So this will be your last hearing, I guess, you'll be attending before this committee.
And I certainly want to publicly thank you for all the cooperation that you have given us in the last several years, and I know that you were always there, ready, willing and able to assist in any way that you could, and I want you to know that we're very, very grateful for all of the service that you've given us.
I appreciate those kind words from you and from your colleagues today.
Do we have 170 12/8/99 RULES - BILL 990311 anyone else to testify on this bill? Please approach the table. (Witness comes forward.)
Good afternoon. Please pull the microphone closer to you, identify yourself for the record, and proceed with your testimony.
Mr. Newburg, you're going to have to pull the microphone a little closer, please. Thank you.
Jeremy Newburg, Jefferson Square CDC -- Community Development Corporation. Good afternoon. Thank you for the time to talk. And I'd like to say good afternoon to the St. John's Leadership Team and the residents of Jefferson Square and express my appreciation for their patience this morning. In June, we introduced the Jefferson Square plan to you. So for the sake of time, I'm 171 12/8/99 RULES - BILL 990311 not going to go over all of details of the plan. What you have there is Version 10, and in that version, what you see is the result of more than seven scheduled specific meetings with the St. John's Leadership Team to work through an agreement regarding the issue of parking for the Mt. Sinai Hospital regarding the issue of clarifying what type of relocation services will be provided. And what you have there is a plan to produce 72 new construction twin houses. The motivation for the twin houses is to introduce a lower-density design to the rowhouse neighborhood as a means to keep families in the city rather than choosing to move to the suburbs. However, we seek a balanced approach on this, and it includes the construction of to 30 19 in-fill rowhouses. The 20 to 30 in-fill rowhouses 20 will be dedicated specifically to families that are being asked to relocate. Homeowners who live in the neighborhood, who are on the condemnation list, will be given first priority for the relocation rowhouse. The relocation rowhouse will have a 172 12/8/99 RULES - BILL 990311 minimum of three bedrooms and two baths. We're currently experimenting with a design format where we include a drive-in parking space, actually a drive-in garage. We think the drive-in garage actually modernizes the rowhouse and adds value. So what I'm trying to put forth is that this plan provides balance where families that can pay upward from $85,000 for the new twins, they will benefit from a revitalized neighborhood. But more importantly, existing owners of properties who have to move will be provided a house within the neighborhood. So then rather than asking a family to move somewhere in South Philly, we're asking them to move half a block into a new house, that, in all likelihood, may be worth three times what their house is worth today. So in this plan, existing residents benefit from the reinvestment as much as the new residents. I want to make it clear that we've really had a hurdle to get over, because the Mt. Sinai Hospital closed. We need that hospital reopened. The benefit of these negotiations over the summer and fall is that we've come to common 173 12/8/99 RULES - BILL 990311 ground that the hospital needs to be addressed, and I think we'll work together towards that end. But one thing that we've made clear in our commitments -- and I'd like to address this specifically to you, Councilman Cohen -- is that when an operator for the Mt. Sinai Hospital is identified, we will engage in a similar process of meetings with community residents, so that, number one, the hospital administrator does an exhaustive assessment of what their parking needs are and can we maximize the existing parking that is there today without expanding or taking anyone's house. If the new operator determines that they need to expand the parking, it will be done so within the context of joint meetings with St. John's and Jefferson Square CDC so that it's an open process. One of the things that clouded this whole process was that we didn't actually have an operator for the hospital, okay? So I want to be very clear that we've established a tone for communicating, we've produced an agreement that that plan reflects, and we will continue to use that process. " A personal relocation plan entails establishing the fair market value for the property, working with the RDA to calculate the relocation benefits, and then helping that family determine where they want to go, if they want one of the relocation houses, if they want to rent in the 37-unit Mt.
Sinai low-income senior project, what they want to do. So it's all or nothing. We have to get everyone on board. So we've put that in writing in the plan that we've submitted, and I think we're open to signing a memorandum of understanding. But I can say with confidence that we've done a lot of work over the summer. We both learned about each other's needs and goals, and we both were committed to an outcome to resolve the situation. 175 12/8/99 RULES - BILL 990311 So approval of the 133 properties in the combination list will facilitate the new housing construction, but more importantly, it facilitates the land acquisition so that we can build the relocation rowhouses. So if I could present a timeline for you on where we're going with this plan. With the urban renewal plan being approved today, all the Councilmembers facilitate what's known as "equitable title" for us, which is site control. That jump-starts all our development activity in the sense that we can finish the fund-raising and move forward with personal relocation plans for each family that's being required to move, okay? So immediately, we'll condemn all of the vacant lots and all of the shells, but we won't condemn the occupied houses until we've done a relocation plan with each family; and they if choose to move into the relocation rowhouse that we build, we will first build that house, and then the family will move. So the first housing production that could occur is actually the relocation rowhouse. By the end of the spring, we'll have the first two 176 12/8/99 RULES - BILL 990311 models built. So I thank you very much for your time. And if there are any questions, I'd be happy to answer them.
Thank you very much. Are there any questions? The Chair recognizes Councilman Cohen.
This is not a question, but a comment. I wanted to commend all the parties. I understand that under Councilman DiCicco's leadership, all of the parties have been very busy at work, and I'm hoping that today, we can see an end to it, with all parties fully satisfied that their rights are protected, you know, forever. Thank you.
Thank you. Thank you very much. And you did indicate that there were a number of people from St. John's Leadership Committee. Maybe they could just stand so that we could just recognize them. (St. John's Leadership Team members 177 12/8/99 RULES - BILL 990311 stand for recognition.)
The record will indicate there are about people in the 5 audience from St. John's Leadership. 6 Who is the next person to testify on 7 this? 8
If there are 9 a number of you to testify, come up to the table 10 so that we can save some time. 11 (Witnesses come forward.) 12
Good afternoon. Please identify yourself for the record and proceed with your testimony.
Good morning. My name is Peggy Brookens, and I am a co-chair for the St. John's Leadership Team. As you have been informed, we were here in May and June. We were here in June under some much heated debate regarding the relocation of families that did not feel as though we should have to move, especially those people who were going to be forced out of their homes, to make provisions for a parking lot. I'd like to say now that we thank you for making it possible for us to 178 12/8/99 RULES - BILL 990311 meet with the Councilman and to come up with a mutual agreement about the plan that has been presented to you. Regarding the development of our community, although we still remain opposed to people being forced out of their homes, much work has been put into this plan over the summer. Councilman DiCicco has worked with us very diligently so that we could come up with a mutual agreement regarding the process of relocation. Our initial meetings were indeed tense, but we were able to overcome the tense atmosphere so that we could begin to work with the real issues regarding this relocation process. During the summer, they produced a plan which shows a lot more concern for the community than its original draft. It has allowed us to have some input with the decision of the plan, and we are pleased to let you know that that has occurred. Thank you, Councilman DiCicco, for working with us and agreeing to allow us to be a part of your decisions regarding what happens to our community, and we look forward to working with 179 12/8/99 RULES - BILL 990311 you on a continued basis throughout the process of this plan. As you heard before, there is a concern that the plan and the ordinance are two separate documents. Our concern is that we do want to have -- we feel we need to have some type of protection stating the promises that have been made to us in the plan. Because, you know, we're confident that, in all sincerity, the promises that have been made in the plan are those things that you and the developer intend to do. But, you know, stuff happens, and we need that assurance in writing, the promises that you have provided for us, aside from those things that are in the plan 'cause, after all, this is an intense revision of this plan, and we need to have that indicated in writing, preferably in the ordinance. And, you know, we feel that this type of thing should be a part of the ordinance anyway 'cause we should not have to read -- we, nor anyone, in the future should have to contend with working with two documents when it pertains to their lives. You know, like the plan will say one thing, the ordinance may say something else, and a 180 12/8/99 RULES - BILL 990311 lawyer will further elaborate on that when he speaks. But during this process of working with the plan with the redevelopment of our community, we've gone through some very tense moments, you know, for the past two years. It's been, you know, a lot of anxiety, a lot of hard work, a lot of fear that we were going to be forced out of our homes and not have any input regarding where we were going to go. We felt we were going to have to move out of the community. Now, knowing that we will be allowed to stay in the community, it has taken a load off of us, our parents, and it just makes for an entirely different situation. And we thank you for that again, you know. On the other hand, working with this plan has allowed us the opportunity to gain a lot of experience in fighting for those rights that belong to us. We gained a lot of experience in doing that. We've met -- we've built new relationships, and we've also earned the respect and the awareness that we can, and we have a right to object to those things that we think are not to our benefit.
181 12/8/99 RULES - BILL 990311 And I'd just like to end by saying that we look forward to continue to work with you, and we're depending on you to make sure that these things are carried out so that they will benefit the community on the whole along with the residents in the community. We thank you.
Thank you very much. Please identify yourself for the record.
My name is Mary Black, and I live at 1303 South 15th Street. I'm also a member of the St. John Leadership Team. First I'd like to thank God for allowing all of us to be here today. I'd like to thank City Council for allowing me to speak. I just want to say briefly that we appreciate and we thank Councilman DiCicco for working with us, and we truly look forward to working with him in the future. We also acknowledge the fact that there's been several changes in the plan, but we also would like for City Council to consider the 182 12/8/99 RULES - BILL 990311 fact that we don't believe that this is a good policy to have anyone removed from their homes for parking-- not just in our community but anywhere in the city, anywhere. Thank you.
