COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE Room 400, City Hall Philadelphia, Pennsylvania Wednesday, March 27, 2024 10:00 a.m. PRESENT: COUNCIL PRESIDENT KENYATTA JOHNSON COUNCILWOMAN NINA AHMAD COUNCILWOMAN CINDY BASS COUNCILWOMAN KENDRA BROOKS COUNCILMAN MICHAEL DRISCOLL COUNCILWOMAN JAMIE GAUTHIER COUNCILWOMAN KATHERINE GILMORE RICHARDSON COUNCILMAN JIM HARRITY COUNCILMAN CURTIS J. JONES, JR. COUNCILWOMAN RUE LANDAU COUNCILWOMAN QUETCY M. LOZADA COUNCILMAN NICOLAS O'ROURKE COUNCILMAN ANTHONY PHILLIPS COUNCILMAN MARK F. SQUILLA COUNCILMAN ISAIAH THOMAS COUNCILMAN JEFFREY YOUNG, JR. BILLS: 240179, 240180, 240181, 240182 RESOLUTION: 240193 - - -
Y'all know I'm Baptist. Good morning, everyone. (Good morning.)
This is the public hearing and public meeting of the Committee of the Whole regarding Bill Nos. 240179, 240180, 240181, 240182 and Resolution No. 240193. Ms. Loughead, will you please call the roll to take attendance.
Present. Thank you. A quorum of the Committee is present and this hearing is now called to order. Ms. Loughead, will you please read the titles of the resolutions.
Bill No. 9 240179, an ordinance to adopt the Operating Budget for Fiscal Year 2025. Bill No. 240180, an ordinance amending Chapter 19-1800 of The Philadelphia Code, entitled "School Tax Authorization," to provide for an increase in the tax that the Board of Education of the School District of Philadelphia is authorized to impose on real estate; and amending Chapter 21 19-1300, entitled "Real Estate Taxes," to establish an equivalent reduction in the tax rate for the City real estate tax; and making technical changes; all under certain terms and conditions. Bill No. 240181, an ordinance to adopt a Fiscal 2025 Capital Budget. Bill No. 240182, an ordinance to adopt a Capital Program for the six Fiscal Years 2025-2030 inclusive. Resolution No. 240193, providing for the approval by the Council of the City of Philadelphia of a Revised Five Year Financial Plan for the City of Philadelphia covering Fiscal Years 2025 through 2029, and incorporating revisions with respect to Fiscal Year 2024, which is to be submitted by the Mayor to the Pennsylvania Intergovernmental Cooperation Authority pursuant to an Intergovernmental Cooperation Agreement by and between the City and the Authority.
Today we will continue the public hearing of the Committee of the Whole to consider the bills read by the Clerk, that constitute proposed operating and capital spending measures for Fiscal Year 2025, a Capital Program and a Forward- looking Capital Plan for Fiscal Year 2025 through Fiscal Year 2030. Today we will hear from the Administration regarding the Administration's finances. This morning we will hear testimony from the Department of Finance and the Department of Revenue. This afternoon we were originally scheduled to hear testimony from the Sinking Fund, the Board of Pensions and the Treasurer. Given the overlap of these departments' duties, these departments are available for questioning this morning. This afternoon we will continue with questions from Members on these departments. And at 3:00 p.m., we will hold our first of three public testimony sessions. For the record, I want to note the presence of Councilmember Katherine Gilmore Richardson, Councilmember Mark Squilla, and Councilmember Jamie Gauthier and also Councilmember Cindy Bass, and Councilmember Nicolas O'Rourke. Ms. Loughead, will you please call the first witness to testify from the Administration.
The first person to testify is Rob Dubow, Finance Director. (Witnesses approached Witness table.)
Welcome back, Rob. Just state your name and title officially for the record and then you can begin your testimony.
Good morning, Council President and members of the Committee. My name is Rob Dubow. I'm the Finance Director. I'm joined at the table by First Deputy Cat Lamb. With us today are Deputies from around Finance and as you said the City Treasurer, Revenue Commissioner, Executor of the Pension Board are all here too. Before I go into my testimony, I just want to take a moment to thank all the people who work in Finance. All the stuff we talk about today couldn't happen without them. So you have my written testimony so I won't go through that. We're all available to answer questions. I also had testimony on the tax bill. Should I do that now too?
Okay. Good morning. Providing testimony on Bill No. 240180. The bill proposes a shift in the Division of Real Estate Tax between the School District and the City, increasing the portion that goes to the District and establishing an equivalent reduction in the portion that goes to the City. The change would increase the School District's portion from 55 percent to 66 percent. That would result in approximately $22 million in new funding for the District in FY25 and 129 million over the course of a Five Year Plan. That would allow the District to benefit from any growth in real estate value in the City. The millage shift supports the Mayor's goal of providing world class education for Philadelphia students of all ages in socioeconomic backgrounds and supports future planning for the multi-year roll-out of the Mayor's full-day year-round school initiative, enabling students to receive educational enrichment they need throughout the year. And thank you for the opportunity to testify. We are all here to answer your questions you may have.
Thank you, Rob. So before we get started, I just had a couple of questions just based upon, one, the American Rescue Plan funding that goes away in 2024. A couple of my colleagues and I had discussions around when this funding goes away. Some say it's going to be a fiscal cliff. What are we doing to make sure that we're fiscally stable as we look forward as those funds go away? And we know that those funds also were used for a variety of different programs such as our rental assistance diversion program as well as the Free Transit program we provided, free transportation to SEPTA. Those types of initiatives that were shored up by the American Rescue Fund, how are we going to look at from a fiscal stability standpoint stabilizing our budget and those type of programs moving forward?
Yeah. So one of the things that differentiates Philadelphia from other jurisdictions is we have to do a five year plan and we have to show that that plan is balanced in each of its five years. So we show in our Five Year Plan the ARP money going away at the end of -- well, in the middle of FY25, the end of this calendar year. And then we show a balanced plan throughout. So by having to plan for five years, that's how kind of we show that stability after the ARP money is gone.
Thank you, Rob. As you previously testified, the City uses an outside economic metric firm to provide growth projections for our City's revenues. These are then used to determine how much revenue the City is projected to have in the coming years. In a response provided to my office, you stated that the economists provided a range of growth scenarios. Can you first please share an overview of those growth projections? And then talk to us about how you determined what projections to use.
Yeah. So they had -- and we've talked about this yesterday. They think that because of kind of the rapid job growth we've seen, that job growth will slow down. They showed us a range of anywhere from basically no job growth to half a percent a year where we wound up -- and this is in the middle of the year. We wound up at about a quarter percent a year so kind of in the middle of the range that we discussed with them. They also think that inflation will come down as it's already started to do, and then that will have an effect on wages. So both of those things had an impact on our projections.
What's the name of the company that we're using?
Okay. All right. The City has its highest combinations of credit ratings of more than four decades, which as you stated in your written testimony is an important factor in determining the interest rate that the City pays on its borrowing costs for infrastructure investments. How much money has the improved credit rating saved the City on borrowing? And just state for the record our current credit rating as a city.
Yeah. So we are in the A category with all three rating agencies, which is something that hasn't happened in decades. We can get back to you on the savings because it varies by where the market is, so we'll get you something based on the current market.
Okay. Thank you very much. Over the years the critical piece of the finance goals and key budget investments have been for the OPAL project, which will replace the City's existing accounting, contracting and procurement systems. Can you recap for us when this project started and when it will be fully implemented? What is the cost to date and how much is budgeted for future cost?
Hi. Cat Lamb, First Deputy Finance Director. So OPAL is the project to replace our core financials and purchasing systems. So for those of you who may be familiar with those systems, its FAMIS, ADPICS, ACIS and PHLContracts. It's replacing it with Workday which is a modern day ERP solution, so it's going to be more connective between all of the data in those four systems. The project initially kicked off in 2019 when we started resourcing for the project director and other people to lead the project. It was delayed due to the pandemic, but we kicked off with our service, our system implementer Accenture this past November. So that's when things really, really started picking up. We are closing, finishing out the initial design session which is the continuation of the design over the summer. The projected start date of the system right now is June or July of 2026, but I will say that we are re-evaluating that based off of learning we've done with Accenture and as we go through the design, right. So the more we learn about exactly what we're going to do, the more we have to re-evaluate when we want to do it.
It's very complex. It's a very large project. So the capital in the six year program right now for it is $107 million, so it is not a small endeavor. It is replacing all of our core financial and purchasing business processes. These legacy systems have been in operation, some for 40 years so almost as old as, you know. So there's a lot to have to re-evaluate and to manage the risk of this, right. Doing these large system implementations because it touches everything in government, when they're working, they're working smoothly behind the scenes and you don't even know that they're there, paying our vendors, getting contracts in place, right, creating our budget documentation, documents and all that stuff. When things go wrong, they can really, really go wrong. So part of also the planning effort that takes place in the design work is to really manage the risk of the complexity and the change that it's going to introduce.
Thank you. The City received 163 million in Community Development Block Grant Disaster Recovery funds to support Philadelphia's recovery from Hurricane Ida. The City was required to complete a needs assessment and submit an action plan which was approved by HUD and is now embarked on planning and implementing this program. Based on the unmet needs assessment, how much does the 163 million cover and what portion of the needs assessment cannot be met by these funds? And what is the plan from the City to address these unmet needs in communities most at risk of flooding? And this is an issue near and dear to me, particularly as it relates to the neighborhood of Eastwick, Southwest Philadelphia who we see continually flooding year after year.
Yeah. I'm going to ask Deputy Finance Director Sabrina Maynard to come up or should I call up Pat? Patrick Clark, he can come up and answer that. (Witness approached Witness table.)
My name is Pat Clark. I'm the CDBG DR Project Director for Finance. And I think the question was about the unmet needs assessment for the CDBG DR program. It's Community Development Block Grant Disaster Recovery Program. $163 million is allocated by HUD to the City of Philadelphia. Two allocations, and that equals our total of $163 million. Last year we did an unmet needs assessment where we combined and compiled data about the relief that was provided to Philadelphia and also the needs that were identified through various data sources like FEMA individual assistance, FEMA public assistance, small business administration support as well as the local sources from departments. We identified over $1 billion in unmet needs tied to Hurricane Ida that obviously far surpasses the total allocation, so we've programmed our budget proportional to that need. The biggest need was in housing. The second biggest need was in infrastructure. There's also a need in economic revitalization, and that is applied to the City as a whole. So we're currently going through the process through signing our current budget to target areas more specifically. For Eastwick we're doing close collaboration with Sustainability, OEM. There are a lot of ongoing community engagement initiatives occurring, so we're using their support to help guide our mitigation funding for the CDBG grant program.
The portion where you talked about restructuring the budget, particularly to focus on some of the housing unmet needs, could you provide that to the Chair just so we can also look at how does that play a role in the Administration meeting the 30,000 units of housing in the City of Philadelphia?
Yeah. I just want to make sure I'm understanding your question correctly. You'd like more information about our programming, the housing?
That will be definitely helpful. Just to make sure we're aligning the targeted goals to reach the 30,000 units. That would be helpful so we're on the same and also how we can be supportive as well.
Yes. It's a citywide program, so we're working with neighborhoods across the City, including Manayunk, East Falls, any area that was impacted by Hurricane Ida.
Awesome. Also, in terms of tax revenue, Mr. Dubow, in 2022 I introduced the Save Our Homes Tax Relief Plan. The City expanded the Senior Citizens Tax Freeze program and a Longtime Owner-Occupants Program known as LOOP as well as expanding the Homestead Exemption from 45,000 to 80,000 to provide much needed property tax relief to vulnerable homeowners, and I know we're going to see a property assessment at some point in time in the future and we'll get a chance to see what neighborhoods are impacted the most. And also, as we look at the issue of gentrification as we still see the rapid development taking place throughout the City of Philadelphia, we want to make sure as many long-term residents have an opportunity to stay inside their home. Of the eligible homeowners, what percentage are receiving relief from 2024 and how does that compare to prior years? And do we have a plan for enrollment in relief plans as we move forward? I think someone talked about maybe streamlining all of our tax relief programs under one particular vehicle, so to speak. So an individual can go online and add one particular portal to apply for all of the -- actually, no, Kendra Brooks introduced legislation or Nicolas O'Rourke to figure out how do we streamline that process. But could you give us an update on where we're at?
So Deputy -- I mean Commissioner Rebecca Lopez- Kriss will talk about the percentage of folks who are enrolled. And I think we will have to get back to you on the program you're talking about.
Good morning, everyone. I'm Rebecca Lopez Kriss, Deputy Commissioner for Policy and Outreach. To answer to your question, Council President, currently we estimate 75 percent of eligible households are receiving some sort of assistance that's either, Homestead, LOOP or the Senior Freeze. It doesn't count people who maybe have an OOPA.
And do you have this data broken down, this is LOOP, this is Homestead, this is Senior Citizens Tax Freeze?
Okay. Can you provide that to the Chair as well?
And also, Rob, I don't know if you can provide this to me now or maybe later. Just wanted to see based upon the total amount of funds that were available, right, that we allocated for Senior Citizens Tax Freeze, Homestead and LOOP, based upon that 75 percent that was used, the remaining dollars, that number, because that stays inside the General Fund, correct, because it's not being used?
Yes, but also what we should do when we get back to you is tell you what we assume for percentage participation because we don't assume 100 percent participation.
Could you bring the microphone a little closer? Go ahead.
Also, when we get back to you, we'll also tell you what percent participation we assume because we don't assume 100 percent participation.
Okay. All right. Thank you very much. Mr. Dubow, your testimony cites launching an outreach index mapping in FY25 to help Revenue, City Council and other stakeholders focus outreach efforts in the areas of the City that are most needed for tax relief. Can you tell us more about this effort and what is the budget for outreach for tax relief programs?
As part of the Department of Revenue's DEI initiative, we took a look at ways that the Department of Revenue can address needs more in a more focused way. And one of the projects that we completed is a mapping project that we will be able to make public to you and to the City Council that overlays estimated owner-occupied properties. The percentage of folks who are enrolled in our program, demographic information, it's almost like you can see exactly where the gaps are on a map of where we need to look, where we need to focus our efforts.
Okay. Is there a marketing and social media plan?
Absolutely. The Department of Revenue has a very robust outreach group. And as you remember, Vicki Riley was our champion and she did over 350 inperson events a year. We have a new person. That's Joy McCoy. We also do social media. We're on YouTube, LinkedIn, X and Facebook. We also do videos, how-to videos. I think the most effective thing for us to do though is to partner with City Council. No one wants to talk to us. They want to talk to their elected officials and they feel more heard or they feel some sort of efficacy and it's a better outcome when we're able to do, let's say, a pop-up neighborhood event where the letters have come from City Council. That sort of thing is --
And we've done several very successful ones in South Philadelphia as well as Southwest Philadelphia. Has your team been proactive in reaching out and touching base with District Councilmembers regarding planning these type of events as you move forward, knowing we're going to be assessing properties and then we're going to have First Level Review, some people are going to appeal? How is your team preparing for this upcoming re-assessment of properties as we move forward to make sure we're in front of the issue as opposed to behind?
One of the things that we did this year was provide City Council with an assistance program cheat sheet, something that staff could just have next to the phone. We've also been sending regular updates via email to City Council, including staff to kind of inform them of what's happening, word changes to the rules, like Councilmember Lozada extended the date for LOOP last year. And also, there were some changes to how we interpreted properties in that program. So we've been trying to make sure that City Council is up-to-date with what it is that we're doing as well as reach out individually to say Joy McCoy is our new person, she's our new outreach coordinator and she's the person that we can work with to schedule events with you.
All right. Thank you, Rebecca. And last question for yourself: Are there any special programs to help seniors around the First Level of Review, walking them through that process when it comes or appealing their property taxes? Because a lot times during constituent services I've seen individuals get the stickler shock of their tax going up, doubling and tripling. And then also, there's a disconnect between our local banking industry in the appeals process where the banks get the notice that the property tax goes up and then you'll see your mortgage double and triple. And then you'll go into the appeal but they're already charging you, kind of eat up your escrow at the same time while you're going through that process. And then once your appeal goes through, if your appeal becomes successful, then there's a whole process that the average person really don't know about to help you get your refund from the bank. Have we done anything to try to make the connection between the banking industry and when we're dealing with First Level of Review in the appeal process to help individuals who's stuck in that type of situation?
