Committee on Finance, June 5, 2024

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 5, 2024 10:10 a.m. PRESENT: COUNCILWOMAN KATHERINE GILMORE RICHARDSON, CHAIR COUNCILWOMAN CINDY BASS, VICE-CHAIR COUNCILWOMAN NINA AHMAD COUNCILMAN MICHAEL DRISCOLL COUNCILMAN CURTIS JONES, JR.

240372, 240373, 240374, 240375, 240377, 240378, 240379, 240416, 240417, 240467, 240470, 240494 RESOLUTION: 240027 - - -

Good afternoon or good morning. (Good morning.)

I now note that the hour has come. Clerk, will you please call the roll to take attendance. Members that are in attendance will please indicate that you are present when your name is called.

Councilmember Driscoll.

Present.

Councilmember Ahmad.

Present.

Vice-chair Bass.

Present.

Councilmember Jones.

Present.

Chair Gilmore Richardson.

I am present. Thank you. A quorum of the Committee is present and this hearing is now called to order. This is the public hearing of the Committee on Finance regarding Resolution No. 13 240027 and Bill Nos. 240372, 240373, 240374, 240375, 240377, 240378, 240379, 240416, 240417, 240467, 240470 and 240494. Clerk, will you please read the titles of the bills and the resolution.

Resolution No. 21 240027, a resolution authorizing the Committee on Finance to investigate the operations and significant overspending of the Office of Homeless Services under the previous administration, as well as quality of services provided in the homeless services system. Bill No. 240372, an ordinance constituting the Twentieth Supplemental Ordinance to the Amended and Restated General Airport Revenue Bond Ordinance; authorizing the Mayor, the City Controller and the City Solicitor, or a majority of them, to issue and sell one or more series or subseries of tax-exempt or taxable airport revenue bonds or notes of the City of Philadelphia; setting forth the use of proceeds; determining the sufficiency of pledged Amounts Available for Debt Service; covenanting for the payment of interest and principal; authorizing the Bond Committee to take certain action with regard to the terms and conditions of the airport revenue bonds or notes and related agreements and the elections under the Amended and Restated General Airport Revenue Bond Ordinance; authorizing the Director of Finance to take certain actions with regard to the sale of such airport revenue bonds or notes, the investment of the proceeds thereof and the City's continuing disclosure obligation and specifying the applicability of sections of the First Class City Revenue Bond Act in the Amended and Restated General Airport Revenue Bond Ordinance. Bill No. 240373, an ordinance constituting the Sixteenth Supplemental Ordinance to the General Gas Works Revenue Bond Ordinance of 1998, (the "1998 General Ordinance"); authorizing the City of Philadelphia, Pennsylvania, (the "City") to sell, either at public or private sale, one or more series of Gas Works Revenue Bonds and Gas Works Revenue Bonds to refund such Bonds, (the "Bonds"); to pay the cost of certain capital projects and other Project Costs and the cost of redeeming the City's Gas Works Revenue Capital Project Commercial Paper Notes; authorizing the City to amend, novate or terminate all or any portion of any Qualified Swap Agreement; authorizing the City to obtain credit enhancement for any Series of the Bonds, making certain determinations and covenants relating to Gas Works Revenues and the payment of interest and principal; and authorizing covenants and actions in order that the Bonds shall not be arbitrage bonds; all under certain terms and conditions. Bill No. 240374, an ordinance amending the Seventeenth Supplemental Ordinance to the Amended and Restated General Airport Revenue Bond Ordinance, (Bill No. 190432) of the Council of the City of Philadelphia, approved by the Mayor on June 26, 2019, to authorize an increase in the aggregate principal amount of Airport Revenue bonds or notes to be issued under the Seventeenth Supplemental Ordinance from Three Hundred Million to Five Hundred Million (exclusive of costs of issuance (including underwriters' discount), original issue discount, capitalized interest, funding of deposits to the Sinking Fund Reserve Account, if necessary, and similar items); further amending said Ordinance (Bill No. 190432) to authorize the pledge for the security and payment of some or all of the Obligations a lien and security interest in passenger Facility Charges, to the extent available; and authorizing certain other actions. Bill No. 240375, an ordinance constituting the Nineteenth Supplemental Ordinance 4 the Amended and Restated General Airport Revenue Bond Ordinance, providing for certain amendments the Amended and Restated General Airport Revenue Bond Ordinance, under certain terms and conditions. Bill No. 240377, an ordinance authorizing the City Treasurer, on behalf of the City, to enter into an amendment agreement with Citizens Bank National Association for provision of payroll banking services to the City, under certain terms and conditions. Bill No.

240378, an ordinance approving the amendment of the Fiscal Year 2024 Capital Budget providing for expenditures for the capital purposes of the Philadelphia Gas Works (including the supplying of funds in connection therewith) subject to certain constraints and conditions and acknowledging the receipt of the Revised Forecast of Capital Budgets for Fiscal Years 2025 through 2029, as amended. Bill No. 240379, an ordinance amending Title of The 9 Philadelphia Code, entitled 10 "Contracts and Procurement," to 11 modify the requirements for 12 contracts with not-for-profit 13 vendors, all under certain terms 14 and conditions. 15 Bill No. 240416, an 16 ordinance authorizing an increase 17 in the non-electoral indebtedness of the City within the Pennsylvania constitutional limit; authorizing the Bond Committee to sell bonds at public or private negotiated sale, to provide funds toward various capital municipal purposes; providing for appropriations to the Sinking Fund Commission for the payments of such bonds; and authorizing agreements to provide credit or payment or liquidity sources for the bonds in connection with issuance of the bonds, and certain other actions. Bill No. 240417, an ordinance approving the Fiscal Year 2025 Capital Budget providing for the expenditures for the capital purposes of the Philadelphia Gas Works, including the supplying of funds in connection therewith, and acknowledging receipt of the Revised Forecast of Capital Budgets for Fiscal Years 2026 through 2030, all under certain terms and conditions. Bill No. 240467, an ordinance amending Chapter 19-3500 of The Philadelphia Code, entitled "Hospital Assessments," to revise provisions relating to hospital assessments; and authorizing the Department of Public Health to enter into an intergovernmental agreement with the Commonwealth, Department of Human Services, relating to such hospital assessments, all under certain terms and conditions. Bill No. 240470, an ordinance amending Chapter 19-3200 of The Philadelphia Code, entitled "Keystone Opportunity Zone Economic Development District and Strategic Development Area," to provide for additional extensions of certain benefits, under certain terms and conditions. And Bill No. L. 1449, Section 4, as amended, to prevent and eliminate blight; authorizing the Director of Planning and Development and the Director of Commerce to file 12 applications to obtain other grants from the Commonwealth; authorizing the Director of Commerce to use Section 108 Loan Guarantee Program; and authorizing the Director of Planning and Development and the Director of Commerce to enter into all understandings and assurance contained in such applications and take all necessary action to accept the grants, all under certain terms and conditions.

Thank you very, very much. Before I call on the Clerk to call the first panel, would any of my colleagues like to make any opening comments? (No response.)

Okay. Seeing none, I'd like to publicly announce, one, to thank the nonprofit providers that I had the opportunity to meet with at a wonderful meeting of about 47 individuals yesterday regarding my Bill 240379. I will be amending that bill. The amendment has been circulated to all colleagues on the Committee and we look forward to receiving testimony regarding that legislation. Clerk, will you please call the first panel we have to testify on Bill No. 240379.

The Honorable Christy Brady.

Thank you, Madam Controller, the Honorable Christy Brady. We are so pleased to have you here this morning. If you could state your name for the record along with Bill, and proceed with your testimony. (Witnesses approached Witness table.) CITY CONTROLLER BRADY: Absolutely.

And for the record, I'd like to acknowledge the presence of my colleague Councilmember Isaiah Thomas who is here and present for the hearing. CITY CONTROLLER BRADY: Good morning, Chairwoman Gilmore Richardson and distinguished members of the Committee. My name is Christy Brady and I am the City Controller. I am here to testify on Bill 240379. On May 17th of this year, my office notified the Mayor that we will be commencing an audit of the contracting and encumbering processes for the departments listed under Section 17-406 of the Philadelphia Home Rule Charter regarding sole source contracts, emergencies and other exceptions of the Charter. We also included the Office of the Managing Director and the Law Department where we have seen these types of practices being utilized over the past several years. The objective of this audit will be to determine whether contracts exempt from the public bidding process are being awarded properly and fairly as stipulated in the Charter. Additionally, the audit will review the contractual amounts encumbered in the City's accounting system for reasonableness and accuracy. As you may have seen in my Community Expansion Grant audit and in the draft report released by the Office of the Inspector General, I realize this is a much larger issue in the City's contracting processes. Therefore, I have decided that my Audit Division will look at this issue globally to determine whether the City is benefiting from the RFP nonprofit exemptions or if it is a gateway to other issues. I will be reviewing best practices from other cities, states and municipalities to see how they handle their need for expedited services and what we may be able to incorporate here in the city of Philadelphia. I recognize the need in which the contracting process may need to move quicker to ensure the citizens of our city are fully cared for, but as found in the IG draft report having leadership make comments like being disinterested in the minutia of their budget or fiscal management of services contracts is how budgets fail. Leadership was driven by the mission, and fiscal considerations became an afterthought. With taxpayer dollars, we cannot allow for fiscal considerations to be an afterthought. The exemption that cities allow for nonprofits is a problem that needs addressing. As such, my office will be reviewing all contracts that fall under this exemption. Thank you and I am available for your questions.

Thank you. Thank you so very much, Madam Controller, for being here and for your exhaustive review not only of the Community Expansion Grants, the report that was released in April, but also the work that you are undertaking now to help us better understand what is taking place from a contracting perspective relative to most of the departments that are under the Health and Human Service portfolio as listed in Section 17-1406 of the Code. My first question for you would be if you could just provide any additional information about what the report from April found about the use of the nonprofit exemption for the Community Expansion Grants in particular? CITY CONTROLLER BRADY: Absolutely. First, I want to say I like working with your office, and our staff and your staff working together is a very good collaboration and I'm very appreciative of everything that you're doing in this area. When I was Acting Controller, I had found that we had money budgeted in one department and then I found out that the contract for the CEG oversight was in another department and I didn't -- I wanted to look into why. I had to resign to run. And when I came back into the City, it's exactly what I did, was look into how this contract was conformed in another City department but the funding was in another.

