COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE OF THE WHOLE - - - Room 696, City Hall Philadelphia, Pennsylvania Tuesday, April 29, 2003 10:20 a.m. - - - RESOLUTION 020509 - a Resolution authorizing the Council Committee of the Whole to hold hearings on real estate taxation in Philadelphia and the potential of land-value taxation to encourage development and discourage blight creation in the city... - - - PRESENT: COUNCIL PRESIDENT ANNA VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL CLARKE COUNCILMAN DAVID COHEN COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN ANGEL ORTIZ COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILWOMAN MARIAN TASCO - - - V A R A L L O, INCORPORATED LITIGATION SUPPORT SERVICES 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 I N D E X RESOLUTION 020509 PAGE JONATHAN SAIDEL, City Controller ............ ED SCHWARTZ, Tax Reform Commission .......... 9 DR. ROGER MCCAIN, Drexel University ......... 45 BRETT MANDEL, City Controllers Office ....... 50 JOSHUA VINCENT, Center for the Study ........ 56 of Economics ........................... 56 JOHN KROMER, SR., Fels Center ............... 87 FRANK CONCANNON, Controller of Allentown .... 104 DAN SULLIVAN, Henry George School ........... 111 CARTER MURDOCH, National Assoc. of Realtors.. 135 REV. BRUCE EDWARDS, Urban Leadership Council. 141 NAOMI ZASLOW, HAPCO ......................... 147 KEVIN MAZZUCOLA, Automobile Dealers Assoc.... 149 SANDY SORLIEN ............................... 155 CHRISTINE SCHWARZ ........................... 158 FRED MURPHY, Center City Residents Assoc .... 162 CHRIS PATUSKY, Fairmount CDC ................ 172 JOANNE BEACH ................................ 175 ED GOPPELT .................................. 177 KATHY HARRIS ................................ 189 ANDREW HOHNS ................................ 197 ALBERT HARTHEIMER, The Center for the Study of Economics ........................... 208 STEVEN CORLEY ............................... 217 WILLIAM CHECK ............................... 218 JOAN SAGE ................................... 219 3
Good morning, everyone. This is a public hearing of the Committee of the Whole regarding Resolution No. 020509. I would ask Mr. McPherson to please read the title of the resolution.
Resolution 020509, a Resolution authorizing the Council Committee of the Whole to hold hearings on real estate taxation in Philadelphia and the potential of land-value taxation to encourage development and discourage blight creation in the city; and, further authorizing the Committee to seek advice and recommendations on real estate tax policy and land-value taxation from citizens, community groups, economists, academia, business executives, officials from other jurisdictions, and state legislative and executive branch officials.
I believe Jonathan Saidel is our first witness, the City Controller. Please approach the witness table. Good morning. Please identify yourself for the record and proceed with your testimony.
Jonathan Saidel, City Controller. 4 I come before you today to offer testimony on resolution 02059, which seeks to explore the potential of land value tax action to encourage development and discourage blight creation in the City. I applaud Councilwoman Blackwell and all of City Council for focussing attention on this worth I issue. As you know all too well, this past summer, homeowners across Philadelphia received notice that their real estate taxes would increase because of a change in the market value of their homes. Like you, I was upset to see so many neighbors and seniors angrily complaining that their taxes have increased by more than 100 or even 200 percent. Then, as now, I argue that we must fix our system of real estate valuation to ensure fairness, transparency, and certainty. But despite a number of legislative initiatives by this Council, tax relief for our neighbors remains elusive. As one way to reduce real estate tax burdens for Philadelphia homeowners, we can change how we tax property. As I recommended in my November 2002 Tax Structure Analysis Report, I advocate for a system that will tax buildings less 5 and tax land more to encourage individuals to maintain and improve their properties. At the same time, such a shift will discourage speculation and blight by decreasing incentives to allow buildings to decay. Based on my