Committee Hearing, October 1, 2002

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.

Say that again.

Barnett.

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. )

Thank you very much, Ms. Myles.

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.

No, but may I speak?

Okay.

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 --

Yes, it would, Councilman. Absolutely.

Thank you.

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. Councilman Kenney.

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?

$250 a month.

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. (Applause.)

Councilman DiCicco.

Thank you, Madam Chair, and good morning. How long is it you say you've been living in Philadelphia?

I've lived downtown two years.

And you moved here from where?

I move to Pennsylvania six years ago from the midwest.

The home you are living in is it a home?

Yes.

Was it new construction or was it existing?

It is 14 years old.

Did you make any improvements during the last two years? 31 10/01/02 - FINANCE - PUBLIC HEARING

I did. I renovated the kitchen.

I just wanted some of those facts.

However, I did that after the property tax reappraisal.

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.

You're welcome. Councilman O'Neill.

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.

Okay. Thank you.

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.

We had nothing to do with it.

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.

Hi, my name is Sam Bartholomew.

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

Thank you.

Thank you.

Can I be heard? Council, I know I'm not prepared, but I want to say --

You have to give your name first.

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.

Helen J-a-r-o-s-i-e-w-i-c-z.

How do you pronounce it?

Jarosiewicz.

Okay, I think you were on last week's list, were you not?

No. This is the first time I'm here.

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. Councilman Kenney.

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?

My name is Paul Pascucci.

Would you spell Pascucci for us for the stenographer?

That's P-a-s-c-u-c-c-i.

Thank you.

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 very much. President Verna.

I do hope you have filed an appeal.

I got the papers today from Councilman DiCicco's office.

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.

Thank you, Councilman. (Applause.)

Thank you. Councilman DiCicco.

Thank you, Madam Chair. Good morning, Paul.

Good morning.

The property that either you or your dad or both of you own at 12th and Ellsworth, is that your property as well?

Yes, sir.

That property has recently gone under some major renovations. I don't know if the units are being occupied yet.

Not currently. We're waiting to be signed off on.

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. Thank you for your testimony.

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.

Yes.

But I just wanted to clear that up that it's not a $31,000 increase.

No, it wasn't an increase.

Thank you.

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?

Madam Chair, if I could hold until after --

I'm sorry. You did say that. That will be fine.

Thank you.

Commissioner, would you like to testify?

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.

Thank you very much. Councilman O'Neill.

Point of information.

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.

Point of information.

Point of information. Councilman DiCicco.

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

In the year --

On the reassessment.

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?

Absolutely not.

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?

It is possible. (Applause.)

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.)

Thank you, Councilman. Councilman O'Neill.

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. Councilman Nutter is next.

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?

That was a settlement agreement in which --

So that means that there was no opinion?

That's right.

There was no 20 determination made by the Court.

Not a final determination of the Court.

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.

Okay.

Good morning, Madam Chair, Councilman Nutter. Richie Fader, I'm the Chief Deputy City Solicitor for Appeals and Legislation.

Good morning.

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?

The Court decides.

When the Court decides.

Correct, Councilman.

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?