DiscoveryWorks Global 888.557.8650 www.dw-global.com COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON APPROPRIATIONS Room 400, City Hall Philadelphia, Pennsylvania Wednesday, March 21, 2012 1:05 p.m. PRESENT: COUNCILMAN W. WILSON GOODE, JR., CHAIR COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN BILL GREEN COUNCILMAN BOBBY HENON COUNCILMAN CURTIS JONES, JR. BILLS 120169, 120170, 120171 and 120172 - - - DiscoveryWorks Global 888.557.8650 www.dw-global.com
Good afternoon. This hearing is called to order. This is a public hearing of the Appropriations Committee on Bills No. 6 120169, 120170, 120171 and 120172. My name is W. Wilson Goode, Jr., Chair of this Committee. I note that a quorum is present. To my immediate right is Majority Leader and Vice Chair of the Committee, Curtis Jones. To his right is Councilwoman Jannie Blackwell, and to my left is Councilman Bill Green. The title of Bill No. 120169, authorizing transfers in appropriations for Fiscal Year 2012 from the General Fund, certain or all City offices, departments, boards and commissions and from the Grants Revenue Fund, the Director of Finance - Provision for Other Grants to the General Fund, certain or all City offices, departments, boards and commissions. The title of Bill No. 120170, DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. authorizing transfers in appropriations for Fiscal Year 2012 within the Grants Revenue Fund from the Director of Finance - Provision for Other Grants to the Managing Director - Office of Innovation and Technology. The title of Bill No. 120171, authorizing transfers in appropriations for Fiscal Year 2012 from the Grants Revenue Fund, the Director of Finance - Provision for Other Grants to the Hotel Room Rental Tax Fund, the Director of Commerce. The title of Bill No. 120172, authorizing transfers in appropriations for Fiscal Year 2012 within the Aviation Fund from the Department of Revenue - Sinking Fund Commission to the Director of Finance - Fringe Benefits. Our first witness is Rebecca Rhynhart, Budget Director for the City of Philadelphia. (Witness approached witness table.) DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC.
Good afternoon, Councilman Goode and members of the Appropriation Committee. My name is Rebecca Rhynhart and I'm the Budget Director for the City of Philadelphia. I appear before you today to offer testimony on Bill No. 120169, 120170, 120171 and 120172. Bill No. 6 million coming from the General Fund and the remainder transferred from the Grants Revenue Fund. 9 million to appropriate 9-1-1 surcharge receipts for use on 9-1-1 eligible projects. com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. revenues collected per agreements with the FJD. 8 million to fund a shortfall in FICA. The Fire Department requests 4 million for minimum staffing level related overtime caused by no new firefighter class and an increase in firefighters injured on duty and on heart and lung. 96 million to offset increased fuel costs. 9 million to fund professional services needed to address the increased number of appeals related to the common level ratio to be established by the State Tax Equalization Board, or STEB. com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. five million is needed for indemnities to cover a projected shortfall due to a large number of high dollar settlements. One million is requested for the Sheriff to fund wage increases awarded during interest arbitration. Of the smaller transfers, OHCD wishes to appropriate acquisition recycling receipts for several fiscal years, '8, '9 and '10, in the amount of 154,000. The Office of the Director of Finance requests 148,000 for initial funding needed to establish the Office of Property Data. The Managing Director requests 84,000 to fund a contract with Town Watch. The Department of Parks and Recreation needs 80,000, which would allow them to support winter season programs they operate at School District facilities. com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. transfers with no net change in appropriation levels, including -- and I'll just list them out instead of reading the whole thing -- the Managing Director, the Fire Department, City Planning and the Office of Inspector General, as well as the Auditing Department. Bill No. 3 million. This is needed to allow payment of accumulated 9-1-1 surcharge receipts to the General Fund for use on 9-1-1 eligible expenses. Bill No. 5 million to the Director of Commerce in the Hotel Room Rental Tax Fund. The purpose of this bill is to appropriate receipts from the Hospitality Promotion Tax that are coming in higher than originally projected. com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. agencies to promote the use of the Pennsylvania Convention Center and the area served by the tourist promotion agencies. Bill No. 120172 transfers 1 million within the Aviation Fund to the Director of Finance for employee benefits to fully fund health and medical payments for the balance of the fiscal year. I respectfully request that you report these bills out of Committee with a favorable recommendation, and I further request that the rules of Council be suspended so as to permit first reading at the next session of Council. I appreciate the opportunity to testify before you today, and I'd be happy to answer any questions you may have.
