COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, October 25, 2005 10:15 a.m. - - - Resolution No. 050844 PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILWOMAN DONNA REED MILLER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO RESOLUTION 050844 - Resolution authorizing Philadelphia City Council's Committee of the Whole to hold public hearings on the Board of Revision of Taxes's proposed change in property tax... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. This is a public hearing of the Committee of the Whole regarding Resolution No. 050844. I would ask Mr. McPherson to please read the title of the resolution. MR. McPHERSON: Resolution 9 authorizing Philadelphia City Council's Committee of the Whole to hold public hearings on the Board of Revision of Taxes's proposed change in property tax assessment, known as "full valuation," the policy's need and fairness, its effect on taxpayers, and possibilities of mitigating large tax increases.
Thank you very much. I would like everyone to know that today we are going to simply hear from the BRT and the Administration, and we will then continue the hearing to another date. So everyone is welcome to stay; however, if you have other business and you think you're going to be called 3 10/25/05 - WHOLE - RES. 050844 today for testimony, I just wanted to make the announcement that it will just be the Administration testifying. At this time, the Chair recognizes Councilman DiCicco.
Good morning and thank you, Madam President, and good morning to everyone who is in attendance today. I just have a brief opening remark to hopefully set the tone for these hearings over the next three days, or actually over the next week or so, but three days of hearings. For the past several weeks, my staff and I have met and spoken with various experts, interest groups and constituents regarding the Board of Revision of Taxes' Full Value Project. We have run numbers and looked at exactly what effect this proposal will have on various neighborhoods. We have researched other cities' and states' property tax relief. We have explored possible buffering techniques, like 4 10/25/05 - WHOLE - RES. 050844 circuit breakers, deferrals, caps, homestead exemptions, truth in taxation programs and phase-ins. We have talked, read and calculated, and after all of it, one thing is abundantly clear, this whole topic is pretty damn complicated. So that's why I called for this hearing, to gain clarity and dismiss misconceptions, to ask questions and hopefully get answers. Questions like, What exactly is Full Value Project and what does it mean to various neighborhoods throughout the City? Why is the BRT proposing full valuation? How will properties be assessed and how can we guarantee that those assessments are accurate? Will we commit to our constituents that we will not take this opportunity to fatten the City's coffers or increase our debt service? Will we promise to lower the tax rate to an appropriate level, and what is that level? Will we guarantee the proposal to be revenue neutral? What does revenue 5 10/25/05 - WHOLE - RES. 050844 neutral mean? Will this proposal have a negative impact on the real estate market and further force the middle class out of the City, or will the full valuation harm small business or further hamper our efforts to bring new businesses? Most importantly, how can we protect those who will see dramatic increases in their property tax bill? How can we protect seniors and others on fixed incomes? How can we protect the working poor? My constituents and I, as all of us, are asking all of these questions and more. This must not become a political exercise to make people feel good or bolster our own political careers. Political answers to real questions and fears will only damage the long-term future of Philadelphia. Instead, we must find real answers and we must propose workable appropriate policies for the coming tax year. To the witnesses that have 6 10/25/05 - WHOLE - RES. 050844 agreed to testify, I thank you and look forward to your expertise. Finally, I look forward to tackling this issue with the cooperation of my colleagues and the Administration. By working together, we can address our constituents' fears while building policies for the City's long-term fiscal health. Thank you.
Thank you. Councilman, was it your intent to also have the experts testify today or on the 27th?
Very well. Thank you. Good morning. Welcome. Mr. Glancey, I would ask that you introduce yourself for the record and proceed with your testimony.
Thank you. Good morning, Council President Verna and 7 10/25/05 - WHOLE - RES. 050844 members of City Council. Before I begin the testimony this morning, let me just introduce a few folks so you know who is with the BRT this morning. Sitting at the table with me is the Vice-Chairperson of the Board, Charlesretta Meade, and the Secretary of the Board, Robert Nix. Also, we have other members of the Board here. We have Board Member Harvey Levin, Dveral Silberstein and Joseph Russo, and we have the Executive Director of the Board here with us today, Ricky Foglia. There's two vendors I would just like to introduce to you, because they're very involved in what we're doing with the Full Value Project. First, our data conversion partner and someone who has partnered with us on our website in the past is Ben Barnett from Media Bureau Professional Services, a local software firm and a computer firm. And, finally, we have the representatives from Colorado CustomWare, Inc. here today, and the 8 10/25/05 - WHOLE - RES. 050844 President of the firm is Lori Schlotter, and she is here, and the Project Manager for this project, Nancy Roldan is here, and all of those folks will be happy to answer any questions. We can make room 7 for them here at the table if anybody has any questions about their particular processes. So with that, on behalf of the Board of Revision of Taxes, I applaud City Council for its willingness to open a public dialogue on the issue of full market valuations of real property, what we call the Full Value Project. Let me say at the very beginning of this testimony that we're not here to raise anyone's property taxes in the City of Philadelphia. That's not our job at the BRT. We don't decide whether property taxes rise or fall. That difficult job belongs to the Mayor and to you fine ladies and gentlemen on City Council, because the Mayor and City Council set the tax rate for the City. 9 10/25/05 - WHOLE - RES. 050844 At the BRT, our job is to determine property values for all 568,000 commercial and residential properties in the City of Philadelphia. Setting values is all we do, and what's more, we're required by state law to do that. So at the outset, I want to be very clear about why the BRT has launched the Full Value Project. State law requires the BRT to value all properties in the City at full value. We don't decide tax policy. We merely help you define the parameters of the tax debate by setting values as accurately as possible. And make no 17 mistake, the most accurate valuation we can achieve is to value properties at their full market value; in other words, what a property would sell for on the open market. It simplifies the process and makes it easier to understand. Most property owners know the value of their property. The Full Value Project is based on that simple 10 10/25/05 - WHOLE - RES. 050844 understanding. The market value of your home or commercial property in Philadelphia now will become the basis for your property taxes as well. No more complicated formulas or fractional assessments to try to calculate property taxes. With full value, the equation is simple: Market value times the tax rate equals property taxes on any property in the City. As I said, full value is state law in Pennsylvania. Nearly 40 percent of all Pennsylvania counties use this method, including our neighbors in Chester, Delaware and Montgomery Counties. We now have the resources and state-of-the-art technology to achieve full value, and that is why we're moving ahead with setting accurate property values throughout the City. Just a quick commercial about the technology. Earlier this year, after reviewing proposals from many of the most 11 10/25/05 - WHOLE - RES. , to help us design, install and run a state-of-the-art Computer Assisted Mass Appraisal system. The so-called CAMA system will allow us for the first time to set and maintain accurate property values for all 568,000 properties in the City.
