COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, September 24, 2008 10:20 a.m. - - - PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN CURTIS JONES, JR. COUNCILWOMAN MARIA QUINONES-SANCHEZ COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 080573 - An ordinance amending Chapter 19-2600 of The Philadelphia Code, entitled "Business Privilege Taxes," by expanding the program under which a credit against business privilege taxes is given to certain businesses... RESOLUTION 080103 - Resolution authorizing City Council's Committee on Commerce and Economic Development to investigate, and to hold hearings on, the issue of diversity within Philadelphia's Building and Construction Trades... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning. Could everyone please take your seats. Before we start, could we please have a moment of silence for Officer Patrick McDonald. (Moment of silence.)
Thank you. Good morning. This hearing is called to order. This is a public hearing of the Commerce and Economic Development Committee on Bill No. 080573 and Resolution No. 080103. My name is W. Wilson Goode, Jr., Chair of this committee. I note that a quorum is present. To my far left is Councilwoman Maria Quinones-Sanchez. To my immediate left is Councilwoman Blondell Reynolds Brown. To my right is Councilman Curtis Jones. The title of the Bill No. 24 080573, amending Chapter 91-2600 of The Philadelphia Code, entitled "Business 3 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Privilege Taxes," by expanding the program under which a credit against business privilege taxes is given to certain businesses that contribute monies to community development corporations undertaking economic development activities within the City of Philadelphia, all under certain terms and conditions. The title of the Resolution No. 12 080103, authorizing City Council's Committee on Commerce and Economic Development to investigate, and to hold hearings on, the issue of diversity within Philadelphia's Building and Construction Trades, and further authorizing the Committee to issue subpoenas to compel the attendance of witnesses and the production of documents and other evidence. We will take testimony on the resolution first related to construction industry diversity. Our only witness today is Mr. A. Bruce Crawley. If he 4 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 will approach the witness table. (Witness approached witness table.)
Please state your name for the record and proceed with your testimony.
Good morning. My name is A. Bruce Crawley. I'm a life-long Philadelphia resident and a business owner here in the City. I was also a founder and first chairman of the Board of the City's African American Chamber of Commerce and I currently serve as a Board member of the Technical Assistance Center for Emerging Contractors, an organization that provides training, financing, management and technical assistance and business development support to black and minority contractors. 5 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 I also currently serve as a member of the Mayor's Commission on Diversity in the Construction Industry and as a member of the Diversity Inclusion Oversight Committee for the Pennsylvania Convention Center Expansion. I present that background to establish for you that I have been concerned about, and involved in, the issues related to the ongoing lack of diversity in Philadelphia's construction industry for a very long time. I also want to quickly add, at the very outset, that I believe this city has, for far too many years, squandered a long series of opportunities related to billions of dollars of construction projects wherein there could have been, and should have been, greater inclusion of blacks, minorities and white females, both as workers and contractors. For those who may wonder why this issue is still so vitally important in a city like Philadelphia in 2008, I 6 9/24/08 - COMMERCE - BILL 080573 - RES. " The report was produced on August 30, 2007 by Todd Swanstrom of St. Louis University. S. 19 Census Bureau reports that one in every four persons in Philadelphia is living in poverty. According to that report, "The Road to Jobs" -- and these are just a few of the highlights -- construction is one sector where you can earn a decent wage 7 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 without a college degree. The evidence for this is that less than ten percent of construction workers are college graduates. African Americans have systematically been excluded from better-paying skilled trades, including in the construction industry, since slavery was abolished. In 2003, the national median wage for black men was only 73 percent of the white male median wage, and Hispanic men only made 63 percent of whites. The unemployment rate for blacks in that same year was twice that of whites. The unemployment rate for Hispanics, both black and white Hispanics, was almost 50 percent higher than for whites. High rates of unemployment and low wages have reduced the number of men who marry, leaving many women to raise children on their own. Female heads of household suffer disproportionately from poverty, and the children who grow up in those households generally do not do as 8 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 well in school. Communities with high levels of poverty and unemployment suffer from social problems, including high rates of crime, teen pregnancy, high school dropouts and welfare dependency. S. cities, including our own right here in Philadelphia. The report goes on to say that in every metropolitan area in which the study was done -- and this was done in 14 metro areas across the country -- the 15 researchers found that African Americans 16 were underrepresented in the construction 17 workforce. In every metropolitan area, 18 women held six percent or less of construction jobs. If blacks were employed in construction at the same rate that they are employed in the overall workforce, the researchers estimate 42,700 more blacks would be employed in construction in the 18 participating metro areas. 9 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Based on the size of Philadelphia compared to those other metro areas, that would project an increase for black construction workers alone of about 6,960 new jobs. Today in the Philadelphia metro area, there are 174 black construction companies, quote/unquote, with employees, carrying a payroll of 1,138 persons.
That number should be added, of course, to the modest numbers of African Americans who are employed in non-minority-owned construction firms or who are union journeymen. For those who wonder whether there is sufficient construction work in Philadelphia to accommodate new minority and female workers, I want to point out that currently our city's construction workforce is significantly augmented from project to project by the addition of workers who not only live outside the City, but who also live outside this region. 10 9/24/08 - COMMERCE - BILL 080573 - RES. 3 trillion national construction industry is the fifth largest industry in the country on the basis of gross receipts, larger than motor vehicles and parts dealers, larger than food and beverage stores, larger than chemical manufacturing, larger than the nation's general merchandise stores. 4 billion in 16 local project revenues, won an average of 17 56 contracts each during that year and 18 created work for 3,931 full-time workers, 19 among others. 20 And when we look out on the 21 business horizon, despite the highly 22 publicized deterioration of the 23 residential construction market, there 24 will still be a significant amount of 25 public and commercial construction work 11 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 done here over the next several years. For example, the combination of the planned Convention Center Expansion and two beleaguered casinos represent an economic impact of more than $2 billion in construction-related contracts and the prospect of 4,900 construction jobs alone. There is certainly work to be done. There is an obvious opportunity, even in a depressed business environment, to grow our local economy and to increase our inclusion of more good, diverse workers and contractors, minorities and females. As I understand your Committee's Resolution No. 080103, you intend to investigate, and hold hearings on, the issue of diversity within Philadelphia's building and construction trades. As I have mentioned in previous testimony, I believe that while the focus of the building trades may be appropriate, it is only one part of the 12 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 larger issue of achieving appropriate levels of black, minority and female inclusion in the local construction industry. In my opinion, there are other significant players that comprise the construction industry whose cooperation will be just as important, if not more important, than that of the unions. At any construction project, as an example, the single most influential player is, of course, the project owner. In some cases, it is a hospital; in others, it is a church, mosque or synagogue. Universities are project owners, as are non-profit and community development organizations. In the case of the Youth Study Center, which is currently going out to bid, the owner is the City of Philadelphia. In the case of the Convention Center Expansion, the owner is the Convention Center Authority. Eventually there will be a construction project owner named Foxwoods and another project owner named SugarHouse. These 13 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 owners are the originator of the projects. They have ultimate responsibility and authority. It is their money that goes into the project, either invested or financed, and they absolutely have the authority to determine not only the design, size and scope of the project, but also the composition and quality of the workforce on their sites. There is a growing belief that in Philadelphia, construction project owners of both mainstream and minority-owned projects have been derelict in their responsibility to emphasize a need for workforce and contract diversity and, as a consequence, the subject is not a critical issue on their work sites. Other key players and potential allies in achieving diversity-related enhancement in this industry are, of course, the City's largest construction companies.
14 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 These are the people at the construction management level and at the general prime contractor level who have signatory relationships with the building trades, who are partners in the project labor agreements, who actually employ the workers who are sent to the construction sites by the unions and who can certainly do a much better job of communicating their interest in having a diverse work site and contractual composition. There is a lingering belief also that in Philadelphia, construction management firms and other large prime general contractors could do more to create a diverse work and business environment at local construction sites. Today, no one is really engaging them in such a program or creating accountability in that area. The commitment is simply not flowing down from the top. J. White began to stress such 15 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 involvement in a more focused and proactive way, that the unions whom they pay could continue to be non-compliant? Add to the list of key construction industry players the banks and surety companies that should be working diligently to develop successful working capital financing vehicles and bonding opportunities for minority and female contractors. It is virtually impossible for a small minority or female-owned construction company to be successful without such accommodations. Whose job has it been to monitor that activity? Finally, in addition to the ongoing monitoring that you intend to do among the member building trades unions, it would certainly be appropriate for City Council to obtain regularly scheduled reports from the City of Philadelphia itself as the owner of its own projects and as a facilitator for so many more projects wherein there has been 16 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 far less than satisfactory levels of participation for far too many years. As I'm sure you intend, none of these efforts need be seen as anti-union, anti-construction industry or generally antagonistic, but without a new spirit of cooperation and focus in this and other local industries for our common, citywide economic benefit, we will, most assuredly, continue to operate in separate racial, gender and neighborhood camps to the detriment of our entire local economy. As I mentioned at the outset of my remarks, I currently serve as a member of the Mayor's Advisory Commission for Construction Industry Diversity. I have been very pleased to date with the quality of the work being done there, but I do believe that there absolutely has to be an unwavering legislative commitment to ongoing compliance monitoring in this important area if we expect any of these historically unsatisfactory conditions to 17 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 change. In summary, I encourage you to expand the scope of your resolution to include all of these vital components of the local construction industry, and I commend the members of the Committee on their groundbreaking efforts to date to have this done.
