Committee Hearing, June 2, 2009

COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON FINANCE3 - - -4 Room 400, City Hall5 Philadelphia, Pennsylvania Tuesday, June 2, 20096 1:30 p.m. 7 - - - 8 9 PRESENT: COUNCILWOMAN MARIAN B. TASCO, CHAIR10 COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE11 COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR.12 COUNCILMAN WILLIAM GREENLEE COUNCILMAN CURTIS JONES, JR.13 COUNCILMAN JAMES F. KENNEY COUNCILWOMAN BLONDELL REYNOLDS BROWN14 15 BILLS 090288, 090437 and 090352 RESOLUTION 09045116 17 18 19 20 - - -21 22 V A R A L L O Incorporated Litigation Support Services23 Eleven Penn Center 1835 Market Street, Suite 60024 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.267025 2 1

Good2 afternoon. Thank you so much for your3 patience. We never can get started on4 time. There are 50 million things going5 on at the same time.6 I'd like to call the Committee7 on Finance to order and note that I8 have -- we'll have five before we take9 any action on any bill. Two10 Councilmembers are on their way.11 We are going to establish that12 we have Councilwoman Blondell Reynolds13 Brown, Councilman Greenlee, Councilman14 Kenney here and yours truly.15 We're going to take up two16 bills before we go to the Community17 Development Block Grant bills, because18 these bills are fairly short.19 First we're going to call on20 Andrew Frishkoff regarding Lancaster21 Avenue. He is here? Okay.22 (Witness approached witness23 table.)24

Would the25 3 6/2/09 - FINANCE - BILL 0902881 Clerk please read the title of the bill.2

Bill No. 090288, an3 ordinance authorizing the Commerce4 Director to file an application with the5 Commonwealth's Department of Community6 and Economic Development under the Main7 Street Program in an aggregate amount not8 to exceed $1 million to assist in the9 revitalization of the Lancaster Avenue10 Commercial Corridor; and authorizing the11 City to enter into one or more agreements12 with DCED in furtherance of grant13 requirements; all under certain terms and14 conditions.15

Thank you.16 Would you identify yourself for17 the record, please, and proceed.18

Yes. Thank19 you. Good afternoon, Councilwoman Tasco,20 members of the Finance Committee and21 other members of City Council. I am22 Andrew Frishkoff. I'm Director of23 Neighborhood Economic Development for the24 City of Philadelphia's Commerce25 4 6/2/09 - FINANCE - BILL 0902881 Department. I will present testimony on2 behalf of the Administration on Bill No.3 090288, which permits the City to apply4 for $1 million from the Pennsylvania5 Department of Community and Economic6 Development for the revitalization of7 Lancaster Avenue.8 For the past several years, the9 Commerce Department has been working with10 Councilwoman Blackwell, Councilman Jones11 and a number of community stakeholders to12 design streetscape improvements for13 Lancaster Avenue between 38th Street and14 63rd Street. Through City capital funds,15 Cultural and Commercial Corridor Bond16 proceeds and Water Department funds, the17 City has committed $6.3 million towards18 design and construction of these19 improvements. We anticipate beginning20 construction this fall.21 In addition to the significant22 City commitment of funds, the23 Philadelphia Housing Authority, People's24 Emergency Center CDC, Lancaster Avenue25 5 6/2/09 - FINANCE - BILL 0902881 Revitalization Corporation and other2 local developers have made major housing3 and community investments along the4 corridor. In response to these local5 investments, DCED has invited the6 Commerce Department to apply for up to $17 million from its Main Street Program to8 support the Lancaster Avenue streetscape9 improvement project. These funds are10 above and beyond the $500,000 in the11 annual Main Street funds that the City12 typically receives from DCED. This is a13 one-time allocation that will allow us to14 include additional sidewalk and lighting15 improvements on Lancaster Avenue that we16 could not otherwise afford.17 I respectfully request that you18 authorize the Commerce Department to file19 an application to DCED for Main Street20 funds on behalf of Lancaster Avenue21 streetscape improvements.22 Thank you for the opportunity23 to testify today.24 Allow me, please, to make one25 6 6/2/09 - FINANCE - BILL 0902881 clarification. The $6.3 million figure2 would include the million dollars of the3 state funds. That will be the total4 project cost. The City would be5 providing up to 5.3 million and the state6 would be providing up to a million.7

Thank you8 very much.9 Are there questions?10 Councilman Greenlee.11

Thank12 you, Madam Chair.13 Mr. Frishkoff, just for the14 record, your written statement says 4.315 million. That's a typo?16

That is a typo.17 We are segregating the project in terms18 of bids between the upper part and the19 lower part. The total full length, 38th20 to 63rd, would be, with the state funds,21 6.3.22

Okay.23 Thank you.24

Yes.25 7 6/2/09 - FINANCE - BILL 0902881

Thank2 you, Madam Chair.3

The Chair4 recognizes Councilman Jones.5

Thank you,6 Madam Chair.7 I just want to put on the8 record that I enthusiastically support9 this application, and I think that it10 will go a long way not only for Lancaster11 Avenue -- and that strip of land covers12 the 3rd District, which is Councilwoman13 Blackwell's, but the 4th District. It is14 the old Route 30 highway, which used to15 be a main thoroughfare from suburbia to16 Center City. But it will also impact the17 entire area because of the amount of18 traffic, vehicular traffic, that comes19 through there.20 So these improvements will go a21 long way to spur private investment to22 redevelop that whole area. So we are23 thankful and appreciative of the Commerce24 Department's ongoing efforts to work with25 8 6/2/09 - FINANCE - BILL 0902881 us.2

Thank you3 very much.4 Any other comments or5 questions?6 (No response.)7

Do you8 want a suspension of the rules?9

We would10 request that at this time. Thank you.11

We'll have12 to hold this until we get a quorum.13 We'll just take testimony right now.14 We'll go with Bill 090352, but15 we're waiting for Councilman Goode, who16 has, I believe, an amendment to this17 bill. Do we have anyone here to testify18 on Bill 090352 regarding Wachovia Bank?19 (Witnesses approached witness20 table.)21

Could the22 Clerk please read the title of the bill.23

Bill No. 090352, an24 ordinance authorizing the Office of the25 9 6/2/09 - FINANCE - BILL 0902881 City Treasurer, on behalf of the City, to2 enter into an agreement with Wachovia3 Bank, NA for provision of payroll banking4 services to the City, under certain terms5 and conditions.6

Good7 afternoon. Would you state your name for8 the record and begin your testimony.9

Good afternoon,10 Councilwoman Tasco and members of the11 Finance Committee. My name is Francois12 Dutchie. I'm head of the Finance and13 Contracts Division of the City's Law14 Department.15 We are here today -- my task16 here is to offer up an amendment to Bill17 No. 090352. I believe a copy of the18 amendment, both the black-lined and a19 clean version of the amendment, have been20 provided to members of the Committee.21 The amendment handles an issue22 that I believe was raised by Councilman23 Goode at the last hearing, and what the24 amendment does to the Provider Agreement,25 10 6/2/09 - FINANCE - BILL 0902881 the contract between the City and2 Wachovia, it amends the term provision,3 so that rather than having a renewal4 provision in the contract, the contract5 will run for a term of one year and it6 will not be renewed unless Council7 authorizes its renewal.8

What has9 been the normal terms of the agreement?10

The original term11 provision for this agreement, as with12 most City contracts, is that the initial13 term would be for one year and it would14 allow for three one-year renewals.15

But each16 year it would be an automatic renewal?17

It would not be18 automatic. It would be at the City's19 discretion.20

But21 without this amendment, it would be22 automatic?23

I'm sorry?24

Why are we25 11 6/2/09 - FINANCE - BILL 0902881 doing the amendment? What is the purpose2 of the amendment?3

Essentially, the4 amendment limits the contract to one year5 and does not allow for it to be renewed6 unless Council determines that it should7 be renewed and we get specific8 authorization from Council to renew it.9

But prior10 to this amendment, the City could renew11 it without coming back to Council?12

That's correct.13

That's14 what I'm trying to get on the record.15

That's correct.16 Yes, Councilwoman.17

Thank you.18 You want to testify, young19 lady?20

I am Rebecca21 Rhynhart, City Treasurer.22 I just wanted to add that you23 should all have received lending24 performance information, as well as25 12 6/2/09 - FINANCE - BILL 0902881 Wachovia's diversity data, and there are2 representatives from Wachovia here to3 answer any questions you may have on4 that.5

The Chair6 recognizes Councilwoman Brown.7

Good8 afternoon. State again what the standard9 operating procedure is when it comes to10 this type of measure and banks and the11 City.12

You're referring13 to the term provision of a standard City14 contract?15

Yes.16

For most17 contracts, at least with respect to18 professional service contracts, our19 standard term provision states that the20 initial term will be for a period of one21 year and that the contract may be renewed22 at the City's sole discretion for up to23 three additional terms of one year.24

And the25 13 6/2/09 - FINANCE - BILL 0902881 defining difference between what you just2 said and this again is?3

That there is no4 option to renew this contract. This5 contract will run for a term of one year6 and then it will end, unless it is7 renewed upon approval by City Council.8

Thus,9 making this not a part of the norm,10 correct?11

That's correct.12

Thank you13 for the clarity.14

Certainly.15

Could you16 point out any other contracts that are17 similar to this, what we're being asked18 to do today?19

I am not aware of20 any. This amendment was done, I believe,21 specifically at the request of either22 Councilman Green or Councilman Goode at23 the last hearing. We discussed the term24 provision, and they thought that it would25 14 6/2/09 - FINANCE - BILL 0902881 be prudent to limit the term to one year.2

Excuse me3 a minute.4 Councilman Kenney.5

Thank you,6 Madam Chair.7 Speaking here with Councilman8 Greenlee, this Diversity Profile, is this9 being offered as part of the record, the10 public record? Will this be attached on11 the passage of the bill?12 I mean, there's just a kind13 of -- I kind of understand on what you're talking about, but I think it15 could be said maybe in a better way. One16 of the inclusive culture bullet points is17 that the bank "conducted a white men's18 session to discuss how they can model19 effective diversity leadership." While I20 understood what it meant when I read it,21 if this is going to be part of the22 record, maybe we could use majority23 business owners or -- I just think it24 needs -- and I'm not angry --25 15 6/2/09 - FINANCE - BILL 0902881

Why don't2 Wachovia -- why don't they come up, if3 that's okay.4

If they can5 come up with a different term. I just6 think it's --. I'm7 sorry.8

They can change9 that.10

I just11 think if it's part of the record, it12 should -- and I understand what they're13 saying and what the bullet point means.14 I just think from a language standpoint,15 we ought to clean it up a little bit.16

Okay.17

Thank you.18

The Chair19 recognizes Councilwoman Blondell Reynolds20 Brown.21

Councilman22 Jim Kenney's observation begs a follow-up23 for me. So when you receive these type24 of documents, what then does City25 16 6/2/09 - FINANCE - BILL 0902881 Treasurer do with them?2

Well, for this3 particular one, we asked for this4 information to provide to City Council.5 So are you asking if it will be part of6 the record?7

Yes. Do8 you read them?9

That's more of10 a -- is that okay if it's part of the11 record?12

It can be. It's13 not a -- it was not anticipated that this14 would be an exhibit to the ordinance, so15 it does not need to be part of the16 record.17

Well,18 actually, they do, because the new19 practice here at this table is for anyone20 who is doing business with the City of21 Philadelphia, we want to know what the22 OEO plan is. So it actually should be a23 part of the record for us to review.24

Then it will be a25 17 6/2/09 - FINANCE - BILL 0902881 part of the record.2

If I'm not3 mistaken, I believe that was why4 Councilman Goode asked for this. Do you5 recall?6

I believe that is7 correct.8

Thank you.9

Is this10 Councilman Goode's amendment?11

This is an12 amendment that -- yes, essentially. He13 requested that the agreement be amended14 to remove the renewal options.15

Thank you.16 We'll recess for two minutes.17 Thank you.18 (Short recess.)19

That was20 longer than two minutes. We're back.21 Are there any other questions22 relative to this bill?23 (No response.)24

We'll just25 18 6/2/09 - FINANCE - BILL 0902881 hold action on this bill until the2 sponsor appears. Thank you very much.3 Well, it appears that we're4 just not ready with anything today. So5 we're just going to be -- just take a6 little break, because the next two bills,7 Community Development Block Grant bills,8 are not -- well, what we can do is have9 testimony. We'll ask -- well, we can10 call other witnesses prior to the11 testimony of the Administration. The12 Administration is not prepared, and it's13 not their fault. It's just that they14 were trying to negotiate with Council.15 So what we'd like to do is call16 up the next bill, have the public come17 and testify and give their testimony, and18 then we'll have, when the Administration19 is ready, we'll have that testimony. Is20 that okay? Okay. Thank you.21 The Clerk will now read both22 bills, the resolution and the Plan.23

Bill No. 090437, an24 ordinance authorizing the Director of25 19 6/2/09 - FINANCE - BILL 0902881 Housing, on behalf of the City, to file2 applications with the United States3 Department of Housing and Urban4 Development for a Community Development5 Block Grant; to participate in the HOME6 Investment Partnership program and the7 Emergency Shelter Grant program; and for8 a Housing Opportunities for Persons With9 AIDS Grant; and to file applications with10 the Commonwealth to obtain grants under11 the Act of April 12, 1956, Public Law12 1449, Section 4, as amended, to prevent13 and eliminate blight; authorizing the14 Director of Housing and Director of15 Commerce to file applications to obtain16 other grants from the Commonwealth;17 authorizing the Director of Commerce to18 use the Section 108 Loan Guarantee19 Program; and authorizing the Director of20 Housing and the Director of Commerce to21 enter into all understandings and22 assurances contained in such applications23 and take all necessary action to accept24 the grants; all under certain terms and25 20 6/2/09 - FINANCE - BILL 0902881 conditions.2 Resolution 090451, resolution3 approving the City's Substantial4 Amendment to the Year 34 Consolidated5 Plan (Fiscal Year 2009) and application6 to the United States Department of7 Housing and Urban Development for8 $14,046,629 in additional Community9 Development Block Grant funding for10 economic development and housing11 activities pursuant to funds made12 available through the American Recovery13 and Reinvestment Act of 2009.14

Thank you15 very much.16 We will call witnesses for Bill17 090437, the Year 35 Consolidated Plan.18 The Chair recognizes Mr. James19 White, Philadelphia Association of CDCs.20 (Witness approached witness21 table.)22

