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CITY COUNCIL CITY OF NEW YORK ------------------------X TRANSCRIPT OF THE MINUTES of the EXECUTIVE BUDGET ------------------------X May 25, 2010 Start: 09:47am Recess: 01:55pm HELD AT: Council Chambers City Hall

B E F O R E: DOMENIC M. RECCHIA, JR. Chairperson COUNCIL MEMBERS: Gale Brewer Fernando Cabrera Margaret Chin Leroy G. Comrie, Jr. Mathieu Eugene Julissa Ferreras Lewis A. Fidler Helen D. Foster Sara Gonzalez Vincent Ignizio Robert Jackson Peter Koo G. Oliver Koppell Karen Koslowitz Brad Lander Stephen Levin Melissa Mark-Viverito Darlene Mealy James S. Oddo

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A P P E A R A N C E S (CONTINUED) Annabel Palma Diana Reyna Joel Rivera Ydanis Rodriguez James Sanders, Jr. James G. Van Bramer Albert Vann Mark S. Weprin Jumaane D. Williams

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A P P E A R A N C E S (CONTINUED) Jeanne Mullgrav Commissioner Department of Youth and Community Development Bill Chong Deputy Commissioner Youth Services DYCD John V. Cirolia Asst. Commissioner Contract Agency Finance DYCD Suzanne Lynn Deputy Commissioner Community Development DYCD Robert Walsh Commissioner Small Business Services Andy Schwartz 1st Deputy Commissioner SBS Angie Kamath Deputy Commissioner Workforce Development SBS Seth Pinsky President Economic Development Corporation Jason Wright Chief Financial Officer EDC

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ready?

EXECUTIVE BUDGET CHAIRPERSON RECCHIA: Are you

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MALE VOICE:

Yes sir. Okay. We’ll

CHAIRPERSON RECCHIA:

now resume the City Council’s hearing on the Mayor’s Executive Budget for fiscal 2011. At this

time we’re going to go out of sequence, I will turn the floor over to Council Member Al Vann. Council Member Vann. COUNCIL MEMBER VANN: thank you, Chairman Recchia. Good morning,

As you know, I’m Al

Vann, I chair the Committee on Community Development, and I’m pleased to join my fellow CoChair Lewis Fidler, and of course Chairman Recchia, and we’re looking forward to hearing testimony from Jeanne Mullgrav, the commissioner of DYCD on the Executive Budget for the Department of Youth and Community Development. The proposed

$94.2 million cut to DYCD is a tremendous cut. This is a combination of programs to eliminate the gap, we understand that, as well as state and federal reductions, as well as Council-funded initiatives not reflected in the fiscal 2011 executive budget. With reductions affecting core

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EXECUTIVE BUDGET youth programs, including out-of-school time,

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beacon programs, literacy services, and the summer youth employment program, without question these are very, very deep cuts that hurt deeply. of these groups that are being affected are grassroots. Many of them provide unique social Most

and economic support services that are at the heart of a community’s long-term development. Today’s hearing will also provide an excellent opportunity to understand how the $50.5 million in federal economic stimulus community service block grants allocated in fiscal 2010 were spent. Furthermore, I am interested in the Department’s proposed $4.6 million cut in city funding for adult literacy, which funds adult basic education, ESL and GED, and serves over 10,000 participants. New York State is cutting more than a million dollars in GED testings, and $2.6 million in adult literacy for CDO’s. We need to understand what

would happen, or what will happen, to adult literacy services in New York City as a result of both the city and the state cut. It is my

expectation that in addition to an analysis of the executive budget, we will also hear from DYCD

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EXECUTIVE BUDGET about the stimulus funds that did or did not affect employment outcomes. Thank you very much

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for the opportunity, I’ll pass to my fellow coChairs at this time. CHAIRPERSON RECCHIA: Thank you

Council Member Al Vann, and good morning and welcome to the seventh day of the City Council’s hearings on the Mayor’s Executive Budget for fiscal year 2011. Again, my name is Domenic M.

Recchia, Jr., and I am the Chair of the Finance Committee. At this time I’d like to introduce my We have

colleagues who have joined us today.

Ydanis Rodriguez, Jumaane Williams, Oliver Koppell, Peter Koo, Al Vann, Lewis Fidler, Fernando Cabrera, who have joined. Yesterday we heard from the Department of Consumer Affairs, the Business Integrity Commission and the Department of Education. This morning the Finance Committee

will be joined by the Committee on Youth Services Chair, by my longtime friend and Council Member Lew Fidler, and the Community Development Committee chaired by my colleague, Council Member Al Vann, to hear from the Department of Youth and

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Domenic.

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Then the Finance Committee

and Community Development Committee will be joined by the Committee on Economic Development, chaired by my colleague, Council Member Tom White, and the Committee on Small Businesses, chaired by my colleague, Diana Reyna, to hear from the Department of Small Business Services. At noon

the Finance Committee and the Economic Development Committee, chaired by my colleague, Council Member Tom White, will hear from EDC. Before we hear from the commissioner, Jeanne Mullgrav, from the Department of Youth and Community Development, I’d like to turn the microphone over to my co-Chair, Lew Fidler, Chairman of the Youth Services Committee. COUNCIL MEMBER FIDLER: Thank you,

Good morning, everybody, and again we

apologize for the inconvenient way that we have to set up today, but as hectic as things are down here, we know that we’re going through a budget season that does not contain a lot of good news, particularly for children. So I am going to … in

a few moments we’re going to hear from Commissioner Mullgrav. I always get her into

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trouble, by saying she’s my favorite commissioner, so I’ll continue to get her into that kind of trouble. But a lot of the choices that have been

made by the Mayor in the executive budget proposal do seem to be misplaced priorities. First, in

some good news, it looks like the summer job program may actually be reasonably whole. And I

look forward to hearing from the commissioner as to the status of the federal jobs bill that supposedly contains money for summer jobs that will bring us, not to last year’s record levels, but to the level of the year before that. I am,

however, perplexed by some of the other choices that have been made. I can’t frankly comprehend

what part of the budget dance allows the Mayor to exclude $5.9 million of shelter beds for runaway and homeless youths. I don’t get it. The out of

school time program will just absolutely devastate, not only kids but working families in the city. We haven’t heard the term ‘latchkey If we allow

children’ in our city in a long time.

the out of school time cuts to continue, to proceed, we’re going to hear that again. And of course we have all the

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typical budget dance stuff that the Council funded it, so the Mayor didn’t bother, like good programs like the After School Corporation, New York Junior Tennis League, sports and arts, things like that, that we had historically funded. And then I know

a lot of you are here today, as Councilman Vann alluded to, to the cut to zero for the adult literacy programs in the city. And obviously,

since the Council has made GED prep a highlight of, and a priority for the city, we’d be very interested in knowing what the Department proposes to do about that. So I just want to call my colleagues’ attention in particular to this form that’s been included with all your materials this morning. It’s a scorecard, it’s scorecard of the

things that are not in the budget, how they affect you, how they affect our kids, whether they are PEGs or a non-restoration Council-funded initiatives, it really doesn’t matter to the people out there whether or not it’s a PEG or whether it’s a non-funding of a Council initiative, it’s a cut in service. So I call your

attention to that, and please, you know, look at

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EXECUTIVE BUDGET it, and understand that our priorities for the Youth Services Committee are going to come from that, and we have a lot of work ahead of us, Commissioner, so I turn it over to you. COMMISSIONER MULLGRAV:

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Is this on?

Good morning, Chairman Fidler, Recchia, and Vann, and members of the Youth Services, Finance and Community Development Committees. I’m Jeanne

Mullgrav, Commissioner of the Department of Youth and Community Development, and thank you for the opportunity to discuss the fiscal 2011 executive budget. Since 2008, DYCD has implemented eight rounds of gap-closing action. During all of

these difficult decisions, our priority is to help the city meet its fiscal obligations while supporting children and families through the recession. Some of the most significant budget

actions implemented prior to the executive budget include $25.9 million reduction in the Out-OfSchool Time program, which was achieved by increasing funds that were withheld from providers who failed to meet performance targets, consolidating services in locations with beacon

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programs, reducing summer services and eliminating Option 2 programs and 33 school year programs. While painful, these decisions preserved yearround programs in traditionally underserved communities. It’s also important to note that

despite these actions, OST funding has more than doubled to more than $99.5 million since its inception in 2005. We also took $4.13 million in

reductions to the Beacon program, and this was achieved by reducing the base contracts of 66 Beacon centers supported by city tax levy funding. We again thank the Council for its allocation of $3.5 million this year, and this help, combined with $2.3 million in stimulus funds, allowed us to maintain the traditional budget level of 400,000. With the stimulus funding expiring in the executive budget, the sites will have an average budget of $340,000 in fiscal year 2011. Federally-funded sites maintain an average budget of $400,000. In fiscal 2010, $1.18 million was

eliminated from the Cornerstone initiative because of savings resulting from new centers that will open as originally scheduled. However, these

programs will also face an 8% cut in fiscal 2011.

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EXECUTIVE BUDGET As part of the executive budget, DYCD identified an additional $5.75 million in savings. Our executive budget for next year is

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$293.6 million, of which $174.1 million is city tax levies, $82.8 million is federal, $11.5 million is state, and $25.7 million comes from other funds. Consistent with our efforts to

identify cost savings without impacting core services, we expect to save $1.13 million in rent costs. DYCD also made the very difficult decision

to eliminate the city tax levy portion of the adult literacy program to save $4.6 million. DYCD remains committed to adult literacy services by investing a mix of federal funding totaling $6.1 million. This also helps to preserve other city

tax levy-supported programs such as OST, Beacon, and the summer youth employment program, as well as our adolescent and family literacy program. The executive budget also has some encouraging news. DYCD is thrilled that it

restores funding for two of our signature programs, the Out-of-School Time initiative and the summer youth employment program. It restores

$600,000 of city funding that will support 1,940

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EXECUTIVE BUDGET slots at summer day camp programs located at 30 middle schools. Additionally, the New York

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Community Trust has committed to raise $700,000 in private funding, for a total restoration of $1.3 million. This public-private partnership is a

result of our ongoing dialogue with a wide range of stakeholders on the importance of our afterschool and summer camp programs, and we thank the Trust for their continued support. The executive budget also restores a $1 million proposed reduction in SYEP funding from the city’s preliminary budget, and committed an additional $9.7 million in city funding. We

are aware of the fiscal realities faced by our city, and the many difficult choices that the Mayor had to make in other areas of the budget. It’s clear that he recognizes the goals and accomplishments of SYEP, and shares our concern for providing meaningful and productive work experiences to as many of our city’s young people as possible. The new funding will allow us to add During the past few months,

over 7,000 SYEP jobs.

with the support of Mayor Bloomberg and the city’s legislative staff, I’ve traveled repeatedly to

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EXECUTIVE BUDGET Albany and Washington D.C. to make the case to policy makers and legislators about the need for continued support of SYEP. We are encouraged by

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the news that the House and the Senate are expected to consider a bill this week, maybe even today, which will include $1 billion for summer jobs. If it passes, we anticipate that the city

will receive $23.3 million to fund an additional 16,000 jobs. This will enable SYEP to serve

approximately 41,000 young people this summer. While passage of this bill would be welcome news, we will still fall short of the 52,000 young people served last year, with the help of our partners in state government. As you know, the

Governor’s budget proposal completely eliminates $19.5 million in TANA funding used to support SYEP. We remain hopeful that additional state

funding will ultimately be added to SYEP, to insure a robust program this summer. Despite funding uncertainties, we are continuing to build on innovations that we have made since 2003 when the program was transferred to DYCD. As you know, DYCD has used

technology to make program management more

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EXECUTIVE BUDGET efficient, and this includes SYEP online, which has computerized the application, enrollment and timekeeping system, and we’re pleased that about

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85% of the applications that we are receiving are online. This summer we are piloting the use of

handheld wireless devices to monitor work sites in real time and reduce paperwork so that staff may spend more time in the field. As you know, the program also emphasizes financial literacy in its educational component, complementing this effort as you know, DYCD replaced paper checks with debit cards and partnered with several banks to provide fee-free ATM transactions. While making payroll more

efficient, this also empowers communities and households without access to banks. This summer

we are piloting a project with the Department of Consumer Affairs to offer free checking accounts with no minimum balance requirement to participants eighteen and over. To date, six

banks with branches located across the city have signed on and they include Chase, Citibank, Checkspring Bank, Cross County Federal Savings Bank, the Municipal Credit Union, and the New York

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These efforts coincide with our enhancements to another youth workforce development initiative, the Out-of-School Youth program, OSY. DYCD is currently awarding $11.8

million in contracts for 26 OSY programs beginning on July 1st. Through these new programs, we’re

continuing to build strategic partnerships with other community-based organizations, institutions of higher learning, and employers, to provide participants with a blend of meaningful activities to improve outcomes. Using labor market data to

focus on high growth jobs, 1,328 participants each year will receive training in areas such as food service, EMT, health care, graphic design, customer service and construction. This type of

innovative thinking extends throughout the agency, and we teamed up with a number of public and private sponsors to support some special initiatives. Some current examples include the

BCC/Nike Step it Up dance competition, which will be held on June 7th at the New Amsterdam Theater on Broadway, the 5th Annual Fun on the Rock event, which will be held on June 10th, 2010, and this

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EXECUTIVE BUDGET event gives youth who live on the peninsula a chance to enjoy healthy recreational activities, make new friends and connect to their community. The Robotics program, which will be holding its

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championship on June 12th at Polytech Institute of NYU. We also teamed up with Nike and New York

Liberty in support of the Beacon/Nike Middle School Girl’s League, and the championship will be held at Madison Square Garden on June 18th, and we’ll again have the DYCD Day at the Bronx Zoo on July 22nd. Finally, we’re pleased to announce a new partnership with the New York Academy of Sciences, and it will utilize graduate students who will help organize project-based learning opportunities and mentor participants. All of

these activities are consistent with our efforts to provide fun, holistic and structured themebased activities, trips and recreational services to young people. Additionally, they help lay the

groundwork for expansion when the city’s economy improves. Thank you once again for the

opportunity to discuss the DYCD fiscal 2011 executive budget, and I am joined by Deputy

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EXECUTIVE BUDGET Commissioner Bill Chong and John Cirolia, Assistant Commissioner for Contract Agency Finance, and we’d be pleased to answer your questions. CHAIRPERSON RECCHIA: Thank you,

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Before we move forward, I’d like to

recognize Melissa Mark-Viverito, Council Member Jackson, Council Member Sanders, Council Member Darlene Mealy, Council Member Brewer, okay. this time, okay, we will hold off on the questioning for one minute. [START TAPE TWO] CHAIRPERSON RECCHIA: At this time At

before we start the questioning, I’d like to recognize Annabel Palma, a Council Member who joined us, and Council Member Diana Reyna. At

this time I turn the floor over to my co-Chair, Lewis Fidler. COUNCIL MEMBER FIDLER: Thank you.

And Commissioner, I was remiss in my opening remarks by not thanking the administration for finding, I guess, about ten or eleven million dollars to restore the summer jobs program between the preliminary and the executive budgets. I

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EXECUTIVE BUDGET understand that the administration, you know, reflects … this money reflects the city tax levy contribution that existed before we got stimulus money last year, and I think it was a very, very positive development for kids who were hoping to work this summer, and I want to say thank you. And also for, and you touched on it in your testimony as well, restoring the summer OST program for middle schools, which I think as a critically important step as well. to say thank you to you for that. So let me start first with summer And I wanted

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jobs, and ask you about the federal bill, and what you know about it. We have reached out, as have

many of the advocates, to senators Schumer and Gillibrand, and I understand that Senator Schumer made a public pronouncement that there would be $50 million coming to the State of New York. that money go to the state, or will it come directly to the city? And if it goes to the Does

state, do we have any assurances of what will actually arrive in the city? COMMISSIONER MULLGRAV: I will

check with the legislative staff, but my

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assumption has been that it comes directly to the city. COUNCIL MEMBER FIDLER: directly to the city. It comes

And so you anticipate that

portion to be about twenty three and a half million dollars? Was that it? Yes. Okay. If

COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER:

that happens, and I know we don’t have a crystal ball, what do you perceive will happen with the efforts in the assembly and the senate to provide state funding for the summer job program? And I

guess the second part of that question is, if they feel that the federal money has taken care of the issue, would the money that they traditionally have used for summer job programs be available for other youth programming in the city? COMMISSIONER MULLGRAV: Given that

we had 139,000 young people apply last year over a five week period, we’re committed to still making the case that the summer youth employment program needs those resources. $19.5 million represents a

big hole, obviously, in our summer youth employment budget, and it also sets what I think

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EXECUTIVE BUDGET is a very difficult precedent for us going forward, because the moneys that are coming from the federal government, my understanding is that they are not long-term moneys but will only be available for this summer. So without the state

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commitment, I think the precedent going forward is, also doesn’t bode well for next summer. COUNCIL MEMBER FIDLER: I

understand that, and I certainly, you know, would like to see as full and robust a summer job program as possible. I mean, last year, in a

record year, we left 100,000, almost a 100,000 kids applying unemployed, or not employed with the city summer jobs. So obviously that would be

desirable, but we also have in the past, for example, and I will come back to this in a moment, OST2, we took a one-shot funding to keep those programs open. So we have a bit of a balance

here, and if the state is using TANA funds or some particular revenue stream to fund summer jobs, and you know, Lord knows getting our fair share out of Albany has proven to be difficult this year, you know, before we allow them to turn around and say to us, well, you have, you know, not last year’s,

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EXECUTIVE BUDGET but the year before’s level, so you don’t need this money, mightn’t we be able to make the case

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to them that that money could then … that we have other needs, such as OST2? COMMISSIONER MULLGRAV: I think we

have a myriad of needs, and you’re not incorrect to suggest that, but I think, given that youth unemployment is at a record 40%, some four times higher than adult unemployment, I would be committed to maintaining the summer youth employment moneys. COUNCIL MEMBER FIDLER: Okay, a

Let me jump to OST2, and on your Every kid who isn’t in

other … all the OST cuts.

an OST program next who was in one last year will not want to hear that they live in a low-priority zip code. Also, the OST2 programs which we were

able to sustain in I guess a post-budget shift of dollars, with the assistance of your office and the secretary of state, you know, those programs are all public-private partnerships, am I correct? COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER: Yes. That’s what

You’ve just created a public-private

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partnership with the New York Community Trust, and clearly that is something that your agency is looking to do as you continue to do more with less. Wouldn’t the OST2 program fit exactly into

that mold? COMMISSIONER MULLGRAV: The

decision to make the cuts to OST2 were based on research that suggests that comprehensive programming, programming that meets on a regular basis, every day and for a certain number of hours, has a better success at helping young people reach certain outcomes than programs that meet more intermittently. And so it was really

our commitment to that comprehensive and intensive programming that made us look at the option two programs for reduction. MR. CHONG: Just to add on- -

COUNCIL MEMBER FIDLER: (Interposing) You need to, for the record, you need to identify. MR. CHONG: Bill Chong, Deputy Just to add on,

Commissioner for Youth Services.

that the partnership with the New York Community Trust restores six weeks of summer service ten

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of service? 160? 160 right?

EXECUTIVE BUDGET hours a day, which certainly meets the needs of working parents. And also, there’s a lot of

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national research that shows that in high-need neighborhoods there’s a trend of summer learning loss, that kids who are in poorer neighborhoods tend to fall behind in what they’ve learned in the school year. And so to address that, the public-

private partnership made sense to fund a comprehensive strategy to meet that challenge. COUNCIL MEMBER FIDLER: Certainly

no argument there, we’re all in favor of that. But I, you know, Commissioner, if I recall the numbers correctly, OST2 serves about 10,600 kids for 160 hours apiece. intermittent. COMMISSIONER MULLGRAV: I’m working with are 5,484. COUNCIL MEMBER FIDLER: Okay. Is The numbers That doesn’t sound

Or did I get them both wrong? COMMISSIONER MULLGRAV: What’s the

COUNCIL MEMBER FIDLER:

160 hours

DEP. COMM. CHONG:

So the 160 hours

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COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER:

Oh, okay. All right,

DEP. COMM. CHONG:

But it’s annual

hours, so if you look at it over the course of a year. COUNCIL MEMBER FIDLER: Well,

obviously, I wouldn’t expect anyone to be doing 160 hours a week. But you know, when OST2 was on

the table last year, all of us, every one of us heard from programs in our districts, they tend to be the more innovative, you know, programs, a little bit different than some of the others. I just want to express, without beating it into the ground, that this Committee has already sent you a letter, many of my colleagues have sent you a letter on OST. We are not looking for an And

across-the-board cut in OST, we’re looking to restore OST, all OST. And we’re glad that you

took care of the middle school summer program, but that doesn’t take care of the “low priority zip code” issue, and it does not take care of OST2, and we will be working on those as we go forward,

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EXECUTIVE BUDGET and would really like to see those restored.

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know, and you had to know, that the shelter bed question was going to come from me. I have it on

reasonably good authority that the task force that was created by the Mayor regarding LGBT youth is going to call for an increase … set a goal of additional shelter beds over the next several years. I’d just like to know how it could

possibly be consistent then, that regardless of the ritual of the budget dance that goes on here, that the Mayor has not put the $5.9 million for shelter beds, that particularly the money that creates the diversity in our shelter bed program, back into the budget. COMMISSIONER MULLGRAV: Any

initiative to create new programs or any new beds would obviously require additional resources. And

so whenever we think about launching any type of program, we look to many levels of government, and we have had conversations with the federal government on expanding resources for RHY, as well as, I think you’re referencing the commission, and on that commission there were many private partners, many representatives from foundations,

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who agreed to work with us in meeting goals for a number of different new initiatives. And so the

city obviously is committed to providing a range of youth development services, but we cannot do this work alone. And so, you know, anything,

especially in this environment, will entail us working closely with partners, again, on many levels of government, as well as with our private partners. COUNCIL MEMBER FIDLER: Commissioner, if I didn’t value the partnership that I had with your agency on runaway and homeless youth, and know the good work that you’ve done, I’d probably be raising my voice right now. We are the same level of government, whether it’s that side of the building or this side of the building. We’re not talking about, as the report But we’re talking now

may suggest, expanding.

about half of the money being missing because it’s, you know, there’s some budget dance nonsense going on. And if there’s going to be a commitment

made to preserve shelter beds for children sleeping on the street, I don’t understand why we should be playing this game. I think the Mayor at

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EXECUTIVE BUDGET least said the right things in creating the commission, to look at the question, to look at long-term solutions.

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I’m sure it is going to be a

very well thought out report, and it’s going to contain a lot of positive things. But all of that If

will mean nothing if the money is not there.

you’re going to … if we pass the budget the Mayor proposed, we’d be closing 50 shelter beds, a hundred shelter beds, at a time when the report is looking to expand the existing shelter beds. And

I know we’ve had this conversation offline, I’ll have it again online. You know, no report And quite frankly,

substitutes for a shelter bed.

