Okay. I mean, you understand that it is a little difficult to try to provide the appropriate representation, if you don't know what the information is?
I fully appreciate your concern. I will tell you this: That there is a great deal of disparity in the level of information and details associated with those reports. But, having said that, I understand your question, your need, and we will work directly with you to try to accommodate your needs.
Now, where is the city's preference for these gaming facilities?
I don't believe that the city has heretofore indicated a particular 151 RESOLUTION NO. 060019 - 2/14/06 preference. I think that, looking at various factors, there are some that would provide greater revenues, there are others that would be more in character with the neighborhoods involved, with transportation availability, et cetera. So I think the city has not, through either the Mayor's Advisory Task Force on Gaming, nor the city as a policy choice, indicated that it had a preference as to particular locations. And I think the statements previously made by the Gaming Advisory Task Force have been to the effect that each of the potential locations has pluses and minuses; and a particularly good application in a challenged location might be a desirable result; and a bad application in a very good location could be a bad result. And I believe that each of those locations has to be evaluated with a particular facility and developer in mind.
Well, I 152 RESOLUTION NO. 060019 - 2/14/06 understand that. But, I mean, I thought, at least based on news accounts and public statements either by the Mayor or yourself, that, I mean, the city seemingly has given an indication of a preference for a particular site, because you voted for one.
If you are referring to the Penn's Landing site, Councilman, I think the Penn's Landing Board majority vote reflected a desire to make a particular site available in advance of the December 28 filing deadline before the Gaming Control Board. It was not indicated either as a final decision of the city or the Penn's Landing Corporation Board that that was the best site in the city for a gaming facility. That decision is not, obviously, within the purview of the city. That's a Gaming Control Board decision, which hopefully the city and its residents will have a clear opportunity to effect.
Well, I got that. 153 RESOLUTION NO. 060019 - 2/14/06 But, I mean, my recollection is -- I don't remember what the numbers were, you may -- I mean, it seems to me that the closest of the vote in that particular matter, if the Board had voted against it, the site would not have been available for consideration in the first place. I mean, you clearly made a decision, at least, that there was a preference for that site in at least making it available by the nature of a vote for that site; correct?
I mean, if the vote went the other way, the site wouldn't be available; right?
I can tell you from personal experience and from the conversations I have had within the Administration, that was not the decision that I understood was taken. It was not a vote indicating that this was the preferential site within the city; it was a vote, supported by the Administration, to make this site available as part of a comprehensive review by the Gaming 154 RESOLUTION NO. 060019 - 2/14/06 Control Board of sites that might be available for consideration before the December 28 filing deadline with the Gaming Control Board.
Okay. If the vote had gone the other way, the site wouldn't be available for consideration; is that at least correct?
I know you were talking. If the Board had voted in a different fashion, that site would not have been available to even be considered by the Gaming Control Board for a facility; correct?
First, I think that is correct. But let me point out that the site was made available by the Penn's Landing Corporation Board as part of a competitive process that started many months before the ultimate decision to allow it for consideration --
-- as a site. 155 RESOLUTION NO. 060019 - 2/14/06 It was a Request for Proposals. And in response to the Requests for Proposals and the application that was provide to the Penn's Landing Corporation Board, the Board decided to at least make it available for consideration by the Gaming Control Board; with no predisposition, as I understand it, that this was a preferential site within the City of Philadelphia for one of the two licenses.
All right. I am just trying to understand, if you had already decided on one location, have you decided on the other location, and just where this was all going.
The last point before I get snatched is that, if you had already made a decision about one site, I wanted to understand if you had made a decision about the second site, because there had actually been action by city officials with regard to one location.
Well, I suppose, 156 RESOLUTION NO. 060019 - 2/14/06 Councilman, we are just going to have to agree to disagree, because I would not accept that characterization. And I think I have already explained that I did not agree with your suggestion that somehow the city had decided this was a preferential site subject to a second preferential site to be decided. I think the Administration has been clear that the more competition we have with regard to available sites within the city, the more likely that we are going to have developers who are going to be responsive to the concerns not only of the Administration and Council, but also to residents. I think the most harmful situation relative to the city's interests with regard to gaming in the future is if we were to have only two or less than two applications. Because at that point you really have almost no incentive for the developer to be responsive to the community. I think with five competing applications before the Gaming Control Board, 157 RESOLUTION NO. 060019 - 2/14/06 the actions by this Council to engage with developers and the community and that of the Administration, I believe all of those efforts will be much more effective in getting applicants and developers to design and to develop facilities that are going to be in the best interests of the city.
I don't disagree with the philosophy. I think, in that situation, having more competition is better for the city. That is not my point. I am not ascribing -- I don't know what your intention was with regard to the vote. I think we have at least agreed that, if that site were not available, and it only became available based on the Penn's Landing Board vote, some of whose appointees are from the Administration, if the site were not available, it just wouldn't be in competition. That's the only --
That is absolutely accurate. And you and I can agree on that point, sir. 158 RESOLUTION NO. 060019 - 2/14/06
Councilman Nutter, thank you, your time is up. Councilwoman Brown.
Thank you, Madam President. I would like to do a quick followup to Councilwoman Jannie Blackwell's questions regarding the full evaluation. That is for sure a complex and, I will call, very convoluted issue, which has a legitimate goal of getting to some level of equity with regard to how citizens are taxed. As the Administration moves to, to use your word, make sense, moves towards figuring out what makes sense, and in addition to Jannie, Councilwoman Blackwell's question, to keep us informed, is there not some value in making sure citizens are well informed along the way? And, so, my question is, has any discussion been given to a thoughtful roll-out of the issues, so that citizens across the 159 RESOLUTION NO. 060019 - 2/14/06 board are informed of the ultimate goal, as well?