4 million over four years, particularly since other municipalities and counties have paid millions more than we will pay to implement full value appraisals. I'd also, just as an aside, I'd like to note that Colorado CustomWare, Inc. is an accredited WBE. It is a 100 percent-owned women's business enterprise. As I said, full value is the act of setting market value rates on all 12 10/25/05 - WHOLE - RES. 050844 properties and maintaining those values from year to year. Since real estate taxes are based on multiplying the property value times the tax rate, starting in 2007, the value is one half of the equation: Market value times the tax rate equals property tax. This fundamental reform of the system makes it easy to understand and improves taxpayers' confidence by making property valuations fair and uniform. In response to some of the points that Councilman DiCicco raised, what full value is not is a back-door tax increase or an attempt by the City to cash in on a hot real estate market or an unfair tax on senior citizens and the poor, because full value is merely about setting accurate property values. In doing so, we make it clear that responsibility for all decisions concerning property values rests with the BRT. Responsibility for taxes rests with the City's elected officials. 13 10/25/05 - WHOLE - RES. 050844 What will happen as a result of full value? 8264 per $100 of assessed value. And as we go through this, there are charts that I've attached to the back of this testimony where we can see that in a dramatic fashion. The policy question that you control is, how much does this tax rate decrease. It is possible to reduce the rate to a level that would make full value revenue-neutral; that is, reduce to a level where most properties would see either modest decreases or no changes at all in their taxes. Yet, there is no question that full value will cause increases for others, especially those whose properties have been severely undervalued for many years. The question for these 14 10/25/05 - WHOLE - RES. 050844 properties will focus on whether tax increases should be phased or buffered to prevent property tax sticker shock for homeowners. Let me be as clear as I can be. As the Chairman of the BRT, I have no 8 opinion on how City Council and the Mayor choose to set the tax rate. That is your job. But as a Philadelphia taxpayer, I am just as concerned as all of you in making sure that the tax system we create is fair, uniform and affordable. And even though full value does not begin until 2007, the time to begin thinking about these issues is right now. I'd like to turn to the charts. If I could ask Joe Faraldo, if you don't mind, would you please go up. First of all, I think we have to move it closer so that everybody can see. If you can move the whole apparatus closer. However, as I said, in the back of the testimony, there are copies of those charts. Can you see now, 15 10/25/05 - WHOLE - RES. 050844 Councilwoman?
I'm going to work off the copy, because it's a bit hard to see. The first two charts that I'm going to show you, these are slides that have been on our PowerPoint for over a year and a half. These are slides that I've taken out to or community 12 organizations. So the reason I say that 13 is that a couple of the numbers are 14 somewhat dated, but we're not here to 15 talk about those numbers specifically. We're really here to talk about the concept behind those numbers. If you would turn to on the chart where it says 2005 and look at the total market base, it is 30 billion 9, roughly. That number was created in 2004. It's somewhat higher today. 08264. So if we take 32 percent of the 30 billion 9 16 10/25/05 - WHOLE - RES. 050844 and multiply it by the millage rate, the entire tax base yield for the property taxes -- and this includes the School District and the City. 7 million in tax yields. If we move over to the 2007 hypothetical, you see the total market value base of about 42 billion 7. We simply added 30 percent on top of the 30 billion 9, kind of a quick and dirty calculation just to give you the sense of what 2007 may be. Again, I believe that will be a higher figure. The ratio is now one to one. It's 100 percent. 9 mills roughly, 1909 mills. You can see, that's a dramatic reduction. That's 17 10/25/05 - WHOLE - RES. 050844 about an 80 percent reduction in the current millage rate. If we can go now to Chart No. 5 2, Joe, if you're around. Joe, if you go to Chart No. 2. This chart is something that folks in the community groups I've attended really understand well. " That's currently happening. That's a real number and that's what happens today. Now look at the house -- we read this going across the top of the chart. Let's assume in '06 that the house valued at $100,000 is really a $125,000 property or it's 80 percent of what the full value is. So in '07, it's going to be valued at $125,000. I'm using the hypothetical 1909 millage rate from the chart before, and as you see, I will use that throughout. 18 10/25/05 - WHOLE - RES. 050844 You note that the taxes on that property in '07 will be $2,386, about a $300 savings from what it is currently in 2006. The second property is kind of the great middle where we have the City-wide average being somewhere in the 70, 71 percent of market value to actual sale price. Again, a $100,000 property is in fact worth $140,800, almost $141,000. Significant increase in value. Using, again, the hypothetical millage rate that we extrapolated, the taxes on that property will be $2,687. Basically a wash from what they are paying in '06 to what they would pay in '07 under the full value example I'm using. Thirdly, this is an example of what we call the severely undervalued property. In '06, it's a $100,000 market value, but it's really a $200,000 property, and so, therefore, it's 50 percent under value. We take that 19 10/25/05 - WHOLE - RES. 050844 $200,000 property value in '07, multiply it by the hypothetical tax rate of 1909, you see there is a property tax increase in that property. It's about a $1,200 increase to 3,818. Two observations I would make. Number one, we have to be there anyway, and under the current system, taxes on that property, if we have to be there anyway, would be double what they're paying today. It would be over $5,300, if we moved it to $200,000 and used today's tax rate, with our same fractionalized system that we're doing today. The other thing I might add is that this is something that we're going to be talking about, I suppose, during the questions and answers, is there may be tax buffering. There may be methods within which that kind of dramatic increase can be softened at least over the first several years. And the final chart that we 20 10/25/05 - WHOLE - RES. 050844 have, if you can move that, Joe, this is a chart we prepared specifically for this hearing, and we did this to show dramatically that it's all about the tax rate.
First, just please look at the asterisk at the bottom of the page. 32, times the tax rate. If we take a $250,000 property and simply at 100 percent use the current tax rate -- I did this, as I said, to dramatically show you why the tax rate is so important -- that taxes would be over $20,000. I'm sure that nobody wants that to happen and nobody here is suggesting that something like that could happen, but I just use that as an example to show the dramatic differences that you could have when you look at No. 2. Look at the second line where it says "2007 full market value," using the same 21 10/25/05 - WHOLE - RES. 050844 hypothetical millage rate that we have used in the other two charts. The 2007 taxes would be $4,772. A small increase, about a $70-some increase from what it is in 2006. And we put down the third rate of mills, again, simply as an 9 illustration to show what -- that is all 10 about the tax rate, how important it is. 11 And the reason we put down the 15 mills 12 is because I think that the higher the 13 taxable assessed value -- in our example, 14 we're using like $42 billion. I believe 15 it will be higher. The higher the taxable assessed value, the lower the millage rate can be to make it revenue-neutral. I'm going to go back to my testimony now, if I can find the where I was. During the past year, BRT employees have been collecting, reviewing and verifying data on property characteristics that impact value all 22 10/25/05 - WHOLE - RES. 050844 over the City. We've had teams of evaluators in neighborhoods looking at properties from street level. We've employed Pictometry, a system that allows us to accurately view external property conditions from aerial photographs, and we've been building the CAMA system and making it work in conjunction with the City's other computer systems. Next year, we begin testing the entire process, with the goal of going live with full value in 2007. And the next part of this testimony I think is very important for -- Councilman DiCicco, certainly you've raised some of these issues, and Councilman Kenney has. Let me assure you that our goal is to switch to full value only when we're sure the system works. The mantra we've been using is, we want to get it right before we get it fast. We believe that our aggressive schedule is one we can meet, and we are 23 10/25/05 - WHOLE - RES. 050844 pushing very hard to make that schedule. However, the system must work before there's any changes in the system. We're going to take our time, if we must, and we're going to get it right. Taxpayer confidence in this system demands nothing less than complete accuracy. When full value begins, it will be a very good thing for Philadelphia. It will make the property tax system easier to understand: Market value times the tax rate equals property taxes. It will create an accurate set of values for all City properties, one that can be maintained every year thereafter. The appraisals will be fair and reliable, and taxes that are built upon those valuations will be more predictable and equitable as a result. Most important, it will place decisions about tax policy where they belong, in the hands of our elected officials. Full value in this sense is really a building block for comprehensive 24 10/25/05 - WHOLE - RES. 050844 tax reform. Decisions about reducing any of Philadelphia's other taxes, wage taxes, for example, or business taxes, are dependent, to a great degree, on the amount of revenue the City collects in property taxes. As the Tax Reform Commission concluded when it recommended market rate valuation for all properties in Philadelphia, these types of tax-shifting issues require accurate property valuations as the starting point for any reform. We recognize that this is an issue that people feel passionately about.