Right. CITY CONTROLLER BRADY: And that's why we went into looking into it. That's what we found in that audit.

Sure, sure. And so, I just want to be clear for the record that I think it's more difficult from sort of a budgeting and finance perspective to follow the dollars but also follow the City's financial policies and procedures when you have one department conforming a contract, I guess, that another department would amend? CITY CONTROLLER BRADY: Yeah. I mean, it causes confusion because if you're conforming the contract in one department, then that vendor should be dealing with that department. But if the money is funded in another and that's where -- there's a reason why there's a budget. You approve the budget for that specific department. You expect that department to be performing those services. So when the contract's conformed in another City department, you would think that that vendor then has to deal with that department. But in the end, it was shifted back to the department where the money was funded and it causes confusion.

Right, which is probably most of the reason why we can't really follow as much as possible some of the contracts that are in question relative to some of the departments in the Health and Human Services portfolio. CITY CONTROLLER BRADY: Correct.

Thank you. All right. Thank you so much, Bill, for being here and thank you, Madam Controller, and we appreciate your work and we look forward to the additional report that will be released once you are finished your investigation. Do you have a question?

(Nodded affirmatively.)

Okay. Councilmember Jones.

Thank you, Madam Chair. And thank you, Controller Brady, for the work that you're doing in this regard. A few questions, and I'm channeling my inner Blondell Reynolds Brown, who was a part of the initiation of including nonprofits in our calculations of minority and participation because at one point they were exempt from the number. So one of the intentions of this legislation was to make sure that the pie, if you would, that was issued in major forms of contracts were included in our overall calculus of participation. If you were to calculate, what do they represent by way of annual procurement and what in particular qualifies someone to be a minority nonprofit versus a majority nonprofit? CITY CONTROLLER BRADY: We can make that part of the report, those percentages of the nonprofits that are minority versus a regular contract. You have to go through a process with Procurement to be considered -- you have to apply to be minority local businesses.

So I think that would be an interesting -- and I'm thankful to the author of this legislation for some of the amendments that will be issued today which will allow us to ferret out the unintended consequences of what might happen. And in order to correct a thing, sometimes those unintended consequences have a major impact on things we didn't consider. So your report will be critical in evaluating how we surgically apply this legislation. Thank you, Madam Chair.

Thank you. Thank you so much, Councilmember Jones. Any additional questions from members of the Committee? Councilmember Bass.

Thank you very much. I just wanted to thank you, Madam Controller and also Bill. How are you, Bill? Good to see you. Also, just really wanted to thank you for committing to providing additional oversight to the department and also I'm assuming other departments as well that have this sort of flexibility, I guess you would call it, when it comes to being able to do this kind of contracting? CITY CONTROLLER BRADY: Yes, I'm looking forward to diving in and seeing what we find for sure. I definitely want to determine if it's fair, if it's transparent, what do other cities, municipalities do, you know, does it make sense.

Well, listen, I just wanted to say thank you for that because when we're spending tax dollars and spending without forethought about where is it going, how's it going to be spent, who's it going to, what kind of checks and balances are in place, any suggestions or recommendations that can come from the Controller's Office I think will help us along the way so we can make sure we don't end up here again. We really don't have the money to waste, especially on a very vulnerable population with the Office of Homeless Services. So I just really wanted to say kudos and we look forward to your updates in the future around this spending, so thank you.

Thank you.

One other question, Madam Chair.

Yep. Thank you, Councilmember Bass. The Chair now recognizes Councilmember Jones and then Councilmember Ahmad.

Thank you again, Madam Chair. Real quick for the record, exempting out the Office of Homelessness, exempting them out of this consideration, has your office been made aware of any financial defalcations in the procurement process from these other nonprofits or departments that utilize that sole source provision? CITY CONTROLLER BRADY: Have we found discrepancies?

Yes, ma'am. CITY CONTROLLER BRADY: Our audit will -- I'm looking forward to diving in to see if there's any issues that are happening, if there are departments taking advantage of this special exemption. The CEG audit did show that it occur -- that one department had the contract but it was funded in another department, but we need to see how prevalent that is. And also, in the IG's draft report it showed that it occurred.

So again, for the record other than the department in question, there has not been a pattern of malfeasance in this regard that you are aware of? CITY CONTROLLER BRADY: No, I have not -- I'm not aware of. But I hope that this audit will be looking for patterns.

Thank you, Madam Chair.

Thank you. Thank you so much, Councilmember Jones. I just wanted to note for the record, Councilmember Jones, that right now the Community Expansion Grants Report was released by the Controller in April of 2024. The investigation relative to OHS has been ongoing. And so, this has not been sort of like an investigation into all the departments in the Health and Human Services portfolio. But we have found during this process that there are other departments that have contracts that are being amended and utilized in this provision even though they're not under the Health and Human Services portfolio, and that's the challenge that we face because it's harder to find the money and/or follow the money.

Thank you. CITY CONTROLLER BRADY: That's exactly right.

Thank you. Thank you, Councilmember Jones. Thank you, Madam Controller. The Chair now recognizes Councilmember Ahmad.

Thank you, Madam Chair. Thank you, Madam Controller, for your testimony. There's been an amendment that's been circulated exempting some departments from the Code change that we're looking for. I just wanted to know that while we understand for efficiency purposes that some of these departments have been excluded, I wanted to know what standard ways do we have to do performance audits on everybody, but particularly those who are exempt from this provision? CITY CONTROLLER BRADY: That's what we're doing now. We're conducting a performance audit now. It's not just on OHS. It's on all the departments that have this exemption as well as looking at the overall encumbering process for contracts in the City's accounting system that would allow a department to conform a contract that's up to a certain amount but encumber much less.

So the reason I ask is much of this is after the fact, right. So how can we take those performance audits that you have and be more proactive even though they're exempt for these departments to make sure they are complying and our constituents are getting the very best services, particularly those who have been underserved and are vulnerable? CITY CONTROLLER BRADY: Auditing is after the fact. But the results of our audits should -- my goal of an audit is to have a recommendation that will change a policy or procedure and make sure that the departments are following those policies or procedures. So that's where I would come in.

Well, thank you. We need transparency and accountability and I commend our Majority Leader for really putting this out there. This is a new Administration, a new Council. We have a reset. Let's do it well. Let's make sure our constituents know where their tax dollars are being used. And I really appreciate that we're spending time so people understand why we're doing what we're doing. Thank you. CITY CONTROLLER BRADY: I agree 100 percent.

Thank you, Councilmember Ahmad. And thank you, Madam Controller and Bill, for being here. We truly appreciate your testimony and your work and we look forward to receiving your next report. Thank you very much. CITY CONTROLLER BRADY: Thank you very much. We appreciate it.

I also wanted to note for the record that we have a letter of support from Lauren Cristella of the Committee of Seventy. And I want to thank them for their support for Bill No. 14 240379. I also wanted to state for the record relative to the amendment that has been circulated, the amendment is at the very bottom of the page. It's under Section 2 where you see Chapter 17-1400 under 1406, Section 2. This ordinance 22 shall become effective on July 1, 2025 removing the immediately. That is the amendment for Bill No. 25 240379. Will the Clerk please call Panel 2 to testify.

Inspector General Alex DeSantis.

Thank you so much to our Inspector General for being here today and for his robust report wherein we had Recommendation 4 on Page No. 14. And so, if our Inspector General could please state his name for the record and proceed with your testimony. (Witnesses approached Witness table.)

Thank you so much to you and to your team for being here today. You could just state your name for the record and proceed with your testimony. INSPECTOR GENERAL DeSANTIS: Thank you. My name is Alex DeSantis, Inspector General.

Please proceed. INSPECTOR GENERAL DeSANTIS: Thank you. My name is Alex DeSantis, Inspector General. Thank you very much for inviting us here today. Firstly, I would like to say that I don't speak for the Administration. I'm here today on behalf of the Office of the Inspector General as an institution and the men and women who work tirelessly to serve an ideal that our government should always be honest above all. Secondly, I would like to thank you, Madam Chair, directly for introducing this particular legislation and for creating a forum for all of the different City stakeholders to collectively discuss the nonprofit exemption but, more broadly, the state of our City's contracting process. We are immensely positive about these hearings because we believe that we are now faced with a valuable opportunity to understand exactly how our departments conduct business and to some fairly significant extent may view the contracting process as an obstacle to progress. This conversation does need to take place. With respect to the nonprofit exemption Code Section 13 17-1406, there undoubtedly has been abuse separate and apart from OHS. And I believe that my colleagues elsewhere in the City will readily and openly admit as much. Today I'm hoping that we can also understand why. Every day, but since the pandemic in particular, our operating departments are regularly faced with pressured act, time pressure, pressure from the conditions in the community, emergency situations, forgive me for saying but also pressure from this body, to get money on the field and to start realizing the results of our investments. Unfortunately, sometimes in the face of this pressure our officials look for a contracting mechanism that's quick and easy with very few transaction costs and without regard to formality or process. Here we introduce a tremendous amount of risk because when we skirt process, our decisions are exposed and many more questions eventually surface, as we see with OHS. It's my sincere hope that the conversation around this legislation will help us address abuse but, more importantly, acknowledge and address the broader need for reform and our collective need to have a tangible impact on the conditions out there in the community. We need to balance process and outcome, and the nonprofit exemption is only one small part of that ecosystem. As you know, the OIG published a Report of Investigation in April outlining the matter in which OHS created and carried roughly $10 million worth of debt in the form of contractual commitments that exceeded the office's budgetary authority. As presented in our report, we do believe that Philadelphia Code Section 17-1406 enabled this practice to some extent because OHS could more easily conform and renew its catalog of service contracts outside of a competitive process. The recent OHS experience, as well as other cited instances of abuse, suggest that there should be some reasonable limits to the exemption such as a dollar value threshold, a yearly cap or capped renewals, total vendor cap, additional reporting to City Council or other monitors or some restriction on cross-departmental use. We stand by our recommendation of course, but we also recognize the need to balance the interests of the operating departments and our local nonprofit vendors who may not be able to compete with strength in a purely economic bidding environment. There is still an underlying policy behind the original exemption that should not be totally disregarded. As such, we believe that Bill 17 240379 in its current form -- sorry, I wasn't able to review the amendments before this testi --

I apologize that you did not -- INSPECTOR GENERAL DeSANTIS: No, no --

-- receive a copy of the amendments. And I also did not receive the Administration's testimony until right before this hearing. Thank you. INSPECTOR GENERAL DeSANTIS: We believe that in its current form the bill is overly broad and unnecessarily penal, especially to departments who have been using the exemption with due care and responsibility. Rather than wholesale removal of the exemption, we sincerely hope that this legislation can frame a deeper discussion through which the Administration and Council may collectively define more precise circumstances when the exemption may or may not be appropriate and/or in the best interests of our city. We also hope that the discussion does not start and end with the nonprofit exemption but also leads to the introduction of some new tools that can address our need to move fairly, swiftly and effectively for the people of this city. Thank you for the opportunity to contribute to this conversation. Happy to answer questions.