I know the BRT has undertaken -- it has gone to a lot of community meetings, has the Power Point they present, but I think clearly there is a lot more work that needs to be done and -- you know, so that people understand. It's complex, but I think we can probably simplify it so that folks can follow the various threads; and that we don't need to undertake it until we have, you know, done that education work that you are talking about. You know, they did it in Pittsburgh without enough preparation, and --
Yes, and it was a nightmare. And I think everybody is interested in trying to avoid that. And I know Glancey has been going around to, you know, basically, anybody that would listen to him, trying to 160 RESOLUTION NO. 060019 - 2/14/06 explain. But as we get closer, you know, as we begin to get some real information, know where -- what the real impacts are likely to be, we need to mount an education campaign that explains to people what the problem is, once we begin figuring out what some of the remedies might be to some of the problems we are likely to encounter. You know, we really do need to spend a lot of time educating people about what's going on. Hearing from people; making sure that the protections that we think are adequate are, in fact, adequate to the problems that will arise.
The work that Mr. Glancey has done, I believe, is the first layer or the first lap around this. And you go precisely to what I am suggesting, is that we need to. But is there a commitment? And can the Administration impose on the BRT that it be very, very strategic in how it informs and educates 161 RESOLUTION NO. 060019 - 2/14/06 citizens about this?
I think we can work with Dave Glancey. I think he is willing to work with us. I think he has shown a willingness to work with Council in the past. I think we can all develop, you know, a strategy for rolling this out in a way that makes sense. I'm comfortable that he would be willing to do that.
Okay. My final question. of your testimony, you discuss the arts and culture proposed $61 million, I believe it is. And I should go on the record and say I am excited, too, about the prospect of this infusion of dollars for the arts and cultural and parks community. Can you speak to how those dollars will be -- can you delineate how those dollars will be spent with regards to the institutions, and which institutions will ultimately win the prize of added needed funding? 162 RESOLUTION NO. 060019 - 2/14/06
We want to set up a mechanism to decide exactly how those dollars would be allocated. We envision the dollars as infrastructure dollars. We are going to be talking with other parties that commit funds to arts organizations, you know, other parties that are in a better position to fund operating support, so that we can try to coordinate the resources that we are putting on the table. I think we have talked publicly about the Art Museum. And the Capital Budget has funding for the Art Museum that would reflect spending dollars raised pursuant to the bond issue. We think we talked publicly about the Art Museum in part because it represents such a clear example of the need to fund the arts. It was part of the economic development blueprint. I think we all celebrate when the big shows come to Philadelphia. And I think it very graphically tells the story of our -- 163 RESOLUTION NO. 060019 - 2/14/06 if we continue to fail to invest in the arts, we are going to turn around and find that the wonderful events -- the last show generated something like 50-some-odd million dollars for the local economy. We won't even be able to host those because we haven't dealt with infrastructure problems. But, you know, we look to putting forward a process to make sure that we identify those organizations that do need the support; that we don't just work off of information we have, but gather additional information to get to additional organizations. And, importantly, that we work collaboratively with the corporations and foundations that also support the arts, so that we can craft a package that has the various kinds of assistance that they need, because it is not all capital support.
You are welcome. The Chair recognizes Councilman 164 RESOLUTION NO. 060019 - 2/14/06 Kenney.
Thank you, Madam President. On of the City of Philadelphia Notes to the Financial Statements for the Fiscal Year Ended June 30, 2005, Exhibit 8, Roman numeral 13, Roman numeral 2, Section 1, Budgetary Information. "The city's budgetary process accounts for certain transactions on a basis other than Generally Accepted Accounting Principles." On Page II the Five-Year Plan, the Administration has a chart showing the city's General Fund balances. The chart reflects that the only year the city had a deficit was 2004. It further reflects a General Fund surplus of $96.2 million in FY 2005. The city's financial year ended June 30, 2005. Annual financial report states on , "The General Fund's budgetary unreserved fund balance surplus of $96.1 million differs from the General Fund's financial statement deficit of $36.4 million 165 RESOLUTION NO. 060019 - 2/14/06 by $132,588,000 due to the Business Privilege Tax receipts which are received prior to being earned, but have no effect on budgeted cash receipts." The annual report states on , "The city's budgetary process accounts for certain transactions on the basis other than Generally Accepted Accounting Principles." Will someone explain for the record what these statements mean and why we should not be concerned about them? Does the Administration have a City Solicitor's opinion that we in fact have a balanced budget, since the city has different fund balances depending on the accounting methodology used? If we're not following Generally Acceptable Accounting Standards, and we are imposing different standards, how do we know that what we are reading, that we have a balanced budget or a fund balance, in fact is accurate?
Mr. Jannetti will address that. 166 RESOLUTION NO. 060019 - 2/14/06
Good afternoon. Please identify yourself for the record.
Vince Jannetti, Acting Finance Director. Councilman, the $96 million fund balance is as a result of the legal statements, which are the budgetary statements. And the Generally Accepted Accounting Principle statements, which have the accrual for the Business Privilege Tax, has the $36 million deficit.
They are just two different bases of accounting. The BPT comes in in April, but it is 167 RESOLUTION NO. 060019 - 2/14/06 for the whole calendar year. So a portion of that is applicable to, you know, the July-December time frame, which is --
Well, on the legal statements, it is like cash. It's revenue when it comes in. On the GAAP statements, it's broken up, and a portion of it is attributable to the following year.
Are there any other entities, either -- I assume these are only public entities that do that. Are there private entities that operate with two separate sets of books? I mean, are you aware of entities that operate with, basically -- I mean, if these are the Generally Accepted Accounting Principles, why don't we determine all of our fiscal situation based on those? What's the need for the other set of books?
I am going to ask the accounting manager of the city to explain that 168 RESOLUTION NO. 060019 - 2/14/06 to you. It is Mike Kauffman.
I didn't do that well in accounting at La Salle, so you have to do it slow.
Good afternoon. Michael Kauffman, Director of Accounting. Actually, Councilman, there are three bases of accounting that we report on.
