COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COUNCIL COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, May 6, 1998 9:38 a.m. - - - BILL NO. 980228 - An ordinance authorizing the Mayor, on behalf of the City to file an application with the United States Department of Housing and Urban Development ("HUD") for a Community Development Block Grant ("CDBG"), as required by Section 104 of Title 1 of the Housing and Community Development Act of 1974, Public Law 93-383, as amended, including all understandings and assurances contained therein, and designating the Mayor and the Director of Office and Community Development ("Housing Director") as the authorized representatives of the City to act in connection with the application to provide such additional as may be required and to accept the grant under certain terms and conditions. PRESENT: COUNCILWOMAN ANNA C. VERNA, Chairwoman COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILMAN JAMES F. KENNEY COUNCILWOMAN DONNA REED MILLER COUNCILWOMAN MARIAN TASCO COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN HAPPY FERNANDEZ - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 COMM. ON FINANCE - BILL NO. 980228 I N D E X John Kromer. . . . . . . . . . . . . . . . . . 4 Director of Housing, City of Philadelphia Dainette Mintz, OHCD Director of Special Needs 10 Kevin Brooks, Assistant Director . . . . . . . 14 Development and Training Office of Housing and Community Development Michael Bell, Director . . . . . . . . . . . . 19 Minority and Women's Business Enterprise Development, Redevelopment Authority Steven Mullin, Director Commerce . . . . . . . 22 City of Philadelphia Maceo Cummings, Executive Vice President . . . 56 Philadelphia Housing Development Corporation Noel Eisenstat . . . . . . . . . . . . . . . . 81 William Hankowsky. . . . . . . . . . . . . . . 93 Blaine Bonham, Vice President of Programs. . . 150 Pennsylvania Horticultural Society Lee Capkin, Executive Director of Housing. . . 157 Consortium for Disabled Individuals. Vivian VanStory, President . . . . . . . . . . 162 Community Land Trust Corporation Vincent Mason, Vice President. . . . . . . . . 162 Community Land Trust Corporation Bertha Barksdale, ACORN. . . . . . . . . . . . 167 Felipe Alvarez, HACE Business District Mgr. 170 Jeff Brown, President, AFSCME Local 1971 . . . 176 Pete Matthews, President, District Council 33 190 Lionel Drain, Community Developer, Mantua. . . 235 3 COMM. ON FINANCE - BILL NO. 980228 P R O C E E D I N G S
Good morning. This is the public hearing of the Committee on Finance. I would ask the clerk to please read Bill No. 980228.
Bill No. 980228, an ordinance authorizing the Mayor, on behalf of the City to file an application with the United States Department of Housing and Urban Development ("HUD") for a Community Development Block Grant ("CDBG"), as required by Section 104 of Title 1 of the Housing and Community Development Act of 1974, Public Law 93-383, as amended, including all understandings and assurances contained therein, and designating the Mayor and the Director of Office and Community Development ("Housing Director") as the authorized representatives of the City to act in connection with the application to provide such additional as may be required and to accept the grant under certain terms and conditions.
Mr. Kromer, before you start your testimony, I would like to invite Mr. Eisenstat and also Mr. Mullin to the table so 4 COMM. ON FINANCE - BILL NO. 980228 that we could hear all of your testimonies, and then we could proceed with our questioning. Good morning. Please identify yourself for the record, and proceed with your testimony.
Good morning, Councilwoman Verna and members of the Finance Committee. I am John Kromer, Director of Housing for the City of Philadelphia, and I'm pleased to testify here on behalf -- in support of Bill No. 980028. I have submitted copies of my written testimony, but I wanted to go quickly to emphasize a few highlights and make a few comments about this upcoming fiscal year. I do want to say that again this year, in order to meet our filing deadlines with the U.S. Department of Housing and Urban Development, I would like to request that the Finance Committee vote this bill out of committee with a favorable recommendation and with a request to suspend the rules to allow first reading at the next Council meeting. This is an exciting time for Philadelphia's Community Development Block Grant Program for Philadelphia neighborhoods, and I 5 COMM. ON FINANCE - BILL NO. 980228 really owe a lot of thanks to this Finance Committee and this Council for the progress that we've been making. Two weeks ago, the first houses in 6 the Cecil B. Moore Home Ownership Zone were 7 selected by buyers. And we have buyers -- some of 8 them moderate-income buyers -- for the first time 9 in our program heading towards settlement on 10 houses in the Cecil B. Moore area. 11 We have the nation's largest housing 12 counseling and settlement assistance program. And 13 sometime during the coming fiscal year, we will 14 have helped 10,000 households become first-time 15 home buyers. That will be a national record and a 16 real boost to Philadelphia's real estate sales 17 housing market. 18 I'd like to have three individuals make 19 presentations very briefly, a couple minutes 20 apiece, on special areas of activity in which we've been engaged this year first. But first, I wanted to also distribute some information about the funding picture that we face. The Community Development Block Grant allocation this year is approximately $68 million, 6 COMM. ON FINANCE - BILL NO. 980228 with home funding in the amount of approximately $13 million. And that's a very substantial resource. But as you can see from this chart, the resource has been cut in the past three years by relatively small percentages, but the percentages add up overall. And, of course, the cost of hammers and nails continues to see. This situation means that we've got to be as cost-efficient as we possibly can be, that we have to support our core programs -- housing counseling, the home ownership zone, moderate rehab, the Community Development Corporation, sales housing and rental development, and so on. And that is the basic thrust of this program. First I'd like to call on Belinda Mayo to briefly present some information about the employment and training and job-readiness activity that we are supporting.
Good morning. My name is Belinda Mayo. And I'm Assistant Director for Community Development, at the Office of Housing and Community Development. OHCD has continued to work for the School District nonprofit community-based 7 COMM. ON FINANCE - BILL NO. 980228 organizations and the private sector to identify job opportunities and to develop training and skills development programs that prepare low-income unskilled and unemployed residents for employment. Of particular interest -- there's a chart attached to my remarks that shows the programs that we're currently involved in and will be involved in the Year 24. Of particular interest is a new initiative that will facilitate a partnership between Community College of Philadelphia, communities and schools, OHCD, and American Airlines. American Airlines will establish an American Airlines travel academy that will provide training to high school juniors and seniors in the hospitalities and tourism industry. Through the Philadelphia School District's Small Learning Communities Programs, students will divide their learning experience between a basic academic curriculum and a specialized curriculum that will prepare them for opportunities in the hospitality and tourism industry. 8 COMM. ON FINANCE - BILL NO. 980228 In addition, Community College of Philadelphia will provide training facilities and instruction on related technical skills. Graduates of the program will complete the program as high school graduates and with up to college credits from CCP. These graduates 8 will be uniquely prepared to compete in the 9 hospitality and tourism job market at a time when 10 the City's experienced a growth in the industry 11 that brought $3 billion of resources to 12 Philadelphia in 1996. 13 Also during 1997, OHCD began a 14 collaboration with the Private Industry Council, 15 the Department of Public Welfare, and the Mayor's 16 Office of Planning and Policy to identify the 17 training and employment needs of welfare recipients affected by changes in public assistance regulations under the new temporary Aid to Needy Families program. As a result, resources are being coordinated in a way that leverages CDBG dollars and that fills funding gaps in program. The Year 24 proposed allocation of CDBG funds for the job training and education, more 9 COMM. ON FINANCE - BILL NO. 980228 than $750,000, is included as a resource in the City's Greater Philadelphia Works Program to be funded by the State's federally-funded Welfare-to-Work Program. Finally, in the area of job development, during Year 24, OHCD proposes to continue to support the work of the Greater Philadelphia First Corporation in identifying job opportunities in the private sector. The focus has been to work with potential employers to identify the human resource needs over the next five years. Greater Philadelphia First Corporation has been successful in this approach in the data-intensive and precision manufacturing industry. Working with corporate partners, GPF has helped to identify over 1,000 future job opportunities in the data-intensive field, develop training programs, and is currently identifying training providers. During Year 24, GPF will take the same approach in the hospitality and tourism industry, and particularly in the hotel industry, in light of the plans for the development of five new 10 COMM. ON FINANCE - BILL NO. 980228 hotels in Philadelphia by the year 2000. So, as you see, OHCD has continued to work closely with partners to make sure that we have a prepared work force in Philadelphia that can take advantage of economic opportunities that will become available over the next few years. We've tried to focus on programs on welfare recipients and chronically unemployed individuals, and we've met some obstacles but have been very successful in our partnerships.
