COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING - COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 8, 2005, 2:35 p.m. BILL NOS. 040876, 050369 and 050506 PRESENT: COUNCILWOMAN JANNIE L. BLACKWELL COUNCILMAN JUAN F. RAMOS COUNCILWOMAN MARIAN TASCO COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN FRANK DiCICCO COUNCILMAN BRIAN J. O'NEILL COUNCILMAN MICHAEL A. NUTTER COUNCILMAN FRANK RIZZO COUNCILMAN DARRELL CLARKE COUNCILMAN JAMES KENNEY V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, PA 19103 215.561.2220 215.567.2670 2 6/8/05 - Bills 040876, 050369, 050506 - Finance
Thank you. Good afternoon. Let me thank you, everyone, for their patience. It's one of those days. This committee, we will now begin the Finance hearing with regard to Bill Nos. 040876, 050369 and 050506. For the purposes of the record, we have a quorum. To my left, Councilwoman Marian Tasco, Councilman W. Wilson Goode. To my right, Councilman Juan Ramos and behind me, Councilman Darrell Clarke. Thank you very much. We will now ask the clerk to read the title of the first bill.
Bill No. 040876, An Ordinance amending Section 19-2900 of Title 19 of The Philadelphia Code entitled --
Clerk, since they're already sitting there, we'll let the gentlemen go first. Would you read the title of the second bill dealing with Airport Revenue Bonds. The Revenue Commissioner, do you 6/8/05 - Bills 040876, 050369, 050506 - Finance mind? COMMISSIONER KAMMERDEINER: No. 4
That will be Bill 7 No. 050369, an Ordinance constituting the Fifth Supplemental Ordinance to the Amended and Restated General Airport Revenue Bond Ordinance; authorizing the Mayor, the City Controller and the City Solicitor, or a majority of them, to issue Airport Revenue Bonds, of the City of Philadelphia, in a maximum aggregate principal amount not to exceed $125 million exclusive of certain items, and in the event the Airport Revenue Bonds are issued with such items, authorizing an increase in the aggregate principal amount of such Airport Revenue Bonds, so issued, by the amount of such items; setting forth the use of proceeds; determining the sufficiency of pledged Amounts Available for Debt Service; covenanting for the payment of interest and principal; authorizing the Bond Committee to take action with regard to the terms and 4 6/8/05 - Bills 040876, 050369, 050506 - Finance conditions of the Airport Revenue Bonds and related agreements and the elections under the Amended and Restated General Airport Revenue Bond Ordinance; authorizing the Director of Finance to take certain actions with regard to the sale of such Airport Revenue Bonds, the investment of the proceeds thereof and the City's continuing disclosure obligation; specifying applicability of Sections of The First Class City Revenue Bond Act and the Amended and Restated General Airport Revenue Bond Ordinance; and amending the Amended and Restated General Airport Revenue Bond Ordinance to provide for authorization of Qualified Swaps or Exchange Agreements by Resolution of the City Council, provided only that, if the City Council does not meet within 15 days after a request to enter into a Qualified Swap, such Qualified Swap or Exchange Agreement may be authorized by the President of the City Council.
Thank you very much. The Chair likewise notes that Chairman Frank DiCicco is here. He was 5 6/8/05 - Bills 040876, 050369, 050506 - Finance standing to the rear of the room, and he is absolutely a member of this committee and we thank him for all of his participation. Sorry. I didn't recognize -- COUNCILMAN DiCICCO: My mistake.
Clerk, I'm sorry, gentlemen, it has been requested by one of my colleagues that we do allow the Senior Citizen Low Special Tax Provisions to come forward first. So out of respect to my committee member, to one of my colleagues, we will ask the clerk to read Bill No. 040878 and we will ask Ms. Kammerdeiner and those with her, Gail Garrett and I assume Gail Garrett, PCA, Philadelphia; Karen Weiss and Pedro Rodriguez, Action Alliance. Thank you all for your patience, and while they're coming forward, the Chair also notes the presence of Councilman Brian O'Neill, another member of this committee. Thank you very much. Please identify yourself for the record and begin your testimony. 6 6/8/05 - Bills 040876, 050369, 050506 - Finance COMMISSIONER KAMMERDEINER: I have copies here, if you would like to get them.
I'm sorry. We did not read the title of the bill. Clerk, please read the title of Bill 8 No. 040876.
Bill No. 040876, an Ordinance amending Section 19-2900 of Title 19 of The Philadelphia Code entitled "Senior Citizen Low Income Special Tax Provisions" by expanding the coverage of this Chapter to include senior citizens who are eligible to participate in the Commonwealth's Pharmaceutical Assistance Contract for the Elderly Needs Enhancement Tier ("PACENET") program.
Thank you. Commissioner. COMMISSIONER KAMMERDEINER: Good afternoon, Councilwoman Blackwell and members of the Committee on Finance. I'm Nancy Kammerdeiner, Revenue Commissioner, and 7 6/8/05 - Bills 040876, 050369, 050506 - Finance I'm pleased to be with you today to present testimony regarding Bill No. 040876. As stated by the title, this bill 5 would amend Section 19-2900 of The Philadelphia Code that's entitled "Senior Citizens Low Income Special Tax Provisions" and it would extend the coverage of that program, which is commonly known as the Senior Citizen Real Estate Tax Freeze, to include those senior citizens who are eligible to participate in the PACENET program. The Real Estate Tax Freeze program was established by ordinance of City Council signed on June 2, 1995, almost exactly ten years ago today. However, approval of the required state-enabling legislation delayed implementation until tax year 1997. A participant in the program receives a refund or forgiveness of that portion of the real estate tax liability that is attributable to a real estate tax increase in rate or an increase in the assessed value of their homestead; in other words, their owner-occupied property. 8 6/8/05 - Bills 040876, 050369, 050506 - Finance Participants must be at least 65 years of age and meet the PACE requirements for income. They are currently $14,500 or less if single and $17,000 or less if married. 1 million. I don't have the final numbers yet for tax year 2005 because that year is not yet over. It should be noted that there are 26,663 PACE participants in Philadelphia County and there are undoubtedly many others who meet the income criteria but do not participate in PACE. Of course, not all of these seniors own their own homes but a high percentage of them do. Future increases in property assessments throughout the City, as well as increased publicity about the program will undoubtedly result in an increase in participation in the current program. If this ordinance and the state-enabling legislation are both approved, single senior citizens with 9 6/8/05 - Bills 040876, 050369, 050506 - Finance income between 14,500 and 23,500 and couples with income between 17,700 and 31,500 would also be eligible for participation in the program. According to the state, there are 9,602 PACENET participants in Philadelphia County, and, again, many others could meet those income criteria, but are not currently participants in the state program. Revenue has attempted to estimate the impact on real estate tax revenue if this bill were implemented. Based on information that we have received from PACE, we estimate that approximately 80 percent of the PACENET participants own their own homes. 29, it would reduce real estate tax revenue by $1,518,000 per year. The School District's exposure would be 881,000 and the City's, 637,965. 2 million. And, of course, that again would be divided between City and School District. Should the participation in the Freeze program from PACENET participants be similar to that of the PACE participants, the likely exposure would be lower, perhaps more in the range of $379,795 per year for the City and $524,478 for the School District. This change would provide a safety net for our financially vulnerable senior citizens, and from that perspective, I would like to support this amendment. However, this Council has just approved a budget and five-year plan that are delicately balanced. This reduction in revenue was not anticipated in either the budget or the plan. This is not the time to reduce income. This is especially true with regard to a program that relates to real estate assessments since, as you know, the Board of Revision of Taxes is in the midst of a 11 6/8/05 - Bills 040876, 050369, 050506 - Finance revaluation process. It might be better to address this issue when the new assessed values and new millage rates are being considered.