We are required by the Government Accounting Standards Board to report on two bases of accounting. We have a full accrual entitywide statement, which takes in all funds of the city. Then we have the governmental fund types, General Fund, which we do on a modified accrual basis. And then the third thing we have is 169 RESOLUTION NO. 060019 - 2/14/06 our budgetary basis. The issue with the Business Privilege Tax is that, as Vince mentioned, when the people are required to make a mandatory prepayment of next year's taxes, according to GAAP, we can only record as revenue on a GAAP basis the first six months of that year, of the current calendar year, and we record that as GAAP. The other, on the legal basis, when you are doing your budget, you can include that as cash basis. So the legal basis is modified accrual, but in this particular instance we take that as cash. This is the only instance because of the way that's recorded.
In some ways are we taking six months of the tax receipts and applying it to a year where it is not being earned?
Well, on the cash basis we have, actually, received that cash.
But it is for the prepayment of next year's taxes. 170 RESOLUTION NO. 060019 - 2/14/06 So why wouldn't it be counted as earnings in the next year, as opposed to earnings in this year, because there is no 5 validity -- I mean, it is cash in your hand, but there is no validity to its earning in that particular year, in that particular budgetary year. It is actually earnings for the next year, because it is prepaid.
On a cash basis, we take what's received by June 30. So, that portion has been received by June 30. On the modified accrual, we have to break that off and say, well, we haven't earned that for the next year.
But all of the money is next year's money, is earnings for next year. Well, if it is prepayment for the next year, then it is next year's money. It is next year's -- what was due and owing for next year. And they are forced to prepay it. So, therefore, that puts cash in our hands, which we, obviously, need to operate. 171 RESOLUTION NO. 060019 - 2/14/06 But in the end, when the bottom line of whether it is a surplus or deficit or a break-even, that money was actually earned, even though collected, was earned next year, or the year after the year you accounted for.
We are working a fiscal year, so that's why we take half of it and then push half into the next year.
I just want to make sure that what we are being told now is not misrepresented based on accounting maneuver or accounting principles that give a false indication of what may be there.
No, I don't think we are. The budgetary basis of accounting, according to all the pronouncements, the accounting pronouncements, can be what you want it to be. So we use modified accrual, and this portion comes in as cash.
That's why I didn't do well in freshman year at Accounting 101 at La Salle. Thank you. Thank you, Madam President. 172 RESOLUTION NO. 060019 - 2/14/06
You are welcome. The Chair recognizes Councilwoman Tasco.
The Councilwoman would like you to ask another question.
Let me go back to Roman numeral 5 of the plan, where there is mention made of New River City. The Administration states, quote, that the Delaware and Schuylkill Rivers, which provide more than 40 miles of river frontage, one-sixth the total size of the city, are booming, end quote. If this is correct, why are you proposing to spend $125 million of water fund reserves, paid for by our water customers, for water infrastructure along the river, when this is normally the cost of development? 173 RESOLUTION NO. 060019 - 2/14/06 If this is a booming area, why do we need to supplement or subsidize their water infrastructure, that they are going to build anyway based on the ten-year tax abatement? What additional water revenues are included in the plan as a result of these expenditures? If no benefit is reflected in the plan as a result of the expenditure of these funds, then why should we approve their expenditure? And what is the justification, if it is not to benefit the city financially? What is the revenue loss to the General Fund, interest on water fund reserves that go to the General Fund as a result of the expenditure of these funds as reflected in the Five-Year Plan, and how are these amounts calculated? I think you need an accountant up there for part of this one, no offense. Let me ask the first part. If the river is booming and the tax abatement is working, why do we need to borrow money to entice people to build? 174 RESOLUTION NO. 060019 - 2/14/06
I would say to you that one of the reasons that the riverfront is booming is that the Mayor made this announcement two years ago, and we have been focusing on it. And we have been promising that there would be a River City infrastructure program, and that's what this is all about.
With all due respect, come on. I know you try to take some credit with NTI for things and River City. The ten-year tax abatement is what made this thing run. Frank DiCicco is not here, but deserves all the credit. I can't see how New River City or NTI has anything to do with the residential development on the waterfront. Now, certainly we will disagree. I don't mind the Administration taking credit for things that maybe they had some hand in, but I don't think they had anything to do with what's going on on that riverfront. 175 RESOLUTION NO. 060019 - 2/14/06 So I don't see any reason why we need to entice them more, because they are looking for land every day to build on.
I agree that the ten-year tax abatement has played a large role in this. But I think that the commitment that the Mayor and the Administration has made over the past two years to provide the infrastructure needs at the Navy Yard, at the Schuylkill River Developments, at the residential developments on the North Delaware are a large part of also attracting the developers to these sites. And now we are going to deliver on that promise with the $125 million of infrastructure that will support the developments that they are already engaged in.
I think that one of the other things that we're asking developers to do is to dedicate land along the river so that we can create along the Delaware the same kind of thing that's been created along the Schuylkill River. 176 RESOLUTION NO. 060019 - 2/14/06 There's public access, there are improvements to the public access. We would like to see the same thing along the Delaware. You know, so, we are asking developers to give up land. And some of what we want to do is to have resources that will enable us to get the land dedicated, so that we don't ever see the day when people can't have access down to the river.
See, part of the problem is that in this plan, from my perspective, in certain instances we recognize the expenditure we have to make, and then identify the result in revenues in the out years. So, for example, we talk about Promote Philadelphia. It is two and a half million dollars in that initiative. We talk about River City. We talk about some other issues that require an expenditure of money, and then we count it down the road at some point in time as a return in revenue. If we are projecting revenues for 177 RESOLUTION NO. 060019 - 2/14/06 some of these initiatives, why aren't we projecting revenues for River City? I don't see any indication of revenues generated as a result of this investment, when we have numbers that tell us that, you know, every dollar spent on media generates $185 of visitor spending, $13 of state and local taxes, $41 dollars in additional wages. And all these investments that we are making should have some at least guess at quantitative benefit down the road. I don't see where that is. It is nowhere in the Five-Year Plan. Do you have any projections of revenues for River City?