I would hope, I would believe, I would like to think, that not only is the Mayor’s commissioner and this Council on the same side, but the Mayor might be on the same side as well, and he might tell his Office of Management and Budget that this doesn’t make sense in a business model, it doesn’t make sense from just a matter of right and wrong. That money needs to be restored, and it needs to be restored immediately. Our shelter bed

providers have a right to know that on July 1st the leases that they’ve entered into will not be

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EXECUTIVE BUDGET vitiated because we don’t have money for them. And just before I go to Council Member Vann, I just want to do a little, something that we do

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every year, along the lines of the Council budget dance. There are a number of programs that I know

Council has believed are worthwhile that are not in the budget, probably because the Council funded them. And I just wanted to make sure that they’re So

not in the budget not for any other reason. I’m going to read a list of programs that the Council funds that are zero in the executive

budget right now, to make sure that you don’t have a problem with any of them, that you think they are all financial, you know, finances permitting, are all good programs. The After Three

Corporation, Neighborhood Youth Alliance Street Outreach, The New York Junior Tennis League, Sports and Arts in Schools Foundation, WEDCO, YMCA Virtual Y program, our two Food Pantry programs, the Jill Chaifetz Hot Line. Any of those programs

not in the budget because they’re not being run well or they don’t provide a valuable service? COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER: No. That was a

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you Chairman. in- no?

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COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER: COMMISSIONER MULLGRAV:

No. Okay. They’re not

COUNCIL MEMBER FIDLER: (Interposing) In other words, money not being an object, they would all be in the budget, right? COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER: Council Member Vann. COUNCIL MEMBER VANN: Okay, thank Yes. Okay.

Good morning again, Commissioner. I’m particularly concerned

I’ll be fairly brief.

about adult literacy eliminated from city funding. It is our information that you plan to eliminate, I guess, $4.6 million in city funding for adult literacy education, which provides ESL adult basic education, GED, to I guess over 10,000 participants. New York State also is cutting over

a million dollars in GED testing, as I understand it, and another $2.6 million in adult literacy, which goes basically to CBO’s. So, you know, what

will be the impact of these cuts, both city and

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EXECUTIVE BUDGET state cuts, on the adult literacy program as we know it? COMMISSIONER MULLGRAV:

31

First, when

the numbers were released, it didn’t … we weren’t at that time to do an agency-by-agency look at the reductions. And so the participant reduction

number that we are working with, having done that review, is 5,316. And that means that 4,615 will

continue with adult literacy services in the FY11 budget. COUNCIL MEMBER VANN: The 5,000

figure you gave is those who will not, who will no longer be eligible to receive, is that it? COMMISSIONER MULLGRAV: Yes, that’s

the participant reduction number, which is significantly reduced from 10,000 to 5,316, and that’s us really looking agency-by-agency and looking at all the different funding combinations and finding out how many slots are really impacted. COUNCIL MEMBER VANN: Is there no

federal funding that is available in this portfolio, do you know? COMMISSIONER MULLGRAV: Yes, we

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EXECUTIVE BUDGET will continue to have about $6.1 million in federal funding, which is a mix of CSBG and CSBG ARRA, as well as CDBG. COUNCIL MEMBER VANN: Well, I’m

32

sure you understand the severe impact this will have on the low income and unemployed people who are trying to make it in the city, and I’m sure if there is any alternative, you would take that alternative, if there is any other way of providing the adult literacy program, it’s a very high priority. I know that you understand that.

And so hopefully we will be able to do something to avoid this very, very, very serious cut. COMMISSIONER MULLGRAV: I have to

agree with you that this was, really with a very heavy heart. As you may know about, you know,

DYCD’s track record is that we have been advocating for literacy programs since our inception. We have piloted both family literacy

and adolescent literacy, being the first in the country to take on many of those programs. We

innovatively used our moneys to support literacy. And so it has been really a part of our portfolio that has been very critical in helping move people

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 enough.

EXECUTIVE BUDGET to self-sufficiency. And, but we have taken, as

33

you heard earlier, devastating cuts in so many of the other areas. We were left to find, you know,

over $5 million, and there really is … it was no area in the budget that could sustain that. COUNCIL MEMBER VANN: The state

cuts, have they … they were made previously to the 2011 budget? They were made back in the early Or they were proposed in the Were these cuts made

part of the year?

governor’s 2011 budget?

already by the state, or are they being proposed going forward? COMMISSIONER MULLGRAV: cuts, I’m not quite familiar. The state

I mean, I know more

anecdotally about the cuts that they have made in GED, but I’m probably not the best person to talk about the state’s cuts. COUNCIL MEMBER VANN: Okay, fair

Community service block grants, DYCD

received $50.5 million in community service block grants as part of the federal stimulus. that $32.5 million has been used, and the remaining $18 million is being rolled over into 2011. What did we spend the $32.5 million for in I’m told

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EXECUTIVE BUDGET federal stimulus funds? that were funded? was served? What are the programs Who

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Did we create any jobs?

Give me some information on that

$32.5 million. COMMISSIONER MULLGRAV: It is quite

a long list, so you may want to get this under separate cover. COUNCIL MEMBER VANN: Well,

actually you can give me the … you can just summarize it, give me the list, you don’t have toCOMMISSIONER MULLGRAV: (Interposing) We spent a considerable amount on the summer youth employment program, on adding subsidized work opportunities to our fatherhood programs, including our young fathers. We spent

money on AVE and GED services and ESOL and immigrant employment services. We also spent

moneys on a low wage immigrant workers program. We spent moneys on domestic violence, adding workforce development programs to our domestic violence portfolio. COUNCIL MEMBER VANN: I appreciate it, my indulgence. Commissioner,

Did you create

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EXECUTIVE BUDGET any … how many jobs were created or retained? me leave it at that, as opposed to- COMMISSIONER MULLGRAV: (Interposing) The number of FTE’s is 3,887.

35 Let

FTE’s

of course are a term of ARP, and if you have a while we can go through the whole process. COUNCIL MEMBER VANN: Does, the

FTE’s, are they new jobs created, or were they jobs that were retained? of the two? COMMISSIONER MULLGRAV: combination of both of them. COUNCIL MEMBER VANN: gave you that answer. Good thing I One other There was It’s a Or is that a combination

Okay, all right.

question, going back to adult literacy.

some reference to CUNY, who also provide adult literacy, as I understand it. In the budget

there’s some language as to CUNY taking over, perhaps, or assuming some of the responsibility for what was previously with the DOE? anything about that? Do you know City

Or is that accurate?

University of New York, that is. COMMISSIONER MULLGRAV: Yes, I

think all of us in this climate are challenged to

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EXECUTIVE BUDGET

36

try to meet the real needs, but I am not familiar with a plan for CUNY totally taking over the responsibility for literacy services. COUNCIL MEMBER VANN: couple of other questions. I see. A

Adult ESOL and

immigrant employment services, how much CSBG stimulus funding for the ESOL and immigrant employment services program, do you recall? you have that number? COMMISSIONER MULLGRAV: We do. Do

ESOL we have at $4.589, and immigrant $1.9, and, I’m sorry, what was the other area? COUNCIL MEMBER VANN: Well

essentially I really need to know how many jobs were created or retained by ESOL and immigrant employment services? COMMISSIONER MULLGRAV: I’ll have

to get back to you with that level of detail. COUNCIL MEMBER VANN: You’ll get Adult

Okay, it’s got to be sidetracked.

literacy and employment program, do you know what the stimulus funding was for that, for those programs, adult literacy and employment program? Do you want to get back to me on that one too?

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EXECUTIVE BUDGET COMMISSIONER MULLGRAV: Deputy

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Commissioner Suzanne Lynn is going to help clarify. COUNCIL MEMBER VANN: You provided

adult basic education and GED services and job readiness services. DEP. COMM. LYNN: Yes, the adult … Suzanne

COMMISSIONER MULLGRAV: Lynn, Deputy Commissioner. DEP. COMM. LYNN:

We had for CSBG

stimulus funding in adult literacy- COUNCIL MEMBER VANN: (Interposing)

Get a little closer to the mic, please. DEP. COMM. LYNN: I’m sorry. We

had, we budgeted a little over $4 million in CSBG ARRA funds for the expansion of adult literacy ABE and GED services. That included both slots,

additional slots and employment-related services. COUNCIL MEMBER VANN: Could you

give me the same information on the ex-offenders, I believe you used over $4 million in CSBG funding. DEP. COMM. LYNN: We actually used

a little under $4 million for a combination of

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EXECUTIVE BUDGET subsidized job opportunities for ex-offender fathers 25 and over, as well as younger fathers. COUNCIL MEMBER VANN: DEP. COMM. LYNN: combination of the two. COUNCIL MEMBER VANN: under $4 million? DEP. COMM. LYNN: Yes. Right. And And a little Right.

38

So the

COUNCIL MEMBER VANN:

how many jobs were retained or created, did you say? DEP. COMM. LYNN: back to you on that. COUNCIL MEMBER VANN: Okay. And We’ll have to get

finally, immigrant services, the domestic violence program. I think you used close to $2 million in

CSBG funding. DEP. COMM. LYNN: That’s correct. You created

COUNCIL MEMBER VANN: jobs, retained jobs?

Give me some idea. Yes, yes we did,

DEP. COMM. LYNN:

we created jobs, but we have to get back to you on the exact number. COUNCIL MEMBER VANN: And also let

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Chairman Vann. Thank you. exactly.

EXECUTIVE BUDGET

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us know how many individuals received education or employment in support services, and how many participants, in other words. DEP. COMM. LYNN: violence immigrant services? COUNCIL MEMBER VANN: Right, In the domestic

DEP. COMM. LYNN:

We have actually

enrolled in those programs 340 people. COUNCIL MEMBER VANN: Chair? CHAIRPERSON RECCHIA: Thank you, Uh huh, okay.

We’ve been joined by Council

Member Sanders and by … actually, the Council’s leader on adult literacy programs, Council Member Sara Gonzalez. signed up. We have seven Council members

Try not to go over the same ground,

please, because, as you do know, we do have a stated meeting. And to those of you in the

audience, you know, if you see Council members coming and going this morning, we have a number of meetings. Finance itself is meeting in two places

at the same time, so if you see people coming and going, it’s not because they’re not interested.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 excuse me.

EXECUTIVE BUDGET

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Council Member Cabrera, followed by Council Member Williams. COUNCIL MEMBER CABRERA: so much to both Chairs. Thank you

Commissioner, welcome.

You know, I’m sitting here a bit frustrated in light of the fact that these cuts are really targeting … let me just focus for now on adult literacy. It’s really targeting the poor, and the We

economically disadvantaged and minorities. have 1.6 million New Yorkers who need a GED. They’re lacking a GED. every year.

We have 50,000 test takers

Now, I did a little calculation here.

If you have each of these graduate with a GED, in their lifespan they would contribute about $325,000 in taxes. Annually, that would be $1.6 Please explain to

billion in revenue annually.

me, a Mayor that really wants to put himself out as the business, job creator/mayor, how can the Mayor really justify cutting these programs, and we’re talking about little money, in light of the fact that he’s sponsoring all of his big pet projects? CHAIRPERSON RECCHIA: Excuse me,

Before the Commissioner answers that,

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EXECUTIVE BUDGET

41

I have to tell you we have 25 more minutes before we have to turn over the room. Every time we’re

interrupted by applause, it’s going to make it harder for us to do that. So I have to ask you,

if you really feel the need to participate, try the silent applause thing. All right? Thank you. I would say

COMMISSIONER MULLGRAV:

that all of the programs that DYCD has the privilege of creating and developing and maintaining, play that role in the community. Help promote self-sufficiency, help promote youth development, and the issue for this agency is to try to figure out how to preserve the agency’s programs that we are most known for, and most are related to the agency’s mission and most … and where no other organization or city agency is doing that work. None of us want to be in that

position of making the choices among, you know, sort of which children do you give up. want to do that. None of us

I mean, that’s not what any of

us signed up to do, but as public servants, I had to think long and hard about all the different programs that DYCD runs. As you know, OST has

taken a reduction of almost 25%, and that’s

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 significant.

EXECUTIVE BUDGET

42

The Beacons have also taken cuts, as

well SYP, and at the end of the day, I had to make that hard choice, for which I am accountable. COUNCIL MEMBER CABRERA: Commissioner, I know you have in place, and I keep saying this to the other commissioners, an impossible situation. I’m just trying to get a

message to the Mayor, that I believe where he’s targeting, the program that he’s seeking to cut is going to have an economic impact upon our community, especially those who are economically disadvantaged. Dealing with the poor, I believe Look, I was an ESO

the commissioners are right.

student, I know how scary it is, to come into this nation, you know. and No. All I was able to say was Yes

And I know what it is to have parents … Parents I have

see, this is going to impact parents.

have an impact on the child’s education.

constituents saying to me, I met a man the other day who is involved in illegal activity, if I may, right in St. James Park. He told me, “Please get

me to a GED program, I want to be able to get out of this lifestyle. I don’t know how to read, I If we keep cutting

don’t know how to write.”

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EXECUTIVE BUDGET

43

these programs, we’re not going to be able to help the most needy, and those who are crying out for help. I’m going to keep it … I’m going to close But

right here, because I’m mindful of the time.

please, for the love of these people, let’s find another alternative, please communicate that to the Mayor on my behalf. Thank you so much. Council

CHAIRPERSON RECCHIA:

Member Williams followed by Council Member Rodriguez. COUNCIL MEMBER WILLIAMS: you, Mr. Chair, both Chairs. Thank you, Three Chairs, Thank

Commissioner, for your testimony. I’m sorry.

So, you know, I’m not sure who to be

really angry at, so I’m going to be angry at you. But I think the cuts and stuff come down from higher above you, from the administration and the Mayor. So then I’m going to be mad at him. The

problem is, as I always have, and I notice when it’s time to deal with the budget, the poorer you are and the more melanin you have in your skin, the more that’s going to be on your backs to try to balance the budget. And I think that’s the

problem, and I think it’s evidenced here.

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Obviously there’s some people here who don’t want you to cut adult literacy, and I agree with them. And I think there’s a bunch of things that we shouldn’t cut, that’s one of them. That one in

particular, as I mentioned, I think is much needed in order to do better in society here. My parents

were immigrants, the one thing that was a plus for them, they came from the English-speaking Caribbean, as opposed to French- or Spanishspeaking. So they could move along much easier. And

And the people who can’t, it’s a problem. that, in particular, I think for the Asian

community that makes up 12%, they get less than 1% of the services, and adult literacy in particular I think is very, very important to them. And my

first question is trying to figure out why do we zero out any program that’s this important? Why

would it not just be a cut from one or two places? Why do we zero out a program? COMMISSIONER MULLGRAV: I felt that

continuing to take away from programs, I mean, that we have initiated, like the after school program, would result in really not having much of a program. Because you would reduce the quality

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EXECUTIVE BUDGET and reduce the participant price, such that you would be running in theory a program in the very

45

communities that you’re concerned about and you’re talking about, and that we not only have an interest in having programs, but we need to have an interest in having programs that are high quality and that do the job that they say that they set out to do. And I think if we convince

ourselves that we’re able to do that job, with the kind of cuts that I would have had to take had I not taken this cut, then we’re doing a long-term disservice as well. And that a part of

sustainability is that you preserve a program with the elements that are necessary, so that if there are good times, which I believe there will be very soon, that you have something to build on. And so

I was at this sort of a crossroads in terms of either taking more reductions and really reducing the quality, or just saying we can’t afford to do this service any more. COUNCIL MEMBER WILLIAMS: about two quick questions. I have

But I just wanted to

know, my colleagues reminded me that this is a program that the Mayor mentioned in his address to

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the city.

EXECUTIVE BUDGET So it’s even more strange to me that And

46

this is a program that would be zeroed out.

also, all of these programs, you know, the City Council passed the Gang Initiation Prevention bill, which I didn’t support. But the people I

work with who deal with gangs say that all of the programs that we’re planning to cut here are the programs that prevent gang activity and youth crime. And these are the very programs that we go So every level of the

at to slash and burn.

structure of our society I think our young people, particularly the young people of more color and the poor young people, are set up for failure. these are the programs that we have to restore, like the Out of School-Time program. And I’ve So

been asking these questions, I don’t know if we have any follow-up, but the way that we, and this is a little selfishly for my district, the way that we decided which ones get cut with the districts is strange, because I have one particular program that’s in a district that desperately needs it, but because of the way it’s carved up on these zip codes, it looks like it’s, I guess, a more middle class than it is, not to

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Very quickly.

EXECUTIVE BUDGET say middle class kids don’t need an after school

47

program, but I think there’s some that definitely need it. How did we decide that, why can’t we go

through census tracts or something like that to try to figure it out? Because if we did do a

census tract, I’m sure that that would be restored. COMMISSIONER MULLGRAV: We actually

do use that analysis of looking at census tracts to make those decisions. Regrettably, even people

who live in the working class communities or who have pockets of poverty can have neighbors who are worse off, and I think that’s what we are faced with, that there are some people that are just getting by and are really struggling, but that their neighbors are even worse than they are. we’ve made a commitment to preserving the most, most vulnerable among vulnerable. CHAIRPERSON RECCHIA: Member, I’ve got to- COUNCIL MEMBER WILLIAMS: (Interposing) Okay, this is- CHAIRPERSON RECCHIA: (Interposing) Council And

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EXECUTIVE BUDGET COUNCIL MEMBER WILLIAMS: We, and

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my colleagues have identified ways that we can raise revenue instead of cutting. One of them is

sharing the pain in terms of income, that would raise income taxes to $1.3 to $2 billion. Mayor will not support that. The

There’s also some

money, he’s been able to shepherd us very well, so we have some nest eggs that they say they’re saving for a rainy day. I’d like to know what a

rainy day looks like if we’re not in one now, and I think it’s pouring. So my question is, lastly,

that’s yes or no, would you support raising new revenue options and dipping into nest eggs, so that we can preserve these programs- CHAIRPERSON RECCHIA: (Interposing) That’s

Council Member, I’m going to cut that.

really not a fair question to ask the Commissioner of the Department and Youth and Community Development, who has nothing to do with tax policies. So- COUNCIL MEMBER WILLIAMS: (Interposing) Would you- CHAIRPERSON RECCHIA: (Interposing)

If we had all the time in the world, I’d be

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I ask- -

EXECUTIVE BUDGET interested in hearing her thoughts, but you made your point. COUNCIL MEMBER WILLIAMS:

49

Okay, can

CHAIRPERSON RECCHIA: You made your point.

(Interposing)

COUNCIL MEMBER WILLIAMS:

Would you

commit to telling the Mayor, telling him what I said, and the issues that we have there? do that? CHAIRPERSON RECCHIA: I predict the Can you

answer, it’s … what she tells the Mayor in private is not what she’s going to tell us here. COUNCIL MEMBER WILLIAMS: commit to telling him that at least? COMMISSIONER MULLGRAV: I think Can you

there are representatives from the Mayor’s office here who are hearing your point of view. CHAIRPERSON RECCHIA: And OMB will

be here on June 7th, and you can ask Director Page that question, I think it would be more pertinent. I apologize. COUNCIL MEMBER WILLIAMS: CHAIRPERSON RECCHIA: Sure.

But we have

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EXECUTIVE BUDGET to be out of the room here in about ten minutes. COUNCIL MEMBER WILLIAMS: for the work you’re doing, Commissioner. COMMISSIONER MULLGRAV: CHAIRPERSON RECCHIA: Thank you. So and

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Thank you

apropos of the OST low priority zip code thing, I know Council Member James is not here, because her mother passed recently, but I’m sure this is the point in the hearing where she’d be mentioning Ingersoll houses being in the wealthiest zip code in the City of New York, and not being low need. Council Member Rodriguez, followed by Council Member Mark-Viverito. COUNCIL MEMBER RODRIGUEZ: Thank

you, Commissioner, and thank you everyone for taking your time to be here. And everyone should

know that it is important to come to these hearings. And also we have to be ready to go

outside in the street, do a rally and demonstration. That’s how we will be able to My question to the

restore the funding.

Commissioner is, we had a number that 10,000 participants will be affected in the adult literacy. I mean, we have 10,000 participants in

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EXECUTIVE BUDGET the adult literacy program, and with the cut of $4.6 million, how many participants will be affected? COMMISSIONER MULLGRAV: I had an

51

opportunity with Council Member Vann to clarify that number. The participant reduction number is

actually 5,316, because the 10,000 number actually was the entire number of participants, and didn’t include the other funding streams, and so- COUNCIL MEMBER RODRIGUEZ: (Interposing) And so 5,000 is the number. COMMISSIONER MULLGRAV: 5,316. And do

COUNCIL MEMBER RODRIGUEZ:

we have a breakdown on how the number will affect by district? COMMISSIONER MULLGRAV: We can get

that to you, and we do anticipate that 4,615 participants will continue to receive literacy programming. COUNCIL MEMBER RODRIGUEZ: Okay,

and as you are very aware, like the district that I represent has the highest unemployment rate, at least in Manhattan. How do you think that this

cut will be affecting also unemployment in my

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 district?

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COMMISSIONER MULLGRAV: that, you know, the programs will be

I think

oversubscribed, and I think that, you know, these are certainly skills that people want to improve to be able to both get a job and improve their standing in their organizations and get a raise or get a promotion. And I think that this will be

hampered, but I will certainly work with my colleagues in the illiteracy arena to make sure that, if there are ways to accommodate more people into literacy programs, that we will do that. We

also looked, that’s why we did the organization by organization, to see the impact that would happen on a very granular level, based on whether organizations had SED funding or whether organizations had other kinds of federal funding. COUNCIL MEMBER RODRIGUEZ: And my last question is, first of all, my comment is that it isn’t fair that I used to come to these meetings, especially at the higher level, this (inaudible), and now in here by the same cycle every year, it’s like they measure, they know that they constantly restore, they come and they

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EXECUTIVE BUDGET propose those cuts. And then we will be looking

53

at the number, trying to bring the funding back. And I believe that it is unfair, now we’re trying to balance the budget, basically cutting on social services. And is there any conversation among the

administration trying to get the money, the $4.6, not expecting that the Council will restore the funding? Because how, especially in the DYCD, how

one particular area was the one targeted on cutting, especially the adult literacy program, where it’s basically like the only vehicle that many adult people have in order to learn how to read and write, to get like a job training. So is

there any conversation among your team, among the administration, I know you as a person on the administration, trying to look on how they could get the $4.6 million without expecting that that money will come from restoring from the City Council? COMMISSIONER MULLGRAV: We are

always looking for options to not make the cuts, and to restore funding not from tax levy moneys, but also from other resources, whether that’s other levels of government and private. I mean,

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EXECUTIVE BUDGET that’s one of the ways that we were able to

54

restore, in a different area, the OST funding, is working collaboratively with the Youth Funders Network, and being able to bring back $1.2 million in matched public/private money. And we do this

behind the scenes with all of the parts of the portfolio that have been cut. That being said, we

don’t have anything, you know, we don’t have anything on the table. COUNCIL MEMBER RODRIGUEZ: Okay, so

thank you for your great work, and I hope that we will be able to put together funding, especially institutions such as the Inwood and the Northern Manhattan, that they are here, that they would be able to get funding to keep supporting our adult community. Thank you. COMMISSIONER MULLGRAV: COUNCIL MEMBER FIDLER: Council Member. Thank you. Thank you,

And in listening to your answer

about the number of participants that would be losing adult literacy services, do you want to revisit your answer to OST option two? Because I

think you gave that answer to my OST option two question. I believe we got off your website that

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it serves 10,700 kids for a minimum of 160 hours. So you told me, no, it was 5,000, and I marked myself wrong. correct. I’m not so sure that that’s

We’ll come back to that, so I don’t … I

just wanted to make the record clear. COMMISSIONER MULLGRAV: The 10,000

number covers CTL, CSBG, CDBG, CSBG ARRA, CSBG NDA, and something called FSET. COUNCIL MEMBER FIDLER: OST option two, right? DEP. COMM. CHONG: No, that’s That’s all

COUNCIL MEMBER FIDLER:

No, I’m I think

asking, now I’m jumping back to OST two. we made this the last time. back to it. DEP. COMM. CHONG:

That’s why I’m going

No, the option …

excuse me, the 10,000 is an annual number. COUNCIL MEMBER FIDLER: DEP. COMM. CHONG: Right.