We've been organizing and participating in community meetings throughout the City this year, and I can assure you that when it comes to property valuation and property taxation, people care very deeply about the impact of any change whatsoever. At the BRT, we welcome this debate. It's long past time for 25 10/25/05 - WHOLE - RES. 050844 Philadelphia to simplify its property tax system so that our citizens can understand and have confidence their taxes are being set in a fair and uniform manner. I applaud the members of Council and the Mayor for engaging the public on this issue. It is time for full value in Philadelphia, and the more people can learn about it, the better off we'll all be, government and taxpayers alike. And with that, I thank you for listening to our testimony today, and we are here happy to answer any questions that you may have.
Thank you very much. Mr. Glancey, you state in your testimony that state law requires the BRT to value all properties in the City at full value. Will you explain what full value is?
And are you also insinuating that the BRT has not been in compliance with state law until now?
Well, I think that's a great question. Number one, what the statute says is that all property within the county, now or hereafter made taxable by law, shall be valued by the assessors and assessed by the Board at the actual value thereof. In arriving at actual value, the county may utilize the current market value or may adopt a base year. So it says that we should value properties at their actual value. Sales are not controlling, but they indicate what actual value is. And what we've done in the past is, what we've attempted to do is to take the actual value of property and when we've taken the actual value of property, we've taken a percentage of that actual value uniformly across the City and then 27 10/25/05 - WHOLE - RES. 050844 have used the fractional 32 percent ratio in order to find our taxable assessment. If you're asking me whether we were not in compliance, I think in the very literal sense we probably were not. We probably should have been at 100 percent of value since this Act was passed, but we believed we were in compliance because we treated all properties uniformly. And with that, I think at least we were trying to comply with the spirit of this statute.
I think you said something about the base year. What do you mean by "base year"?
What the statute means by "base year" is, that is, you can take a given year. Let's say you take this year's value, 2006 value, and you use that as the base valuation going forward, and you increase the values based on, I guess, inflation or other kinds of sales activity that takes place on top of that base year. 28 10/25/05 - WHOLE - RES. 050844 There is taking place in Allegheny County now, there is discussion about what the base year means, and what they're saying base year means is, it's frozen at the level of the base year. I think they're absolutely wrong in that and I think it will probably end up in court. You really can't freeze assessments in the Commonwealth of Pennsylvania. So a base year is simply let's take a value, whatever the value is on a property this year, use that as the basis for any increases that go forward.
Mr. Glancey, why do you believe that the BRT is now able to move to full value while in the past you were not able to do so?
Well, a couple of really good reasons. One, thanks to you folks and the Mayor, you've helped us with the ability to buy some technology that currently exists that has never existed in the past. 29 10/25/05 - WHOLE - RES. 050844
I'm sure you won't be, Councilwoman. The technology today is just so far advanced from what it was four or five years ago. So the funding and the technology, we believe, are the best answers to your question that we can. With the help of our partners in doing this, we will certainly be able to get the best possible and most accurate values on property today.
Can you tell us for the record what is spot assessment? What factors other than sales do you take into consideration when valuing a property?
The definition of spot assessment is to treat one property of a group of properties in a different way. It usually means to increase the value of one property in that group so that it is not uniform with all the other 30 10/25/05 - WHOLE - RES. 050844 values in that group. Other than sales, we take into consideration all the property characteristics of a property. What we will do is, say, if a home has a deck or a home has a fireplace or a home has a kitchen -- I'm sorry; kind of a new kitchen, a rehabilitated kitchen or a rehabilitated recreation room, we will find properties that sell with those amenities. And if you have enough of those properties and you group them together, you can then take those amenities and put a value on each one. So that, for instance, a home that sells with a fireplace might be $5,000 more than a home that sells without a fireplace. So, in a sense, we use a statistical model based upon what the home sells for, breaking out that model, breaking out the characteristics in that model, and then doing something that's called a regression analysis to see what each of those particular 31 10/25/05 - WHOLE - RES. 050844 elements add to the valuation of a property. And I'm sorry. I'm talking really about residential properties. I want to say this for the record: We're really speaking about residential properties. For commercial and industrial properties, the valuation process is entirely different. And so while I'll talk primarily about residential properties now, if commercial and industrial properties are to be talked about, we should actually talk about the income approach to value and the cost approach to value.
Thank you. This is a follow-up to your question, because I pretty much had the same question. Do you basically start from a particular size and then work yourself out? I mean, is there one standard value 32 10/25/05 - WHOLE - RES. 050844 of one home? Does size come into it? I mean, other things other than -- I'm trying to just figure this out.
The location. Location is the biggest additive or detractor from value in any residential property. And then from location, you start to look at the amenities, the exterior amenities first, whether it be a brick or a wooden house, whether it has a lawn, whether it doesn't have a lawn, whether it has a garage or doesn't have a garage or it has a deck, doesn't have a deck. And then when you have the correct data, when you have the data that's necessary for the interior of the property, then you look at that as well. Is this a property that has been completely rehabbed or is this a property that is in the same shape it was since 33 10/25/05 - WHOLE - RES. 050844 1965 when it was purchased by the homeowner. So you really look at all those things. Let me just back up for one second. We have broken the City down into over 600-some units that we call geographic market areas. I guess a way of thinking about that would be neighborhoods, although we don't use the term "neighborhood" because everybody's definition of neighborhood, where the boundaries are, is different from everybody else. We've broken down the City into these units where we believe we're comparing -- the best we can do is to compare apples to apples, the most homogenous type of properties to other homogenous type of properties, and then look at the sales and then look at the other things around those sales that will add value to the properties. And then with all that information, we then must model that. 34 10/25/05 - WHOLE - RES. 050844 Because remember what we're talking about. There are 568,000 properties in the City, and over a year, you may see 30,000, 35,000 sales. Okay? So to value properties in the City, what you must do is to take those properties that have sold and extrapolate a value to those properties that are unsold. And that's really both the science and the art. It's easy to put a value on a home that has sold. The hard part is putting a value on the many homes that haven't, using those sales and using those other statistical models that I talked about to place values on properties. Somebody once said it's a very easy thing to say that you're going to value properties at full value or whatever value. It's a very difficult thing to do.
I'm sure it is, because in some neighborhoods, I know in my district, we have some 35 10/25/05 - WHOLE - RES. 050844 neighborhoods that have very large homes and a block away, you have rowhomes, and then the characteristics of the neighborhood itself I would think is important. In some neighborhoods in my district, that type of situation I just said, around the corner there may be all kinds of neighborhood problems, a lot of blight. So how do you come up with the full value?
