COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COUNCIL COMMITTEE ON APPROPRIATIONS - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 23, 1999 2:00 p.m. - - - BILL 990464 - Authorizing transfers and appropriations for Fiscal Year 2000 within the General Fund from certain or all City offices, departments, boards, and commissions to certain or all City offices, departments, boards and commissions PRESENT: COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN DARRYL CLARKE COUNCILMAN MICHAEL A. NUTTER COUNCILMAN W. THACHER LONGSTRETH - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 6/23/99 APPROPRIATIONS - Bill 990464 I N D E X Dean Kaplan . . . . . . . . . . . . . . . . . 3 Deputy Director of Finance Deborah McColloch. . . . . . . . . . . . . . . 6 Deputy Director, Office of Housing and Community Development 3 /99 APPROPRIATIONS COMMITTEE P R O C E E D I N G S
Good afternoon. The Committee on Appropriations is now in session. Would the Clerk will please read the bill.
An ordinance authorizing transfers and appropriations for Fiscal Year 2000 within the General Fund from certain or all City offices, departments, boards, and commissions to certain or all City offices, departments, boards and commissions.
I'm Dean Kaplan. And with me today is Deborah McColloch from the Office of Housing and Community Development. I appear before you today to offer testimony on Bill No. 23 990464. The Administration opposes this legislation and urges that the committee not 4 /99 APPROPRIATIONS COMMITTEE approve it today. We believe that Bill No. 990464 is -- our understanding of the legislation is that it would fund a variety of community neighborhood revitalization efforts, which while we believe there is a-- as Director Kromer testified two weeks ago on the CRIB bill, it may be a worthwhile goal. We're concerned that the bill provides appropriations for which there is not currently an authorization or an authorized program. We believe it would be productive to have a consensus on how to spend these appropriations, whether to spend them and in what manner, before moving forward with an appropriation. In addition, it would be important to look at how funding might be provided in the years subsequent to Fiscal Year 2000 specifically in the case of the budget side of this, and Miss McColloch will speak about the OHCD issues with the legislation. We're concerned that moving $9 million from the fringe benefit appropriation this early in the year could cause a problem later in the year with fringe benefits. The last two fiscal years the City has 5 /99 APPROPRIATIONS COMMITTEE completed, we have ended with less than $5 million in the fringe benefit line. And in both of those years, we had a 4 percent growth in the health and welfare costs when we had budgeted conservatively for 6 percent. In FY 2000, we have recently learned that our health and welfare costs will grow by about 5.5 percent. So that increment, which has been available through our good fortune the last two years, will not be next year. And obviously we're discerned about the variety of mostly mandatory payments which have to be made from fringes in this specific proposal. In addition, as the committee well knows, we normally try to be very conservative about transferring funds, especially such a large amount, early in the year. This year, for example, in FY 1999, before it, Council acted on package of transfer ordinances in late March. We transferred only 3.6 million in the entire General Fund in the first nine months of the year. This bill would propose to move $9 million before the year even starts. As somebody who clearly will not be here later in the fiscal year, I have to say that 6 /99 APPROPRIATIONS COMMITTEE I would be concerned about the City's ability to respond to a variety of contingencies, including weather, or indemnity awards, adverse court orders, or other unpredicted actions by rearranging a budget which was just approved by this Council two month ago and by the PICA Board last week so quickly. So in summary, the Administration urges that the committee hold the bill today and not vote it out for consideration by the full Council. And I believe Miss McColloch has some additional comments.