But the 5,000

represents the stimulus portion that runs out August 31st. COUNCIL MEMBER FIDLER: So the

other half of OST two is in the budget?

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. 100, not a 50. that- -

EXECUTIVE BUDGET DEP. COMM. CHONG: No.

56

COUNCIL MEMBER FIDLER:

So the part

DEP. COMM. CHONG:

(Interposing)

All Option two starting in fiscal year ’10 was stimulus funding. COUNCIL MEMBER FIDLER: DEP. COMM. CHONG: Right.

And so 10,000

slots in FY10 were funded with stimulus ARRA, CSBG ARRA. COUNCIL MEMBER FIDLER: DEP. COMM. CHONG: Right.

Specifically. So if it’s

COUNCIL MEMBER FIDLER: not there, we lose 10,000 slots. DEP. COMM. CHONG:

And then we- -

COUNCIL MEMBER FIDLER: (Interposing) In OST two. DEP. COMM. CHONG: Right. So I get

COUNCIL MEMBER FIDLER:

DEP. COMM. CHONG:

Yes. Okay, thank

COUNCIL MEMBER FIDLER:

DEP. COMM. CHONG:

The annual

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COUNCIL MEMBER FIDLER:

Council

Member Melissa Mark-Viverito, followed by Council Member Brewer. COUNCIL MEMBER MARK-VIVERITO: Thank you, Mr. Chair. I want to definitely just

add my voice to all the people that are in the room and all the conversation that has been had about the difficult times that we are in and the difficult that you are struggling with, and that all of us are struggling with. And I think that

it’s clearly understood, you know, we don’t have a state budget, we know we’re looking at $1.3 billion less, and that’s what the Mayor was operating with. Even with an adopted budget,

we’re really going to see a real devastating cut. So I think we understand, I know I understand, because many of the people in this room, that we’re willing to make sacrifices in difficult times, and it’s understood that that’s the case now. But we’re not willing to make unreasonable

cuts and accept unreasonable cuts during difficult times. And the reason I say that is that we

should not be accepting unreasonable cuts,

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET particularly when not all options are on the table.

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And when I say all options, is, you know,

we in the Progressive Caucus and we as individual members have been talking about and we are going to keep that drum beat going, of looking at all options available to minimize the impact of cuts that we’re seeing here. the table. All options should be on

This administration should be taking a

leadership to say that everyone has to pay their fair share in this city, and that Wall Street has to pay, and so do those that make above $500,000 a year. And for this Mayor to say that those

options are off the table, for our Deputy Mayor to say that those options are off the table, to me is not setting the right tone, is not sending the right message. Wall Street and those that are

making above $500,000 have benefitted, have benefitted, from the investments of every single person in this room, who put their taxpayer dollars- COUNCIL MEMBER FIDLER: (Interposing), is there a question there? COUNCIL MEMBER MARK-VIVERITO: will ask a question. I

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EXECUTIVE BUDGET COUNCIL MEMBER FIDLER: Thank you. But

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COUNCIL MEMBER MARK-VIVERITO:

I think that it is important that that message is sent out there. We need the advocacy community to

basically put that out there, this is not about pitting ourselves against each other, this is about putting the message out there, that all options need to be looked at. So I ask you to

send that message out there when you advocate as well. Considering that next year it is being said

that the budget is going to be worse than it is this year, I’m asking you, Commissioner, first of all, two questions, where would you begin to cut additionally? If we’re looking at the devastating

cuts that we’re talking about now, and we’ve heard it all in the news, and families are feeling the effects. Where would you start to cut for fiscal

year 2012, considering that if we don’t look at revenue options, we’re going to have a worse budget than we have this year? And do you believe

that it is unreasonable for us to be asking this administration to look at all options, at all options, so that we don’t have to make such atrocious and devastating cuts? Those are the two

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Okay. you haven’t- -

EXECUTIVE BUDGET questions that I have for you.

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If you could start

first … I mean, I can imagine that it is already being projected that we’re going to be in a worse fiscal situation next year, that conversations have begun within agencies about where additionally cuts will be happening in the next fiscal year. Not just this that we’re trying to So where

close now, but the next fiscal year.

additionally will you begin to make those cuts? COMMISSIONER MULLGRAV: I think

we’re going to have to look at all of the tax levy programs. I mean, the programs that are supported

by tax levy in my budget are straightforward, we’ve discussed them all, you know, SYEP, OST, Beacon, adult literacy and RHY. And those are the

portfolios that we’ll again have to revisit and look at. COUNCIL MEMBER MARK-VIVERITO: So

COMMISSIONER MULLGRAV: (Interposing) And we haven’t made those decisions yet. COUNCIL MEMBER MARK-VIVERITO: So let’s just say, looking at the cuts

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you’re making on your … that are being proposed in this budget right now, if we start projecting a worse budget next year, how devastating do you believe additional cuts, beyond what we’re looking at right now would be on communities throughout the City of New York? say it would be? How devastating would you

It’s devastating now, I mean,

can you even project what it would mean to our communities? Particularly the disenfranchised,

more low income communities. COMMISSIONER MULLGRAV: No, we know

that they are significant now, and we know that further cuts would really challenge the agency, but more importantly, the communities that we’re working in. COUNCIL MEMBER MARK-VIVERITO: Okay, so then the last question, as I said before, so then do you think it’s unreasonable for us to be demanding of this administration to take leadership to make sure that all options are being explored when it comes to revenue, to insure that we minimize the impact on communities throughout New York City? CHAIRPERSON RECCHIA: Council

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very much. very tight- know, I know.

EXECUTIVE BUDGET Member, I don’t mean to interrupt. COUNCIL MEMBER MARK-VIVERITO: I

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CHAIRPERSON RECCHIA:

But I’m on a

COUNCIL MEMBER MARK-VIVERITO: (Interposing) You’re going to tell me that it’s not appropriate for me to ask the Commissioner. CHAIRPERSON RECCHIA: on a tight, I’m on a very tight- COUNCIL MEMBER MARK-VIVERITO: (Interposing) Thank you. CHAIRPERSON RECCHIA: schedule, thank you. COUNCIL MEMBER MARK-VIVERITO: think I got my message across. Thank you. All right. I … tight No, no, I’m

CHAIRPERSON RECCHIA: Council Member Gale Brewer. COUNCIL MEMBER BREWER:

Thank you

First of all, knowing you and your

staff, I know that this is a really hard decision. And I don’t think there’s any, we almost don’t know enough about DOE to know if there’s any administrative fat. I don’t think that’s true at

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 million? DYCD.

EXECUTIVE BUDGET So my question is, maybe I should be able Your new total budget is

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to figure this out.

about $294 million, including all of the different levels of government, but how much is the cut projected specifically for FY11? Just total if

you add up all these fabulous programs? COMMISSIONER MULLGRAV: COUNCIL MEMBER BREWER: $5.7, $5.7. $5.7

COMMISSIONER MULLGRAV: COUNCIL MEMBER BREWER:

Yes. Okay. And

then my other question is, when you are dealing with CEO, it’s a program that none of us have completely understood, can you be specific, does it contribute, does it take from your budget, or complement your programs? And have any of the

initiatives that you partner with been evaluated? COMMISSIONER MULLGRAV: Yes. CEO

has absolutely contributed and has enabled us to fund in two areas that we haven’t been able to fund in before. One is our young adult internship

program, which is a fourteen week subsidized internship program for young people who are out of school and out of work, and has really helped

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET young people get back on track and into the workforce and be able to have something substantive for their resumes, and give them the skillset and social skills. COUNCIL MEMBER BREWER: COMMISSIONER MULLGRAV: Okay. The other

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is Teen Action, which is a community service initiative that helps young people give back to their communities and see themselves and their communities as a resource. COUNCIL MEMBER BREWER: COMMISSIONER MULLGRAV: Okay. And so both

of those initiatives are programs that we were not able to fund previously. COUNCIL MEMBER BREWER: Okay, do

you have any sense that this CEO budget, whatever it is, could help fund some of the other programs that are being cut? COMMISSIONER MULLGRAV: CEO is

supported by tax levy dollars, and so they too have had to take reductions. COUNCIL MEMBER BREWER: All right. I

The other question I have is with the Beacons. understand the cuts that you’re making, but also

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so is ACS.

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In other words, they too had money in

the Beacons, so how, do you talk together about how this would impact the programs? And do you

have a sense of what would be left as a result of your, you know, whatever is left? In other words,

how does this impact the Beacons, do you think? Because it’s not just you, it’s also ACS, projected. COMMISSIONER MULLGRAV: Yes, ACS

used to fund preventive services that layered on to the Beacon model as a way, as an innovative way of recruiting, of recruiting families and identifying families that may be at risk and in need of preventive services. Those dollars

represented about $8.8 million and Commissioner Mattingly did call me to notify me of this budget reduction, and we’ll be working together to figure out how those families can continue to be served within our Beacon model. COUNCIL MEMBER BREWER: Okay, I

mean, they won’t be, I have to tell you, that would be the bottom line. And then just finally, Well,

I know you mentioned the Community Trust.

what else, between Robin Hood and some of the

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 an answer. last question.

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other foundations in the City of New York, because the programs that you list today, as my colleagues have indicated, they’re on what I call on-theground programs. They make people survive, as

opposed to understandably other cuts that could be taken in not everyday life. So my question is,

has the foundation community stepped up at all to be supportive of some of the programs, from literacy to OST to be supportive? is somebody pushing them? In other words,

Is the foundation

community besides Community Trust doing anything at all in this city? CHAIRPERSON RECCHIA: Member, is that it? COUNCIL MEMBER BREWER: That’s my Council

CHAIRPERSON RECCHIA: COUNCIL MEMBER BREWER:

Thank you. But I need

COMMISSIONER MULLGRAV:

We’re

working very closely with, as I said, the Youth Funders Network. I don’t have any other good news

for today, but I think they are well aware of the reductions that are being made, and I also want to

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 morning. thank you.

EXECUTIVE BUDGET stress that we take seriously the idea of not competing with the non-profits for private dollars. We only really enter that conversation

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when we believe we can do a public/private match and stretch the dollars, or where we can look at a system as opposed to one program that might have a strong fundraising infrastructure, and might be able to benefit. We look at the system, so that’s

when we would enter that conversation. COUNCIL MEMBER BREWER: All right,

COMMISSIONER MULLGRAV: CHAIRPERSON RECCHIA: Council Member Sara Gonzalez. COUNCIL MEMBER GONZALEZ: morning, Commissioner. COMMISSIONER MULLGRAV:

Thank you. Thank you.

Good

Good

COUNCIL MEMBER GONZALEZ:

Before I

move on, I just want to say to my folks up there, silence, a silent cheer for you, I just want to say. The adult literacy community that’s in the

house, all those folks that continue to advocate for these so essential services. Commissioner, I

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just want to tell you that my office has received hundreds of letters and calls, nearly 5,000 people have signed online petitions calling on the city administration to find a way to save DYCD adult literacy funding. There are many people who are

alarmed and worried about the potential impact of such drastic cuts. I’m not going to get into the

question, because I see that a lot of folks have already asked them. But I do want to say to you

that I have received, here they are, some of them, hundreds and hundreds of letters. And these folks

not only do they speak about their lives falling apart, not being able to get a job, not being able to be trained, not being able to assist their children with respect to school. I mean, it is a

drastic, drastic situation, so I just want to leave it here in a public situation and say to you how essential, how important this is, and I stand with these folks, and I know that it is a difficult budget, and I know that it is going to get worse. But as a lot of my colleagues stated

earlier, there are things that are more essential than others, and that’s what we expect here in this Council, that we can preserve those essential

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 services.

EXECUTIVE BUDGET So I say that for the record, and I

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thank you for your time and thank the Chair. COUNCIL MEMBER FIDLER: Thank you,

and I want to, you know, note that Council Member Gonzalez has really led the fight over the years in the Council for funding for adult literacy programs. A lot of the money that’s being cut

today is in the budget because Council Member Gonzalez got it there, so I just want everyone to know that. Vann. COUNCIL MEMBER VANN: I think the We are going to close … Council Member

Commissioner has been grilled enough, I’ll pass for now. answered. My questions basically have been Well, point of clarification. I notice

in the preliminary budget, we were proposing, you were proposing at that time a half million dollars, $554,000, to be cut in 2011 from adult literacy. So between the preliminary budget and

now, where it’s up to $4.6 million, what happened? Was that part of the PEG? COMMISSIONER MULLGRAV: COUNCIL MEMBER VANN: Part of the PEG? That was- (Interposing)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PEG.

EXECUTIVE BUDGET COMMISSIONER MULLGRAV: subsequent PEG. COUNCIL MEMBER VANN: Subsequent …

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In response to Mr. Williams, as to why the

cuts are being made, and you indicated that a small cut would so affect the quality of the program, that it would be better to have the major cut. Did you say something like that? Do you

recall? COMMISSIONER MULLGRAV: I was

looking at the agency as a whole, and looking … I mean, part of this, when we do budget reductions, we look historically what we have done in the past, and take into consideration where we have made reductions in the past. And so with that

perspective, I felt that, with after school, we had already taken significant, significant reductions. COUNCIL MEMBER VANN: follow up later with you. Okay, I’ll

I do understand the Thank

premise, but I’ll follow up with you later. you. COUNCIL MEMBER FIDLER:

All right,

before we conclude, I first want to acknowledge

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EXECUTIVE BUDGET everyone who was in the audience, particularly those of you who are seated up in the balcony, including the kids from the United Neighborhood houses, and give thanks to all the Committee

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staffs that have worked on this, particularly the Youth Services finance analyst, Rocco D’Angelo. Commissioner, I just want to say this. I’m sure

that my colleagues and those who follow the Council know that I am not shy about battering a commissioner who sits in the witness well. I feel

bad in having that, you know, having conversations like that with you, because I know your heart is in the right place, and you in fact have done more with less. And I think every member of this

Committee, of both committees, has acknowledged that the choices you’re being asked to make have been forced upon you by the Mayor and his Office of Management and Budget, they’ve given you a number, they’ve told you to make it. And there’s

very little comparison across city agencies of which cuts should be prioritized and which ones shouldn’t, and that’s the conversation that we are going to have to have now with the administration. So I know that any dollar that we restore to adult

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literacy or to Beacons or to Out-of-School Time or runaway and homeless youth will be money that you will gladly accept and spend well. I would,

however, just repeat the hypocrisy regarding the shelter bed money is something that I find galling and I really would ask you to go back and speak with the Mayor, you know, to make sure that his words and his deeds are consistent. And obviously

you’ve heard from this Committee that cuts to OST, to Beacons, and to adult literacy are very problematic and we are going to have to work moving forward in seeing that they are restored to as full an extent as we possibly can do that. thank you. CHAIRPERSON RECCHIA: I want to At So,

thank my colleagues, Al Vann and Lew Fidler. this time the hearing on Youth Service and the executive budget is closed.

I will be moving on

to Small Business Services, we will begin immediately, and I want to thank the Commissioner, Jeanne Mullgrav, and her entire staff at DYCD for coming here today, and for always doing a great job. We’ll begin Small Business Services in two Economic Development, Commissioner

minutes.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Development. thank you.

EXECUTIVE BUDGET Walsh, please come forward. [crosstalk] Can

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everyone kindly find their seat, we’re about to begin the Executive Budget for the fiscal year 2011 for Small Business Services, joined by my colleague Diana Reyna. Commissioner Walsh, I

invite you to sit in my chair in the front here, the front row, that’s an honor. Gonzalez’s seat. COMMISSIONER WALSH: I got yours, I That’s Sara

CHAIRPERSON RECCHIA: sit in my seat.

Andy, you can

You know what, that’s it. Okay. Economic

COMMISSIONER WALSH: CHAIRPERSON RECCHIA:

There are seats up in the balcony.

Rob Walsh’s staff could sit anywhere you wish, they can surround you anywhere. FEMALE VOICE: sit, Mr. Chair. [crosstalk] Okay. Good There’s no place to

CHAIRPERSON RECCHIA:

afternoon, ladies and gentlemen, we will now resume the City Council’s hearing on the Mayor’s Executive Budget for fiscal year 2011. everyone. I welcome

The Finance Committee and the Community

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Chair.

EXECUTIVE BUDGET Development Committee have been joined by the Committee on Small Business Services.

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We’ve been

joined by my colleague, Diana Reyna, and I welcome everyone to the Council chamber, my name is Domenic M. Recchia, Jr. I’d like to recognize We have

those members that have joined us.

Council Member Jackson, Brewer, Al Vann and Diana Reyna. We will hear from the Small Business

Services Commissioner, but before I do that, I would just like to advise everyone, immediately following this we’ll hear from the Economic Development Corporation, following Small Business Services. I’m delighted to chair this Committee

with my two co-Chairs, Diana Reyna, Chairman of Small Business Services, she’s doing a great job, and Al Vann, who’s doing a wonderful job in Community Development. At this time I recognize

Council Member Diana Reyna. COUNCIL MEMBER REYNA: Thank you,

This is the hearing on the fiscal 2011

Executive Budget for the Department of Small Business Services. In this hearing the Small

Business Committee would like to learn the details of how SBS spends the $31.73 million Workforce

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EXECUTIVE BUDGET Investment Act dollars, the federal stimulus funding, how many New Yorkers were served, how many jobs were created or retained.

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In addition,

the Committee would like to learn about the current status of the office, the Mayor’s Office of Industrial and Manufacturing Businesses, otherwise known as IMB. I am a strong advocate of

keeping and saving manufacturing in New York City, proposed funding for the fiscal 2011 Executive Budget for the IMB is $1.56 million, this is less than 50% restoration, and funding was a $3.3 million allocation for fiscal year 2010. How much

funding would be allocated for the sixteen IMB contract service providers is very important to determine for the future of the industrial business zones in the City of New York. like to thank the Small Business Services Commissioner, Commissioner Robert Walsh, as well as his wonderful and capable staff, for the service they have provided to all businesses, all 220,000 businesses in the City of New York. I I would

thank you for joining us, and we will hear your testimony at this time. COMMISSIONER WALSH: Thank you

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EXECUTIVE BUDGET Chairwoman Reyna, and thank you to Chairman Recchia and all the other members of the City Council who are here today.

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I am Rob Walsh, I am I’m

the Commissioner of Small Business Services.

joined here by the First Deputy Commissioner, Andy Schwartz, and Deputy Commissioner Angie Kamath who heads up our Workforce Development Division. And

there’s others from SBS here to answer specific questions you may have. This morning I would like to discuss how SBS is making it easy to open, operate and expand small businesses, and how we’re connecting more New Yorkers to jobs. I’ll

highlight our recent accomplishments and outline some of the new initiatives, and also the challenges that we have ahead. New York City’s 220,000 small businesses are truly the backbone of the economy, and we’re doing everything we can to help them. Through New York City Business Solutions, we help small businesses in a variety of ways. More and

more people are coming to our centers because they need capital. As credit markets tighten, SBS

strengthened its focus on helping small businesses

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET access the financing needed to weather difficult economic conditions. In 2009, New York City

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Business Solutions helped 404 businesses secure more than $22 million in loans from institutions ranging from the largest of commercial banks to credit unions to small micro-lenders. Our

services are designed to help businesses navigate every step that it takes to secure financing. help our customers prepare and compile a full package of information that lenders need to see before they award loans. We help customers We

identify which lenders would be most likely to finance their businesses by leveraging our relationships with a range of banks, credit unions and non-traditional lenders. We work hard to

understand the varying lending criteria of each of these partners. If needed, we refer businesses to

partners who can help them improve their credit scores. Taken together, these services help

businesses to identify a broad range of options and put their best foot forward when seeking financing. efforts. We are continuing to expand these Over the course of this calendar year we

expect to help more than 500 customers secure

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 financing. goal.

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So far we are on track to exceed this

Through the first four months of 2010, New

York City Business Solutions helped customers secure 213 loans. If we go at that rate, we’re

probably seeing over 600 customers. To continue to increase the number of businesses that can access financing, SBS is now partnering with the City Council to create a second-look program. Through the program, banks

will refer small business owners who do not qualify for bank financing to a New York City Business Solutions center for assistance in packaging their loan applications and apply to an alternative lender. We also offer a variety of

business courses for both startups and operating businesses at our New York City Business Solutions centers, and last year we partnered with SUNY’s Levin Institute and the Coffin Foundation to launch two new business courses: Fast-track New Ventures to help aspiring entrepreneurs launch a new business, Fast-track Growth Ventures is an eight week session classroom training for companies that seek to grow or adjust their strategies. SBS has continued to offer both

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courses in 2010, more than 4,000 New Yorkers took advantage of all these courses offered by New York City Business Solutions. Our business outreach team helps businesses handle issues that require follow-up from city agencies, working with representatives from all city agencies, we help our customers cut through red tape and recover from an emergency. This group does truly an amazing job, enduring some of the toughest times in New York. At the forefront of our efforts to help businesses navigate government is the city’s New York City Business Express website, which provides businesses with license permit packs and incentive information applications. More than

twenty city agencies are working together to fundamentally change the way companies do business with the City of New York by enabling them to start, operate and expand their business through a single online point of contact. New York City

Business Express already includes customized advice and information for all sectors that are relevant to New York City. Thirty three

applications available to the public online,

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allowing businesses to provide information to the city only once and when needed, and no longer waiting on some of the long lines at agencies. An

incentive estimator, allowing customers to assess eligibility for 45 city, state and federal incentives. Customer accounts that provide

status, balance and fine information about a customer’s business. In the first four months of

2010 over 4,000 new NYC Business Express accounts have been created. Additional advice and

information about online applications and customer account information will be rolled out through this year. And I would urge you to visit the

NYC.gov/businessexpress, and to the Chair, I want to thank you for your recent advice. One of the

things that you pointed out to us was that for those who are working at home, the freelancers, the system could be daunting, and we did make some changes to the website, and I would urge others to also take a look at it, you know, this is a work in progress. We’re continuing to get, you know, The good news is, as I speak to

permits online.

more and more, you know, small businesses, it’s a tremendous lift and help to them.

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EXECUTIVE BUDGET We also help businesses access

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city, state and federal incentives that lower the cost of doing business in New York City through tax credits or rebates. Businesses may be

eligible for government incentives if they invest in new equipment, purchase or improve property, or hire employees. In addition to launching the New

York City Business Express estimator, last year we provided more than 200 businesses with hands-on technical assistance to help them access incentives. We’re now providing legal assistance

to customers through a network of attorneys working with us on a pro bono basis. In 2009, 295

customers used the services to receive advice on choosing a legal structure, assessing a business contract, or reviewing a lease. From January

through April of 2010, this service saved 115 customers an average of about $2,000 each, and I think it’s a great service to supplement our efforts throughout the five boroughs. New York

City Business Solutions recruitment services assists customers in finding the qualified staff they need to run their business. We work with

businesses to identify job openings, and then we

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EXECUTIVE BUDGET develop a customized recruitment strategy by partnering with the city’s Workforce Career Centers to review resumes, identify and screen candidates, and find the right employees for the job.