Madam Chair, members of the Rules Committee, my name is Irv Ackelsberg, and I'm with Community Legal Services, and for the past several months. I've had the great privilege and honor of representing the St. John's Leadership Team in this struggle. I would like to first just reiterate the thanks and recognition extended to Councilman DiCicco. When this process began, there was a tremendous amount of distrust on both sides. And I think largely due to the graciousness of Councilman DiCicco in hosting the talks and in his real determination, I think, to make something happen out of the talks, I think that distrust very clearly, as you can see here today, gave way to a spirit of cooperation that I'm convinced will have a lasting positive effect in this corner of South Philadelphia. I do, however, just want to briefly 183 12/8/99 RULES - BILL 990311 address the issue that Councilman Cohen raised. I think it's very important -- it's very important not just for this particular redevelopment bill, but really for how Council does redevelopment bills in the future. I heard what Mr. Eisenstat said in terms of his lawyers being of the opinion that redevelopment bills can't be amended. I think that what that means is that -- I mean, I certainly would agree that this body does not have the power to change the boundaries, to add properties to the list. Those matters have to go before the Planning Commission; we all know that. However, the law specifically says -- and I'm actually reading from the State law that we're operating under. The governing body, meaning the City Council of Philadelphia in this context, shall not approve a redevelopment proposal unless it is satisfied that adequate provisions will be made to rehouse displaced families, if any, without undue hardship. Now, in the bill that you have before you, there is a finding in Section 4 of the bill 25 that Council finds and declares that the 184 12/8/99 RULES - BILL 990311 relocation is adequate. Now, I suspect that this is boilerplate language that is used in virtually any redevelopment bill that comes before Council. There is nothing in State law that prevents Council from being specific about what, in fact, those relocation provisions are. If you read section 1 of the bill 9 before you, which is really the only section that is authorizing anything in particular to happen, it refers to the redevelopment proposal, including maps, the plan, the maps, and all other documents, etc., which form a part of the proposal, without really specifying what documents we're referring to. Now, the agreement that has been described at length here this morning is contained in a document entitled, "The Jefferson Square Revitalization Plan." It's Chapter 8 of this document and it has a date of November 1999. It is our position that there is nothing whatsoever in State law which prevents this body from amending the ordinance just to make it clear that those documents contain this particular -- the documents alluded to contain 185 12/8/99 RULES - BILL 990311 this document, and that the relocation provision is the relocation provision that is agreed to in this document. I have taken the liberty of drafting a proposed amendment to the bill, which does nothing more than make clear what I have just said and make clear the understandings that have been alluded to here and described at great length. But, again, the redevelopment lawyers have taken the position that, for some reason or another, you know, this can't be in the bill. I would respectfully dissent from that opinion. And maybe if it can't happen today in this bill, that this body should ask the Law Department for its opinion. And I would be more than happy to work with Council on that. But I would ask that Council the amendments that I've proposed, and if I could approach and give the Chair. . . (Copy of Mr. Ackelsberg's proposed amendments not provided to stenographer.)
Mr. Ackelsberg, not being an attorney, I've been hearing arguments on both sides as to whether this is a legal way of 186 12/8/99 RULES - BILL 990311 proceeding with the amendment and can it be interjected into the bill. For the record, I would read it into the record this morning. Councilman Cohen, I'll probably yield to you being the attorney that's sitting here with Council this morning. I don't know if that makes a difference or not. And I understand the question of trust, which goes even beyond this document, and I'll just speak to that very briefly, that I want to thank all of you and all of the members of the St. John's Leadership Team for allowing me the opportunity to present this plan and this vision over the last several months, and for your open-mindedness in allowing me to be able to present that. And I do agree that at the initial stages, even back as far as 1996, there was a lot of suspicion out there. And it was a learning process for me also. Having been a first-time elected Councilperson, I had a vision for a community close that is very close to where I lived and wanted to change some things for the better. 187 12/8/99 RULES - BILL 990311 Maybe I was a little bit slow or derelict in my presentation to the community, so I apologize for that never. It was my intention to just uproot people and change the entire community, but I was looking to make some minor changes, or maybe some significant changes, that would make for a better product all the way around. As to the issue of the parking lot, we discussed this for the last couple of years and more recently during the summer months, during our negotiations, that we all do agree that something needs to be done with the hospital facility. And I think at the meeting before the last -- or two meetings before the last, before we even began to discuss the plan, I had mentioned to all of you that I had found out that there was no deal to reopen the hospital. So that the issue that we had been negotiating, as it relates to a parking lot facility and how that would impact on the number of families and homes that may have to be taken, was not an issue at that time. So I think I was very honest with you. I could have probably just passed by that and no 188 12/8/99 RULES - BILL 990311 one would have known. But I was just doing that as an effort to express to you that there was no 4 secret agenda here, and that there was openness on my part. We will at some time, as I think Jeremy Newburg pointed out in his testimony, need to revisit the issue of a parking lot in order to get tenants into that building to provide jobs for the community and to occupy a building that is almost one city square block that is now vacant. There are negotiations, as we speak, going on with Methodist Hospital and others, who are looking at the hospital facility and occupying a couple of those floors. So it's very fluid and you'll always be a part of that process. Whether this document is in there or not, I can assure you of that. I have no reason to want to change the way I've been doing business with your community or any other community over the last four years. And, again, I do want to take this opportunity one more time to thank all of you for allowing me into your life basically to present this plan and vision. And I think in the end, 189 12/8/99 RULES - BILL 990311 over the next couple of years, we're going to have something that we can all be proud of. Thank you again.
Madam Chair, if I could just conclude. Again, it is our wish that the agreement be referred to in the bill. If that cannot happen, you know, the memorandum of understanding that was referred to before that -- and as I take it, the idea is that this memorandum of understanding would be signed and made a part of the record, and I would say it could be included within the other documents that are referred to in Section 1 of the bill. If we could do that, I think that it would be extremely important, and it would be the bear minimum, I think, of what needs to be done here. But, again, I would strongly urge Council to consider this whole question of why it is that agreements like this could not really be a part of the regular business of this body, because after all, under State law this, it's body, not the Redevelopment Authority, which has the legal 190 12/8/99 RULES - BILL 990311 obligation to make sure that adequate provisions have been made for relocation of current residents. Thank you.
A question to Mr. Ackelsberg. Where precisely in the bill would the amendment go?
Councilman Cohen, it's really just two things that I would suggest adding. One is just simply a new whereas clause. That's the first paragraph in the sheet that I've given you.
And that whereas clause would read as follows: "Whereas, the Redevelopment Authority, through the Jefferson Square Community Development Corporation, has engaged in discussions with existing residents of the redevelopment area, and as a result of such discussions, has developed a document, entitled 191 12/8/99 RULES - BILL 990311 "Jefferson Square Revitalization Plan," dated November 1999, which document contains, among others things, a relocation plan for existing residents." So it would be a new whereas clause, and then the key amendments, Councilman Cohen, would be in Section 1. (Unintelligible, parties talking over each other.)
I'm making two suggestions. One is an additional whereas clause, and that's the first paragraph on the sheet that I've handed out.
The second suggestion is in the actual enabling text of the statute, that Section 1, that we insert the shaded language that I've included. And hopefully on the copy, Councilman Cohen, you can see that, and perhaps I should --
Okay. In other words, I would insert in Section 1, after the reference to the various documents that make up this 192 12/8/99 RULES - BILL 990311 proposal, the following language: "And including the Jefferson Square Revitalization Plan, dated November '99, which plan contains the relocation provisions applicable to current residents." And then I would ask add a phrase at the end of the second sentence which gives the redevelopment the authority to take such action as is necessary to carry out this, and that we add, "Except that involuntary relocation of current residents of the redevelopment area is conditioned on compliance with the commitments contained in the Jefferson Square Revitalization Plan, dated November '99, and will occur only if sufficient funding exists to comply with such commitments." And that, finally, in the subsequent sentence, "which gives the redevelopment the authority to proceed with minor changes that are in substantial conformity to the plan as passed by Council." And that we add the phrase, "and as long as such changes are in conformity with the relocation commitments contained in the Jefferson Square Revitalization Plan dated November '99."
Mr. Eisenstat, do you mind approaching the table. 193 12/8/99 RULES - BILL 990311 (Mr. Eisenstat comes forward.)
Good afternoon. Now, I would ask you to reiterate what you said earlier.
I'd be happy to, but now that I understanding where Mr. Ackelsberg's coming from and he's explained what he would like to do, it creates a series of other issues which he had not discussed with me, and I would further like to explain that I believe the authority before this body can commit to what's been said. But as Mr. Ackelsberg has gone on and on and on, he has outlined more issues that become more problematic as it relates to the specifics of which he's attempting to speak here today. Specifically the problem that I see he's -- leaving aside the issue I spoke with you earlier about, the legality of amending redevelopment plans at the time of final adoption, the problem here is, he's attempting to reference a document dated November 6th that was prepared by the Jefferson Square CDC and by incorporating that document, the concern is that's a document that 194 12/8/99 RULES - BILL 990311 was never presented for approval or consideration by the Planning Commission or by the Redevelopment Authority. Furthermore, you, was the governing body of Philadelphia, approve the developers and then subsequently approve redevelopers. And part of that process is the acquisition of land and then the selection of redeveloper. And what Mr. Ackelsberg has proposed is effectively binding City Council to make the Jefferson Square CDC the redeveloper, without following State statute as it relates to redeveloper's agreement, redevelopment plan and adoption by the Redevelopment Authority and the Planning Commission before coming to you by resolution. And I think that by beginning this process, it would just be unnecessary. As I've expressed to you earlier, Council President, the Authority is willing and able to, by a letter, bind itself in a way that memorializes the understanding. We believe substantively that, as first explained to me yesterday and the day before, which was the first time I saw Mr. Ackelsberg's language, although 195 12/8/99 RULES - BILL 990311 hard to read on the fax, I would have had further discussions with him earlier or later if I thought that this would have persisted. This can be accomplished in other ways, and we would believe it most appropriately to do so.
Madam Chair, the intent of this idea was certainly not to create additional problems, and I appreciate what Mr. Eisenstat has said. And, really, I think the way to address that is where the language here speaks of the Jefferson Square Revitalization Plan dated November '99, we can simply say the memorandum of understanding, dated whatever that date is. In other words, we can -- my point was not to do all of the various things that, you know, to endorse a particular developer. My point is that the agreements, as they exist as of now, are in Chapter 8 of this document. They don't exist in writing anywhere else. And the point is -- and I think is obvious and I think it's articulated most clearly by Councilman Cohen that whatever happens, there's a lot of understanding, it needs to be memorialized in some fashion. And I think the 196 12/8/99 RULES - BILL 990311 easiest way to do that is to allude to the document that contains it, whether it's this plan, whether it's a separate document called a memorandum of understanding, it needs to be specified. That's all.
And I agree that we should be able to have a memorandum of understanding, and I believe that you will actually not be able to take final passage till a week from Thursday, not tomorrow. So I don't see any reason why we don't attempt to have an independent agreement that is now memorialized in the document rather than amending the ordinance 15 today.
And just for purposes of some history here, if you can indulge me. I just want to make clear, though, that that then will be -- that memorandum of understanding will then be one of those documents that accompany the plan and that are referenced in Section 1 of the ordinance.
If you're asking me to respond to that, I'm not. I'm not here, again, to 197 12/8/99 RULES - BILL 990311 amend a bill; I am here today to suggest that if you wish to enter into -- you're asking me.