analysis, such a system would reduce real estate taxes on nearly 80 percent of residential property owners. Similar systems in Harrisburg and Allentown have reduced abandonment, encouraged development, and generated popular approval. At the end of the day, I hope to convey a few simple points. First, land value taxation is property tax relief for Philadelphia. While we have and will continue to reduce the wage tax and business taxes, land value taxation will bring relief to neighborhoods hit by August's reassessments. My proposal is to decrease the tax on structures and increase the tax on land so that Philadelphia could generate an equal amount of revenue from the tax on land and the tax on structures instead of the current situation where three quarters of real estate taxes are generated by the tax on buildings. My estimate, confirmed by a research team from Drexel University, is that such a 6 change would decrease real estate taxes for almost 80 percent of Philadelphia homeowners. Like a universal tax abatement, this tax shift would reduce taxes for those who are maintaining and improving their properties. Second, the proposed shift to land value taxation would be revenue neutral as the shift to land value taxation would shift taxes from buildings to land while generating the same revenues. Under my proposal, the School District and the City will receive the same amount of taxes they do now. In the future, if the tax base expands, School District and City revenues should increase accordingly. Today, I will present a number of panels who will address the merits of land value taxation. You will hear from experts and economists that taxes on land value are less troublesome than taxes on wages or business and that land value taxation can reduce residential property taxes, fight flight, and foster community development in Philadelphia. You will hear from City officials that land value taxation is encouraging development and improving neighborhoods in other jurisdictions without stress to revenue collection bureaucracy. You will hear 7 from business leaders that land value taxation make sense for businesses in Philadelphia. Finally, you will hear from a parade of representatives from neighborhood organizations and ordinary citizens that land value taxation can help revitalize neighborhoods across Philadelphia. I hope you will find these panels to be enlightening and educational, and I encourage you to satisfy any questions you might have about land value taxation by posing those questions to these panels of experts.
Staff from my office will remain in these Chambers to aid you in inquiry in any way. I have long believed that land value taxation makes sense for Philadelphia and I am pleased to see that so many individuals and organizations are here today or represented today by written statements to urge this Council to introduce and approve legislation to make this policy a reality. I have long advocated for business tax reductions and I've even marched on City Hall for wage tax reductions, and I'm happy to report that these tax reductions improved the City's business climate and dramatically closed the gap between 8 Philadelphia employment growth and US employment growth. 4 percent. 4 percent. Ongoing business tax and wage tax reductions are working. Now it's time to extend tax relief to productive property owners and enact land value taxation in Philadelphia. Thank you again for turning your attention to this matter. I hope that you will pose your questions to the experts on the panels who should be able to answer any questions you have in greater detail than I could. Again, staff from my office will remain and address any issues you might have about my proposal and that may arise during the exchanges with the panels. I thank you again.
Since we have approximately 52 witnesses who would like to testify, I would ask Councilmembers to refrain from asking questions of the Controller today. We can certainly do so at a later date when we have another 9 hearing.
We have a number of panelists who want to testify on Panel No. 1. Since we only have three seats at the witness table, I would ask Mr. McPherson to please call the first three witnesses on the first panel.
Brett Mandel with the Controller's Office. Mr. Schwartz can speak on behalf of the Tax Reform Commission and then the Controller will present his panels.