Let me defer to Revenue Commissioner Kathy McColgan. (Witness approached Witness Table.) COMMISSIONER McCOLGAN: Good morning, Council President and members of City Council. My name is Kathleen McColgan. I'm Revenue Commissioner. So your question is have we done anything to partner with banking institutions to help ease some of the challenges that customers face when they have had an appeal, their property value has been recertified and to make sure we bridge the gap there; is that correct?
Absolutely correct. COMMISSIONER McCOLGAN: Okay. I'm happy to say that we have. With the implementation of the Philadelphia Tax Center, we've partnered very closely with lending institutions to improve our data communication with them so they now have a secure log-in that they can utilize in the Philadelphia Tax Center to log in and to basically at any time look at the amounts that are due for their parcels. So if a recert has been processed, they go run that report and receive the most up-to-date information on the taxes due.
Okay. Thank you very much. And last, how do we work with seniors who may not know how to navigate this process? I don't know if this is for Rebecca as well. But when it comes to First Level Review, going beyond First Level Review when you want to basically go to court to challenge your property assessment?
I think that our outreach efforts in the community is the best way that we can reach seniors. I know that our outreach and communications team, they go to senior centers and make sure that they're reaching out to communities where they're most likely to be able to provide assistance to seniors. And I think that we really offer assistance to any program for which they may be eligible and guide them through the processes. So again, I think it's a little bit of making sure that we get the word out and that we're reaching out to those who are eligible which is why we appreciate the partnership with City Council offices.
Awesome. And what banks have y'all partnered with in terms of do you have specific banks that we have partnered with to work with us -- COMMISSONER McCOLGAN: For real estate tax?
Mm-hmm. COMMISSIONER McCOLGAN: We have several different ones. They're not all I don't think well- known as banking institutions. One of the largest one is called CoreLogic, so they actually escrow and remit on behalf of many different lending institutions. I think there's a list of probably about 8 to 10 different institutions that we partner with.
Okay. All right. Thank you very much. COMMISSIONER McCOLGAN: Thank you.
Mr. Dubow, in accordance to the passage of Bill No. 220485 in 2002, Revenue will complete regulations for market-based sources and pursue state-authorizing legislation. If enacted, this change aligns Philadelphia business tax rules with other jurisdictions and better reflects business activity in Philadelphia. This is a recommendation that's come from prior tax reform efforts. As we reconvene the Tax Reform Commission, what are the areas that should be focused on by the Tax Reform Commission as it relates to the tax structure and regulatory environment to make our City more competitive and business- friendly from your expertise of being around here for some time?
Yeah. I sort of want to talk about some of the things that have happened since the other Tax Reform Commissions have come in play. There's been really significant changes, particularly in the BIRT. So the number of businesses that are subject to BIRT has decreased by about two-thirds. And then within the last couple of years have to file. So that has become much simpler. But you mean for smaller businesses and then businesses that hire, I think it's at least six people don't have to pay for their first two years.
Right, three in the first year, three in the second. So a lot of structural changes to the BIRT have already happened. I think on the market- based sourcing has not passed the state yet. Anything else on the business tax that we can make simpler?
I think just implementing the Philadelphia Tax Center has made it a lot easier for people to be in compliance, and we've gotten a lot of good feedback. I think making businesses responsible and rights very clear is something that I think we've done a better job of in the last eight years or so. It's structurally --
All right. Thank you very much. The Chair recognizes Councilmember Curtis Jones.
I guess I'll pull that away a little bit. Based on Member Isaiah Thomas's questions that I heard in here in chambers but also in other briefings, what is the plan for the drop in real estate value in Center City and the fact that many investors based on interest rate bumps are simply just walking away? And what is the conversion rate from commercial to residential and how does that impact our dollars?
So in terms of how we've handled the protected losses in the Five Year Plan, we've assumed that appeal losses will equal about $1 billion this year. So when we look at our projections, we assume those losses and then we assume after that loss that commercial values will be flat this year and then go through inflation going forward.
The difference in square footage commercial, the difference in square footage taxable residential, what's the --
So for most, we're different from other jurisdictions in that we much more residential than commercial. I think that the office sector is about percent of our property tax, so it's relatively small because sometimes it's some big losses, but it's relatively small.
My next 7 question is several years ago we cited that tax delinquent property owners who did not live in the City were using these properties as investments, weren't paying, ignoring all of our efforts to collect. We then said it might be good if we attach their properties in the counties in which they live. How has that made a difference? Have we implemented that aspect of it and has it positively impacted collections?
I'll ask our Revenue Commissioner to -- or Frances Beckley. They're deciding who to come up. Frances Beckley will answer that. (Witness approached Witness Table.)
Good morning. Frances Beckley, Chief Counsel of the Revenue Department. Unfortunately, the Act 93 project which attaches liens to properties, basically we've focused on the outlying suburbs, has not proved effective as we had hoped. One of the major challenges there is typically investors will have their primary residence out there. It'll be very valuable, but it will be jointly owned. And their City real estate will be in either their individual name or entity name. So in the last fiscal year we only realized 113,000 in collections from that program.
How do we get around that loophole so that people, investors from different parts of Pennsylvania and even beyond get to leave all properties tax delinquent and keep their residences safe from our collection efforts? How do we reconcile that?
Unfortunately, I'm not aware of any legal strategy that will allow you to move liability from something that's owned by an individual to something that's owned by a different entity or individual. What we have focused on in terms of investors, delinquent real estate taxes, is filing what we call consolidated actions. We used to file individual actions for water or real estate or L&I demolition liens against properties individually, and we have now with our better data started filing suits where we take a landlord who's basically been using us as their bank. Every time they want to sell a property or refinance it, they'll bring it current. But the rest of the time they'll just let their City liabilities hang out there. And instead we sue them in their personal capacity for all the various municipal means they owe on all of their properties. I mean, some of these actions have 50 different properties put in there. And when they get the judgment in that action, that judgment attaches to every one of those properties. So the landlord cannot refinance or sell any of those properties without coming and getting in compliance with us with all of his or her liabilities.
Let me say this for the record: Nonresidential, nonoccupied properties, Member Brooks, O'Rourke and Rue Landau right behind me, not talking about any of them, but what does New York do that we don't to make sure that people pay and how do we compare to them? If you mess around with New York, they will come after you, take that property. What do they do that we don't?
I would have to get back to you on that. I'm not aware of New York's tactics. So we'll say in the state of Pennsylvania we have the best sheriff's sale process. It's significantly better than what the other counties have. They have to do two rounds of sales to our one. And that's been a tremendous tool for us, particularly now that we have Owner-Occupied Payment Agreements so that we feel comfortable that we are not sheriff selling owner-occupied residences. We've been able to be more aggressive with sheriff's sale and it's very effective both in collecting revenue and also in getting nuisance and underutilized properties back into the hands of somebody who cares about them and will develop them.
Can you provide to the President's office an analysis comparing Philadelphia to places like New York, Washington and maybe even Baltimore, see how they are approaching this? As our properties have become more valuable and our revenues stated by you are going down, we might need to tighten that up a little bit. Thank you, Mr. President.
You're welcome. The Chair recognizes Nicolas O'Rourke.
Thank you, Council President. And thank you to the Department of Finance and the Department of Revenue for joining us today and working with us to understand your budgets and priorities. Looking forward to working together, our office, certainly to ensure our City tax and finance systems are both keeping the City and working people financially stable. For the last three or four years, the Budget Office's Education, Engagement and Impact Unit has been holding citywide community engagement sessions, as I understand it, to educate the public about the budget process and to incorporate community voices into the budgetary goals of the Administration. Just this past fall the Budget Office engaged with nearly 800 Philadelphians to collect feedback on the budget. I want to pause and recognize the critical importance of that mission and to thank the Budget Office and all the community partners that contribute to this work. Philadelphians who don't have the time to make it to City Hall for a hearing or might be tuning in now while on the clock, they need to have different venues and arenas by which to participate in this process. I think it will be better for all, if that's possible. However, we've recently been informed by community partners that the FY25 spring engagement sessions have been put on hold indefinitely by the Administration. So that the budgeting process can be informed directly by the people of Philadelphia, will this program continue?
Yes. We're just trying to figure out kind of the best way to do it going forward.
Any idea so far in terms of specifically about what the new Administration wants that engagement to look like, especially for the remainder of this budget cycle, and any ideas that are kind of already coming up as you're thinking about it?
Yeah. I think we're kind of in the early stages of figuring that out, but we'll get back to you with more detail.
Okay. I'd like to turn now to discussing taxes and revenue. I want to acknowledge and applaud the work that has already been done to create and expand existing tax refund and exemption programs, including the Low Income Wage Tax refund, Homestead Exemption, LOOP, OOPA, Senior Tax Freeze and the Water Department's TAP program, all of these which are absolutely essential for stabilizing most vulnerable Philadelphians, and thanks to the President of this body for asking similar questions earlier. As far as I understand, the Water Department has been working closely with the Office of Integrated Data for Evidence and Action to automatically enroll eligible Philadelphians in the TAP Program by taking advantage of data-sharing and cross-enrollment. This is a huge development and really exciting step forward in cutting through the red tape to automatically enroll Philadelphians in the programs that they need, something that we really, really want to do in our office to make these sorts of things easier to be able to access by folks. That said as far as I understand, for one of our most important tax exemption programs for homeowners, the Homestead Exemption, it's estimated that a fifth of eligible homeowners are not enrolled in this program. That's a huge misopportunity to actually help more people stay even in their homes, even though the number may be small. What's the plan to use data-sharing and cross-enrollment efforts to try to auto-enroll 100 percent of eligible homeowners in the Homestead Exemption?
I think there are some state law issues that complicate that, but I'll ask Revenue to come up and explain. (Witness approached Witness Table.) COMMISSIONER McCOLGAN: Good morning, Councilmember.
Good morning. COMMISSIONER McCOLGAN: Thank you for the question. I appreciate that we share the same goal of expanding assistance programs for all that are eligible. We certainly have made great strides in doing that over the years. And as you mentioned, we recently, very recently, auto- enrolled many customers into Water assistance programs. In terms of Homestead, there's challenges in utilizing data and matching it accurately for all programs, but there's I think additional limitations and further complexity on the tax side in doing that. So for Homestead specifically, we do not have data that accurately reflects properties that are owner-occupied, which is why we do all that we can in reaching out to property owners to let them know about the program to assist them in enrolling in it. The application is very simple and I think easy for homeowners to fill out. And like I said, we offer support in doing that as well. So there really is no one source of data that we have been able to identify to expand Homestead. Now, I'll also just say on the tax side in terms of other tax relief programs we are bound by laws of confidentiality that also really limit what we can do with that data. So we look forward to continuing to work with City Councilmembers and the Administration to identify new ways to do that, but it's certainly a challenge and not something that we can easily implement.
It's a legal thing. Okay. I don't know if this is for them. I'm going to move on. Another absolutely crucial component of stabilizing the most vulnerable Philadelphians is holding predatory landlords accountable and enforcing the rental code that keeps Philadelphian renters safe in their homes. Half of Philadelphians are renters, something that we should always keep at the front of our minds. And almost half of Philadelphians' rental properties are in states of disrepair that can actually jeopardize the residents' safety. For instance, doors with secure or insecure locks, homes with lead, mold and animal infestation, leaking and caving roofs. Meanwhile only 7 percent of Philadelphia's rental units are inspected each year and often code violations are not enforced on landlords. The Department of Revenue's budget testimony states that Revenue has a plan to utilize tools available in the Philadelphia Tax Center to improve tax and water data-matching to identify landlords with multiple property delinquencies for sequestration and consolidated actions. I hope I said that correctly. That's a quote. Can you speak to what this plan entails? COMMISSIONER McCOLGAN: Sure, absolutely. Thank you for the question. Sequestration is a very important tool for us in collection and it also provides protections for tenants because we are appointed a court-ordered sequester to take over the rents that are paid so that they can pay off the delinquency of property, and that protects tenants from water service disconnections and sheriff's sales and strong enforcement action like that. And so, in terms of what we report in our testimony for the improvement in data use, the Philadelphia Tax Center has a data warehouse that allows us to better analyze and aggregate data from all of our systems so that we can identify those landlords and also pursue them in a more efficient way.
Thank you, Mr. O'Rourke. The Chair now recognizes Councilmember Jim Harrity.
Thank you, Council President and colleagues, Rob. My questions have to do with the real estate also. And I'm just going to give you all three questions. That way you can just answer them, if you have to get back to us with information, that'll be fine. Real estate tax, how many properties owe back taxes here right now that we know of? What is the average amount owed in back taxes on a per-property basis? And when these properties are put up for sheriff's sale, what is the percentage of back taxes that the City collects? COMMISSIONER McCOLGAN: Thank you for the question, Councilman. I think I'm going to need to get back to you on at least two of them. I'm just going to look real quick and see if I have the answer to your first question. In response to your first question, the number of properties that have delinquency, there's just over 67,000 properties that have delinquency.
All right. And then Councilman Jones had asked my fourth question, but just a follow-up to that. So how can we expand the outreach to determine the number of owner- occupied properties? COMMISSIONER McCOLGAN: I do not believe that we have data that allows us to accurately determine which properties are owner-occupied. But what we've done recently, and we're just finalizing, is a mapping of the City of Philadelphia that creates a scoring that allows us to understand which parts of the City need outreach the most. And that scoring includes median income levels. It's by Census tract, median income levels, the number of children in that area that are enrolled in assistance programs, the number of properties that are tax delinquent and the number of properties that are delinquent with water so that we can focus outreach in that area. And once this mapping is complete, our plan is to reach out to Councilmembers in those Districts to see how we can best partner with you and other agencies in the Mayor's Administration to conduct outreach in that area.
Okay. And then just one more question: The policies for tax clearance, when the property doesn't owe taxes but owes commercial fees or something similar to that? COMMISSIONER McCLOGAN: I'm sorry. What the process is your question?
Yes. What's the policies? COMMISSIONER McCLOGAN: Okay. So for tax clearance, anybody who is seeking to essentially do business with the City, they're seeking to get a license or permit from L&I. They want to open a business account, they are applying for a refund or a vendor who's doing business with the City, they have to be tax-compliant. So we have an interface with Licenses & Inspections that does not reveal any confidential information but simply indicates whether somebody is compliant or not. And if they are not, then they need to respond to -- I'm sorry, they need to come to Revenue so that we can help them come into compliance. That process has been significantly improved with the Philadelphia Tax Center. Customers can go online and print a tax clearance certificate themselves. They can do that prior to the Philadelphia Tax Center, but the difference now is that they can log into their account and actually see why they're not compliant and work to resolve it there.
Okay. Are we advertising that this system exists now because this is the first I've heard of it here? COMMISSIONER McCLOGAN: The Philadelphia Tax Center?
Yes. COMMISSIONER McCLOGAN: Yes, absolutely. We went live with the first phase of that in the fall of '21 which was most of our business taxes. We went live with the second phase in the fall of '22, and then we went live with a third phase which replaced our cashiering system in the fall of last year. And throughout that entire process, our communications team did a really excellent job of creating videos, tutorials, directing and explaining what to expect during each of those processes, so that's all on our website. And I think that those videos have been very helpful to people who are adjusting to new processes with the system.
Thank you. Appreciate it. COMMISSIONER McCLOGAN: Thank you.
The Chair recognizes Councilmember Isaiah Thomas.
Thank you, Council President. Good morning, colleagues. Good morning, Administration. Thank you for the testimony yesterday. A couple of questions: So first, I'm a big fan and a huge supporter of the Administration's recommendation around moving from 55 percent to 56 percent of real estate taxes going to the School District. I'm wondering what is the Administration's overall vision as it relates to real estate taxes going specifically to the School District? Does the Administration anticipate coming back before this body and asking us to look at those numbers again in the near future?