Thank you, Ms. Rhynhart, for your testimony. If you would please stay at the table as we call each department individually.
Sure. DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC.
The first department to be heard is the First Judicial District. (Witnesses approached witness table.)
David Wasson, District Court Administrator, First Judicial District.
Kevin Cross, Deputy Court Administrator, First Judicial District.
To the Chair and the Committee, we respectfully request City Council approval of our FY12 mid-year transfer ordinance in the amount of 6.15 million for the following uses: Filing fee revenue, 4 million; Title 4E funds, 1,075,000; filing fee revenue for DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Zone Court, 575,000; bench warrant initiative, 500,000. The majority of this is used for staffing, Class 100, for probation officers, courtroom staff, and this is required to keep these workers on payroll for the rest of this year.
Thank you. Are there questions from members of the Committee? Councilman Jones.
Thank you, Mr. Chairman. And thank you for your testimony. A couple of quick questions while we have you. I'd be interested in knowing the future of the Mortgage Foreclosure Diversion Program. There's been an uptick based on some articles by way of foreclosures in the City of Philadelphia, and I wanted to know if that has a smooth landing in this fiscal year and are you projecting to continue that program into the next fiscal year?
Yes, Councilman. DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Unfortunately, I'm unable to comment on that at this time. I was not prepared for that, but I could get that information to your Chambers tomorrow and I'll have discussion with Administrative Judge Herron, who heads that program.
Okay. I guess -- well, if you're unprepared to do that -- that would be important to me.
I know that -- I don't know -- I guess you won't know their success ratios, but this Council two consecutive times shut down Sheriff sales, to the degree that we could. We were able to bring all parties to the table and talk about this important issue. And even though the economy seems to be improving in some sectors, not in the homeownership end, and I hear we had a spike in filings recently. Can you speak to that?
I will definitely get that information for you. DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC.
Thank you, Councilman. Any other questions from members of the Committee?
Yes. I'm sorry, Mr. Chair. You testified about Class 100 filing fees and they're in the tune of 4 million, I believe, and I wanted to know do you keep all of the filing fees that you receive?
Councilman, we have a revenue-sharing agreement with the City of Philadelphia. For certain level of filing fees, we get a one-third share that gets applied to our budget, and we don't know what those filing fee amounts are going to be. So they're not included in our budget at the beginning of the fiscal year, so as the fiscal year goes on, we reconcile that amount with the Administration. DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC.
Year to date do you have any figures on what those fees have been, the amounts?
We're looking at probably around $14 million and a projected amount of around $20 million.
Last year was a little higher year to date, but they may come in around -- last year it was around $21 million. This year we're projecting around $20 million. So it's down a little bit.
And, Councilman, if I can just add to that. When we -- there's several revenue-sharing agreements with different types of fees with the courts, and so in the mid-year DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. transfer ordinance, what we're doing now is when the courts makes a request of the City, we look to see what the actual revenue collected to date is for each revenue source to make sure that we feel very comfortable that they're on track to hit the number that they're requesting at that point.
Another court that I'm interested in -- and I'm assuming you're not prepared to talk about it is -- you discontinued Community Courts.
And I wanted to know what the future of Community Courts was.
Well, we'll definitely include that in our main testimony, but I will say it's basically a funding issue and we have, in a sense, expanded the concept of Community Courts through our AMP program, Accelerated Misdemeanor Court program. So we have DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. more locations that are doing basically the Community Court philosophy and work. Community Court was shut down because of funding, money connected to certain funding, but we were able to expand the programs through other funding under a different name. And we'll speak more of that in our budget --
I'm going to need a detailed understanding of what shared other responsibilities and how, since it's no longer open, those services are provided. There was a $13.5 million grant from the Justice Assistance Grant. Is that the funding shortfall you speak of?
