutes to listen to our testimony about this very important issue. We have testimony that we gave your staff, and so I won't try to read it. I would just 303 RESOLUTION 010562 - 10/17/01 rather paraphrase it, because I know there are some other people waiting to testify. We have been involved in Philadelphia since 1921. And a lot of you don't know that the NAACP has moved to another front. Two years ago we formed the Next Generation Community Development Corporation, because we believed that the final battlefront of the civil rights struggle will be in the economics field. That we have already secured the place at the lunch counter for folks to sit, but the question now is, do they have a cup of coffee. We have already secured the place for people to sit on the bus. The issue now is, who drives the bus, who makes the bus, and who decides the roads where the bus travels. So our economic development corporation has been in existence for two years. And we have been running a Welfare To Work training program and an entrepreneurial student program after school for high school students. The third phase of that program has been economic development, especially of abandoned 304 RESOLUTION 010562 - 10/17/01 properties. We have completed abandoned property redevelopment in the Germantown section, and now we are working on one in the North Central Philadelphia. And thanks to the help of Councilman Darryl Clarke, we have been able to secure 1619 West Cecil B. Moore Avenue. And that's really what I want to talk to you about and just express to you in very straight-forward terms what it is like in the trenches to do development. And why we think NTI is important, but because there are so many questions why we think the role of City Council in addressing these issues is so vitally important. We placed a down payment of $5,000 for this abandoned property at 1619 roughly 18 months ago. And we had to give that money to the Redevelopment Authority, which is one of the many alphabet-soup organizations that handles abandoned properties. The first property we dealt with, we dealt with the Vacant Property Review Committee. We next went to the Empowerment Zone and 305 RESOLUTION 010562 - 10/17/01 were told that there was no money there for redevelopment. We then went to OHCD and was told there was no money there, also. Later on we found -- John Kromer to my face told me there was no money. And Eva Gladstein told me there was no money in the Empowerment Zone. But I want to get to that as my final point. We then turned to the Redevelopment Authority to begin the process to turn the property over to us. Under the laws of Pennsylvania, Madam President -- I am sure you know and some of the Council Members also know -- if they don't own the property outright, we as a nonprofit, tax-exempt organization have to put up an escrow fund to hold the city harmless. So in this case a building that had been vacant for years, an old bar, and it had been 21 improperly used for apartment dwellings for about 30 years, we had to put up $21,560 as an escrow fund. And we talked to the executives at Redevelopment Authority, and they made it clear there was no way around it. 306 RESOLUTION 010562 - 10/17/01 We then had to go to the permits at L & I, to file a permit. It cost $940 to put up a permit fee to redevelop an abandoned building. And then we had to get a zoning variance. And to get it expedited, that cost $700.

So almost 25,000 of a roughly estimated budget for 120 to 125 thousand dollar redevelopment fund has been used in ways that don't put brick and mortar, don't put electric lights, don't put new plumbing into an abandoned building. And this is what we wanted to talk to you about. NTI needs to be filled in by this agency, by this institution, City Council, we are begging you, we are hoping that you will fill in the blanks; that you will create the super agency to bring all these alphabet-soup groups together and make it responsible to you as well as the Administration. You know, I can't talk about the big picture that the Professor Hughes did in terms of the overall blight and land management. But I want to make it real clear to you that we develop, we deal with a lot of other CDCs also. And we share the same kinds of problems, 307 RESOLUTION 010562 - 10/17/01 whether they be church-based groups or civil-rights groups or neighborhood groups. We have to find the money, deal with all the agencies, and wait sometimes for years to get the property. Let me just make it real clear. As of right now, even though we have begun to redevelop 1619, we have expended almost $50,000, the process to turn the deed over to us, which we began, as I said months ago, hasn't been completed. Hasn't 12 been completed. So I put up the $21,000, but I 13 don't have a deed. 14 And it is not because I think that they 15 are doing anything bad to me. It is the way it 16 works. It doesn't work well. It works to almost 17 make you want to abandon your belief that you can do 18 something. And so we are still waiting. We hope to have the deed to 1619 in about 45 days. But let me also make it clear to the Council, in the meantime, there are certain funding sources that we can't go to because we don't have that deed. So what we are saying to you is, please 308 RESOLUTION 010562 - 10/17/01 fill in the blanks of NTI, write the super agency, create it yourselves. If the Administration is not going to do it, then don't wait for them. Do it. There are bright people in this room. I am looking at one of them right now. You have been in this city for a long time. You can do it. Something has to be done to move this process along. And we are not here to beat up on anybody. We are not here to pick at anybody. We are urging you to take this bull by the horns. I think as Professor Hughes said it better than I can, these questions that are answerable, we hope the City Council will answer them. We just gave you one story about one little small group. But I think it is indicative of what's wrong with the overall system. It doesn't work well as it currently stands, and we need to change it desperately. Thank you very much.