Thank you. Thank you so much to our Inspector General, and thank you very, very much for your work on the preliminary report. I paid particular close attention to your analysis and the recommendations that started on and then carried over to wherein No. 4 of your recommendations stated that we should look at the scope of the nonprofit exemption in government. And so, that's the one that I paid closest attention to. You see I already have a circle here, Evaluate the scope of the nonprofit exemption -- INSPECTOR GENERAL DeSANTIS: Yes, ma'am.

-- wherein you talked about how there was a lack of market controls, although it may be difficult to quantify, the department's use of the nonprofit exemption bolstered this activity because they could conform contracts much faster than most other departments and it is an attractive reason for other City departments like MDO to seek cost- sharing arrangements that further complicate the OHS budget. Generally, OHS created and managed a unique market for services that was fairly unregulated and not driven by pricing competition. For one or two contracts, this is less of a problem. But with more than 150 nonprofit vendors, the lack of market controls gave OHS a certain freedom to work with their vendors on more of an informal -- and I call it friends and family -- and relationship-driven basis. And so, we also saw here restrict the use of general funds and grant funds on a single contract as another opportunity for improvement within government. And so, I wanted to just note that for the record because I did pay close attention to this preliminary report when it was released on April 22nd, and wanted to ensure that we were able to follow up on the robust research that your department has been undertaking as an opportunity for us to improve how we deliver quality service in the city of Philadelphia. And so, I do appreciate the level of concern that you voiced in your testimony, particularly about the use of the exemption. You've also outlined a number of potential changes we could additionally consider, but I was hoping that you could just state for the record how you think that keeping the exemption in any form will allow for fully transparent and accountable business practices after we've seen it used in multiple departments to evade requirements and mix money between departments? How do we follow those dollars? And so, if you could just respond to that. INSPECTOR GENERAL DeSANTIS: Sure. Well, I don't think that there's a transparency issue in all circumstances, right. And as I understand the policy behind the exemption, I think it does have to do to some extent with helping smaller organizations, local organizations that may not be able to undercut as a matter of price, a very, very large organization that can take advantage of market of scale. So that's why I don't know that a wholesale removal of it is necessary, but certainly some responsible cutbacks seem appropriate, yes.

Okay. And in your opinion, how do you think we do that? How does one do that? INSPECTOR GENERAL DeSANTIS: Well, I think you could, number one, consider dollar value of the contract, right. And in a smaller contract the exemption seems to support the policy rationale a little bit more directly. In a larger contract that has the opportunity for much more value, I think price is a much deeper consideration. And so, perhaps there's a threshold value that could be instituted. The other issue that I think is informative from OHS, right, is the impact of deferral. So as is outlined in our report, the department was essentially deferring costs down the line year after year after year and potentially contract after contract. This has the effect of locking the department into having to deal with the same contractor for extended period of time, right, because they're not going to be able to square up with that contractor unless there's an active relationship in place. So perhaps there could be something that is getting at the repeated use of it for a particular opportunity. Perhaps the initial opportunity could be an RFP and renewals could be done using the exemption or vice versa depending on how those discussions shake out. But I do think that limiting the actual use of it as a discrete matter could be helpful.

And I thank you for that response. I think that we understand though that there are dollar amount thresholds related to contracting. I think when I first started with the City it was like $37,000 or something. Now, it's higher. I think it's in the 80s now. But at any rate, we know that that threshold does exist to a degree when we're contracting. However, my concern would be what about those providers that we all say are smaller, right. We want them to be able to gain capacity, be able to vie for larger contracts. What happens to those firms if they are held to that threshold, you know what I mean? INSPECTOR GENERAL DeSANTIS: I do, and I think that that's part of the discussion I'm hoping that my colleagues can inform those of us that are in the operating departments that have much more contact with the contractors, they may be able to inform that balance point.

Right. Because that also doesn't necessarily ensure quality, right. And I think that's a part of the challenge, that we want our providers in our network who are providing needed services to citizens across our city, we want them to have some level of continuity. But what's happening here is that they're not bidding for these contracts. And so, as an example as you stated if they bid for it and they get a four-year contract, they know they have some continuity for four years and then maybe possibilities of three one-year renewals, right. And so, then they know what to anticipate, they know what to expect, particularly around planning purposes around their finances. And so, right now they're dependent upon, all right, we get this every year but there's no 6 controls in place. They just know they're going to get it every year, but there is no process to evaluate the quality of service that's being provided because they just know they're going to get it every year. INSPECTOR GENERAL DeSANTIS: There's no question that that's the case. And in particular, one of the other issues that we've pointed out in the report is cost increases, right. The Department of OHS has pointed out over the period of time that we're addressing in the investigation a lot of the spending was driven by market increases, supply chain issues, inflation and so on and so forth, yet it struck us that there's no market check, right.

Right. INSPECTOR GENERAL DeSANTIS: So especially when you see that the market forces are driving prices up, to me that might suggest the need to issue an RFP at some point once you see those cost numbers start to move.

Right. And I'll give you an example. Even the cost of a bed, we've gone from 17,000 and change to 25,000 and change for a cost per bed -- INSPECTOR GENERAL DeSANTIS: Yeah.

-- each year. I mean, we've gone up, what, $8,000 per shelter bed per year. As another example, this Council from a General Fund perspective in FY18 allocated $47 million for OHS, and the last fiscal was 80. So it's not because Council is not funding the department. Something's wrong here and that's what we're seeking to address. INSPECTOR GENERAL DeSANTIS: Well, I hope you count me as a partner in that effort.

Thank you. Colleagues on the Committee, do you have any questions for our OIG?

Yes.

Okay. Councilmember Bass and then Councilmember Jones.

Thank you. Good morning. INSPECTOR GENERAL DeSANTIS: Morning.

So I had just a couple of questions, probably more like statements. So the legislation that we have in front of us really was crafted -and, Council Majority Leader, you can correct me if I'm incorrect on this -- but it was really intent, you know, developed based on the report that was issued and specifically Item No. 4, To evaluate the scope of the nonprofit exemption. And as you read through it, it seems it's just very, very vague. It calls out that the nonprofit exemption is an issue, but it doesn't give any recommendation. It doesn't lead us down any sort of path to be able to correct what is here. And so, I'm wondering if you're going to give us -- will there be a follow-up report, I guess, putting these items in writing? And not just for No. 4, but for really all of these recommendations, that there's going to be some sort of response that's going to say this is what we are solely and squarely recommending that happens going forward. So that way the Administration can be on the same page, as Council can be on the same page, as OHS can be on the same page. Everybody can be on the same page as to, okay, this is what we're going to do and this is how we're going to do it. INSPECTOR GENERAL DeSANTIS: Certainly. With respect to future reports, that is one of the reasons why we titled that report that you're holding as preliminary, because as you know we do have -- the Administration has engaged an accounting firm to conduct a forensic piece. We are working on a number of lines of inquiry separate and apart from that. Of course, as you just heard the Controller is initiating a more broad review. So, yes, there is opportunity for us to produce additional findings. But what we wanted to do is get something out publicly quickly to answer some of the questions that you all were asking about the process and, in particular how this department got out of budget position. Well, the interesting thing to us about this matter is that it's both sort of simultaneously complicated and simple, because yes, it's complicated in the sense that our report is technical. We do discuss encumbrances and some of the other technical processes there quite deeply, but it's also true that at its core if there's an executive who decides to ignore a spending cap, that challenges any internal control.

Sure. INSPECTOR GENERAL DeSANTIS: And so, with our recommendations we were trying to acknowledge that fact to some extent with respect to our dialogue with the Administration and also understand, for example, with encumbrances balance that we do understand and appreciate that many of our departments behind us are under encumbering for perfectly legitimate, sound and good business reasons, right. So I do think that it does require the Administration to sort of take those recommendations, chew on them a little bit and articulate what may be practically possible, and that's why we framed them that way.

Okay. So when can we expect a -- since this is preliminary, the completed and finalized? INSPECTOR GENERAL DeSANTIS: Well, we're working very hard with the contractor so when they're finished -- I don't know that I can commit to a timeline, but when they're finished hopefully some point this summer or the end of the summer we can have a deeper conversation about their work.

So you think it'll be in the coming months? We're not talking about in 2025. You think it'll be some time -- INSPECTOR GENERAL DeSANTIS: I'm hoping we can get it done in 2024, yes, ma'am.

Okay. All right. We'll be looking for it. INSPECTOR GENERAL DeSANTIS: I understand.

Thank you.

Thank you, Councilmember Bass. The Chair now recognizes Councilmember Jones.

Thank you again, Madam Chair. Inspector General, do you find some of the issues related to some of the forever contracts, which my colleague talks about the entitlement kind of contract, is that germane only to nonprofits or do we find that true in the general contracting process that -- and I base this based on my experience of being with the Minority Business Enterprise Council responsible for contracting in the City of Philadelphia in another life. But what you get is some contractors that come in and then they find different change orders and then they find that it is necessary to change the amount of the contract based on increased cost supply chain issues and do that in general. So I guess my question is, is this a process of evaluation just for nonprofit or for contracting in general? INSPECTOR GENERAL DeSANTIS: I think that it's for contracting in general, sir. And I think it's exacerbated somewhat in the area of nonprofit because of the use of the exemption, but, yes. And some of my opening comments were hoping to drive that point that you just made as well, sir. So I do believe that there's a general effort to minimize transaction costs. And departments once they have a vendor in place, whether it has been awarded via an RFP or otherwise, I do think there's a general reluctance to switch out a vendor or change because of all the transaction costs that go into getting that vendor up to speed, working with that vendor, getting them acclimated to the department and the scope of work. So I do think that, yes, in general an incumbent contractor to some extent has an advantage, yes.