Thank you for your testimony, Mr. Crawley. It's a good start to the hearing on this resolution. As I have mentioned to you privately, it is my intention to probably list this resolution at every hearing that we hold of this committee. I think it's that important. I think if we don't keep the emphasis there until we accomplish what is needed, that we'll be derelict in our duty. I'm glad that the Mayor's Commission is actually having some success in its work and has continued to be diligent, but I do believe that, as I said before, that is not a replacement 18 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 for the work we need to do as legislators. So thank you for laying out the issue as you have, and at this time if any members of the Committee have questions. Councilwoman Blondell Reynolds Brown.
Thank you, too, for your testimony. You mention on the last page of your testimony in the last paragraph that you're pleased to date with the quality of work being done by the Mayor's Advisory Commission for Construction Industry Diversity. Speak on that, if you will. What types of things have you seen that suggest that sentiment?
I don't want to preempt the people who have to give the 19 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 report in a formal way from the Administration. They have their information. There is an interim report that will be released sometime over the next few days within the coming week, so I don't want to get into that, but what I will say is that I was pleased when I was added to the Committee that they were primarily focusing just on workforce issues, and workforce issues are important, but they seem only to be focusing on workforce. There was a Workforce Committee and a Research Committee, and now fully empowered also there is a Contracting Committee. We serve on that. And a part of the issue is that people understand that if you really want to impact the workforce, you have to have African American, Hispanic, Asian, female-owned businesses that will employ people from their respective communities. That is not to say that you don't expect the mainstream companies to 20 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 also do their part, but the best place, the most logical place, to have that employment done is by people in the respective community. And so I think that is now a part of it and I think good work is being done and I'm, quite frankly, surprised. I didn't expect it to be --
Now, for sure you have a strong and rich track record in a number of different organizations on this issue. So how does what you see there differ from what you've seen in the past and thus give you the hope that things will be different going forward?
I think the good thing is that often times we find ourself in separate parts of the City across the tables at each other, across picket lines 21 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 from each other, but in this operation, this Commission, we have everybody at the same table. We have union representation, we have business representation, we have the head of the General Builders and Contractors Association, people from staff in the municipality. So all of these people are there. Donna Reed Miller is a member of the Committee. So I think everybody there together speaking has allowed us to initially get some stuff off our chest and then buckle down and do work that needs to be done. And I think there's a recognition that there is significant economic benefit in having this all work out. This is not just the Hatfields and the McCoys or, you know, some other silly game.
And you've aptly laid that out in your testimony when you speak to who all the primary actors are, like building owners. So are 22 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 any of these, the construction building, Gilbane, Driscoll, Turner, Intech or even the awardees of the Convention Center, those owners, are they at this table?
Well, the person who best represents the interests of the larger contractor community is Walter Palmer.
Walter Palmer, III, I think he is, Walter Palmer, III, who is the head of the General Builders and Contractors Association, and most of the large construction companies, construction management firms are affiliated with his organization.
They do their representation. They negotiate with unions through his office.
So I think it's critical that he's a member of that committee, and they understand that this 23 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 can't be resolved without them making the similar kind of commitment that people are expecting the unions to make.
Thank you, Councilwoman. Let me mention for the record that Councilman DiCicco is also present as a member of the Committee. Councilman Jones.
Thank you, Mr. Chairman. Mr. Chairman, as a point of protocol, am I allowed to call him Bruce since I know him years now? Is 18 that all right, Mr. Crawley? 19 (Laughter.) 20
A couple of things. One, I appreciate the testimony and the way it was framed. One of the things that was important to note in that testimony is that the problem has a rippling effect in different areas, 24 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 whether we talk about poverty in general or crime in particular and other aspects that aren't immediately seen by the lack of employment or lack of participation. It has rippling effects throughout our city. But likewise the solutions have to have a multi-faceted approach as well. What we do in the public sector versus what we do in the private sector versus what we do to incentivize, both positively and sometimes negatively, the adequate inclusion that we're going after I think is equally important. So with that, I'm going to ask a couple of questions kind of just to get them on the record, not so much out of curiosity, because I kind of know some of the answers. But by way of what the excuses generally are, that there are none, we can't find them, they're not interested, how are we going to quantify through any studies that are out there that there is, first of all, an available and ready and willing workforce? 25 9/24/08 - COMMERCE - BILL 080573 - RES. 080103
Well, that has been a major issue within that Commission on Diversity in the Construction Industry, and you probably know that the research component of that Commission includes Bernard Anderson, that's not a secret, at the University of Pennsylvania, but also there is, as a facilitator together with Anderson, who is the Chairman of that Committee, David Crawford from Econsult also at the Wharton School, and he's doing all the numbers crunching to determine what the availability in different crafts are, what are the availabilities in those crafts, and what is the true utilization. So at the end of the day, we'll come out of this being able to answer the question if people say, Well, we don't think there are people out here or we don't -- there aren't people out here. One of the problems of the "no 24 people out here" argument has been brought about by the existence of the way 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 MBEC has been put together and if you look at the fact that MBEC claims and probably has about 880, 890 certified MBEC business owners, black, white, female, Hispanic, Asian, disabled, all together about 880, and about 550 of them are from Philadelphia. So if you look at those numbers, you are liable -- and this is after years. And there are in 11 excess of 10,000 black-owned businesses 12 in Philadelphia alone. White females, 13 black-owned businesses, Hispanic and 14 Asian businesses together constitute 15 about 57 percent of all businesses in the 16 City, and MBEC has, you know, 880 and 550 17 from Philadelphia. 18 So the chances of a large prime 19 contractor who has been told that they've 20 got to do business with a certified MBEC 21 contractor or business owner, the chances 22 of them finding that particular business 23 owner in that certification file is slim, 24 and so they get waivers. So it's easy for them to say, Well, you know, I tried, 27 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 but I looked at the list and there were no left-handed paper hangers. So you don't have them in there. And I think that that is going to be addressed going forward, but that's been a major problem and it's been an easy excuse for people to get waivers and the reason why people are not getting the kind of business they ought to be getting.
Equally documentable by way of the contractors availability pool, which I understand, how do we then also take away the excuse of by way of personnel and over the long haul? Arguably, we have less skilled workers. I mean, I've seen studies that say that by way of major cities, and it has been put out there in the universe, if you would, that that is true. And let's concede that. Even though I don't agree, let's concede that point for the moment. How do we, over the long haul, correct if in fact it is true? Is there 28 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 going to be a kind of concerted effort to reassert trades within the public schools, shop within the public schools, young people who may not be college bound, but are definitely ready and available to learn trades and participate in this economy? So my point is that, as we said before, it has to be a multi-faceted solution and I'm questioning whether or not we are moving in that parallel track.
Yeah, I hope so, and I think that the apprenticeship program that the School District announced enthusiastically a couple years ago with the building trades, which hasn't been a rousing success, but I hope that's a first step in the direction of putting those kinds of training programs back into the classroom. With the program that they have in place now, the one they announced a couple years ago, you had to be 18 before you got into the program and you had to 29 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 be a graduate of the school before you got into the program. So the schools were really out of the equation, and so you wound up having people who, on average, were 31 years old who got accepted into the apprentice program, and they claim that those people had to do with that School District-related initiative. That's not true. So I think that everybody understands that we need to have that back in the classroom as it used to be years ago, and I think that there's a great feeling inside the School District. There are people who believe that. We've even seen information, though, that -- I think U.S. News and World Report did a study, put out a report about six, eight months ago that said that what they're saying to kids coming out of school with Bachelor's degrees and -- they are doing a study of people who graduate from Bachelor's degree programs. They said they're 30 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 recommending for the first time that some of these students go into blue-collar trades because those trades are not exportable, some of them, and they mention specifically the construction industry, the fire department. They're recommending this to college students, because some of the degree programs are leading to career choices that are overseas by the time the kid gets their diploma or their degree. So for the first time in its history, U.S. News and World Report recommended that this thing start to happen. So I think that the School District and other school districts around the country are starting to realize the great value of having careers that are not as exportable and the great value of having careers where you don't necessarily need a college degree, but you can move to the suburbs if you want to, get a nice car, have a nice pension. Some other ethnic groups have done that 31 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 for years. The new ethnic groups, the African Americans, Hispanics and Asians, ought to have that same opportunity. Those programs have also been, as you well know, Councilman, great reentry programs. They didn't have a name over the door that said it was a reentry program, but you had people who might have had run-ins with the criminal justice system who wound up with a job in some of the skilled trades and other unions and who remade their lives, sent their kids to college and became very successful. So all of that is very important, and especially important in a city like ours with a 17.9 percent Bachelor's degree rate, lower than virtually anywhere else in Pennsylvania, lower than the Pennsylvania average and certainly lower than the national average. So we've got to start from where we are, and the construction industry has to be a vital component in 32 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 reclaiming our economy.