Based on what the Board has said in the past, that should be next year for next year's budget. I will add one thing. Should you wish to move this bill forward, I would respectfully request that you eliminate Section 110(e). This provision would require a participant to apply for PACE or PACENET. We don't currently require someone to apply for PACE just to meet the income criteria. Seniors with another prescription plan, for example, may not apply to PACE but could be income eligible, and I don't think that Council really intends to cut out this group of senior citizens who would be income eligible but not apply to PACE for other reasons. And, therefore, I would suggest that the income criteria as established in Subsection (c), that would be Section 110(c), could be the controlling factor and accomplish what you're intending to accomplish. 12 6/8/05 - Bills 040876, 050369, 050506 - Finance This concludes my testimony and I'll be available to answer any questions you might have.
Yes. Just a question on the school part of this, and I understand your testimony, but there's a state act. Is it Act 46? I can't remember the number of it. COMMISSIONER KAMMERDEINER: I think that's the one you're referring to, yes.
It was the school takeover legislation. COMMISSIONER KAMMERDEINER: We can't reduce the local liability and share, and there could be a question raised about that. I know that question was raised when we looked at deferral or reduction programs or cap programs on real estate tax a couple of years ago, and though that question was not completely resolved, it was one that was hanging out there, that if we reduced the 13 6/8/05 - Bills 040876, 050369, 050506 - Finance City's local contribution to the School District, it could bring into question some of our provisions on Act 46.
Has the Law Department looked at that; do you know? COMMISSIONER KAMMERDEINER: They didn't give me anything on this particular one to say whether or not it was in line or not, but it would be a question I think we would have to look at. Since this new state-enabling legislation, it might be that it could be dealt with in that regard.
Are there other questions from members of the committee?
The Chair notes the presence of Councilwoman Blondell Reynolds Brown. Councilman Clarke.
You're 14 6/8/05 - Bills 040876, 050369, 050506 - Finance welcome.
Good afternoon. COMMISSIONER KAMMERDEINER: Good afternoon.
As the prime sponsor of this particular bill, I just wanted to indicate my reasoning for this doing this. In most recent years, as property values have gone up dramatically in some instances in some neighborhoods, I've had the pleasure and actually in some cases the displeasure, given sometimes the tone of the meetings, to talk to residents throughout not only my district but the City and particularly senior citizens who were not eligible for the existing program. Given the levels of income of some of those people, it was clear that they were not in the upper income individuals. They just simply didn't qualify for this $14,000 max. So what we wanted to do was to incorporate a number that could capture as 15 6/8/05 - Bills 040876, 050369, 050506 - Finance many people as possible without creating a financial burden on the City of Philadelphia. And we looked at the PACENET criteria, and as you indicated earlier, that would add probably an additional 10,000 people, senior citizens, to this particular program. We thought that was the right number and we thought because we already had authorization as it related to the PACE-eligibility legislation, that the most prudent thing was to simply attempt to amend the existing authorization as opposed to trying to do a new bill. I want a couple of questions I needed answered that I wasn't clear on. You talked about in Subsection (c), you indicated that that should be what now? COMMISSIONER KAMMERDEINER: If you look at the bill that's before us, on of that, there's a subsection called Qualified Individual, and Subsection (c) of that sets forth the income criteria, but when you go further down, Subsection (e) says that they've already applied -- it says they apply 16 6/8/05 - Bills 040876, 050369, 050506 - Finance for pharmaceutical assistance under the Act known as the State Lottery Law, and my point is that if we require them to apply for PACE or PACENET under the State Lottery Law, it could mean that people who aren't applying because they have another pharmaceutical program but are eligible on an income basis might because of that provision be kept out of the program, and I don't think you intend to disqualify them for that reason.
You are correct. COMMISSIONER KAMMERDEINER: That's not in the current section of the Code, and when we have someone who is already in PACE and we see eligibility of PACE participation, they're automatically approved on an income basis for participation in the Freeze program. If they don't have the PACE approval, then we review income information that they supply in order to determine their eligibility, and that works well with the existing program. My suggestion is that if this goes into effect, we continue to do it 17 6/8/05 - Bills 040876, 050369, 050506 - Finance that way instead of requiring them to apply to PACE. We do work with PACE and can get confirmation from them of PACE participation. I don't know that they would be able to give us something on someone who applied but was not approved for some reason other than income. And so I'm not sure that this adds anything. It might actually cause some confusion.
Okay. Duly noted, and thank you for that. With respect for your timing as it relates to the budget process, I clearly understand the concern that could potentially imbalance the current budget. COMMISSIONER KAMMERDEINER: It's a timing issue more so than anything else.
Right. Realistically I don't anticipate within the next two weeks being able to get state authorization to implement this particular bill. What we're interested in doing is 18 6/8/05 - Bills 040876, 050369, 050506 - Finance getting the bill in the position so we can then have the appropriate people in Harrisburg carry water for us to get an ultimate amendment, not understanding -- well, to some degree, understanding the process in Harrisburg, it could be some time, best case scenario. COMMISSIONER KAMMERDEINER: It was the last time. My concern here is that if we get state approval during the fall, it could apply to tax year 2006, which is already included. The revenue that comes in for tax year 2006, the bulk of it, goes to fiscal year '06, for which the budget has already been approved. And so from that standpoint, not only is it the budget year that would be affected but then the plan throughout. If you were looking at 2007 and thereafter, which is possible with state legislation, but you really don't know --
It might take that long. COMMISSIONER KAMMERDEINER: -- it creates even more problems, because it 19 6/8/05 - Bills 040876, 050369, 050506 - Finance could have a short run as well as a long-run problem if it happened in 2006.
Right. Well, understanding that this won't happen within the next couple of weeks -- COMMISSIONER KAMMERDEINER: That doesn't mean anything for real estate tax, because we don't levee the real estate tax until December of 2005 for 2006.
I understand all of that. COMMISSIONER KAMMERDEINER: Okay.
I just want you to understand that I don't anticipate having, best case scenario, this bill 18 implemented within the next several months. It's just not going to happen. COMMISSIONER KAMMERDEINER: But if it happens any time between now and the end of November, it could affect 2006.
I understand that, but the City would then have the wherewithal with this bill to designate a 20 6/8/05 - Bills 040876, 050369, 050506 - Finance specific time line on the implementation of the bill, right? COMMISSIONER KAMMERDEINER: I believe the original legislation had two time lines within it. One was a date specific and the other was 180 days after approval of the state-enabling legislation. And that's really why it went into 1997 before the existing program went into effect. Even though it was June of '95 when Council approved the legislation and it was signed by the Mayor, it was the end of '96 before -- excuse me; the end of '95 before the state approved it, maybe early '96. As a result, the next tax year that began 180 days after that was '97. Something similar to that that gives us 180 days -- the tax year that follows at least 180 days after the approval by the state gives us enough lead time to orderly implement it and give notice to seniors who might be eligible.
Okay. The numbers you indicated, the probable numbers, I know you talked about scenarios that all 80 percent of the people who own their homes were 21 6/8/05 - Bills 040876, 050369, 050506 - Finance to participate in this program, and it was a certain number. That's not a realistic number. What was the number that you said was the probable number, assuming that the same number percentage-wise people that participate in PACE would then participate -- COMMISSIONER KAMMERDEINER: Right. Just looking at it in the same proportion as the current participants in our program as compared to the number of PACE participants, using that same relationship, it would be somewhere in the range of $380,000 a year for the City and $525,000 for the School District. I'm rounding the numbers now.
Commissioner, I heard your point about the 22 6/8/05 - Bills 040876, 050369, 050506 - Finance PACE application requirement. It seems to me that that's a good provision, because if we have somebody we're trying to help who is a low-income senior and we get to tell them that there's a PACE program that you're not applying for even though you're eligible, we help them more, not less. If we find out that there's a particular situation that would run counter to that, it's going to be very, very rare, if at all, if it happens at all, and we can then deal with that later, but we'll be helping a lot more people. We're already giving them a discount. Why shouldn't they be enlightened that we want to give it to them but we want to require that they get also what they're entitled to from the state? I think that's a good provision. I think there's two ways of looking at it. I've never heard of anybody in that income bracket not getting PACE. COMMISSIONER KAMMERDEINER: Councilman, I'm thinking there are people who 23 6/8/05 - Bills 040876, 050369, 050506 - Finance have other insurance. They may have a prescription plan and they're not entitled to have PACE.