I don't know what you're referring to out of $13.5 million grant from the Justice -- the BJA. We had --
The Recovery Act, the First Judicial District received 13.5 million from the Byron Justice DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Assistance Grant.
We had 7.5 million of that for recovery positions for Fiscal Year 2010 and 2011. Funding was replenished for the probation officers but not for the Community Court. We had a one-year grant for Community Court, which kept us through this fiscal year.
Thank you, Councilman. Let me acknowledge for the record that Councilman Bobby Henon, member of the Committee, is also present. Councilman Green.
Thank you, DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Mr. Chairman. My question relates -- net-net, the General Fund provides money to the courts regardless of all fees collected?
So why do we have complicated revenue-sharing agreements at all? I mean, ultimately it's a net payment from the City to the courts. You present a budget; we approve the budget. What is the purpose of a revenue share considering that overall we provide the entire budget whether or not we share the fees?
I think to answer that question, there's a base budget that makes up the bulk of the money we give to the courts, and then the revenue sharing is on top of that base budget. And the idea of that came about, I think, many years ago. It's called the Zero Growth Agreement, and the idea behind it is that the City wasn't going to fund the courts -- give the courts DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. additional money or wouldn't be required to give the courts additional money unless they raised more revenue. So the idea was that, okay, that there's baseline for various different revenue sources that the courts collect. There's a baseline, and then anything above that, if they collect above that, they get -- most of the time it's one-third to the courts and two-thirds to the City. So it's in addition to the base budget. Does that answer your question?
Yeah, but if you can't plan on that, I mean, why is that a sound budgeting method?
How many lawsuits are filed and the County of Philadelphia is not controlled at all by the court system or the City, and it seems like a lot of time and energy wasted trying to keep a count of something that is meaningless in the context of us providing net money to the DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. courts anyway.
Well, but we wouldn't -- the revenue sharing money we wouldn't provide to them if they didn't hit the baseline. So --
But they don't control whether or not they hit the baseline.
Not with filing fees they don't. People file or don't file.
I mean, you can speak to some of the initiatives that the courts has done to raise some of the revenues. But we budget for -- starting in Fiscal '13 and in the Five Year Plan, we put in an adjustment in the fund balance number to account for the revenue sharing, the average of the revenue sharing over the past few years. So it DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. is in the budget. But in terms of we just shouldn't do it altogether, is that what you're saying?
It seems like I don't know why we're keeping track of it since we're net providers of money to them. And if there were many less filings, the court system wouldn't cost less to operate. We would be doing transfer appropriations from the Grants Revenue Fund. If the money comes in way in excess, they're essentially getting money that they didn't request and don't need in theory, so the following -- we're then encouraging them to go ahead and spend before the year is over. It doesn't sound like a sound budgeting practice. That's my only point. I don't want to belabor the Committee with that right now, but we can talk about it during the budget hearings.
Councilman DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Jones.
One other follow-up question. Thank you, Mr. Chairman. Gun Court, is that planned to be continued?
Again, that was another funding issue. The state gave us a special grant for Gun Court for a number of years and the state cancelled that funding. So those probation officers that were on that grant, about to 20, 18 probation officers, a couple 15 more staff, were moved onto the General 16 Fund, and the function of one court 17 handling all the gun cases were then 18 transferred throughout the various zones in the court structure. Since Zone Court came on board about a year or so ago, it almost took out the need to have a special Gun Court.
Because of the way DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Zone Court is set up, it --
There's geographic prosecution; is that what you're talking about?
Geographic prosecution, and the thought there is that is a better -- from the people that put that together, which include the courts, that's a better way to handle caseloads than to have various groups of specialized courts.
This will be a question asked again during the regular budget process, and I want you to quantify why that's better this way versus that way as opposed to today just stating that. Because as you can see, we're having a slight problem with proliferation of firearms in the City of Philadelphia. So any move one way or the other, it's important that we quantify why we're doing it. And I understand that cost is always a factor. That's the reality of budgeting, but the unintended DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. consequences that come with a budget cut or a shift in resources, we need to monitor closely.