I'm going to ask one question and I'm going to yield to my colleagues who probably want to weigh in on this matter, and hopefully, Mr. Chairman, we have enough time to be able to come back around, but my final point and question is that you can, throughout the history of this town, point to projects that have failed by way of participation inclusion, both in the realm of subcontracting and prime contracting opportunities, as well as job placement. But there is an example that comes to mind where it was done right, and that's the Lowe's project out in West Philadelphia where we invested somewhere in the neighborhood of $80 million and got record levels of inclusion. And I couldn't help but draw the relationship to your testimony that said it is by the will of government, but it's also by the will of the owner to want to do the right thing by way of that, and I want to have 33 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 you expound upon that, if you would.
No. I mean, it is a very good example of that. I mean, it flows down from the top, and we've mentioned in some of the public hearings that this is not peculiar to white owners. Black churches are owners of projects, and they really do need to have some introspective moments about why they don't have inclusion, representative levels of inclusion, on their own church construction projects. So owners, wherever you might find -- I've seen community development organizations in predominantly black communities not use black contractors to do their construction projects. So anybody who is an owner ought to understand that they have a responsibility. Then it flows down to the construction company, construction management company, and certainly the unions are a part of it. But I just think that we've been missing the most 34 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 important part of the ball, the guy with the money, the people who can make the decision, the people who can hold the workforce accountable. If the owner of a major project says, I want 70 percent of the people on this project to be Philadelphia residents, they'd better do that or they have a problem with the project labor agreement and maybe the guy goes somewhere else. One of the issues -- and I know this is an issue for the unions themselves, the building trades -- is that when you look at data across the country, there are about 8.4 million people who are employed as workers in the construction industry, and only about 15 percent of them are members of the building trades union. So the vast and overwhelming majority of people who work in construction are not union members. So, I mean, people are starting to look at whether they ought to continue to have 35 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 that option. People are supporting the unions here in the City of Philadelphia, but if the contractor, if the construction management company, if the owner says, This is the way I want this to work -- you can see that in other jurisdictions. People have exercised their options as owners to do what they need to do to get the kind of workforce they want.
Let me just mention for the record that on the Lowe's project in West Philly, it was definitely a matter related to the ownership, and part of the ownership was the West Philadelphia Financial Services Institution. It actually was owned by a community development financial institution created by the Empowerment Zone. That's part of what made the difference. Councilwoman Sanchez. 36 9/24/08 - COMMERCE - BILL 080573 - RES. 080103
I'd be remiss not to do an adequate follow-up. And that happened because the community -- the leadership with that community organization there made it clear, these are the conditions upon which this will be built, and if you can't comply with these conditions, then nothing happens. And so the community, coupled with both the elected and unelected leadership, worked closely, but put the pressure on that if you want to build, these are the conditions.
I think that in some cases, the owners, community-based projects, small churches, I don't think they understand that they have the option or the right to do that. I think they believe they are compelled to listen to what they've been told by the people who are doing the construction. I don't know that they -- and so a part of all this is not just bringing them in and holding them accountable. I think a part of this 37 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 is just orientation. When you're going to start to do a project, let them understand how much of this is your right and what you can insist upon, because a part of what you're doing should be to enhance the quality of the economy in your community. To have other people come in exclusively and get the jobs and leave is self-defeating.
And consequently, the beauty of that -- I'm sure someone here from that project can provide the hard, factual number, but the overwhelming majority of the employees in that complex out there walk to work. So there are folks right there in that community unemployed, hungry for work, and because of the conditions laid down by all the parties at the table, the overwhelming number of the majority walk to work.
Councilwoman Sanchez. 38 9/24/08 - COMMERCE - BILL 080573 - RES. 080103
Yes. Thank you, Mr. Crawley. I was happy to be a member of this Council when we took the leap that we did in the beginning of the year as it relates to this. As someone who has worked on this issue for a long time and for all of the acclaim that this was kind of a historic agreement, I had the opportunity to listen to some of the testimony that the construction industry, the Committee has been having and really was moved by some of the testimony about how deep this is rooted, people who are currently union members and how they're treated on the work at the site and so forth. Have you seen -- and this is kind of a personal question as someone who has worked on this for a long time. Have you seen an attitude shift in the unions?
Well, you know, I'm going by -- I think that the unions start to understand that when they don't 39 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 have carte blanche, then they are cooperative. All they want to do is continue to operate their organizations, pay people -- and have their people get paid and continue to get reelected into their leadership positions. They're not really trying to start trouble. I think they get away with -- and that's true of anybody. I think they do what they can get away with, and if nobody is holding them accountable, if nobody explains to them that this is the way business is done in the City of Philadelphia, then they will do it the way they have always done it. And I think that it took Council having the good judgment to stand up and say, Business as usual is not enough anymore. I think when that statement was made, it started to shift everything, and I see a more cooperative attitude among some of them. It's not universal. I mean, all of them have not submitted their data yet. So I think there's a way to come, but I think if the 40 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 new culture becomes the dominant culture, everybody will be cooperative. I think if you let the unions off the hook, if you let the contractors off the hook, if you let the owners off the hook, we'll be right back where we started. But they look to you and they look to the Administration and they look to Ed Rendell in Harrisburg for guidance. And it's going to be interesting to see what happens with the Convention Center and with these two casinos. If they ever get them built, we need to make sure that there's inclusion there.
In light of the expectations of the report that's coming out, one of the things that I ask you as a member of this Council and the Committee is that in the spirit of cooperation with the Mayor -- obviously this was a legislative initiative. The Mayor really took ownership to this, and we're doing this in collaboration -- that part of the report really include the 41 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 role of Council, because you mention this in your testimony. I mean, we've had to legislate this. So that we're clear around the expectations of the executive, but that we're also clear around Council's role in this. So I ask that as a member of this Commission, because that's what I'm going to be looking for. There's an executive part of this and there's a legislative part of this and what's going to be our role in making sure that we change this dominant culture that's existed for so long.
I agree, and I don't want to talk out of class because, again, the full report is coming, but there's been a lot of good work by a lot of people on that Commission. They've put in a lot of time, gone to a lot of meetings, and I think one of their concerns is that this will be one more report that gets put on the shelf and nobody pays any attention to, that the 42 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Administration may get distracted and go off in four or five other directions, by need or by choice. And I think there is an appreciation by individuals -- I mean, there hasn't been a vote, but I think there's an appreciation by individuals who have done a lot of good work of the fact that there ought to be some mechanism to ensure that this thing is handled, managed, monitored on an ongoing basis by a legislative body. I think that is very, very welcome.
Are there any other questions for this witness? (No response.)
We will now take testimony on the bill, and our first witness will be the Revenue Commissioner, 43 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Keith Richardson. (Witness approached witness table.)
Good morning, Commissioner. COMMISSIONER RICHARDSON: Good morning.
Please state your name for the record and proceed with your testimony. COMMISSIONER RICHARDSON: Keith J. Richardson. Good morning, Chairman Goode and members of the City Council Committee on Commerce and Economic Development. I'm Revenue Commissioner Keith J. Richardson. I am here to testify on Bill 19 No. 080573, which proposes an expansion of the business privilege tax credit to corporations for donations to community development corporations. As you know, the Department of Revenue administers this program, which provides an annual $100,000 business 44 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 privilege tax credit for ten years to firms that donate $100,000 per year for ten years to community development corporations. This program was originally approved in 2001 and provided for participation of ten corporations. The program was expanded in 2002 to 9 participants and expanded again to allow 10 for 25 participants beginning in tax year 11 2004, resulting in an annual cost to the 12 City of Philadelphia of $2.5 million. 13 Bill No. 080573 seeks to once again 14 expand the program, raising the number of 15 participants to 30 and the annual cost to $3 million. The program provides an opportunity for Philadelphia corporations to partner with non-profit community development corporations in order to provide resources for community economic development activities. Mayor Nutter, who supported the creation of this program while serving as a member of City Council, clearly understands the value 45 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 and positive impact this program has had for many neighborhoods and CDCs. However, due to the deteriorating financial position of the City, the Administration is concerned about the expansion of this program with an additional annual cost of $500,000. As Mayor Nutter has shared with you and the citizens of Philadelphia, declining national and global economic conditions have negatively affected the City's finances, leading to a decline in tax collection and poor performance of the City's Pension Fund. Business privilege tax revenue in Fiscal Year 2008 fell $34 million below projections and was 7.4 percent, or 32 million, lower than the Fiscal Year 2007 collections. The struggling real estate market has led to the second consecutive year of diminished real estate transfer tax collections. Real estate transfer taxes generated 15 percent less revenue in Fiscal Year 2008 than in Fiscal Year 2007 46 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 and were 51.4 million less than in Fiscal Year 2006. These declines in tax revenue, combined with a struggling economy that has undermined the Pension Fund, are projected to lead to a shortfall of at least 450 million for the City over the next five years. The recent disruptions in financial markets, along with the increasing likelihood of a slowdown in economic activity, threaten to make this number substantially larger in coming months. In this challenging environment, Mayor Nutter wants to have the opportunity to further discuss this program in the full context of our financial climate before any action is taken to expand it. I am joined today by representatives from the Commerce Department who work closely with Revenue in administering the CDC Tax Credit Program. We would be happy to answer any questions you may have about this 47 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 program. Thank you.
Thank you, Mr. Richardson. Commissioner, I have to ask this question for the record. This bill 8 was introduced on June 12th. At the point at which it was introduced on June 12th, is it your position that the City could have afforded the $500,000 expansion? COMMISSIONER RICHARDSON: In June 12th you're talking compared to now?