Well, one of the things we count on are our professional staff to be outside in those neighborhoods looking at the things you just mentioned, and we do that now under our current system, and we will continue to do that. There's no question that rowhomes should never be compared to detached houses, for sure, and we don't do that. We group, as I said, apples to apples. We group like properties to like properties. The quality of life issues, we 36 10/25/05 - WHOLE - RES. 050844 have something that we have been working on recently and will continue to work on called a Block Quality Index, which will both add value and take away value, depending on whether there's, say, a nuisance bar on this particular block or there's a ton of vacant properties on the block, or on the other side, do I butt up against the park and it's a very nice amenity. So, yeah, all of those things have to be put into the equation. And what we're going to do in the future is to have a modeling technique that will put all of those factors together and come up with values on the properties that you're mentioning. But none of that will be done until we test it, test it, test it, test it, test it first.
You're welcome. 37 10/25/05 - WHOLE - RES. 050844 Mr. Glancey, in this area of escalating housing prices, what steps does the BRT and/or the Administration believe should be implemented to ensure that homeowners are not driven out of their homes due to escalating real estate taxes?
Well, the first thing is, we will put the right values on the properties.
We will put all the right values on the properties. Even if they are rising, it's our job to put the right value on the properties. One way that you attack the property taxes is to do the tax rate; that is, the Council and the Administration must look at the tax rate.
You know, you have said that at least six times. The question that Council controls is how much does the tax rate 38 10/25/05 - WHOLE - RES. 050844 decrease, is that correct, what the tax rate decrease will be?
Well, does not the Mayor set the estimate of tax yields and isn't City Council bound by those estimates?
My understanding is that the Mayor and City Council will work together to set what the tax yields are, and then you then set the tax rate.
Well, I think you also said time is of the essence that we consider this if we're going to be prepared to do it for '07. I don't think anybody from the Administration has talked to me. I don't know about anybody else. Then the Mayor, through his estimates of what the taxes will yield, really sets the rate and not City Council, as we have to pass a balanced budget; isn't that correct? 39 10/25/05 - WHOLE - RES. 050844
Well, I'm not the expert on what the Council and the Mayor's responsibilities are. However, let me just say, my understanding is that it is a joint effort between the Administration and City Council to set the tax rates. And if I'm incorrect, I'm sure the Solicitor will tell me that.
Well, I think that will be a question for the Administration then. Councilman DiCicco.
Point of order on your line of questioning. I want to be clear on this. In your testimony, Mr. Glancey, , you say that full valuation does not begin until 2007. At the bottom of that page, "Let me assure you that our goal is to switch to full value only when we are sure that the system works. We are going to take our time, if we must, and we're going to get it right." Are we bound to have this done 40 10/25/05 - WHOLE - RES. 050844 in '07?
I just wanted to make sure. I didn't think we were. I wanted to be clear.
I'm not looking to drag this out. I mean, getting it right is the most important thing. If we can do it in six weeks, fine, but if it takes longer, I just want to make sure that we're not under the gun to have this done in '07 if, for some reason, we can't get to that point.
If I just might, 41 10/25/05 - WHOLE - RES. 050844 this is only going to take a second. No, there's no law that says it should be done by '07, but I will tell you that the law says it should be done, and I think it's a ticking time bomb in the sense that you might find a court or somebody might file a suit, a Court will come in and say, You have to get this done. And I think getting this done with the Council and with the BRT and with the Administration is a better way to do it than have a Court tell us how to do it.
I agree. I agree on both points. I just wanted for my mind and I guess for everyone else to make clear that there's no deadline set on this. The quicker we do it, the best it is for all of us, I agree, if we can get it right. Right depends on whose district you're representing, how many people got an increase, I guess. But before I go any further, I just want to go back to my opening remarks. I just failed to mention 42 10/25/05 - WHOLE - RES. 050844 that -- and I've said this in the past when you and your folks have testified. I've always had a great working relationship. This is not an adversarial issue for us. We're going to talk and work on this together. So I just want to again thank you for all the help you've given me in the ten years that I've been in Council.
I think we could all echo those same comments, but I think this is a very important issue and one that certainly has to be fully discussed, because I know I'm already getting communication from my constituents, who are really not too happy about what they're hearing. So when they communicate with us, we're going to have to have some answers that would at least be somewhat logical. With regards to the School District, has the BRT and/or the Administration met with our state 43 10/25/05 - WHOLE - RES. 050844 delegation to ask for an amendment to Act 46 with regards to lowering the District's millage?
The BRT has not. We are waiting for the Administration to take that lead.
I have any number of questions that I would like to continue asking. However, I see that several of my colleagues have been very patiently waiting, so we will have a first go-around, and at this time, I would recognize Councilman Kenney.
Thank you, Madam President. Thank you, Mr. Glancey, and all those at the table and all your staff that are here. I know you are very responsible and want to do this in the best way possible. Hypothetically, if this could be guaranteed to be revenue-neutral and that every homeowner with the adjustment of the millage rate and the adjustment of 44 10/25/05 - WHOLE - RES. 050844 the valuation were to experience little or no increase, I think we wouldn't need to be sitting here talking. But when you use the term "severely undervalued," that gets my attention in that I wondered if you could give me examples of where or what types of properties have been severely undervalued, because I assume they're the ones that are going to be experiencing the severe increase, potentially severe increase in taxes.
Absolutely. Councilman, I think if you can recall what took place in the reassessment cycle of 2003, there were about 47,000 properties that received substantial increases during that period of time. They were in neighborhoods throughout the City, but I'll throw out some names for some help. Obviously Center City, Bella Vista, Queen Village, University City, parts of the Northeast, the upper Somerton area, Mount Airy, Chestnut Hill, East Falls. So there were significant 45 10/25/05 - WHOLE - RES. 050844 value increases in many of the 47,000 or 50,000 properties. I think even with that, with the increases that we performed in that revaluation, there's still, because the market has skyrocketed as we all know, there are still severe undervaluations in those properties. I would also --
I'm sorry; in those neighborhoods. I would also add that -- and this is counterintuitive, but it's kind of the information that we've seen -- that properties in North Philadelphia and West Philadelphia and other what you would consider moderate-to-low-income neighborhoods have also seen dramatic increases as well over the last four or five years. So having said that, it might be more than 50,000 properties fall 46 10/25/05 - WHOLE - RES. 050844 within that. The housing types are single-family houses, townhomes, condominiums, every type there is.
Are there any neighborhoods or types of properties that, in your estimation at this point, have been overvalued?
Yeah, there's some. For instance, if you can think of the neighborhoods that surround the Elevated project in West Philadelphia, probably you couldn't sell a property there today for what the value is that they bought it a couple of years ago. There are small pockets like that, Councilman, throughout the City. I do think that every property in the -- because we aren't at 100 percent of value on any property, for the most part, but I do think that there are a significant number in that middle that fall somewhere between 65 and 70 percent of what they could sell for that will not see significant increases or decreases. 47 10/25/05 - WHOLE - RES. 050844
In the potentially undervalued or severely undervalued, as you said, or potentially overvalued, is there an idea that your staff has right now as to what the average increase or decrease, dollar figure or percentage, would be in those severely undervalued or overvalued areas?
