Committee Hearing, May 5, 2004

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE OF THE WHOLE FY '05 OPERATING BUDGET - - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, May 5, 2004 9:55 a.m. - - - - BILL 040255 - An Ordinance adopting the Operating Budget for Fiscal Year 2005. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE L. BLACKWELL COUNCILMAN FRANK DICICCO COUNCILMAN JAMES F. KENNEY COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 I N D E X BILL 040255 PEDRO RAMOS, City Solicitor......... ROMULO DIAZ, Law Dept............... 33 ROBERT DUBOW, Budget Director....... 39 DON MARINO, Law Dept................ 64 ELLEN GREENLEE, Chief Defender..... 118 LYNNE ABRAHAM, District Attorney... 131 GEORGE MOSE, DA's Office........... 203 AL TOCZYDLOWSKI, DA's Office....... 226 3 05/05/04 - WHOLE - FY '05 BUDGET

Good morning, everyone. This is the continued hearing of the Committee of the Whole regarding Bill No. 040255. The first department that we'll hear from today will be the Law Department. Please approach the witness table. Identify yourself and proceed with your testimony. Good morning.

Good morning, President Verna. I'd like start off by introducing members of the Law Department who are with me this morning, and then I'll pause and ask you how you'd like to proceed from there, whether to read testimony or to go straight to question and answer. Sitting at my right and your left is the Law Department's First Deputy Donna Mouzayck, who many of you know very well. Sitting behind me to my left is Romulo Diaz, who's Chief of Government and Regulatory Affairs and who was acting City Solicitor before I got here. To my right also and 4 05/05/04 - WHOLE - FY '05 BUDGET before the bar is Chris Lane, who is the head of the Administrative Services in the Law Department. Behind me I have Ed Fauser, who's Chief Deputy for NTI. Barbara Ash, who is the Chair of our social services group, which includes DHS, mental health and those areas. To her left is Don Marino, who's our Chair of Litigation. There's a guy back there named Rob Dubow who we don't have anything to do with.

May I offer you a suggestion? We all have a copy of your testimony. It will be given to the stenographer to be transcribed in full, so if you would simply abbreviate your testimony, we would appreciate it.

Thank you, President Verna. Then I won't read from testimony. I ask that it be submitted into the record and I'll just do a quick run-through programmatically of the highlights that I've included in the testimony. I've outlined for the Department based on the time that I've spent there to date, which is a little bit 5 05/05/04 - WHOLE - FY '05 BUDGET over two months, four programmatic priorities for the Law Department. First and foremost, to increase the delinquent debt collections for which our department is responsible. Secondly, to help DHS, the courts and all the people involved in the issues of the child welfare system, to complete the court reform that's been going on, whereby we've moved from a system -- which I often describe like night court -- where a child ends up represented by whoever happened to be on duty that day from the Law Department, DHS, the courts, to assist them where all the parties in the court are familiar with the case and where the system revolves around the individual child. And that has been taken very far. And I'd like to work with the Commissioner of DHS, Family Court and child advocates to complete that reform. Third, obviously the Law Department has a significant role to play in supporting reforms in the area of ethics and to lend our expertise to that. 6 05/05/04 - WHOLE - FY '05 BUDGET Finally, given the priority of NTI initiatives in the City, we have committed ourselves to make sure that we provide all the support necessary out of the Law Department to help achieve those goals. I'd like to talk a little bit about just very briefly in the area of delinquent tax collections, which I said was my first priority is in the time I've been here. For the next fiscal year, there are four general strategies that I want to pursue for our Department. First, I want to focus our efforts and our resources and our people to that part of the collection continuum that is made up of younger debt. We have a higher chance of collecting debt when it's younger than when it's older. So I'd like to move resources that we have in a broader range of time to the earlier part of the delinquent debt to get to the younger debt. Secondly, for older debt we're going to outside counsel. We're changing a little bit of how we go about doing that. We're moving from going from contingency fee 7 05/05/04 - WHOLE - FY '05 BUDGET arrangements to pursuing statutory fees. A quirk in the law which I was surprised by is that the outside counsel actually have the ability under statute to pursue higher rates than in-house counsel. So we're working on an arrangement where outside counsel would work, not for contingency, but for a statutory fee of percent -- we're very excited about that 10 -- and giving them older ones, freeing up our 11 people to go after younger debt, and collect 12 at a higher rate. 13 Third has my favorite title, which 14 is execution. And that's essentially taking 15 people that were formerly doing work on 16 collections for PGW and directing them largely 17 at what we call a new area in the Law 18 Department called the Execution Unit, where they would pursue execution on judgments that perhaps outside counsel wouldn't have as great an incentive to go after. We would have people dedicated to going after collecting on those judgments that are out there and including attaching a personal property. Especially because of the title, but because I 8 05/05/04 - WHOLE - FY '05 BUDGET think it will increase our effectiveness, I'm excited about that. Finally, the fourth element of that strategy is communication. We want to, not with new resources, but again with existing resources, redirect money towards our tax collection efforts. For example, we have in the Law Department produced a newsletter, which all of you probably have received over time. We're discontinuing that.

I'm committing those resources exclusively to these priorities, especially the tax collection priority, in the form of doing things as simple as looking at how we communicate along the collection stream, what the paper looks like, what the letters say, to considering what we can do to shame delinquent taxpayers. I guess I would pause there, having talked about those priorities, and ask for questions and answers, if that's the Chair's desire.

Thank you very much. 9 05/05/04 - WHOLE - FY '05 BUDGET I must say that I am encouraged to see that you are developing a City-wide campaign aimed at delinquent taxpayers to increase collections in FY '05. Would you explain the roles of the Revenue Department and your Department in the area of collections of money owed the City?

The revenue collection is the primary collector. We essentially act as the outside collections lawyers for the Revenue Department. Under the Charter, after 90 days, delinquent taxes can be sent from the Revenue Department to the Law Department. The Revenue Department does collections first, then they come to the Law Department. They get staged to us and we take it from there. As you know, there are other functions that the Law Department plays in the tax collection process, what we do before administrative proceedings and our prosecution of tax cases, but I believe your question was about really the collection process and how we interact with Revenue. I guess I've been before this Body before and am known for my 10 05/05/04 - WHOLE - FY '05 BUDGET candor, and I won't deviate from that. I'd like for that to be a more seamless relationship. The Commissioner and I are looking to how we can do that. Janice Davis, the Finance Director, and Joyce Wilkerson and I are very interested in continuing to finding ways in making that more seamless. There's technology issues. And I think that, especially as somebody kind of new on the block who's learning this as I go along as well, there's some opportunity to finding ways of making how and how often we interact with Revenue more seamless, and I welcome that opportunity.

Sounds wonderful. I think you're being much more aggressive than we've seen any City Solicitor in the past on this issue. Are you going to need more personnel?

We're not looking to grow the Law Department. We are re-allocating resources within the Law Department. As I said before, the people that have been freed up from the changes over at PGW who were 11 05/05/04 - WHOLE - FY '05 BUDGET already in our shop, we're training and turning into part of our execution team. We had support from the Budget Office in being able to retain our staff in our tax collections area. It's a part of our Department that's important, that's got importance beyond the Department. It's really important to the City in our ability to generate revenue. I'm used to managing in a way that you deploy the resources you have towards your priorities, and that means making choices. So some things won't get done and other things will. I gave the example in communications on tax collections. We won't do a newsletter, but we'll take those resources and put them towards communicating with delinquent taxpayers. I guess I've never had the benefit of managing with increasing budgets. When I was at Penn I did two years of managing cuts. So for better or for worse, that's the mode in which I'm used to managing.

Great. Would you please explain what Operation KICK 12 05/05/04 - WHOLE - FY '05 BUDGET is and how that operates?

Keep It Code Clean is our effort to hold owners of vacant lots responsible for code compliance, including in our Department going after the prosecution of the L&I fines. One of the things we're looking to next year is we're setting a goal of, I think, $400,000 to 500,000 in increased revenue from pursuing collections against those who owed those particular kinds of fines.

How many people are assigned to the Neighborhood Transformation Unit?

The total is 18, including lawyers, legal assistants and other staff. I believe of that, 11 are lawyers.

What is the function of that unit?

A large part of their operation is the code enforcement, and KICK is an example of that. My predecessor, Judge Diaz, I believe, was the one who organized the NTI Unit. What's different about it from how 13 05/05/04 - WHOLE - FY '05 BUDGET the Law Department has -- and frankly law firms often organize it -- it's a little more interdisciplinary than you would normally have in a law firm or in a law department where you have people with just one particular type of expertise. So they do code enforcement, housing. They do the administrative enforcement out of that area. We represent the Zoning Board, for example.

I have a number of other questions I would like to ask. However, I don't want to dominate this hearing. I notice there are a number of Councilmembers that want to be recognized. Each will be given five minutes on the first go around. At this time the Chair recognizes Councilman Nutter.

Thank you, Madam Chair. Good morning, Mr. Solicitor.

Good morning, Councilman.

I regret that I 14 05/05/04 - WHOLE - FY '05 BUDGET was not able to be here for your confirmation hearing, but I was away at the time. Congratulations to you.

Thank you.

I just wanted to ask maybe just a couple questions that might normally be asked at that time. I apologize.

We're not going to have a re-vote on that bill, are we? My wife may want to show up and testify.

Oh, no. I understand. We'll treat her with the greatest dignity and respect. What I often seek to know from the different solicitors that we've had the pleasure of working with is the policy with regard to legal opinions and the nature, I guess, of that confidential advice. You have a wonderfully unique position that only one person has of trying to provide legal advice to both City Council and the Administration, which we will always place you in some, at times, uncomfortable positions. What is your policy with regard to a 15 05/05/04 - WHOLE - FY '05 BUDGET request by a Member for a legal opinion and the confidential nature of that opinion in the context of the lawyer/client relationship? When is it, if ever, released? Are there any special conditions that we as Councilmembers need to request with regard to that legal advice and when it's released?

It certainly is a question that we discussed at confirmation. I think President Verna asked it. Councilman Cohen had asked it before. It's an important issue that is appropriately raised often because of the nature of the Law Department's representation under the City Charter, as you've pointed out. I guess most directly it's my experience in the time that I've been in the Law Department, first of all, that the professionals in the Law Department with whom Council deals are very conscientious and careful about their role in representing both the Administration, Council, boards and agencies. Apart from that, each of us as lawyers grow up with a cannon of ethics in our 16 05/05/04 - WHOLE - FY '05 BUDGET minds from the first day of law school. When a Councilperson asks for a confidential opinion, it is an opinion that is strictly for that Councilperson. Even within the Law Department we would not share with other lawyers that we're working on a confidential opinion for a specific Councilperson. That's not to say that I won't say to Richie Fader, Richie, what do you think about this issue? But if Councilman Nutter has asked for a confidential opinion, then we operationally are very disciplined about not revealing those confidences, even within the Department. And certainly that extends to not revealing any of those confidences on purpose or by accident. In my role, for example, as a member of the Cabinet, just as I have a responsibility to the Cabinet, I have a responsibility both under the Charter and as an attorney to maintain those confidences, which I take very seriously, as does the Department now and historically. That's not to say that an issue 17 05/05/04 - WHOLE - FY '05 BUDGET won't come up twice, that you may ask for a confidential opinion at the time that you act on -- let's say that you're given certain advice with respect to an ordinance. When that ordinance comes up, at that point we have a responsibility to obviously opine on that ordinance and hopefully to give consistence across clients, which I think we also do very well. Does that answer your question, Councilman?

Yes. Pretty much on that specific issue because I've certainly had that experience. As you've probably heard from the folks that you work with, I maintain a fairly active relationship with the Law Department and have received many memos and advisory pieces in the past and will continue to seek the Law Department's advice. Is it the Law Department's policy that every bill, as it's moving through the process or at least on its way to the public hearing process, if not coming up for a vote, 18 05/05/04 - WHOLE - FY '05 BUDGET is it standard procedure that the Law Department reviews every ordinance that is coming through the process and gives someone some advice within the Administration as to the legality of that particular ordinance?

We would not give preemptive advice to the Administration on an ordinance that has not been presented.

No. I'm saying there's a live bill. It's sitting in Committee. It's been scheduled for a hearing in two weeks. Putting aside the request for a legal opinion, at what point does the Law Department as a matter of policy -- if it is a policy -- give advice to the Administration about a particular bill?

As you know, there are several stages and different standards along different stages. When we, for example, sign off on an ordinance we're opining as to that it's proper in form. At a different point we might give -- when it's for signature to the Mayor -- advice as to its legality as well as to its enforceability. Let's say it's passed 19 05/05/04 - WHOLE - FY '05 BUDGET and signed, we still have to give advice with respect to the same now law to the departments and agencies about its enforceability.

I know the bell has rung.

Councilman, just to go back to two questions ago, just to dot an I back there. The situation I didn't address is the next extension of your question, which was, what happens if there is a conflict. As you know, under the Charter and from experience where we believe that where such a conflict arises, we have the ability and have in the past authorized Council to seek separate counsel.

But unless a Councilmember authorizes it, a legal opinion would not be released without their permission. Is that the policy?

I believe that it's the practice for our lawyers to consult with the Councilperson to establish what they want, whether they want a confidential opinion or not. 20 05/05/04 - WHOLE - FY '05 BUDGET I have to tell you that one of the things that our legislative folks and Richie Fader's group tells me about is the proliferation of confidential opinions, which raises an issue down the road about publication of Solicitor opinions. Because obviously one of the things that we do in the Law Department for institutional reasons of legal continuity is look to previous Solicitors' opinions, and particularly published opinions. So there's also that tension too. It's my experience -- because this is something I've obviously, as part of my wanting to orient myself at the very beginning, is that we regularly will have that conversation with the Councilperson. I urge our lawyers to always be clear about the ground rules. And I don't think that any of our lawyers would be offended by Councilmembers repeating what their desire is with respect to the request.

Thank you.

The Chair 21 05/05/04 - WHOLE - FY '05 BUDGET recognizes Councilman Ramos.

Thank you, Madam Chair. Good morning, Mr. Ramos.

Good morning, Councilman Ramos.

I have a few questions. I'll wait for the second round. Last on your section on this initiative of yours -- which I think that we all are very happy to hear about -- because Madam President of this great Chamber and this great Council has said that we also have a collection crisis going on in City. So we are glad to have someone come here and outline a plan of how to collect monies that is owed the City, the citizens of Philadelphia. In your collection presentation here, it brought back something that I had done last year before I came to City Council. I took just a cursory look at our departments. When I looked at the Law Department, it seemed to me that in the Law Department's debt collection group, that you had a whole lot of 22 05/05/04 - WHOLE - FY '05 BUDGET lawyers in debt collections. The question that sprung up to me was, why do they have so many lawyers doing debt collections? Shouldn't there be more debt collectors, professional debt collectors doing that, and couldn't that probably bring down our budget in that area? Just explain how you're revising the debt collection where you would have more people that are non-lawyers doing debt collections versus attorneys. And if you're not doing it that way, just explain it to me, please.

First of all, I think three out of the four people that I mentioned with respect to PGW were non-lawyers -- or all four of them are non-lawyers. The delinquent tax collection operation of the Law Department is significant. It's currently around 76. But let's say it's in the ballpark of 80. Most of those are non-lawyers. Currently the tax staff includes 13 lawyers.

So there's no 24 lawyers doing tax collections?

There are lawyers in the 23 05/05/04 - WHOLE - FY '05 BUDGET process.

I saw somewhere where it comes to tax collection, I saw more lawyers than non-lawyers, and I just want a rationale for doing it that way, if you continue to do it that way. But my curiosity was, why do we have lawyers doing debt collection?

I believe, Councilman, that the bulk of people doing tax collection work per se are non-lawyers. Certainly part of the tax collection process is litigation at different levels. And the 80 people or 70-something people that we have doing tax collection, it's my understanding that about 13 total are lawyers. And I don't know that they're necessarily doing what you're thinking of as the tax collection process. It's an operation that actually has a range of levels of people and scopes of responsibility, some represented, some non-represented. So the bulk of that are non-lawyers.

And you're proposing to do more in-house debt collection? 24 05/05/04 - WHOLE - FY '05 BUDGET

We want to collect more money in-house, and part of how we want to do that is -- it's just a fact that the younger the debt, the higher the chance of collecting it. So we want to take our in-house people we have with the resources we have and commit them to what I call a younger part of the collection stream where there's a higher chance of collecting. And then for older debt, rely on outside counsel under a different type of an arrangement that is currently common. Our current arrangement is that we pay a percent contingency. What we're 16 pursuing is a relationship where the outside 17 counsel relies on the statutory fee that they 18 get in the court with the taxpayer, instead of 19 getting 25 percent of our take. Our goal is 20 in the Law Department to increase delinquent 21 tax collections by $10 million for Fiscal '05. 22

How do you reach 23 that $10 million mark? How do you project 24 that you're going to be able to collect $10 25 million? 25 05/05/04 - WHOLE - FY '05 BUDGET

There's two things. It's not a precise science, but we've got people who are experienced at collections. We know that for, well, a couple things. It's based on individual managers all the way up to our Chief Deputy planning on how much they can collect with the staff at various staffing levels and various staffing compositions. It's based on discussions internally as well as with outside counsel about what we think we could do better, which is leading to this reorganization. There are some rules of thumb -- what is it, eight to one -- what our experience has been is that the return on that investment is usually about 10 to one. I think I've budgeted it, like, eight to one, or something like that, to be conservative.

Are you contracting out less now that you want to do more in-house debt collections? The Law Department has traditionally done a significant amount of contracting out.

If you measure in terms 05/05/04 - WHOLE - FY '05 BUDGET of dollars it should all be up because we want to collect more, especially for outside counsel. The more they collect, the more that they're doing, the more that they're getting because the incentive is on them to collect.

Councilman Ramos, I'm sorry. Your time has been up. The Chair recognizes Councilwoman Tasco.

Good morning. Welcome. Congratulations. For the first, we have the Mayor's $500 million economic development initiative. It is proposed that $125 million will be taken from the City's Water Reserve Fund. Has your office issued a legal opinion regarding this proposal?

I think we've been asked by Council as well as the Administration about this. I'll tell you what our response is, as well as where we would ultimately end up. We have looked at the issue and do have an opinion as to it. We believe that what the Finance 27 05/05/04 - WHOLE - FY '05 BUDGET Director has proposed in terms of taking the $125, substituting it with an insurance policy and using those proceeds for water infrastructure-related projects is a legitimate use and legal use of those proceeds. There would be steps required including, I believe, an ordinance to effectuate that. And before we did that we would get an outside bond counsel opinion.

Have you issued the opinion yet?

We would issue an opinion on a transaction.

During the budget hearings, the Finance Department has testified regarding a proposal for self insurance of health benefits for City employees. Has your office issued a legal opinion regarding this proposal?

A response to the question presented previously at Council is on route to you. But I believe the question as it was stated was a pretty general question. Maybe you can just ask it directly, which was 28 05/05/04 - WHOLE - FY '05 BUDGET what would it take to effectuate self insurance, particularly what would Council's role be in effectuating self insurance? As a recovering benefits lawyer and somebody who has spent all my career in the private sector, I have to say I was surprised by the reaction to the mention of self insurance, because in my experience so many people, especially that work for large institutions, are self insured and never know it because their Blue Cross card or whatever it may be looks exactly the same as it did when it was insured. Now, all self insurance means is that rather than pay a premium to an insurance company, you're entering into some other type of an arrangement where the risk of using health benefits rests someplace, either is shifted to the City or is shared in some way with the City. And you can structure that lots of different ways. If you don't have an insurance company doing that whole thing, taking the risk, processing your claim, having the deal with the doctors and hospitals, you 29 05/05/04 - WHOLE - FY '05 BUDGET can do different parts of that through separate contracts. You can have a third-party administrator with whom the City contracts to administer a plan that's designed by somebody. You could have an arrangement with somebody like Blue Cross that says, these are the benefits we want you to offer. That may be a package that you offer, but instead of you taking the risk, we want you to bill us what it costs you, plus something. That's more information than you want probably, but the range of options available, variations on self insurance are pretty wide. What it comes down to with respect to Council is any of those arrangements that require a legal obligation that's longer than a year and whether any one of those pieces of particular contracts would be required to be presented to Council for approval. Does that respond to your question?

Partly. But my time is up. I have to come back.

30 05/05/04 - WHOLE - FY '05 BUDGET Councilwoman, your time is up.

I know.

The Chair recognizes Councilwoman Miller. Excuse me, before I do recognize you. Have you been consulted by the Finance Director on the self insurance issue? Because we're not really being told too much on that. I believe that one of the options would be that the City would negotiate its own rates. Are you being told about what the possibility is that the City would be self insured?

I framed my answer in terms of what the City Council's follow-up questions during testimony to the Law Department because I -- to follow-up on Councilman Nutter's earlier question, just as I would preserve confidentiality of individual conversations with Members of Council, I would do that with respect to the Administration.

Okay. Well taken. Thank you. The Chair recognizes Councilwoman 31 05/05/04 - WHOLE - FY '05 BUDGET Miller.

Thank you. Thank you, Madam President. Good morning, Solicitor.

Good morning.

I just have one question at the moment regarding Operation KICK. One of the things that many Councilpeople have wanted is strong, aggressive enforcement in the district. So if we're doing NTI in doing bricks and water, we also have to do the other things in neighborhoods that's going to keep neighborhoods stable. So strong enforcement is important to us. In my office we were talking about this Operation KICK, and we were wondering if there could be a systematic enforcement targeting a particular group of people, particularly property owners who slip through the cracks, who short report when they're issued a citation, but they're just, just barely getting by meeting property codes. In 32 05/05/04 - WHOLE - FY '05 BUDGET essence, slum lords. And we have a number of them. We can actually provide you with a list from our district of those types of owners that are just doing the bare minimum in property code maintenance. But there's always an issue. There's always an issue.

Frankly, Councilwoman, the level of detail beyond where I think I can be helpful, except in this way -- I mean, helpful in responding on the spot. Obviously, one question is whether such owners are in fact in compliance with the Code, as opposed to, as you say, slipping on the inside of the compliance with the Code, because obviously you're either in compliance or you're not. The other is beyond the Law Department or beyond the enforcement operation, what happens programmatically with respect to those landlords. What they're hearing about, you know, that's a commercial corridor, what other interactions they're having with the City, other than enforcement actions if with the facts you give they're in compliance. 33 05/05/04 - WHOLE - FY '05 BUDGET I want to ask Romulo Diaz as to whether he wants to supplement that in any way.

Romulo Diaz, Chair of Regulatory and Government Law. Councilwoman, as part of the City's strategy to gain compliance with Code responsibility of homeowners and others, we're looking at making sure that we're imposing monetary fines. We're recording liens when fines remain unpaid and we're seeking judgements again against property owners. As the Solicitor indicated earlier as part of the Execution Unit, when owners fail to meet their responsibilities. One of the matters that we've looked at in particular that has come up in earlier Council questioning has been the ordinance 20 passed last year with regard to the windows and doors issue. And we have begun to develop a pilot program with Licenses and Inspections to ensure that we initiate an effort to determine where we should prioritize our initial effort, and we'd be pleased to respond 34 05/05/04 - WHOLE - FY '05 BUDGET with periodic updates as to our progress.

Okay. Who would you suggest that my office meet with to talk about this issue further and to give you a list of properties that we'd like you to target under your new -- I assume you're going to do it City-wide. We just thought maybe it could be a systematic approach neighborhood by neighborhood if there's particular outstanding property owners that constantly violate.

It is going to be a City-wide effort. We would be assisted if you would send us a list of areas of concern so that we might consider those for the priority pilot effort that I indicated earlier. And we're always available to meet with you or your staff at your convenience.

Who is the best person to request? You?

I'll be happy to take any calls, Councilwoman.

Thank you. Thank you, Madam President.

Thank you. 35 05/05/04 - WHOLE - FY '05 BUDGET The Chair recognizes Councilwoman Brown.

Good morning, welcome and congratulations again. On of your testimony, this last paragraph you discuss the very diverse work force that you have in the Law Department, so let me commend you on your very diverse work force at all levels. It's my personal opinion that if the leadership of all of the departments were as aggressive and sensitive to reaching out to professionals of all persuasions we'd have a much better City. On of your testimony, please discuss community development, what that is, please.

The Community Development Fund?

Yes.

It's OHCD funding and support of legal support.

At the top of you speak to the reduction in the General Fund. Is this in response to the 36 05/05/04 - WHOLE - FY '05 BUDGET Administration's request to City department heads to cut by percent or percent, 4 whatever the figure is? 5

Yes, Councilwoman. Our 6 budget reflects a 5 percent reduction, budget 7 to budget. Budget '04 versus proposed '05, 8 and a 10 percent reduction in proposed '05. 9 And that's because of some of the anomalies 10 that were discussed in the transfer ordinance 11 last week.

I believe the question was answered with regard to Operation KICK, so there's no need to revisit that. I would like to alert you that I did introduce a resolution actually calling for hearings on how well our City does or does not do with regard to collections, court revenue collections. So come this fall we will invite you back to hear in greater detail more about the new effort you have underway with tax collections with hopes that we can get our handle around improving that number that we have with other City departments. Thank you. Thank you for your testimony. 37 05/05/04 - WHOLE - FY '05 BUDGET Thank you, Madam Chair.

You're welcome. Mr. City Solicitor, on your detailed budget -- it's the detailed budget -- you did tell your minor object code 253 as well as the purpose and scope of service. Would you please explain the following? $20,000 for PGW multi-site agreement. Can you tell us why that is not being paid through the General Fund? What are we paying for?

Let me have a minute, President Verna, to locate reference.

It's Section 23, .

Let me ask Romulo Diaz to answer. I think this relates to reimbursement from -- that these expenses are reimbursed by PGW, even though they're showing up as a General Fund element.

That's exactly correct, Council President. That is a consulting contract that we have with Maco (ph) Law Firm. 38 05/05/04 - WHOLE - FY '05 BUDGET We use them for a number of environmental remediation needs with regard to PGW facilities and other City facilities as well.

The other $40,000 for SEPTA leases with the City?

We've engaged, Council President, with the Obermayer firm in connection with the upcoming lease-back agreement termination, which will terminate December 31, 2005. We thought that as part of a comprehensive City-wide review of transit policy, that we would want to look at that particular agreement with SEPTA and other transit agreements as we prepare.

$35,000, advice on bond issues regarding the stadium. I thought the stadium was complete and we were out of that picture, so to speak. Do you see it?

I think at the peril of doing what I shouldn't do before Council, I think I --

I think Mr. Dubow is here. He's a little itchy. Do 39 05/05/04 - WHOLE - FY '05 BUDGET you want to explain?

We contract with Paul Richie, who some of you know has been in the Law Department, and still is an enormous resource to the Law Department on public finance. And the reason the stadiums are part of this is really left over from previous years. His current engagement, which I am very familiar with firsthand, is on general public finance issues, bond issues, PICA issues. So to my knowledge, none of this relates to any left over from the transaction itself.

As you work down further on that same list, there's $80,000, and it says, stadiums, Genesis Healthcare and gaming. Why are we still dealing with this for all of the stadiums?

It's a similar answer, President Verna. The stadium part of this relates to -- because we're showing three years here on this line. It's helping describe the whole thing. So the stadiums part of that relates to previous years, not to 40 05/05/04 - WHOLE - FY '05 BUDGET '05. We're showing years '03, '04 and '05.

I know one of the Councilmembers yesterday was questioning about the gaming portion. Is your office involved with any of the gaming aspect I'm talking about possibly getting in the City? Just yes or no. 9

Yes. Government and Regulatory Affairs is advising.

$30,000, Dream Garden, Parking Authority. Can you explain that, please?

At least the Dream Garden part of that is from previous years.

What is the Dream Garden?

The Curtis Center. It's, like, a mural at the Curtis Center.

This is the, could you take it out of the building or not case.

The parish piece.

What about the Parking Authority? Is that part of the 41 05/05/04 - WHOLE - FY '05 BUDGET Administration's litigation?

Let me ask our Chair of Litigation, Don Marino, to come up.

Good morning.

Good morning, President Verna. I believe the Parking Authority part of that is the recently -- as you're well aware, of the successful litigation in the Supreme Court of Pennsylvania where the court found 7-0 in favor of the City. This happened before I came aboard, but we had retained outside counsel to help with that. Bob Heim actually argued the case. We won that case, as you know, 7-0, which I might point out is very unusual to win a case in the Supreme Court 7-0. But that would be that part of it.

But isn't that over with? Why are we still carrying that forward?

It's a mix, President Verna. There's some ongoing pieces of the litigation just mentioned by Mr. Marino on Act 230 as well as other advice being provided by 42 05/05/04 - WHOLE - FY '05 BUDGET the firm, such as labor and employment.

Thank you. The Chair recognizes Councilman Nutter.

Thank you, Madam President. Mr. Solicitor, since we're in that area -- I assume you're talking about the line item related to the SB 1100. Is that what you were just talking about?

Yes.

What else is remaining from that particular representation? And if I'm reading this correctly, in FY '03 the Law Department spent $330,000 in that litigation. And what did you spend in FY '04? It's budgeted at $70. What was the actual?

Let me take that in pieces, Councilman. At least on the first part of your question, my understanding is there's nothing really substantial left in connection with that. Now, the second part of your question -- 43 05/05/04 - WHOLE - FY '05 BUDGET

So the $330 is what was spent in FY '03?

No. I'm now asking you to repeat the second part of your question, which was about the $330 number.

In FY '03 the budget book indicates that litigation related to SB 1100 -- or I think you referred to it as Act 230 -- it was the Pennsylvania Convention Center, the Parking Authority and probably four or five other components. They're kind of a large, multi-faceted piece of legislation. The Law Department spent $330,000 in FY '03 in that litigation?

I can't say that it would all be related to litigation, because often matters will be open for one purpose and firms are consulted on other matters. My understanding with respect to Decker is that that it's mostly the SB 1100 litigation. So yes, but not necessarily 100 percent.

What about in FY '04, the current fiscal year?

My understanding is that 44 05/05/04 - WHOLE - FY '05 BUDGET what we project for a total for Fiscal '04 is $70,000, and nothing for Fiscal '05. A follow-up that I would ask is, do we think that $70,000 is already accrued? It's already been accrued. It's not continuing.

So has the billing ceased on SB 1100?

I believe there's nothing continuing as to whether the billing has ceased or where the payment of bills -- which is a whole other matter -- I don't know. But in terms of incurring expenses, I believe we're done.

Now, the end result of all this litigation in some of the these matters, at least in one of the components of SB 1100, is that the legislature ended up passing a new piece of legislation, which was one of the components related to the Convention Center in SB 1100. So that's been resolved. Then the legislature passed other another piece of legislation related to the Parking Authority component, which is another 45 05/05/04 - WHOLE - FY '05 BUDGET significant part of that litigation, which now seems to have spawned a new piece of litigation. Didn't the City recently file 5 suit against the Governor and the Parking Authority related to the latest piece of legislation by the General Assembly related to the Parking Authority?

I respectfully would not characterize the new litigation as a spawn from the 230. I think that --

Act 230 resulted in a new piece of legislation being passed related to the Parking Authority. Now we have a lawsuit related to the latest piece of legislation regarding the Parking Authority, right?

Litigation involving the Parking Authority is two parts. One is the Act litigation, which is a challenge of the 21 first takeover of the Parking Authority, which 22 is scheduled for argument before the Supreme Court of Pennsylvania. And then there was some litigation after that, as you know, resulting in Act 9, which we have also 46 05/05/04 - WHOLE - FY '05 BUDGET challenged the legality of in court. There are different elements to it. But simply put, it was Act was a violation of Home Rule. 5

Is that the 6 latest litigation? 7

That is the latest suit 8 that we filed, yes. 9

And what is the anticipated cost of that and where is that reflected in the budget book?

We're handling that entirely in -house. Richie Fader's group is litigating that matter. What I guess is harder to quantify is the cost of not pursuing the suit. I should mention there's another suit involving the Parking Authority, Councilman, which is a suit for specific performance under the agreement and seeking the transparency of finances of the Parking Authority to which the City is entitled.

So presently how many lawsuits do we have involving just the Philadelphia Parking Authority? How many 47 05/05/04 - WHOLE - FY '05 BUDGET active cases do we have?

In terms of dockets, probably three; the one before the Supreme Court, the contract specific performance action and the challenge to Act 9. And I would argue that the challenge to Act is 8 really part of the same litigation as the Act 9 22 litigation.

The bell went a while ago, right?

It did. But if you have one last question on this issue, we'll consider it.

I understand that you're fighting on the principles of truth, justice and the Home Rule Charter and trying to make the best case that you can. I guess --

I think, Councilman, if the ability to enforce our own parking rules isn't Home Rule, I don't know what is.

I'm not going to argue the case with you here in the City Council. I wouldn't dare put myself in that 48 05/05/04 - WHOLE - FY '05 BUDGET situation. On the other hand, you kind of opened that door slightly. I guess one of my responses would be, yes, it's an important legal principle. You'll argue all of the facts of that legal principle. But we are also spending significant dollars. Now you're handling one of the cases in-house. But I do start to wonder at some point when these legal bills are escalating, there are some other vital City services beyond who controls parking or who issues a parking ticket, that, to be honest with you, I think are somewhat more important to many of the citizens of the City. I do have some concerns when you look in this book, on and the next page, I mean, some of these legal fees to outside counsel for a variety of purposes are in the millions of dollars at a time when we have significant financial problems and proposals to reduce a variety of services to citizens. So we don't have to have an argument about it, but I think it is a very 49 05/05/04 - WHOLE - FY '05 BUDGET serious issue. Again, I'm not demeaning or degrading or blowing off the significance of the importance of some of these legal issues. They have to be balanced against other pressing concerns that citizens have. You know, you get a ticket, you get a ticket, versus rec centers and swimming pools.

I understand your view, Councilman, and certainly respect it. We do set priorities, as I outlined in my testimony, and do re-allocate resources consistent with those priorities, such as just not doing some things to do increased tax collections. The Parking Authority issue is one where we'll disagree as to its importance. It is kind of a fundamental Constitutional type of issue that comes up --

Maybe before our litigation maybe we can have a mediation strategy. Maybe we'd have more discussion between and among these parties before the next step is to march into court.

Certainly one thing that 50 05/05/04 - WHOLE - FY '05 BUDGET continues to be an opportunity is for the ongoing litigation notwithstanding is for the rights of the City with respect to the Parking Authority under the agreement to be honored and respected, and we're hoping that we can through litigation as well as through personal contact, as you suggest, get to a point where at least that part of the relationship is more what the City's entitled to.

I understand that. Thank you.

Councilman, your time is up. Thank you. The Chair recognizes Councilman Ramos.

Thank you, Madam Chair. Mr. Ramos, in your statement I found it very interesting in that your involvement, your Law Department's involvement in NTI seems to be a major role. You use the words that the Law Department is an effective partner in implementing the ongoing Neighborhood Transformation Initiative, and you go on to 51 05/05/04 - WHOLE - FY '05 BUDGET talk about also being involved in the new River City America. Is your involvement just legal or is your involvement more than just legal in the NTI and River City development? And if you are, talk to us about it, because we want to know about more people that have a say in NTI and the implementation of NTI or anything about River City because we haven't gotten much information on River City.

Our role is, as you know, to provide advice along the way to the Administration, the boards, departments and agencies and to the Council in all aspects of that, and we're kept pretty busy just being the lawyers. Obviously, me personally as a member of the Mayor's Cabinet and part of the Administration and part of the Mayor's Management Team in that respect, but would within that tend to focus on the legal issues. For example, the question proposed earlier about the Water Fund.

What is Eva Plaza from your staff that I've gotten to work with -- and I know she is a very hard-working 52 05/05/04 - WHOLE - FY '05 BUDGET person. You're very fortunate to have her on your staff. That seems to be more than just legal advice, the work that she does.

When legal advice seems like it's more than legal advice it's called good legal advice.

What I'm getting at is that if the Law Department has ways to get things done in implementing NTI and has information on the new River City and what all that means, I want to know about it.

Our role used to be the lawyers along with the confidence that comes along with that. But I would say perhaps -- this is going to get more philosophical than I know you would like, either in this venue or outside this venue, but I --

Try me.

I think this was a very smart, creative thing that my predecessor did in organizing this part of the Law Department, the NTI Unit. Usually law practice is divided up into kind of specialties. You know, you'll have your tax lawyer and you'll have your 53 05/05/04 - WHOLE - FY '05 BUDGET securities lawyer and you'll have your litigator and those things. Then the client becomes the hub in the middle trying on the different expertise. What my predecessor did with NTI was, he put different specialties in this group. You've got Code enforcement people. You've got real estate folks. So they're able to approach something very wholistically. It's a big enough thing that we're able to group lawyers around the Initiative. So I think that's why it looks a little different. How the Law Department is practicing in this area may look a little different. And it's a good thing. It's something that I've thought about outside of the context of the Law Department or the City and how law firms can better represent their clients.

I concur. So the work, for example, of Ms. Plaza is strictly as a legal advisor to NTI? MR RAMOS: Yes. We're working as lawyers. Of course, we want to be helpful to our clients and point out things that we think 54 05/05/04 - WHOLE - FY '05 BUDGET our client should know that some folks may think is not strictly what people think of narrowly of legal advice, such as representing somebody in court or interpreting a statute. But it's very much part of the legal representation, the legal advice and the context of attorney/client relationships.

Going to another issue. I just received, Madam President, the infamous or the widely proclaimed disparity study yesterday afternoon. It looks like it's going to take a few hours to go through it. But we all know through press accounts what it says and we know from personal experience. Although your department is a department that has done a significant amount of work in thoroughly integrating racially through qualifications in your department, I see no breakdown in the numbers of Latinos in the Law Department. Do you have any idea of how many Hispanic Americans you have working for you?

Within the Law Department, Councilman? 55 05/05/04 - WHOLE - FY '05 BUDGET

Yes, within your department.

In terms of staffing, sure. Let me just kind of start at the macro level. Latino attorneys, we have 13. Within the senior most management team of five called the Executive Committee, we have two.

That includes yourself?

Yes.

You and Romulo Diaz?

In the Executive Committee, the chairs, which is pretty much the group that's here today. And then there's the Chief Deputy in NTI, which is under Government and Regulatory Affairs. The specifically Latinos, Councilman, management in the -- what we would call Managing Attorneys, which includes the Executive Chief Deputy divisionals, we've got three Latinos out of 33. Non-managing attorneys, we have eight out 141. Legal assistants and law clerks, we have three out 56 05/05/04 - WHOLE - FY '05 BUDGET of 48. Support staff, civil service and exempt, we have five out of 135. And that should add up to Latinos. 5

Thank you, Mr. 6 Ramos. The reason why I say that, I've been 7 tracking this, and I don't believe I have made 8 it a point until this moment. You're doing 10 9 times better than at least four, five 10 departments in this City. There's a City 11 department here that has no Hispanic Americans 12 working in that department at all. And I know 13 that the Hispanic American community in this 14 City has existed for at least 60 years. I've 15 been part of that for most of those 60 years, 16 not quite, but most of it. 17 I'm actually appalled that I have a 18 department that comes in and tells me how the 19 Administration is doing global Philadelphia. I applaud the Administration for those efforts. Then I turn around and take a look at how many folks they have in their department, and it was zero. No Hispanic Americans. You can always say, well, maybe they're not applying. They're not interested 57 05/05/04 - WHOLE - FY '05 BUDGET in working government. But I'm with the Philadelphia Police Commissioner, and the Police Department has done a magnificent job in reaching out. Their levels of equality across racial lines have improved tremendously because they have gone and reached out to find qualified people. The same with the Fire Department. The same with prisons and other areas. If less department heads make an effort, a real effort to go out and integrate their departments, these numbers will continue to be really awful. I don't know how far this disparity study goes, but we might as well take a look at the disparity within the government and the departments because it is totally unacceptable and unreal that one department in this City has two. Another one has two. Another one has zero, of departments that have hundreds of people working in them. But I am glad that you're making some substantial strides and I know under your leadership that this will continue to improve.

I would also, 58 05/05/04 - WHOLE - FY '05 BUDGET Councilman, add that I would be remiss having the privilege of serving this position and with my experience to not point out, however, some of the things that have been encouraging in the last five years. As you know, when Mayor Street was elected, he, like his predecessor, was supporting me to Chair the School Board. Alba Martinez became the Commissioner of DHS, probably the biggest agency with the greatest responsibility, high stakes. Ken Trujillo, who was a City Solicitor. I know you've heard me say many times that throughout my life I've often been the first Latino to do various things, and that's a distinction, but not always something you're pleased about. One thing that I am pleased about is that in this particular position, that I'm not the first Latino to serve at the head of the Law Department.

Councilman Ramos, your time was up a long time ago.

You let my colleague Mike Nutter go over there for ten 59 05/05/04 - WHOLE - FY '05 BUDGET minutes. Can I just get another seconds? 3

Yours was 4 up a long time ago and I didn't want to 5 interrupt you, but this will be your last 6 question for this round, please. 7

I have no 8 questions. I just want to make an observation 9 here. I applaud all of that, and Mayor Street 10 has done a tremendous job in this area of 11 naming Latinos to high profile positions in 12 the government. It's a very good thing for 13 the City Solicitor to be Hispanic American and 14 for the City Councilman addressing you to be 15 Hispanic American. But there's a lot of 16 Hispanic Americans, a lot of people in this 17 City without jobs. So we employ 15 people, 18 that's fine. The people are very proud. 19 Hispanic Americans are very proud of seeing us 20 in this great Chamber and discussing the issues. But the issue of employment is an issue of fairness, and in that area we have a lot to do. I'm sorry, Madam President. I'm done. 60 05/05/04 - WHOLE - FY '05 BUDGET

I'd like you to come up to the table a minute, please. Never mind. I just wanted to prove something to you. The Chair recognizes Councilman Kenney.

Thank you, Madam President. Mr. Ramos, just think if Juan wasn't your brother what would have happened to you. I was afraid. Let's go back to Home Rule for a second. Echoing some of the concerns that Councilman Nutter has relative to the cost of litigation relative to these philosophical Home Rule arguments. How did the City of Philadelphia get Home Rule?

Through a state Constitutional convention.

And an act of the legislature?

Which resulted in the creation of an amendment to the Constitution.

So it was 61 05/05/04 - WHOLE - FY '05 BUDGET authorized by the state legislature, basically?

It derived from that constitutional process.

How did we get the Parking Authority? How was it created?

Before there was a Parking Authority we had the right to, as part of our police powers, and continue to have the ability to police parking. The Parking Authority was created to facilitate the public finance infrastructure of the Parking Authority.

What authority was created?

To implement that there was both state legislation as well as City Council ordinance in a fairly elaborate system of local law on that matter. I probably with some respect, Councilman, understand where you are going in pointing out that there are certainly -- you know, if my opinion is completely undebatable there wouldn't be a case, so I appreciate and 62 05/05/04 - WHOLE - FY '05 BUDGET respect the point you're making.

Similar to the Convention Center Authority also. There are similar circumstances, I guess.

I don't want to argue this too much, but your police powers, I think, are pretty uniquely low.

And I'm not making an argument on behalf of the state. I got some understanding by the times I spent working with the legislature that the viewpoint of Harrisburg vis-a-vis Philadelphia is almost diametrically opposed Philadelphia vis-a-vis Harrisburg. I think what happens here is two issues. Number one, when there is a lack of relationship or strong relationship with the leaders in the legislature, often times they take actions to either get attention or to get around the fact that there's no relationship. That's a political issue that's out of your hands. The other issue there is they believe that we are basically a creature of 63 05/05/04 - WHOLE - FY '05 BUDGET the state. We exist as a result of the state authorizing us to exist, and theoretically could take that Home Rule away with a similar procedure that was followed to give us Home Rule. So I think what happens is we wind up getting entrenched in legal battles, even though the arguments, our arguments or our position may be clear and strong to us, their arguments and position are clearly strong to them. And without the basis of a relationship to have a conversation, we wind up in court. I think at some point in time if we had developed a relationship of leadership in the legislature, they wouldn't have thought of taking the Convention Center Authority or the Parking Authority because there would have been discussion give and take, a relationship, a friendship perhaps, you know, concern and understanding between each other. Now we're both in trenches firing rocket grenades across to each other, and I don't see us going anywhere other than continuing this process.

I respect that, Councilman. It's certainly an issue that 64 05/05/04 - WHOLE - FY '05 BUDGET affects other local governments as well. And certainly in addition to the legislature, there's a role of the courts in interpreting the Constitution.

It seems that ours, though, are a lot more contentious than some of the others. It's just a comment that I think if we had taken a different approach four years ago, we may not be entrenched in a court battle, which is costing the taxpayers of Philadelphia a lot of money. Let me ask you about one other court issue that's relative to our constituents, and that is the condo trash situation. Can you give me your view of the status of that and where you think we're going?

I believe it's scheduled for argument at the Supreme Court, Councilman. I believe in June, but I'm not sure. I'm sorry. Let me ask Don Marino.

Good morning, Councilman. It's presently scheduled for argument in the Commonwealth Court. Judge Arlen Adams will be arguing the case. 65 05/05/04 - WHOLE - FY '05 BUDGET

For the City?

For the City.

How much have we spent on that?

I don't have the figures in front of me.

For Fiscal '04, we're projecting $40,500. For Fiscal '05, $30,000.

Has there been any effort to have any discussion as to try to solve this in some way, or we're just going full guns to the Supreme Court again? Has there been any discussion about trying to figure out how to make this work, or we're on a legal strategy and that's it?

At this point I know of no discussions. But of course possibly there would be room for that. But that would have to flow from Council. I'm not aware that counsel for Council has attempted to have any discussions on that.

S-e-l, counsel.

What is that?

As opposed to City 66 05/05/04 - WHOLE - FY '05 BUDGET Council.

Again, I think the Council was pretty clear on what we wanted to do to make some equitable attempt to treat our citizens, many of them paying high levels of real estate taxes unfairly, and they're not being treated fairly now. I would really just like to see maybe some effort to get this going, rather than just this strategy of litigation. You're talking about the basic right of government to control their parking. A basic right of a citizen is to have their trash picked up. I don't think anyone would argue that. There are other ways of doing it as opposed to just having the City assume the additional costs. There's reimbursement to condo associations and other things that we project would be a lot less than the City Streets Department thought it would be. So I would urge continued, perhaps, effort to try to get this resolved, rather than just stretching this out for principle's sake.

Thank you, 67 05/05/04 - WHOLE - FY '05 BUDGET Councilman. Your time is up. The Chair recognizes Councilman Nutter.

Thank you, Madam Chair. I have a series of things that I would like to talk with the Solicitor about, which will clearly take more than the normal time. So what I'd like to do, if possible, is just defer any of my time until other Members have been able to go through there questions.

No one else? (No response.)

Mr. Ramos, I'm still on with regard to litigation and some of the costs of litigation. Why don't we move to -- I'm sorry. Let's go back to 17 for a second. Not that I'm particularly focused on the Parking Authority, but I noticed that there was another line item related to them further up from the previous item. You've got labor, civil rights --

Where are you, Councilman? 68 05/05/04 - WHOLE - FY '05 BUDGET

I'm sorry. I'm back on 17. There's a $400,000 item in FY '05, which is preceded by a $250,000 item in FY '04, and a $851,000 item in FY '03. It's on the line that says, labor, civil rights and PK AUTH. I'm going to assume that that's the Parking Authority also?

Yes, Councilman, but I don't believe it's Parking Authority litigation.

What would it be?

I'm sorry. That wouldn't make sense. It may be left in there from past years, Councilman. We don't know of anything that Ballard is doing that's Parking Authority related at this time.

What may be left in from previous years?

I think the reference that you're making to the Parking Authority for that line is another one of these that's left over from previous years and not related to any current matter. 69 05/05/04 - WHOLE - FY '05 BUDGET

Was there a previous matter? Is that how it got in there in the first place?

There may have been something that went into Fiscal '03. To my knowledge, they haven't been involved in any litigation we've been discussing.

Okay. Let's go to . You have an item for $40,000 --

, Councilman?

of the budget book. Zeller and Brandt in FY '04, $40,000. In FY '05, $40,000. The line reads, New Jersey Counsel, DEMS landfill lit. Is that litigation?

Yes, Councilman. That's a Superfund litigation in New Jersey where we're one of the parties being represented and sharing costs.

Is that because we disposed of trash over there or something?

There is a case alleging to the exposure to that effect.

The next item, 70 05/05/04 - WHOLE - FY '05 BUDGET the description is unanticipated outside counsel, various legal services as required, $1.2 million in FY '05, $2.4 million in FY '04, with no other description. What is that?

What numbers did you just give, Councilman?

FY '05, $1.2 million. FY '04, $2.4 million. The line reads, various legal services as required. The description is unanticipated outside counsel.

As you know, that's a -- what it says. As much as we try, there are things we can't anticipate when budgets are planned. So this is money set aside for the unexpected, which always happens. You just don't know what it's going to be.

How did you arrive at that figure?

The experience of our budget and finance folks.

Well, in FY '04, which is over in two months, what did you spend it on? 71 05/05/04 - WHOLE - FY '05 BUDGET

You'll notice that the part of the '04 amount -- hopefully we won't spend the $2.4 for '04. It is an aggregate authorized amount for a couple things, the biggest part of which are the costs associated with cooperating with the FBI investigation.

How much is that?

The aggregate amount to date was $1.2, which we were projecting to get up to $1.5, I believe. We testified last week on the transfer ordinance to that effect. We also have -- and I don't know whether it's in here -- other matters beyond that particular matter that have continued from previous years, as well as not yet identified costs with things going on this summer including the labor negotiations, I believe. Councilman, I understand that part of why this was bumped in there is one thing that we are seeking to avoid is not -- I don't think it would be appropriate with respect to those things that are related to our 72 05/05/04 - WHOLE - FY '05 BUDGET cooperation with the FBI investigation to give firm by firm breakdown at this stage for fear that they could be interpreted as reading something into the mental impressions of the lawyers.

I'm sorry. I couldn't hear that.

You have outside counsel representing the City with respect to certain individuals and their cooperation with the investigation and we don't -- to the extent we go down the road of trying to say, this is how much we expect to spend on any one firm that's identified with any one individual, we are unfairly communicating something that could be interpreted or misinterpreted as indicating how much work or how worried you are about any particular person.

Who would you be unfairly communicating it to?

To anybody other than the clients to whom you owe confidentiality.

Okay. We'll come back to that. 73 05/05/04 - WHOLE - FY '05 BUDGET I was not clear on the number. The FY '04 number is $2.4 million. I was not clear from your answer how much is related to the ongoing federal investigation.

We've projected $1.5 through end of fiscal year for what keeps getting referred to as the FBI probe. There are other matters that we're handling from that from previous years that continue that also have some costs. I think we may also have put our hedge on any potential additional labor costs in there.

So the number at the moment is $1.5?

For that matter.

What are you estimating for FY '05?

We don't anticipate the spending at this level to continue.

What level do you anticipate?

For '05, we are budgeting $1.2 million. That includes -- we don't know. It's an estimate of what we think 74 05/05/04 - WHOLE - FY '05 BUDGET could be incurred as a result of the matter you're discussing or other matters. For that same type of collection of things we are budgeting $1.2. Obviously if it's less we won't need it. If it's more, hopefully we won't have to come back for a transfer ordinance. We'll find it someplace else.

Has the $1.5 million been spent already?

$1.5 is what we expect to spend throughout the end of the fiscal year, I believe. As I testified last week, the dollars out the door or amounts approved for payment for the specific matter, for the FBI probe, was about $1.2. That was both paid and approved.

Paid and approved is $1.2 and you're expecting it to go to $1.5?

That's what we project.

Let me ask you a series of questions related to the larger issue. What provisions of The Philadelphia 75 05/05/04 - WHOLE - FY '05 BUDGET Code or the Home Rule Charter or other relevant statutes provide for requiring the City of Philadelphia to provide legal services to public officials or public employees in this situation?

I believe it's Title 20, Section 701 or 702 -- but I'll get that for you -- which to paraphrase, says that the City Solicitor and Law Department have an affirmative duty to represent employees and persons previously employed by the City on any matters whatsoever arising from their employment.

Is there any distinction as to whether or not the matter that arises --

That's Section 702.

Of Title 20?

Yes.

Is there any distinction in that regard between matters that are of a civil nature versus possibly a criminal nature?

No, there's no 76 05/05/04 - WHOLE - FY '05 BUDGET distinction in the rule.

And in this situation, though, the Law Department is not providing the direct representation, but we are paying outside counsel; is that correct?

We are providing outside counsel to those individuals. The US Attorney has asked that we get outside counsel to ensure that there's no potential for conflict.

Why would there be a potential conflict?

That's the position of the US Attorney's Office. It's just before you talk to folks, you don't know what you're going to hear in a number of cases to be cautious and to avoid getting anybody into a conflict situation. We've decided, and they insisted, generally that separate counsel be obtained.

So we've hired the outside counsel, you're saying on the advice of the US Attorney?

At the insistence of the US Attorney. 77 05/05/04 - WHOLE - FY '05 BUDGET

Under what set of circumstances would a public employee's actions --

I would add, the reason you do that, just so you understand, is the Law Department at all times represents the City. We represent people to the extent of their employment with the City at some point. We don't want to put anybody in the position where their employment situation with the City or something like that hinders their full cooperation with the federal government. So if you, for example, said -- you know, I came to you and said, let's talk about the responses to the subpoena, and you say, I've done nothing wrong, but my boss might be mad at me, or my boss might have an issue with what I have to say, that might be a case where -- I'm making that up -- where I might say, well, maybe you should talk to somebody other than me because I'm always the City's lawyer. The US Attorney, they've taken a conservative, cautious, and I think appropriate route in these matters and I think it's enhancing the 78 05/05/04 - WHOLE - FY '05 BUDGET full cooperation.

So it's been reported at least in the press that there are upwards of lawyers who are representing 6 various individuals in this matter; is that 7 correct? 8

What was reported was 9 that there were 14 firms representing -- what 10 was reported was 14. There are a total of 15. 11

Who is managing 12 all of this representation? 13

Our Chair of Litigation, 14 Don Marino, since I've been here, with my supervision.

Is there a limit to how much could be spent on the representation for the outside counsel?

The Code doesn't impose a limit.

I'm sorry?

Where you started off, the Philadelphia Code provides an affirmative obligation which continues. For the most part the US Attorney is insisting on these outside 79 05/05/04 - WHOLE - FY '05 BUDGET representations, so there is no choice there. What we try to do is we try to negotiate, as always, rates significantly below the normal billing rates of the firms involved. But there isn't a point where we just stop representing people because of money.

Because of?

The short answer is no. 10

There is no cap?

No. Because there's an affirmative Code obligation and there's the insistence of the US Attorney on the use of outside counsel. There's also in some cases the potential for ethical responsibility on the part of the Law Department to get somebody outside counsel.

Is there a process or procedure that is in written form that lays out how you decide or how you determine -- and you've obviously referenced somewhat specific instruction, if not insistence from the US Attorney -- but how does the Law Department in general decide whether a public employee or a public official 80 05/05/04 - WHOLE - FY '05 BUDGET gets outside counsel? When do you decide that there might be a potential conflict?

In this particular matter, Councilman?

In this matter or any other matter.

In this matter the answer is easy. It's at the insistence of the US Attorney or a judgment of the Law Department that there's a potential for a conflict. It doesn't have to be an actual conflict, just a potential for conflict.

And if the Chair of Litigation is managing the process, how involved is either that individual or yourself in what goes on with these particular cases? It seems you're representing the City. The employees or officers have their own outside counsel. The City has also apparently -- at least been reported -- the City has actually hired its own counsel outside. What would they be doing?

The outside counsel for the City per se responds to the voluminous 81 05/05/04 - WHOLE - FY '05 BUDGET requests for information made by the US Attorney. That is the labor intensive part of cooperating with the government's investigation. It is producing the hundreds of thousands of documents and e-mails and facilitating witnesses. That's where the bulk of the work is. And it requires a particular experience not normally associated with the Law Department in criminal law.

Is there any point at which the City stops providing or paying for representation?

For itself?

No. For the officers or employees?

The Philadelphia Code says that you have this obligation for matters arising from the acts performed within the scope of somebody's employment. If it's at some point determined by us that something is not within the scope of somebody's employment we would discontinue representation.

Is it fair to say -- I could just be wrong -- that most of 82 05/05/04 - WHOLE - FY '05 BUDGET those types of representation usually fall more on the civil side of litigation as opposed to the criminal side?

I don't understand the question.

The nature of what someone might do that would result in a public employee or an officer being sued, you know, if one of our employees possibly smashes their vehicle into a citizen's car. The citizen sues. They go up the chain. They do the employee, the supervisor, the commissioner or the department or possibly even a higher person.

I think what you're asking, Councilman, is the question you asked before, which is whether the Code is limited to civil representations, and the answer is no. 21

Okay. If you stop providing representation because you determine that the acts or actions were not within the scope of the person's job, who covers the cost of the previous 83 05/05/04 - WHOLE - FY '05 BUDGET representation?

If we determined that certain conduct is not within the scope of representation and it precludes us from providing that representation, the easiest part of that is we would certainly discontinue representation. And the question that arises, which because it's at least possible, could in fact arise at some point, is our ability to go back retroactively to collect, and that's a litigation decision that we would make at the time based on specific facts and circumstances.

Was there any circumstance under which if that scenario were to play out and it's subsequently determined that the actions were not within the scope of the person's duties and the City has expended whatever amount of money its expended for the previous representation under the Code and state statute, why wouldn't the City seek to recover funds expended for the representation since it is at that point you already made the determination that representation should no 84 05/05/04 - WHOLE - FY '05 BUDGET longer be expended because of whatever the actions were? Doesn't it seem to negate having provided the representation in the first place?

I would take the position that the Law Department will pursue the City's interest. The first thing is what's our legal claim going backwards. I'd probably argue that we have a claim going backwards. Then you have the litigation decision that you would make in any litigation matter of what it would take to pursue those costs. But it's not a decision that I'm prepared to make in the abstract without any facts and circumstances before me. The Code provides for representation within the scope of their employment. I said that there is a question then that arises if something is not within the scope of their employment, I'd make a litigation decision based on law and fact, specific law and fact, as to how much sense it makes to go after these folks the way you make decisions in litigation all the time. 85 05/05/04 - WHOLE - FY '05 BUDGET

Lastly, what interest for the citizens of the City of Philadelphia is being protected or guarded by having the representation provided? How are the citizens benefiting from the representation? How are their interests being protected?

Well, first, the Code provides an affirmative obligation for the City to provide representation for people acting within the scope of their employment. They're acting on behalf of the City. The Law Department, as you know, is -- because we have an elected District Attorney, the elected District Attorney's Office is the prosecutorial arm of the criminal law expert in the City Charter framework. The Law Department does not routinely keep on hand expertise in responding to criminal investigations and criminal subpoenas. I think that it makes sense when that need arises, to go out and seek the expertise rather than to have people doing that instead of delinquent tax collections. 86 05/05/04 - WHOLE - FY '05 BUDGET So we have an obligation to provide adequate representation. We also want to cooperate fully with the federal government. Cooperating fully also requires expertise, because if you don't know how to read a subpoena or what something really is about, you're not necessarily -- you don't want that to be misinterpreted. And finally, we're running the City here. The Law Department has lots of things it's doing. One of the questions that kept coming up before and since I've taken the job, people keep wanting to say, you know, you must -- assuming that the investigation is consuming the Law Department, that other things aren't going to get done. That's not how I'm going to manage the Law Department. The business of the City is going to get done. We're going to seek the help we need from people outside in a way that doesn't hinder the work that the Law Department has to do in helping the City run. I think that defending against meritless claims against the Police 87 05/05/04 - WHOLE - FY '05 BUDGET Department, pursuing delinquent tax collections --

I understand that.

We are doing zoning enforcement. All of those things are things that we're able to do because we're not turning our Law Department into a criminal law defense firm.

I understand that. But again from our previous discussion, that's also balanced by -- and I'm glad the Law Department is not overwhelmed or consumed by all of this because then I wouldn't be able to get all the legal opinions I'm going to ask you for. On the other hand, you're also projecting upwards of $2.7 million in outside legal costs, which would be of concern --

Total outside legal costs.

-- to the City, who again are facing projected service cuts and who may wonder for themselves, how do I 88 05/05/04 - WHOLE - FY '05 BUDGET benefit as a result of all this activity going on when, you know, my library is closed.

Our job is to protect the resources of the City and to collect those resources owed the City. That's not to say that there aren't changes that are adverse to the City. One of the things we're very distressed about is the erosion of the law under the Tort Claims Act. A recent Supreme Court case finding that sidewalks adjacent to state -- that we would have some exposure for sidewalks adjacent to state highways. That's something we have nothing to do with, but has a real impact on the City, the taxpayers and the Law Department's responsibilities.

Well, Solicitor, earlier there was testimony lauding the decision making of the Pennsylvania Supreme Court in one particular case. You know, you win some, you lose some.

Yes. And they all have consequences.