With River City, what we had presented previously was a leveraging, what we expected to leverage in terms of private investments. And I can get you what it is that we provided previously for that. On the investment for the arts, there have been any number of studies that 178 RESOLUTION NO. 060019 - 2/14/06 were done that, you know, that --
I didn't get to the arts yet. I just want to talk about the River City issue. Because, I mean, it is clear to anyone who looks that the investments are being made. There is no need to jump-start this economy when it comes to riverfront development. And why would we then go into debt to provide incentive for developers who don't seem to need incentive?
Some of the investments are being made. I think one of the challenges with the naval yard over time has been the fact that it doesn't have the infrastructure; that it had its own utility systems down there. Those things still need to be replaced. It has flooding problems. You know, if we are ever going to maximize development opportunities at the Navy Yard, there are some investments that have to be made that outstrip what it is anyone 179 RESOLUTION NO. 060019 - 2/14/06 expects the private sector to make.
And have these been identified? Is there a plan on how to spend this money?
When we come to City Council with the legislation, some of that will be itemized. We have detail on what's projected as needed at the naval yard, and we will make that available to you.
When will that be available? When is the legislation coming?
We will have the information. We can make available the information about the Navy Yard. There has been a lot of work about the infrastructure needs at the Navy Yard, and we will make that available.
Okay. Ms. Wilkerson, according to of your testimony, you make reference to a consulting team that will develop a strategic marketing plan to raise revenue, approximately $22.5 million from Fiscal '07 to Fiscal Year '11. Who is this consulting team? And how is it different from the previous proposal to sell city assets that has failed to raise revenue and has cost the city approximately $168,000 in consulting fees?
Well, the city has sold assets. I mean, that's separate. The strategic marketing is an initiative. Sean McNeeley can talk about it. We did a solicitation, put out an RFP, interviewed a number of firms, and have identified a firm that we are working with. The proposal was broken into two phases. The first face Sean can talk about, and then we will tell you where we are. MR. McNEELEY: I think, actually, we talked about this a little bit here this time 181 RESOLUTION NO. 060019 - 2/14/06 last year. We did an RFP. We received six proposals. We selected a committee that included the Fairmount Park Commission president, members of different departments, Managing Director's Office, the Mayor's Office, and City Council staff, selected one vendor. We went with that vendor. That team is led by a combination of firms. One is called Civic Entertainment Group, based out of New York. And the other firm that they are partnering with is Octagon, which is an international sports marketing, sports representation firm that negotiated New York City's Snapple deal. You might have heard of the multi-million dollar agreement for Snapple to be the official drink of the City of New York, and to have vending machines in schools and city buildings there. The special product, especially for the schools, low in sugar, and in order to support athletic programs. 182 RESOLUTION NO. 060019 - 2/14/06 So those firms lead the team that's been working for us. They have developed a draft report. We are still providing them feedback on that draft report. But they have identified revenue-generating opportunities in about six major categories; some things that we're doing now that we could do better, and some things that we're not really doing now. And the revenue that they have projected as potential from those opportunities actually significantly exceeds what we had assumed in the plan. So we hope we are being conservative there. At this point we are, as I said, getting feedback from departments on their draft plan. And we will finalize that, and are looking to move forward with them so that they will go out and be our -- kind of our designated marketing agent. Rather than do some of that work in-house, we will outsource it to people who have expertise and who have national corporate connections and relationships, so that they will be the ones trying to broker these deals 183 RESOLUTION NO. 060019 - 2/14/06 and arrange sponsorships, official products, licensing agreements, different ideas like that.
That will be another team separate from this? MR. McNEELEY: No; it is the same team.
They are developing a plan? MR. McNEELEY: We are discussing with them. And that's the second phase of the RFP.
That they would go out and sell the idea, develop the partnerships? MR. McNEELEY: Yes.
So it is still in the planning stage right now? MR. McNEELEY: Well, it is -- it is still somewhat in the planning stages. One of the main categories in the draft report or draft plan is out-of-home advertising, which includes street furniture. You would most prominently think of 184 RESOLUTION NO. 060019 - 2/14/06 that with the bus shelters that we have now. We have advertising on bus shelters. We think that we can expand that program, have more shelters, which really provides more service. As someone who is from Cleveland, I know I huddled in bus shelters a lot in the Cleveland winters, and it always struck me that there were not as many here as what I am used to. So I think it would be both a service, but also a way for us to generate additional revenue for other city services. So we are developing an RFP to go out on the street and try to get more bus shelters and other kinds of street furniture, and have a more comprehensive approach in the city. And we think that we can generate additional revenue, significant additional revenue, based on that. Many of our peers have signed new contracts in the last few years with substantially higher revenue than ours. 185 RESOLUTION NO. 060019 - 2/14/06 Most recently Washington, D.C., which signed a new contract that nearly doubled their number of shelters and provided significant revenue, a $24 million up-front payment, $2 million a year guaranteed after that, another $20 million payment in the tenth year. And D.C., you know, has half our population, half our square miles, similar bus ridership, you know, maybe a little bit different demographics, maybe a little bit different advertising inventory. But we hope that we can do something like that that provides both better service and more revenue.