If we're going to go through this debate, I think we better do it -- the two of you can go into the back of the room because we have six other bills and we have a Finance Committee hearing that has been waiting in the wings for another hearing, and then we have Public Property that's also listed today. So maybe you could go to the back of the room and have this discussion among yourselves, but to have this open debate on the record, I'm afraid the hour is much too late people and we have other people that have been waiting here since 9 o'clock to testify.
Is there anyone else to testify on this bill? Please approach the witness table. (Witness comes forward.)
My name is Kevin Price. 198 12/8/99 RULES - BILL 990311 I'm a Democratic Committee person, and I'm also a member of the Jefferson Square Community Development. I'm also a neighbor of the people of Jefferson Square -- I mean, the St. John's community group and I'm a parent of the neighborhood. I strongly come forward to support the bill, over the last five months, meeting with Councilman DiCicco, the St. John's group and other members of the neighborhood that are not represented here today. The only concern of the members was the relocation of residents being moved out of their homes, and I think that we've come up with an agreement that's a win-win situation for everyone involved. That's all I have to say.
Fine, thank you, and thank you for your patience. Do we have anyone else to testify on this bill? (No response.)
Okay. Seeing no one else to testify on the bill, I would ask the clerk to please read Bill No. 990673. 199 12/8/99 RULES - BILL 990673
An ordinance authorizing the Health Commissioner, on behalf of the City of Philadelphia, to enter into a contract with the Health Care Advocate to represent the City's health consumers in various matters relating to the provision and access to health care; and amending Chapter 17-100 of the Philadelphia Code, entitled "Procurement Contracts," by requiring that a City contract with a hospital health management organization or other health-care provider shall include the provision requiring such health-care provider to make available to a City-contracted Health Care Advocate information relating to the provision of health care to City residents, all under certain terms and conditions.
I'm so sorry you've been kept waiting all this time, but it's one of those days.
President Verna and members of the Rules Committee, good afternoon. I'm John Domzalski, Executive Deputy and Chief of Staff for the Philadelphia Department of Health, and I'm pleased to represent Commissioner Richman in presenting testimony concerning Bill No. -- 200 12/8/99 RULES - BILL 990673
Excuse me, excuse me, excuse me, Commissioner. Sorry but the noise level is much too high. We must be able to hear the witness testifying, please. Thank you very much. Please proceed.
Thank you. The concept of a health care advocate for the citizens of Philadelphia is a very attractive one to the Philadelphia Department of Public Health. This bill incorporates two very distinct functions. One is to act as an ombudsman to give consumers of health-care services a voice with health-care providers that would also provide a place where consumers can turn to resolve individual problems. The second function involves working with providers around charitable care policies and practices, which is an increasingly important issue as the number of the uninsured in Philadelphia continues to grow. The Department is increasing aligning itself with other major stakeholders in the City's 201 12/8/99 RULES - BILL 990673 Health Care Agreement to development regional responses to health-care quality and access, and the provisions of this bill greatly expand that role. In the last year, the Department has broadened its outlook on the uninsured to move beyond the impact on our health-care centers. Along with other major providers, the Department has begun looking at citywide numbers and trends toward development of regional responses, but these efforts are in their infancy and are being done at this time with support from staff on a collaborative basis. This bill would support and enhance these efforts. One function of this bill is to act as an advocate with health-care providers to resolve individual consumer problems. In fact, the bill 19 states that the health care advocate must provide an annual report on the number of cases handled and results obtained. Clearly, these problems have the potential to range from very small specific problems to larger systemic ones. While attempting to solve problems and perhaps assisting in an ombudsman role, the advocate will need to 202 12/8/99 RULES - BILL 990673 have real authority to accomplish this. The second function includes data- gathering and analysis and projection, and there are very different skills needed for this, and it clearly means that the Department will need to access staff with sufficient expertise to produce meaningful information. Again, this effort will need a great deal of cooperation from health-care providers, as they are under no present obligation to provide the information stated in the bill. The ability to gather data on the uninsured is vital. The number of uninsured is a critical issue for city government and for all health-care providers. A healthy population is a long held value in the City of Philadelphia. Key to this is access to health care and the corresponding access to health insurance. Philadelphia has an adult population of approximately 860,000. And survey data from 1998 shows that 10 percent, or an astounding 86,000 of these adults, are without insurance at the time of the survey. And that 20 percent, or double that number, 173,000, are without insurance at some point during the year preceding survey. In 203 12/8/99 RULES - BILL 990673 addition, percent reported having no 3 prescription drug coverage, and 24 percent 4 reported being without dental coverage. Vital to 5 any initiative addressing the growing fiscal and 6 social burden of providing care to those without 7 insurance are data. 8 While the current system of safety-net 9 providers, including the City's hospital systems, 10 has continued to provide services. We are 11 critically aware that broad system changes are 12 necessary for the viability and continued quality 13 of care for Philadelphians without insurance. 14 Accurate data would show not only the number and 15 demographics of the uninsured population, but also 16 the utilization of existing resources to determine 17 which members of this population are not accessing 18 available services and what services are most 19 needed.
Recognizing the lack of a current obligation on the part of health-care providers to provide the type of information to the City, the provisions of this bill would provide a means of obtaining data necessary for citywide policy development around health care for the uninsured. 204 12/8/99 RULES - BILL 990673 And, Madam President, we thank you for the opportunity to present testimony on this bill 4 today.
Thank you. I hear most of your testimony, but I note that this bill creates a position for a health care advocate and confers certain powers to that individual. Describe, if you will, the position of the particular advocate and what that person's responsibilities would be.
As we understand it from the bill, Madam President, it would be responsible for collecting the data that is essential to understanding the dynamics and the demographics with regard to the extent of the uninsured in Philadelphia, and it would also -- it would also report the --
Not overall. There are bits and pieces. Each health care system has its 205 12/8/99 RULES - BILL 990673 own bits and pieces of those aspects that are clearly important to it. I'm sure the Delaware Valley Hospital Council has some information, probably a lot, that would be very valuable. And we --
So they would provide the Health Department with all of the necessary data?
Well, the idea is that the provider, the hospital systems, the health-care providers, the insurers would -- who are under no present obligation to do this, would, under this bill, do it.
And how do you feel that this bill will improve the delivery of health care to the citizens of Philadelphia?
I think that if we get it to a point where it can be implemented, it would be a bill that would create the important body of information that tells us who are not getting services, who are -- what are the complete demographics of the uninsured population, who is accessing care, and who is falling between the cracks. 206 12/8/99 RULES - BILL 990673 You know, we grapple with this issue on a daily basis on a one case by one case basis in the Department now, and we don't have an overall body of information to help us plan effectively.
Thank you. Are there any questions from members of the Committee?
Thank you, Madam Chair. I know that there will be testimony from representatives of the health-care community as well as advocates in the same community. A number of concerns have been raised, which I am, Madam Chair, more than prepared, I think, to try to respond to, both in a general fashion, as well as in a substantive fashion, about some of the scope of the activities of this person. I think it should at least should be stated for the record that the passage of the bill 25 does not create a health care advocate for 207 12/8/99 RULES - BILL 990673 Philadelphia. It enables the City administration to create such an advocate by contract. And there are amendments that I have to put forward to make sure that both the administration is clear and the Council is clear on what the ultimate and detailed responsibilities are for this person, as well as allow us some time for all of us to continue to meet and discuss these issues, not necessarily under the high-pressure environment that we may find ourselves in today, but to grant some time to allow for other potential amendments going forward. So I wanted to at least put that on the record, and I'll discuss shortly what those amendments are, but I appreciate your testimony and your views, Mr. Domzalski.
And if you don't mind waiting until the conclusion of this hearing, there may be other questions that we have to ask you. Thank you. 208 12/8/99 RULES - BILL 990673
Thank you. Do we have anyone else to testify on this bill? Please approach the witness table. (Witnesses come forward.)
Is there anybody else that's testifying on this bill? Why don't you approach the witness table so that we can save time. Ladies first. Good afternoon. Please identify yourself for the record and proceed with your testimony.
), and I'm the Assistant Director of the Philadelphia Unemployment Project. Part of my job is to run a health rights hotline, in which I attempt to gain access to health care and advocate on behalf of health care for the citizens of Philadelphia. Accessing health care for the uninsured has become increasingly difficult. The amount of available resources is shrinking and the number of uninsured in Philadelphia is increasing at an 209 12/8/99 RULES - BILL 990673 alarming rate. We are in a health care crisis in Philadelphia. Over percent of the adult 5 population between the ages of 18 and 64 are 6 uninsured. Seventy percent of them are working 7 adults and another 30 percent are unemployed. On 8 top of that, an additional 21,000 families have 9 lost their medical assistance in the last year due 10 to welfare reform. These numbers represent over a 11 100,000 people in the Philadelphia area who have 12 no health coverage at all. 13 People are being turned away from 14 hospitals and clinics simply because they cannot 15 afford to pay for care. They are cancer patients 16 who are being refused chemotherapy treatments, 17 patients in need of liver biopsies who are being 18 denied surgeries. We have head-trauma patients 19 who can't get MRIs just simply because they can't 20 afford to pay for care. Most of our hospitals are nonprofit institutions, which are bound by a charitable mission upon which they were established. This mission dictates that they provide care for poor and uninsured citizens in the community. It is 210 12/8/99 RULES - BILL 990673 sad to say that some of these hospitals are reneging on their obligations. This is unacceptable, especially when these institutions have not only a charitable but also a legal obligation to do so. Within the last year, we saw the emergence of the first for-profit health-care system in our area. They had no charitable or legal obligation to care for our poor and uninsured. Historically, for-profit health-care systems have a tendency to cut services to increase profits. It was only through the demand and pressure from health care advocates and the community that a commitment was made by this for-profit hospital to implement a charity care policy. This is the first formal written charity care policy in the city, and it is a commitment that needs to be made by the rest of our hospitals to ensure that the health needs of our citizens will be met by all health-care institutions. As competition in the health-care industry intensifies and the government subsidies to hospitals decline, this results in an increase in the uncompensated care for hospitals. It is 211 12/8/99 RULES - BILL 990673 probably safe to say that we will see more for-profit institutions emerge in our area and a decline in the services to the poor. Presently, there is no City agency or agent monitoring or enforcing any regulations or commitments by health-care agencies and institutions to make sure our citizens get the necessary care they need. These institutions are left to monitor and enforce policies at their will, and sometimes at the detriment of the poor and uninsured. Our city health centers remain the only means for which the uninsured get care without being turned away, but these centers are being burdened with the overwhelming number of uninsured who walk through their doors. People are waiting for up to four to six weeks before they can get appointments. As the number of uninsured increases, this will create a significant need for additional funding for our health centers. This could severely impact the financial stability of our city. Presently, there is no one monitoring the impact of this crisis, which could create a 212 12/8/99 RULES - BILL 990673 financial hardship for us. All of this could be the role of the public health advocate. The advocate would be a significant resource and consumer protection agent for the city and its citizens.