Good afternoon. My name is Deborah McColloch. I'm the Deputy Director at the Office of Housing and Community Development. John Kromer, the Director, had another commitment and so sent me in his stead. OHCD has several concerns about this bill, mostly in that we don't know exactly what the program would be that would be implemented with the funds that are in question. We're not sure what the appropriate level of staffing would be and exactly how the program would be carried out. It would probably be carried out through our 7 /99 APPROPRIATIONS COMMITTEE increasing a contract with the Redevelopment Authority, which would then need additional staff to implement the program. And we have some concerns about having to increase staff when there's no forward commitment beyond next year's budget of having to hire staff, and then we would have some labor issues about having to lay them off or what have you. Not knowing exactly what the program would be makes it difficult to plan for that, and especially at this point in our budget year. We have generally concerns about the implementation of about how the decisions get made about which blocks would receive new curbs and sidewalks and how the program would be carried out. All of that is part of program development that we would want to be involved in and would look forward to working that through, but it's difficult to do that at this point since all of that hasn't been figured out to know how we would implement the program and what the staff needs would be. In addition, another concern that we have is that through the Capital Program Office 8 /99 APPROPRIATIONS COMMITTEE and the capital program budget process, we have capital funds assigned to housing activities each year, some of which are from several fiscal years ago that are set up to assist us in some of our major housing developments such as the Cecil B. Moore Home Ownership Zone or the Poplar Nehemiah, and we're somewhat concerned that if these funds were allocated, that might mean a decrease in the other funding that we receive as capital funds for curbs and sidewalks connected to our projects, and we wouldn't want to be, if you will, penalized in that process because we had some unspent funds through this appropriation, and that that's been a concern, a justifiable concern of the Capital Programs Office that we have some unspent money there that we haven't been able to spend because of the development process. So we're concerned that we might get penalized on the other end. And, finally, there are some fundability eligibility issues that we would have to work out. My understanding of how this appropriation would work is that these funds would be used to pay other CDBG expenses -- in particular we're talking about paying off the 9 /99 APPROPRIATIONS COMMITTEE Section 108 debt, and then that would free up those CDBG funds to be used for these activities. And then we would have to work out what the new activities are in terms of the curbs and sidewalks or street trees or what have you to ensure that each of those was fundable and eligible under the Community Development Block Grant regulations. As you know, the CDBG funds must be spent for low-, moderate-income activities, and so there would be a question of making each block fundable and eligible, each block that would receive the curbs and sidewalks. And here again, while I believe that those things could be worked out and that we would have to figure it out for each block, it would be another step in the process in implementing a new program.
Thank you, Madam Chair. First, let me share with my colleagues that there is at least the need for one amendment to this bill, which I would at least ask for action on today. This is away from reporting the 10 /99 APPROPRIATIONS COMMITTEE bill out. It's in Section 1. There's a typographical error that makes a reference to Fiscal Year 1999; that should read "Fiscal Year 2000." And, Madam Chair, I'll try to make that adjustment later on. Mr. Kaplan, let me first say that in the spirit of being as optimistic as possible, I appreciated your comments that you asked that the committee not approve the bill today. I assume that that leaves the prospect or hope that you might come back and offer that the committee possibly approve the bill on another day. It may be optimistic thinking on my part, but I appreciate your statement. The second is, as you well know, there have been various times when transfer ordinances have been proposed. Most often the part of the budget where they're coming from, the dollars are coming from, are often the places where in past years we were aware that the Administration kept large sums of General Fund dollars in certain locations. And so let me state for the record that there was never any intention to do anything to public employees and their health benefits. 11 /99 APPROPRIATIONS COMMITTEE But I think it's fairly accurate that in past years, the fringe benefits section is a place that often had excess funding. So I want to make that clear. Miss McColloch, on your testimony, which, if the committee could get a copy of it, it would be very helpful. I don't think we have a copy of your testimony. What I'd like to ask specifically is if OHCD, now having had a chance to look at and participate in the public hearing own what's generally called the CRIB bill and the amendments that were proposed at the time of that public hearing, if OHCD would at least make a commitment to look at what the provisions of that bill and the proposed activities and use of dollars in a serious way to try to answer many of the questions that you laid out today that are problems for OHCD -- eligibility issues, staffing issues, program issues, how we would do with, you know, a serious effort toward trying to actually do these things. What would OHCD's proposal be in response to what is has generally been referred to as the CRIB bill? And with that, some response back for this hearing through the Chair and 12 /99 APPROPRIATIONS COMMITTEE certainly for the rest of us as to what your ideas would be or what your proposal would be. Using dollars that are eligible for these activities, looking at census tract data, looking at the distribution even of the use of CDBG dollars throughout the City and how it matches up for a population that Philadelphia has -- 64 percent of its households are low and moderate income. And they are disbursed surprisingly rather evenly throughout the City. Most Council districts have about 10 percent of low- and moderate-income households in their Councilmatic districts. Do you have any sense of what the distribution of the use of CDBG dollars is in relationship to the low- and moderate-income population throughout the City?
I'm sorry. All CDBG funds are spent on low-, mod-income areas.