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Last year we helped more than 600 businesses

across the five boroughs recruit thousands of candidates for job openings in fields such as retail, health care, food services, and others. Through April, 2010, businesses have already committed to recruiting over 6,000 candidates through our services, and I think this is an important point, because we all work hard with the consolidation of Small Business Services and the Department of Employment, to put these services together. And, you know, here’s a case in point

where we’re working together, not only on the economic development side, but also on the workforce side. We’re also working with businesses to improve the skills of their employees through training, with the goal of making the company more profitable and productive. New York City Business

Solutions training funds cover up to 70% of training costs. Since the program began in 2007,

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EXECUTIVE BUDGET New York City Business Solutions training funds

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have awarded nearly $5 million to 76 companies to train 2,973 workers. Our investment has been

matched by over $3.6 million in employer contributions. Finally, we help businesses learn how to sell their goods and services to government, so that they can take advantage of federal, state and contracting opportunities. continue to support the city’s industrial manufacturing businesses by working hard to connect them with a suite of services offered by New York City Business Solutions. In December of We

2009 we launched the Workforce One Manufacturing Career Center, which works closely with businesses to recruit and train New Yorkers for positions in the city’s manufacturing industry. Additionally, SBS recently secured $1.2 million for each of the next three years to continue delivering the vital services to conduct targeted outreach to this sector. I’d like to

thank the Council for your continuing support of this program. Our current service providers are

under contract until September 30th, and we

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EXECUTIVE BUDGET anticipate release of an RFP for services beyond that period. At the forefront of SBS’s efforts to increase opportunities for businesses is our Minority and Women-owned Business Enterprise program, better known as the MWBE program, which fosters growth of MWBE firms and helps them do business with the city. Businesses that certify

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with the city as an MWBE can take advantage of tailored procurement assistance, free advertising in our online directory, city bidding opportunities and networking events with city buyers. In fact, as we speak, today we are

holding our fourth annual citywide procurement fair, where I was this morning. Speaker Quinn I

kicked off the event, we have over 500 firms. asked for a show of hands of how many people

showed up the year before, there was about half of them, we’re hitting a number of new customers. It’s happening all day today at the Bank of New York Mellon. If you do have time you could stop

in and see some of the, you know, great work that’s taking place. You know, I think one of the

best parts of that program is the fact that 500

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EXECUTIVE BUDGET firms have, if you will, 50 city agencies held hostage for the day, to put their best foot forward and make connections.

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And I want to thank

the Council, again, for the work on this particular program. Since Mayor Bloomberg signed Local Law 129, we’ve seen a steady increase in both the number of businesses participating in the MWBE program and in the number and value of contracts they have won. During the program’s three year

ramp up period, MWBE firms were awarded nearly 19,000 prime and sub contracts valued at over $1.2 billion. The continuing growth contract awards is

partly due to our ability to certify more MWBE’s. Today we have over twenty seven hundred certified firms, and as of December of 2009, businesses can now apply for MWBE certification online, using New York City Business Express. While the primary

goal of our program is to connect certified firms with procurement opportunities, we recognize that not all MWBE’s will immediately win city contracts. Nearly 70% of city-certified firms

have revenues below $1 million upon entry into our program. As small business owners, they face

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sure that certified MWBE’s know about all of our services that will help them grow their capacity to compete in the city’s procurement, and in the larger marketplace. These services are offered at

no cost, and include business courses, accessing financing and incentives, and recruiting and training employees. Businesses have been telling

us, and so has the City Council, that we need to do more on capacity building and building up the MWBE firms. That’s why with the help of the City

Council, we launched Strategic Steps for Growth, a new executive education initiative designed to strengthen MWBE’s and their ability to compete for city contracts. Classes, which begin on June 8th,

will be held at NYU School of Business, where professors from the Stearns School of Business will serve as instructors. Each participating

firm will create a customized three-year growth plan and learn the skills needed to implement it. We’re going to start this program small, with about fifteen people, and my hope is that we grow it and, you know, over the years. Much of the

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work that we do is with the help of partners such as the City Council’s funded MWBE Leadership Association. This partnership has been

instrumental in increasing the number of businesses getting certified. Now in its fourth

year, SBS worked with the City Council to establish further objectives. In fiscal year

2010, our community partners provided certified firms with capacity building services, including helping to apply for bonds, preparing bids and proposals, and marketing to both the public and private sectors. In the past year there have been

several policy changes to reduce the barriers to compete. The city has eliminated bonding

requirements for construction projects under a half million dollars, amended the city’s Five Plus Five policy for contracts valued between $5,000 and $100,000 to allow the addition of more certified MWBE’s in the bidding process, and agreed to new project labor agreements that enable greater participation of MWBE subcontractors on public works projects. SBS will continue to

advocate for policies that support the MWBE community.

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In addition to providing businesses with direct assistance, SBS works in commercial corridors throughout the five boroughs to strengthen neighborhoods and make them more attractive to do business. Bids continue to grow.

Over the last eight years, the administration has created twenty new bids, eighteen of them in boroughs outside of Manhattan. Collectively SBS …

I’m sorry, collectively bids contribute more than $98 million in supplemental services to their districts. While we’ve seen the number of bids

increase for the past two decades, we also want to make sure that we focus our work on developing and strengthening them, and creating transparency for bid stakeholders. SBS recently launched profiles

of each bid on its website, which provides an overview of each bid’s accomplishments, goals, district maps, budget and contact information. release an annual report highlighting the aggregate impact of bid programs and services and spotlighting innovative initiatives occurring in bids throughout the city. Our work in the city neighborhoods go beyond bids. Our Avenue NYC program provides We

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critical support to community-based groups working to create vibrant commercial corridors throughout the city. In fiscal year 2009, Avenue NYC enabled

40 commercial organizations to accomplish a diversity of goals, including attracting new businesses to their commercial districts, producing websites to promote different districts, improving storefront facades and creating a new bid. In fiscal year 2010, Avenue NYC is investing

close to $2.4 million in commercial revitalization programs of 59 neighborhood organizations. We’re

expanding the technical assistance that we provide to these organizations, offering new capacitybuilding workshops on top, it’s like marketing, managing capital projects, business attraction and placemaking. Finally, I’ll tell you about how we’re helping New Yorkers find jobs and access training. With New York City’s unemployment rate

at just under 10%, the Mayor has made it clear that getting New Yorkers back to work is a top priority. Despite the recession, our Workforce

One career centers placed New Yorkers in 25,128 jobs in 2009, a nearly 45% increase from 2008.

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increased the number of job placements to 6,896 last quarter, January through March of 2010, from just 127 in the first quarter of 2004, when SBS took over the city’s adult workforce programs. have expanded the total number of our Workforce One career centers to nine from three in 2004. In We

2010 we added two sector focus centers, The Health Career center, in partnership with La Guardia Community College, and the Manufacturing Career center in downtown Brooklyn. We are helping over

10,000 New Yorkers access training grants this year, to help our customers make informed decisions about the type of training and which schools are best for them. We created the New

York City Training Guide, an online tool that publishes information about courses, training provider track records, and student reviews. The

New York City Training Guide has received over a half a million visits since its launch in 2008. I

encourage you all to visit the training guide, and get the word out about this special tool to help people who are looking at training options.

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The number of

partners placing people in jobs through the career centers continues to grow. In 2009 we made forty

five hundred job placements through our community partners, up from forty two hundred in 2008. February of last year, SBS received a one-time federal stimulus award of $31.7 million in the Workforce Investment Act funds to serve New Yorkers impacted by the recession. Despite the In

short implementation timelines, SBS was able to put innovative and successful programs in place, and I’ll tell you how we invested the money. We

expanded the services at the Workforce One career centers. SBS launched the Workforce One Health

career center to connect hundreds of New Yorkers to careers as medical technicians, nurses and EMT’s. We also invested more money in career

advancement services to help New Yorkers in low wage jobs access career coaching, training and specialized financial planning. We contracted

with twenty community organizations to provide preparation, training and job placement services

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EXECUTIVE BUDGET to 3,000 New Yorkers facing barriers to employment, including ex-offenders, immigrants, and individuals with low literacy.

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Stimulus funds

also allowed SBS to increase the availability of individual training grants in 2009. Additionally

SBS partnered with other agencies like the Department of Education and the FDNY to train New Yorkers in high demand occupations. Through

federal funding we are on pace to exceed 25,000 job placements again in 2010. In order to meet

this goal we will improve technology to better match job seekers with job opportunities, focus on the customer experience of job seekers and businesses, target our limited training budget in areas where there is a known business demand and growth, and refocus our investment on programs and partners with proven track records. Our system In six

has certainly come a long way since 2004. years we have become a national model for innovation and effectiveness in workforce

development, and credit should go to Angie Kamath, our Deputy Commissioner, and her staff who have done just a tremendous job in this area. While

we’re proud of what we’ve accomplished, we know we

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This

is not a new story for us, as we have absorbed a 37% cut in federal workforce funding over the last five years. But there is no doubt we will need to

do more with less in the years ahead, I am confident that the gains we have achieved, including credible employer relationships, strong partnerships throughout the five boroughs, and more jobs for New Yorkers, have given us a solid foundation to meet the challenges ahead. In conclusion, I would be remiss not to thank the Council for all your help in supporting many of our programs, whether it’s partnering with us to strengthen the MWBE program, helping businesses access financing or building our workforce programs. As you can see, we’re

working harder for small businesses and job seekers during these difficult times, but we are fully aware that there is much more to be done. We’re constantly looking at how to improve our services, spread the word about our work with partners in the communities, and you know, to many of you I’ve met, you know, on an individual basis

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very much.

EXECUTIVE BUDGET in your neighborhoods, I welcome the opportunity again in the upcoming years to come out, see the programs, see some of the things that are taking place in your districts. Again, I want to thank

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all of you and I would be happy to answer any questions you have. opportunity. CHAIRPERSON RECCHIA: Thank you Thank you very much for this

At this time I’d like to recognize

Julissa Ferreras, Margaret Chin and Brad Lander. Welcome. I’m going to start off asking just one

or two questions, and then turn it over to my coChair, Diana Reyna. On page eight, Commissioner,

you talk, you know, and you know, thanks a lot for your testimony, you tell us everything that you’re doing. You know, but we’re interested in knowing

some numbers, and you talk about the $31.7 Workforce Investment Act grant, okay, and was able to put innovative and successful programs. many jobs did that create? COMMISSIONER WALSH: I’m going to How

turn it over to Deputy Commissioner Angie Kamath for more specifics. CHAIRPERSON RECCHIA: Just identify

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DEP. COMM. KAMATH:

Sure.

Good

morning, I appreciate the opportunity to answer that question. My name is Angie Kamath, I’m the

Deputy Commissioner at SBS overseeing the Workforce Development Division. So as the

Commissioner mentioned in his testimony, the $31.7 million that we received last April for stimulus, we programmed in five main areas. The funding was

two-year funding to be expended by June 30, 2011. We had New York State Department of Labor expenditure requirements to spend about 75% of that by this June, so in terms of the programming, we’re actually midway between the programming. I can give you the forecasted numbers, when everything is done, which is a service level of serving 10,000 New Yorkers, and placing about 6,000 of them in jobs, which includes training completions as well. through the program. We are not yet halfway A lot of our contracts, as So

the Commissioner had mentioned, for example our Health Care Career Center came on line last October. A number of CBO contracts with

community-based organizations came on line in

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EXECUTIVE BUDGET December, so we’re not full with the full contract. But to date we’ve served about 7,000

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individuals, and the most recent placement numbers put us at about twelve hundred job placements. But again, the program isn’t even halfway done, and we’d be happy to report in future hearings on the progress towards the ultimate goal of serving 10,000 folks and putting 6,000 New Yorkers into jobs. CHAIRPERSON RECCHIA: So 10,000

apply, you place 6,000 out of those 10,000, and when all this is said and done, how many jobs do you think you’ll be placing? DEP. COMM. KAMATH: is the 6,000 jobs. CHAIRPERSON RECCHIA: total that you’re going to place? DEP. COMM. KAMATH: are serving a minimum of 10,000. CHAIRPERSON RECCHIA: about training? DEP. COMM. KAMATH: And then within And what Correct, so we That’s the The placement

the training we are looking at probably training about thirty five hundred individuals in

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EXECUTIVE BUDGET occupational areas. CHAIRPERSON RECCHIA: So, is there

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COMMISSIONER WALSH:

(Interposing)

I think what’s important on that in terms of the stimulus is one of the things it allowed us to do is get these centers open, and to expand this is something that Council Member Brewer has- COUNCIL MEMBER BREWER: (Interposing) Railed about. COMMISSIONER WALSH: Railed about.

I think I was going to use a harsher word, but railed, I’ll take railed. CHAIRPERSON RECCHIA: COMMISSIONER WALSH: You know- (Interposing)

And it’s to get expanded hours at our centers, and I just wanted- CHAIRPERSON RECCHIA: (Interposing)

Yes, I just wanted, you know, so 10,000 is the total number? COMMISSIONER WALSH: We don’t have

the numbers yet, you know, I mean, this is again, as Angie mentioned, the numbers are still coming in. We have a number of initiatives going. But-

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CHAIRPERSON RECCHIA: Yeah, of course.

(Interposing)

But so far, how many jobs that As of today? As of today

were placed so far?

DEP. COMM. KAMATH:

it’s about twelve hundred job placements. CHAIRPERSON RECCHIA: hundred job placements. money already? DEP. COMM. KAMATH: the end of June we’ll be at 75%. CHAIRPERSON RECCHIA: Okay. And No, we are … by Twelve

And you used 75% of the

how many people came into this entire program? DEP. COMM. KAMATH: So to date

we’ve served about 7,000 individuals, but again, we’re not even halfway done. CHAIRPERSON RECCHIA: DEP. COMM. KAMATH: to be serving more. CHAIRPERSON RECCHIA: So out of the Okay. So we’d expect

7,000 you placed twelve hundred in jobs? DEP. COMM. KAMATH: Correct, so

far, but again the placements there typically lag, so a lot of our training programs that we invested

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EXECUTIVE BUDGET in were training programs that exceeded six, seven, eight months, particularly in the health care sector. CHAIRPERSON RECCHIA: DEP. COMM. KAMATH: Okay. So there’s a

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lag effect, but yeah, we feel like we’re on pace right now to hit the overall 6,000 placements by June 30th, 2011. CHAIRPERSON RECCHIA: All right,

and you said you were also in charge of workforce development? DEP. COMM. KAMATH: CHAIRPERSON RECCHIA: Yes. Okay. In

your budget for 2011, your budget is going to be cut $29.93 million less than 2010’s adopted budget. work- DEP. COMM. KAMATH: (Interposing) How is that going to impact you? The

That’s purely the stimulus-related cut, so the one … the $31.7 was a one-time investment that is obviously not going to be recurring next year. CHAIRPERSON RECCHIA: So a lot of

the programs you started might be discontinued after this money runs out, is that correct?

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contracts that we entered into were one year contracts in investments like the Health Care Career Center that clearly has infrastructure and long-time (inaudible), we’re looking at our own internal federal ongoing, we have budget to make up that difference, and just, you know, making the decisions that will enable us to keep that one going. CHAIRPERSON RECCHIA: All right.

In the business development program, in the Executive Budget, compared to the adopted budget of 2010, there’s $5.56 million less, how is that going to impact the business development programs? 1st DEP. COMM. SCHWARTZ: Andrew I think

Schwartz, 1st Deputy Commissioner at SBS.

most of the funding that’s not there is the Council items that come in at the adoption. they’re not carried over to the Exec budget. CHAIRPERSON RECCHIA: So the $5.56 So

are all Council Member, that’s restorations? 1st DEP. COMM. SCHWARTZ: Right,

that are spent in the business development area, in contracts with local development corporations

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and similar things through our Avenue NYC program. CHAIRPERSON RECCHIA: Council Member Diana Reyna. COUNCIL MEMBER REYNA: Good Okay.

morning, thank you so much for your testimony, Commissioner. COMMISSIONER WALSH: COUNCIL MEMBER REYNA: Thank you. I wanted to

thank you for your acknowledgement, although I wasn’t there this morning, my staff member and legislative director, Eric Uris was there, and he had mentioned what a fabulous event it was, and how well-participated with the number of businesses that actually took the day for your fourth annual procurement session. And you know,

referring to the MWBE’s, I wanted to just understand the progress you’ve made concerning procurement opportunities amongst agencies in relation to your staff personnel and overseeing procurement officers and agencies, and will that be affected in your budget? COMMISSIONER WALSH: I don’t think

… you know, well, thank you, and it was nice to have your staff member there also. I think, you

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know, despite cuts and I would say minor cuts in this area, with the staff that oversees the MWBE program, we will continue to see certification increase. I think we’re going to continue to see

gains in micro-purchasing, in sub-contracting. I think the challenge has been the linkage on the larger contracts, quite frankly, those contracts over $100,000, and I think it’s a longer road. You know, today we recognize two agencies that were doing a stellar job with their MWBE program, Homeless Services and the Parks Department. Andy

has the numbers, you know, at the top of his head much better than I do, because he oversees it day to day. But what we’re trying to do is use those

that are doing well, HRA is doing well, Homeless Services, Parks Department, as models for the other agencies. What are they doing, what are the

procurement staffs of those particular agencies doing that could be replicated in other places. And, you know, if you look at the numbers and the data, we’re not happy. You know, overall we’re But the good news

not happy with the penetration.

is, we’re continuing to see, you know, progress. And you know, some of the recent changes in

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plus five, some of the efforts that we’re making on capacity building, some of the efforts that we’re making in linking it to other business services, I think we’ll continue to see that trend. So the good news, with your help, is when

we’re no longer looking at the MWBE in isolation, quite frankly. You know, when someone certifies

with us, they quite frankly are bombarded with emails about other services that we have at the agency that could be of help. Andy, do you want

to add anything in terms of the data and the numbers? 1st DEP. COMM. SCHWARTZ: Yeah,

although the Commissioner, I don’t have all the numbers off the top of my head, I wish I did. But

we do put together a pretty comprehensive report that we last did on April 1st, which gave the first six months of the fiscal year ’10. And a couple

of things to note there, the first half of FY10 over FY09, was the increase in micro-purchases, which went from 12.7% to 15.4%, so that continues to go up. And this- COUNCIL MEMBER REYNA: 12.7% to

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1st DEP. COMM. SCHWARTZ: COUNCIL MEMBER REYNA: value in dollars? 1st DEP. COMM. SCHWARTZ:

Yes.

And the

Value in

dollars, that was $4 million and 16,000 up to just about $4.4 million. The big news there though, is

this is the highest volume area of procurement that agencies do, although it’s in small dollar amounts, it makes up vastly 90% of agency procurements, and it’s kind of the first step in the door for companies trying to win city contracts. So what we found is when you’ve won

that first contract, often you perform well, it’s an opportunity to get more contracts. And also

the Five Plus Five program seems to be making a difference in the $5,000 to $100,000 contract area, which is the small purchase. And that’s

where now with Five Plus Five, more of these opportunities are being sent out to MWBE’s. And

there we saw an increase of 10.4% in the first half of ’09, to 16.4% in ’10, and that’s about a 58% increase, year over year. COUNCIL MEMBER REYNA: And what is

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The value

there went from $7.3 million to $11, almost $11.6. So the important thing there, of course, is that that program seems to be helping, the Five Plus Five change, in getting more of these opportunities for small purchases. And in terms

of contracts going out with subcontracting opportunities, just more and more agencies are able to put out prime contracts that have subcontracting targets attached to them. And as

we’ve talked about before, those will continue to spin off subcontracting opportunities for a number of years, so that’s kind of a cumulative effect we’re seeing on that side. COUNCIL MEMBER REYNA: And what is

the value amount in prime contracting currently? 1st DEP. COMM. SCHWARTZ: Well, the

overall … I don’t have the number, the number was, for the first half of the year, again for those combined categories, are going up to a million dollars, it went from $19.9 million in the first half of last year to $24.6 this year. COUNCIL MEMBER REYNA: And

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 millions. subcontracting?

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1st DEP. COMM. SCHWARTZ:

It will

take me a couple of moments to get that data, okay? COUNCIL MEMBER REYNA: Absolutely. Or it will

1st DEP. COMM. SCHWARTZ: be in the report, if that’s okay. COUNCIL MEMBER REYNA: COMMISSIONER WALSH: Do you have that one? 1st DEP. COMM. SCHWARTZ:

The- (Interposing)

Okay,

subcontracting now, okay, to MWBE’s with targeted goal contracts, went from $3.4 in the first half of ’09 to $5.7 in FY10. COUNCIL MEMBER REYNA: $5.7? Yes.

1st DEP. COMM. SCHWARTZ: COUNCIL MEMBER REYNA: in millions, you said, or billions? 1st DEP. COMM. SCHWARTZ:

And this is

Yes,

COUNCIL MEMBER REYNA:

A far cry

from the value of what would be expected in a billion dollar budget, as we referred to New York City, and you know, we’ve been asking every agency

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will. I will.

EXECUTIVE BUDGET as they come to budget hearings the question of what is the percentage and what is the value in dollars, and disappointedly they don’t come prepared with that question. So it would be

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helpful that you can reach out to- COMMISSIONER WALSH: (Interposing)

COUNCIL MEMBER REYNA:

… as an

agency, to every co-agency to come prepared to our budget hearings concerning MWBE procurement percentages. COMMISSIONER WALSH: I certainly

COUNCIL MEMBER REYNA:

The other

issue I wanted to raise was the manufacturing and industrial. Although there is some light at the

end of the tunnel, it’s still not at 100%, and I have concerns that a budget that is being recognized as less than 50% is not a budget at all. The sixteen providers, service providers,

that are contracted, I understand are going to be ending their contracts with the City of New York. COMMISSIONER WALSH: COUNCIL MEMBER REYNA: In September. September

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30th.

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COMMISSIONER WALSH: COUNCIL MEMBER REYNA:

Yes. And at the

moment we’re not planning for a full fiscal year, or a full contract. So that mid-year what’s going

to happen to the IBZ’s and the service providers that you have intact today? COMMISSIONER WALSH: Well, you’re We’re in

right, there is a cut, it is a deep cut.

the process now of looking at how, you know, quite frankly we’re going to serve them through … one, I think, there’s a number of, you know, what I would call the gold standard organizations that are doing a tremendous job. You know who they are. What I’m quite

And they’re doing quite well.

frankly challenged by is how do we end up serving many of the others. I’m looking at our business

solutions centers in, you know, doing much more outreach from our business solution centers and it would be a combination of funding those organizations that have performed extremely well, combined with our efforts through the business solutions centers. realize that. It’s not a perfect answer, I

We’re calling on many of the

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know, how to best serve, you know, some of these particular areas. COUNCIL MEMBER REYNA: Why wouldn’t

the $3.3 million budget for sixteen service contractors be included as part of the contract with EDC? COMMISSIONER WALSH: I think the

$3.3 is covering a three year period, if I’m not mistaken. COUNCIL MEMBER REYNA: It’s a fifteen month period. COMMISSIONER WALSH: Right. I’m not It’s not.