We must ensure that the health care needs and demands of our city and their citizens are met. I would also ask that this position is contracted to a nonprofit agency who will not in any way jeopardize the credibility, integrity, or commitment or effectiveness of the job that needs to be done. I hope you understand and do see the need for an important position like this to be developed. Thank you.
Thank you. HEALTH CARE ADVOCATE WITNESS: Good afternoon. My name is Stephanie (unintelligible), and I'm reading this on behalf of Alison Stein, who is a public health professional and the director of the health care organization for Citizens for Consumer Justice. I would first like to thank Councilman Nutter and the Rules Committee for allowing me to 213 12/8/99 RULES - BILL 990673 speak today concerning the importance of amending Chapter 17-100 of the Philadelphia Code, thereby allowing the City to hire a health care advocate to represent consumers and that there is a willingness on the part of the committee to listen to us on the consumer perspective of why it is important to have a health care advocate. Let me say that what has been apparent in the organization of the CCJ existent is the growing disillusion and the powerlessness that consumers feel in relationship to health systems. CCJ has identified many health issues of growing concern to consumers. Among these issues are the growing number of uninsured in Pennsylvania, the difficulty in obtaining charitable care from hospitals and other health-care providers, and the need for the advocate to act as an ombudsman to assist consumers with their health-related problems. Only these matters would be addressed by hiring a health care advocate for Philadelphia. The proposed legislation would strengthen the individual participation in the health-care systems in many ways. The health care advocate would be in a position to serve as an 214 12/8/99 RULES - BILL 990673 information clearinghouse while monitoring and examining current health-related policies and recommending direction for a change and action. He or she will be able to mobilize individuals and organizations around issues that affect the health of Philadelphia residents and communities and provide the technical information to help people become advocates for their own community health. In addition, the health care advocate would be able to educate people about available health-care services and their rights and relationship to these services, provide referrals to health-care providers, advocate for consumers, and analyze important policies which affect people throughout the City. Finally, a health care advocate would help the City of Philadelphia determine what best to focus our limited energy and resources. As an example, there has been little research on managed care impacting a minority population and to work on what delivery systems feature can best insure access and quality care for the underserved population. Providing a health care advocate for Philadelphia would be an opportunity to fill some 215 12/8/99 RULES - BILL 990673 of the important knowledge gaps by providing the City with a person whose job is to access the health and well-being of the consumer. One of the Citizens for Consumers Justice's primary goal is that a health-care system should respond to the needs of the local communities. We welcome any organization or individual who will play a role in the public education and policy to improve the health system. We want to the public to know more about the community health. We want accessible, reliable information concerning health care available to all consumers in Philadelphia. We want to promote a dialogue between health professionals and laypeople. We want to give the public a voice in the health and well-being of their community. And finally, and most importantly, we want to improve the health of people in Philadelphia. For all of these reasons, we ask that you amend Chapter 17-100 of the Philadelphia Code and allow the City to provide a health care advocate to represent the City consumers. 216 12/8/99 RULES - BILL 990673
Thank you, Madam President. I'm Jonathon Stein, and I'm general counsel at Community Legal Services here in the City, and we have been representing the interests of uninsured and those low-income people who have been facing barriers to access to health care. I think this is an historic moment for City Council because this is an extraordinary moment of giving a voice to health consumers and to the uninsured, which they never had in the city before. And we applaud Councilman Nutter's initiative and your interest as Councilpeople here this afternoon in this bill. The bill continues to support our district health centers which are really the care of last resort for the uninsured. And the City is to applauded and Council is to be applauded in terms of that continuing support. But we can't rely on health centers to fill this enormous gap, and I think there is a role for a public health advocate to assist people in getting through the systems 217 12/8/99 RULES - BILL 990673 ›-œ that exist to access benefits. There are thousands of people in the City who have a right to health under existing programs but are not getting due to various problems in state government and state welfare programs. And I think this public advocate can play an important role in doing that. You will hear, as I imagine you'll be hearing, some concerns by some others to be speaking in a moment or two about this advocate, but I can only recall that 10 years ago when the public gas advocate was established and how PGW wasn't particularly happy with that. We'd had a very successful decade of work with gas public advocate. It saved ratepayers millions of dollars. It's helped resolve lots of problems. It hasn't solved the problems of PGW or gas service, but it's made, I think, an important public service contribute. This advocate does need some flexibility and breadth. And I know there are some concerns that are being expressed that their responsibilities need to be more specifically defined. Some people have specific agendas for the advocate like medical assistance enrollment. But I think the important not to tie the hands of this advocate since the 218 12/8/99 RULES - BILL 990673 Ñ›-œ health system is changing so much and issues really will be altered really continually into the future. So in conclusion, I think this is really an extraordinary initiative the City is taking, an important one that gives consumers a voice. And let me just say that the Philadelphia Citizens for Children and youth couldn't wait to this moment to give their testimony wanting me to pass on their written testimony to you and have it entered into the record. Their a group that has been advocating for children and families for many years and they see, too, that this health care advocate is crucial to help those families assist and access health care and look to broader solutions and recommendations that I think are needed in this entire area. I'd like to offer this piece of testimony as well. (Testimony attached to transcript.)
Thank you very much. The Stenographer will take and add it for the record. Are there any questions for these witnesses? Councilman Nutter?
No questions. I 219 12/8/99 RULES - BILL 990673 Ñ›-œ just want, again, thank you for your testimony and your advocacy in the health care community and really appreciate you coming out this afternoon.
Mr. Chairman, before the next group comes to testify, we received testimony. A person indicated that they wanted to be here to testify, but they may have had to leave. Alisa Simon, Director of Health Care Organizing Citizens for Consumer Justice. With the Chair's approval, I'd like to offer this testimony as if it's been read into the record. (Copy of testimony attached.)
Good afternoon. My name Andrew Wigglesworth, I'm president of the Delaware Valley Health Care Council. Kevin Hannifan who is president CEO of Methodist Hospital had hoped to be here to present his views. Unfortunately, he was called away to actually a health care issue. His son has injured his arm and he had to go be with his family. So he apologizes for not being able to wait. 220 12/8/99 RULES - BILL 990673 Ñ›-œ DVHC, and perhaps you can give our testimony up. DVHC represents and advocates for more than 150 hospitals and health care systems and health related organizations across southeastern Pennsylvania, including all hospitals in the City of Philadelphia. I will summarize my written statement, which is being handed out in the interest of time, but I want to say at the outset that we obviously appreciate the opportunity to present our views relative to this ordinance which would create a health care advocate. In concept, as we've done in discussions with Councilman Nutter, the sponsor of the legislation as well as with others, we're very supportive of the concept. Some of the issues that the previous witnesses raised about the growth of the uninsured, the growth of uncompensated care, the lack of a national solution to the problem of the growing numbers of uninsured are some think we are absolutely as concerned if not more so than previous witnesses. But I think that the complex nature of this legislation, some of the -- basically the way that it is currently drafted it is so broad as it is difficult to determine precisely what the role of 221 12/8/99 RULES - BILL 990673 Ñ›-œ the health care advocate would be and how the health care advocate would fit into in the context of the existing advocacy programs. For example, under the Older Americans Act and Philadelphia Corporation for Aging currently has a ombudsman program for senior citizens that advocates on behalf of senior citizens. If Kevin Hannifan had been able to stay, he would have told you about the advocates for the Asian community with resect to Methodist Hospital and in terms of the long-term care ombudsman, as well as the governmental agencies, for example, the Health Care Financing Administration with respect to Medicare patients has very explicit responsibilities as it relates to advocating for patients. All hospitals have patient advocates as well as social work departments that attempt to assist the uninsured and as well as other patients deal with the health care deliver system, which as we all know, has become increasingly complex and difficult. So there are a whole series of different agencies. There's a lot of talk in terms of the representative of the City Health Department as it relates to data and data collection. Well, there's a state agency called the Health Care Cost 222 12/8/99 RULES - BILL 990673 Ñ›-œ Containment of Council, which annually produces reports on uncompensated care delivered in this City as well as across the Commonwealth of Pennsylvania. As you know, again, DPW has responsibility with respect to medical assistance recipients. This isn't to say that a properly crafted ombudsman or health care advocate role in the City couldn't be an enormous help. But the way the legislation has been introduced and we think that basically there needs -- we would respectfully request that the Committee defer action on this. Let's sit down and basically craft the legislation in a way that we can all support it. I think in terms of the delivery, and there were some comments by previous witnesses about the delivery of services to the uninsured. I think all the members of this Committee know that the hospitals in Philadelphia are committed to providing access to quality care for all of our citizens. It's a principle that they live by today. Philadelphia actually is the largest city in the country without a public hospital. The services are provided by private hospitals.