Yes. COMMISSIONER RICHARDSON: I would say probably so, yes.
As I look through the -- good morning. I'm sorry. COMMISSIONER RICHARDSON: Good morning.
As I look through the list, Commissioner, of the 48 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 participating CDCs and companies that were willing to embark upon this program, is there a correlation between community health viability, economic wherewithal, upward mobile communities and this tax credit? Is there, in your mind, a quantitative correlation between the two? COMMISSIONER RICHARDSON: I would ask if someone from Commerce could help answer that question for you that you have. (Witnesses approached witness table.)
Good morning. My name is Duane Bumb, Senior Deputy Commerce Director, and I'm joined by Andy Frishkoff from Commerce. Councilman Jones, in response to your question, I would sort of say that, yes, there is some correlation, because the sort of pairing of -- a CDC that can actually identify a company and sort of work through this sort of application process actually demonstrates 49 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 some capacity to find other funding sources to implement programs. So at the most sort of basic level, the fact that these CDCs that are currently within 6 the program because they've paired 7 themselves with participating companies 8 means that they've got a certain level of 9 sophistication in order to be able to do 10 just that. 11
And may I 12 then ask the follow-up question, as these 13 CDCs rise based on revenue they find, is 14 there a quantitative analysis done to say 15 that for every dollar that we put in, 16 there is this amount of matching dollars 17 found and also economic development or 18 community development that comes with 19 that? We haven't done any of that 20 analysis yet? 21
We haven't done it 22 sort of for the entire group of 25. We 23 certainly have sort of seen that on a 24 case-by-case basis. There are a lot of 25 good examples of that, and I'm sure 50 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 you're going to hear some testimony today from some of the participating CDCs on just that issue, but we still need to sort of do more analysis ourselves on that front.
And Mr. Bumb, that is part of the question. The question is, what analysis has the Commerce Department done? In preparation for this hearing, I asked the Philadelphia Association of Community Development Corporations to do an analysis of the program. But this program has been in effect for five or six years. There are partnerships 17 there. I'll ask the question related to 18 these 25 participants and related to 19 other CDCs that receive Commerce 20 Department funding, and the simple 21 question is, do you know what bang you're 22 getting for each buck? In other words, 23 if I were to claim that each dollar was 24 being leveraged in terms of two to three 25 dollars in terms of private investment, 51 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 is that part of the decision-making that will take place as we look to determine fiscal priorities over the next month or so?
I'm going to ask Mr. Frishkoff to sort of respond in some detail to that, but, yes. The premise that you're sort of raising is one that we would agree, which is that the analysis does need to -- we believe that the analysis will show us the level of leverage and sort of help to sort of indicate any sort of adjustments we'd want to make in our own reporting, the reporting requirements, to help us sort of fine tune that analysis.
Yes. Thank you, Mr. Chairman. Andy Frishkoff, Neighborhood Economic Development Director for the Commerce Department. We have been working with the Association of CDCs in looking at the information that they've used as part of their report that I believe they're 52 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 sharing with you and we found that we still need to do some more detailed information to answer the specific questions that you're addressing today around the specific leverage questions. They're not questions that were asked previously as part of the annual reporting and renewal process. So we have the information that's given to us --
Mr. Frishkoff, my question is not just related to the City's Tax Credit Program, but related to the CDCs that are also funded by the Commerce Department. As we look to make decisions in this financially stressful environment and particularly look at what type of economic development investments we're going to make and as we're setting public policy priorities, not only do I want to see the expansion of this program happen, but not only do I want to make sure that we continue to invest in CDC economic 53 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 development, which is partially already legally mandated by my CDBG ordinance, but I want to know whether the decision that's going to be made as we discuss this in the future -- and I've agreed to discuss this over the next month or so -- whether the decision is actually being made in a data-driven way and whether there is a fair analysis being done in terms of the type of investment and return on investment we're getting from this work.
And the answer is yes. In the neighborhood economic development side, we are actively engaged on this. Again, we have not focused so much on this particular piece of it, but the larger question, we are absolutely looking at that. We're trying to measure what else is happening in a particular neighborhood marketplace, trying to look at whether there are new businesses coming there, whether there are businesses closing. So we've been 54 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 looking even at it more globally, not just the work that the CDCs are doing, but what's happening in their neighborhoods, as much as we can track that on a data basis. Absolutely.
I think the Chairman is on point with my line of questioning, and, again, with broken English, I say if it ain't measured, it ain't managed, meaning that we're going to see a lot of choices over the next couple of months in making decisions about priorities and where we spend our limited resources at. But I don't want us to be penny wise and to be pound foolish. If in fact we are generating economic development, community development based on small initiatives that create a wealth that based on that initial priming of the pump, I don't want us to turn it off. 55 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Recently, one of these neighborhoods was named Town and Country's most livable communities. So I'm beginning to think that some of the things we do in government are actually helping the public, and if in fact that is, we should continue that. But where I think we have a challenge -- and this is not you on that side of the table versus us. It's us together, believe me when I tell you, because the budget deficit affects us as it affects you. We need to analyze where we're getting mileage out of investments and where we're not. PICA is going to demand that of us. The taxpayers are going to demand that of us. So when you say a thing, that we should cut a thing, there should be something quantitative next to it that says why. There were some arguments that I've heard in my limited time at Council that were compelling about things we needed to close because they could to a 56 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 person say, Well, if you're willing to spend $53,000 per person on this, then we should continue on, and then it forces us as a Council to make tough decisions with you. But in fact when that does not happen, in fact when we see good things happening and we don't know if there's a direct correlation, we have to prove it one way or another. And that's my only point, Mr. Chairman.
Yes. I guess I want to echo that and get some clarifications for myself. The Administration's position is against this, and I guess my concern over this is going back to the fact that some of the stuff is not measured, and as a Councilperson, I'm willing to say, Okay, we're going to put this as part of a holistic perspective, but this Council 57 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 has been consistent both in our CDBG hearings as it has been in our budget hearings, is that because the economy is so bad and housing is so bad, this is why this becomes even more important, not less important at this particular time. So I guess I just want to say that this -- I believe that this Council and my Council colleagues, both on this committee and in Council, are going to be looking to do more of this. I mean, and we sent that message when we added money to the Housing Trust Fund and other initiatives that initially the Mayor was against. So that for you to come to us with just the testimony that says, well, because of the budget, this is not important, when I think we agreed in our budget negotiations that this was in fact more important at this time, concerns me. So that obviously this is to the call of the Chair, but as we move forward and if he so chooses to hold it, I just want it to be clear to the 58 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Administration that this is what we need to be more strategic on, not less strategic on, and that when you come back to us, it is data driven and that you are mindful that this is areas that there's very little negotiation on as it relates to us in Council at this time, given the housing slump.
Thank you, Councilwoman. Clearly, it's obvious I have the votes to move this out of Committee, but I made an agreement to at least recess until next week, but we're going to continue to take testimony actually from the CDCs to continue to prove our point today, but thank you for your testimony, Commissioner. I would ask the Commerce Department to stay, because I'm sure we will have a lot more questions for you after we hear from the CDC Association and the actual community development corporations doing the front-line work in 59 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 these communities. Thank you.
We will now hear from the PACDC panel. They can come up as a group. (Witnesses approached witness table.)
Good morning. I believe our first witness is James White from the Philadelphia Association of Community Development Corporations. Mr. White, please state your name for the record and proceed with your testimony.
Okay. My name is James White and I'm the Policy Coordinator of the Philadelphia Association of CDCs, and I am here to express PACDC's strong support for Bill 23 080573. First of all, thank you, Chairman Goode and members of the 60 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Committee, for the opportunity to testify today. I know I gave you a list of folks, but a number of our members were compelled to come and speak, so we have kind of set ourselves up in an order, and they'll come and testify and all present their names to you. In 2001, under the leadership of Councilman Goode, the City Council unanimously approved the creation of an innovative pilot program encouraging new partnerships between community development corporations, CDCs, and businesses. In return for providing a predictable revenue stream to a CDC to plan and implement neighborhood economic development activities, a business receives tax relief from the City. In 2003, the program was made permanent and expanded to allow for up to 23 partnerships. 24 PACDC has just completed a 25 report, "Expanding Economic Opportunities 61 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 and Revitalizing Neighborhoods," a copy of which was distributed to the Committee prior to my testimony. The report highlights neighborhood economic development accomplishments supported by the CDC Tax Credit Program and lays out a series of recommendations for making it an even more effective tool in increasing economic vitality and livability in our neighborhoods. Based on our review of the 13 partnerships currently in existence, the 14 program has leveraged tens of millions of 15 dollars in private and public investment 16 to bolster neighborhood economies, 17 expanding local access to goods, services 18 and jobs while growing the City's tax 19 base. CDCs are using tax credit funds to 20 strengthen neighborhood commercial 21 corridors and to develop commercial real 22 estate, to help new businesses get 23 started, to provide services to existing 24 businesses, to market their neighborhoods 25 and help residents obtain jobs, resulting 62 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 in significant positive economic impact on the communities that are participating in the program. In addition to the fact that this program has encouraged many businesses to develop partnerships with CDCs for the first time, one of the most encouraging findings of our research is the strength of the partnerships being formed between businesses and CDCs. Most of the businesses involved in the tax credit programs are supporting their partner's work through far more than financial contribution. Several CDCs are here today to testify about their economic development work and can better report on their efforts than I can. I would like to use the remainder of my time to highlight a few of our recommendations to boost the impact of this program overall. PACDC recommends the following three legislative changes to strengthen the City's CDC Tax Credit Program: 63 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Expand the program by raising the cap of the number of partnerships that can participate; open up the program to boost a broader range of businesses and address the potential impact of declining business privilege rates by allowing a CDC to partner with up to two businesses that would share the credit for the hundred thousand dollar annual contribution; allow a limited number of CDC intermediaries to participate in the program to provide capacity building support to CDCs. We also recommend that the following regulatory or administrative changes be implemented: Strengthen the program's accountability and reporting requirements to facilitate better information and data collection that can be used to measure impact and share success; reward high-performing CDC partners with access to additional resources to support their neighborhood economic development work; develop 64 9/24/08 - COMMERCE - BILL 080573 - RES.