We'll have a year under our belt, so we'll be able to compare the year under Zone Court and the prior years under Gun Court. We'll definitely do that for you.
The Office DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. of the Sheriff is next. The Office of the Sheriff is next. (Witness approached witness table.)
Good afternoon, Sheriff. SHERIFF WILLIAMS: Good afternoon, Councilman.
Please state your name for the record and proceed with your testimony. SHERIFF WILLIAMS: Good afternoon, Councilman Goode and members of City Council. I am Jewell Williams, the Sheriff of the City of Philadelphia. Again, good afternoon. The Sheriff's Office is seeking additional funding for its Class 100 budget allocations to provide for an arbitration award of June 21st, 2011. In that award, the sworn officers was granted a 2.5 percent wage increase retroactive to July 1, 2010 and DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. an additional wage increase of 2.5 percent effective July 1, 2011. This combined wage increase of approximately 5 percent was not budgeted in our Fiscal Year 2012 in our class appropriations that was approved by Council. Due to the lateness of the arbitration award; i.e., June 21, 2011, the entire fiscal impact of this award fell upon our fiscal budget of year 2012. Without this transfer, the Office of the Sheriff's office will be without a budget authority to meet its payroll responsibilities June 2012. Thank you for allowing me to speak, and I look forward to answering any questions.
Thank you, sir. SHERIFF WILLIAMS: Thank you. DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC.
Office of City Controller is next. (Witness approached witness table.)
Good afternoon, Councilman Goode and members of the Appropriations Committee. I am Harvey Rice, First Deputy City Controller, and with me is Andrea Rose, our Administrative Services Director. I am here today representing City Controller Alan Butkovitz to present testimony on the Auditing Department's Fiscal Year 2012 budget. The ordinance before you contains a mid-year budget transfer of 170,000 for the auditing department. The need for this transfer is to fund unanticipated expenditures for the forensic audit of the Office of the Sheriff. So I thank you for your cooperation. It's always appreciated. I'd be glad to answer any questions that DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. you may have.
Thank you. This money has already been spent? This was spent with outside auditors?
So how come you didn't seek approval prior to expenditure? In other words, you've spent money that has not been appropriated. That's a question for the Controller's Office.
We did seek approval with the Finance Department. They agreed to fund out of the General Fund $45,000 and then we were going to pay the additional 45,000 out of our existing budget, and that's what we did under the Class 200 funds. And, therefore --
Mr. Rice, DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. are you aware that the City Council is the only body of this government that can appropriate funds to the City Controller's Office?
Let me just try to clarify this a bit. I think that this audit was at first expected to be done last year, in Fiscal '11, and the funds were appropriated and not fully spent in that year. And so this was a matter of needing appropriations in Class 200, and they had extra -- they have extra money in Class 100 that they're moving over to fund other things in Class 200 that they would normally spend out of Class 200. So the expectation was that this contract was going to get funded last year, actually, just to clarify.
Mr. Rice, how much was spent on the internal investigation that was recently in the City Paper on private investigator fees and --
All I can tell you, DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. because I was not involved in that, the allocation or the commitment of how much it -- I can only tell you what the Controller has reported was 8,500.
Would you please provide the specific details of all expenditures related to that investigation to the Chair of this Committee. Thank you.
Thank you. City Solicitor. (Witness approached witness table.) SOLICITOR SMITH: Good afternoon, Councilman Goode and members of the Appropriations Committee. I am City Solicitor Shelley R. Smith. With me today are Donna Mouzayck, First Deputy City Solicitor, and Suki Kazahaya, DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Administrative Services Director. We are here today to offer testimony relating to Bill No. 120169, which will transfer General Fund appropriations of $1.85 million to the Law Department's Class 200 and 1.5 million to the General Fund Indemnities appropriation. The factors causing the Law Department to request the appropriation transfers are as follows: First, the Law Department, as Budget Director Rhynhart said, requires a number of contracts to secure property appraisals for use in unusually large tax assessment appeals pending with the Board of Revision of Taxes or the Court of Common Pleas. The total cost of the contracts to hire appraisers in appropriate cases is estimated to exceed $1.85 million. The Law Department Class 200 budget is without sufficient funds for these contracts. Second, two extraordinary cases have significantly impacted the budget DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. for indemnities. Specifically, the Woods case settled for $1,600,000 and the Isaac case settled at $1,825,000, for a total of $3,425,000. In the Woods case, the plaintiffs sued the City for breach of contract for educational services that they provided for DHS-placed special needs children at Woods. In the Isaac case, the plaintiffs' decedent was fatally wounded when a police officer discharged his firearm into the house where he was celebrating New Year's with his family. The costs of these two significant cases will leave the Indemnities Fund with a shortfall and thereby reduce the funds available for the payment of other more routine settlements which occur throughout the year for which appropriated funds were budgeted. Because timely payments are required by the courts, the Law Department requests additional funding DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. for Fiscal Year '12 Indemnities Fund. Thank you for the opportunity to testify today, and we are happy to answer any questions that you have at this time.
Good afternoon, Solicitor. Thank you for your testimony. Similar to the questions that were asked of the previous office, the $1.85 million for the hiring of appraisers, is that money that has already been spent or money to be spent?
That is money to be spent. It's being transferred from -- the request is to transfer the money from the Office of Property Assessment over to Law so that the Law Department can hire appraisers for these cross appeals that they need to do.
And how will the selection process occur? SOLICITOR SMITH: We will put -- I believe we put out RFPs to hire DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. appraisers. Essentially what they are is the equivalent --
I'm asking specifically for this $1.85 million. Has it been spent? The answer is no. It's going to be spent. How will the selection of the appraisers be done? Will it be done through RFP? SOLICITOR SMITH: They've already been selected and they've been selected through an RFP process.
So the money has been spent? SOLICITOR SMITH: The money hasn't been spent, but the firms have been selected, and should the ordinance 18 be --
So once again, how did you know the appropriation was going to be approved?
If the appropriations aren't approved, the Law Department won't fund the contracts. I mean, I don't think -- I think that the DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. request makes sense, but your power is such that you provide the appropriation power to be able to fund the contracts.
And can you tell me who was selected? SOLICITOR SMITH: The firms that were selected -- you asked me who the firms were, right, and how they were selected? Okay. So the firms that have been selected are the American Evaluations Group, Bearoff and Company, Griffin Consulting Services, Ludwig Corporation, PJL Realty Advisors and RCDH of Pennsylvania, doing business as AR Hughes and Company. And Dan Cantu-Hertzler, our Corporate Chair, can tell you what the RFP process was.
I don't recall the RFP process. I don't know DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. whether this was posted. I don't know for sure whether this was posted or not. It was publicized. They tried to get people on board very quickly. It's taken a lot longer than --
I'm not sure how to answer that. SOLICITOR SMITH: I think the best thing for us to do, Councilman, is to get back to you with the details of how the process -- of what the process was for selecting these appraisers rather than try to piece it together from our best understanding of what the process was. I think we should get back to you with the details.
Are the contracts for the appraisers equal among the people you listed who were awarded of the awarded contracts? SOLICITOR SMITH: Yes, except for one. The RCDH looks like it was DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. contemplated to be a larger one. The others are equal.
Do you know what portion of the money being spent or hope to be spent, the 1.85 million, is going to Philadelphia-based firms? SOLICITOR SMITH: I do not, but we can get that information for you.
Do you know what portion is to be spent with disadvantaged firms? SOLICITOR SMITH: I do not, but we can get that information for you.
In the future -- I'm just going to say this for the record now, say this to the Budget Director -- the process we're going to have is that these bills will not be introduced until we know what the requests are, and we will quite possibly DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. separate the bills. In this case when I saw the requests, this was one of the bills that I would have separated from the package. Do you understand that?
You mean in the future you could possibly separate the requests?