Next question would be what is the difference in your mind between lowest responsible bidder and best value? INSPECTOR GENERAL DeSANTIS: I interpret one to be price-driven, the other to be more broad.

So more broad in my mind based on the intention of the contracting change was to look at not just the lowest responsible price for ink pens, but is that ink pen company in North Philly, is that ink pen -- INSPECTOR GENERAL DeSANTIS: Yes, absolutely.

-- impacting employment in that area, is there a greater value that can be found in that and is that germane maybe to some of these nonprofits? INSPECTOR GENERAL DeSANTIS: Yes, Councilmember, absolutely. And I think that that came through in our investigation as well. The department was very interested in supporting their vendors as a matter of supporting their community as well. And so, yes, I absolutely think there are going to be circumstances when best price is not what's best for the City more broadly, yes.

And then finally, in your report do you call for the elimination of the nonprofit exemption? INSPECTOR GENERAL DeSANTIS: No, sir. No, we don't.

Why is that? INSPECTOR GENERAL DeSANTIS: Because I do think as you have pointed out, there's value to allowing some flexibility and there's value to allowing departments to evaluate contracts and opportunities beyond price alone.

Thank you, Madam Chair.

Thank you. Thank you so much, Councilmember Jones. I think we note that there's much more work needed and necessary around contracting as a whole in the City of Philadelphia. So thank you very, very much for those questions, Councilmember Jones. Are there any other colleagues that have questions for this panel? (No response.)

Seeing none, we will now move to Panel 3. Will the Clerk please call Panel 3.

Administration representatives, I believe it's CAO, CEO, DHS and Health.

Thank you so much for being here. If you could please state your name for the record and proceed with your testimony.

If maybe CAO and CEO want to come up first just because I don't know if there's enough chairs for folks. (Witnesses approached Witness table.)

Right. And so, what we'll do for this panel for Panel No. 3 since we have a number of witnesses for this particular panel is we will take all of your testimony in its totality and then we will reserve the balance of our questions at the end for the end of the testimony. Okay. So please state your name for the record and proceed with your testimony.

Good morning. My name is Camille Duchaussee.

Okay. Thank you. Please proceed.

Good morning, Chairperson Gilmore Richardson and the Finance Committee. My name is Camille Duchaussee and I am the Chief Administrative Officer for the City of Philadelphia. Joining me today is Acting Procurement Commissioner LaShawnda Tompkins. I'm providing testimony on Bill No. 240379, amending Title of The 15 Philadelphia Code, entitled 16 "Contracts and Procurement," to 17 modify the requirements for contracts with not-for-profit vendors. This legislation, if passed, would remove the nonprofit exemption for specified City departments and agencies codified within Philadelphia Code 17-1400, Noncompetitively Bid Contracts. The nonprofit exemption detailed within Philadelphia Code Section 17-1406, Item 8, sole source contracts, emergencies and other exemptions has been in place for almost two decades. While the impetus for the exemption was to reduce and/or eliminate the cost of the Request for Purchase or RFP process to nonprofit organizations with which the City contracted on a recurring basis, the exemption also resulted in an expedited and streamlined procurement process. Essentially, the nonprofit exemption allowed and allows specified City departments to timely and quickly secure and provide health, human, public safety and social services to residents during crisis, natural disasters, public health emergencies and unforeseen infrastructure failures. The exemption created a streamlined process to securing services, medical care and resources when the City's humanitarian responsibilities outweigh the value of and need for competitive contracting rules. At its heart, Bill No. 240379 appears to be about ensuring the efficient and effective provision of critical services while ensuring that we have a robust accountability framework in place to prevent mismanagement. As a lifelong public servant whose career included serving as an Auditing Chief within the Department of Justice implementing and assessing internal agency controls, it is with that lens that I view and welcome the opportunity to improve accountability of the administration of the City's processes to include the administration of contracts. Philadelphia Code Chapter 17-1400 was not initially conceived, intended or constructed for expedited procurement associated with emergent resident services, and it did not contemplate the agility essential to empathetic and servant-centered municipal management or resilience. While I appreciate the importance of the regulation established by Chapter 17-1400 as the anti-pay to play law, in establishing the controls necessary to protect against threats to fair competition and spending transparency, maintaining an exemption to the contracting process during emergencies and for the swift provision of critical social services is crucial to effectively address the immediate needs and crises that impact the most at-risk residents in all Councilmanic Districts. By their nature, emergencies require swift and decisive action to mitigate harm and ensure safety. Since its effectuation, the use of the nonprofit exemption has included procuring services, many of which are life-saving and sustaining, during significant crises. So experientially, the process works. And I respectfully suggest other options to improve or operationalized additional internal controls be considered as the removal of the nonprofit exemption would result in exclusive reliance on the process outlined in 17-1400, which is a procurement process framework that was not designed to be responsive to critical service delivery needs. In its investigation report, the Office of the Inspector General specifically identified a large majority of the 170 contracts administered by OHS qualified for the nonprofit exemption. The report identified that this condition allowed for the quick and easy conformance of contracts with less involvement from outside agencies like the Procurement Department.

Furthermore, the OIG report, fittingly cited by Majority Leader Gilmore Richardson, expressed OHS created and managed a unique market for services that was fairly unregulated and not driven by pricing competition, creating a lack of market controls which gave OHS a certain freedom to work with their vendors on more of an informal and relationship-driven basis. This conclusion appears to presuppose that an informal and relationship-driven approach to contracting under emergent circumstances is uncommon and/or antithetical to effective and ethical service delivery. While it may be antithetical to regulations promulgated by Chapter 17-1400, this conclusion does not appear to consider whether the informality was either intentional or necessary to realize more expedited, culturally-informed and responsive procurement practices. However, the report suggests several adjustments to include additional controls and/or oversight of the encumbrance process as well as other agency involvement are worthy of consideration. More specifically, the report recommended, one, strengthening the budget verification process and conformance; two, imposing stricter encumbrance rules; three, collecting and tracking data from the Finance Payment Verification Unit; four, evaluating the scope of the nonprofit exemption; and five restricting the use of general fund and grant funds on a single contract. The report does not include a recommendation of the complete elimination of the nonprofit exemption for the Office of Homeless Services or other defined City agencies for whom the exemption is authorized. We concur the review and potential implementation of these recommendations is warranted and will likely mitigate the unfavorable outcomes identified within the preliminary report. To that end, an additional control that we recommend to be implemented at the outset of the nonprofit exempt contract workflow is requiring the City Solicitor or the Chief Integrity Officer to approve each use of the exemption for new contracts rather than retaining that authority within the duties of the department head. This would insert an independent objective approver in the same fashion as is required with other 17-1406 exemptions before a contract may be awarded or commenced. The City fully supports the review of its processes to determine the cause and extent of breakdowns of internal controls and potential remediation. I truly believe that is one of the main reasons why I am the CAO. The Controller's Office has announced an audit of special exemption contracts, which we will fully cooperate with. Additionally, we have initiated our own review of the use of the nonprofit exemption to identify additional areas in the process that need modification and strengthening. However, in the absence of a full accounting of the use of the special exemption contracting practices, we risk crafting a solution for which we do not have a full accounting or understanding of the root cause and scope and which may create unintended consequences that harm our resident service delivery and our ability to effectively support residents in their most crucial, critical time of need. We appreciate and share Chairperson Gilmore Richardson and Council's commitment to accountability, transparency in centering human beings and compassion in the delivery of City services. We are all committed to providing essential services in a manner that fosters trust, ensures equitable access to resources and does so without compromising on accountability and integrity. We respectfully request that this bill is held in Committee in order to allow the Administration to work with Council to address your concerns regarding the nonprofit exemption specifically. Balancing internal accountability controls with human- centered services in city government is a complex but essential task.

The Administration is absolutely committed to collaborating with Majority Leader Gilmore Richardson and Council to improve the administration of the nonprofit exemption in order to ensure that the City serves its residents with both integrity and care. Thank you for this opportunity to provide testimony on Bill No. 240379, and I welcome the Committee's questions.

Thank you very, very much, and thank you for your testimony and thank you really truly for your collaboration and your willingness to work together. I do appreciate working with you in particular. And so, many of you I've had the opportunity to work with over the years. I am appreciative and recognize that this would be a seismic shift in the way that you all do business, and I want you to recognize that I understand that and am very appreciative of the work that you all do each and every day. This is not at all seeking to make your lives more burdensome relative to the work that we must do to provide service to our citizens across the City. This is simply an opportunity to ensure that we have a fair, transparent, accountable government that is fair to all who seek to do business with the City of Philadelphia, whether they're a for-profit or a nonprofit. And so, what I am going to ask as the Chair of this Committee, particularly because I just received this information right before the hearing, particularly because it's pages that I was 4 not able to fully review prior to 5 this hearing, that if everyone 6 else, if you could just please 7 state your name, title and 8 department for the record and your 9 position on the legislation and if 10 we could submit the balance of the 11 testimony for the stenographer and 12 for the benefit of the Committee 13 because it is 23 pages long, and we 14 do have a Committee of the Whole 15 hearing later on today as well. 16 Is that okay with the 17 Committee? 18

So just 19 for clarification, I believe not 20 all of the testimony that you have 21 in that document, which I apologize 22 that it was received this morning, 23 will be presented in person today.

Okay. So we wanted to, if possible, just have everyone else submit their testimony for the record. I do have several questions relative to vendors, that I wanted to just put these two questions on the record but also state that not every day is an emergency, like not every single day is an emergency. We sort of know what to anticipate and/or expect. In addition to that, you know I did my research. This legislation came around in 2004 initially. So this was not something we've always done in City government. I think folks are making this seem as if we've been doing this forever, we've been doing this always. That's not the case. This legislation was introduced in 2004. And since that time, things have shifted. That's only been 20 years. Okay. And so, one quick question I did have as a result of sort of going back in Legistar and looking through that process, how much has the City privatized our Health and Human Services portfolio since 2004 when the original legislation was passed?

Excuse me. How much has Health and Human Services --

The City sort of privatized the Health and Human Services portfolio?

I'll ask LaShawnda Tompkins to come up.

Okay.

And also, I'm not sure if Senior Deputy MDO would be able to speak to that as well, Vanessa Garrett Harley. (Witnesses approached Witness table.)