May I follow up on the question with regard to bus shelters? I am sorry I missed my colleague's 186 RESOLUTION NO. 060019 - 2/14/06 question. But we are having a problem with bus shelters in my area. As if we don't have enough problems with this West Philadelphia Elevated project, now SEPTA has come along and decided to start in my area to far-side bus stops. And far-side bus stops mean, in addition to them withdrawing four stops completely, which we've talked -- Congressman Brady even helped us have them returned. Far-side stops is why they have been demonstrating and shutting down the 52 bus on 52nd Street. Then they pick 52nd Street, where my businesses are closing, 52nd and 60th. And they took the far-side stops and decided to stop buses across the street from where they are now and skip some that would save SEPTA time and they thought weren't necessary. Having said that, they created a mess. Because some stops, one was across from a park, and they put it in front of a daycare, you know. And one they put in front of a 187 RESOLUTION NO. 060019 - 2/14/06 pizza shop, on a bad corner. The drug addicts are mixed in saying, "I am waiting for the bus." But the issue with bus shelters is that they remove bus shelters. First they took some buses, moved them across the street; and then you had a bus shelter on one side, and then a bus stopping on another side; and they just took bus shelters out. I mean, no conversation. No -- you know, they just did it. I don't know how that helps the city revenue or advertising, if they are just removing bus shelters. And then we had a meeting where one gentleman was complaining how dare they decide they are going to put a bus shelter, if that's what they are doing, in front of my house. And we had a blind man who is all involved. Just all kinds of problems, as always. I think SEPTA just has decided that, you know, we are just not their cup of tea. But my point of it is, with these bus shelters, I would really, really like to know under whose authority are they removed 188 RESOLUTION NO. 060019 - 2/14/06 and changed. And that seems -- obviously, it has to negatively impact. And how can they put a bus shelter in front of property, without permission, you know, and dig up the sidewalk, and just do all kinds of things where they don't include me, they don't include the community, and they just continue to the wreak havoc. Could you tell us this whole policy of how bus shelter sites are chosen? When are the community and when are the officials included in any of this discussion? MR. McNEELEY: I'm not sure if the solicitor is aware of the particular issues you are discussing. The shelters, as far as I know, are our property, and they are our responsibility and right to assign. So it is a little surprising to me if SEPTA is moving them. As far as how they have been placed, at this point we're kind of living at the end of an old contract with a finite number of shelters that the vendor maintains for us. And we have -- I know that people in 189 RESOLUTION NO. 060019 - 2/14/06 our transportation office have been working with your office, and the solicitor has worked with you.
I wish. I wish they had been working with me. You know, we have had people shutting down the Route 52 on 52nd Street, threatening to shut down the whole bus system. Like I said, I went up to Congressman Brady to get four bus stops returned. I could name them now. But, you know, they just removed bus stops. First people were going across the street to wait for a bus, and the bus shelter was on the other side. Now they just decided, you know -- at our last meeting one man said, "I served my country. I was in the Service for years. 20 How can they treat me like this?" 21 One woman said they changed, went to 22 the far side, and a blind man stood out there 23 for hours waiting. I mean, the things that 24 they do. 25 And then to just move bus shelters, 190 RESOLUTION NO. 060019 - 2/14/06 you know, at will. Nobody has talked to me. Everybody here knows how much I fight every year on this whole SEPTA issue, and here comes another one. They just keep continuing to harass my community any way they can. And, you know, we are beginning to think it is personal. Nobody talked to me. You know, now I have got to go to meetings where I am kind of -- I don't want to get out and demonstrate. I will, if I have to. But, come on, that's what the press has been reporting demonstrations about the 52 bus line. All that is about this, too. All that is about far-side stops and bus shelters being returned.
Councilwoman, if I may. Romulo L. Diaz, Junior, City Solicitor. I was not aware of this particular issue that you just raised in connection with the bus shelters not being used or moved. I will say this: In connection with the effort to prepare for the continuation of the lease/lease-back, under a settlement 191 RESOLUTION NO. 060019 - 2/14/06 agreement the city reached with SEPTA last year, we are working closely on the operational issues and service issues. I will definitely put this high on the agenda for our discussions with SEPTA. I would like to address the issue related to the additional bus shelters. As Mr. McNeeley indicated, given the fact that we had a policy decision that we could have the most impact in terms of revenues generated for the city if we bundled together these marketing opportunities strategically, as the Chief of Staff testified to earlier, we determined that it was best to have only a short-term extension of the bus shelter contract that would end December 31 of this year. We're going through the RFP development process currently. As part of that effort, however, I can assure you that we pushed hard to have the advertising agency with whom we had the contract to add additional bus shelters. Not a large amount, because it was a short period and a short rate-of-return opportunity. But 192 RESOLUTION NO. 060019 - 2/14/06 they added about a dozen additional bus shelters at their cost. And what we tried to do through the city's transportation office is to review all of the requests that we had received, including from your office and other councilmanic offices, for additional bus shelters. Clearly, with a limited pool of additional shelters, we tried to cover as much of the requests as possible. We intend to push to have a larger number of bus shelters under the future contract. And we will be happy to work with your office and other Council offices to make sure that, when these service and operational issues come up, they clearly should be addressed on a bilateral basis between the city and SEPTA, so that residents are not affected in the way that you have testified to.
Councilwoman, I just want to get something clear in my own 193 RESOLUTION NO. 060019 - 2/14/06 mind. Because I know that there was a bus shelter removed in my district maybe two and a half or three years ago. And we have been begging, pleading, and imploring that it be replaced, to no avail. Do we write a letter to you with that request?
You don't even have to go through that effort. We will be happy to call your office, find out where that location is, and see what we can do to get it replaced.
Madam President, I am talking about, if anybody knows West Philly, between Baltimore and Jefferson Street in Councilman Nutter's area. So it runs almost the length of my district, the whole 52 line. You know, certainly I support the city, I support shelters, I support advertising, and all of that. 194 RESOLUTION NO. 060019 - 2/14/06 But to take them all down? All of them. They took all mine on the 52 line, they just removed these bus shelters. And then we have people arguing, saying they said they're going to put one on my house, in front of my house. And if we're at the end of a contract, I just have no idea how this happens. I don't know why SEPTA insists on just picking on my people.
Councilwoman, as I said, we will definitely be addressing this issue with SEPTA. But I also would just simply note that you will have an opportunity to ask that question directly of SEPTA in the upcoming budget hearing.