Philadelphia has the highest percentage of uninsured residents of any 223 12/8/99 RULES - BILL 990673 Ñ›-œ county across the state. And again, according to the Health Care Cost Containment Council, last year hospitals provided over $235 million worth of uncompensated care. That number is under stated in that it -- that's only in-patient services, it doesn't include clinic services, it doesn't include services of physicians to others, it's just inpatient hospital services. So hospitals are providing an enormous amount of uncompensated care today, and quite frankly we agree with the witnesses previously that we all need to work together to try to provide answers or solutions to the growing numbers of uninsured. We think one thing that we hope that this Council as well as and all the advocates that are here today can work together with us on is in terms of trying to attain tobacco settlement funds in terms of providing coverage for the uninsured, which would be a meaningful step in terms of trying to provide access to all our citizens to health insurance coverage. I think two final points before I just touch on a couple things. One is also to put this whole environment into the context. As you know, 224 12/8/99 RULES - BILL 990673 Ñ›-œ hospitals and actually on a previous bill there's discussion about the closure of Mount Sinai Hospital. Three-quarters of the hospitals in this region lost money on operations last year. 5 billion. A previous witness represented or discussed the reductions in medical assistance under act 35. That increased hospital uncompensated care across the region by more than 150 million. There are enormous issues with respect to health care, enormous issues that we think we all need to work together on. And to the extent that a health care advocate could help enroll people in insurance in the children's health insurance program or MA, that would be appropriate role. The bill, as drafted, doesn't even provide that role which is, as we see, a significant problem. Additionally, we think the health care advocate should advocate on behalf of consumers and providers with insurers and managed care organizations. There are enormous problems with people being denied coverage by their managed care organization. And we think the odbutsman or the 225 12/8/99 RULES - BILL 990673 Ñ›-œ health care advocate could play a role in that. The legislation, as drafted, doesn't cover those situations. Moreover, as I indicated before, as drafted, the bill basically duplicates many of the existing duties of state and federal agencies. Given the limitation on resources, we think it should be focussed in those areas where it doesn't duplicate the existing governmental activites and would note that the way the bill is drafted now, it's not only the uninsured, but every person that's covered under Medicare, Medicaid, city employees, federal, state employees, or military dependents, all, the way this bill is drafted as those are government-sponsored programs, would all be in effect eligible for the advocate services under this legislation. That's an enormous responsibility, enormous resources that we think, again, we need to more narrowly focus this bill or target this bill on the specific problems, not focus away from problems but basically make sure that we utilize the resources of this city and the most effective way. Those, I think, are the comments that I wanted to share with you. Again, my written 226 12/8/99 RULES - BILL 990673 Ñ›-œ testimony goes into the specifics of the bill in greater detail. We also provided a report that is a compilation of information about uncompensated care across the Commonwealth as well in the City of Philadelphia. I'll be happy to answer any question or go through each one of the issues with respect to this bill as it's drafted and talk to you about what the potential complications or implications are. Thank you for the opportunity to testify.
Are there any questions of this witness? Thank you very much. I believe your next to testify. You're not testifying?
Rose Wenshal (ph) works for the Delaware Valley Health Care Council. I apologize. I should have introduced her to begin with.
Thank you, Madam Chair. Let me say to both Mr. Wigglesworth and Ms. to Ms. Wenshal, I appreciate your testimony, your views. I think as you have articulated, we have had 227 12/8/99 RULES - BILL 990673 Ñ›-œ an opportunity to talk about this on a number of occasions. As I mentioned earlier, I do plan to propose some amendments which I think directly will respond to a couple of the issues that you raised. I understand from your perspective the timing issue. I will try to address that. It may not completely to your satisfaction, but I will at least say here on the record and in public that I am sure that there will be other issues that need to be addressed as relates to the creation of health a care advocate. And as we continue our discussions, I will continue to work with you and talk with you and other groups and organizations. And during that time period, I would come back with any needed amendments to clarify even further the role of the advocate. I don't think anyone envisions that the mere creation of the advocate, one, will solve all the health care problems in Philadelphia; two, that this individual, either by themselves or if someone were suggesting that they, for instance, would need an army of people to work with them, one, we don't have an army of people to throw at this particular operation. But I do think this Council and the City Administration and all our citizens would benefit 228 12/8/99 RULES - BILL 990673 Ñ›-œ from someone having somewhat like a laser beam focussed on this particular issue. And let me also state for the record that while the title would be something along the lines of health care advocate, that does not mean that they are exclusively only for consumers. There are issues that Delaware Valley Health Care Council has that both the Council and the City Administration need to know about, and there is certainly nothing, I would think, prevent the health care advocate figuring out some of those issues from advocating on your behalf as it relates to negative policies that may come down to us, as they often role up the highway from Washington or roll down the highway from Harrisburg. That effect, hospitals and other providers in their ability to provide services to our citizens. So I don't look at it as necessarily a one-way street. There may be issues that both consumers and providers agree on and that you need someone else to make that advocacy and be in the ear of the Mayor and ear of the Council as we try to work together in a cooperative fashion to get to the point where we all want to be.
Councilman Nutter, I appreciate your comments and we, obviously, would 229 12/8/99 RULES - BILL 990673 Ñ›-œ like to work with you. But again, in terms of passage of a bill at this point that basically authorizes we're-not-sure-what to a one in context of the transition of a new administration. We're not certain who would be the city health commissioner to basically authorize the creation of it and entering into a contract for a whole range of services that we don't know, one, what it is, and the things you just said in terms of providers and consumers having very similar concerns, absolutely. But the bill as drafted doesn't do that. So we, again, would respectfully suggest that you sit down between now and the start of the new session of the Council. Obviously, you all will be back here again shortly after the first of the year, and we'd love to work with you to develop a bill that is focussed like a laser beam on the issues in a way that is meaningful, because as it is now, it is so broad as to be somewhat incomprehensible, with all due respect.
Thank you. The Chair recognizes Councilman Cohen.
Mr. Wigglesworth, I 230 12/8/99 RULES - BILL 990673 Ñ›-œ read the bill before I attached my name to it, and then as I heard your testimony I was wondering whether I was on the right bill or not and I kept trying to hear a specific complaint. Seems to me this bill is just exactly what an advocate's bill 7 ought to be. The problems in the health field are too great that it seems to be any advocate has to have a very broad range of powers and it seems to me that Councilman Nutter's explanation made that very clear, and you've indicated yourself from time to time that you agree that these problems have to be dealt with. So let me ask you a specific question. Is it that your concerns are really not about the advocacy part but about the provision that relates to contracts with health care providers which authorizes the advocate to obtain information from hospitals? And I did not hear anything from you with respect to that, and yet your strong feeling against doing anything on the bill and not giving us any specific problems dealing with led me to believe as a lawyer that maybe the real problem was that this bill would arm the advocate with the right to get information which perhaps hospitals did not want 231 12/8/99 RULES - BILL 990673 Ñ›-œ to give. Am I wrong as to that?
Well, put it this way. To the extent that I didn't, I should state absolutely for record, and I'm glad that you reminded me, as a matter of record, we, one, don't appreciate the mechanism that's used in the bill in terms of conditioning contracts on the delivery of information. It's not that the information can't be necessarily be available but, again, the way the bill is structured, it says obtaining necessary information from hospitals. We don't -- what does necessary information mean? Related to various matters; what do various matters mean in terms of obtaining as it relates to -- deal with issues and problems for Medicaid, Medicare, city employees, state employees, federal employees, Campis recipients, those are hundreds of thousands of people. Concern about the information pieces that as notwithstanding some of the language in the bill 21 which suggest at least makes a passing reference to it. Information that we have is confidential. There are federal laws as it relates to the release of substance abuse and mental health records. There are state laws as it relates to release of patient 232 12/8/99 RULES - BILL 990673 Ñ›-œ identifying information. With respect to information on uncompensated care and the delivery of services, as I've indicated before, we report that to the state government today and have been for years. Pennsylvania has one of the most comprehensive data reporting requirements for hospitals in the country. So it's not that we're afraid to have data out there or whatever. But, again, the way the bill is structured, this would say that the health care advocate could say, "We want to see every single patient record for all admissions to the hospital." And this law theoretically would enable that. That would be overly burdensome and we would suggest inappropriate. What we think needs to be done is to focus this legislation on those areas -- if it's complaints, for senior citizens they can complain to HIFFA. As you know, under federal law we must provide services to all persons who present at the emergency room. They must be screened and evaluated, and to the extent they have an emergency condition, must be treated under federal law. If there's a complaint about that, the federal government can come in and basically lift Medicare 233 12/8/99 RULES - BILL 990673 Ñ›-œ certification, there's various substantial enforcement mechanisms as it relates to that. And I'm not afraid and I think having an advocate involved in that would be okay. Let's focus the scope of this onto the problems. And, again, the way the bill is drafted right now, it's wide open for whatever and conditions it. And some hospitals, quite frankly, may not want to enter into city contracts if this is wide open. And I'm not sure who losses the most under that, whether the City losses the most or the hospitals lose the most. But certainly, people do; people lose the most. And I don't think it needs to have that kind of dynamic because this is an area that we all agree that we need to do more to provide coverage for the uninsured. We need to provide access to consumers. Hospitals need help in terms of financing uncompensated care. It's a huge problem.
Councilman Cohen, if I can quickly respond to that. Councilman, the bill 22 could not be more clear. In Section 17-108, Item 1, which is in this area of the contract issue, that section reads, "Such provisions shall not require any health care provider to provide any information 234 12/8/99 RULES - BILL 990673 Ñ›-œ which the health care provider by law may not provide to the health care advocate." From my perspective, at least, the hospital or other providers not allowed by law to release the information, they don't have to give it to health care advocate.
Again, that raises the spectra of, okay, the advocate wants information about a complaint and it would be against state law to release patient identifying information; so therefore, we go to the health care advocate and say "There's a complaint." This is an extreme example, but under this bill, basically there's a complaint. There's a city of 1.6 million people, go out and find what the complaint because we can't identify the patient under state law. We think that we need to work through these kinds of issues. There would be a requirement if the patient consented to having records, then that could be done. But again, what you're talking about is volumes of patients. And 235 12/8/99 RULES - BILL 990673 Ñ›-œ again, it is not that we're opposed to the concept per se, but we think the legislation needs to be crafted more carefully and targeted more carefully. And that's, I guess, where we have the disagreement.
Madam Chair and Councilman Cohen, again, I would suggest that through amendment there some opportunity to lessen at least for the moment some of the concern as expressed. I think all of these concerns are very legitimate. I do believe that with time and added review by the Council of scope of services what the terms and conditions of this contract are, if, again, the new administration decides to enter into a contract, Councilman, you may have been out of the room a little while ago, I suggested that I have some amendments that have been circulated across the table that may address some of those issues and give us additional time and opportunity as well as a direct involvement in review of all these activities.
Is your intention to have the Council act on a bill before the end of our session?
One additional suggestion for you. One final point. From a technical standpoint, the bill reference to health management organizations, which I think it's supposed to refer to health maintenance organizations which are HMOs, but in that context it would leave out basically all the other major insurers. So that either a whole series, for example, Blue Cross is a hospital plan corporation. Children Health Insurance Program. Variety of others. So that, again, the scope of the bill is not what those that are supporting passage of this particular legislation would suggest and it needs to be cleaned up as far as that goes as well.
Mr. Wigglesworth, I'm sorry, I missed part of what you just said. I hospital plan corporation.