Okay. Just please state your name for the record and proceed with your testimony. COMMISSIONER TOMPKINS: Good morning. LaShawnda Tompkins, Acting Procurement Commissioner. How are you?

Good. How are you? COMMISSIONER TOMPKINS: Can you restate your question?

Sure, sure. Since about 2004, how much has the City I'll say privatized and/or outsourced the work of the Health and Human Services portfolio over the last years? 19 COMMISSIONER TOMPKINS: I 20 can work with our team to get that information for you because I don't have that information with me now so we can definitely work. Thank you.

Okay. Thank you. And so, if we could just submit that information and then we'll disseminate it to the Committee and to the members of Council. And my other question was relative to vendors. I had a very robust meeting with about 47 vendors yesterday. And I do want to thank the Administration for the vendors that they personally invited. If you could talk about the concerns that the vendors have around having to engage in an RFP process. Each and every year the vendors believe that will be burdensome, even though you all are already dealing with them on a yearly basis. And I'm just going through my notes that I took at the meeting yesterday. Is there a reason why any of the departments, including OHS, could not do multi- year contracts with the nonprofit vendors via RFP, basically providing them with some level of continuity and knowing what to expect relative to the support they will receive from the City?

So let me start. First, I do think both from a nonprofit exemption-use perspective and from the RFP perspective the goal is to provide continuity of care and service and the nonprofit exemption allows for our departments to be able to do that, to ensure that case managers aren't subject to the lowest bid, right. Once a family becomes accustomed to, has a relationship with and is confident in the services that are being provided, those services aren't abruptly changing based on the competitive process, competitive RFP process. What we are understanding from the perspective of our nonprofit providers is that a lot of our -- or at least a number of our nonprofit providers rely fairly significantly on their contracts with the City and they are small and their margins are small and they have limited back office support, their support and their expertise rests in the service that they are providing rather than in the administrative tasks that are fairly considerable in preparing a Request for Proposal. So I think that is one of the larger concerns that we in so doing and removing this exemption completely, and absolutely agree not every use of it is based on emergency. There are uses that are based on providing services that are critical to our residents even if not a public safety emergency, right. But at the end of the day, their expertise of these nonprofit vendors relies, I think, mostly in the service that they provide rather than in the administrative functions that are associated with a cumbersome procurement process.

Sure. But isn't that the case for small businesses? Don't they have to go through an RFP process if they want to do business with the City?

Yes, but time is less of the essence in that case and in most of those cases. And I would think universally small businesses will struggle, whether it's a not-for-profit vendor or for-profit vendor.

But we still do have a provision for small businesses to go through the RFP process, correct?

We do, but we also have a provision for smaller or lower-costing contracts which implicate small businesses most of the time to not go through the RFP process.

And one other thing we heard from some of the nonprofits in the meeting yesterday was that they utilize City funding to leverage other state or federal support. And so, don't you think having some level of continuity would help them to better plan for the additional support they are seeking at other levels?

Continuity in general, yes, absolutely builds expertise and would allow for leveraging that experience to better apply for and utilize the RFP process, but it is not exclusive to -- continuity is not exclusive to the RFP process. Continuity is essentially one of the main reasons why the nonprofit exemption is so beneficial to our departments.

Thank you. And then one other thing, and I'm just going through all my notes because I want to get some of this on the record, particularly for the nonprofit providers, because I felt their consternation on the call yesterday. One other thing that was noted was providers feel as though they are being punished for the actions that are happening above them. And so, to that point if you could speak to sort of the overall environment of how businesses and organizations do business with the City. I think there's a lot here. Another thing I would mention would be paying people on time. That was another issue that continuously comes up, and I think we've even seen that within this process. If you could speak to that as well, that would be helpful because --

Absolutely.

-- I think the vendors are feeling punished because of what's happening that is squarely outside of their control --

Right.

-- but also at the same time they're waiting for payments from the City. It takes a very, very long time to process, and you all know sometimes we have to get involved even to try to push it along to make sure you all have the invoices, the necessary information to process the payments for services that these vendors have already provided for contracts that have already been conformed. And so, I think if you could speak to that part of the process too because I have continued to sort of field complaints about that as well.

So one of the things that I heard and received from our IG, Inspector General DeSantis, was the concern with the burdensome nature, the labor-intensive and time-intensive nature of contracting processes in general and because of that, there may be some attempt or some leaning toward using processes in a manner in which they were not intended. What I absolutely want to assure this body and all of my departmental colleagues frankly is that we are committed to reviewing all processes within the contracting universe, within that ecosystem. We cannot create and maintain a system that is burdensome, that harms our ability to work with our community partners, harms our ability to provide services to our residents, harms the efficiency and effectiveness of the really hardworking department and departmental staff because we're losing opportunities based on this process. We are doing everything in our power, we've created a number of different work groups, had a number of different innovation conversations and they are happening in collaboration with our Service Design Studio within CAO, with our Strategic Direction and Transformation Group within CAO, we are going to crack this nut, right. We are going to make some significant strides in improving the process. I know we've had conversations even with Councilmember and office staff in regard to taking a holistic look at 17-1400 to determine where and if we can make some positive changes to ensure that we are not creating a process that incentivizes manipulation.

Right, and I think that's the overarching concern, are the policies and procedures really changing. It's one thing to say it and to put a process in place, but it's another to practice it in your everyday work in how you change the way you do business. And so, I think that is one of the main concerns that we have is that we don't want this to continue because we recognize the good work that you all are seeking to do to change this process and really identify the real problems and the log jams in the system, but how does that in turn trickle down to the departments, right, who are sort of in charge of this work on a day-to- day basis. Because we even heard from one of the vendors, this particular individual, say that there's been no increase in contract in 30 years. I said, well, how could that be. We went even from General Fund in Fiscal Year '18 from 47 million now to last Fiscal 80 million just from a Council perspective. That's not even including all the grants revenue that's coming in just for the one particular department that is OHS. But one of the vendors said no 15 increase in contract in 30 years. How does that happen when the invoices are stating something different? And you know I personally review the invoices and the invoices have increased year over year, even if we just talk about the bed situation. And so, I think our main concern is really dealing with from a departmental level the policies and procedures and getting into the weeds to ensure that this is not happening, because you all could have a certain belief and goal for what you want this process to look like. But if the departments are not doing that, it won't matter.

Yeah, I cannot agree with you more, right. So as I stated in my testimony, my career includes being the Chief Examiner within the Program Review Unit of the Department of Justice, the Federal Bureau of Prisons. That unit's sole responsibility was to implement and create internal controls as well as monitor the effectiveness of those controls. That is the experience that I am squarely bringing to the review of our contracting process. We've already had a number of conversations between myself, the Acting Commissioner and the Deputy Commissioners within Procurement. There are things that we're doing right now as a response to the concerns that you have raised and we will continue to do. But even changing processes, that by itself does not do it. There has to be a process by which we are monitoring, providing feedback and requiring accountability for things that we are finding that are inconsistent with the intention and the integrity of the process. That is what we're going to implement.

Right, and I think that's what we're seeking to do with this legislation. Because what happens is if you are utilizing the exemption, you don't have to work with Procurement. They don't have to work with your side of the ledger in order to get a contract through, and that's exactly what we're seeking to address. And so, I'll -

And we appreciate that. We agree that there is a review of that practice that almost demands that the process itself be re-examined. And as I offered earlier, the three inflection points of the nonprofit exemption, use and contracting all rest right now within the department. So the department essentially is judge, jury, right. And so, we want to pluck at least one of those pieces out of the department and place it in a neutral -- whether it's a City Solicitor or the CIO or the CAO -- space so that it's being examined each and every time.

Okay. And I look forward to continuing to work with you all on the additional suggestions that you have offered today. I did not again have an opportunity to review the pages, but you know I will and then we will circle back. Are there any further questions from this Committee for this panel? Okay. Chair now recognizes Councilmember Ahmad.

Thank 10 you. I have a question about can 11 you give me an example of what 12 would be impeded if this process 13 was instituted? 14

Sure. 15

So 16 good morning. Vanessa Garrett 17 Harley, Chief Deputy Managing 18 Director for the Office of Children 19 and Families. Good morning, Chair 20 Gilmore Richardson, Councilmember 21 Ahmad and Councilmember Jones. I 22 think a quick example would be 23 under the Office of Children and Family comes the Department of Human Services or DHS, as we call it. An example for them of what would be impeded while I will first start out by saying we certainly respect the use of this exemption and try to be as careful and as prudent as we can when we use it, the majority of DHS contracts are RFP because we do understand the importance of a competitive bidding process. However, there are sometimes emergent situations. Particularly, DHS deals with child welfare as well as juvenile justice, but particularly in that child welfare arena where there are life or death situations almost that are going on. Sometimes to give you an example, we may have a young person who is experiencing some significant behavioral health episode or something, they may be in the hospital. There may not be a provider, be it profit or nonprofit, that we have a contract with that is able to handle the crisis or the emergency that is going on at that time. And so, what we do is look for a nonprofit. Sometimes we can find them in the City. There have been in my past experience in the last years or 10 so that I've been here sometimes 11 they're out of the City. But we 12 have to do something in an 13 emergency because that child is in 14 that level of a crisis. And so, we 15 use the nonprofit exemption to 16 enter into that contract. 17 So we don't take that 18 lightly at all, but there are times 19 when absolutely we have to do that 20 because the contracting process as 21 we all agree is very complicated 22 and it's lengthy, and you just 23 don't have the time to wait to 24 enter into that level of a contract. There's also sometimes as part of you're trying to reunify a young person with a family member that may be in another state, there are state requirements around. We call them, ICPC or interstate compacts. However, we may also be trying to very quickly enter into some level of a case management contract with a contractor that's in that city or state because even though we're sending that young person to live with their relative, we want to still monitor and make sure that they're okay at least for a little while, while they're transitioning back in. So those are some quick examples.

So both of those examples you gave me tells me there's a breadth of issues that come up in these departments, and we should by this time having been here for so long have an understanding of what is going to be encountered and have provisions as such. So saying that something, especially the example of sending a child to another state, that's not just emergency. That is a thought- out process that has a time frame to it. So for that to be used as an example to say we can't have this process, doesn't seem to make sense to me because this is not an emergency situation. You have a thoughtful process to -- you can't just send a child off. You're doing a lot more things before you're sending them off. Same thing with looking at a criteria for someone in some kind of behavioral health crisis. Those are all delineated in how diagnoses are made. So that's what we deal with in this office or should.