It would be a guess, and you give me an opportunity to kind of give you a time line here, I think, because you'll need that as we go forward. I think we could use our information today, and if we're using the same valuation process next year, we could give you some idea, but I don't want to do that because I don't think those are numbers that you should really count on.
That you could count on. We plan in December of this 48 10/25/05 - WHOLE - RES. 050844 year to have some test numbers, and I really want to emphasize test. It's not numbers I would like to ship over to you, because we are testing them. We intend to have some test numbers in December of this year with numbers that are proposed, and I'm talking numbers, taxable assessed numbers for all properties, numbers that are --
That proposed millage -- not proposed millage, but that example of the millage rate reduction, is that a revenue-neutral effort?
So that hypothetical and that millage rate is kind of where we would be if we were trying to be revenue-neutral?
That's correct. I think it's going to be lower, but I think you can use that as a hypothetical.
And that's 49 10/25/05 - WHOLE - RES. 050844 the number you would plug into -- that or a lower number where you would plug into your test to determine what's going up, what's going down?
That's correct. But the problem is to get the actual taxable assessed numbers at 100 percent. Those are the numbers that you need to look at. My sense is by early '06, we will have a significant amount of numbers for you to --
From my perspective, I understand the full valuation is what's the important effort here, but what's also additionally important for me, and I think for a lot of my colleagues, is that when you do the formula, when you do the math, even though the property is existing at 200 and you're going to move the valuation to 250, what is the number going to be in the envelope when the tax bill comes. That's more important to most 50 10/25/05 - WHOLE - RES. 050844 people, because if you look at people in various stages of life, they don't care that their house is worth 200, 300 or 500 if they're not going to move. If they're going to die in the house, they don't care. If a person is younger and made it as an investment, it got fully valued from 250 to 300, they may be thrilled because they can flip it and make -- everybody is in a different circumstance. So the number that comes to the door in the envelope from the mailman is going to be the number that we're going to hear about.
That's right. I couldn't agree with you more. The question when I go out to community groups, and it's the right question, is what does it mean to me.
Would you recommend at some -- and I don't want to ask you to recommend a particular percentage right now, but should we be prepared to at least be proactive with a 51 10/25/05 - WHOLE - RES. 050844 potential cap, a percentage cap, on what an individual would experience in a given year over a given number of years, and can you at some point when you have better numbers kind of provide us with some guidance as to what a fair cap above which we will not go in a particular year?
I will be happy to provide you with every bit of information that not only I have from my experience but my staff has researched of what's taking place across the United States for all sorts of property tax relief measures. Caps are merely one of them. There are a significant number of property tax relief measures that I think we should talk about at today's meeting -- if not today, at another meeting -- which will impact, I think, those large increases to severely undervalued properties.
That's one issue, but the next question is, since 52 10/25/05 - WHOLE - RES. 050844 you've gone through with outside consultants probably the most in-depth analysis of our residential property, is there some way to use that information to really put into effect, for once and for all, the authority the City has had to take care of gentrified areas? I mean, we got a Constitutional amendment way before I was in this Council, I guess back in the '80s, and we could never seem as a body to be able to implement anything because the numbers were so nebulous and difficult to deal with. This seems that the activity you've gone through and are going through would give us a really good opportunity to designate which areas are gentrified or are going through gentrification and which are not, and be able to apply some tax relief to long-term residents there.
We may be 53 10/25/05 - WHOLE - RES. 050844 at a good time information-wise to do that.
You bet. I agree with you. And not only will we be able to supply you with the data that you need, we may even be able to slice and dice some of that data for reports that you can use and slice them and dice them in different ways yourself.
Because I believe that if we can attack some of those issues that have been festering out there -- for example, the neighborhood -- I remember working for Senator Fumo. The neighborhood that triggered the gentrification issue for us when I worked for the Senate was Fairmount and Queen Village. Well, they've never been able to experience any relief because they're totally gentrified now and in a totally different condition. But there are still neighborhoods in many areas of the City that are beginning a rebirth, that the residents there who have been there 54 10/25/05 - WHOLE - RES. 050844 through the hard times are concerned, obviously very concerned, about losing their homes relative to the increase in property taxes. So if we had that information available to us, it may be a good opportunity to soften the blow of all this by trying to implement something for real.
Is Councilman Clarke in the room? He would be next. (No response.)
Since he's not here, the Chair recognizes Councilman DiCicco.
I'm going to pass. I think most of my questions that I have at this time have been asked by either Councilman Kenney or yourself. 55 10/25/05 - WHOLE - RES. 050844 I'm going to pass for a few minutes. Thank you.
Thank you, Madam President. Good morning, Mr. Glancey --
-- and members of his staff. I just want to know about the appeal process. Are you still going to have an appeal? In other words, you're doing this by, I guess you would say, unit rather than neighborhoods and whatnot. Now, I know in the Northeast, there's many different homes on each block and they're entirely different. If a person has really been hit hard in taxes, what is the appeal process that the person would have?
Let me assure you, Councilman Kelly, that the appeal process that exists today will be the 56 10/25/05 - WHOLE - RES. 050844 appeal process that will exist in the future. Even though we internally group properties by these GMAs, we always try to make the most homogenous appeal hearings and bringing folks from the same neighborhoods together with the same problems. We may, depending on the amount of appeals, we may break into panels, but even saying that, seriously, we will have the same appeal process going forward that we currently have.
You mention in your testimony that it is possible to, when we increase these taxes, that we can do it in increments rather than a person getting a huge bill, especially senior citizens. As Councilman Kenney just stated, that it's possible that a person has no chance of moving or they don't want to move or whatever, they want to stay there forever and all the sudden, they're hit with this huge, huge tax increase. 57 10/25/05 - WHOLE - RES. 050844 Is there any steps that we can --
That is certainly possible in what we talk about property tax relief measures, but that is something that you, the Council, and the Administration would have to work out. There has been talk of rolling averages, for instance, after the revaluation. The taxable value would be based on a rolling average of three years. There is also -- and I think this answers your question directly -- talk of phasing in whatever the tax increase might be over two or three years. Those things have to be done, and, again, I don't know if it has to be state legislation authorized or it can be done under Council's current authority, but those are decisions that Council and the Mayor would make together on those things. 58 10/25/05 - WHOLE - RES. 050844 We will continue to put the value up. And I don't want to anger the Council President, but we also have to talk about tax rates again. We will put the value and there will be tax rates, but also the phase-in of those kinds of operations still remain in the hands of the elected officials.
You're welcome. The Chair recognizes Councilwoman Brown.
Thank you, Madam President. I'd simply like to underscore a comment raised already by President Verna with regards to calls and concerns that we're beginning to get, particularly seniors. And so though you've informed us a couple of times already that we set the rates, I will look to your 59 10/25/05 - WHOLE - RES. 050844 professional opinion on what best alternative we should consider with regard to where we end up. Is buffering preferred over deferrals versus exemptions and factoring in every single step along the way seniors, who I think at the end of the day are going to be most severely impacted.
I appreciate your asking for our opinion on this. I think as we go through this process, I will certainly express my opinion to all Council folks.