When I see a red flag, which this is, and I saw the flag, but I got the memo the day before the bills were introduced. Had I gotten the memo a week before, I would have separated this bill out.
I'm happy to work with you on that. If there's a better process for you, I'm happy to do that.
Thank you. Any more questions for this witness? Councilman Jones.
Thank you, Mr. Chairman. Solicitor Smith, could you DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. provide for this Committee a breakdown of all awards over the last three years and the categories, so if it's a slip and fall, and the amounts? Do you have that kind of data? SOLICITOR SMITH: You mean from --
Arbitrations or court cases. SOLICITOR SMITH: You want settlements and all the payments that we've made in cases for the past three years?
Correct. SOLICITOR SMITH: Sure. We can provide that to you.
By whatever the categories. SOLICITOR SMITH: By category, yeah, we can provide that to you.
Councilman DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Henon.
I have a few questions. You're asking for additional monies for the RFP you put out. Are they pending appeals or are they anticipated appeals? SOLICITOR SMITH: They're pending appeals.
Pending appeals from 2012, from citizens from last year's budget? SOLICITOR SMITH: From the tax assessments from last year.
Do you have an idea of how many cases? SOLICITOR SMITH: Two thousand, is my understanding.
So they haven't been heard yet, right? SOLICITOR SMITH: I'm sorry?
So they haven't been heard yet? SOLICITOR SMITH: I think they've begun to be heard. I think the DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. BRT has started to work through them.
And will you be coming back to this body for additional monies for future anticipated cases? SOLICITOR SMITH: We don't anticipate doing that. We anticipate that what we're seeking today should cover -- the amount that we've requested is, I believe, the estimate that our office, working with OPA, has determined should cover the cost of independent appraisers for all of the appeals that we are currently aware of.
And anticipating in FY13? SOLICITOR SMITH: Well, these are the current -- I mean, there's 2,000 of them now, so this is for the current appeals.
But you would imagine that there's going to be a significant amount of appeals anticipated in the next coming year? DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC.
We'll have to look at -- I mean, obviously that's a moving process and, I mean, we'll have to continue to look at that in terms of Law's budget and if they could handle it within their budget. But the expectation for '13 and beyond is that Law is expected to handle it within their own budget.
Thank you. I think that raises a good question. This is a thousand dollars roughly per appeal based on Allegheny County, elsewhere. I'm just wondering why -- is there a reason that we are doing this in the Law Department as opposed to OPA? SOLICITOR SMITH: Yes. And the reason is that the -- we actually talked DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. about this and came to the conclusion that it didn't seem appropriate for OPA to hire -- it's basically, if you're familiar with injury litigation, it's basically the equivalent of an IME, an independent examination of what OPA has done. So it didn't seem reasonable for OPA itself to pay for the cost of an appraiser to evaluate its own work. So that's the reason that OPA isn't doing it -- wouldn't be hiring the appraisers itself.
But, I mean, why doesn't the work of the professional appraisers at OPA stand on its own? Why do we need to hire outside experts to prove that OPA is right? And is this expected to be standard practice or are we confident that OPA's appraisals can stand on their own if we go to full value or AVI?
I think we're definitely confident in OPA's ability to appraise. I think that this specific DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. situation arose -- it started as a result of the STEB decision. I think you're familiar with this. And the number of -- a number of appeals we received because of that, the rate being set much lower than the 32 percent originally. So there was a decision made to cross appeal, and this was a decision made that was in the best -- expected to be in the best interest of the City. This was a one-time decision for the 1.85 million. I think going forward, there isn't an expectation that this is a new standard policy that Law would get funded for this going forward. This is related to the STEB ruling.
I see what you're saying in terms of if there are appeals in the future, what are we going to -- how are we going to handle those appeals.
No. Even DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. with respect to this, I mean, we're talking about what is the fair market value -- what is the actual value of these properties, which really is not at all related to the common level ratio. What the value of these properties are is what the value of these properties are, and so OPA has determined what the value of these properties are, and I'm wondering why that is not sufficient for us to move forward within the process. And if OPA is not capable of determining the actual value of these properties, we've got 570,000 more lined up behind this.