Not this fiscal year. Obviously something in each year as we do our plans and budget, we will look at and decide whether there are changes that we want to propose.
But do you think that this is something that you'll have an appetite for in the future or do you anticipate it being a one-time ask?
I can't commit either way at this point. It is something that we're going to evaluate every year.
Okay. I think that will be important for us to know so we can understand what we want to do as it relates to the percentage of real estate taxes that goes to the schools. Earlier in your testimony you said 7 percent of real estate taxes, the revenue from real estate taxes come from commercial businesses, correct?
Okay. So that means that based on your numbers, 85 percent of the --
-- real estate tax comes from residents, right. So when you talk about an 8 percent increase in the income that we expect on real estate tax and combine that with the fact that you anticipate losing over $1 billion from commercial businesses, you're basically anticipating the bulk of that money being paid off of the backs of middle-class folks which is the same demographic of people who's choosing to leave our city; is that correct?
Just one clarification. What we're assuming is 8 percent increase on the residential side and then that appeal loss and 0 percent increase on the commercial side. So the overall, we talked about this yesterday, is in the 4.5 to percent range. That 8 percent is just on residential.
So what I'm asking is the same demographic that you're expecting to see this increase from is the same demographic of people who are choosing to leave the City of Philadelphia; is that correct? When we look at our population issues, a lot of the people who are choosing to leave the City of Philadelphia are working middle- class people, correct?
So the tax rate is on everybody who owns a property, not just middle-class people and the Homestead at 80,000 gives more relief to a home that has lower value because it's a bigger percent of that value.
-- this is what I'm saying, I'm saying when we're looking at the population change in the City of Philadelphia, the same demographic that is choosing to leave the City of Philadelphia is the same demographic of people that we're relying on as it relates to real estate taxes and who we anticipate the new revenue coming from, correct?
I don't think so. I'm trying to say I don't think so. Because of the various relief measures we have, property --
Okay. So we can agree to disagree on that one again, right? Because Homestead and LOOP are phenomenal programs, but we talked about yesterday how a large percentage of our city who actually need to take advantage of these programs don't necessarily get the information in time. So with that being said, out of our top employers in the 5 City of Philadelphia, how many of 6 those folks pay real estate taxes? 7
10 Employers, the 10 folks who provide the most jobs to people in the City of Philadelphia, how many of those folks pay real estate taxes?
So I don't have that in front of me, but I know that there are a number of those that are nonprofits that do not pay real estate taxes on all of their properties. Even nonprofits pay some real estate. So if they have commercial activity, they'll pay on that. But for a --
So, for example, if you're Penn and you have commercial property that you own, you'd be paying property tax on that.
So how much do you think we get from Penn per year on property taxes?
Okay. So based on what I see the majority of our employers in the City of Philadelphia are government agencies like the City of Philadelphia, SEPTA and things of that capacity, hospitals and nonprofit organizations such as Temple and UPenn. Based on our analysis, out of the top 10 employers in the City of Philadelphia the only one who pays real estate taxes is Comcast, and we know that they have franchise agreements and other subsidies from the City of Philadelphia as it relates to real estate taxes. So based on your testimony, the percent of our real estate 5 revenue comes from nonresidential 6 spaces. What is the 7 Administration's plan, similar to 8 Councilmember Jones' question, what 9 is the Administration's plan to 10 move that number from 15 percent to 11 a higher space? 12
Yeah. So that 13 number becomes higher the more that 14 we have people in relief programs, 15 the more programs that we offer. That means residential properties are paying less tax, more of the tax would come on the commercial side.
So to the extent that we have relief programs and they're on the residential side, it means we're getting less revenue on the residential side and more on the commercial side.
Okay. So just to paraphrase, your vision is to offer more incentives and programs to residents so that a larger percentage of the real estate taxes come from businesses instead of residents?
We've been doing over time, right, by offering more relief programs. That's the impact of that.
Why not do things to try to attract more businesses so we have more --
So what's your vision around that? How do we attract more business that will pay real estate taxes?
As we talked about yesterday, we want to make the City to be a safer, cleaner and more attractive place for people to come to.
Philadelphia is one of the poorest big cities in the entire country. percent of our city lives in 8 poverty. From a tax perspective, 9 what incentives are we offering to 10 encourage business growth and 11 better jobs here in the City of 12 Philadelphia? 13
I'm 16 sorry. I'm talking about new 17 things, like in this year's 18 budget -- I know what we do in the 19 past. I'm saying what do we want 20 to -- clearly that's not working. 21 We've been the poorest big city for a long time. So what innovative approaches are you all recommending to address some of the poverty issues that we have from a tax-base perspective?
So we're not -- in this budget and plan we're not attacking that from a tax basis. We're attacking it from an investment basis. We're attacking the things we've been talking about, about increasing what we spend on public safety, increasing what we put into workforce development. It's a different approach.
Thank you, Council President. I know my time is up. We definitely recognize that it's a different approach. And I think all of us who travel across the City of Philadelphia will agree that the City needs to be cleaner and we need to do a lot about public safety, but I do think that we can do both at the same time. I think that we can ensure this City is cleaner. We can do things around public safety. But we also really have to take a critical look of this issue around poverty, growth, business growth and especially Black and Brown businesses. The City of Philadelphia is one of the worst cities in the entire country as it relates to giving Black and Brown businesses the opportunity to grow, expand and remain here. If a business -- we recently seen an article where a business chose to go to Conshohocken instead of Philadelphia. The Philadelphia suburbs is one of the most economically thriving suburbs for any major city in the entire country, and we have to at some point have the hard conversation about why people choose to go to Conshohocken and Plymouth Meeting and all these other places instead of Philadelphia. And I can assure you that safety and clean and green is not the only reason. If I'm going to have to 6 20 percent more profit in my bottom 7 line by going outside of the County 8 and can still enjoy all the great 9 things that we fight for, at some 10 point we have to have that tough 11 conversation about why businesses 12 choose to do that. 13 Thank you, Council 14 President. 15
You're welcome. The Chair recognizes Councilmember Kendra Brooks.
Good afternoon, everyone. And thank you for your overview on the Administration's priorities. I want to focus my questions this morning on revenue. This upcoming fiscal cycle will have most of our federal dollars from COVID pandemic relief coming to a close. Because of that, I want to make sure that we are not just looking at this proposed budget but what this budget signals maybe coming out -- well, coming in the outlying years of the five-year strategic plan. So according to that plan, the Administration identifies one of the challenges we face is major sources of revenue drying up and the tax bases that faces challenges. Much of the Administration's plan around this is pushed into the next budget cycle to take into consideration recommendations from the Tax Reform Commission. The Inquirer had stated the lineup appears favorable towards business interest. So I'm interested to see what is the criteria the Administration has for this Commission, like how are people being picked on the Commission and will community organizations or members of the public be able to make recommendations to the Mayor?
So the Commission was actually set up by a Council resolution. It has members, four appointees from the Administration, four from Council, four from the Chamber and one from the Controller. And I think those slots are in the process of being figured out right now.
So one of the things when we looked it up, we saw six seats for the Chamber on this Commission. And I want to know what is the Administration's plan to ensure diversity of opinion? So will there be spaces for those who hold a view that more revenue is needed for good City services?
When we look at who we will be appointing, yes, that will be one of the things that we consider.
So what is the expected timeline for the completion of the Tax Reform Commission's work?
I mean, it's not our Commission so I don't want to be presumptuous. You might defer to the Council President on that question.
Sure. We're in the process now of aligning up the appointees to get the process started. We expect recommendations that come out of the Commission for this upcoming budget process as well as a long- term strategy on how we evaluate our tax structure system as a whole. And so, I'm looking forward to once I get the appointees from the Administration hopefully as early as next week to start the process. We have our appointees. We're just waiting in giving the Administration some time to give us theirs. But obviously, the goal was to kick this thing off next week. That's the timeline that we have. Thank you.
Thank you, Council President. So given the pending 2025 fiscal cliff that PICA referenced and especially with the ARPA money running out at the end of this year, how is the Administration thinking about solutions that won't negatively affect working Philadelphians and communities?
Yeah. We showed that through our Five Year Plan. So the plan has the ARPA money going away. It has the big pension obligation bond agreement in '29 and it still stays positive in each of its years with the investments that we've been talking about over the last couple of days.
So knowing that the cuts to the Wage tax and BIRT tax directly impact communities as it cuts into our revenue for public services such as parks and libraries, if such tax cuts are proposed, where would the Administration consider cutting budgets to pay for these tax cuts?
So we don't look at it in that trade-off. We do look at tax cuts as an investment that are designed to help grow the budget over long- term. And I think the disagreement that we're having now is what's the best investment to grow the economy, not whether these are all legitimate investments.
So the City is currently in negotiation -- I'm on to my question -- with the public sector unions for new contracts. In the budget there is a bucket of money set aside to pay for wage and benefit increases. If this amount turns out to be insufficient, how might the City increase revenue in order to close that budget gap?
So what we do, every time we have a collective bargaining agreement is look at how it relates to whatever we set aside and then we do kind of a holistic approach to figure out how we balance our budget and how we can do that without having an impact on services, so that's a process we'll go through when we see where they come out.
Okay. One of the program's goals that I was happy to see included in the Five Year Plan from the Department of Finance was advocating to eliminate the Uniformity Clause at the state level. The Uniformity Clause keeps our residents in poverty by taxing billionaires at the same rate as our embarrassing low minimum wage. So State Rep Liz Fiedler has recently introduced legislation appealing the clause. So the past Administration has been unsuccessful. So I'm curious about how the Department of Finance plans to advocate for the repeal of the Uniformity Clause and what we can do to help in City Council to help those efforts?
Yeah. I think what we really want to be able to do at the state level is make the case that this is really important to us. So, for example, being able to tax different types of property different rates like New York does. He talked about New York earlier. That's really helpful, or maybe looking at whether you have different rates on the wage tax too so it can become a progressive tax rather than a flat tax. I think there are really important things that you could do if you didn't have the Uniformity Clause. And part of our job is to explain to the Commonwealth why that's really important. And to the extent that Council was partnering with us in that advocacy will be really helpful.
Thank you. The Chair next recognizes Councilmember Cindy Bass.
Thank you, Mr. President. I just wanted to follow up on some conversation that was had with Councilmember Jones. And the conversation brought to mind something that happened with the Revenue Department several years ago that I just wanted to bring attention to, and it should never, never happen again. But I wanted to ask Revenue specifically about -- and I think, Frances, we had this conversation before regarding a constituent, a small business, minority small businessman in Germantown who had been out of business for quite some time. And the City of Philadelphia could not find his payroll tax records. And so, what they did is they prompted him and said, we don't have a record that you have paid these payroll taxes, you are required to do so. We need those records or we need the payment ASAP. He had been out of business and not to mention the fact that it had been probably about 15 years after the fact that we were asking him for this documentation and he couldn't find it. The payroll company was nonresponsive. And so, the City of Philadelphia sued and won in court a judgment saying that these payroll taxes had not been paid because the City couldn't find them and the business owner couldn't find them, the payroll company was nonresponsive. So fast-forward maybe six months, maybe a year, I forget the exact amount of time, this was during the pandemic, but he found the records. And when he went back, he found the records, he found the documentation, the payroll company actually had finally responded what it was, finally responded, provided the documentation to the City of Philadelphia. And I remember specifically that the City had -- I don't know what it's called in legal terms, but the City had basically asked the judge please do not admit any additional evidence in this case. And as a result of that, he was unable to submit records that clearly showed that these taxes were paid and that the City just basically couldn't find their records and their documentation. And so, I wanted to ask about that particular filing that says if someone is able to find their documentation and then the City has already asked the court not to accept any additional documentation, is that a standard practice of how we collect tax revenue or payroll revenue or any other type of revenue in the City of Philadelphia? And I would even further suggest, and maybe we need to legislate, that that's not something we should be doing. We should never say we don't want to see additional documentation. Because even if you paid it, we just want to make you pay it again. And so, again this was a small businessman from Germantown who's out of business and who now has a $60,000 judgment against him from the City of Philadelphia for payroll taxes that he can prove that were paid. So I'd like for there to be some comment on that. (Witness approached Witness table.)
I'm happy to follow up with you offline on any particular case. I do not remember the incidence of which you're talking. I will say that I'm also not aware of my office ever having tried to collect anything twice. We're very scrupulous about that. And we are very clear that our mission, and I stress this with my young lawyers, is to collect the correct amount of tax, not the maximum amount of tax. Once we have somebody, we're not trying to ring the maximum out of them. We're just trying to get them to pay their fair share.
Well, thank you for saying that. I'm glad to have you say it on the record because that's not what was communicated through yourself and also through the previous Revenue Commissioner. We had these conversations and I was in the courtroom hoping that we could have some justice for this particular business owner. And the Revenue Department was extremely, you know, just firm in their belief that there was no further recourse for this particular business owner, and that because he couldn't find the records when they were requested, that they were not going to give any consideration to the payroll records that were provided by the payroll company. It wasn't something that he went home and doctored up himself. These were official documents. And when he presented them, I specifically remember the response from Revenue which was basically we don't care, we're collecting again and we don't want, you know, we don't want to see what he's presenting. So that's why I'm asking that, you know, in the future there should never be any sort of case in which the City of Philadelphia is saying we don't want to see additional evidence, because what we really want -- as you just said, what we really want is to get down to the facts.
There's no 20 question that we do not want to collect something a second time. That said, legal processes have deadlines. And if people fail to respond at a certain point, there will be consequences.
And I'm glad you brought that up because he did respond after the deadline because the City came back years 5 later and said that they wanted to 6 see these payroll taxes and that he 7 hadn't paid, 15 years. And so, if 8 you ask me to dig up something from 9 15 years ago, I'm going to have a 10 really hard time doing it. 11
Again, I 12 can't comment on the specific case 13 because I don't -- 14
I would be happy to have an offline conversation and to see if it's even still possible for the City of Philadelphia to rectify their part in this matter because we look badly in this. We look like we took advantage of someone because we had the power and the authority and the legal muscle to do it and it just wasn't the right thing to do. So I look forward to having that conversation with you offline. So thank you.
Thank you. And that wasn't my question. I wanted to ask about NPI dollars. And if we can get an idea of the $100 million that was spent from last year and additional monies, how much have we borrowed thus far on NPI?
Have we spent down our entire 200 million? Is it all allocated for -- are we doing additional borrowings any time soon?
We have not spent all the money and we will borrow again based on cash flow. When we need cash, then we will borrow again.
Okay. Can you tell us how much of that 200 million has been allocated roughly?
Jackie Dunn, the City Treasurer is coming up. (Witness approached Witness table.) CITY TREASURER DUNN: Good morning. Jackie Dunn --
Good morning. CITY TREASURER DUNN: City Treasurer. Thank you. Regarding the NPI borrowings, we've done two $100 million borrowings for funding for the NPI programs. And across both of the borrowings, there is $90 million remaining as of this morning. So they spent around 110 million of the proceeds.
Okay. And what's the timeline on spending down that last 90 million to get it out the door so we can make some of these projects? CITY TREASURER DUNN: Sure.
Because we've got so many projects. It takes the City so long to spend money. CITY TREASURER DUNN: Sure. It does take time for capital projects to move through the pipeline. The NPI team has been doing a great job. They consistently requisition for funding. I think historically over the two years it's been about $4 million a month. That said this morning, we got a large requisition. So the NPI team indicated they're going to do an updated future forecast of spending needs. And then as the Finance Director mentioned, we'll base timing of the next borrowing on that so we make sure they have the cash when they need the funds available.
Okay. All right. Thank you. I'll come back on my next round, Mr. President. Thank you.
Absolutely. Chair recognizes Katherine Gilmore Richardson.
Thank you, Mr. President. Thank you all so much for your testimony. And thank you in particular, Rob, for all the work that we were able to do together in the first terms, a lot of fun. So you know that I was up going through some of the old transcripts and some of the work that we've done --
-- over the last four years, but my colleagues have addressed some of the questions that I had already. So if we could just get a copy of the report from S&P Global Market for our review. You can submit it to Council President for dissemination to all members of Council.