And I will be happy. I will send you the documentation. As I said, we have been working with our Congressman, who is trying to help us. You know, it is very frustrating when you go to meetings and you have handicapped people saying, "I stood outside 195 RESOLUTION NO. 060019 - 2/14/06 waiting all day." They changed the bus route and didn't advertise properly. And now they take the bus shelters and just move them at will. Who do these people think they are? It is very frustrating year in and year out to continue to be the victims of all that they do to disrespect people in neighborhoods, charge us the highest fare, and then treat us any kind of way they want. That's why people want to demonstrate. It is not the worst thing they are doing. The worst thing was probably urinating on people's lawns. But it is just kind of the straw that broke the camel's back. And it is hard to make people think that we are responsible, we are trying to do our job, when they continue to just do whatever they want at will. It is just very, very, very frustrating. So, obviously, I am not angry with you. And I support advertising, I support bus shelters. But, my goodness, they just can't continue to treat us any kind of way. 196 RESOLUTION NO. 060019 - 2/14/06 Thank you, Madam President.
My recollection is that they are owned by the city. They are installed at the advertising contractor's expense. And we have currently, I believe, about 200. Sean knows the number better than I. MR. McNEELEY: We have 330. About 270 generate revenue, the others don't have...
How would the removal of the bus shelters in Councilwoman Blackwell's district on 52nd Street fit in with the overall study that you are doing on bus shelters, I mean, and advertising? MR. McNEELEY: We will have to look into that. I mean, our focus, we want to 197 RESOLUTION NO. 060019 - 2/14/06 maintain service right now. Our focus on expanding the number of shelters is really on the next contract and getting out the improved contract. Clearly the existing contract, that only has a little bit longer to go, we need to work on that.
We need to get the information on who is removing the shelters, why they are being removed. You know, we are trying to move in the opposite direction. I think part of the solution will be what Romi is talking about, you know, trying to get the SEPTA relationship back on track. But we will gather the information from Council members and pursue this.
Madam President, while the young man is here talking about this, I raised the issue, two questions. One, in the contract for the advertising, is it a long-term contract? And if it is more than a year, do you have to bring it back to City Council? And some of the other advertising 198 RESOLUTION NO. 060019 - 2/14/06 that would go on those shelters, would you have to bring it back to Council? And what are some of the local zoning ordinances with these not only shelters, but any other advertising venues? Would it be to go before the Zoning Board? And I agree with Councilwoman Blackwell. We are in these neighborhoods, and we are in constant contact with people we represent. And where is the input from those of us who talk directly to these people?
With regard to the question about will you have an opportunity to review these long-term contracts? The answer is, yes. In fact, the current bus shelter contract has been previously approved by City Council.
The Chair recognizes Councilman Kenney for a point of information.
The City 199 RESOLUTION NO. 060019 - 2/14/06 Solicitor artfully said we will have an opportunity to review the contracts. Will we have an opportunity to vote on the contracts?
I just wanted to make sure the record is clear, that we will be voting, not just reviewing.
Thank you for the helpful question. It would be coming to City Council for approval, as the current bus shelter contract previously did. And in connection with the issue that you raised on zoning, the current contract provides for a tiered revenue structure based upon the type of advertising which is allowed. We have made it very clear that tobacco advertising is not allowed. And with regard to alcoholic beverages, that those, even though it is part of a tiered revenue structure, we have come to an informal 200 RESOLUTION NO. 060019 - 2/14/06 agreement throughout the period of this remaining contract, through the end of this calendar year, that there will not be alcoholic beverage advertising within a certain distance of schools and churches and other institutions, without affecting the revenue stream to the city. And I will be happy to give you more details on that distance. I don't recall it right now.
Thank you. I know Councilman Nutter is next, but I would just like to ask two questions. Ms. Wilkerson, on Page B-17 you state that the city --
Point of information. May I make one final comment on those whole bus shelter issues? And that is, may we request, then, from the Administration and every branch that, if there are any discussions with regard to SEPTA, that we be contacted? 201 RESOLUTION NO. 060019 - 2/14/06 Because they go to community meetings and they say, the city agreed with this. I had a meeting where I had to tell two people from the Streets Department, I had to tell my audience, when SEPTA got up and said the city agreed with this, and said, no, these people at this point, I'm elected, you deal with me. But they use the city against us. So I am making a request to everybody in the Administration that, with regard to SEPTA, any discussions that are made, that the District Council person is contacted before anything happens. I don't care what it is, if they talk about a streetlight or light out. May I make that request and have a commitment that it will be honored?
I think you have already made it. It has been heard. And I am sure it will be given consideration.
Thank you, Madam President. 202 RESOLUTION NO. 060019 - 2/14/06
Ms. Wilkerson, on Page B-17, you state that the city's General Fund Work Force as of January 30, 2005, was 23,190; while in Appendix 5, , you show 22,889. Which number is correct?
2000? I am referring to Page B-17, and Appendix 5, 6. There seems to be a difference in the numbers of the work force. So my question is, what number is correct?
The appendix number is correct. 203 RESOLUTION NO. 060019 - 2/14/06
Thank you. We also received a revised Mayor's budget and brief for FY '06 with the notation, "As approved by Council, June 5, 2005." And in that document it reflects 22,914 positions for FY '06. Can you tell us why that differs from 23,020 that appears in the proposed plan?
We allowed some departments to adjust their budgeted number of positions based on the dollar commitment for that department.
Why would that be different, if you updated it from June 5? Do you want to see the page as we have it, that was submitted to us? Do you want to see it?
Good afternoon. MS. MARGARET VanBELLE: Good afternoon, Council President. I am Peggy 204 RESOLUTION NO. 060019 - 2/14/06 VanBelle, Deputy Budget Director. After we had finalized the FY '06 budget, we were still undergoing negotiations with a number of departments, particularly some of the other independently elected officials, and we allowed them to adjust their adopted budget number.