I don't know it off the 13 /99 APPROPRIATIONS COMMITTEE top of my head. But in general, the bulk of the funds go into North Philadelphia and then the next, if you will, chunk of money goes into West Philadelphia also because that's where the highest concentration of low- and moderate-income people live, in North and West Philadelphia. But I could provide the breakdown exactly. I just don't know that percentage.
I understand, but it would be fair to say that there are significant low- and moderate-income households in other portions of the City that are not covered by North Philadelphia or West Philadelphia.
And the expenditure of CDBG funds in some cases dramatically is mismatched between the population of low- and moderate-income people in a Council district versus the expenditure of CDBG funds in those Council districts. Would you agree with that statement?
That there's a dramatic difference between the number of low-income people and the amount of expenditures? 14 /99 APPROPRIATIONS COMMITTEE
Okay. When do you think OHCD would be able to follow through on the requests that I made with regard to looking at in a legitimate fashion the program as outlined in the other bill, this attempt obviously to fund that and not take any funds away from current sub recipients. As Mr. Kaplan, I think, laid out, this was merely an effort to lower the amount of money that OHCD was going to use of CDBG dollars which are limited to repay HUD 108 loans, and that this effort would only attack the HUD 108 loan repayment of $13 million, take that obligation away from CDBG funds, use City dollars to make those payments, 'cause we should make our payments, and then use the freed-up dollars for the eligible activities. When do you think you'd be able to come back to us with a legitimate analysis of the issues that were raised earlier and propose even a program using any combination of CDBG dollars, 15 /99 APPROPRIATIONS COMMITTEE capital dollars, and if there are any operating funds that can be put into that combination of funding mechanisms?
Well, I can't give you an exact date; I would need to review it with John Kromer, the Director of Housing. But I know that we're already -- the Law Department is already reviewing the fundability eligibility issues raised in the bill that you put forward to try to figure out if we move forward with this, how could we make each section of it fundable and eligible. So we're working on it now, and I'll have to talk to Mr. Kromer about it and be able to get something back to you over the summer.
Two last questions. Can you provide to the Chair an analysis of the CDBG spending over the past few years, both by Council district, and if you have any information on the distribution of low- and moderate-income people or households throughout the City by Council district?
Yes. The expenditures by Council district, we've prepared a report for last year's fiscal year. Already we're working on 16 /99 APPROPRIATIONS COMMITTEE two additional reports on that now. They should be ready in the next week or so. And the distribution by income, we would be dependent upon the census data, the same as -- I mean, we can provide that; it's just that those are the data that are available.
Right. My last question is, would it be your testimony that, away from the debate about what the source of funding is or how it's provided, that there are certainly additional programs or projects that we could try to provide to various citizens throughout the City that encompass the issues of infrastructure renewal or community revitalization that are important to some constituencies in the City that may not directly involve housing construction or housing rehabilitation?
Are there programs that do that? I just want to make sure I understand the question. That there are programs that do not directly involve housing that are important? Is that the question? I'm sorry.
Are there programs and services that are provided by OHCD, funded by 17 /99 APPROPRIATIONS COMMITTEE CDBG funds, that do not specifically or soley involve housing construction or housing rehabilitation that you can provide? You may not have enough money to provide, but that you can provide that are important to the revitalization of many neighborhoods in Philadelphia?
We are engaged in a variety of public service activities. All of our housing counseling programs are not directly involved in rehab, but they're involved in providing assistance both to homeowners and tenants. We have a variety of planning activities. We fund the neighborhood advisory committees, which act essentially as ombudsmen in their communities to assist people in a variety of community needs, not just housing. So there are other activities that we're engaged in -- some job training activities and so forth that are not soley housing or housing rehab activities.
So part of our 18 /99 APPROPRIATIONS COMMITTEE dilemma here today -- and I'll close with this -- is that there is great need in many parts of the City for rehabilitation and new construction. And a part of our dilemma at times is, how do we balance those needs and interests with the needs and interests of other areas that may not have strict housing problems but have more preservation and maintenance stabilization issues in some of those neighborhoods, and how do we split up, you know, limited funding to try to maximize the efforts to keep the people that we have and revitalize communities and even bring some people back. And would you say that that's part of our challenge here --
Councilman 19 /99 APPROPRIATIONS COMMITTEE Clarke.
