Land (bank) and Water (department): A Philly update

On Monday, Philadelphia Mayor Michael Nutter held a signing ceremony for the Philly land bank bill. It represents an historic opportunity to address the City’s broken system for putting vacant properties back to productive use. 

The hard work of creating a Philadelphia Land Bank begins now. To get the land bank up and running quickly, the Philly Land Bank Alliance has called on the Nutter Administration as well as City Council to focus on three key steps:

• First, the Nutter Administration and City Council must appoint a permanent Board of Directors so they can immediately begin the work of overseeing the development of the new agency’s Strategic Plan, policies, and regulations. 

• Next, the Council and the Mayor need to work together to ensure adequate funding for the Land Bank’s operations as part of the FY15 budget. 

• Third, Council and the Administration must transfer all of the thousands of publicly-owned properties to the Land Bank. A key reform of the land bank ordinance is the consolidation of publicly-owned properties from the three agencies that currently hold them into one single entity.  

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In December, we told you about a bill that will change the way water rates are set in Philly. After 2015, a board of political appointees will be tasked with setting rates. We agree with ex-Mayor John Street on this one. It's not a good idea. 

We were especially concerned because last-minute amendments removed key minimum financial standards that had been negotiated by the Philadelphia Water Department, City Council, and stakeholder groups -- standards that would help guarantee that the department has rates set high enough to cover operating expenses and debt service.

In addition to harming the Water Department's ability to carry out its mission, we were concerned the lack of basic financial standards could damage the department's credit rating and cause concern among bond holders. Why is that important? When it costs more to borrow money, those costs are absorbed by water customers -- ultimately leading to higher rates across the board. 

Welp, that didn't take long. 

In an otherwise positive ratings outlook, credit rating agency Fitch cited recent Council amendments and "politicization of rate relief," saying that the changes made to the ordinance raise concerns and could lead to "negative rating action" -- meaning higher water rates.  

While there was no credit downgrade, make no mistake, credit agencies will be watching closely. 

This is a story we'll be following. 

Andrew Sharp is PennFuture's director of outreach and is based in Philadelphia.

Last minute City Council amendments could prevent PWD from making critical investments

"If you let politicians set water rates, we'll all be drinking mud."

Those words were uttered by someone who knows a thing or two about Philly politicians, former Mayor and Council President John Street. 

On Thursday, City Council is set to vote on a bill that will allow a board of political appointees to set water rates. 

Currently, water rates are set through a public hearing process in which the Mayor and City Council select a hearing officer and a public advocate, with the final decision to approve rates made by the Water Commissioner. 

While not perfect (or completely devoid of politics), the process has allowed the Philadelphia Water Department (PWD) to maintain water infrastructure and set rates that ensure we have clean drinking water. [PennFuture intervened in both the 2009 and 2012 rate proceedings.]

The current rate process has afforded the City the ability to make badly needed investments in stormwater infrastructure through its Green City Clean Waters initiative, the City's Environmental Protection Agency (EPA)-mandated plan to protect and enhance our water supply by managing stormwater. 

But thanks to a ballot question last November -- and last-minute amendments in City Council last week -- things could change, and soon. And not in a good way. 

Let's back up: Last November, voters approved a ballot question to create an "independent" rate-making board. (Not surprising given that Philly tends to approve the cleverly-crafted ballot questions). PennFuture opposed the ballot question at the time, as it will instantly burden the process with more political actors who may not understand the need to balance low rates with the need to create a good water system.

On Thursday, City Council will vote on a bill that will officially create this rate-making board and regulate how the rates are imposed. 

But missing from that bill are key provisions that would provide the water department basic fiscal certainty -- fiscal certainty that is needed to protect our water supply, maintain aging infrastructure, and adapt to unforeseen economic circumstances. 

Amendments introduced last Thursday removed essential minimum financial standards that had been negotiated with the Water Department, City Council, and stakeholder groups -- standards that  would help guarantee that the department has rates set high enough to cover operating expenses and debt service. 

In June, a bill passed out of committee that did just that. We testified in support of the original unamended bill at the committee hearing because it gave the department the best chance to continue its crucial stormwater work and adequately invest in key infrastructure projects. 

In addition to harming the Water Department's ability to carry out its mission, the lack of basic financial standards could damage the department's credit rating and cause concern among bond holders -- ultimately leading to higher rates for all ratepayers. 

We urge you to contact your Councilmember and tell them that the Water Department needs basic financial certainty to do its job and provide clean, safe drinking water. 


Andrew Sharp is PennFuture's Director of Outreach and works out of our Philadelphia office.