You would have insurers, you'd have under state law, the way that this is drafted, the HMOs would say this bill 25 doesn't apply to them. Managed care plans would say 237 12/8/99 RULES - BILL 990673 Ñ›-œ that the bill doesn't apply to them. Blue Cross would say that it wouldn't apply to them. In other words, there needs to be specific amendments to basically cover, and I assume the intent would be to say that non-profit plans like Blue Cross to the extent that they have a contract, which they have a very substantial contract with the City, should provide information to the health care advocate as it relates to them denying services. I would assume that you would also want to include community health care physicians, long-term care, nursing homes, all of these other facilities where there are issues in terms of -- those are the kinds of things that in terms of trying to address this between now and the 16th, which I understand is where the problem is.
I understand. Let me just ask you one very specific question. You made a statement earlier. You said hospital plan corporation and then something you said something after that. That was the thing I didn't hear.
It should be basically HMOs, PPOs. It should also, for example, Children's Health Insurance Program, if you wanted to cover that, the two major vendors for that are 238 12/8/99 RULES - BILL 990673 Ñ›-œ AETNA US Health Care, but then it's also the Independence Blue Cross Caring Foundation which technically is not an insurer and, therefore, would have to be crafted in a different way. I'm not sure how to do that.
Thank you. Any other questions or comments from Members of the Committee? Thank you very much.
My name Bernard Johnson. , and I'm the Chairperson of the Philadelphia Health Consortium which has a focus on infant mortality. I'd just like to say that that's an area that the health department has talked to our committee about, the area of infant deaths where the 239 12/8/99 RULES - BILL 990673 Ñ›-œ City cannot always get a record from all the city hospitals. So some hospitals in the City, as it relates to my understanding, may not issue a death certificate for a child who was born premature and dies. That has caused a problem for the Office of Maternal and Child Health and for Healthy Start Consortium in our partnership to design education programs for families who have suffered the death of a child. So we have been, through MCH and through the Pennsylvania Citizen Association, been trying to negotiate with the hospitals for them to produce the dealt records for every child who is born and dies. So I think that's an area, Councilman Nutter, that is a clear area for us where documentation is not easily obtained from the hospitals. But I would like to say that the reason I came to the table was to support the broadest clearest definition of a health advocate. And that we may want to make sure that this advocate has all the tools that are necessary in terms of staff. Not an army of people, certainly, but a staff that certainly could assist the advocate in carrying out the everyday duties that are outlined there because that's a real task there. 240 12/8/99 RULES - BILL 990673 Ñ›-œ I'd like to just give some areas where we're concerned that we think an advocate would be helpful. Around drug and alcohol centers, programs, that provide quality care as it relates to drug and alcohol but may not have the tool that allows it to provide mental health services to those folks. We think that those, especially men who are in those types of environments need to be advocated for so that they in fact can get, if needed, get the behavior health services that are necessary. Another area is around boarding homes. And I've tried to establish a conversation with Councilman Kenney around the quality of boarding homes and the type of care that people who are living in boarding homes should be entitled to but in many cases are not receiving. We believe that an advocate there would be a very useful kind of person. I'd like to talk about the areas where behavior health services are provided. We don't believe that in Southwest Philadelphia and in parts of South Philadelphia that there are adequate behavior health services. And what we've found is that people get referred to a behavioral health provider based on their address. So you have 241 12/8/99 RULES - BILL 990673 Ñ›-œ neighborhoods where people are getting services, but we believe they're not quality services. As an example, about six months ago we took a client of the Kingsessing Network Behavioral Health, we took their client and met with the Health Commissioner and dumped on the Health Commissioner's desk about two years' worth of prescription drugs that had been given to a patient and with no follow-up, the dosage just continued to be increased by saying, "Do you want more? " And the person nodded her head and said, "Yes, I'll take more," because that person actually thought that they had to accept the medication in order to keep their public benefits. So that is the type of concerns that we're having. We also think it would be a good opportunity for an advocate to bring all of the advocacy groups and organizations and individuals that they could identify in the City together along with people like the folks that were sitting here from the Hospital Council so that we can begin plan and develop programs and services that are going to meet the needs of folks who are in the most critical parts of their life when they're I will. So, again, 242 12/8/99 RULES - BILL 990673 Ñ›-œ I just wanted to -- and I tell you another thing. This is my next point.
What people believe is the dual system of care at like hospitals like the University of Pennsylvania where they strongly believe that if you're insured through a commercial company, you get one type of service; if you are insured through a managed care company that services people on public assistance that you get another type of service; and if you're uninsured, then it's real questionable as it relates to the quality and care you receive. So I'm here on behalf of my organization Healthy Family and on behalf of the Philadelphia Healthy Start consortium encouraging the Council to move forward and adapt the bill that will allow the Commissioner to appoint an effective health care advocate and team. Thank you.
Thank you. Do we have anyone else to testify on this bill? Seeing none, I would ask the clerk please read the title?
At this time the Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Madam Chair with your permission I'd like to 243 12/8/99 RULES - BILL 990673 Ñ›-œ read into the record proposed amendments to Bill 3 990673 which could then could be taken up in the public meeting portion of today's proceedings. The first amendment would amend Section 1 of the bill 6 starting on the fifth line, the sentence currently reads "health management organizations." The word "management" should be stricken; the word "maintenance" should be inserted. After the word "organizations" and comma, insert the words "third-party payers, managed care plans, health plan corporations, children's insurance programs for other insurers." The sentence would continue, "and other health care providers," insert "or foundations." That's in small 1. In 2, the sentence presently reads, "Resolving problems and issues relating to the access of city residents to health care services." The amendment would add in the phrase or wording "and assisting children and other eligible persons to enroll in plans for which they qualify." In 5, the end of the sentence, last line of that sentence presently reads, "And any discernible trends in the provision of health care to city residents." Additional language, "including 244 12/8/99 RULES - BILL 990673 Ñ›-œ detailed information and reports regarding the policies and practices of the city, state or federal government that may negatively impact the ability of hospitals, health maintenance organizations, third-party payers, managed care plans, hospital plan corporations, children's insurance programs, or other insurers and other health care providers or foundations to provide these services to city residents." Amend Section 2 of the bill, add a new sentence to the end of that paragraph to read, "The contract shall not be executed until the contract, including it's terms, conditions and scope of services, has been approved by resolution of Council. Amend Section 17-108(1), at the top presently reads "health management." Strike the word "management"; insert the word "maintenance." Continuing on in that sentence, after the word "organizations" a new come and add third party payers, managed care plans, hospital plan corporations, children's insurance programs, and other insurers." The sentence continues, "and other health care providers" insert "or foundation." 245 12/8/99 RULES - BILL 990673 Ñ›-œ Lastly, add a new Section 4, Section 4 to read, "This ordinance shall take effect July 1, 2000." Those are the proposed amendment, Madam Chair. What that effectively does is starting with the last one, the bill would not then be effective until July 1, 2000. Secondly, should the health care advocate be appointed and a contract drawn up, that contract would be subject of approval by resolution of City Council. I believe, Madam Chair, at least those two mechanisms the City Council clearly in the process for what the final activity would be for the health care advocate with full discussion of those matters. It also allows us time to have those discussions among, I believe, all the parties stated at the table today they were more willing to have continued discussions about this. Thank you, Madam Chair.
Thank you. At this time I would ask the clerk to please read the title of Bill No. 990812. (Pause.) Mr. Ackelsberg. We're just going back to the bill regarding 990331. You did have a 246 12/8/99 RULES - BILL 990673 BILL NO. 990812 meeting?
Yes, we did, Madam Chair, and we have agreed that between now and the session where the bill would be put up to vote, there will be a memorandum of understanding. Joining in that agreement will be the CDC, Councilman DiCicco's office, the St. John's Leadership Team, and Redevelopment Authority, and at the time the bill is presented for a vote, it will be made clear in the record that it is understood by Council in passing the legislation that the memorandum of understanding is a part of what is happening.
Thank you. The clerk will please read the title of Bill No. 990812.
An ordinance amending Section 19-1303(4) of the Philadelphia Code entitled, authorization to offer exemption from real estate taxes on new construction of residential properties by changing the definition of eligible dwelling unit under certain terms and conditions.
Who's testifying on this bill? 247 BILL NO. 990812 Good afternoon.
Good afternoon, President Verna, and Members of the Committee. I'm Michael Nadol, N-A-D-O-L, Director of Finance for the City. I hope that you've all received our written testimony, the Administration's written testimony regarding this bill. I'll be happy to briefly summarize it if that's the Committee's pleasure. Also with me is Mimi Pulasky from the City Law Department, and we may be joined shortly by several other administration officials who had stepped out momentarily to help answer questions. This is actually our second round of testimony in recent weeks regarding tax abatement proposals. We did testify at some length about the Administration's general approach to such abatement initiatives so long as we don't lose our focus on reducing the overall tax burden for all Philadelphians, we do believe that some target incentives can be a tremendous boon to the City by stimulating residential and commercial development that might not have happened without such incentives. Certainly, the recent conversion abatement program to convert vacant and unused 248 BILL NO. 990812 office and commercial space into residential apartment dwellings has been a tremendous success and we hope that some of the ordinances recently enacted after our previous testimony and previous hearings on this matters will have similar beneficial stimulus affects. One of those bills that was recently considered was a proposed expansion to the existing City abatement program for real state taxes on new residential construction. Currently, there's a three-year full abatement for new residential construction and under a recently passed ordinance 14 that is slated to be change to a 10-year phased out abatement program creating a somewhat greater incentives to try to spur new investment in residential housing. That bill and this amendment that we're considering today or rather the bill that we're consider today which would also amend the same provisions of the City Code, it should be noted would require change in the state enabling legislation to take effect. Currently, again, that expansion of this program that was recently approved and the one that's being considered today could not take effect. What this proposed bill would do is to 249 BILL NO. 990812 further expand the new construction abatement program to include apartment, commercial, rental housing, apartment dwellings. Currently and for many years, this particular tax abatement program has been limited to owner-occupied dwelling units. We have, with the help of the Budget Office -- I have been joined now by Rob Dubow, the City's budget director. We have under taken our best efforts to analyze the potential cost impacts of this bill. Of course, as with any abatement program, the stimulus impact is hard to project, but what we have looked at is the recent usage of similar current a basement programs that taxpayers would be eligible for if they're undertaking commercial apartment rental housing construction. We've looked at the level of usage throughout the City and we've looked at what financial impact would be in terms of foregone revenues if the bill that's under consideration today were fully in effect. And over the course of a 10-year period, the aggregate4 cost of that bill would be approximately 6- to $700,000 with that impact, of course, borne both by the City and the School District. The initial years of the program would actually not have an adverse 250 BILL NO. 990812 impact on the City's budget. That's because new commercial construction, including that for apartment buildings, rental housing, is already eligible for a three-year or abatement of real estate taxes under the commercial improvement tax abatement program that the City currently offers.