A Sergeant-at-Arms will get it and distribute it, please. Good morning. 10
Good morning, Councilwoman Verna. I am here today as Chairman of the newly created Tax Reform Commission that has been meeting since January of this year. Our charge, by November 15, to produce in writing recommendations on how to restructure Philadelphia's entire tax system in order to reduce the burden of taxation on Philadelphia residents, to make the City more competitive, and to provide a better fiscal climate for the City for people to live and work. That is our charge. My name is Ed Schwartz, I'm President of the Institute for the Study of Civic values in my work life, and I've spent a few hours here along the way. Given this timetable, the Commission itself is composed of 15 people who come from a variety of business community perspectives. There are people on an advisory committee which 21 broadens the organizational base. And so it 22 provides an opportunity for a group of people, many 23 of whom who have not met each other before but who have been active in various aspects of Philadelphia, to take a good hard look at all of the tax 11 initiatives that have been proposed and our own notions of what they might be and to see what we think and then to come out and give our best judgment as to what we think ought to happen. We are also required to produce model bills if there's legislation to be produced by this. So that's what we're doing. We're methodically going through a lot of different proposals. We really do intend to give the public some notion of what our recommendations are or might be before November 15th so that there can be at least one public meeting to react to them at that time. So we're not going to wait until the night before November 14th and come out with a surprise package here. The public will be well aware of what we're doing and have a chance to influence us this as it does now. Within this framework, I'm here to say right now, we do not have a firm position on the land tax. This is April, about to be May, and so we have not staked out we're for it, we're against it. But I am here to say that the Tax Reform Commission takes the land tax very, very seriously as a significant proposal for taxes in Philadelphia and 12 one that could do the City a lot of good. And so we are from the very beginning making the examination of the land tax one of our major priorities. For example, the first public meeting that we had to focus on real estate taxes featured a presentation by Benjamin Howells, a former City Councilman in Allentown who led the fight for land tax there, as well as Josh Vincent whom you will hear from here from the Center for the Study of Economics in Philadelphia. We will be having our own first public meeting as the Tax Reform Commission in this room on May from 1 o'clock to 14 8 o'clock in the evening, and we anticipate to hear 15 additional testimony on behalf of the land tax from groups there. A member of our research staff did her graduate thesis on the land tax, working with Robert Inman from the Wharton school, so one of our staff members have specific and particular expertise in that. And we have a Real Estate Tax Committee on the Commission and we have asked Brett Mandel from the Controller's Office, who sits on the Commission, to Chair that Committee. And of course, Mr. Mandel and the Controller have been, as you've heard, 13 leading advocates of the land tax. So that while we haven't yet taken a position, we have taken a position. At least on the importance of this proposal and the need to undertake this kind of careful analysis of it, because if it works as the Controller described it this morning already, this would be, obviously, a huge benefit for the City of Philadelphia in every possible way. What are the issues that we're looking at, and in fact, we had a meeting -- our Real Estate Committee met a couple weeks ago and this was an array of the issues that we felt we needed to examine.
First and foremost, the land tax is aimed at producing economic development by putting pressure on vacant land and the owners of it to do something, the best use of the land. It contributes in theory to the development of the City. And certainly with thousands of vacant parcels of land in Philadelphia, with speculators and everything else, that's an inviting prospect. So we want to take a good, hard look at the evidence collected by the Controller and any other on how this might work 14 for economic development. A second issue, however, on the other side is the question of how much of this money from vacant land would be uncollectible. If we're trying to make this proposal revenue neutral so that the amount that we raise by shifting the burden from improvements to land, the overall amount remains the same, what happens if a certain portion of the land that we are trying to tax higher is just not taxable at all? Having spent a number of years of my life dealing with the problem of vacant land in Philadelphia and trying to get ahold of people who own it who don't live here anymore, that to me is a question. It may be a very small portion of it, but we need to look at that. But on the other side, the assertion of the Controller this morning certainly has been said, not only by Mr. Saidel, but by a Finance Director Betsy Rivell 10 years ago when I was in the Mayor's cabinet, and that is that we could raise the real estate tax with a land tax and 80 percent of the homeowners of Philadelphia, the residential property owners, would get reductions in their taxes if we raise land tax. Well, obviously, that then becomes 15 not simply an economic development program, but an important tax relief program for a lot of people. Is that true? Does it work out? The Controller's numbers suggest that it does. We're taking our own fresh and somewhat independent look at it. On the other hand, some taxes will go up. You know, there's no such thing as a free lunch. Whose taxes will go up? And we've asked that question specifically whose taxes go up here? We know that owners of vacant property go up, but there are others who may have more vacant land on their property than improvements. What does that mean and what impact will that have? And do we think that impact is worth the benefits that we would receive? And finally, are there any other public goods that might be undermined by a land tax? Some people, for example, have pointed out that a parking lot is an obvious example of a piece of land if it's located in an economically hot area that might be used economically for a better purpose. Well, that may be true, but we do have parking problems in Philadelphia. So how does that work? How can it be made to work? 16 So as I say, there are issues on both sites, but I have to tell you that if we thought this proposal were frivolous or ridiculous or off the table or something, we wouldn't be doing that. We're doing precisely the opposite. We think this is an extraordinary proposal and it needs to be examined with great care and that's what we intend to do. I would just conclude by saying that last year -- and a personal note. Controller Saidel had a similar day here on the land tax, and members of Council may recall that I came in at that time and said that while it may not be possible for Council to make a fast decision on this, it certainly was a proposal that deserved to be examined very carefully. And I felt 10 years ago when Betsy Rivell proposed this to Council and it was not voted for or taken seriously then, nothing was done ever again to look at it, I thought that was a mistake because I had a high regard for her abilities as a financial manager. So I am now pleased to have an opportunity to contribute to the analysis and discussion of this, and certainly I would say if the presumptions behind the land tax 17 that have been advanced here hold up to the scrutiny that we provided, I think that -- I can only speak now for myself.