Good afternoon.23

Good24 afternoon.25 21 6/2/09 - FINANCE - BILL 0902881

Thank you for the2 opportunity to testify. 18 Number one, ensuring adequate19 funding for affordable housing. When20 housing is built or repaired, the total21 economic impact is much greater than22 simply the cost of construction. The23 process involves the purchase of24 construction materials, payment of wages25 22 6/2/09 - FINANCE - BILL 0902881 to construction workers and fees to2 professionals, which generate sales, wage3 taxes for the City, as well as real4 estate transfer taxes and a stronger5 property tax base. 5 million per year in funding committed22 from the General Fund. 8 million per year to3 the City's Basic System Repairs program4 and the development of new affordable5 homes. 9 The Housing Trust Fund is a10 flexible source of funding that enables11 CDCs and other developers to put vacant12 and abandoned properties back into13 productive use and expanding the City's14 tax base as well. 53 million from the General Fund to the4 Housing Trust Fund. 13 With regard to the Substantial14 Amendment to the Year 34 Consolidated15 Plan overall, we are supportive with the16 range of programs designated to receive17 CDBG Recovery funds. In particular, we18 strongly support providing sufficient gap19 financing to support "shovel-ready"20 affordable rental housing development21 projects currently seeking Low Income22 Housing Tax Credits from the Pennsylvania23 Housing Finance Agency. Such a strategy24 will maximize the leveraging of outside25 25 6/2/09 - FINANCE - BILL 0902881 resources to address Philadelphia's2 critical housing needs, in addition to3 all the other benefits of new affordable4 housing. 12 We also urge the City to13 utilize a larger portion of the CDBG-R14 funds identified in the Substantial15 Amendment to the Year 34 Plan to support16 affordable housing programs. 24 Issue 2, further strengthen25 26 6/2/09 - FINANCE - BILL 0902881 neighborhood economic development. The2 City has made significant investments in3 strengthening neighborhood commercial4 corridors and small businesses to better5 address the needs for local access to6 goods, services and jobs. 15 Demonstrating the growing16 importance of this program, the City's17 overall economic development strategy has18 to include this in the Consolidated Plan19 for the first time. To maximize the20 benefits of the CDC Tax Credit Program,21 we urge City Council to approve pending22 legislation that will allow a CDC to23 partner with up to two businesses that24 would share the credit for the hundred25 27 6/2/09 - FINANCE - BILL 0902881 thousand dollar contribution. Especially2 given the current economic downturn, this3 change is needed to ensure the continued4 success of the program. 15 This change will also open up16 the program to participation by a broader17 range of businesses operating in18 neighborhoods throughout the City versus19 the relatively few that have business20 privilege tax liabilities of over 100,00021 per year. 19 Issue 3, reform the City's20 property acquisition and disposition21 system. The long-term challenge of22 assembling vacant, blighted and abandoned23 properties in Philadelphia in a timely24 manner has served as a deterrent to new25 29 6/2/09 - FINANCE - BILL 0902881 development for far too long. We are2 encouraged by steps being taken by the3 City to improve their systems for4 acquiring and disposing of these5 properties, such as the development of an6 inventory of publicly owned properties7 and the creation of a clear written City8 policy on disposition, which should9 include nominal or below-market10 disposition of public land for community11 benefit, such as affordable housing12 development, community facilities,13 responsive neighborhood economic14 development programs and open space. 22 Now that the audit for the NTI23 bond funds used for property acquisition24 is complete, it is time to move forward25 30 6/2/09 - FINANCE - BILL 0902881 with acquisitions currently in the2 pipeline so that planned developments can3 proceed.

We look forward to working with4 the City to support implementation of5 further needed changes in our property6 acquisition system, including a single7 application to acquire vacant property8 controlled by public agencies, the9 recycling of NTI bond funds to support10 future acquisition activities, reform to11 the Sheriff's Sale process and creation12 of a Unified Land Bank. 5

Thank you6 for your testimony.7 Are there questions or comments8 from members of the Committee?9 (No response.)10

Thank you11 very much. We always look forward to12 having you come in to share with us your13 thoughts.14

Thanks. Always15 look forward to the opportunity.16

The Chair17 recognizes Steve Jurash.18 (Witness approached witness19 table.)20

Good afternoon,21 Madam Chair.22

Good23 afternoon.24

Members of the25 32 6/2/09 - FINANCE - BILL 0902881 Finance Committee. My name is Stephen2 Jurash and I'm President and CEO of the3 Urban Industry Initiative, a 501(c)(3)4 non-profit economic development agency5 working in partnership with the6 Philadelphia Commerce Department. Our7 mission supports the core mission of the8 Commerce Department, specifically to9 create and retain manufacturing jobs in10 Philadelphia neighborhoods through a11 comprehensive strategy that strengthens12 businesses and builds relationships13 between manufacturers and their14 community. 18 I'm here this afternoon to19 testify on behalf of the Urban Industry20 Initiative, the UII, and the21 manufacturing sector as they may apply to22 the American Recovery and Reinvestment23 Act of 2009. Specifically, the Urban24 Industry Initiative is seeking a grant of25 33 6/2/09 - FINANCE - BILL 0902881 $500,000 over two years to support our2 core administrative functions. 18 The Urban Industry Initiative19 urgently needs to find alternative20 funding sources, and I believe we are21 eligible under provisions for CDBG-R22 grant funds. Since 2006, we have23 received substantial support from the24 Commerce Department through the use of25 34 6/2/09 - FINANCE - BILL 0902881 stimulus funds, which, as you know, have2 been dramatically reduced as a result of3 these challenging times. 6 We were created in 1997 by PIDC7 and then funded with a three-year grant8 from Pew Charitable Trusts. That grant9 was in effect for the years 2000, 200110 and 2002. During those years, the UII11 was responsible for manufacturing in a12 ten square mile area of the lower13 Northeast, Port Richmond, Bridesburg,14 Frankford. Those ten square miles15 contain 427 manufacturing companies with16 13,000 employees producing over billion17 in gross product annually. million in new21 investment through its innovative22 economic development programs involving23 intensive outreach and fieldwork. 3 By the end of 2002 when the Pew4 money ran out, PIDC decided that the UII5 was not relevant to its mission. At that6 time, then Commerce Director Jim Cuorato7 saw the value of the UII and did not want8 to lose what had been gained over the9 previous years. He brought the UII over10 and physically located it at the Commerce11 Department. Unfortunately, there was12 only enough funding to support one13 person, so UII staff went from seven to14 one. 18 Below summarizes the funding19 the Urban Industry Initiative has20 received from the City. Between 1997 and21 2006, the only funding we received was22 phones, desks and computers. There was23 no cash put in. Fiscal 2005 to 2006 we24 received our first money, which was25 36 6/2/09 - FINANCE - BILL 0902881 $100,000. 2 Fiscal 2007-2008, 300,000. 4 These funds have allowed the5 UII to regain its strength and once again6 engage manufacturing companies in the7 field, reaching out to companies,8 connecting them with grant and loan9 opportunities, helping them navigate City10 government, finding new opportunities for11 them to grow, and linking them with12 training resources that would strengthen13 their businesses. Government has made14 many programs available for businesses,15 but generally does not do a good job of16 disseminating this information. 12 I can tell this Committee with13 a great deal of confidence that one of14 the strengths of the UII has been the15 fact that no other agency in the City is16 more trusted by manufacturing or has a17 better understanding of their unique18 needs as an economic sector. For 1219 years now, the Urban Industry Initiative20 is who Commerce and other City agencies21 go to for outreach to manufacturing. 25 38 6/2/09 - FINANCE - BILL 0902881 Philadelphia has been the only county in2 the Commonwealth without a trade3 association, and it showed. Companies4 were not buying from one another. They5 were not even aware of each other's6 capabilities. 15 But today we are on the16 precipice.

In 28 days, the UII could17 literally cease to exist. 21 Foundations are reluctant to fund22 projects which have no solid base of23 support. The $250,000 we need from the24 City for Fiscal 2010 supports our25 39 6/2/09 - FINANCE - BILL 0902881 administrative core from which all other2 projects flow. 6 One of the most important7 points I'd like to make here is that the8 Urban Industry Initiative has been9 decreasing its dependency on City10 funding, from 56 percent in Fiscal11 '06-'07 to a projected 30 percent in next12 year's budget. 18 But we need more time. 24 I would like now to give you25 40 6/2/09 - FINANCE - BILL 0902881 just a summary of some of the initiatives2 that will die with the UII if we do not3 receive funding. 8 This program is what emerged from the9 UII's Working Group on Employment and10 Training -- many of your staffers11 attended those meetings -- two years in12 development, along with a survey we13 conducted encompassing 83 percent of the14 City's 1,300-plus manufacturing15 companies. 22 Job Ready was created to close23 the skill gap that now exists in24 Philadelphia's manufacturing sector,25 41 6/2/09 - FINANCE - BILL 0902881 leaving us with one of the highest2 unemployment rates in the nation while3 our manufacturers have hundreds of job4 openings they cannot fill. Job Ready5 will recruit from this City's poorest,6 most economically disadvantaged7 neighborhoods. We will partner in8 recruiting with the City's faith-based9 organizations. It is believed that by10 doing so, we will receive candidates who11 possess the kind of support and12 encouragement needed to complete the13 program. Each Job Ready course will be14 three months in duration and contain15 adult basic literacy components, along16 with shop math for manufacturing. But at17 the heart of this innovative job training18 initiative will be instruction in19 foundational skills. These are the20 skills missing in many job applicants21 today, which are necessary to help22 individuals stay employed and become23 capable of advancement to even higher24 skill levels. This training includes25 42 6/2/09 - FINANCE - BILL 0902881 learning skills in conflict resolution,2 team building, concentration and3 listening, and other invaluable4 competencies that many of our current5 generation of workers simply do not6 possess. City manufacturers who have7 participated in structuring the8 curriculum for this program told us that9 Job Ready candidates must possess work10 ethic. They are frustrated by employees11 who cannot show up for work two days in a12 row or cannot seem to understand the13 importance of being on time or who think14 it's okay to incessantly text during15 working hours. Job Ready will be a boot16 camp, which will not tolerate absences or17 tardiness, acting out or disruptive18 behavior. 21 Candidates who successfully22 complete the course will be certified by23 the Manufacturing Alliance of24 Philadelphia and the Community College of25 43 6/2/09 - FINANCE - BILL 0902881 Philadelphia, our training partner. The2 UII is currently applying for $520,000 in3 funding for this program through the4 Philadelphia Workforce Development5 Corporation and the Philadelphia6 Workforce Investment Board via newly7 arrived federal stimulus funds. This8 program, unlike most others, is designed9 to become self-sufficient at the end of10 its first year. This means that we will11 not return to government for future12 funding. 22 Two, PRIDE Energy Independence23 District. In 2002, the Urban Industry24 Initiative created the first urban25 44 6/2/09 - FINANCE - BILL 0902881 industrial district in the Commonwealth2 known as the Port Richmond Industrial3 Development Enterprise, or PRIDE. PRIDE4 is a three square block neighborhood5 improvement district containing 536 manufacturing companies in a mixed7 residential environment and is managed by8 the UII. We created the Richmond9 Corridor Association, RCA, with 8310 manufacturing companies shortly11 thereafter.

16 The UII intends to create a17 pilot program in partnership with PECO18 and PGW that has the potential to capture19 heat energy given off during the20 manufacturing process and convert that21 energy into electricity for use by the22 homes surrounding these manufacturing23 facilities. Each 1,000 kilowatt24 microturbine has the equivalent effect of25 45 6/2/09 - FINANCE - BILL 0902881 removing 700 cars from the road, reducing2 emissions. 6 As before with Job Ready, even7 if we receive funding for this program,8 without City funding, we will not have9 the administrative capacity to execute10 the program and it will die. 13 These are just two examples of14 the innovative economic development15 programs emerging from the Urban Industry16 Initiative. There's also a newly formed17 partnership with Drexel University to18 offer Philadelphia manufacturing owners19 access to an online program designed to20 teach them how to think more21 entrepreneurially. 3 In conclusion, if one4 substitutes the word "industrial" for the5 word "commercial," we easily have a fit6 with what has traditionally been the use7 of CDBG funds. 14 One of the things we have learned from15 manufacturers is they feel completely16 ignored by the City and its policymakers,17 and for good reason. 23 This City cannot afford to24 ignore its manufacturing sector. 5 Then there's the wages. 10 This is why I say that manufacturing is11 the last best chance for the City's12 neighborhoods. And manufacturing is13 growing, not dead or dying, as some would14 have you believe. S. 6 trillion in20 2007, nearly double the 811 billion21 produced a decade earlier. Not bad for a22 country that doesn't produce anything23 anymore. And we have see it here in24 Philadelphia. Manufacturing is growing,25 48 6/2/09 - FINANCE - BILL 0902881 but it's also changing. 10 And while we have been busy not11 investing in our manufacturing sector, we12 have been missing tremendous13 opportunities. For years I have been14 talking about how we can attract15 manufacturing here, how we can begin to16 put some of those old frequently empty17 buildings back to work in our18 neighborhoods. In fact, the UII has a19 plan. 21 As you can see from City wage22 taxes collected and from salaries paid,23 manufacturing is not dead. 6

Thank you7 very much.8 Are there any questions from9 members of the Committee?10 (No response.)11

Thank you12 for coming out and thank you for your13 testimony.14 The Chair recognizes Mr. John15 Rowe.16 (Witness approached witness17 table.)18

Thank you, Madam19 Chairwoman, members of the Committee,20 members of City Council. I will make my21 comments brief. I am John Rowe, the22 Executive Director of the Utility23 Emergency Services Fund, and I present24 testimony in support of funding for25 50 6/2/09 - FINANCE - BILL 0902881 emergency utility assistance to2 low-income families.3 Our deep concern is that the4 submitted Year 35 Consolidated Plan has5 eliminated $1 million of emergency6 utility assistance for 3,000 very poor7 families, families with an average income8 of about $12,000. On average, the9 families have one to two young children,10 and more than a third of the families are11 employed.12 The City also loses the13 opportunity to leverage these funds into14 $2 million through matching utility bill15 credits. All of the funds are dedicated16 to utility assistance, not to processing,17 not to administration, but solely to18 utility assistance to prevent19 terminations or to get utilities turned20 back on.21 While UESF is very thankful for22 the support shown by OHCD, the23 Administration and especially by City24 Council, the 3,000 families will be25 51 6/2/09 - FINANCE - BILL 0902881 devastated by this funding cut.2 UESF is the last resort for3 many. The City is applying for $144 million through the American Recovery and5 Reinvestment Act, whose goals include6 assisting those most impacted by the7 current economic recession. While we8 certainly acknowledge value of the9 projects being proposed in the10 Substantial Amendment to the Year 3411 Consolidated Plan, emergency utility12 assistance is as crucial, if not more so.13 PGW is projecting 43,00014 terminations in Philadelphia; PECO,15 87,000 terminations. A month ago in16 April of 2009, PECO terminated 13,00017 low-income families in one month, a 10018 percent increase over the same month last19 year, April 2008. That was 13,000 in one20 month.21 If emergency utility grants are22 not available, especially in today's23 economy, families will become homeless,24 houses will get abandoned and families25 52 6/2/09 - FINANCE - BILL 0902881 with children will be devastated.2 To pay for utilities last year,3 about a third of all low-income families4 went without food for at least a day,5 while almost half went without medical or6 dental care. More than a quarter were7 unable to make their full mortgage or8 rent payment. Many were evicted,9 foreclosed, moved in with family or10 friends, or moved into shelter or became11 homeless.12 I present this testimony not13 only on behalf of UESF and the families14 we serve, but also on behalf of community15 organizations located throughout16 Philadelphia who serve over 200,00017 low-income families annually. I include18 a list of the organizations who support19 this testimony in the written testimony.20 We are very grateful to City21 Council and the City Administration for22 its financial and other support over the23 years. We respectfully request that the24 $1 million to continue this program be25 53 6/2/09 - FINANCE - BILL 0902881 made available. The funds will be2 leveraged into $2 million, will prevent3 problems before they occur and will have4 positive and long-term outcomes for5 Philadelphia.6

Thank you7 very much.8

Thank you.9

We're10 working on it.11

Thank you very much.12

Thank you.13 Any questions?14 (No response.)15

And thank16 you for your hard work at the services17 you provide as well as the other18 community organizations in the City.19

