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?