Well, maybe you would like to stay at the table, because I have another question that you may be able to answer. Another item of interest is the positions reflected for the prisons. Both schedules have 2,058 for FY '06, and the plan from last year shows them at that number through FY '10. The plan before us increases their position level by 242 positions, to a total of 2,300. What has caused you to increase their position level by 12 percent in FY '07, and why was this not reflected in last year's plan? MS. VanBELLE: We allowed the 205 RESOLUTION NO. 060019 - 2/14/06 prisons to adjust their --
I knew you would be able to answer, that's why I asked you to sit there. MS. VanBELLE: We allowed them to adjust their position number for two reasons. One -- and maybe the prison Commissioner will want to speak about this -- the prisons has undergone a proposal that allows them to hire full-time people in return for reducing their overtime. And the second, or more important part, of the increase --
Wait a minute. We could do that for prisons, but we can't do it for the police department? MS. VanBELLE: Well, there are some instances where that works, particularly in that type of environment where you have fluctuations in the population. But the second part of the answer is that, in FY '07, prisons is going to be moving inmates out of Delaware County, out of county, and back in-house 206 RESOLUTION NO. 060019 - 2/14/06
I am sorry. Would you mind repeating. MS. VanBELLE: Yes. I am the saying the other part of the increase to the 2,300 has to do with having a higher in-house prison population and a lower out-of-county prison population. While the prison population we project will remain at 8,500, with the inability to place prisoners in Delaware County, as we used to in the past, we will have our Class 200 costs reduced and have an additional need to hire additional correctional officers.
Thank you. I believe, Councilman Nutter, you are next. You could try.
Let's just give peace a chance. Ms. VanBelle, you said that because of the fluctuation --
I'm sorry. Your previous response was, because 207 RESOLUTION NO. 060019 - 2/14/06 of the fluctuation in the prison population, it is better to have more personnel, which you are allowing the departments to hire if they reduce their overtime. But in the earlier conversation, which I think was raised by Councilman Ramos, which has now got the managing director jumping up, the response was, we don't need more police officers, even if crime increases, because we need the flexibility. Could you -- what do they call that? -- reconcile the nuance --
Pedro Ramos, Managing Director. Talking about two different operations and two different circumstances. With prisons, what you are hearing is that there has been consistent overtime over a period of time that's predictable, that it makes sense -- and, in fact, it was a very 208 RESOLUTION NO. 060019 - 2/14/06 close call, and not obvious -- that the better thing to do is to turn those into full-time positions, instead of overtime. But in terms of the workload and some of the other issues that the prisons face, such as turnover, that managerially was the better -- was the decision made for the prisons, given their operation. Reminding you that the operation is one where the job is to pretty consistently, one, you know -- I don't want to -- it is an oversimplification, but it is mostly operating at certain ratios in the function of guarding prisoners. With police, you have -- what the purpose of the $10 million is, is to focus it very intensively on violence prevention and reduction. It gives us the ability to more immediately respond with flexibility to the current needs. And we're not ready to say that that elevated level is the right level in perpetuity or that, when you compare overtime 209 RESOLUTION NO. 060019 - 2/14/06 to staffing, that you reach the same conclusion.
Madam Chair, I am sure we will have further conversation on these issues. I would like to make a recommendation, if I might, if you would take this into consideration: That in the future, that the five-minute rule is attached to the length of time that the member speaks, and the time of the answer is deducted, kept separate, is isolated, and handled in a different fashion, which might result in me having a fun balance of time. So, okay. We will go back through that on the police side. Let me ask this question: With regard to Page Roman numeral 4, the $150 million borrowing, the plan seems to indicate that $65 million is going to a variety of horticultural institutions, another 65 is going to neighborhood/commercial corridors. First, what happens to the other 20?
I should have said 210 RESOLUTION NO. 060019 - 2/14/06 approximately 65. That's my error in the Five-Year Plan. Approximately 65, approximately 65. We do know that there are transaction costs that I believe will be about $5 million. But the intent was to say approximately 65, and approximately. We plan on dividing it in half.
We are working through that with bond counsel. It would be probably either PAID or -- PAID would appear to have the legal authority, and we are looking towards PAID at this point.
And who will decide how the two 65s, the net proceeds, are distributed?
We have circulated a Power Point for the Restore Commercial 211 RESOLUTION NO. 060019 - 2/14/06 Corridor Program that identifies various categories of spending. We would look to, you know, work with Council to refine that, much in the way we did with NTI. There are certain kinds of activities, like the streetscape activities. We do look to do a mortgage -- a loan guarantee program with some of the proceeds. But in terms of refining the actual categories for expenditure, I think we would end up developing it much the way we developed the categories of NTI borrowing. We envision it being used for, you know, capital costs. And to the extent that the program needs operating support, we are looking at taking funds --
We are looking at taking, reprogramming some of the CDBG funds and targeting those to support, you know -- I know, for example, Councilwoman Tasco is always talking about the need to have people 212 RESOLUTION NO. 060019 - 2/14/06 working on the corridors. You know, we would look to use some of the CDBG funds or other dollars we have coming in to provide operating support in connection with the Restore Commercial Corridor funding.
So will there be a list that shows how the art and culture money is being spent, and we would have a role in that, or has that already been decided? Will the 65 be on the commercial corridor splitup, such that there is some relatively equitable spending of that?
Let me start with commercial corridors. We don't know that it would end up being equitable. Commercial corridors aren't equitably spread across the city. Some districts have more commercial corridors, some districts have commercial corridors that have greater needs than other districts. Some of the programs we would propose to have citywide. There is no reason to have a 213 RESOLUTION NO. 060019 - 2/14/06 district-based lending program. There is no -- you know, some of these activities don't really fit into a district model. But we would come to Council with a proposed budget. Like with NTI, for example, we came with an acquisition, a disposition, you know, kind of budget. Eventually we ended up breaking that out based on some formula by district. And, you know, we may get to point. But, we would come to Council. It is something that will require authorization from City Council. And, so, there will be, you know, opportunity to have at it. We would propose the same kind of, you know, mechanism or a mechanism setup that spells out criteria for the arts borrowing. It is our view that it is not appropriate to fund operating needs out of the borrowing. There are capital projects that we think ought to be funded, and we would come to Council for them.