Thank you very much.20

Thank you.21 Councilwoman Brown.22 Mr. Rowe?23

I'm sorry.24

Good25 54 6/2/09 - FINANCE - BILL 0902881 afternoon, Mr. Rowe.2

Hi.3

When I4 look at your very, very compelling stats5 around what's happening or not happening6 with our City's children, it's often said7 that a city is measured by the manner in8 which it takes care of the least of9 these. So I am going on record to show10 that I will be working with Finance Chair11 and other members of this Council to12 ensure that you get what's needed,13 because the long-term impact of14 homelessness on children typically can't15 be measured. Keep up your important16 work.17

Thank you very much.18 We partner with the Drexel University19 School of Public Health. They recently20 gathered data that energy insecurity for21 children increased by 38 percent from22 2007 to 2008. I still need to know what23 the definition of that is, but they're24 talking about the impact of high utility25 55 6/2/09 - FINANCE - BILL 0902881 costs on the health, nutritional health,2 the schooling, the attendance in school3 of children. I'd be happy to provide4 that as soon as I can find it out.5

Please6 provide it to the Chair, and she'll see7 that we get it.8

I will.9

Thank you.10

Thank you11 so much.12 Any other comments?13 (No response.)14

We15 appreciate your testimony, and thank you16 for waiting.17

Thank you very much.18

Next we19 have Elouise Edmonds.20 (Witness approached witness21 table.)22

Good afternoon.23

Good24 afternoon.25 56 6/2/09 - FINANCE - BILL 0902881

I'm Elouise2 Edmonds, Strategic Planning Consultant3 working with Community Land Trust4 Corporation, and I come today in support5 of the ongoing planning of Community Land6 Trust to acquire the old vacant warehouse7 at 9th and Poplar Street and to convert8 it into intergenerational enterprises9 that will support persons, including our10 older adults taking care of children,11 persons with disabilities and other12 households in poverty in the City of13 Philadelphia. Rather than read to you,14 I'm going to just briefly tell you the15 situation.16 This warehouse is located in17 the Empowerment Zone, in the Enterprise18 Zone and is in the middle of the19 Broad-Girard commercial district at 9th20 and Girard. Specifically, the intent is21 to use a bond issued from PIDC to the22 Pennsylvania Economic Development Finance23 Agency to cover the costs of acquiring24 and retrofitting this warehouse and to25 57 6/2/09 - FINANCE - BILL 0902881 provide a diverse range of enterprises2 that would be linked to workforce3 development resources, on-the-job4 training resources and, as a Professor at5 Temple, teaching finance of community6 economic development where I pull my7 students in to work with the8 community-based organizations to help9 them complete mission-impossible type10 projects, to pull in a diverse range of11 students from all levels who will have12 sustainable employment in the context of13 creating economic development enterprises14 to support people in distress in the City15 of Philadelphia.16 Okay? Questions?17

Do you own18 this warehouse?19

I'm sorry?20

Do you owe21 the warehouse or you need the funds to22 acquire the warehouse?23

We're trying to24 acquire the warehouse. We have -- we're25 58 6/2/09 - FINANCE - BILL 0902881 trying to joint venture between the2 Community Land Trust Corporation and3 private sector. In fact, we have4 participants who want to operate the5 various enterprises in this warehouse.6 We have a doctor who wants to do the7 community healthcare. We have a chef, a8 world-class chef, who wants to operate9 the community gourmet food enterprises.10 And as a specialist in the finance of11 community economic development who12 teaches, I want to pull in students at13 all levels who will have on-the-job14 training resources in the context of this15 warehouse.16

Who17 currently owns the building?18

Mark Nicoletti.19

Okay.20

And he started21 with an original price of 12.5 million22 and he dropped it down to 7.5 million.23 As we speak, we have a property valuation24 appraiser who is coming up with what25 59 6/2/09 - FINANCE - BILL 0902881 should be the comparable price for2 acquiring this warehouse.3

Thank you.4 Any other questions?5

Madam6 Chair, I'm confused from the testimony7 whether or not this is something that's8 included -- if this particular project is9 included in the legislation we're10 considering today or is this something11 that the witness is coming to seek our --12

She's13 coming to seek.14

She's15 coming to seek our assistance on it? But16 it's not been finalized through PIDC?17

I'm coming to18 seek your assistance and to give notice19 of what we're doing.20

Okay.21

Because we22 actually have been operating pro bono.23 We have Dechert law firm working with us24 and me as a pro bono strategic planning25 60 6/2/09 - FINANCE - BILL 0902881 consultant, and we have Campbell Thomas2 Architects, who have been supporting3 Community Land Trust since the solar4 houses were developed in the 1980s. So5 seriously, we have been pulling together6 pro bono the technical team.7 We met with PIDC to basically8 find out exactly what we need to do at9 this stage, and we are preparing packages10 to go to DCED requesting planning grants,11 et cetera.12

Okay.13 Thank you.14

Thank you.15 Thank you so much.16 Next we have Beth Goodell,17 Irwin Trauss.18 (Witnesses approached witness19 table.)20

Thank you, Madam21 Chairwoman. Good afternoon. My name is22 Elizabeth Goodell. I am the managing23 attorney for consumer and homeownership24 law at Community Legal Services. I am25 61 6/2/09 - FINANCE - BILL 0902881 here today to support Resolution 090451,2 the amendment to the Year 34 Consolidated3 Plan. That amendment includes a $14 million line item supporting the5 Philadelphia Mortgage Foreclosure6 Diversion Program.7 I was expecting that our8 testimony would follow that of Deborah9 McColloch, who would be offering, among10 other information, details on the11 numbers, the statistics for the12 Foreclosure Diversion Program. I've13 borrowed a summary of those numbers, if14 you're interested in them at this point.15 I know Deborah will be addressing those16 when she does testify.17

She'll18 take care of that.19

But I think I'm20 going to depart from my written testimony21 to talk about an overview of the22 Foreclosure Diversion Program rather than23 just CLS's piece of it, because what's24 truly amazing about the Philadelphia25 62 6/2/09 - FINANCE - BILL 0902881 Foreclosure Diversion Program is the way2 it has pulled in a number of different3 non-profit agencies to serve the needs of4 homeowners facing foreclosure in5 Philadelphia.6 The Diversion Program is a7 court program, but it is not funded8 really through the court system. The9 court personnel manage the program with,10 I think, no additional funding, in fact11 facing decreased funding. The services12 to homeowners are provided by a closely13 knit network of non-profit agencies, and14 the City of Philadelphia, through support15 of OHCD, has pulled those agencies16 together in a way that I think is17 probably unique and foremost of its kind18 in the nation.19 The OHCD-funded, the20 City-funded housing counselor network21 works very closely with Philadelphia22 Legal Assistance, and Mr. Trauss will23 testify regarding PLA's operation of the24 Save Your Home Philly Hotline. Community25 63 6/2/09 - FINANCE - BILL 0902881 Legal Services as well provides direct2 representation for hundreds of individual3 homeowners, while the counseling network4 calls on the lawyers at Legal Services5 for support in their cases. The6 Volunteers for the Indigent Program,7 which is a Bar Association program that8 organizes volunteer private lawyers, also9 provides legal representation to hundreds10 of homeowners, and all of these moving11 parts work together with outreach funded12 by the City to draw homeowners in, PR13 campaigns through the Mayor's Office,14 lots of moving pieces that work together15 in, I think, a unique way to provide16 assistance to homeowners in foreclosure.17 The federal sources of funding18 that you would think at this point in19 time would support this kind of program20 still is not. The feds balked at21 providing assistance to programs like22 this one and hold back from funding legal23 services for homeowners in foreclosure.24 So at this point in time, funding from25 64 6/2/09 - FINANCE - BILL 0902881 the City, including the $1 million in2 this amended Plan, is vital to this3 one-of-a-kind program that has attracted4 national and international attention.5 At this point, Mr. Trauss will6 discuss the Save Your Home Philadelphia7 Hotline.8

Thank you.9

Good afternoon,10 Madam Chairwoman, members of the11 Committee. I am Irwin Trauss. I'm a12 attorney with Philadelphia Legal13 Assistance. We operate the Save Your14 Home Philly Hotline under the auspices of15 the Office of Housing and Community16 Development. 8 I'm very pleased to see that9 the Year 34 amendments seem to have in it10 additional funds coming from the stimulus11 package that would allow us to operate at12 that level. But that the Year 35 Plan13 that's being proposed provides for less14 than a quarter of the funds that we will15 need starting in July of 2010 to keep the16 hotline operating. 10 The program has received a11 great deal of attention nationwide and12 indeed throughout the world, and much of13 it is deserved. However, the program is14 advertised as a cost-effective way of15 preventing foreclosures and keeping16 people in their homes, but it is not17 free. 20 And this is what the court can do. The21 court can pause the foreclosure process,22 and it requires lenders to negotiate with23 the homeowners to try to reach an24 affordable loan modification or other25 67 6/2/09 - FINANCE - BILL 0902881 arrangement that will enable them to stay2 in their home affordably and sustainably3 for the long term. But all the court can4 do is place that pause. 11 In order to be effective, the12 program needs effective, informed housing13 counselors. 23 The hotline takes calls -- in24 the last 12 months, we received about25 68 6/2/09 - FINANCE - BILL 0902881 8,000 calls. 3 The Mayor has made media spots4 advertising the hotline, and there's been5 a great effort and it's been a very6 successful effort in educating the public7 about the existence of the hotline. 12 The hotline does more than13 that. While we make referrals,14 appropriate referrals, to attorneys and15 to housing counselors, we also in16 appropriate circumstances will jump in to17 prevent some imminent harm coming to the18 homeowner. We're in a position to19 identify those people that are about to20 lose their homes, they're about to have21 judgments entered against them or perhaps22 somebody who was supposed to be able to23 participate in the diversion program, but24 for one reason or another wasn't able to,25 69 6/2/09 - FINANCE - BILL 0902881 didn't get the proper notice, or went to2 the hearing but was not treated properly3 by the lender. 14 The City has done such a good15 job of advertising the hotline that we16 get calls from private attorneys about17 the Diversion Program. We get calls from18 constituent service people, from persons19 on your staff as well as staffs of our20 Congressmen, our Congresspersons and21 Senators, are referring people who have22 problems with their possibly losing their23 homes to us to help them, often at the24 very last minute or even beyond the last25 70 6/2/09 - FINANCE - BILL 0902881 minute. 5 In addition, the hotline is6 able to act as a back-up. As I7 mentioned, when things go wrong, we're8 able to bring that to the attention of9 the court. 18 As my written testimony19 indicates, we're staffed with six20 full-time paralegals, an administrator21 and a full-time lawyer who are devoted22 solely to the hotline, and this is the23 minimal amount of staff that we need to24 deal with the volume of calls that we are25 71 6/2/09 - FINANCE - BILL 0902881 getting. Without the comprehensive2 supports, including the housing3 counselors and the attorneys and the4 hotline, the Mortgage Diversion Program5 could become what it actually has become6 in some other jurisdictions, which is7 simply another opportunity for lenders to8 take advantage of unsophisticated9 homeowners, and we have seen this in the10 operation of the hotline. In those cases11 where -- and in the operation of the12 Diversion Program.

And those cases where13 clients get to the hotline and refer to14 housing counselors, have the help of a15 volunteer attorney, working with an16 experienced mortgage foreclosure defense17 attorney from Legal Services, they are18 getting very good results, and we know19 that because we're involved in those20 cases. But we have seen cases where21 clients aren't able to take advantage of22 that system and they just walk in by23 themselves. 2 In some cases, the foreclosure is3 actually expedited. And we are seeing4 cases in which the lenders' attorneys are5 actually charging the homeowners fees for6 appearing at these conciliation7 conferences. 15 So long as the foreclosure16 crisis that we're in continues -- and we17 anticipate that it's going to get worse18 before it gets better, because we're19 expecting another round of teaser loan20 resets, and we're also seeing now the21 effects of unemployment. People's22 unemployment compensation is starting to23 run out, and there's usually a delay24 between the time somebody loses their job25 73 6/2/09 - FINANCE - BILL 0902881 and their property actually comes into2 foreclosure. 14 And if I might just add one15 other matter that's related, and that is16 on the issue of funds under the17 Neighborhood Stabilization Program. As18 you're aware, Congress has made available19 funds of the Neighborhood Stabilization20 Program, which is designed primarily to21 address the problems of properties that22 have been foreclosed after a Sheriff's23 Sale has taken place, preventing those24 properties from remaining vacant and25 74 6/2/09 - FINANCE - BILL 0902881 becoming a blight. And we applaud the2 efforts of the City, which were3 publicized in the Inquirer some months4 ago, where the RDA is planning to buy5 properties that are vacant to prevent6 them and get them to developers so they7 don't become a blight in the8 neighborhood. We suggest that Council9 consider -- and it may be something they10 consider in the year -- they can11 consider -- you can consider in the Year12 35 Plan -- using some of this13 Neighborhood Stabilization money, the14 second round money, for the purpose of15 enabling people who are in their homes,16 who have lost their homes to foreclosure17 to be able to buy them back. We are18 seeing dozens of people or perhaps19 hundreds who are in a situation where20 they actually have a better opportunity21 to resolve the mortgage foreclosure22 problem after the Sheriff's Sale has23 taken place than while the foreclosure is24 in process, and that is because the sales25 75 6/2/09 - FINANCE - BILL 0902881 have already taken place. In many cases,2 there are no bidders. The lenders are3 now stuck with properties, which they4 anticipated would be worth a lot of money5 and they now know they're not worth very6 much and they know they can't sell them,7 and they are actually eager to sell these8 properties. If we could arrange for a9 revolving fund that could be made10 available to homeowners to borrow money11 that would be based on their realistic12 income, their real income, not some13 imagined income, they could then buy14 these properties back with a new loan15 from a revolving fund which would be16 affordable, which by definition they17 would be able to pay, and this would do18 two things -- or three things. One, it19 will keep people in their homes. 9

Thank you10 very much.11 Any questions?12 (No response.)13

Thank you14 all for your questions and for your15 comments, and certainly we might follow16 up on the last issue about the17 Neighborhood Stabilization funds.18

Thank you.19

Thank you.20 Annie Saekang, Michelle Lewis,21 Pamela Kannebrew --22 (Witnesses approached witness23 table.)24

I'm here.25 77 6/2/09 - FINANCE - BILL 0902881

I know.2

Oh.3

And4 Allison Hughes.5 Go ahead. Thank you.6

Good afternoon.7 Thank you for the opportunity to testify.8 My name is Annie Saekang and I'm9 representing Boat People SOS.10 Boat People SOS Philadelphia is11 a non-profit organization that has served12 the Vietnamese immigrant and refugee13 population for almost a decade here in14 Philadelphia. In the course of our work15 with clients, we continue to find that16 language remains a barrier, both large17 and small, to accessing the many18 resources that the City has to offer.19 According to the 2000 census,20 at least 61 percent have limited English21 proficiency, and because we know that the22 census severely under-accounts this23 community, the number may be much higher.24 That being said, we have looked25 78 6/2/09 - FINANCE - BILL 0902881 over your Consolidated Plan and find many2 promising projects that would benefit3 members of this community, specifically4 the activities that maximize job5 creations and economic benefits. We are6 excited about these opportunities and7 commend your efforts. However, we are8 concerned that due to language and9 cultural barriers, a large number of not10 only the Vietnamese American community11 but other limited English proficient12 community members may be unwittingly13 excluded from the benefits these programs14 have to offer. Thus, we ask that the15 Council keep at the forefront of their16 minds the issues of access, and work with17 us and other community organizations to18 make sure that our communities are19 connected to these opportunities. We20 recommend that the program information21 should be available in various language22 formats and that outreach efforts should23 also target those with limited English24 proficiency. We hope that the services25 79 6/2/09 - FINANCE - BILL 0902881 benefit people with limited English2 proficiency so that they understand and3 be aware of its eligibility criteria,4 receive help in accessing the services5 and benefits, and know where to call and6 who to contact to get information and7 services.8 Working together, we can ensure9 that the effects of the CDBG-R funds are10 felt far and wide and will benefit the11 members of the Philadelphia community who12 have the most need, whether or not13 English is their first language.14 Thank you for your time.15