Yeah, we can -- yes, we can get you that. So a lot of what happens is conversation. We can send you things that we have in writing from them.
Oh, okay. So whatever you can share so that we can understand the perspective as well. You know, the Five Year Plan, it proposes about 1.2 billion in new capital investments across the life of the plan. So our ability to afford this sort of significant level of borrowing is predicated upon our credit rating which you talked about with Council President. And so, are we projecting that our debt service costs on the new spending based on our current ratings or do we have different scenarios of cost in case of rating decreases?
Yeah. So this goes back to the question of kind of what cost -- how much cost would change for a rating. So we can get you that information on what a change in rating means for cost.
Okay. And then we're still here, the $80 million balloon payment?
right? Okay. Just want to make sure. And I'm going to skip the real estate transfer tax question. I'll submit that for the record because a few folks asked tangentially about that. Now, the budget and brief, it shows that obviously we know a 63.5 percent reduction in the federal dollars from FY23 to FY24, but then a 5 percent increase from FY24 to '25, could you just explain that?
From federal dollars, it probably has to do with timing of reimbursements. So that's -- sorry, one second. Yeah, that'll be timing of reimbursements for higher cost.
Okay. Hold on one second. I'm just taking notes here. Okay. And then obviously we saw the percent projected 5 increase in the hotel tax. And 6 obviously, that's probably due to 7 PHL250 in 2026 and MLB. Could you 8 just explain that? 9
Well, it's 10 partly also because we want to make 11 sure that there are sufficient 12 appropriations if that tax comes in 13 higher than projected. And so, we 14 have that projection as probably 15 higher than it'll come in just to 16 make sure we have appropriation 17 power, and they can only spend what 18 comes in so it doesn't -- 19 increasing the projection doesn't 20 mean that they can spend more. They can spend what comes in and nothing more, so we're giving them room in case more comes in.
Just putting that on the record. Also, for Public Property, in the budget and brief the FY24 original budget for the sale of our capital assets was 28 million, but the current estimate is 1.2 million and that's also the estimate for FY25. Why was the FY24 original budget so high and why is the current estimate so low and why does the proposed FY25 amount remain flat?
Kind of based on the progress we've made in selling assets, it became clear we're not getting them sold quickly. We still have it in the Five Year Plan, but we don't think it'll be in the first year of the plan.
Yeah, because there are a couple of big sales. And so, if they're not happening, then the dollars move further out in the plan.
Yeah. I think one of them is the Roundhouse. I think that's the biggest one. And there's obviously a longer process there than we had anticipated.
I think there's also one of the medical facilities as part of kind of an overall change there.
Okay. Also, in the budget and brief the FY24 original budget for zoning permits was $3.4 million, but the current estimate is $7.3 million, and the proposed budget for FY25 is $2.4 million. And so, with such an increase from the proposed to the actual, why are we now anticipating a drop for FY25 in this new proposed budget?
And actually the person who works on that is out sick today so --
Oh, okay. If you could just submit that one also to Council President, because some things just stand out when you're looking through the page.
I have a few more and I'll come back on the second round. In the budget and brief, the FY24 original budget for the court cost reimbursement is $10 million, but the current estimate is $6.5 million. So do we anticipate receiving the full budgeted amount by the end of the fiscal year?
That is something if we could I'd like to have a conversation with you outside the public hearing.
Understood. Okay. And so, we will get that scheduled. Okay. Really quickly for Water revenue, also in the budget and brief there's an estimated 55.2 percent decrease in revenue from the state and federal government for a watershed assessment and redevelopment projects. And so, could you just explain that reduction?
Okay. And then I'll send you the second question because Water originally budgeted a 37 million transfer from the Rate Stabilization Fund in FY25, but now the current estimate is 62 million and the FY25 budget is 57 million. So if you could just explain also with that.
Yeah. That one I can probably talk through a little bit now. So collections in general are a little lower this year than anticipated.
And when collections are lower, they need to pull more from that fund.
Right. But I think the concern here is that there's really been an increase and reliance on the Rate Stabilization Fund. And so, how do we deal with that?
That is a legitimate concern and something that obviously will be part of what Water considers in their next rate case and when they look at their expenditures.
Okay. I'll come back on the second round because I still have a ton of questions that I need to get on the record. Thank you, Mr. President.
One more? All right. Now, we're back in business. Thank you so very much. And thank you, Council President. So to that point I just want to get this one finished because this is of concern because we know we'll have some additional borrowing coming in the coming years. But how much remains in the Rate Stabilization Fund based on the FY24 estimate and the FY25 contribution?
Okay. I'll send you the last question too as well.
Okay. Well, in FY23 Water had 250,000 in Class 500 contributions. In FY24, a $6 million allocation in Class 500. FY25 proposed is $6.5 million. So what's the significance in -- same thing?
Okay. Because it's a significant bump. It's 250 to 6 million to 6.5 million in just a two-year fiscal period. Okay. In the budget and brief again, Office of Sustainability has a 539 percent increase in grants revenue from FY24 to FY25. And so, we recognize that that office is overperforming in bringing in grant revenue obviously. Do you believe that we are properly resourcing this department to manage all of the new grant dollars that they have?
Because some of those I'll say Class 100 increases were achieved through Caucus amendments. And you know typically the Caucus amendments aren't included in the new proposed budget for the next year. And so, I just want to get that on the record as we move down this process.
Of course. Of course. We talked about BSR yesterday, and you sort of went through that over the life of this proposed Five Year Plan that there's a decrease in $21.8 million for the BSR contributions. And I just wanted to get on the record there that we know the City is likely to face some type of challenging economic time at some point over the Five Year Plan, particularly because -- and in addition to that though, our fund balance will be relatively low. And so, I just wanted to ask for the record what conditions would this Administration consider necessary to tap into IR or BSR, recognizing that BSR has different rules around how you and when you can tap into it?
Right. And just for context to the answer, by the end of the plan we're at 265 million in the Fund, which is more than we've ever had in a Rainy Day Fund. So that's a big help. I think we would really want it to be like a real fiscal emergency to tap into that. And what exactly that would be we'd probably have to kind of see it to know. But, you know, I think the idea behind that is it's got to be something extraordinary for you to pull into it.
And I only ask because of the initial proposal relative to putting the dollars in IR versus BSR.
Well, I'm saying both. But I understand that BSR it has to be certain economic conditions in order for you to tap into BSR. I asked that because in the proposed budget there's contributions going to IR more so than BSR -- I'm sorry, for appropriations for the spring midyear.
Right. But over the life of the plan there's much more emphasis on the Rainy Day Fund than on the Recession Reserve Fund.
Right. And so, I will tell you why I ask this. You know, originally when we approved the budget for FY24 there was a large -- it was a bump the year that we had to spend down on the federal dollars, so it would have been a larger contribution to BSR which would have been around like what, 141 or 171 million?
Right, but now because of the way this plan is spending that changes. And so, while it's more regular, it's a lower number and it's also $21 million less or $21.8 million less than what we originally approved in FY24.
Because there's a set formula. The IR is both more flexible on putting and taking out. That's why in terms of putting in that was our emphasis.
Right. Okay. We can certainly circle back to that. I think we have a difference of opinion only because we thought the contributions would be made in a certain way based on when the federal spend-down would happen, but because the new budget is so different than the last relative to spending, it doesn't allow for the larger contribution that we originally anticipated in the life of the plan.
Understood. We still obviously get to a prehealthy amount in there but I understand your point.
Right. Now, going back to the budget and brief, there's a projected 10.19 percent in personal services obligations and a projected 4.12 percent increase for FY25. Could you just explain the increase in personal services obligations for FY24 despite our significant vacancy rate? And I did try to ask yesterday in preparation for this question exactly the numbers around vacancy and City employees.
Yeah. So I think the biggest reason for the increase in '24 is probably the three extensions.
No, not three. The collective bargaining increases, so there are increases in '24 for all of our unionized employees.
Increase under our collective bargain agreements for all of our unionized employees, so that would increase our personal services cost.
Gotcha. Okay. I will send you the other questions around the vacancy rates and also the projected vacancy allowances that are in the budget because I think that'll be important information for us to understand on how you all are looking at this budget based on what your vacancy allowance rate is going to be. Okay. Because things have just changed so much from what we approved previously. I will come back on the next round. Okay.
You're welcome. The Chair recognizes Councilman Anthony Phillips.
Thank you, Council President Johnson. I want to come back to the NPI question that Councilwoman Cindy Bass proposed. We have a number of projects in the City of Philadelphia that are still outstanding when it comes to the NPI funding, including the alleyways, the driveways, so forth. I wanted to know if we can get a better understanding of when that funding -- how can we do a better job with monitoring the funding so that the projects that need to be rendered to neighbors in our districts are able to go through in an effective and efficient manner? Meaning, we have a number of alleyway requests left, we have a number of driveway requests left, we have a number of other NPI-assigned projects left. What is it going to take in terms of a loan or other services that are going to need it to make sure that that those projects are going to be rendered and completed?
I mean, from our perspective we monitor the expenditures, the uses. And then when invoices come in, we make sure they get paid as quickly as possible to do exactly what you're saying, make sure that when projects are ready to go, we have the funding available and money can be spent and the projects can move forward.
Thank you. Could you provide our office with or just all of Council if they want, but our office with information on in order for us to fulfill the amount of driveway requests and connect that with the amount of funding that we actually have, how much more funding we may need in order to fulfill as many driveways, alleyways, whatever requests that are going to be given over the next year or so when it comes to the City?
Yeah, Rob. I just want to also -you can give your response, but also I'm working day-to-day with Jenaye Munford and the NPI team to do an overall assessment on NPI in general so we can also provide you some additional information in conjunction with the information that Mr. Dubow provides. Go ahead.
I just also want to provide another question around the Department of Finance and FY2025's proposal there's $3 million as being allocated for community development. Could you provide further details on the specific initiatives and approaches to community development undertaken by your office?
So I think what that is, is there's community development grant money that shows up in our office and then is actually used elsewhere in the government. We're just kind of the entity where the grant money comes in.
Got it. Got it. That was helpful. Revenue provides tax relief to individual homeowners and business taxpayers through a taxpayer assistance and credit program. In FY23, 75 percent of eligible homeowners receive relief and 80 percent is the target for 2024, 2025. Do these numbers include landlord homeowners or owner- occupied homeowners? Can we have a breakdown of the homeowners receiving relief by District and by their status?
Thank you. And I just also wanted to add this important question. The Department of Revenue's proposal states that after several years of successfully working with minority- owned businesses, Revenue will increase its OEO participation goal from 48 percent to 50 percent. Could you elaborate on Revenue's achievement in collaborating with minority-owned businesses, how many businesses have success stories to share as a result of this partnership? Also with a 2 percent increase in the Office of Economic Opportunity's participation, what is the additional funding amount and where will it be allocated?
Deputy Revenue Commissioner Delores Davis is going to come address that question. (Witness approached Witness table.)
Thank you. Good morning. Delores Davis, First Deputy Revenue Commissioner. Good morning to Council President and Councilmembers. We have been working with very large collection agency companies for a very long time that are minority-owned and also our current training and development vendor provides much of our training, professional development services which is minority and female. And so, over the years we also work very closely, collaboratively with the office of OEO to make sure that when we put out an RFP we are making sure that if there are any eligible minority businesses that we're reaching out to them, so we have been very successful. This is the third year that we're increasing our minority participation and we're really proud of the work that we're doing. We believe that the vendors we're working with also put a lot of emphasis on diversity and making sure that their subs are also diverse, so we're really happy to work with those agencies. I know you asked for some numbers --
It would be helpful for us to come back and give you those numbers.
Yeah, that's what I was going to say. If you get the number of success stories as well as the outcomes of those minority businesses, that would be great. My last question that I have, it is -- how do I say this. This is one of the best budgets that the City has ever seen in terms of expenses, you know. The questions have to do a little bit more about the details in terms of how are we going to implement a lot of these important measures. So those things are wonderful about what this budget presents. However, one of the concerns that I think several Councilmembers have thought about is we don't have a sense of something that is very likely going to happen, which is why our Council President put together the tax administration review process. We are in a position where there may be a need one day to increase taxes. And what do we -- and also to go into the, what's that fund -- not increase, I'm saying we don't want to, but we've got to be in a position where we talk about this. You know, we don't want to be in an economic downfall. What steps is the Administration going to be doing to make sure that we're increasing revenue so that we don't have to be in a position we have to go into increasing taxes for the City of Philadelphia because that fund is getting lower and lower each year, and we need to find out, you know, how are we going to make sure that we don't have to tap into it. So what's our plan for that?
Yeah. I mean as we talked about, we really believe that the investments that we make throughout this plan will lead to growth for Philadelphia and that will lead to increased revenues. So it's really everything that we've been talking about, everything we talked about yesterday, everything that departments will come to talk to you about over the next however many weeks is all designed with making Philadelphia a more attractive place for people to work, live, play, visit. And all of those things will help drive revenues.
No, thank you. And I just want to say for the record the goal is not to increase taxes, but the goal is for us to put ourselves in a position so we can find other ways of revenue as opposed to focus on the wage and earned income tax, which affects our residents because I know they would be up in an uproar if we have to increase taxes. So I just want us to come up with more creative ways, more -- if there's a plan or come up with creative ways, some additional revenue because Council President -- I mean Council Majority Whip Thomas had said something earlier about attracting more businesses. It's going to be key to our tax revenue plan. And I would like to hear more about that as well. Thank you.
Thank you. The Chair recognizes Councilwoman Jamie Gauthier.
Thank you, Council President. Since we've touched on this issue of tax cuts a good amount today and yesterday, I did want to make a few comments about that. First, I hope we're waiting for the Council President's Tax Reform Commission to issue recommendations before we take any action as a Council. I think everybody understands that we have to be extremely thoughtful about this. Last year when we approved the tax cuts, it was in light of an $800 million surplus from the federal aid that we received during the pandemic. So this is a non-recurring source, but the tax cuts that we made will outlast that. Also, in terms of what happened last year and its impact, the wage tax cuts saved the average Philadelphian $21 a year. The business tax cuts would save a company with a net income of $1 million $1800 a year. I understand that we want to send a signal to businesses that Philadelphia is a good place to do business. I also want to do that and I also want us to see growth, but I think we also have to recognize that there's another side to this that has to be considered and it's that every tax cut we make does cut revenue from the City that could be used for services and could be used to keep our balances healthy. In looking at the Five Year Plan, by the end of FY29 the fund balance is projected to be $14.4 million, less than 1 percent of revenue. So all of these goals have to be thought of concurrent, comprehensively, right, the desire to have business growth, but also what that does to the City's coffers and our ability to fund services. And then lastly, I just want to point out that Mayor Parker's proposal which has a hefty amount of services that we all like keeps taxes flat and that in testimony yesterday both Rob Dubow and Aren Platt, one of the Mayor's top aides, expressed again and again that if we want to be able to deliver on this vision of a clean and safe city, we need the revenue to fund the services and programs to do that. So just offering a perspective and hope to be able to comment more fully when there's an actual recommendation from the Commission. My questions are about the Housing Trust Fund. So Philadelphia's Housing Trust Fund is build as a dedicated source of local revenue that's vital to addressing the City's affordable housing needs. Through the City's density bonus program, developers may build larger than their zoning would typically allow if they include affordable housing in their development. But rather than actually constructing affordable units onsite, developers almost always choose to make a "payment in lieu of providing affordable housing to the City." However, not once since this payment-in-lieu option began has these density bonus payments led to a proportionate increase in the actual Housing Trust Fund. This means essentially that the City is cheating neighborhoods that are seeing overscaled development out of their benefits and that we are underfunding affordable housing programs citywide. So can you tell me how many of these payments in lieu have been directly allocated to the Housing Trust Fund and are they leading to a commensurate increase in the trust fund or are they just backfilling existing commitments to the fund?
Yeah. I can get back to you on that and I'll put it in the context of overall funding because a percentage of our expenditures each -- we make a contribution to the Housing Trust Fund each year based on a calculation as a percent of our expenditures, so I will get you something on trust fund funding overall and include what you just asked.