By switching to a 10-year phase program, in the first few years there might actually be a net savings to the City because we would be phasing out the benefit of the abatement, but over the course of time as the full program kicks into place over the decades ahead, we would be looking at, again, assuming current levels of construction activity, about $150,000 a year aggregate impact between both the City and the School District. While this financial impact is relatively modest, and we certainly share the goals that we believe are embodied in this proposal of stimulating new apartment and residential construction and investment in the City, the Administration does have some concerns regarding a potential impact of this expansion of our abatement programs on the success of some of the programs already in place. Specifically, we have concerns by 251 BILL NO. 990812 tilting the playing field a little bit further by new construction of apartment buildings we would be tilting the playing field away from our existing successful abatement program at a time when there are many active conversions still in the pipeline and at a time when there are still, according to preliminary analysis by the Board of Division of taxes we're now at a point in time where there are still scores of potential candidates for future conversion to residential apartment buildings. And we would not want to see that program, as successful as it has been and as we hope it will continue to be in the near term, we would not want to see that program undermined by the creation of a new incentive that might serve to undermine it. So taking that concern and to some degree the cost considerations into account, the Administration at this time does not recommend support for Bill No. 990812. We do, again, share many of the goals reflected in it. We welcome this opportunity to talk about the creative ideas such as this, and we would be happy to answer any questions that you may have at this time. I also want to note that I've also been 252 BILL NO. 990812 joined at the table by David Glancy, Chairman of the Board of Revision of Taxes. Thank you.
Thank you. The Chair recognizes Councilman DiCicco.
Thank you, Madam Chair. Thank you, Mike. Just lay out a scenario. Let's just assume for the moment that there were no 9 potential conversion candidate buildings available in Center City. Would the position of the Administration be somewhat different than it is presenting today? And that's a hypothetical. And where I'm going with this, I will have someone who is a developer who is here today to testify as to whether or not he believes that the all of a sudden because there is a bill that may be passed today or voted out of the Committee today that is favorable to new construction that for some reason developers are going to abandon the notion or the conversion of vacant buildings. I think the testimony will be presented today by developer and there may actually be another developer who does conversions that that is not necessarily what will occur. The irony of this whole thing is when we introduced the original conversion bill, there was concern for the negative 253 BILL NO. 990812 impact to the City finances, and now their worrying about all of sudden we may not have a conversion thing happening. So even to my surprise, it's much more -- there's more conversion going on than I ever anticipated in my wildest dreams. And I mean with the demand, at least as it relates to Center City which is the only neighborhood we have seen an increase in population. The demand for more units, I think that this bill is necessary at this time in order to give developers a little bit more of an edge to encourage them to begin developing units that will accommodate for the demand. And Mr. Dranoff, Carl Dranoff, I'm hoping shows up before these hearings end, has indicated yesterday that there are not that many buildings left that are good candidates for conversion and there's a whole set of reasons for that. Some of them have to do with the start up of tax credits, some of them may have to do with the integrity of the building. And as someone who has done several and is anticipating a few more conversions, he will simultaneously be conversions and new if the opportunity presence itself. And it also has to do with location, location, location in real estate that not all abandoned office buildings 254 BILL NO. 990812 or industrial buildings are going to be candidates for conversion merely because people may not want to move into those neighborhoods. So I think this is an opportunity for us to give more incentives, to encourage more development of either new and/or existing buildings, and I think the conversion bill 8 has proved that if you give developers a reason to do it, they will come and they will do it. Again, I understand your position and I understand it's not a hostile -- you're not adverse to this bill because you think it's going to negatively impact the budget all that much. But I certainly, again, based on my conversation with builders, don't think that they're going to abandon that conversion. But Mr. Kline who is here, Steve Kline is here is a developer; he's going to testify also. Thank you, Madam Chair.
Good afternoon, Councilman DiCicco and Madam President. My name is David Glancy and I'm the Chairman of the Board of Revision of Taxes. I know Mr. Nadol gave the testimony of the Administration. What I might say may coincide with the Administration; it may not. But I will try to make obvious to you as I say it. I guess I'd 255 BILL NO. 990812 like to give you some real facts. There are 38 applications, some are still pending, but nonetheless 38 applications for the 10-year conversion bill. And I agree with you, this has gone beyond our wildest expectations, so I suppose the fear of those of us in the Administration have is will this put a stop to that particular success story. I did a very quick first pass on properties in what I call Center City corridor which really goes down from Washington Avenue, river to river, and maybe up to Spring Garden Street. And using the criteria in the ordinance about age and about vacancy, I came up with about 70 buildings. Again, these were not inspected nor was there an economic analysis done, obviously. I came up with about 70 buildings that just on that first pass would meet those qualifications. As I was sitting here this morning, I went through that list of 70 buildings to see in my own mind if I knew where they were, what they looked at. And again, physical location. And of that 70, about 44 looked like they would pass at least physical location muster. Now, none of that goes to the economic viability. And again, every building would have to be inspected all by itself. 256 BILL NO. 990812 Each one is a suey-generous type of property, where you would just simply have to say on an ad hoc basis whether this makes sense or not. But I do believe that the pool does exist. We were here last; there was some testimony that everything that can be converted has been or most of them have. I'm not so sure that's the case, again, just based on the quick kind of first pass analysis that I did with the information that we have. And I'm not here to tell you that all 44 of those buildings could possibly pass the economic test, the muster for that. One of the things that has made this conversion bill so successful, I believe, is that it is not just that it is a 10-year abatement when you do this conversion; it's been coupled with some other things, i.e., historic tax credits. Not so sure, in fact, we know that new buildings will not be able to make that kind of kind of coupling. So the one final thing I would like to add is that -- and maybe this is more of an aesthetic argument, in that some of these buildings are historic. And it's my experience that it is a lot cheaper to build new than it is to convert. If you have buildings that might still retain historic nature of the City and 257 BILL NO. 990812 if I'm developer -- and again, the developers can testify about this better than I. But if I'm a developer, I might say, "Well, yeah, it would nice to have that building, but that lot is really what I'm interested in. I can knock that building down, build cheaper new." And the question is, is that what we want to do as a matter of policy? Are we concerned about maybe savings som of that? But again, that's not my decision to make. I just raise that for your consideration.
I understand that and I appreciate it, but if it's a building that has historical significance, they're just not going to be able to knock it down that easily either.
It may not be historically certified by the Historical Association, but it may have historical significance and you can make those kinds of moves.
And I guess the other thought that I've had is in the area you just described, there isn't really that much land where new construction could begin to take place, I don't think.
Well, again, as I said -- 258 BILL NO. 990812 well, there's probably some on the riverfront if we go north and south of Penn's Landing.
And that's going to occur anyway. We're negotiating now with community groups along Delaware avenue to do some multi-level high-rise apartment buildings on the river, whether there's a tax abatement or not. But again, I think the developer Mr. Kline is in the room today can testify better than I can.
I agree with you, but as I indicated, you can find land if you knock something down, and that's really a concern.
If you do and you take it and you knock something down, historical significance aside, we've accomplished something. We're taking a vacant building, putting up a new structure, and providing an opportunity for people to move into the City. I mean, that's what this is about. It's about reinventing and recreating neighborhoods and giving people an opportunity to want to move in. So if it's an old building, we take it down and they build new and they take advantage of this bill, I think we've accomplished what we've set out to do, repopulate the City and 259 BILL NO. 990812 we're going to start from Center City and continue to go from there out.
One of the other concerns that we would have, as you noted there are proposals for additional apartment construction that would happen -- would very likely happen with or without this abatement. And to the extent that that were to occur, the cost impact could become significantly greater than what we've seen. We based our financial analysis on just the last several years worth of activity where new apartment construction has happened to have been relatively modest in scale and almost exclusively within the low income housing market. If we do see -- and there are a number, as you've indicated, a number of major projects in the pipeline. If we do see those come to fruition soon, we might be foregoing more revenues that we would have received even without this abatement, and that is just something to take into consideration.
Let me rephrase that and then we can go on with the other witnesses. There are two project that I'm aware of in my 260 BILL NO. 990812 district. One has already been tiffed. That's the multi-level high-rise apartment at Seventh and Walnut. So that wouldn't even come under this; they've already gotten tiffed. The other is the proposal by DePaul for a high-rise development on the river. So really it's only one that is even being proposed and would be affected by this. My hope is that what we get out of this is the same benefits that we got our of the conversion bill that will stimulate simultaneously conversions and new. Thank you. Thank you, Madam Chair.
Thank you. Do we have anyone else to testify on this bill? Please approach the witness table, sir.
I was trying to relate -- unfortunately, I wasn't here at the very beginning of the discussion. I was trying to relate the discussion that you and Chairman Glancy of the 261 BILL NO. 990812 Board of Revision of Taxes was having to this bill. Could you help me with that?
I think what the chairman was suggesting that in an area which we refer to the Center City from Washington Avenue to Spring Garden, river to river, there were about 77 buildings that, in his opinion, may qualify for conversion.
Converting vacant office buildings or industrial buildings to residential rental units which was a bill that this Council passed a couple of years ago. And beyond even all of our expectations there are a significant number of buildings that have already been converted or are in the process of being converted. Mr. Glancy suggests that possibly 40, 44 of those 77 buildings would qualify or pass muster just on the integrity of the building, not looking at the economics of the building for conversion. Should this bill pass, people may abandon the notion of doing the conversions and opt for new construction. What I say is even if they take that 262 BILL NO. 990812 building which would qualify for conversion but decided it's cheaper to do new and they tear it down, so what? We have a new building, we're providing for people to come into the City because there's a demand for people to want to move into the City and move into these rental units. Whether it's converted or new, I think we've accomplished our mission by repopulating these neighborhoods.
But the basic purpose of this bill is to remove the limitation that may be abatement applicable only to a home --
So the purpose of this bill is to eliminate that exemption.