Thank you. Next I'd like to call on Dainette Mintz to briefly describe some of our special needs housing initiatives.
I'm sorry, you're going to have to speak closer into the microphone. Thank you.
My name is Dainette Mintz. And I'm the Director of Special Needs Housing, at OHCD. OHCD special needs housing activities include the funding of transitional and permanent 11 COMM. ON FINANCE - BILL NO. 980228 housing for a variety of special-needs populations, which include the homeless, persons with substance-abuse problems, and mentally ill and mentally disabled persons.
Excuse me, I'm sorry. Members of the committee cannot hear you. Just pull the microphone closer to you.
The special needs populations include the homeless, persons with substance abuse, mentally ill and mentally disabled persons, persons with AIDS, disabled persons, and the elderly. OHCD provides development financing to special-needs housing projects selected through a competitive RFP process overseen by the Redevelopment Authority. Funding is provided to the Homeless Prevention Program whose goal is eviction prevention through delinquent rent, mortgage, and utility assistance, and the provision of job placement assistance, to reduce the threat of homelessness. 12 COMM. ON FINANCE - BILL NO. 980228 Funding is also provided to the Health Department's Office of Health and Mental Retardation to support assisted housing for persons with mental illness. And OHCD also funds the Philadelphia Transitional Housing Program, which is administered by the Tenants Rental Assistance Corporation and the Philadelphia Health Management Corporation to provide housing counseling, case management, and rental assistance to homeless households. Funding is also provided to support Dignity Housing's program of counseling for formerly-homeless persons residing in housing rehabilitated by Dignity. OHCD is also the grantee for Housing Opportunities for Persons with AIDS ("HOPWA"), funding for the nine-county Philadelphia region, and supports the following activities with the HOPWA: rental assistance, emergency assistance to prevent homeless, operating costs for community- based and other residences, information and referral, resource identification, and supportive services. 13 COMM. ON FINANCE - BILL NO. 980228 Funding is also provided to increase housing accessibility for disabled people and funds the Adaptive Modification Program, which modifies to make fully accessible the residences of homeowner and renter-occupied disabled households. Funding is also provided to support the Pennsylvania SIDS Center and fund technical assistance through the Urban Affairs Coalition and for the operations of special-needs housing projects. We also provide technical assistance to organizations developing or providing assistance to persons with disabilities or to elderly persons. OHCD also acts as the administrator and the packager of a competitive federal McKinney Homeless Continuum of Care Program, which funds local nonprofit organizations through a consolidated application. And OHCD serves as the agency that receives the funds and contracts with the agencies.
Thank you kindly. 14 COMM. ON FINANCE - BILL NO. 980228 Finally, I'd like to ask for a brief presentation from Kevin Brooks of the Office of Housing and Community Development, and Michael Bell of the Redevelopment Authority, confirming -- concerning employment and training issues associated with our development ventures.
Good morning. My name is Kevin Brooks, and I work as the Assistant Director for Employment and Training in the Office of Housing and --
Do you have copies of your testimony to be distributed?
Yes, ma'am. Unfortunately, the handouts are not my written testimony. Unfortunately, I didn't bring prepared written testimony for distribution. But we'll be happy to -- these are handouts that are being circulated now that address some of the construction employment 15 COMM. ON FINANCE - BILL NO. 980228 activities overseen by our office. My name is Kevin Brooks. I'm the Assistant Director for Development and Training, in the Office of Housing and Community Development. And my department is responsible for coordinating affirmative action and employment and contracting policy on behalf of OHCD, where our funds are spent. We work very closely with the Redevelopment Authority of the City of Philadelphia, and you'll hear from Michael Bell, who is the MBE/WBE Director for the Redevelopment Authority, shortly. We also work with PAC, the Philadelphia Housing Development Corporation, the Commerce Department, and PIDC. Our focus is on construction-related activities. We address employment and subcontracting on housing projects and commercial development projects in the City of Philadelphia. We perform oversight responsibilities, either directly administering the activities; or through our relationships with delegate agencies, outlay policies that they would adhere to. I'd briefly like to explain to you the 16 COMM. ON FINANCE - BILL NO. 980228 trends that exist right now in subcontracting and employment activities. And I think the handout that you have in front of you will help clarify for you that information. The first sheet you have in front of you is a listing of the subcontracting allocations by Councilmatic District for the first -- for the quarter, the last quarter, between January and March. We provide a quarterly report that shows the distribution of subcontracting by race and gender and location. And that's the most recent quarterly report we have. The second summary report you have summarizes the general contracts awarded. And you'll see there's a slight increase in the number of general contracts awarded to minorities over the past quarter. And you'll also notice a continuing trend of about percent subcontracting to MBEs. 21 This shows that there is a slight increase, as I 22 said, in the general contracting and in the 23 subcontracting activity on housing and commercial 24 projects. So that's one of our responsibilities. 25 The second responsibility we have is 17 COMM. ON FINANCE - BILL NO. 980228 working closer with PIDC to help ensure that Council's concerns and the City's concerns regarding minority participation on major commercial projects are achieved. And it's my understanding that PIDC will be holding hearings on these projects in the next couple weeks, and my office will be providing materials that address the subcontracting employment on these projects. Finally, I'd like to just highlight a couple of areas that we've identified where there's room for improvement; one being the area of professional services on development projects. When perspective developers want to do business in the City of Philadelphia, we have to do a better job of communicating to them the need to have a diverse professional team on projects here in the City of Philadelphia to allow more opportunities for minority and women in professional service. The second area that I would highlight is the number and the diversity of skilled tradespersons on construction projects, both housing and commercial projects. We just have to 18 COMM. ON FINANCE - BILL NO. 980228 do a better job of getting more skilled minorities and women on construction projects. Now I'd like to turn it over to Michael Bell, who will highlight some of the specific accomplishments on RDA-administered activities.
Okay. I have a handout, and I don't know if it was distributed.
Mr. Bell, before you start your testimony, can we just look at your first sheet, please (addressing Mr. Brooks).
In the 4th District, is that for an enterprise zone, why are there so many more in one district, and there's practical zero -- you have 31 contracts in the 4th District, and I see that other districts have absolutely zero. Can you please explain that?
This is a quarterly report, and it's for this period -- for this quarter. And it's some of the most recent information we have on contracts, both general contracts and subcontracts for that period of time. 19 COMM. ON FINANCE - BILL NO. 980228 Overall, there will be a distribution of general contracts and subcontracts awarded. But what you have is a snapshot of one quarter, the period between January and March 31st.
We provide a completed list on a quarterly basis, and I'll be happy to provide our quarterly 1029-A report to you.