Thank16 you very much.17 Are there any questions or18 comments?19 (No response.)20

Thank21 you for your testimony.22

Thank you.23

Good afternoon,24 Madam Chairwoman Tasco and members of the25 80 6/2/09 - FINANCE - BILL 0902881 Finance Committee and others. 8 I'm here to share with you the9 work that the Unemployment Information10 Center counselors, along with the other11 City-funded housing counselors, have12 performed during the current fiscal year,13 specifically around the foreclosure14 prevention. 8 And also to date, specifically in our9 agencies, the Unemployment Information10 Center, also known as PUP, we've saved11 approximately 68 homes through February12 2009. 19 We're saving homes. And many of the20 people who have come to us in the past21 have been in dire situations. As22 Mr. Trauss mentioned before, this is sort23 of the first wave of foreclosures. 8 The recent statistics that were9 quoted before, as well as my own personal10 experience as a housing counselor, I'm11 confident and I'm sure you're confident12 that housing counseling in Philadelphia13 is making a difference. 16 I liken the housing counselors to the17 emergency room. When they come to the18 emergency room or when a person comes to19 the emergency room, the goal is to get20 them back whole, possibly to save their21 life, but it's not meant to provide22 ongoing wellness. 2 Many of the people are in3 fragile situations. The economics, the4 situations that push them to foreclosure5 are increased utility bills -- that was6 testified before -- loss of jobs. 21 I commend the City for the22 funds allocated for the upcoming year and23 I strongly suggest that or hope that24 additional funding will be provided for25 84 6/2/09 - FINANCE - BILL 0902881 that follow-on. 8 So once that workout has been gotten,9 that the people are able to access, Well,10 what happens if I have an unusually high11 utility bill and I can't make my mortgage12 payment? What do I do to fall into -- so13 I don't fall into foreclosure? 4

Thank you5 very much for your testimony.6 Any comments or questions from7 the Committee?8 (No response.)9

Thank you10 very much. We appreciate your taking11 your time, and we do really support12 housing counseling programs, and13 Philadelphia has a great housing14 counseling program and I tout it15 everywhere I go.16

Thank you very17 much for your support.18

But there19 are other ways we can be helpful, and I20 agree with you.21

Thank you very22 much.23

Thank you.24 Is there anyone else here to25 86 6/2/09 - FINANCE - BILL 0902881 have testimony other than the2 Administration on these two bills?3 (No response.)4

Okay.5 What we're going to do is take -- no.6 Excuse me.7 We're going to go back to the8 Wachovia bill, if we could get the9 Administration to come back.10 Councilman Goode.11 Wachovia is here. The Law12 Department is here. Would you come13 forward, please. Councilman Goode has14 some questions for you. Law department15 is not here. Oh, yes, he is. Wachovia,16 he'd like for you to come forward too,17 representative from Wachovia to come18 forward.19 (Witnesses approached witness20 table.)21

Good22 afternoon. Only a few brief questions23 for the record. First, my understanding24 is that the contract, as amended, calls25 87 6/2/09 - FINANCE - BILL 0902881 for a one-year contract with three2 renewals; is that correct?3

No. That was the4 contract as originally written. The5 amendment removes the three one-year6 renewals.7

Okay. And8 we talked at the previous hearing about9 the possibility of actually authorizing10 other depositories as payroll11 depositories. Where are we in that12 process? Not contracting with them, but13 authorizing them to receive our deposits.14

We're still in15 discussions about exactly how to16 format -- how to get that done.17

Lastly,18 questions for Wachovia. Is Wachovia19 still in the business of lending and20 community reinvestment?21

Absolutely.22

And how will23 that be affected by --24

Excuse me,25 88 6/2/09 - FINANCE - BILL 0902881 Councilman.2 Would you please identify3 yourself for the record, please, young4 lady from Wachovia.5

Stephanie Wall,6 Community Development Manager for7 Pennsylvania and Delaware for Wachovia.8

And how will9 that be affected by the Wells Fargo10 takeover?11

It will be12 unaffected.13

And so for14 the term of the contract, Wachovia will15 continue to do lending and community16 reinvestment?17

Yes.18

I have no19 further questions.20

Okay.21 Thank you.22

To the Law23 Department, the original contract was for24 one year with three renewals?25 89 6/2/09 - FINANCE - BILL 0902881

I'm sorry. When2 you say "the original contract," you're3 referring to?4

The original5 contract that was attached to this piece6 of legislation.7

Yes. The8 original contract contained the provision9 for three one-year renewals.10

And under11 that renewal process, the original12 contract called for the renewals to be13 approved by City Council?14

No.15

Okay. Thank16 you.17

The Chair18 calls Ms. Allison Hughes.19 Thank you.20 (Witness approached witness21 table.)22

Good23 afternoon.24

Good afternoon,25 90 6/2/09 - FINANCE - BILL 0902881 Madam Chair.2

Please3 present your testimony. Identify4 yourself first.5

6 My name is Allison Hughes and I'm the7 Executive Director of the Homeownership8 Counseling Association of the Delaware9 Valley, which is a trade association for10 housing counseling agencies. 13 I greatly appreciate this14 opportunity to speak to you today on15 behalf of our 41-member agencies who are16 providing the critical service of housing17 counseling for families and individuals18 in the City of Philadelphia. 21 In my testimony today, I really22 just want to concentrate on one area,23 and, that is, the crucial issue of24 foreclosure. 4 Each week they are there alongside of the5 housing counselors. They spend an6 emotionally exhausting day in the7 Residential Mortgage Foreclosure8 Diversion Program, which is in Courtroom9 676. 24 I also want to thank you for25 92 6/2/09 - FINANCE - BILL 0902881 continuing funding of the Settlement2 Assistance Program, which is where we3 start to draw potential home buyers into4 seeking housing counseling so that they5 will learn about the home-buying process6 and receive prudent advice on how to7 avoid bad loans and scams, which is how8 many of the families end up in9 foreclosure. This knowledge is really10 crucial, and for us it's the first step11 of foreclosure prevention, as we have12 witnessed a growing number of families13 who are in trouble simply because they14 got too much house or the wrong type of15 mortgage, such as one with an adjustable16 rate, or they were steered into a product17 that wasn't affordable for them. 2 We can really anticipate that3 this massive foreclosure problem will4 continue until there is a comprehensive5 and aggressive foreclosure prevention6 program nationally. The President's plan7 making homeownership affordable is8 certainly a much-needed step in the right9 direction towards stabilizing the10 foreclosure crisis. However, once you11 take a close look at the program, there12 are some aspects that have reasons for13 concern. We're greatly concerned that14 participation in this program is15 voluntary. 18 Another concern is that the19 program will allow for temporary loan20 modifications which will expire after21 five years. We've seen this practice in22 court. 5 Another area of great concern6 is the lack of guidance on the treatment7 of principal write-downs and interest8 rate reduction. 19 I'm starting to receive calls weekly from20 newly established non-profits that are21 telling me that they are housing22 counseling agencies and now want to23 provide loss mitigation services. The24 National Reinvestment Coalition conducted25 95 6/2/09 - FINANCE - BILL 0902881 an investigation of more than 900 of2 these loss mitigation organizations and3 found that many of them were the formerly4 abusive mortgage brokers who have now5 reinvented themselves as loss mitigation6 or mortgage consultants and are still out7 there preying on consumers. These8 so-called consultants are exploiting9 already distressed homeowners by charging10 exorbitant fees and never really engage11 in any real legitimate foreclosure12 prevention counseling. 17 I know that many of our18 counselors are really overwhelmed by the19 demand, but they're there every week. In20 the foreclosure court, we see at least21 260 cases are scheduled per week, with a22 30 percent show rate. 25 96 6/2/09 - FINANCE - BILL 0902881 Therefore, I support the2 proposed uses of the CDBG Recovery funds3 as described in the Plan for economic4 development and housing. I also want to5 particularly urge the City to support the6 use of the $1 million of CDBG Recovery7 funds to combat our City's foreclosure8 epidemic. Specifically, these funds will9 allow the establishment of post diversion10 counseling.

This new initiative would be11 used to provide follow-up for homeowners12 once they've received a preliminary13 agreement to avert foreclosure either14 before or as part of the Residential15 Mortgage Foreclosure Program, and many of16 these cases, the homeowner may receive a17 repayment plan or they may get a18 modification if -- and the case moves19 from the court. If the homeowner misses20 a payment or has problems with the21 mortgage company in the following months,22 the homeowner could be right back in23 foreclosure, actually scheduled for24 Sheriff's Sale. 6 And I apologize. 16 I thank you very much for your17 testimony -- for my opportunity to18 testimony to you -- to provide testimony19 to you today. 20

Thank you.21 Let me just ask you one question. I know22 Councilman Kenney has a question.23 In the President's Making Home24 Affordable Program, do you have a25 98 6/2/09 - FINANCE - BILL 0902881 national counseling organization that has2 a lobbying arm in DC?3

There is4 NeighborWorks, which is the national5 organization that's been designated by6 Congress, and they are closely looking7 at. But there's not really a body that I8 can say at this point has a firm grasp on9 the plan.10

I have a11 young lady at the National League of12 Cities who is our contact with the White13 House on these issues, and I've worked14 with her very closely. I'd like for you15 to contact her about this program. We'll16 talk so that she can put it on the agenda17 to discuss with the White House to let18 them know, because that's how I get my19 message through about what's happening,20 and I think she can be very helpful to us21 here in Philadelphia. So we'll talk22 about that.23

Thank you.24

Because we25 99 6/2/09 - FINANCE - BILL 0902881 can be concerned about it, but we have to2 find a way to do something about it. And3 so we do have the National League of4 Cities, which the City is a member, as5 well as we have many cities around this6 state who are members of the National7 League and the Pennsylvania League, and8 it's a very strong lobbying arm, and the9 young lady who is our lobbyist there has10 very close connections to the White11 House.12

Wonderful.13

And I14 think she can be helpful with us on this.15 Councilman.16

Thank you,17 Madam Chair.18 Thank you for your testimony.19 During the course of your testimony20 relative to the existence and operation21 of unscruputable housing counselors who22 were formerly bad lenders, are you aware23 of who, if anyone, regulates housing24 counseling? Is there a regulatory body?25 100 6/2/09 - FINANCE - BILL 0902881 Is it state, is it federal or is it kind2 of just such a newer type of need that3 it's not been regulated yet?4

It doesn't fall5 under banking regulations.6

So we7 wouldn't have a state preemption issue?8

No.9

And I raise10 this now because I know Council Majority11 Leader Tasco has been involved for years12 in dealing with this predatory lending13 issue and has made great strides both14 locally, nationally and statewide in15 bringing this issue to the fore and doing16 something about it. I was wondering17 whether it made any sense during the18 course of the summer if we tried to sit19 down, our staffs, and figure out some20 regulations to license housing counselors21 in Philadelphia County.22

We already23 did that.24

We did it?25 101 6/2/09 - FINANCE - BILL 0902881

I'll check2 it.3

Because I4 think it will be --5

They just6 legalized something.7

We license8 home inspectors in Philadelphia County.9 We've licensed other types of10 professionals who put their stuff out for11 sale, put their credentials out for sale.12 So I don't think there would be any13 reason why we wouldn't be able to require14 certain levels of bonding, certain levels15 of insurance, other types of things. If16 they're not already required, I'd be17 happy to work with Councilwoman Tasco's18 staff through the course of the summer to19 maybe come up with something that we can20 do in the fall to kind of rein these21 fellows in and get some control over22 their activities so they don't further23 abuse people more than they've been24 abused already.25 102 6/2/09 - FINANCE - BILL 0902881

Our organization2 would be happy to work with you on that3 throughout the summer.4

Is that5 okay with you?6

Sure.7

Thank you.8

Thank you.9 Don't leave.10 Now I think we're ready to have11 testimony on Resolution 090451 and Bill12 090437.13 The Chair recognizes14 Ms. Deborah McColloch.15 (Witnesses approached witness16 table.)17

Good18 afternoon.19 MS. McCOLLOCH: Good afternoon.20 I have testimony.21 Shall I begin, Councilwoman?22

23 MS. McCOLLOCH: Good afternoon,24 Councilwoman Tasco and other members of25 103 6/2/09 - FINANCE - BILL 0902881 the Finance Committee and members of City2 Council. I am Deborah McColloch,3 Director of Housing. I will present4 testimony on behalf of the Administration5 on Resolution 090451, which permits the6 City to apply for $14,046,629 in federal7 Community Development Block Grant funds8 which are being made available through9 the American Recovery and Reinvestment10 Act of 2009. S. 15 Exhibit A to the resolution is the City's16 Proposed Substantial Amendment, in the17 form dictated by HUD. On May 5th, 2009,18 HUD released the guidelines and19 requirements for applying for these20 funds. The City must submit an approved21 Substantial Amendment to HUD no later22 than June 5th, 2009. 8 Community Development Block9 Grant funds are made available through10 the American Recovery and Reinvestment11 Act, ARRA, known as CDBG-R funds. CDBG-R12 funds are one-time funds designed to13 advance the ARRA goals of job creation14 and economic benefit. 23 Transit-Oriented and Livable24 Communities Commercial Development Fund:25 105 6/2/09 - FINANCE - BILL 0902881 This fund will provide gap financing for2 projects that have seen a reduction in3 debt or other financing due to the4 recession. 10 Affordable Housing Development:11 This activity will provide gap financing12 for affordable housing developments that13 are ready to go to construction but need14 additional resources. 19 The Mortgage Foreclosure20 Diversion Program: This activity will21 support the City's existing program which22 assists homeowners to remain in their23 homes. CDBG-R funds will support24 outreach, legal services and housing25 106 6/2/09 - FINANCE - BILL 0902881 counseling. 18 In addition to these19 activities, which were outlined in the20 Proposed Substantial Amendment, the21 Administration is now recommending adding22 a new activity: Utility Emergency23 Services Fund. 3 A revised budget for the4 Substantial Amendment which incorporates5 UESF and also increases funding for6 affordable housing development is7 attached to this testimony. 19 My colleagues and I will be20 happy to answer any questions you may21 have. 22