Well, but you're stretching the possibility of it, and I think leaving out a provision that can help a whole lot of people who will be educated as well, because there are people obviously who are in Philadelphia who are PACE eligible that aren't applying. Pedro, I'm sorry.
Councilman, Pedro Rodriguez from the Action Alliance of Senior Citizens. If you are currently on Medicaid and you're over 65, you're not eligible to apply for PACE. They just will not take you into the program.
It's easier to say then you're not PACE eligible, and you can put that in the legislation. There's people that aren't applying for PACE who are applying for this program who are PACE eligible, and I think this helps them. You 24 6/8/05 - Bills 040876, 050369, 050506 - Finance can make that an amendment, a very simple amendment, what you just said, but it doesn't throw the baby out with the bath water. It actually deals with a real situation that you're aware of that people are not eligible for PACE even though their income meets the requirements. So they're not PACE eligible. So I think there's a way of dealing with it. I appreciate the difference of opinion and the information, and I think we can help more people if we put this in. I know people I represent will be helped better. COMMISSIONER KAMMERDEINER: I'm not at all suggesting that we shouldn't be encouraging those people to apply for PACE if they're eligible for PACE by income and don't have another prescription plan. I just thought that we were creating some confusion here in setting up a standard we don't currently use for this program and that may cause some conflict for people who -- in understanding for people who are not eligible for PACE.
We can go 25 6/8/05 - Bills 040876, 050369, 050506 - Finance back and forth on that. COMMISSIONER KAMMERDEINER: So it's a matter of how we word it or else eliminate it.
I just have a question, and I'm sorry, Councilman, I kind of drifted off when you were explaining this. Are we raising the income levels here -- COMMISSIONER KAMMERDEINER: Yes.
-- for the participants? COMMISSIONER KAMMERDEINER: Yes.
So now it's 14,500 or less if single and 17,000 or less if married?
So now you can be married and make between 14,500 and 23,000.
Couples, -- again, why did you raise the income 9 level? 10
Because we 11 found that a substantial number of people that 12 are suffering, senior citizens, that are 13 suffering as a result of real estate, who, in 14 our view, most people's view, are low income 15 and they're not eligible for our current 16 PACE-eligibility program, and the thought was 17 that if you increase from PACE to PACENET eligibility, where most people would assume that PACENET eligibility is a low-income individual, that we should simply amend the existing legislation to incorporate those individuals to participate into the program. COMMISSIONER KAMMERDEINER: Councilwoman, if I may, when the original program was created, only PACE existed. 27 6/8/05 - Bills 040876, 050369, 050506 - Finance PACENET was created after that. This Council did once informally in between that point in time and now consider going to PACENET but didn't pursue it, and this is an effort to pursue taking that income level up to the higher level.
To the PACENET? COMMISSIONER KAMMERDEINER: To the PACENET level.
Commissioner, we offer a senior low-income discount to water customers. COMMISSIONER KAMMERDEINER: Correct.
Is that a PACENET level or some other level? COMMISSIONER KAMMERDEINER: It's a different criteria based on some poverty-level statistics from the federal government. It's a chart that's based on size 28 6/8/05 - Bills 040876, 050369, 050506 - Finance of family, as well as income.
And what are the income levels? COMMISSIONER KAMMERDEINER: I don't know off the top of my head, but I could get that for you.
Could you get it while you're here? Isn't it in the $20,000, $25,000 range?
So we're still way below a similar program in the City offering seniors that we consider low income and we're giving percent? 17 COMMISSIONER KAMMERDEINER: 20 18 percent. 19
20 percent 20 discount on water. What's the discount on real estate? COMMISSIONER KAMMERDEINER: Here it's the amount of the increase that you have in your tax as a result of assessed value or as a result of a rate increase. 29 6/8/05 - Bills 040876, 050369, 050506 - Finance
So it could be a variant? COMMISSIONER KAMMERDEINER: It's varying. The average amount per year for our current participants is just over $195.
Okay. And so that's probably less than they get in the water, because they're all eligible for water if they are in this category. COMMISSIONER KAMMERDEINER: Yes.
So we're actually giving them less of a discount on real estate taxes from a larger base than we are from water bills from a smaller base? COMMISSIONER KAMMERDEINER: Income percentage basis, yes.
The Water Department by itself is a lot smaller than the rest of the City. So if that's our base where we're giving a bigger discount, where we have a larger base we're giving a smaller discount. I just wanted to mention it because Councilman Clarke and I will probably have 30 6/8/05 - Bills 040876, 050369, 050506 - Finance some more discussions about it. Thank you.
Thank you very much. Are there further questions? (No response.)
We'll continue taking testimony. Would anyone else like to have something to say with regard to this bill?
My name is Pedro Rodriguez, the Director of the Action Alliance of Senior Citizens of Greater Philadelphia. The Action Alliance is in support of this amendment. We concur with the statements of the Commissioner that this will be a great help to our seniors throughout the neighborhoods. I submitted some written testimony, but I'm just going to emphasize a couple of points. One, we all know we're experiencing the increases in real estate prices around the City. This is creating some anxiety among many seniors who have been long-term residents 31 6/8/05 - Bills 040876, 050369, 050506 - Finance of neighborhoods who have been targeted for redevelopment, gentrification and new construction. And this will help to reassure them that they will not be driven out of those neighborhoods because the real estate taxes and appraisal are going to go up. Our people in this City are really struggling. Our seniors are really struggling to maintain a decent standard of living facing -- the Water Department is asking for a rate increase that's going to impact really negatively on a lot of our seniors on a fixed income. We know what happened with the gas prices this past winter. Anything that we can do to help maintain people in their homes in the way that they can afford to keep those homes. I know the development that City Council should take into consideration. It is all the pressures on the Medicaid budget at the state level are shifting some of the policies of the state towards being more predisposed to have people remain in their homes and their community when they reach levels where they need nursing home 32 6/8/05 - Bills 040876, 050369, 050506 - Finance type care. As we do more of that, and this is something that seniors always wanted to do, to have that choice to stay home in the community, that we had to be able to provide vehicles and tools for those individuals who decide to stay in their homes so they can stay there, they can stay there in a way that is safe, stay there in a way that is affordable. Anything that we can do towards helping achieve that goal will enhance the quality of our life in our communities and our neighborhoods and allow our seniors to contribute. In addition to that, I think that this will be a great opportunity also to review a number of other programs that we have for our senior population in the City. Just to go back in terms about the people who are eligible for PACE because of income but are not allowed to enroll in PACE because they already have Medicaid, we're talking about in this City about 16,000 people who fall within that category more or less, 33 6/8/05 - Bills 040876, 050369, 050506 - Finance and to have the language in such a way and the ability to apply for the program make it easier and friendly for them to do so will also allow us to have more people enjoy the program. Thank you.