No. I think OPA is capable, but Shelley or Dan can speak to the process -- the strategy of cross appealing in this specific case.
Cross appealing has nothing to do -- legal strategy has nothing to do with what the properties are worth. OPA has determined a value, an actual value, fair market DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. value, for these properties. SOLICITOR SMITH: What's at issue here, though, in these appeals is the old valuations, and because of that, because of the STEB issue and because in relation to the STEB issue at some point it was determined that cross appeals would be taken in some instances, collectively we determined that the best way to approach litigating those issues was to have an independent appraiser attest to or contest, depending on what the situation was, the appraisal that had been done. So this is a situation that's sort of unique to these particular circumstances, as Rebecca said, and not a policy going forward.
So the City may take a position that OPA was wrong and that the actual value of the properties is far higher; is that correct? SOLICITOR SMITH: The Law DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Department may, but in relation to old appraisals and not --
There's no 9 such thing as old or new. On the City's books, on tax bills that we send out, there's an actual value that is not related to the 33 percent or 32 percent of that for which is the assessed value, and the actual value is either accurate or not. SOLICITOR SMITH: Also remember at some point there was a moratorium, so a fresh appraisal wasn't done. I mean, there's all these complications that drove the decision relating to this particular set of circumstances.
So the moratorium is partially responsible for the fact that these commercial properties are not at actual value and that this $2 DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. million expenditure is required?
I would say that once the Office of Property Assessment goes through and reassesses all of the properties, that we will be in a very different situation. I wouldn't say this has to do with the moratorium. It has to do with the fact that, as you know, we don't have assessments that are correct for the entire City. That's why we're going through the process of full valuation, and once that happens, it will be a very different situation. I think we all know that.
Well, it seems to me if we have an actual value for properties, they ought to be on the OPA's system and there should be no such thing as new or old.
Councilman, with all due respect, we know that the system as it has stood for years and years has been relatively broken, and that's the goal, is to fix that system. So moving DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. forward, it will be a different situation.
State law requires that we have an actual value that's correct in the system every year.
For those of us who are non-lawyers, not ready to argue these matters in court, if you were to simplify it for my own edification, that we have a broken system, you are now charged with defending that broken system, to the degree that you can. SOLICITOR SMITH: Correct.
And what is at risk is tens of millions of dollars of revenue that if we are ruled against from the 25 to 33 or 17 range, we could be DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. exposed. SOLICITOR SMITH: Right.
So you have a piecemeal approach at this point because that's what you've inherited, that this may not repeat itself if we actually do what we are looking to do, which is create a fair and equitable system that is less challengeable in court. SOLICITOR SMITH: That's correct.
For the non-legal mind. SOLICITOR SMITH: That's correct, yes. If the system is fixed, we won't have to --
If it's fixed, we won't have to go through this again. SOLICITOR SMITH: Correct.
Is that DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. close? Thank you, Mr. Chair.
Thank you. Any more questions for these particular witnesses? (No response.)
Ms. Rhynhart, are you presenting testimony from the Finance Department?
I can. And I think someone is here from the Office of Property Data. Saskia, do you want to come up. (Witness approached witness table.)
So I'll start with my testimony. The Office of the Director of Finance is requesting an increase to its operating budget in the amount of $148,284 to cover the costs associated DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. with the start-up of a new division called the Office of Property Data. The Office of Property Data has been created to lead and manage a cohesive program for the efficient collection, maintenance and distribution of current and accurate property information. Once fully operational, the division of the Office of the Director of Finance will put in place a cross-departmental mechanism that will reduce the redundancy, cost and inconsistency of City-held property information and ensure that all business processes related to the development and maintenance of property information are efficient, effective and customer-service focused. Specifically, we are requesting $117,300 in personal services to cover salaries for the four-member Office of Property Data team and $30,984 for the purchase of materials, supplies and equipment associated with establishing this new division. DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Thank you for the opportunity to testify today.
Thank you. I don't understand the purpose of this office.