I think the best thing to do today, however, is to let's, first of all, find out what all the possible alternatives are. We put it on the table. And then as that debate goes on -- because I agree with Council President Verna. Today is just the beginning. Today is simply the beginning. This is the beginning of a debate about this process, and we really 60 10/25/05 - WHOLE - RES. 050844 appreciate your having these hearings in order for us to begin that debate. And as that debate goes on, Councilwoman Reynolds Brown, I think all of us will start to crystallize around certain issues that we think would be best to solve those problems, and there may even be property tax relief measures that none of us in this room are thinking about today that we could come up with as we do it. So I'll be happy to be part of that.
Okay. A follow-up question, has this City ever been at this type of place on this issue before? Is this unprecedented? Is this a first? What is it?
To my knowledge, that is true. To my knowledge, there has never been a system where the properties have been valued at 100 percent of what they sell for.
So to underscore a comment you made in your remarks, it's better that we do this 61 10/25/05 - WHOLE - RES. 050844 right and not rush it, because it is a first and we really do need to get it right. So the debate along the way for me will be -- well, the discussion will be very, very important, because it's a big issue and so many different worlds are going to be impacted, although because of state law, we're going to have to apply whatever we come up with uniformly.
I mean, that's really the alternative. I agree with you. As we go through this, if the information and the data that we are providing to you, if it's accurate, then we should just continue going forward, there's no question. And we believe that we will meet the deadlines that we've set to give you that kind of accurate information, with the caveat that if we don't believe that it's right, we won't go forward with it. We have to make sure that it's right. You know, in all honesty, I 62 10/25/05 - WHOLE - RES. 050844 think -- and as a citizen of this City for all my life, I think it's absolutely right for us as citizens to demand that you get this right the first time, that you don't go through a process that puts angst into every everybody's life and then do it again and then do it again. And I'm not picking on my colleagues in Allegheny County, but that's what happened out there, and it just is not the right thing by way of public policy. Listen, this is good public policy, full value, understandable market values, understanding what your property tax system is. It would be bad public policy to institute this without talking about all the ramifications.
I welcome it. Thank you. Thank you for your testimony. Thank you, Madam President. 63 10/25/05 - WHOLE - RES. 050844
You're welcome. The Chair recognizes Councilman Clarke.
One follow-up on the Council President's question as it relates to your new systems that we unfortunately funded. My understanding is that -- or maybe I'm wrong. My understanding is that it enhances your ability to do assessments on a yearly basis, on a more consistent pace, as opposed to currently where you kind of go out and sporadically do assessments in different parts of the City?
Well, Councilman, 64 10/25/05 - WHOLE - RES. 050844 we do that now. I mean, law says we have to do it year by year. Does it make us do it better? You bet.
Does it in any way, shape or form replace or does it simply enhance your current system where you right now use personnel --
It replaces? So are we still going to have the current level of personnel that traditionally did the assessments?
No, no. I'm sorry. I misunderstood your question. 65 10/25/05 - WHOLE - RES. 050844 Our system does not replace the personnel. It replaces the methodology. It replaces the software. It replaces the technology with which we are working. Please forgive me. I didn't understand your question. It does not replace the personnel. We still need all the valuation personnel. We still need the professional evaluators to in fact look at properties. We still need the IT group to make sure that the system works properly.
Okay. In terms of the current process that allows individuals to appeal their tax bills, will we still have a similar system given the fact that now essentially it is what it is, it's 100 percent valuation? In the past, during the course of the appeals, people were able to say, Well, this property down the street sold for this, mine sold for this ten years ago, and it was somewhat of an ambiguous 66 10/25/05 - WHOLE - RES. 050844 situation where you didn't really know what the values were because of the 71 percent ratio and the 3.2 ratio. Now it is what it is. What's the appeal process going to be like now?
The appeal process should be exactly the same. We don't intend to change the appeal process at all. I was, in a sense, joking with Councilman Kelly, but if there are a significant number of appeals in year one, we simply may break up into panels. But the process will be the same. Everybody can come in and tell us why they think the value on their property is not the correct value, even if the comparables would seem to show that that's the correct value. They can give us reasons why their home is different from all the comparable sales that were used to value that property and all the other amenities that I talked about earlier, location amenities.
What could 67 10/25/05 - WHOLE - RES. 050844 be a possible scenario where a person can justify a reduction based on an appeal? I mean, if you're saying that this is the value, this is the market value, this is the comparables, it is what it is, I mean, I'm trying to understand that.
It's very easy. All the homes are selling on this block for $100,000, roughly. Well, mine is not going to sell for $100,000 because I have to wear hip boots when I go into the cellar because my basement is flooded all the time because there's an underground stream that affects my property, and when I sell that property, I have to disclose that kind of disability. Or there's a crack in my foundation or that all the hundred thousand dollar homes that are being sold are rehabilitated properties, and mine is an original from the 1960s. All of those things would go into specifically to that property to reduce the actual sales value of that property. 68 10/25/05 - WHOLE - RES. 050844 See, what we're looking at is what can a property sell for. Even on the same block with houses that look almost exactly alike, you will find that there are differences, so much so in some properties that will be a change in the value of those properties. We're not going to know that, Councilman, because we're looking at the sales and we're looking in a mass appraisal system. The appeals process has always been course correction for those kinds of problems, and it will continue to be that.
So the level of specificity in determining the values, the hundred percent values, weren't being in place, that essentially is the responsibility of the property owner to determine if in fact it should be a lesser value, therefore a lesser tax bill.
Your question is do they have to tell us why their 69 10/25/05 - WHOLE - RES. 050844 property value should be lower than we say it is? The answer is yes, and that's been the case as long as I've been on the Board of Revision of Taxes.
So with your enhanced systems, there's no way that you can do that prior to the issuance of the new assessment?
I mean, if we're improving the system, it seems like you're improving the system to achieve one goal but you're not improving the system to help that property owner who has a property that should not be valued at the level that you all are saying.
The system is to value 568,000 properties. If we were 99 percent accurate, it would be 5,600 mistakes. I would hope that our system will be 99 percent accurate, but that still is not going to obviously -- if we don't have specific information about a 70 10/25/05 - WHOLE - RES. 050844 property, and the examples I was using would be very difficult for anybody but the homeowner to have that kind of information, that homeowner, yeah, the burden -- again, according to the law, the burden of proof is on the homeowner to tell us why that value is an incorrect value.
With respect to areas -- like I represent an area where we're doing a substantial amount of new homes, subsidized homes for low-moderate-income individuals and we're creating these sales values. How does that play into your assessment process? I have a situation in Brewerytown right now. We're rehabbing a number of houses and the values are, in terms of the sales, what we determine they are. In close proximity, there are properties that on the private sector are being rehabbed and sold at two, sometimes three times the cost of that particular house. 71 10/25/05 - WHOLE - RES. 050844 How do you get comparables in that situation? What determines the comparables? Does the subsidized house determine the comparable in terms of the sales price or does the market?
They're all separate groups. We wouldn't take a subsidized house and compare it to a market-value house. Those sales are apples and oranges. We don't do that. We don't do that now. We won't do it under the new system.
How do you do that? So do you leave out all of the properties that are subsidized?