Your planning, did I get that -- I'm sorry. My hearing was 214 RESOLUTION NO. 060019 - 2/14/06 affected.
I only have a quick question. I will give you one minute.
He is a great man. What's the anticipated additional cost you would expect in the course of this plan? What are you anticipating related to our legal costs involved in the federal corruption investigation?
Romulo L. Diaz, Junior, City Solicitor. 215 RESOLUTION NO. 060019 - 2/14/06 I assume, Councilman, you are referring to the amount of the outside costs related -- outside Council costs related to the FY '07 budget?
FY '07 and on out. I mean, what have you anticipated for future costs through the Five-Year Plan?
To the best of my recollection -- these are round numbers, and I -- well, I would prefer to provide those numbers to you, if I may, for the record. But, they are less than the numbers -- I don't have them. I would rather not put out a number that's incorrect. But they are less than the numbers that we are projecting for FY 06. And I would hope that we would not be seeing for FY '07 through '11 a need to build into our base outside counsel dollars for payment of outside 216 RESOLUTION NO. 060019 - 2/14/06 counsel in connection with the federal investigation. But I will give you those numbers for the record shortly after this hearing.
Thank you, Madam President. When we talk about the sale of city assets, is there a list? I have looked through here, and I can't spot what I am looking for. Is there a list of assets that are on the block?
We will provide a list of all the properties, I think there are about 50 properties on the list, that have been declared surplus. And we will share the 217 RESOLUTION NO. 060019 - 2/14/06 list with Council.
That's fine. I would appreciate that. But you talked earlier about PGW and that, if the right deal could be put together, that works, that that would be an asset of the city that would be sold. Tell me, is there any conversation about any other major department? As an example, the Water Department?
We have no active conversations about selling the Water Department.
There are no 16 active conversations about the sale of the Water Department?
Correct. Pedro, we're not actively marketing the Water Department? I want to make sure I am not missing anything. We are not actively.
No, I know. Other 218 RESOLUTION NO. 060019 - 2/14/06 cities have looked at that. Atlanta looked at disposing of its Water Department. Other jurisdictions have done that. We are not actively doing that.
I think you would sell the Water Department before PGW. I was just concerned. I just wanted to make sure the Police and Fire Department weren't on there. Thank you. Thank you, Madam Chair.
Thank you. Ms. VanBelle, do you mind approaching the witness table again, please. I just would like some clarification regarding the prisons. Appendix 2, , the prisons' budget does not seem to reflect a decrease in Class 200 to fund the additional hires. MS. VanBELLE: No; that's correct. You wouldn't actually see a decline in 200 because the savings associated with no 23 longer housing prisoners in Delaware County is reprogrammed to pay for cost increases in prison maintenance or prison health. 219 RESOLUTION NO. 060019 - 2/14/06 So we didn't actually reduce the Class 200 in their budget; we reprogrammed those savings for other expenses that they had in Class 200.
I am sorry. I don't quite understand that. MS. VanBELLE: I think when you see the budget detail for the prisons, which is being delivered today, I think you will understand what I am talking about. You will see that the contracts for Delaware County go away, but the dollars associated with those contracts are reprogrammed into other Class 200 expenses.
Such as? MS. VanBELLE: Such as maintenance or medical costs, things like that.
You say we will get the detailed budget when? MS. VanBELLE: Today.
Today. Okay. We will look at it then. Councilman Kenney.
Thank you, Madam 220 RESOLUTION NO. 060019 - 2/14/06 President. One of the themes of this whole Five-Year Plan that seems to me to be pretty prevalent is this kind of urgency to borrow. We are borrowing for River City. We are borrowing for arts and culture. We are borrowing for numbers of other things. And on of the plan, the Administration states, "The city's ratio of debt service to revenue will continue to restrict its ability to issue general obligation debt. A relatively high ratio of debt service to revenue will not only crowd out other operating expenditures; but, if the ratio gets too high, it can also result in the reduction of the city's bond rating, increasing the costs of borrowing." In your opinion, is there a difference as far as our debt ratios are concerned from issuing GO debt or debt through an authority?
I think there are technical differences. I think the whole question about 221 RESOLUTION NO. 060019 - 2/14/06 have we borrowed too much from either directly or through PAID is one that, you know, PAID raised recently, and is something that we are very mindful of. I think that we believe that, in order to grow the city, we have to look at a whole host of factors, not just, you know, the level of borrowing. We also have to look at things like, you know, the tax rate. We believe that the city yields benefit from strategic investments. And, so, we take all that into consideration. The level of debt for the city is, I think, as PICA pointed out, something we need to be concerned about.
Is that a justification, based on the city's high debt burden, to issue another $150 million worth of new debt?
And if the city's 2007 capital budget is only $52 million of new GO debt, this proposed borrowing is almost three times as much as what we are 222 RESOLUTION NO. 060019 - 2/14/06 proposing to do now. Why would we have more interest, three times as much interest, in going into debt on items that are somewhat speculative, although well-intentioned, when we have one-third of new debt to take care of the items and maintenance we already have?
I think that these -- you know, one of the things that I have said repeatedly is that these are for capital kinds of costs, curbs and sidewalks. Curbs and sidewalks, streetscapes, and commercial corridors are the kind of investment that we need in order to continue to grow the activity happening in our neighborhoods.
But is it potentially unfair to the next Administration, in the event that all of these either revenue speculations and this definitely concrete borrowing debt that you are asking us to go into, is it fair at this stage of the Administration to saddle the next Administration with potential speculation on 223 RESOLUTION NO. 060019 - 2/14/06 revenue and definite clear debt that's required to be paid over the next generation or so?