COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON FINANCE - - - Room 696, City Hall Philadelphia, Pennsylvania Tuesday, October 1, 2002 10:10 a.m. - - - BILL 020577 - an ordinance amending Chapter 19-1300 of the Philadelphia Code entitled "Real Estate Taxes" by adding a new Section 19-1306 providing for a cap on tax increases... BILL 020579 - an ordinance amending Title of the Philadelphia Code entitled "Finance, Taxes and 12 Collections" by amending Chapter 19-1300 of the Philadelphia Code entitled "Real Estate Taxes"... 13 RESOLUTION 020585, a resolution authorizing the Committee on Finance to conduct hearings to 14 investigate the property assessment practices of the Board of Revision of Taxes. 15 - - - 16 PRESENT: 17 COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILMAN DARRELL L. CLARKE 18 COUNCILMAN FRANK J. DICICCO COUNCILMAN JAMES F. KENNEY 19 COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO COUNCIL PRESIDENT ANNA C. VERNA - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 (215) 561-2220 I N D E X WITNESS PAGE GOLDIA MYLES, Resident....................... MARY JANE HAZEL, Somerton Civic Assoc. ...... 16 BERNICE HAMIL, Society Hill Civic Assoc...... 19 STACY WIGMAN, Resident ...................... 24 MARY RICHARDS, Veterans Stadium Neighbors ... 32 SAMUEL BARTHOLMEW, Resident ................. 37 HELEN JAROSIEWICZ, Resident ................. 42 PAUL PASCUCCI, Resident ..................... 46 JULIE WELKER, Real Estate Broker ............ 52 NANCY KAMMERDEINER, Revenue Commissioner .... 58 RICHARD FADER, Chief Deputy Solicitor ....... 86 DAVID GLANCEY, Board of Rivision of Taxes ... 113 JUDY CERRONE, Resident ...................... 280 SANDY JUNKER, Resident ...................... 297 3 10/01/02 - FINANCE - PUBLIC HEARING
Good morning. We certainly want to thank everyone for coming. And we will now call this hearing into session. This is a Finance hearing. This is a continued meeting from September 25th, and we have a quorum present. To my right, Councilman Frank DiCicco; to his right, Councilman James Kenney; and to his right Councilman Michael A. Nutter. So again, we thank you all for coming this morning. And what we would like to do is to permit a few people who didn't have the opportunity to testify on the bills we heard on the 25th, we will permit a few people to testify, if that is acceptable to the committee. After that, we will call Nancy Kammerdeiner, Commissioner, Department of Revenue; and David Glancey, Board of Revision of Taxes. So at this time, Goldia Myles. Please identify yourself for the record. Is Lois Fernandez here? (No response.)
She is not here. Is Mary Richards here? Okay, you will be next. 4 10/01/02 - FINANCE - PUBLIC HEARING Is Judy Cerrone here? Laura Garrett and Joshua Vincent, if any of those people are present, they said they did not get a chance to testify last time. If they come, after Mrs. Miles and Ms. Richards are finished, they will have the opportunity. If they are not here, then we will move on to today's scheduled hearings. Thank you. Please identify yourself and begin your testimony. And thank you for coming.
My name is Goldia Myles, M-Y-L-E-S. I'm Eulah Barnett's sister.
Thank you. We're so glad to have you, and you are from a wonderful, wonderful family whom we love dearly. Please begin your testimony, and thank you.
I know I'm supposed to address everybody, but I won't because I don't want take up my time. But I do want to thank Councilman DiCicco because he's the one that brought this thing this far. I've been working on this since 1994 5 10/01/02 - FINANCE - PUBLIC HEARING when they first start going up on senior citizen taxes when they don't make anymore money. I retired in '76. We don't get any more money. Two percent a year when you already on a low salary is really nothing that you can continue to go up on taxes. You act like this is the only thing that you have to pay for is taxes. Inflation has tripled since I retired. You have the gas gone up. I went to Harrisburg. You have PECO gone up. I went up to meet -- up to the school, the college. All these things have gone up and have tripled since I retired. How is we senior citizens that get this little bit of money every year, 2 percent, going to continue to pay the rise in cost? Now, just because someone moved in my neighborhood after I've been there 32 years -- 23,610 I paid for my house, about $475 of taxes. If it continue to go up, how am I going to pay for it if I don't get anymore money? And that's exactly what has happened. Now, I'm really asking for senior citizens. I don't care what they make. If they have managed to get a little bit more than another person, I think we need a $500 deduction across the 6 10/01/02 - FINANCE - PUBLIC HEARING board for us senior citizens to try to catch up with senior citizens. Now, I went to Harrisburg on this thing in 1994. I came to City Council. I also went to the Board of Revision of Taxes at that time. At that time, a lawyer was there for us just for show. And I'm afraid this is for a show today. After all, this is election year. And I'm afraid this is for a show. But we old people need something to be done with the little money that we retired on. See, when ya'll retire it will be enough, ya'll will get enough money to live on. We don't have enough to live on. We have to pay the increase and the real estate taxes, water, PECO, telephone, house insurance, flood insurance has been added. It wasn't there when I was there because I live in the area now, you know, says a $500 flood plan, but we flooded in 1998. Those people, some of them, are out of the houses because bribe was taken and they didn't build the houses right and so now they still have to pay their bank, but they don't live in the house. So how they going to do that? And I was talking to some of the people in here today. I'm not going to call their name. 7 10/01/02 - FINANCE - PUBLIC HEARING They're in the same position. We're not at the poverty level yet that -- see, I had three strokes since I been fighting this thing and sometimes right in the middle of the sentence I forget. But what I'm going to say that we are not exact at the poverty level where we get a rebate. That rebate is just a handout. If you already at the poverty level, rebate doesn't do you any good because they still can't pay taxes. Now, some of us are not there yet, but you're putting us there this year. Now, we have this letter, we had to pay more taxes for 2002. Before we could even digest that, here you come with a letter in September that we got to pay more next year. We can't continue to do that. And this bill that you have about stretch the tax until you retire or move and then pay it, that's a mortgage. I already mortgaged my house in order to have it handicap accessible. That's already mortgaged and that's what I got to try my best to scheme and pay back out of what I already get. And I just don't think it's fair. Most of us senior citizens today that retired, they retired years ago, about the best 8 10/01/02 - FINANCE - PUBLIC HEARING we could do is to make $10,000 a year. I retired on $10,000 a year. Now, you tell me what kind of money you are getting on $10,000. Right the other day when I was in here, my husband was in the hospital. I had to get somebody else to bring him home.
When you get a certain age, you fall in bad health, but this is the first year I ever fell in bad health. I'm not only here for myself today, I am here for all the senior citizens that I got there. )
You're not going to put me out right now, are you? This woman read nine pages the other day and I had to sit and listen to it. And I had already heard that before.
Thank you. The Chair notes that Councilman Rizzo is here, and we thank him likewise for his attendance. All right, you can continue, Ms. Myles. 9 10/01/02 - FINANCE - PUBLIC HEARING
Well, the senior citizens, Southwest Senior Citizens, they asked me to come here to speak for them. But see, I'm not a lawyer, neither a paralegal, but I've been fighting for them since 1994. And every day when I go there, they come up to me and says, "Well, what you gonna to do now?" They sit there twiddling their thumbs. What we get at senior citizens, it's not free. I mean, if you take exercise to stay in shape, you got to pay for it. If you take a trip, you got to pay for it. So a lot of times you just can't go on these trips. Everything that you get, you still paying for it. I don't know what the lottery is paying for because it's certainly not paying for -- I guess anything except the place we go to because everything we get, we are paying for it. I have written to every representative in Harrisburg. I wrote letters and sent them to 21 Harrisburg. I got an answer from about 2. Now, 22 ya'll are there to represent us. That's not 23 representing us if we just don't even hear from you. 24 I wrote to Candidate Rendell not too long ago 25 because when I heard him say what he gonna do about 10 10/01/02 - FINANCE - PUBLIC HEARING the taxes, well, I got a letter back right away and he didn't ask me for no money for the campaign either. I appreciate that because I get a lot of that from Harrisburg. And Congressmen during the holidays, they gave them $50,000 raise in the paper yesterday, $155,000. Well, why we gonna to be set at $17,000 if you're married, $14,000 single? It takes the same amount of money to heat your household if you are single or either if you're married if you can stay there. Right now my husband has fell in bad health. If anything would happen to him, I couldn't even stay in my house. And my house is my castle. My house and all these old people's castle. When you work hard 30-some years and pay for a house, you should be able to live in that house until you get physically disabled or die. You should be able to stay in your house. And right now, what ya'll are doing is running us out of our home. (Applause.)
When Administrator Haye (ph) when he turned me down as far as last year's appeal, he told me the next thing I could do is just take it to Common Pleas Court. You think I didn't do it? I 11 10/01/02 - FINANCE - PUBLIC HEARING took it to Common Pleas Court. Right now it's in Common Pleas Court, but it's nothing I can do because they told me to come back with a lawyer. I did get a lawyer, but he changed his mind. So right now one of the lawyers from VIP called me, she gonna call me back and she may take the case with a group of her people. And I certainly hope they do. But when she take it, she will be taking it for all us senior citizens; it won't be just for me because I'm not the only one in a bad shape. I'm just the only one that is speaking for them. They asked me to come here to speak for them, but, of course, I'm speaking for myself, too. You know when you get older, you have to pay out much more money for healthcare. We got co-pay when you go to a doctor. A lot of medicine that you was taking have been taken off the prescription. And it's off the prescription, you gotta pay for it. And I've been up there in that drug store when a person came in and say they want their medicine but "I can't get all of it. Can I get half?" Well, they got to have the medicine when it's time to come back for the other. The other check may not be there. Many people that I started 12 10/01/02 - FINANCE - PUBLIC HEARING out with in 1994 fighting for -- 4,000 some names I had on a petition. Councilwoman Verna is my Councilman. I gave her a copy of it. Well, a lot of those people today, they dead. Every week we are sending condolences to somebody that have died because they're trying to live in their house. Before I went to the senior citizens -- because I didn't want to really go there and start exercising because I feel that you done got old, but I have got old -- I used to walk in the park. And this lady was walking in the park with me living in her house by herself. It was hard for her. She didn't want nobody to room with her. So therefore, one day when I walked in, she died overnight. It's from worry. When you worried about getting out of your house, it brings about a heartache, heart attacks, strokes. When I left out of that Board of Revision of Taxes in April, I testified on a Tuesday. On Wednesday morning at 11 o'clock, I had a stroke. I had to go to the hospital. When I got to the hospital, I had another stroke. The next day at 7 o'clock at night, they said I was okay, they put me out. When I got home before I got to bed, I 13 10/01/02 - FINANCE - PUBLIC HEARING had another stroke. So then they took me back and kept me seven days. Now, I don't feel like our officials should continue to go up on senior citizen taxes when they have been in a neighborhood for 32 and 33 years, paid what was supposed to be paid, and then these people that making 65, 80 and a hundred thousand dollars a year come into your neighborhood and pay all this money and your taxes gonna go up, you gotta to pay the same thing. It's just not right. Is it right, senior citizens? It is right? I hope I'm saying what ya'll want me to say. (Applause.)
Now, I have a letter here -- I'm not gonna read it, I'm not gonna read it. I have a letter here that I wrote to Chairman David Glancey. I have a letter that I wrote to Mayor Street. I didn't get no answer. I put one in his pocket. I put one in his pocket and sent one to his office. He said he didn't get it. I have one I sent to Representative Fumo. I guess it's Representative Fumo because I think he's in Harrisburg. And then I have the letter that I sent 14 10/01/02 - FINANCE - PUBLIC HEARING to you, DiCicco. I don't even know if you got that or not. When I went back to your office, they said the letter got lost. And I also -- to let you know how long I've been working on this, I sent you some of the letters that I wrote back in 1994. And I have a brief here that I had written out for Judge Sylvester next door to have my case. I'm not going to read them. And I put an article in the Globe every week. I also have sent faxes to other neighborhood papers asking the senior citizens to all get into the act and start fighting for themselves, because me fighting by myself is not going to do any good. But those old people there where I am, at the senior citizen place where I am, they sit and twiddle their thumbs, say, "What am I going to do?" I can't fix my furnace. I can't buy another one. Today, appliances do not last more than 10 years. I been at my place for 32 years. I've had to have two furnaces, two air-conditions, three stoves. You may think I'm hard on stoves, but that's the way they make them today. And you're out of your money if you try to pay insurance. Insurance is just too high. And then when you call 15 10/01/02 - FINANCE - PUBLIC HEARING them, they'll say, "Well, that's not a part of the insurance." So you just out all the way around. I heard some of these old people in the hall this morning saying that they should come in house and see how many things are broke down and I can't fix them. And we can't because we only get a little money. So I won't take up anymore of your time. But I just hope that I have spoke for these people that are on this petition. I hope spoke for them.
I assure you, you have. Thank you very much, Ms. Myles. (Applause.)
The Chair notes that our Council President is here, Councilwoman Anna C. Verna, to my left. And we thank her for coming. And Councilman Angel Ortiz is likewise present. Thank you for being here. Mary Jane Hazel, Somerton Civic Association, are you here? Bernice Hamil from Society Hill Civic Association. We welcome you both, and please have a seat. You're welcome to sit at the table as well. 16 10/01/02 - FINANCE - PUBLIC HEARING Mary Jane Hazel, Somerton Civic Association.
Good morning. My name is Mary Jane Hazel, I'm President of the Somerton Civic Association. I have been this route before. In 1997, in fact, we had the Board of Revision of Taxes come up into our area and put them on the hot seat. Unfortunately, we do not have representation in the State that we have in the City of Philadelphia. And I want to thank the Councilman for being in our corner on this. Two years ago, the State of Pennsylvania sent out a check to every homeowner of $100. Had they had taken that $100 to every homeowner and given it to the School District, then the Board of Revision of Taxes wouldn't have had to come up for another reassessment. It's just unfortunate that nobody in Pennsylvania -- and I know because I've been in Harrisburg many, many, many times. When we go there, Philadelphia comes in on a spaceship. We are aliens to the rest of Pennsylvania. And what we have to do is teach our state reps and our state senators how to vote for Philadelphia. And if they don't, then we don't vote for them. That's the 17 10/01/02 - FINANCE - PUBLIC HEARING first thing that has to be done. In the Somerton area, 68 percent of our taxpayers are senior citizens. Now, I don't want to blow this out of proportion with senior citizens, I just think it's important that we let you, the City Council, know ours is 2.2 percent a year. That does not take in anything that's not gross national product. Your taxes are not that, your heating is not that, your electricity is not that, and most certainly your health insurance is not that. So while last year most of us received a $20 increase each month, our insurance went up $24. Our taxes, in my case, went up almost $300. We already start out in a negative. If you look over through all of Pennsylvania, you'll find that the voters of Pennsylvania are not the young people that are worried about bad-hair days or what's good on television, it's your senior citizens. They are the ones that come out to vote. They will come out in wheelchairs, in walkers, it doesn't matter. They will not miss a voting day. And this is important. And this is what all our representatives have to realize. You move the senior citizens out of 18 10/01/02 - FINANCE - PUBLIC HEARING Philadelphia, I don't know what will happen. I'm not leaving. I'm a Philadelphian. This is my grass roots, and I'm staying right here. And if I have to fight Mr. Glancey every year, I will do so. (Applause.)
But we have to put a curb on this. I called one time and they said to me, "Well, go into reverse mortgaging." Well, when you're a senior citizen, we have spent our entire life making sure that our bills are paid on time. To ask a person who had their mortgages finally paid off to go into reverse mortgaging, that's asking them to declare bankruptcy. And I think that's sad that you ask anybody to do that. They say, "Okay, we'll put a freeze on it, we'll put a freeze on it." $14,000 a year, if you make under that, the freeze is they can't raise your taxes. Well, I don't know of anybody that lives in Somerton can afford to live in Somerton for $14,000; they can't, because their taxes start off at $3,000. So they're automatically in the hole. So it is really imperative that we put some kind of a cap on this. I'm not saying a percent cap or do a moratorium for the next 10 years, no, that's not 19 10/01/02 - FINANCE - PUBLIC HEARING realistic. But realistic is nobody should be raised, as one of our members was raised, $800. Too much. Absolutely too much. I think that if they want to really do something and do it fair is put a cap on it and as they sell their homes, whatever that home sells for, then you reassess because if a person can afford to pay $250,000 for a house, they can afford pay 3,000, 4,000 for taxes. And that's my suggestion to this group. I hope you listen to us and I hope we can come to some agreement. I certainly don't want to fight Mr. Glancey again. I thank you very much. (Applause.)
Thank you very much. Bernice Hamil, Society Hill Civic Association. Excuse me one moment, please. Please take a seat a moment. To my left Brian O'Neill who has a question, and the Chair also notes that Councilwoman Tasco is here. She's here, stepped out and will be back. She's in her office listening. Councilman O'Neill. 20 10/01/02 - FINANCE - PUBLIC HEARING
First, I'd like to thank the witness because I know without it being a wild guess she probably traveled further than anyone who's here today for this hearing. Mary Jane, you mentioned a cap of reasonable amount. There is a bill with a 4 percent cap that would sort of reflect what you were talking about. Would that fall in your --
Thank you again. Bernice Hamil, Society Hill Civic Association.
Good morning, ladies and gentlemen, members of Council. My name is Bernice Hamil. I'm Vice President of the Society Hill Civic Association. My husband and I have lived in that section of Center City for 15 years. Prior to that time, we lived with our children West Mount Airy. Essentially, we have always been Philadelphia's city dwellers even though we were often ridiculed by our suburban friends and colleagues for the high taxes 21 10/01/02 - FINANCE - PUBLIC HEARING we paid in relation to the inferior level of services we received over many years. (Applause.)
Last year, many of my neighbors were upset by increases in their property tax bills, which were raised by or 30 percent. 8 Then again this year several others learned of 9 additional tax increases. In some cases, these 10 back-to-back tax assessments have increased their 11 total tax bills by 50 percent or more, an unjust 12 hardship. 13 People have complained that they feel 14 penalized for upgrading their homes. One neighbor, 15 for example, painted the exterior of his house and 16 shortly thereafter he was smacked with a 20 percent 17 increase in its market value. Was that a 18 coincidence? And so I wonder why approximately 19 27,000 city property owners have been hit with a tax 20 bill increase of 30 percent or more in one year. Yet, Philadelphia has been a success story for the past 10 or so years. In spite of the economic disincentives to live, work, or conduct a business here; in spite of its wage taxes and frightful business taxes, we recently, amazingly 22 10/01/02 - FINANCE - PUBLIC HEARING experienced a residential boom. People have flocked to our City's excellent stock of housing with its good family neighborhoods for their essential value and for the quality of life we've managed to create here. The City has enjoyed a surprising surge in popularity by suburbanites, by professionals, by families who enjoy the City's congenial living locations in neighborhoods such as Center City, the Northeast, Northwest. Our numerous cultural and historical amenities have brought people back to the City. Are we crazy to take this residential renascence and kill it with unfair property tax reassessments? Speaking for myself as well as for the Society Hill Civic Association, we oppose the exorbitant increase in real estate tax assessment because it is counter-productive to the well-being of Philadelphia. We believe it has been levied without democratic process and is inequitable in its application. (Applause.)
For now, we request that these taxes be frozen at the 2001 rates. Therefore, our organization has voted unanimously to support 23 10/01/02 - FINANCE - PUBLIC HEARING Council bills 490 and 491, which would base property taxes on last year's assessments. These bills could be a short-term solution to what is more likely a long-term challenge. And that challenge is to keep hard-working middle class citizens from leaving this city that we love in spite of the nonreciprocal nature of that love. Importantly, we support a comprehensive and equitable city-wide tax reform that would consider a variety of potential solutions. We need to know that every residential property is taxed fairly consistently using modern technology. We need to know that in return for paying what could be the highest taxes anywhere in the country, we will receive quality City services. The Society Hill Civic Association and its more than 900 dues-paying households applaud City Council for having the courage to tackle this complex tax reassessment issue. We particularly appreciate the efforts of our Councilman Frank DiCicco for his leadership in the fight to keep people from fleeing the City's neighborhoods. Thank you. (Applause.) 24 10/01/02 - FINANCE - PUBLIC HEARING
Thank you very much. Stacy Wigman. Welcome. Thank you very much. Please identify yourself for the record.
My name is Stacy Wigman. I am a Center City resident. Thank you to the Councilmen and womem for inviting me here this morning to express my views on the property taxes. I'm a 35-year-old professional. I do not work in the City. I chose to live in the City because my job, up until recently, required me to travel out of the airport and the train station about six times a month. The drive to and from the airport and the train station became onerous, and I chose to move downtown. However, my job has changed. I no longer travel like that, and yet I still choose to live downtown. There are some things about it I've really learned to like, like walking in the neighborhoods, walking to the parks, meeting with my friends. Last year, however, after living downtown only two years, I was hit with a 125 percent increase in my property taxes. I don't technically live on a fixed income, in that I do 25 10/01/02 - FINANCE - PUBLIC HEARING receive merit raises every year. However, when I received that bill, it isn't as if I could go into my boss and say, "I need more money to pay my property taxes." I also felt that I was hit because I'd improved my home. I had recently bought and also within the year I had refinanced, and that's when the City caught up with me. Now, as a young professional, I have a lot of years ahead, a lot of taxes to pay. I may even some day have a family, and where I choose to live may hinge on those factors, but it also will hinge on taxes I pay because I have choices. I don't work downtown. I vote with my feet. I can move somewhere else that costs me less and spend my money on other things. I can spend it on fixing up my house or on just enjoyable activities rather than on taxes. I'm the type of person the City wants to keep. The purpose of taxes, I understand, are multifactorial. One is to raise funds for the programs that the City needs to provide for its residents, and I respect that. And as much as I hate taxes as much anyone else, I do respect that I 10/01/02 - FINANCE - PUBLIC HEARING must pay them. I do think there's a limit how much a person should be expected to pay in an increase in a given year no matter what their income. Fixing it at something reasonable, that, I can't necessarily define. But it should be done because to keep people like me, which is another component of taxes, to attract and retain citizens, is very important and something that this City is losing. The rate of people leaving this City is still high. And people like me who, again, I don't work here, I could move, you want to keep someone like me. And so to that end, I've chosen to come and say a few words to you today and hope that you'll think about that. I don't necessarily have the answer to what percentage is reasonable. But there should be some middle ground because 125 percent in one year, which I'm paying because last year there wasn't as much interest in it as there is this year, is too much to ask. Thank you for your time. (Applause.)
Thank you very much. And thank you for taking the time from your workday 27 10/01/02 - FINANCE - PUBLIC HEARING today to come here and testify. I'm sure that cost you a few dollars too to be here today. Would it be appropriate -- and if you don't want to answer it, that will be fine. Can you give me an idea what the increase was in real dollars?
Because people come in and talk about percentages and they're high percentages, 125 percent, but when you talk about the real dollars is where it really does impact you. I thank you for coming in. But I'd also like the record to be clear that in this country of ours, there are two cities in the nation of similar size that have lost population in the last decade, Philadelphia and Detroit. Every other city in the nation of similar size, Boston, Chicago, New York, and other Sun Belt cites and West Coast cities have -- some gained double digit increases in their population. We still don't get it here. We're not playing to our customer base. And our customer base, like they would in any other economic model, are deciding to move and spend their dollars and raise their 28 10/01/02 - FINANCE - PUBLIC HEARING families and do other things elsewhere. (Applause.)
And one of the points I've tried to make in this debate, which has gotten lost in some of the press reporting of it, is that instead of trying to figure out ways to expand the size of government and to increase the spending on programs, even if they're worthwhile programs, our budget numbers keep going up consistently every single year and our population consistently keeps going down. No business who serves any customers or clients could continue to increase the size of their budget and expenditures while losing clients and customers. It is a bad economic model and it should be one that should be applied to the City of Philadelphia. It's a bad economic model. And when Philadelphia and Detroit are the only two cities in the nation of similar size that have lost substantial -- 4 percent population we lost in the last decade, Detroit I think lost 7. When cities like New York City -- and I understand they're an anomaly because of the economic engine of New York -- had a 15 percent domestic out migration of 29 10/01/02 - FINANCE - PUBLIC HEARING native-born New Yorkers and a 9 percent overall gain in population. Something's going on there in Chicago and in New York that we need to model. But continually expanding the size of our budget expenditures with an increasing reduction in the number of people able to pay puts a continued burden on people like yourself and the other people in this room, and we need to recognize that fact. And one of the things that I hope that we can do as a result of capping and looking for reducing the percentage of increase in a given year is making all of this revenue neutral. Because as long as we continue to give this government or any government money, I guarantee you they will spend it and not look for ways of going backwards by reducing our budget expenditures. So thanks for your insight. (Applause.)
I think hearing from long-term residents and seniors is important because I know they're suffering with their economic situation, but again, you said very clearly that you could move with your feet and vote with your feet and decide to raise your family, contribute both your taxes and your involvement in the community 30 10/01/02 - FINANCE - PUBLIC HEARING somewhere else, and we'd hate to see that happen. So thank you for your insight.
Thank you, Madam Chair, and good morning. How long is it you say you've been living in Philadelphia?
Did you make any improvements during the last two years? 31 10/01/02 - FINANCE - PUBLIC HEARING
So we don't want to know your address today, okay. I just needed to know that for some testimony that I'm going to be questioning later on. Thank you. Thank you, Madam Chair.
One question. Did you file an appeal last year after the 125 percent increase?
I did file an appeal. And actually, in talking with the office we agreed, because I guess there was an enormous number of appeals, that we would phase it in over three years. So I'm paying 40 percent increase over the next three years.
Thank you very 32 10/01/02 - FINANCE - PUBLIC HEARING much. Mary Richards. Is there anyone else here to testify on the bills for the 25th? Mary Richards. Thank you. Would you identify yourself for the record.
I'm Mary Richards. I live in South Philadelphia. I'm a member of Veterans Stadium Neighbors Association. I'm an alternate for District 1 of the Sports Center Complex District. This is about my third time that I'm speaking in front of City Council. The first time was against the Vet Stadium. We fought it and we got it. We fought against trash to steam; we won. And the City benefited because we understand that that system was not what it should have been. So, okay. We fought against the two new stadiums, and we lost. We asked the Mayor to help us because we live in the area where there's a lot of congestion, a lot of pollution we asked for a tax abatement; we didn't get it. We asked for a tax freeze; we didn't get it. But we did get a tax increase. But I'm not here just to speak for myself. I'm here and 33 10/01/02 - FINANCE - PUBLIC HEARING appealing each one of you as our elected officials to help us. Now, I briefly spoke to a city official, I briefly spoke to someone from the Board of Assessment. My facts aren't what they should be, but I'm speaking from the heart. The City of Philadelphia needs to keep its people. How they need to do it, I don't know. But it's not by raising these assessments the way they have. What system and where did they get the system that everybody, the whole City, City employees as well, have been hit with these taxes? I'm sure your raises aren't going to go up to be able to pay these. I was working for City Government when we had a fiscal crisis. And I know what we went through to be able to pay. I know that the City had a committee and they had to decide, who do we pay, who do we pay first, because we didn't have enough money to go around. We didn't know. We had to pay our debt service first. We had to pay human services, and then the vendors. People that supply the City with the necessities as far as toilet paper. I remember having to bring toilet paper in 34 10/01/02 - FINANCE - PUBLIC HEARING from home because we were in such bad shape we couldn't pay our bills. So then a new Administration came on board and then they said, "Well, we got to do something to help the City get out from under, and they implement many initiatives from the Mayor's Office all the way down where everybody had to count for each paper clip they used. I'm stretching it a little bit. But I'm not going on to say why. But I understand what we went through, and we didn't have this assessment happen then to raise money to keep the City from going under. So what's happening now, when we know that people are fleeing the City. Why are they fleeing the City? Because they can't afford to live here. That's one of the reasons. They can't afford to live here because of the schools. Fifty-five percent of our tax money, I think that's correct, of our tax bills go to the schools. The people are sending their children to the public schools when they really don't have too much of a choice. I sent my kids to Catholic grade school and then I sent them to public high schools. Today, I don't know if I would. Not because we 35 10/01/02 - FINANCE - PUBLIC HEARING can't have a good school system. Somebody is running the school system wrong. I don't know what it is. There's a lot of problems there. The other reason people are leaving the City is because they can't park their cars. Why can't they park their cars? There's too many cars. There's a lot a pollution. The streets are dirty. I mean, my husband and I walk down Broad Street and we cannot believe the trash. Now, there are businesses in this City that should keep the front of their properties clean. " You could raise money that way, too. But I'm appealing to you people of City Council to please help us. I don't know how this assessment came about, what system that was used, but the people are suffering. And myself, I'm on a fixed income. I can't say that I would move out of the City because I can't afford it because I love the City.
But if push comes to shove, I will move; I will move, and you don't need to have people like 36 10/01/02 - FINANCE - PUBLIC HEARING me that have constantly come before you begging for help and not getting it. We need you to help us. City Council, you've been elected by us. We put our faith in you, and I know you are going to help us. I don't want to blame you because we are where we are because this is City Government, but we have to blame somebody. So we're going after whomever we can go after, the Mayor on down.
I know you say you didn't have anything to do with, but we put you in office so you got to help us now. That's all I have to say. (Applause.)
Thank you very much. Is there anyone else here who didn't get a chance to testify on the 25th? Thank you very much. We will now ask the Clerk to read the title of the bills and resolution for today's hearing. The Chair also notes that --
Does this 37 10/01/02 - FINANCE - PUBLIC HEARING gentleman want to testify?
Sir, would you like to testify? Please identify yourself for the record.
Yes, I remember seeing your name on last week's list. Yes, sir.
I've been in the area for -- the Westmont area -- by the way, I belong to the association, but today I'm not representing the association. I'm just speaking for myself. I have been living there now from 1980. I started there in 1977. And something is happening there that we just don't understand. We've been hit with taxes there time after time after time. Seem like we never get missed in that area. When I moved there, my taxes -- I have it down here. In 1980, my tax was $1216. By 2000, it was $3,031. Almost three times. By 2002, last year alone my tax went up almost $500. My 2002 tax is $3,472.51, and there is another increase in the works right now. And they say about property value and 38 10/01/02 - FINANCE - PUBLIC HEARING the real estate market is hot. It's only so for the people who selling the houses. I'm not there to sell. We are almost a senior citizen community. Most of the people in my neighborhood are retirees. Last year we got a 2.3 or 2.2 cost of living increase, which is nothing to offset the high increases. It's getting to where we can't afford the car that we drive. We have to take off -- we can't afford the two insurances, like the liability and collision; you have to drop one and keep one, but you need both. I'm even thinking now about dropping the homeowners' insurance because of the high taxes. Where do we go? Councilman Nutter is my representative, and I know he tries to help us and tonight there's going to be a meeting at Roxborough and I will try to be there. We are here to ask for some kind of relief. My taxes have gone triple in the past 20 years, triple. Last year alone it was $455 increase in one year, last year. And it's something that just have to be done. I mean, what the City is proposing, it seems like taking your property and rent it back to 39 10/01/02 - FINANCE - PUBLIC HEARING you. They gonna take your property away from you and they gonna rent you back to you. (Applause.)
On a monthly basis they rent it back to you and say, "Well, we'll make a deal with you that you can pay what you want now, what you paid last year's rate and we'll divide the other increase in payments. Well, we have gas, 10 we have electric, we have telephone, we have 11 mortgages. How can we take on another mortgage? 12 Then they talk about the real estate market. Well, it may be up, but it's only good for the people who are selling. It doesn't do us any good who want to live there. Somebody who wants to move into the neighborhood, can come and offer any kind of money that they can afford to buy a house in the neighborhood. Why should the homeowners be penalized for what somebody else can afford to pay? We're not going anywhere. We're not selling. We're here to stay. That's the only place I know to live. I came here and I like the area. In fact, I built my own house; that's what I do. But it's getting to a situation now where they're chasing us out of there to give it to somebody else. 40 10/01/02 - FINANCE - PUBLIC HEARING Or they gonna take it -- tantamount to confiscating our properties and saying, "We'll rent it to you, you pay $600 a month," or whatever it is. And when you can't pay that, they put a lien on it and they take it away from you. Then where do we go? We come back to the welfare system? Which we try to get away from at the start, that's why we all try to move ahead so we can get away from a system that we think we can do better. But I'm asking City Council to look into the area, not really my area, but all the areas because some kind of relief is badly needed in those situations because some people can leave, but we are too old to leave. Where do we go? We have nowhere to run. We'll be going to a senior home or a nursing home or something like that. And what you work hard to secure so you don't have to go to those situations, the City take it away from you. They talk about fixing your home. Well, fixing up your home, there is such a thing as equity and that's the incentive you get when you fix your house or your property up, that increase between what you put into it and what it's worth, that's your equity. That's all -- if you have to make a 41 10/01/02 - FINANCE - PUBLIC HEARING loan to do some more fixing up, do a kitchen or a bathroom or something like that, you need that to borrow on to do some fixing. Why should the City come and take the equity off and put you back in the same situation that you were in? We have no 7 incentive to fix up. (Applause.)
Last week somebody talk about letting their property go wooded. It seem like it pays because if you let it grow up in bushes and weeds and woods, they leave you alone. But as soon as you try to mow the lawn or you try to improve the property, they don't even go in, they don't come into the property; they drive by or go in the computer and see what a house sold for and everybody have to be penalized for that like it's a bad thing to improve your house. It's no incentive to improve. Just stand still and let it fall down around you and then when you can't live there anymore, let it go to the City. So you wind up with the abandoned places. But we can't afford to move. We have to stay there, especially seniors at this age. There is nowhere to go. There is nowhere to go. You have 42 10/01/02 - FINANCE - PUBLIC HEARING to stay where you are. We are put 2.3 percent on a cost of living expenses, that doesn't pay the increase in taxes, 30 percent, 40 percent, 50 percent, even double. How do you do that? Lots of us have to live with no insurance because you can't afford to pay it. Those who have co-pay have to find a way -- I heard the lady say a while ago to get a prescription in two parts or three parts. If you have 60 pills, you might have to get now and 20 12 later as your income comes in. I mean, that's no 13 way to live. And the City to put that kind of 14 pressure on the older citizens is very unfair. 15 Very, very unfair. And that's about what I wanted 16 to say. 17 (Applause.) 18
Thank you, Mr. 19 Bartholomew. 20 The Chair also notes that Councilman Darrell Clarke is here. We thank him for his presence as well.
I just want to thank my councilman, Michael Nutter, for standing up for us and giving us the best he got. 43 10/01/02 - FINANCE - PUBLIC HEARING
Can I be heard? Council, I know I'm not prepared, but I want to say --
My name is Helen J-a-r-o-s-i-e-w-i-c-z. I live in the Fairmount section.
Spell that again because we didn't hear it very well. Say it and spell it for us.
Okay, I think you were on last week's list, were you not?
All right. Is there anyone else who would like to testify so that 44 10/01/02 - FINANCE - PUBLIC HEARING we can begin today's hearing? All right, we have two other individuals after you. Thank you.
The only thing I want to say is nobody has brought up is I been in my home for 48 years. I have paid taxes for 48 years. Don't you think you should think about the people who have stayed and fixed their homes. Without the seniors, you wouldn't have the neighborhoods you have. (Applause.)
I think that should be taken into consideration. If you can spend that many years in a home, you should be able to be frozen after 30 or 35 years because you love your City. I have nothing else to say. I was unprepared. If I had been prepared, I could say a lot more. Thank you for listening to me.
Thank you, Madam Chair. I think it's important for the people who are here today to understand what the process is 45 10/01/02 - FINANCE - PUBLIC HEARING we're going through right now. And while I recognize and appreciate that this forum is an opportunity for people to express their anger and disappointment and fear over what the future may hold, this is a forum that's dealing with eight different pieces of legislation and one resolution 8 to try to solve that problem or to try at least to mitigate the impact that these assessments have had on you. While we don't mind and we deserve sometimes to be yelled at and told off as is our job to listen, it's also important for you to understand that the process we're going through today is an attempt to pass or to modify legislation that will help relieve a lot of these problems. So you can yell away at us. We've got thick skin; we've been in this business a long time. But understand, the end result of this, what we hope to accomplish, is to be able to get some or all of these bills onto the floor of Council and passed so that these drastic increases can be mitigated and you don't have to bear the brunt of what you're facing now. So this is a process to try to solve and resolve and deal with these problems moving into the 46 10/01/02 - FINANCE - PUBLIC HEARING future. We may wind up needing state legislation in addition to City Council ordinances. Maintain your anger, but understand this is, hopefully, a process we can work our way through to give us some relief or at least some fairness and equity in the process. So I just wanted the record to keep that clear. (Applause.)
Thank you, Councilman Kenney. Good morning. May we have your name for the record?
Would you spell Pascucci for us for the stenographer?
I'd like to thank City Council for giving me the opportunity to speak. I'm 32 years old. I'm a business owner in the City. I own six properties and two businesses in the City. I grew up in the suburbs. I came back to the City when I was 21 years old. Councilman DiCicco knows I started my business at 12th and Anna. I purchased the property on Oregon Avenue. When I originally 47 10/01/02 - FINANCE - PUBLIC HEARING purchased my business property, my taxes were 800. They are now, I believe, $3200. I did not complain. When I purchased my store in Manayunk, taxes were originally 800. I believe they're 4500 now. I did not complain. I employ employees in the City of 8 Philadelphia. I just recently found out my wife is 9 expecting. We decided to buy a house in the City of 10 Philadelphia in the 10th and Bainbridge area. How did the City reward me for having businesses in this assessment? My taxes $750. They're now going to be $2500. I'm finally going to speak up. I pay my dues in this City. I'm a young man. The City has been very good to me, very, very good to me. Councilman DiCicco, anytime I've had a problem, has been more than willing to help. I probably wouldn't have said anything about this matter if Councilman DiCicco didn't happen to send a letter to my new residence. My family has a deep tradition in this neighborhood. They've been here for years. My wife's family lived here all their lives. We want to stay. Don't make it hard for us. Despite what you may do, I think you're 48 10/01/02 - FINANCE - PUBLIC HEARING going to chase people my age away. All the friends that my wife grew up with in the City went to Washington Township. I mean, it's unbelievable. What access do we have in these neighborhoods? To live in this 10th and Bainbridge area and have access the cultural -- to walk up and down 9th Street, to be able to go to a supermarket, to be able talk to your neighbor; these are all things we're going to lose. You tell somebody outside the City that you are living in the City, they look at you like you're crazy. The average person from the suburbs thinks the City is a ghetto. They don't realize what we have. Let's not wreck it. And that's all I have to say. And I'd like thank everyone.
Thank you. Councilman Ortiz and then Councilman 49 10/01/02 - FINANCE - PUBLIC HEARING DiCicco.
Thank you, Madam Chair. You know, the worst thing about all of this -- and I've just become computer literate so I started actually answering e-mails that I get. And I've never gotten as many e-mails on any issue other than this one. And it is really getting flooded with it. It is that people do not understand how the process works. And government should be, at least, understandable. People should understand that what happens when government takes an action here, that this is going to be the result. The issue is that really very few people -- I don't even think this Council -- thoroughly understands the BRT, you know, Bacon, Romaine, and Tomatoes. People just do not understand. And I think this is what is so mystifying. This is what is causing so much of the problems. And when it goes from one year and you get a 200 percent increase and you haven't read anything in the papers about your legislature debating any tax legislation, you haven't heard that there's a tax bill, so there has been really no debate about raising taxes. And there has been no debate in this Council about 50 10/01/02 - FINANCE - PUBLIC HEARING raising taxes for over years. I mean, since Wilson Goode was Mayor, property taxes have not been raised in the City of Philadelphia. And people cannot understand how taxes keep on rising and they don't understand how the process of assessment takes place. So I think one of the things that we have to do here is, one, break the mysticism about this process. Make it understandable. Bring some reality to it. And then make some sense of it. And I don't whether we are going to be able to do it or we're going to end up in court and having a court and a judge come together and set up a more comprehensive and understandable system. But something has to be done that can create a confidence in the people of Philadelphia, the citizens, a confidence that they understand how to make up their budgets from year to year, what to expect from year to year, and that they do not get surprised, as they have been surprised during the last few months. And I think that's our task. And I don't think it's going to be an easy one. I don't know whether we have the authority or not, but we're going to legislate. And if people tell us that 51 10/01/02 - FINANCE - PUBLIC HEARING we're wrong, then let a court decide.
The property that either you or your dad or both of you own at 12th and Ellsworth, is that your property as well?
That property has recently gone under some major renovations. I don't know if the units are being occupied yet.
Was that one of the properties that you received an increase, recent reassessment?
No, Councilman. I'm sure that will be coming as soon as the new permits are officially signed off on. The reassessment have -- 52 10/01/02 - FINANCE - PUBLIC HEARING every year since 1993 at 2600 Juniper Street have gone up. I owned our art gallery in Manayunk for approximately three years, and all three years those property taxes have increased. This past year we had just purchased our residence on 10th and Bainbridge. And I explained to you how much work is actually needed to get one of those houses livable.
I understand. But the property reassessments have not gone to the property at 12th and Ellsworth yet.
They have been increased every year, but they haven't reassessed the latest fix-ups.
Thank you, Councilman. Julie Welker. Is this it for those who want to testify with regard to September 25th? So this will be the last person and we'll move on to the hearings for today.
Good morning, members of City Council and all the people who are present 53 10/01/02 - FINANCE - PUBLIC HEARING here. I am here because I have gotten so many phone calls and had so many conversations. For those of you who don't know, I've been a business owner and a real estate broker for the past years in the City 6 of Philadelphia. And I have never had so many 7 people call me and e-mail me on a problem. And so I 8 wanted to come before City Council to urge the 9 members of City Council to support the bills that 10 will freeze the assessments at 2001 level. 11 (Applause.) 12
And I do understand there 13 may be some legal issues or constraints, but then 14 we'll have to deal with those legal issues and 15 constraints. 16 I was very encouraged last Tuesday at 17 your hearings to hear the head of Board of Revision 18 of Taxes say that he is willing to work with City 19 Council to help solve the problem. And I wanted to 20 thank David Glancey for those remarks. They were 21 very encouraging because many of us were beginning 22 to feel that there was no hope. People in this City 23 are hurting. 24 (Applause.) 25
Your seniors cannot afford 54 10/01/02 - FINANCE - PUBLIC HEARING the increases. They are on fixed incomes. When we had our meeting in Fairmount, your Councilman can tell you, there was standing-room only. People came out, pouring out of their homes to see if there was any possibility of relief. Your people who are purchasing properties, I know, at high levels. When they purchase these properties, they do a very careful analysis of what they can afford. They look at the current taxes on the property. Yes, it may be a high-price property, but believe me they have to budget to afford this high-price property. They are not -- you know, they don't come into real estate offices with their pockets bulging with money. They can't afford it. And you're going to have people walking away from their houses, properties up for Sheriff's sale. I understand there's one property in the City of Philadelphia that has a new tax of $31,000. And I am here to tell you that even at Sheriff's sell, that property will not sell. I know you are not the people who did the tax assessments, but I am here to really urge you on behalf of so many of my neighbors, my friends, the seniors in all of the neighborhoods, 55 10/01/02 - FINANCE - PUBLIC HEARING and we serve every neighborhood in the City of Philadelphia, to make sure you vote in favor of freezing the tax assessments at the 2001 level. And then when you work to reform the taxes, which is what has to happen, you have to take into consideration, Number 1, our seniors. (Applause.)
Number 2, a cap, some kind of realistic cap on real estate property taxes. None of us have an infinite amount of money in this City. And Number 3, to just think about all of us as people who want to live in the City of Philadelphia. And if it keeps going up the way it is, you will not have very many of us left. Thank you so much for listening.
Thank you very much. Any questions? Councilman DiCicco.
Thank you, Julie for your testimony. I know you were here last week as well. Thank you for coming back. I just want to clear up one thing. You know, I'm one who's been 56 10/01/02 - FINANCE - PUBLIC HEARING out front on this issue. To the best of our knowledge, no property taxes have increased in any one property by $31,000. However, there are a number of properties that have received reassessments as high as $10,000. But the $31,000, according to our investigation, doesn't exist.
Well, I didn't say it was a new assessment. But that's the total of the person's taxes at this time. At least that was reported at a meeting I attended with Councilwoman Anna Verna. And I have since talked with some former clients whose taxes are in the $20,000 tax bracket.
That's true. And if this recent reassessment were to be implemented, there will be many more properties that will be in the $20,000 range as well.
But I just wanted to clear that up that it's not a $31,000 increase.
Thank you very much, Ms. Welker. 57 10/01/02 - FINANCE - PUBLIC HEARING We will now ask Commissioner Nancy Kammerdeiner and Dave Glancey, BRT, to come forward. And while they're doing, we're going to ask the Clerk to read the title of the bills scheduled for today's hearing. And let me note that Bill No. 010746 is being held at the request of the sponsor. Thank you very much.
Bill No. 020577, an ordinance amending Chapter 19-1300 of the Philadelphia Code entitled "Real Estate Taxes" by adding a new section 19-1306 providing for a cap on tax increases, under certain terms and conditions. And Bill No. 020579, an ordinance 15 amending Title 19 of the Philadelphia Code entitled "Finance, Taxes and Collections" by amending Chapter 17 19-1300 of the Philadelphia Code entitled "Real Estate Taxes" by providing for certain deferrals of payment of a certain portion of real estate taxes due the City of Philadelphia or the Philadelphia School District, all under certain terms and conditions. And Resolution No. 020585, a resolution 24 authorizing the Committee on Finance to conduct hearings to investigate the property assessment 58 10/01/02 - FINANCE - PUBLIC HEARING practices of the Board of Revision of Taxes.
Thank you very much. Before we ask you to testify, we have a statement from Councilman Frank Rizzo. Councilman Rizzo, are you prepared to make your opening statement?
Good morning, Chairwoman Blackwell and members of the Committee on Finance. My name is Nancy Kammerdeiner, and I'm the Revenue Commissioner City of Philadelphia. I'm pleased to continue the discussion of the various real estate tax bills that are on today's agenda. I believe you have my testimony. It was supposed to have submitted ahead, so I won't read the whole thing. I'll try to highlight some of the pieces of the testimony. 59 10/01/02 - FINANCE - PUBLIC HEARING As I had indicated in my testimony last week, the Administration appreciates the spirit in which these bills have been drafted and shares many of the concerns that you have raised, especially with regard to the ability of our poorest citizens and those on fixed incomes to pay the property taxes on their homes. We also share your concerns regarding homeowners who are facing steep increases in assessments. However, the Administration continues to have concerns about the bills before you today. They come at a time when financial pressures, including a sluggish economy, place real and growing threats on the City's five-year financial plan. There are also legal impediments to the implementation of these bills. I guess I don't really have to remind you of the memorandum that the City Solicitor provided identified last week identifying these impediments. But it's just as important to emphasize that the Administration does support tax reform, responsible tax reform. The Administration fully supports the creation of a tax Reform Commission to study Philadelphia's tax structure and recommend 60 10/01/02 - FINANCE - PUBLIC HEARING ways it can be improved. In considering actions to support in the short run with regard to real estate assessments, the Administration wanted to strike a balance between ensuring that taxpayers are not burdened with dramatic increases in their taxes and ensuring that the City receives an amount of taxes that is consistent with the value of the property. I will first address some particulars on the two bills you're hearing for the first time today. Bill No. 020577 introduced by Councilman O'Neill would put a cap on increases in real estate tax by restricting the tax levied to 104 percent of the prior year's levy provided that the owner remains the same. This legislation would require state enabling legislation before it can be implemented. This proposal, while an outright freeze, is so close to one that it would be virtually indistinguishable from a legal perspective. As the Solicitor has advised, none of the bills that would effectively freeze or cap assessments at any level other than the actual assessments returned by the Board 61 10/01/02 - FINANCE - PUBLIC HEARING pursuant to state law are legal. The Solicitor did recognize that in 1981 the Court of Common Pleas in Coleman v. Green approved a consent decree that allowed for a gradual achievement of taxation based on actual current assessments. And, therefore, an argument can be made that an ordinance that demonstrates good faith attempt to reach a uniform current tax system with all deliberate speed but without imposing sharp economic hardships on property owners who may have experienced extraordinary assessment increases may be defensible on an equitable basis. That was a quote from his opinion. A cap that allowed a maximum increase of only 4 percent would not meet the gradualism principle contained in Coleman v. Green because in many instances it would take far more than the six years approved in that case to achieve full compliance with the statutory mandate of taxation based on current values. Furthermore, with such a cap in place, it would be unlikely that the revenue projections in the City's five-year plan would be met. The Administration cannot support this bill.
Let me move on Bill 020579, which was 62 10/01/02 - FINANCE - PUBLIC HEARING introduced by Councilman Rizzo, would authorize the Department of Revenue to grant partial or complete deferral of annual increases in excess of percent 5 for qualified property owners with the amounts 6 deferred until ownership of the property changes 7 hands. 8 With appropriate revisions, this bill 9 could accomplish two goals that the Administration 10 supports: Protecting homeowners sticker shock. And 11 over the long run, insuring that the City receives 12 taxes consistent with the value of the properties. 13 The City Solicitor has indicated that this bill is 14 potentially lawful so long as enforcement is uniform 15 and equitable. He did, however, raise questions about whether the eligibility criteria suggested in the bill would be allowed under uniformity principles. The bill is also unclear regarding the penalties that would be imposed and/or waived. With revisions to remove the ambiguities, the Administration could support this bill or one similar to it, and we would be pleased to work with Council in developing acceptable amendments. Let me very, very quickly recap some of the comments I made before the committee last week 63 10/01/02 - FINANCE - PUBLIC HEARING because these bills are still before you. Bills No. 3 020490 and 020491 would require the City and the School District to freeze real estate tax at the 2002 levels. The Administration opposes both of these bills. And I would reiterate that the City Solicitor's opinion is that these bills could not be defensible in court. Bill No. 020493 would expand the number of senior citizens who are eligible to participate in the senior citizen tax freeze program. Although the Administration supports the concept behind this bill, we understand that the General Assembly may be considering expanding eligibility for the PACE Program to prevent lower income senior citizens from losing prescription benefits. It is essential that the bill before you, which would have to have state enabling legislation as well, be drafted consistently with the State's approach. And we would welcome the opportunity to work with Council in ensuring that outcome. Bill Nos. 020537 and 020538 would limit the assessment increase in any one year to 10 percent, but this would be and an outright freeze; it would not be a deferral. As a result, the City 64 10/01/02 - FINANCE - PUBLIC HEARING Solicitor has concluded that these bills are not lawful with respect to the current Fiscal Year and that Bill 020538 is not defensible for any year because of Act 46 constraints. That's the School District portion. With all of these concerns in mind, we believe that the appropriate forum for these two bills is with the Tax Reform Commission where they can be evaluated in proper context. Last week you requested further information about the new installment payment program that Revenue is developing to address the problems faced by those taxpayers who are not low income but have received steep assessment increases and are unprepared to pay the full amount due by March 31, 2003. Since the Department of Revenue will be able to identify those who receive increases in the taxable assessed value of their properties, no application will be required. Taxpayers will be given information about this program with their 2003 real estate tax bills. If they pay an amount equivalent to their calendar 2002 tax by March 31, 2003, taxpayers will be able to pay the taxes associated with the assessment increase for their 65 10/01/02 - FINANCE - PUBLIC HEARING calendar 2003 tax in installments through the end of the year. If full payment is made by December 31, 2003, the additions to tax that would normally accrue during this period will be forgiven. " Section 19-1303 of the Philadelphia Code provides for the imposition of additions to real estate tax. They increase at the rate of 1 1/2 percent per month.
They begin in April and another 1 1/2 percent is added every month through the end of the year. On the 1st of January of the year following the year for which the taxes are assessed and payable, an addition now totaling 15 percent is added to the real estate tax that remains due and unpaid. A lien is then placed against the property for what's called capitalized amount. That's 115 percent of the tax principle that's unpaid at December 31st. It is this addition to tax that will be waived if the taxpayer pays the increment in tax due by December 31, 2003. I know one of the questions that was raised by many of you last week was how this would affect someone who has a mortgage escrow account. 66 10/01/02 - FINANCE - PUBLIC HEARING Since we expect that the mortgage companies will advance the increased amount and the taxpayer would be required to work with the mortgage company to repay this advance, we in Revenue would find it very difficult to work directly with those taxpayers. We would have already been paid. We are, however, in the process of surveying mortgage companies, the ones we deal with as what we call bulk requesters to see how they would work with a taxpayer who had this kind of situation where their mortgage escrow account was less than the tax that was billed. And we're attempting to identify any flexibility they might have in easing the pressures on the mortgage-holder, especially if any individual mortgage company gets a number of situations where they have very large increases or where they have quite a few people who have mortgages with them who are similarly affected. We have not yet gotten responses from -- most of what we've heard so far is that it has to be referred to someone else in the firm. So we will continue to monitor this and see what we can do to ease that burden if there are, in fact, additional payments or interest that would have to be paid at the mortgage companies. 67 10/01/02 - FINANCE - PUBLIC HEARING I was also asked last week about delinquent real estate tax collection. Each year we collect in excess of 90 percent of the tax levied during the tax year. Liens are filed on January 1st for the balances that remain at year end. In each of the last four fiscal years, the City collected over $60 million prior real estate taxes using a combination of enforcement actions, including repeated billing, the filing and enforcement of in persona judgments, sheriff's sales, and the collection of liens at the time ownership transfers. As a result of these delinquent collections, total collections as a percent of the tax levied for a given year rises to approximately 98 percent after eight years. 6 million. It should be remembered, however, that there are approximately 60,000 vacant properties, 31,000 vacant lots, and 29,000 vacant buildings in Philadelphia, many of which have been abandoned for years of taxes and for which it's unlikely that taxes will be collected. But we do continue to 68 10/01/02 - FINANCE - PUBLIC HEARING endeavor to collect every dollar that we can in those delinquent taxes. This completes my testimony for today, and I'd be happy to answer any questions.
Thank you very much. We will have a statement from Councilman Rizzo. Then Councilman O'Neill and Councilman Nutter and Councilman Kenney as well.
Thank you, Madam Chair, and members of the Finance Committee for allowing me to speak on behalf of the Bill No. 13 020579. For several years now I have received complaints from constituents about the increase in their property assessments and the resulting increase in real estate taxes. This year those complaints have reached a feverish pitch. Some people are complaining that the assessment is too high, but more are complaining that the increase is too much in such a short time. More compelling is the plea commonly made that the residents just can't afford to pay the increase in real estate tax. In the past, I've sponsored citizens' sessions with representatives of the Board of 69 10/01/02 - FINANCE - PUBLIC HEARING Revision of Taxes, coached residents in making their appeals, and actually attend or assigned staff to attend the BRT hearings with property owners. I've been glad to do this. I'm going to do it again and I will continue to do it. However, there is a larger problem here. The good news is that homeowners' property values are skyrocketing because of the hot real estate market that exists in various sections of the City. The bad news is that because property values are skyrocketing, their real estate taxes are increasing at the similar rate. The real problem is affordability. The answer, tax deferral. It is fair to pay more tax on more valuable property, but to ease the burden, we should allow homeowners faced with financial hardship the opportunity to pay the increase in their property taxes at a later time when they or their heirs can afford it with the sale of the property, when they have realized the cash windfall for having lived in what was the hot real estate market. The burden gets relieved. The tax gets paid. The city services get rendered. That seems fair. Therefore, I introduce Bill 020579 with a hope of accomplishing 70 10/01/02 - FINANCE - PUBLIC HEARING this goal. The purpose of the ordinance is to provide a tax deferral system by which those property owners who have financial difficulty in paying real estate tax increases of over percent 7 can have their increased real estate tax burden that 8 is above the 15 percent threshold deferred to future 9 years. Eligibility for deferrals will not, and I 10 repeat, will not be based solely on income, but will 11 be an option for all homeowners who can demonstrate 12 difficulty in paying a tax bill that has increased 13 more than 15 percent. 14 The factors that the Department of 15 Revenue will consider in granting deferrals will be household income, reasonable household expenses, including but not limited to housing, food, transportation, education, healthcare, debt service payments, and overall tax burden and available liquid assets. The deferral shall be effective until the date of the sale of the property, however, a property owner may satisfy the debt consisting of the deferred amount and the accumulated interest at any time prior to the sale of the property. Thank you again for allowing me to speak 71 10/01/02 - FINANCE - PUBLIC HEARING on the real estate tax deferral Bill 020579. I hope the Finance Committee would look favorably on this bill. And I believe it is a smart and effective way to address the problems of affordability in this real estate tax debate. Thank you.
Point of information on the floor. Councilman Kenney.
Thank you. Just one point of information on this particular bill and the statement. I'm not sure the answer of it. I think we went through this question last time with Councilmember Clarke's bill relative to income limitations on the deferrals or on some of the forgiveness. Will the record reflect, and if someone could answer, do we still need -- and I think we do -- state statutory change to allow for income to be considered as a criteria? I believe when I worked years ago in my 72 10/01/02 - FINANCE - PUBLIC HEARING past life working as a staff person in the Pennsylvania Senate, we did, with Senator's Fumo's help, pass a constitutional amendment allowing for long-term property tax relief. And one of the specifics of that bill was that we were not imposing any income limitation because not only did we want to help seniors, but we wanted to help working families making 40 or $50,000 a year with tuition bills and the other things. So is that in fact accurate that -- maybe Mr. Glancey or Commissioner Kammerdeiner could illuminate the record on whether or not that's still a requirement for this bill too.
Councilman, it's my understanding that since this bill would not require a certain income threshold that it may not need the same test of state enabling legislation as the Clarke bill that you referenced. The Law Department is still looking at this very closely to provide advice to us should this be approved, what kind of tests and standards we can use that would be in accordance with uniformity clause. But they've indicated that they don't think state enabling legislation is necessary for this bill because it's not a requirement. It's one of the measures that 73 10/01/02 - FINANCE - PUBLIC HEARING would be used.
It's been a long time ago since I worked on that particular constitutional change, but I do remember one of the specifics, and I don't know whether or not it's in the legislative record, the intent of the bill was specifically to have no income limitations in order to effect the widest group of people possible, not only saving seniors from grief, but middle class working families from the squeeze of rocketing assessments due to factors normally not even within their control.
I believe that's what was intended in the statement the Councilman just made. He referenced a situation where someone's income could be high but their expenses or other factors could enter into the situation and it wouldn't be just a set income criteria. And I think that's the difference that's being related to me. The Law Department may want to amplify on that.
Is it the Department's position or Administration's position that they would only support this bill if there was some form of income limitation? 74 10/01/02 - FINANCE - PUBLIC HEARING
We aren't certain of what the right thresholds would be or what the right factors would be. That's part of the what the Law Department is still exploring. And one of the reasons that we have suggested that this legislation not move forward in its current form but that it serve as a basis for developing something that we can feel could be supported legally as well as administered.
That's fine. Thank you. Thank you, Madam Chair for the point of information.
Thank you very much. With regard to Bill 020579, this would in fact lien the property in order to have this deferred payment?
Any amounts that are due at the end of a calendar year are liened at the beginning of the following calendar year. It's our only insurance, if you will, that we'll have an opportunity to collect later on. A title company that does a search on the property at the time it 75 10/01/02 - FINANCE - PUBLIC HEARING transfers hands looks for the lien that may be out there for prior year liabilities in order to determine and successfully collect on those outstanding liabilities. Without the liens, we would lose the opportunity to collect several years down the road.
Thank you. And while I appreciate the intent of the bill, and as Councilman Kenney said earlier, that is the purpose for these hearings so that Council can have the opportunity to introduce bills and we can go through a process to see which of those bills are more appropriate and which ones work and which bills don't work and which ones are legal and not legal. We had a similar round of questions on this bill 21 last week. In your testimony, you referenced that the Department could possibly grant a partial or complete deferral. Let's take the complete deferral for a moment. Isn't that basically a freeze? 76 10/01/02 - FINANCE - PUBLIC HEARING
No. The assessment would continue to rise. The assessment would be on the books. We would tax on that basis. We would not enforce on the additional tax. It would be deferred, and our enforcement would be deferred until the property changed hands.
There was a lady who testified earlier today, the young lady who said she's lived here for a couple years and I think she appealed to the BRT last year and got a three-year deferral, I assume. Is there any interest or penalty attached to that? Was it a payment plan? Was that what it was? Mr. Glancey?
No. Good morning, Councilman. How are you? I believe what she said is that there was a decision made at appeal or maybe it was made with the evaluator -- I wasn't quite sure -- where whatever the initial increase was, there was an agreement between that taxpayer and either the Board in Appeal or the evaluator to phase that increase 77 10/01/02 - FINANCE - PUBLIC HEARING in. So there would not have been any taxes owed during that year because the value would have dropped in that current year, increased the next year, increased the next year.
Was there any interest or penalty that would be attached to that?
Just a straight out payment. I guess my question is -- and I think I asked this last week. A, we still don't have an answer as to the lender, the mortgage company in this case as to whether or not they would agree to it and as to whether not there would be additional interest and/or penalties for advancing the money. No one has the answer to that yet.
Unfortunately, no. 19 We have sent out inquiries to a dozen or so mortgage companies, but we do not have their responses. So, unfortunately, I can't share that information with you today.
I mean, it's conceivable if a senior today, and we'll take the age of 65, and that senior has a tax bill of $1,000 78 10/01/02 - FINANCE - PUBLIC HEARING a year, just for the purpose of this conversation, and that senior lives for years, life expectancy 4 is growing in this country. I think the average 5 life expectancy for a female is somewhere around 79 6 years old today, maybe 80 years. So at the end of 7 20 years we anticipate that life expectancy will 8 extend. So for 25 years, the additional 9 reassessments, whatever they may be, will begin to 10 accumulate. It's conceivable that at the end of the 11 day, 20 years from now, either when that person 12 decides to sell the home, that person becomes 13 deceased and decides that in his or her will that 14 they're going to will that property to their family 15 -- and many seniors, at least the generation of my 16 parents, they're whole life was about raising a 17 family, paying off that mortgage, marrying their 18 children off and some day leaving them this huge 19 estate, a row house in South Philadelphia. And they 20 took pride in that. And I don't mean to make light of that. That was something that was really, really important for them. And three or four kids divided up is 70, $80,000 on a good block inheritance. It's possible, the way I see it, that at the end of the day that the taxes that are due on that property may 79 10/01/02 - FINANCE - PUBLIC HEARING far exceed the value of the real estate, so in effect, the heirs could be inheriting a debt. Isn't that possible?
Thank you, Councilman. We'll get back to you, but we did have Councilman O'Neill waiting. We'll do a round. Yours was a point of information.
It's not an attack on the sponsor of the bill. By no means, it's not a hostile statement, but these are the things that the hearing is all about, so I think that is a concern. The concept, we all want to do something to give tax relief, especially to our seniors because those are the people who have stayed here for years and years and decades to make Philadelphia what it is today. They didn't run. They didn't run like the third and fourth generation may have run. They stayed. They're still here. So we all want to figure out a way of giving them tax relief. I just don't want to defer that to a point in time so that their dream of leaving something behind for their children to make their children's lives better is all for naught. So 80 10/01/02 - FINANCE - PUBLIC HEARING I wanted to make that point. Thank you. (Applause.)
Commissioner, nothing you said as far as the Administration's position on different bills surprised me, only because it's common sense that the Administration would not want to freeze; that would mean less money. A 4 percent cap, while very, very reasonable, would mean less money than no cap. And deferrals which would cause everyone with a deferral to put a tax lien on their own house with 6 percent would mean you get the same revenue. You could borrow against those liens, probably at 4 percent and make money on the differential. None of that surprises me. It does surprise me that the Revenue Commissioner is here when we're dealing with an independent agency and trying to work things out. I would think it would be somebody from the implementation side that could be telling us how they could help us if we did A or if we did B or if 81 10/01/02 - FINANCE - PUBLIC HEARING we did C. (Applause.)
It doesn't surprise me when the catch words of "low income" and "seniors" are people we try to help, even though we know under the constitution we can't do that. We have to help everybody or we can't help anybody. We have to make it the same for everyone because the Constitution is clear under the uniformity clause. And people with kids in school and families trying to make a go of it often have less disposable income than seniors or people in poverty. You go right across the board in this City with people that are affected by things like gross increases in their real estate taxes. Let's try to help everybody. One thing you said -- if this is the Administration's position, I want to see how far we can take it. Because I'm amazed by it more than almost anything I've seen from any Administration since I've been here. The sentence that you said under your testimony on under Bill 020577 which would put a 4 percent cap on property tax increases per year with no liens, no deferrals. "This proposal while not an outright freeze," this 82 10/01/02 - FINANCE - PUBLIC HEARING is a percent cap, "is so close to a freeze," which is zero, "that it would be virtually indistinguishable from a legal perspective." Well, if we reduced the City's revenues this year by 4 percent, I think we'd be reducing them by about $120 million; is that right? Three billion, take 4 percent of it. I think 30 million is 1 percent. So 4 times that would be $120 million we'd have less this year if we took a 4 percent cut. So I'm going to recommend to my colleagues that we reduce City revenues this year 4 percent since now I know that it's Administration's position that while not a freeze, it is so close to one that it would be indistinguishable from one. That, to me, is the most absurd statement I ever remember hearing. (Applause.)
Now, I'm pretty -- a little more focused on it because this is a very emotional issue, not because it's my bill, because I have to go out and talk to the people and hear that they're looking for solutions. I think I've come up with a fairly reasonable one. I have interviewed 200 people in my district and that I've met on the street just in the 83 10/01/02 - FINANCE - PUBLIC HEARING last week. I talk to them about liens. I talk to them about percent. I get nowhere. 15 percent. 4 They're lucky if their income's going up or percent. And that's assuming all their other expenses stay the same. 4 percent, I'm pushing. I don't know anybody that's getting a 4 percent increase in their wages. But the City needs revenue. There's some reasonable level in between. But now I find that it's indistinguishable from a freeze. So maybe to make it less distinguishable from a freeze I should make it minus 4 percent. I don't know. (Applause.)
This thing just befuddles me to no end. And I'll just take it -- work it into my discussions with my colleagues as we come up with a common solution for this. I mean, it needs state legislation, but I can tell you, when I talk to people I know in the state legislature -- and I'm sure some of my colleagues will be talking to people they know. When they tell them and I tell them that this proposal for a 4 percent cap which we're asking them hopefully to give us the right to do, the 84 10/01/02 - FINANCE - PUBLIC HEARING Administration feels that that is no different than an outright freeze. Well, if we just increase real estate taxes this year by 4 percent across the board, the Administration's position would be, we don't oppose that because that's no different than if you hadn't done anything, which it would be indistinguishable from not lowering taxes. I don't know if this is a misprint. I don't know if it's a typing error. I don't know if somebody said something that they meant to say in a different way. But a 4 percent -- I can understand you saying, it's much lower than a percent cap. I can understand 14 you saying that. I can understand you saying it's a 15 lot higher than a freeze, 4 percent, like 400 times higher than a freeze. I just can't understand you saying 4 percent -- just think of $120 million on our $3 billion budget -- there's no difference. I don't need a comment. Unless it's a typo, I don't need a comment. I just think somebody in those cabinet meetings is drinking too much coffee or something; I'm not sure. But this is not the way people in Philadelphia feel about a 4 percent increase. I can guarantee you that, that it was indistinguishable from not getting an increase. 85 10/01/02 - FINANCE - PUBLIC HEARING Thank you. (Applause.)
You can comment if you want. This is your statement. I just can't believe it.
Thank you, Madam Chair. Commissioner, I am probably going to, if I have the time, I'll probably switch back and forth between the testimony from last week and this week. But for the moment I'll stay at this week. Now, on of the testimony, you make reference in the first paragraph, and it's in quotes, you remind of the September 24, 2002 memorandum from the City Solicitor Nelson Diaz in he stated in his opinion, "Each of the bills that attempts to interfere with the assessment process is unlawful, particularly with respect to the current fiscal year and particularly with respect to the tax authorization of the School District." First, I need to ask you, again, similar to Councilman O'Neill, since it's in your statement, 86 10/01/02 - FINANCE - PUBLIC HEARING can you tell me either the basis for that conclusion or cite a court case that has made that determination?
I really reference you to the Solicitor's memorandum in which he expounded on those issues. The court case that most comes to mind is Coleman v. Green and the settlement that was arrived at in that decision.
I appreciate you mentioning that. I hate to cut across you Commissioner. Now, can you tell me what was the opinion of the Court in that particular case?
So let me go back and ask you again. What court case has it been decided that any of these bills are unlawful, 87 10/01/02 - FINANCE - PUBLIC HEARING illegal, or void?
If I may, I would like to have a representative from the Law Department come up because they've done the actual research on this.
Good morning, Madam Chair, Councilman Nutter. Richie Fader, I'm the Chief Deputy City Solicitor for Appeals and Legislation.
Councilman, there are no 13 cases that we've cited in that opinion because there are no cases that have dealt directly with the issue, but sometimes when a statute is clear and when the Charter is clear, lawyers have to make judgments, and our opinion states what it says.
I appreciate that. So does that mean then definitively not only is there no court case on point, but that in effect the opinion is just the opinion of the City Solicitor, with every respect to the Solicitor and the position that the Solicitor holds by way of our City Charter, but there is no law on point on this particular issue? 88 10/01/02 - FINANCE - PUBLIC HEARING
Councilman, the opinion covers lots of different issues. I think there is law on point with respect to all of the issues. Just because there isn't a case that has ever decided the exact question doesn't mean there's no 7 law on point. The Solicitor sites in his opinion the General County and First Class County Assessment law which we believe is directly on point with respect to Council's ability to effect the assessment process after the Board of Revision has issued those assessments.
Well, let me ask this question: If, in fact, the Council were to do something and it was deemed unlawful by the Solicitor and that there were a court case in that particular matter and the Court made whatever ruling it made, either agreed with the Council or didn't agree with the Council, or for the one case that's cited there was a consent decree -- now, was that consent decree challenged? Was it subsequently overturned? Or did it, in fact, go into effect?
The consent decree was approved by the Court recognizing that there was substantial disagreement between the parties and the 89 10/01/02 - FINANCE - PUBLIC HEARING Court felt that it was a fair and gradual attempt to get into compliance with the First Class County Assessment law.
And the only reason the Court intervened in the particular matter is because the Council took an action, the Mayor disagreed with it; the Council took another action, the Mayor disagreed with that, had the Solicitor issue an opinion and tell the Board to ignore what the Council did and ultimately ended up in court; is that correct?
There was a lawsuit brought by City Council, which is how it ended up in court.
Right. Because the Council felt that it had the right under the Charter to pass bills, go through a process and that they then believed that the Solicitor was in error in advising the Board to ignore the law as passed by City Council; is that correct?
Councilman, not only does Council believe that it has the right to pass legislation, the Solicitor would never disagree with that. The Council has the right to pass legislation and the Council has the right to go to court if the 90 10/01/02 - FINANCE - PUBLIC HEARING Mayor doesn't enforce that legislation to attempt to test the legality of it.
Does the Solicitor have the right to overrule City Council?
The Solicitor doesn't overrule City Council, Councilman. The Solicitor issues advice to --
In effect, the Solicitor overruled City Council by telling another client of the government to ignore the laws passed by Council. Now, who decides when a law is a law? Does the Council decide or does the Solicitor decides?
What's the status of a law passed by Council that the Solicitor disagrees with until it gets to court? Is it a law or not a law?
Under the Home Rule Charter, the Administration and all city officials are obligated to follow the advice of the Solicitor. 91 10/01/02 - FINANCE - PUBLIC HEARING The Solicitor does not overrule City Council. The Solicitor looks at the relevant ordinances, the relevant provisions of the Home Rule Charter, the relevant provisions of state law and case law to determine whether Council was within its power to pass that ordinance --
-- and if in the Solicitor'S judgment that ordinance was not a lawful act of City Council, it's the Solicitor's obligation to advise the Administration and Council of that fact.
Well, I have that part, but I thought you said earlier that when Council passed a law, it's a law until the Court deems otherwise. How does the Solicitor get to then tell another client to ignore that law?
The Solicitor's job is to determine whether a law was lawfully enacted. If a law is passed but it's clearly not within Council's power, it's the Solicitor's obligation to tell the Administration not to enforce that law.
What was the unlawful enactment? Didn't they have public hearings? Wasn't there a vote of the Council? 92 10/01/02 - FINANCE - PUBLIC HEARING Didn't they vote with at least a majority? I think it was unanimous to pass the bill. Didn't the Mayor veto the bill? Didn't the Council override the veto in accordance with the City Charter? What was unlawful about the way they passed the bill?
What was unlawful in the Solicitor's opinion back then, and we agree with it, is that under state law Council did not have the power to enact that ordinance.
And, Councilman, we could disagree over that. I recognize there are legitimate disagreements. Council has the right to pass a law notwithstanding what the Solicitor says and ultimately the Court will decide if --
And the Solicitor takes the opinion that whatever Council does, that's all well and good, but the Solicitor's the Solicitor and if the Solicitor thinks that it's illegal, he'll tell the other clients to ignore that particular law. I mean, that's the bottom line, right? 93 10/01/02 - FINANCE - PUBLIC HEARING
It's not ignore law, Councilman. The Solicitor is obligated to advise his clients with respect to all laws. I'm sure, Councilman, you can appreciate there are sometimes --
Well, the Solicitor has a conflict in that situation because he's got two different clients with two different opinions with two different responsibilities.
Which is why the solicitor simply states in his best judgement what the law is, not with respect to what his various clients' views may be.
Okay. We'll come back to that one. Ms. Kammerdeiner, the next paragraph, you say that the Administration does support tax reform, you support the creation of the Tax Reform Commission. Let me ask this question: Based on the timing of when the Tax Reform Commission, hopefully, by the voters would be approved, what, if any, relief could the actions of the Tax Reform Commission provide the people who received a notice of increase assessment this summer? I believe those 94 10/01/02 - FINANCE - PUBLIC HEARING assessments, subject to any appeals, will be certified in November. The voters won't have the opportunity to vote on the Tax Reform Commission until November. And so what possible substantive relief could the Tax Reform Commission provide to the citizens of this City who will have a tax bill 8 come to them sometime in January?
The paragraph of my testimony that you're referencing is in terms of longer term relief in dealing with the underlying problems and issues. The following paragraph, I indicated that in considering short-run actions that the Administration could support. And I went on and I addressed --
I understand that. Why don't we just take it one question at a time? What relief can the Tax Reform Commission which this Council approved and will be on the ballot in November, it's a statement in your testimony, what relief can the Tax Reform Commission provide to anyone who received an assessment notice this summer? The answer is either some or none.
It would not provide immediate relief. It would be long-term relief and, 95 10/01/02 - FINANCE - PUBLIC HEARING therefore, it would not address the immediate problem.
When the budget was put together -- and it goes back to the point that Councilman O'Neill raised. I'm actually trying to keep track now of some of the timing issues involved here. And it is intriguing, as much as some people would like to deny, it's certainly intriguing that the two representatives we have here today are the Board of Revision of Taxes responsible for assessments and then we have the Revenue Department responsible for collections. Now, lay out for me how was the FY 2003 budget put together in the context of what you expected to receive in the way of property taxes when the FY 2003 budget, I'm going to assume, was put together sometime in late 2001 somewhere in the November, December time period, introduced by the Mayor in January of 2002, you will not get the revenues for FY 2003 from real estate taxes until February or March of 2003, yet the assessment notices just went out this summer, we're in the appeal process after October 7 going toward certification. So what was the expectation when the FY 2003 budget was put together in terms of total 96 10/01/02 - FINANCE - PUBLIC HEARING dollar revenue from the real estate tax? What was the City expecting?
The City was expecting a 2.5 percent growth in real estate taxes.
I'm not sure of the exact dollar amount. I'm not good at doing the calculations on the fly. But we bring in about $750 million a year, City and school, on real estate tax.
Approximately. I don't have the numbers here with me in terms of what last year's --
Somewhere in that neighborhood. So you're expecting 2 1/2 percent. So what's that? Every percent is 7 1/2 mill?
About 18. So you're expecting in FY 2003 an additional $18 million in real estate tax, and that's what the budget was 97 10/01/02 - FINANCE - PUBLIC HEARING built around; is that what you're saying?
I'm just thinking back to some of the comparisons that I have seen. And I don't have numbers right here, but I did reference in my testimony last week that if we compare the revenue we actually received in fiscal 2002 to the budget projection for 2003, we were looking at a difference, I believe it was about 10 million for the City and 14 million for the School District. And that would be probably a closer comparison than what we were just doing using round numbers right now.
Approximately 17 million between City and School District. 18
But I thought you 19 were anticipating a 2 1/2 percent growth. 20
I may have 21 understated the amount of money we received between 22 City and School District. I don't have the figures 23 right here in front me. 24
How would we get to these numbers or tell me where we would find it in 98 10/01/02 - FINANCE - PUBLIC HEARING the -- it must be in the five-year plan?
It's a combination of the five-year plan and the monthly reports we do internally to identify the collections. I was using a number that would come from the end of the fiscal year. That's one of the problems we have here, the tax year is a calendar year and then we're looking at fiscal year numbers, so we go back and forth depending upon whether you're using fiscal year or tax year, and I don't want to confuse the issue greatly on that.
When the Mayor makes his budget address and the budget is submitted to City Council, there are numbers in that budget that anticipate a certain amount of growth in revenues.
I am trying to understand for the FY '03 budget which was put together before these notices went out, so you had no benefit of the notices or who was going to get hit with what amount of tax or what it would generate. You made the judgment call, not you personally, the Administration made a judgment call in constructing that budget that a certain amount of 99 10/01/02 - FINANCE - PUBLIC HEARING additional real estate revenue would come to the City. What I am trying to understand is, what was that number?
The final numbers are put together through the Budget Office. Revenue provides some forecasting information, historic data in terms of what has happened in terms of growth in prior years both in terms of the assessments and in terms of collection activity because we have to factor in how much is collectable in addition to have the assessment changes. Not every assessment increase is going to be collected. And so it's a judgment call that is generally a conservative judgment call so that we don't overestimate the amount of revenue that we anticipate.
Can you get someone over here this morning to answer that question?
Okay, I'm going to move on. 100 10/01/02 - FINANCE - PUBLIC HEARING Now, does the Revenue Department or the Finance Department ever have a conversation with the Board of Revision of Taxes about how the budget is put together or what the physical needs of the City are?
I can't totally speak for finance. I know that it doesn't happen in Revenue. And to the best of my knowledge, it doesn't happen from Finance either. We may inquire about how many increases might be going through. I do that from, I will say, a very different perspective than the one you're alluding to now. The Department of Revenue runs the outgoing mail center for the City. And so --
The outgoing mail center, all of the bulk mailing that goes for the City goes from Revenue. So in addition to the bills, we mail a number of other things, things like pension checks and notices for other departments and among the things that we mail are these assessment notices that go to people. So my inquiry was in terms of numbers of notices as opposed to the dollar impact. 101 10/01/02 - FINANCE - PUBLIC HEARING
I understand, and I would probably just stipulate for the record that I don't think the people who are down in the mail room 5 have anything to do with the level of the assessments going out. I think they probably have no influence on the process.
I thank you for recognizing that. They will thank you also.
Please let them know how I feel about them. Let me ask you about of your testimony. You talk about Councilman O'Neill's bill. You talk about at the bottom, "A cap that allowed a maximum increase of only 4 percent would not meet the 'gradualism principle' contained in Coleman v. Green because in many instances it would take far more than six years approved in that case to achieve full compliance with the statutory mandate of taxation based on current values. Further, with such a cap in place, it would be unlikely that the revenue projections in the City's five-year plan would be met." Now, what do you project in terms of revenue from the proposed 4 percent cap bill? Have 102 10/01/02 - FINANCE - PUBLIC HEARING you done those?
We don't know what the numbers would actually look like because we know that there are some people who had no increases, some people who had increases that were under 4 percent, so we don't know what the dollar differential would be. Until the Board certifies numbers to us, Revenue doesn't have the ability to make those forecasts.
Well, I understand that. But you have in your testimony already that you oppose it based on that basis, but you've not done any economic analysis to come to that conclusion yet.
A 4 percent cap would mean that we would have less than a 4 percent growth rate because not everyone is going to have an increase. And so our basic reaction to that is that it would be an increase that would be less than the amount that was projected in the five-year plan.
Well, let me ask this question: How long will our present system take to reach the statutory mandate of taxation based on current values? 103 10/01/02 - FINANCE - PUBLIC HEARING
How long will our present system take to reach, in your words, the statutory mandate of taxation based on current values?
If there are no caps, it would happen in the year in which the assessments are levied.
You're assuming that the assessments are at the current values?
The assessments are the current values that are certified to us by the Board.
Okay. So you don't deal with the whole 70 percent or 71 percent? I mean, the numbers, for your purposes at Revenue, the numbers are what the numbers are and that's the end of that discussion?
That's correct from our end. You will hear later from the Board of Revision in terms of how they derive those numbers.
Okay. Let me ask this one last question. The Chair has been very 104 10/01/02 - FINANCE - PUBLIC HEARING accommodating. In Bills 020537 and 020538, your testimony down at the bottom is, on , "The impact would likely be substantial and would result in the permanent loss of revenue, not a deferral. Solicitor concluded that these bills are not lawful with respect to the current fiscal year and that Bill 020538 is not defensible for any tax year because of Act 46 constraints." One, can you define for me back on "substantial"? Compare that to the five-year plan. And could you enlighten us as to the interplay between any of these proposed cap-type bills and Act 46 and the jurisdiction of that particular legislation?
We have found it extremely difficult to make any calculations or dollar estimates on the impact of any of these bills that provide caps because we at the Administration's end do not have the raw data on what the assessments would look like. We don't know how many assessments would have 10 percent increases and what the base was on which those 10 percent increases were being calculated. 105 10/01/02 - FINANCE - PUBLIC HEARING
You don't have the data disk from the Board of Revision of Taxes?
No, we do not. And that is something that we -- and I emphasize again because of the separation in this process, we do not have that data until it is certified to us in November. And so we could make hypothetical guesses, but we wouldn't know whether those guesses were anywhere in the right range or not in the right range. It's possible that the Board in their analysis can give you some more insight into that, but we --
Well, let me ask this question: Is anybody else in the government looking at this particular issue? I understand the need for the technical separation between the entities, but, I mean, the Revenue Department, with every respect, is -- I mean, I'm assuming that you're not the only ones around this government with an Excel spreadsheet on your computer.
It is possible that they're making some guesstimates in the Budget Bureau but, again, they would be basing those on 106 10/01/02 - FINANCE - PUBLIC HEARING hypotheticals that are not tied to the raw data.
All right. Let me ask you this then. Does the Administration believe that the current system is fair to taxpayers?
We know that there are problems and that there are inequities in any systems and there can always be improvements to the way the process works so that it is fairer. There are concerns that we have as individuals and as an Administration in terms of just how the process works.
If this were another hearing, I'd probably kind of let you go with that. What I'd like to ask is, does the Administration believe that the current system is fair? And it's now a yes-or-no question.
And I don't think it's a straight yes or no. I think there are gradations here that there are parts of it that may have concern that need to be looked at closer. I cannot give a yes-or-no answer to that.
Does the 107 10/01/02 - FINANCE - PUBLIC HEARING Administration feel it would be fair to raise real estate taxes this year, the rate of tax percent? 4
I'm talking about 7 by Council ordinance sponsored by the 8 Administration. 9
We do not at this 10 point have a firm position on any legislation that 11 would be proposed. 12
Well, by inference, 13 I mean, we have never received a real estate tax 14 increase bill from this Administration or the last, 15 I believe. So it would seem to me by inference they think it's unfair to increase taxes at any rate, let alone the exorbitant rates that we've seen this year in the tax assessment process. And I'm going to infer from that lack of activity and initiative on the Administration's part that they think it's unfair. Because if they thought it was fair, I think they would do it. The City needs revenue. The only thing that would be stopping you would be the unfairness of it all. And that seems to be stopping because we have not received a bill in this 108 10/01/02 - FINANCE - PUBLIC HEARING Administration or the last to raise real estate tax rates, even the indistinguishable percent. We 4 have not had anything at that level. So I'm going to take the answer from the lack of initiative on the Administration's part that they really think it's unfair and that's why they haven't done it. Michael, one other thing, because we don't have the numbers in front of us. But while we're talking about projections, in the Mayoral election years that I've been in City Council, which are now starting to add up, we've never had any net assessments done in the City, at least that I've ever heard from anybody about. This past -- I don't know what the projections were in the fiscal year '99-2000. And then the following year we didn't have any increases because of a computer turnaround. It would be interesting to see if the projections were met without any assessments -- I know last year there were some pretty heavy assessments in different parts of the City and then this year probably even more. But for two years running, the election year and the one after, there was virtually no -- with very few exceptions, there were no 25 increases. And it might be interesting, Michael, as 109 10/01/02 - FINANCE - PUBLIC HEARING a follow-up to see what those projections were, what the total was and whether the City fell apart as a result of those lack of assessments. Because it seems like if we cap people at 4 percent, you know we'd be closing the City down. Thank you.
Last question. I asked last week, and I think your response was you were working on it. What plan does the Administration have for any system reform? You were very good at repeating verbatim your response to fairness questions about the systems problems. What would the Administration do to change or reform the system?
Do you know if anyone within the Administration is working on any plans to propose reform to the system.
I am not certain of anyone. I know we were looking at all pieces of the process. I don't know whether it's coming to a point at this juncture of being a plan. I don't think I would characterize it at as that at this point. 110 10/01/02 - FINANCE - PUBLIC HEARING
So the Administration is basically opposing all of the bills that are coming forward from Council. But is your answer to Michael Nutter's question is that the Administration has no idea what it is that it has to do except to maintain the current system? That it has no idea as to what changes, if any, should be done or what modification should be coming forward?
We are not yet at the point of being able to present something. That doesn't mean that it's not being --
How long will it take? Because this issue, I think the citizens of Philadelphia started talking about this quite a long time now. How long does it take for the Administration to start formulating a policy as to these assessments?
We, like you, want to 111 10/01/02 - FINANCE - PUBLIC HEARING hear the points of view of various people and get as many facts as possible. And I think we would be shortchanging to come up with something before we heard --
Well, we as a legislative body would like to hear from the Administration what their position is and where they believe we should be going. And you're coming here and you're saying that you're waiting to hear but you have no idea where it is that we should -- you're supposed to lead.
Thank you very much. In fact, Mr. Glancey hasn't made his statement yet and we have some questions for him. But with regard to Commissioner Kammerdeiner, Councilman DiCicco, then Councilman Kenney and then Councilman Ortiz.
Thank you. Councilman DiCicco and then Councilman 112 10/01/02 - FINANCE - PUBLIC HEARING Ortiz.
Thank you again, Madam Chair. And good afternoon, Commissioner.
I just need some information as to the noticing. Could you explain to me -- I'm sure Mr. Glancey would probably want to get involved in this conversation as well. BRT does reassessments, they prepare the documentation for the following year, the upcoming years' real estate taxes. I assume that there's a disk, some sort of a computer printout, whatever, that goes from the BRT to the Department of Revenue for billing purposes.
We get a computer file, and that's what I've been referencing that we get mid- to late-November. I believe by law they're required to certify those values to us by September 1st. In the last several years, it's been mid-November.
So the BRT supplies you with the addresses for the particular properties?
Are you talking about 113 10/01/02 - FINANCE - PUBLIC HEARING the notices that get mailed about the assessment increases, or are you talking about the billing?
Both. Where does that information come from? Who supplies the data for property addresses on reassessments and then ultimately for the tax bill?
Councilman, thank you. Let me address the notices. They have nothing to do with it except mailing. Revenue has nothing to do with notices of real estate property tax, values or increases except to mail them. What we do is we have cartridges printed. Our evaluation staff does the upload from our computer to a computer over at MOIS. They print cartridges. Cartridges are then delivered to the Mail Center -- the product of the cartridge is a notice. Those are then delivered to the Mail Center, and the Mail Center delivers them. That's the only contact Revenue has in that process.
Where does the information come from that gets on or into the cartridge? 114 10/01/02 - FINANCE - PUBLIC HEARING
How do you determine there's a property at 1207 South 11? The CAMA System?
The process is an evaluator over the course of the year makes a determination as to a value of a property. Each residential evaluator roughly has about 10,000 accounts. That evaluator then looks at all the sales in his or her given geographic area. Those sales are compiled and analyzed by a CAMA System. And we can go through this later on. I think it would be helpful. And what happens at that point is that a printout -- something on the screen. We're not going to printout anymore, but something comes up on the screen of that individual evaluator who then looks at all the data, looks at all the properties and makes the determination whether or not to override. There's still that human 115 10/01/02 - FINANCE - PUBLIC HEARING involvement in the end. If there is no override, that is uploaded eventually to the mainframe at MOIS; and from MOIS, cartridges get printed. But the ultimate answer to your question is that myself, our technical staff make those determinations, entirely free from anybody else's interference.
So the block that I live on, the six new houses relatively anywhere from 5 to 10 years old, 1201 through 1211, South 11th Street, the information that is gathered as to the property owner of each respective property, who determines that? How does that get -- how do you know that Frank DiCicco owns 1207?
That's what I'm getting at. Now, the Department of Records gives you, the BRT, the information as to the owner of the particular property?
Councilman, excuse me a minute. Would you like us to formally 116 10/01/02 - FINANCE - PUBLIC HEARING have Mr. Glancey make his testimony so we can get into his area of questioning?
I was trying to go, starting with the Revenue Commissioner who ultimately has --
Okay. If it's still with regard to her, then we'll wait.
Well, I want to make sure that it's not the Revenue Department who's generating the name and address of a particular property owner who will receive the bill. That starts with the BRT. And then the BRT's telling me that they're getting that information from the Recorder of Deeds?
And Revenue also has in the real estate system information on the parcels with the BRT numbers, the owner information. We confirm the same information with the Records Department. So we have the name and address based on the deed information in the revenue system, but we will get information on the mass certification from the Board of Revision that we compare to what we have so that if they have updated information, we 117 10/01/02 - FINANCE - PUBLIC HEARING do have the benefit as well as, at the time that they send the file to us.
How often is your information updated? Or do you rely again on the Department of Records?
We update on a daily basis, and I would say we're probably -- it varies from time to time depending upon how many deeds are being filed, but we're usually within a month of the filing of the deed in Records.
So if I were to sell my house to David Glancey, tomorrow next year this time if there's activity on that property concerning reassessments and/or tax billing notices, it should be in the name of David Glancey next year?
It should be. I won't say that we're 100 percent on that but, yes, that is our effort to update and keep those records as accurate as possible.
Excuse me. Wouldn't that depend on the time line? Because I know that the Department of Records, you file your deed but that deed does not go into the rolls immediately. I mean, there is usually, depending on where we're at, 118 10/01/02 - FINANCE - PUBLIC HEARING anywhere from four to six months, maybe even longer periods of time in which deeds really are not really filed. You may take them into Department of Records.
That had been the case. And I know that they have worked very diligently to improve their process. I can't give you exact statistics on the turnaround time on that.
Joan Decker I think would give you a much shorter time period on that as the time for turnaround. In any case, as soon as it's recorded there, we do get access to that information. It's now electronic, and we work with that data to ensure that our system is updated. And we're working on a process that's similar to the one that the Board of Revision has where most of that's done by electronic file, file interchange from one system to another. And then the only thing that staff actually works with are exceptions where there's a problem in reading the data.
Is it to correct to say then BRT -- does the BRT do any reevaluation as 119 10/01/02 - FINANCE - PUBLIC HEARING to the authenticity of the property owner as it relates to the reassessments which ultimately becomes the building by way of Department of Revenue?
Probably not not unless we are told to do so. Unless there's some evidence that might pop up to indicate that the ownership information is incorrect.
I don't know. Somebody might know a property and know that that's not a property owner. I mean, that's very rare, I'm sure. But it seems to me, Councilman, that once you see the ownership name on the deed, that's the basic document that we have to believe in.
So, again, you're relying on the information that is supplied to you by the Department of Records? No evaluation, no 21 people on your staff go out to check that Frank DiCicco still owns that property at 1207?
Let me just double check with my senior staff. They're sitting right here. No, we don't. 120 10/01/02 - FINANCE - PUBLIC HEARING
Thank you, Madam Chair. Mr. Glancey, first, I know this has been a very difficult time. There's been a lot confusion and a lot of anger and frustration on everyone's part. And just for the record, I would like to say that I've attended a number of meetings that were held in the neighborhoods with Councilman DiCicco. And your staff is there, they are like the Christians in the Lions' den. They stand there and take unbelievable and sometimes indescribable, or I can't describe it in mixed company, abuse that they've been getting. Every meeting I've been, they've been very forthright. They answer the questions they can answer. They try to be as honest and open as the information that they have. And they really deserve some extra pats on the back for going through what they've been going through. So I just wanted to let you know your staff has really been there under fire and has their best to respond 121 10/01/02 - FINANCE - PUBLIC HEARING in the best way possible.
And it's been tough, I know. It's been tough on everybody. The thing I think that's made -- in addition to the percentage increases and the numbers associated with the percentages, the thing that's, again, been very difficult to understand is just the whole process itself. I mean, basically, as I understand it, you value property based on, I guess -- correct me anywhere where I'm wrong -- a combination of what the perceived market value is and also a combination of what the recent sales in a particular neighborhood are.
That's true, but we have a mathematical difference -- it's a relationship, clearly, but we don't go to 100 percent of market value. We're somewhere between 71 and 75 percent of market value. Madam Chairman -- Mr. Kenney, I'd certainly answer all your questions, but I would like to deliver my testimony and then we can get into all of this. 122 10/01/02 - FINANCE - PUBLIC HEARING
That will be fine. Madam Chair, I'll be happy to do that.
Thank you. So if it is the will of the committee, we would be very happy to move forward and to have Mr. Glancey make his testimony. Thank you very much. Please proceed.
Thank you, Madam Chairman. I would certainly just like to introduce -- first of all, we thank you for this opportunity to, hopefully, bring some light into a process that, I guess, we're not doing good enough job in explaining and will say that today. I mean, I'm not defensive about what we have to do. We think we're doing a good job, but we also -- we're not the repository of all the greatest ideas in the world, so we're happy to listen. I have with us today, just to show you the seriousness with which we take this process, the Secretary of the Board, Bob Nix, and two other members of the Board Devereux Silverstein and Harvey 123 10/01/02 - FINANCE - PUBLIC HEARING Levin and will stay with us through the process. I also have about five members of our senior staff here, folks who have been the Christians tossed to the Lions.
Well, we thank you all for your attendance and for your patience. Thank you very, very much for being here.
Good afternoon. My name is David Glancey, and I'm Chairman of the Board of Revision of Taxes. I'm before your committee today to offer testimony regarding the Board's city-wide Assessment Equalization Program, the standardized methods and procedures behind the program, and the effect of Equalization 2003 on the market values of properties in the City of Philadelphia. At the same time, I would like to address some issues that have been recently raised by our citizens that concern the public perception of the BRT's assessment administration policies. It is my objective today to lay out the facts about the BRT's assessment system in hope that 124 10/01/02 - FINANCE - PUBLIC HEARING at the end of day you're clear about what we do, why we do it, and what could responsibly be done to ease the pain of our citizenry when they are faced with rising property values. And as we all know, rising property values ultimately translate to rising tax bills. Briefly, I would like to speak to our Assessment Equalization Program. The BRT is mandated by law to place a fair and equitable opinion of market value on each and every property in the City. Our method of accomplishing this mandate is to empower the technical staff of our department to implement a computer-assisted mass appraisal system using nationally-accepted operating standards that will perform within nationally-accepted parameters for large urban jurisdictions. As I said earlier, there is a handout that I placed up on your desk this morning which, hopefully, with the pictography will also explain our methodology. At this time, while I emphasize that our work is not yet complete, I can say that city assessments are within those nationally-accepted parameters. As proof of this, I've submitted along 125 10/01/02 - FINANCE - PUBLIC HEARING with my testimony the accepted standard measures of assessment uniformity known as the coefficient of dispersion and the price related differential. And I, again, have given you a very short handout which includes material that explains the relevancy of these measurements for your examination. But, again, I must remind the Committee that the BRT is not satisfied where we are today. We want to further reduce the numbers and become the most fair and equitable assessment jurisdiction in the country. At this point, I'd like to address some of the concerns about the policies of the BRT, particularly the perception that the process and methodology used is not conducive to public scrutiny and to examination. In previous testimony before City Council, I promised to make this process as transparent as possible. And with that promise in mind, the BRT directed our staff to open the process in several tangible ways. Initially, we redesigned the notice of change in market value. This notice is now easier to read and contains more information about the reasons and the effects of a reassessment on your 126 10/01/02 - FINANCE - PUBLIC HEARING real estate taxes. I'm going to skip over some of this because I think some of you may have already read it. We've redesigned the assessment appeal form. And the importance of that is that what we are able to do is to make sure that the taxpayer can in their appeal form tell us the characteristics of their property upon which that valuation is based. The BRT website and the property assessment search which went into effect on January 1st of 2000. It's probably the most effective initiative that we've undertaken. gov site. 0 which is taking the current application that we 127 10/01/02 - FINANCE - PUBLIC HEARING have and expanding it in a demonstration model. We won't be on-line until probably sometime in late November, early December. And being able to push a button and get block information, push a button and get every comparable that the evaluator used to value your property and push a button to get any different kinds of information that we think will help the citizenry look at those property values and look at their own.
And, hopefully, help them, again, be able to compare and contrast for fairness. Users of this service have fostered a new era of accountability at the BRT by pointing out corrections or additions to the data that we house about City real estate. Property owners can verify that they're being treated fairly and equitably -- or they can tell us they are not, it works both ways -- by our assessment system by viewing the sales prices of homes on the block. By using our e-mail link, our citizens are interacting with the staff and administration of the BRT on a daily basis, effectively keeping us open for business 24/7. As evidence of this, I've attached a copy of our most recent WebTrends report which details the volume and other characteristics of our daily users. 128 10/01/02 - FINANCE - PUBLIC HEARING I've supplied you with summary pages of that report. The week before last, we had 188,000 hits. This past week, we had 156,000, I believe. All of those hits aren't people looking at information, but we have a substantial amount of visitors and they're the folks who are looking for information. Those visits basically, I think, average somewhere between four and eight minutes, depending on which week we get a report back from WebTrends. And we'll be happy to e-mail to each and every one of you a copy of that report every week if you'd like see it. Community outreach is another thing that we've done at the BRT for the last 10 years. Our senior staff members have attended community and civic association meetings throughout the City, from Chestnut Hill/Mount Airy to Packer Park, from Roxborough/East Falls to Society Hill and Fitler Square, they've been describing our system, our methodology, answering questions about the BRT, and assisting people filing appeals. This year alone they will have attended over 20 community meetings since September 10th. While the staff has been in the field, I have been the BRT spokesman in the mass media. That 129 10/01/02 - FINANCE - PUBLIC HEARING is a role that is far from my favorite job. I think I would rather walk on ground glass rather than have to do that for the time that I have spent doing that for the last couple of months. But since we're a public agency, accountability to the public is paramount. I perceive this as a duty that must be performed. I have not nor will not turn down any inquiry or information request from any media source. I look upon these occasions as opportunities to communicate with the larger audience of our citizens. Further, the BRT sees at least 2 to 3,000 citizens face-to-face every year during the appeal process. With the possible exception of all of our elected officials, we may be the agency in the City that sees taxpayers face-to-face more than anybody. And we see them four or five months a year every year, and we've done that since I've been there. So we get to see firsthand the results of our actions. And believe me, the citizens we meet are the backbone of the City of Philadelphia. They're always forthcoming with evidence concerning their properties. And ultimately, we are accountable to the citizens of Philadelphia through 130 10/01/02 - FINANCE - PUBLIC HEARING the prism of the law. Another subject that residents have expressed concerns about is the fairness of this most recent evaluation. And some of you may have heard me say part of this message last week, but I think it bears repeating. Putting aside what I've said previously about national standards, I can say with certainty that both fairness and conservatism have been designed into our assessment system every step of the way. The problem, as we see it, is that in any assessment system, regardless of how much fairness is built in, seems inherently unfair when you own property in a desirable area and the market value of your property is skyrocketing.
Our current real estate market has had dramatic and volatile increases during the last five to seven years in the locations in our City where the demand far outpaces the supply. If the BRT adjusts market values to keep pace with this market, equity, fairness, and uniformity are diminished. Inequities in valuation ultimately become inequities in the real tax system. Under the laws of the Commonwealth of Pennsylvania that govern the operation of assessment boards, if we were to ignore the market and freeze 131 10/01/02 - FINANCE - PUBLIC HEARING values at last year's level, we would, in my opinion by definition, institutionalize all inequities that we have attempted to cure with the proposed 2003 equalized values. Now, having said all that, I ask each of you how fair to the citizens would it be if this Board ignored the rising market in the face of its own sworn responsibilities under state law? Not very fair, and I think you'll agree. Our goal was to make sure that the market value of any given property is determined by the sales of other similar properties. We believe the removal of subjective judgments to be replaced by objective standards brings fairness to all property owners. In truth, the fairness of our assessment system is in conflict with what many people in the City want out of any system that results in a tax bill. There is a conflict. Under current law, the BRT is mandated to follow the movement of the market. This, of course, builds volatility into the process. There is no certainty that the next hot neighborhood won't be the one that you live in. The one thing that is predictable is 132 10/01/02 - FINANCE - PUBLIC HEARING that values rise and fall at different rates on different streets and in various neighborhoods over a period of years. The other thing that is certain is that the BRT must set that value wherever it takes place, whatever the market conditions. So, as I said last week, where do we go from here? And with all due respect, I'd like to offer several suggestions. I believe we must redefine the relationship between property values and assessments and revenue raising. My duty is to value all the real estate in the City. Your duty and the duty of the Administration among a host of other things is to create and fund a budget for the City and School District. I don't want your duties and authority and you don't want mine. I think the bills introduced by Councilman Nutter and Council President Verna, which would be Bills 020537 and 020538, are a responsible attempt to separate the valuation function from the revenue-raising function. The BRT is in the business of real estate valuations and should not be in the revenue-raising business. That's your responsibility along with the executive branch. Let's work cooperatively to be 133 10/01/02 - FINANCE - PUBLIC HEARING un-band these two functions. Secondly, we would be happy to explore with you the discarding of the present system of fractional assessments for a 100 percent market value to sale price system. This must be done, however, with a good deal of forethought and planning, since there will be shifts of taxation within and between property types, even with a millage reduction, to produce revenue neutrality overall. Thirdly, while the BRT cannot divest itself of its legally mandated substantive valuation function and surrender its authority to any other agency or body, we would be pleased to cooperate with Council to establish and implement any reasonable procedural standards that you may suggest. And No. 4, anything else that we haven't discussed. As I said, we're not the repository of every good idea in the world. We are open to every suggestion that makes our system more transparent and allows it to be better, fairer, and more equitable. There have been six or seven bills -- I 134 10/01/02 - FINANCE - PUBLIC HEARING was told this morning eight. There are eight bills introduced in this Council on this issue.
And at least 70 bills introduced in the State Legislature in both special and regular sessions concerned with real property taxes, both systemically and procedurally. We believe lots of good can come out of the energy and, yes, even the anger stirred up by this recent round of valuations. Hopefully, more clarity than confusion will be the result of this critical mass of ideas and opinions. And if you don't mind, if I can just go off the script for a second, I want to reiterate that we are open to all good ideas. I'm not here in a defensive posture. I am here to explain. I certainly am here to give data to what we think sometimes has been an anecdotally-driven kind of problem. And I think we have to get the anecdotes, at least the data that we have on those anecdotes out of way. And then secondly, as I said, we're willing to work with this Council. We're willing to work with the Administration. We believe at the BRT that this is a special moment in time to take a look at this process, to take a look at what we ought to 135 10/01/02 - FINANCE - PUBLIC HEARING be doing, where the responsibilities ought to lie. We ought to be doing valuation. Whatever takes place with revenue-raising certainly ought to be a function where you oversee it. It is not our responsibility. And finally, I think as I said last week, I'm 58 years old and I've lived in the City all but actually, Councilman Nutter two years. I said one year; I made a mistake, I did work in Harrisburg for a year. And there is nothing, nothing that I would rather see than a great Philadelphia. There is nothing that myself, any member of the Board or any member of our staff is trying to do to hurt the City of Philadelphia. But we take it very seriously, ladies and gentlemen, when we put our hand on the Bible and we raise our arm and we take an oath that says that we have to defend the Constitution of the Commonwealth of Pennsylvania and the Home Rule Charter of the City of Philadelphia, we take our responsibility seriously. So with that, I'd be happy to answer any questions that you may have. Thank you.
Thank you very 136 10/01/02 - FINANCE - PUBLIC HEARING much. Mr. Glancey, we were told that there are thousands and thousands, obviously, of value increases of 100 percent, 200 percent, and even more than 300 percent. Can you tell us how many increases fall into those categories?
I'd be happy to. I supplied Council with this bar chart this morning, and I hope everybody has a copy of it. If not, I will make sure that we have that given to you. This bar chart shows -- I would run through this very quickly. Where we say 300 percent or higher -- well, the title of this is "Number of Percentage of Accounts with Value Changes in Excess of 10 percent of 267,000 Parcels Affected by Equalization 2003." There were 87 parcels that were increased 300 percent or higher. And I will tell you, those 87 parcels were not in the equalization program. Those 87 parcels were because there was a significant change of use in the property, whether it was vacant land and a home was built on that vacant land, and of course, you're going to see some value increase because the improvement is going to increase the value of that property over what the land was. Each of those 87 was performed manually by an evaluator 137 10/01/02 - FINANCE - PUBLIC HEARING who had evidence generally from a building permit to make that change. So there were no 300 percent or higher changes done by equalization. Now, having said that, could there have been a typo somewhere? I don't know. I mean, I'm not going to say that didn't take place with 267,000 notices. But if that's the case, it should be pretty obvious to whomever the homeowner is that there is a typo on that, and we'd certainly do something to correct it. On the next bar down you see 200 to 300 percent increase. It's 169 properties. I'm sorry, I don't have the backup with me today on whether or not -- how many of that 169 were part of the Equalization Program. I can read these numbers, but I think you can read them as well. What we are basically saying here is that there are between percent -- 20 any increase of 20 percent or over out of the total 267,000, there were roughly 27,000 increases that were 20 percent or more based on the data that we have. There was another 69,000 from 10 to 20. And, of course, the balance between 0 and 10 percent is below that. 138 10/01/02 - FINANCE - PUBLIC HEARING
You testified as you're reading this that anything above percent 4 was 26,000? I think it's 30 percent. 5
Above 20 percent would be 9 47,000. I'm sorry. That was my error. 10
Thank you. 11 What is the total market value of all City 12 properties, and how does that translate into real 13 estate taxes? 14 Also, second part to that same question, 15 how much of those taxes go to the School District 16 and how much to the City? 17
Let me answer that, Madam 18 Chair, by telling you what the total taxable market 19 value is. The total market value would also include 20 exempts, but let me just tell you what the total taxable market value is. The total taxable market value, certified, which was the 2002 number, was $31,745,000,000. The proposed 2002-2003 is $33,108,000,000.
Can you repeat that, 139 10/01/02 - FINANCE - PUBLIC HEARING please?
Sure. The certified taxable market value is 31,745,000,000. I'm giving you gross figures. The proposed 2002-2003 taxable market value which includes this round of reevaluations is 33,108,000,000. Included in that are any other commercial and industrial increases as well. And I believe the second part of your question is how does that translate to taxes. And as opposed to Ms. Kammerdeiner, I'm going to give you gross numbers. I have no idea what's delinquent. I have no idea what's collected. I will give you what that number that I just gave translates simply using 32 percent times the tax rate. In 2002 the gross numbers, these are gross, remember, according to our records are -- for all real property taxes in the City of Philadelphia, $839,505,000. And the proposed is 875,555,000. That is total, City and School District. And I think your final question, Madam Chairman, is how does that break out. I haven't done the math, but it's easy to do. It's 58 percent of those numbers are for the School District for the 140 10/01/02 - FINANCE - PUBLIC HEARING 200,000-plus kids in the Philadelphia School District and, therefore, the 42 percent is the City share.
Thank you. How many appeals does the Board of Revision of Taxes hear each year?
Annually, we hear roughly 2000 or so appeals. This year, I did -- before I came over today, I did a download as of the 27th of September. We have 4,070 or something filed as of this date. This week is usually what we call geometric progression week. Whatever we have today might geometrically progress tomorrow and geometrically progress the next day. So I think we will probably end up this year with 7000 appeals, if I had to guess.
Wow, so that's more than triple. Do you believe there is a quote/unquote bubble in the real estate market that will soon burst?
I do not. As I said in my testimony, this market has been rising for the last five to seven years and it's still rising right now. 141 10/01/02 - FINANCE - PUBLIC HEARING It is still rising. So there is no bubble that's going to last that long. I brought with me a clipping from the Philadelphia Inquirer of September 11, 2002, where Alan Greenspan had testified before, I guess it was a Senate committee, and Greenspan said when asked if there was a bubble, if he thought it was -- in his opinion was there a bubble in the real estate market. He said, "We've looked at the bubble question and we've concluded that it is most unlikely." That sounds very Greenspan-like, I'm sure. And I know he's speaking nationally, but what I think we're able to see in Philadelphia does follow the national trend. There is no hotter market in the United States than the residential real estate market. And when we look in Philadelphia, I think I just saw the other day that some very substantial commercial developers, Lupert and Adler have joined at least in concept with Westram (ph) who is a substantial residential developer. They've seemed to have joined in an attempt to put fair market housing inside the boundaries of the City of Philadelphia. I think they're very astute investors. And I think normally somebody who's a commercial investor you don't see 142 10/01/02 - FINANCE - PUBLIC HEARING jump into the residential market really quickly. But I do think that's an indication that we are not in a bubble market, that we are still in a very good market.
Well, do you think our system punishes people who try to improve their real estate property?
No, I don't. And I'll tell you why. Again, I gave a handout to Councilmembers. If you don't have it in front of you, please let me know. It's a single sheet that says, "Common Misconceptions About Property Taxes in Philadelphia." The very first question is, minor repairs such as painting, mowing your lawn, new windows cause real estate taxes to increase? My response to that is, market values used to derive property taxes are changed in response only to changes in the physical condition or characteristics of the property only if those changes would result in significant change in the anticipated sale price of the property. I'm not going to read the whole thing to you. What happens in reality, and I believe that, again, this is one of the myths across the 143 10/01/02 - FINANCE - PUBLIC HEARING United States about a real property system. If you want to fix up your house, if you want to paint your house, you want to put window boxes out like I do, if you want to put a planter in front of your house like I do, that's not going to cause your market value to go up. You pull a permit and add a deck or add an addition to your property, something that physically changes the nature of your property, it may very well add value. It's not necessarily dollar for dollar in the cost, but something like that is what the evaluator looks at. We don't punish people for keeping their homes in a well-maintained manner.
As Part B to that, do you think the Historic Commission punishes people or do you think since there is no basic change to the property that it does not as well?
I'm not sure "punish" would be the right word. I think what the Historic Commission asks people to do is that if you have a historic front, to keep it that way. But in most instances, you almost have to voluntarily get involved in that program. So if you make that effort to voluntarily get involved, I mean, you know 144 10/01/02 - FINANCE - PUBLIC HEARING going in what you have to do. So I don't believe it's punishment per se. It might cost you some more to keep it that way.
Thank you. Finally, my last question and I'll turn it to my colleagues. Would you be in favor of contracting with some neutral third party to analyze BRT's process of valuing properties, including its methodology, Administration, and governance?
You bet. I think one of the things that we hear today -- and again, maybe it's our fault for not getting the information out, and we have to do better at that. But I would absolutely welcome some neutral third party to take a look at our system. We employ the best practices, we believe, in the United States. And if a neutral third party -- and by that, I mean it could be university-driven or it could be the organization that oversees assessments throughout the United States, the IAA0. If any of those kinds of institutions wanted to do a third-party analysis of our practices, we would welcome them with open arms. We would take whatever criticisms -- in any respect, the answer is yes. We welcome it with open arms. 145 10/01/02 - FINANCE - PUBLIC HEARING
Thank you, Madam Chair. Chairman Glancey, first I'd like to say what I've been telling people for the last month or so at community meetings that first if they feel their assessment is unfair for whatever reason, value being a large part of it but often the size of the increase and there is such thing pleading for mercy. But I've told them that even though it's a quasi-judicial panel, that I've never seen a panel, starting with yourself and other members, listen as well and treat people with as much courtesy as you do. And I want to compliment you publicly on that and not just say in small community meetings.
Because it's a very unusual situation where people feel like their trip has been worthwhile even if they're not successful because of how they've been treated. And I appreciate you doing that and the other members. And also, I think the other members bring from different parts of the City a familiarity with areas 146 10/01/02 - FINANCE - PUBLIC HEARING that if you're all from the same area may not happen. But I wanted to mention two things to you or ask you. You mentioned the Verna bill and the Nutter bill and I believe one is the freeze bill 7 and the other is the 10 percent bill?
No, let me ask a question because it can be real quick. I don't have to get into -- the 4 percent cap bill that I introduced has no effect at all on what you do; we've had that discussion.
That's fine. I don't want to get into that. It seemed like you had said those two did not affect the processes at the Board --
I probably should have been more limited and simply said those bills that somehow impact on what we believe is the valuation prerogative granted to us by the State Legislature would be the bills that we as a board would personally oppose. Everything else, seems to me, 147 10/01/02 - FINANCE - PUBLIC HEARING that we would be for.
And the percent 4 bill does not impose any limitations on you.
But the bar graph you handed out, I found it interesting -- and I hope this wasn't a subjective thing on your part because I've got an awful lot of appeals that fall below the bar graph. There's no indication at all on how many between 4 and 8 percent or 4 and 7 percent or 7 and 10 percent. And there's 200,000 appeals that are under 10 percent.
I mean potential appeals. I'm sorry. I'm wondering if we could get some real good information because my argument, and one that I believe is very reasonable, is that the Adminstration needs some money -- this is on the bill. It does not affect what you do, just the information you've given me may -- I hear enough in the public arena in the community that the Administration and the BRT are tied at the hip and nobody is going to convince anybody otherwise. 148 10/01/02 - FINANCE - PUBLIC HEARING Well, this will be an argument, if I made that argument, this would support it, that your bar graph only went down to percent; the inference being 5 that there's a subjective opinion that 10 percent 6 and up is what you should be upset about. I've got 7 people upset anywhere from 3 to 10 percent just as 8 much as who makes a lot more money or has a lot more 9 expensive house at a much higher number. And so if 10 you can get that for me, I'd appreciate it.
I don't think it was intentional, I'm just pointing out that someone may interpret that. The other thing is the bubble's been mentioned and I hear an awful lot of that from people that, what happens next when the values go down in my neighborhood? Well, I think, you know, Alan Greenspan's been not so right for the last two years or so. I mean, he hit a lot of grand slams, a lot of home runs, he's having trouble with singles lately. But there is a difference of opinion even within the Board. But I don't think there's any question that high-wealth individuals who have stock 149 10/01/02 - FINANCE - PUBLIC HEARING portfolios -- and I can tell you, I don't represent many people with stock portfolios. But they have gotten out of the market in a large part in the last few years. The market is scaring them. Real estate is where they're going. Buying an expensive condominium or house is something that they make a decision on. I don't have any problem with that. What I have a problem with is that there's neighborhoods getting lumped into this real estate phenomenon that aren't experiencing the same rates because these people aren't buying $80,000 or $120,000 houses. Mortgage rates are driving everyone. It's hard to pass up. People are stretching. That could change tomorrow. So I think there is a bubble. And I think it's a bubble in the expensive housing market based on what stocks you're doing and where people want to put their investments and mortgage rates covering everybody from the low end to the high end. But the one thing I like about my bill, in addition to having what I think is a reasonable cap, is if I'm the high-wealth individual, I look at Rittenhouse Square -- I'll use that because that's kind of our highest other than Chestnut Hill homes. The condos around Rittenhouse 150 10/01/02 - FINANCE - PUBLIC HEARING Square are usually seen as pretty top flight stuff. So I want to buy a very expensive, maybe a seven-figure property. I go in and I make all my evaluations as to where I'm putting my investment and I look at the taxes and the taxes are $5,000, say. Well, the next year, they're $20,000. I mean, this is an argument that really doesn't affect my district, but I just want to point it out because it comes back on the way to my district and the bill 11 that has the 4 percent cap. I buy that property and then I get a $25,000 tax bill next year, which may be very fair based on equalization. Under the 4 percent cap, the person owning doesn't get more than 4 percent a year. They're being treated very fairly. That person making that decision to buy the million dollar condo who gets the $25,000 bill, because you're only looking at value, they're being treated very fairly too. And they just make another decision based on investment. They're no more upset by the $25,000 than the 5 because they'll probably just negotiate the price down to meet that because they're investors. These are people that are very sophisticated financially. But I believe it applies everywhere. It helps long-term homeowners because 151 10/01/02 - FINANCE - PUBLIC HEARING they aren't being gouged in any one year. A person buying their house goes in with their eyes open. They make their mortgage decisions, their affordability decisions on that. So I think if we're trying to help people and not seeing how much we can squeeze out of a system to help run a government -- and we're really squeezing on the margins. I mean the difference between -- because I think you'll show us when you give us the bar graph, between 4 percent increase and how many that would affect and the $3 billion we spend a year is going to be fairly marginal. It may be indistinguishable, to use a term I'm starting to like a lot. So I think it's fair, but I do think the Board and the assessor should at least take a look at some of the dissent from Mr. Greenspan. It may be his own dissent today because he may have a different opinion. I don't know what the date of that was.
That there are two factors out there that could change tomorrow: Mortgage rates and the stock market. Mortgage affect everyone. I think the stock market affects your highest properties that are getting these real high increases. And look at 152 10/01/02 - FINANCE - PUBLIC HEARING that in terms of gradualism within the mind of the assessor. You said the last person that looks at that screen is a human. " I'm doing my job if it's a lot lower than that but there's a substantial increase. And I point that out because it seems like you have assessors who are more aggressively guessing high as opposed to less aggressively guessing low. Because this is all guesswork when you get into the comps. No two are alike and all that. I say that because just the other day, I believe it was a the Inquirer, it might been on Sunday, did a story about a fellow that works for the Mayor who is a contract employee. And those were examples they gave in different parts of the City, assuming they're true, the anecdotes all come out. I mean, now it's in the Inquirer -- and maybe at some future time we can find out what those were, but I believe each four of those assessors thought they were doing their job the same. And looking at the comps, I believe you have aggressive 153 10/01/02 - FINANCE - PUBLIC HEARING assessors, you have push-the-limit assessors, and you have assessors that are a little more reasonable. I won't say rational because I think they're all being rational. But there is a very big human impact here that one property that sells for the same amount of money is $2,000 more in taxes than another that sells for the same amount of money. I just mention that because I wish some of this could happen before the envelope is sealed and these get out in the -- they're inhuman. These increases -- I mean, I don't have to deal with them personally, the ones that are 100 percent, 200 percent. What is anybody thinking sending out a 200 percent increase. I just can't figure that one out. The last thing, because you asked for advice and I don't know if this advice or not, but I have found in several thousand hearings at the Board that one of the things that is the toughest for people to deal with is getting the comps that were used on their particular assessment about 10 seconds before they sit down to talk to you. They don't know in the process. They're terribly nervous. They're not sophisticated. And then they get hit with three properties that they may not even know. 154 10/01/02 - FINANCE - PUBLIC HEARING But had they had a little bit of time -- so I'm going to suggest one of two things. One, they go out with the appeal form so they can look at it and maybe not appeal; they'd say, "Oh, if these are the three, I don't have the a chance," because they may be very reasonably compared. Or that they in some way have the opportunity after they file the appeal to have it sent to them, whether it's accompanied by a phone call from the assessor or not. And the last thing is, if you could check -- I understand the assessors are trying hard to compromise some of these appeals before they get to you. If you could provide them with some envelopes because I understand as of yesterday there was so much activity they were running out of envelopes. I'm saying that lightly but apparently there's a shortage of envelopes. I'll leave with you that. Thank you.
Thank you, Madam 155 10/01/02 - FINANCE - PUBLIC HEARING Chair. Mr. Glancey, if you want to check back with the office, there might be some sentiment this is wrong committee that I'd be glad to talk to Councilwoman Krajewski, Chair of the Appropriations Committee if you think you need some additional appropriation for envelopes. We'd be glad to have that discussion in another hearing.
We'll just walk over the Staples and take care of that problem ourselves.
What I'd like to do is do a little bit of some background questions on the BRT and then become very current with the testimony, talk a little bit about what goes on in other jurisdictions and then get into some more detail questions. The board has seven members, correct?
All appointed by the Board of Judges of the Court of Common Pleas.
Last week when we were here together, we had some discussion about the general issue of accountability. Now, there's no 5 doubt in my mind that the seven members, as you indicated, they took their oath, they take this work very seriously and they are trying to do the best they can in dealing with that wonderful "T" word called taxes, so it's not exactly going to make you the most popular person in town, but they're trying to do their job. Are you aware, and there was some discussion last week, of any other jurisdiction or county, I guess, in the Commonwealth that has -- ours is called the Board of Revision of Taxes. Other places I think it's the Board of Assessments and Review or something like that -- where there is no oversight direct line of accountability by the elected officials in the particular jurisdiction? And specifically now I'm talking about the legislative or executive branches of government in those other counties.
No, I believe that Philadelphia is unique in the way it has appointed its Board of Revision of Taxes. 157 10/01/02 - FINANCE - PUBLIC HEARING
So we're the only County that has a system such that the executive and legislative branches have virtually no direct oversight or involvement, putting aside the issue of how the more technical assessment process is done which should naturally be done by qualified assessors, you're in a position where -- I think your testimony last week was, "Well, we're accountable to the Commonwealth of Pennsylvania, we're accountable to the people of Philadelphia, we're kind of generally accountable to everyone but specifically we report to no one." Is that fair?
Well, I think that's fair. The way I put it is that we're accountable to everybody but are not necessarily responsive to the political winds that sometimes blow around the tax issue.
And your testimony -- I'm going to pop into your testimony for a second. I don't want to read too much into this, but Point No. 3 where you talk about "While the BRT cannot divest itself of its legally mandated substantive valuation function and surrender its authority to any other agency or body," and I 158 10/01/02 - FINANCE - PUBLIC HEARING highlighted this, "we will be pleased to cooperate with Council to establish and implement any reasonable procedural standards that you may suggest." Now, is that a very nice way of saying that you would be willing to work with us possibly to look at some of the other models around the Commonwealth where there are oversight entities that are established by legislative and executive branches of those county governments?
Absolutely. Let me just -- I think the one that comes to mind the most recent model comes out of the Wentworth Miller case out of Allegheny County. And what Allegheny County did, as you're aware, legislated an oversight board, legislated an Office of Property Assessments and legislated a separate Board of Appeals. So those kinds of things, I think, should all be explored.
And they separated those functions, and specifically one of them by their Section 209 I think was specifically put over in the County Executive's Office.
If I recall, Councilman, what happened was that there -- 159 10/01/02 - FINANCE - PUBLIC HEARING
Office of Property Assessments has now been shifted to the executive branch and the Chief Assessment Officer goes --
But the County Chief Assessor is appointed by the two bodies, the County Executive and County Council President, and I think they both have to agree or it doesn't happen.
Right. So in Allegheny County they have a Property Assessment Oversight Board which is three members and they have their duties and responsibilities, and then there is this Office of Property Assessments which is over in the executive branch, and then they created a new Board of Property of Assessment Appeals and Review which would essentially be what we refer to here as the Board of Revision of Taxes. So they broke up some of the elements that you have under one structure and made them accountable to various elements of the government.
Now, they also seem to have -- and I think I know just about every member of the board, and this is more for establishing record. These questions have nothing 160 10/01/02 - FINANCE - PUBLIC HEARING to do with the qualifications or any of the interests or commitment of the members when I ask these particular questions. But, again, looking at that particular ordinance that was done by Allegheny County which they were able to do under their Home Rule Charter, they make reference to qualifications of the board members for the new Board of Property Assessment Appeals and Review. They talk about the seven members. They specifically make reference to "In making appointments to the board, the racial, geographic, age and gender diversity of the County shall be considered. All members shall have been registered voters for at least the immediate year preceding appointment and shall remain registered during their terms of office. In addition to the foregoing, the members of the board shall meet the following special qualifications: Three members of the board shall have not less than 10 years practical experience as a registered real estate broker or real estate appraiser or assessor. One member shall have not less than 10 years practical experience as a building construction engineer, civil engineer, or general contractor or assessor. And one member shall have not less than 10 years 161 10/01/02 - FINANCE - PUBLIC HEARING experience as a practicing attorney at law with residential valuation expertise." And then those seven people, four are appointed by the board -- "four members of the board shall be appointed by the County Council, three members of the board shall be appointed by the Chief Executive with the consent of at least a majority of the seated members of County Council." Again, I guess that's their way of ensuring that there is some straight line connection. Can you talk to us about -- I know the First County Taxation Assessment Act basically says, for us, people have to be competent and qualified citizens and they're appointed to six-year terms.
Are there any other qualifications required under either our act or your regulations.
I do not believe in law there are qualifications other than what you see in the First Class County Assessment Law. It has been the practice, however -- and I must say that. It has been the practice, however, that the Board of 162 10/01/02 - FINANCE - PUBLIC HEARING Judges has generally selected people who have had at least real estate experience as attorneys or real estate experience as brokers or real estate experience as appraisers. I don't believe we've had a building or construction engineer on our board, but we've had mostly attorneys and we've had a significant number of real estate folk who have been on the Board.
Okay. Let's talk about appeals. Councilwoman Blackwell asked you about the number of appeals. I think you said last year there were 2,000?
I'm sorry. I made a mistake. Last year there were about 3400 filed. COUNCILMAN NUTTER 3400.
I think I said on the average we have about 2,000 appeals per year and that was the 5- or 10-year average.
And do you know of the 3400 appeals how many were successful, either by number or by percentage? 163 10/01/02 - FINANCE - PUBLIC HEARING
By number -- maybe I can work backwards and we can figure it out. There were 3758 appeals.
Yes. I'm just looking at the sheet I have now. 3758 appeals with 1,435 denials. And 134 appeals were withdrawn without any change in value which also be -- we'd put that in an unsuccessful --
Yes. So if you add those tow numbers, you can get a percentage out of your total.
Yes. Now, let me tell you, some of the balance is somewhat different than simply being a successful appeal. There withdrawn by evaluator, which is happening now where you have an evaluator deal with the taxpayer. There may be some compromise in value. Of that, there were 529 of those. 164 10/01/02 - FINANCE - PUBLIC HEARING
I'm sorry. Revised at hearing which means there was some relief given to the taxpayer, although it was not rolled back. And there is one further category which is really an evaluator move, but they have to be approved by the board because we have standards which evaluators cannot make approvals on their own above certain limits, and that would be 877 cases. That should give you your total of 3758.
We call them withdrawn by Board, which is really they were revised by an evaluator or a settlement offer was brought to the Board by an evaluator, but the evaluator could not do that on his or her own because it was beyond the limits within which we allow them to settle cases.
How many of those were 165 10/01/02 - FINANCE - PUBLIC HEARING what, sir?
I have a list, but I can tell you roughly -- in 2002 for 2002 we sent out 195,068 notices.
On this sheet, which is not dated, it's 269 roughly. Same thing.
Are you able to replicate the single sheet that you gave us? And I'd like to go back to that shortly. Could you show us the last five years? If you take this sheet and show us the last five years?
Oh, those percentages for the last five years? I believe we can do that. I am told by my technical staff "maybe", but we will attempt to do that, and if we have the technology to do it, we'll do it. The reason he is saying "maybe" is that we started this particular program, if you recall, for the year 2000. So we have three definitely we 166 10/01/02 - FINANCE - PUBLIC HEARING can give, three years we can give you definitely. So if that would suffice, we would certainly produce that for you.
How many people ended up appealing to Common Pleas Court?
You know, Councilman, I don't know. There wasn't many, but I really don't have that figure. I mean, I could get it for you.
Oh, yeah, yeah. But I don't have that figure day. I'll get it for you. That's for sure.
What was the total value of the anticipated assessments based on the notices that were sent out, I'm assuming this was summer of 2001, as compared to the total amount that ended up being certified I assume sometime in November? 167 10/01/02 - FINANCE - PUBLIC HEARING
Do we have that book with us? We don't have this book with us. It will have those numbers exactly and we will also give you what we certify because that certainly easy to do.
I believe it's Eugene Davey. I don't believe I am. I believe it's Eugene Davey who is the Chief Assessment Officer.
Yes -- well, I don't know 168 10/01/02 - FINANCE - PUBLIC HEARING if legally that's what he is called in the statute. I'd have to take a look at it. And if you want me to do that, I'll do that now. But my sense is he is the Real Property Administrator.
In reading through the statute at 5341.4, it's titled, Chief and Other Personal Property Assessors, Real Estate Assessors, et cetera. It says, "The Board shall appoint for terms of six years each a Chief Personal Property Assessor whose salary is --
But we don't have that anymore. The Chief Personal Property Assessor doesn't exist.
We have a Real Property Administrator, and that's Mr. Davey. A Real Property Administrator, Councilman, I might just add was recommended for us to do in the 1981 IAAO report.
And what's it called 169 10/01/02 - FINANCE - PUBLIC HEARING again?
Real Property Administrator. Real Property Appraisal Administrator.
Okay. And is there a particular classification or certification of assessors known as a Certified Assessment Evaluator?
You made mention of the 1981 report. Can you tell us what of the recommendations in that report which ones have actually been implemented?
In 1998 I told the House Subcommittee on Urban Affairs that we instituted at that time approximately 85 percent of that report. Some of the things that we did not implement were changing the name which was a suggestion. To also change -- to have funding come entirely from the 170 10/01/02 - FINANCE - PUBLIC HEARING City as well as the City and School District; we did not change that. But the substantive, for the most part, the substantive recommendations have been changed with maybe the possible exception of Public Information Officer.
Why don't you maybe do for us an analysis of 1981 report and then report back to the Chair which recommendations were actually implemented and which were not and whatever the reason may have been.
Let me ask about the Computer Assisted Mass Appraisal System, CAMA. Who developed this system?
Well, one of the founders is here today. One of the founders is here today, a gentleman by the name of Kevin Kean. And he, together Mr. Davey and with one of our personnel who is now deceased, Mr. Jerry Newman, were really the founders of what was called in 1995 Trending. And Trending has now become CAMA, the Computer Assistant Mass Appraisal System. And if you don't mind, maybe Mr. Kean could sit up here with me and we can talk about some of the specifics of that, if you'd like. 171 10/01/02 - FINANCE - PUBLIC HEARING
If you would like some company at the table, that's fine with me.
No, I'm fine. I just think if there's something that you have a specific question, if you don't mind, I'll call him at that point.
At some point I'll ask for him. Now, does every homeowner receive a notice whether they receive an increase, a decrease or their assessment stays the same?
No, sir. The only homeowners that receive notices are those who've receive increases in value, decreases in value, or if there is a change in ratio, but that would affect all homeowners.
The people who don't receive an increase or a decrease, why don't they receive a notice?
The question is, 172 10/01/02 - FINANCE - PUBLIC HEARING Councilman, is that why don't who don't get changes get notices as well?
I know from the dissent decree that Judge Tacov (ph) said we didn't have to do that. Where Judge Tacov got that ultimately, I thought it was from law. But, that, I'm sorry I don't know. The reason -- forgetting the law, the reason we wouldn't do it would seem to me not an efficient expenditure of money to send something to somebody that's not going to change anything. That would be my feeling.
Suppose a person doesn't agree with what their current assessment is?
If they don't agree with what their current assessment is, and I know we're talking a different time, it's easy what your current assessment is if you just go on-line and you can check your address on-line.
How many people in the City, by your estimate, have access to the Internet?
I don't know how many 173 10/01/02 - FINANCE - PUBLIC HEARING people own them, but I will tell you I would assume more than 50 percent have access to them since we have them in libraries, we have them in various community centers, we certainly have them in our office and we welcome folks to use them. But I have no idea. It almost would be like, it would seem to me, sending somebody a notice of appeal when they've gotten everything that they wanted. Suppose we reduced your value --
But suppose from that person's perspective, they now have information about their particular property that at least indicates to them that the current assessment, even though it's not changing, is incorrect. Or maybe a change the previous year and they didn't appeal, for whatever reason, they missed, and it's just one additional piece of information that they would have and be able to come in and say to the Board, you know, "This assessment, even though you're not changing it, is actually not correct and these are why." You'll dispose of it, they win or they lose, whatever the case may be.
That kind of eliminates, even under the current circumstances, about half of the City from saying anything.
Currently, it's about 180,000 this year who do not receive notices. So you saying maybe they should have received notices and therefore they would have seen their values and maybe wanted to appeal them. That's a very good idea. We'll take that into consideration.
Let me ask this question: On of your testimony, dead center, you say, "Our goal is to make sure that the market value of any given property is determined by the sales of other similar properties."
Now, this is slightly personal, although I think you already know from public statements, you will not be seeing me over at your shop, as much as I enjoy talking with you. But in my own situation, with the exception of a minimal increase in 1995 which was 7 percent, I did not receive an increase for seven years. Some of my neighbors did. Our houses are all about the same, no new construction on the block, nothing 175 10/01/02 - FINANCE - PUBLIC HEARING anybody's done anything, with every respect to my neighbors, nothing particular spectacular to the houses on the street. And all of a sudden, I have received a significant increase. How does that happen?
Well, again, I won't speak specifically about your property because I don't think that would be fair or ethical of me to do that.
One possible way that could happen, Councilman, and I don't know if this is the case and maybe at some point after this the staff could look at it, is that for the first four years we didn't have the amount of sales that we required in our geographic market area in order to trigger an increase in your real property. And if that were the case, I think that would simply be the end and that would be the answer and it happened now. I don't know if that's the case. It would probably require somebody to look into it. I don't know if you want anybody to do that, I mean, we'll certainly be happy to do that if you wish.
I mean, it would 176 10/01/02 - FINANCE - PUBLIC HEARING certainly be, I guess, again, somewhat intriguing more as the exercise, not for my use of the information because I'm not appealing. But, I mean, I did get some information from the BRT. And I think as Councilman O'Neill said, for whatever has been requested, you guys certainly do your best to produce it. But in looking at the homes on the block, I mean, there are only of them. I'm 10 actually one of the more recent sales or purchases. 11 That was eight years ago. And I think in that time 12 there were only two transactions, one in 2000, one 13 in 2001, one of which may have been more of a family 14 transaction. So I guess I am somewhat intrigued as 15 to what now would have triggered it since there's 16 basically nothing going on on the street. 17
The sales on your block don't necessary trigger your value. I mean, you are put together with other groupings that would be a similar property that would be like yours that may be on the next block or the block -- I don't know. But that's what we attempt to do. In fact, in this little booklet, you will see exactly what that process is and that's how we describe that process. But are there anomalies? 177 10/01/02 - FINANCE - PUBLIC HEARING There could very well be. And maybe as an academic exercise just for our staff, we'll take you property and do that.
Well, I appreciate that, but I guess what I'm also trying to understand is how could properties on the same block get increases during that same time and --
They were absolutely the same as yours, right, those properties?
Well, almost all the houses are virtually the same. But for a seven-year period there was none in my particular situation and then the 41 percent comes on. And most of the neighbors have received valuations going to the same number. I guess I just I don't understand how that happens.
I will try to find the answer to that question. I think what happened -- and again, this is by no means by way of excuse and no means by way of laying it anybody else. In the year 1998, we had a significant problem getting deeds from lots of sources. But we were, if I'm not mistaken, how many months did it take us? We missed six months worth of deeds in 1998. Now, I don't 178 10/01/02 - FINANCE - PUBLIC HEARING know if that's the -- that's possible, I suppose. But, as I said, that's --
How do the assessors or how does your system get the information that ends up either on the notice or on some of these printouts? I have some of the printouts from city system, again, for those properties that shows the and the frontage, the depth, total square foot area, two story, attached garage.
Well, some of it comes from a view and lots of it come from the deed itself. Physical view and some of the deed. And what we're trying to do, Councilman, and I think it's a very good question that you ask, the best way our system can be improved is for our data to be improved. That's really one of the reasons we ask folks to give us more data. I know that scares people because they think if they give us data, we're going tax you more. It's not the case. We give you better value if we have data. And 179 10/01/02 - FINANCE - PUBLIC HEARING sometimes the input on some of the deeds is incorrect. So we just have to work with what we have. And our folks can make mistakes as well.
Let's talk about the value question. Where did the 71 percent number come from?
If you don't mind, I can hopefully just give you the history of it. It came from this. In 1995, myself, Mr. Davey, Mr. Kean, and as I said, the gentleman who passed away, Mr. Newman, decided that we wanted to try to do -- what was happening throughout larger urban jurisdictions in the United States was to make automated as many functions as we could in our assessment office. The first pass -- in '95, we couldn't do this for '95, for '96 because we just weren't ready to do it. The first pass showed that there were so many properties significantly undervalued in the City of Philadelphia and a smaller amount of properties that were overvalued.
Well, I think what happened was that we were doing this manually. I 180 10/01/02 - FINANCE - PUBLIC HEARING think there were people who in their hearts, the evaluators who in their hearts tried to do the right job. And again, I'm not blaming them. I think what happened, it kind of just got beyond them. It went well beyond their abilities to do what they were doing. Another factor was that when you had 67 or 66 evaluators, everybody was working from a different standard, even though they didn't even know they were working from a different standard. We could generally say these are the standards, but if I let you follow the standards, and let Councilman DiCicco follow the standards, I think there might be some differences if you have to do something manually. And I think that kind of happened.
Councilman, can you tie it up in a few minutes and then we can make another round.
Thank you. 181 10/01/02 - FINANCE - PUBLIC HEARING
How does whether you're doing something manually or by the latest Dell that came on the market, how does that impact your utilization of the standards? And I have to believe that people are train, some of them have professional certification and the like. I mean, are you saying 67 people were doing things in 67 different ways throughout the City?
No. I don't want to overstate it. It wouldn't that gross. But it's very clear that if I hear standards a certain way, I might apply them a different way than you would. I mean, human beings have a tendency to be more subjective than a computer. And I'm not saying all the answers are in the computer. I am not saying that. That is not me saying that, Councilman. However, what does happen, I think -- and again, I don't think any of this was -- again, I'm not trying to over-exaggerate, but I do believe if there were a set of standards and every human being were trying those set of standards, and I believe they were, you would still find some differentiation between one person and another as to how to apply those standards. That's really all I'm saying. But that 182 10/01/02 - FINANCE - PUBLIC HEARING doesn't specifically answer why properties were undervalued. I think they just couldn't keep up.
Okay. My last question is, has the Board considered -- and certainly your testimony seems to be going in that direction. Does it take some of the subjectivity out of it if you go to a hundred percent and then figure out what the appropriate tax rate should be to then end up in a revenue neutral situation and then go from there? I understand that there will always be gaps, there will always be lags, but certainly not generally of 20, 30, 40, 50 percent because you're right there at one moment, things are going to happen in the market, you're still going to fairly close. Why don't you just go to a hundred percent and try to figure out between Finance and Revenue what the new tax rate should be, which obviously should be lower. It will certain create a new group of quote/unquote winners and losers from a tax standpoint, but then people at least know what the real number is. Part of the problem here is -- I mean, I have my notice in my pocket. The moment you open it, you know that there's something wrong with it because it is not possible for the market 183 10/01/02 - FINANCE - PUBLIC HEARING value on that sheet of paper, in most instances, to be correct. So you have both a factual problem with people and a perception problem that all of the numbers on this sheet are paper are wrong. They cannot possibly be right so I start the game in the hole and I have to dig myself out against, you know, people with the CAMA, letters or initials behind 9 their name, and I can never, ever explain what the 10 situation is. Why don't we just change the system 11 in that fashion? And then we have other things 12 still to do with regard to fairness. 13
Sure. We're for it. We 14 would appreciate working with the Administration for 15 sure, but I think we certainly have to work with 16 City Council as well hand-in-glove. If we're going 17 to change to 100 percent of market value to sale 18 price, it certainly makes our life easier. I think it does add a certain objectivity measure that is easier for us to judge, sale price. Now, we know that sales price is to be considered but not controlling, that's correct, we understand that. But it does give you a bar. I think what you're saying is, I look at my value and I know it's too low so, therefore, I 184 10/01/02 - FINANCE - PUBLIC HEARING don't agree with anything else that's going to be on this paper. And I think that's a very fair statement and it's a statement I think that we should take to heart and try to do something about. We agree with it.
Thank you, Madam Chair. Thank you for allowing me, although I'm not a member of the committee to ask a couple questions. I wasn't privy to the last session on Friday because I had some job fair obligations that I had to attend to. But there have been a number of questions that have come as a result of various community meetings that I've attended. And I had actually asked you a couple of these questions earlier off the record, but for the record I just wanted to ask a couple of the things that was asked of me. One was an extension of the appeal time. I think the deadline is on the 7th. 185 10/01/02 - FINANCE - PUBLIC HEARING
And a number of residents because of the uncertainty of what we were doing, the uncertainty of several organizations would potentially do, i.e., tax class action suit, they wanted to know could there be an extension of the time?
We cannot officially extend the time because of the state statute mandated. If there are particular extenuating circumstances and you want to bring those extenuating circumstances to our attention, we'd certainly be happy to look at them.
The other question was the availability or the opportunity to file 17 appeals in the evening hours. There are a number of people who work, and to take a day off of work to come down and deal with an oral appeal was troublesome to them and they wanted to know could we potentially set up some evening hours in strategic locations around the City to give people an opportunity to appeal in evening hours. Is that a possibility?
I appreciate the question. 186 10/01/02 - FINANCE - PUBLIC HEARING There's a couple of problems with it. And it's certainly something that we would, again, as part of this entire discussion as to how we can make the system work, easily accessible to folks in the City, it part of that. The problems I would mention on the record, however, are number one, that would entail overtime and my budget does not have that built into it at this point. Number two, it also would entail going to places that have some technology or at least the access to some technology because we do use in our appeals hearings more and more we use what everybody else is using is a computer. So barring those two things, we'd certainly be happy to explore that with you.
When you say technology, you mean access to computer systems?
Yes. If there's someplace, make sure that we can plug in and bring what we have to get, our laptops, whatever it might be.
I know some of our libraries across the City are on-line. With respect to the overtime issue, could it simply be a situation where you change the 187 10/01/02 - FINANCE - PUBLIC HEARING shift which would normally be during the course normal business day and then change that shift to an evening hour to accommodate individuals.
We could certainly look at that, Councilman. I would have to discuss that with the staff, obviously. I can't make those decisions because there might be some union considerations involved, so we would look at that and see if that's available.
With respect to the timing of the issue because, as you just indicated, that we can't extend the appeal process. How long do you think the appeals will be? And this is probably an abnormal year.
My guess is that -- we have seen this amount of appeals before. If I had to guess it would run through November, December, January, February, March.
So we have to make the adjustments if we agree that we'll do some evening appeals? 188 10/01/02 - FINANCE - PUBLIC HEARING
I said we do have time to do some adjustments if we agree to do some evening appeals in terms of scheduling and in terms of locations.
There is another issue. This actually came up last night at a meeting. There's a block -- I'm going to give you specifics, there's a block, the 2100 block of Green Street where there's a myriad of housing stock on a particular block. There are a couple of properties that are listed as condominiums. There's actually a property that's commercial property. There are multi-family rental properties, and there are owner-occupied single family units. There are various extremes -- actually, ultimate extremes because apparently one of the properties on the block which was a commercial property got no 21 increase in assessments, but the owner-occupied single family dwelling got a substantial increase in assessments. How does that work? Are there different categories?
Sure. Absolutely. We 189 10/01/02 - FINANCE - PUBLIC HEARING have an entirely different category of commercial and industrial properties. And to the best of my knowledge those notices are in the process of just going out this week. However, to answer your question specifically, I mean, there's a different way of valuing commercial and industrial properties than there are residential properties. For the most part, residential properties are valued by sales of comparable properties. That's what everybody who buys and sells residential properties will look at when they go to a broker or go to wherever they want to buy or sell a property. With commercial and industrial properties, Councilman, the best measure of value if it is not owner-occupied -- if it's owner-occupied sales would also be good. Best measure of value always has been with commercial properties to be the income that it produces. You use the income that it produces and you capitalize that and you have a value for the bricks and mortar.
So when you do an analysis on a commercial property, you actually determine what the income that is produced as a 190 10/01/02 - FINANCE - PUBLIC HEARING result of that property's operation?
Yes, sir. Whenever it looks as if it's a property -- or an evaluator waiter makes a decision that this is a property that I may want to increase, he will request income expense statements for two or three years from the property owner. If that is not forthcoming, he or she will do their own proforma based on industry standards. There are books that kind of help us get through this. Industry standards of what this kind of property, what kind of income ought to be kicked off by this kind of property and what kind of expenses are attached to this kind of property and make a decision that way.
I want to understand. There's a commercial property, and our assessors look at that commercial property, it's operable, they make a determination -- first of all, they ask the individual through a letter, through a visit, site visit?
Usually a site visit. 191 10/01/02 - FINANCE - PUBLIC HEARING
They go in and ask the individual, you're running a business --
They ask for certain information with respect to their gross receipts, the whole nine years?
No, we ask them for an income and expense statement, what's your income and what's your expenses.
Okay. All right. Now, multi-family properties versus single-family, how are they evaluated? The same time?
Multi-family properties are commercial and industrial properties.
Yes. If it's an investment property for sure. Now, we do have cutoffs. If it's a multi-family property that has five or more -- if we have a multi-family property that has five or more units, that's a commercial and industrial property. If we have multi-family property that has five or fewer -- I guess it's four 192 10/01/02 - FINANCE - PUBLIC HEARING or fewer units, that is evaluated the same way other residential properties are evaluated, through sales, comparable sales.
So in a particular neighborhood that I'm talking about, there are traditionally three-story row homes and traditionally there are three units in a particular building. You're saying that that three-unit development is valued the same as an individual --
I'm getting corrected. Can you hold, please? My staff is not arguing with what I said, they're just saying to make sure when that when you have a single-family residence and you have a, say, three-unit apartment building next door to it, looks the same from the outside but we know it's a three-unit apartment building because it's going to have bells on the outside. We know that. Number 1, lots of times there is an owner-occupant in one of those buildings.
Well, sometimes. 193 10/01/02 - FINANCE - PUBLIC HEARING
Secondly, we don't compare that to the single-family residence. We compare that to other small multi-family properties that sell. We compare single properties to single properties, multi-family to multi-family.
We evaluate them the same way because we're looking at sales. We are not looking at their income and expense statement.
But you don't take into account the income-producing --
No, no. I think it's just an administrative rule that we've made because we believe that, Councilman, in most of those instances you're really seeing an owner-occupant live in these places, in duplexes and triplexes throughout the City. That is absolutely the case.
I disagree with you on that. I yield to the Councilman. 194 10/01/02 - FINANCE - PUBLIC HEARING
So if I own a three-family dwelling non-owner-occupied, that property is being evaluated at the similar as a small single-family residential?
No, no. What I'm saying is that property is being evaluated compared to the sales of other three-unit or less properties.
Because I can have a six-unit apartment building that is taking in less revenue than the three, depending on the neighborhood.
I suppose that's possible, but that would be reflected in sale of that property. That's what we're saying. It should be reflected in the sale.
But there are other properties that do sell. That's how we value single-family homes in the City this round based on 40,000 sales. All we can do is to extrapolate from 195 10/01/02 - FINANCE - PUBLIC HEARING those homes that sell to value those that did not sell. The methodology is the same.
And we will have a follow-up question as soon as you're done, Councilman, a follow-up on the same issue by Councilman O'Neill.
I'm sorry. I've tried to answer your question again. Go ahead.
There were some irate homeowners who didn't understand why the property down the street that's obviously producing in that particular case some pretty healthy revenues and why they were receiving a certain assessment in those particular properties. It happened to be three units in it weren't receiving any assessments. And I was at a loss as to explaining that, and I'm still kind of at a loss as to a way to explain it.
Well, let me try to help. Councilman, that is -- I can't speak to the specific property, obviously, but what I can -- I guess the best way I can say it, is that single-family homes are compared by the sales of other single-family 196 10/01/02 - FINANCE - PUBLIC HEARING homes that sell. Three-unit or less multi-family units are compared by 3 unit or less multi-family units that sell. I mean, it's sales to sales. I'm not saying that we don't look at income. We look at income when it becomes. I'm sorry, four or five or above. That's the methodology.
But it sounds like to me that the single-family dwelling is easier to do an assessment on because you don't have to worry about the income that's produced as a result of the operation of the building. So that's why, you know, subsequently you assess those single families and it sounds like it's some ambiguous strategy as associated with the way you assess multi-family units.
We assess them by sales. I mean, that's not ambiguous. I'm sorry.
Councilman DiCicco wants me to ask you can you explain similar?
Three-family versus three-family on the same block, what is similar about them.
Similar would be the construction, would be the condition, it would be 197 10/01/02 - FINANCE - PUBLIC HEARING the neighborhood, the location, you know, all of those kinds of factors that go into it.
One could be producing double the income as the other.
It usually doesn't happen but your example hypothetically could be true. It could be true.
But I would say, my guess is that one that's producing more income is substantially rehabilitated inside to get more income.
So, therefore, that would not be compared to the one on its block.
But how do you know that there's been substantial improvements?
Assuming they took the permits out. 198 10/01/02 - FINANCE - PUBLIC HEARING
Well, I would think they would have to do the kind of improvements that you're positing in your hypothetical.
I still don't feel that I can go and respond to that constituent, but I see you're trying. On that particular block, there's also a unit that is designated as condominium. How do you assess that particular building? Condominiums should be in the Equalization Program, and they will be in the Equalization Program. They are not yet. They are still part of -- they are evaluated by a group that simply does condominiums. There are two employees that simply evaluate condominiums. We believe, and we are working in that direction, to get them into the Equalization Program, and we will get there. But they are valued, Councilman, just giving you that as a procedural answer, substantively they are really valued the same way except it's a bit easier to evaluate because they are within a neighborhood of their own, so to speak. Now, I'm talking about a condominium building that might have 20 or 30 or 40 199 10/01/02 - FINANCE - PUBLIC HEARING units. Within each building, there are X number of sales that take place all the time. So what we do is value the units within a building based on the sales within the building. And what we've generally found out that what happens is that they're very good indicators of what the value of those units are as to look at the value of the sale within the unit and you can also see it escalates as you go higher. If you're in a high-rise condominium, you're paying more for the higher floors than you're paying for the lower floors. If you're on the river, you're paying more if you're closer out to water than if you're closer to Christopher Columbus Boulevard, so to speak, when we're looking at Pier 3 and Pier 5.
I'm talking about the six-unit property that is designated as a condominium property in a particular neighborhood.
Well, initially, we would try to see what the sales of those condos were inside that six-unit building. And if there aren't any sales that are recent in that six-unit building, we're going to try to find that which is similar by location, by size, I mean, again, using the same methodology, if you will except an individual 200 10/01/02 - FINANCE - PUBLIC HEARING evaluator will do as opposed to an equalization program.
All right. Mr. Glancey, I'll probably need to revisit this in a private settling because I really -- I'm a little perplexed with respect to some of your responses. It seems like there needs to be some work done in the BRT in certain instances such as this, but I don't want to take the time of the Committee, particularly since I'm not on the committee.
Happy to meet with you anytime. Appreciate your questions and happy to meet with you.
Thank you very much. We had a follow-up question from Councilman O'Neill and then Councilman DiCicco.
Again, I appreciate your testimony and your frankness and willingness to try to work as much as we can together. If you could just let me know after the hearing if you have a chance to think about it, the more I was thinking about my suggestion to put the comparables, you 201 10/01/02 - FINANCE - PUBLIC HEARING know, let the people have them, I think the first suggestion isn't that good with the appeal form because it may not be relevant. But certainly, when people have filed their appeal and you're sending them a notice of their hearing, that might be something you could put in there. And some may not want to come down if they see that it's something they really can't defend very easily; I don't know. The other is, if you could break down this bar graph. There's an ambiguity that will get more ambiguous as we get lower with the numbers. If you have to 30 percent and 10 to 20 percent below 14 it, 20 percent is in two groups.; you follow? 20 15 percent is in two groups. 16
We have 0 to 10 percent 17 which you don't see that as a bar. Then we have 10 18 to 20 percent -- 19
Stop right there. 20 So 10 percent is in two groups. It should only be in one. As you're getting new numbers for me with the lower, if you could keep them real micro. In other words, to 4, to 7, to 10, something like that, like maybe three breakdowns on the small ones?
Let's take the to 8 percent. At 10, it means 10.0001. Anything over 10 9 percent up to 20 percent is included in that 69,062. 10 And it works its way up from there. But your real 11 question is to make cuts that are more -- 12
It looks like 10 13 percent is included in both, though. 14
How long would that 16 take? I'm hoping within the next week or so I can 17 get a breakdown of the -- get a bar of the smaller 18 ones. 19
Council 203 10/01/02 - FINANCE - PUBLIC HEARING President Anna Verna.
Thank you. Mr. Glancey, what is a representative sale?
A representative sale? It sounds like a comparable sale, if that's what you mean.
A comparable sale. A representative sale, I think, and an comparable sale are probably the same thing.
Yes. And a comparable sale is trying to find -- there are no two absolutely perfect matches, but trying to find properties that are like other properties. That's what comparable sales are.
Can you tell us how many properties is an assessor responsible for.
I'm going to turn to Davey and he might be able to give you that information. Or actually, wait a second, I think I might have that here. 204 10/01/02 - FINANCE - PUBLIC HEARING While he's looking, let me tell you this. We have roughly 440,000 residential properties. And if you just did the math of approximately 41 or 43 full value appraisers, you're looking at roughly 10,000, maybe a little bit more, 10,000 properties per evaluator. Now, they vary, of course. Certain have more, certain have less. And I can give you some information about that. We have 26,262 singles.
Do we have different assessors for industrial commercial?
With the residential, can you give us some idea as to how many assessors we have?
And of that number, how many properties will the assessor do a visual inspection?
That's what I brought because Councilman Nutter asked that last week. We figured out -- and I tried to do it by property type. I think it makes most sense to do it that 205 10/01/02 - FINANCE - PUBLIC HEARING way. Single or detached properties which are the hardest to view, for instance, an evaluator in Chestnut Hill has a lot more property to see and more space in between properties. We believe that he can probably evaluate per year about 960 of those properties. For twin or semi-detached properties, about 7200 views a year are made by the evaluator for twin and detached properties. For rows and town houses, we believe roughly 14,400 can be views can be made for rows and town house. Now, having said all of that, I mean, we still have -- what we did over two years was to put conditions from new construction down to vacant and boarded, eight different codes on every property, every residential property in the City. It took us about two years to do that. And that's because sometimes we don't have street signs, sometimes we don't have correct addresses, and sometimes locations really simply require more than one person to go to the site so there might be some security issues in certain sites. But those numbers are actual the best we can do in averaging out, given the number of properties, the amount of our employees, and the average they can view a year. 206 10/01/02 - FINANCE - PUBLIC HEARING
Tell us what a visual inspection entails, please.
Absolutely, yes. We do not go inside a property because, A, we don't have the staff to do it; and quite frankly, I don't know of any urban jurisdiction in the country that allows appraisals, inside appraisals all the time unless they contract it out, unless it's contracted out to some agency that does that once ever four or five years or whatever. But you would really need to have appraiser to go into somebody's property. What we do is we look at the exterior condition of a property. The evaluator tries to make notes as to what the construction of the property is, makes locational notes about the property. And by that, I mean really neighborhood type notes. This is a property that's located on a nice block but something's happening at the corner. We will see that kind of information on an evaluator's report. 207 10/01/02 - FINANCE - PUBLIC HEARING Plus, what you will see are the eight codes. Does this look like it is a new property? Does this look like it is a recently rehabbed property? Does this look like it's in average condition? Does this look like it's in poor condition, et cetera.
See, I think that is one of the issues that trouble many of the seniors in that there is not an interior inspection made. Many of them have not be able to make improvements in their homes for years and years, and yet they have a neighbor that lives in the same block who has done probably a total rehab. They're being taxed the same amount of money. And they just feel that it's not fair.
We attempt to answer that question, Councilwoman. And of course, again, as I said, I'm not here to defend everything, but there are times when it doesn't work. We attempt to answer that by putting these exterior condition codes on a property. Even though you're doing an interior renovation, many times you can tell that something has been done by looking at the outside of the property. If you can't, you can't. And then 208 10/01/02 - FINANCE - PUBLIC HEARING you're right, that's the person whose property gets caught in the sense of being revalued when they shouldn't have been. If we get that information from somebody, we certainly react to that without having anybody have to file an appeal.
So when these people file appeals, they will certainly be given consideration?
We need to give the stenographer five minutes. Can you hold your point for five minutes?
Thank you. We will give the stenographer a five-minute break. Thank you. (Brief recess.)
Mr. Glancey, you were holding a point and you were in discussions with Council President Verna on issues so, Council President, you and Mr. Glancey have the floor.
Do I have the floor, 209 10/01/02 - FINANCE - PUBLIC HEARING Council President? You had mentioned the senior citizens' problems, and during the course of this -- it was very interesting. I had a member of my staff just do some checking in other jurisdictions around the country, because it really is something that comes out of the State of Pennsylvania as opposed to City Council, and we found some very interesting situations. Washington, D.C., for instance, has a household income threshold of $100,000 and an age limitation of 65. And if you meet the $100,000 and you're 65, your benefit description is it can reduce your property taxes by 50 percent. New York City has a household income threshold between $21,500 and $28,900 and, again, a household age of 65. And you can receive a partial exemption ranging from 5 to 50 percent based on income. According to what we've heard, that would have to be some state legislation, obviously, to affect either of this. Cook County, which is Chicago, has a household income threshold of $40,000 and an age limitation -- an age threshold of 65. And that is 210 10/01/02 - FINANCE - PUBLIC HEARING what's very similar to what we do here in Philadelphia. Freezes equalize the assessed values at the year prior to the application. They also offer two other senior exemptions which can save up to $700 in real estate taxes. Allegheny County, much closer to home, has a $30,000 income threshold because they're allowed to do that under the State Act that Councilman Kenney was talking about. Second class counties can have an income and age limitation already. Their Councils can do that. Our Councils cannot because there's no income or age limitation allowed here. Anyway, Allegheny County has a $30,000 household income threshold, which excludes 50 percent of social security, SSI or railroad benefits. And it has an age limitation, basically it's you're 60 years old or if you're a widow or a widower, your deceased spouse would have to be 60 years old or more, and is a flat percent discount 21 on the real estate tax. 22 And of course, as you know, in 23 Philadelphia we are at $14,000 -- I should not say 24 that. We in Pennsylvania are at $14,000 for a 25 single, $17,000 for a married couple. The age 211 10/01/02 - FINANCE - PUBLIC HEARING threshold is 65 and we freeze taxes at the year prior to the filing of the application. So I just thought I'd bring that information to you, if you would find it of some interest when you're discussing this with colleagues and certainly with your legislative colleagues.
Thank you, Madam Chair. The Computer Assisted Mass Appraisal System, what is that? What information does the technical staff enter into it? How do they interpret that information, in the simplest of terms, if you can? And if you can't do it all today, maybe something in writing might be appropriate to the Chair. I'm sure it's very complex, but if you can give us some generalization as to what it does.
I'll try to do that. And if I stumble, I'll maybe ask the experts that are on my staff. What it is in its simplest form, I believe, is to get as many -- to sort and group 212 10/01/02 - FINANCE - PUBLIC HEARING parcels of real estate. Sort first, group them second, parcels of real estate in the City of Philadelphia, and then analyze those groups with sales of properties within those groups so that you can extrapolate a value from those sales to like properties within those groups. In a nutshell, that's the simplest way I could put it. But I think, what I've often said when I've discussed this before, try not to think in computer models. Try to think of it as, you know, a mathematical relationship, if you will. That you have X amount of properties that sell, and in this round it was 40-some-thousand properties. From that group of 40-some-thousand properties, we extrapolated values for the 270,000 or so properties that received tax -- I'm sorry -- received market value increases this year. That's the simplest way I can put it. This little booklet, when you get a chance, Councilman, maybe you and I could sit down in your office. I think this really, in a nutshell, attempts to describe how behind the methodology -- allows you to know the methodology, plus our own administrative practices as you go through this, our 213 10/01/02 - FINANCE - PUBLIC HEARING own identifiers, if you will.
In your testimony, and I know you touched on this through some of the other questions that were asked, basically you say that the work of the BRT is not yet complete. But within the national accepted parameters, what makes the BRT's work not yet complete? What improvements do you think we need to make?
Great question, because I think -- and I don't want to give you the Chamber of Commerce answer. The Chamber of Commerce answer is, "Well, we're not complete because we're never tired." But the real answer to that is we do have some specific goals that we'd like to achieve. I gave you a short -- again, one-side pictograph showing coefficients of dispersion and price-related differentials. Those are significant measurements of how we will you're doing in your jurisdiction for uniformity, both horizontally and vertically. Our PRD, our price-related differential, which is, again, a comparison of properties that are similar high to low, that's why it's vertical. High-end properties are being valued at the same 214 10/01/02 - FINANCE - PUBLIC HEARING percentage as low-end properties. The national standards say that you should be about 1.10, 1.15 -- is that correct? 1.15. And I know I have it in front of me somewhere, but I seemed to have lost the papers. We're below 1.15. I think we're about 1.13 with that horizontal -- I'm sorry -- that vertical uniformity measure. Coefficient of dispersion is another measure of uniformity, which is horizontal, because you're valuing like properties in the Northeast part of Philadelphia to like properties in South Philadelphia. Now, we all know they're different locations and different numbers on that. But there, I believe, we have some work to do. -- you know, 16 .20 is where we want to be because that is what the 17 national standards say is great. Anything below .20 18 is terrific. Urban jurisdictions get some leeway 19 because we're old, and we're urban. And lots of 20 urban jurisdictions don't do what we do by way of trying to adjust these -- adjust our values using automated methods. So we are today at .24. We should be at .20, I think, to fit within where we should fit in. That's one area that we have a lot of work to do. Prior to this equalization round, we 215 10/01/02 - FINANCE - PUBLIC HEARING were at .27. After this equalization round, we are at .24. So the equalization round has helped. This is all pre-appeal. But it has helped us get that kind of horizontal equity that is measured by a coefficient of dispersion. Now, let's talk about some other things. What we can do -- and, again, what I think I've learned over the last month, I thought we were transparent. I thought we were giving everybody all the information we could every which way we could. It seems to me, although we make it available, we have to let folks know better where it is available and how to do it. I mean, I think we have all the information we want to give people. I think what we need to do now is tell people that this is where you get it. And that's going to cause some outreach. And I think we have to do that. We have, I believe, been constantly, constantly upgrading our customer service, if you will, when taxpayers contact our office or we go out into the community. And you have firsthand knowledge of some of that, I'm sure. Where we try to make sure -- these aren't -- I'm using the word taxpayers. That's the old word. These are our clients. These folks who are here 216 10/01/02 - FINANCE - PUBLIC HEARING today, they're our clients and we should treat them that way, and I think we do. So I think there are things that we have to do along those lines as well. And are there other substantive things that we should do? Yeah. Yeah. I mean, I think every day we can make our evaluators be more careful about selection of what properties we're going to use for comparables. Because even though the CAMA process, the software, can give you X amount of comparables -- I think Councilman O'Neill raised a question about, well, maybe we should look more carefully at the sales we use to measure against the value that we're extrapolating from those sales. So I think that's just a short group of things that we can do and we can do in the short term. And I'm sure there are others that will come along as we get through this process.
As for the transparency -- from my notes I was going to ask the question a different way. I'll just offer it as a suggestion, that maybe we need to include the particular building -- the property building, characteristics, payment information and comparables. That may help, if it's not already 217 10/01/02 - FINANCE - PUBLIC HEARING being done, because I don't think that's on the web.
I think you're right. I take your suggestion along with Councilman O'Neill's suggestion.
I think initially, maybe, as we send out a notice to tell people when they're appealing. We may not be able to do it this round. But if we do it next round, send them the comparables.
Because according to my notes, again, it seems that Cook County and Chicago, Los Angeles County, Allegheny County, New York, do supply that information on their web sites as well.
We will be doing that as of hopefully early -- late November, early December of this year. I think there was also the point raised that maybe everybody doesn't have access to a web site. We're going to put it on the web. We know that. That's going to happen, and that's done. That'll happen hopefully before the end of 2002, but maybe we can do more next year, if we want to 218 10/01/02 - FINANCE - PUBLIC HEARING actually send these things to folks who have filed appeals prior to them coming in.
And I think the way the system is now, where that the homeowner basically supplies a lot of the information that was in error by the evaluator, creates a lot of anxiety in the property owner. The client over the phone, in person as -- all of the sudden now, I'm giving you information what's in my house, but why didn't you know that in the first place. You know, because you sent out a notice about what my property is worth, my value of my property, and here it is you really didn't have the proper information. And there are cases, I'm sure, that it may work to the advantage of the homeowner. I'm not going to suggest that that doesn't happen. But in either case, I think it makes people suspicious or they feel there's a lack of effort on the part of the BRT. And I'm not subscribing to them. I'm just saying that I think that those are some of the things that the public has a problem dealing with.
We would welcome any suggestion on how to get that data. I'm the first 219 10/01/02 - FINANCE - PUBLIC HEARING one to tell you that if we have the better data, you'll have the better values. There was an attempt done about years ago by the Department of Records 5 to gather that information upon the transfer of a 6 property, so when a deed came in that if -- there 7 was a form that was filled out, should have been 8 filled out, by, I guess, the buyer and/or the 9 seller, giving property characteristics, number of 10 bedrooms, number of fireplaces, lot size, square footage. I don't know how we can get that information today without the help of the clients, of the taxpayers. If we could send out a survey -- and I have no objection to doing that. I'm just not sure what our response would be. Maybe that's not a good enough excuse. Maybe we ought to just try it and see what the response would be. But I'd be happy to do that. We did at one point -- and I meant to say that to Council President Verna -- we did at one point try a pilot program to knock on doors, ask people if we could look at their property inside. I will tell you, the success rate on that was diminimous. If we had 10,000 property accounts, I'm guessing it was an under 2 percent rate because 220 10/01/02 - FINANCE - PUBLIC HEARING folks would not want us in their house.
You've testified last week and again today about the current real estate market in Philadelphia. The substantial increases that go back 7, years. Again, the 7 question that comes up at the town meetings and when 8 we get calls is that, well, we realize that market 9 values are going up. Why did it take so long? Why 10 has it taken us all these years to get to that point? Why did we not do some gradual increases, which would have been less painful? There are a few people in my district that did get a gradual increase last year and the year before. And for those folks, obviously, now they're getting an increase of 100, 200 percent. They feel as though they're totally being misrepresented because they did get some gradual increase and now in a year's time -- I mean, last year some property owners received a $2,000 increase. This year as high as 5 to $10,000. So, you know, again, this is the anxiety that builds up. And we talk about, well, the market is where it is. And the bubble is there and maybe it will burst. Maybe it won't burst. It's just too 221 10/01/02 - FINANCE - PUBLIC HEARING much for these folks to absorb all at one time.
I think in your district, particularly, that is the case. The run-up of the market since 1998 until the present time in the 2nd, 5th, 8th, 15th Wards, parts of the 30th Ward, has been incredible. It has been -- I'm talking about sale prices -- it has been 150, 200 percent in many occasions. So -- and I know this is not a satisfactory answer, not to you and clearly not to the client, is that while we may have raised values rather substantially, relatively it is still gradual as opposed to what the actual sale price of the property is. Now, that doesn't mean that it's not painful, and I understand that. And I encourage, as you do, everybody who feels that they were aggrieved, to file an appeal with us or to talk to the evaluator first. But I think, Councilman, it may have been -- and again, I'm not trying to shirk responsibility. Not having six months of sales in 1998, my sense was that some of this, some of the major league run-up that we have this year, would have been gradually increased somewhat last year and we may not have been facing what we're facing this 222 10/01/02 - FINANCE - PUBLIC HEARING year if we had that data. But -- and again, that is no excuse. That is our responsibility.
Thank you for acknowledging that. One final question and -- I think, actually, two. According to our records that were supplied to us by the BRT, close to 97 percent of the non-residential properties received either a zero or a less increase in their taxes. Will these non-residential properties be receiving a property tax increase?
Yeah. I don't know if you were in the room. Our notices for commercial and industrial properties are probably going to go out this week.
I was probably in the room. I didn't hear that. Because I just left on the break. Thank you for that.
But I might add -- I'm sorry. I didn't mean to cut you off. I might add that all real estate markets don't rise or fall together. What we've seen is an extraordinarily hot residential real estate market. And our commercial market, although it is not terrible, it is not bad, it is rather flat. 223 10/01/02 - FINANCE - PUBLIC HEARING
Do you think that an increase would discourage additional sales?
Do you think that an additional increase in commercial properties may discourage businesses from coming in?
I mean, if the market is already flat, then I don't see how that --
I mean, that's not your job, I understand. I'm just --
We made a lot of effort over the last several years to make Philadelphia a more attractive place, which leads me into my last question. There are a number of people who have 224 10/01/02 - FINANCE - PUBLIC HEARING come up to me in the last few weeks, especially during my town meetings, and basically accused me of the bills that I sponsored, which were the abatement and exemption bills that were unanimously supported by City Council and signed by both Mayors. I know a lot of it is generated by my political opponents who want people to realize, or think at least, that the abatements are the reason for this massive increase in property values and reassessments, this recent reassessment. I know that is not true. Unfortunately, people will believe what they want to believe. Every week there is some idiot standing outside telling people that I pay $330 in real estate taxes and all that stuff. In your opinion, in your professional opinion -- and we've had a lot of hearings about this, on the abatement and on the exemption bill for the industrial buildings, which became converted buildings for residential use -- do you think that there was any impact as a result of those abatements and exemptions that is causing any of the increases in the recent reassessments?
I don't see how it could. And I'll tell you why. Because abatements, 225 10/01/02 - FINANCE - PUBLIC HEARING particularly commercial properties, would have no 3 impact, obviously, on the residential sales. I don't believe that has any impact on the residential sales. Abatements on residential properties, when we do our analyses, we don't compare them to properties that are already, what we'll call, previously-owned properties. We only compare abated properties which are brand-new to other abated properties which are brand-new. That's how we value those properties. So they're a separate market entirely from the market that -- I'm sure the folks are coming from your district and talking to you at these town meetings, these are folks that don't have brand-new homes. These are folks who had houses that are in the City of the Philadelphia previously owned or owned by them for a long time. The abated values have no connection whatsoever to the previously-owned properties. And let me just say, abatements, it seems to me, are one of the best things that this City Council and both administrations, the Rendell and the Street Administration, have done to get people into the City of Philadelphia. I think abatements -- and I know there is -- reasonable 226 10/01/02 - FINANCE - PUBLIC HEARING people can differ on whether abatements are a good thing. My opinion -- and this is mine, not the Board's opinion, because I'm speaking philosophically now. My opinion is that the more we can do to bring folks into the City, the more incentives you can offer to bring folks into the City -- and there might be some short-term real estate taxes losses doing that, in the long run you will see a significant gain financially and population wise. So I happen to think that abatements are a great thing that you folks did.
Thank you. And, again, the irony of this whole thing on the attacks on me is being generated by labor. And they probably benefited the most because we created literally thousands of jobs for the building trades in the City of Philadelphia as a result of all the conversions to the industrial buildings and the like. So I just wanted that on the record. Thank you. Thank you for your testimony.
Thank you, Councilman. I assume that Councilman Nutter -- Councilman O'Neill and Verna, are you two all right? 227 10/01/02 - FINANCE - PUBLIC HEARING
Just to pick up on the last place where Councilman DiCicco was, it doesn't necessarily require a response. But, Mr. Glancey, your sense of what abatements have done for the City is, I believe, one, absolutely correct. What we are starting to hear now, though, from people who have been the long-term residents in the City who stuck it out, didn't leave, and are now experiencing, for some, these exorbitant assessment increases, and naturally the property tax increase that goes with it, is "What about me? Where do I fit in in the entire scheme. It's good that you have programs to attract people to the City. You're providing a financial incentive for them to come. What program do you have, whether it's low income, no income, middle income, upper income, for people who have stayed here? " And in your terminology, how do we separate, again, for the public, the assessment process, which is clearly a Board of Revision of Taxes technical process, from the revenue needs or interests of the City? And what should we do in order to, not only attract the residents with initially short-term and now longer-term abatements, for new people, how do we create some kind of new abatement program, if you will? You can call it whatever you want to call it, but if we take less, then people are getting some benefit and some savings for longer-term residents. And it would seem to me that a part of this discussion, this exercise, this angst, and even in your testimony, the anger that's being expressed should be utilized in the most positive fashion possibly to bring about change, to bring about fairness, to bring about a sense that we want to attract those who have either never been here before or who possibly moved out and some are moving back, but there has to be some fairness and some reward for people who stayed. As I said last week, we participate on 229 10/01/02 - FINANCE - PUBLIC HEARING both sides of this economic transaction. We take money from people as their assessment increases for those who did not buy the property for investment purposes or for short term, but are here forever. We take it as it's happening on the one side of the equation, and then we ask for 3 percent on the real estate transfer tax to get the full benefit of all of that appreciation over time. We are, in fact, at a certain level, double dipping on people and creating an unfair situation for folks who have no 12 intention of going anywhere. The fact that your house is more valuable, some of which you've created, some of which you have nothing to do with it because of what the market is doing it around you, if you never put a coat of paint on the place, but you don't get any benefit. In the near term, by the fact that the value of your property has increased -- I mean, maybe you can borrow more against it. You can do a wide variety of other things but, you know, it's all on paper. But we continue to benefit from that. And so to the extent that we can take less of that appreciation, which is a Finance, Revenue, City Council, Executive decision, should 230 10/01/02 - FINANCE - PUBLIC HEARING not interfere with or negatively impact your ability to do what the state statute says, which is value properties, do it on an annual basis. And the discussion we had earlier about 71 percent, 100 percent, we should be able to make that decision. Now, I need to go back to an earlier discussion. I don't want you to go too far because you've got your items situated there in a comfortable fashion. I need to get the Revenue Commissioner back and a representative from the Law Department to go over some financial issues that I've discussed earlier. I think she may have some answers for us. Commissioner Kammerdeiner, we had some dialogue earlier, and I was asking you when the FY 2003 budget was put together -- we are presently in FY 2003.
Finance and certainly Budget, possibly Revenue, had to make some estimates which were incorporated into the budget that we passed this spring for what the real estate tax expectation would be, which I think either theoretically or in fact you had to do somewhat blindly. But I guess based on past history, because you did not know at the time what the proposed new assessments would be, 231 10/01/02 - FINANCE - PUBLIC HEARING what the value would be, how many people would appeal or even what the certified values of those -- what do they call them, precepts, I think -- you couldn't know that at the time the budget was put together. So the question I asked earlier was, how much did the FY '03 budget anticipate in growth; and you told me 2 1/2 percent. But then we got into a discussion about the actual dollar amount. What is the number?
Since we talked earlier, I've had an opportunity to speak with the Budget Director, Rob Dubow, between meetings, and he was able to pull out some of his work papers and give me a rundown on what transpired. You're correct, we do make the estimates in a time period long before the assessment notices go out. We do that on the basis of prior year history and look back at several years in terms of what's happened, any growth rate or trends that we see. It's done tax by tax. But with regard to real estate tax, the assumption that they came up with after looking at past trends was a 3 percent growth in assessments, 232 10/01/02 - FINANCE - PUBLIC HEARING but then that would have been about $300 million because that would have applied against an assessment base of just over $10 billion. But they also assume that a certain number of appeals would be filed and that there would be reversals on some portion of that $300 million in assessment growth. And the assumption they made was that $80 million in those assessments --
Not $300 million, you're talking about assessment values?
These are assessment values. We're not talking about tax. I'm talking about the assessment values.