Sorry. Are you talking about the Charter change that happened?
Okay. So that is a commitment to the Housing Trust Fund. But outside of that, the density bonus program that has existed for years was always intended as a source of funding for the Trust Fund separate and apart from the Charter change which happened a couple years ago what has been, you know, has that process worked in terms of the density bonuses that are generated by development and what goes to the Trust Fund?
No. Definitely we'll get you that and put it in the overall context of the Trust Fund's financial position.
Okay. But you've been mostly -- this has been at the Administration's discretion since the program began and includes a lot of your input. Do you have a sense of what has happened?
Okay. Can you also provide a breakdown of where Housing Trust Fund dollars has been spent and for what purposes?
Is there a process by which you look at where high density development is happening in the City and look at those balances in the Trust Fund to determine what communities really need to see the impact of these dollars?
Yes. I think that's a process that Planning and Development goes through, so I do think that happens.
I think that's a Planning and Development question. They're the ones who really do that.
Okay. But you'll be able to get back to us with a detailed sort of assessment of where those funds have been spent as compared to where they've been generated?
Like I said, I'll work with Planning and Development on that and see what they can provide.
Thank you so much. I wanted to talk a little bit about water assistance. So our Constituent Services Team receives dozens, if not hundreds, of calls from constituents asking for help with their utility bills. So we greatly appreciate all of the assistance that Revenue provides for water bills. But I wanted to learn a little bit more about water shut- offs. So can someone talk about the demographics of customers who have faced water shut-offs in recent years, what neighborhoods they live in and what their average income level is? (Witness approached Witness table.) COMMISSIONER McCOLGAN: Good morning, Councilmember.
Good morning. Let me see. I'm just going to check and see what stats I have with me for shut-offs today. I can in general though share with you that many protections have been put in place over the last few years again through data-matching. We have protected households with seniors, households with children, income levels that have been protected through data- matching from shut-off. We also have had the Raise Your Hand program so that if somebody who also identifies with one of those groups was not identified through data, they have the opportunity to also be protected from shut-off. So the number of households that are eligible for shut-off at this point has declined dramatically. This season we have roughly, approximately 2,000 households that were sent shut-off notices, leading up to the April 1st shut-off date.
Okay. Can you tell us something about the demographics of those 2,000 households and also how do we assess whether our shut-off policies and procedures are meeting the needs of these households, particularly those facing significant financial hardship and other barriers to payment? COMMISSIONER McCOLGAN: Okay. Well, again we do share the goal of making sure that anyone who is eligible is enrolled in those programs. We have partnered with other agencies. The Office of Engagement and Opportunity to do outreach to those who are eligible for a shut-off notice. So they are doing door-to-door, sending notices, leaving notices if they have not reached the customer to try to make sure that they understand that they're eligible for the program. We also have the CAP program so that people can apply for Water assistance programs and it's a consolidated application basically. And we are also working with design team in the CAO's office to evaluate the assistance program application to see what barriers are there and that are really keeping people who are eligible from taking advantage of it so that we can identify opportunities to improve the process so that we can increase enrollment.
Okay. I'd love for you to get back to us with some information about those 2,000 households and also information about how they fell through all those cracks, right. I'm assuming that the people who are in that 2,000 number, you tried to do outreach to or you talked to them about a plan and for whatever reason it didn't work. So it would just be good to understand more about that population so that we can see if there's something more that we need to do as a City. Thank you, Mr. President.
You're welcome. The Chair recognizes Councilmember Jeffrey Jay Young.
Thank you, Mr. President. And good morning, Mr. Dubow and members of the Administration.
Just have a couple questions related to the Five Year Plan again and where we are anticipating growth, right. Because from looking through the budget when the section that describes the City's fund balance for FY24 basically stating that the fund balance was bolstered by growth in ARPA and things like that. But then it says at the same time this projection reflects reduced revenue estimates primarily driven by real estate transfer tax, Business Income Receipts Tax which are coming in lower than projected of FY24, right. So that's lower. Then you look on what's it, 37, invest in Philadelphia. The fragility of the City's fiscal health will continue to be a challenge beyond FY25, right. So that's just all through your own Five Year Plan. Just to make another note, as of December 2023, Philadelphia's unemployment rate dropped to 3.7 but is expected to increase through 2026, and it goes on to say with continued inflation, labor shortages and continued uncertainty the City's budget faces twin constraints of operational feasibility and limited funds. These circumstances are layered on top of many unmet needs and challenges related to Philadelphia's persistent poverty agent infrastructure, high fix and inflexible costs and increasing need for public safety efforts and other challenges, right. And so, as I'm looking through here I don't see any areas of growth other than the anticipated growth of 8 percent in residential real estate taxes. So my question is has the Administration, has Finance done any projections on where this expected and anticipated 8 percent increase in the assessment will be, because typically from my understanding, particularly in the 5th District, where the values have been traditionally underassessed for years significantly, we are in a position where our neighborhoods are becoming more popular and could see the bulk of that increase. So can you tell us or show us where this anticipated 8 percent growth will be?
Yeah. I just want to say one clarification before. So it's not, for example, on the wage tax that were not showing any growth. It's that we're showing less growth than in last year's plan. So there's still growth in the range of to percent a year when we get to 26 to 29. So there's still growth in there, just not as much as the year before.
Right. But then we're doing a millage shift from the City side to the School District side so then we're losing that money as well. So whatever growth we're anticipating with that to percent, we're already conceding that over to the School District.
So to percent increase in the wage tax would generate more than $22 million. It would outweigh that shift. And I mean, if you look at what we've shown in our plan we do show overall revenue going down after because we lose the 17 federal money and then it starts to 18 grow from there, gets back up to 19 the 25 level in FY28 and then grows 20 again in '29. So we do show 21 growth. It's just kind of off a 22 lower base because we're losing the 23 federal money. And with that, that 24 anticipated growth, right? 25
And if we have this millage shift and this year is anticipated to be $22 million, but we know that our commercial real estate assessments will probably decrease by a significant amount given the lack of activity in Center City, what is our plan to continue to provide the School District with that same amount of money if our real estate tax revenues are lower?
Yeah. So that reduction in real estate tax revenue, that billion dollars in appeal loss we talked about, that's built into that number. So that 18 million already assumes the big 19 appeal loss. 20
Yeah, 21 that's for maybe FY25. But what 22 about moving forward?
Yeah. So moving forward, we think that we've kind of taken the commercial hit through those appeals. We won't see any growth in '25. And then in '26 as interest rates start to come down, we'll start to see basically inflationary increase in the property tax so there'll be some growth for the District out of that.
Getting back to my original question, have you all looked at where this 8 percent growth in residential real estate will be?
So that is a citywide assumption. As we get more detail from OPA, we will come back to Councilmembers and kind of show them a district-by-district breakdown of where we think that is.
So I guess what data did you use to come up with this assumption essentially if it's a citywide assumption where you had to pick certain places to figure out where this growth is, can you describe to us I guess --
Yeah. It's really based on citywide information that we see on the residential market. So what we've seen is kind of global. But as we get more refined information, we'll come back to Council.
So, yeah. I just want to ask what areas have you seen this residential growth in the market, the growth in the residential --
Yeah. What I'm saying is I don't have that, but I will as we get more information and we will come back to you and walk you through that.
Thank you. I have a few questions on your data systems. Can you provide an overview of the current data systems in use like their primary functions and the types of data managed because it mentioned earlier that you don't have data for homeowners, I guess, to do outreach directly. And so, I just figured -- I mean, just trying to figure out what systems you used because I have a data system where I can get the info for homeowners in the City. And so, I want to see what are you using.
This is a question for Revenue. I think is what you're... (Witness approached Witness table.) COMMISSIONER McCOLGAN: Good morning, Councilmember.
Good morning. COMMISSIONER McCOLGAN: The City has several different sources of data and we have property ownership information. What we struggle with is identifying properties that are owner-occupied, and those are the ones that are eligible for the assistance programs and that's the data that we really struggle to -- I don't have a source right now that can cleanly identify owner-occupied properties.
I'm just saying that I use the data to find owner-occupied properties. I mean, that's how I got here. So it's there, it's out there. I just think that we really need to look at other sources to get the data so we can target the folks who we really need to target that are most affected by this growth, right, in residential real estate that we're going to see. I can tell you it's probably going to be in neighborhoods like Strawberry Mansion, Ludlow, Poplar, those areas that I represent where there's a lot more interest in those areas than they have been in the past, you know, years. 4 And so, I really will hope 5 that the City targets those folks 6 to let them know that the great 7 programs that we have exist, you 8 know, we have the best in the 9 country but there are some 10 challenges with those programs. 11 And I have a question 12 related to Homestead and LOOP. 13 We've been getting a lot of calls 14 from constituents stating that when 15 they apply for LOOP, they get 16 knocked off Homestead. And so, 17 it's causing issues with their 18 mortgage company and things like 19 that and it can cause them to go 20 into default. So are you aware of that as being the issue, one. And if so, what can be done to fix that? COMMISSIONER McCOLGAN: I have heard that. And just to your earlier comment, I would appreciate to have conversations with you that could potentially improve the data that we use to identify owner- occupied properties. I'll be happy to talk with you about that. To your second point, we have heard that -- well, first I just want to say a homeowner cannot have both Homestead and LOOP.
Yes. Understood. COMMISSIONER McCOLGAN: And so, they have to make the choice between one or the other, and it can sometimes be a complicated choice to make which is why we did prepare a worksheet for homeowners to use to see which one they benefit from most to make that decision. Recently I have heard a few taxpayers have come forward to say that they made the wrong decision. And in that case, we have reverted back to the program that they were enrolled in.
I mean that's not -- so my question is we got a call from a constituent who applied for LOOP. It takes however many months for that to apply. But in the meantime as his application is pending for LOOP, he was dropped from Homestead because his application was pending with LOOP. And so, now he's liable for the full tax amount rather than getting a discounted amount from one of the programs. And so, I'm asking are you aware of that being an issue and how can we resolve that issue to allow him or them to stay on Homestead until their LOOP application fully is approved? COMMISSIONER McCOLGAN: Okay. I'm sorry. I better understand your question now. So for instances like that and that property owner, you can certainly send that to us and we'll take a look at it. It is a matter of timing. We in the Department of Revenue approve the LOOP application and then the tax is not adjusted until we receive a recertification, and we do work very closely with the Office of Property Assessment and have provided them with data recently that we think will help close that gap for some of those customers that fell into that category. But we can certainly take a look at the account that you have identified and see what we can do to assist the customer.
Yeah. I mean, a credit would be essential here because he has to pay -- his mortgage increased -- as Council President mentioned earlier today, his mortgage increased because he was in limbo with these tax programs. So I would love to reach out to your office and provide that constituent with your information. And I heard the bell, Mr. President. I have questions. I'll wait until the next round. Thank you so much.
Thank you, sir. COMMISSIONER McCOLGAN: Can I just add one more comment?
Go ahead. COMMISSIONER McCOLGAN: Deputy Rebecca Lopez Kriss just informed me that her team is working to make a system change to ensure that the Homestead is not removed until the LOOP is recertified, so that is something that we have in progress. Thank you.
Thank you, Mr. President. And thank you for clarifying that. That is a big concern that we've had also. And I guess while we're talking about that, as you mentioned the communication between OPA and Revenue, and we know OPA, we put a lot of money into the CAMA system. That's up and running. And we were told once that was up there that the communication between either assessment value changes or assessments in general would then be directly sent over to Revenue. Do you guys get that information as soon as OPA makes those adjustments? COMMISSIONER McCOLGAN: Yeah. So like I mentioned earlier, we do work very closely with Office of Property Assessment. We meet with them regularly to address any concerns that are affecting taxpayers. I can just speak to the process within Revenue as it relates to the Philadelphia Tax Center. And I can say that there have been improvements in recent years since we went live with the Philadelphia Tax Center in the processing and the speed of processing for those on the Revenue side. When the Office of Property Assessment recertifies a property, it is sent to Revenue and Revenue picks that up on a nightly basis now. And within to 48 hours, a 14 bill is issued for that. 15
As 16 soon as their appeal is completed 17 within 24 hours, you guys generate 18 a new bill? 19 COMMISSIONER McCOLGAN: 24 20 to 48 hours from the receipt -- 21 Revenue receiving that information. 22
But 23 it's automatic, right? They put it 24 in their CAMA system. You guys get it immediately? COMMISSIONER McCOLGAN: They put it in the CAMA system. There's a data-sharing environment, the data bridge where data's pushed to. So they push it to the data bridge and Revenue picks it up nightly and processes it.
So that's every night. So we can tell people as soon as that's done, you guys should have a new bill 12 available? COMMISSIONER McCOLGAN: Yes, that's already the process. So we pick it up, we process it nightly and the bill is generated within to 48 hours and sent out 18 to the customer. 19
That's 20 great because it wasn't like that. 21 COMMISSIONER McCOLGAN: No, 22 it wasn't. 23
And 24 how long has that been in effect? COMMISSIONER McCOLGAN: Since we went live with roll-out of the Philadelphia Tax Center, which was in the fall of 2022.
Okay. Then we have some problems because there's people that are getting appeals heard and six months still not receiving their new bill, so there must be a glitch somewhere. We've worked with your office within the last two or three years on individual cases that we were able to get resolved, but there's been six month lags before a new bill has been generated. What would be the reason for that since it's automatic? COMMISSIONER McCOLGAN: The process requires interagency processes. The process that I just referred to is strictly within Revenue. I think that it would be helpful for the Office of Property Assessments to probably talk through their processes when it's their hearing.
Right, okay. And we'll have to. And you guys will both be here at the same time because OPA I guess will take time to get it to you, but you pick it up every day even though they were saying that it takes 30 days for you guys to get it or -- COMMISSIONER McCOLGAN: It does not take 30 days for us to get it, no. That may have been the time frame that was reported prior to us going live with Philadelphia Tax Center.
Okay. All right. And then as far as Senior Freeze, and I know Revenue, the applications in PACENET is being increased. Are we increasing our new forms for that increase in PACENET from the Commonwealth? COMMISSIONER McCOLGAN: I'm going to defer to Deputy Rebecca Lopez Kriss to answer that.
The eligibility income level for Senior Freeze is directly tied to that PACENET number. So if the PACENET number changes, then we have to update all the --
But on the applications where it has the values, are we -- you know how you put PACENET value for seniors to be eligible if you're single if you're --
Okay. Yeah. All right. Because I think that's important to know that we need to make sure that there's a lot of people who just missed that. And I think the one question that Jeff, Councilmember Young, had mentioned about being dropped from one relief program as soon as you apply, you've made that adjustment or you're making that adjustment?
So they won't have to drop Homestead in order to apply for LOOP or vice versa?
Right. So there's kind of two processes happening. There's the process when folks submit an application on paper and that requires some process changes and then also when folks apply online, we need to make some system changes. One quick thing I'd like to add about the Senior Freeze eligibility, now that folks can go back five years, the eligibility -- sorry, um --
You could think that through and send us the information.
Yeah, we'll send it to you because I don't want to misstep. Now that they go back five years, what we are looking at is what was the eligibility five years ago, right.
But if they go back five years if they weren't eligible but then all of a sudden are eligible, then they would only get the two years that they were eligible for?
What is the earliest that they were eligible for the program.
Right. Okay. That's good. The auto- enrolling and we talked about Homestead for people. How do we know how many people are not in Homestead, what percentage are not in Homestead if we don't know how many people own homes?
So the Census Bureau provides estimates every year. As we do our analysis, we look at data that the Census provides and then we compare it to the data that we have. So I would say it's probably very close to accurate. But it's not the same data source.
And do we work with -- like when people buy homes and stuff, to make sure when they're purchasing homes that they have the option of doing Homestead at that point?
Yes, I've had that conversation with a few folks that I think that is a process that could be improved, that if there was a way to include Homestead applications within closing documents or within the closing process, I think that would alert people to the program much sooner. I know that when I bought a home my realtor just did it, like he said, oh, you need to fill this out. But I want to make sure that all realtors do that.