Good afternoon. My name is Katherine Weiss. I'm a staff attorney at the Senior Law Center in Philadelphia. We urge the Council to adopt this bill. The Senior Law Center provides free legal services to low-income seniors who reside in Philadelphia County, and based on my experience, this bill is vital to the elderly to continue to own and reside in their own homes. The impact of this bill would increase the eligibility of low-income people to the program to reduce their tax liability and mitigate any increases due to increased property values. It's important to remember that increased property values is not income 34 6/8/05 - Bills 040876, 050369, 050506 - Finance and people can only pay their bills from income. In Philadelphia, the elderly in this City are the poorest and most numerous in the country. We have the highest percentage of seniors of the ten largest cities in the United States. I found some numbers from the 2000 census, a little out of date but still pretty stunning. Fourteen percent of our population in this City is over 65 years old and nearly two-thirds of them are female people over the age of 65. Forty percent of all households in Philadelphia had a total income of less than $25,000, which is actually 200 percent of the poverty level. It's not much money. Nearly 17 percent of individuals over 65 live at the poverty level, which is less than $775 a month. Try to imagine $775 a month is all you have. Twenty eight and a half percent of households in this City have Social Security income and the mean was $867 a month. Only an 35 6/8/05 - Bills 040876, 050369, 050506 - Finance additional percent had retirement income to supplement the Social Security. Approximately 12 percent of the householders in this City are 65 years or older, and 38 and a half percent of homeowner occupied dwellings in the City in 2000 had a value of less than $50,000. So we're not talking about high income people and high income property. What I'm trying to convey is, so many seniors in this City live on the razor edge of financial existence. I'm not sure I can describe to you in words the misery that we see because very few people have excess expendable income after they pay their bills. Sometimes we see people who are paying mortgages of almost 50 percent of their monthly income. If real estate taxes are increased, the balancing act tumbles over, and even with the low income utility programs, there's just not much money. And, frankly, you know that the income is not going up. There's no 25 opportunity to raise income. 36 6/8/05 - Bills 040876, 050369, 050506 - Finance Recently a large number of real estate tax cases in the City went into collection and the result in our office has been a tidal wave of cases coming to us and to Community Legal Services to try and to get into tax agreements to pay real estate tax bills to prevent foreclosure and sheriff's sale. I'm aware that in this City there are a number of very high-end condominium units being built in Center City, the Avenue of the Arts, and I hope that we can attract more high-income people, more higher-earning people to this City and I'd like to be able to tax them. The City really should not raise revenue on the backs of the elderly, who have no prospects whatsoever of increasing their income during their lifetimes. Thank you.
Good afternoon, City Council and Committee on Finance members. My name is Gail Garrett. I'm the Legislative 37 6/8/05 - Bills 040876, 050369, 050506 - Finance Affairs Manager for the Philadelphia Corporation for Aging, which is also known as PCA, and on behalf of PCA, I thank you all for the opportunity to testify today. Designated as the area agency on aging for Philadelphia, PCA is a non-profit organization that was established in 1973 by the Federal Older Americans Act. PCA is the largest area agency on aging in Pennsylvania and the fourth largest in the United States. And we do plan, fund, administer services to over 100,000 older persons and people with disabilities each year. Our mission is to improve the quality of life for these individuals and to assist them in achieving maximum levels of health, independence and productivities. PCA is funded in part by the Older Americans Act, Medical Assistance and the Lottery, all channeled through the Pennsylvania Department of Aging. We receive dedicated state funds for long-term care assessments and Medicaid funds for home and community-based care, as well as tobacco 38 6/8/05 - Bills 040876, 050369, 050506 - Finance settlement funds for additional long-term care services. However, the Pennsylvania Lottery is the primary source of funding for PCA. We appreciate the Lottery funds are used for PACE programs and we also like PACE and home and community care programs to continue for the elderly. PCA strongly supports this legislation to amend Section 19-2900 of Title of The Philadelphia Code entitled "Senior 13 Citizen Low Income Special Tax Provisions" by 14 expanding the coverage of this Chapter to 15 include senior citizens who are eligible to 16 participate in the PACE and PACENET programs. 17 There are over 267,000 seniors 18 living in Philadelphia with an average age of 19 75. The greatest proportion, 50 percent of seniors, are in the 65 to 74-year-old age category. More than half of those served by PCA are minorities and 32 percent are below the poverty level. If this legislation becomes law, many poor and older Philadelphians may be 39 6/8/05 - Bills 040876, 050369, 050506 - Finance relieved from some of the burden of paying higher real estate taxes that they can't afford and face the grim reality of losing their homes. In Philadelphia, many of the homes are owned by seniors. They are old and in need of major repairs. Housing assistance programs in Philadelphia are scarce or have waiting lists. If the legislation is passed, seniors could possibly use the money saved from not paying higher real estate taxes and put that towards making much-needed home repairs. This could also benefit the City, as it would decrease the chances of having more abandoned homes across the City. High utility causes another area of concern for seniors, along with the proposed cuts in the state Medicaid program that would severely impact the lives of many seniors. Not only will seniors have to make the choice to buy medicine, food or heat their homes, they will soon have to make the decision to seek medical attention if they should become ill, as the proposed changes would result in 40 6/8/05 - Bills 040876, 050369, 050506 - Finance new physician fees. As an agency that provides care to thousands of seniors on a daily basis, we know firsthand the needs and many challenges seniors face just to reside in their home and community with dignity and respect. Again, PCA advocates for the passage of this legislation and we thank City Council for the opportunity to express our support. Thank you very much.
Thank you. Are there any questions from members of this committee? (No response.)
Is there anyone else here who would like to testify with regard to this bill? Councilman Clarke, you wanted to say something?
Yes. I would just like to say, first of all, thank you all for coming in to testify. It's our hope that we're successful not only here 41 6/8/05 - Bills 040876, 050369, 050506 - Finance locally but also in Harrisburg. We may need to put you on a bus and take you up to Harrisburg if and when we get the ability to try to amend it on the Harrisburg level. Madam Chair, members of the committee, first I want to thank you for some of the recommendations both by Councilman O'Neill and by the Revenue Commissioner on some potential amendments. What I would like to do, though, is to ask if the committee would pass the bill out of committee and then we could amend it on the second reading, and that would essentially take us into the summer. Over the course of the summer, we will work with our state legislators to determine if we'd be able to get this amendment done on the state level, if that's appropriate.
So you're requesting a suspension of the rules as well?
Yes, please, because I want to, at a minimum, have it on the second reading, so then they can 42 6/8/05 - Bills 040876, 050369, 050506 - Finance understand the City Council of Philadelphia is extremely supportive of this measure.
Thank you very much. Now that the Airport Revenue Bonds, Bill No. 050369, has been read by the clerk, we will ask Mr. Isdell, Vince Jannetti and anyone else you would like to testify to come forward so that we may hear your testimony. We thank you all for your patience and welcome you to come forward and to begin your testimony.
Good afternoon, Madam Chair and members of the committee. My name is Charles Isdell. I'm the Director of Aviation for the Philadelphia Airport System. I'm pleased to have this opportunity to testify today in support of Bill 050369. This bill will provide the City of Philadelphia with authority to issue 125 43 6/8/05 - Bills 040876, 050369, 050506 - Finance million in fixed-rate airport revenue bonds known as the 2005A bonds. This critical financing, together with other available funding sources, will enable the airport to undertake a $251 million construction program for the expansion and modernization of Terminals D and E, improvements to Terminal A East, Terminal B and C security enhancements and the resurfacing of Runway 9 Right, 27 Left. Philadelphia International Airport continues to be one of the fastest-growing airports in the nation. 6 percent increase over 2003. 9 percent increase in aircraft operations. To accommodate the continuing growth, our facilities need to be expanded, modernized and reconfigured. Security screening wait times have increased due to heightened federal screening procedures and the above-referenced passenger traffic increases. Approval of the 2005A 44 6/8/05 - Bills 040876, 050369, 050506 - Finance bonds will allow for additional passenger screening lanes in five of our terminals, A East, B, C, D and E. Without these additional lanes, long lines of unscreened passengers will continue to stretch from the terminals to the parking garages during peak hours. The airport's gate capacity is strained. Approval of the 2005A bonds will allow for construction of three new aircraft gates on Concourse E, which will provide space for expanded low-fare service. The scheduled airlines have unanimously approved these projects to be funded by the 2005A bonds. The airlines have a firsthand understanding of the airport's capacity constraints and they recognize the need to modernize passenger terminal facilities to make them work better in today's aviation environment. For instance, Terminals D and E, which accommodate AirTran Airways, Delta, Northwest, Southwest, United and others, were constructed in the early 1970s and require substantial reconfiguration. 45 6/8/05 - Bills 040876, 050369, 050506 - Finance We're pleased to report that last month all three bond rating agencies, Moody's, Standard & Poor's and Fitch, affirmed the airport's "A" credit ratings in anticipation of this 2005 bond issuance. S. Airways. These expressions of confidence in airport management and financial performance strongly position us to achieve favorable interest rate pricing on the 2005A bonds. Bolstered by the above ratings, we are pleased to also report that the airport recently received aggressive bids from four bond insurance firms that were given credit briefings by airport and finance officials on April the 15th. These bids represent a savings of two and a half million dollars over original estimates developed by the City's financial advisors. However, a delay in passage of this bill could jeopardize our ability to lock in these bids. 46 6/8/05 - Bills 040876, 050369, 050506 - Finance Prevailing interest rates favor the City's issuance of the 2005A bonds at this time. There is a growing belief that rates for the remainder of this year are more likely to rise than to fall. Consequently, we run the risk of higher interest rates, which would make our bond issuance more costly to the City and its airlines. A rise of only ten basis points, for example, would translate into a $4 million increase in interest costs over the life of the bonds. The projects will generate an estimated 600 construction jobs and over 200 permanent jobs that are badly needed for the local economy.