Good afternoon, Miss McColloch. Miss McColloch, I have a question with respect to the distribution of funds out of the block grant dollars, that process itself. Is it driven by, say, for instance, requests for proposals for a particular area, or is it just a general requests for proposals to do affordable housing? And does that encompass areas of low- and moderate-income locations throughout the City of Philadelphia, not just north and West Philadelphia?
Yes. We've done requests for proposals both for site-specific proposals. We've put out RFPs for site-specific developments where the City, or in this case, it might be the Redevelopment Authority owns the site and we want to have it developed, so we put out an RFP that says, We want to develop housing on this site. Come forward, developers, and make a suggestion. We also put out general RFPs saying, Give us a proposal for affordable housing, 20 /99 APPROPRIATIONS COMMITTEE wherever that may be. And so we've done it both ways. We have more frequently done the general, if you will, RFP than the site-specific RFP. So the fact that the bulk of funding has fallen into two general areas of Philadelphia is really in part about who responds to RFPs and in part about where the need is the greatest.
And I noticed it was relatively interesting that when I looked -- I did some research recently during the campaign trail to find out where that money was going. I realized that the district that I represent was actually pretty far down on the list in terms of the recipients of that funding. So, I mean, how is that -- I mean, is it that it's being marketed more aggressively in other areas? Or is it that there are probably 21 /99 APPROPRIATIONS COMMITTEE properties that fall within that category in other areas?
I don't know the exact answer for your district, but I would suggest that there may be a lower home ownership rate because the Basic Systems Repair Program s only for homeowners, and that would be one factor. And the other factor would be that there are caps on the amount of funding that could be spent on any given property under the program. And if the house is so severely deteriorated that it needs in excess of the cap, then the case is declined. So that it could be a combination of fewer homeowners who would be eligible and then, you know, homeowners who live in the neighborhood may need repairs in excess of what the program can offer.
Okay. So basically, there were other areas of the City that the properties were, essentially, in better condition.
That may be -- right. But the program in general is just first come, 22 /99 APPROPRIATIONS COMMITTEE first served. So it's citywide.
All right. Commerce-related activities. I know that you fund some portions of the Commerce Department in neighborhood commercial corridors. How is that distributed, to the best of your knowledge? Is it concentrated in one area or is it pretty much a citywide program? I know you do like some site improvement for certain areas.
Well, it's citywide. And, again, it has to be in a low-, mod-income census tract, a CDBG eligible census tract. But other than that, it's citywide.
Thank you. Miss McColloch, and probably to a lesser extent Mr. Kaplan, but since he's up there, I didn't want him to think we forgot about him over there. But I mean it's clear from a lot of the discussion that many members who are on the 23 /99 APPROPRIATIONS COMMITTEE committee and quite possibly many who are not here with us today, we need to have more information. I've asked you to look at particular programs and figure out how they might be implemented. We have funding issues, we have eligibility issues, and a whole host of questions that -- you know, and I certainly understand that you might not be able to give us all the information today. What I would like to propose, both to the Chair and to my colleagues, is, given the volume of information that we've asked for and some of the questions that have been asked, that you be prepared when we return, and in a hearing on this particular bill and get us the information prior to, that you be in a position to fully respond to the questions that were asked here today, that we have documents and information and data that will allow us to further explore this particular issue again, as we try to balance and adequately to the best of our ability serve the needs of the various populations that have, you know, different programmatic needs. But I believe all have the same share of interest, which is to live in a good neighborhood, have good housing 24 /99 APPROPRIATIONS COMMITTEE stock and, you know, be in a place that they'd like to stay. And that's going to take, I think, a fair amount of work. I'm more than willing to work with all of you, and I think my colleagues are as well, but we need more information from you and would like to be prepared to deal with that when we return in the fall.
Thank you Councilman. Any other questions? (No further questions.)
Before we recess, Councilman Nutter, your amendment.
Madam Chair, if we can go into a public meeting, I just want to ask if we can amend this one typographical error which reads now "Fiscal Year 1999," and I'd like to propose the striking of "1999" and inserting the term or phrase "2000" so that there's consistency.
All those in favor? 25 /99 APPROPRIATIONS COMMITTEE So amended. The bill will read appropriations for fiscal -- rather than "1999," it will state "the year 2000."
All right, thank you very much. We'll recess at the call of the Chair. That ends our public discussion.
Thank you. (Adjourned at 2:40 p.m.) - - - C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, June 23, 1999, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COUNCIL COMMITTEE ON APPROPRIATIONS BILL NO. 990464 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter