To follow up on Councilman Goode's question, he ask you, I thought, did MBEC have any jurisdiction with regard to I think the wide list of alphabet soup agencies, was that PIDC, RDA.
My response is based on those are quasi City agencies and not direct City agencies, not the City operating department, so to speak.
Have you received legal advice about that issue? 556 2/15/00, Operating Budget, Bill 000005
I can provide legal advise for you -- I mean, a legal brief for you, but I'm pretty sure about that.
Have you received advice from the Law Department that you are not able to either get information that was responsive to the Councilman's question or that you definitively have no jurisdiction whatsoever with regard to those particular authorities or agencies?
Okay. Then I would ask you directly or -- Mr. Dubow, are you technically in charge today? Are you responsible for this vast array of incredible governmental talent and they're all under your jurisdiction today?
Good answer. 557 2/15/00, Operating Budget, Bill 000005 Somewhere between the two of you --
A formal request to have Law Department advice on that particular issue?
Commissioner Applebaum, I have a two-part question so I'll ask the whole question and then you can respond. I'd like to get a status on the 800 trunking radio system, where we are with that since that's such a substantial purchase by the City of Philadelphia. Also, and I've had conversations with the Administration, this probably will be one of the finest communication systems in the country once it's installed. It's been installed with a 558 2/15/00, Operating Budget, Bill 000005 lot of thought, a lot of just excellent engineering, and it's also being installed with a lot of extra capacity, Capacity that's thought that could be sold to other agencies like Delaware River Port Authority, the School District, SEPTA, etc. How could people or could you explain how that concept could work and the Procurement Department could solicit users of that system and create revenue for the City of Philadelphia? COMMISSIONER APPLEBAUM: Okay. Councilman, the 800-megahertz system is, from what I understand and the weekly reports that I get, is moving quite well. I would suggest that when Public Property is here, you direct that same question to them and they'll give you the real specifics.
I'm talking about the purchase of it. Is it all bought? COMMISSIONER APPLEBAUM: Oh, the award was made after six, nine months ago. The award was made and it's in process now. Their towers are being constructed. City Hall is being set up. It's under construction, yes. 559 2/15/00, Operating Budget, Bill 000005
The amount during the last budget process was kind of a subject that we weren't discussing. Could you tell us how much this system is going to cost us, how much this bid was awarded for? COMMISSIONER APPLEBAUM: I believe it was $52 million.
Fifty-two million? COMMISSIONER APPLEBAUM: Fifty-two million over a three-year period with a complete installation of the 800 megahertz system. I believe that's the correct amount.
And that's over three budgets. COMMISSIONER APPLEBAUM: It's a three-year process to get it from beginning to end, Phase 1, Phase 2, and I think it's 36 months from beginning to end. And there will be budget allocations in each year to meet the requirements that are necessary to fund the purchase orders.
That a 52 million, there's obviously other expenses in there from City employees and other support to make that system work that's not included in that 52 560 2/15/00, Operating Budget, Bill 000005 million. COMMISSIONER APPLEBAUM: The $52 million number is the contract with Motorola, that's the contract.
That's the number with Motorola? COMMISSIONER APPLEBAUM: That's the purchase price of the system.
My second part of the question. COMMISSIONER APPLEBAUM: The second part of the question is the potential selling of sites of the extra capacity that we had spoken about. That is something that hasn't been brought to the forefront now, but certainly is something that we discussed early on and that the Procurement Department will be involved through the issuance of what we call concession agreements to try and sell that extra capacity. But of course, before you can sell something you have to have it and it will take us two years to complete the system. But that is something that we definitely will be looking into.
The reason being 561 2/15/00, Operating Budget, Bill 000005 that we really need to move now because many of these agencies are in they're engineering stages for the purchase of similar systems at a smaller capacity. Like, just an example, I'm not suggesting that this is happening, but the Delaware River Port Authority might want to spend $15 million to build the design and install their own 800 trunking radio system, which doesn't make a whole lot of sense if we have one that has 30 percent capacity available to it. They need to know early on that this is available to them before they start spending millions of dollars in engineering and so on. So I would hope that whoever's I believe the Managing Director is interested in this concept, but I'm just wondering, it would be a Procurement Department function to put all of that together? COMMISSIONER APPLEBAUM: Most likely it will. The Procurement Department is responsible for what they call concession-type agreements where we receive money from outside people, and we will be involved in that and your point is well taken to try and see what we can do sooner than later on these events. But realize our system is 562 2/15/00, Operating Budget, Bill 000005 built to supply radio coverage within the City of Philadelphia, and I'm not sure of the ranges of the Delaware River Port Authority, but we certainly -- that's one thing that we should look at, absolutely.
Thank you very much. The Chair recognizes Councilwoman Miller.
This question is for the Procurement Department. My office received a complaint from a pest control company who was unable to bid for City contracts because his business doesn't have an 500,000 annual gross. His best year was 200,000 annual gross. What is this rationale for this have a million dollar threshold as a requirement to do business with the 563 2/15/00, Operating Budget, Bill 000005 City, and is it unfair to small businesses? COMMISSIONER APPLEBAUM: There is no 4 threshold that I know of in dollars and cents on specific contracts. I'm not familiar with the contract that you're speaking of. Generally speaking, our contracts require that the vendors who are awarded a particular contract have experience, background with similar-size accounts and can bring to the City of Philadelphia the expertise that is needed for the particular contract that they're bidding on. So it's not a dollar figure that we establish at all. It's just a judgment that is made that the vendor must satisfy the requirements that he has experienced similar contracts to our size so that we're assured that we will get appropriate service when we need it. If you could give me that name of the company after this or you could call my office, I certainly would look into it and get back to you directly on that particular contractor.
