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.
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.
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.
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.
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.
The Chair 21 05/05/04 - WHOLE - FY '05 BUDGET recognizes 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.
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.
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?
30 05/05/04 - WHOLE - FY '05 BUDGET Councilwoman, your time is up.
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.
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.
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.
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 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
$30,000, Dream Garden, Parking Authority. Can you explain that, please?
At least the Dream Garden part of that is from previous years.
This is the, could you take it out of the building or not case.
What about the Parking Authority? Is that part of the 41 05/05/04 - WHOLE - FY '05 BUDGET Administration's litigation?
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?
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
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.
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.
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
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.
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.
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 --
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
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.
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?
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?
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.
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 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.
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.
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.