Finally, at the request of City Council and this committee during the March 30th airport bond hearing, the Administration has added a provision to this bill which will amend the General Airport Revenue Bond Ordinance to require Council approval of all future airport exchange agreements, including qualified swaps and swaptions. Council's passage of the general ordinance back in June 47 6/8/05 - Bills 040876, 050369, 050506 - Finance 1995 had allowed the City to transact such agreements for the airport without requiring Council approval. The confluence of so many positive developments and circumstances makes this an optimum time to proceed with these bonds to fund the following essential airport improvements that are in the best interest of the City and the region. The Terminals D and E project consists of the expansion and renovation of these two terminals, including construction of a three-level connector between the terminals to consolidate them into a single complex similar to the Terminal B/C complex. The project will provide for additional ticket 18 counter positions, nine additional passenger 19 screening lanes and three new jet gates. 20 The A East improvements represent 21 the completion phase of the City's program to 22 expand and upgrade international terminal 23 facilities. The Terminal A East security checkpoint, concourse, ticketing lobby and other facilities will be renovated and 48 6/8/05 - Bills 040876, 050369, 050506 - Finance upgraded to standards compatible with the spectacular new Terminal A West. 1 percent increase. S. Airways commenced non-stop service -- new non-stop service to Barcelona and Venice, and we would expect international passenger numbers to increase again this year. In Terminal B/C, passenger security screening areas will be expanded and upgraded, allowing for the addition of up to two screening lanes at each terminal and installation of advanced technology security equipment. The Terminal B/C ticketing lobby and outbound baggage facilities will also be improved to enhance the efficiency of baggage screening. Runway 9 Right, 27 Left is 10,500 feet long and 200 feet wide. It is one of the airport's two main runways. The runway was last resurfaced in 1990 and will be resurfaced as part of the City's airfield renewal and replacement program. 49 6/8/05 - Bills 040876, 050369, 050506 - Finance I would like to take this opportunity to thank the members of Council for their consideration of this bill. Over the years, Council has supported our efforts to improve the airport's facilities. This support has led to the opening of a first-class commuter terminal in 2001, a spectacular new international terminal in 2003, record traffic increases in domestic and international service and the emergence of Philadelphia International Airport as a pivotal engine in the regional economy. We ask that Council give us the opportunity today to continue this progress. If I might add, just yesterday we received our April passenger numbers, and through the first four months of the year, we're over 10 million passengers. So we would anticipate we'll probably crack the 30 million mark this year for the first time in our history.
Last year was 28.5 50 6/8/05 - Bills 040876, 050369, 050506 - Finance million and the previous record had been 24.9 million.
Good afternoon, Councilwoman Blackwell and members of the committee. My name is Vince Jannetti. I'm the Acting Director of Finance. I'm here to provide testimony in support of Bill No. 12 050369. The purpose of Bill No. 050369 is to authorize the City to issue General Airport Revenue Bonds, Series 2005A, in one or more series, under the First Class Revenue Bond Act, Act of October 18, 1972, Act No. 234, the Amended and Restated General Revenue Bond Ordinance, approved June 16, 1995 under Bill 20 No. 950282 as amended and supplemented, the general ordinance. Specifically, Bill No. 050369 will authorize the Fifth Supplemental Ordinance, to the General Ordinance, to issue project funds not to exceed $125 million. The proceeds of 51 6/8/05 - Bills 040876, 050369, 050506 - Finance the bond sale will be used to finance the cost of certain improvements to Terminal A East and to Terminal B/C and expansion of Terminals D/E, as well as resurfacing of Runway 9R-27L. As required by the First Class City Revenue Bond Act and the General Ordinance, I have submitted the required financial report, which is based on the analyses of the airport system conducted by Leigh Fisher Associates. This is the feasibility consultant, and Urban Engineers, Incorporated, the consulting engineers. Copies of both firms' reports were transmitted along with the Director of Finance's report. At this time, I'm almost proposing an amendment to Section 11 of the ordinance, which appears on . I am requesting that the ordinance be amended to add a period after the word "Council." This is in the fourth line of Section 11, and deleting the remainder of the section beginning with the words "provided that."
Would you repeat that? 52 6/8/05 - Bills 040876, 050369, 050506 - Finance
Certainly. I ask that the ordinance be amended to add a period after the word "Council." This is the fourth row under Section 11, the paragraph that starts "notwithstanding." This is on .
, Section 14 11. The paragraph "notwithstanding anything to the contrary," on the fourth line after the word "Council," the proposal is to add a period after the word "Council" and strike out the rest of the paragraph.
Mr. Jannetti, if this paragraph weren't there at all, would an ordinance be needed? Forgetting taking what you just took out and 53 6/8/05 - Bills 040876, 050369, 050506 - Finance leaving the resolution in, if the sentence as it would now read ending with "Council" were taken out also, would an ordinance be needed to accomplish the same thing rather than a resolution?
Council, are you asking if we take this language out, would we still need an ordinance?
If you took out "notwithstanding anything to the contrary" and ending with "Council," which you're still asking to remain in here --
Yes. The language as we're asking to be amended, we'd need an ordinance.
If this weren't left in here. In other words, if I said --
Right, if 54 6/8/05 - Bills 040876, 050369, 050506 - Finance it remains in, but in the absence of that sentence asking for a resolution, would you need an ordinance?
To clarify Councilman O'Neill's question, he's asking if you strike everything, would you have to come back here in order to do the swap, and the answer is no?
Because the garble in the ordinance allows us -- the language allows us to do that, to do a swaption.
1995? 55 6/8/05 - Bills 040876, 050369, 050506 - Finance
We did one swaption on the Series 1995 bonds that we just a month ago -- the swaption was triggered and we swapped the bonds. So, yes, we did do one transaction on the airport bonds.
And you didn't need any Council authorization because of the 1995 legislation?
We didn't need Council authorization to do the swaption. However, to hedge the swap when that was done, we did have to come back to Council to get authorization to do the refunding back.
Okay. In the absence of the 2000 ordinance, you would have needed Council approval every time you wanted to do a swap?
You wouldn't have to come back here to do swaps? 56 6/8/05 - Bills 040876, 050369, 050506 - Finance
I thought it was put in the 1995 ordinance and that's how come you were allowed to do it. Without that in the 1995 ordinance, would you have to come back? I'm not sure --
Take this sentence out dealing with the resolution 12 requirement that you're asking to be left in.
Taking that out, you would be able to swap without coming to Council because of the 1995 ordinance --
-- that allowed it? But for the 1995 ordinance then, you would not be able to do it without coming back to Council, if it hadn't been for the 1995 ordinance?
That's correct. 57 6/8/05 - Bills 040876, 050369, 050506 - Finance Yes, sir.
Thank you very much. The clerk is making copies of this so that we may formally amend this after the discussion. Are there other questions with regard to this amendment?
Subject to the necessary approvals, the Series 2005A bonds are scheduled to be priced during the week of July 4, 2005. Therefore, we respectfully request approval of Bill 050369, with a suspension of the rules of City Council to allow for first reading at the next regularly scheduled Council meeting. This concludes my testimony. I'd be 58 6/8/05 - Bills 040876, 050369, 050506 - Finance happy to answer any questions.
Thank you very much. Do you have anything to say, Mr. Anastasi?