We only compare the sales of subsidized properties to sales of other subsidized properties, and if there's none in that particular group, we will find like subsidized properties in other locations and try -- just as a regular real estate appraisal will do, we'll either add or subtract value based on that. We will never take the 72 10/25/05 - WHOLE - RES. 050844 subsidized properties and put them in a group with market-sale properties and say what are selling here is going to be a value there. We never did that in the past.
There is entirely different financing on that situation, yeah.
I'm talking about your process. You go out and you do an assessment on a neighborhood and you look at the comparable sales, right? You're saying that the sales of properties that are subsidized, you don't put those in the equation?
We don't put them in the equation of market properties. We put them in the equation of only matching their sales with other sales of 73 10/25/05 - WHOLE - RES. 050844 subsidized properties. It's apples to apples. Mr. Nix has just informed me it's the same as if you took a rowhouse and a twinhouse. You don't compare a rowhouse to a twinhouse.
But I'm talking about a sales. You look at sales, right? When you do your comparables, you pull up and you say what are the recent sales in this neighborhood, right? And are you saying that your testimony automatically -- first of all, how can you determine if that property was subsidized?
Our staff groups these properties together. They're grouped according to what they are, the types of properties they are.
And your staff can determine that that property is subsidized with your system?
Sure. We do that now. That's not something that's going 74 10/25/05 - WHOLE - RES. 050844 to be necessarily newly instituted. We've been doing that for a long time.
So when the tax bills go out for neighborhoods such as the Brewerytown where there are people that are rehabbing houses and they're selling for $200,000, we're getting -- matter of fact, we have a meeting tonight where we're selling Home Start houses where we're selling them for $60,000, and then a person who lives in the neighborhood who lived in a house that has not been rehabbed will probably only sell for $35,000 if they were to sell it. How do you get to a number for that person in terms of what their house is worth?
You only look at the sales of that type of property, which is the neighborhood house that has not been subsidized nor has been rehabbed. You look at sales --
Has not been rehabbed. 75 10/25/05 - WHOLE - RES. 050844
So you're telling me that in a neighborhood like Brewerytown where these people live and these values are escalating by virtue of market-rate rehabilitation and government subsidized rehabilitation, when you send out those tax bills on people that live in that neighborhood, they're going to be based solely on the type of properties that they have?
Let me finish. We don't send tax bills. We'll send a property value notification. We don't bill anybody. Secondly, the answer is clearly yes. We will only group together and value like properties to like properties. So if somebody is not in any of the 76 10/25/05 - WHOLE - RES. 050844 categories that you've just described, that's not going to be part of one of those categories.
Okay. So you're telling me that the individuals that live in Brewerytown should have no 8 concern as it relates to, quote/unquote, gentrification because their tax bills or their assessments will not increase dramatically because their house was not a market-rate rehab, although it would be a comparable house at the end of the day, or a government subsidized house that was rehabbed and sold for a particular value, their values will remain steadfast based on the existing housing stock that is comparable? That's what you're telling me?
What I'm saying, Councilman, and I can't say it any clearer, is, we don't compare apples to oranges. We don't compare market-value properties to subsidized properties to pre-existing homeowners that are already 77 10/25/05 - WHOLE - RES. 050844 there. What we do is, we group those homeowners that are there who are not subsidized, not market rate, folks who have been there for 30 years, we only group those together and the sales of those properties. We do not group them together with other properties.
So you're telling me that those people should have no concern or no fear of gentrification because their taxes are never --
Councilperson, I'm not going to be able to tell you about gentrification. I'm telling you about how we value properties.
What you're telling me now, that those property values are never going to go up.
No, not at all. What happens if the value of those properties increase?
Whenever the 78 10/25/05 - WHOLE - RES. 050844 values of that group of properties would increase, all ships go with the tide. I mean, everything that is part of the group will be looked at in that sense. But we're not going to cross comparable groups. That's what we're saying. I think the specific answer to your question maybe for this evening's meeting is, we got $200,000 properties being built next to properties that are worth $50,000. I think you can clearly say that the BRT is not going to compare those types of properties. But I can't answer other questions about fears of gentrification. That's something that I don't even know what exists other than that.
They elected me to do that. I'm not asking you to do that. And we had that discussion at the earlier meeting before they built the now $300,000 house.
I can tell you about the values. That's the correct 79 10/25/05 - WHOLE - RES. 050844 answer that you can give them tonight about the values.
All right. They didn't believe me at the first meeting. They're probably not going to believe me tonight, and that's okay. I just want to get some definitive information about the existing housing stock. If those properties aren't selling for an ever-increasing value, then their taxes will pretty much stay the same, their assessments?
Councilman, I think -- my name is Robert Nix. I'm Secretary of the Board of Revision. I think what you're saying is if that $300,000 property is built next to the $50,000 property, will that $300,000 property drive up the value of the $50,000 property that's not improved. It very well might. In that end, we don't -- I mean, that's a market force. So there may be 15 $50,000 properties around that development. If those 80 10/25/05 - WHOLE - RES. 050844 properties start selling for 100,000, 125,000 where in the past they sold for 50, then in fact that's --
That's fine. That's a comparable. But as long as the existing housing stock does not dramatically sell for ever-increasing --
Very well. The Chair recognizes Councilwoman Miller.
Thank you, Madam President. I actually had a question similar to Councilman Clarke's around the value of properties being increased because of new development, but you answered it. But there is a difference, I guess, in what you're going to do now. 81 10/25/05 - WHOLE - RES. 050844 I was just talking to Mr. McPherson. I have a constituent that called who lives in Chestnut Hill who says, I've been here for 40 years, and someone down the street demolished a house and built like a $5 million house. So their fear was that their taxes were going to go up because of that new house, and you're saying that their taxes will not go up.
That $5 million property will be such an individual property, it would be a market unto itself. We would only look at that property, we would only value that property, we would never use that as a comparable for any of the other houses, unless there's a couple of other $5 million new properties being built, then we would use it.
Right. When speculators come in, because that's what's happening, a lot of speculators are coming in, purchasing homes and 82 10/25/05 - WHOLE - RES. 050844 driving the cost up. I have someone from the North Philadelphia part of my district that called me and talked about a house being purchased on North 15th Street near Allegheny for an astronomical amount based on what the other homes in that neighborhood are selling for, and that just seems to be going on, and perhaps that happened there because people are trying to buy properties to rehab for Temple University, housing of Temple University students. So there's just weird things going on across my district in different areas. But this system will evaluate and assess per property, not -- I think most of us kind of believe what Darrell was saying, that when there's a new development or new things going on in a certain part -- in the Tioga portion of my district, we're looking to do lots of development, and, of course, I guess I can better answer the questions now to 83 10/25/05 - WHOLE - RES. 050844 some of the residents that have been there 50 years or more or even years, 4 that their property taxes are not going 5 to be substantially increased because of 6 new development. 7
That's correct. 8 If you're not part of that development, 9 you shouldn't be compared with what's 10 taking place in that development. I 11 think it would be a fair statement -- 12
13 Excuse me. You're talking about a 14 development. 15 Is that what you're talking 16 about, Councilwoman? 17
Yes, both 18 new and old. New developments versus 19 existing housing. New housing. 20 And we're going to create new housing on lots.