Are there any questions from members of the committee? Thank you again for coming in. May I just say you were very fortunate 309 RESOLUTION 010562 - 10/17/01 you didn't have to go through sheriff's sale for that property. Mr. Rick Sawyer.

Good afternoon. RICK SAUER: Good afternoon.

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

Good afternoon, Madam Chair, Madam President, and members of City Council. My name is Rick Sauer, and I am the Executive Director of the Philadelphia Association of Community Development Corporations, which is the citywide association of 78 CDCs and other organizations working to revitalize the city's neighborhoods and rebuild its communities. We recognize that there are multiple factors that impact on the families or individuals decision whether to remain in the city, a particular neighborhood, move to another neighborhood, move out of the city, or in an ideal situation make Philadelphia their new home. And these include what's been mentioned previously by a number of other speakers, quality of 310 RESOLUTION 010562 - 10/17/01 life issues in our neighborhoods, the public school system, job and housing opportunities, crime, taxes, auto insurance rates, access to services, et cetera. At the same time, not all Philadelphians have the access to resources to leave their current neighborhood in search of improved living environment, and particularly lower-income households that reside here. I think what we have heard is that it is clear we need a comprehensive and integrated approach to addressing all these issues, if we hope to reverse the city's declining population trend, increase the self-sufficiency of households living here, and improve the quality of life in our neighborhoods. For example, studies have shown that children who do not live in a stable home are less likely to perform well in school, be less prepared to obtain gainful employment, and are more likely to be involved in criminal activities. Likewise, it is difficult for parents to obtain and keep a job and meet the other basic needs of their family without an affordable, decent roof over their head and other supports to address their 311 RESOLUTION 010562 - 10/17/01 needs. So, yes, we do agree that we need to strengthen the local school system. But we also need to provide quality after-school opportunities to engage youth, work force development programs and job creation for adults, child care for the children and expand the city's supply of quality affordable housing. Now, there has been an issue raised here today about whether all this should be done in the context of NTI or not. And I don't think it is possible to address everything in the context of NTI, but it does need to be an integrated approach overall. So if NTI is trying to address some specific issues, let's move forward with that. But we need to tie it to addressing other things like the school system, if we are going to address this larger population issue overall. At the same time, we need to retain existing and attract new middle-income families to the city to add to the tax base and strengthen the income mix of our neighborhoods. However, such a strategy needs to be 312 RESOLUTION 010562 - 10/17/01 pursued in a way that will benefit long-term residents of our neighborhoods. We know the school system is not the only factor in decisions of people with resources to decide where they choose to live. We need to revitalize our neighborhood commercial corridors, to increase local access to goods and services, create jobs, and recirculate dollars locally to strengthen our neighborhood economies. We need to develop housing in our neighborhoods that responds to the different needs and desires of home buyers and renters, creates job opportunities for local residents, and help establish the residential base needed to support local businesses. If we hope to grow the city, a key part of the strategy needs to be neighborhood revitalization, which would include comprehensive planning, preserving, and redeveloping our residential neighborhoods, including affordable housing development, and strengthening our neighborhood commercial corridors. We need to use public investment to spur 313 RESOLUTION 010562 - 10/17/01 private investment by residents, businesses and others to further strengthen the areas.