All right. Thank you very much. As you may know, Council passed a Resolution No. 050429 some time ago. It's a non-binding resolution. It was memorializing Council's intent with regard to the issuance of debt by the City or any other agency. I assume that you gentlemen have seen this and I wanted to ask you how you feel this affects the legislation and your opinion as to where the City is with regard to what the future should or could be with regard to this resolution. Do you have any comments for us? Do you have it in front of you?
I have the resolution in front of me, Councilwoman. I think going forward, we're going to be looking 59 6/8/05 - Bills 040876, 050369, 050506 - Finance at how we select teams with the whole issue of negotiated versus competitive. A lot of the transactions that we do fit -- under the method of bond sale, they fit into the circumstances which would allow us to do a negotiated sale. So this is something we're looking at.
Thank you very much. Councilman O'Neill and Councilwoman Tasco.
On the swap issue again, is a swap -- I'm not exactly sure -- I've had it explained to me times. 16 A swap is another form of refinancing; is that a fair description?
You do it to save money basically, the same way -- you do it for the same reasons you do a refinancing, it's another method?
Right. You're not really refunding the bonds. You're trading interest rates. 60 6/8/05 - Bills 040876, 050369, 050506 - Finance
Right. But you're trying to accomplish the same thing?
Yes. In the case of the airport, they got an amount of money up front when they executed the swaption. That constituted the savings.
Okay. Why is it -- and I probably voted for that 1995 bill, but I can tell you, it escaped me that we were changing history in terms of giving the airport the ability to do swaps without coming back to City Council any more than we would have wanted to give you the ability to do refinancings without coming back. What is the reason that -- no one has ever asked, to my knowledge, to do refinancings without coming back to City Council. What was the reason on the swaps? Could you explain it?
On the swaption, you're not issuing debt. You're trading rates. When you do a refunding, you are issuing new bonds at a lesser interest rate or 61 6/8/05 - Bills 040876, 050369, 050506 - Finance floating rate or fixed, whatever, and replacing -- using those bonds to replace another series of bonds. So you're actually issuing -- you're doing another bond issue. So a swaption is the option to do a swap, and when you execute the swaption, depending on market conditions, you may not actually swap the bonds out at the trigger date. Okay? It may not be economically viable for the counterparty to do that, and in which case --
And yet somebody doesn't want to have to come back to the legislative body and explain what the risk is and how people weigh it, whether it's new debt or not. New debt seems to just be a technicality. We're basically getting involved in something other than the original issuance that was approved. I mean, I think it makes all kinds 62 6/8/05 - Bills 040876, 050369, 050506 - Finance of sense to just come back, have the regular old process that seems to have worked pretty well with full scrutiny. Resolution versus an ordinance, I just can't understand even that differential, but certainly being able to do it without coming back at all for anything doesn't seem to make any sense, if only for the reason that there is some risk involved, and I think that should be both the Administration and the Council that are approving that risk. But that's enough on the subject for right now. Thank you.
I don't have a question on the swap. I just want to say as a frequent flyer, we do need to have these changes at the airport. The only question I have for you is, have you done anything about the signage in Terminal F to tell people where to go to get transportation?
I spend 63 6/8/05 - Bills 040876, 050369, 050506 - Finance more time telling people -- when their families or someone is going to pick them up, people automatically go to the arrival gate. Terminal F is at the end of the departure Terminal E, which is on the departure side. And I've been there when people are screaming and yelling in their cell phones that, I'm standing here, I'm here. It happened to me years ago when I first used Terminal F. They need to know to walk across the street or walk across the connector to go to the location at the end of the arrival terminal for pickup, and it's very difficult for them to understand where they are.
It is definitely an anomaly at the airport. It's the only terminal that has baggage claim on the departure side of the roadway system. It was designed that way specifically by U.S. Airways because the concept when that terminal was designed before it was built was that something like 75 to 80 percent of the people who use that terminal would just be getting off one plane and getting on another plane and 64 6/8/05 - Bills 040876, 050369, 050506 - Finance they would never end their trip here and pick up baggage and be looking for a taxi cab or a private pickup. Obviously that has changed significantly in the last few years, that it's part of this evolution where a lot of U.S. Airways activity has switched over to what they call their regional commuter lines. What used to be a trip to St. Louis or Milwaukee or places of equal distance went on the main line, the bigger jets. A lot of them now go on regional jets that come in -- after they land, they come into Terminal F. They're smaller aircraft and they use that terminal, and those are what we call originating passengers. They're not connecting passengers. So the percentages have changed since the building opened, and we've done a number of things. We have increased the number of signs that direct people so that they understand that after they pick up their bags there, that the actual pickup point is across the bridge over on the arrival side of 65 6/8/05 - Bills 040876, 050369, 050506 - Finance the airport, and we've created a mini ground transportation center over there that is staffed, the same way the ground transportation centers are in all the other baggage claim buildings. We've asked our design consultants to also look at what would the cost be literally to move baggage claim for Terminal F to the other side of the airport. There's only one carrousel in Terminal F, I believe, right now. So we --
I'm sorry; two. You've been there more recently than I have. But there is a possibility that in the future we could actually relocate baggage claim for Terminal F to the other side of the airport. There would be an expense involved. We did not incorporate that into this D/E project that's been described today, but I think it makes a lot of sense. And, again, looking at the trending of the use of that terminal, it is a problem 66 6/8/05 - Bills 040876, 050369, 050506 - Finance for people. We acknowledge it. For a while, we let cabs come down the departure road and pick people up on the departure side, but we thought that the opening of this mini ground transportation center on the other side would be equally or more convenient. But I do hear a lot of complaints similar to yours and I think we need to keep working on that problem.
It's really a serious problem. Who will oversee and supervise the construction? Will it be the City of Philadelphia or will it be the airline such as Terminal A?
These contracts will be bid through the Procurement Department's Public Works section, and the Division of Aviation and the City of Philadelphia will manage these projects. No 67 6/8/05 - Bills 040876, 050369, 050506 - Finance airline will.
Are there any other questions from members of the committee? Councilman Nutter.
Thank you, Madam Chair. I appreciate the opportunity to just ask a couple of questions. Mr. Jannetti, I want to go back to your response to the Chair regarding the resolution passed by Council and what, if any -- I don't want to say impact, but certainly response or action that might be taken with regard to that resolution. I heard you say that you are looking at how you put teams together and then I kind of lost you a little bit as to where that was going, and then I'd like to speak more specifically to this particular bill and where it stands in the context of the resolution.
Councilman, we started talking about this looking at this. 68 6/8/05 - Bills 040876, 050369, 050506 - Finance So where it's going to go, we're not sure yet. I'm sure that the resolution will play a part in that.
Okay. Well, let me ask this question: Would the resolution or any its provisions, if applied to this particular bill, would it interfere with your ability to execute the transaction?
Yes, Councilman, I think so. This transaction is -- this transaction was done in --
This transaction was done as part and parcel of the Series B and C bonds. This transaction, for all intents and purposes, is almost done. So if we were to stop and go back and do things in accordance with the resolution, we may be, without my having to study every line, we may be in a position where we might, I don't know, be changing team members. So we would lose the transaction.
Well, I 69 6/8/05 - Bills 040876, 050369, 050506 - Finance understand that and I appreciate that concern. You know that there is a provision in the resolution that anticipates unusual circumstances, and this would probably qualify as such. You're aware of that?
So you know that Item No. 6 in the resolution, you could utilize that provision, not interfere with your transaction, not disrupt your team and still at least meet the goals that the resolution seeks to accomplish, right?
Okay. So you could comply with the resolution just by using Provision 6?
I'm George Magnatta with the Saul Ewing law firm. Councilman, there's a 1919 act that applies with respect to the incurrence of 70 6/8/05 - Bills 040876, 050369, 050506 - Finance debt. We have to advertise five times before final passage in newspapers, two newspapers of general circulation at least three days apart. That would take us past June the 16th. So we wouldn't be able to issue the bonds in July.
Well, you're proposing to amend the ordinance, and if you're amending the ordinance, we have to republish a summary of the ordinance and we have to republish it five times, and that's at least a 15-day process.