That's kind of 89 05/05/04 - WHOLE - FY '05 BUDGET the way it goes. lays out two additional contracts each for $20,000 related to the airport. Line items for both read, FBI investigation.

I'm sorry. ?

37, yes. Is this all part of the same investigation?

I'm sorry. Councilman, give me a second. Councilman, go ahead.

Are those two matters all related to the same investigation?

Yes.

Are there any other places -- I don't want to keep you up at the table too long -- are there any other places --

Any other funds?

Yes.

That's all we have in our budget outside of the General Fund.

I'm sorry?

Within the Law 90 05/05/04 - WHOLE - FY '05 BUDGET Department budget, that's -- I think it's General Fund and this piece of the Aviation Fund. To the extent there may be current or past work at the Pension Fund, that would show in their budget.

Also related?

I mean, PGW was served a subpoena. That would show up under their's.

Those all end up at the Law Department eventually anyway. Why wouldn't it be in your budget?

The short answer, I guess, is that the work done strictly for those enterprises and funded by those enterprises that we're not managing but we would ultimately approve show up in those budgets. This is the universe that I'm familiar with.

Do you know then, based on those, as you referred to them, other enterprises, what their costs are or what is the total cost of what you've characterized a couple times as the FBI probe? What's the total cost to the City? 91 05/05/04 - WHOLE - FY '05 BUDGET

I'm not aware of those, but would be happy to communicate back through Finance the request to other departments.

I'd like to have from you in writing a legal opinion regarding the City's policy of providing private legal services for public officers and employees. I'm going to for the moment assume that you were accurately quoted in a newspaper story from April 12th of this year regarding three different but overlapping legal grounds for refusing to make certain information public. You've made reference to the City legal obligation to protect grand jury secrecy in terms of apparently refusing to release any information with regard to the amounts of money spent on the individual representations. Second, you've made reference -- again, I'm only going from the press accounts -- that City officials and their private counsel would violate one of the rules of professional conduct for lawyers regarding protecting all information about a client related to representation, again in the 92 05/05/04 - WHOLE - FY '05 BUDGET context of laying out either who is involved or what the amounts that we're spending individually. And last, that public disclosure of which officials have been contacted by the grand jury may operate to the prejudice or impairment of the person's representation, which apparently is another exception to the state's public records law. Obviously, there have been some names in the newspaper. Do you have any belief at the moment that any of these individuals have prejudice or impairment of their personal reputations?

I'll make available to you, Councilman, the opinion that we provided the law firm for. I don't know whether it was the Daily News or the Inquirer, which is an opinion on -- I will provide that opinion to you.

One last question in this area. I understand the opinion as to what you may or may not want to share with the general public or the press. In your capacity as our attorney in the 93 05/05/04 - WHOLE - FY '05 BUDGET context of a budget process, is it not at least appropriate to tell us, since we're asked to approve a budget -- you have two pages with probably different listings of 6 Class 250 contracts, professional services, 7 that lay out by name companies, organizations, 8 individuals with whom you contract, what the 9 description of the services are. Do you think 10 that that is information that should be 11 withheld from City Council in the context of 12 our budget approval process? 13

You're asking for a list 14 of all the firms involved in the matter? 15

Yes. 16

Councilman -- 17

Don't answer the 18 question so quickly because what we normally 19 get is both pieces of information. I don't 20 know anywhere in any of the two books that we have, that for professional services there is a listing of a general item with no detail as to who we're contracting with or what the contracted amount is for. I know this is an unusual 94 05/05/04 - WHOLE - FY '05 BUDGET circumstance, but I don't know, at least in my time, when I've ever looked in a budget book and couldn't figure out who we were contracting with and how much it was for.

Well, Councilman, we will provide a list of all the firms involved in the representation. And as we've done before, the aggregate amounts spent and projected when it comes down to individually how much for each firm, we're -- you know, as stated more articulately in the opinion that I'll share with you, I believe that that would be highly inappropriate for all of the reasons stated in that opinion, both as -- .

Are you precluded from the US Attorney's Office or the rules of grand jury secrecy from sharing that information?

Excuse me?

Have you been either precluded or restricted or is there any request from the US Attorney's Office to not share that information, or is there any violation of grand jury secrecy with regard to 95 05/05/04 - WHOLE - FY '05 BUDGET how much of the taxpayers' dollars are going to an individual firm to provide representation?

I think it's the same question. I'll provide you the written opinion that we provided on the very same question to the news media. I don't think that to whom we're disclosing, including this Body, which does have the authority you say, changes both the obligation as well as the ethical responsibilities of me or my department.

Do you have a media person under contract?

We had a communications person that's been working for the Law Department who had primarily been working on a newsletter. That is the contract to which I alluded earlier where I have discontinued the newsletter and directed the resources being spent on communications specifically to our efforts to collect delinquent taxes.

So you're saying the $80,000 item in FY '05 is going to be 96 05/05/04 - WHOLE - FY '05 BUDGET eliminated or just the resources redirected?

I'm not doing the newsletter. I'm doing a campaign. I'm using it as what I hear from Revenue is a small fraction of what has been spent on previous campaigns. But I'd like to spend the resources we have for communications on priorities I've established managerially for my Department, the highest one of which is delinquent tax collections. So to the extent I have communications resources, they're going to be directed at that, at collecting money.

Who is going to do that strategy?

Excuse me?

Who is going to provide the service for the strategy?

I've given notice to Keel Communications, who's listed there, that I don't wish to continue with the newsletter and ask them then for a communications plan for delinquent tax collections.

For the same amount? 97 05/05/04 - WHOLE - FY '05 BUDGET

They're currently on retainer. I want to see what it is that they're proposing to do. When I mentioned the number in a previous setting with someone in the Revenue Department, they were telling me that when the City has tried to do outreach on collections, they've spent more. I'd like to see what I can spend with the resources I have.

So the issue here is not so much that the contract has been discontinued, the scope of service has changed from the newsletter to seeking to --

I'm aligning my resources, people, outside folks, money towards my Department's priorities, the highest of which is going to be this. So I want to use that expertise. If they can't do it, somebody else will. But I would like to see what they propose.

I understand. In the current fiscal year for the $70,000 contract, how many newsletters were developed?

It's been a monthly 98 05/05/04 - WHOLE - FY '05 BUDGET newsletter, in addition to any time there is any kind of a release or something from the Law Department specifically, but it's mostly been the work of producing and publishing and distributing the newsletter, which has been generally a monthly newsletter.

Could you just forward to the Chair --

And help in publishing e-magazines and legal magazines and things like that.

Okay. Last question. Labor costs, could you forward to the Chair your estimates on -- I think it usually ends up in your budget or maybe it's over in Labor Relations. Does the Law Department usually end up absorbing some of the costs of labor representation for municipal contracts?

I know the lawyers are in my budget. I'll have to check and get back to you.

If you could provide to the Chair your estimates of the 99 05/05/04 - WHOLE - FY '05 BUDGET cost of those upcoming contract negotiations.

Yes, sir.

Thank you, Madam President.

Thank you. Are there any other questions from Members of the Committee? The Chair recognizes Councilwoman Brown.

I thought I was done, but a few of Councilman Nutter's questions have triggered a few questions for me about MBEC. Please share with us or discuss with us what priority level has been assigned to the Law Department's legal assistance and/or support to MBEC.

I can talk about my time here, which is that I personally and the entire Cabinet has heard at length from the Mayor and the Chief of Staff about the importance of minority participation and collusion in our contracting and about the importance of supporting MBEC in its current transition. 100 05/05/04 - WHOLE - FY '05 BUDGET In my Department, just in the time that I've been there, it's taken a fair amount of my time, a fair amount of folks in our legislative staff, as well as the people that regularly work with MBEC, such as Michelle Flamer in my Department who works in the procurement process and is our in-house expert there and I believe will play a significant role during this transition in supporting the new director there and the Administration in continuing to tailor its minority participation goals and agenda.

Where are we with the incorporation of both the ordinance 16 and the executive order mandates and pre-bid and orientation proceedings and agency bid packages? I'm seeking some tangible or specific task tactics strategies that support what you've just shared.

Well, we're involved in the contracting process right now. We're involved in the Contract Review Committee and we're involved in review of mostly the 101 05/05/04 - WHOLE - FY '05 BUDGET non-procurement contracts, and we have somebody there who is active. We're all charged. My Department's got some significant charge in strengthening going forward what we do, including consideration of what vehicle we would use legally for continuing to strengthen our minority participation program.

So there is an individual or individuals who is principally responsible for --

We have somebody who is -- who regards this as kind of this person's arena, and it is. And I think we continue to expand the number of people that support that. At least in my own involvement it's an area that's of personal interest to me, as well as professionally. You know, times of transition are times of opportunity. I think that we're going to do everything we can. I know that the new director is very eager and willing to get as much support as he can in building a better structure for minority participation.

Recognizing 102 05/05/04 - WHOLE - FY '05 BUDGET that your time here has been limited, if this is not in place -- and I'm curious to know where you are in the process -- have there been any regulations formatted to implement or supplement both the ordinance or the executive order yet?

I believe the last executive order has expired, and we're aware of that. And the vehicle that we use that the Administration ends up using to further strengthen its minority participation agenda will be something that we will help them with. If we were working on a particular matter we wouldn't disclose it until that client is prepared to.

One red flag that continues to wave itself has been the lack of the enforcement of penalties for contractors who are not in compliance. Where might your office be with regard to that issue? Has your team had a chance yet to deal with that? Because it's still a blatant disregard --

Councilwoman, I'm not 103 05/05/04 - WHOLE - FY '05 BUDGET sure -- I'm just personally not sure -- I'm not saying that collectively we don't know which particular penalties you're talking about. If you indulge me, I'd take a question that we can respond to in writing to the Chair.

Okay. That would be helpful. My hope is that next year this time, acknowledging your short stay, that you and/or MBEC can give us some assurance that regs and enforcement penalties are in writing, that there is some confidence that contractors who do not comply are held for not doing that.

I can give you one assurance recognizing my short stay so far, which is I've immersed myself personally in the law in this area. And it's something I think and care a whole lot about. And at least to the extent that we have a role -- in which we do -- I'm personally interested in it and see myself, as our department, as doing whatever we can to help the City get to a program that deals with the historical issues 104 05/05/04 - WHOLE - FY '05 BUDGET of exclusion.

My final question on this matter is, Councilmembers were anxiously waiting for the receipt of the disparity study, and my comrade just shared with me it was delivered late yesterday. Has your office had a chance yet to do an analysis or a review of the disparity study?

Yes. The person I mentioned earlier, Michelle Flamer, this is part of what she does every day. Let me put a little historical context on disparity studies, depending on how much time you had. Because I think these things kind of get talked about in the abstract. I don't want to become a law lecturer here, but in 1989 there was a US Supreme Court case called Crozen, which undid the City of Richmond, Virginia's minority set-aside program. It really changed the landscape for what cities can do. And it said that any time that a city -- well, it ended up having two results. One was that if a city is going to go down the road -- or any government 105 05/05/04 - WHOLE - FY '05 BUDGET down the road -- of making race-based distinctions, then the courts were going to look at that with the highest level of scrutiny. What they were going to look to is what evidence there is of active or passive discrimination. And then it's going look to what you did about it. The first think they look to is, what things did you try that were not race based. And of the things that you did that were race based, how close was the solution to the problem. They call that narrow tailoring. As a result of all that, cities and other governments saw the need to start documenting disparity to know how they were doing, how well they were doing, but also, if you're going to have a program, you need to be able to show that you know where the problems are, that you're not just making broad-based distinctions. You need to know whether there is exclusion, where it is, and that whatever you do about it is tailored in a way that's defensible to the problem that's found. So 106 05/05/04 - WHOLE - FY '05 BUDGET these things called disparities studies give rise to a whole new line of work for folks that do these data analyses. From my own biased view of these is that I wish -- they need to rely on good data in the world outside of us in a way that the data is not there. So the studies do the best they can in measuring what's the availability versus the participation. So they're important for us to know kind of where we are from the data that we can get and help provide a potential guide for areas where we can focus. They also, looking forward, serve that purpose of if we're going to do something more aggressive, it's important that we know why we're doing it and where.

Well, thank you for the background. And I'm encouraged to hear that you expect to be very proactive in getting your arms around the issue and the Department, because it resonates daily in these Chambers on where we are not with regards to MBE/WBE participation. Thank you for your testimony. 107 05/05/04 - WHOLE - FY '05 BUDGET Thank you, Madam Chair.