1st DEP. COMM. SCHWARTZ:

sure exactly where that $3.3, but just to clarify, the contracts right now, basically on a twelve month basis, are about $2.1 million. So we

anticipate having $1.2 million for a three year period, coming up. So that is a reduction on what But there will

will be available for contractors.

be, you know, the last quarter of those contracts that go into fiscal year ’11, that’s about another $500,000 that would be added to that $1.2. So

it’s a little closer, and I think probably your $3

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EXECUTIVE BUDGET million figure may include staffing and other costs associated with industrial, which we’re going to have probably in other parts of our

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budget that are not part of that $1.5, so we … I could sit down with Ralph Hernandez and go over that a little bit, just to clarify. But by

running the industrial program in our agency with our incentives program, we are leveraging additional staff to address industrial needs as well. COMMISSIONER WALSH: You’re asking

we’re going to serve, and you know, one of the things that I’ve been looking at with Don Giampietro who heads up the office is, you know, where we see a concentration of IBZ’s, can we have one service provider, quite frankly, that’s covering a greater geography. Is that the best?

No, it’s not, you know, it’s not what we have right now, but we’re going to try to figure out maximizing our use of the incentives office, the solutions centers and other ways to make up for it. COUNCIL MEMBER REYNA: But

Commissioner, wouldn’t it be an answer for SBS who

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City of New York to be able to take on as part of due-diligence with the $12.6 million contract that they have currently, to be able to take on the task of funding the full amount of service contract providers for sixteen IBZ’s? COMMISSIONER WALSH: I’m smiling,

because I feel like I have my hand out, you know, quite a bit on a lot of different programs, you know, with EDC. I have a great relationship with

the president Seth Pinsky and his staff, I hope he’s behind me and hears that. You know, we’re

looking at some of the bigger issues of the IBZ’s and maintaining many of these zones so we can continue jobs. He’s been extremely helpful in

terms of resources, you know, across the board. So, you know, the good news for us is for the first time we have a three year, you know, commitment. The bad news, it’s not the number

that we’ve had in past years. COUNCIL MEMBER REYNA: It won’t

even cover, you know, approximating $3.3 as the figure what it costs to provide the contracts, if they’re each running at a $100,000 budget, that’s

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EXECUTIVE BUDGET the full sixteen contracts. COMMISSIONER WALSH: I agree with

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you, and I am trying to figure out every which way of, you know, how we can end up serving some of these districts. COUNCIL MEMBER REYNA: And the

contract service that we have with EDC through SBS at 12.6, what are we getting for that contract, as far as services are concerned? COMMISSIONER WALSH: I’m not sure

what the reference in the budget that pertains to 12.6. COUNCIL MEMBER REYNA: It’s a pass-

through funding for graffiti removal services. 1st DEP. COMM. SCHWARTZ: These are

the funds in the SBS budget that are expense items on the EDC budget. COUNCIL MEMBER REYNA: Correct. Yeah,

1st DEP. COMM. SCHWARTZ:

they’re things, several of the items pertain, I think, to Governor’s Island, brown fields, graffiti removal. COUNCIL MEMBER REYNA: would be an option. So that

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EXECUTIVE BUDGET 1st DEP. COMM. SCHWARTZ:

113 Yeah, if …

I mean, it all eventually comes from the city either way, so I know that’s how the 1.2 got funded through discussions with EDC and OMB and in a way, you know, we’re happy for the funds wherever they come from, but those funds are committed to certain programs. COUNCIL MEMBER REYNA: And so, you

know, making sure that EDC as a quasi-agency, and SBS contracting with them, to be able to have EDC leverage some of the funding with their own, you know, revenues, we all have seen the report concerning the latest auditing concerning $125 million and how some of that money can be dedicated to leveraging some of the funding that could clearly assist businesses, which is what EDC’s mission is all about. Moving forward, I

want my colleagues to be able to have an opportunity. I wanted to just take a moment to

question New York City & Company Tourism, there’s a $15 million budget. Perhaps four years ago this And I’m

budget has tripled since 2005, perhaps.

trying to understand where is this funding concentrated on? Because I believe that there is

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offices internationally with the mission of being able to attract tourism to New York City. And

where there is savings, have we maximized the highest potential to be able to save some further funding. COMMISSIONER WALSH: We administer I think

the contract for New York City & Company.

the best person to handle a question like that would be George Fertitta, who is the president of New York City & Company, and can explain, you know, the efforts overseas on tourism, but I’m not in a position to answer that question. COUNCIL MEMBER REYNA: You don’t

oversee … you don’t have oversight over that budget? COMMISSIONER WALSH: I don’t … we

administer the contract, but we don’t have oversight of the budget, the budget oversight would be … we’re basically a vehicle for the contract to move. COUNCIL MEMBER REYNA: of 2.9 was a contribution from- COMMISSIONER WALSH: (Interposing) So the PEG

That was a decision made between OMB and New York

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 made Mark- will. City & Company.

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COUNCIL MEMBER REYNA:

Okay, is

there any opportunity to see further savings, have you had a conversation with OMB? COMMISSIONER WALSH: New York City & Company? COUNCIL MEMBER REYNA: COMMISSIONER WALSH: COUNCIL MEMBER REYNA: COMMISSIONER WALSH: Yes. I have not. Will- (Interposing) With regard to

I could find out more detail and get back to you on that. COUNCIL MEMBER REYNA: be helpful, thank you. COMMISSIONER WALSH: I certainly That would

CHAIRPERSON RECCHIA:

Council

Member, Mark Page will be testifying on June 7th, the last, so you could come and present that question to him directly yourself. COMMISSIONER WALSH: CHAIRPERSON RECCHIA: Thank you. That’s why we

COUNCIL MEMBER REYNA:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very much.

EXECUTIVE BUDGET (Interposing) Commissioner Walsh will make sure that he gets the question beforehand? COMMISSIONER WALSH: COUNCIL MEMBER REYNA: CHAIRPERSON RECCHIA: COMMISSIONER WALSH: Yes. Thank you. Okay. Okay. And I

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got your … loud and clear on the MWBE information. Thank you very much. CHAIRPERSON RECCHIA: Council

Member Gale Brewer, then Council Member Chin. Does any other Council Member have a question? And then Brad Lander. COUNCIL MEMBER BREWER: Thank you

CHAIRPERSON RECCHIA: then after that EDC will testify. Chin and Lander. COUNCIL MEMBER BREWER:

Of course So it’s Brewer,

Thank you.

The GED issue came up a lot under DYCD with major cuts to adult literacy. I know some of the folks

that you work with who need jobs, need literacy. So how are you going to handle that issue? have your own program? How are you going to Do you

handle the general issue of literacy with so many

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FY10. cuts?

EXECUTIVE BUDGET Or is that not an issue at your agency? COMMISSIONER WALSH: and I’ll ask- COUNCIL MEMBER BREWER: (Interposing) I know it is, I’m just asking a leading question. COMMISSIONER WALSH: it, I could feel it coming. DEP COMM KAMATH: Council Member Brewer. Thank you, I could feel

117

It is an issue

In terms of folks that

come into the workforce from career centers who seek either ESL or GED services, it’s really an important connection that we seek to make for those job seekers with services in the city, and so for FY10 what we are doing at- COUNCIL MEMBER BREWER: (Interposing) Talk slowly, because if you talk fast, Angie, we can’t understand. DEP COMM KAMATH: Go ahead.

Sorry, sorry. So for

COUNCIL MEMBER BREWER:

DEP COMM KAMATH:

So for next

fiscal year, with the support of Council Member, Speaker Quinn, rather, we’re going to be looking

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 going to be- -

EXECUTIVE BUDGET at a GED referral pilot program COUNCIL MEMBER BREWER: DEP COMM KAMATH: Right.

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Where we are

COUNCIL MEMBER BREWER: (Interposing) The Portal. DEP COMM KAMATH: exactly it’s that. COUNCIL MEMBER BREWER: So right The Portal,

now we’re not going to have any place to send them, that’s the problem. In other words, the

previous testimony from Commissioner Walsh’s colleague, the commissioner of DYCD, indicated that they have major cuts in adult literacy. So

I’m wondering, can you use some of your money from Washington to fund some of the programs that DYCD is going to cut. DEP COMM KAMATH: So, the Workforce

Investment Act is put into Title I and LEA Title II. COUNCIL MEMBER BREWER: DEP COMM KAMATH: Uh huh.

Title I is what

funds all of our infrastructure for our Workforce One career centers, and our individual training

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 grants.

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LEA Title II, which is at the discretion

of the New York State Department … or New York State Education Department, is used locally to fund two what they call literacy zones, which I believe are located in Queens and in Brooklyn. And so part of the Portal idea is, while there are significant cuts that are pending, it is to find way to refer job seekers that are coming into our centers seeking those services to find ways to refer them to those literacy zones that are funded by LEA Title II dollars, in addition to CBO’s, in addition to CUNY, in addition to Department of Education programs. It’s definitely a very …

obviously a very tough and concerning budget environment for adult literacy and ESO programs, but we’re committed to making those right referrals for job seekers that are looking for both work and an ability to improve their literacy. COUNCIL MEMBER BREWER: So

translated, does that mean that some of the cuts that everybody here is concerned about at DYCD for the general issue of adult literacy could be picked up during this time period by federal

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 money?

EXECUTIVE BUDGET In other words, she has major cuts,

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Commissioner of DYCD. COMMISSIONER WALSH: So do we. I know, but

COUNCIL MEMBER BREWER:

you have some federal money and she doesn’t, for this. So is some of your federal money going to

pay for her cuts? DEP COMM KAMATH: Our federal money

is actually not our federal money, it goes straight to the Department of Education at the state level. COUNCIL MEMBER BREWER: should have some suggestion. DEP COMM KAMATH: So we don’t have But you

any purview or oversight for it, it’s totally committed to literacy zones, and that was a decision made in Albany to the best of my knowledge. COUNCIL MEMBER BREWER: So I’m just

… all I’m saying is, if you were here earlier, you would have seen hundreds of people here. COMMISSIONER WALSH: I was here. And if you

COUNCIL MEMBER BREWER:

don’t have some place for people to learn to be

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with them.

EXECUTIVE BUDGET literate, then you’re not going to get a job.

121 So

I assume you’re aware of the DYCD cuts and you’re going to figure out what to do. COMMISSIONER WALSH: We’ll work

COUNCIL MEMBER BREWER:

All right,

number two is the issue of workforce development, and the Chair of the Budget Committee, Chair Recchia, asked a little bit about that. But can

you just help me to understand, the money that came from Washington will be more or less done by June, 2011, that you talked about. COMMISSIONER WALSH: about the stimulus money. COUNCIL MEMBER BREWER: stimulus money, I’m sorry. The You’re talking

So now the question

is, for the just the Workforce One centers in general, what … how much are they going to be funded for through, obviously, the 2011 budget. COMMISSIONER WALSH: Yes. And how

COUNCIL MEMBER BREWER:

many job placements without the stimulus money are they able to handle? DEP COMM KAMATH: Sure, so our

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 think that- -

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federal allocation through formula dollars for the Workforce Investment Act is about $39 million for this upcoming fiscal year. That plus some carry

in funds from last year, excuse me, we believe that that budget in total will yield at least 25,000 job placements. So- -

COUNCIL MEMBER BREWER: (Interposing) So basically the same as last year is what you’re saying. DEP COMM KAMATH: The same as last

year, while absorbing a fairly significant budget cut, so the Commissioner talked earlier about some of the efficiencies that we hope to gain through better technology, just through doing more with less. COUNCIL MEMBER BREWER: DEP COMM KAMATH: Uh huh.

And so we do

COUNCIL MEMBER BREWER: (Interposing) But the hours are going to still stay extended with this budget cut? DEP COMM KAMATH: So through the

extended … the hours that we extended, we extended both evening and Saturday hours. The utilization

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EXECUTIVE BUDGET for evening hours has been fantastic, and we’re

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going to find the budget to continue those evening hours. Saturday hours, on the other hand, have

been poorly utilized, quite frankly, so an average of less than 70 people visiting in a month per center, and so starting July 1, faced with budget cuts, we’re going to be shutting down the first and third Saturday hours. We believe that, based

on the very low utilization rates, despite large marketing efforts to try to drive some traffic, the main use that people were using when they were coming in for Saturdays was our research rooms, and libraries and community-based organizations can probably fill that need adequately. COUNCIL MEMBER BREWER: the libraries open. If we keep

Do you have, another

question, technology dollars for small business. As part of the Business Solutions centers, what are you doing, either federal money or, I guess, city money, to help technology dollars for small business? In other words, one of the issues is

how do they develop their websites and blah, blah, blah. Is that all part of the Business Solutions

center, and is there any extra money- -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 happening? do that?

EXECUTIVE BUDGET COMMISSIONER WALSH:

124

(Interposing)

The Business Solutions center with a great deal of focus on the, you know, the continued build out of Business Express. COUNCIL MEMBER BREWER: So they do

COMMISSIONER WALSH:

Yes. Okay. And

COUNCIL MEMBER BREWER:

my last question is, it’s not budget, they’re going to get mad at me, but the city Planning Commission and SBS is supposed to be thinking about ways that we can extend mom and pop stores. COMMISSIONER WALSH: Yes. What’s

COUNCIL MEMBER BREWER:

COMMISSIONER WALSH: been with city planning and- -

Well, we’ve

COUNCIL MEMBER BREWER: (Interposing) It’s not budget, I’m letting you know right now. COMMISSIONER WALSH: COUNCIL MEMBER REYNA: (Interposing) You won’t get away with that. COMMISSIONER WALSH: It’s been city It’s been- -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET planning, it’s been us, and it’s also been EDC

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that’s been looking at this, and looking at, you know, commercial corridors, you know, throughout the city, you know, what’s happening. I think one

of the ways where we could end up playing a greater role, and I really firmly believe this, is to build a capacity of those organizations that are on the ground, that are doing a good job. I’ve been out with the president of EDC, I’ve been out with Bob Lieber, we’ve been looking at some of the examples that you know about, because you played a role in it. I’m looking at Council

Member Lander, places that, how do you re-create, if you will, in other neighborhoods great success stories like Myrtle Avenue? And how do you

partner up, you know, I think, quite frankly, and one of the things that we’re doing is putting a lot more technical assistance into building the capacity of the smaller organizations, the hundreds of local development corporations, the merchants associations, those organizations that want to take the next step, you know, so that they can end up building their capacity. COUNCIL MEMBER BREWER: That works

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET everywhere but in my district. COMMISSIONER WALSH: your district too. COUNCIL MEMBER BREWER: chains, the 7-11 came in. COMMISSIONER WALSH: You know, I No, the It works in

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think on Columbus Avenue I think you have a number of individual, you know, shops that have opened. I think some of the organizations up there have done a good job. COUNCIL MEMBER BREWER: COUNCIL MEMBER REYNA: Council Member. All right. Thank you,

Thank you, Council Member Brewer. I

I think that deserves a follow up discussion.

hope that if you haven’t had one, which I highly doubt, you can continue to have corridor retail, which I am always in favor of. I know that I’ve

been picking the Commissioner’s brain for eight years concerning that issue. COMMISSIONER WALSH: COUNCIL MEMBER REYNA: Yes. I’d like to

call upon Council Member Chin, and before I do so, we’ve been joined by Council Member Levin, Fernando Cabrera, and Mathieu Eugene.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Madam Chair.

EXECUTIVE BUDGET COUNCIL MEMBER CHIN: Thank you,

127

Good afternoon, Commissioner. COMMISSIONER WALSH: COUNCIL MEMBER CHIN: Hi. I just want

to follow up, I guess, in the same line of question. On the area of business development, we

were talking about building capacity of the smaller organizations. COMMISSIONER WALSH: COUNCIL MEMBER CHIN: Yes. Local

development corporations, and here in this FY11 budget, half the amount of money is being taken out of contractual services, and I think you had mentioned before $4.5 million is going to go to Governor’s Island, right, and the rest is to meet the PEG, the 981,000. So that budget, I assume …

how are you going to be able to continue the work of Business Solutions center, your Business Express, your micro-enterprise program, and all the support, technical assistance, with half the budget of last year? COMMISSIONER WALSH: If I may, if

Commissioner Schwartz could end up giving you a little bit of detail in terms of the money you are

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128

talking about, and then I could talk about some of the other pieces. COUNCIL MEMBER CHIN: 1st DEP COMM SCHWARTZ: Okay. Yes, there

was an earlier discussion that I think the funds that are not there for business development are really mostly Council items that were in last year’s budget that don’t carry over to the exec budget. So our business development, our Business

Express funding is still in place, that’s city tax levy bid program, etc., are not being cut. provide funds to the local development corporations through federal CD funding, which is at about $2.3 million this year, it’s actually going to be up a little bit. So that’s how we do And we

the grant agreements with local development corps. So we should still be able to continue those types of services in the same manner. COMMISSIONER WALSH: If I could add

to that, you know, the Avenue NYC program will have $2.4 million. On top of that we have $3

million in the Business Solutions centers, you know, for the five boroughs, divided up among those. And in addition to that, we secured a half

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET a million dollars for the programs I’m talking about, the technical assistance, the capacity building, working with non-profit organizations about building their boards or marketing.

129

These

are a lot of new programs that we’ve initiated recently for many of the organizations that I would say are, have just started up, or have small staffs. COUNCIL MEMBER CHIN: So where did

that money, that extra $4.5 million, that was able … you were able to kick it out and then move it to Governor’s Island? 1st DEP COMM SCHWARTZ: No, that,

the Governor’s Island is not something we’re spending directly. I wouldn’t compare those two.

What I said was, the Council, fortunately, generally funds a lot of organizations at the time of the budget adoption, which was in our budget last year, but does not show up in the Mayor’s Executive Budget. So we expect at adoption of the

Council funds groups, that will be back in the budget for this year. COUNCIL MEMBER CHIN: I guess my

question was, I’m not clear, is that so where is

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it that the money that’s going to be allocated to Governor’s Island, that it was coming out of your budget? It’s not? 1st DEP COMM SCHWARTZ: No, well,

Governor’s Island, there will be an entity created for the city to operate Governor’s Island, which EDC has been working with the city/state entity, DYPAC, previously. But I think the funding will

come through our agency, through a contract with the new Governor’s Island entity, but- COMMISSIONER WALSH: (Interposing)

Not taking it from another part of the agency for that. 1st DEP COMM SCHWARTZ: Right, it’s

not being taken from SBS’s other funding, though. COUNCIL MEMBER CHIN: But from what

I saw in your budget, the amount was like half of what your FY10, compared to your FY11, right? It’s minus five point some million. 1st DEP COMM SCHWARTZ: We’d have

to sit down and look at the exact documents, but I’m saying, yeah, the funding passes through us for Governor’s Island. It has, you know, we would

like to have additional funding, but that’s for

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Governor’s Island.

EXECUTIVE BUDGET And how OMB has created the

131

funding for that, I couldn’t tell you. COUNCIL MEMBER CHIN: Yeah, I think

I would love to get some clarity on that, because, you know, if EDC is administering it, it should really come out of their budget, and not … I just want to make sure- CHAIRPERSON RECCHIA: (Interposing)

We have EDC … EDC is coming in next, so- COUNCIL MEMBER CHIN: (Interposing)

I just want to make sure that money for the Department of Small Business Services are going to be there to support all the small businesses that you’re talking about, or the programs. CHAIRPERSON RECCHIA: Council

Member Diana Reyna’s committee will follow up with a letter to Small Business Services and then we’ll question EDC when they come in next. I want to Okay,

recognize Council Member … oh, you did?

Council Member Lander will be the last person, Council Member, to ask questions to Small Business Services, and EDC will be next. get EDC Seth Pinsky on board. joined us. So if we could And Peter Koo has

Go ahead, Brad Lander.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Tavern? having me. Chair Recchia.

EXECUTIVE BUDGET COUNCIL MEMBER LANDER:

132 Thank you,

CHAIRPERSON RECCHIA: microphone on, please. COUNCIL MEMBER LANDER: think I wasn’t talking into it. CHAIRPERSON RECCHIA: serious, he brought his computer. COUNCIL MEMBER LANDER: No, no, no, it’s all right. for being here. COMMISSIONER WALSH:

Turn your

It is, I

This is

All right.

Commissioner, thanks

Thanks for

COUNCIL MEMBER LANDER:

I’m pleased

to report that in the time since the preliminary budget, I’ve had a chance to speak with some small businesses in the neighborhood who have used Business Express, and had a chance to go to the Black Horse Tavern that the Mayor spoke about in the State of the City, that are doing very well in my district. COMMISSIONER WALSH: I haven’t been there yet. CHAIRPERSON RECCHIA: I’m sorry to Black Horse

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to do it. centers. interrupt.

EXECUTIVE BUDGET

133

Josh Nachowitz, could you please get Thank

Seth Pinsky, tell him to get ready to go. you. COUNCIL MEMBER LANDER:

And I also

want to remind you that in the preliminary budget hearing we talked about bringing people together around some of the challenges the child care businesses are facing, both family day care centers- COMMISSIONER WALSH: You did, you did. COUNCIL MEMBER LANDER: … and (Interposing)

COMMISSIONER WALSH:

And I’m happy

COUNCIL MEMBER LANDER:

That’s

going to make sense after the budget, but as they approach and think about the Early Learn RFP, some of the challenges specifically facing people around certification and sort of the business and health certification, and the multiple layers of government they have to go through, it would be great to do. So I think the Speaker has also

wanted to talk to you about that.

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EXECUTIVE BUDGET COMMISSIONER WALSH:

134

They have a …

to set up they have a challenging list of permits and regulations. COUNCIL MEMBER LANDER: It seems

like a perfect opportunity for us to use the infrastructure as you did in the business sector. COMMISSIONER WALSH: We did it

quite well with the restaurants and also some of the supermarkets, quite frankly. COUNCIL MEMBER LANDER: COMMISSIONER WALSH: Thank you.

Yes. Following

COUNCIL MEMBER LANDER:

up on Chairwoman Reyna’s questions about MWBE, I’m going to push a little more there as well. COMMISSIONER WALSH: Sure. Because

COUNCIL MEMBER LANDER:

while I appreciate that you are bringing us some data, and at the preliminary hearing you mentioned the reports, and my staff worked hard to try to muddle through them, but I have to say the following. For those areas where the Mayor is

serious about using data to improve performance, we don’t just talk about the couple of folks who did the best, we provide the data in a clear and

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will.

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135

transparent way that also shows who’s not getting the job done. And I don’t believe that that is

made clear in the reports that you’ve provided. My staff are currently trying to work through it, so we can really see that. But I really think we

have an obligation, if we’re going to try to do well here, not just to give gold stars to folks who deserve them, although that’s entirely appropriate, but also identify those agencies that aren’t getting the job done, and have there be some consequences if they don’t get the job done, both on subcontracts and on those larger contracts. that. And I hope you’ll join us in doing

You know, you can do it in a friendly way,

and those are good commissioners trying to do their jobs, but it doesn’t feel to me at the moment like we’re yet using the data to hold people accountable who aren’t meeting the shared goals that we have. that. COMMISSIONER WALSH: I certainly And I hope you’ll help us do

COUNCIL MEMBER LANDER: COMMISSIONER WALSH:

Thank you.

Yeah, we’d be

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 understand.

EXECUTIVE BUDGET happy to sit down with you and look at those

136

reports, which, again, provide more comprehensive data than has ever been done in terms of individual contracts, by agency, by ethnicity, by gender, by dollar amount, and industry. So we’d

be happy to go through it, and just to recall that there was a three-year ramp up period where we were grading agencies not so much on the actual dollars awarded, because that could be a little bit of happenstance. COUNCIL MEMBER LANDER: I

COMMISSIONER WALSH:

But by their

ability to create opportunities, participate in the networking and capacity- COUNCIL MEMBER LANDER: (Interposing) Of course, I mean, the goal is to help them do better. COMMISSIONER WALSH: Right. Not to call

COUNCIL MEMBER LANDER:

them out for doing poorly, but you know, that’s, part of the effort here should be focusing on those agencies, especially with large opportunities, and reaching in there to help them

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EXECUTIVE BUDGET do better, and they’ve got a lot to do. that push is important.