080103 program guidelines that clearly spell out the requirements and expectations of the program participants and undertake a concerted effort to market the program to potential business partners; convene participating partners on a periodic basis to share knowledge and best practices and utilize electronic communication to foster communication with partners. The legislation before you today as proposed would help accomplish our first goal, expansion of the CDC Tax Credit Program to enable an additional five partnerships to participate. Numerous other CDCs undertaking significant economic development work are waiting in the wings for these partnerships. Expanding the program will provide critical long-term resources to enable more communities, as well as the City overall to benefit. While we understand the concern over the City's current budget situation, 65 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 we also believe investments to strengthen our neighborhood economies and businesses will produce long-term benefits to the City, including a stronger tax base. In fact, now is a critical time to invest in the CDC Tax Credit Program, as strong neighborhood economies and commercial corridors are critical to building strong communities that attract new residents that have choice. Without such investments, we will not be creating the conditions for long-term revenue growth. As Senior Advisor to the Mayor, Terry Gillen is quoted in last Friday's Philadelphia Business Journal regarding the City's budget shortfall. She's quoted, "It's very important, the only way we are going to get out of this is to grow our way out of this," Gillen said of the financial problems. " CDCs have a long-term 66 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 commitment to their neighborhoods. The CDC Tax Credit Program provides long-term flexible funding to support this commitment. There are CDCs here to testify about the program's strong impact on our city, as well as prospective program participants who are presently engaged in economic development activities in their neighborhoods that will speak to how to expand the Tax Credit Program and how it could do even more to help us and help our communities. We believe this program should be a strong integral part of the City's overall economic development strategy and we urge the Committee to support Bill 18 080573. Thank you.
Thank you. I'm going to take testimony from all of the witnesses and then open it up for questions. The next witness can state your name for the record and then proceed with 67 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 your testimony.
Thank you. Good morning, City Council members. I'm Nilda Ruiz. I'm President and CEO of Asociacion Puertorriquenos En Marcha, commonly known as APM, and I'm here today to express my support for Bill No. 9 080573. The partnership between APM and Blank Rome has been extremely fruitful. In the past three years, we have been able to leverage their pledge of 100,000 per year many times over. With these funds, APM has embarked on a feasibility study of their Germantown Avenue commercial corridor from York Street to Berks Street. We have started the development of a 2,500 square foot TruMark credit union which is under construction and will provide the much-needed services to the unbanked in our area and the first of its kind in decades. We've began the pre-development activities of a $40 million 68 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 transit-oriented development project at the Temple Rail Station corridor that will create much-needed jobs and bring an infusion of investments from outside the City. We completed an infrastructure study along Germantown Avenue from Berks Street to -- Germantown, Berks Street and between the Temple Rail Station and the Elevated Station which resulted in a commitment of $1 million from Home Depot for greening -- from the Home Depot Foundation for the streetscape infrastructure of improvements. So some of the answers about how this can be leveraged, we're living proof of that. These funds are allowing us to bring our vision to fruition for a healthy and sustainable community and a city. We're all cognizant that the City's budget is tight and that the business privilege tax has decreased by eight percent this year. However, the commitment of $500,000 per year from this 69 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 budget will allow others like APM to leverage this funding and provide economic engines that will provide substantial returns to the City. So I respectfully request your support for this bill and deeply thank Councilman Wilson Goode for introducing it. So mil gracias.
Thank you. Please state your name for the record and proceed with your testimony.
Thank you. Good morning. My name is Kira Strong and I'm here on behalf of People's Emergency Center Community Development Corporation in support of the bill introduced by Councilman Goode to expand the City's Tax Credit Program. PECCDC provides an array of housing, economic development and quality-of-life activities to transform our West Philadelphia neighborhood into a community of choice. PECCDC has been fortunate enough to be in the sixth year 70 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 of a very productive partnership with Duane Morris through the City's Tax Credit Program. This partnership has enabled us to undertake a comprehensive effort to revitalize the Lancaster Avenue commercial corridor from 38th to 44th Streets. We have improved the streetscape with new trees, eight 10 mosaic tree pits, four murals and 26 new 11 trash cans, helped eight businesses 12 renovate their facades, with five more in 13 the pipeline, and we also fund daily 14 street cleaning services. Additional 15 streetscape improvements are on their 16 way, as well as the completion of the historic West Philadelphia Title and Trust building facade improvement, otherwise known as Hoagie City, at 40th and Lancaster Avenue. This funding has also supported business recruitment and promotion that allowed us to publish a comprehensive business directory, attract 20 new businesses to Lancaster Avenue and 71 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 provide existing businesses with technical support to allow them to grow and expand. This funding has also supported our core operations and, importantly, allowed us to leverage city, state and private funding to create true impact on Lancaster Avenue, which has attracted over $3 million of investment on the corridor and over $40 million of investment in the community, with more, we hope, in the pipeline. This program creates jobs and a thriving community for business owners and our residents. Over the duration of our partnership with Duane Morris, we have also attracted individual private investment and are receiving frequent positive feedback from both our business owners and our community members regarding the look and the feel of Lancaster Avenue. Thank you to PACDC, Councilmembers and Councilman Goode for your support to expand this vital 72 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 program.
Thank you. Our next witness, please state your name for the record and proceed with your testimony.
Good morning. My name is Ann Mintz and I'm here on behalf of University City District. 2 square mile area of West Philadelphia. I'm proud to be here to support Bill No. 080573 and I'd like to thank Councilman Goode for introducing that bill. UCD supports the economic development of University City. We provide services that improve the competitive environment for hundreds of small, independently owned businesses and enhance their ability to compete in the marketplace. Tax credit funds provided by the Intech Corporation make these activities possible. We're in the third year of our 73 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 partnership with Intech. These tax credit funds support all our core activities: neighborhood initiatives, Clean and Safe programs and marketing. This is particularly important to UCD, because all of our funding comes from voluntary contributions, grants and fee-for-service. We make a substantial investment in the cleaning and safety of our neighborhood. Tax credit funds support the 27 men and women of our Public Space Maintenance team, who clean 160 blocks in University City, removing 150,000 bags of trash every year, and supporting four community-wide clean-ups every year. They also work with corporate volunteers on corporate work days, allowing employees of corporations like Citibank and Comcast to get more involved with the neighborhood quite literally on the ground. Tax credit funds support UCD's Summer Jobs Program. We created this 74 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 program in the first year of our tax credit funding with ten high school students. It grew to in the second 5 year and 30 in 2008. All these kids are 6 juniors and seniors in high school. 7 They're all residents of West 8 Philadelphia. Most of these kids have 9 never had a job before. Most of them 10 told us they didn't know anybody who had 11 ever had a summer job. They receive 12 real-world job experience and workforce 13 readiness training and are paid for the 14 workforce readiness training. 15 Tax credit funds support our 42 16 Safety Ambassadors, highly visible 17 deterrents to crime on the street seven 18 days a week. Serious crime in the 19 district has dropped by 20 percent since 20 UCD was founded in 1997, and that program is the recipient of a national Crime Prevention Award. Tax credit funds support the Neighborhood Initiatives Department, which includes the commercial corridor 75 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 program, which directly serves small businesses on the two corridors we manage, Baltimore Avenue between 45th and 50th Street, Lancaster Avenue between 34th and 38th. We can document that new 8 businesses opened in our district in 2007 9 alone, six of them on the corridors we 10 manage, a net 85 new businesses since our 11 corridor program was started. We've made 12 over $173,000 in facade improvement 13 grants to small, locally owned 14 businesses, leveraging $825,000 in 15 private investment in corridor businesses 16 and over $4 million in private funds on the Baltimore and Lancaster Avenue corridors, not counting the $5 million in streetscape improvements that are going on on Market Street right now since there's no tax credit funds in that project. We invest tax credit funds in capital improvements, which have made a dramatic difference on the commercial 76 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 corridors. The tax credit investment there has leveraged over $1,250,000, again, on the corridor alone. Tax credit funds support our marketing program. For instance, we operate a promotion called Dining Days. Ten thousand dollars a year in tax credit funds leverages over $100,000 a year in donated promotional services on behalf of participating restaurants. Businesses 12 at these restaurants increases by 400 or 13 500 percent during Dining Days. 14 Partnerships such as Dining 15 Days are crucial in these challenging 16 times.