Is that something we should make a requirement or do you think it's something we need to do or is just something that's done through regulations or through policy?
I think we'll have to look into what the legislative answer is there.
All right. Thank you. And one last thing because I know my time's up. Auto-enrolling and we mentioned that if people purchase a home or live in a home, obviously we don't know if they decide to move somewhere else or they leave it and rent it and whatever and we have to figure that out case-by-case. But even with TAP, right, and Water revenue, I recently was auto-enrolled in TAP. I'm not eligible. So the criteria that we use, how do we double check to make sure that since I was auto- enrolled -- now, I'm removed, thank you for removing me. But when I received my first bill and I saw a discount, I said, oh my God, what's going on. But that could be a challenge because the ratepayers pay the difference for the people who are in TAP and the people who aren't eligible get in. How do we put those checks and balances in?
I think you bring up a really, really important issue with auto- enrollment. There is not a single source of income data across the City. We have flags for any number of things, but there's not going to be a single source where we can know someone's exact income. So we have had to weigh the benefit of having folks get into the program against potentially sweeping up folks who may not be eligible. What we try to do is communicate this change and make sure that folks understand the program and whether or not they might not be eligible.
Because some people when they get that, they say, oh, great, a discount. They may not never know, right, so now they're paying a discount price for a long period of time.
Yes, it's something that we as we're looking at other auto-enrollment programs, that's one of the biggest challenges, is not being able to really pinpoint somebody's income and trying to kind of weigh the risk of that.
We don't receive -- because wage tax is paid for by the employer, we don't receive individual tax returns from residents.
-- unearned income so it's not going to be the whole thing.
Not income. Okay. All right. Thank you. Hopefully we could figure out a way to clear that up. And what happens if somebody's on that for several years and didn't realize it and then we catch that, you know, all these folks are on TAP that shouldn't be on there?
I don't think that the City can appropriately try to back-bill someone. But I think we would need -- the goal is to bill as accurately as possible.
Okay. Thank you. Thank you so much. Thank you, Council President.
You're welcome. We are now embarking upon our second round.
No, we're in the second round. Y'all spoke the first round. We're in the second --
Excuse me. The Chair recognizes Councilmember Nina Ahmad.
We're good. Nina first. Then we'll go to Quetcy Lozada and then we'll go to -- and then we'll officially be in the second round.
Okay. So I had the question sort of a follow-up on what has been asked, particularly what my colleague Isaiah Thomas was kind of trying to get to around what are our plans for revenue growth. I had a question about the econometric analysis of your long-term investment doing the safe, clean, green. Do you have a sense of when that's going to start paying off?
Yeah -- I mean, sorry. So I would say that it probably starts to pay off relatively quickly as we have success and people start to feel safer. So I think it's probably relatively quickly. That's not --
So you don't really actually have a model set out saying we're going to invest so much, we're investing so much money and what is the outcome for that because that can then be tied into what other revenue growth-producing measures do we need to take to match up to really have real growth?
Right. I don't think there's a really good model that would make that link. So I think for an econometric firm, that's not something that they would be doing.
So we don't have a sense of when all of this will be actually profitable?
The next question I had was about the increase in millage. Have we taken into account what we're going to -- we don't know when, but what the state will be changing and how much it will be giving to the School District and is that tied in?
Yeah. Sure. So the Governor's budget proposes a $240 million increase for the School District, and that was part of what we considered when we thought about our millage shift.
So that means our millage increase was still needed after that investment that the Governor is potentially going to make?
Yes. So what the School District says is that the Governor's proposal was an important first step in meeting the requirements of the Commonwealth Court ruling of getting towards adequate funding. And our millage shift is another step in that process. But there's clearly more the state needs to do to get to where the School District --
The reason I ask is if the state sees us increasing our millage, will they then say, oh, they're going to take care of it themselves, we need not to --
I think sometimes the opposite happens where they'll say the City's not doing anything why should we, so we want to just show that we had a commitment.
All right. And another question I had was about this pandemic that we just came out of, right, or still coming out of. This was somewhat of an unforeseen global economic shock. Going forward, is there somewhere in the budget, I haven't seen that, that we actually have a proactive stance because we live in a world that's really small and we're going to have more of these. So what have we built in and where have we built in this anticipation of having to have another issue like this?
Yeah. And that's what you have the Rainy Day Fund and a fund balance for. That's what those were supposed to help with. Obviously, we've never seen anything like the pandemic before. And hopefully, there's nothing like it again. You can't really plan in a five year plan for that kind of catastrophic fall-off in revenue that we show.
Do we have a sense of what it would take if that were to happen? Meaning, it may not reflect in the numbers of the budget. But have we as a City put together a proactive plan that would be put into motion?
Yeah. And I think the people who are best able to answer that are the people from our Office of Emergency Management, but they have definitely put together plans for how to react to various scenarios.
So your dip in the General Fund -- in the fund balance with respect to having a lot of the federal money gone also sort of anticipates that -- that and the Rainy Day Fund together anticipates potential issues that we would have the capacity to take care of if one were to see something like this?
So it would cushion that. But if we saw something like the pandemic and the dramatic fall -- it was a $1.5 billion loss in revenue. We don't have that built into our plan.
Right. and the last question I have is about program-based budgeting. We hear this, that it's done. Are you actually doing the analysis when you're asking for the increased or decreased next amount in the new budget? How is that tied into seeing how the delivery and success happened in order for that department to say we need more money or not? Is there an actual analysis done?
Yeah. So we do budget by program. And by program we have performance measures and we do look at those measures in determining what funding levels should be. And when departments ask for additional funding, one of the things we look at is what impact that will have on measures.
And the follow-up to that is that program work that happens connected to alleviating poverty and addressing our most vulnerable, does every department have metrics of that manner to see did we do that in how we spent our money?
Yeah. I mean, that is one of the factors that we look at and one of the things that we talked about because that's one of our overarching goals.
So there's like a saying, X program did this here and we actually were able to address our poverty rate in extrapolation, not an exact number?
Not an exact number. I mean, really what we're looking at is how measures tie into our overarching goals, right. And those overarching goals if they're successful will lead to reduction in poverty.
Where would we see that or are we just seeing it in your request for more or less money? Is that where -- we're assuming that you've done that, correct?
Yes. And you can see in the Five Year Plan in the budget detail the measures that we use by department.
Thank you. I'm going through our board. And so, we're still on the first round. Councilwoman Quetcy Lozada and then we'll wrap up the first round with Councilmember Rue Landau. We just had small technical difficulties. And so, if you press your button, right, just leave it and it'll stay on up here. But if you press it once or twice, it may go off the screen. But we're good. We're on the same page and let's keep rocking and rolling. And so, the Chair recognizes Councilwoman Quetcy Lozada.
Thank you, Mr. President. I want to make a statement and then I want to follow up with two questions. First, I just want to say thank you to the Revenue Department who partnered with me on doing a Homestead drive in the District where we were able to really zone in on the addresses of the individuals who had not taken advantage of Homestead yet and we were able to go door-to-door and enroll people where they are, right. But what we learned from that was that residents still don't understand the program. They don't understand it and they don't trust it, right. They believe that if they enroll in this program when they go to sell their property, the City will then penalize them for being enrolled in this particular program. And so, I think it takes that one-on-one relationship or engagement with them in order to ensure them that this is a program to help them get some of that tax relief that's so desperately needed. So I think we just need to figure out how we do better. I'd like to ask what are you all doing to ensure that communities that are non-English speakers understand the program better and have access to enrolling because we often times talk about a digital divide in many communities, but these programs require them to enroll online. (Witness approached Witness table.)
Good afternoon, Councilmember. That's an excellent question. I'm really happy to be able to report that the Department of Revenue recently engaged with a local marketing firm to work specifically with communities that do not speak English as a first language, and that's a continuation of a project that we first started in 2020. And I think that it's a very important aspect to our outreach that we understand. I think Revenue is very, very cognizant that our largest request for non-English materials is in Spanish. We translate many of our blogs, especially things that are for assistance programs into Spanish automatically. We provide dual language materials always. It's a given. And we've also completely translated the Philadelphia Tax Center into Spanish. We're happy to work with your office around how to improve the message. I think you bring up a great point and it's something that we'll definitely be talking about with our vendor.
I appreciate that. You guys know that we have a very limited budget as it relates to mailing and all that. And while we try to do that and include it in all of our mailing pieces, it's really important that departments like yours take the extra step to either promote on Spanish radio or Spanish media. I have a huge constituency of folks that speak Mandarin in the District who also don't understand and are not enrolled. And so, anything we can do in languages besides English to be able to encourage folks to get enrolled is extremely helpful. I also want to add to Councilmember Gauthier's request for information around the Housing Trust Fund. If we could add to her request the list of developers who consistently take advantage of that paying into the Housing Trust Fund to avoid the affordability requirement, I would appreciate that because what I do want to see is as we are meeting the goal or as we're trying to hit the goal of that 30,000 new units or housing units in the City, I want to know who the developers are, who are their partners. And if it is those who consistently want to pay to avoid the affordability, then I'm going to have a serious problem with that, right, because the land, the available land is in the 7th and in the 5th, right. And so, if they are doing projects in Districts like mine and consistently avoiding that affordability requirement, then I don't think that we should be using them to meet our housing goal.
You're welcome. The Chair recognizes Councilmember Rue Landau.
Thank you so much, Council President. Thank you, Budget and Revenue. Just to follow up on some of the more recent conversations about the Homestead exemption and LOOP and reaching people, it's kind of a larger conversation about how we are spending our time and money to collect taxes and revenue versus how we are spending our time finding the people who need our programs most. And I would like to see a shift in some of that. I would like to see us spend a lot of resources on some of our very successful measures to go out, to continue on what Councilmember Lozada was saying about the door-knocking, the reaching people individually, using the City's language access budget to reach as many people as possible versus the other side which is collections, lawsuits, losing their homes. There are costs on each side, and I would like to put the front-end costs of actually reaching people. I had a conversation with Revenue about the Water Department's practice of sending collection notices to people. They helped to explain a lot to me about how they send folks to collections but they don't necessarily file 16 complaints in court which harm people's records and can cause some significant damage. But even just sending them to collections, I would rather us to take the money that we are giving to these companies and figure out other ways that we can reach these folks beforehand, way beforehand, so we can figure out should they more actively get into TAP, are there other things that we can do with them. I was very impressed to hear that when the Water Department does reach people that they do try to connect them to other resources once they find them. I feel like there's a massive data gap here. We finally got to the point where the Water Department figured out how to automatically enroll those who they think would be eligible and Councilmember Squilla. But I think that we -- as the head of the Information and Technology Committee, I want to figure out more ways that we automatically enroll folks in these programs that we believe they'd be eligible for. Often times if you're eligible for TAP you're eligible for this, you're eligible for that. Let's start there. Let's put our money there instead of putting our money into collection companies, instead of taking people's homes in court, instead of having to even get in plans, to repayment plans that folks can't meet. Let's get them on the front end. And I am a huge partner with that. The second thing I wanted to say -- oh, and I wanted to also double down on, I know we used to use Philly Counts for this, we used to do a lot of door-knocking. We are talking now about a city that wants to put a lot of ambassadors on the street. We want clean and green with these ambassadors on the street. Let's also make these ambassadors or add to these ambassadors people who want to help folks get enrolled, get connected to our City programs and get connected to our low-income programs in particular because there are a lot of folks that we're going to have on the ground. I want to follow up -- I've got a bunch. I will hold some to the second half, but I believe that you said to -- I want to clear up something that I believe that you said to Councilmember Brooks. Councilmember Brooks was asking if we cut taxes what else will you have to cut in the budget in order to offset those tax cuts? And I thought I heard you say you don't look at it that way. And I wanted to get a little more clarity on that.
Yeah. So I mean, we looked at all of our revenue sources, right, and that's how we balance a budget and a plan. So we look at our projections and then balance the plan. It's not that we say, you know, this revenue's changing by this much and as a result, we're making reductions. Every time that we've had wage tax reduction we still had increases in the wage tax revenues. It's not that we have these incremental reductions and our wage tax revenue is decreasing the next year, right. They are still increasing.
Is that because more people become employees? How --
Yeah. Every year there are changes in two things: How many people are employed and what they're paid. And those two things combined drive what the increase in the wage tax is. You add that and then add the rate in, and the rate reductions have not exceeded the combination of those two.
Okay. That's helpful. I had a simple question about your budget to start, which is that in FY24 you reported that you had 139 staff members at -- in FY25 you projected having 147 staff members, but the increase in your budget was only about $37,000. And I didn't understand how you could increase by staff members to $37,000? 8
A couple 9 things. Five of those staff 10 members are funded by Grants Fund 11 so they won't show up in our General Fund budget. We're also looking at the timing of when we think the new employees will come on. We think that there will be some vacancies so there'll be time before they come on. And there are also kind of changes in some employees are leaving, others are coming in and there can be salary differentials between them. So that's why you see that small increase.
Makes sense. A couple more subjects, Council President. Okay. And one is that I've been hearing in all my conversations with folks throughout the City of delayed payments to contractors. And many of these folks have said that they're being paid extremely late, and even the Inquirer released an article on January 17th of this year that reports some Philadelphia homeless shelters have gone months or years without being paid on time. How will the City improve the payment of our essential contractors? And can you tell me how many contractor payments are outstanding?
I'm going to ask Cat who's been actually working on this issue to talk about it.
Yeah. So long- term for the improvement of payment to vendors is we hope to realize benefits with OPAL with replacing our financial and purchasing systems, right. So when data and systems are better linked, you can first have visibility on where they are in the process to be able to see where they slow down in the process. That gets me to the second part of your question, which is how many payments are outstanding. Right now that is difficult for us to report on because when a vendor sends an invoice to a department, it doesn't actually get entered into a system until it's ready to be paid. So that lag time at the department could be part of the delay, right. And that's not in a system for us to be able to report on. That's all basically manually tracked at the department. When we migrate to the new system, we hope to have majority of our payments come in at the point of when they submit to the departments is when they're actually entering information into the system. So we know the point where the vendor believes that they have submitted for payment and we'll be able to track that. Though to Council President's point, it's taking us a while to get there because we have to do this big system upgrade to get there. So in the interim, we have convened a working group to start looking at some other -- so Law, Procurement and Finance convened a working group to start looking at some interim changes we can do to try to help alleviate the problem. We do know the more vendors enroll in ACH, which is automatic payment, the quicker they're going to get their payment. So if you guys can help us push that goal, that would be very helpful. In addition to that, we are looking at upstream any issues around contracting that can lead to a delay in payment. So for most of our payments you have to have an active contract for us to be able to pay you against it. And so, there's some complexities there that we are trying to better understand.
Thank you for working on it. If there's anything that my office can do to help with that and all the other ways in which we could collect this data. I would rather us subcontract to entities that could help us connect the data and then give us a product in the end than to sometimes go through the process. As somebody who -- when I ran the Human Relations Commission, it took us nine years to get a database, nine years. Let's maybe front-end that and get a product and come back. The second one just for this round, another question, is about legal settlements. The City's projected in FY24 to have $1.1 million in settlements and in FY25 $1.4 million in settlements. Can you share with me how we're working to lower settlements? And can you also break down these settlements by department and categories, like employment, you know, accidents, slip-and-falls or anything like that?
Yeah. So I'll have Sharolyn Murphy to come up and talk about what our Risk Management does to try to reduce the number of claims that the City faces.