However, such an effort needs to be carried out in a way that balances the needs of existing residents and potential new residents at all income levels. While there are many issues that could be addressed, I would like to address today, I am going to confine my remaining remarks to three key issues. The first of all is the role of CDCs in neighborhood revitalization in NTI. Even with all the obstacles faced by organizations working to revitalize neighborhoods, CDCs have built their capacity to undertake a comprehensive approach to neighborhood revitalization, including neighborhood planning, vacant land management, housing preservation, development and counseling, economic and work force development, facilities development, and social service provision. These groups are uniquely positioned to partner with and leverage resources from the public, private, and philanthropic sectors. As mentioned at Monday's hearing, CDCs 314 RESOLUTION 010562 - 10/17/01 have been doing this for a number of years. They have a long-term commitment to working in our neighborhoods and working with residents to rebuild the physical environment, but also to develop the human capital and self-sufficiency of the residents. The involvement of CDCs is critical to successful comprehensive neighborhood revitalization. With adequate resources and improvements in systems, they can accomplish even a lot more than they have in the past. The second of the three issues I wanted to address specifically is the development system. And we just had a good example of that with the last speaker. I believe that if Philadelphia is going to be successful at spurring population growth, we need to take some significant steps to improving the existing development system here. We have to make it more user-friendly and more streamlined. Too much time is spent right now on dealing with various obstacles that come up; whether it is land acquisition problems, whether it is trying to navigate the city's bureaucracy, or 315 RESOLUTION 010562 - 10/17/01 whether it is dealing with the high cost of development here. I think we need to acknowledge that NTI does take an attempt to address a number of these obstacles, and that effort of reform needs to be strongly supported. Successful implementation, while certainly not guaranteed, would attract more outside private investment, as well as enable groups such as CDCs that have been dealing with this current broken system for a long time, to accomplish a lot more with the limited resources that are available. I wanted to comment on one other issue relating to this that's come up in the hearing today, and that is the whole issue of subsidizing development and using private-sector resources to spur private-sector investment. Even if you look at the 16,000 housing unit goal that's part of NTI -- and there is a component of that that's more market rate, market oriented development, let's call it -- the plan calls for the city to demolish housing, assemble land, do site improvements on land, grant tax abatements even for, quote, market-rate development. 316 RESOLUTION 010562 - 10/17/01 So we are talking about investing a significant amount of public resources in order to encourage private-sector investment. So let's not say that we are not putting any subsidies towards this housing. Likewise, in order to spur the reduction of affordable housing for lower-income households, we need public-sector investment, as well. And it so happens, due to the lower income of those families, we need to invest a larger amount of money per unit. Certainly a key to addressing this problem is reducing the cost of development. But at the same time, for the foreseeable future, we are going to have to continue to invest these public resources to get that result. The final issue I want to address is the property acquisition system. We have heard from numerous people about the need to streamline and expedite the process.

There is also a specific need currently for new funding to support acquisition for development activities currently in the pipeline. There has been a failure in the current 317 RESOLUTION 010562 - 10/17/01 fiscal year to allocate any new resources to support acquisition for new development projects. And as a result of this process, the development pipeline is grinding to a halt. We are losing out on the opportunities to leverage millions of dollars in resources from other noncity sources, whether it is federal low-income-housing tax credits, funding from the Pennsylvania Housing Finance Agency, funding from the Federal Home Loan Bank of Pittsburgh, Section 12 202 funds from HUD, funding from financial institutions and foundations. Without site control, it was mentioned before, you cannot secure most of these resources. So we need the city to step up to the plate and provide funding in the very near future to enable the acquisition process to start moving forward, so that we can get some things built to continue that neighborhood redevelopment process. Otherwise, we are going to be looking at a long period of time without redevelopment activities taking place, we are going to be looking at risking a great loss in developing capacity, and particularly among the CDC sector. 318 RESOLUTION 010562 - 10/17/01 So we urge Council to act on that particular issue. We are certainly glad that City Council is supporting a more open public dialogue on this important issue through these hearings. While we certainly voiced concerns in the past about how the Administration's proposed Neighborhood Transformation Initiative was developed or is being developed, and how it will likely play out, we also believe that it contains many key components that are critical to advancing neighborhood revitalization. So we urge City Council to work with the Administration and with neighborhood stakeholders to strengthen and finalize details in the NTI plan and improve funding so we can implement the program in the near future. I think, as we said before, we need to more this process forward now. The future of our neighborhoods and city depends on it. Thank you.