Well, I understand that, but an amendment has already been proposed to the bill.
We had already advertised the ordinance as amended in another version that was introduced earlier in this session. So we've already provided for Section 11 as it reads as amended. We've 71 6/8/05 - Bills 040876, 050369, 050506 - Finance advertised three times -- we've --
Are you saying that you advertised a bill in an amended version before it was amended by the City Council?
No. This is the third time that a bill -- the Fifth Supplemental Ordinance has been introduced.
The first time, there was no Section 11. The second time, there was a Section 11 that reads as currently amended. And the third time is Section 11 with the 15-day provision in it. It's by luck that we comply with the 1919 act with respect to the amended bill.
But testimony was just offered asking us to strike the 15-day requirement, is that right, which we have not done yet?
No. The 15-day requirement started a while ago when it was forwarded to Council, because we need to have advertised five times before the 16th. 72 6/8/05 - Bills 040876, 050369, 050506 - Finance
Well, I'm fairly thoroughly confused at this point. Why did Mr. Jannetti ask the committee to amend Section 11, put a period after the word "Council" and strike out the language and subsequently a proposed amendment was just circulated to the committee and to the members?
It's my understanding that the wrong bill was sent to the Chief Clerk for advertisement. The bill 13 with an 06 as the last two digits was one that should have been sent. That one reads the way this amended bill would read. So Mr. Jannetti is proposing that we amend the bill to read as it was intended to be in its latest form.
But the bill in front of us -- I heard what you just said with 06 at the end. This bill is 050369.
69 was advertised. 73 6/8/05 - Bills 040876, 050369, 050506 - Finance
For councilmanic advertisement. For purposes of the 1919 act, summaries of 69 and 06 were advertised, because 69 had been introduced earlier and 06 has been introduced most recently. So we're covered with respect to the 1919 act and the requirements of its advertisement.
But your issue when you started was that you can't make any more amendments to this bill because you've already advertised the bill in the form that you seek to have it amended today; is that where we are?
So you advertised a bill without the language that is in this 369 bill?
That's because this is the third time that it's been introduced. The first time, it did not have a Section 11 in it.
This is the one that got held in committee? 74 6/8/05 - Bills 040876, 050369, 050506 - Finance
But the problem is coming back the next day with a bill.
-- (continued) it just had the requirement of a resolution 13 for swaps. The third time, the 69 bill, it has the 15-day requirement also. We have done our 1919 act advertising summarizing all three versions, one without Section 11, one with Section 11 only requiring an ordinance and one with Section 11 having 15 days' notice. So from the 1919 act, we're covered.
I understand. So your concern is that if there were a new amendment that required some adherence to the previously passed resolution, you don't have a bill that's been advertised with that particular provision and you would 75 6/8/05 - Bills 040876, 050369, 050506 - Finance then have to go back to the start?
That's correct. And we would not be able to comport with those advertising requirements prior to enactment on the 16th.
Okay. So the bill you really wanted in front of us is the bill that has whatever the start of it is, but has 06?
So now you need us to amend 369 to make it appear similar to the 06 bill even though we're not moving on the 06 bill?
Right, because 76 6/8/05 - Bills 040876, 050369, 050506 - Finance everything else reads the same.
Sorry for the confusion. I'm told that it's not 06, Councilman. It's 050507.
Well, then we have to go back through all the same discussion again so the record is clear so that I'm talking about the right bill. Okay. Let's start again. No. Okay. All right. I think you win that round, inadvertently. Okay. My last question, though, Mr. Jannetti, is, but for this advertising issue and let's say this transaction -- let's say we're at an earlier point in the year and all the other issues, would you be able to comply with the particular resolution 21 utilizing this Section 6 unusual circumstance provision and not interfere with your transaction, assuming that you had the proper time you needed for advertising purposes and everything else? 77 6/8/05 - Bills 040876, 050369, 050506 - Finance
Okay. Great. Thanks. Thank you, Madam Chair. I'll have a question on the other bill whenever we get to it.
Thank you, Councilman. Are there other questions with regard to this bill? (No response.)
All right. Then we will have the clerk read the title of Bill No. 050506.
Bill No. 050506, an Ordinance authorizing the creation of a loan or loans to provide funds for and toward various capital municipal purposes; authorizing the Mayor, City Controller and City Solicitor, or a majority of them, to sell bonds at public or private negotiated sale; setting forth the capital purposes and the amounts for which the proceeds of the loan or 78 6/8/05 - Bills 040876, 050369, 050506 - Finance loans would be expended, including reimbursement of City capital expenditures; providing for the maturities and for other terms and conditions and for the form of the bonds; providing that certain bonds may be redeemable prior to maturity; providing sinking funds for the bonds and for appropriations to the Sinking Fund Commission for the payment thereof; authorizing agreements to provide credit or payment or liquidity sources for the bonds and interest rate swaps in connection with issuance of the bonds, and certain other actions; provided for obtaining the consent of the electors to increasing the indebtedness of the City of Philadelphia; and fixing a day for holding the election for obtaining such consent and providing for the arrangements for holding such election.
Thank you. Would you identify yourself again and make your testimony.
Yes. Good 79 6/8/05 - Bills 040876, 050369, 050506 - Finance afternoon, Councilwoman Blackwell, members of the Finance Committee. My name is Vince Jannetti, Acting Director of Finance, and with me are various officials from the Office of the Director of Finance and the Capital Program office. I am here today to propose amendments to Bill No. 050506, which was introduced on May 26, 2005, and to testify in support of these amendments. The first request is to amend the bill to increase the total borrowing amount to $69,680,000 to reflect the FY2006 capital budget as passed by City Council on June 2, 2005. The second request is to amend the bill to reflect the change of the ballot from the primary election date to the general election date. The purpose of this bill is to obtain approval from City Council to place a loan authorization question on the General Election Ballot on Tuesday, November 8, 2005. The loan question requests an increase in indebtedness from the electorate in an amount 80 6/8/05 - Bills 040876, 050369, 050506 - Finance not to exceed $69,680,000 to fund the City's fiscal year 2006 capital budget, which is an increase of $8,025,000 from the amount in the ordinance as introduced. State law requires the City to place a question before the electorate during an election to increase its borrowing authority. The loan authorization, if approved, would finance capital projects classified for the following purposes and in the following aggregate amounts: For transit, $5,067,000; for streets and sanitation, $17,678,000; for municipal buildings, $25,738,000; for parks, recreation and museums, $17,558,000; and, finally, for economic and community development, $3,639,000. In order to provide appropriate time to advertise and print the ballot question to ensure that it's placed on the November 8, 2005 General Election Day Ballot, the bill 22 should be enacted no later than October 6, 2005. Normally the City Commissioners need to have the certified copy of the loan authorization ordinance in time to mail the 81 6/8/05 - Bills 040876, 050369, 050506 - Finance absentee ballots 30 days prior to the election date. Finally, attached as part of this testimony is the proposed ballot question requesting loan authorization from the electorate of the City of Philadelphia. This concludes my written testimony. I would be happy to answer any questions Council might have at this time.
Thank you very much. Questions? Councilman O'Neill.
Mr. Jannetti, without looking through the numbers and checking them with the capital budget that just passed City Council, the capital budget was amended in City Council, $7 million was added back as it was last year for recreation, and while we still don't have an agreement with the Administration on either year, last year when the $7 million was added back, that was placed on the ballot in that amount, that added additional amount. 82 6/8/05 - Bills 040876, 050369, 050506 - Finance Can you tell me what's in this ordinance in relation to what we did last week and this, whether it conforms as it did last year?
Yes, Councilman, I can do it. Councilman, it was $7 million even was added to the authorization for Council's projects and another million dollars for, I think it's, MDO projects.
What is 1,000,025 in the municipal buildings? It's on the amendment.
Do I have the right one? 83 6/8/05 - Bills 040876, 050369, 050506 - Finance
Diane Reed, Budget Director. The million 025 is the hundred thousand dollars per district that the Mayor added for Council districts in the MDO's line, plus cost of issuance.