137 So having

A similar area where I

know you’re working on coordination, but in the time since the preliminary budget I’ve become even more concerned about the disconnect is in some of our Workforce Development and Workforce placement programs, not solely the ones that you manage. now have a Homeless Services commissioner who’s made very clear, for example, that he’s going to expect people to work, we’ll leave aside the fact that he apparently also wants to take some of that money for rent payments. But I’m open to a focus We

on work, but I want us to be more coordinated in how we’re then investing in the pathways to employment, and I’m concerned that instead they’re a bit fragmented, that HRA has some and Parks has some, although we’re cutting the one in Parks too much, and now I hear tell that NYCHA is beginning something, which is also good, and some private ones, the Center for New York City Neighborhoods. But it’s not at all clear to me how they can enter the Workforce One centers and the pipeline that we’re building, how we look across them and see which ones are working and not working, it’s great

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to hear that you guys know which hours people are using your centers and can invest in the ones the things that are working and save resources when we have to on things that are not. And I just, it

feels to me like we currently have some disconnects that are growing in the good effort to put resources in place for job development and job placement. One challenge is at HRA the one person

who seemed to know what all the programs at least that HRA ran, was Seth Diamond, who is now at Homeless Services, and so I would like to know that someone in the administration is looking comprehensively at our workforce development and placement programs. I think you guys are the most

appropriate to do that, there are of course some special attentions needed when it’s for people in a homeless shelter or people who are on public assistance. But it seems to me that we ought to

do a little better job of coordinating and attending to what’s working and what’s not working across those programs. COMMISSIONER WALSH: I’d like to

respond to that, maybe Angie could add to this. This is a, you know, clearly a difficult issue and

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EXECUTIVE BUDGET a frustrating issue. was five years ago- CHAIRPERSON RECCHIA:

139

I can remember, I guess it

(Interposing)

I don’t mean to cut you short, Commissioner, could we give it a short response, because we’re running out of time? COMMISSIONER WALSH: Yes, six years

ago, we are best – thank you – we are best when someone walks in the door prepared for a job. And

I think we’ve made a lot of headway as we talked about the numbers. We are beginning to have even

more extensive conversations with the Chair of the Housing Authority, you know, when do you pass off the ball to, you know, the career centers. But

where we are primed, we’re the best, when a person walks in and they are ready to go to work, they’re job-ready. Some of the other programs that you

talk about, HRA, the Parks Department’s program, Homeless Services, there’s obviously a lot more work that has to go into preparing, you know, people for jobs. The neat thing of what Andy has

done is develop that relationship and that network with many of the community partners. And you

know, I think we’re making headway in there, but

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I agree.

EXECUTIVE BUDGET obviously there’s still a lot to be done. COUNCIL MEMBER LANDER:

140

And I’m not

saying that you shouldn’t … they shouldn’t run them, but for example, when we have a transitional jobs program and somebody comes to the end of their transitional job- COMMISSIONER WALSH: (Interposing)

COUNCIL MEMBER LANDER:

… and

you’re still going to expect them to work if they’re going to receive a rent subsidy, for example, I’d like to make sure that the connection is being seamlessly made, so that everything can be done to get that job- COMMISSIONER WALSH: (Interposing)

And this is some of the things that we have begun to have conversations, you know, with the Chair of the Housing Authority. COUNCIL MEMBER LANDER: Great. My

last question is about the Downtown Brooklyn Partnership and what we’re providing them and what cut that represents or that doesn’t represent, and I’m not entirely clear whether that flows through EDC or SBS.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very well. was $500,000. $500,000. last year? through us.

EXECUTIVE BUDGET COMMISSIONER WALSH: It goes

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It’s a … I believe it’s a $200,000 …

$250,000 in resources goes to the Downtown Brooklyn Partnership for their administrative costs, and you know, there’s efforts in downtown Brooklyn now of consolidating a number of different organizations. COUNCIL MEMBER LANDER: What was it

COMMISSIONER WALSH: Was it $500,000?

Last year it

Yes, it was

1st DEP COMM SCHWARTZ:

I know it

COMMISSIONER WALSH:

Yes you do. Okay, so

COUNCIL MEMBER LANDER: that’s a 50% reduction. COMMISSIONER WALSH: CHAIRPERSON RECCHIA:

Yes. And that’s a

conversation maybe we should have with the Brooklyn delegation and the Small Business Services. COMMISSIONER WALSH: Yes. Thank you.

COUNCIL MEMBER LANDER:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. entire staff.

EXECUTIVE BUDGET CHAIRPERSON RECCHIA:

142 That’s a very

sensitive topic for the Brooklyn delegation. COUNCIL MEMBER LANDER: forward to that conversation. COMMISSIONER WALSH: CHAIRPERSON RECCHIA: Right. Okay, without I look

anything further, I want to thank the Commissioner. COMMISSIONER WALSH: CHAIRPERSON RECCHIA: Thank you. Thank your

I personally want to thank you for

the work that you are doing in the job, Workforce Development in Coney Island is doing a great job. COMMISSIONER WALSH: CHAIRPERSON RECCHIA: Right. Angie’s doing

a great job, and I just want to thank you. COMMISSIONER WALSH: Yeah, thank

CHAIRPERSON RECCHIA:

MWBE at

Coney, it is, it’s going, I want to thank everybody. COMMISSIONER WALSH: of you, I appreciate it. CHAIRPERSON RECCHIA: Okay, we’re Thanks to all

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going to take a two minute break, Seth Pinsky’s up next, EDC, stay tuned, don’t go anywhere. be starting immediately. CHAIRPERSON RECCHIA: We welcome We’ll

everyone, it’s a beautiful sunny afternoon, but we’d rather be inside the beautiful City Council chamber with Council Member Domenic M. Recchia, Jr., and his wonderful colleague, Diana Reyna, our wonderful co-Chair of Small Business Services, our Chairman of Community Development, Al Vann … Al? And I welcome everyone to the City Council chamber for our hearing on Economic Development, the Executive Budget 2011, dealing with EDC. I want

to recognize all of our wonderful Council Members who have joined us today, Council Member Julissa Ferreras, Margaret Chin, Mathieu Eugene, Brad Lander, Al Vann, Peter Koo, Diana Reyna. Okay?

At this time I recognize my co-Chair, Diana Reyna, Chairman of Small Business Services. COUNCIL MEMBER REYNA: Chairman Recchia. Thank you,

I just wanted to, on behalf of

Council Member Tom White, share a few words as the Chair of the Economic Development Committee, who is not here with us today. We hope he is doing

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 well.

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2011 Executive Budget for the Economic Development Corporation. In this hearing the Economic

Development Committee would like an explanation on the current status of Willets Point and Coney Island Development, and the $24 million funding for Atlantic Yards. The Committee would also like

to discuss the Controller’s EDC audit report. Finally, the Committee would like to know the current status of EDC’s capital access program, which will assist more businesses in accessing credit to allow them to start, expand, and/or maintain their businesses, and the progress EDC has made on MWBE contracting, percentages as well as value in dollar concerning contracts. I would

like to thank EDC’s president, and its wonderful staff for joining us here today. your testimony. MR. PINSKY: Thank you very much. We will now hear

Good afternoon, Chairman Recchia, Chairwoman Reyna, Chairman Vann, and the members of both the Finance and Economic Development Committees. Before reading my prepared testimony, I just wanted to express my personal best wishes to

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Council Member James and to Chairman White, I hope they’re both doing okay, and I hope that you will pass along on my thoughts to both of them. My name is Seth Pinsky, I am the President of the New York City Economic Development Corporation, and I am here today with Jason Wright, our Chief Financial Officer and other members of my staff. I’m pleased to present I

EDC’s executive budget for fiscal year 2011.

will go through the operating and capital budget that support our ongoing plans with an emphasis on the changes since my last presentation to you. also have a brief presentation on our agenda for the coming year, and after the presentation I will of course be happy to take any questions. As you well know, over the past 18 months the city has faced a number of economic challenges. For example, according to the latest I

data, our unemployment rate stands at 9.8%, which is approximately 0.8% higher than where it stood last year. Though it is down more than half a By the end of the

percent from the month prior.

recession the city’s Budget Office now predicts that we will have shed close to 170,000 jobs.

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real estate market, with total Manhattan class A office vacancy rates some 50 basis points higher than when I last testified before you. Though our

city’s economy is clearly not out of the woods yet, I am pleased to report that the first green shoots of recovery that we were beginning to see when I last appeared before you in March continue to grow. For example, as you probably know, the

city’s budget office now projects that we will post steady employment gains in the second half of this year, with wage recovery beginning soon thereafter. Meanwhile, notwithstanding the

softness in the market, commercial real estate New York does continue to hold up better than the commercial real estate market in most other U.S. cities. Perhaps of greatest importance, as

difficult as the downturn has been, and it certainly has been difficult for many New Yorkers, New York City is still performing better than the rest of the country, with the percentage of jobs lost during the recession here currently standing at 4.1%, as compared to a 7.2% loss in the nation as a whole. Even with the nascent economic

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recovery though, the fiscal picture continues to be challenging. As a result EDC’s operating

budget, as with that of the city, remains impaired. When I testified before you in March,

our projected fiscal year ’10 operating deficit stood at approximately $12 million. Today, thanks

to our decision to defer certain project costs that we were anticipating earlier, we now project that this deficit will come in at approximately $10 million at yearend. Going forward, we plan to

look for innovative ways both to generate new revenue and to cut costs, and hope that during fiscal year ’11 we will succeed in reducing our operating deficit even further. While working to

reduce our operating deficit during fiscal year ’10, we have continued to make substantial contributions to the city’s effort to reduce its budget gap. As you know, the way that EDC makes

these contributions is through a combination of regular contract payments and special payments to eliminate the gap, or so-called PEG payments. This is because we generally do not rely on tax levy funds from the city for our operations, instead generating the lion’s share of our

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Just since the

last time I appeared before you in March, you can see in the highlighted portion of the table that we were asked by the city’s budget office to make additional PEG payments to the city’s general fund. On top of the payments of $18.5 million and

$18.6 million that we were anticipating to make in fiscal years ’11 and ’12, we are now anticipating to make payments totaling another $1.2 million in each of fiscal years ’11 and ’12. This figure

will drop slightly in each of fiscal years ’13 and ’14, but in total will bring the cumulative new PEG payments that we are being asked to make to $4.4 million over the next five years. As a result of the foregoing, during the same five year period, EDC’s total PEG payments to the city are projected to come in at over $84 million. Together with the other annual

payments that we make to the city, which also include one-time extraordinary payments resulting from land sale transactions, it is now projected that by fiscal year ’14, the total amount that EDC will have paid to the city during the forecast period will equal nearly $219 million.

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Turning now to our capital budget, you can see from this slide that approximately $2.5 billion is now allocated for all EDC-managed capital projects for fiscal years ’10 and ’11, an increase of approximately $225 million, or 10%, since my last testimony before you in March. This

change is largely due to an increase in projects that EDC is being asked to manage for city agencies, with projects being managed for the Department of Environmental Protection accounting for most of the increase. As this slide shows, 38% of our capital budget, or about $959 million, is now allocated to projects that EDC is managing for city agencies. The majority involve the

Departments of Cultural Affairs, Parks and Environmental Protection. Examples of these

projects include capital investment aimed at creating recreational access to Randall’s Island, redeveloping Lincoln Center, and building a water siphon between Brooklyn and Staten Island, to allow the Port Authority to deepen the channel beneath the Verrazano Bridge. Meanwhile, about $1.04 billion of

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capital for commercial and mixed-use development initiatives. These include projects that will

strengthen our central business districts, such as downtown Brooklyn, downtown Jamaica, 125th Street, and Long Island City. These also include

neighborhood redevelopment projects in places like Willets Point, Coney Island, the Staten Island Home Port, and Hunt’s Point, as well as waterfront development projects at facilities like the Brooklyn and Manhattan cruise terminals. Another $230 million of our capital budget, or 9%, is allocated to improvements to city-owned industrial sites managed by EDC, including the Brooklyn Army Terminal, the Hunt’s Point food distribution center, and Bush Terminal. Markets such as the Essex Street market and East Harlem’s La Marqueta, and waterfront bulkheads and structures throughout the five boroughs. A

further $149 million of our capital budget, or 6%, is allocated to investments in community projects that support commercial and local development, including streetscape improvement. Finally, 5% of our capital budget,

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Brooklyn Navy Yard Corporation, which manages its own capital projects, but is funded through EDC. Beyond the day-to-day management of our capital and operating budgets, we continue to work, as I described in March, to transform New York into the capital of 21st century innovation. We believe this transformation must happen along two axes, physical and economic. The first way in

which the city must transform itself is physically. This is because, as you no doubt

agree, our city cannot compete with 21st century rivals using a physical plant that in many cases is decades old, or older. This is why in the next

several years we at EDC will focus our attention both on restoring existing physical assets and to creating new physical assets, not just through investment in basic infrastructure like pipes and wires, but through investment in amenities like parks, cultural facilities, and in some cases, whole new neighborhoods. Since I last testified

before you, we have achieved a number of significant milestones along these lines. In Huts

Point in the Bronx, for example, we announced the

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selection of an affiliate of Atlantis Management Group to develop and operate a retail alternative fueling facility. This 128,000 square foot

facility will encourage the use of alternative fuels, such as bio-diesel and compressed natural gas, by trucks and other vehicles traveling within the city, in order to reduce the negative impact of diesel emissions in this area that has been plagued by high asthma rates for years. The $11

million facility will be the first station of its kind to open to the public in New York City. Nearby, also in the South Bronx, we recently completed demolition of the old Yankee Stadium. In the next month or so, we anticipate breaking ground on the site for the last of the $195 million in parks that were promised in connection with the construction of the new ball field. finished next fall, this final park, Heritage Field, will feature three championship quality grass athletic fields, new bleachers, a comfort station, a concession area, and a commemorative program that will pay tribute to the legacy of the original Yankee Stadium. Here in Manhattan, meanwhile, we When

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broke ground earlier this month on the first phase of the 1.7 million square foot East Harlem Media Entertainment and Cultural Center. This

development will eventually include 800 housing units, 600 of which are to be affordable, as well as a hotel and new retail, office, open and cultural space. The project will create fifteen

hundred permanent jobs and 4,000 construction jobs. And later this week, the first three acres

of new and improved amusements are set to open for the season in Coney Island. An affiliate of an

Italian-based company called Central Amusements International has been working furiously for the past few months to get the park up and running, and we are very proud of this significant milestone in the revitalization of this historic area. Of course, this is just the first step in

the redevelopment plan for this great Brooklyn neighborhood that was passed by the Council last July. The plan will ultimately result in a 27

acre amusement and entertainment district, together with forty five hundred units of new housing, and 500,000 square feet of new retail space.

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working to access money made available through the federal stimulus package to advance projects across the five boroughs. Investments that we

have made to date using stimulus-related programs include $114 million in direct funding for projects, ranging from infrastructure investments to alternative energy initiatives. We have also

been active in allocating tens of millions of dollars in tax exempt bonding authority that the city received under a number of new or expanded private activity bond programs, including $120 million received in connection with the recovery zone facility bond program. In fact, since I

testified before you in March, we have made the final preliminary allocations under this recovery zone bond program to two new development projects. One, a $52 million project in the Elm Park section of Staten Island, to expand a cement import and distribution facility, and create 200 construction jobs and 125 permanent jobs, and the other, an $80 million mixed-use development in Harlem that is anticipated to create 250 construction jobs and

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EXECUTIVE BUDGET 200 permanent jobs.

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Meanwhile, our earlier allocations are now paying dividends. For example, one of the

first projects for which we approved recovery zone bonds, the City Point project in downtown Brooklyn, is expected to break ground next month on its first phase, creating over 150,000 square feet of new retail space and over 250 new residential units, nearly 50% of which are anticipated to be affordable. In making our final

two allocations and breaking ground on projects that received earlier allocations, we believe that we have made New York a model for the rest of the country, most of which has not yet made use of this powerful tool for economic development. At the same time that we work to move our city’s infrastructure into the 21st century, we must, as I mentioned at my last testimony, also focus our attention on moving our city’s economy into the 21st century as well. That

is why over the past year we have launched over 60 initiatives designed to support entrepreneurship across all industries while also seeking to help legacy industries like media, fashion and

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seeking to help capture a leadership role for New York in emerging industries, like bio-science, green services and technology. I’m pleased to

report that just since my testimony in March, we have achieved a number of successes towards these ends. These include the following: earlier this

month we announced the start of development for Bio-bat, a new, nearly 500,000 square foot commercial wet lab facility being established at the Brooklyn Army Terminal in Sunset Park. Development of this facility will play an instrumental role in helping us to retain the 20 to 30 bio-science companies that spin out of our academic institutions every year, complementing our efforts to open new lab space at Alexandria Center at East River Science Park, and to expand incubator space at SUNY Downstate, while simultaneously building on the bio-science R&D tax credit voted into law by the Council last year. Meanwhile, to help support the arts and cultural sector, one that contributes to the city’s quality of life, deepens the day-to-day experiences of millions of New Yorkers, and serves

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this month we designated two organizations, East Harlem’s Hope Community Incorporated, and the Dumbo Improvement District, to market the growing arts clusters in their communities under our promoting arts clusters program. We are pleased

that the program is building on other EDC programs geared towards this sector, including a new artsrelated boot camp, and a new incubator facility at the Brooklyn Army Terminal, which together are designed to take creative people with great artistic concepts and help them to turn these concepts into viable and sustainable businesses. And just this morning we joined Mayor Bloomberg in announcing the initial investment by our new NYC Entrepreneurial Fund, the first seed investment fund of its kind in the nation, located outside of Silicon Valley. In

establishing the fund, the city has partnered with FirstMark Capital, a leading New York City-based venture capital firm, to make up to $22 million in seed and early stage investment capital available to city-based startup companies. My City Way, a

mobile application and platform provider that won

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the investor’s choice and popular choice award at the city’s inaugural NYC Big Apps competition, will be the first company to receive crucial early-stage funding from this new fund. As further evidence of how our work to support startup companies is paying dividends for entrepreneurs across the five boroughs, I’m pleased to report that just since July of last year, when we launched our first business incubator with NYU Poly on Varick Street in Lower Manhattan, companies calling our incubators home have received $8 million in venture capital funding, with four companies ready to graduate to unsubsidized space, creating room for a new generation of startups. Today our network of

announced incubators extends to five locations from East Harlem to Sunset Park. We expect to add

two to three more locations by the end of the year, including incubators in neighborhoods and boroughs not yet served by these important facilities. And in another milestone, we have now also welcomed our 1000th New Yorker to the new entrepreneurship training program that we put in

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Services, the Kauffman Foundation and SUNY’s Levin Institute. Designed to teach new entrepreneurs

how to start businesses and existing entrepreneurs how to guide their companies through difficult economic conditions, these programs should accommodate another 1,000 people over the coming year. But we’re not stopping there. Going

forward, we intend to take lessons learned from these initiatives and expand the programs that have worked, while simultaneously developing new programs to address the needs of businesses not served by what has been put in place so far. Of course, as I mentioned in my last testimony before you, we recognize that while transforming the city’s economy, we must insure that in doing so, the benefits of this diversification are felt in all communities, and by people of all backgrounds and creeds. This is

why we are so focused on our efforts relating to minority and women-owned business enterprises or MWBE’s. As I have said to you before, we do this

not just because of Local Law 129, the city’s MWBE mandate relating to certain sub-contracts under $1

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million on city-funded projects, but also because we believe that MWBE’s provide new opportunities for traditionally disadvantaged communities, while spurring competition and reducing costs for the city. We’re pleased to report that we continue to

surpass our MWBE goals of 20% MWBE participation on applicable construction project sub-contracts and 22% MWBE participation on applicable professional services sub-contractors, with actual year-to-date participation rates so far in this fiscal year at 30% and 31% respectively. As well as we have performed this year, though, we know that we can do better. time I appeared before you, I promised that I would report back to you on plans to enhance and expand our MWBE program, and I am pleased to make good on that pledge today. Though we are still Last

fine tuning some details, we will, by the end of the summer, launch a comprehensive suite of initiatives designed to help MWBE’s. This suite

of initiatives will focus on three main areas. First: we will build on the momentum generated by the many successful events that we have hosted in the past in neighborhoods such as Jamaica, Hunts

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significantly larger number of these events in the coming year. In so doing, we hope to insure that

more MWBE’s are made aware, and can take better advantage, of the New York City Economic Development Corporation’s projects and programs that we have available to help these deserving businesses. However, getting the word out to The

MWBE’s is just the beginning of our efforts.

second area on which we are focused is structuring our projects in such a way that to increase the opportunities that MWBE’s have to participate in them with the goal of making it easier for MWBE’s to bid, not just on EDC’s smaller purchases, but on our larger capital projects as well. Finally,

in our discussions with stakeholders on how to improve our MWBE program, we’ve heard repeatedly that contractors needed help in building their capacities, with a particular emphasis on capacity that would make these businesses, many of which are small enterprises, more bankable and more bondable. For this reason, the third area on

which we are focused is developing capacitybuilding programs for MWBE contractors, with the

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As we continue

to finalize these initiatives, we will be conducting stakeholder outreach, including soliciting feedback from members of the Council, steps that we intend to take throughout the month of June. I look forward to meeting with you and

members of your staff, as we work to make these programs as robust and meaningful as they can be. As you can see, in spite of the very challenging fiscal and economic environment in which we are living, we do not intend to slow down our efforts. Though we know that the task in

front of us is a significant one, we also believe that working with the Council over the last eight plus years, we have laid the foundation for our ultimate collective success. With the continued

support of your committees and the rest of the members of the Council, we at EDC are confident that the city will, as it has repeatedly done throughout its history, emerge from this challenging period a city that is not only as strong, as innovative, and as prosperous as it was

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before the most recent downturn, but one that is stronger, more innovative and more prosperous than it has ever been in its long and illustrious history. questions. CHAIRPERSON RECCHIA: Thank you, Thank you, and I’m happy to answer any

Mr. Pinsky, for that wonderful, wonderful testimony. But in the future, you can make your Twelve pages is a

testimony a little shorter. little bit too long.

Or the next time you can

submit it, and sum it up. MR. PINSKY: It would require us to

CHAIRPERSON RECCHIA: my co-Chair very happy.

But you made

I have to tell you that.

So in the interests of time, I will let my colleagues ask questions first, in the interests of time. And I’m going to recognize Mark Weprin,

who has joined us, okay, and we’ll start off with my co-Chair, Diana Reyna, followed by Julissa Ferreras. I got it right, Diana Reyna has been

working with me the whole time. COUNCIL MEMBER REYNA: I apologize,

Mr. Pinsky, we’re teaching Domenic Recchia

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Spanish. Yes.

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Thank you, President Pinsky, for your elaborate testimony. It’s very helpful to just gauge where

EDC is at, and as you can see, you’ve already mentioned a few of the answers that we were searching for. I do want to just go back to the

percentage that you included in your testimony, 30% and 31%, for exceeding the goal. What is the

value amounts, as it pertains to the dollar figure? MR. PINSKY: The value amount of

our MWBE program during the period is, let me just get you that information. It’s $7.4 million in

contracts under $1 million for construction and professional services projects in fiscal year 2009 and to date in 2010. COUNCIL MEMBER REYNA: MR. PINSKY: $7.4?