Respectfully --

Can I just say --

I'm sorry. I just wanted to say respectively, Councilmember, that's not necessarily true. There are situations where it is an absolute emergency. We may take a child in, we do the necessary court hearings and everything and then we find out about that relative or that other parent or whatever that is somewhere else and it does happen as an emergency because you want the child to be in the system the least amount of time as possible because you don't want them to be damaged. And Commissioner Ali has come up and we'll give you an exact example of the one in terms of the behavioral health episode.

And I just want to state for the record that we know that there are other provisions in this section of the Code that relate to emergencies. It may not be listed in this exact bill but are already in this section of the Code. And so, I didn't want us to go down this road knowing that we all know that there are other provisions here that will allow that work to continue. Okay. And so, I just wanted to state that for the record so that we have that on the record, okay, because you know that we would never do anything --

Sure. Understood.

-- to impact a child or any resident or individual in our city that would prevent them from receiving emergency service that we have to provide. And so, I think we know that. I think the ledger folks know that. And so, I just wanted to put that on the record.

Respectfully, I did want to also for the record indicate that while 1406 does include some exceptions to the RFP process, it does not cover kind of the day-to-day emergent issues. They may not be emergencies, but they also don't rise to the level of the exceptions that are provided within 1406. And so, the carve-out, the exception for the nonprofit vendors is I think the thoughtful response to don't we know that these things are coming, right. Don't we understand that by nature of the work that is done by DHS, by Office of Homeless Services, there are going to be times when we're going to have to create and quickly respond to it using a vendor. This exception does address that. It does allow -- it may not have been the intention, but it does allow us to do that.

But what did we do before? What did we do let's say in 2000? What did we do then? Because I mean, we've all been around. And so, what did we do in 2000 because this only has been around for years. I mean, what 9 I'm struggling with is that 10 everyone is saying in so many words 11 the world is going to come to an 12 end. Okay. What did we do 20 13 years ago before we had this 14 provision? What did we do 30 years 15 ago? I mean, I'm really asking 16 what did we do. 17

So what I 18 would suggest here is that, first 19 of all, the world has changed quite 20 a bit.

Right.

And the extent to which we are as a governing body, as a municipality, providing more and more supportive social services to our residents, that by itself is a very distinctly different condition. But before 2004, there was no restriction, there was no policy. So the manner in which this process and the quick use and standing up of contracted services, it wasn't regulated. I think that this exception very clearly responds, ties the work that we're doing in exigent circumstances to 17-1400. That's a good thing, right. It ties it to some regulation. So prior to this, I would suggest that -- maybe my colleagues might have a little bit more information about that -- but the conditions that we're under right now, as you know, I'm preaching to the choir, are significantly different and we are providing significantly more supportive services.

Right. And I just want to say this. I know our Madam Commissioner is here for the record, that I think DHS is one of the best examples in the portfolio, that they quite often undertake a RFP process, even did so for the CRCC Center. So I just want to say for the record I think that in instances this has worked even without this being on the table. COMMISSIONER ALI: Yes. Thank you for that, Madam Chair. I'm Kimberly Ali. I'm Commissioner for Department of Human Services, DHS. And to answer your question, Councilmember Ahmad, in terms of the ability to anticipate, if you will, the needs of young people, the needs of young people have greatly changed. When I think about the Department of Human Services and where we were even 20 years ago and to where we are now, we have taken a real targeted effort to ensure that the young people for which we care for are the young people who are in need of child protective services. And so, the complexity of the young person, the complexity of the family has changed a great deal. And so, to give you another example, I won't call it an emergency but certainly urgent, is really our ability to blend funding, if you will, with our partner Community Behavioral Health. As you know, DHS does not pay for psychiatric treatment of young people. And so, we do have many instances where young people are hospitalized. They are in need of a psychiatric residential treatment facility. CBH, who's the contractor, will pay for the treatment of the young person, will certainly identify the facility and DHS pays for the room in board. And so, I use that exemption in order to enter into a contract with that provider that's identified so the young person can be discharged from the hospital and continue his or her treatment. And so, that's another instance in terms of when I use the exemption.

And let me ask you a question there and I'm just really seeking clarity. And I want to be clear for the record again that an amendment has been done, okay, that will allow the Administration a whole year an opportunity to sort of work through all the nuances when you go through the regulation portion. Is there a way to contract with a provider to say, all right, the last five fiscal years we had 5 young people five years ago, 10, after COVID it was 28 and then 32, and now that we know the pattern, is there a way to sort of anticipate, you understand what I'm saying? COMMISSIONER ALI: Absolutely. And we do that, so we then enter into a full contract with that provider and we do look at the needs of young people over time in trends. As you know, DHS, we respect the RFP process. We respect the transparent process, but we also do not always get bidders. And so, when you don't get bidders, then you need to identify a provider. Most often the provider is not in the city of Philadelphia. It's really providers that are out of state unfortunately. And so, we repeatedly do RFPs because we want to ensure that our continuum of services meets the individual needs of young people. For example, we currently have an RFP out for a communitybased detention services for females because we recognize the need.

Yeah, we received that information. I'm sorry. Councilmember Ahmad.

No, no, that's fine. I think Majority Leader did point it exactly out about being evidence-based, to lay out all your data, to see all the outliers and then to see how to respond to outliers. I appreciate that you are serving people, especially our young people, at their most vulnerable so we understand the need for you to be able to respond. But this is the whole point of going back in this time frame and looking at how do we reduce the emergency nature of these situations, and that can be data- driven. So I would love to see from your department an analysis of what you have considered to be emergencies and what that looks like going back, you know, let's just do a couple of years, four years, and seeing how the data has driven you to make policy that would address the emergent nature of that. I would love to see that data. COMMISSIONER ALI: Yes, we can definitely supply it. And I can give another very concrete example as well. As we look at the number of young people who are being held in our juvenile detention center, so the PJJSC, as you know DHS does not pay for treatment for young people. And so, CBH did identify a provider. We have Hall =Mercer who was co-located in the PJJSC in order to meet the ever-growing needs of young people that are held in detention, okay, because there is an existing regulation that once a young person is in detention for 31 days or more, Medicaid no longer pays for that young person's mental health treatment. I needed to enter into a contract with Hall-Mercer to ensure that young people who are being held longer in detention have their mental health needs met. And so, I entered into a contract with Hall- Mercer because they were the existing entity that was providing behavior health supports for the young people.

And that can be made standard, right -- COMMISSIONER ALI: Yes, and it is.

-- because you know this is happening beyond that, so that doesn't mean we can't go through the RFP process because we already know that. COMMISSIONER ALI: When I entered the contract, I did not do an RFP process because of the needs of the young people changing. They were already an existing provider that was providing the services in the PJJSC. And so, I just expanded their contract, if you will, but that was outside of the RFP process to address the needs of the young people.

Thank you.

Well, thank you. We are going to move along because we have 12 bills total that need to be addressed in this Committee hearing today. But I do want to thank this panel for your testimony, for your longstanding work with the City of Philadelphia. We appreciate working with each and every one of you.

Thank you. COMMISSIONER ALI: Thank you.

Thank you.

Will the Clerk please call the witnesses that we have for public comment, and we would ask that each of you summarize your testimony.

Kenneth Bigos, Jill Roberts, Abraham Pardo, Will Gonzalez and Andy Toy.

Okay. Please state your name for the record and proceed with your testimony. (Witnesses approached Witness table.)

Okay. Please state your name for the record. Proceed with your testimony. I'm asking respectfully if you could please summarize your testimony. We have to move things along a bit and we have more bills and one more resolution that we have to get to within the next hour or so. Okay.

Thank you, 5 Councilwoman. 6

Thank you. State your 8 name for the record and proceed 9 with your testimony. 10

My name is 11 Jill Roberts. I'm the Director of Advocacy for Clarifi. I will get to the meat of what I have to say versus telling you all about who we are and what we do. But there may be many positives to eliminating this exemption, but we see potential negative outcomes if Bill 19 No. 240379 is passed. It would add cost to the safety net. Social service nonprofits do not have the capacity to create and submit competitive bid proposals. The additional cost of adding this function would have to be covered by increasing prices or reducing services. It might create competition between experienced, place-based nonprofits and untrained nonprofits or worse, predatory for-profits that may deliver subpar services until the oversight function of the agency addresses them. Two years of poor service could easily occur. It may reduce the number of neighborhood-based nonprofits by bankrupting agencies, thus creating a failure to deliver essential social services as the gap between costs and contract reimbursement increases. It may create gaps in the delivery of services as nonprofits submit RFPs and waive through the steps required in the competitive bid process. Services will not be able to start as they do now with the knowledge that the money will be coming and the contract will be conformed. Nonprofits will not be able to leverage critical philanthropic support needed to cover the gap between City department contracts and the actual cost of fulfilling the services required under the City contract if the contract or letter of award are not in place. I will use one example of some of these things that I've just talked about. And really the financial empowerment counseling that we do, which is the core of everything that we do, requires three full-time equivalent counselors. That represents $450,000 in direct cost to provide the services required to meet the deliverables, but we are reimbursed only $210,000 for that. The loss of those services to the City, to the low- and moderate-income folks, living in middle neighborhoods, looking for housing counseling, foreclosure prevention, eviction modification, et cetera, the idea of us not being able to do our work because of this frightens me. It is why we come to work every day to help our citizens with their housing and their finances, and we really hope that this won't stop due to the removal of that exemption. Thank you.

Thank you. Thank you so much for your testimony and for being on the meeting yesterday as well.

Thank you for the meeting.

Okay. If you could just state your name for the record, proceed with your summarized testimony. Thank you.