Thank you very much. Are there any questions from members of the committee? 319 RESOLUTION 010562 - 10/17/01 Thank you so much for coming in to testify. Andrew Toy. Hello. Welcome back. How does it feel being back home? ANDREW TOY: Scary. Good afternoon, Council President Verna and Councilmen and women. I am just going to read off of what I wrote here. The Administration's NTI program proposes to spend hundreds of millions of dollars to be mortgaged against our future funds. This investment, and that is what it should be seen as, needs to pay long-term dividends and look beyond short-term solutions. For example, yearly cleanings of certain city lots by the city. There has been much focus on demolitions and lot cleanings, but these are just the back end of the problem of private disinvestments and population loss in the city. The assumption that Philadelphia, with an infrastructure built to accommodate well over 2 million people, will continue to shrink or stay at 1.5 million is defeatist. I think we should all cringe when we hear the words "managed decline." 320 RESOLUTION 010562 - 10/17/01 And somebody else mentioned that before me. If we approach our existing building stock as an asset rather than a liability, we hold a strong attraction for new homeowners and entrepreneurs entering the city. Representative Dwight Evans recognized that fact and has begun marketing vacant homes in Oak Lane before they become demolition candidates. Society Hill and Northern Liberties offer proof that Philadelphia's housing stock is not obsolete. We also know that population loss is not a certainty, as demonstrated by the population growth in New York, Chicago, Boston, other major cities around us over the last decade. And that's due largely to immigration. By growing our population, we will create the demand for vacant property which will then become revenue-generating assets. Even with the need to improve schools, improve on our tax base, taxation, and a number of other issues, there are still many interested in locating in the city. Jobs and economic opportunity are still 321 RESOLUTION 010562 - 10/17/01 the key factors in luring immigrants and others to the city and should be considered investments in blight removal as well. The other opportunity is availability of housing stock, which we obviously have. One of the major impediments to new investment in restoring properties is the difficult and time-consuming vacant property acquisition process, as was discussed earlier. Certainly a land bank will help to create some inventory. However, the driving force in most development is private investment. We can encourage private investment by expediting the sheriff's sale foreclosure process. Today properties often sit a decade or more abandoned and tax delinquent, unless a private investors puts down an $800 deposit to get the city to act upon the property. As an example, Pennsylvania's Cartographic Modeling Lab took Revenue Department statistics from, I believe, the Year 2000 and found that almost 40,000 properties in the city have ten or more years of real estate tax delinquencies. This is unacceptable. 322 RESOLUTION 010562 - 10/17/01

Aren't we creating our own blight when we allow that to happen?

Yes. Absolutely.

Case closed.

By the time the city moves many properties to sheriff's sale, they are often more blighted and of little value, sometimes needing demolition, as we have seen. The city has in fact failed to fulfill its duty to proceed on sheriff's sales expeditiously, as stated in the 1992 State Act 135, which required that, quote, Cities of the first-class, meaning Philadelphia, shall proceed on tax claims after one year of delinquency unless the owner makes a payment agreement or proves hardship to the city. The longstanding excuse has been the lack of adequate funding and staffing to significantly ramp up you the numbers of sales. And there are thousands of tax delinquent properties that can fit this definition. Investing NTI monies into pushing additional properties through the sheriff's sale process to homeowners and developers should be a 323 RESOLUTION 010562 - 10/17/01 priority. One other tool that could be used as an incentive is to prevent blight, rather than band-aiding the problem, is to move towards a land-based real estate tax assessment. Simply put, the emphasis of this tax would be to not penalize taxpayers who improve their properties, while imposing relatively higher taxes than today on vacant, underutilized properties. Ultimately for comprehensive blight removal investment to be successful, it must create opportunities for long-term private investment and must view the city's building stock and infrastructure as assets, not continuing liabilities.

Thank you. The Chair recognizes Councilman Goode.

Thank you, Madam President. Good afternoon, Mr. Toy. It is good to have another one of my old colleagues here. At the Commerce Department, when we were there together, you were what I would characterize as the land guy. 324 RESOLUTION 010562 - 10/17/01 Can you please explain what role land plays in economic development, and where your role, the Commerce Department, fit into development projects?