My name is Michael Bell. And I'm the Director of Minority and Women's Business Enterprise Development for the Redevelopment Authority. And what I have to present to you today is just a summary of employment statistics and subcontracting statistics on Redevelopment Authority-sponsored projects. On an 8 1/2-by-14 sheet here, we have the projects, and we also have employment by Councilmatic district. So for 1997, during the year, we had a total of 753 Philadelphia residents working on RDA-sponsored projects, and we do have 20 COMM. ON FINANCE - BILL NO. 980228 a breakdown by City Council districts. We have derived this information from Section 3 reports that are submitted by the general contractors on these projects and also by the subcontractors. And we are going to try to increase these numbers this year -- we get the reports very early -- and then summarize where the employees are coming from on these projects. So for all these projects, they're in alphabetical order with the numbers of Council Districts from 1 to 10 totals on your right-hand side. On the second page, we have from -- what we do is we complete neighborhoods benefit strategy summaries, and we have the total employees that worked on these projects from which we have reports. And there were 1722 total employees that worked on RDA-sponsored projects during 1997; 720 minority, 17 female -- which that is a sore point; and 985 non-minority employees by project zip code and also by surrounding zip codes. We try to emphasize, wherever a project is being completed, that a general contractor 21 COMM. ON FINANCE - BILL NO. 980228 would solicit employees from the immediate zip code and also from the surrounding zip codes on a project. Also, you have a sheet which will company that and will talk about the contracts that were awarded to Philadelphia-based firms, minority-, and women-owned businesses in specific areas and the percentages. And these are projects for which we have completed neighborhood benefit strategy summaries. And we try to work according to the executive order that was signed by Mayor Rendell to try to keep 50 percent of what a total contract value is within the Philadelphia limits. And I think we reached that on one or two projects. I would say Aspen Olive Apartments and the Cecil B. Moore Village, and Station House Apartments were all very good projects in terms of the number of Philadelphia-based contractors that were hired and also employees. So when you look at the total neighborhood benefit strategy summaries, these are the goals that we are trying to have this year. We have a number of projects going on now and 22 COMM. ON FINANCE - BILL NO. 980228 which we'll talk to contractors early, not just in terms of minority- and female-businesses, but also suppliers and employees.
Thank you. Thank you very much for your testimony, Mr. Bell.
Thank you. Mr. Eisenstat and Mr. Mullin. (Mr. Eisenstat and Mr. Mullin come forward.)
Good morning, Mr. Eisenstat. Do you have any testimony to present today?
I'm available for questions, but I do not have any testimony to present today.
Good morning, Councilwoman Verna and the committee. My name is Steven Mullin. I'm the Director of Commerce for the City of Philadelphia. And I would like to offer brief 23 COMM. ON FINANCE - BILL NO. 980228 testimony in conjunction with John Kromer's testimony related to the economic development component of the CDBG Year Fiscal Year '99 5 Consolidated Plan. 6 Today -- I will also note that various 7 of my colleagues from the Commerce Department and 8 from PIDC and PCDC are also here today and will be 9 happy to join me in answering any questions you 10 may have. 11 But in terms of a very brief overview, 12 I would like to note that we in the Commerce 13 Department and in the City's "Economic Development 14 Division," I will call it, the Philadelphia's 15 neighborhoods do play a very pivotal role in the 16 City's economy. And most of the City's economic 17 activity takes place in the neighborhoods, and the 18 funding used if the block grant is strongly 19 directed in that direction. 20 The City's approach to neighborhood 21 economic development encompasses three basic 22 goals: 23 First, assisting small businesses in 24 the neighborhood; Second, investing in the neighborhood 24 COMM. ON FINANCE - BILL NO. 980228 physical infrastructure, including housing, to improve the business environment near residential areas; and Third, fostering the growth of community economic skills and capacities, particularly within CDCs. These goals are reflected in a broad array of neighborhood programs, initiatives, and accomplishments in this past year and what we are looking for in this block grant year. To help meet these goals, for example, we will be expanding this year our targeted CDC support efforts in lower Germantown and East and North Philadelphia. And we will be continuing our basic lending and grant programs that are carried out and administered by, first, the Commerce Department and various programs by PCDC and PIDC. The Small Business Lending Facade and improvement Program are implemented by PCDC. And in this upcoming year, we anticipate funding the Small Business Revolving Loan Program at $1,900,000 the facade program will be funded at $250,000, and the Housing Contractors' program will provide approximately $1 million in lending. 25 COMM. ON FINANCE - BILL NO. 980228 PCDC will provide support for, in addition, the Small Business Support Center, the Old Philadelphia Company Store Job Training Program and our Micro Loan Program. These are typically funded from non-CDBG sources, but they are used in conjunction with the CDBG funding for PCDC. PCDC will continue to operate the Neighborhood Commercial Revitalization Program, providing an array of support to 38 commercial areas. And this year, we are proposing four new commercial to add to the list -- Fifth Street, below the Boulevard; the 100 to 700 blocks of West Gerard Avenue; East Girard Avenue in Fishtown; and South Street west from Broad Street west. Our major commercial and industrial lending programs are administered by PIDC. These include the CDBG Mortgage Loan Program, the Neighborhood Development Fund, and the Section 108 Loan Program. 2 million this year will be used to support the Mortgage Loan and Neighborhood Development Programs. And toward the end of this coming year, we anticipate drawing down Section 26 COMM. ON FINANCE - BILL NO. 980228 108 funds to assist larger-scale development projects in support of our hotel development initiatives and to support neighborhood lending programs. We anticipate the loans to range, in general, from $250,000 to $5,000, with certain exceptions on particular programs. The loans will be utilized to support an array of development needs, including, but not limited to, acquisition, site preparation, construction, infrastructure improvements, machinery and equipment.
The primary goals of these Section 108 loans will be to create permanent jobs for residents of Philadelphia, to stimulate private investment, and to generate tax retables for the City. While the creation of jobs for low- and moderate-income Philadelphians will be the key criteria of these loans, the expansion of goods and services in our neighborhoods and the elimination of blight will be the alternative criteria. The projects approved for the Section 25 108 loans will be appropriate to the City's 27 COMM. ON FINANCE - BILL NO. 980228 overall economic development strategy, as presented in the economic stimulus component of the five-year plan. At Commerce, we will continue to provide neighborhood development and planning grants to nonprofit community-based organizations, and we will also expand our targeted neighborhood service grants. We will provide support for organizations in the American Street and West Parkside Enterprise Zones in Germantown, West Philadelphia, South Philadelphia, Frankford, and Central North Philadelphia, and Eastern Philadelphia. At this time, I would like to thank the Council for the opportunity to share this brief overview. And, as I mentioned, my colleagues and I will be more than happy to address any questions you may have. Thank you.
Thank you. Mr. Kromer, is there anyone else that you want to testify at this point in time?
Thank you. Then I 28 COMM. ON FINANCE - BILL NO. 980228 guess it's time for a question-and-answer period. Mr. Kromer, on of the plan, it refers to the neighborhood-based home ownership reduction and states that in Year 24, OHCD intends to fund the development projects selected through Year RFP process for which the planning and 8 acquisition activities have been completed. 9 Would you please provide us with a full 10 list of all of those proposals that were selected 11 through the Year 22 RFP and which of those 12 proposals are now ready to proceed in the Year 13 24. 14 If they are not ready to proceed, can 15 we be told what the holdup is? 16
Yes. I have a list 17 identifying all of the sales housing development 18 ventures that were selected through that RFP 19 process and can provide further information. 20 Some of these measures were funded for 21 planning and acquisition activities, which are now 22 completed or substantially completed and will be funded for development during Year 14, and that was the purpose of the reference. You'll see through the handout that a 29 COMM. ON FINANCE - BILL NO. 980228 number of the projects are currently under construction or scheduled for construction this summer. Others are in the midst of plan review at the Redevelopment Authority. And in some cases, there are acquisition issue that have to be addressed in order to complete pre-development and move to development. In two instances, a list at the bottom of that chart, there was a change in the developer due to the withdrawal of the developer that had been selected previously.
