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
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
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
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
It would not be18 automatic. It would be at the City's19 discretion.20
But21 without this amendment, it would be22 automatic?23
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
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
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
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
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
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
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
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
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
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
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
The Chair17 recognizes Steve Jurash.18 (Witness approached witness19 table.)20
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
And thank16 you for your hard work at the services17 you provide as well as the other18 community organizations in the City.19
Good25 54 6/2/09 - FINANCE - BILL 0902881 afternoon, Mr. Rowe.2
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
Thank you11 so much.12 Any other comments?13 (No response.)14
We15 appreciate your testimony, and thank you16 for waiting.17
Next we19 have Elouise Edmonds.20 (Witness approached witness21 table.)22
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 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
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
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'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
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
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
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
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.20 Annie Saekang, Michelle Lewis,21 Pamela Kannebrew --22 (Witnesses approached witness23 table.)24
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
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
But there19 are other ways we can be helpful, and I20 agree with you.21
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
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
And so for14 the term of the contract, Wachovia will15 continue to do lending and community16 reinvestment?17
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
The Chair18 calls Ms. Allison Hughes.19 Thank you.20 (Witness approached witness21 table.)22
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
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
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
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