You're welcome. The Chair recognizes Councilwoman Tasco.

I have just one. It doesn't have to be a long one. On on the grants revenue, you have $15 million plus to increase revenues to the City School District of Philadelphia and Philadelphia Gas Works --

Excuse me, Councilwoman. I'm sorry. I have people talking to me while you're asking the question. I can't listen.

Could you tell me where does the money come from? Do these agencies pay you? And why have you increased it back to the level to $15 million when you really only obligated $5 million during 2004?

I asked the same question. The straightforward answer, which is for those collections done by outside counsel, they're paid based on what they get, so it's grants revenue. To the extent that 108 05/05/04 - WHOLE - FY '05 BUDGET you're collecting more, the more collection you have, the more that you're paying out for those contingency arrangements that you do have. So it's an estimation that reflects more how much you expect to collect through contingency arrangements than anything else. If you collect less, less gets spent out of grants revenue. Part of how you do delinquent tax collections for some taxes is you have contingency arrangements. The firms only get paid for what they collect, and they get paid a part of that. The way they get paid is, we get 100 percent of what they collect and then they get paid a portion back. That's this. The grants revenue reflects how much we expect to have to give firms as largely as contingencies for what they collect, and we can't spend that on anything else.

You expect to collect $15 million?

We expect to collect a lot more than $15 million. We expect that to be their take. 109 05/05/04 - WHOLE - FY '05 BUDGET

But they only took $5 million in 2004.

We need money, and my highest priority is getting some, at least to the extent we have some in the Law Department.

Thank you.

Thank you. Councilman Ramos, did you want to be recognized?

Madam President, my colleague asked a similar question that I had in mind. Thank you.

Thank you. The Chair recognizes Councilman Nutter.

Solicitor Ramos, on a completely separate topic, which I'm sure you're glad to hear, there's kind of a big issue and then there's the broader issue which we've been challenged by in the past, which is whether it's a lower level court decision or even in some instances the Pennsylvania Supreme Court decision around the issue of when the City takes someone to court for 110 05/05/04 - WHOLE - FY '05 BUDGET whatever we take them to court for. In some instances, let's say it's a zoning violation or a building violation or you built something that you weren't supposed to build or didn't fix something you were supposed to fix. Now in a more specific instance, the situation with some of the recent billboard cases, the City has been successful in pursuing whatever it needed to pursue. The court rules in our favor. It rules against the operator or whoever the offending party may be. This is not, again, just about billboards. And the process for whatever reason seems to almost come to a grinding halt in terms of actually making the parties either do what they're supposed to do or take away the thing that was the source of the litigation in the first place. If the Pennsylvania Supreme Court determines that an entity, an object, a thing should not be in the place where it is, what actions do we take to ensure that the thing, the object, the entity is removed or finally dealt with or disposed of? 111 05/05/04 - WHOLE - FY '05 BUDGET

In almost all cases -- again, my history here is not deep, so some of this is impression. One impression is that the cases, when you think they're over, they seem to continue. There are some cases which we hope are final, like the wall wrap case at 7th and Callowhill, which has become sort of symbolic in some ways. There are simply more illegal signs than there are legal signs -- billboards -- in the City. The Mayor has asked the Managing Director and me to come up with a game plan for addressing the issue. In fact, I'm scheduled to meet with billboard advocates sometime this week.

Are they billboard advocates or are they anti-billboard advocates?

Anti -billboard advocates. I appreciate you giving me the opportunity to correct the record before I meet with them.

I can give you 112 05/05/04 - WHOLE - FY '05 BUDGET some legal advice on that regard.

Again, I tend to try to take a view of how do you manage towards a high impact result. And I don't want to get ahead of the process the Managing Director and I are going through in terms of really trying to come up with a thoughtful, comprehensive plan on this. But one put that I can tell you, an observation, which is a big part of this, is what I've now come to know as eight sheets, which are, as far as I can see, all illegal and they tend to be the ones in the neighborhood. You often see them as the smoking or drinking ads. Not that we care. Not that content is the big thing here. But they are certainly inconsistent with our efforts to eliminate blight, and there are a lot of them and they're all illegal. And there are hundreds of them. By comparison, let's say there are 4,000 billboards -- these numbers are real rough -- 4,000 billboards. Maybe 800 of them are legal. Our total litigation in this area, 113 05/05/04 - WHOLE - FY '05 BUDGET including L&I, I think we prosecuted 45 cases, including L&I. It's good in terms of setting law, but it doesn't get those signs down.

Which should be the ultimate goal, right?

Which is why it's a Law Department as well as Managing Director issue and why we're working together. I would think -- and I'm not done talking to Phil about this, and I haven't met to hear out SCRUB on what their thoughts are, and they have a lot of experience on this -- but my view of it is, we have a lot of initiatives to improve the quality of life in neighborhoods and we can make a huge dent in that arene. It would be a great dramatic increase in the level of our enforcement activities and consistent with folks' priorities. Part of the process is knowing that even when you think these cases are final, the fight continues. It's which fights where you're going to look to have an impact. And I don't want to over-commit. And I'll be more hesitant when I know more to talk about it. 114 05/05/04 - WHOLE - FY '05 BUDGET But that's my initial take on the situation.

I know you're getting into a variety of issues, but when you make mention of a coordinated approach between yourself, the Managing Director and hopefully the Department of Licenses and Inspections all at the direction of the Mayor, which is certainly good, when do you think you will have a plan of action and be in a position to, I think, demonstrate to the citizens of this City, that when people have illegal things up we will take action? This is what we're going to do and we're seeking results. We get into longer debates about, is the goal to get the thing down or is the goal to get people in compliance to be legal, which is another --

Well, there are lots of parts of it. I tend to try to make things simple so I can deal with them. You know, eight sheets and they're all bad, most counter to all of our agenda items. That has to be balanced against what's possible by the operation side of the City. But that's how my thought process would be. 115 05/05/04 - WHOLE - FY '05 BUDGET In terms of a time table, the Managing Director and I, with the NTI and L&I folks, have been doing some homework. This meeting with SCRUB is part of my homework on this. I hope that it's weeks and certainly not -- I don't want to get into the summer without having what I consider to be a plan.

Let me lastly say on this that again I'm certainly pleased to hear that, and I know other Members care about this particular issue. Beyond the billboard issue -- and again, whether it's zoning violations or a variety of things, I think what you're going to find is the larger issue is whether or not people believe that the City means business. When you get a violation notice, you possibly end up in court. You go to court. You lose at Municipal. You lose at Common Pleas. You lose at Commonwealth. You lose at the Supreme Court. And at the end of the day nothing really happens. If you even go through all of that process, you know better than I that that can be a very protractive process. 116 05/05/04 - WHOLE - FY '05 BUDGET In the meantime, the person continues to collect whatever rent or money that they're getting, probably continuing not to pay us anything that they're supposed to pay us. But in the larger sense it is the kind of massive thumbing of the collective nose at the government and its enforcement components that basically send a message to people, you can do whatever you want. They'll send you a notice. You don't comply, they'll chase after you. When it's all said and done nothing is ever really going to happen, which just sends, I think, the absolute wrong message.

Which I think is consistent with preferring to pick battle grounds rather than try to fight on all fronts at once from the beginning.

Okay. Thank you. I look forward to it. Thank you, Madam Chair.

You're welcome. The Chair recognizes Councilwoman 117 05/05/04 - WHOLE - FY '05 BUDGET Tasco. No?

No. 4

Any other questions or comments from Members of the Committee? (No response.)

Thank you very much. You've been very informative. Thank you so much.

The District Attorney was supposed to be next. However, she had notified us sometime ago that she had another commitment at this hour, so we are continuing with the District Attorney until 2:30 this afternoon. We will now hear from the Defender Association. Good afternoon. Thank you for your patience. Please identify yourself for the record and proceed with your testimony. And if you care to abbreviate your testimony, a copy will be given to the stenographer, which will be transcribed in full.

Thank you very much. 118 05/05/04 - WHOLE - FY '05 BUDGET I'm Ellen Greenlee. I'm the Chief Defender of the Defender Association. To my left is Charles Cunningham, first assistant defender, and to my right is our controller, Selim Tawadros. It's S-E-L-I-M, T-A-W-A-D-R-O-S. It's hard for me to contain my disappointment that we didn't get to hear the show and tell from the District Attorney. But I guess we'll have to come back this afternoon. I will miss all that hyperbole and fear mongering that seems to be present in her statement, especially her attack on the Defender Association, to which I will respond briefly in a few moments. First of all, I have to, as we do always, thank City Council, Council President and the Members of City Council for their support of the work of the Defender Association, which has been in business now for about 35 years, and as you know, is in engaged in the work of representing the poorest citizens in Philadelphia who are charged with crimes, both juveniles and adults, representing those who have a civil 119 05/05/04 - WHOLE - FY '05 BUDGET mental health hearings, mental health problems also that are reflected in Criminal Court, and also representing 6,700 dependent children in Family Court in contested custody matters. During the last year, in 2003, we received approximately 68,000 new court appointments. We made almost 350,000 court appearances, each time representing a client in a court of record. And we provided 73,000 ancillary services, such as investigations, social service help and interviews of our clients. As you are aware, Council President, the City has requested for us an appropriation in the amount of $32,500,000, which is the same as for the last fiscal year, only with an addition for about $123,000, which represents the third year of a four-year plan to achieve some parity for our administrative staff. For those who have been the beneficiaries of that, the Defender Association, I say thanks to City Council as well as to the Mayor for that benefit. In addition to that, though, we are 120 05/05/04 - WHOLE - FY '05 BUDGET engaged in discussions with the Budget Director, as we seem to be in that position every year at this time, because we have issues that revolve around annualizing our health insurance, other increases in benefits costs, such as disability, life, Workers' Comp, and we also are asking for a 3 percent figure that would represent an increase for our staff. There is no increase in this year, as you are well aware, for City agencies, but our staff continues to fall behind others in the City in comparable positions across the board. I must point out that in terms of parity, the District Attorney, on her statement, while complaining about the fact -- and probably rightly so -- that her office has been cut, indicates that there's some injustice in that because the Defender was not cut. Now, clearly the District Attorney knows because she's been around for a long time, that the Defender Association is not a City agency, not a City department, so that we are not part of any City benefit 121 05/05/04 - WHOLE - FY '05 BUDGET plans, but that we must provide all the benefits for our employees, and certainly we must attempt to provide benefits at the level of City employees. We continue to fall behind in terms of salary across the board, both for attorneys, social workers, investigators and administrative staff. The District Attorney complains about the fact that we are not required to live in the City and don't have a lot of expenses she says that is attached to living in the City, and that we handle about 60 percent of non-homicide cases, which is 70 percent. But the most grievous misstatement -- and she knows better -- is the next line in that top paragraph on where she says that we try 100 percent of all matters in the court system. " The District Attorney well knows that we receive no federal funding.

There is 122 05/05/04 - WHOLE - FY '05 BUDGET a federal defender office that is entirely separate, apart and separately funded from us. We receive no federal money unless it is part of the small grants that we receive through our juvenile unit, which is some federal money, and you're talking about maybe a quarter of a million dollars that's funneled through the City and goes to all the agencies that work in Family Court. I take great umbrage at this suggestion, that we're receiving money from the federal system that we are not reporting to the City, and obviously we don't need the money that the City gives us. The reason that we are not cut is because we are private and do have to fund all of our expenses for insurance and employee benefits. We work very closely with the Budget Director, as we did when Mr. McPherson was budget director, and they are very clear and sure about the fact that we run a very lean operation, and there is no fat in our operation. And when we say there are increases in insurance costs and benefits, 123 05/05/04 - WHOLE - FY '05 BUDGET they know that we speak the truth because they understand and they see the figures. That's all I want to say about that. I don't engage in ad hominem attacks, unlike some other parties that may appear here. We are critical players in the criminal justice system -- I think you know that -- as we are in Family Court, and without us the system would fall apart. We do an extremely competent job. We provide effective representation to all of our clients in whatever area in which we work. At the present time, what I think would be helpful would be for Council to take the lead in deciding that the three law offices that are to appear here today, the Law Department, the DA and the Defender all should be on the same salary scale. Then we would have no quarrel at all, and she wouldn't have to attack us and we wouldn't have to complain every year that they earn more than we do, because they do. This September at present our starting salary for an attorney is $42,000. 124 05/05/04 - WHOLE - FY '05 BUDGET The District Attorney's starting salary is $44,823. So they're almost $3,000 ahead of us. When we look at our professional social workers, they are overworked and underpaid, and paid approximately $7,000 on average less than social workers at DHS. Even with the administrative pay plan, for which we are eternally grateful, our administrative staff still remains well below what is the standard and the average in the City. The only pitch that I really want to make today is that Council put an end to this bickering and to these attacks on one another, in which we really want to play no 16 part, and decide that there should be each year a salary scale for all three that is the same, commensurate with the levels of experiences and the jobs that people work. We, of course, being the ones in third place, will be eternally grateful if this is put in place. If you believe -- and I know you do believe -- that our poor citizens deserve the same level of representation as the 125 05/05/04 - WHOLE - FY '05 BUDGET well-to-do, there is really no reason to treat their attorneys any differently than you treat prosecutors or treat city solicitors. We have a staff of very dedicated people who are willing to do this work, work very hard and are underpaid. We were the beneficiary -- and I point that out again -- of an attorney parity pay plan that went for four years, which enabled us to increase our starting salaries of the salaries for our lower level attorneys, but that ended in 2003. And we're kind of stuck there because we do not have written into our budget money for increases to increase these lower levels every year.