I'm certainly sympathetic to it and I would say that the members of the Commission, wherever they're coming down on this, wouldn't be looking at it so hard if we didn't think of this as something that really needed to be given this kind of scrutiny as a possible route to improving the City of Philadelphia. So I thank you for this opportunity to share these views. I will stay and listen to what people have to say. I'm learning a lot from being on this Commission and I hope to learn more.
Thank you, Madam President. Good morning, Mr. Schwartz.
Mr. Schwartz, I just wanted to ask you a couple of questions or ask for 18 you to investigate some issues that we wrestled with during the course of our NTI proceedings, particularly with respect to vacant land. As you know, being a former Councilperson and being involved in the Institute of Civic Values, one thing that we don't have a shortage of in Philadelphia is vacant planned. One of the things that I'd like you to look into is the percentage of vacant land particularly extremely underutilized, because to some degree some people don't consider parking lots underutilized. But we have a lot of land that are creating blighted conditions in our community, and I'd like to really focus on that. And also our ability to collect the tax. One of the concerns that I have, while we may increase the level of taxes on underutilized, i.e., vacant land, the reality is that our ability to collect any revenue from that vacant land in the past has been spotty, at best. And simply imposing an additional penalty on that property owner, I'm not sure that we'll get that additional revenue and I don't know if you recall I actually introduced and got passed a bill around two years ago. It was called the non-utilization tax. And at that 19 particular time, the Revenue Commissioner indicated that there would not be an increase in revenue simply because the amount of land that we wouldn't get additional revenue from as a result of our inability to collect that tax would offset any gains in any land of landlords or property owners who are, in fact, willing to pay. So in your deliberation, in your analysis as a member of the Tax Reform Commission, could you look into that? Because that's very important.
Well, you'll notice, in fact, in the second of the issues that I raised in my comments here was that issue, and it does reflect my own experience with this going back 30 years. You bring up your ordinance. I will remind the Council -- some of you were here then -- that in 1981, then Councilman the late John Anderson introduced at my behest -- this was my idea. He introduced it, but I brought it to it to him.
And I must admit, Councilman, that I mirrored his bill.
I understand. I heard this. So let us share it with everyone because it's 20 an instructive experience. We were fighting over the fact that thousands of vacant properties were destroying neighborhoods. And at that point we weren't collecting any taxes on them, even the taxes that people owed. So I felt why shouldn't we add a cost for somebody who's owning a property and destroying a neighborhood. So I went to Councilman Anderson and he proposed a vacancy tax, as we called it then, 10 percent on vacant land. And the Council passed it. The Revenue Department tried to enforce it. It sent out letters. Its records as to who owned what were not terribly good, and I have to say here the problem was not that they couldn't find the people; they did. And the people showed up in Council Chambers en mass, some of them, they didn't want this tax. Some of them were not served properly. And so there began a negotiation over the next two years since the Green Administration at that point wasn't interested in this anyway. And so at some point a court agreement -- and that has never been enforced. As far as I know, it's still on the books and now you've introduced it. I 21 certainly have asked the current Revenue Commissioner to -- because I've never been in a position to do this even as a Councilman. I want to take a look as to why it wasn't collected. I certainly think that people who own vacant property sitting in neighborhoods not doing anything with it and the very existence of the property is such a blight that we now have had to take a $300 million bond issue in order to clean the lots and all of that sort of thing. They ought to be paying a higher price. And if a land tax is a way of getting at that, I'd like to be able to do it. I suspect in areas where there's not a lot of economic activity or it's been hard for other reasons, we might have a problem. But in some areas where there is economic activity, then people are just getting off Scot-free and a land tax will put the pressure on them. And the question is how much money do we raise in the process. So, yes, it's a very big concern of mine.