Yes. As some people would say, land is king. Land is the first step, site control is the first step. In order to do development, you need to have site control. If you cannot get site control, your development is not going anywhere. And the other things about development in the economic development arena is that you have to have a shorter time frame. A year is not acceptable. If someone requests a property for a development, they are not going to be able to wait a year. A developer, a businessperson, they need to move on it much more quickly than that. Right now, the sheriff's sales process, or the condemnation process, takes approximately a year. And so if you wait until the person comes to the door to start the process, they are not ready, the property won't be ready for them within 325 RESOLUTION 010562 - 10/17/01 their time frame.

In terms of your role at Commerce, what was your job in terms of doing development deals, so to speak?

Well, in terms of my role, I would say we were coordinating the process and trying to push forward and prioritize those properties that developers or businesses needed. And, also, the other side of it is explaining the process. Because a lot of people are very unfamiliar with the vacant property process. So there is a lot of education that needs to go on in terms of developers and homeowners as to how to get involved in the process of acquiring a property. If we made it easier, we could definitely encourage people to get involved.

Now, NTI has been described as mostly residential development. There is a small economic development portion to it. I would prefer that it was a lot larger, but it is what it is at this current time. In order to facilitate that part of the planning, your successor at the Commerce Department 326 RESOLUTION 010562 - 10/17/01 put together a list of properties, a target list of properties, for the $20 million. In your former capacity, would you be able to identify the properties for those $20 million to go after? Is that something that you would be prepared to do?

To a certain extent, yes. Because being out in the world there, you do identify properties that look like prime targets in terms of --

So, in other words, you were well-equipped, as are other people, to identify where development is most likely to take place and where the best opportunities for development are over the next, say, five years or so?

Yes; with input from the private sector. Because ultimately they are the ones that are going to put the investment down. So sometimes we as city employees or people in the public sector didn't decide for them that this is the best site for you. We have got to hear what they have to say, as well. So it is a two-sided -- the information 327 RESOLUTION 010562 - 10/17/01 has to flow two ways. We can't always tell them that you should locate in X neighborhood because we think it is a good thing. It really has to come both ways.

Simply put, since you continue along that line, we chase the money people.

Correct. Money talks.

Thank you, Madam President.

Thank you. Any other questions of this witness? Thank you very much, Mr. Toy.

Thank you.

Our next witness is Mr. Katz. Good afternoon and welcome. SAM KATZ: Thank you, Madam President. Nice to be here. I didn't prepare written testimony, but I just thought I would make a few comments, tell you something about what -- my name is Sam Katz. I am the Chief Executive Officer of Greater Philadelphia First, GPF. GPF is a civic organization comprised of the executives of 50 for-profit and nonprofit 328 RESOLUTION 010562 - 10/17/01 business organizations in the region, and committed to actions that will accelerate the transformation of the Philadelphia area economy from an industrial- and service-based to a knowledge-based economy. So I can represent GPF on a number of issues that I think would be of interest to this committee and to the Council as a whole. Obviously Philadelphia is extremely important to this region. And as I am sure all of you know from having seen the recent study by the Pennsylvania Economy League and 10,000 Friends of Pennsylvania under the Metropolitan Policy Center, this is a region that has experienced flat growth over a long period of time, largely through the migration of Philadelphia jobs and businesses into the suburbs and de novo growth that's occurred in the suburbs, as well. If you think about it, Philadelphia should be a much stronger player economically. And I just want to echo. I am not here to give an opinion about or support or criticize the Neighborhood Transformation Initiative. GPF hasn't taken a position on that. But I want to comment on what Councilman 329 RESOLUTION 010562 - 10/17/01 Goode just said, that the history of unsuccessful housing investments is accompanied by a lack of connection to economic development. And that history goes back over 50 years in this country, where attention was given to financing the acquisition of housing and home ownership, the improvement of housing. But in neighborhoods where those investments were most heavily concentrated, the absence of an economic development strategy tied to jobs and sustaining ownership or rental housing ultimately caused the demise of that housing. It seems to me today that Philadelphia still needs a more focused economic development strategy. And as a region where Greater Philadelphia First has tried to focus its attention, is to look down the road over the next 10 to 19 years and identify assets around which economic 20 growth and economic development can occur. And given the changes in the world, in the economy in general, where we have tried to give particular attention is in industries and jobs and businesses that require knowledge, that require educated or smart workers, that will produce high 330 RESOLUTION 010562 - 10/17/01 incomes, that will create spin-offs in procurement and spending that will sustain an economy through not just the next or years, but for the next 5 100. 6 If you look back at the last ten, when 7 the Rendell Administration took office and 8 Philadelphia was confronted with serious fiscal 9 problems, and many of the city's assets had 10 relocated to the suburbs, the Rendell Administration needed to grow and not simply cut its way out of fiscal disaster. And it arrived at a strategy predicated on recognizing the city's then best asset, which was tourism and hospitality, the construction of a new Convention Center, and the fact that the Betsy Ross House wasn't going to move to Malvern. At the center of that strategy was an anticipated development of the river as a center for gaming. And riverboat gambling was very much a part of the fiscal recovery of the city, which of course never materialized. Ten years later, the investment in arts and culture, sports and entertainment, tourism and hospitality has created an economy or an economic 331 RESOLUTION 010562 - 10/17/01 character for the city which is designed to make Philadelphia a great place to visit.