Please explain to me the home ownership rehabilitation plan that is referenced on of your plan. I know that there is up to $25,000 per property available. Is this a grant, or is it a loan program?
The Home Ownership Rehabilitation Program, known as the "HRP," is administered by Redevelopment Authority and was developed several years ago as a result of some discussions about the need to deal with vacant properties that are in reasonably good condition that we'd like to turn around faster so that they 30 COMM. ON FINANCE - BILL NO. 980228 don't remain vacant and become more expensive to rehabilitate and take longer to fix up. The intent of the program, which was designed by the Office of Housing and Community Development and the Redevelopment Authority staff and with the participation of others, was to create a very simple mechanism in which a city subsidy, which, in effect, is a grant, which, I believe, is structured as a self-amortizing loan, with no --
In the -- Noel Eisenstat can elaborate if need be, but all of our development subsidies are structured as self-amortizing loans in which no interest or principle payments are due for the life of the long as long as the venture is maintained as affordable housing for income-eligible people. And that's the structure of this grant, which is in the amount of up to $25,000. That subsidy is combined with a rehab loan used to fix up a short-term vacant house for home ownership.
Can you tell this 31 COMM. ON FINANCE - BILL NO. 980228 committee how many such properties were renovated in the Year and the Year 23, and how many 4 properties can be done with the additional $3 5 million requested in Year 24? 6
Since the inception of the 7 program in the Year 22, a pipeline of 243 cases 8 has been established. Of that amount, 119 houses 9 have been completed, and another 54 are under 10 construction, with an additional 25 awaiting 11 construction start. 12 Although that's aggregate amount, the 13 program is fairly new and has increased in volume 14 every year. 15 I think the Year 24 could be a good 16 year for HRP because a lot of the Year 22 and 23 17 cases are cases left over from the old PRP case 18 load and are not, strictly speaking, the houses 19 that we or other groups that have committed 20 themselves to finishing up the PRP pipeline would 21 have chosen ordinarily. 22 Now there are a number of groups that have substantial experience with the program and are going to be able to pick their own houses, having completed the commitment to the PRP 32 COMM. ON FINANCE - BILL NO. 980228 pipeline. And I think we can increase production again during the Year as a result. 4
On of the 5 plan, it refers to the Troubled Buildings Program, 6 which is operated in conjunction with L&I. 7 Can you tell us how many such buildings 8 were treated in the Year 23? And is L&I using all 9 of the money that is available for this program? 10
The Office of Housing and 11 Community Development had proposed in prior years 12 a troubled buildings line item in the budget that 13 was intended to provide development subsidy 14 funding to address situations in which a 15 deteriorated rental property in danger of being 16 closed, due to a bankruptcy action or L&I 17 citation, could be rescued so that tenants would 18 not be displaced and the building could be 19 recovered and brought back to its stability. 20 Our experience was that that line item 21 generated a lot of proposals which really were not 22 the kinds of proposals that we would have liked to 23 have seen. And so, several years ago, we 24 discontinued that line item in the budget and, instead, supported a process in which we've worked 33 COMM. ON FINANCE - BILL NO. 980228 with the Department of Licenses and Inspections and the Law Department to coordinate our activities. I guess the best current example of that coordination is the Manheim Gardens venture of several hundred units in the lower Germantown area partially occupied in a bankruptcy proceeding, a complicated case and a potential for workout being managed by the Law Department, in coordination with us. The Redevelopment Authority has participated in the review of alternative development proposals for Manheim Gardens, and prior to any commitment of City funding, has evaluated these proposals and communicated with the developers in the Law Department so that we are trying to get the best deal that we can for any dollars that we may commit. So we really rejected the approach of putting forth a troubled buildings line item and offering to spend money and, instead, committed to working with other City agencies, primarily Law and L&I, to address these issues in a coordinated fashion as they come up. And that approach has 34 COMM. ON FINANCE - BILL NO. 980228 proven more successful.
Your budget detail shows a cut of $500,000 in the Emergency Repair Program through L&I for rental buildings. Can you tell us why? And what is the difference between this and the Troubled Building Program?
The Emergency Repair line item is funding that has been made available to L&I to address the need for emergency heater repairs in rental properties. The rental properties that are repaired through this program are abated for a heating emergency. They are not troubled buildings in danger of being shut down, per se, but they need a heater or they need some heater work and it's not getting done by the owner or the manager. And so L&I abates the heating problem to prevent displacement. But in these situations, there's not the multitude of problems that we experienced with the Manheim Gardens or other troubled-buildings- type situation. The Department of L&I had not kept pace 35 COMM. ON FINANCE - BILL NO. 980228 with spending funding that had been allocated in the Years and 23. And the amount that's 4 proposed in the Year 24 will be combined with 5 unspent Year 23 funding and, we expect, will be 6 sufficient to fund L&I at capacity, to continue 7 this activity all year. 8
Yes, it is. 11 For the owner-occupied buildings, we 12 have the basic systems repair program and the 13 heater hotline operated by PHDC. 14
I hear very little 15 about that program these days. 16
I would like to 19 hear what they say a little later. 20 I don't want to dominate this hearing. 21 I'm sure that several of the Councilmembers have 22 other questions, and I will get back to mine. The Chair recognizes Councilman Nutter.
Thank you, Madame Chair. 36 COMM. ON FINANCE - BILL NO. 980228 Mr. Mullin, let me ask you a couple questions about your testimony. At the bottom of the first page, your testimony reads, "In recognition of these two simple facts, the City has targeted neighborhood economic development as Philadelphia's number-one priority." And just for the record, I think I'd like to get a better explanation for the basis of that particular statement. How is that measured.
Okay. I'm not sure whether I want to say "compared to what," but I will note that our Economic Development and Economic Stimulus Program focuses on neighborhood economic development, not only in the direct employment in the neighborhoods, but also focuses on trying to make sure that neighborhood residents have access to jobs throughout the City.
Do you measure that in dollars spent in neighborhoods? Do you measure that in the number of jobs created in neighborhoods? Do you measure that in development 37 COMM. ON FINANCE - BILL NO. 980228 projects in neighborhood? Do you measure that in the amount of rehabilitation of either homes or businesses or commercial corridors in neighborhoods? I mean, what is the measure?
I would take the category "all of the above." We don't -- in the Commerce Department, we don't measure the houses directly, as they do at OHCD, but all of those areas, the number of developments, the rehabilitation of commercial projects or buildings or businesses. The retention of businesses, and the employment -- not only directly in neighborhood but, again, for employment for neighborhood residents.
Okay. Well, I guess the only reason I'm confused is -- well, maybe we have a number of number-one priorities in the City. But I thought the number-one priority was the hotel and tourism industry. That's the one that seems to get the primary focus, that's the one that seems to get all the money. Do you want to tell me about how many 38 COMM. ON FINANCE - BILL NO. 980228 HUD 108 loans were granted in the neighborhood areas as compared to everywhere else, or in Center City?