Hello. I'm Saskia Thompson. I'm the Executive Director of the Office of Property Data. The purpose of this office is to handle all of those cross-departmental handoffs that we know exist and are not necessarily as efficient and we would like them to be for all property-related information.
For example, Property Assessment generates addresses and has tax accounts associated with those addresses. Those addresses don't necessarily link up to addresses in other data systems across the City; for DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. example, at Licenses and Inspections, which is also performing inspections on those same properties. The way the data is structured, you can't necessarily tell that one tax account is on the same property that L&I is inspecting. Some of those are data issues built into the systems that are old and out of date and some of them are just the way that we are inputting information, and it's a cross-departmental issue. It's more on business process that we're hoping to fix.
Right. So why are we creating a special office for this? There's a bill before City Council today that would require that every single City department that deals with one taxpayer, one property, whatever, use the same identifier to identify that property so that there's real data. It requires that if there's a field on a form, that every field that's on a paper form must be in the database rather than DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. just selecting fields that we put into our databases, et cetera. I just don't understand the need for this office in the Department of Finance and what personnel are doing. Are you taking data from each department and inputting it yourselves?
We're trying to answer that question right now. So our staff is very small. It's some people on the business analyst side and then two people that have GIS backgrounds, and we're trying to figure out exactly how to do that, how to create a unique identifier, how to make sure that we're all talking about the same thing. Because each department is responsible for generating its own data, they don't necessarily -- they're not necessarily in the position of making sure or knowing how even to make sure their data attaches to someone else's.
Isn't that just -- when we -- it's really just a DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. question of the City setting specific criteria for each department of what data they have to put in, how they have to put it in, where it goes into a database, right? And you don't need to create a separate office for that. That's just created in the standards that we send down from on high to every department and build in a system such that it communicates with each other. I don't understand why we're using manpower to do something that we should be doing. And what I really don't understand, since it's related to property, is why we're doing it in the Department of Finance when we created the OPA, the Office of Property Assessment, that deals with property data. We created a separate office that was not under Finance or Revenue, that was its own office to deal with property data so it could be independent. And this seems to me to be moving things back over into the Finance/Revenue side of the house DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. with respect to property data.
I think the Office, if I can just add something, of Property Data is addressing a really big issue that's existed for 20, 30, 50, 60 years in the City, which is that departments have created their own systems and are inputting their own data -- just let me finish. And there's a lot of inefficiency, a lot of inefficiency in that, because there's incorrect addresses. Like when one department fixes an address, it doesn't fix it across the whole City.
The problem is clearly identified. We all agree on the problem. How are four people in the Department of Finance going to solve the problem?
I think that's what Saskia was trying to explain, but all I was saying was that the problem is quite large. So that's why I was saying that -- if you could just let me finish DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. for a second. The problem is actually quite large, which is why it's not just about telling the departments, Oh, put this data in this way, because of all the different systems, and Saskia can speak to what her staff are doing.
But what she said was that they didn't know how they were going to do that.
We're answering that question right now. So you said somebody has to set the standards. We're trying to figure out what those standards are.
Let me ask the first question, which is when was the office created?
Staff just came on -- I was hired a year ago last February.
I think Saskia was brought on by the Finance Director DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. about a year ago, right?
It was brought on as part of in Finance's budget, but the request is being made to add money to Finance, yes, right now.
There was thought in the last budget process of creating an Office of Property Data and the thought of hiring four new people?
No. It came -- it was after the budget. Maybe it was about a year ago maybe. I think that the process has been --
When the budget was proposed. I mean, I could get you more specific details from Rob Dubow, the DiscoveryWorks Global 888.557.8650 www.dw-global.com 3/21/12 - APPROPRIATIONS - BILL 120169, ETC. Finance Director, about it. I think that --
The question is just simply, when was it created? Are these new personnel that were hired for this purpose? Will it be in the proposed budget for next year?
How is it reflected in that budget? And what is the purpose for spending that money in this way during this fiscal year if it wasn't anticipated during the last budget process?
It will be -- to answer the question about being included in the proposed budget for '13, it is definitely included in the budget request. So it can be part -- will be part of Finance's budget.