Right. I understand. But you know that my question is --
They basically assume then a growth in assessed value of about $220 million, and that translates into approximately $8.2 million in terms of City tax. Right now I'm only looking at the City budget and the assumptions on the real estate tax that comes to the City. Using 233 10/01/02 - FINANCE - PUBLIC HEARING that information, they forecast the City portion for Fiscal '03 at $321.7 million. That's the number on which the budget forecast was originally based, at least that's what I'm told. At the time that they were making that forecast, they were forecasting City revenue on the real estate tax for Fiscal '02 to come in at $338.5 million. But, of course, you know that Council -- the Mayor was proposing and Council was considering at that time a shift in millage. And so when you take the $25 million in millage shift away from that forecast, that would mean that we were, at that time, forecasting $313.5 million if we stayed at the '02 rate. You add the additional tax from the growth potential and come up with the 321.7. Let me add that when we have the preliminary actuals from Fiscal '02, once you take the millage shift of million out, the comparable 20 is 311.5 million. So our '02 numbers are actually 21 about 2 million less than was forecasted back in 22 December of '01 for the Fiscal '03 budget. And 23 that's where the number comes from that I referenced 24 in my testimony last week. 25 If you compare the budgeted number of 234 10/01/02 - FINANCE - PUBLIC HEARING 321.7 million to our actual collections from '02 of 311.5, it's approximately a $10 million growth expectation that we're looking for between '02 and '03.
Okay. So you're expecting an additional $10 million. And the preliminary indications are based on the assessment notices that have been sent out. We have not gone through the appeals. We don't know what's going to be certified, but the preliminary calculation is that the City, if somehow, some way, no one was successful in an appeal, which is not necessarily likely, but the City would anticipate growth of $35 million; isn't that correct?
I would have to defer to Mr. Glancey on that because we don't have those numbers.
The question is, what's the anticipated revenue growth based on the assessment notice that have gone out to the citizens in terms of 2003 tax revenue?
These are market value numbers that I'm giving you. Tax numbers follow that. That's not my position, as you know. 235 10/01/02 - FINANCE - PUBLIC HEARING Overall, what has taken place from 2002 to 2003 in market value growth, if you take the entire universe, it's 4.13 percent. If you take just the universe of those properties that were increased, that's about 6.6 percent.
Okay. Is it fair to say -- and do you back into the number by -- you gave us earlier, certified 2002 was $31,000,000,745. You gave us the '03 at $33,000,000,108.
Market value. That, I believe, is a $1.4 billion difference. You would take the $1.4 billion times .32?
And would that amount, do you know off the top of your head, is that $35 million?
It could be a little bit more because there were commercial industrials in there.
Thank you, Mr. 236 10/01/02 - FINANCE - PUBLIC HEARING Glancey. So Commissioner Kammerdeiner, what I'm trying to understand is you made a budget and submitted it to Council in January, which we approved, under which circumstance you were anticipating receiving an additional $10 million. We now come to find that, based on at least the assessment notices -- we don't know the end of the process, but based on the assessment notices, the City is now anticipating the prospect of $35 million; is that correct?
That's City and school together. So the City portion of that would be approximately 42 percent.
Well, let's go back to the $10 million discussion. When the City was anticipating an additional $10 million dollars, what was the School District anticipating?
I don't have their precise numbers here, but I understand that they used essentially the same formula that we did, and the differential was approximately $14 million between what they had in '02 and '03.
So is the number $24 237 10/01/02 - FINANCE - PUBLIC HEARING million total between the two governments?
So would the number be $24 million total between the two governments?
And so now we're saying that, again, between the two governments, we're anticipating a $35 million increase?
Following the calculations that you and Mr. Glancey did, yes.
So is it fair to say that, again, between the two governments, but taking the total amount of revenues to be generated, there is approximately $11 million more being generated than you anticipated when the budgets were put together?
Based on the assessments that have been sent out, but we still have the appeal process to go through.
Councilman, maybe just for clarity is the only reason I'm stepping up here, is that not only do we have an appeal process, but I'm also talking, as I indicated when I gave all those numbers before, gross numbers. It has nothing to do 238 10/01/02 - FINANCE - PUBLIC HEARING with delinquencies. It has nothing to do with past year problems. So what Ms. Kammerdeiner has said is what they usually collect, somewhere around $750 million, I think she said, for a given year. And what I'm talking about is substantially more than that because I'm using gross numbers. The relationship should be the same, if that's your question.
I understand. I guess one of the directions this is leading in is, given the size of the increase for some citizens and given that there is a potential -- I don't want to say revenue windfall, but certainly revenues in excess of anticipated revenues to put a budget together. And so as to not end up in a discussion about any action that we might take that would potentially unbalance the budget, it sounds like there is some amount of leeway, from a legislative and a fiscal standpoint, that would potentially allow us to take some actions to, in fact, scale back the amount of revenues that we technically need to collect in order to have a balanced budget and run the FY '03 budget year the way it was 239 10/01/02 - FINANCE - PUBLIC HEARING anticipated when the budget was introduced and approved.
In gross numbers, at this point in time, that would appear to be correct. We still have the appeal process to go through. We still have the certifications to come in. It is possible that some of the gap that you're referring to will be reduced, but there would appear to be some differential there between what we need in order to balance the budget and the numbers as they are proposed at the moment.
We will, since we're having for the moment a philosophical or theoretical discussion --
And if I may add, we're talking here only about real estate taxes. And as I indicated in my testimony, the economic picture is such that we do have other pressures on the budget that are out there. So in terms of a balanced budget, talking about real estate tax in isolation is something we can do theoretically. But when you're looking at the whole budget, there are other things you look at, growth in some areas over and above your forecast to balance out where your 240 10/01/02 - FINANCE - PUBLIC HEARING forecast has been too high in other areas. And so that is something that I think you need to take a look at in terms of balancing this. We can talk theoretically about real estate by itself, but that doesn't mean that final decisions can and should be made in isolation.
We will, I understand that. But, I mean, with every respect, when people go to the BRT to discuss what their assessment is, I think the BRT only wants to have a discussion in isolation about real estate taxes. I don't think they want to hear about the price of bread, the cost of gasoline or what your auto insurance was as a function of whether or not they'll reduce the level of your assessment. So, I mean, we're either going to allow a fuller discussion on both sides of the discussion, or we're going to have an isolated discussion about only those items that are relevant.
That's why really we need to keep the assessment process and the taxes that are levied against that assessment separate. Because you are correct, the discussion at the Board should only be on the value of the property. But 241 10/01/02 - FINANCE - PUBLIC HEARING the discussion that we have in terms of the taxes that are levied against those assessments can and should be taken into balance with a lot of other factors in addition to that.
Okay. That's that one issue. Now, Mr. Fader, you were up earlier and you were very forthright and firm in your views, or at least expression of views of the Solicitor, with regard to Council's authority with regard to passing laws; when is a law a law, when is a law not a law, judges, courts, Solicitor's opinions, City Charter, state statutes, Pennsylvania Constitution. I think you pretty much threw in everything short of the Magna Carta. But we haven't finished our discussion here day. Let me read to you a very interesting dialogue that took place back on December 29, 1980, between some members of Council and the then City Solicitor, Allen Davis. This starts, actually, with a comment by Councilwoman Verna, now our Council President, having had some discussion with the Solicitor. " Mr. Davis: "That's right. " Councilman Street -- Mr. " "Councilman Street: Are you suggesting that you would advise the Board that they could ignore the bill and would not have to go to court in order to get any legal or judicial determination as to the legality of the bill? "Mr. Davis: I don't know whether they would have to go to court or not, but I would advise them that the bill is not legal. "Councilman Street: I would like to know whether or not, in your opinion, it would be necessary for the Board of Revision of Taxes to go to court to get a judicial determination as to the legality and/or Constitutionality of the bill, or whether or not you would advise them to just ignore the bill? "Mr. Davis: I would advise them that 243 10/01/02 - FINANCE - PUBLIC HEARING they have the option of going to court and testing it that way, or waiting or not putting, in effect, a freeze and letting a taxpayer raise it. It's a matter of procedure. " You may recall this was a bill about freezes. "Councilman Street: But you would not advise them that they have any obligation to adhere to this bill until such time that a judicial determination was made? In other words, you don't think that they are bound by it at all? "Mr. Davis: No, sir, I don't. "Councilman Street: Now, are you suggesting then that such advice could reasonably be given to say the Mayor or some City agency, if you or that agency felt that a law were invalid or unconstitutional or illegal, that any bill that we pass could be ignored until such time that somebody went to court to seek its enforcement? "Mr. Davis: That's generally the case with legislation, yes. "Councilman Street: That's not generally the case with legislation. "Mr. Davis: Well, if someone believes 244 10/01/02 - FINANCE - PUBLIC HEARING that a law isn't right, they have a right to ignore it and test it. "Councilman Street: Sir, that completely ignores my comment and my question. We are the legislative body of the City of Philadelphia. And assuming that we pass an ordinance which requires this Administration to do X, are you suggesting that it is normally the process that the Administration could refuse to do X and that this Council or some citizen will go to court in an effort to enforce -- to force the Administration to do X? "Mr. Davis: If a bill is illegal, it is void and of no effect. It is not binding on anybody. "Councilman Street: But it isn't that. "Mr. Davis: The court determines the question of legality. "Councilman Street: Isn't it only void and illegal until determination is made? "Mr. Davis: No, sir. "Councilman Street: And isn't it true, that up until that point, that this City will be bound by that Bill? 245 10/01/02 - FINANCE - PUBLIC HEARING "Mr. Davis: No, sir. Just the same as a taxpayer who believed the assessment was illegal wouldn't have to pay it and could ignore it and make the City go to court and make them try to collect it. "Councilman Street: Okay. " Mr. Fader, who was right in that discussion?
In my opinion, the Solicitor was correct. That the Solicitor is obliged to advise the Mayor and the Board and the Council what he believes, in his judgment, is the law. And that if a Council ordinance is enacted that goes beyond Council's authority, it is the Solicitor's obligation to advise the Mayor that, in his judgment, it goes beyond the Council's authority and it is not effective.
Okay. Now, what is the Solicitor's responsibility with regard to either legislation that's drafted or in working with the 246 10/01/02 - FINANCE - PUBLIC HEARING body -- I mean, the Solicitor is, again, in that wonderful position of representing both the Administration and the Council. What's the Solicitor's responsibility with regard to assisting its client in the passage of legislation or making it correct or making it legal?
The Solicitor has a responsibility to all of his clients, both the Councilmembers and the Administration. As you and many members of this Committee and this Council know, our office works closely with any Councilmember to draft any legislation that the Councilmember or the Council wants drafted. We will do whatever possible to try to make it in as legal a form as possible, although we'll draft it in any form that the Councilmember asks. And we will try to think creatively with the Councilpeople, if asked, to try to come up with legal ways to accomplish what they want to accomplish. In the end, however, we're going to advise them what we think is the law.
And do you think that the opinion that we received recently meets that test, or is that an opinion that just primarily 247 10/01/02 - FINANCE - PUBLIC HEARING tells us what we cannot do?
I think it most definitely meets that test, Councilman. As I pointed out to you last week, for instance, we spoke about one of your Bills, which we said, although there are pretty good arguments that it is illegal, we would be prepared to defend it, at least with respect to future fiscal years, along the lines of the Coleman vs. Green settlement. Because we think there are good equitable arguments that we could make in court, even though there are very strong legal arguments against the Bill.
With respect to the Bills that the Solicitor said he felt they were illegal, is because we did not feel there were any arguments that we could make in court to defend them.
From that same point in time, in the same discussion, between the same two people, I also found it interesting, this 248 10/01/02 - FINANCE - PUBLIC HEARING statement. This is still with Councilman Street and City Solicitor Davis, which goes in this fashion: "Oh, one other thing. And that goes to the City Solicitor's capacity and ability to represent the Council and the Administration and the Board of Revision of Taxes in these situations which are fraught with conflict and problems, both for the City Solicitor and for the Council. And the problem that I have is that when you have a lawyer, you want a lawyer to advocate for you. And I don't need a lawyer, I do not need a lawyer anywhere that is simply going to take an idea I have, is not going to develop it to the point where that lawyer seeks to achieve an objective that I have. "And one of the problems that I have felt is that, although I can get advice and this Council can get advice, we do not get the kind of counsel that puts us in a position where we can go to the Solicitor and say, this is what we want to do. And what we want to do is correct the bad problem for the citizens of Philadelphia, particularly a group that are being hard hit now. "We need somebody, not to simply take what idea we have, put it in the form of a Bill and 249 10/01/02 - FINANCE - PUBLIC HEARING then at the same time get a letter saying that it's unconstitutional. But we need somebody to look and find a way to do it. You see, if we had our own lawyers, I guarantee you we could say, find a way to do it, find a way. And a way would be found, because that's just the way it is. A way would be found. So that says to me that perhaps we need to work on a Charter change provision that would give this Council independent legal representation so that we don't have to -- so that neither one of us has to be in this uncomfortable position. Thank you." Do you know what the Solicitor's view is or opinion on whether Council should have its own legal counsel separate from the City Solicitor and amend the Charter to do so?
I do not know the Solicitor's view on that, Councilman. But I can tell you that the first half of that speech you just read, the Solicitor, I'm sure, would agree with completely, which is that Councilpeople have the right to ask the Solicitor and anybody in the Solicitor's office to work with them and to try to come up with ways to the best of our ability to 250 10/01/02 - FINANCE - PUBLIC HEARING accomplish the goals that you want to accomplish. That is absolutely our responsibility to do that.
Well, let me ask this question, and I don't know whether you or Ms. Kammerdeiner know. Who is, again presently, working on any of these various ideas, either things we though of, things that Mr. Glancey has suggested -- I don't know the Administration's position on his proposals -- today or any other ideas that may exist? Who in the Law Department is working on trying to find a solution to any of these problems?
I cannot answer that question, Councilman. I don't know that there is anybody tasked specifically with finding a solution to all the many problems that are being discussed here. We try to work with the problems that Councilpeople bring to us and that the Administration brings to us, and we're prepared to work with you to continue trying to do that. I don't know that there is anybody specifically working on those questions right now.
Okay. I understand that. Let me ask the question a different way. I mean, are you aware of any discussions that are 251 10/01/02 - FINANCE - PUBLIC HEARING going on, whether in the Law Department, the Finance Department, the Budget Office or the Mayor's Office in general, that has any group of people seeking to put forward any ideas with regard to reform or changes to the current assessment system to make it more fair for the citizens of Philadelphia?
I'm flattered to think that you would think that I would be party to those discussions, but I wouldn't know if those discussions are taking place, Councilman.
Mr. Fader, you're much too modest and you shouldn't undervalue yourself. Well, maybe I should then make a request that various parties from the Law Department, the Revenue Department, the Mayor's Office, the Finance Department, the Budget Office and the BRT, and even if you want to just, you know, throw in for excitement a couple members of City Council, to sit and work as a group to see if we can reach some level of agreement and accommodation on these kinds of issues. Could you possibly take that message back to the respective parties?
I would be happy to and it 252 10/01/02 - FINANCE - PUBLIC HEARING sounds like an excellent suggestion.
Okay. Thank you. Mr. Glancey, can I have you back, please? I'm sorry. Either Mr. Fader or Ms. Kammerdeiner, does anyone know the Administration's position on the three or four points that Mr. Glancey laid out in his testimony in terms of possibly changing the system to 100 percent market value? Mr. Glancey testified that he seems to be somewhat okay with at least one or a couple other Bills, although there's been testimony that the Administration either opposes them or doesn't believe that they are legal. What is the Administration's position on the three or four suggestions that Mr. Glancey has made in his testimony?
So far as I know, today when he made the presentation is the first that we have heard these as his proposals. So there has not been an opportunity yet to consider his input on that. And that's certainly something that I know I would want to discuss with others to fully understand the impact at our end.
All right. Mr. Glancey, what other elements, in 253 10/01/02 - FINANCE - PUBLIC HEARING addition to the proposals or ideas that you've laid out today, what other -- if we were going to -- and I want to be careful in the language. I don't want to necessarily talk about change the way we assess properties, because I believe both by state statute and by -- what is it, the International Assessors --
IAAO. -- that there are standards and criteria for how you conduct that work. That is possibly, I guess, a little less art and probably a little more science with some subjective judgment attached to it, but there are many other elements that go to standards, criteria, oversight, accountability. Councilman DiCicco has talked about transparency, the ability to understand. If we were going to change and make more fair the assessment system or process, what do you think are some of the critical elements that would lead toward a more fair system?
Well, let me just take a step back. First thing I would do is go across the country and gather every possible bit of information I could as to how you can set standards without crossing the line, if you will, the boundaries of 254 10/01/02 - FINANCE - PUBLIC HEARING what the evaluation process is. And having said that as a procedural background, I think at least from what we're hearing in Philadelphia, is that there has to be public information, starting with that. What is it that you do and how do you do it? I think we can explain what is it that we do and how we do it. But as I said before, I think our problem is we're not getting that message out clear enough. So that's number one. I think that has to start. Number two, and just to reiterate what Ms. Kammerdeiner said, I did not share my testimony with the Administration. You're the first group today that saw the testimony. I do believe --
That is a precedent and a stunning revelation, Mr. Glancey, that we would be the first to receive anything from anyone under any circumstance. I appreciate you setting that precedent, although I will not get used to it.
The ability to make values connected more to what people think values are. That's the best way I can describe it. Have something that is closer in value to what people think their homes sell for, I think, would go a long way to giving the impression of fairness, although I 255 10/01/02 - FINANCE - PUBLIC HEARING have to give you a caveat. I think the process will be the same. It's simply a different number that we're going to work with. The number is that whatever your property would sell for, you would get a notice from us somewhat closer, let's say 85 or 90 or 100 percent of that value. There will be a gap, as you admitted. We believe we do that very same thing today, except the relationship is a mathematical difference from 100 down to 70 percent. So those are two things right off the top of my head. I think thirdly, and this is maybe somewhat radical, but it's something that my staff and I have talked about, is having somebody in our office who is an advocate, a consumer advocate, if you will, not an IG kind of advocate, but somebody who, A, where all of the complaints that come to me and come from Board members and come from Council, that person would be the person we would funnel those citizen complaints to. That person would be an advocate for those citizens. And then that person would also be responsible, I think, for just kind of making sure that the evaluation staff is doing what they're supposed to be doing vis-a-vis 256 10/01/02 - FINANCE - PUBLIC HEARING these kinds of things. I mean, right off the top of my head, I think there is three very good things that we can do. Maybe there are other things that we can do by making more simple. And I think we're doing -- and again, I know everybody's not on-line. I think we're doing on-line better than we're doing in hard copy. I think we're making our descriptions of what we do on-line. I think we're giving information of what we have on-line a lot better than when we send notices. I think our notices, we think are as clear as can be, but they're very busy. There's a lot of stuff, if you will, in a notice. Maybe there's something we can do along those lines. And I think all of those standards -- there could be standards that would be set for those sorts of things. And I also believe that, you know -- again, going back to your question about the IAAO, it might be important for me to go through those 81 -- I think there were 81 or 87 recommendations that were made.
58 recommendations that were made. There were a substantial amount that 257 10/01/02 - FINANCE - PUBLIC HEARING were done. We now have -- you know, entry-level college degrees are necessary in order to be a full-time evaluator. But again, off the top of my head, Councilman, having said all of that, I do think that I probably would feel more comfortable going to look at other practices and other jurisdictions and coming back with you with some suggestions there.
Let me ask you this question. What would be your reaction to -- again, if we were to go through the entire process, utilize the authority and power that we have, ultimately seek voter approval, and put all of this in Bill 15 form and then incorporate it actually into our Home Rule Charter as a way to, again, get the objective evaluation of both how the system is functioning and how properties are being evaluated on an accurate basis. The Board agreed back in 1981 to, through the Finance Office, pay for an analysis by the IAAO of your practices. And the result was the '81 report, 58 recommendations, you've done some, you haven't done some others for various reasons. First my question would be, what would be your reaction to a requirement that on no less 258 10/01/02 - FINANCE - PUBLIC HEARING than five, no more than 10-year basis, that kind of independent analysis was done for the Board paid out of your budget, paid out of our budget? It's all in the same big budget. Ultimately it doesn't matter if you're hiring an outside entity. What would be your reaction to that?
What would be your reaction for maybe around about the same time frames, no less than five, no more than 10 -- this might be a little trickier and possibly a little more expensive. When people go to do a transaction with their home, home equity loan, refinancing, whatever the case may be, the first thing generally the bank wants to know is how much is your property worth. How much equity do you have in the house. And they're going to make their decision based on what they believe the value of that property to be, which is often very different than what the City believes the value of the property to be, at least currently because we're dealing with 70 percent and the like. What would be your reaction to a 259 10/01/02 - FINANCE - PUBLIC HEARING requirement that, over some period of time, every property in the City would have an independent appraisal done of that property? Which, as I think about this, has an independent entity who is in the appraisal business taking a snap shot at some point in time of what's going on with that particular property, which then basically gets matched up with what the BRT says the property is valued at. And you'd either see they were within some range or there was significant variance, which I think is going to tell you maybe that there is a problem going on. Should there be regular, although infrequent, independent legitimate appraisals done of properties, and does that add any value to this discussion?
I think the word that for me would rule this out is, infrequent. I think it would have -- if you were telling me we had the money to be able to do this, if we had the funding to be able do this, and every three years on a rolling basis to have every property have an independent appraisal value, I think to me that would be the best way to value property in the 260 10/01/02 - FINANCE - PUBLIC HEARING country. That would work. But when you say, infrequently -- and I know why you say it, because it's really a practical way of doing it.
Right. Infrequently -- when we see appraisals that come before us - and I must read 300 to 400 appraisals a year for commercial and industrial properties -- if that appraisal is older than months, it's suspicious 12 because things change. 13
Well, let's go back. 14 I asked you last week -- and last week's hearing was 15 more about the Bills. Let's talk about the office. 16 Now, I am not trying to get you in any trouble with 17 the Budget Office, although I think technically they 18 can't really do much to you, at least at the moment. My recollection is that you told us that there were approximately 485,000 residential properties and we had 43, 44, 45 or so residential assessors.
You're right on the residential assessors. I think we're roughly 450,000 residential properties.
And then another 261 10/01/02 - FINANCE - PUBLIC HEARING number of commercial and industrial that took us up over 500,000.
Is it truly possibly for 43 people to legitimately, accurately, regularly assess 450,000 properties?
And if you were going to get more, how many more would you need to ensure regular, consistent, fair, appropriate, and within whatever the standards are, the guidelines to really have that work done properly?
My wish list would be at least to start this process. And I think it would certainly be -- it's something I have shared with the Budget Director in conversation, but not in the form of making a budget request, because I just don't think it would have been done. If we could get 10 more staff, 10 more human beings, good, solid real estate-trained human beings, if we could have 10 of those and another half a million dollars for technology, I think that that million investment -- roughly that's what the 10 positions would cost.
10 people is a half 262 10/01/02 - FINANCE - PUBLIC HEARING a million and a half a million for technology.
If we could get that initial investment of a million dollars, I mean, I think that would improve the quality of what we do a great deal.
Of the total number of assessors, can you give us a breakdown between -- some of the assessors, actually, technically either are paid by or technically work for the School District; is that correct?
No. We do not have any evaluators who work for the School District. We have real property assistants. That's what they are. They are all School District employees. And Council President Verna was terrific in getting us a career path for those folks.
Real property assistants assist the professional evaluation staff. Some of the things that they would do, they get deeds for us if they -- if we can't get them flushed over to us electronically, they go to the Department of Records. They do the clerical work around what is necessary to be an evaluator. They are also now -- 263 10/01/02 - FINANCE - PUBLIC HEARING we've trained them on use of some of the computers to input information from deeds into our system. If you could imagine a clerk-plus, that's basically what we have for a real property assistant from the School District.
Did you respond to a question last week when you were asked about commercial/industrial properties, that they did not receive notices this year or that they're going to receive notices next year? Was that your testimony last week?
If it was, that was mistaken. My testimony is they're going to be getting them sometime this week.
Sometime this week. Okay. So residential, commercial and industrial properties were all assessed in the course of this year?
They were all valued in the course of this year. And as I said to Councilman DiCicco, you may have been out of the room, is that all real property does not rise at the same level. Residential properties have risen sharply. And our commercial and industrial 264 10/01/02 - FINANCE - PUBLIC HEARING properties, some of them will be looking at valuation increases, but it has been a stable market. It certainly has been better than some other cities.
As the ultimate holder of all the information that many, many people are searching after, including, I guess, soon the Department of Revenue, have you given thought or asked any of the technicians to run potential models of what some of these bills or proposed bills would actually do; what the impact would be to the City, what the impact would be to the School District, whether it's Councilman O'Neill's Bill at 4 percent, Council President Verna and I at 10, Councilman DiCicco at a freeze, Councilman Rizzo at a deferral, and started to run any spreadsheet models on what any of this impact would be?
I did not think you would ask that question. I swear to you I did not think you would ask that question. The answer is yes.
And you know we haven't spoken about this. We have run a spreadsheet with 265 10/01/02 - FINANCE - PUBLIC HEARING the Nutter-Verna Bill, with the percent cap. That was the only one that we did. And I saw it for the first time yesterday. And there were assumptions that were made in that model, that there would be, based on a five-year history, an appreciation of real property among types. To make a long story short, what we tried to do was to run equalization five times, run it out to 2007. Okay. So I saw the spreadsheet yesterday. It looks as if your model, your Bill, would meet the five-year plan standards. However, it would not meet them for 2003. Now, having said that, I am not convinced that we have made the right assumption from '02 to '03 yet, so it is not complete. I appreciate you asking the question, and I hope you appreciate my answer. I'm just not ready to send it to anybody at this point until I check the prior year to '03.
One of the things I might ask you to do -- and I know we have to be very careful with all of this information -- but again, given the conversation with the Revenue Commissioner, Budget Office and Finance, it seems to 266 10/01/02 - FINANCE - PUBLIC HEARING me that we have a short-term response that needs to be made to citizens, and then we have a longer term, more permanent response that should be the real solution. I don't sit here this afternoon believing that we have necessarily found the solution. I think we have some elements of the solution and we could benefit from any one or combination of the Bills that are floating around at the moment. But it seems to me there has to be a way to do something right now that lessens the assessment shock that people are experiencing, not unbalance the budget, allow for the anticipated growth that the budget predicted, not knowing what the assessments were going to be back in January, and do that with the goal of returning something or providing some relief or lessening the burden for '03. And out of that and in the course of the next year, before we find ourselves in this position again, and we should seek to impose a bit of a deadline, whether we say we're only going to have that system in place for a year, and should we, I would think, wrongly, if not stupidly, do nothing. We would then find ourselves right back in the same situation. So we would hopefully be compelled to do 267 10/01/02 - FINANCE - PUBLIC HEARING something in the course of the next year. Put a plan together with the kind of cooperation that we talked about earlier and have something available for the voters come May of 2003, which would be hopefully a plan that we could live with and that people would feel comfortable with. It would have to be sold. Does that sound like anything that's reasonable or within the realm of possibility to you?
Sounds like a plan to me, Councilman. I think that, as I said last week and I said again today, and I think what Mr. Fader said was your excellent suggestion. This is a critical time. This is a moment in time where certain things can change and we can grasp it and do it. And I think we should. But it can't happen unless everybody that you mentioned, including City Council, sits at that table and with good will, attempts to rectify the situation.
Thank you, Madam Chair. The commercial property reassessments are 268 10/01/02 - FINANCE - PUBLIC HEARING going out this week?
I believe they are. Let me just double-check. Yes. I'd say within seven to days. 6
Do you have any 7 knowledge as to what the value of those 8 reassessments will be, notwithstanding any appeals? 9 Ballpark it. 10
I'd like to. To the Chair, please. Is it reasonable to say, though, that we anticipate an increase in revenue as a result of those reassessments?
In addition to the 35 million that are as a result of the recent residential property reassessments, notwithstanding any appeals?
So go back to my colleague, Councilman Nutter's, questions -- line of questioning earlier to the Revenue Commissioner about the million versus the 35 million. We may 6 have 40 million, 45 million, whatever the number 7 may be? 8
But it's safe to 11 say that we expect an increase and not a decrease as 12 a result of the commercial notices that will be sent 13 out? 14
I will tell you the 15 notices we're sending out for commercial/industrial 16 properties are not decreases. 17
They're not 18 decreases. So in effect we will be generating more 19 revenue than the 35 million that we will be 20 generating with the residential. So for our 21 purposes in Council, based on the line of 22 questioning that Councilman Nutter was presenting 23 earlier, there is additional discussion as to 24 possible roll backs, whatever it is. My last question is really to the 270 10/01/02 - FINANCE - PUBLIC HEARING Revenue Commissioner and Mr. Fader. And I promise that will be my last -- I shouldn't promise that, but I will promise this is my last question. To the Revenue Commissioner: If the Mayor should decide to do something that I had suggested by way of Bill 490 and 491, notwithstanding his public relations person, Mr. Keel's (ph) suggestion that it was stupid and absurd, but should the Mayor decide to instruct the Revenue Department to ignore temporarily, at least for this year, the recommendations that are being sent over on recent reassessments for residential properties by way of the BRT, what would you do?
I'm assuming if I got that direction it would also have the direction and blessing of the City Solicitor because, basically, we do have that internal issue and concern here in terms of what I can legally implement.
Okay. So -- I guess your answer kind of leads into my next question to Mr. Fader. If that were the case where the Mayor were to do, in Mr. Keel's words, stupid and absurd, and advise the Revenue Department not to send out notices, the recent reassessment notices, 271 10/01/02 - FINANCE - PUBLIC HEARING would you then defend the Mayor's position as the City Solicitor -- the Office of the City Solicitor?
Councilman, the Solicitor is not here, but I feel fairly comfortable telling you that the Solicitor's advice will be the same as what you read in our --
Notwithstanding his advice. Going back to the questions that Councilman Nutter posed earlier -- and there was a former Mayor who I never supported and really didn't think too highly of his fiscal responsibilities. But the one thing I always admired him saying, don't tell me what I can't do. Figure out something that I can do. Don't you think that the City Solicitor would be in the position then to try to find a solution to this problem and to figure out a way in which we can make that recommendation legal?