I don't necessarily see them as mutually exclusive. The targeting of a particular industry to invest in is also, as you know, the Administration considers that a source of employment for neighborhoods and can be seen as an integral component of the overall neighborhood economic development throughout the City. We do have HUD 108 loans, for example, that go to businesses and to projects that are not in Center City, even though the largest dollar amounts are for projects in Center City, that is true.
Okay. And if one of the engines driving Center City investment and development is hotel and tourism -- and that's fine, I guess something has to drive the engine down here -- then tell me what is the engine driving the economy of West Philadelphia, and 39 COMM. ON FINANCE - BILL NO. 980228 what's the targeted industry that we're going after to get people employed or jobs developed in West Philadelphia.
Right. I want to answer that in three components: One is the employment-based businesses, whether they be industrial or service-sectors businesses that are not located in the Center City area, and there are thousands of those. We do look at retention and attraction of businesses there, and certain of these funds are directed towards trying to promote that business activity. In addition, we are looking at and we spend funds and time and effort to try to help develop the economic development skill bases of not-for-profit organizations and community development corporations throughout the City so that they can work hand-in-hand with us and 40 COMM. ON FINANCE - BILL NO. 980228 actually see if we can -- more than working hand-in-hand with us, see if we can assist them in helping generate economic activity in the sub markets throughout the City. The third area is job -- job -- well, employment recruitment, job training, and other efforts that part of these funds are used in conjunction with the Private Industry Council with the new Greater Philadelphia Works Program and in other areas there that we are looking for assistance to try to help the -- to try to help the employability and the employment for individuals in these other areas, whether that is directly in the neighborhood or jobs or employment that they can reach through transportation.
Well, I greatly appreciate the response, but I take it from the response that the answer is that there is no 20 targeted industry that we are going after similar to hotel and tourism. I mean, let's take as a granted that hotel and tourism is not the industry that's driving the engine of activity in West Philadelphia or Southwest Philadelphia or South 41 COMM. ON FINANCE - BILL NO. 980228 Philadelphia, is that right?
There's not a lot of hotels being built in West Philly.
Not a lot of hotels, but residents of West Philadelphia probably will have increased employment opportunity through those, and they'll bring the money back into the neighborhood that --
Well, this is the refined trickle-back theory. This is not trickle-down; this is trickle-back. You get a job somewhere, you take your money from your job in some other neighborhood, and the you run in back to your neighborhood, and that makes everything better. Is that our theory?
I'm not sure that that's necessarily new. I think that the income generated by individuals in neighborhood is what supports the neighborhood services. And that's -- and I'm not saying that that's the only --
And then they fix 42 COMM. ON FINANCE - BILL NO. 980228 up the neighborhoods themselves, is that what they do?
They create demand for services. I'M not saying it's the only thing, and I'm not saying it -- it works one hundred percent to solve everything, but it is an important component.
All right. Well, on of your testimony, at the top of the page, you talk about investing in neighborhood physical infrastructure, including housing to improve the business environment near residential areas. Could you tell me about these neighborhood physical infrastructure improvements that have been made out in our commercial/residential areas? What investments does the Commerce Department make to improve the physical infrastructure in residential areas?
The two ways that we -- 43 COMM. ON FINANCE - BILL NO. 980228 that the Commerce Department is involved in the economic development, one is through block grant funding for neighborhood capital projects, and the second is through City capital funding, which we try to coordinate as much as possible. And one thing that I would note to give an example, with block grant funding, the recently-opened parking facility or parking lot at Fifth and Indiana tried to help the commercial corridor along North Fifth Street would be one example of CDBG dollars going to infrastructure in a neighborhood to hopefully make the ability of that neighborhood commercial strip stronger in servicing the people of the area.
What are the top industries for the City and not just our neighborhoods? What are the top three industries that we're trying to attract to Philadelphia?
Are we trying to be known as any particular hub of service or industry in the country? Or are we just taking whoever comes and we're glad that they come?
Well, as you've mentioned, 44 COMM. ON FINANCE - BILL NO. 980228 certainly, we are trying to capitalize on what we consider to be an underutilized asset of Philadelphia as a location for a tourist and convention city and still investing in that industry. The second industry that we are going to -- say when I say "we," it is really the entire metropolitan area, but the pharmaceutical and health-care industry, even though the latter is going through significant change, it is still a huge engine for both investment and employment throughout the area. Service-sector industries, including telecommunications and communication information technology, are also broadly-defined areas -- broadly-defined industries that we are trying to figure out ways and that we are trying to promote for the City of Philadelphia.
And lastly in this area, there was a story in the paper on Sunday that talked about the Philadelphia region as a major financial services center; although in the D-2 graphic, the City of Philadelphia was barely visible on the chart. 45 COMM. ON FINANCE - BILL NO. 980228 Are there reasons why these kinds of companies -- GMAC Commercial Mortgage or MBNA, or any of these entities -- choose not to be in Philadelphia versus wherever else they might be? Don't they employ large numbers of people? And people who work at those kinds of companies make a fairly decent amount of money versus somebody who might -- and if you're unemployed, I guess a job beats no job every day. But if we had our druthers, wouldn't we want to have more people working in those kinds of industries than in hotel rooms?
All else equal, I believe the very strongly that the answer is yes, although I don't mind that people work in hotel rooms either.
Well, they work wherever they want to work. I rather work they work than not work. What I want to know is what are we doing to -- we're obviously trying to get the one.
Aggressively. What are we doing about everybody else? 46 COMM. ON FINANCE - BILL NO. 980228
Okay. Well, in terms of the -- I can give you one example in terms of the financial services industry. And I saw that article too, and we are very much aware that there is a very strong regional financial services industry here, which includes money management. And you're familiar, with your background, both money management, mutual funds, investment banking, and commercial banking, which has seen a lot of air play lately as that industry restructures. There are a couple of things that we are working on right now because I can tell you that there are certain things in our tax code that make locating inside Philadelphia for certain types of financial services industries very, very uncompetitive to locating outside of Philadelphia. We are working with the Law Department and the Revenue Department to identify those things. And, by the way, I'm not talking -- we will always hear people say the wage tax or business privilege tax, and it's -- I won't say that those aren't in part factors because we -- this administration recognizes that, yes, they 47 COMM. ON FINANCE - BILL NO. 980228 are. But even the way that they are applied, the way that we apply business privilege tax, what we count as net income, with financial service industries, including many of the ones that essentially accumulate money from other people, invest it, and then return some type of return to the investors, we tax those extra here in the City of Philadelphia.
I understand you, and I don't mean to cut you off. I'm pretty much aware of what the problems are. What I want to know is if somebody's doing something about it and that it may actually happen even in my lifetime.
And I hope it happens in mine, too, yes. In terms of the financial -- again, in terms of the financial services industry, we are working very closely with the Law Department and the Revenue Department to identify some of those cases where we just have these little burrs that are -- that seem nothing to us, but they're huge out there.
Okay, gotcha. 48 COMM. ON FINANCE - BILL NO. 980228 The last thing in this area is, do we have a written policy that either a potential developer or someone that has a project or even a member of City Council might be able to see with regard to the use of HUD 108 loans and TIFs and all of those various incentives that we try to utilize to either keep or attract new businesses here? I'm becoming concerned, and I've raised this before. I think Mr. Hankowsky has provided, from time to time, a listing of all the various deals and what we think they might do long term. The flip side of that is, in the TIF deals, for instance, we give up a fair amount of potential tax revenue. And I understand the argument "You might not have had it if you didn't do this anyway." But the City is increasingly being chopped up into either TIF districts, special services districts. And now, out of the brain trust in Harrisburg, we are being told about, I believe, Keystone Opportunity Zones, which I have very little information on. I heard a little bit about it, but would like to get more data. 49 COMM. ON FINANCE - BILL NO. 980228 Is there any concern by the Administration that in our efforts -- in our, at times, desperate efforts to do anything we possibly can to have anybody here for any reason, that we will have no one paying any taxes for long periods of time?