That’s correct, and

since the MWBE programs were put in place, it’s been about $77 million in total. COUNCIL MEMBER REYNA: you said 70% or 7.4? MR. PINSKY: It’s $7.4 million I’m sorry,

since, between fiscal year 2009, the beginning of

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million since the beginning of our MWBE program several years ago. COUNCIL MEMBER REYNA: And so $7.4

million out of the ’09-’10 budget, what was the total amount of dollars in professional services contracts? MR. PINSKY: Well, the $7.4 million

represents somewhere around 25% to 30% of the eligible amounts. In this fiscal year, it’s been

30% and 31%, but since 2009, it’s been somewhere between 25% and 30%, so it’s probably been $28 million total. Just to be clear, the way that the

MWBE goals that the City Council has set work, is that they apply to professional services contracts and construction contracts, sorry, sub-contracts, under $1 million. COUNCIL MEMBER REYNA: MR. PINSKY: Right.

So the eligible

contracts that we’re measuring against are about $28 million, I can get you the exact number, but it’s somewhere around $28 million, and we’ve had about $7 million of those going to minority and women-owned businesses since 2009. Our percentage

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EXECUTIVE BUDGET is higher this year than it was last year. think this brings up an important point.

166 But I Although

I think that’s an impressive number, and it certainly is beating the goals, we know that there’s more that we can do. We have a very large

capital budget, the city has a very large capital budget. COUNCIL MEMBER REYNA: MR. PINSKY: Right.

Which is why we’re

working very hard, not just on meeting these goals, but also expanding our program. And the

key, I believe, is building capacity in the MWBE community. The reason why the goals that the

Council set are against only these smaller contracts is that in many cases MWBE firms are small firms that can’t bid for the larger contracts. We want to work to make it so that

these companies can compete for the larger contracts. COUNCIL MEMBER REYNA: And the

budget allocated for the program that you have mentioned in your testimony, designated to assist with hosting events in Jamaica, Hunts Point and Bedford-Stuyvesant, not limited to those

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particular neighborhoods, MWBE’s as a whole will be invited, but what is the funding to host these types of events, and are you going to have them quarterly, in different neighborhoods so that there’s a set up figure that you’re dedicating concerning your particular budget as it stands with generating more contracting goals? MR. PINSKY: Yeah, and I’ll have to

get you the exact number for what we’re spending on the programs to date, but as you point out, it’s been somewhat ad hoc. We’ve had a number of

these sessions, but it’s when there are opportunities available that we host them. What

we’re looking to do now is make this more of a regular event, at least quarterly, maybe more frequently than that, and to increase the budget for them as well. So we’re now dotting the I’s

and crossing the T’s and making sure that the programs that we’re putting in place are really meaningful. We want to talk to the MWBE community

to make sure they believe it’s meaningful, and we want to talk to Council members, to insure that they believe it’s meaningful as well. And so

we’ll be coming to you over the course of the next

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EXECUTIVE BUDGET several weeks to give you much more detail. COUNCIL MEMBER REYNA: I look

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forward to those discussion, absolutely, and we’ll include other members of the Committee, if they do choose to participate, I welcome them. I do want

to take an opportunity to ask concerning Willets Point redevelopment. EDC’s executive capital

commitment plan includes $381.7 million for fiscal years 2010 to 2020 for site acquisition and infrastructure improvements at Willets Point. would like to ask you to provide the Committee with details regarding the current status of the Willets Point redevelopment, as in regards to the acquisition, the relocation of small businesses, and the workforce training the administration will provide for displaced workers, as well as the traffic study. So each one of those categories, I

if you could give us an update and break down the $381.7 million as it relates to each one of these categories. MR. PINSKY: Sure. As you know,

the ULURP for Willets Point was passed overwhelmingly by City Council in 2008, and allowed us to move forward with this very

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we’ve continued with property acquisition. may know, the plan now is to develop it in a rolling series of phases.

As you

The first portion of

the project that will be developed, and as we’re finishing each portion, the next portion will start, we have agreements with about 75% of the landowners for that property, and we’re continuing to negotiate with other landowners, and our hope is that we will reach negotiated agreements with all of them. Meanwhile, at the same time we’ve

also selected a design and construction manager for the off-site infrastructure work. So in order

to redevelop Hunts Point … I’m sorry, Willets Point, the first thing we need to is we need to actually build sewer connections and electrical connections to the border of the project. We’re

in the process of working with our designer to do the design work for that basic infrastructure, and we think that that will be completed sometime around 2011, and in early 2011 our hope is to get into the ground and start constructing the offsite infrastructure. We at the same time have

been working to get the ramps issue, which I think

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EXECUTIVE BUDGET is what you were resolving, completed.

170 We’ve been

dealing with city DOT and state DOT and the Federal Highway Administration to get approval for our plans for the ramps coming off of the Van Wyck, and our expectation is that that approval will come sometime in the fall or winter of 2010. And while we’re doing all of that, we’ve also gone out to the development community to see what kind of interest there is in developing the onsite portion of the project. So we’re talking about

designing the offsite infrastructure, there’s also all the work that has to take place onsite. We

issued a request for qualifications in 2009, and we were pleased to get 29 responses from major development teams. And our anticipation is that,

either sometime later this year, or maybe early in next year, depending on market conditions, we’ll issue an RFP for a developer partner for the first rolling section of the project. And then with

respect to your question about the retraining program, we continue to work to relocate certain businesses that are in Willets Point that are mainly owner-operators, so there are three different kinds of businesses there.

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EXECUTIVE BUDGET COUNCIL MEMBER REYNA: MR. PINSKY: Uh huh.

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There are people who

own property but don’t have any facilities onsite. There are people who own property and have a facility on that property, and then there are people who lease property but don’t own the property. We’ve been targeting primarily the

owners for relocation to start with, because they tend to be the bigger businesses. The Council

recently approved our relocating five of those businesses to College Point, and the good news is that many of them will actually be expanding in College Point. And our anticipation is that other

businesses won’t need to relocate from Willets Point until we’re closer to doing the onsite work, which is still a year away. And we’re going to

give those businesses ample opportunity to relocate, but in the meantime we’re working our relocation advisors, Cornerstone, are working with them to insure that we understand what their needs are, and we’re looking for sites for them. And

with respect specifically to workers, the last question that you asked. COUNCIL MEMBER REYNA: Uh huh.

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EXECUTIVE BUDGET MR. PINSKY:

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Our worker assistance

program, which is managed by La Guardia Community College, has had about 450 registrants already in the program, 230 of them have completed their classes. And a program that we’re launching

that’s a first of its kind program with the Greater New York Auto Dealers, the courses in that program began in March 1st, 2010, and we’re seeing very high interest in that. So we’re continuing

all of our work, we believe that we’re going to be building this project out on the schedule that we had originally announced, and we think that now it’s more important than ever to be making these kinds of investments for the future. COUNCIL MEMBER REYNA: I appreciate

the elaborate description of each category, but as far as the value amount concerning site acquisition, what is the dedicated allocation of the other 381.7? MR. PINSKY: The $381 million will

be used both for site acquisition and for the infrastructure work. COUNCIL MEMBER REYNA: MR. PINSKY: How much?

It’s … the full amount

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EXECUTIVE BUDGET will be used for the two. How much of that we

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spend on site acquisition will depend on the agreements that we reach with the property owners. COUNCIL MEMBER REYNA: So no site

acquisition money has been spent at Willets Point? MR. PINSKY: No, there has been

money that’s been spent, we’re continuing to reach agreements, and as we reach those agreements, more of that money will be spent down, and the remainder of that will go to the offsite acquisition. And I can get you the specific

amount that’s been spent to date, I just don’t have that off the top of my head. have that? COUNCIL MEMBER REYNA: And the [aside] Do you

amount of relocation funding dedicated for small businesses, you said five have been successfully moved, or agreed to move to College Point? MR. PINSKY: They were among the

largest five that have been … gone through City Council approval and are in the process of closing their transactions. But we’re continuing to work With most of the other

with the other businesses.

businesses, they’re not required to move for a

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little while, and so we’re trying to do this in a way that we’re allowing businesses to stay in place for as long as possible. COUNCIL MEMBER REYNA: So the

projected amount of money for the relocation of the five. MR. PINSKY: It was part of the …

these were all owner-occupied businesses, so it’s part of the acquisition costs of the property. Basically we bought the property and they’re using that money to buy a new property and move to that. COUNCIL MEMBER REYNA: So there was

no relocation cost separate and apart from the acquisition? MR. PINSKY: That’s correct. And as far

COUNCIL MEMBER REYNA:

as the workforce training, how much money is dedicated for the training? MR. PINSKY: Yeah, again- -

COUNCIL MEMBER REYNA: (Interposing) For placement of 450. MR. PINSKY: I’ll have to get you

those specific numbers, I don’t have the breakdowns within the 380, but I can get you all

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EXECUTIVE BUDGET of that information. COUNCIL MEMBER REYNA: And as you

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can see, I’m trying to figure this $381.7 million. MR. PINSKY: Uh huh. As far as

COUNCIL MEMBER REYNA:

the capital commitment in relation to a budget for fiscal years 2010 to 2020. MR. PINSKY: Yes. Because the

COUNCIL MEMBER REYNA: figure doesn’t seem to be accurate. MR. PINSKY:

What is not accurate? As far as

COUNCIL MEMBER REYNA:

MR. PINSKY: definitely accurate.

No, the figure is

COUNCIL MEMBER REYNA: MR. PINSKY:

Okay.

And I’ll give you the

breakdown, I just don’t have it in front of me. COUNCIL MEMBER REYNA: Okay. The

Atlantic Yards, for the sake of Council Member Tish, who was not here, we had a briefing, this was one of the specific questions asked. The

Atlantic Yards received an additional $24 million from the administration, could you explain to the

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EXECUTIVE BUDGET Committee what the funding is for? MR. PINSKY: Yeah, it’s actually

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not an additional $24 million, what’s happened is that the money that was previously in the budget has been reallocated, so- COUNCIL MEMBER REYNA: (Interposing) And what budget year was that? MR. PINSKY: So when the project

was originally proposed, two or three years ago, there was a $100 million in the city’s budget for … to help Forest City with site acquisition, and then $105 million that was in the city’s budget for infrastructure that the city was going to build connected to Atlantic Yards. As the project

has been better defined, we’ve reprogrammed $31 million of the $105 million for additional assistance to Forest City for land acquisition. So that brings the total amount that’s been spent, and all that has been spent for land acquisition, to $131 million. Then, in addition to that, it

was agreed that Forest City, because they were doing work on the site- COUNCIL MEMBER REYNA: (Interposing) I’m sorry, I just want

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MR. PINSKY:

Sure. $131 million

COUNCIL MEMBER REYNA: has been spent in site acquisition? MR. PINSKY:

That’s correct.

So- -

COUNCIL MEMBER REYNA: (Interposing) And site acquisition for infrastructure on behalf of the City of New York? MR. PINSKY: No, no, just for site

acquisition for the arena, for the project. COUNCIL MEMBER REYNA: And that

will be turned over to the City of New York? MR. PINSKY: No, that … it’s

property that’s actually owned, technically, by the Empire State Development Corporation, and then leased for over a long term to Forest City. COUNCIL MEMBER REYNA: And the

city’s rate of return in investing $131 million is? MR. PINSKY: The estimates are that

the net benefits of the project. COUNCIL MEMBER REYNA: MR. PINSKY: Uh huh.

So we’re putting in,

and I’ll get to the total number, we’re putting in

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EXECUTIVE BUDGET about $179 million in capital. COUNCIL MEMBER REYNA: MR. PINSKY: Uh huh.

178

And the estimates are

that when you subtract out all of the investments that we’re making, the amount in surplus taxes that will be generated by this project will be hundreds of millions of dollars more than we’ve invested, over the life of the project. So it’s a

considerable return that the city will be making off of the project. COUNCIL MEMBER REYNA: Projected

MR. PINSKY:

Correct, correct. And the

COUNCIL MEMBER REYNA:

total amount of those projected returns are? MR. PINSKY: The last estimate that

was made, I think it was back in 2006, was around $300 million, although, again, I don’t remember the exact number. the project. COUNCIL MEMBER REYNA: Okay. I But that was the net benefit of

know my colleagues have questions, and- MR. PINSKY: sorry, can I just finish? (Interposing) I’m

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EXECUTIVE BUDGET COUNCIL MEMBER REYNA: MR. PINSKY: Please.

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I just want to make

sure that I give you the full. COUNCIL MEMBER REYNA: MR. PINSKY: Yes.

So, it was $100

million for acquisition, there was a $105 million on top of that for infrastructure. $31 million of

the $105 has been put into acquisition as well. So that brings acquisition total to $131 million. Then Forest City is going to do some of the work that the city had planned on doing, and so $24 million of the money that the city … of the $105 that the city was going to spend, is now going to be paid to Forest City to do the same work. And

on top of that, another $8 to $16 million will also be paid to them to help them put in a water main. And then finally the city has done $8 So,

million of the $105 million work ourselves.

just to add that all up, what that means is that it’s $100 million for acquisition, plus $31 million for acquisition, plus $32 to $40 million for Forest City to do onsite work on behalf of the city, and $8 million for the city to do its own work, which brings the total, instead of $205

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 before?

EXECUTIVE BUDGET million, where we had been before, it will be somewhere between $170 and $180 million. COUNCIL MEMBER REYNA:

180

What was it

MR. PINSKY:

About $205 million. And so your

COUNCIL MEMBER REYNA:

calculation is balancing this out as a savings to the City of New York? MR. PINSKY: We’re making a smaller

capital investment in the project than we had anticipated, and we’re continuing to get the same benefits over time. And so we believe, per your

earlier question, that there will be a significantly positive return to the city as a result of this project. COUNCIL MEMBER REYNA: Okay, and

before I turn it over to my colleagues, I just wanted to get an update concerning the April, 2010 Comptroller EDC audit report, stating the city was owed $125 million from EDC, the bulk of the money, $100 million, are funds that were advanced by the city to developers to build out two sites as part of the 42nd Street project. The developers paid

these funds back, and Comptroller Liu asserts that

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EXECUTIVE BUDGET EDC was supposed to return this funding to the general fund, but has kept it.

181

Can you comment on

this particular audit, and what are the next moves concerning the $125 million owed to the city? MR. PINSKY: Yeah, first of all, as

was evidenced, I think, by our response to the comptroller’s audit that was attached to the audit, we strongly disagree with the comptroller’s conclusions. I think it’s important just to

understand what the comptroller was looking at, and what the comptroller was doing was auditing EDC’s master contract, the contract that we operate under with the city, between 2006 and 2008. The figure that he cited was money was

money that had been received by EDC between the 1990’s and 2007. So there wasn’t a bulk payment,

this is payment that’s been coming in over a number of years, a few million dollars at a time, on average. Every quarter that we’ve received

this money, we’ve disclosed it to the city as part of our quarterly review of our budget with the Office of Management and Budget. Every year we

put these figures in our audited financials, so you can go back through our audited financials and

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EXECUTIVE BUDGET you’ll see references to these funds. We share

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every year these audited financials with the City Council, we share them with the Comptroller’s Office, and we post them on our website. In fact,

if you go to our website today, you can see references to these moneys on our website. As the

Comptroller knows, under our contract with the city, it is envisioned that EDC will keep certain revenues that it generates, in order to fund its economic development mission. part of that. And this money is

And the Law Department issued an

opinion to us stating that they agreed that under our contract we were entitled to use this money for economic development. And in fact what we’ve

done is we’ve invested that money, as we invest all the money that we have, in our economic development mission, and during the same period that the Comptroller cited, we actually have turned back over to the city over $400 million. So we’ve invested that money, as we’ve invested all of our money, and given much more money back to the city, which is what the Economic Development Corporation was created for. COUNCIL MEMBER REYNA: Well, I’m

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EXECUTIVE BUDGET glad that you’ve expressed the clarification on

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the investment, perhaps it wasn’t a direct payment concerning the 42nd Street Project, but rather a reinvestment back into the city, as you have just mentioned. And having mentioned that mission, I

wanted to just raise the issue of the deficit we’re seeing in the IBZ service contract providers. And as you heard me dialogue with

Commissioner Walsh, the concern that I have that in the time of economic downturn and seeing that there is a recovery in the economy, that we would want to continue to fund these contracts. And it

is important that EDC finds it upon itself to leverage what the city has committed already to making sure that within your portfolio you would be able to pick up the balance that is in dire need, considering all the work that you have been able to accomplish, the work that you’ve done at 55 Broad Street, as well as the Varick Street buildings, where technology entrepreneurs are coming in and finding a home. The same is true

with manufacturers and industrial businesses, and these are the providers that continuously give that lifeline to making sure that the businesses

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are surviving and creating jobs and retaining the jobs that we so depend on in the City of New York. So I hope that we can continue our conversations, and that you will have a conversation with OMB to convince them how important it is to your portfolio. Thank you. MR. PINSKY: Right, and I could not

agree with you more about the importance of the manufacturing sectors of the city, why we’re investing tens of millions of dollars in Sunset Park, in Hunts Point, in other locations, and I’d be happy to continue the conversation with you. CHAIRPERSON RECCHIA: Brooklyn, north Brooklyn. MR. PINSKY: And north Brooklyn. That would North

CHAIRPERSON RECCHIA: make the Chair happy.

Okay, before I turn it over

to Council Member Lander, I just want to just ask a question about the Comptroller’s report, because I looked at the report, I looked at the contract between the city and EDC, and I couldn’t quite understand what the Comptroller was getting at, considering that you were given the authority to do what he says you really can’t do in the

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EXECUTIVE BUDGET contract, between that. And the funding was

185

clearly … the funding over the years that was paid, because you did pay money every year, and so I just want to make clear, and did I miss anything, or is there something that the Comptroller was missing? Because I don’t

understand why and how he could come out with this report that is so misleading. MR. PINSKY: Well, I have enormous

respect for Comptroller Liu, we’ve worked very well together on a number of occasions. CHAIRPERSON RECCHIA: Yeah, we all

have a good respect for the Comptroller, but I’m a bit disturbed by this, considering the contract laid out exactly that you could do all these things. MR. PINSKY: Well, as I mentioned

to Council Member Reyna, in this case we fundamentally disagree with the conclusions that the Comptroller reached. We think that our

position is supported in law, and the Law Department has said as much in an opinion that they issued to us. So we feel confident that

we’ve acted appropriately, and that the money that

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we’ve retained has been used for the purposes for which it was intended, and has created substantially more in returns for the city over the period at question. CHAIRPERSON RECCHIA: Could I see,

could we see a copy of that opinion from the Law Department? MR. PINSKY: Sure. Or is that

CHAIRPERSON RECCHIA:

MR. PINSKY:

No, we’d be happy to. Was that

CHAIRPERSON RECCHIA:

opinion written before this report came out, or after this report came out? MR. PINSKY: Well, we consulted

with the Law Department in the past, just to insure that we were acting appropriately. When

the Comptroller launched his audit and it became clear to us that this would be one of his focuses, we asked the Law Department to formalize it, so we got a memo from them to that effect. CHAIRPERSON RECCHIA: a copy of that? MR. PINSKY: Sure. Could we have

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Chairman.

EXECUTIVE BUDGET CHAIRPERSON RECCHIA: to share that with us. MR. PINSKY: Sure. I’d really

187 If you’d like

CHAIRPERSON RECCHIA: appreciate that.

And I ask that you send it to Tanisha, Thank

myself and my counsel, Tanisha Edwards. stand up so everybody knows who you are. you. She does a great job.

At this time, it

gives me great pleasure to turn over to Brad Lander and then Margaret chin. COUNCIL MEMBER LANDER: Thank you,

President Pinsky, it’s nice to see

you here, congrats on your recent hire of my friend Josh Wallach as your COO. And I want to

thank you and your staff, especially, Andrew Genn, Venetia Lannon, and Josh Nachowitz, for the great tour they gave me of the Brooklyn Army Terminal and the Bush Terminal and all the investments that are going on in there, the investments in the rail infrastructure as well as in kind of manufacturing, it’s great to see. Just one little

contract related question, I’m just trying to understand, because when we were looking at the SBS budget, there still is a contract through

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which SBS pays money to EDC, yes, and that that’s being reduced this year, I guess, in addition, but that’s separate from the money that you’re additionally giving to the city in the PEG? MR. PINSKY: Well, Jason Wright is

here with me and he’s our Chief Financial Officer, he can answer in more detail. But we do receive

limited amounts of tax levy and other funds to subsidize very specific programs that the administration or the Council has decided should be funded through EDC by city funds. The amount

that we turn back and the amount that we produce ourselves is dramatically larger than anything that we receive. And then on top of that, we also

receive capital dollars from the city for some of our projects. But I don’t know, Jason, if you

have anything to add to that? MR. WRIGHT: Yeah, I mean, that’s

There’s … this year there’s a decrease

in CD funds for graffiti, but we’re trying to look at other sources to pay for that. There’s also

federal highway funds that is supplementing that CD, and they pay us a portion of the rent, we actually hold the lease for the building that SBS

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EXECUTIVE BUDGET And, you know, that’s what you

189

see, sort of the fluctuations year to year. COUNCIL MEMBER LANDER: And just

contractually, sort of related to the question of the contract, there are multiple contracts between EDC and SBS, and then a separate one that governs the payment of EDC moneys to the general fund? MR. WRIGHT: contracts with SBS and EDC. There are two There’s the maritime

contract which traditionally governs how we manage the waterfront properties in some of the markets. And then there’s the master contract that we have with the city that covers everything else that we do, including economic development and a whole host of other programs. And through the master

contract, the city will set what payments we make to the city every year. COUNCIL MEMBER LANDER: those things that we can get as well? MR. WRIGHT: The contracts? Yeah. And are

COUNCIL MEMBER LANDER: MR. WRIGHT: Sure.

COUNCIL MEMBER LANDER: be great, thank you.

That would

Okay, now for a minute I

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EXECUTIVE BUDGET have to channel my colleague, Council Member

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James, who I know appreciated your remarks at the beginning. I’m not sure that I can work up the

full level of Atlantic Yards-related bluster that she would have if she were here. I will say that

I’m glad that we’re not actually authorizing any new money for that project. In fact, as you

reported in the preliminary budget hearing that, of this reduction from $205 to $179. I guess just

one specific question, first, for the it looks like $40 to $50 million that we’re giving them for infrastructure rather than having the city spend on infrastructure itself, what’s the rationale for doing it that way? MR. PINSKY: The reason is that

most of this infrastructure abuts or is surrounded by the work that they are otherwise doing on their development. And so rather than having the city

have a contractor who is trying to work around or through the work that Forest City is doing, it made more sense just to have one contractor, the contractor that’s going to be in there anyway, doing that work. behind it. And so that’s the thinking

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EXECUTIVE BUDGET COUNCIL MEMBER LANDER: Okay, now

191

you spoke at one point about that project being more well-defined. On the other hand, you also

referred to three-year-old data on the net benefits to the project. The project has changed

substantially since 2005-2006, so how do you … why do we still have any reason to believe that the net benefits proposed … have you done some updated analysis that says that the net benefits of that project as substantially reduced, with a much longer construction timeframe, and with a lot of long-term uncertainty, still has the same financial benefit to the city? COUNCIL MEMBER LANDER: Yeah, first

of all, we don’t think that it’s a much longer timeframe. We think that the overall timeframe is

likely to be consistent with what had been assumed before. In fact, there are certain elements of For

the projects which have now been accelerated. example, with the arena construction as part of the final agreement with the SDC and the city,

Forest City has agreed to build the first building on the site within three years. That will include

about at least 50% affordable housing, and before

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EXECUTIVE BUDGET there was no requirement that they start any of the additional building that early.

