Council President Clarke airs concerns with Rebuild initiative’s proposed structure

As the Kenney administration enters its second year, one big policy issue on the horizon will be the mayor’s $500 million commitment to reinvest in the city’s parks, libraries, and recreation centers. Dubbed Rebuild, the proposed initiative will be realized in large part through $300 million in city bonds and a $100 million grant from the William Penn Foundation—the largest in foundation history.

Thus far, the Rebuild narrative has been optimistic, but with 2017 approaching the political maneuvering and negotiations around Rebuild are well underway. Some on City Council, led by Council President Darrell Clarke, have serious concerns with certain aspects of the administration’s current Rebuild proposal.

On Tuesday, Clarke sent out a memo to the rest of the council outlining his criticisms of the administration’s plan to put the management of Rebuild’s capital projects—and $300 million in bonds from the Philadelphia Authority for Industrial Development (PAID), the public authority responsible for such issuances—under the auspices of two nonprofit organizations, the Fairmount Park Conservancy and the Free Library Foundation.

“The administration’s approach of placing the total $300M of public funds into the hands of PAID, the Conservancy, and the Foundation in the first year of Rebuild seems needlessly risky and maybe even irresponsible,” Clarke’s memo reads. (Clarke’s office declined to offer additional comment for this story.)

The Kenney administration’s proposal involves skirting the city’s usual low-bid procurement requirements and the city’s Capital Program Office, which has historically been criticized for being slow and unresponsive. The administration has also argued, as the Inquirer reported, that the low-bid procurement process hasn’t met expectations when it comes to racially-diverse hiring practices, and that a more nimble nonprofit organization will be able to do better.

Clarke’s memo to City Council expresses profound doubts about the wisdom of this approach. At one point he writes that if the Conservancy and Foundation are made “the long term stewards of all or most of the City’s Parks” that “seems to privatize those facilities operations.”  

In an interview with PlanPhilly, Rebuild executive director Nicole Westerman and spokesperson David Gould said they felt some of Clarke’s concerns could be chalked up to misunderstandings between themselves and the Council President’s office. The $300 million, for example, wouldn’t be simply handed over to the nonprofits in the first year. Instead $100 million would be released every other year in three tranches over the course of the seven-year program.

They also played down the long term power the nonprofits would wield over the Rebuild sites, noting that the contract structure is one the city commonly uses with major infrastructure projects like airport renovations. Clarke’s memo expresses concern that Rebuild projects would be structured to avoid low-bid requirements baked into construction projects covered by PAID funds. He worries about the implications of the city’s intention to sign a long-term lease arrangement with the Fairmount Park Conservancy and the Free Library Foundation, which includes a provision about the option to transfer title to these public properties.

Clarke’s memo notes that his office asked the administration for a clearer understanding of these title transfers, “but to date we’ve received no direct response”

Westerman said that the administration is proposing a master lease structure for the seven years of Rebuild, which would enable a nonprofit to do work on parks, rec centers, and libraries on behalf of the city. But leases on individual properties wouldn’t be activated unless a particular site is selected and the district council person in question is on board. Then the lease on that site would only last as long as the period of construction, which should only last a year or two.

In lease agreements like these, “there is an option to purchase and that’s a requirement of state law, but the city isn’t actually planning to sell off parks and libraries,” said Westerman. “The way that option is defined in these agreements makes it so the entity at the other end won’t exercise that option. The airport has these agreements in place too, and the city is not intending to sell off chunks of its airport.”

Clarke also details his concerns about the Fairmount Park Conservancy’s racial diversity, or lack thereof. The memo includes a count of the number of people of color on both the staff and the board (he counts six, of whom five are politicians).

“Its current staff of 21 has but one person of color: an Asian female,” writes Clarke. “The Conservancy’s record on diversity is not encouraging. Are we to assume it will suddenly choose minority contractors when it is free to choose who it wants?”

But the Rebuild team tells PlanPhilly that the questions of diversity in the nonprofits are fair and that there have been internal discussions about this issue. But they also dispute that the Conservancy will be free to choose who it wants to hire.

Anyone under contract to implement a Rebuild project “will not be free to choose the diversity and inclusion goals they will be reaching,” Westerman said. “The city as the landlord would be in the position of defining the targets to be reached…those will be very explicit in any agreement that will exist between the city and PAID.”

For his part, the Fairmount Park Conservancy’s executive director Rick Magder says his organization has committed to working in divested neighborhoods with large minority populations, and that their work is hardly concentrated in Center City or in affluent neighborhoods.

“In terms of staffing, the organization is not hugely diverse right now but since I started in September we’ve had three hires, all of diverse candidates,” said Magder. “I’m personally deeply committed to diversifying our staff so it does reflect Philadelphia, and committing to kids in the neighborhood that they will be part of Rebuild.”

At the heart of Clarke’s counterproposal is that the city should use its established means to execute the Rebuild program. After all, the Fairmount Park Conservancy will have to staff up mightily to handle Rebuild. Clarke writes that they are seeking to hire between six and 12 new staffers and questions why that funding wouldn’t be better used to enhance capacity on the city side. In his memo, he proposes routing Rebuild through the Capital Program Office as an alternative.  

But Westerman defended the choice of the nonprofits, saying that although the Conservancy doesn’t have experience with projects of this magnitude, they have been working on increasing numbers of capital projects in recent years, from Hunting Park to the current Civic Commons project in Parkside. “The Conservancy today doesn’t have the capacity to do $50 million in additional capital projects in the next year or two, but neither does the city’s Capital Programs Office,” said Westerman.

“The private sector is more nimble at staffing up and dealing with a fluctuating volume,” she said.

Westerman added that both nonprofits have a very good track record for attracting other financial resources and the more money that’s brought into Rebuild, the more sites can be fixed up. She adds there is a real argument for the speed and efficiency of project management outside of city channels. The Rebuild staffers say that right now city contracts often take too long to issue pay: from 60 to even 120 days.

“The city is not known for delivering capital projects quickly,” said Westerman. “They are working on it. We have faith the city processes will get better soon, but as the city gets that up and running we don’t feel they should be burdened with another several hundred million dollars in projects.”

PlanPhilly contacted a handful of district councilmembers to gauge the reception of Clarke’s memo. In some cases, they feared that an increased role for the nonprofits would limit the input they have on projects in their district.

Councilwoman Cindy Bass said she largely agreed with Clarke’s concerns, and shared those about working outside the Capital Program and the idea of bringing in nonprofits to oversee construction under the Rebuild.

“At the end of the day I think there will be a unified council saying no to a diminished role for us and for our members,” said Bass. “It’s the old line of over my dead body would we turn over control of rec centers and playgrounds we’ve been working on for years. It’s a little insulting to suggest we should step aside and let someone unfamiliar with the neighborhood come in.”

The office of Councilman Curtis Jones said the councilman would wait to respond until the mayor had made comment. But Councilwoman Maria Quiñones Sánchez backed Clarke’s memo.

“I share Council President Clarke’s call to undertake Rebuild projects through our City’s Capital Program Office,” said Maria Quiñones Sánchez. “Instead of handing over $300M to a private entity, we need the political will to fix our systems and provide our taxpayers with an efficient government.”

Clarke’s memo ends with assurances that he will keep an open mind moving forward. But in the next year it is clear that the Kenney administration will have plenty of work to do convincing council of the exact merits of their plan for Rebuild’s execution.

View Clarke Rebuild Letter To Council – December 20, 2016 PDF