I think the answer is no 9 to that, that we do not think that we're -- that we are close to --
Yeah. As part of it is, as we talked with the Mayor and PIDC and so on, how are we strategizing, and what areas might we want to use various types of incentives? That's one, and that isn't something where we have it codified and said, "If you have XYZ, then you can 50 COMM. ON FINANCE - BILL NO. 980228 apply for this." And in some of our other programs, like the HUD 108 loans for the loan pools, we actually do have the written procedures. We have gotten those in CDBG mortgage programs and others like that where we have regulations. You know, they've been approved by HUD, and we've been using them for some time. Or they're new regulations on sort of what is eligible. They're generally broad-based type of eligibility as opposed to this type of business only, but there are ones where we --
Yeah, I understand that. But what I'm concerned about is, is somebody keeping a running total somewhere, does somebody have a board somewhere, you know? Or has someone decided that each and every year, we will do X-amount, and we'll only do X-amount because we're not going to mortgage the future, or we're not going to have ourselves do HUD 1078 loans into the year 2020. That's what I'm concerned about.
Yeah, I think that every one of my colleagues, the Mayor on down -- and I'm 51 COMM. ON FINANCE - BILL NO. 980228 not counting him as a colleague, but all my colleagues and the Mayor, we are very conscious of how much of the 108 are talking about. And we have a statutory -- or a HUD-imposed limit on that and we recognize that, and also with the tax increment financing. It was also consciously talked about, last year, the extension of three-year to ten-year tax abatement for the conversion of commercial industrial institutional properties into apartments. Part of what shaped -- and I think you were involved in some of that or had input on that. Part of the what shaped that was how much are we talking about, what parts of the tax base are we talking about.
So my short answer is, I think we are extremely conscious of that. But there isn't -- to my knowledge, there isn't a single number where we say once we hit 500 million or something, that's too much.
I think the policy is, if we think it helps the deal, or if it serves 52 COMM. ON FINANCE - BILL NO. 980228 as a further inducement, you can get one. I think that's the policy.
The only thing that I would -- I think that there's a cost benefit calculus that's done there too, because there are a lot of deals that come in, or a lot of projects proposed, where they say, you know, and let's use a TIF and let's use a TIF. So before it even gets up to any level here, there's a level where PIDC will say, No, that is not appropriate for a TIF.
All right. Lastly, if you can get me any information additional information that you may have on these Keystone Opportunity Zones, I would be very interested in getting it prior to anyone's attempt to create one.
Madame Chair, I have other questions, but I know you have questions too, so I yield back.
At this time, I will recognize Councilwoman Blackwell. 53 COMM. ON FINANCE - BILL NO. 980228
Thank you. Mr. Kromer, in your testimony, you mentioned a relationship with the Health Department and OMH and Mental Health and Mental Retardation for Assisted Housing. Does that put you in a position to have any kind of relationship with CDH, does housing have any relationship with that department?
The answer is no at this point, although we've had some discussions with Commissioner Richman about the possibility for linking our resources. To date, we've collaborated with the Health Department and various affiliates of the Health Department on special needs ventures that involve particular services to mentally ill people, for example, but that's all been Community-Development-Block-Grant-related.
Thank you. Mr. Kromer, can you tell us how much is allocated for the basic system repairs?
Yes. The allocation is 54 COMM. ON FINANCE - BILL NO. 980228 shown on . And it shows the division, at the very top of that chart, between the three tiers of the program, Tier I being the emergency repair hotline, item 1 on that page. And then under item 3, the Tier II and Tier III categories. In past years, as you'll see the overall funding --.
I'm sorry. Would you mind explaining what the tiers are -- Tier I, Tier II, and III.
Yes. The tiers represent various levels of repair needs. And Tier I is the most basic one and involves activities such as heater repair, just addressing a crisis that requires a contractor to fix or replace a heater primarily, or to deal with other immediate emergency. Tier II is a level that -- and Tier I is limited to one category -- plumbing only or heating only. Tier II is a category that is intended to support repair needs that require more than one trade -- plumbing and heating, plumbing and electrical. And, of course, the cost of the 55 COMM. ON FINANCE - BILL NO. 980228 repair per unit goes up. And Tier III is reserved for the most expensive repair work that is required, where the roof may be in danger of collapse and the heater needs to be replaced and the weatherization needs to be done. Although the funding for emergency repairs and other related activities has increased slightly. You'll see the Year amount of $18.4 11 million compared to our proposed 19.3 million. 12 PHDC, with our support, has made some 13 changes in the basic systems prepare program, and 14 Maceo Cummings can elaborate if that would be 15 helpful. 16 But PHDC was finding that a lot of the 17 Tier I cases were cases that, months later or a 18 year later or two years later, required a return 19 visit from the PHDC. People called the hotline 20 they got the heater replaced, but there was an 21 electrical problem and so there was a callback a 22 short time later, the electrical contractor came 23 out. So we could say to you, we do two Tier I cases during that year. In fact, it was one 56 COMM. ON FINANCE - BILL NO. 980228 house; we came back twice. And so PHDC reasonably suggested that we build up the Tier II category and try to anticipate, look more closely at the total need of the house, and try to address that through Tier II. That's the reason for the increased funding for Tier II that's shown here, an increase of about percent. 11
I would like to get some information on how many of our constituents were serviced through the system repairs during the last year. (Maceo Cummings comes forward.)
My name is Maceo Cummings. I'm the Executive Vice President of the Philadelphia Housing Development Corporation. The Philadelphia Housing Development Corporation, as you have heard, administers the 57 COMM. ON FINANCE - BILL NO. 980228 Basic Systems Repair Program. And during -- and I can actually give you up through the end of April of this year, we have completed close to 4,000 units of service. That does not mean that, obviously, there were quite a few numbers where we had to go out and inspect and they were not emergencies or they did not -- they were not eligible. But from working the Tier I, Tier II and Tier III levels, including weatherization, we were above 4,000 units of service.
If a senior calls and says that they have no heat or there is something wrong with their heater, how long does it take for repair or replacement of the heater?
We usually try to respond within for 48 hours. We also have a 19 nonprofit corporation that works with us, ECA, 20 where they will do repairs to heaters. 21 So we try to refer the repair -- what 22 we would believe a repair to a heater as to ECA. 23 If it's a replacement, we do the replacement. 24 Typically, we're 24 to 48 hours.
You respond within 58 COMM. ON FINANCE - BILL NO. 980228 hours? 3
And how long does 5 take before the repair or replacement takes place? 6
All right, thank 9 you. 10 Does anybody have any questions of Mr. 11 Cummings? Councilman Nutter. 12
Yeah. Actually, 13 for all three individuals at the table. 14 Having to do with the CDBG budget. On 15 pages 220 and 221, and we'll wait until Mr. 16 Eisenstat gets here. Has he disappeared from the 17 room? 18
Is Mr. Eisenstat 19 in the room? 20 UNIDENTIFIED PERSON: He's outside. 21
If I'm reading this 22 correctly, it appears that $30,948,000 out of the 23 $78,268,000 in CDBG funds are categorized in 24 either annual operating costs or general administration, is that correct? 59 COMM. ON FINANCE - BILL NO. 980228
That's correct. These categories -- annual operating costs, and as you can see, that's broken down into program delivery, the category on , and the general administration's on .