Good afternoon. I'm Sharolyn Murphy. I'm the Risk Management Counselor and the Employee Disability Manager. So with respect to settlements, it really depends on the category of settlement that you're referring to. And I'm not sure so I'm going to tell you about all of them until you tell me to stop. So with Workers' Compensation settlements, those settlements come through the Risk Management Department, the Employee Disability Unit. We settle cases based upon the severity of the claim, the injury, the number of years the employee has with the City, the diagnosis that is presented and also whether or not the case is in litigation. Cases that are not in litigation that settle, of course they settle at a lower amount. Cases that are in litigation settle at a higher amount because you have an attorney involved and you also have a fee that you have to pay. I'm going to give you an example with Aviation. Their cases are settled at a higher rate because they have this litigation piece involved in it. With Workers' Compensation, fortunately we can settle those cases without the involvement of the attorney, and we have a limit on how much we generally settle cases for. So, for example, if a person has received a service connected disability pension, we won't settle that case for an amount greater than about 1.5 years because we have the pension offset on that. Other cases that don't fit that model, we try to settle those at a reasonable amount. We try to be reasonable with the workers and we also want to be reasonable with taxpayer dollars. So we're trying to get the best settlement that we can for the City, but we still want to be fair. So there are a lot of factors that go into settling cases. They're all done on a case- by-case basis. We don't just have a dollar figure and we say all these cases settle for that amount. So a lot goes into how we settle the cases. There's some cases that are settled through the Law Department and they have their own discussions about the factors that I've just outlined for you and those cases are settled differently. I'd be happy to talk to you in greater detail about how we do it department-to-department, but those numbers are going to vary based upon the individual case.
Thank you for that. Can you and the Law Department get together and give us a list? I'm curious how many of those cases are associated with police officers, how many are slip- and-falls if we didn't fix a sidewalk timely and things like that. That's what I'm looking for.
How we can fix things in order to minimize the amount of money we're paying out.
Absolutely. Some of those cases are going to fall under the Tort Claims Act and we can certainly give you those numbers of cases that we settle, and some of those cases, you mentioned police officers, those will probably be Heart and Lung cases. Those are going to be under Employee Disability. We can certainly get you numbers for that as well.
Yeah, one more. Thank you for that, and I might follow up with you later on that. But thank you. I wanted to follow up on -- let's see. So this is a Councilman Jones' special I think. It's real estate tax. Last year Councilman Jones asked you what is the real estate taxes owed to us, what are the amount of taxes in Philadelphia that are owed by individuals outside of the City and what are those collection rates. And you responded, the City responded that principal delinquency is at $234 million. It was 80 percent. But 204 million of the 234 was owed by Philadelphians. $15 million was in other parts, was outside of Pennsylvania. What are the numbers today from that fiscal year from now, this fiscal year, and what are we doing to ensure we get funds from owners outside of Pennsylvania? I believe I heard the Revenue Commissioner say that we had 67,000 tax delinquent properties, so I'm curious how many of those are owners outside of Philadelphia and how much in total is owed? COMMISSIONER McCOLGAN: Thank you, Councilmember. At the end of Fiscal Year '23 out-of-state mailing addresses, we had 3,612 accounts associated with those and 11.8 million in debt owed.
Okay. COMMISSIONER McCOLGAN: For other Pennsylvania mailing addresses, we had 3500 accounts totaling 13 million in debt. And for Philadelphia residents, we had 46,400 accounts totaling 144.8 million owed.
And you said that was FY23 but -- COMMISSIONER McCOLGAN: Yes.
Okay. Do we know where we are now in FY24? COMMISSIONER McCOLGAN: I think we can get updated stats.
That would be helpful. Thank you very much. COMMISSIONER McCOLGAN: Sure.
I didn't -- sorry, I want to ask a collections question real quick. What are we doing to get the money to collect -- this is where I'm happy about collections, right. What are we doing to collect more vigorously from folks outside of Philadelphia or outside of Pennsylvania even? COMMISSIONER McCOLGAN: Okay. We do file judgments against folks that are outside Philadelphia. As chief counsel mentioned earlier, the challenge is when ownership varies from a property within Philadelphia to a property that they own outside. Is there anything to add to that -- filing the judgments is really the action that we are able to take to ensure that we can secure that debt.
And it should be pointed out that we could not adopt a program of systematically treating people who are non-Philadelphians differently as a matter of us constitutional law.
I am painfully aware. Thank you very much. Thank you, Council President.
You're welcome. So we will now take a break until 1:15. And at 1:15 we will start our second round. Thank you, everyone. (Lunch recess.)
This hearing is now called back to order. We are in our Round 2. And so, with that being said I just want to start off with one question for the Board of Pensions. (Witness approached Witness table.)
Good afternoon, Council President. Francis Bielli, Board of Pensions, Executive Director.
Good. My question is regarding diversity and inclusion for investment managers. And your testimony notes that the Board seeks to promote diversity and inclusion in its investment manager selection process. And so, I just want to know what strategies do you use to promote this and what is the current diversity rate of your investment managers?
So our current rate is diversity managers manage approximately 55 percent of the Board's assets, which is slightly over $4.2 billion. You could compare that to a handful of years ago when it was in the teens. The number of managers, diverse managers, is 28 percent. We do a utilization study every year, which measures the number of diverse managers in the whole investment universe database that meet the minimum criteria to invest money for the Board. That's 11.84 percent. So you can -- it's a very small percentage in the investment world that are diverse investment managers. And what the Board and the Trustees have accomplished over the last several years is extremely impressive.
Are you able to break those numbers down based upon the demographics?
Yes, we can send that to you. You will have that, and we publish that every month in our flash report which is on our website. And for example, at the Board meeting tomorrow that's in the materials at the Board meeting, but we can send that to you, yes.
Thank you very much. It also is noted in your testimony in the Five Year Plan since the 2016 pension reforms, the Pension Fund has increased its funding ratio from 44.8 percent to 61.9 percent and is expected to be fully funded by 2033. This has taken a collaboration across the City and state governments to make it happen which I think is a great thing. Once fully funded, what impact would that have on our budget? Now, I know Rob touched on this briefly in our budget briefings but we just want to go on the record. And then also, Rob, can you also compare the size of the payment the City makes now to the Pension Fund each year compared to what the payment will be in 2033?
So getting to 100 percent funded will mean that the amount that we contribute to the Pension Fund will go down dramatically because the biggest portion of our payment is paying off the unfunded liability from prior years. So that payment will go away when we're 100 percent funded and our total payment in '33 would go from 768 million to 147 million, and that is an all funds number. But as you can see, it's a giant impact on our budget. It frees up a lot of funds. Our decision-making at that point will be a lot different from what it is now.
Good job investment-wise. Appreciate it. Also, I want to ask for the City Treasurer to please come on up. (Witness approached Witness table.) CITY TREASURER DUNN: Good afternoon, Council President. Jackie Dunn, City Treasurer.
And good afternoon. I want to talk a little bit about NPI, the Neighborhood Preservation Initiative. It's now in its third year of a four-year program. As we plan for the future of this important program, does the Administration recommend another bond issuance versus using General Fund dollars or an infusion of both to continue to build upon the work related for NPI? CITY TREASURER DUNN: Thank you, Council President. This body several years ago approved an authorization for a total of $400 million borrowings over several years to support the programs underneath the Neighborhood Preservation Initiative. As mentioned earlier to one of your colleagues, we've done two of those $100 million borrowings and we're working with the NPI team on what their upcoming cash forecast needs look like to see where that pace of spend is, to see when we want to time that third borrowing.
Yeah. And, Rob, could you also just clarify also for the record -- now, I know we spent 200. There's 150 under discussion. I just want to make claim that 150 before the Administration begins planning and then -- technically there's 50 left, but could you just clarify it for me?
So the amount spent, I think the Treasurer said this morning it's 110 million. So of the 200 million that's been borrowed, there's 90 million left to be spent. Of the 200 million that's not borrowed yet, there's been an NPI budget approved by Council that was for 150 million.
150 million. I just wanted to clarify that because I know some District members -- not even just District members, members in general had questions about it. And also based upon that last 50, we had to determine as a group, Administration and Council, if we decide to do more borrowing or figure out a strategy on how we want to move forward; is that correct?
Okay. Part of NPI, and I think this is very good information. I know we're addressing affordable workforce housing, we're addressing the tree removal, the alleyways. We're also addressing the issue of driveway repairs as well, all our key critically important issues throughout the City of Philadelphia. One particular area that significantly has an impact on our NPI funds are the support for Basic Systems Repair as well as Restore Repair and Renew, right. And so, on the first NPI bond issuance of 100 million eliminates that backlog. And so, I just want to get an idea, if you can give me an idea and an update on this bond and what the payback outlook looks like? CITY TREASURER DUNN: I'm sorry, Council President. Could you repeat the last part of your question, what the?
Can you give us an update on the $100 million bond that we used and the payback and the outlook on that particular bond, what that looks like?
Yeah, debt service on it. Yes, the 100 million. CITY TREASURER DUNN: Sure. So on the first part of your question regarding the program allocations, the Basic Systems Repair program, through the first two bonds was allocated around 40 million. Adaptive Modification received approximately million, 7 and that's also a program 8 administered by Philadelphia Housing and Development Corporation. Those programs spend quite quickly. As you mentioned, they have a lot of need and they receive not only NPI dollars but also funding from other state sources, which is helpful. But those programs are the two quickest that we see requisitions for. And then in terms of the debt service, so the debt service on the first two borrowings to date is projected to be approximately 15.2 million in Fiscal Year '25. Because those were borrowed through our service agreement structure, those are paid through the Class 200 line item in the City budget, because that's more unique relative to Class 700 debt service payments. And then we anticipate that when all 400 million in bonds are issued for the NPI program, the annual debt service is projected to be approximately 33.7 million annually.
Okay. Thank you. And also, thank you for the work that you're doing around NPI and working with the team as we draw down the funds to move forward to address the variety of those different issues. So -- CITY TREASURER DUNN: Thank you. They do all the hard work so I appreciate that.
I just want to publicly thank you for that. At this time, the Chair recognizes Councilman Curtis Jones.
Thank you, Mr. President. Very quickly, my colleague asked how we could further market some of the programs available dealing with real estate and seniors and abatements. Can you tell me if we are connected and included in BenePhilly?
Okay. That's an important way to codify everything that people are eligible for in one application, so I think it would behoove us as a city to take advantage of it and get it marketed a bit better and boots on the ground. And one of the things Anton Moore does in South Philly is go door-to-door. And he knocks on the door and says, how can I help you, which I think is novel. And I am going to get some of that, Mr. President, because I think it's the best way to demonstrate to taxpayers that we're here to help with bringing relief door-to-door. I think it's laudable. The other thing is Vicki Riley, you need to convince her to come out of retirement because she is one of the few people that could go to a community meeting and have people clapping about taxes and wanting to pay their taxes. So whatever you have to do to incentivize her to come out, I would suggest. Do you have an answer? COMMISSIONER McCOLGAN: Thank you. I appreciate that question. The information on BenePhilly, I'm not familiar with partnering with them, Revenue partnering with them to date. So I would certainly welcome any opportunity to partner with any organization that can help get the word out.
Yeah. It's not just you that -- but particularly you, when somebody takes their time to fill out one of those long-form applications, it is efficient if they find out everything that they're eligible for. And it's been said, Councilman Domb used to always tell us we leave about $11,000 per household on the table in low-income neighborhoods that we could be taking advantage of. So if you could get to the President a confirmation about that. And if we're not on it, how we can incorporate that. I think that would be helpful. Then finally, I want to say thank you because when you do something wrong we tell you about it. But when you do something right, we should tell you about it. And in this case maybe six budget cycles ago, we had a complaint from a senior citizen that came into our office. And she was one of those seniors that still paid by check, still put the stamps on the envelope, took the envelope to the post office to make sure her money was paid. And she did it religiously, which is something to be appreciated. But what she came to the office and said is, When I put $30 on this, my balance doesn't come down. And when we looked at it, it was because it was applied to principal and interest and there was no breakdown on the actual receipt as to what your dollars were being applied to. Well, we checked before the hearing, and you guys have done that and then some. It's in most Revenue packets that breaks it down. This money, this dollar is going towards interest. This dollar is going towards penalty or this dollar is applied in part to the principal. I think for seniors and those who are not necessarily seniors, that is accountability at its best. And I just wanted to on the record thank you guys for at least hearing us. So I say this to my colleagues, you know, they actually do listen and they actually do take heed to what we are saying as elected officials. So thank you. Thank you, Rob. COMMISSIONER McCOLGAN: Thank you, Councilman. That was a great suggestion. We were happy to implement that. While we're talking about assistance programs, I also just wanted to mention we distributed some information, but I just wanted to make sure everyone is also aware of the Pennsylvania Housing Assistance Fund that's available right now. Applications just reopened on March 18th. And there's between $40 million and $50 million that's available to Pennsylvanians. That's for people who experience financial trouble during the pandemic and that applies to mortgage payments, property taxes and fees and also utilities. So I'd just like to get the word out about that also.
You're welcome. The Chair recognizes Councilmember Katherine Gilmore Richardson.
All right. Thank you so much, Mr. President. Thank you again, Rob. I just want to circle back to a couple of questions that I had, and then I'll have some questions for the Treasurer's Office.
And then I have an update to an answer that I wasn't able to give before. So whenever you want me to do that, I can do that.
Okay. Great. That's excellent. First, if you could just talk about the economic stimulus fund. In the budget and brief there's a projected $11.3 million increase in the economic stimulus fund from FY24 to FY25, and that makes the total for FY25, $29.3 million. And so, can you just explain the significant increase in the contribution to the fund. And if you could just talk about what you all are thinking about like a strategic plan to spend the funds on initiatives that grow and support minority business owners.
Because the money runs really through Commerce. And I think it's about million a 7 year for the rest of the plan. So 8 I think they'll be well-prepared to 9 talk through how they view using 10 that. 11
Right, but it's just 13 such a significant increase, 14 overtypical. And so, I'll circle 15 back to Commerce. I just made a 16 note to circle back to Commerce on that. The CCP subsidy, so if you could just for the record what was the actual contribution of CCP for FY23?
Give me a second. Instead of guessing I should actually look at --
I think you're talking about FY25 because that's 51 million.
And part of that was, which I think is going to be your next question, we gave them an additional 15 million in '23 for their capital budget, and that was intended to cover three years of capital costs for them. So it was a one-time thing that they need to occur because it was helping them with capital.
Understood. Okay. So FY23 was 67 because of the capital needs. FY25 proposed is 51, right?
And the FY24 year-end transfer ordinance, you're proposing a $10 million increase for CCP, and that would bring them up this year to 61 million?
Okay. And I guess the justification for that is the additional contribution to offset the tuition increase?
So partly the tuition increase and partly to establish the municipal college for City employment.
Okay. And so, then do you believe CCP would be able to stave off a tuition increase in FY25 so that they can run this new program with the $10 million decrease in the FY --
Okay. My colleague asked a question about indemnities and refunds, but if you could just go over it for me. For FY23 our indemnities cost 10.7 million?
Yeah. So here's the kind of quirk there is that at the end of the fiscal year, indemnities costs in our financial statements are then allocated out to departments.
So what we'll show is the actual in the finance indemnities isn't the full indemnities. So to answer the question of what we spent in indemnities for '23, we would have to go back and kind of go department by department and then get back to you.
Okay. Because to me from the budget and brief it looks like FY23 is 10.7 million, but FY24 projected 74.2 million and then FY25 then would be a decrease of $13 million in contributions to the fund.
Yeah. And again, the change from '23 to '24 is distorted by having allocated the indemnities cost out to departments.
Okay. All right. And then really quickly on insurance. In your budget detail, Rob, it shows that in FY24 we paid $859,084 for cyber security liability insurance and $3,350,491 for terrorism liability insurance. There are no allocations that I can see or find for FY25 for those costs. And so, could you just share the terms of the policies?
Yeah. If you look at the bottom of that page, you'll see there's a big 4.-something million to cover all the insurance. So we don't know how exactly it'll be allocated between the two, but that funding will come out of that pot.
Oh, okay. So it'll come out at the bottom of the page --
-- and then you'll allocate it out. I was just concerned because we're having so many events coming up and --
Correct. Yeah, it's not going away. It's just those two are bundled together on that page.
Understood. I heard the bell. I'll come back on the next round. Okay. Thank you, Mr. President.
Do you want me to give you the information -- so the two facilities that were included were the MEU, Medical Examiner's Unit, and 500 South Broad. Those are the two that we thought we were going to sell that will take a little while longer to sell. And then the other part was why the zoning permit number went up so much in '24. If you remember when the abatement law changed, there was kind -
The abatement law changed and there was a rush to get permits so that inflated the number, and that's why it goes back down.