We think that the combination of higher-education institutions, which like the Betsy Ross House are not relocating to the suburbs, the fact that there is a tremendous investment both in the city and the region in financial services and information technology, in healthcare and medical service delivery and life sciences, and of course in education in general, provides the same framework for the next 10 or 20 or 50 years that tourism and hospitality provided for the last 10. So we are bullish about the region, and we are optimistic that the city can get its act together and play a meaningful role in the economic future of the region. But there are some things that I guess I would like to just suggest are going to be central to making the city more competitive. First and foremost is recognizing that for a long time our suburban neighbors have been eating our lunch. And that unless and until we are prepared to recognize that the ways that we have done business in the past will not sustain us in the 332 RESOLUTION 010562 - 10/17/01 future, we will likely continue to lose. We recently polled residents in the region. And I am sure that the results of this poll would not surprise anyone. But when you disaggregate the data between suburban and city, what residents say about their view of the potential for the city to be more competitive is the following: First percent 10 think that the quality of public schools have gotten 11 better, but 44 think that schools are continuing to 12 deteriorate, versus only 19 percent of the suburban 13 residents who feel that schools are getting worse; 14 64 percent of city residents say uncompetitive taxes 15 dissuade people and companies from moving to the 16 region or staying in the city; 60 percent think that 17 the crime and public safety dissuade people from 18 stay in the city. 19 So the continued issues of crime, 20 schools, and taxes, something that I spent a lot of 21 time talking about in 1999, remain concerns for the 22 future economy of the city. 23 In addition, we applaud the fact that 24 the Administration is now supporting and has just 25 recently started an innovative economic development 333 RESOLUTION 010562 - 10/17/01 initiative. There is a tremendous opportunity around life sciences, where Penn and Temple and Drexel and Fox Chase, and other universities in this region are going to be producing cures, medicines, devices that will sustain and prolong life and improve the quality of life. s, but lab technicians and all kinds of other skills that the public school system needs to spend more time training for. We also would applaud the efforts of this Council to try to raise immigration as an issue. Because clearly the growth in Chicago and Los Angeles and in Boston and in New York City, the growth of the consumer marketplace, as well as the growth of employment, have in part been fueled by immigration. We support and applaud efforts to retain more of Philadelphia area college student graduates. My children don't think Philadelphia is cool. I don't happen to agree with them, but then I wouldn't know cool if it bit me. 334 RESOLUTION 010562 - 10/17/01 But, on the other hand, we are a great place to raise a family, and we are a great place to grow a family and grow a business. And so if we can do a better job of selling Philadelphia to its already recruited pool of smart workers, the college students and graduate students of today, I think we can do a better job. Last but not least, city government needs to recognize that being customer-friendly, coordinating and reducing the number of city agencies that do similar jobs, delivering services more efficiently are all part and parcel of a strategy to reduce the cost of government and to reduce tax rates. Ultimately, unless and until Philadelphia removes high wage taxes, high earnings and net profit taxes on businesses, people will use that as an excuse to get out of Dodge.