Right. So those number seem to add up or actually divide such that nearly 40 percent of our CDBG allocation from the federal government is used for annual operating costs and general administration, is that correct?
Okay. And when CDCs get money from us, is there a particular breakdown of operation costs or general administration that is either a mandate or a requirement for those funds?
No. All of the development funding is awarded for development only, and we have no awards to CDCs for operating costs, although we do fund neighborhood advisory committees, which are a separate line item.
Well, I guess, you know, when you think about this program and who it 60 COMM. ON FINANCE - BILL NO. 980228 is for, it might lead the somewhat naive person to think that most of the money is going to the very low, low and moderate-income population for which it is granted and is the basis for the calculation by the federal government.
And that is correct. Most of the money is going to that population, not only because of federal mandate but because of a City Council mandate that requires us to structure the plan in that way.
But you don't find 40 percent admin costs to be unusual or high or out of whack? Or are we leading the nation in low administration costs, or are we in the middle of the pack? I mean --
They're very substantial, and let me be clear. I'm sure you're familiar with the distinction between program delivery and general administration. Program delivery involves specific costs that are staff costs and other administrative costs that relate to producing a unit of housing or a unit of repair, the cost of inspectors and others associated with those 61 COMM. ON FINANCE - BILL NO. 980228 specific tasks, as opposed to general administration -- my salary and people like me who are in purely administrative positions. And the cost is substantial. Let me be clear. We could reduce these costs very dramatically if we changed the nature of our program and provided a lot more funding to developers to do housing anywhere, to do any kind of housing, and reduced our underwriting. Or if we --
How does that change how does that change your admin costs? You'd farm more of it out?
Sure. We could get rid of the people that scrutinize the low-income housing tax credit proposals and coordinate with PHFA to get as much tax credit financing as we can. We could do away with the housing counseling contracts. There are 27 of them. And with the contract administration, which we are committed to because we support the idea of community and nonprofit -- community-based and nonprofit groups delivering programs and services. We don't have to fund 30 housing 62 COMM. ON FINANCE - BILL NO. 980228 counseling agencies throughout the City.
I don't think anyone would even venture to think that we should somehow cut services to people. I'm just asking you a very simple question about the size of the administration costs versus the total grant. And it just struck me as -- that it might be somewhat high. And knowing that you would never accept a grantee having such high admin costs, I'm just asking the question.
This is a level of admin, both program delivery and general admin, that is comparable to that of other large cities around the country. And I think you'd find that we're actually more cost-efficient than other cities. Our product is certainly superior. I don't know of a another city that is dependent on the federal and State funding, that has a performance that we have in some key areas -- housing counseling, home ownership zone, moderate rehab, Title lending, and title property acquisition. And that's been studied. We've got a better project, and we're paying for that in 63 COMM. ON FINANCE - BILL NO. 980228 staffing it appropriately to deliver that product.
But at the same time, Mr. Kromer, I don't think you want to completely leave the record that the only way to cut admin costs is to cut program delivery. Don't you at least want to throw out the possibility that some of these administrative costs, if there was a change in policy internal to the government, that some of these -- I mean, your admin costs are people, they are bodies. They are salaries.
That some of those could either be offset by additional City funding, or those folks could be paid from another pot of money as opposed to CDBG funds? Don't you want to at least throw out that possibility?
There's no question of that, but -- and I would love to have more City funding. But I don't think it makes sense. Given the other properties that you and the Mayor have 64 COMM. ON FINANCE - BILL NO. 980228 to deal with, and I would not propose that. The Community Development Block Grant is a limited resource, but it's a substantial resource, and I think we could make very effective use of that. I think that there's plenty of room for administrative cost cutting, and I've tried to lead the way in cutting administrative costs. Several years ago, when the decline in HUD funding began, I eliminated a deputy director position, the Deputy Director for Special Projects. John Palen (ph.) filled that position. The next year, I eliminated another deputy director position; that was the Deputy Director for Operations. Carlos Acosta filled that position. There is no position of that type at OHCD. The next year, I eliminated the executive secretary position assigned to me that was vacant. I reassigned the Assistant to the Director, Teresa Mulligan, to the Commerce Department. This month, I terminated funding for 65 COMM. ON FINANCE - BILL NO. 980228 the Deputy Director of Operations position at the Philadelphia Housing Development Corporation. I was the only cabinet member or commissioner that recommended to the task force that was studying the compensation levels for department heads that there be no increase in compensation, and they concurred, and there has been no increase in the compensation for our agencies. So this is not going to bring in millions of dollars, but I think it represents the kind of cost-cutting to which you're referring, and we have to be committed to it.
Well, I appreciate all of your efforts and even your sense of personal self-commitment to trying to cut costs, your enthusiasm for the recommendation of no 19 salary increases, which may or may not be shared by others affected by the recommendation. (Laughter.)
I have not heard them jumping up and down about it but you can certainly continue to do that. Let me ask you one last question, 66 COMM. ON FINANCE - BILL NO. 980228 because I never did complete understand this, and I was left to just try figure it out by reading newspaper stories. The contract with Carl Green seemed to take a fairly circuitous route somehow weaving its way through PHDC. And I any never could figure out why that was the case. Whose payroll is he on, signs his paycheck?
Maceo Cummings may be able to elaborate on some of this, but I believe the correct answer is that the Housing Authority --
Anyone who's taken an involuntary cut doesn't have to respond. (Laughter.)
Carl Green is on PHA's payroll, but I believe that the PHDC arrangement is the contingency in the event that during the three-year contract period, the Board of Commissioners of PHA determine that his services are not required by PHA, at which time he would be assigned to PHDC. But there is no Community Development Block Grant funding nor any other funding other than PHA funding that is supporting his salary. 67 COMM. ON FINANCE - BILL NO. 980228
He would be assigned to PHDC do what? If PHA didn't want him for some reason, why would PHDC want him?
Well, I think it's -- in the past, some of our staff have gone to PHA, and some PHA staff have come to the City's Housing --
Well, I understand that people float around all over the place. You know, it's a great thing to do. Mr. Green is in a singly, kind of special situation with a somewhat guaranteed contract. I don't know why, if the PHA Board made such a serious determination about his services, that he would subsequently, as the fall-back, end up at PHDC. I never heard that before. My understanding was that if the termination was for any particular reason, and specifically having anything to do with the situation in Detroit, that we would just buy him out of his contract. And I assume he goes wherever he goes with the cash. I hadn't heard about the fall-back, the PHDC scenario, so can you explain that?
I'd be glad to submit 68 COMM. ON FINANCE - BILL NO. 980228 additional written information just to be sure that I'm giving you the correct information. My feeling is that it's unlikely that the Board of Commissioners would opt to do this, but I will give you the details.
Well, I understand that, but I still don't have an answer to the other question. Who signs his paycheck, where does his check come from?
Mr. Kromer, can you tell me the reason for the reduction of approximately $450,000 from the Youth Build budget? I think that's such a wonderful, wonderful program, and I don't understand why we would be reducing the funding for it.
We've increased our support for Youth Build every year and continue to support Youth Build. I believe this reduction represents a 69 COMM. ON FINANCE - BILL NO. 980228 shift from the Year 23, in which the Youth Build line item included some development funding to line item which reflects the administrative funding only for Youth Build, with the development funding being committed under the line item under , Neighborhood-Based Home Ownership Production. Our feeling was, rather than include the development subsidy in a specific contract with Youth Build, that we should fund them for operations and continue to commit to funding at the level that we had committed to in the past, but to provide the development subsidy funding through the Redevelopment Authority, as part of our Housing Production Program.