I'd appreciate that. I know that this vendor was one that we referred for work with the state government when I work for Representative Richardson, so he does 564 2/15/00, Operating Budget, Bill 000005 have the experience. But I will get you the name. COMMISSIONER APPLEBAUM: I would appreciate that. I will look into it and respond to you.
A couple other questions. This is regard to MBEC. In your testimony, you mentioned the creation of a disadvantaged business enterprise plan developed by MBEC. The question: Please describe the disadvantaged business enterprise plan that was developed and what percentage of the airport's retail merchandising units does this 605 number represent of the total availability?
That 600 number is a misprint, it's a typographical error. It's supposed to read 60 percent which -- that's the percentage of actual what we call merchandising retail units, which is the carts that are out at the airport. Initially, what that program is supposed to do is to take people who are interested in the retail business but does not have the financial wherewithal for an in-line store, but to take a concept and see how successful it can be; also to provide them with 565 2/15/00, Operating Budget, Bill 000005 the support to make the actual entrepreneurs more successful to the point that once an in-line space becomes available that they would have access to that.
Okay. I wanted to ask you a follow-up to that. It just slipped my mind, but I'll just move on. The graph that you provided in your testimony reflects that the amount of women who have been awarded public work contracts has steadily declined. What measures have been set in place to address that, if any?
The only thing we can do is aggressively increase the goals for women business participation in certain areas. And the only thing that I could use as an example of that if there are contracts where we have more women businesses than we have minority, then we will increase that portion. I have to tell you that from a public perspective, it's decreasing; but from a private perspective, it's increasing because most of the advisor committees that I participate on, there is almost more women business participation than 566 2/15/00, Operating Budget, Bill 000005 there is minority. I mean, they're gaining, so it will surely reflect in the level of participation that we're able to get moving forward.
In the survey that you speak of in your testimony is going to be completed sometime in the year 2000. Do you have a projection on a month?
Right now we've finally got in the process of paying. What I would like to do is render you that in writing because I need to talk with the Law Department and look at their schedule because there are some things that we are trying to do through the Law Department that will have a direct bearing that, on the conclusion of that.
Oh, yes. I mean, for the first time in two years, we're actually in the process of paying them because they've given us the bulk of the documents that they asked for, so we're really in the final stages of the review, and it's in the Law Department at this point.
Okay. Just a 567 2/15/00, Operating Budget, Bill 000005 couple other questions, Madam Chair.
Why will a firm be denied minority certification? In your testimony on at the bottom --
Do you want all of the reason? They're ineligible for one reason or another. They're at least five to ten reasons why we would deem a firm not acceptable. One could be for economic size, one could be for business size, one could be for ownership or control. It could be the economic status of the individual principals of the firm. I mean, there are a number of issues where they could denied certification.
No, the size of the company or the -- right now, in order to be considered disadvantaged, you cannot have a person net worth greater than $750,000. So if your personal net worth, excluding your equity in the business, excluding your primary residence, is 568 2/15/00, Operating Budget, Bill 000005 more than $750,000, than you are not economically disadvantaged by the criteria that we use.
Okay. And for those firms that are not financial advantaged, what would be a reason to deny?
Ownership or control. The very primary one would be ownership and control. They have not demonstrated that the company is an independent firm that is owned or controlled by a person in a something class.
Okay. And why would a firm be denied recertification? Would that be the same types of reasons?
Generally, it's because of size, they outgrew the program. Or there's this myth out in the street that if you're a minority firm and you sell your business then the minority status goes along with it, but that's not the issue, that's not the case.
Okay. And what relationship does MBEC have in regard to the entire bid process, example, bid specifications, preparation, review, and decisions as to who gets the bid? 569 2/15/00, Operating Budget, Bill 000005
That's an MBEC question. We have two bites at the proverbial apple, so to speak. Once RFP is drafted, it's sent to the MBEC to develop ranges. We review the range, we then submit it back to Procurement Department for their consideration. Once that's done, in many cases we participate in the pre-bid conferences. And then when the bids are actually submitted, we review it for compliance to determine whether or not the bids are responsive and responsible, then we make that recommendation to the Procurement Department for consideration. Now, there are a number of other processes where there's actually a selection as part of the bid process, and the MBEC participates with the Procurement Department in those activities. As an example, the voting machines, I am on the review committee for the voting machines. And so I review the participation from the vendors or the MBEC is responsible for making a recommendation to the Procurement Department and the City Administration as to what firms are responsive and responsible.
Okay. One other 570 2/15/00, Operating Budget, Bill 000005 question. Can you give us a update on MBEC participation at Kvaerner? If not today, some future time.
I may have to defer to the Finance Director and the Chief of Staff because one of the things that the City Administration may want to do is request that information directly from Kvaerner and then have Kvaerner submit it to us. Council has met with them on several times and I'm not sure as to what legal responsibility they have to give the information to MBEC.
Thank you very 571 2/15/00, Operating Budget, Bill 000005 much. Did you receive a letter, Mr. Roundtree, by chance from Congressman Fattah asking for some information on participation?
No, in general. He asked for some participation level.
All right. Perhaps it wasn't you. I'll verify. I see Councilwoman Tasco is not here, nor is Councilman DiCicco and Clarke for the moment. If they are here, we are ready for you to submit your questions to the Procurement Department and to MBEC. Are there any other questions? Councilman Mariano.
Thank you, Madam Chair. Sorry I'm late. If somebody asked this question, please accept my apology. Handicap accessibilities, Mr. Applebaum, for people in wheelchairs, some of the 572 2/15/00, Operating Budget, Bill 000005 divisions that I have, I can think of one division at 56th ward where there's like three people in wheelchairs. Has that all been factored into it as far as the machines not being up too high? COMMISSIONER APPLEBAUM: You're talking about the voting machines?
Mm-hmm. COMMISSIONER APPLEBAUM: The voting machines will all be handicap accessible, positively. That's one of the requirements in the RFP and that will be absolutely positively handled.
Thank you. Thank you very much. That's the only one I have.
Thank you very much. Are there any other? Councilwoman Miller? Sorry, we can't hear you, Councilwoman. Can we have her Mike?
Is there any information that you can give us on the level of participation at the hotels, I don't have a list handy right now that I can compare with, of those 573 2/15/00, Operating Budget, Bill 000005 hotels that are currently being developed and have already been developed under the TIFs?
I believe that's being monitored by the Office of Housing and Community Development.
Thank you very much. Are there any other questions? (No further questions.)
All right, gentlemen, it looks like you haven't been here very long. It looks like it's time for us to move on. COMMISSIONER APPLEBAUM: We've been here since yesterday. (Laughter.) COMMISSIONER APPLEBAUM: Thank you.
The Revenue Department is next. (Revenue Department witnesses come 574 2/15/00, Operating Budget, Bill 000005 forward.)
Thank you for your patience. Good afternoon. I know that you, too, were here yesterday. Maybe we can get yesterday's schedule done pretty soon. One moment please, let me check with the stenographer. (Brief recess.)
I'd like to now recognize Revenue Commissioner. Commissioner, please identify yourself for the record and proceed with testimony. COMMISSIONER KAMMERDEINER: Thank you. Good afternoon, President Verna and members of City Council. My name is Nancy Kammerdeiner and I'm the Revenue Commissioner for the City of Philadelphia. With me this afternoon is Denise Garrett, Chief of Water Revenue Bureau. We're pleased to be with you today to discuss the fiscal year 2001 operating budget for the Department of Revenue and for the Water Revenue Bureau. I'll start off with some highlights regarding the tack side of the operation, and Denise Garrett will follow with testimony about the Water Revenue 575 2/15/00, Operating Budget, Bill 000005 Bureau and its budget. The Fiscal 2001 General Fund appropriation request for the Department of Revenue totals $17,918,802. This is an increase of $360,779 over the Fiscal Year 2000 estimated obligations and provides full funding for 327 full-time positions. For all other expenditure classes, the department is requesting appropriation levels equal to the estimated obligations for Fiscal Year 2000. In the Grants Revenue Fund appropriation which provides funding for school tax enforcement activities and for payments to collection agencies, revenue requests an appropriation of $2,353,688. This is just $9,369 more than the Fiscal Year 2000 estimated obligations. Finally, in the water fund appropriation request which covers payment processing, we are requesting a total of $1,634,344. This provides funding for 42 full-time positions and is an increase of $126,060 over this year's estimated obligations. I'd like to make just a few comments 576 2/15/00, Operating Budget, Bill 000005 about our revenue collection activities. 78 billion this fiscal 7 year. This increase in tax collection has been 8 achieved at the same time that tax rates reduced 9 and the personal property tax as well as four 10 nuisance taxes were repealed. A number of 11 significant tax changes have affected these 12 collections. Some of these include the 13 legislation mandating the withholding of City wage 14 tax for Philadelphia residents who work in 15 Pennsylvania, that was state legislation, and the 16 changes that this Council has approved for the 17 business privilege tax. The increased use of data 18 matching has also served to enhance revenue 19 collection, and probably one of the largest factors in the department's ability to increase revenue collection has been the implementation of the technology improvements. The department is building single consolidated taxpayer information processing system in phases. TIFs now includes all of the self-assessed taxes and we plan to 577 2/15/00, Operating Budget, Bill 000005 merge the use and occupancy tax into TIFs this coming summer. With funds requested for Fiscal 2001, we expect to complete the integration by bringing the real-estate tax system into the consolidated accounting system, and we'd hope to do that by June 30, 2001. The department's cashiering remittance processing and scanning equipment has been upgraded to take advantage of technology improvements and document imaging has been added to our capabilities. These recent legislative changes and technological improvements have been design to improve taxpayer service. In addition, we continue to work to reduce telephone and walk-in waiting times, increase telephone answer rates, reduce the time it takes to answer correspondence, and improve the maintenance of correct addresses for taxpayers. Efforts are also underway to improve the accuracy and clarity of the information that we provide to taxpayers. In addition, the department is exploring the use of web-based technology to provide faster and wider access to its information 578 2/15/00, Operating Budget, Bill 000005 and services. These services will ultimately include the filing of tax returns and the making of payments over the Internet.
I'll pause now and ask Denise Garrett to review the activities of the Water Revenue Bureau and their budget request. And then we'll both be available to answer your questions.
Good afternoon, President Verna and members of City Council. I'm Denise Garrett, Assistant Finance Director and Chief of the Water Revenue Bureau. Thank you for the opportunity to present testimony on the Water Revenue Bureau of Fiscal Year 2001 operating budget request. The Water Revenue Bureau continues to operate under the direction of Director of Finance while maintaining a close working relationship with the revenue and water commissioners. The bureau is requesting a water fund allocation $17,418,351 in its Fiscal Year 2001 operating request, with $9,501,225 for personal services. This will include funding for 262 full-time 579 2/15/00, Operating Budget, Bill 000005 employs and part-time employees. We're also requesting $7,212,900 for the purchase of services and $704,226 for materials, supplies, equipment, and contribution wards. This is an increase of $484,346 from our Fiscal Year 2000 appropriation due to a negotiated increase in wages effective in the spring of 2000 and continued investments for the improved delivery of customer services and virtual call center initiatives. Focussing on its mission, the Water Revenue Bureau has undertaken many initiatives resulting in numerous achievements in the past eight years. As many of you know, in September of 1997, in conjunction with the Water Department and with the support of City Council, we began the installation of more than 460,000 automatic meter readers in all residential homes in the City. I am pleased to report that we completed this project ahead of the two-year schedule and are now in the process of automating our large commercial meter base. AMR installation means the end of inconsistent estimated readings and the beginning 580 2/15/00, Operating Budget, Bill 000005 of consistently accurate billing every month. We are closely tracking changes in receivable growth and decline to determine the impact of AMR. percent from one year earlier. percent for the same period in Fiscal Year 1999. 7 percent for the same period in Fiscal Year 1999. We will continue our collection strategy, which includes the use of professional collection agencies and agents to implement enforcement programs such as the Utility Services Emergency Tenants Right Act. The success of these programs can be measured in the revenue they generate. Since Fiscal Year 1998, these programs have generated gross revenues of approximately $70 million. 9 for Fiscal Year 2001. In Fiscal Year 1997, the Bureau and the Water Department initiated a complete system redesign project, including reconfiguration for Y2K compliance. This effort was successfully completed in January of 1999. The focus is now on implementation of the new customer data information system known as CDIS. The specifications were for Phase 1 delivery within Fiscal Year 2001. The CDIS contains expanded capabilities that will meet both the customer needs and the needs of representatives responsible for the delivery of efficient quality services. The new CDIS in conjunction with major changes underway in the recently combined Water Revenue Bureau and Water Department Call Center is he cornerstone of our customer-focused approach. The successful implementation of the fiscal year 1999 of the virtual Water Revenue Bureau and Water Department Call Center has allowed customers to call one number and reach all services of both departments. As a result, we experienced a 582 2/15/00, Operating Budget, Bill 000005 reduction in call activity and improvements in response rate and we also reduced repeat calls. With the implementation of CDIS and the expansion of our call center, we project that these improvements will continue into Fiscal Year 2001. In addition to improvements in customer service, we have stepped up our enforcement programs. This draws attention to the issue of our most vulnerable customers, the low-income customer, the elderly customer on a fixed income, and the customer with extenuating and long-term medical hardship.
Safety nets such as grant assistance outreach and the moratorium are designed to protect customers from the loss of water services. We continue our commitment to ensure more reliable identification and sensitive handling of customers with hardships. As a result, our Water Revenue assistance program database -- as a result we are upgrading our Water Revenue assistance program database with the intention of incorporating it into the new CDIS system. We have expanded our outreach by actively participating in the energy coordinating project team reach. The ECA project which focuses on 583 2/15/00, Operating Budget, Bill 000005 holistic approach to helping customers solve their long-term utility affordability issues. In Fiscal Year 1999 we serviced 10,808 customers with low-income agreements, bill credits, and grant assistance totaling $897,035. In Fiscal Year 2001 our goal continues to be improving collections by improving delivery of the services to customers so that they feel they are receiving value for the rate they pay. We seek to establish excellence in performance standards and measures that hold each employee responsible and accountable for the delivery of efficient and quality service to the water and sewer customers of the City of Philadelphia. I thank you for this opportunity and am happy to answer any of your questions.
Thank you. Miss Garrett, how many collection agencies does the Water Revenue Bureau contract with?
Initially we contracted with approximately seven. We had two collection agencies per portfolio, we had three separate portfolios and we had one agency that was 584 2/15/00, Operating Budget, Bill 000005 administering our utility services tenants rights act program.
Do they receive a portion of whatever they collect?
No. They must remit full payment to the city and then they bill back for the service fees based on the contract negotiation that we have in place. So each agency that was selected submitted a fee percentage that they would bill us for, and we subsequently receive their invoices and reviewed them and pay them that way.
Is there any thought to bring back this work in-house?
There is some thought to bringing some aspects of it, but the program has been relatively successful and very cost effective. To train our staff to be professional collectors would really be really somewhat prohibitive and it would involve expanding our staff at this particular time. As you will note in the record, we currently have 226 employees. That's down from approximately 390 employees about two years earlier. So what we're doing is we're 585 2/15/00, Operating Budget, Bill 000005 really sort of containing our cost by utilizing services that will give us more return for our investment dollar.
Thank you. Commissioner, what is the current status of the tax lien portfolio? COMMISSIONER KAMMERDEINER: As you know, the tax lien sale took place on June 30, 1997. At that time, we sold a little over a hundred million dollars in tax claims and were paid through a bond issue approximately $75 million. That was a combination for the City and the School District. The properties that had tax claims that were included in the sale, the tax claims were referred to three servicers who are engaged in collecting those tax claims. At this point, one of those servicers has turned their portfolio over to another, so we're at two servicers who are engaged in collecting those tax claims. At this point, one of those servicers has turned their portfolio over to another so we are at two servicers who are managing the collection of the tax claims. The payments to the bondholders have 586 2/15/00, Operating Budget, Bill 000005 taken place on time, on schedule, for each quarter. All of the interest payments have been made and some payment has been made against principal in each quarter. The first of the sheriff sales for foreclosure on these properties took place last month. Another sale is scheduled for, I believe, tomorrow. And basically, what we are seeing is that the servicers, having exhausted normal methods in terms of contact with the owners of the properties have gone through the court process and filed and are now at the foreclosure stage on a number of properties. And as we have with the City's tax sales, they are starting to find that people who otherwise were ignoring notices are starting to come forward and pay. And so we're expecting that we'll see a lot more activity in terms of payment in the coming months as a result of foreclosure process actually taking place. People now realize they're serious.
All right, thank you. Councilman Nutter, your light is on. Did you want to be recognized?
Yes, Madam Chair. 587 2/15/00, Operating Budget, Bill 000005 Miss Kammerdeiner, yesterday, somehow you got drug up to the table. COMMISSIONER KAMMERDEINER: Yes.
And we had a discussion about some wage tax issues and I think you were going to try to get for us a copy of a particular memorandum. Have we had any success with that? COMMISSIONER KAMMERDEINER: Yes, I have that. I was expecting to include that with written responses to any or all of the questions that might come up. But there is a memorandum of understanding that has been signed off by each of the sports leagues and all of the teams within the leagues including the home teams are covered by that memo of understanding, and it does provide for payments for duty days, payments of wage tax for duty days in Philadelphia. And for the home teams, that means practice days in addition to actual game days. For visiting teams it's basically game days.
How does that agreement treat issues like incentive pay, signing bonuses and the like? 588 2/15/00, Operating Budget, Bill 000005 COMMISSIONER KAMMERDEINER: If it's part of the compensation, that becomes part of the payment that is captured within the wage tax, so it would be based on that. If that's part of their compensation in a given year, then that becomes part of the factor that would be used in calculating the tax.
But that's not for visiting teams, is it, Commissioner? COMMISSIONER KAMMERDEINER: Yes, it would be -- no? I'm seeing someone shake their head no. I will verify that, but I thought any compensation was included as long as it was part of their basic compensation.
Would you please check that? COMMISSIONER KAMMERDEINER: Yes, we certainly will.
That's all right. I'm assuming, Madam Chair, you were talking specifically on the signing bonus issue or the visiting teams in general? 589 2/15/00, Operating Budget, Bill 000005
Visiting teams in general, okay. And could you indicate again just for the record that if there is some signing bonus is all of that subject to the wage tax or whatever portion the person is supposed to pay or how is that treated? COMMISSIONER KAMMERDEINER: It depends on how that is established. Sometimes those bonuses are deferred over time or it really is a matter of determination of whether or not that's a part of their compensation. As you know, with the wage tax, it's your compensation that is taxed, your earned income.
With all due respect, Commissioner, I don't think it's a gift or I don't think it's given to them because I think they're nice; they're giving them a signing bonus because they expect them to perform. COMMISSIONER KAMMERDEINER: That's why I'm saying that I believe that's included as part of their compensation, and depending on the 590 2/15/00, Operating Budget, Bill 000005 definition of the compensation, would include signing bonuses and a number of other things in the calculation.
Now, you said depending on whose definition of the compensation? COMMISSIONER KAMMERDEINER: The City's definition. It's in regulations.
Okay. Well, can you imagine a situation where that kind of payment would not be covered? COMMISSIONER KAMMERDEINER: I'm just going to double-check with staff who have looked at it more closely than I have and see. (Pause.) COMMISSIONER KAMMERDEINER: What Debbie was, the Commissioner was clarifying for me and is what I was intending to say is that a signing bonus could be or would be a part of their compensation in a given year and all of the compensation in that year should be included in the calculation of their earnings for that year and the wage tax is based on that.
And do we know that that has been the practice of the various teams as 591 2/15/00, Operating Budget, Bill 000005 it relates to the various players who get signed. Almost yearly they sign somebody and -- COMMISSIONER KAMMERDEINER: That's the kind of issue that our auditors review, and this is not just with sports teams, but seeing more and more with law firm, accounting firms, and others where there are people who are in demand, there are bonuses paid or additional compensation paid, finders' fees, things like that. We look for that type of information as part of our audit and would be verifying that if someone received that as part of their compensation that was included in the firm's calculations of wage tax that were turned over to us.
Have we had an audit of the various major sports team recently? COMMISSIONER KAMMERDEINER: I don't know that I can really indicate specifically with business tax confidentiality laws whether any particular entity has been audited recently or not, but that is an issue that we would look for in an audit.
Okay, all right. And you said you'll provide with us a copy of the 592 2/15/00, Operating Budget, Bill 000005 agreement? COMMISSIONER KAMMERDEINER: Yes, I'll provide copy of the memorandum of understanding with a written response on this or any other questions that might come up.
You're welcome. The Chair recognizes Councilman Goode.
Thank you, Madam President. Good afternoon, Commissioner. The forecasting model that you used for economic forecast when you laid the tax revenue is the REMI model, Regional Economic Model, Incorporated? COMMISSIONER KAMMERDEINER: That's correct.
How long have you been using that model? COMMISSIONER KAMMERDEINER: It's two to three years now.
It's my understanding that model was used to analyze 593 2/15/00, Operating Budget, Bill 000005 Arthur Anderson analysis of proposals done for the stadiums? COMMISSIONER KAMMERDEINER: It was one of the things that we used as an opportunity to review the work that they had done, yes.
So you've reviewed and analyzed that information related to the construction stage or beyond the construction stage? COMMISSIONER KAMMERDEINER: I'm sorry?
You used that model to analyze things related to the construction stage or beyond construction stage? COMMISSIONER KAMMERDEINER: Mike Isard who has been involved in using the REMI model has joined me at that table, and I think he would be in a better position to answer directly on what was used and how.
Michael Isard. The question about the REMI model, yes, it was used to forecast the impact of the contribution phase of the stadium project.
Were there any studies done beyond the construction stage? 594 2/15/00, Operating Budget, Bill 000005
There were other studies, but they did not use the REMI model per se. They mostly relied on research used from our taxpayer database.
I believe that the intention of the Mayor's Office is to make them available to Council, yes.
I believe the intention of the Mayor's Office is to make them available to Council.
They're not available directly through your office, through your department?
No, they've been forwarded to the -- okay, yes, we can provide that. It's a sensitive issue. Excuse me.
Thank you. Thank you, Madam President. 595 2/15/00, Operating Budget, Bill 000005
You're welcome. Are there any other questions from members of the committee? The Chair recognizes Councilwoman Miller.
Thank you, Madam President. This question is for the Revenue Department. In your testimony, you talk about one of your objectives of improving taxpayer services, and do you still have the system in place for the senior citizens or those sick and shut-in taxpayers? Because, you know, during the lien when people were coming in to make agreements and whatnot with their taxes, there were some people that were unable to stand in long lines and you did put together a special provision for those individuals. COMMISSIONER KAMMERDEINER: At the time you're referring to, we did take and make agreements -- take information and make agreements over the telephone. We do not at the present time make payment agreements for real-estate taxes over the phone, but we will deal with it by mail and 596 2/15/00, Operating Budget, Bill 000005 have the cards. We can take the basic information by phone, but we will send the cards to them, have them sign the agreement cards and send them back to us, so they will not need to actually be physically present to finalize the agreement if they are unable to come in.
Well, one of the problems that I encountered with a constituent and some of the seniors, older adults seem to have the same problem, is that they don't deal with the checking accounts. So they either have cash or, you know, maybe they even have a hard time getting out to get a money order. I know that I personally went to someone's house and picked up their cash to bring it down and make a payment for them. And I know that might be a little bit difficult. COMMISSIONER KAMMERDEINER: Right. I'm not sure how we can deal with that because we really can't go door to door to actually collect.
No. 23 COMMISSIONER KAMMERDEINER: But we do have two service centers that have cashiers. Now, they will only take checks or money orders at the 597 2/15/00, Operating Budget, Bill 000005 Municipal Services Building. We will accept cash. There's a security issue in terms of the service centers.
Right. COMMISSIONER KAMMERDEINER: And they are not suited for cash payments in a reliable way that would be safe for both the taxpayer and the staff who would be working there. In the municipal services building, we do have a secure area and we will collect cash there.
In your testimony, you referred to a broader definition requires that any firm with ongoing activity in Philadelphia pay the business privilege tax. Could you explain the definition of "ongoing" that you apply in order to have the business pay the BPT. COMMISSIONER KAMMERDEINER: You're referring to the active presence legislation that was approved by the Council two years ago, and I'm going to ask Nikki Marx to elaborate a little bit on how we're defining active presence for this purpose and how that will go into effect.
Nikki Marx, Deputy Revenue 598 2/15/00, Operating Budget, Bill 000005 Commissioner. The active presence regulations are just about ready to be filed, and basically what it means is that anybody doing any business in the City would be required to file. If you come into the City to attend a meeting that's not otherwise involved with your business, then that would not be considered doing business in the City and you would not be required. But if you have even one customer is in the City, if it is a business customer, then you would be required to file even if you don't actually have an office or salespeople who are physically located in the City. COMMISSIONER KAMMERDEINER: I will add to that that with the business privilege license, which is a $200 license that is in perpetuity, it isn't a renewable license, a lot of people found that if they were only coming in for a short period of time, for example, a convention and selling at a trade area in a convention for two or three days that that was onerous. There is a short business license for the purpose of providing trade show or other short duration. I believe that's a three-day period in a given 599 2/15/00, Operating Budget, Bill 000005 calendar year. If you're going to come back on a recurring basis, then the business privilege license, the full license, would be the most appropriate. But even that person who is here just the two or three days for a trade fair or conference where they're selling in Philadelphia would be liable for the business privilege tax for that time period.
Thank you. Are there any other questions from members of the committee? (No further questions.)
Thank you very much. COMMISSIONER KAMMERDEINER: Thank you.
The Board of Revision of Taxes. Mr. Glancey. (Board of Revision of Taxes witnesses come forward.)
Good afternoon. Thank you so much for your patience.
Good afternoon, Council 600 2/15/00, Operating Budget, Bill 000005 President and members of City Council. My name is David Glancey and I'm the Chairman of the Philadelphia Board of Revision of Taxes. With me today are the Secretary of the Board Robert Nix and the Executive Director of the Board, Rick Folia (ph). Harvey Levin, our newest member was here and he did have to leave, but he sends his regards. Harvey was elected our board in November and served on the Board of Review for about seven years. In the interest of time, I intend just to point out a couple of things in our testimony as opposed to going through and highlighting everything. If you just look on , the School District budget for this year is actually $60,000 more than you see on the printed budget. And that reason is -- thank you, Council President and your staff for all the help that you've given us. The School District now has a step program and a career path for our School District employees. That was passed by resolution on February 7th, and the reason that it is not in the testimony as you see is because we had to preprint the testimony prior to that date. 601 2/15/00, Operating Budget, Bill 000005 Also, if you would look on , which is the only other thing point out to you before we take any questions, It shows a chart of residences. If you look at the row dwellings from 1997 through 1999 and if you look at the mean price increase, it's about percent. And if you 8 look at the semidetached dwellings, the twins and 9 duplexes, things like that, you'll see another 10 lesser increase. And then finally, if you look at 11 the detached dwellings, you will see another substantial increase over the time period 1997 through 1999. The 1999 raw figures are really about half year. We do not have the full year figures in for '99 simply because we don't have those documents yet in from the Department of Records. However, I think it does show for the first time in a long while that we have seen residential values increasing at a rather nice rate in the City. We've seen that happen with commercial properties for the last three or four years, and it does look like residences are attempting to catch up and I thought it would be important to note that to City Council. And with that, we'll take any questions 602 2/15/00, Operating Budget, Bill 000005 that you might have.
Thank you. Mr. Glancey, you state in your testimony that the board's 2000 predetermined ratio remains at 32 percent. Are you able to maintain this level throughout the five-year plan period?
Is there any danger that the predetermined ratio could drop?
Well, I suppose there's always that danger if the market just happens to go absolutely berserk, but under normal circumstance it would seem to me that the 32 percent will not drop over the five-year plan's life.
Were you consulted by the City's Finance Department with regards to the assessment growth assumptions contained in the FY 2001 budget and the City's five-year plan?
I don't know if "consult" would be the right word. I mean we get asked --
Discussion, inquiry? 603 2/15/00, Operating Budget, Bill 000005
It, quite frankly, it makes sense for the Finance Department to see what we are projecting as growth, if anything. And the real growth that we would show for the year 2001 is there. So sure, that does take place, but it really is just transferring numbers as opposed to consulting and talking about it or trying to say "is that all you can do" or "are you doing too much?" None that takes place. It's just "what are the numbers".
Councilman Nutter, your life light is on. Do you want to be 604 2/15/00, Operating Budget, Bill 000005 recognized?
Mr. Glancey, in looking at the , I notice that there is a pretty significant drop in the number of row dwellings sold between 1998 and 1999. Actually, for every type of unit there is a drop from 16,000 in '98 to 6,000 in '99; 3100 in semidetached to 2000; and 1200 to 700 in the detached dwellings. What, if any, significance --
I'm sorry. I guess I didn't make it clear. Those are not complete figures for 1999. What happens is, is that we get the most current figures that is we can get from the Department of Records of recorded instruments.
Those are the ones that we have used. It's about a half a year figure what you're saying seeing for 1999. If you would look at -- and I know you do, Councilman, you keep our testimony from prior years. If you would look at our testimony from prior years --
Oh, I have a warehouse of it. (Laughter.) 605 2/15/00, Operating Budget, Bill 000005
If looked at our testimony from prior years, you would see that the $16,000 figure last year came in here around this time at about 8,000, so it's just simply not a complete year.
Thank you, Madam Chair. We've utilized many, many TIFs, tax increment financing schemes, to move forward development of many, many projects, I guess for the most part, hotels, but other types of entertainment, recreational projects that have either been on the board ready to go or soon to be on the board. 606 2/15/00, Operating Budget, Bill 000005 Do you have an opinion over watching through the number of years we've been implementing this tool, the direction that we're going? Are we at our TIF limit? Are we under-TIFed, over-TIFed? Are you TIFed off? (Laughter.)
You guys have been watching this now for a long, long time. What do you see?