Are there23 any questions from members of the24 Committee?25 108 6/2/09 - FINANCE - BILL 0902881 Councilman DiCicco.2 COUNCILMAN DiCICCO: Thank you,3 Madam Chair, and good afternoon.4 Thank you, Ms. McColloch, for5 your testimony. Aside from what you just6 put forth in your testimony regarding the7 Administration's request for the Utility8 Emergency Services Fund, is there9 anything in your testimony that is10 different than what was given to us at11 our briefing?12 MS. McCOLLOCH: The only13 difference is that the budget has been14 revised. In the budget bill as presented15 at the briefing, there was $7.5 million16 in the Transit-Oriented and Livable17 Communities Commercial Development Fund18 and there was approximately $3.6 million19 in the Affordable Housing Development20 line. And so what this -- what is21 proposed in this amendment is to increase22 the funding for affordable housing23 development, decrease the funding for24 transit-oriented and livable communities25 109 6/2/09 - FINANCE - BILL 0902881 commercial corridors and add the $500,0002 for the Utility Emergency Services Fund.3 COUNCILMAN DiCICCO: Two4 questions. Do you have the amendment,5 and how did this all come about and when6 since the briefing?7 MS. McCOLLOCH: Since the8 briefing, we met with Council leadership,9 and this was a request from Council10 leadership, and there is an amendment11 that has been prepared.12 COUNCILMAN DiCICCO: I'm not13 sure as to why this was being -- this14 request is being made. I'm not15 suggesting I would not be in favor of it.16 At the last minute I'm hearing of it for17 the first time.18 Does anything change in the19 formula? As an example, for the20 affordable housing increasing 3.6 to 621 million, is there anything that changes22 in the formula or does it just add that23 much more money to the pot?24 MS. McCOLLOCH: It adds that25 110 6/2/09 - FINANCE - BILL 0902881 much more money for affordable housing2 ventures and decreases the pot for3 commercial corridor activity.4

Let me try5 to explain since I was in the meeting.6 During the course of the7 discussion, because the Recovery money8 has to be spent by a certain date and9 we're looking at "shovel-ready" projects,10 the number of affordable housing projects11 that are shovel ready, that we believe12 would generate additional jobs and13 stimulate the economy faster. Some of14 the other projects that were listed on15 the -- in the first line of the16 commercial, some of those projects that17 were listed were projects that were put18 together basically by the Commerce19 Department. Some of those projects had20 applied for gap funding. A number of21 them are still -- some of them have been22 completed, some of them have not been23 completed. And we're trying to find24 projects that will put people to work25 111 6/2/09 - FINANCE - BILL 0902881 faster.2 COUNCILMAN DiCICCO: And I3 appreciate that, and I certainly support4 housing development, but I'm just curious5 as to which ones are shovel ready. I6 mean, commercial corridors to me, if I7 had to make the choice between the two,8 provide much greater economic returns,9 because it creates jobs, which ultimately10 gives people an opportunity to have work11 and be able to afford housing. Just12 doing housing is one thing, but13 decreasing the amount of money -- and if14 I have it wrong, correct me -- for15 commercial corridors, I just don't see16 the logic.17

Well, the18 commercial corridors, they were basically19 individual businesses. It was not like20 the commercial corridor development as we21 knew it under the bond that we were doing22 where you could go in and you could do a23 whole block or something of that nature,24 these were scattered sites of businesses25 112 6/2/09 - FINANCE - BILL 0902881 throughout the City. Some of them may2 employ one person, maybe two. You're not3 sure how many they're going to employ.4 So we thought doing the houses would5 be -- and Councilman Clarke can speak to6 this. He was part of the meeting -- to7 generate a quicker return on the dollar,8 plus put people to work quicker. And9 some of the projects have been waiting --10 COUNCILMAN DiCICCO: Well,11 putting to work is the construction, but12 once those projects are complete, those13 jobs go away. I guess that's --14

Well, it15 didn't take away all of the projects for16 the commercial corridors.17 COUNCILMAN DiCICCO: I'm sorry?18

We didn't19 take all the money out of the commercial20 corridors.21 COUNCILMAN DiCICCO: I know.22 It's been decreased, so I'm just trying23 to figure out --24

Councilman25 113 6/2/09 - FINANCE - BILL 0902881 Clarke, would you like to comment?2

I'm sorry.3 Before Councilman Clarke, as a member of4 the Committee -- and, again, as5 Councilman DiCicco said, this is kind of6 the first we're hearing about this. And7 I know that Councilman Greenlee -- I just8 had a discussion with him, because he's9 been at the forefront of this10 transit-oriented development -- was not11 aware of the reduction in the line item12 for transit-oriented development. And13 I'm not saying at this point in time that14 I would be against shifting this money15 from transit-oriented development and any16 place else into affordable housing, but I17 will say this only on my behalf, because18 as a member of this Committee, I would19 like you to talk to me as a member of20 this Committee before you decide to21 develop an amendment which you are22 putting forward to move money anywhere in23 this CDBG process, even though I24 recognize that it's a short period of25 114 6/2/09 - FINANCE - BILL 0902881 time that we need to get our stuff in2 front of HUD. I realize that3 shovel-ready projects are something that4 in this particular short timeframe are5 something that's more desirable than6 something that needs planning and won't7 have an impact immediately, but I find it8 somewhat -- I won't say offensive,9 because I'm not there yet -- somewhat10 disconcerting that I have an amendment in11 front of me moving around millions of12 dollars that I'm supposed to approve as a13 member of the Finance Committee that I've14 had no discussion with anyone about up15 until probably five minutes ago.16 So I recognize this process is17 shortened, and I hope to be able to18 support this amendment and the19 legislation generally, but as a member of20 the Committee, I am making a request to21 the Administration that I get some22 information beforehand.23

First, let24 me -- in defense of the Administration,25 115 6/2/09 - FINANCE - BILL 0902881 they were notified yesterday afternoon in2 terms of some concerns about how the3 funds were laid out. We met with staff.4 We met with them again this morning. We5 have not been doing this for a period of6 weeks. It was the last 24 hours. So7 it's not their call. It's our call, and8 so you have to take issue with the9 leadership in how we handled this.10 Probably we should have called, but we do11 plan to meet with Councilmembers12 tomorrow. We do not intend to vote this13 bill out today. We will come back14 Thursday morning. We will go over this15 with all of the members of the Committee16 and other Councilmembers to see how they17 feel about this.18

Madam19 Chair, with all due respect, I recognize20 the short timeframe and I find no fault21 with leadership relative to trying to get22 this thing done in an appropriate time.23 I'm saying as a member of this Council24 and a member of this Committee, I'm not25 116 6/2/09 - FINANCE - BILL 0902881 finding fault with the Administration.2 I'm telling you this is a $19 million3 issue right now we're dealing with.4 Going forward, starting in September, I5 need to hear from you also.6 MS. McCOLLOCH: I understand.7

Thank you.8 MS. McCOLLOCH: I understand.9

And they10 agree, and we agree with you, but given11 the 24 hours, they did not have time,12 because we were -- that's why we've been13 here all day.14

Madam15 Chair, I don't want the record to have16 any misunderstanding that I'm upset with17 the Administration or I'm upset with18 leadership, but I do think as a member of19 the Committee -- again, this is hindsight20 between 20/20 -- the members of the21 Committee should have this information22 prior to an amendment being prepared or23 at least to have some input. Whether or24 not our input is taken or whether it's25 117 6/2/09 - FINANCE - BILL 0902881 included or not, that's another thing,2 but as a member of the Committee, I would3 like to in the future, this issue aside,4 have some direct contact with the5 Administration.6

Thank you7 very much.8 Councilman Goode.9

Thank you,10 Madam Chair.11 Good afternoon.12 MS. McCOLLOCH: Good afternoon.13

I don't know14 if this question is more appropriate for15 OHCD or Commerce. Was there a projection16 of jobs on the original proposal,17 construction and/or permanent?18

For the record, my19 name is Kevin Dow. I'm the Deputy20 Commerce Director for the Commerce21 Department.22 There were not entirely across23 the board, but there were for the TOD24 projects. We had some estimates of what25 118 6/2/09 - FINANCE - BILL 0902881 the jobs creation would be there. As far2 as the other projects, we had some, but3 not all.4

I'm saying5 for the total amount of the CDBG-R funds,6 was there a projection of jobs under the7 original proposal and is there an amended8 projection of jobs under the new9 proposal? In other words, how many10 construction jobs were you going to11 create under the original proposal and12 how many permanent jobs were you going to13 create under the original proposal and14 now how many construction jobs are you15 going to create under the amended16 proposal and how many permanent jobs are17 you going to create under the amended18 proposal?19 MS. McCOLLOCH: Right. I20 understand your question, Councilman.21

If you don't22 know, just say you don't know.23 MS. McCOLLOCH: I don't know.24

Is it fair25 119 6/2/09 - FINANCE - BILL 0902881 to say that you will be creating less2 permanent jobs in the amended proposal?3 And Commerce can answer that question,4 other than OHCD.5

It's hard for me to6 answer that question whether or not those7 would be less permanent jobs. Without8 individual projects, I think it's9 premature.10

It's11 possible that there could be more12 construction jobs because, as the13 Chairwoman said, those housing projects14 are more shovel ready, and so that may be15 a better use of the funds by creating16 more construction jobs.17 So I'm not saying one proposal18 is better than the other. I'm simply19 saying we should have that sort of20 analysis before us, if you're shifting21 that amount of money in terms of the22 amount of construction jobs and permanent23 jobs created in one proposal and the24 amount of construction jobs and permanent25 120 6/2/09 - FINANCE - BILL 0902881 jobs created under the new proposal.2

And I would agree3 with that. I would also say that when we4 look at construction and we look at the5 process by which construction creates6 jobs for our economy, that if you look at7 that stream of the economy that that8 impacts, that jobs are created along the9 economic path. And so construction jobs10 might come in and be temporary in nature,11 but the service jobs that that would12 create, the need for services along the13 commercial corridors where those14 neighborhoods are being rebuilt up are15 created. So the economic development and16 economic opportunity that results is17 permanent in nature.18

I would19 challenge that, but rather than challenge20 that, I'll just go back to the original21 debate that took place in Congress in22 terms of what is the whole purpose of the23 American Recovery and Reinvestment Act.24 To what extent is it supposed to be25 121 6/2/09 - FINANCE - BILL 0902881 focused on permanent job creation and to2 what extent it's focused on construction3 jobs. And I'm not pitting one against4 the other, aside from saying that we5 should have that analysis before us6 before we make a decision on shifting7 funds.8 Thank you, Madam Chair.9 COUNCILWOMAN TASCO:10 Councilwoman Brown.11

Thank you,12 Madam Chair.13 I'd like to shift the14 discussion, if we could, to where15 it's my first time that I'm seeing these16 dollars used for what you're calling the17 Creative Industry Workforce Grants. I18 think it's brilliant, and knowing how19 arts and culture has the economic impact20 that it does on our city, just briefly21 discuss what that is for those of us who22 may not be familiar with that sector and23 how you expect those dollars to be made24 aware to that particular community.25 122 6/2/09 - FINANCE - BILL 0902881 MS. McCOLLOCH: I'll ask my2 colleague to answer that.3 (Witness approached witness4 table.)5

I'm Gary Steuer,6 Chief Cultural Officer and Director of7 the Office of Arts, Culture and the8 Creative Economy.9 And the thrust of this will10 really be to reenforce the fact that11 arts, culture and creative industries are12 part of how you build a healthy13 neighborhood, and the focus will be, as14 in the rest of these areas, on jobs and15 looking at projects that can get off the16 ground immediately and generate both17 short-term jobs in terms of the actual18 construction/renovation jobs and then19 also long-term jobs in these businesses20 that we are supporting.21

Have you22 had a chance to flush out targets, what23 corridors may benefit, what the process24 will be, how arts and culture communities25 123 6/2/09 - FINANCE - BILL 0902881 can access, what the criteria might be2 for those who want to take advantage of3 these grants?4

Sure. It's going5 to be a broad process. So there'll be an6 RFP. So we'll be trying to get7 information out widely, and we'll call on8 Council and your expertise in terms of9 whether there might be projects within10 your districts that you might know about.11 And there will be a focus, as I said, on12 what the particular requirements are of13 this Act and of this particular pool of14 funds. There are, for example, a number15 of projects that were considered as part16 of the Cultural Corridors Bond funding17 that we had where there might be some18 additional funding that's needed for19 those projects. So this will be a great20 opportunity to look at projects that are21 already underway where we can come in and22 provide some funds that will allow them23 to fully finish their projects.24

Is this25 124 6/2/09 - FINANCE - BILL 0902881 new potential practice unprecedented?2 Are other cities around the country using3 these dollars in that way? Can you speak4 to that?5

Well, I think a6 particular dedicated use like this in7 Philadelphia is relatively new here. So8 this would be new here and very exciting,9 I think. There have been programs like10 this all around the country. There's11 been a program in New York City that has12 used CDBG funds for supporting cultural13 projects in eligible neighborhoods that's14 operated since the inception of the15 program. There's a really innovative16 program in Denver that specifically17 targets creative industries. So there18 are examples from all over the country of19 how these funds have been used to use the20 arts as an engine of how we build healthy21 neighborhoods.22

So it23 certainly will not be -- there are24 certainly cities we can look to on how to25 125 6/2/09 - FINANCE - BILL 0902881 ensure that we get this right?2

Yes.3

Thank you4 for your testimony.5 Thank you, Madam Chair.6

Thank you.7

Councilman8 Kenney.9

Thank you,10 Madam Chair.11 Going back to the affordable12 housing development versus -- not versus,13 but juxtaposed to the other things we14 were talking about and transit-oriented15 corridors and things, what's your16 definition of "shovel ready"?17 MS. McCOLLOCH: It has a fairly18 wide range of definitions. We want to19 support those developments that are ready20 to go and that -- we have a couple that21 are all ready, I mean literally could22 start as soon as we provide the money.23 They have the zoning, they have their24 permits.25 126 6/2/09 - FINANCE - BILL 0902881

Could you2 give us an example?3 MS. McCOLLOCH: An example4 would be there's a homeless housing5 facility on Kensington Avenue called6 Rites of Passage. It's a 30-bed facility7 that has already has some support from8 the Office of Housing and Community9 Development and it has its zoning, it has10 its design, it has its permits, it's11 ready to go. It has a funding gap of12 about $500,000. So when we make that13 money available, it can go to loan14 closing and begin.15 That's as shovel ready as we16 can get. We also have some developments17 that have submitted proposals. We18 haven't been able to support them and19 move them forward because we don't have20 the resources, but when we put out a21 Request for Proposals, put out the RFP,22 they'll come in, we'll do that review and23 we'll be able to move them forward.24

When we had25 127 6/2/09 - FINANCE - BILL 0902881 the briefing last week, the proposal that2 you brought forward to us I felt you3 defended quite well, Mr. Altman, yourself4 and others defended quite well. Now,5 it's been tweaked and changed, and the6 argument continues to be or at least the7 effort continues to be job creation. I8 think that's been the national -- the9 Obama Administration and Congress's10 desire to have increased employment as a11 result -- increased permanent employment12 as a result of the expenditure of these13 dollars. I know Councilman Goode and14 others in Council have been working for15 diversity in construction and a lot of16 the other issues. Could you explain to17 me how we can be assured on shovel-ready18 projects that are going to be -- that the19 construction jobs are being pointed to as20 the job creation piece, how we guarantee21 that the people on those sites are22 Philadelphians who will either get a23 semi-permanent job or a permanent job as24 a result of that? I mean, do we have any25 128 6/2/09 - FINANCE - BILL 0902881 requirements in our contracting with2 these shovel-ready projects that3 Philadelphia residents will be on these4 sites or are we going to still have the5 same situation that we have at the6 Convention Center and other places?7

I would suggest that8 EOPs, economic opportunity plans, that we9 would attach with any one of these10 projects. All the projects that we're11 doing through the Commerce Department12 will have this type of language, which13 would address contracting employment as14 well -- contracting and employment.15