Thank you, Chairperson. So my name is Ken Bigos. I'm the Executive Director of the Affordable Housing Centers of Pennsylvania, so I want to begin by expressing my agreement that we need accountability and transparency with the housing counsel -- for nonprofit organizations. But at the same time, the bill puts unreasonable demands on nonprofit organizations by requiring them to submit those RFPs. For example, looking at the housing counseling contracts, the DHCD contracts to housing 15 counseling organizations throughout 16 the city of Philadelphia and almost 17 all of them meet those HUD-approved 18 agency designations. And 19 basically, we'll be re-applying and 20 competing for the same limited 21 funds that we would be accessing 22 each year. Requiring nonprofits to prepare and submit those proposed annually will create those unnecessary administrative costs, smaller nonprofit organizations in particular. That includes the Neighborhood Advisory Centers, energy centers, housing counseling organizations. Majority of their funding comes from the City of Philadelphia. And with their tight budgets and the delays of conforming of their contracts will result in the delays of being able to deliver those services. Some of these services are very labor-intensive niche opportunities, like particularly mortgage foreclosure services, particularly for working with those in the Mortgage Diversion Program or in the now new permanent Eviction Diversion Program to provide positive outcomes. The Division of Housing Community Development already conducts compliance checks to make sure these agencies are fulfilling the contract requirements and maintaining sound policies. Annually we submit our tax returns, our independent financial statements and in terms of housing counseling, also monitor our client management system. So there is always these reviews that are being placed. So while I understand the importance of holding transparency and organizations accountable to higher standards, I think there's definitely more better cost- effective ways to do that. So I want to thank you very much for hearing my testimony and also making yourself available yesterday in the meeting as well. Thank you.

Thank you very much for being here today and for being on the meeting yesterday and for the feedback you provided that I tried to share and incorporate in the amendment that we offered today. Okay. Please state your name for the record and proceed with your testimony.

Hi. Good morning. I'm Abraham Reyes Pardo. I'm the VP of Housing at the Urban League of Philadelphia and a member of the Housing Counseling Action Committee. I believe in City Council's effort to foster a fair and transparent environment, an effort that will be translated and executed by the Administration. As it has been reported throughout the pandemic and recently, the City of Philadelphia has experienced significant shortages in terms of employee recruitment and retention, which has impacted some of the services offered by the City. The housing counseling organizations contracted by the City have experienced some of the same challenges after the final rule that went into effect in 2021, which requires all housing counselors to be certified directly by the Department of Housing. At times when we've experienced capacity challenges, the City of Philadelphia has come to our aid, recognizing the imperative need for the array of services we provide, which include some very critical ones like foreclosure and eviction prevention as well as crisis utility assistance through UESF. Without mentioning the needs created by programs coming out of the Neighborhood Preservation Initiative such as Philly First, I must recognize that some of these services have very delicate timelines, like the Eviction Diversion Program requiring completion of the process within 30 days. In reference to the configuration of the housing counseling agencies retained by the Division of Housing and Community Development, we have all been certified by the Department of Housing. To retain our certification, we are consistently evaluated, audited and monitored by the Department of Housing while we adopt and adhere to a series of national industry standards aimed at fostering fairness and transparency. The City of Philadelphia has discretionary access to our case management system where they can track our production and outcomes. We are held to the highest standards as our role is to advance the Fair Housing agenda. Our sole existence is connected to Title 8 of the Federal Civil Rights of 1968, and we can operate at this level because of the support that is provided by the City. More specifically, the certainty that comes with knowing that the City cares for its residents and seeks to ensure that the continuity of services is not disrupted. We welcome the opportunity to support the need for accountability and hope the immediate needs of our residents are taken into account. Thank you.

Thank you. Thank you so much for your testimony and for your work. I wanted to also state for the record that we received testimony from Will Gonzalez, Executive Director of Ceiba, and Andy Toy, Executive Director of PACDC, and they did participate also in the meeting yesterday. Are there any questions for this set of witnesses? (No response.)

Okay. Seeing none, we thank you for your testimony and we thank you for being here today. Is there anyone else here to testify on Bill No. 240379 whose name has not been called -- oh, okay. I didn't see you there. Okay. Please state your name for the record. Proceed with your summarized testimony. Okay. Thank you.

Buenas tardes -- buenos dias. Gracias. Will Gonzalez, the Executive Director of Ceiba. Ceiba is the backbone to the Latino Equitable Development Collective. We join the chorus of concern about this bill. Our Philadelphia nonprofit ecosystem is strong, innovative and an overall good partner of City government. We view this bill as a cure that could be worse than the disease. Obviously, it addressed the situation at OHS. We in the Latino community are well very familiar with the challenges at OHS at that time. I point to the Latino homeland paradox and how OHS failed to serve the Latino community with its overall needs. And obviously, they were throwing away fiscal considerations that put them in this spot. Our nonprofits are 501(c)(3)s where a lot of public info is available about them, the 990s, the tax returns are open to the public. The charitable registration statements that we file with the Commonwealth of Pennsylvania shows our audits, so you can see overall anything having to do financially with the nonprofits. Obviously, the challenge here has to do with City government. But on the nonprofit side, we're an open book and there's a lot of transparency. To me, the biggest highlight of today was a statement made by the folks from the Inspector General's Office where to quote, they say that this bill is overly broad and unnecessary for those departments who have been using the exception with due care and responsibility. I think that speaks volumes from the agency that cast oversight over City government. And in a hopeful note, they say that rather than the wholesale removal of the exemption, that we engage in a dialogue to see how to make it better, stronger. So I encourage you to retain the exception. Yes, look at how to modernize it and improve it, but it is important to the efficiency of City government and our nonprofit ecosystem to retain it. Also want to thank you for your openness and sharing with us, giving us the opportunity to speak today and the opportunity to speak yesterday. Thank you.

Thank you and thank you very much for being here. Please state your name for the record and proceed with your summarized version of your testimony.

Thank you. Good afternoon almost, Chairperson Gilmore Richardson and members of City Council Committee on Finance. My name is Andy Toy and I'm not the Executive Director. I'm the Policy Director of Philadelphia Association of Community Development Corporations. Thank you for the thought, though. Thank you for the opportunity to testify today to respectfully request that the Finance Committee hold Bill No. 25 240379, which makes changes to City procurement processes in ways that will impact our membership and other nonprofits. PACDC, as you know, is the leading voice of nonprofit community development organizations in Philadelphia. We represent 60 CDC members and over 100 additional associate members, many of whom are also nonprofit organizations engaged in the work of equitable community revitalization and community stabilization. Our members are mainly place-based organizations in neighborhoods across the City, building affordable housing, providing essential services, managing our commercial corridors and improving the quality of our communities as great places to live, work and play for all residents. The City of Philadelphia relies on our network of missiondriven nonprofits to fulfill many basic municipal responsibilities because our members are trusted in their communities and uniquely positioned to deliver services and activities more efficiently and effectively given the diverse community landscapes that make up Philadelphia. We're asking for Bill No. 11 240379 to be held for additional consideration because many are still unsure about the far-reaching impacts it could have on the ability of our members to do their work and therefore the ability of the City to provide services to its residents. We believe there may be some unforeseen, unintended consequences that will make nonprofits' work even more challenging than it already is. We are also aware of a recent New York City "Joint Task Force" to get nonprofits paid on time. That would be useful to inform our efforts before actually taking action. Philadelphia could benefit from a similar analysis. As you know, there are issues with the City's contracting process that need to be addressed given that nonprofits must often move forward for months without a conformed contract or payments, often paying for service delivery from lines of credit and even as we've heard from personal savings before they receive reimbursements from the City. Any additional uncertainty or time added to the process could have dire consequences in the delivery of services by our nonprofits, and even their staffing stability if there is even less continuity. This is not an issue we can afford to mishandle by moving too quickly and without proper consideration of the consequences. PACDC looks forward to continuing this conversation with Councilmember Gilmore Richardson and other City Councilmembers and the Administration to ensure that our efforts to improve our system don't result in unintended harms or fail to address other core issues with the contracting process that will then need to be addressed with additional legislation or fixes. Thank you for the opportunity to testify and we once again respectfully ask for you to hold Bill No. 240379 today.

Thank you and thank you so much for your testimony. Please state your name for the record and proceed with the summarized version of your testimony.

My name is David Chiles. I'm the Executive Director at Lutheran Settlement House. We work with families experiencing homelessness as well as survivors of domestic violence. I'll be short because I'm not used to speaking in nice rooms like this and I know your time is short. But I want to say as I've been listening and learning today, a couple issues were coming up for me. One is it seemed like this was being considered in terms of managing and controlling costs, and we're one of the agencies that has gone years without seeing our contracts increase or seeing minimal increases in the contracts. And so, I would definitely welcome anyone to look at our contract. We have to spell out every staff person that we employ and their salaries. And I think it will be very clear that no one's getting fat off of these contracts. The other issue that comes up for me is one of accountability. And I just want to be clear that as a nonprofit that takes money from the City and the trust that we're going to use that money to serve and improve the lives of the people who come through our doors, we are not afraid of accountability. We are very open and we are frequently monitored, we're frequently visited. I invite anyone to come and visit our shelter, visit our programs, learn about what we do. And if we're not doing it well enough, I expect we're either going to improve or our contract's going to be pulled. We're not concerned about that. What we're looking for is predictable revenue as we are holding a lease on the building and we're investing our own money into making that building a better place for our families. We need to know that we're not going to have that contract pulled for reasons other than our ability to serve our clients. Thank you very much.

Thank you. Thank you very much for being here and for the feedback provided. You know that I was going through my notes from yesterday so I hope you heard that as well, but thank you very, very much for being here and for your testimony. Okay. Is there anyone else here to testify on Bill No. 240379. (No response.)

Okay. Seeing none, we will now proceed to Bill No. 20 240372.

Jackie Dunn.

Okay. We will now proceed with Bill No. 240372. As the Chair of the Committee, I am modifying the agenda that was printed at the onset of this hearing. We will hear all the bills first and then proceed with the resolution. (Witnesses approached Witness table.)

Okay. Good afternoon. Thank you so much for being here. Please state your name for the record and proceed with your testimony. CITY TREASURER DUNN: Sure. Jackie Dunn, City Treasurer. And if it pleases the Chair, I can also combine '372 with --

Pull the mic a little closer. CITY TREASURER DUNN: Jackie Dunn, City Treasurer. Is that better?

(Nodded affirmatively).

Yes. CITY TREASURER DUNN: Great. If it pleases the Chair, I can also combine '374 and '375 which also pertain to the airport.

Right, and you know that I notated that in my notes. And so, what I will do now is prior to us doing that, let me do this for the record. Is there anyone else here to testify on Bill Nos. 240372, 240374 and 240375? (No response.)

Again, is there anyone here to testify on Bill Nos. 240372, 240374 or 240375? (No response.)