In your estimation, if we try to set a threshold in terms of the value of the land and implementing such an increase in 22 taxes, do you think that would go against the Uniformity Clause?
No. We know that -- we wouldn't even be looking at it. It does not go against -- we could pass it tomorrow. The Uniformity Clause only is people in the same position should be taxed the same way. It does not violate the Uniformity Clause. That's why some of the other -- Allentown for a while, Pittsburgh, have done various forms of taxation. It does not violate the Uniformity Clause. There are some other issues out here that might, but not this one.
You're welcome. Mr. Schwartz, I do believe that another issue that your Commission should be looking at, the City currently uses various incentives to spur development, such as TIFs, abatements, zones, just to name a few. I think you're going to have to look at how the land tax would impact the City's current development strategy.
We are. And I was focussing simply on this proposal. Even in relation 23 to the real estate tax, there are a lot of other issues we're looking at. At the same meeting where we discuss the land tax, we also have presentations from the Board of Revision Chairman David Glancey and Terry Gillan and Ken Gillan on the whole question of assessments. And really, frankly, the entire charge that we have might be guided by the following proposition: If, in fact, the real impediments to development are the constellation of City taxes which is the core argument of the Controller's tax structure report, that the wage tax and the business tax are really horrendous that we could do some things with the real estate tax that is not as horrendous but ease the burden. That may be if we changed all of these things to be tax free, we wouldn't need as many special incentive programs because we have a tax structure that would be inviting to business as it is. So that's one of the virtues of having the Commission with a charge to look at the whole system is that first we have to come to grips with our attitudes about any particular reform and then we have to see how they connect with one another, which if you do one, the other. 24 The Controller's report says if we were to do the land tax, we might even be able to raise the real estate tax because the amount that we could reduce the wage tax and reduce the business tax over all people in Philadelphia would be real winners. That's the kind of perspective that we'll be giving as well as on the various incentive programs.
Thank you. The Chair recognizes Councilwoman Blackwell.
Thank you, Madam President. I've been very interested in this issue, and Lu before me from the Henry George school of tax and all of that. However, I'm still not -- and some parts of my area, especially in University City, are sold on the idea.
Are. They support having land tax. They support Historic Commission. They support zoning to regulate the heights of buildings. They support a lot of traditional kinds of things. And this is a new idea 25 and they support this as well. I'm trying in my own mind to figure out where I should stand. Let me ask you, and you will specifically appreciate the question. If certain areas in the City become popular to developers or residents and land value increases or what we put on top increases, how will that affect, not only development, but blight removal, and all we're trying to do to enhance neighborhoods? At the heart my question is, if you tax the property more, if you improve and others improve their block or if you tax the land more where people will build, who does it affect? Which is better? And which helps out City most?