And with all the assets and all of the strengths and all of the attractiveness that Philadelphia can offer particularly young workers, who are starting businesses and who will be the foundation of businesses in the future, and to attempt to capturing the lion's share of the 335 RESOLUTION 010562 - 10/17/01 start-up opportunities that the intellectual pool that's at our universities will create, worrying less about whether we can get Boeing to locate a corporate headquarters, and making sure that more of our businesses that are here stay here and don't move out of the city, the sooner we can do that and attack the major impediment to that, which is the wage tax, the more likely a Neighborhood Transformation Initiative will be successful. I appreciate the opportunity to appear before you today. And, again, I commend you for your efforts to recognize what I think is one of the city's most important issues, which is the future of its population.

Thank you so much. The Chair recognizes Councilman Goode.

Thank you, Madam President. Good afternoon, Mr. Katz. You reference in your testimony the fact that the previous Administration made significant investments in the hospitality and tourism industry. I think that post September 11, there are those that would be worried about those massive 336 RESOLUTION 010562 - 10/17/01 investments in terms of hundreds of millions of dollars, yet it was the right decision at the time because of its vision. Last year you came to Council, you testified on behalf of stadiums. And who knows what's going to happen in terms of sports and entertainment in the future. And people at some point may second-guess that decision years down the road. My question to you, as someone who has expertise in financing major economic development initiatives or major development initiatives, period, is, when you consider a major development and the vision for major development, what percentage is, quote, unquote, are art and what percentage is science?

First of all, I wanted to address one of your points, which is that I think there are those of us -- and I would include myself -- who started to wonder about the wisdom of the almost exclusive focus on tourism and hospitality as a focal point for Philadelphia economic development investment long before September 11. 337 RESOLUTION 010562 - 10/17/01 In fact, you know, at some point it seems to me -- and I would say it is properly '97, '98 when cities like Boston and Austin and New York and Chicago and San Diego and Seattle and others were really catapulting their economies on the backs of science and technology, that the birthplace of science and technology seemed not to be paying attention to that as a potential for growth in the city. And not only for growth in the high-profile, high-wage jobs, but also in all of the support positions that go along with it. And we put all of our eggs in one basket, the culmination of which was the advent of a convention, national convention, which I think is something the city should be very proud of. But there was a diversification strategy that needed to take place in the second Rendell Administration that I think was missed.

I have to make one point, though. The two major attractions in attracting a national convention, I would say, was Convention Center and the First Union Center, which was not the Rendell Administration. 338 RESOLUTION 010562 - 10/17/01

Actually, I think there were three qualities or three physical assets. Clearly, hotel rooms. Absent a number of hotel rooms, you wouldn't even have been qualified. But I don't want to dispute that. And I am not looking, by the way, to criticize the Rendell Administration or avoid recognizing the Goode Administration. Both of them clearly made a significant commitment to the infrastructure that made possible the convention. But my point is that we have these universities, they were doing stuff. We have these science institutions, they were doing things. And the disconnect between them and the city's economic strategy has been going on for a long time. Now, I think it is starting to change. Governor Ridge and the legislature recently created Greenhouses for Life Sciences. There is a tremendous amount of venture capital that's flowing into the city and the state to fund start-ups in IT and life-science companies. And I think there is a lot of great opportunity there. I think all deal-making is an art. There is no science involved. The science is in the 339 RESOLUTION 010562 - 10/17/01 execution, but deal-making is art. And I think Philadelphia has a great track record, going back 50 years, of being a great deal-making city. But there are different kinds of deals now that need to be made, different kinds of partners on the other side of these deals, not just real estate developers. Somebody said land is king. Land isn't king anymore. In the 21st Century, brain power is king and workers are king. And the great asset that can distinguish a city or a region from another city or a region is its capacity to deliver to employers workers. Because employers have proven they can go anywhere. You can have 200 acres of land in a place with all kinds of tax incentives, and the county across the line will do the same thing. So what matters, in my opinion, is intellectual capital and intellectual resources and the capacity to deliver those.

Thank you. Thank you, Madam President.

You are welcome. The Chair recognizes Councilman Ortiz. 340 RESOLUTION 010562 - 10/17/01

How are you doing, Sam?

Good, Councilman.