I'm sorry. I didn't hear your question. What I was saying was, I think to be more accurate, where you said you would value one 84 10/25/05 - WHOLE - RES. 050844 property at a time, a mass appraisal, you can't value one property at a time. More accurate would be property types. We will value groups of property types, and they will be as you described in your hypothetical. You have different property types. You have the new development and you have others who are not part of that development, pre-existing housing. They would be grouped separately and valued separately.
And earlier when you answered my question, you talked about something called a Block Index?
Yes. It's called a Block Quality Index, and it's done statistically, but I won't get into that particular methodology, but the point is is to say on a given block or in a given neighborhood or a given GMA, if there are significant quality of life properties, that index is going to be lower and it 85 10/25/05 - WHOLE - RES. 050844 will have an impact in lowering the actual value of that property. The amenities I was talking about to lower values, of course, would be if there's vacant properties or, God forbid, a crack house or a nuisance bar, or even to the point where there's just some illegal activity taking place by way of tractor-trailer parking on streets, which does happen in parts of our neighborhoods. The other side are the good amenities, the amenities that you're next to a park or that all the homes are kept nicely. The Block Captain has made sure that the neighborhood is -- you know, flower boxes and that kind of thing. Well, the Block Quality Index there would add to the value of property. We're not talking about huge numbers. What we're really talking about here is to say if you sold a house on a block that has 16 vacant properties and it's only a block away from properties 86 10/25/05 - WHOLE - RES. 050844 that are well kept, the house where it has vacant properties should be a 4 lower value than the homes that are well 5 kept. 6
Is there 7 something written? Do you have a list of 8 the comps? Is this in writing, the 9 factors that would impact the Block 10 Index? Is that written? 11
Sure. We can get 12 that. We'll have to send that. We'll 13 send it to the Council President to send 14 to you, but we will get that for you. 15 Yeah. There is the list that we use or 16 the elements that go that BQI. We'll make sure you get that.
You're welcome. Is Councilwoman Blackwell in the room? (No response.) 87 10/25/05 - WHOLE - RES. 050844
But we will do a second go-around, so just be considerate.
And the rest of your colleagues. One of the issues that I'd appreciate for the record, many of us are accustomed to a real estate appraisal. Could you please describe for the record the difference between what you will do and a real estate appraisal?
Sure. A real estate appraiser will look at one property basically and will go inside the 88 10/25/05 - WHOLE - RES. 050844 property -- will obviously look at all the exterior conditions, will then go inside the property, will measure the property, will inspect things, such as heating units, air conditioning units, over and above all the other amenities that may be in a property. When you're doing mass appraisal, you clearly can't do that. That's not available for us to do, nor do I think anyone would want to pay for that kind of thing. In order to interior-inspect over 450,000 residential properties would be so cost-prohibitive that the City would never be able to do that. So what we do, Councilman Rizzo, is, we do have physical exterior inspections of properties. Obviously location, obviously property type, obviously any amenities that can be seen from the outside of a property, appraisers either walking around the outside -- because we will never trespass 89 10/25/05 - WHOLE - RES. 050844 on a property. We also use another tool that we have. It's called Pictometry. Pictometry is aerial photography that will show us oblique angles of properties throughout the City, and with that, you can see where decks are, whether there are other structures on a property that you may not see from the street. You can also look at the chimneys and make a fairly significant guess at what the fireplaces might be in any given property. You can certainly see if there's swimming pools or other amenities in a property. The third thing, and this is something that we continue to work on and this is something new, we have been attempting to contract with either the trend MLS service in the City of Philadelphia, I might add unsuccessfully at this point, or other databases that contain what we call interior property characteristics. I'm separating that 90 10/25/05 - WHOLE - RES. 050844 from the first two things. The first two things we do. We have that now. We also ask in a survey, as you see on every appeal form, whether homeowners would send to us their interior property characteristics or correct the property characteristics. So we have that data coming back as well. The best data that we can get -- at this point, we have been unsuccessful in attaining -- we would love to have the real estate listing service, the MLS service, sell us, and we would contract with them to do this, the interior property characteristics of historic properties, not what's currently on their list of houses to sell but three or four or five years' worth of historic data, and that data would include number of bedrooms, number of baths, kitchen remodel, those kinds of things. We don't care who the owner is. We get that from records. We don't care about who the real estate salesperson is. 91 10/25/05 - WHOLE - RES. 050844 No meaning to us. We don't care what the sale price is on that listing, because, again, we'll get that from the Department of Records, but what we would love to get is that interior data. We're not giving up. We are still trying to work with MLS to see if it's possible to get that from them. But there are other databases, and some members of my staff are in constant contact with folks to attempt to get that interior characteristic data.
Can I just jump in? Because I have a couple more questions. This is not the first time in this polity in the United States of America has moved towards 100 percent. Why can't we learn some lessons from other places that did this? I mean, we've heard all these questions. I'm sure these questions have popped up some place else, and I hope part of your process is to communicate with other 92 10/25/05 - WHOLE - RES. 050844 jurisdictions that recently have went to 100 percent, because if it happened there, it's going to happen here. And I hate to have us reinvent the wheel here. I mean, 100 percent valuation is in New Jersey, it's in Delaware, it's in other places close by, and for us not to learn from those experiences would not be a good situation.
Thank you so much for asking that. We are doing exactly what you've asked. We are in contact with Nassau County, New York, for instance, which is a huge, as you can tell -- I think it's about a 700,000-parcel jurisdiction. We've been in contact with Allegheny County to see how not to do things. We've been in contact with -- I should say this, and I give kudos to our CAMA vendors from Colorado. They have installations all across the country. They have been supplying us with best practices from those installations all 93 10/25/05 - WHOLE - RES. 050844 across the country. I mean, they do Oklahoma City, they do Alexandria, they do Washington, the State of Washington, they do the entire State of Wyoming. We're relying on them to give us that kind of information.
Well, I know a community that recently did a reevaluation. They all were at 100 percent, but they just did a reevaluation, and from their department, and I assume our Department of Licenses and Inspection, when a developer comes in to build 50 homes, that we have plans on records of what the square footage are, how many bathrooms, what the options potentially could be on that construction for many years. I know of a situation that the person that was doing the physical reevaluation in New Jersey had on a laptop every property's building plan that was submitted to the code enforcement people for approval to build 94 10/25/05 - WHOLE - RES. 050844 the property. I mean, there was no 3 snowing them. Walk up to the door, how many bathrooms do you have. Well, he knew, four, three, two, one.
I might add, we do too for all new properties. That's not a problem. The problem is, we have so many pre-existing properties.
Well, I would bet that the Department of Licenses and Inspection goes back many decades and has records, whether they're on paper, for various communities throughout the City of Philadelphia. I'm not suggesting every little rowhouse that is located -- they're townhouses now. When I grew up, I lived in a rowhouse. I didn't realize I lived in a townhouse. But I would think that the Department of Licenses and Inspection could be a very, very valuable source for information of what we have out there.
You're absolutely right, and we have been in contact with 95 10/25/05 - WHOLE - RES. 050844 them. They're giving us electronic information all the time, but, again, the new properties, we get the information. That's not a problem. I grew up in a rowhouse as well, and I'm not so sure L&I would have the plans of my rowhouse that was built in 1950. If they do, we'll get it.