A small independent Ethiopian 17 restaurant on Baltimore Avenue cannot get 18 promotion donated by Philadelphia 19 Magazine, but we can, working on behalf 20 of all 21 of those restaurants. 21 We leverage our tax credit support many times over. It's a very good investment in the future of our neighborhood and the future of our city. Thank you so much for the 77 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 opportunity to come this morning and speak on behalf of this program.
Thank you. Our next witness, please state your name for the record and proceed with your testimony.
I'm Sara Corlett. I'm the Director of Economic Development for New Kensington Community Development Corporation and I'm here in support of Bill No. 080573. Our CDC has used these tax credits to service primarily the areas of Fishtown, lower Port Richmond and East Kensington. This funding has allowed New Kensington's Economic Development Program to flourish, and NKCDC can offer assistance to local businesses in the form of licensing and permitting navigation, zoning guidance, marketing and promotions, and access to financing. 78 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 And as a direct result of this tax credit program, NKCDC has been able to build an economic development staff of four, working to help entrepreneurs and strengthen our local business community. I'm going to list here some of our accomplishments since we became a tax credit partner in 2002. The Frankford Avenue Arts Corridor Plan was completed with the community in 2004. Since then, NKCDC has leveraged three and a half million dollars in pre-development and implementation funding from the City and the State and foundation. The William Penn Foundation, because of our tax credit partnership, has given us several hundred thousand dollars to do early action plans to move this project forward, our arts-related development strategy, including eight art racks, which are bike racks that serve as art sculptures; a corridor marketing brochure in tandem with a 79 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 corridor-specific website; pedestrian-level lighting for businesses; partnerships with Mural Arts; a facade design assistance program, are all just some of our accomplishments. Six businesses completed our Design Assistance Program on Frankford Avenue and implemented the recommendations. Just in 2007 alone, seven new businesses opened up on Frankford Avenue, and since January 2007, the entire service area has seen 45 new businesses opening as a result of our work in this program. The City of Philadelphia has invested over a hundred thousand dollars in the 19125 zip code through the Facade Improvement Program. We have started First Fridays on Frankford Avenue just about a year ago with three participants, and today we have almost a dozen merchants participating in the special event. For two years now, we have put 80 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 on the Kensington Kinetic Sculpture Derby, which is a celebration of human-powered transit and an opportunity for us to promote our local businesses and alternative means of transportation. In addition, I'd like to mention other sources of funding that we've been able to leverage as a result of our tax credit partnership: A hundred thousand dollars from the Department of Commerce annually for corridor management; $30,000 from the Local Initiative Support Corporation; $305,000 from the William Penn Foundation from 2005 to 2007 to help implement our arts-related economic development strategy; $20,000 from the Fels Foundation for a feasibility analysis and exploration of an arts center on Frankford Avenue. We've also received $160,000 from the Department of Commerce to explore this project. Recently, we received half a million dollars from the William Penn Foundation to explore our 81 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 approach to sustainable neighborhoods, which will involve business energy audits, it will also involve additional lighting and improvements and enhancements to our corridor. Thank you for this opportunity.
Yes. My name is Tyrone Holland. Members of the Committee on Commerce and Economic Development, good morning. (Good morning.)
My name is Tyrone Holland and I'm the Director of Economic Development at the Ogontz Avenue Revitalization Corporation. OARC is a non-profit community development corporation whose mission is to create and stimulate economic development and improve the quality of life for the residents of West Oak Lane and other 82 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 neighborhoods in Northwest Philadelphia. Our approach to community development is based on what we term our five pillars: housing and economic development, business development, education and community relations, cleaning and greening, and arts and culture. OARC is currently in the process of identifying a potential partner for the CDC Tax Credit Program. Like all the organizations represented here today, we too are looking to use this program to increase our capacity and continue our work, supporting existing businesses on the Ogontz Avenue commercial corridor and attracting new businesses as well. Changes in the economy must always be anticipated. As the needs of the market change, so will the businesses who supply those needs. Over the years, we have used financial incentives such as establishing rents based on projected revenues and bringing select tenants to 83 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Ogontz Avenue. Another one of our strategies has been to acquire vacant commercial properties, renovate them and showcase these properties to prospective tenants. Tax credit funding under this program can be used for these acquisitions and renovations. Keeping the corridor vibrant and a magnet for commerce is a priority for us. OARC is celebrating its 25th anniversary this year. Since 1983, we have worked diligently to create an economic engine in Northwest Philadelphia. The Ogontz Plaza Shopping Center, the cornerstone of our economic development philosophy, has been the birth place of many small businesses in West Oak Lane. Keeping the CDC Tax Credit Program alive and well will set the stage for future entrepreneurs to flourish, not only in West Oak Lane but the entire city as a whole. Expanding this program is an important component of PACDC's Campaign for Vibrant and Safe 84 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Neighborhoods. OARC strongly encourages City Council to exercise its authority to make this expansion a reality. Thank you.
Thank you for your testimony. Our next witness? Good morning.
Good morning. I'm Phyllis Martino. I'm the Director of Community Development at Impact Services Corporation, which is a multi-service non-profit that's been serving the lower Northeast of Philadelphia since 1974. My understanding is that our presentation here was to talk about our accomplishments in calendar year 2007, and that is what I came prepared to do. So we have rather broad experiences. We've been partnered with Philadelphia Coca Cola Bottling Company for the last six years in this program. We do not have summary accomplishments to present here. We're also part of the 85 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 State's Neighborhood Partnership Program. So, again, we have a comprehensive development plan that is in operation for the area surrounding Kensington and Allegheny, which is the commercial corridor, which is the primary focus of our current tax credit program. In the last year or completed year 2007, we had 926 job placements in four different employment programs. So when we are looking at the need to have demand in the neighborhood and employ the families and the residents, this has been a primary focus of Impact's work. We have estimated that $5.8 million of wages were generated by these job placements and that $248,000 in City wage tax were generated by this. In the testimony that we presented, there is a spreadsheet with the detail. We also garnered $692,000 in state RACP funding for conversion and improvement of former industrial sites in the target area, which we were involved 86 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 in developing. On the wealth-building side, we brought over $1 million into the community by running the Volunteers in Tax Assistance Center, the VITA Center, that brought $1,025,000 in both returns and earned income tax credits. So, again, that's a very important way to bring a lot of buying power into the neighborhood, and that is what supports businesses. So our work with three business associations included the American Street Erie Avenue Business Association, the Kensington and Allegheny Business Association and the Aramingo Business Association. On Kensington, we bought -- 11 new businesses were established in calendar year 2007. We lost five, net gain of six, for a net gain of 119 jobs. Not necessarily all new to the City. We did not do that analysis. So they might have -- some of them, we know, shifted from outside the area to inside the area. 87 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 So the economic impact on the City we can't really attest to there, but... There was over $5 million in private investment associated with the establishment of those new businesses. We also worked to establish or initiate the establishment of a BID on the Aramingo commercial corridor. That's not finalized yet, but, again, part of the funding last year was used to hire the consultant to do that. And I think that about summarizes the economic impact that we could identify. It came to over $12 million between private investments, state investments, federal money brought into the neighborhood, and we think it's very important that the City continue to make investments in CDCs to do this sort of work, because we can access and mobilize very different sorts of resources than the City, and we think we've done it very effectively. Thanks. 88 9/24/08 - COMMERCE - BILL 080573 - RES. 080103
Good morning. My name is Gina Snyder. I'm the Director of the East Falls Development Corporation, and I thank you for the opportunity to testify today in support of Bill No. 10 080573. The EFDC has been in this program since its inception and we are partnered with the Pep Boys. This program has supported our economic development work. In East Falls what it has done is allowed us to help create opportunities for economic development. East Falls can be characterized as having a very strong housing market, but the commercial corridor has suffered disinvestment over decades, and there are a number of investors who are in there who have spent money but who have been very skittish and apprehensive about 89 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 economics generally and about the condition of the commercial corridor, and they have supported our work, as well as local businesses have supported our work, because we have the capacity to leverage resources for the district that they themselves cannot bring to the table. So we have hundreds of millions of dollars coming in in housing development and other pieces, but there is still the necessity to do the commercial corridor work. These are sort of a list, not complete, of some of the things that we have done since our partnership with the Pep Boys. We have leveraged capital funds for capital projects in excess of $2 million, which included lighting the Falls Bridge, creating a historic nighttime landmark. We operate a parking lot which serves the corridor, as well as the Schuylkill River Trail as a trail head. We hold events in the neighborhood, two major events, one 90 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 coming up on October 4th called Arts By the River, which draw thousands of people into the neighborhood to create the neighborhood as a destination, a riverfront business district. We are doing marketing for the neighborhoods. We have a Mural Arts program partnership. We are undertaking a feasibility of a business improvement district, which would allow the businesses and investors in the district to support themselves and to generate their own income off the assessments to get this marketing work done. We also work with local businesses to connect with City agencies and services to support them, because a lot of times local businesses are not aware of what's available with the City and can run into some frustrations. Another piece of our work is to reposition real estate to its highest and best use. We have been working with the Redevelopment Authority to reposition a 91 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 piece of real estate in the district and also with the Fairmount Park Historic Preservation Trust. One of the things that is critical to this work is that the work be community based. If it is not -- "highest and best use" might mean something else to someone who is into pure commercial development, but from the perspective of community-based economic development, we are there to make sure that the community meetings get held, that people in the neighborhood know what's going on, that they read articles, they get e-mails, they come to community meetings and they understand what's going on in terms of commercial real estate in their neighborhoods. One specific thing I wanted to add about the Pep Boys as a partner, the Pep Boys is a national corporation which happens to be located in the area. They have added a member to our Board of Directors. They have been active and 92 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 engaged with us. They have allowed us to come in and use their facilities. We think that this is a terrific example of a local partnership with a national organization. In sum, the program has created a successful partnership with a national business, and, in addition, the ongoing flexible funding has allowed the EFDC essentially to exist and to perform its work.