I don't think we're over-TIFed. Once this phenomenon of TIFs and abatements and other kinds of tax incentives started to in the last eight or ten years really get a foothold in the City, we have watched I think some substantial development. What we did as a board was just make some very, very quick and dirty studies of other cities throughout country. I suppose the TIF capital of the world is Chicago, and that's what we've discovered. And Chicago has done extremely well in doing what they've done. And again, we all have to remember that these 607 2/15/00, Operating Budget, Bill 000005 structures that we have, the tax structures, differ if city to city. The authorizations differ from city to city. In Pennsylvania we are so restricted by what is known as the uniformity clause, it has a terrific effect. We can't have two tiers of taxation for various types of property. As that as a background, Councilman, my opinion is the more the better. It seems to me that the benefits that we get, whether it be in the actual wages paid to people who are working on these projects, but even more importantly, and not just with the hotel because some of that is very temporary, we need to increase the population in the City of Philadelphia, and I think we have to do that in any way possible. And one of the ways that we have seen, or at least in my opinion, have seen that take root is to offer these kind of incentives. Again, not just for the construction, but for the permanent base of some office building, some folks moving in here because of the abatement, the development of apartments, the ten-year apartment abatement, all of these things taken together I think are very important. And my 608 2/15/00, Operating Budget, Bill 000005 sense is that if you take one away, it might have an impact on the whole, so I don't think we are over-TIFed. I believe maybe that we should look at the projects maybe somewhat more carefully. And again, I'm not criticizing anybody for what has been done in the past. I think all of these things have been very important, but in the future maybe what we ought to do is to say, "Well, we have enough of this type of property. Maybe we ought not to be TIF-ing this type property. But we don't have this type of property and maybe that's some place where we really ought to put our muscle and our incentives to try and get that."
Without saying so, we maybe have utilized this tool maybe in our limit on hotels, you know, because as we look past the Republican National Convention, we're talking about the expansion of the Convention Center to keep up with hotel occupancy and number of rooms.
The other problem that we have, I think, is that we really don't offer middle-class families a residential choice within their pocketbook range. The people that I 609 2/15/00, Operating Budget, Bill 000005 know are simply anecdotal who have moved from the City to either South Jersey or the suburbs are people who wanted to move from a rowhouse to a single family home with a garage or a lawn, some other amenities, a family room. Their pocketbook range was the 130 to 160 kind of range that you find in Turnersville and Washington Township and Springfield, Delaware County and places like that where a lot of these people have moved. There are very few places in Philadelphia that you can find a single detached stand-alone home with the suburban amenities that people are looking for when they move up from rowhouses in Mayfair or South Philly or Fishtown and those places. Unless you move into the suburbs or South Jersey, if you go into East Falls, for example, you're not going to find a single home under 275, 300. If you go to places in the Northeast, you're not going to find them under 200. We basically have invested a lot of our money, whether it's state federal dollars, into low and moderate income housing, which I think is wonderful to do because we're housing as many people as you possibly can. But there's that whole cohort of people that are the 610 2/15/00, Operating Budget, Bill 000005 ones we're trying to save that we're really not giving any choice to other than moving outside the city. I mean, even in South Philadelphia, for example, in places that have traditionally been stable neighborhoods like Packer Park and Britton Estates, they're not even detached homes. They're townhouse-type homes that are selling for 180, 190, 210, 250. But that 120, 130 to 160 range, I don't know if you can find it here in Philadelphia. And we've been looking at some ways to incentives that, and any information or any incentives that you could think of that would help us get there, any kind of residential TIF in that regard. Because a lot of people who have moved said, "You know, I really didn't want to go. I wasn't unhappy with the schools. I wasn't unhappy with my neighborhood. My wife just drove me crazy because she wanted a bigger house and we couldn't find a bigger house in Philly that we could afford." We really do fall sort of giving people those kind of options.
I agree with you. I'm not so sure it is necessarily an incentive. I 611 2/15/00, Operating Budget, Bill 000005 think we have a limited supply of what we need to solve that problem, and that's land. We have a limited supply. Up in Councilman Nutter's district, there is a development that is taking place. I think it's 85 or 90 of the type single-family homes that you're talking about. There is some supply up there. If we had a, you know, if you had the land, I think you can find developers who are going to do this with the incentives that we currently have to offer.
Well, projects that are going on had been completed in northern New Jersey across from Manhattan in old industrial brown fields land that have reclamated and reused and have really created a neighborhood. And what's nice about is you wind up creating an integrated neighborhood but of all people with same economic background. Because I know people who have moved to the suburbs for fear of changing neighborhoods and find out that their neighbors are now of a different color background in their new home, but say, "Well, you know, the guy works same kind of job I work and it's the same kind of people." I'm glad you had in our epiphany, but 612 2/15/00, Operating Budget, Bill 000005 you had to leave the city to find that out. And I think that's one of the things -- anything that the Board or your staff could come up with to help us get there would be a help.
Thank you, Madam President. Good afternoon, Mr. Glancey.
With regard to the Keystone opportunities, there's a chart in the back of your written testimony, KOZ chart that cites Commerce Department applications. Can you tell me what those applications are for?
They're applications to be located in the Keystone opportunity zone.
Are property owners 613 2/15/00, Operating Budget, Bill 000005 that are tax delinquent able to apply?
Oh, I would doubt that. The reason I can't say for sure is because we keep these applications, the Department of Commerce really does the -- they do the follow-through. You file first with Commerce and then the follow-through is with Commerce. But I'm just informed by the Revenue Commissioner that they, in fact, do tax delinquency checks. And if you do have a tax delinquency, you will not get the benefit of being in a KOZ.