But these16 are for positions that in the life of a17 construction project probably last 12,18 16, 18 months and then would be finished.19

Right.20

So at the21 end of that 12, 16, 18 months, what22 happens to the people who we counted as23 job creation when the very important24 affordable housing complex is up and25 129 6/2/09 - FINANCE - BILL 0902881 running and taking care of people, as it2 should, as one of the goals that we have3 as a city, but that 12, 16, 18 months,4 where is the job creation number if that5 job goes away?6 MS. McCOLLOCH: It's not -- the7 housing developments that we're talking8 about, the affordable housing9 developments, are not in that sense10 creating those permanent jobs that you11 speak of. They're essentially -- the job12 creation is essentially construction jobs13 that would last the period of time that14 the construction takes.15

Which is16 important, and we're not discounting the17 importance of that.18 MS. McCOLLOCH: Right.19

But at this20 point in time -- and, again, you've had a21 very short period of time to deal with it22 and even a shorter time to get it where23 it needs to be in HUD -- do you have any24 indication or guarantees or at least25 130 6/2/09 - FINANCE - BILL 0902881 something you can give us that would2 indicate that there's an effort to have a3 more diverse workforce in these4 shovel-ready projects that are being5 funded with this stimulus money?6 MS. McCOLLOCH: Well, that, as7 Kevin just mentioned, the equal8 opportunity plans.9

And then that's10 the -- we will include that language in11 the contracts.12

Well,13 again, time is short and I don't want to14 beat this, but counting job creation in a15 job that's going to last no more than 1816 months is a difficult stretch.17 Thanks.18

Councilman19 Clarke, you have your light on.20 Oh, I'm sorry.21

I will defer22 to Councilman Clarke.23

Real briefly. Just to kind of talk about some of the4 issues that were debated, and I know it's5 a limited timeframe as it relates to6 everybody making decisions and amendments7 and changes to the proposed Plan. The8 issue around affordable housing versus9 TOD/commercial projects and loan funds,10 because we need to characterize it for11 what it really is, there is a limited12 number of shovel-ready projects as it13 relates to commercial activity, and I14 believe there's probably two at this15 point of significant size, Weavers Way16 and Progress Plaza. The rest -- and I17 hate to use the term "speculative," but18 they're not ready to go, those other ones19 under construction. 21 The reality is, on the housing22 side, at this point there are currently23 nine projects that are currently at PHFA24 that have been approved for funding for25 132 6/2/09 - FINANCE - BILL 0902881 tax credits. Those projects will2 probably -- well, do have a gap of3 varying sizes. The question with respect4 to those nine, if the City -- this is5 based on conversations with PHFA. If the6 City is in position to help support those7 funding gaps, those projects are shovel8 ready. These are actually 2007 projects9 that are in the pipeline. There are10 actually approximately ten projects that11 are 2008 projects that have been12 submitted to PHFA that a decision will be13 made later on in the year. 17 This whole issue about18 permanent jobs versus short-term jobs,19 the reality is is that from a20 construction standpoint -- and I agree21 with Councilman Kenney that the diversity22 level in construction is not even close23 to where it needs to be, and that's24 something that we need to deal with on25 133 6/2/09 - FINANCE - BILL 0902881 the broader construction for both2 commercial and residential. The reality3 is that the construction phase tends to4 create a broader spectrum of jobs. It5 touches pretty much every particular6 trade as it relates to building in7 trades, electrical, masonry, all of the8 things. One of the things that we looked9 at from the housing side, our ability to10 leverage $90 million in PHFA funds that11 is also stimulus dollars. The12 Philadelphia Housing Authority received13 $90 million of stimulus dollars, and the14 Philadelphia Housing Authority has also15 made a decision to dispose of upwards of16 2,000 scatter site developments. 1 million,7 because there is money in the Year 358 Block Grant. 10 There's an additional one point -- I11 forget the exact number. 5 The reality is more from a6 philosophical perspective, that the7 Administration had committed $3 million8 in Housing Trust Fund dollars in the9 first budget and because of budgetary10 problems, that money has been reduced11 dramatically over the years, through no12 fault of the Administration. It's just13 simply based on the lack of activity in14 the City as a result of recording fees15 and the Administration's commitment. So16 the thought is that if you have a17 significant resource coming to the table18 for affordable housing at a minimum and19 we can still fill some of the gaps that20 were eliminated -- that were created as a21 result of the inability for the22 Administration and the City to continue23 to support affordable housing. 8 So based on all the things that9 were looked at, it is believed -- and10 understanding the fact that construction11 of affordable housing, even in the12 weakest of markets, is probably the13 strongest likelihood that will happen,14 because they are deeply subsidized. 20

Councilman21 Goode.22

Madam Chair,23 since I deferred to Councilman Clarke,24 can I ask him a couple of questions?25 137 6/2/09 - FINANCE - BILL 0902881

Sure.2

Councilman,3 we have a list here of commercial4 corridor TOD projects that were supposed5 to be funded by the Commercial6 Development Fund. There's 27 projects7 amounting to roughly $63 million in total8 project costs and 556 permanent jobs.9 Were all of these projects actually10 reviewed?11

No.12 Unfortunately, there was not time for us13 to receive a briefing. We did ask that,14 but the timeframe associated with --15

So we can16 assume that all these projects didn't17 necessarily need to be, quote/unquote,18 "shovel ready," because they may be19 business economic development ventures20 that don't require new construction or21 rehab?22

I would23 actually not assume that they are shovel24 ready. I'm sorry.25 138 6/2/09 - FINANCE - BILL 0902881

I'm assuming2 they might not require a shovel at all.3

That's the4 problem. I don't know, Councilman. But5 they were all listed as financing through6 a loan pool, not direct financing for7 development.8

Mr. Dow, are9 you familiar with this list of 2710 projects?11

Yes.12

Are these13 real projects?14

Yes.15

Do these16 projects actually amount to 556 permanent17 jobs?18

Yes. That's what we19 estimate.20

So how many21 jobs are we going to lose by reducing the22 amount?23

I'm not sure because24 we wouldn't know which projects would be25 139 6/2/09 - FINANCE - BILL 0902881 done and which ones we would do, so --2

Can we guess3 at that by the time we have first4 approval for this --5

Sure.6

-- how many7 permanent jobs we're going to lose?8 Do we know how many permanent9 jobs are going to be created by the10 housing projects that will replace it?11 MS. McCOLLOCH: No, I don't.12

Thank you.13 COUNCILWOMAN TASCO:14 Councilwoman Brown, do you have a15 question?16

No.17

Councilman18 Kenney.19

Just one20 addendum to Councilman Goode's21 questioning, and I think they're22 important questions that have to be23 answered before we vote on this, but we24 had an extensive conversation in Council25 140 6/2/09 - FINANCE - BILL 0902881 Caucus Room when we were briefed about a2 combination of both, where in a3 commercial corridor, many throughout4 Philadelphia's older neighborhoods and5 existing commercial corridors, there's a6 desperate need for above-the-store,7 above-the-business housing, and we could8 possibly do both, that if we concentrated9 on housing components of commercial10 corridor improvements by creating jobs11 both in the retail and whatever other12 sector that goes in the bottom of the13 store, there's two and three apartments14 on the top of a lot of these buildings.15 I think Councilmember Quinones-Sanchez16 brought that up about Kensington Avenue17 being boarded up on the second and third18 floors. I mean, if we can do both the19 commercial corridor development, job20 creation and the housing that's21 associated with those commercial22 corridors, I think it's a win-win-win for23 everyone.24 So, again, I think we're25 141 6/2/09 - FINANCE - BILL 0902881 arguing over a relatively small amount of2 money compared to the need, but I do3 think that some of the issues that were4 raised in the briefing I think could be5 probably incorporated. For example, I6 could envision that if you did a7 commercial -- if you kept a commercial8 corridor's money the way it was and9 attached a requirement that, where10 appropriate, where available, there would11 be a housing component above that12 commercial operation that's not there now13 that maybe either was one that's now14 boarded up and not available, I think15 you'd get kind of where you want to be on16 both fronts.17 But the other issue too is that18 you, as I said earlier, you clearly and19 effectively argued your point at the20 briefing, and I sense that during21 Councilman Goode's questions there are22 things that you still can't answer. So23 I'm glad we're going to hold these until24 we have additional discussion and25 142 6/2/09 - FINANCE - BILL 0902881 hopefully you can get the numbers that2 Councilmember Goode is looking for.3

I'd like4 to ask a question about the list that we5 have here of the6 Transit-Oriented/Commercial Development7 funds. Have all of these businesses8 contacted the Commerce Department for9 assistance? And how old is the request?10 And have you had an opportunity to go11 back and evaluate if their application is12 still -- what the status of the13 application is? How did you generate14 this list?15

Through a combination16 of our resources through all of the17 Commerce Department. We worked with18 PIDC, PCDC, all of the folks that we felt19 like had loan resources or loan20 opportunities out there. We called them21 together.22 And so we do know that -- we23 have had contact with them in some shape,24 fashion or another to know that they are25 143 6/2/09 - FINANCE - BILL 0902881 real projects. We have qualified them to2 the extent that they are still options3 out there available for us, and there are4 some that are committed to that we5 could -- while not shovel ready in terms6 of being pick in the ground, there are7 businesses that are ready to receive8 financing in some shape or fashion.9 How long have they been in the10 cue was one of your questions. I'm not11 sure about that right now. It could be12 something that came up very recently to13 something that's been sitting out there14 waiting for us to provide the funding for15 for some time now.16

But has17 your department contacted 27 businesses18 to get a status report?19

In one shape or form20 or another. So either through the direct21 application that they sent in to us,22 through our outreach efforts through23 both -- all three, would be the Commerce24 Department and PIDC, as well as in our25 144 6/2/09 - FINANCE - BILL 0902881 efforts through the gap financing2 program.3

Councilman4 Jones, while I'm getting my question5 together.6 No, no, no. I'm sorry. I'm7 sorry. Councilman Kenney and then8 Councilman Jones.9

I'll defer10 to Councilman Jones. He's so patient and11 kind, and I will defer to him.12

Thank you,13 Councilman. I appreciate that.14 As Chair of Transportation and15 Public Utilities in City Council, as we16 start to talk about transit-oriented17 development, I note on No. 27, the18 Market-Frankford El, which extends from19 46th and Market to 63rd and Market, it20 covers the 3rd and the 4th Councilmanic21 Districts. There are over a million22 people that ride that a month, and I'm23 confused as to why there is not one24 project on there, after they've gone25 145 6/2/09 - FINANCE - BILL 0902881 through the worst seven years a2 business -- ten years a business could3 imagine. We've lost 50 small businesses4 along there and we can't find one5 shovel-ready project along that corridor?6

Well, that was not to7 pinpoint any one particular project on8 that corridor. We know that there are9 multiple projects along that corridor10 that are ready to go. So we didn't pull11 one out. We looked at that as a whole12 corridor that was ready to go that we13 know we could do some things, that we14 could augment some other stuff that's15 going on also through our shop through16 the state programs that are happening17 there.18

So is there19 a dollar amount attached to that20 corridor?21

We do not know at22 this time, because we would just -- I23 mean, for all intents and purposes, we24 would just be doing a full --25 146 6/2/09 - FINANCE - BILL 0902881

So what I2 see here then is actually good news, that3 you're going to include that --4

Absolutely.5

-- in a6 blanket way and the amount is to be7 determined as we identify the specific8 projects?9

That's correct,10 because we feel very, very confident with11 our activities on Market Street from 63rd12 Street to about 40th, if not down to13 34th, we can find projects there that we14 would be able to fund.15

And that's a16 good -- that's the best response I've17 heard in quite some time.18

I'm glad.19

The second20 thing I'd like to ask is, as we start21 looking at other areas like 61st and22 Lansdowne, which has the 10 trolley on23 it, and we had a, if you would,24 shovel-ready deal for a market that had25 147 6/2/09 - FINANCE - BILL 0902881 been closed for some decade along there,2 would that be the kind of eligible3 project that could have been a recipient4 of this kind of an award?5

Could be. Don't know6 without the details, but what I'm7 familiar with from that particular8 project, yes.9

So is the10 window closed for these opportunities?11

No. These are just12 projections that we know right now.13 There would be a very open, transparent14 process to identify those individual15 projects that would be ultimately funded.16 So the door is not closed for any other17 projects that we have yet to discover.18

Thank you,19 Madam Chair and Councilman Kenney, for20 your kind deference.21

The Chair22 recognizes Councilman Kenney.23

Madam24 Chair, I'm going to defer any more25 148 6/2/09 - FINANCE - BILL 0902881 questions. I think that if we're going2 to have further discussion and you're3 going to hold the bills, we can probably4 hash some of this out at a different5 time. Thank you.6

Councilman7 Clarke.8

Okay. Just9 one quick question with respect to this10 list for the commercial corridor. And I11 hate the fact that we're here actually12 debating the merits of commercial13 corridor projects or loan pools for14 businesses and communities versus15 affordable housing, because I think that16 they are obviously extremely important on17 an equal basis.18 The question as it relates to19 the stimulus dollars, frankly speaking,20 centers around the readiness of those21 projects. I understand that Commerce22 went out and basically looked at every23 particular inquiry that they've received24 over the past year and a half from a25 149 6/2/09 - FINANCE - BILL 0902881 businessperson who is interested in2 financing, and when you look at that, as3 Councilman Goode suggested, I would ask4 for you to look at it in a sense that out5 of those 500-and-something proposed jobs,6 what's the likelihood that they will be7 created, not necessarily of jobs that8 will be lost, because they are9 speculative, with the exception of a10 couple.11 With respect to the proposal on12 the table -- and I understand we're going13 to have this discussion tomorrow -- in14 terms of the distribution -- that word15 was brought up -- my understanding, it is16 an equal distribution in both housing and17 commercial development. So it's not like18 these recommendations are weighted one19 way or the other, commercial versus20 housing, as was in the earlier version21 where it was close to $9 million -- and I22 won't use 9. I'll use 7 -- 7 and a half23 versus 3 and a half. So the record is24 clear on this issue about distribution,25 150 6/2/09 - FINANCE - BILL 0902881 it's not like the housing amendment2 proposes a significant amount more than3 the commercial.4 Getting back to the5 shovel-ready issue, because we were not6 in a position where we receive a list7 that is as detailed as the list for the8 commercial projects, because -- whatever.9 I don't know why that wasn't. If at all10 possible, if you can quickly put together11 a list of the housing developments --12 MS. McCOLLOCH: I have a13 pipeline list here.14

-- and the15 proposed job creation as a result of the16 construction. That's why I said as17 detailed a list. And the total amount of18 the construction. Because I understand19 in the nine projects that are at PHFA20 that have actually already been committed21 to by PHFA, it's close to $90 million in22 construction activity. So it would be23 nice to see the potential job --24 MS. McCOLLOCH: So I want to25 151 6/2/09 - FINANCE - BILL 0902881 make sure I understand the question,2 Councilman. You want to prepare the list3 of the PHFA --4

No. I want5 all of them.6 MS. McCOLLOCH: But in the7 pipeline I have here it doesn't include8 the PHFA. The PHFA proposals and the9 jobs we believe will be created by that,10 plus whatever else is the --11