Seeing none, I'll ask that our City Treasurer proceed with her testimony, summarized version of her testimony, for all three of Bills 240372, 240374 and 240375. CITY TREASURER DUNN: Great. Thank you, Chair. Good afternoon, Chair Gilmore Richardson and members of the Committee on Finance. I'm Jackie Dunn, City Treasurer. And with me this afternoon are Tracy Borda, the Airport's Chief Financial Officer, and Matthew Bowman, Deputy City Treasurer. I'm here to testify in favor of Bill Nos. 240372, 240374 and 240375. You have my longer written testimony submitted for the record. And so, I'll read the highlights. Bill No. 240372, constituting the Twentieth Supplemental Ordinance would provide authorization for the airport to issue General Airport Revenue Bonds or notes in an aggregate principal amount not to exceed 600 million in new money bonds, exclusive of original discount, capital interest funding of deposits to the Sinking Fund Reserve and if necessary, similar items. Additionally, the bill 7 would permit the Airport to refund up to 1.5 billion in bonds previously issued with City Council approval from the Years 2015 to 2021. There are no immediate opportunities to pursue traditional refundings of airport bonds for debt service savings and portfolio management, but this ordinance 16 positions the City to respond timely when future market conditions permit. Bill No. 240374, constituting an amendment to the Seventeenth Supplemental General Airport Revenue Bond Ordinance, would provide authorization to expand the Airport's Commercial Paper Program from the current 350 million capacity to 500 million. Commercial paper is a flexible financing tool to fund capital projects quickly on an interim basis and the commercial paper is taken out with permanent financing when the work is completed. Due to the success of the Airport's current program at the significant capital plan, the City and Airport seek to increase the size of the program by the referenced 150 million so the Airport can expedite capital projects. And finally Bill 240375, constituting the Nineteenth Supplemental Ordinance would amend the Airport General Revenue Bond Ordinance to reflect the recent administrative change, which enshrined the Department of Aviation as the department of the City rather than as a division of Aviation under the Department of Commerce. All the above payments referenced in the bills would be funded through the Aviation Fund, and the Administration recommends adoption of these bills. We respectfully request that the Committee give these bills favorable recommendation and further that the Committee recommends the rules of Council be suspended so as to permit first reading of the bills at the next session of Council. Thank you for your consideration and we're happy to answer any questions.

Thank you. Thank you so much to our City Treasurer for your testimony. Thank you for the Airport officials for being here today. We have with us for the benefit of the stenographer Tracy Borda is with us today from the Airport. And I just wanted to thank the Airport team for the robust meetings, plural, that we have had over the last several months. And I had the opportunity to also visit with you all at the grand opening of Sabrina's Café in addition to the additional meetings we have had over the last several months, so I want to thank you for the briefings that we have had here in City Council specific to these three bills so that as Finance Committee Chair and as a Committee, we understand what's happening today and how we can ensure that we are doing the very best for the City of Philadelphia. Are there any questions from members of the Committee for this panel relative to our Airport revenue bonds? (No response.)

Okay. You know I don't have any additional questions other than the ones that I've already offered in our past several hours of meetings. And so, I thank you very much for your testimony today. Again, is there anyone else to testify on Bill Nos. 240372, 240374 and 240375? (No response.)

Seeing none, we thank you so much for your testimony. And we will now proceed to Bill No. 24037 -- I'm going to go out of order. I'm going to go to '377 first. Okay. So I'm going to do '377 first and then I'll start with '373 and then on down to '78 and '17 so we do all the PGW bills together. Okay. All right. So we will now proceed with Bill No. 240377. And if you could just state your name for the record and proceed with your testimony. CITY TREASURER DUNN: Good afternoon, Chair Gilmore Richardson and members of the Committee on Finance. I'm Jackie Dunn, City Treasurer. And with me is Deputy Shakina Clark of Banking for the Treasurer's Office and also representatives from Citizens Bank. We are here to testify in favor of Bill No. 240377. Bill 240377 would provide authorization for the City of Philadelphia to enter into an amendment agreement with Citizens Bank for provision of payroll depository banking services for City employees for an additional one-year term from July 1, 2024 through June 30, 2025, under certain terms and conditions. In June 2006, the City enacted legislation requiring the Treasurer's Office to implement an RFP process seeking proposals from qualified institutions to provide banking services that include payments to employees, payroll deductions and payroll taxes. The legislation also required that no 6 contract amendment with a proposed bank may be executed until it has been approved by City Council through an ordinance. In 2021, the City Treasurer's Office issued a payroll RFP and the Selection Committee determined that Citizens Bank was the most qualified institution based on the quality of service provided, the cost, the extensive branch network in Philadelphia and their commitments to communities across the City. With Council's approval, we are requesting a contract amendment with Citizens Bank for the final year under the current RFP with the amendment through June 30, 2025. We respectfully request that the Committee report the bill with a favorable recommendation and that suspension of the rules apply so as to permit first reading at the next session of Council. Thank you for your consideration and we are here to answer any questions.

Thank you very, very much for your testimony and thank you for the responsiveness relative to this bill and the meeting that we had. I'm just going to put this on the record because you all know that I care about this and that I've been reading the reports that we receive as members of Council relative to the banks that provide us with payroll services regarding their work within the community and how they interface with the community, but more importantly the amount of loans that are extended, the amount of the loans and also as it relates to the residential mortgages. And I recognize that in this environment that with the interest rates hovering between 5 and percent, that not as many 6 individuals are reaching out to 7 enter into a residential mortgage like they were when the rates were 2.75 percent during the COVID period. But I do pay close attention to that report. And I just want to note for the record that particularly around the low-income individuals who are seeking to gain a position as a homeowner, that we need to do as much as we can to encourage low-income individuals to get into homeownership as much as possible. And I say that, when we receive the reports, they're broken down between certain income levels and the individuals that are vying for certain residential mortgages and not only the rates but the amounts. And so, I'd like to see a higher percentage in the lower amounts, okay, as much as we see in the higher amount mortgages. Okay. And I just wanted to put that on the record because I want them to know that I am paying attention to those reports. I usually send back an email in the wee hours of the morning after I read the report. But I want to ensure that if you are doing business with the City, that we are understanding the population that we are dealing with here and doing as much as we can to extend banking services to them. It broke my heart yesterday morning to be on the way to City Hall coming down Fairmount making the right onto Broad Street and before the check cashing place was even open, it was a line of eight people outside of the check cashing place. And that's nobody's fault relative to this particular bill. But I just want to put that on the record that we have to do as much as we can for the communities that we serve when we are dealing with this level of money from the City of Philadelphia and providing us with this payroll service. So I just wanted to put that on the record relative to that report. I appreciate all the events and activities that the bank participates in throughout the year. And I've read that whole list in the description of the events. I even see you all at events, including one event that I attended at a high school last summer. But I want us to do more about actually connecting folks to homeownership opportunities to receive residential mortgages for small businesses to get loans just as much as the larger ones do. Okay. So I just wanted to put that on the record. Any additional questions for this panel relative to our City payroll services? (No response.)

Okay. Seeing none, we thank you very, very much for your testimony and for the meetings that we had regarding this issue. Thank you very, very much. We will now proceed. Is there anyone else here to testify on Bill No. 240377? (No response.)

Seeing none, we will now proceed with Bill No. 240373.

Matt Bowman. (Witnesses approached Witness table.)

Okay. Please state your name for the record and proceed with your testimony.

Good afternoon. Matt Bowman, Deputy City Treasurer. Joining me here --

Pull your mic up please.

I'm testifying for Brith Sholom, for Brith Sholom.

Yes, I understand, sir. Right now we're on Bill No. 12 240373 and that's a PGW revenue bond bill. So we will let you know when it's time to testify relative to Brith Sholom. Okay. We appreciate you being here. Okay. All right. Please state your name for the record and proceed with your testimony.

Good afternoon. Matt Bowman, Deputy City Treasurer joined by City Treasurer Jackie Dunn. I'm here to testify on behalf of Bill No. 25 240373, which constitutes the Sixteenth Supplemental Ordinance to the General Gas Works Revenue Bond Ordinance --

Hold on one moment because I don't know that we can hear you. Is the microphone on? COUNCIL TECH SUPPORT: Yes.

Okay. Please try again.

Okay. Matt Bowman, Deputy City Treasurer.

Okay. All right. Excellent. Please proceed with your testimony.

I'm joined by City Treasurer Jackie Dunn. I'm here to testify on behalf of Bill 21 No. 240373, constituting the Sixteenth Supplemental Ordinance to the Gas Works General Gas Works Revenue Bond Ordinance. This ordinance will authorize the Gas Works to issue up to 300 million in Gas Works Revenue Bonds for new money purposes for projects that are in the approved capital budgets. We have existing prior authorization to refund any existing bonds for debt service, so that authorization is not needed here. This ordinance will also authorize the termination, partial termination, or amendment to any existing Swap Agreements. You have my further full, written testimony. The Administration recommends adoption of this bill and respectfully requests that the Committee give the bill its favorable recommendation and further that the committee recommends the rules of Council be suspended so as to permit first reading of the bill at the next session of Council.

Thank you. Thank you very much for your testimony and for all the meetings we held as well prior to this hearing. We had quite a few. And I want to thank the PGW team in advance of their testimony as well -- I see them in the back -- for being a part of the meetings that we held in our office. And I apologize for missing the second one, but we had a little meeting with the President that day. So thank you very, very much for your testimony. Is there anyone else here to testify on Bill No. 240373? (No response.)

Okay. Seeing none, we will -- sir, I just wanted to state for the record that you are here to testify relative to Brith Sholom and it is my understanding that that will be in the Committee on Housing at 2 o'clock. Okay. So that Committee hearing starts or is slated to begin at 2:00 p.m. today. And for all of our -- I see a lot of folks here from Wynnefield and we welcome you here to these chambers again and we thank you for being here. The Committee on Housing will be at 2 o'clock where they will undertake the issues relative to Brith Sholom. Okay. Thank you very, very much. Is there anyone else here to testify on Bill No. 240373? (No response.)

Okay. Seeing none, we will now proceed with Bill No. 18 240378. All right. So we will now hear Bill Nos. 240378 and 240417. And is there anyone else here to testify on Bill Nos. 240378 and 240417? (No response.)

Okay. So we will hear from Panel 1 for both 240378 and 240417, and then we will proceed with taking public comment. Okay. All right. (Witnesses approached Witness table.)

Please state your name for the record and proceed with your testimony. MS. McCOTTRY: Good afternoonn. Good afternoon, Chair.