I think the City Solicitor, as Councilman Nutter suggested and as you're suggesting, certainly should work with all the interested parties to try to come up with ways to solve the problems that you're all very seriously addressing. 272 10/01/02 - FINANCE - PUBLIC HEARING
I would take one -- I would hope this will not be more than five minutes. Mr. Glancey, I received some -- I don't normally do this, but it's actually quite enlightening and somewhat instructive. You know, naturally we're getting a lot of calls, letters and a wide variety of things from people. Some of them are quite compelling. And I'll just give them to you. But with regard to some of the proposals that are around -- and I think this was your testimony earlier, but I want to make sure, as we hopefully move into this sense of trying to get something done collectively. Your primary concern is that any action we take does not negatively impact on your ability to deliver legitimate assessments?
And what the other parts of the government end up doing by way of 273 10/01/02 - FINANCE - PUBLIC HEARING collections is an entirely separate matter. And other than in your role as citizen and the rest of the Board, you don't really care what we do?
It allows us to do what we're mandated to do by Commonwealth. And it doesn't impact on that boundary, what the other branches of government, whether they cap taxes or whatever, that's fine with us. That's fine. What we want to do is to be able to do what we do. And, quite frankly, Councilman, there's more ways than one to skin a cat. I mean, there are ways to look at millage rates, as we're probably going to look at, when we talked about 100 percent 274 10/01/02 - FINANCE - PUBLIC HEARING value, various things like that. Sure. The answer is yes, I'm just trying to make sure I don't say I don't care about that.
I understand that. That was a bad question. It's late in the day. Last question to you, and you may have answered this last week, but that was a long time ago. The outrage that you and the staff and the Board are getting, the complaints about regular increases, but of a small amount some people have experienced. And I know in parts of my district people are almost regularly expecting some amount of increase, but it's not at a level that kind of flips them out, if you will. And then all of a sudden they get the big one. What's your basic response to that? And it started happening. You starting getting the outrage. Now we've started these hearings and a lot of ideas and discussion is floating around. What, if any of this, has changed, if it's changed your view at all? Can you tell us what that may be? Do you think it is fair to have a system where people either on the one hand are getting regular increases where we're kind of nickel 275 10/01/02 - FINANCE - PUBLIC HEARING and diming them to death, but they're dealing with it and then all of a sudden you get a large one? Or as I shared with you earlier, nothing over a significant period of time and then the big one, whether it's 40, 80, 100 percent? I mean, what kind of system is that?
We would agree with you. And I think it was something we have done in the past. And, again, without shirking responsibility, I think the reason that this one came was because there was large increases on certain types of housing this year came for two reasons. One, run up that we haven't seen in values of those types of houses. And two, we did have a substantial lack of information last year from the '98 sales that we could have worked with to alleviate what we did for 2003. However, having said that, we believe in the principles of gradualism. The principles of gradualism, I think, are the best way to go when you do this. Now, having said that --
Do we have that, in your view? 276 10/01/02 - FINANCE - PUBLIC HEARING
I think in prior to 2003 -- let me rephrase that. Yes, we do. But for maybe 20,000 properties, 25,000 properties that were increased in 2003, about 25,000 received increases of 30 percent or more. I think that is probably not gradual for those folks.
One last suggestion -- and I know you're trying to streamline your form, probably not so you could put additional information on it, but quite honestly -- and I don't think I could have even gotten this on-line, but I got it from the folks in the office. It would probably help many people -- it's either going to help them or give them more of a headache -- if they could see on that notice actually a bit of history as to what their assessment has been over some three- to five-year period of time, what the actual tax rate was over that same period of time so that they can see a sense of gradualism. Do they really have a complaint? Is their memory fading about what the bill was last year, and so now they've either, you know, embellished the pain or the hurt. Or is it possible to put somewhere on that sheet of paper a box -- and it already has a lot of stuff on it, I 277 10/01/02 - FINANCE - PUBLIC HEARING understand -- that shows you over the last, as I said, three- to five-year period of time, what's been going on with your property?
We will work on that. I think that's a good suggestion. As you know, we show prior year and current year. So what you're asking for -- what you're suggesting is a couple of more years on there. I think that's a good suggestion.
Thank you. Let the record note that reinforcements, although he was doing quite well on his own, reinforcements have arrived from the Law Department. We've now been blessed by the presence of the Solicitor and the top aide, and I guess they want to now come to the table and engage in some legal jousting. If you gentlemen are prepared, I'm certainly prepared, but you let me know what you want to do. Thank you, Mr. Glancey.
You're welcome. Madam Chairman, if it's okay with you, could I give, like two, three minutes to wrap up, unless you have some further questions for me?
There was one point that I 278 10/01/02 - FINANCE - PUBLIC HEARING would like to make, and I'd like to make it now, and it has to do with the relationship of the Board of Revision of Taxes, with the Budget Department, with the Finance Department, with the Mayor's Office. We give testimony to City Council every year, roughly February. In that Council testimony, I try to give you a sense of what the market of the City of Philadelphia looks like. Based on that testimony, I then go to the PICA Board in March. The very first -- the PICA board. I go to the PICA Board in March. For the very first time the Budget Director, maybe the Revenue Commissioner, if she's there, but certainly the budget director and anybody at the City Controllers and folks who sit around that table, for the very first time are hearing -- unless they are at that testimony at Council -- are hearing what our projections are for -- and I don't give them numbers. I just say what the market happens to be. So it's really information that I forward to City Council in January, which I guess will be January, February of this coming year. That's the basis for the market value projections that we use that come out in the summertime for the 279 10/01/02 - FINANCE - PUBLIC HEARING most part. Now, it's very vague, I understand that. It just talks to you about what's going on within the markets. It is not supposed to be number specific at that point because we don't have the numbers at that time. But I just wanted to say that because it was part of the resolution, Councilman, that we didn't really get into very much, that what is the inter-relationship between all of these various agencies? Again, the proverbial stack of bibles. I can tell you that I have never been asked by a Mayor, I have never been asked by a Finance Director, I have never been asked by a Budget Director, I have never been asked by a President of City Council to raise money to lower millage -- to lower values, to raise values. I've never been asked to do anything. It is my responsibility to give them a heads up, as I give you heads up when I send my reports to you folks in July, the very same time I send it to the Mayor, to the Budget Department, to the Finance Director. So as far as what we do, as far as I have been chairman and what we do, we are independent from the budget process and from the 280 10/01/02 - FINANCE - PUBLIC HEARING Mayor's Office. But again, being independent is good, but being cooperative while being independent is better. And as I say, this is a moment in time where I think we can effect some change. So I thank you very much, Madam Chair, for allowing me to get that off my chest.
Thank you very much. And thank you for your patience these days and all these hours. Thank You.
Thank you, Ms. Kammerdeiner, as well. We have two people, Judy Cerrone and Sandy Junker (ph), who would like to testify. Is there anyone else in the room who would like to testify? All right. We know this is Judy Cerrone and we ask you to welcome. Identify yourself for the record and you can begin your testimony.
My name is Judy Cerrone. I'm president of the Stadium Community Council Corporation. I'm also the legally elected director of District One of the Sports Complex Special Services District, and I'm here representing them. 281 10/01/02 - FINANCE - PUBLIC HEARING I felt sick when I got up this morning, and was in bed until one o'clock. But after listening to Mr. Glancey, I feel very sick, because a lot of things he says are not true at all. And as a taxpayer and a homeowner, I know it's not true. First of all, I'll give you my own taxes, so you know that I'm speaking from the heart. I do not care about the percentages. I don't care about the technicalities. I don't even understand them. But we're a neighborhood that will be 50 next year. Our homes -- we'll have a 50th anniversary of the building of our neighborhood in 1953. And we have over 75 percent original homeowners. We have several people on my street that are in their 90s. They're widows and live alone. My parents live six doors away. My mother is 84. She's bedridden with Alzheimer's. And my father is 88. My son is having a baby in three weeks. They will be living with me. And it will be four generations in one neighborhood. So we didn't leave the City. Not yet. I have my own tax bills here. I figured if we're going to talk dollars I may as well talk -- at least know something. In 1957 -- In 1996 I was paying -- I'm 282 10/01/02 - FINANCE - PUBLIC HEARING going to go only by what I pay because that's what counts to me, not the percentage rate -- was $1,547.02. We got raised in 1997 to $1,631.64. We didn't get a raise again for four years until 2001 when it went up $61, and now again, $400. I have a 16-foot row house. I'm in the shadow of the Vet. I will now be paying $1,700. I can't afford it. Nobody in our neighborhood can. They have to remember, which has us really, really angry, is that your house is only worth the reassessment if you sell it. We're being penalized to stay, is the way we feel. I mean, if some fool wants to come in and give me $300,000 for my house, terrific, but they should know then they're going to be paying taxes on $300,000 for my house. But if I don't intend to move, why should I penalized to stay in the City? I know tax abatements are popular and I'm not going to bug Councilman DiCicco on that, what he said, but my neighborhood completely opposes them. We're going to have a new development go up six blocks from us and they get a 10-year abatement. My neighborhood is furious. We have 225 residences; 210 actual homes, some are duplexes. 283 10/01/02 - FINANCE - PUBLIC HEARING When you go to buy a new home in this development you will start at at least $185. When you buy a house from $185, you know you're going to be paying high tax. They're going to go up to over $300,000. That's high tax. But they know that when they buy it. We're being penalized for staying in our neighborhood. If somebody wants to fix up their home, they're being penalized for fixing up their home. None of that to us makes any sense. It may make sense to the Board of Revision, but it certainly does not make any sense to us. To switch the topic, quickly, I was asked by several more knowledgeable people in my neighborhood than me about Mr. Glancey. And we were told he is appointed by the Board of Judges, which consists of five men. I asked my assessor, Mr. Johnson -- Ms. Johnson -- they told me five. I'm not sure myself -- for the names of the five judges because the neighbors wanted to know. Ms. Johnson said she had no idea, and even if she did, she couldn't tell me. And I told her we have a right to know under the Freedom of Information Act. So first of all, I'd like to find out from someone who the five people were who appointed him. He is not 284 10/01/02 - FINANCE - PUBLIC HEARING elected. He is appointed. Also his staff, the assessors themselves -- I'm sorry.
I'm sorry. As best as I can understand, there are seven members of the Board of Revision of Taxes. They are appointed by the Board of Judges of the Court of Common Pleas. There are probably close to a hundred judges who are on the Board of Judges of the Court of Common Pleas. Names are put forward. They have a vote, however they vote, and then that person is appointed to the term on the Board of Revision of Taxes.
I believe Mr. Glancey has been on the Board since 1983.
Well, the people who are employed under him, the assessors, they don't even need a college degree. They don't have an accounting degree, nothing. They're trained how to assess. I find that kind of strange.
That I don't know. I don't know what their qualifications are.
I asked my assessor. And she said they don't need it, but I think they do. 285 10/01/02 - FINANCE - PUBLIC HEARING A few other points I want to make. Our neighborhood is right next to Veterans Stadium. We are the only neighborhood in the country, actually, that's going to have four stadiums right on top of us. The closest home is 150 feet from the Vet. We are in a construction site. We met for six days with the Mayor in his office, practically holding us hostage without any food, to come up with a matrix, which I have here, signed by the City on December 8, 2000, which gives things to the neighborhood in exchange for sticking four stadiums down our throat. As of now, none of these things have been adhered to. None. Two things -- I'll make a statement just to show you. One is that we would have bathing of the sewers for rats. The Phillies are doing it. The City didn't. The sewers would be cleaned. Never happened. We went through a whole summer, our streets were not washed once in one of the hottest summers in history. We are covered in dirt, and this City did nothing. Regarding a traffic study because -- we will, there was a study done by the teams that was shelved from the year 2000 in August. We were 286 10/01/02 - FINANCE - PUBLIC HEARING supposed to have a traffic study that the Mayor signed onto that would be done immediately. That was on December 8, 2000. Nothing was done. We have gotten no services. m. in the morning until the end of 7 the day through the whole summer and spring, and it continues for the new Phillies ballpark. The Mayor called this Ground Zero, which I hate to use because of New York. But he called it Ground Zero. It is Ground Zero. We are in the middle of a construction and demolition site. When that Vet comes down, whether by implosion or a wrecking ball, we don't know if we're going to be standing. So we don't know where Mr. Glancey has the gall to raise our taxes at a time like this when we're worried if we're even going to be there or whether our sewer system is going to be able to withstand the jolt that's it's going to get. Our sewer system is old and we've had problems with it before. It was redone in '89 and there's still problems with it. We are in a filthy mess. We have rats, water bugs, cats all over. Filth, dirt, noise, traffic. It's not a normal circumstance. We do not deserve this. We are being penalized to stay 287 10/01/02 - FINANCE - PUBLIC HEARING in South Philadelphia. A couple other issues. We had a meeting at Stella Maris, which is our school hall in our neighborhood, on September 11th, which Council President Verna attended, along with Councilman Frank Rizzo and a representative for Councilman Cohen. We wanted to make sure it was non-partisan. And we also sent a fax, I did, to the Mayor requesting that he attend, since the Mayor is the one that made all the promises to our neighborhood and has not kept one. Not only did I not get a response, I didn't get an e-mail, I didn't get a fax, I didn't get a phone call, I didn't get a letter. This also states that if he couldn't attend, if he could please give us a meeting as soon as possible. It's dated September 3rd. As of today, I have not heard one word. Now, I know a lot of money is needed by the City for his Safe Streets program, the towing of the car program. The schools. We want to know where that money is going. The Mayor will not answer to the press and he certainly hasn't answered to the people. Nor did City Council. Where is all the money going? 60 percent of our real estate 288 10/01/02 - FINANCE - PUBLIC HEARING taxes go for public school system. And they're complaining that they don't have any books. Where is the money going? It is not going to the City. Nothing that we can see. I even found out recently that North Philadelphia gets two trash pick-ups a week. And it's not new. They have been getting two trash pick-ups. South Philadelphia, including my neighborhood, gets one. We have the mess. We have four stadiums.
Last week we had Little Bow Wow and the Rolling Stones on the same night with no police. Our neighborhood was a zoo. The same week we had the Rolling Stones in an outdoor concert that shot fireworks at midnight. I heard "Get No 17 Satisfaction" at 11:30 in my living room so loud that nobody in my neighborhood went to bed. We are being punished for living in a sports complex, but we're being taxed by the Board of Revisions when they have no clue about our neighborhood. They say that they look at the properties. That is a lie. My front steps have crumbled. We have always been reassessed on my street at the same amount. There are four houses on 289 10/01/02 - FINANCE - PUBLIC HEARING my street that have built-out back decks who got the same bill as me. When I asked Ms. Northern (ph), the assessor, why, she said they're computer generated. That means nobody ever came down and took a look. Why should I pay the same for a house that can sell for way more than mine? I'm not saying I want their taxes raised, but we got the same amount. That is absolutely ludicrous, in my opinion. I have an original kitchen, which is 50 years old. I have an original basement, which is 50 years old. It's just not fair. The senior citizens are on a fixed income. I am on a fixed income. The Mayor talks about a payment plan monthly. That's been existence for years. That is not new. I want a 12-month payment plan myself. I cannot pay another $400. My father has asked me and my son to move in with him and sell my house because I won't be able to keep it, as will the senior citizens in my neighborhood. That is really, really unfair. I don't know where Mr. Glancey and his people think they have the right, but I think City Council represents us, not the Board of Revision. And I think City Council owes it to its constituents to stop him. I don't know how. I don't know the 290 10/01/02 - FINANCE - PUBLIC HEARING legality. And they claim that it's all based on Harrisburg. We will, Harrisburg keeps giving the schools more money, which is real estate tax money, and the schools are still screaming they don't have any money, so it's going somewhere. But it's not going into the pockets of the citizens of Philadelphia. And I know you're trying to bring new people into the City by doing abatements. There are no jobs out there to get, so I don't know why they would want to come back. If you want to work at McDonald's, you can find a job. But I have people on my own street that have given me resumes to give to the sports teams to try to get them a job. They're like 45, 50. Their places have closed down or moved out of town. They can't find a job anywhere. So if you're going to bring people in for a $300,000 house and you can't give them a job, why would they come? You have to take care of the people who are here now who want to stay. I think the Board of Revision is so far off base they're living on another planet, in my own opinion. And another thing. As far as I read in 291 10/01/02 - FINANCE - PUBLIC HEARING the Inquirer, it states -- and I could be wrong, but this is what it states in the Inquirer, that when you raise assessments the entire county must be raised. Now, Girard Estate was not raised. Girard Estate is a beautiful area and I don't want them to get a raise. But if you live on Shunk Street and have a twin home that is three times the size of mine, you're paying $2,200 a year. And I will be paying $2,100 a year. Tell me where the Board of Revision gets their numbers from. They didn't see a thing. Mr. Glancey lives in a closet. He does not understand what's going out on the street. And what he said about people not coming into the homes, that's a lie. Because I went to two hearings where we had appeals, and the neighborhood went together. And my mother was we will then. And I signed a paper for them to come into my home to see it and so did my mother, twice. They never, ever showed up. And when we called, they didn't even respond. And that is the truth. So Mr.
Glancey is lying to City Council. I hope they know that. I hope they see it. The people have to come first. You're driving us out of 292 10/01/02 - FINANCE - PUBLIC HEARING town. I have a sorority of girls from high school. 12 live in New Jersey. I am the only one left in Philadelphia. And to be honest, if my parents were not up the street and so old and sick, I'd be in Ocean City, New Jersey right now permanently. I wouldn't stay here anymore either, especially with venue that's coming up with the two new stadiums on top of us. I think our neighborhood is a special circumstance. I think he has to get down there and look at the properties. The neighbors on Broad Street got a $733 raise. That takes them over $3,300 a year. Some of them have three kids in parochial school. There's no way in the world they can afford it. He talks about senior citizens. They're not the only ones that are hurting. When you have three kids -- you can't go to the public schools where we live unless you want to go with a machine gun. It is that dangerous. As a parent I wouldn't have sent my son there either, if I had to make a bank loan. People don't understand the living conditions unless you're in the neighborhoods. They sit in their offices and they tell us what we have to pay. My neighborhood will 293 10/01/02 - FINANCE - PUBLIC HEARING never accept the increase that we got. We were promised by the Mayor -- if you read the letter that I gave out, the Mayor told us -- we don't have it in the matrix. It's not in writing, so he's going to deny it I'm sure. We asked him for a 30-year freeze for the length of the leases, which we knew he would laugh at. Then we threw out an abatement, which we knew he also would laugh at. But then we told him if he could consider us during construction and demolition, which goes to 2005. He said he would take care of us. Well, he took care of us, all right.
Did he begin -- when he said that, did he just leave it at that or did he amplify that? How did he mean he would take care of you?
We told him we would like not to pay any increase in taxes. And he said, don't worry about it. I'll care of it. We took him at his word.
He explicitly said that? You questioned him? You put that in a very explicit manner?
And he explicitly made that promise? MS CERRONE: Yes. But it's not in the matrix, so there's nothing in writing. But he also said a lot of other things that haven't happened too, so he's going to deny that he ever said them. But we were all there. Council President was at the table too. So were the City attorneys --
I don't remember him ever saying anything like that, Judy. I have to be very honest. I never remember the Mayor saying anything like that.
I remember him saying, Judy, it would be illegal for me to attempt to do anything like that.
To put on a freeze or an abatement. But he said he would take care of us. How is he taking care of us, when he won't even give us a street cleaning in nine months? I mean, they haven't done one thing that's in that matrix, Anne. They have not addressed one of the concerns in the matrix. Not one. 295 10/01/02 - FINANCE - PUBLIC HEARING
I think your group, also, has to get on the job and do what they're supposed to do to get things moving.
The District has been meeting -- we've been meeting. And we did review 70 --
You've been meeting and nothing has been accomplished.
So until you accomplish something, nothing is going to get done in the area.
We shouldn't need to have an executive director for the sports district to have the things that are in the matrix implemented. That was not part of the deal. I mean, these things should be done anyway.
And weren't they all supposed to be implemented after the construction?
No. During. Because a lot of these things say, during construction.
Well, I don't think this is the forum to be talking about that. I 296 10/01/02 - FINANCE - PUBLIC HEARING think you should be talking about the reassessments.
No. But what I'm trying to say is that we haven't gotten services, but we've gotten a real estate increase. $2,100. I can't afford it. There's no way. $3,300 on Broad and $3,000 on 13th Street. I mean, the people are getting hit so bad two years in a row. Two years in a row we got an increase. To me, I mean, if we have to get an attorney, so be it. They say you can't. It doesn't matter if you have an attorney, that the Board of Revision has the right to override any attorney. I don't know. All I'm telling you is that we're depending on our City Council to make sure we're taken care of. We're depending on our City Council to make sure our taxes in our neighborhood, since we're in the middle of the construction site, that we don't get a raise. You're going to price everybody right out of our neighborhood. Unless that's what the City plans to do so that they can use it for a parking lot, which they desperately need. It's maybe an underhanded way of getting us out of town. But other than that, I mean -- I don't know what else to say. 297 10/01/02 - FINANCE - PUBLIC HEARING
Thank you. Well, we've heard between the 25th and today, we've kind of heard from people all over the City, so we understand. We do thank you for coming too.
I appreciate you listening, and I thank you. And I know you'll help us.
Thank you, Ms. Cerrone. Sandy Junker, please identify yourself for the record and begin your testimony.
My name is Sandy Junker and I wanted to come here today to let you know how I feel about the tax issue, the increase. I'm not very good at public speaking. I grew up in the suburbs in Cincinnati, Ohio and I moved here seven years ago with my husband for a job that he got here. And it was quite an adjustment to move here. The quality of life in the City is a struggle compared to living in the suburbs. The City services that I've 298 10/01/02 - FINANCE - PUBLIC HEARING experienced here -- wait a minute. I'm sorry. The City services I've experienced are unfair and unjust, and raising my taxes seems just as unfair and unjust. And I'll explain that. The City services that I've experienced here including the garbage pick up, the police when you have a complaint about different things and the school system is just horrific. I'm going to start with the garbage issue. On my street there are slumlords who leave garbage out -- my garbage day is Friday. And on Saturday there's all kinds of garbage all over the street. There's all kinds of vagrants that come along with knives and slit the garbage bags. There's garbage all over the street all the time. Whenever I call to complain, nobody comes out to ticket these people. Appliances are sitting out there for months and months. No one does anything. And I have worked very hard with the tenants who live in those buildings to come to an agreement so that I can live on my street without having to look at a lot of just garbage and appliances all over the place. But that should have been dealt with by the Streets Department. It wasn't. They do nothing 299 10/01/02 - FINANCE - PUBLIC HEARING when I call. I know of at least other people in the street who have called and they do absolutely nothing. When I call them to find out to follow-up on things, they tell me that they didn't have time they had other more urgent issues. This to me is unacceptable. About a year ago a woman was raped and almost murdered two blocks from my house. When I called the police -- it was about a year later, I was walking down the street maybe a half a block from where it happened and I saw the person -- I'm pretty sure I saw the person who did it. He walked past me and I felt immediately that I recognized him from all of the signs that were up all over the place. I went home as quickly as possible. I called the police and I asked them to please come out and do something to try and get the guy. They told me I didn't have a good enough description. The first thing they said was, what rape? We don't know of a rape that happened in Fairmount. Then when I did describe the man, they told me I didn't have a good enough description of the man for anyone to bother to come out and follow-up on that. To me, that is inexcusable. And I found it so upsetting 300 10/01/02 - FINANCE - PUBLIC HEARING that the morning after it happened, I got up from my bed and passed out. These kind of things should not happen. And I was almost a hundred percent sure that the man that I saw was the same man that was drawn by the woman that was raped. Another example is the school system, the school system that the kids have to go to every day is unsafe and it's horrific. I have friends who work in it and the things they tell me are just so sad. I can't even tell you how sad. So I'm just saying that, unfortunately, this is not just about laws, this is about what people have worked for all their lives, the time and the commitment that they've put into building their communities. They're feeling connected with others in their communities. And a system like this that allows people like this to be forced out of their communities, the communities that they created and supported over many years. So this system ignores the human element, and that is what we are all about. We put our hearts into our homes here. We put our hearts into our communities.
When the stadium issue came up, I fought so hard to get that stadium out of our neighborhood 301 10/01/02 - FINANCE - PUBLIC HEARING and from what I heard from the last person --
Yeah. I'm damn glad I spent all that time doing it, but back to the issue at hand.
Not to coerce you, but we're assuming that you've been reassessed. By how much?
Yes. I filed an appeal last night. I just wanted to finish. When I moved here I was warned by people that lived near me not to move on the street that I moved onto. They said it was a ghetto street. And I've worked very hard to turn that around, and it has been a lot of work. It's been all of my time and a hell of a lot of effort on my part. So the house fronts look terrible on my street. There are problems with trash everywhere. There were problems with slumlords and people who care nothing about their property. Through a lot of 302 10/01/02 - FINANCE - PUBLIC HEARING work and over the five years I've been here, I've been able to help turn that around. The City itself was not helpful, as per the examples that I gave. I am testifying to help with this for the long run. The people who have been here and who have put a lot of time and commitment into the community are being run out. These senior citizens should not be treated this way. I, too, will be a senior citizen one day. And by taking a stand today, I hope to be able to stay in the home I have made for myself. You need to think about incentives to make people want to stay, though, because the enormous amount of work that I have had to go through over the last seven years just shouldn't be a part of my everyday life. The quality of life here should be much better, and I do hope that you will work to improve that.
Thank you very much. Is there anyone else here who would like to testify? We thank you very much. I believe that this will end the stated hearing with regard to these tax bills. - - - COUNCIL OF THE CITY OF PHILADELPHIA 303 PUBLIC MEETING COMMITTEE ON FINANCE - - - October 1, 2002 - - - Public Meeting conducted by the Committee on Finance, held in Room 696, City Hall, Philadelphia, Pennsylvania, on the above date, to consider action on the following: BILLS 020490, 020491, 020493, 020537, 020538, 020577 - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, Chair COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK J. DICICCO COUNCILMAN JAMES F. KENNEY COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO COUNCIL PRESIDENT ANNA C. VERNA - - - 304 10/1/02 - FINANCE - PUBLIC MEETING
We will now enter public meeting. If the committee is prepared, we can report out all Bills and Resolutions, with the exception of Bill No. 010746 at the response of the Bill sponsor, Councilman Clarke. And Bill No. 8 020579 at the response of that Bill's sponsor, Councilman Rizzo. If the committee is prepared, then we can report these bills out, if that is okay. All right. The Chair will entertain a motion with regard to -- we'll go back to maybe September 25th's hearing first. The Chair will entertain a motion to report out Bill No. 020490. This is from September 25th. Councilman DiCicco, this is your Bill.
Thank you, Madam Chair. I move that Bill 020490 be reported out of this Committee with a favorable recommendation. (Duly seconded.)
It has been moved and seconded that Bill No. 020490 be reported out with a favorable recommendation. 305 10/1/02 - FINANCE - PUBLIC MEETING All in favor? (Aye.)
The ayes have it. And so this Bill is reported out. Councilman DiCicco, would you also give me a motion to report out Bill No. 020491?
Thank you, Madam Chair. I move that Bill No. 020491 be reported out of this Committee with a favorable recommendation. (Duly seconded.)
It has been moved and seconded that Bill No. 020491 be reported out of this Committee with a favorable recommendation. All in favor? (Aye.)
Thank you. Councilman Clarke is not here. Councilman Nutter, would you give me a motion to report out Bill No. 020493? 306 10/1/02 - FINANCE - PUBLIC MEETING
Yes. That is not -- Councilman Clarke had two Bills. Bill 746 we're holding, 010746. This is another Bill. It has been moved that Bill No. 020493 be reported out of Committee. Do I get a second? (Duly seconded.)
The ayes have it. And so that Bill is reported out of committee. Councilman Nutter, would you entertain a motion with regard to Bill No. 020537.
Thank you, Madam Chair. I move that Bill 020537 be reported out of this Committee with a favorable recommendation. (Duly seconded.)
It's moved and seconded that Bill No. 020537 be reported out of Committee with a favorable recommendation. 307 10/1/02 - FINANCE - PUBLIC MEETING All in favor? (Aye.)
The ayes have it. And so the Bill reported is out. Councilman Nutter, Bill No. 020538.
Thank you, Madam Chair. I move that Bill 020538 be reported out of this Committee with a favorable recommendation. (Duly seconded.)
It has been moved and seconded that Bill No. 020538 be reported out of Committee with a favorable recommendation. All in favor? (Aye.)
The ayes have it. And so that Bill is also reported out. Councilman O'Neill, would you give me a motion with regard to Bill No. 020577?
Madam Chair, I move Bill No. 020577 be reported out of the Committee 308 10/1/02 - FINANCE - PUBLIC MEETING with a favorable recommendation. (Duly seconded.)
It's moved and seconded that Bill No. 020577 be reported out of Committee with a favorable recommendation. All in favor? (Aye.)
The ayes have it. And so that Bill is reported out. Councilman Nutter, would you give me a motion with regard to Resolution 020585. All right. We've heard testimony with regard to that Resolution and, as we know, we don't have to go further on Resolutions. Again, Bill No. 010740 -- 010746, 020579, both Bills are being held at the request of the sponsors. I think that is it. We have done our duty. Let me thank everyone. This hearing and meeting are adjourned and let me thank all of you for your patience and hard work. Thank you all. 309 10/1/02 - FINANCE - PUBLIC MEETING (Council adjourned at 4:15 p.m.) - - - 310 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of October 1, 2002, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON FINANCE ___________________________ Lisa C. Bradley, RPR and Notary Public