This weekend I had for dinner my niece, and she is at Wharton. And she is from New York. And she said to me, "You know, I have been here now a year, year and a half, at the University. And I reside over here at 1515 Locust Street. And most of my classmates who go to Wharton live there. Most of them are from outside the city." She says, "Angel, I don't have a car. I live in New York. But when I want to do some shopping, I can't find a place here in Center City to do it." And, strangely enough, she was at the sports store on 17th Street and Locust. "I found that I had to go to New York, really, to find some stuff. Because I can't go to King of Prussia because I don't have a car. And, yet, I would love to stay here. But there is an atmosphere or a culture within Philadelphia that really hits at you after you are here a few years that is not conducive 341 RESOLUTION 010562 - 10/17/01 to bringing in that generation of people that you are talking about." So we have people that are getting the training at universities like Wharton, and who might want to stay here. In fact, I wanted her to come and testify, you know, and express her feelings to this Council. But, see, there is a certain political setting that controls the city. And, you know, I wrote as you were saying, how do we become competitive? You mentioned crime and taxes. Crime is going down. Taxes, we really haven't raised taxes in this city the last 12 years, except for the liquor tax. The taxes that we have had have remained. And the wage tax have gone slowly down, maybe too slow for some. But the net profit tax has not, but there are other aspects that detain and prevent people, the young generation, from coming here. And I think development, as we have been talking here about the aspect of development, and the cost of development within the City of 342 RESOLUTION 010562 - 10/17/01 Philadelphia, is extremely high. So I think if you take a look at it, I was going to ask you, my question is, how do we become competitive, besides eliminating the wage tax?

Well, Councilman, I think you have to decide what you want to be competitive for, what are you trying to accomplish. And when we decided that we wanted to become competitive as a tourist destination, going back years, we started with a Convention Center. 13 We did a better job I think of marketing 14 the historic exhibits that were here. We recognized 15 the need for more hotel rooms, and the city invested 16 a tremendous amount of money through Section 108 HUD 17 funding to provide subordinated financing to 18 developers. 19 We increased our investment in tourism 20 and marketing both at the state and at the city level. We knew what we were trying to accomplish. What are we trying to accomplish today as a city? We are not trying to become the center of manufacturing, I don't think. We are not trying to become a 343 RESOLUTION 010562 - 10/17/01 transportation center, to the extent that we once were, although I think can we be a player in transportation. We were for a time, it seems to me, trying to resuscitate the port and the construction of ships. And that may still provide some opportunities, particularly if Fast Ship gets off the ground. But what we are, what we have, are these other assets, these universities, Drexel and Penn and Temple and St. Joe's and La Salle and all these schools, University of Pharmacy, University of Sciences, and Philadelphia University, they are not going anywhere. And they are producing for the 21st Century what factories used to produce for the 20th. So I think it goes right to your point. How do we keep them here? How do we keep those people here? Austin has a great music scene, and they sell the heck out of it. And you can hear rhythm and blues, you can hear Latino music, rock, any kind of night club. I understand there is an issue that the 344 RESOLUTION 010562 - 10/17/01 city is now taking with Senator Fumo to create something now called PhilaCity, which is to try to market the city to young people, to people like your niece at the Wharton school. Those are things that take time to develop. But ultimately what will keep your niece and what will keep young people in the city are great jobs and a thickness to the labor market. Why do people like the silicon valley? Because if your job doesn't work out with Hewlett Packard, there are other employers there, at 13 least you did know until recently, that you could 14 get a job there. 15 We have a thickness of labor market 16 characteristics around life sciences. And we can do 17 a much better job of trying to recruit and retain 18 people for those kinds of industries. 19 But I think the answer to your question 20 about, how Philadelphia gets competitive, it isn't 21 just wage taxes, it is the cost of doing business 22 here. 23 It is the cost of getting a permit. It 24 is the cost of electricity. It is the cost of gas. 25 It is the cost of the SEPTA passes, all of it. 345 RESOLUTION 010562 - 10/17/01 And at the point in time that you figure out who you are competing with and what it costs to do business there, there are strategies that I am sure the city can come up that will make itself more competitive. I don't think lowering taxes five-tenths of a point a year on wage taxes is a way to be competitive. That's my personal opinion.

Thank you.