Hasn't that program expanded into other sections of the City? I know the first section of the City being addressed by this program is South Philadelphia.
But it's my understand now that they have expanded to other areas.
So shouldn't we be giving them more money to get more youngsters to get involved?
There are three Youth Build sites in Philadelphia now. South Philadelphia continues, there's a Ludlow site in eastern North Philadelphia, and a Northwest Philadelphia site, working in West Oak Lane now and to move it to Germantown in the future. And I know there's discussion about a West Philadelphia Youth Build site as well. At this point, it's my understanding that Youth Build has not raised the matching funds that it would like to see in order to open up in West Philadelphia. But to the extent that the organization is ready to move ahead and expand again, we would like to support them. Of course, resources is always a problem, but I agree with you, the Youth Build needs to be one of our highest priorities. It's a great program, and we're regarded as the best program in the country by many people that are familiar Youth Build.
I think that 71 COMM. ON FINANCE - BILL NO. 980228 Councilwoman Fernandez feels as strongly as I do about that program, and I know that's she's really very anxious to say something, so I would recognize her at this point.
Well, actually, one of my questions related to that -- yes, again, Youth Build, I think, is one of the most excellent programs that takes young kids who've dropped out of school and gives them training and a GED; and, probably most important, rebuilds their self-esteem. The young people really feel ready to go into the job market, or some are going on to college. So I think that's a very good investment of CDBG dollars, particularly since their work involves rehabbing a house for a low-income family. But it leads to another question. And I think when Belinda Mayo, you know, had given the testimony, she -- but I thought -- for the record, I think it would be very important to get clear, why are we using housing dollars? And I think of OHCD primarily as housing, even though I know there's community development. 72 COMM. ON FINANCE - BILL NO. 980228 Why are you proposing to use housing dollars for all this job training? I can see it with Youth Build because the young people are perhaps getting trained for jobs in housing, rehab and construction. They are also actually rehabbing houses and you're using the money for that. But since there are other big pots of money through the Private Industry Council and now the new federal Philadelphia Works jobs money. Why are we taking these limited dollars out of OHCD for job training programs?
Our approach really relates to our definition of community development, which, simply put, involves fixing up the physical environment but also getting people ready to succeed in today's economy. And we work very closely with the Private Industry Council and other agencies to try to identify areas that we have interest in and programs that we think make sense. And Youth Build is a good example that, for whatever reason, can't be funded, or can't be funded as quickly or as effectively through the 73 COMM. ON FINANCE - BILL NO. 980228 Private Industry Council or other sources, either because of restrictions or the limited flexibility of the funding that's available to those agencies, or because of the timing, because we can move in more quickly and seed a program that can later be taken on by the Private Industry Council. A good example of that is the Greater Philadelphia First initiative in which we started up an approach involving Greater Philadelphia First staff interviewing employers in some of the key industries -- the precision manufacturing and the data-intensive industries -- to try to structure a training program that specifically addressed the needs of those major employers. Once that work was done at a relatively low cost, the Private Industry Council funded the training program itself. But my understanding is that it would have been difficult for the Private Industry Council to initiate the planning contract with the Greater Philadelphia First, for a relatively small amount of funding, got this rolling.
So that 250,000 was just a planning contract? 74 COMM. ON FINANCE - BILL NO. 980228 Again, I was surprised to see the GPF, you know, in the OHCD budget. So next year, it's showing 250,000.
It was some planning and start-up for these models. And it cut across three of the clusters of employment opportunity that Greater Philadelphia First had identified in its report on the economic development potential of the region.
Yeah, I remember the report. And it's good and I know it's a great idea. I was just puzzled as to why it's here when there is all of this PIC money and now the other kinds of job-training money.
The answer is that the PIC money wouldn't have been ready quickly enough to fund that, and that the process of going to the PIC's funding sources and getting that money available would have consumed time that I think would be better spent moving to implementation.
Well, I think and I am very aware of the kind of leadership you've provided at OHCD. I assume you keep a very close eye, and it's the exception rather than the 75 COMM. ON FINANCE - BILL NO. 980228 rule that, in a sense, shrinking CDBG dollars would be used for --
The good news is that the federal money for jobs and for Welfare-to-Work that was the subject of announcement a few weeks ago --
-- provides a lot of additional money and a lot of flexibility that the traditional conventional funding sources did not. So I expect, as a result, we'll see less of need to fund these initiatives through the block program.
Also, I just want to note for the record, when I looked at the overall budget, the major place where there were cuts was in the administrative costs. So despite some of the other issues raised, I think it should be noted for the record that that was a major -- you know, there weren't 76 COMM. ON FINANCE - BILL NO. 980228 that many cuts in other parts of the program, but you really are constantly trying to squeeze the administrative costs. There's one other question I had, and I forgot to write down his name, the representative from OHCD who was talking about the contracts. And the chart he gave us showing contracts by -- or subcontracting by Councilmatic district, I was puzzled and would like an explanation as to why the 10th Councilmatic District had like 1.7 million. I could understand perhaps some of the other districts, but I didn't know what kind of projects were going on up there that would account for that, unless the contractors are up there.
Councilwoman Fernandez, my name is Kevin Brooks, and I'm the Assistant Director in the Office of Housing and Community Development. In answer to your question, that's a quarterly report. And I provide a snapshot of general contracts and subcontracts for that period of time, so it's over a four-quarter period, but you have one snapshot. 77 COMM. ON FINANCE - BILL NO. 980228 And there's been request from Councilwoman Verna for a full report, and we'll provide a full report to Council on general contracting and subcontracting. So I can't specifically answer in why this quarter, there's a zero, but I suspect that over time, it averages out.
No, it wasn't a zero; it was 1.7 million in the 10th Councilmatic District, and I couldn't figure it out.
Let's see, I had one other question, and that relates to the housing preservation. Mr. Kromer, again, you know I feel strongly about investing in preserving and keeping the current stock that's livable, to keep it in good shape so people can continue to live, and so we don't have more and more abandoned and vacant houses. But I was curious as to why in the -- this is a second-quarter report. And I couldn't 78 COMM. ON FINANCE - BILL NO. 980228 find it in here of how many Tier I and Tier II and Tier III basic systems repair projects had actually been completed.
I had asked that question, and I believe he said 4,000.
There was a -- we've, for over a year, been submitting quarterly reports to Councilmembers. The most recent one showed the statistics for the period ending with the end of March 1998 and showed that Citywide, 6,013 cases had been completed in all three tiers. And -- I'm sorry 3,435 cases had been completed in all three tiers. In your district, Councilwoman Verna -- I think you asked the question -- 382 cases were completed for the year ending March 1998. But it is in the quarterly report that was distributed about a week ago, ten days ago.
Well, that's what I was looking at, the quarterly report. It's not -- the pages aren't numbered, but it only shows cumulative completed was like 500 -- oh, that was weatherization. Let me get my lines 79 COMM. ON FINANCE - BILL NO. 980228 right. The print's so small. But I guess I just wanted to know, are you on schedule in terms of the basic systems repairs? Because the figures didn't seem to make since in the second quarterly report.
I'm sorry that we don't have page numbers on the report. There's a chart that begins the section 10 on basic systems repair. I know there are lengthy lists of addresses by Council district, but that section starts with a chart titled "BSRP Tiers I, II and II, and Weatherization."