And why that? Because I understood because I think I remember the original discussion, the main point was this is to benefit owner-occupied people.
Because originally, and correct me if I'm wrong, Mike, the bill I think said up to three or four unit dwellings, and we actually amended that to include 263 BILL NO. 990812 multi-level high-rise apartment buildings. And if you had a developer and he or she is required to live in a unit, how many units could they possible live in? It's really taking that out of there saying, you no longer have to be an owner-occupied unit to qualify.
If I may try to clarify very briefly. Under the current abatement programs of the City, apartment housing, newly constructed apartment housing, newly constructed rental housing is eligible for a three-year full abatement. This bill will shift that category of property into a new category and along with other recent amendments approved by Council within recent months would have the effect of having apartment dwellings receive eligible for a 10-year phased out abatement for newly constructed apartment buildings.
Newly constructed apartment buildings under this ordinance would go from eligible for a three-year full abatement to become eligible instead for a 10-year phased out abatement. Phasing out, you know, a hundred percent in the 264 BILL NO. 990812 first year, 90 percent in the second year, 80 percent and so on over years. 4
If I can just add, all new 5 residential construction would fit into that 6 category, all new residential construction. So 7 homeowners are part of that. 8
Homeowners are now already 9 part of that or will be pursuant to a very recently 10 passed ordinance. This would also extend that change to apartment dwellings.
And what was the concern you raised that you thought we ought to be thinking about?
The concern I raised, and just for consideration, was that the 10-year conversion abatement that is currently in effect is so successful that would this ordinance, which would encourage new construction as opposed to conversion of older buildings to residential dwelling units, would that impede the success of our currently very successful ordinance. And I raise that for Council's consideration.
And I gather Councilman DiCicco's response was sort of, so what, 265 BILL NO. 990812 it would be beneficial if it did.
At least I understand the issue now. I'm sorry to make everybody go over it.
Yes, Madam Chair. I just want to let the Committee know, and I mentioned it to the sponsor, I will have an amendment to exclude my district from this. I'd like to explain why. This bill, I believe, is a good bill for many areas in the City. I do not need or have to be responsibility for having encouraged the development of one more apartment building in my district. To the extent that different parts of the City have different needs, I would like that to be recognized. This little different from what I was earlier today. I have no problem with the concept of it or what Councilman is encouraging in certain areas of the City that could really use it. But, again, if there was a bill here that was going to figure out -- that was going to encourage apartments being torn down in 266 BILL NO. 990812 turned into single family houses, that's what people in my district would be looking for, not encouraging more apartments. That would be the purpose behind my amendment.
Any other comments or questions from Members of the Committee? I believe we have a gentleman that had wanted to be recognized. Mr. Kline.
Afternoon. Thank you for giving me the opportunity to participate. Thank you for giving me the opportunity to participate. My name is Steven Kline, and I'm the president of the Kline Company, and we specialize in developing apartments in the Suburban Philadelphia market, Bucks, Chester, Montgomery County, and down in Orlando.
Excuse me, Mr. Kline, can you identify where you live?
I live on 217 Delancy Street. I'm a Philadelphia resident, love living downtown, a long time suburbanite, wouldn't go back, it's the best, selling all my friends. Anyway, we've owned at site at 18th and Vine for 17 years. It's the large1 parking lot 267 BILL NO. 990812 right in front of Logan East. We've been trying to build a residential apartment community there for several years. Unfortunately, the economics don't allow us to do so. Let me explain a little bit to you why that's so. In the suburbs it costs us about $45 a foot to build an apartment complex. In the City, it's over $100 a foot because of the high-rise construction costs that you incur. The rents in the suburbs are about $1 to $1.10. The rents in the City, probably $1.60 to $1.70. So you can see the economics really are very difficult, almost impossible to complete. In addition, the real estate taxes in the City as they exist today after the short three-year tax abatement are double what they are in the suburbs. So what's happening is that you see no new apartment construction. There hasn't been an apartment construction of a new building for the past 10 years. What has been very successful is the bill where you have allowed the tax abatement for conversions of office buildings and industrial buildings to residential. So you have now approximately 8--, 900 units that have been completed and there are others in the pipeline. And to confirm what I'm saying, it's very easy. Just 268 BILL NO. 990812 look around the City. There are no new apartment buildings and we are seeing new conversions of older buildings to apartments. The marketplace speaks for itself. It confirms what I'm here to tell you. Without the tax abatement, there will not be any new residential apartments unless there is help from some part of the City, and the tax abatement program provides such a program. I've heard some comment here today as I listened to the testimony and I'd like to respond to that as well. It was said today that the City would lose certain revenues through the tax abatement program. And there is a study by Erston Young that points out that the City would gain revenues although the City would lose money from the tax abatement by populating the City with wage earners, obviously the wage tax and other incidental taxes are available. The other thing that happens as well, the Erston Young study says that about 75 percent of the money earned by people living in the City would be spent in the City. So there is a net gain in City populating the City providing housing of all types. What this bill is intend to do is really level the playing field so we have new 269 BILL NO. 990812 apartment buildings as well as converted apartment buildings. And I think and I can testify for my fellow developers that you will see both type of activities occurring because the conversion has a certain charm, a certain elegance that exist with an older building. A newer building is more contemporary, it's sleeker. It's like having two flavors of ice cream; some like chocolate, some like vanilla; some black clothes, some like blue clothes. And that's what you're really providing here, a chance to level the playing field to allow the City offer all different types of residential housing for people who want to come downtown. And in fact, there is a demand for people who want to come downtown. So it's my suggestion here that by passing this bill you would level the playing field and you would see in this City new development such as you're seeing of the conversion and you would have both types of building here and you'd have choices for people and make it further enticing to come and live in the City.
Thank you, Mr. Kline. The Chair recognizes Councilman DiCicco.
Thank you, Madam 270 BILL NO. 990812 Chair. Mr. Kline, the property that you mentioned that you own and operate as a parking lot, you're paying a certain dollar amount in taxes, real estate taxes today.
You would propose to build at some point a luxury high-rise apartment facility. Could you tell me what the taxes are today and what the taxes at the year of the tax abatement on the real estate of the improvements would be approximately?
Today I believe our taxes are about $50,000, give or take, and in 10 years from now I would think it would probably be somewhere from 600--- and 750,000 a year.
Not counting what the economic impact to the City is by bringing more people in and the spending, as was reported by Erston Young.
Basically, put 300 people in an apartment building and minimum salary would have to be $50,000. You're talking about 15 to $20 million OF earning power per year. Take the wage tax on that, it certainly makes up for the real 271 BILL NO. 990812 estate taxes and then all the money that's being spent.
Thank you. Any other questions? The Chair recognizes Councilman Cohen.
Could you explain why a conversion doesn't run into the same market problems that new construction does currently? You gave us the illustration of how much more expensive it is in Philadelphia for new construction and how you can't compete with the suburbs. Why can the City compete under conversion? What changes?
The bill that you passed several three years ago, the tax abatement has allowed the conversion of the older buildings to the residential apartments. That difference of not paying the taxes for 10 years has made the difference where something is not economically viable to where a project is economically viable, and that's made the difference. The first buildings that you see converted also have had other tax advantages, sometimes facade easements, historic 272 BILL NO. 990812 credits. So when it's all said and done, you've got to say that the initial round of conversions from office to residential has had some form of subsidy in one form or another, but primarily the tax abatement bill has been the major driving force and all we're saying here today is level the playing field, let new construction and the tax abatement for conversion exist side by side. And it's my opinion that you will see both converted residential buildings and new apartment buildings.
Well, the question I have is, their real movement of foot to keep knocking down the wage tax to the point, not only to go into 4 percent, but far below it if possible because most people for many years have said that's the real impediment to people coming into the City much more other conditions. Yet you kind of base your argument on the fact that more money will come in on the wage increase and the wage tax. And it just seems to me it continues to put the City in a very difficult bind. On the one hand we're trying to reduce reliance on it; on the other hand we're increasing the City's reliance on it.
Well, I think, sir -- I'm 273 BILL NO. 990812 not an expert, but I've just read some of these reports, and basically you put so much purchasing power in a 200 or 300 unit apartment complex that the amount of taxes that would be generated to the City through even a lower wage tax and amount of money that is spent by these residents who are coming down to the City will far exceed the amount of revenue that is not being paid because of the tax abatement. In effect, you can see that the new residents are paying more taxes than the building would have paid with real estate taxes.
Thank you. Any other questions from Members of the Committee?
Thank you Mr. Kline. Do we have anyone else testify on this bill?
My name is Ben Edison. I'm a developer from Manayunk. I was actually here on another issue, but I think it's important because I personally have taken advantage of this bill, the 10-year conversion bill. I converted a property 274 BILL NO. 990812 that was sitting vacant for eight years; it's now full. I took a survey of over 200 people who live there. The 200 people who live there represent $57,000 a year in income. That $57,000 a year income, as Steve said, can be translated into $12 million. Those people are paying City wage tax. Surprisingly, because I am in Manayunk, 70 percent of those people who are living in my apartments work outside the city, but yet they have chosen to come here and pay the City wage tax. Another interesting statistic is 70 percent of those people who live in my buildings previously lived outside the City. So I was able attract people who were suburbanites, they came into the City, and they're paying the City wage tax. The other incredible thing about my own survey is that very surprisingly none of these people have children. So they're paying City wage tax, they're helping our school system in effect by subsidizing our school system by paying our taxes and certainly they spend a lot of their disposable income in Manayunk. I heard that there's all these available buildings that can be converted, however, they're not in Manayunk. There are no buildings that I know 275 BILL NO. 990812 of, and I've been in Manayunk for years. I've taken advantage, like I said, of the older buildings and gone and converted them. There are no new buildings. Maybe Dave Glancy knows of one or two; I don't. I've been there a long time. So I think what's the difference? If it's new construction or old construction, the City is losing people all the time. The only other thing I'd like to add is I took a survey of my people again -- actually, City Planning did also. 46 percent of my tenants would consider buying a house in Philadelphia if they were available. So I mean, it's a home run for everyone here because one of the biggest problems is that we're losing all these people all the time.
Thank you. Thank you very much. Any questions from members of the Committee? Thank you, sir. Do we have anyone else to testify on this bill? Seeing none, I would ask the clerk to please read Bill Nos. 990760 and 990761. 276 BILL NOS. 990760, 990761 I'm sorry, at this point the Chair would like to recognize Councilman DiCicco.