Not just12 PHFA. If you're going to create a list13 of commercial projects that say that14 we've been approaching -- and a lot of15 them are speculative. I mean, this one16 at Progress Plaza, I don't even agree --17 that's in my district. I don't agree18 with the number, 1.5, because I was asked19 to give up 500,000 of other monies in my20 district to go to that, and I committed21 to do that. So that eliminates 500,000.22 I'm not suggesting that people are trying23 to pump up the numbers, but, I mean, it24 is what it is. So if you take the same25 152 6/2/09 - FINANCE - BILL 0902881 approach and say that every potential or2 every inquiry for funding for housing, if3 you create that list, I suspect that that4 will be a substantial list if you use the5 same formula that you used for commercial6 activity. So I would like to see, if at7 all possible, you compile a similar list8 for residential opportunities.9 MS. McCOLLOCH: Okay. And that10 list you want -- I'm just trying to make11 sure on the job piece -- what the number12 of jobs that would be created by that13 list? Is that --14

That would15 be -- I mean, that would be helpful.16 MS. McCOLLOCH: Okay.17

Councilman18 Kenney.19

Thank you,20 Madam Chair.21 Just quickly. As it relates to22 Councilman Clarke's request, as you had23 in the commercial/transit-oriented TOCD24 list, could you also include the Council25 153 6/2/09 - FINANCE - BILL 0902881 district? Because the list I have of2 some of the housing projects are not -- I3 can kind of figure out where they are4 based on the title or the name of the5 project.6 MS. McCOLLOCH: Are you talking7 about my list?8

I'm talking9 about Affordable Housing Pipeline.10 There's a list we have here.11 MS. McCOLLOCH: Okay.12

Do you know13 what that is?14 MS. McCOLLOCH: I don't believe15 I prepared that list.16

Whatever17 list you're preparing for Councilman18 Clarke, could you include it by district?19 MS. McCOLLOCH: Yes.20

Because21 it's easier to figure out where it is.22 Just a couple of questions23 relative to the speculative nature of24 commercial corridor projects. Some of25 154 6/2/09 - FINANCE - BILL 0902881 the things you've talked about relative2 to the housing development dealt with gap3 financing and that some of the shift of4 funds allows the ability to provide the5 gap that's needed to get the project6 started. Well, on your list of7 commercial corridor projects, I see a8 number of them that says "next step, gap9 financing." Is that the same thing as10 the gap financing needs for the housing11 projects or are these somehow further12 behind in design and permitting and13 zoning and all the other things?14 I mean, there's an assumption15 during the course of this discussion that16 the commercial corridor projects were17 speculative or behind a timeline that was18 unworkable for an immediate benefit to19 the City, but I see on the list you have20 27 projects and the majority of them, or21 at least half of them, say gap financing22 as the next step. Is there any23 indication on these projects how many24 have been designed already, how many have25 155 6/2/09 - FINANCE - BILL 0902881 got their zoning, how many have their2 permits? I mean, are they that3 speculative or are they -- what's their4 status?5

They are not6 speculative. The gap financing ones are7 the ones that came through the program8 that we had recently. They are9 underwritten and pretty much ready to go.10 We --11

So the same12 gap financing issue that gets a housing13 development on whatever list you're14 preparing started is the same issue on15 the gap financing on the commercial, just16 so we're comparing apples and apples?17

Yes.18

So the list19 that you've given us you would not20 describe as speculative?21

I would not describe22 it as such.23

Thank you.24

Okay. Let25 156 6/2/09 - FINANCE - BILL 0902881 me ask you a couple other questions.2 Earlier this year, the City received3 Recovery funds for neighborhood4 stabilization projects. Has the Council5 selected providers? If so, who was6 selected, and has this been formally7 announced?8 MS. McCOLLOCH: The9 Redevelopment Authority issued a Request10 for Qualifications for developers to11 participate in that program, and it has12 identified, I believe, five developers in13 that, if you will, first cut. Those14 include APM, Asociacion Puertorriquenos15 en Marcha, APM; Community Ventures. Both16 of those are non-profits. OKKS, which is17 a for-profit developer; Penrose18 Properties, which is a for-profit19 developer. And the fifth one is20 Allegheny West Foundation, which is a21 non-profit. So of the first set, five22 developers have been selected through23 that RFQ, two for-profits, three24 non-profits.25 157 6/2/09 - FINANCE - BILL 0902881 The Redevelopment Authority is2 working to identify properties that are3 eligible under that program and will be4 acquired and rehabilitated. To date, two5 properties have been identified, and6 those are churning their way through the7 system.8

So these9 properties are houses, right?10 MS. McCOLLOCH: These11 properties are foreclosed upon houses,12 yes.13

So they14 will rehab them?15 MS. McCOLLOCH: They will be16 rehabbed through -- in the case of the17 two that have been identified, I believe18 both of them will be rehabbed by Penrose19 Properties.20

And21 resold?22 MS. McCOLLOCH: And resold,23 yes.24

And the25 158 6/2/09 - FINANCE - BILL 0902881 profit is going to Penrose?2 MS. McCOLLOCH: No. And then3 it churns back into the fund.4

So it's a5 revolving fund?6 MS. McCOLLOCH: Correct.7

So what's8 the benefit to these five groups who are9 doing the rehabilitation?10 MS. McCOLLOCH: What's the11 benefit to them to participate? They12 receive a developer's fee as part of the13 cost of the rehabilitation.14

Okay. And15 so once the money revolves back in the16 fund, there will be another process?17 MS. McCOLLOCH: Yes, and then18 we'll continue to do more houses. The19 original application anticipated doing20 between 185 and 200 properties.21

So how22 long -- is there a time limit on this23 program?24 MS. McCOLLOCH: For the25 159 6/2/09 - FINANCE - BILL 0902881 Neighborhood Stabilization Program?2

Mm-hmm.3 MS. McCOLLOCH: Eighteen months4 from when we receive the funding of5 commitment, which was March 18th. So 186 months from March 18th, 2009 we need to7 have completed the 185 or 200 houses that8 we have. And then we continue -- the9 funds continue to revolve until we've10 ultimately drawn them all down, because11 we don't get back --12

The13 developer fee.14 MS. McCOLLOCH: -- the full15 amount that we spend. So over time the16 pot gets smaller.17 COUNCILWOMAN TASCO:18 Considering the fact that Mark Alan19 Hughes is leaving the Administration,20 have you all identified the point person21 regarding the applications for Recovery22 dollars?23 MS. McCOLLOCH: I have not. I24 mean, I'm not privy to that information.25 160 6/2/09 - FINANCE - BILL 0902881

Are you2 the person right now?3 MS. McCOLLOCH: It is not me4 right now, no.5

On Page6 119 of the budget detail of the7 Consolidated Plan, it is anticipated that8 PIDC will generate -- did you testify on9 the Plan yet?10 MS. McCOLLOCH: I haven't11 testified on the Plan yet.12

Okay.13 We're still on the -- any more questions14 on the Recovery plan?15 (No response.)16

19 MS. McCOLLOCH: Good afternoon,20 Councilwoman Tasco and other members of21 the Finance Committee and members of City22 Council. I am Deborah McColloch,23 Director of Housing. 9 The bill refers to Exhibit A, which is10 the Year 35 Consolidated Plan, the11 required HUD funding application. In12 order for the City to receive funding13 from HUD, the City is required to submit14 an approved Consolidated Plan to HUD no15 later than August 16th, 2009. 5 The Year 35 Consolidated Plan,6 for the fiscal year which begins July7 1st, 2009, details our plan for spending8 the monies from five primary federal9 sources. The proposed budget generally10 carries forward existing programs and11 commitment. The first source of federal12 funds is the Community Development Block13 Grant, which is still the largest source14 of funding for affordable housing, aside15 from subsidies which the Philadelphia16 Housing Authority receives directly from17 HUD. 271 million in new entitlement19 funding, an increase of 536,000 from Year20 34. 25 163 6/2/09 - FINANCE - BILL 0902881 In Year 35, based on resources available,2 we are anticipating a reduction in prior3 years' reprogrammed funds and in program4 income. 7 I am happy to tell you that8 despite the reduction in available CDBG9 resources, the Proposed Year 3510 Consolidated Plan maintains core housing11 and community economic development12 initiatives and programs. 20 Continued funding is proposed for rental21 ventures financed in conjunction with the22 Low Income Housing Tax Credit and special23 needs housing to assist the homeless and24 those with other special needs. 49510 million in Fiscal Year 2010. 388 million. 21 These funding allocations do not include22 funds proposed for affordable housing23 development, either homeownership or24 rental, which will be available through25 165 6/2/09 - FINANCE - BILL 0902881 the American Recovery and Reinvestment2 Act. 5 The Basic Systems Repair6 Program is proposed to receive a $784,0007 reduction in total funding in Fiscal Year8 2010 due largely to the reduced resources9 expected to be available through the10 Housing Trust Fund earnings. 545 million in Fiscal23 Year 2010. 11 Operating costs associated with12 the housing and community development are13 largely CDBG funded. 22 The second primary source of23 funding for Year 35 is the federal HOME24 Program. 745 million. 17 The third source of federal18 housing funding which is included in the19 Year 35 Consolidated Plan is the Housing20 Opportunities for Persons with AIDS,21 HOPWA, program, which the City of22 Philadelphia administers for a23 five-county metropolitan region,24 including Philadelphia, Bucks, Chester,25 168 6/2/09 - FINANCE - BILL 0902881 Delaware and Montgomery Counties. The2 federal formula for HOPWA funds is based3 on the historical and contemporary AIDS4 caseload in the region. 13 The fourth source of federal14 funding for housing in Year 35 is the15 Emergency Shelter Grant program. 303 million in ESG17 funds for Fiscal Year 2010. 22 In the past, another major23 source of funding for housing has been24 the Section 108 loan program. Under the25 169 6/2/09 - FINANCE - BILL 0902881 Section 108 loan program, the City is2 allowed to borrow funds against future3 CDBG entitlement grants. 9 While economic development10 Section 108 loans are self-sustaining11 through the repayment of debt, subsidies12 for housing funded with Section 108 loans13 must be repaid from CDBG entitlement14 funding. 8 million24 in proposed funding from the state25 170 6/2/09 - FINANCE - BILL 0902881 Department of Community and Economic2 Development's Housing and Redevelopment3 Assistance Program. These funds will be4 used to support home repair grants5 through the Heater Hotline and Tier 16 parts of the Basic Systems Repair Program7 and to support construction homeownership8 opportunities. 12 The Plan also contains a13 recommended budget for funds for the14 Philadelphia Housing Trust Fund.

The15 recession has limited Housing Trust Fund16 earnings, which are based on recording17 fees from deeds and mortgages. 5 million in Year21 34 and approximately half the amount22 earned in Year 33. Line items in the23 Consolidated Plan reflect the priorities24 recommended by the Housing Trust Fund25 171 6/2/09 - FINANCE - BILL 0902881 Oversight Board, as agreed when Council2 passed the Trust Fund legislation three3 years ago. 7 Thank you for this opportunity8 to present this testimony. In order for9 the City to receive funding from HUD, the10 City is required to submit an approved11 Consolidated Plan to HUD no later than12 August 16th, 2009. 20

Thank you21 very much.22 The Chair recognizes Councilman23 DiCicco.24 COUNCILMAN DiCICCO: Thank you,25 172 6/2/09 - FINANCE - BILL 0902881 Madam Chair.2 I hate to do this, but I just3 want to go back for one minute to the4 conversation we were having about the5 potential projects list. I just checked6 with a couple of my colleagues. The7 borrower or the description of the8 projects 1 through 9 is not included. It9 begins on Item No. 10. And if this10 question had already been asked, I11 apologize, but if not, would you also be12 able to supply us with the value of the13 next step? We know what the total14 project costs are, the district, the15 address and the jobs that they're16 purporting they'll create, but I'd like17 to know what the value of the gap18 financing would be for those projects.19

Okay.20 COUNCILMAN DiCICCO: And Items21 1 through 9.22

We apologize for23 that. We see that. That was an error in24 distribution.25 173 6/2/09 - FINANCE - BILL 0902881 COUNCILMAN DiCICCO: That would2 be helpful. Thank you.3

Councilman4 Kenney.5

Thank you,6 Madam Chair.7 Are there any proposed8 amendments to this particular bill? Will9 there be any proposed amendments to this10 particular bill from the Administration?11 MS. McCOLLOCH: There are12 amendments that were discussed with13 Council leadership.14

I'm talking15 about amendments specifically to Bill No.16 090437.17 MS. McCOLLOCH: Yes. There18 were amendments that were discussed with19 Council leadership today that we would20 be --21

Where are22 they?23 MS. McCOLLOCH: We were going24 to bring them back when we bring the25 174 6/2/09 - FINANCE - BILL 0902881 bill -- it's my understanding that the2 session was going to be recessed and we3 would bring them back when we come back.4

Are you at5 liberty to discuss them?6 MS. McCOLLOCH: Oh, yeah.7 Sure.8

How many9 are there and what are they?10 MS. McCOLLOCH: What was11 discussed in the budget was --12

This is13 specifically to this bill now.14 MS. McCOLLOCH: Yes, yes, yes.15 There was a request to increase the16 funding for Utility Emergency Services17 Fund, UESF, by $500,000. That's the18 program that provides utility grants to19 low-income households with arrearages.20 And 500,000 would be taken from the Tier21 2 Basic Systems Repair line to support22 UESF. That's the first one.23 And the second one was to24 create an acquisition loan pool that's25 175 6/2/09 - FINANCE - BILL 0902881 not currently in the budget. It would be2 a new line item for an acquisition pool,3 of which it would be supported with $24 million in General Funds, which are5 currently under contract to the6 Redevelopment Authority, and an7 additional $1 million in Corridor Bond8 proceeds, which are listed in the budget9 on Page -- as gap financing on .10

Well, the11 question I have relative to -- and,12 again, this is new information to me, so13 bear with me because --14 MS. McCOLLOCH: We were going15 to present it more fully.16

Well, we17 don't have a lot of time either, and I18 recognize that on both sides, both the19 Administration and on Council's side.20 You're taking $2 million of the21 General Fund?22 MS. McCOLLOCH: It's General23 Fund money currently under contract to24 the Redevelopment Authority.25 176 6/2/09 - FINANCE - BILL 0902881

What's the2 Redevelopment Authority -- what were they3 doing with it?4 MS. McCOLLOCH: It was General5 Fund money from Fiscal Year 2003 which6 was part of the NTI program before --7

2003?8 MS. McCOLLOCH: Wait a minute.9 I'm with you -- (continued) before the10 first Program Statement and Budget for11 the NTI program was passed. There was12 General Fund money put at the13 Redevelopment Authority to support14 acquisition activities, because there was15 money that was needed for, if you will,16 preliminary work such as appraisals and17 title reports and so forth before the NTI18 bond proceeds were going to be available19 for acquisition. So that money is --20

The $221 million in the General Fund that's under22 contract to RDA --23 MS. McCOLLOCH: Correct.24

-- is that25 177 6/2/09 - FINANCE - BILL 0902881 all of it?2 MS. McCOLLOCH: All of the3 General Fund money?4

All of the5 General Fund money from whatever fiscal6 year we're talking about, because we're7 going back as far as 2003 at this point.8 Does the $2 million represent all the9 money that's in that category under10 contract to RDA?11 MS. McCOLLOCH: I'm sorry. I12 don't know that.13

Who would14 know that? How do you know that the 215 million is there?16 MS. McCOLLOCH: I know that the17 2 million is there because I checked it18 with the Finance Director before this.19