It is critical to supporting local businesses and investors and making sure that economic revitalization is community based. We certainly support the expansion of the program to allow other neighborhoods to have the same kind of resources brought to bear for their communities. Thank you very much.
Good morning. 93 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 My name is Gabriel Mandujano. I'm Executive Director of the Enterprise Center Community Development Corporation, which is affiliated with the Enterprise Center at 46th and Market. We work in a neighborhood called Walnut Hill in West Philadelphia. One of the things that I often discuss with my colleagues at the Enterprise Center CDC is how neighborhoods are like ecosystems. Instead of things like housing and jobs --
-- and a regional climate, we have -- sorry. Instead of things like animals and plants and a regional climate, we have things like housing and jobs and a regional economy. And like ecosystems where ice melting in the Arctic can have disastrous consequences for places halfway across the world, things that happen on Wall 94 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 Street can have pretty disastrous consequences with the sort of things that happen in our neighborhoods. So I'm here to testify that the CDC Tax Credit Program is very important for the health and stability of our neighborhood ecosystems in Philadelphia, and there's two reasons that I'd really like to emphasize. The first is that restoring a neighborhood's economy into balance requires more people around the table than just the government, resident groups and CDCs. We need corporations at the table, too, because, of course, we want their money. Everybody wants their money, but we also need them for the signals that they send to the market, the investments they attract and the specific expertise they bring. When one of Philadelphia's major corporations makes a specific and ten-year commitment to a neighborhood, the market listens. The CDC Tax Credit Program gives us CDCs the tools that we need to 95 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 engage these companies in really concrete ways. Cash is only the most obvious way that they get involved, but beyond that, they bring the expertise, their connections and a different perspective that maximizes the impact of the monetary contribution. Second, the program provides CDCs with the long-term predictability and flexibility of cash flows needed to help move a neighborhood economy and the economic ecosystem back into equilibrium. Any good economic development plan will have short-term goals and milestones and results that you can see only after a few years, but fundamentally changing the way that a neighborhood's sort of economic ecosystem works takes more than that, and often times the missing ingredients are time, perseverance and the ability to react to changes when they come. The CDCs Tax Credit Program because of its flexibility, because of its long-term duration, because it lasts for ten years 96 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 is really critical and pretty unique in a lot of funding instruments. I don't know anybody who makes ten grand commitments anymore. So speaking a little bit specifically about the Enterprise Center CDC, in 2005, we had actually secured a corporation who was willing to contribute to us under the partnership program. Unfortunately, our application was received after 25, all the spots were filled, so we weren't able to get a spot. If more spots were made available, then we think that these spots could have -- and we were successful in receiving one, then we think that there are two really big projects that we could move forward. One is something called the Center for Culinary Enterprises, which is a kitchen incubator that license commercial kitchen space to emerging entrepreneurs on an as-needed basis. These incubators in other cities across the country help small food 97 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 entrepreneurs -- bakers, caterers and the like -- grow their businesses and create jobs. And this is really critical, because if the typical entrepreneur on a nationwide level is white, college educated, native born and male, then the typical food entrepreneur and the typical tenant of a kitchen incubator differs from that typical entrepreneur in at least a few really important criteria. Philadelphia is one of the largest cities in the United States not to have a kitchen incubator. And we just acquired a building at 40th and Spruce to house one. So we estimate that this facility could create 40 jobs in the first three years of its operation. We're still doing the full economic impact study.
But this program would be critical in helping us move that project forward. There's also the Plaza Enterprise Heights, which will be a 98 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 mixed-use, transit-oriented commercial development located across the street from the 46th Street El Station in West Philadelphia. Building on one of West Philadelphia's biggest assets, which is the Market-Frankford El, this development will bring community-serving retail, jobs and economic dynamism to what has been a vacant lot and a check-cashing store. So this program will be critical in helping us move forward if we're successful, so I thank you for your time and the ability to testify.
Thank you for your testimony. Our next witness? Good morning. Please state your name for the record and proceed with your testimony.
Good morning. My name is Majeedah Rashid and I'm the Chief Operating Officer of the Nicetown CDC, and I want to first thank Council and this committee for allowing my colleagues and I to address you here today in 99 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 support of Bill No. 080573. The Nicetown CDC is a member of the Philadelphia Association of CDCs, as well as the Nicetown Business Association and the Northwest Philadelphia Business Coalition, which is more than 400 businesses throughout Northwest Philadelphia. The Nicetown CDC was founded in 1999 with the mission to establish productive and sustainable community economic development initiatives in Nicetown and its surrounding neighborhoods. We have fulfilled our mission with the holistic citizen-driven approach, which includes re-establishing the Nicetown Neighborhood Advisory Committee in 2002. The Nicetown CDC has been relatively successful with planning and economic development projects that have focused on Nicetown's commercial corridor. We began with the redevelopment of an abandoned building 100 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 that is centrally located on Nicetown's commercial corridor. Known today as the Nicetown CDC Community Center, this facility is the headquarters for the Nicetown CDC/NAC and houses a computer technology lab that supports the needs of Nicetown's businesses, as well as students and job seekers. Other activities there include a Mural Arts after-school program, block captains headquarters and meeting space for diverse needs. The Nicetown CDC has developed three commercial corridor revitalization plans that focus on stabilizing existing businesses and attracting new ones that will give our corridor more connectivity and create economic growth. From those plans, we have implemented a Clean and Safe initiative that encourages businesses and residents to be responsible for cleaning and maintaining the environment in front of and around their businesses and homes. This project 101 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 also included facade improvements, new trash receptacles and planters and banners along Nicetown's corridor. We later completed a series of projects that improved the conditions of Nicetown Park and established new signage to go along with the two new murals at its entrance. The Nicetown CDC holds its annual "Give Back to the Community" festival and concerts in this neighborhood park, which attracts thousands with its diverse vendors, arts and culture, and entertainment. The event has invested public and private sponsorship in the Nicetown community for more than six years. Our latest development plan, "Gateways and Bridges," is the second in a partnership with the Community Design Collaborative and highlights the north and south gateways of Nicetown's corridor. The north gateway includes the Nicetown CDC's proposed Nicetown Court low-income housing tax credit project, 102 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 which will yield 37 affordable rental units and 4,500 square feet of commercial space on the street level. With our first submission to PHFA, our Nicetown Court project was fully supported by the City of Philadelphia and was awarded nearly a million dollars from the Housing Trust Fund and a match of PennHOME funds. Nicetown Court will be resubmitted to PHFA in October 2008 and, when awarded, not if, will represent an investment that will catalyze additional neighborhood development, including new businesses and job creation. Nicetown Court and other economic development projects initiated by the Nicetown CDC are designed to establish short-term and permanent benefits for Nicetown in the City of Philadelphia. These projects will increase access to goods, services and employment in a neighborhood that suffers from the flight of industry -- or has suffered from the flight of industry for 103 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 decades.
The success of this strategic economic development planning is very important to Nicetown and the City, especially considering the current state of the local and national economy. In order to maintain our capacity to get this work done, the Nicetown CDC has relied heavily on collaborations and partnerships with City agencies, private corporations and other local CDCs who have already benefited from the CDC Tax Credit Program. The Nicetown CDC is extremely grateful for these valuable relationships. However, we need to identify and hire key staff that will allow our organization to stand on its own while continuing to achieve its economic development goals. The aforementioned Nicetown CDC activities have been successfully developed and implemented in spite of our constant challenges related to a lack of consistent operating capital. In the PACDC 2003 report on the 104 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 first year of the implementation of the CDC Tax Credit Program, the Nicetown CDC was listed as one of the CDCs that would benefit from participating with the program. As you can see in this year's updated report, more than five years later, that fact still remains true, and the Nicetown CDC is requesting that Council will consider another extension of the City's Tax Credit Program. This will allow an emerging organization like ours to continue improving the quality of life in Nicetown, establishing destination points that foster economic sustainability and a more attractive place to live and work.
Thank you for your testimony. Is there anyone else to testify from this panel? (No response.)
Thank you. I guess we'll open it up for questions. Councilman Jones. 105 9/24/08 - COMMERCE - BILL 080573 - RES. 080103
Thank you, Mr. Chairman. Just one bit of housekeeping. In East Falls, what councilmanic district is that? I'm sorry.
Good morning, Councilman Jones. It's the best councilman district in the City, the 4th.
Thank you. There you go. I just wanted to put that on the record. But on two more substantive things, the bike festival that annually happens there or the regattas or things that happen, give me a general sense of what that does for the community by way of economic development.