192

In addition,

the way that the project has been structured, it makes it less and less expensive for Forest City to build the later phases, because they’re paying so much of the money up front. So we think that

they have a very strong incentive to build out that project over the same period of time that they have agreed to. We have liquidated damages

in the agreement if they don’t build certain parts of the project within certain periods of time, which gives us additional confidence as well. In

addition to that, what we’ve done is, we haven’t done a full re-analysis of the cost/benefit analysis that we did, but we’ve made sure that the changes in the assumptions have not gone against the city overall. And so, for example, between

the time that we did the original cost/benefit analysis and today, construction costs have increased. That represents a bigger return to the

city, because that means the taxes that they’ll be paying will be higher. We’ve also looked at the

cost of other aspects of the project, and those have changed in ways that are favorable to the

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EXECUTIVE BUDGET city’s cost/benefit analysis. They’re less

193

favorable to Forest City, which is one of the reasons why it was as difficult for them to get to the closing as it was. But the trend has been in

a direction that’s favorable to the city from a cost/benefit perspective. COUNCIL MEMBER LANDER: appreciate the answer. I

I would love at a

different time to get into this in a lot more detail. MR. PINSKY: Of course. It seems to

COUNCIL MEMBER LANDER:

me in part that the polarization surrounding that process obscured lots and lots of information being provided. So we haven’t had a hearing in

this body on the project since 2004? MR. PINSKY: Uh huh. And an It

COUNCIL MEMBER LANDER:

enormous amount has changed about the project. sounds like you have a great deal of information about it, that it would be great if we had. It

would be wonderful to know that in fact every time we’ve made a change, it’s been to the city’s benefit. I don’t know that that comports with the

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EXECUTIVE BUDGET public information that’s been available.

194 So it

would be great if there was some information that you could provide us on what that contract looks like, and I hope that we’ll have the opportunity at a future hearing to really follow up and dig down. MR. PINSKY: Great. And

COUNCIL MEMBER LANDER:

understand in a lot more detail where this project is. MR. PINSKY: And if there are

specific questions, just let me know and we’ll be happy to answer them. COUNCIL MEMBER LANDER: Okay. On-

CHAIRPERSON RECCHIA: How many more questions do you have? COUNCIL MEMBER LANDER:

(Interposing) Go ahead. Two more

CHAIRPERSON RECCHIA: We’ll let you go. COUNCIL MEMBER LANDER:

That’s okay.

On the

Brooklyn waterfront, as I mentioned it was great to see Brooklyn Army Terminal and Bush Terminal,

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and while I’m excited about some of the increased manufacturing and importing that’s coming into Pier 7 to 12, as you know, that’s not without some quality of life costs to my constituents, both as we’ve discussed in traffic from the Phoenix deal and in emissions from the cruise ship terminal. And I don’t see in the presentation anything like the level of quality of life investments in Pier 7 to 12 that have gone along with many of the beautiful pictures you showed us in other projects. even show. Sunset Parks got the park, which didn’t So I would just like to make an appeal

that as you’re thinking about your capital budget, in light of the increased activity at 7 to 12, as you’ve done in other places in the South Bronx, you know, and many of the other … and especially at Sunset Park, that we use of some of the both capital and operating resources necessary to make sure that increased manufacturing and importing activity not only doesn’t represent a quality of life reduction for local residents, but goes along with demonstrating that we can import, that we can manufacture, in a way that increases neighborhood quality of life, and invests in mixed use

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What I think you’ve done in a lot

of places, but I don’t think where we’re yet seeing it for the residents of Columbia Street and Red Hook. MR. PINSKY: And I think that’s an

excellent point, and first of all I appreciate very much your bringing it to our attention, the issues that your constituents have with the developments at Atlantic Basin, and we’re committed to working with you to try to solve those. And we agree that it’s very important not

just to increase economic activity, but to improve quality of life. That’s why we’re working with

DOT on the Greenway, which will not only go around but through parts of the facility that we have at Atlantic Basin. We’re working to give the

community access for the first time to the waterfront in Atlantic Basin, we’re hoping to have a plan for the upland parking lot and the Brooklyn cruise terminal, but we know that there’s more that we can do, and we’re more than happy to work with you on that. COUNCIL MEMBER LANDER: thank you very much. Great,

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you, Chair.

EXECUTIVE BUDGET CHAIRPERSON RECCHIA:

197 Let’s get him Boat

one of those moveable pools, you know. pools, he’ll be very happy. then Peter Koo. COUNCIL MEMBER CHIN:

Margaret Chin, and

Okay.

Thank I

Good afternoon, President Pinsky.

guess I just want to start off by thanking your staff for working with us to move the flight path of the Wall Street … the heliport, so that it would give us some peace and quiet in Brooklyn, and also in lower Manhattan. And also for all the

wonderful economic transformation projects, I mean, Hive@55 is such a busy center, and it’s really a success. I wanted to ask you some

questions about the East River waterfront, because it’s not in the physical transformation and I know a lot is going on there. So I really would be

interested in terms of the amount of money that’s being spent right now, and how it is being spent. Are we creating any numbers of jobs, local jobs, and also MWBE contracts that are generated from the East River waterfront, and also are there plans to really support small businesses and more public access to the waterfront and activities.

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EXECUTIVE BUDGET MR. PINSKY: Well, the esplanade

198

itself will certainly provide much better access to the waterfront, for not just the public at large, but in particular the residents of lower Manhattan, who until recently had very limited access on the East Side especially. The project

that we’re building will extend from the tip of the island up into Community Board 3, and will include Pier 35 on the north end. It will include

a few facilities for businesses to locate in, to provide services to park users. We anticipate

that we would issue RFP’s to find the operators for those facilities. And we are spending about

$150 million on the construction of this, so there will obviously be a substantial amount of construction jobs that will be created. of permanent jobs, I think it will be a combination of the small facilities in the park that I mentioned, but the real impact on jobs will be by creating a better space, and attracting businesses to the East River waterfront, which in turn will generate, we expect, many, many new jobs. I don’t have a specific analysis, because In terms

it’s a little bit hard, as you get away from

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EXECUTIVE BUDGET

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direct jobs into indirect jobs, it’s a little more difficult to forecast. But it’s clear to us that

in addition to improving quality of life, this will be a major economic development engine for the East Side of lower Manhattan. COUNCIL MEMBER CHIN: I think what

a lot of the community is concerned about is to make sure that whatever amenities that are put there are affordable. And then also it does

create opportunities for small businesses, and neighborhood residents, and of course definitely local jobs. MR. PINSKY: And just to be clear, There’s And that is

I mean, the park itself will be free. nothing more affordable than a park.

going to be the crucial part of what we’re putting in. And our goal would be in terms of the

businesses that would be located in the park, to put in things that are appropriate for the community, and that will be amenities to the community, and not just to people who come from outside of the community. COUNCIL MEMBER CHIN: Okay. I

mean, I would still like to really have a more

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 okay. question is- that. problem. would be good.

EXECUTIVE BUDGET specific breakdown in terms of the costs of the project. MR. PINSKY: Sure.

200

CHAIRPERSON RECCHIA:

If you could

get the costs for the Council Member and send them to her? MR. PINSKY: Absolutely. Yes, that

COUNCIL MEMBER CHIN:

CHAIRPERSON RECCHIA:

Have someone

call her from your office who is going to deal with this. MR. PINSKY: Happy to do that. CHAIRPERSON RECCHIA: To answer Yes, that’s not a

COUNCIL MEMBER CHIN:

One last

CHAIRPERSON RECCHIA: Take your time. COUNCIL MEMBER REYNA:

(Interposing)

… on the …

I know that you have done investments on I mean, Essex Street

markets, which is great.

Market has really transformed from the past and a

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EXECUTIVE BUDGET lot more small business has been able to locate

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there, and you have much more diversity and really interesting food items, and also some, you know, famous little place where there’s cheese or sandwiches that is also quite expensive. least it’s new business there. CHAIRPERSON RECCHIA: neighborhood could afford it. COUNCIL MEMBER CHIN: Yeah, but I Your But at

just want to ask about in terms of future investment. I mean, is EDC considering like

helping to really create market space at South Street Seaport? I mean, our Speaker talked about

it in her State of the City speech, that we really want to bring a first class market, public market, to the Seaport, and would EDC really help to facilitate that role? MR. PINSKY: That’s certainly And in

something that we be interested in seeing.

the plans that have been developed by GGP, there was a notion of a marketplace as part of those plans. Seaport. As you know, we don’t control South Street We own, the city owns the property under

South Street Seaport, but it’s under long-term

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Island? lease to GGP.

EXECUTIVE BUDGET

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GGP, because of investments that it

has made elsewhere, entered bankruptcy last year. It’s now emerging from bankruptcy and our … we believe that they’ll be focusing fairly soon on a new plan for the Seaport, and we certainly would be happy to work with you to encourage them to have a marketplace as part of that. In the

interim, partially as a result, I think, of the work that you and the Speaker have done, and as well conversations that we’ve had with them. are opening another interim marketplace at the former Fulton Fish Market this summer as they did I believe last summer. There will be twelve They

vendors there, I think it opens at the end of this month, and will be open into the fall a couple of days a week. But we’d be more than happy to work

with you to work on something more permanent once the new plans are unveiled for the Seaport. COUNCIL MEMBER CHIN: question is on Governor’s Island. CHAIRPERSON RECCHIA: Governor’s Okay, last

COUNCIL MEMBER CHIN: CHAIRPERSON RECCHIA:

Yes. That’s a lot

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of questions.

EXECUTIVE BUDGET

203

COUNCIL MEMBER CHIN:

Well, it’s

being transferred over to city control, and in the earlier hearing, the Department of Small Business didn’t know if the money was coming out of their agency, and we thought it was coming out of their agency, and we’re very concerned that their budget for business development is cut in half because of the Governor’s Island budget. So I guess my

question to EDC is, what is your role in terms of helping to develop Governor’s Island? I assume

you should play a major part in that, and also is there budget allocated from your budget to help manage the city’s control of Governor’s Island? MR. PINSKY: Sure, and Jason can I

explain to you how the money is likely to flow. don’t know that it’s been concluded yet, because we’re still finalizing the agreements with the State.

But there will be a separate entity that’s

set up that will basically mirror the entity that currently exists, GIPEC, which is a subsidiary of Empire State Development. That will be primarily

responsible for building out and developing the park. That entity will likely report directly to

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EXECUTIVE BUDGET the Deputy Mayor for Economic Development, and

204

therefore will be more of a sister agency to us. We expect to be involved, as other agencies in the city will be, as the plans are developed and the site is built out. But it’s likely that the final

decision making will come from the Deputy Mayor’s office, not from EDC. But we work very

cooperatively with Leslie Koch at GIPEC, and we expect to work with her even more cooperatively once she’s inside the city’s family. And Jason

can tell you a little bit about how the funds will probably flow. MR. WRIGHT: Sure, I mean, how they

had traditionally worked when GIPEC was under the State, is Governor’s Island actually entered into a funding agreement with EDC, and for the city’s portion of the operating funds, or if there’s a capital investment, we provided that money to Governor’s Island. And as Seth had described, the

new entity will probably be similar to EDC and how it’s created, they’ll have a contract with the city, most likely through the Department of Small Business Services, or the Parks Department, and then there will be a direct contract. That’s how

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET they’ll receive their city funding. CHAIRPERSON RECCHIA: COUNCIL MEMBER CHIN: city funding coming from? Okay.

205

Where is that

Is that going to come

from the administration or is it going to come from EDC? MR. PINSKY: city capital money. No, it will come from

And it should- (Interposing)

COUNCIL MEMBER CHIN: But what about the expenses? MR. PINSKY:

The expense money will

likely flow through the administration, through the city budget as well. So there, as Jason was

saying, I think as I said, all this is still being finalized. There will be a direct contract

between the new entity and a city agency, and whichever city agency it is, not EDC, will have the money flowing through its budget into the Governor’s Island entity. CHAIRPERSON RECCHIA: Council

Member, we could sit down with you and explain exactly how that will work. COUNCIL MEMBER CHIN: want to make sure- Yeah, I just

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all right.

EXECUTIVE BUDGET CHAIRPERSON RECCHIA: My staff and I. COUNCIL MEMBER CHIN: … that the

206 (Interposing)

money is not taken away from the small businessesCHAIRPERSON RECCHIA: (Interposing)

You want to make sure that the money is there, right? COUNCIL MEMBER CHIN: CHAIRPERSON RECCHIA: Yeah. No, we could

definitely … but we will definitely sit down with you and explain to you how it’s all going to work. COUNCIL MEMBER CHIN: Yes, that’s

CHAIRPERSON RECCHIA: definitely help you on that. COUNCIL MEMBER CHIN: last point on Governor’s Island. CHAIRPERSON RECCHIA: COUNCIL MEMBER CHIN:

Okay, I’ll

I think one

Sure. Is that

they’re creating this new entity, and as far as I know, there is no input or no representation from the City Council. So I think that the City

Council should have some representative on the

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 entity.

EXECUTIVE BUDGET

207

CHAIRPERSON RECCHIA: going to be a governing board? MR. PINSKY:

Is there

There will be, and I …

I don’t remember, I’ve seen the document that created it, I don’t remember who’s on the board, the agency- COUNCIL MEMBER CHIN: (Interposing)

Yeah, I don’t remember anybody from the City Council. CHAIRPERSON RECCHIA: COUNCIL MEMBER CHIN: Could we- (Interposing)

Because they even have the community board. MR. PINSKY: Yeah, we’ll have to

get the information from the Mayor’s office, but we can do that. CHAIRPERSON RECCHIA: information from the Mayor’s office. MR. PINSKY: Sure. And get back Get the

CHAIRPERSON RECCHIA:

to us, because … and I think you should open up your hearts and put somebody appointed by the Council Member, just like we did in Coney Island. We made up the local development corporation and

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very much.

EXECUTIVE BUDGET the City Council had three seats.

208

So if you could

do something like that, and accommodate the Council Member, that would be greatly appreciated. MR. PINSKY: to the Mayor’s office. COUNCIL MEMBER CHIN: thank you, thank you, Chair. CHAIRPERSON RECCHIA: Well, you All right, I will pass that along

never know, you might be the next deputy mayor, so you don’t know. But we would definitely like to

follow up with you, Mr. Pinsky. MR. PINSKY: Of course. Of course,

CHAIRPERSON RECCHIA:

that’s an issue that’s very important to the Council Member and to this Finance Committee. further questions? COUNCIL MEMBER CHIN: No, thank you Any

CHAIRPERSON RECCHIA: Member Peter Koo, from Queens. COUNCIL MEMBER KOO:

Okay, Council

Thank you, Mr.

Chair, and Mr. Pinsky, welcome to City Council. MR. PINSKY: Thank you. I’m hoping

COUNCIL MEMBER KOO:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET

209

that we have more agencies like you that will make money for the city, instead of spending money. have two quick questions. You mentioned in your I

statement that over a thousand New Yorkers joined these two entrepreneurship training programs, and can you give me a little detail on this and how they can join? Because my office has no

information on this. MR. PINSKY: three programs. Sure, it’s actually

Two of them are run by the

Department of Small Business Service with the Kauffman Foundation. called Head Start. And those programs are And those programs are for

people who have never started a business, who are looking to start businesses, and they learn kind of how you write a business plan, how you raise capital, structuring questions. And then the

second program is for people that have started businesses but have never been through a downturn, how do you navigate a downturn. I’m sorry, it’s The second

called Fast Track, not Head Start.

program … I’m sorry, the third program is called Jump Start, and that’s administered by State University of New York, the Levin Institute, in

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET cooperation with EDC. There what we do is we create classes of about 50 people, who are all laid off from large corporations. We put them

210

through a ten day boot camp, where they learn what it’s like to work at a small business, and then we match them in an unpaid internship with small businesses. And the advantage for them is that

during the downturn they learn new skills, they have something to do. And the advantage for the

small businesses is that they’re getting very experienced workers come to work for them for no cost. And what we found, at least in our first

round, is that about 50% of the people who started in non-paying relationships ended up in paying relationships with those businesses. In terms of

getting information about those programs, what I recommend is that, I’ll give you my card after this, and if you want to have someone from your office contact me, I can put them in touch with the people who are running both programs, and we’d also be happy to come to your district and talk to local entrepreneurs to tell them about the program. COUNCIL MEMBER KOO: Okay, thank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of businesses. the land. you. Point.

EXECUTIVE BUDGET My second question is related to Willets Right now how many businesses have you

211

acquired already? MR. PINSKY: Well, we’ve acquired

COUNCIL MEMBER KOO: MR. PINSKY:

The land.

We agreements with the

owners of the land under about 75% of the first segment of Willets Point, and somewhere, I forget the exact number, it’s between 60% and 70% of all of Willets Point. And so it’s a significant

portion of the businesses that are in Willets Point, but with the vast majority of them, they are still in place at Willets Point. We haven’t

told them that they need to relocate, and we pledged to give them ample warning before we ask them to relocate, and we’ll provide them with assistance to make sure that they can relocate somewhere without disrupting their business. COUNCIL MEMBER KOO: And how many

businesses refused to negotiate or they gave you a very hard time, they don’t want to move? MR. PINSKY: There’s a small number

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET COUNCIL MEMBER KOO: percentage of them? MR. PINSKY: Yeah, I mean, it’s What’s the

212

clearly less than half, significantly less than half. I would guess – and this is just a guess –

I would guess it’s probably somewhere between 10% and 20% of the businesses have flat out said that they’re not willing to negotiate with us. Our

hope is, though, that over time as they see that the project is moving forward, that even with respect to this core of businesses, that we’ll eventually be able to reach agreements with them too. COUNCIL MEMBER KOO: And at the end

… no, are you willing to use like eminent domain to evict them? MR. PINSKY: Well, when the ULURP

was passed, one of the authorities that was given to the city was the authority to use eminent domain. We made a pledge to the City Council that

we were going to do everything that we could to avoid using eminent domain and we still intend to do that, and as I mentioned, we already have agreements with more than half of the land … the

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 goal.

EXECUTIVE BUDGET owners of more than half of the property.

213 At the

end of the day, if there are one or two or three holdout businesses that are preventing us from completing the project, we’re not going to allow those businesses to stop us. We’ll use the

eminent domain procedure, which involves legal protections for these businesses and involves fair compensation of them, but we will move forward with the project. COUNCIL MEMBER KOO: Yeah, I hope

in the end the city will negotiate in good faith with all these businesses, and help them relocate and pay them fair compensation. MR. PINSKY: That is entirely our

COUNCIL MEMBER KOO:

Because as a

property owner myself, I have a business, I don’t want the city to come in and tell me, you know, you cannot continue business here, and we will evict you. So at the end I want you to do

negotiations in good faith, and pay them fair market price for their land values and at the same time find them a location so that they can do their business. Because otherwise the workers

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET have no jobs, and it’s bad for the city and bad for them. MR. PINSKY: that is our intention.

214

I appreciate that, and

Our goal is to reach

negotiated settlements with everyone, and our goal is to create jobs. COUNCIL MEMBER KOO: Then one final

question is, you mentioned we are going to create a bio-center in the city, and is this going to be similar to Research Triangle or Silicon Valley in California? MR. PINSKY: Yeah, you know, New

York City does very well on two ends of the spectrum. In bio-science we are the headquarters

for a number of the largest pharmaceutical companies in the world. And then we’re also a

great center for basic research and development. But where we haven’t done as well is keeping the businesses that come out of our hospitals here in New York. So we’ve been investing in a number of

new wet lab facilities, there’s one on the East Side of Manhattan, there’s one in Sunset Park that we just announced an agreement for. We’ve also

been working to expand the incubators, we’re

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET investing $10 million in an expansion of an incubator at SUNY Downstate in Brooklyn.

215

And the

goal is to create an ecosystem throughout the city of bio-science companies because we have all of the raw ingredients here, and we do well, but we don’t do as well as we should be doing. So

Research Triangle is a great analog to where we would like to eventually be. COUNCIL MEMBER KOO: Yeah, I agree

with you, that we have the great universities, the best medical centers here, and we have so many research, pharmaceutical research companies in this area. So I hope in the future the City

Council will work with you, together we will build a first rate bio-center. MR. PINSKY: Thank you. And

incidentally, the R&D tax credit that the City Council passed last year has been very helpful in creating that, so thank you. CHAIRPERSON RECCHIA: COUNCIL MEMBER KOO: CHAIRPERSON RECCHIA: All right. Thank you. Thank you.

Since no more Council members have any questions, I just want to say that we’ll be following up with

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 year, no.

EXECUTIVE BUDGET a letter to you on some questions. But I just

216

have one last … two questions to follow up with. And getting back to the contract of the Comptroller, and looking at the contract and what the Comptroller came out with his report, and has the Comptroller registered this master contract which has to be registered? master contract yet? MR. PINSKY: Not for this coming Has he registered the

CHAIRPERSON RECCHIA: registered it for this coming year? MR. PINSKY: submitted it yet.

He has not

Yeah, we haven’t

But … so this, the fiscal year

that we are in was registered by the Comptroller last year, Comptroller Thompson, and as the fiscal year ends, we’ll be submitting our new master contract to the Comptroller, Comptroller Liu, in the hope that he’ll register that as well. CHAIRPERSON RECCHIA: Do you think

he’s going to register that contract? MR. PINSKY: It’s been registered

for the past 17 years, my hope is that it will be registered. My- -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXECUTIVE BUDGET CHAIRPERSON RECCHIA:

217 (Interposing)

And if he doesn’t register the contract, what effect would that have? MR. PINSKY: Well, it’s a highly

speculative question, but if the Comptroller weren’t to register EDC’s contract, EDC wouldn’t be able to perform its economic development mission. CHAIRPERSON RECCHIA: many projects be in jeopardy? MR. PINSKY: Yes. And that And would

CHAIRPERSON RECCHIA:

means many projects, like affordable housing, would not be built because of the Comptroller? MR. PINSKY: If that were the

reason, then the projects would not move forward. Our hope is that we’ll be able to have the contract registered, as it has been for each of the last 17 years. CHAIRPERSON RECCHIA: Are you aware

of any contracts now being held up by the Comptroller’s Office? MR. PINSKY: Not that I’m aware of,

no, but that doesn’t mean one way or another, I

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

EXECUTIVE BUDGET just am not aware of any. CHAIRPERSON RECCHIA: Okay.

218

I just

want to thank you, and I hope you can resolve this issue, and I hope John Liu, the Comptroller, registers the master contract, because that would be, you know, a great tragedy to the city, to see these projects go down. But without any further

questions, my co-Chair, Diana Reyna, we thank you. We’ll be working with you and we’ll be following up with a letter. MR. PINSKY: Thank you. This hearing

CHAIRPERSON RECCHIA:

of the Executive Budget 2011 is closed.

219 C E R T I F I C A T E

I, Richard A. Ziats, certify that the foregoing transcript is a true and accurate record of the proceedings. I further certify that I am not related

to any of the parties to this action by blood or marriage, and that I am in no way interested in the outcome of this matter.

Signature_______

________

Date ________May 31, 2010________________