What I20 would like to do when we get the21 information -- when the amendments22 finally come before the members of the23 Committee, I would like you to try to24 find out through the Administration if25 178 6/2/09 - FINANCE - BILL 0902881 there's other money parked over there2 from other budgets. I mean, if we can3 find $2 million from 2003, it's kind of4 frightening as to what may be parked over5 there in the way of General Fund, even6 though committed dollars but General Fund7 money.8 MS. McCOLLOCH: Okay. I9 understand the question.10

I know11 you're not the Finance Director, but12 doesn't that make you wonder?13 MS. McCOLLOCH: I can --14

You don't15 have to answer.16 In your testimony it says the17 Plan identifies 6.8 million in proposed18 funding from the state Department of19 Community and Economic Development's20 Housing Redevelopment Assistance program21 to support the Heater Hotline and Tier 122 parts of the Basic System Repair Program.23 Since we haven't had a state24 budget yet, what's the likelihood or25 179 6/2/09 - FINANCE - BILL 0902881 percentage -- how would you handicap that2 money staying in the budget on the state3 level and coming to us?4 MS. McCOLLOCH: I believe that5 we're going to get some portion of that.6 I'm not sure we're going to get 1007 percent of what we're anticipating. This8 was based on the Governor's budget. This9 figure was based on the Governor's10 budget.11

I'm sure12 you're aware there's the Governor's13 budget, there's the House budget and then14 there's that very austere, Spartan Senate15 budget that hopefully will not come to16 pass.17 MS. McCOLLOCH: Right. Well,18 I'm just telling you what this number was19 based on was the Governor's budget.20

So the odds21 are at some point $6.8 million will be22 less than 6.8; is that fair?23 MS. McCOLLOCH: I think that's24 a fair assessment.25 180 6/2/09 - FINANCE - BILL 0902881

What are we2 doing to make up that gap? Because it3 would seem that if we bumped up the Basic4 System Repair Program line item in5 CDBG-R, we would kind of be protecting6 ourselves in the event that we don't7 get -- either we get half of it or8 three-quarters of it or none of it, that9 we would have money available for10 emergency -- basic systems repairs would11 keep people from becoming homeless in the12 first place.13 MS. McCOLLOCH: I think you14 could increase it. It would just be a15 question of where you --16

Where you17 take it from.18 MS. McCOLLOCH: Right.19

But20 considering the fact that your testimony21 is -- and, again, you don't have a22 crystal ball and neither of us do23 relative to the state budget -- that 6.824 is likely to be less than 6.8?25 181 6/2/09 - FINANCE - BILL 0902881 MS. McCOLLOCH: I think that is2 likely.3

So I think4 we ought to be taking that in5 consideration in our discussions relative6 to CDBG-R, that if we recognize that the7 6.8 we're looking for might not be that,8 that we maybe find a way to ensure that9 we have the heater repairs and the roof10 repairs and some of the other things we11 need.12 MS. McCOLLOCH: Okay. I think13 part of the thought is that because we're14 going to have this increased money, this15 large influx of money for weatherization,16 which --17

We don't18 know what that is yet.19 MS. McCOLLOCH: We don't know20 the exact amount yet, no. We know we're21 getting -- well, we're getting about 1.722 from PHDC increase in July and then we23 will apply for additional funding for24 weatherization, that there will be some25 182 6/2/09 - FINANCE - BILL 0902881 influx of funding through the2 weatherization program.3

My request4 to you is to help address that, what I5 just raised to you now, when we have our6 discussion.7 MS. McCOLLOCH: Right.8

Thank you.9

Councilman10 Greenlee.11

Thank12 you, Madam Chair. Real quickly. And13 maybe this is a question to you. The14 amendments that Councilman Kenney and Ms.15 McColloch were just talking about to this16 bill, when would they be available17 written-wise? I mean, will they be18 available tomorrow?19

Probably20 tomorrow.21

Tomorrow?22 All right. Because I know time is going23 to be tight on Thursday morning, so maybe24 we can see them ahead of time.25 183 6/2/09 - FINANCE - BILL 0902881 All right. Thank you.2

Thank you3 very much.4 Councilman Goode.5

Just6 quickly.7 Ms. McColloch, you mentioned $38 million in the acquisition pool.9 MS. McCOLLOCH: Yes.10

Two million11 coming from RDA and the other 1 million12 coming from where?13 MS. McCOLLOCH: Coming from on14 . I want to make sure we're15 looking at the same book. Page -- is16 that the budget?17

No.18 MS. McCOLLOCH: It's under19 Community Economic Development, Section20 B, Targeted Neighborhood Commercial Area21 Assistance, Line 8, Gap Financing, which22 is currently at 2.1 million.23

Go ahead.24 MS. McCOLLOCH: So that line25 184 6/2/09 - FINANCE - BILL 0902881 item that's currently at 2.1 would be2 reduced to 1.1.3

And so how4 does that affect your compliance with5 Bill 000716?6 MS. McCOLLOCH: It has no7 effect, because this number was not8 included in the calculation for the five9 percent.10

I'm not sure11 that's true.12 MS. McCOLLOCH: The CDBG funds13 are what's in the bill, and this is bond14 proceeds.15

This is bond16 money that's going toward targeted17 assistance?18 MS. McCOLLOCH: This is bond19 money -- leaving aside the proposed20 amendment, this 2.1 is corridor bonds21 that are going to assist commercial22 corridor development, which --23

I only have24 a copy of the preliminary plan. Do you25 185 6/2/09 - FINANCE - BILL 0902881 have a copy of the Year 35 here?2 MS. McCOLLOCH: Yes. That's3 why I thought you were looking at a4 different book.5 So in that book, Councilman, on6 is where we're talking about.7 And you can see B-8 is called Gap8 Financing, and it's 2.1 million and it's9 under the Other category, which is the --10 I'm sorry.11

It's12 reflected on . Thank you.13 MS. McCOLLOCH: Okay.14

It shows 1.115 rather than 2.1 on . Thank you.16 MS. McCOLLOCH: Okay.17

On of your testimony, you talk about the19 rental housing program, the rental20 housing program supported by Low Income21 Housing Tax Credit. Are those tax22 credits available -- what kind of23 housing? Is it single-family housing or24 multi-family?25 186 6/2/09 - FINANCE - BILL 0902881 MS. McCOLLOCH: It's2 multi-family. The Low Income Tax Credits3 are the funds that are available through4 the Pennsylvania Housing Finance Agency,5 PHFA, and PHFA has an application round6 every year.7

But it's8 for multi-family?9 MS. McCOLLOCH: Multi-family.10

Not11 single-family?12 MS. McCOLLOCH: Correct.13

That's my14 question.15 of the budget detail,16 it is anticipated that PIDC will generate17 $1 million more in program income over18 last year's total of 6.7 million.19 Considering that PIDC has only generated20 $3.1 million in program as of May 31st,21 with only 30 days left before the close22 of the fiscal year, how will it generate23 this increased amount of $7.7 million in24 program income next fiscal year?25 187 6/2/09 - FINANCE - BILL 0902881

Well, the number in2 the budget, from my understanding,3 strictly is an authorization of the4 dollar and not the actual. So we're5 authorizing the 7.7 million this year as6 an authorization to allow us to do that.7 Then we will go through and then see what8 programs are funded and the actual9 result. So the actual will probably be10 consistent year to year.11 MS. McCOLLOCH: And also the12 number that you have, the 3.1 as13 generated, which was based upon a report14 that was requested and that I provided to15 City Council, that number was an16 inaccurate number. There was a17 misunderstanding in collecting data from18 PIDC about what information we were19 seeking, and that 3 million was only20 about new loans, not about ongoing and21 cumulative program income. So, in fact,22 PIDC generated more than the 3 -- I think23 it's 3.1 million. They in fact -- it in24 fact generated more than that. It was a25 188 6/2/09 - FINANCE - BILL 0902881 miscommunication about what was actually2 generated.3

Okay.4 Thank you.5 In prior years when program6 income goals were not met, how will OHCD7 make up the difference in the8 Consolidated Plan?9 MS. McCOLLOCH: If the program10 income that was not generated was in the11 loan pools of PIDC, then it just meant12 that it had less money to loan out. It13 didn't mean a reduction in the program.14 In other categories if there was less15 money generated, it essentially became a16 cash management issue for OHCD to work17 with either the Redevelopment Authority18 or PHDC about what additional -- what19 resources it hadn't earned and how we20 could make that adjustment. It generally21 was just a carryover.22 Because we got a new CDBG23 entitlement, we were able to manage the24 budget without having to cut programs.25 189 6/2/09 - FINANCE - BILL 0902881 The point at which we would have to cut2 programs would be if we never received3 any additional CDBG funds and we wouldn't4 be able to roll over any money, then we5 would have to actually cut it off. But6 because it's been an ongoing program for7 35 years, we're able to manage the8 reduction in program income by just9 essentially carrying the debt forward.10

Any other11 questions?12 Councilwoman Brown.13

During14 budget hearings, there were a number of15 questions raised around the Childcare16 Facilities Fund. An aside that occurred17 to me as I was sitting here, is there any18 reason why a childcare center could not19 qualify for the Basic Systems Repair20 separate from the question I'm going to21 pose about a Childcare Facilities Fund?22 MS. McCOLLOCH: Basic Systems23 Repair Program is --24

Strictly25 190 6/2/09 - FINANCE - BILL 0902881 for individuals?2 MS. McCOLLOCH: Is for3 single-family houses.4

And not5 for non-profits at all?6 MS. McCOLLOCH: Right. And not7 for --8

That9 answers that.10 The fact is that the Childcare11 Facilities Fund has 1.4 as budgeted?12 MS. McCOLLOCH: I'm sorry.13

The14 Childcare Facilities Fund has a contract15 now for 1.4 million?16 MS. McCOLLOCH: Yes. It has an17 existing contract with Philadelphia18 Housing Development Corporation for 1.419 million.20

And it is21 my understanding that the Facilities Fund22 receives matching dollars from William23 Penn that grow with the City's24 contribution. Was that a fact and how is25 191 6/2/09 - FINANCE - BILL 0902881 that a fact into the decision-making2 around the allocation of those dollars?3 MS. McCOLLOCH: Well, the 1.44 million is all based on the original 55 million that was made in July of 2003.6 The Childcare Facilities Fund originally7 got $5 million in 2003 to carry out its8 program of grants to childcare facilities9 to make capital improvements, and it has10 a program of technical assistance to11 assist the folks that are running those12 childcare facilities.13 So this is still -- it's still14 carrying out that -- it's still using15 that initial $5 million. In FY09, it got16 an additional $200,000 of General Funds17 added to it.18

Okay. Who19 is administering the technical assistance20 for the Childcare Facilities Fund?21 MS. McCOLLOCH: Non-Profit22 Finance Fund.23

And given24 the length of time and how the 5 million25 192 6/2/09 - FINANCE - BILL 0902881 was spent, what is your prognosis for2 sustaining the program after 2010?3 MS. McCOLLOCH: It will have4 sufficient resources to carry it through5 2010. At this time, after the current6 1.4 million, which is the existing7 contract with PHDC between NFF,8 Non-Profit Finance Fund, and PHDC,9 there's still another million dollars10 that can be either added to that contract11 or a new contract executed all from the12 initial 5 million plus 200,000 of FY0913 money. So I think it can be supported14 through FY10 and even into FY11.15

After16 FY11, procedurally what happens with your17 office and those agencies that are18 contracted to receive dollars?19 Procedurally what do you do as you look20 to the next fiscal year?21 My long-term goal is22 sustainability for what it means and23 making sure that we have childcare24 centers that meet code, et cetera.25 193 6/2/09 - FINANCE - BILL 0902881 MS. McCOLLOCH: We would need2 to consider it as part of the FY12, the3 Year 37 Consolidated Plan, either to put4 additional CDBG resources toward it or to5 consider it as part of the operating6 budget, because the fund does receive --7 this year it did receive General Fund8 support. So it would be part of the9 budget process that we would meet here10 before you indicating how we were going11 to continue to support the fund.12

Very well.13 Okay, then. Thank you both.14 Thank you, Madam Chair.15

Any other16 questions?17

Just one18 quick one.19

Yes.20 Councilman Clarke.21

It's not22 even a question, just a point of23 clarification.24 On the multi-family units that25 194 6/2/09 - FINANCE - BILL 0902881 are funded by Low Income Tax Credits,2 multi-family means more than one unit,3 but it doesn't necessarily mean that a4 unit will have multi families in it.5 Just a little point of clarity. So it6 could be a single home that one family7 lives in that single home?8 MS. McCOLLOCH: Yes.9

And it can10 be funded by Low Income Tax Credits?11 MS. McCOLLOCH: Well, generally12 Low Income Housing Tax Credit13 developments have usually around 35 or14 more units. That's just sort of what --15

But I'm16 talking about the unit can actually be17 one house. In the old days, the18 characterization of multi-family units19 was, you got a big building cut up20 into --21 MS. McCOLLOCH: No, no. I'm22 sorry. I misunderstood your question.23 This does not have to be a big building,24 no.25 195 6/2/09 - FINANCE - BILL 0902881

The new2 model, more often than not, is a single3 home; therefore, a single family.4 MS. McCOLLOCH: Yes.5 Francisville East is an example.6

And all the7 other more recent projects?8 MS. McCOLLOCH: Yes. Yes.9

I just want10 to make sure of the characterization,11 because sometimes when you say12 multi-family home, people think that13 they're old school, big building, 2914 apartments.15 MS. McCOLLOCH: Right.16

Thank you.17 Thank you, Madam Chair.18

The reason19 I ask that question, because we're20 getting a lot of rentals in my district21 and I'm wondering if those owners who are22 renting out these single homes are23 getting tax credits to do that. If I24 wanted to rent my home --25 196 6/2/09 - FINANCE - BILL 0902881 MS. McCOLLOCH: We would have2 to look at the individual. I can't speak3 to that without looking at what the4 address is and looking to see whether5 it's part of a tax credit development or6 not.7

Well, it8 wouldn't be a development. It would be9 like a scattered site rental.10 MS. McCOLLOCH: Then my guess11 is that a scattered site rental would12 most likely not be a tax credit13 development.14

Okay.15 Thank you.16 Councilwoman Brown.17

I see a18 number of professionals here from OHCD,19 and like the School District, we talk20 with a lot of these professionals over21 the phone and never get a chance to put22 the face with the name. So if you could23 just introduce your staff to us.24 MS. McCOLLOCH: I'd be25 197 6/2/09 - FINANCE - BILL 0902881 delighted.2 Could each member of the Office3 of Housing and Redevelopment staff please4 rise and introduce yourselves, starting5 with Joanne.6 (Ms. Jones speaking without7 microphone.)8

And we're9 going to have to add a subsequent step.10 You'll have to repeat who they are.11 MS. McCOLLOCH: I'm sorry.12 Joanne Jones, Deputy Director; Bill13 Yurkow, Director of Finance and14 Administration; Paul Cesario, Fiscal15 Officer; Laura Taylor, Contract16 Administrator.17

So the18 Childcare Facilities Fund would work with19 this professional?20 MS. McCOLLOCH: Actually, that21 contract is carried out through the22 Philadelphia Housing Development23 Corporation.24

Very25 198 6/2/09 - FINANCE - BILL 0902881 helpful. Okay.2 MS. McCOLLOCH: Wayne Stokes,3 Director of Monitoring and Auditing;4 Scott Wilds, pinch hitter. That's it.5