Oh, that's why it goes down again because it was a rush to put in all of those applications?
-- Medical Examiner's is over where Air Management used to be in University City?
Okay. All right. I'll come back on the next round. Thank you.
Thank you, Council President. I wanted to follow up on my previous questions to try to get a little bit more detail. I know a number of folks have also lifted up similar questions regarding auto enrollment in tax exemption and refund programs. As far as I understand, I can also -- I'm sorry. You're coming -- sorry. As far as I understand, Philadelphians are eligible for the low-income wage tax refund if they're eligible for the Commonwealth special tax forgiveness credit. I know we talked a little bit about this earlier, but have you actually engaged the Commonwealth around sharing the data even with the legal pieces, sharing this data to make the low wage income tax refund enrollment process easier for Philadelphians? Has there actually been talk about that? COMMISSIONER McCOLGAN: Thank you for the question. We are always exploring how we can make it easier. I can revisit the topic with my team to see when it was that we last talked with them about that data sharing. I do believe the challenge is that by the time the data is available to us, it's no longer current. So much of the data that we receive in our data share agreements are 2 years old when we get it so that's a part of the challenge, but I'm happy to revisit that and see if there's any changes that could improve that process.
Stay focused. Do you have any estimate of the number of Philadelphians who are eligible for the low-income wage tax refund and not receiving it right now? COMMISSIONER McCOLGAN: Right now I have the number of folks who applied, but I do not have the number who are eligible. So I think we can analyze that and get back to you on it.
Okay. I understand that there are legal and data issues as have been explained to me today which is helpful to know, that ultimately make it difficult to automatically enroll Philadelphians in all of these programs, and I appreciate how much of a priority this is for you all as well. Thank you for getting back to your team as well. But when low-income Philadelphians aren't getting the crucial savings that they need, we are failing them and we really want to make sure the folks have access to what they need. So sort of in concert with all of my colleagues who have been interested in this issue, can I ask for a commitment from Revenue that you'll work with the Council to do everything that you can to automate these programs, Homestead, LOOP, Senior Tax Freeze, Low-income Wage Tax Refund, et cetera, so that we can get 100 percent enrollment for Philadelphians? COMMISSIONER McCOLGAN: I can commit that we will work very closely with you within the legal boundaries that we have and also provided that we have the tools and resources that are needed to do something like that. Because as I said earlier, we do share the same goal.
Yeah. COMMISSIONER McCOLGAN: So I'm happy to have new conversations about how we could potentially expand our assistance programs.
Okay. Thank you. I also wanted to follow up on Revenue's efforts to identify landlords with multiple property delinquencies. How will this Administration coordinate data and efforts between Revenue and other agencies like L&I to identify predatory landlords with multiple tax delinquencies and code violations and then hold them accountable to their tenants and taxpayers? COMMISSIONER McCOLGAN: I'm going to ask Frances Beckley, our chief counsel to come up and speak to that.
Yes, ma'am. Thank you. COMMISSIONER McCOLGAN: Thank you.
So we do work closely with Code Enforcement to identify cases where we will as I described sue landlords for everything that is what we call a municipal claim, which means it's been liened. So that will be the real estate tax, the water, and any work that L&I has done on the property, and that has been quite successful.
And the new PRISM system the Philadelphia Tax Center has done is enabling us to have much better information --
Thank you. Lastly, I wanted to follow up again on the City's budget engagement process. Rob, you mentioned that the engagement strategy -- and thank you for your responses. You mentioned that the engagement strategy is currently under development now, but the budget is being crafted now. I'm worried that if a strategy isn't finalized soon community members won't be able to participate this spring in time for Council to consider the input. Can the Budget Office be clear about when the engagement strategy will be finalized? I know you said you're in the early stages. But when will you have a plan?
Is this Budget Office in your thinking at all for whatever's been talked about still committed to compensating residents for their time and participation in the budget engagement sessions when these reconvene?
I want to shift now to the Board of Pensions. I understand the dire importance of strategically investing our Pension Fund so that it is healthy and hopefully soon fully funded. I also understand that the Board of Pensions has worked hard for a long time to fund and stabilize our Pension Fund. And I want to applaud all of those tremendous efforts. However, I think we would all agree that a healthy Pension Fund should not come at the expense of our values. And, in fact, the City Council has worked with the Board of Pensions at least three times, as I understand it, to direct our investments in ways that hold to our values. 2013, the Board adopted the Sandy Hook Principles to condition their investments in gun and ammunition manufacturers. In '21 the Board divested from private prisons. In '22 the Board divested from Russia and Russia-related institutions. That said as far as I understand, the Board of Pensions provides little transparency around its specific investments because the pension is invested in outside managed funds that are changing constantly. This is concerning to us. And I am curious as to what efforts are being made to ensure that our Pension Fund is not invested in other ways that do not align with our values or in some cases in ways that directly oppose the work that we're doing in the City, like investing in climate change, accelerating fossil fuel industry, gun and other weapons manufacturing folks, corporations actively union busting here in Philly, war bonds and foreign armies. Can you speak to that?
I can speak to -- thanks for the question. I can speak to all the things that you mentioned earlier such as private prisons, guns, so on and so forth, that we have a database where we run our entire portfolio through that database to identify any specific investment that would violate any of those prohibitions. So, for example, if we're invested in an S&P 500 fund, I'm going to say it might be the S&P 490 fund, right, because there's 10 stocks that are eliminated either because of the Sandy Hook Principles or Iran or other prohibitions. Concerning fossil fuels, we work closely with Councilperson Gilmore Richardson on an ESG resolution and she insisted -- I won't use the word insisted because the Charter empowers the Board to do the investments, but we worked in collaboration. We worked together with all of the Council to pass a resolution unanimously to incorporate the ESG principles that Council Gilmore Richardson and us worked together to draft into our investment policy statement. So what the Board does, they take all of those into consideration in every investment decision they make. I will comment on what you said about transparency. This Board is more transparent than any other public pension fund in the country. Our investments go on our website every month. Our Board meeting is a public Board meeting. In fact, it takes place tomorrow. You're invited to come over and watch. Every single investment is discussed and reviewed at every single Pension Board meeting. So I would actually object to your statement that we are not transparent concerning our investments. We are extremely transparent.
Your objection is noted. I would like to come back around for the second round. Thank you.
The Chair recognizes Katherine Gilmore Richardson, Councilmember.
Quick point of information based on the information that was shared, Councilmember Jones. I just wanted to thank Councilmember O'Rourke for his question. We did work together and I'm really thankful to the Pension Board regarding the climate risk disclosure. And I don't know if you recall the private prisons resolution as well. That was years ago when I was still a staffer for former Councilmember Blondell Reynolds Brown, so we have worked with you all on both of those issues. And I just wanted to say thank you for the question and for the work that the Pension Board is doing to ensure that our investments line up properly.
You're welcome. It's very important to the trustees to try to ensure transparency. So if there's anything you think we're not being transparent about, please let us know and we will try to increase that. It's very important to the trustees.
Thank you very much. And I'm sure we haven't invested in Truth Social, correct? Hopefully not. Some of you will catch that later on. And so, I just had to provide just one piece of information. One, I know that Councilman O'Rourke talked about a couple times the budget engagement process in the community. And so, has the Administration figured out what that looks like because as you mentioned, it would be held off indefinitely until they figure out when you will resort to engaging the community? But have no fear, City Council is here. We're starting our first budget hearing at South Philadelphia High School with Councilman Mark Squilla. Then I have one on the 29th with Councilwoman Jamie Gauthier, so we continue. We sent out a request for collaboration with Members about a week ago so we can go on the road and make sure the community has a say-so on what we're doing. And so, I just wanted to update you on that process as the Administration move forward their process. But we're already on top of it. And so, I'll give you an update as we move forward. All right. At this particular time I want to acknowledge Councilmember Jeffrey Jay Young.
Thank you, Mr. President. For Finance, just a couple of questions about your systems and data. Can you tell us how well does our current system integrate with other systems, other municipal systems that we have and if there are any compatibility issues that hinder data sharing or reporting?
So I can speak to our finance -- so OPAL is the project that will replace our current financial and purchasing system so I can focus on that in the response. There is some integration between the systems currently, so there is information that flows from our professional services contracting system. Those are the opportunities that have to be RFP'd. It's called ACIS. It does set up encumbrances, essentially the budgetary amount for that contract within our financial system called FAMIS and expenditures flow back. In addition ADPICS, which is where the bids that have to be competitively or the lowest responsible bids that Procurement does is in ADPICS as well as any of the purchase orders. That is very tightly coupled with our general ledger system, so it sets up encumbrances as well between those two systems. And PHLContracts is to a certain extent probably last I think, but integrated to a certain extent. There's a lot of integrations though that don't happen right now that we hope to be able to do in the new system and that we know that we'll be able to do in the new system. So one of the biggest gains will be the submitting of the invoices upfront, right, like I talked about earlier. In addition, there's some front-end processes of approving various things related to reconciliations or adjustments and payments that happen outside of the system through memos or emails. And also with grant funding as well, that will all be captured in the new system.
Thank you. And I ask that because we've been getting inquiries from our NACs in our Districts and basically saying that because of some issue with Finance they're not getting funded from the Department of Community -- what is it, the Community Development or whatever department the NACs are under. So it's taking them essentially like months to expedite, to get their invoice and payments to the NACs. They are our smallest organizations on the ground that are dealing with the everyday issues of people and I'm just trying to figure out what we can do to expedite the money that is allocated for our NACs programs?
Okay. If you can send me the details, I can follow up on that and figure out what's holding up the payment and see if we can speed it up.
Thank you. The other question, what are the key performance metrics for our current data systems and how do they meet our operational needs?
So I don't know if we have metrics directly tied to the financial and procurement systems about the performance. For our HCM, our Human Capital Management System, we do have performance metrics on how that is performing from a perspective of how quickly are we able to enhance a system and how many defects are we resolving. For our other financial systems, there's various -- within the departments, right, or within budgets, there's various performance metrics around contracting or payments, right, and they are proxies I guess you could say for the systems, right, because the systems are here to support our business processes. And our business processes are about getting contracts conformed and in place so we can do our purchasing and paying our vendors, right, at a core and producing our financial statements, right. So there's performance metrics tied to those business processes but both within the Finance Department as well as the Procurement Department and the CAO's Department. That's how we measure the performance of the system, how well are we able to perform our business process that the system supports.
Thank you. I mean, I ask because we have a performance-based budgeting system and I think every dollar that is allocated to some government function should have performance measures associated with it, so that's why I asked that question.
You'll see -- sorry. You'll see as you look at the budget detail that departments are broken down by program and each program has measures so they'll be there.
Thank you. One more question for this round. How do we ensure the accuracy and reliability of the data within our systems? One issue we've gotten is that the Revenue Department has kind of missed payments from people, right, or they say they've been applying payments -- they've misapplied payments I'll say. And so, how can we assure that data is accurate? COMMISSIONER McCOLGAN: Thank you, Councilman. Most recently we did hear about a system issue that caused some payments to be applied to a future period as if it was an estimated payment. And once we heard that, we were able to identify those accounts and make the adjustments to those accounts. I'm not sure if that's the specific scenario that you're referencing. We also have circumstances where someone may send us a check without a specific payment voucher and the information they provide us isn't detailed enough for us to fully understand where they want that applied, so we'll apply it based on whatever information that we have available. It may just be the owner name, property address. It could even be as little as the P.O. Box that they directed it to, and we will apply that payment. And then later on if we learn that that payment was misapplied after asking for proof of payment, we will make sure that we move it to the right account. But I think that probably the former issue that I mentioned --
Yeah, that's the issue. COMMISSIONER McCOLGAN: -- is what has come up, and that is now corrected in our system.
Thank you. Yeah, we had a senior call us who received a letter saying she had a $2,500 credit on her account. And as she was inquiring about it, she was told that someone made a $4,000 payment on her account, which means some payments were applied to the future rather than to her past payment agreement that she was on. So I just want to make sure that that issue gets cleared up. COMMISSIONER McCOLGAN: Thank you.
And thank you for working on that. COMMISSIONER McCOLGAN: Yeah, we received that feedback through our customer service team and understood that it was an issue and quickly identified it and corrected it.
Sorry. One last question I have on this round. We get a lot of calls about just the customer service aspect of Revenue and how it is very difficult to get someone on the phone to discuss their issues. We have a lot of seniors in our District, so coming downtown that's not feasible. There are no more mini City Halls in North Philly for them to go to. So using the telephone rather than an online system is much more convenient for those folks. So how can we ensure that those residents feel like their government is being responsible to their needs by answering their questions via phone? COMMISSIONER McCOLGAN: So we certainly would like to be able to respond to customers in our call center faster than we have been able to recently and we don't want them to have to come downtown or to any satellite office. The challenges that we've faced has been short staffing, but we're working very hard with OHR to address that issue. We're just onboarding over 40 employees that will help us bolster the staff in that area. We created a new onboarding training program to make sure that our -- that was implemented last fall, to make sure that our staff are as prepared as possible to provide the best customer service to taxpayers. We constantly realign resources as we're able to based on volume in the area of contact. So, for example, if we have longer wait times in our call center, we may be able to reallocate staff from our email unit or another unit, so we're constantly doing what we can to reduce the amount of wait time. We implemented a new call center about two years ago that allows us to give customers the option to request a return call so that they don't have to wait on hold. I think that now that we're hiring this cohort of staff, that will help us close the gap in the long wait times.
You're welcome. The Chair recognizes Councilman Jim Harrity.
Thank you, Council President. I only have really one question for the Pension Board. What is the percentage of City workers who do contribute to deferred compensation and how can we encourage more of the City workforce to contribute?
Thank you for that question, Councilman. We have an excellent deferred compensation plan, and recently we gave a couple of seminars to the new employees in the Mayor's Office and we had people on the spot signing up for deferred comp. We have our representative from Nationwide here today Brad Nice. I'll ask Brad to come up here. But concerning deferred comp, we have currently over 25,000 participants in the deferred compensation plan; 19,737 active participants who are contributing. Some people leave their money in there and stop contributing from time to time. We recently approached approximately $2 billion in the deferred compensation plan. Nationwide does seminars. They go to the airport different shifts. They go to various police districts various different shifts, so they're giving presentations around the clock in order to try to encourage people to participate in deferred compensation, especially newer employees who may not be in some of the older pension plans. They know how important it is to have that additional contribution piece of their retirement. So that's how many people, over 23,000. And, Brad, you have some historical comparison for that, don't you? (Witness approached Witness table.)
I do. Thank you, Fran. Brad Nice, Program Director for the City's Deferred Comp Plan. Thank you, Councilmember, for the question. I started working with the City's deferred comp plan back in 2006 and there was approximately $420 million in assets at the time and approximately 13,000 members, so the growth that has come with the plan up over 25,000 and approaching $2 billion has been really impressive over that time, a direct effect of the Board, their support in promoting the plan as well as the pension staff. As a matter of fact, I just got done putting together our annual review for calendar year 2023. And 2023, we conducted over 350 seminars around the City with over 8,000 attendees of City employees that attended those educational workshops.
Councilman, I'll also add just as a side note, the Philadelphia Parking Authority who are members of our pension plan but previously had their own deferred compensation plan asked to join our plan because the fees in our plan were considerably lower than what they were being charged. So we've had what, Brad, approximately 1,400 people or so from the Parking Authority come to our plan?
500, so they all came to our plan and they're paying fees that are probably 11 percent of what they were paying in 12 their deferred compensation 13 provider with the Parking 14 Authority. 15
Nice. 16 Okay. Thank you. 17 Thank you, Council 18 President. 19
20 You're welcome, Councilman Harrity. 21 The Chair recognizes 22 Councilmember Nina Ahmad. 23
Thank 24 you, Council President. 25 I do have questions about the Pension Board. First --
Could you do this first, Chairwoman? Just for all the Members --
-- please speak into the microphone so our tech guy won't come out here and make a loud presentation again. So I want to make sure everybody speaks into the microphone because we have a