And just as a comment on salary parity, we have attorneys working in our Homicide Unit that are handling many more cases than they should be handling -- I hesitant to say -- with 20 years of experience who are earning approximately $15 to $20,000 less than their counterparts in the District Attorney's Office. This is also grossly unfair. The best thing that could come out of our presentation today would be a 126 05/05/04 - WHOLE - FY '05 BUDGET determination by Council that perhaps you could be proactive in looking towards settling this once and for all. I should also point out, it just occurred to me that it is not a novelty that prosecutors and defenders be paid the same. In the federal system they are paid the same. US attorneys and the federal defenders are paid at the same salary levels. And there's no reason why that shouldn't be true here. Actually, Council President, I hear what you said to me about being brief. I was going to comment, but it's in my notes on the fine work and highlight some of the work of our Homicide Unit, and I know that you are aware that we've only been doing homicide for 11 years. During that time we have handled about a thousand cases, and to date I am very happy to say we've had no client who has received the death penalty. At the same time in Philadelphia, due to the very diligent work, I think, of the District Attorney there have been more than 80 people sentenced to death who have been tried 127 05/05/04 - WHOLE - FY '05 BUDGET in Philadelphia. I think that speaks to not only to the quality of representation, but it also speaks to cost savings which the City gets because we do the kind of job we do. There is less expense in the way of appellate expenses, post conviction expenses. We have also worked diligently at decreasing the number of costly jury trials. We have worked quashing aggravating circumstances to reduce the charge from first degree -- that's death eligible -- and we have also handled many cases at degree of guilt hearings and done a lot of waiver trials. All of these procedures are ways of cutting back on the expenses that are attendant upon the trial of capital cases. And we have been a leader in this because obviously until we got into it there was no 19 institutional presence. I comment also --

Excuse me just a moment. Councilman Nutter, do you want to be recognized?

Ms. Greenlee, I 128 05/05/04 - WHOLE - FY '05 BUDGET apologize for cutting across you, but I didn't want to get too far away from this particular point. I need to ask you, you made reference to a figure of 80 people sentenced to death. What I needed to understand was a time frame or a time parameter around that number.

In the years that 9 we have been doing capital cases, Councilman. 10

So in the course 11 of the past 11 years, there have been 80 people?

I think it's 88. I'm just saying -- more than 80, and I'm conservative. 88, I believe, is the correct number.

So it's about eight a year. On average I guess it's about eight a year.

That's right.

Thank you.

The other work that we highlight, Council President, is our juvenile work. I also mention all the work that our Municipal Court Unit does, which has 129 05/05/04 - WHOLE - FY '05 BUDGET handled 81,000 cases last year. That's kind of astronomical. But they've been doing some good work, legal and social service work, in domestic violence issues, in the domestic violence status court. And also we have taken over representation on 11th Street in Family Court in domestic violence criminal matters, and we have been able to provide a lot of needed social service there in the domestic violence area, which I think has a lasting impact in terms of reducing the number of domestic violence cases. Also in the area probation and alternative sentencing, we handled a huge number of hearings last year. We handled 60,000 probation and parole violation hearings, which is really an increase of 56 percent, a huge increase, since the year 2000. There is more in there, but I hear what you're saying. I go back to simply asking that Council assist us on these parity issues, salary parities, so we don't visit it every year. I thank you for your time and attention. I thank you for your continuing 130 05/05/04 - WHOLE - FY '05 BUDGET support of our work.

Thank you. And thank you for the wonderful work that you do. You were talking about parity. In the City Solicitor's Office, what do the attorneys' starting salary -- what is their starting salary?

To tell you the truth, I don't know. But it's, I'm sure, at least $44,000. I don't have any information on the Solicitor. It's hard enough to get any information on the DA.

They start at $42,250.

Well, they're closer to us.

Okay. I don't know that any of the Councilmembers have any questions. Thank you all for your patience. You were very kind waiting. The DA will be here, so we're going to recess until 2:30. Thank you very much. 131 05/05/04 - WHOLE - FY '05 BUDGET (Recess taken.)

This is the continued public hearing of the Committee of the Whole regarding Bill No. 040255. Is the District Attorney here?

Yes.

Please approach the witness table, identify yourself and proceed with your testimony. I do apologize about the delay this morning. Thank you.

Just give me one moment, Madam President, if you would. Good afternoon, Madam President. I'm sorry for the delay. I'm glad to see you. It's always a pleasure to be here before you and City Council. I know that Council has been supportive of our office and I'm going to ask you to do the same today, but in an unusual fashion. I previously provided to Council a copy of my budget message, and it presents, I think, a fairly balanced approach to the issues facing the District Attorney's Office. 132 05/05/04 - WHOLE - FY '05 BUDGET As you can see, behind me are various chiefs, deputies and others about whom you may be hearing more later. To my right is Al Toczydlowski, and he'll spell his name for the record.

It's T-O-C-Z-Y-D-L-O-W-S-K-I.

He is the deputy for all of our administrative issues which may come up during the course of our proceedings. I'm not going to read my testimony, unless anybody suggests that I do. I'd be happy to do that. Otherwise, I'm just going to ask that my budget statement be introduced as part of the record and made an exhibit thereto and an attachment thereto in its entirety. That will avoid the necessity of reading it. Essentially what I'm asking Council to do is a brave and bold step, and that is to say no to the proposed budget cuts provided to the office through the Budget Director of the City of Philadelphia, the Finance Director and the Mayor. As you may know, the office is a 133 05/05/04 - WHOLE - FY '05 BUDGET very complex structure with a variety of responsibilities and jobs. But essentially what has happened is that we were presented with about a $600,000 budget cut this year. We have always been accommodating to the Mayor and the Administration to the extent that we've been capable of doing so in the past. 5 percent budget cut in each of the three fiscal years. We didn't complain. We didn't moan. We just said, well, we'll do our part because the City was suffering. Similarly this year when our budget statement came through from the Budget Director via the Finance Director, we agreed that we would relinquish $600,000, plus or minus some dollars, to the City as an accommodation, because I read the newspapers and I live here just as you all do, and thought that I would want to do my part, as I have done in years before. We submitted our budget papers to the Budget Director with the $609,000 budget 134 05/05/04 - WHOLE - FY '05 BUDGET cut. 8 percent. And the Budget Director asked us to fill in the papers agreeing to that cut, and I wouldn't do that and I'm not going to do that. The Budget Director is going to do what he's going to do. The Finance Director will do what she's going to do. And I'm asking you to do something that's very brave and bold, and that is say no to this monstrous budget cut. I believe that I am fairly clear in my statements, that the kind of budget cut that has been suggested by the Mayor through his Budget Director and Finance Director is going to result truly in a loss of life and in a loss of quality of life that is truly incalculable. And I'm not here going to try to put a dollar figure on anybody's life or anybody's life quality, but I can tell you that the kind of budget cuts proposed will 135 05/05/04 - WHOLE - FY '05 BUDGET mean a drastic reduction in both programs as well as people. Programs will be initially phased out or eliminated. People will also have to be phased out. We're not going to lay off anybody and we're not going to fire anybody. But obviously, as people leave, we will not replace them. Cases are more numerous in many of our courtrooms. Our courtrooms are really filled to the gills every day with cases. And the fact of the matter is that crime becomes more complicated, more difficult, and the expertise that you need to prosecute difficult cases only comes with experience. Every person in this City who is a victim of crime wants to come into court assured that he or she is represented by skilled counsel. It's the same kind of counsel that you would want if either you were a defendant or a victim. You would want the best quality representation that you could get. And it stands to reason that when people leave the City of Philadelphia and leave our office for the kinds of salaries that we can't even offer 136 05/05/04 - WHOLE - FY '05 BUDGET incoming people -- our salary structure is such that our young lawyers who come to the office are grossly underpaid relative to the open market. While they want to come to Philadelphia or remain in Philadelphia, it makes it more and more difficult for them to survive. So the ultimate upshot of all these budget cuts is that we are going to reduce programs.

And these programs will also be reduced, in addition to the people that we will reduce over the course of this budget cycle. Obviously, lawyers aren't interchangeable. You can't take a youngster fresh out of law school and the Bar and put him on major trials and homicides. It takes a tremendous amount of time and skill to gain that kind of expertise. When senior people leave, you can't replace them with somebody who's just left law school coming into the office. And if you cut the people that we have in this office through this enormous budget cut, the citizens are the ones to suffer. And that's why I'm asking you to say 137 05/05/04 - WHOLE - FY '05 BUDGET yes to the programs that I suggest, that I believe that you want to, support and say no 4 to the program cuts that are going to have to happen. In addition to that, I think it's important to say that because I've been participating in so many marches and so many protests and so many issues and have served with City Council for such an extended period of time, I think I know the pulse of the people of this great City. They really want a strong prosecutor's office. They want to be confident that they're going to get the best possible representation. They are the people who you see, you Councilpeople see, every day, fearful, prisoners in their own home, worried about school violence, worried about shootings on the street, seeing too many young people going to funerals. They cry out to us. They say to us, help us. As my opening quotation says from John Norcross' book, The Wealth of Cities, the City of Philadelphia will never truly be safe unless or until we're ready to take ownership of all of the constituent 138 05/05/04 - WHOLE - FY '05 BUDGET issues that are related to fighting crime. I think Commissioner Johnson is correct. You can't arrest your way out of the problem. There are too many issues. But I believe that a strong and dedicated cadre of men and women, such as are presently occupying the District Attorney's Office, every day going into court, handling countless cases and numerable problems are really doing their yoman's best to represent every person in the City and to make Philadelphia safer and better. They have to live here. They are citizens. They have children. They have wives or husbands or partners. 2 million budget cut. So I think that by asking Council to say no, I'm asking you really to say yes. I'm really asking you to say that we recognize as a body the issues that the prosecutor brought to your attention and that you support them and you want a change in the budget. I know you can't change the budget. 139 05/05/04 - WHOLE - FY '05 BUDGET In other words, you can't put more money in the budget, but you can change money in certain classes from certain things to certain other things. And if you choose not to do so, I can assure you that men and women in the office will continue to do the best job that they possibly can and they will work very, very hard, but you can't hope to have courtrooms covered with insufficient people. And as my budget statement mentioned, we've already told two administrative judges that we will be unable to man courtrooms that they want us to open. It is going to be impossible. It's already impossible for our DAs to handle in some rooms. We used to have many more rooms where two DAs would be there because there would be one on trial and then another one also on trial or ready to try. And therefore, you have to have some respite. You can't just be like an engine or a horse without a break. There are other problems that I've outlined in my notes that will indicate programs that will have to be cut and will be 140 05/05/04 - WHOLE - FY '05 BUDGET cut, and this will mean a tremendous detriment to the City of Philadelphia. So I think that in fairness to Council, I'm asking for your help.

I really want you to take that bold step as Councilpeople and reconfigure the budget so that the loss is not so terrible, so that we can continue to provide high quality representation to all victims of crime and to do the first-class work that our men and women want to do. The consequence of not being able to hire people to replace people who are leaving or to give raises to the people who are trying to stay, is that they will leave and go elsewhere. And there will be a price to pay for all of this. We'll survive, but there will be a heavy price to pay.

Thank you. I see that you're being cut by over $2 million.

That's correct.