The bike race block party was essentially organized by local businesses because they wanted to have an event that would create East Falls as a destination as a national bike race that was happening, and until we started doing that event, nothing was 106 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 going on in East Falls. The bikers would just whiz by times. 4 Since we've started doing that, 5 we've had thousands of people coming into 6 the area, and we do a zip code survey, 7 and the folks who are coming, we ask them 8 what zip code they're from, they are from 9 the region. So it's not just coming from 10 our local zip code, they're coming from 11 the area, from out of state, from New 12 Jersey and they're finding it as a 13 neighborhood, and the businesses are 14 supporting it because those folks are 15 going to come back and say, Okay, I was 16 here for the bike race, now I can go out 17 for dinner at this restaurant, I saw that 18 big chili pepper. Those are the -- 19
Johnny Mananas, Franco's. Maybe I'll buy a house in the neighborhood, looks really nice. Those are the kinds of things that are happening, and that's why the local 107 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 businesses support it.
And they're spending money when they come and creating tax revenues for the City of Philadelphia?
Question on Ogontz Avenue Revitalization Corporation, if they're still here. (No response.)
I would ask them if they were here, that three-day festival they do up there that is probably arguably one of the best in the City of Philadelphia, which is not in my district, for the record, but creates the buzz about Philadelphia. Thousands of dollars are spent each day in the local businesses. And I could go -- my point is, I could go all around this table as to whether it's an art festival, jazz festival, economic development activity, stimulation of thought and discovery of our neighborhoods to say why this is 108 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 synergistic to that, but I won't do that. The other thing that I would ask, are all of you recipients of CDBG dollars? (Most shaking head in the affirmative.)
Okay. For those of you who have received CDBG dollars, have they been reduced over time? Have they been cut back? Does anybody have a sense of that?
Well, I can pretty much assure you that the City has been cut back. So there's probably going to be a reduction in CDBG dollars. So when we have tax incentives like this for the private sector to step in, I don't know if it's a wise move if we're having 109 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 less government dollars to then create a disincentive for the private sector to step up to the plate and participate. That's my general assertion. Also, if you don't do the work you do in the communities, whether it's housing development, whether it's economic development, whether it's marketing of a historical corridor like Lancaster Avenue or Frankford Avenue or Roxborough or any of those dozen places in between, who does it? Who but you will do this? (Nobody.)
Nobody. So you're filling an important role in keeping neighborhood interest alive and well. So, Mr. Chairman, I rest my case on this.
Thank you. Good morning. I underscore 110 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 that you are indeed serving an enormously important role and filling a vacuum for the communities where you serve, and so in an interest to raise the bar -- let me ask first, how many of you were privy to A. Bruce Crawley's testimony at the opening of this hearing? (Most raising hands.)
How many of you currently have major development projects going on of any type? (Couple raising their hands.)
Can I see by show of hands to the Councilwoman's question? (Couple raising their hands.)
And what type of procedures, provisions do you put in place to ensure that those who are working on those projects look like the community where they sit? In other words, how many of you have ever hired an African American, Latina American-owned construction company? 111 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 (Couple raising their hands.)
The point being, that A. Bruce Crawley -- you're certainly welcome to comment, but the point being that A. Bruce Crawley indeed raised my just overall awareness that wherever there are owners who are involved in construction projects, then the owners should be obligated, responsible, feel committed to the notion that those in the community should have an opportunity, and to the extent that that's not happening, then on this particular issue we're all as guilty as the major construction owners in town who we know violate this all the time. Please, sir. 112 9/24/08 - COMMERCE - BILL 080573 - RES. 080103
If I may, Madam Councilwoman, I believe that most of our members do a lot of work in their communities working with the residents and always have done -- well, it may not be construction or housing development. Some of the economic development I think that UCD does, some of the work that APM, PECCDC and all of them do do involve --
Sir, we'll get to your comment. I need to be clear that this is in no way intended to diminish the enormous work that CDCs do. Let me repeat that. My question is in intended to in no way diminish the enormous work that CDCs do. My question 113 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 comes from the important testimony that was provided by A. Bruce Crawley on a very narrowly focused issue, and, that is, to what degree do all of us who are owners of any construction-related opportunities in our communities, to what extent do we go to to ensure that residents from the community are also a part of that economic development opportunity. So, again, my question is very narrowly focused and in no way suggests that there are other varying means by which CDCs ensure that residents from those communities are intimately involved.
To your point, Madam Councilwoman, all of the CDCs here have Boards that are resident driven. They reflect their communities. Most of the communities are predominately minority-based communities in neighborhoods.
You say 114 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 are or are not?
I know that our jobs have 51 percent participation from the community.
Mr. White, first, please just identify yourself for the record again.
Mr. White, just getting back to Mr. Crawley's testimony, Mr. Crawley even within that testimony not only talked about community development organizations, but beyond this, he even singled out black churches, which in some cases are 100 percent African American. They raise money through ties and offering. They decide to expand their buildings and then sometimes they don't think about it. So I think the Councilwoman's question is, to what extent are the CDCs 115 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 thinking about it when they're spending their money as owners to build something? Are they making sure that they're creating the type of economic opportunities that should exist and is that diversity there or not?
I believe that diversity is there. I believe that a number of them could answer that individually if we allowed the time and with the Committee's permission. We'd be willing to even provide research to the extent of that answer. I think that you'll find that most of our members wholeheartedly are totally entrenched and involved in representing improving the lives of their residents. Most of the communities they work in are distressed communities or formerly distressed communities when they got in there. I'm going to let Ms. Ruiz from APM as well. I just, you know --
Actually, there's not a need to necessarily go that 116 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 much further today. That's actually the purpose for why I said at the beginning of the hearing on the other resolution, we're actually probably going to hear that resolution every time we convene a hearing of this committee for that purpose, and we will definitely invite PACDC to come back and talk about those experiences. And that --
-- particular resolution on construction industry diversity is valid until December 2011 and there's not going to be one hearing on it. There are going to be many hearings on it, and that's probably going to be the one issue that will always be in this committee.
And so I will make the formal request, follow up on your offer that, yes, we will ask -- and I will put this in writing -- ask for a complete report on the CDCs that do business with PHDC and a breakdown and 117 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 breakout of how the residents of that community are indeed connected to any of the building trades associated with that project. Thank you.
Just one other point. While we're measuring things, again, it's helpful -- and I did note that in much of your testimony how you quantified what the original investment through the partnership was and how it served as a catalyst for other development. If we've challenged the Administration to say why it shouldn't be, I want to further encourage you to document in ways that you have, but in a way that we can then also compare what the cost-benefit analysis will be to one way or another support this going forward. Yes, there is a support from 118 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 this Committee, but it always helps, it always helps when we can point to new housing starts or new business starts or tax revenues from a festival that is generating new business for people. So I do believe there is a correlation between your activities in neighborhoods and the upward nature of the viability of those neighborhoods. And as important, where there are not these types of partnerships, where these kinds of connections are absent, I think we can also point to if there's no 15 teammate at the ground level from a CDC to be able to do the good works that you do, what does it cost us by way of a city when you're not there.
Are there any other questions for this panel? (No response.)
Thank you 119 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 very much.
I just would like to thank our Councilwoman for already expressing her support, Councilwoman Quinones-Sanchez.
Mr. Frishkoff, one question for the record. First, can you identify yourself again for the record.
Yes. Andrew Frishkoff, Director of Neighborhood Economic Development for the Commerce Department.
One simple question for the record. The type of information that we're requesting 120 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 regarding what type of bang for the buck you're getting from this particular program and from CDC economic development in general, do you believe now that enough information has been supplied to you that you have a better understanding before you came to this hearing?
I think that we actually had an emerging good understanding even prior to the hearing and better now. I think there's still some questions we need to ask of the recipients, and we have already pledged to collect the information better. But, yes, we have better information than before.
My question is, do you have a better understanding. And do you have copies of all the testimony?
And last question is, as we evaluate priorities 121 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 within economic development funding, are you going to hold all economic development programs to the same standard?
No; in terms of neighborhood economic development beyond that, as a representative here from the Administration. As we evaluate how we're going to invest in economic development and as stated in one testimony, it said that the Mayor's advisor on economic development says something I agree with, part of the only way we're going to get of this fiscal distress is to grow our way out of it, and so it's going to mean an investment in some ways in economic development. I'm just simply asking a question. As we begin this real discussion of setting public policy priorities in a financially difficult time, are you going to hold all economic development programs to the same 122 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 standard? Because as a former administrator, I've watched money dumped in certain places without any accountability whatsoever, and then when the question was asked about a neighborhood economic development project, those questions were a lot more stringent and there was a lot more accountability required as if those projects did not measure up, when in fact I know for a fact there were investment made in other type of economic development projects that were not held by the same standard.
I will say that the message that we've received from the Mayor and from Deputy Mayor Altman has been clear in lines with what you just said, that we all are being asked to justify and analyze our economic development investments along these lines. So I believe it is underway and that it is being done.
Not just 123 9/24/08 - COMMERCE - BILL 080573 - RES. 080103 there be an analysis, but that everyone is held by the same standard.
I believe that is underway and being done fully by the Administration.
Thank you. Is there anyone else to testify on this bill? (No response.)
Seeing none, this hearing is recessed to Wednesday, October 1st at 10:00 a.m. Thank you. Let me note for the record that Councilman Clarke is in attendance. (Committee on Commerce and Economic Development adjourned at 12:10 p.m.) - - - 124 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on September 24, 2008, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)