Thank you, Madam Chair. Mr. Jannetti, let's go back to the issue with regard to the resolution on the bond offering itself. Now, when do you expect to do the borrowing for this transaction?
I think the next borrowing is in 2006, I think in December of '06.
And so in 84 6/8/05 - Bills 040876, 050369, 050506 - Finance that context then, you would not have any difficulty in complying with the Council resolution on this particular transaction; is that correct?
Okay. So it will not interfere with your ability to conduct a transaction?
Are there other questions on this bill or any of those discussed at this time? (No response.)
Madam Chair, again, thank you very much for the opportunity to speak. I would only suggest, if possible -- I know that the Administration has forwarded amendments. They've obviously incorporated the $7 million into the parks item and I think 85 6/8/05 - Bills 040876, 050369, 050506 - Finance there's been an explanation about why their overall number is now a little higher than the amendments that were handed out a little while ago by Councilwoman Tasco. I would only ask if there might be consideration by the committee based on the comments made by the Acting Finance Director, the difference between the two sets of amendments are the numbers, which I'm sure is easily rectified, as well as the provision in the back of the amendments offered by Councilwoman Tasco, which is this new Section 14 8, which would seek to incorporate at least the guidelines based on the resolution passed by Council to apply to this particular bill. The team has not been put together. It's been testified that there's no potential for interference in the issuance of debt. I'm obviously not on the committee, but I would at least ask the committee for its consideration with regard to that particular section being amended into the bill, as well as clarifying what the actual numbers are based on the numbers that were proposed by the 86 6/8/05 - Bills 040876, 050369, 050506 - Finance Administration's proposed amendment and make sure that everything gets put together in the proper fashion.
Thank you. Thank you very much. If all minds are clear, we will conclude this part of our hearing and enter into the stated meeting. (Public hearing of Committee on Finance concluded at 4:00 p.m.) - - - 87 6/8/05 - Bills 040876, 050369, 050506 - Finance CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on June 8, 2005, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.) 88 6/8/05 - Bills 040876, 050369, 050506 - Finance COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING - COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 8, 2005, 4:00 p.m. BILL NOS. 040876, 050369 and 050506 PRESENT: COUNCILWOMAN JANNIE L. BLACKWELL COUNCILMAN JUAN F. RAMOS COUNCILWOMAN MARIAN TASCO COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN FRANK DiCICCO COUNCILMAN BRIAN J. O'NEILL COUNCILMAN MICHAEL A. NUTTER COUNCILMAN FRANK RIZZO COUNCILMAN DARRELL CLARKE COUNCILMAN JAMES KENNEY V A R A L L O Incorporated Litigation Support Services 1835 Market Street, Suite 600 Philadelphia, PA 19103 215.561.2220 215.567.2670 89 6/8/05 - Bills 040876, 050369, 050506 - Finance
The Chair recognizes Councilwoman Blondell Reynolds Brown with a motion with regard to reporting out Bill 040876 with a favorable recommendation and a suspension of the rules so as to permit first reading at our next session of Council.
Thank you, Madam Chair. I move that Bill No. 040876 be reported out of committee with a favorable recommendation and suspension of the rules so that we can hear this at the next regularly scheduled session of City Council.
It has been moved and seconded that Bill No. 040976 be reported out of committee with a favorable recommendation and, furthermore, that the rules of Council be suspended so as to permit first reading at our next session of Council. All in favor will say aye. COUNCIL MEMBERS: Aye.
Opposed? 90 6/8/05 - Bills 040876, 050369, 050506 - Finance (No response.)
The ayes have it and so Bill No. 040876 is reported out of committee. The Chair recognizes Councilman Ramos with regard to an administrative amendment and request that you ask for an adoption of said amendment to Bill No. 050369. This amendment has been circulated. It is the one that was read where on there is a period after the word "Council" and the rest of the line deleted. This is an Administration amendment and the Chair asks Councilman Ramos if he would ask that said amendment be adopted.
Thank you, Madam Chair. I move for the amendment to Bill 19 No. 050369. COUNCILMAN DiCICCO: Second.
It has been moved and seconded that the amendment just referenced to Bill No. 050369 be adopted. All in favor will say aye. COUNCIL MEMBERS: Aye. 91 6/8/05 - Bills 040876, 050369, 050506 - Finance
The ayes are having it, so the amendment is adopted. The Chair recognizes Councilwoman Tasco with regard to another amendment concerning Bill No. 050369.
Thank you very much. Councilman Ramos, you were in order.
Thank you, Madam Chair. I move that Bill No. 050369 as amended be reported out of committee with a favorable recommendation. I further move that the rules of Council be suspended to permit first reading of this bill at our next Council meeting.
It has been moved and seconded that Bill No. 050369 92 6/8/05 - Bills 040876, 050369, 050506 - Finance as amended be reported out of committee with a favorable recommendation and a recommendation for suspension of the rules to permit first reading at our next session of Council. All in favor will say aye. COUNCIL MEMBERS: Aye.
The ayes have it and so the bill is reported out. The Chair recognizes Councilman Goode with reference to Bill No. 050 -- no; with reference to an amendment, an Administration amendment, to Bill No. 050506 for its adoption.
Thank you, Madam Chair. I move that the amendment to bill 050506 be adopted.
93 6/8/05 - Bills 040876, 050369, 050506 - Finance Opposed? (No response.)
The ayes have it and so the Administration amendment to Bill No. 050506 is adopted. The Chair recognizes Councilwoman Tasco.
Madam Chair, I offer two amendments. If you turn to , Section 5, I offer this amendment on behalf of Councilman Nutter. On his page, it just has proposed amendments to Bill 050506, in Section 5, there's a request to delete the line "and to enter into interest rate swap agreements," so that just as we did on the airport issue regarding swaps, that they will have to come back to City Council regarding swaps. And on a new line, Section 8, at the bottom, new Section 8, "Notwithstanding the authorization set forth in Section 1, the Bond Committee may not issue and sell general obligation bonds of the City until Council, by resolution, has determined that the sale of 94 6/8/05 - Bills 040876, 050369, 050506 - Finance bonds and the selection of professionals paid out of the costs of issuance will be conducted under a process that conforms to Resolution 5 No. 050429, adopted May 26, 2005. The provisions of this Section 8 are not severable from the remaining provisions of this Ordinance, but are essentially and inseparably connected with all other provisions of this Ordinance, and it is hereby declared to be the legislative intent of Council that Council would not have enacted this Ordinance or any portion of this Ordinance unless the Section 8 were a valid part of such enactment."
Thank you, Madam Chair. This resolution that was passed I was originally a sponsor of and I withdrew my sponsorship. I do not believe that the resolution, which is non-binding, should be memorialized. I think there are members of 95 6/8/05 - Bills 040876, 050369, 050506 - Finance Council, including myself, that did not vote in favor or against it, but let it become approved by affirmation. Therefore, I don't believe it should be asserted into this bill 6 in this way.
Thank you. There is a motion on the floor for the adoption of this amendment. Is there a second?
There is a second. All in favor will say aye to this adoption. SOME COUNCIL MEMBERS: Aye.
Then we will take a roll call with regard to the adoption of this amendment. Councilman Ramos?
The motion is not adopted as the vote is four to three. Am I correct, gentlemen? THE CLERKS: Yes.
And this amendment fails. The Chair recognizes Councilman 97 6/8/05 - Bills 040876, 050369, 050506 - Finance Goode with regard to Bill No. 050506 as amended.
Thank you, Madam Chair. I move that Bill 050506 as amended be reported out of committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next Council session.
All those in favor will say aye. COUNCIL MEMBERS: Aye.
Then Bill No. 050506 as amended will be reported out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended so as to permit first reading at our next session of Council. We thank you all. This will conclude our hearing and meeting. We thank you all for your patience and for coming and getting through all of this. Thank you very much. (Public meeting of Committee on 98 6/8/05 - Bills 040876, 050369, 050506 - Finance Finance concluded at 4:15 p.m.) - - - 99 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on June 8, 2005, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)