Well, I think the argument for land tax that we are examining is that by putting more emphasis on land, in the Controller's formulation, have the amount of the tax going on land equal to improvements instead of now where it's, I think, 80 or 73 percent or something like that but it's very skewed to improvements, you're putting pressure on those who own vacant property, often in areas of high economic activity around it to do something with it, to generate more income, not sit on it. It's an anti-speculation tax at that level. And that will, in a City that is struggling for development, be very useful. Now, the question really is, if the tax is -- you know, is not the only reason why there's something else that's not happening. Any of these systems depend on other things. You cannot tax people higher and nothing happens. But if we're looking at an overall strategy for improving the economy, would a land tax in effect be an important tool to be used here? So that's really -- is this a powerful tool in conjunction with the other things that we obviously need to do to improve economic development? I believe in the last five years of the '90s, the narrowing of the gap between our economic situation and the rest of the country, I think the tax reduction program played a role. But other things also played a role. So you have to, you know, build a shared strategy to the extent that we can figure that out, we're going to give it our best shot. And I have to tell you -- personally, you know I've been here for a few years now. The 27 discussions that we are having on these issues at this point in the Commission are among the most intelligent and thoughtful and interesting discussions on these issues that I've ever had since coming here. We have a very good group of people from different walks of life. And now that we've gotten ourselves a little organized, we're down to business here. So we'll give it our best shot.
Thank you. One of my other questions, for example, in my area, in University City, our real estate has gone way up. One gentleman is moving who worked for Penn, has two children, he's moving to Baltimore and he hasn't put his house on the market, a row house home. And they want 400,000, he's been offered that from the beginning in the heart of a regular row house block. So properties that maybe a year and a half ago and with the advent of a new school in the area and Penn giving 15,000 per house, the real estate has doubled, tripled. But how will that affect, for example -- how would land tax affect not developing on land. Here we're land locked. So the real estate has become -- real estate value has tripled. How does this figure into that? 28
Let me take University City. If you shift the burden from improvements in part to land so it's 50/50, the tax on this person who owns a parcel that might take up the full land will actually drop, not rise. But that will happen -- and you're dealing with it citywide. We don't tax University City particularly. Some of us might want to, but, you know, we don't do that. On the other hand if there were somebody who owned a big parcel of land, let's say, in Mantua, not too far, sitting on it because he or she's seeing what goes on at Penn and they're going to wait another five years for the appreciation to finally catch up with Mantua so that they can sell their vacant property for 400,000, that person is going to discover a whopping tax increase because now that vacant property not too far from Penn is a lot better used by trying to develop it. So in your area, it would redistribute the tax burden somewhat from those who --
In keeping with that, as you know, we have the Lucien E. Blackwell Mantua Revitalization Project, and we're doing just that in Mantua. We are trying to market and trying 29 to develop lots all over. We're working on demolition and we've had lots because we've been working on this. And as you know, it's an area that has survived in spite of Penn and Drexel University expansion and the institutions, Penn and CHOP. HUP surrounds it as well as CHOP. And so you're saying -- how will it affect -- you're saying that their taxes could go up and how would it affect the whole issue of blight removal and NTI, in your opinion? I know it's a big question.
I think under these circumstances, if you have somebody who owns a vacant parcel in Mantua and right now you're trying to get them to do it and you don't have to go through eminent domain and all the things you have to do that will take two years. Telling that person that they're going to have to pay 50 or 60 percent higher taxes for the privilege of owning that vacant land would be perhaps an additional incentive for them to sell it. I mean, if all of this works as they're talking about -- and your area would be one of them, in fact, where this could work because you do have, in fact, a blighted area next to an area of high development where people are sitting back as 30 speculators and trying to wait until the price was right. Think of Sam Rapaport in Center City years ago, owned all those vacant properties and blighted properties, et cetera and just sat on them and let them die until everybody else's investment, the City's and whatever made Center City an attractive thing and then he unloaded for a huge profit. But let's say that Rappaport properties really suddenly he's paying a much higher percentage of the land. He's got no improvements on these properties. He would have had much greater incentive at that point to unload those properties earlier and maybe we could have gotten them at a better price and gotten the development done even more quickly. So the areas that are contiguous to development are the ones, I think, that has the best shot of doing this, and there are a lot of them now, obviously, than in an area where you have a little more work to do. But then the strategy it seems to be would be the land tax then becomes a tool -- I'm almost thinking through some of this as I talk. The land tax then at that point becomes a tool to be used to acquire additional land to see the benefits to contiguous land for development. 31 So I'm giving you the theory of it. By the time we have our recommendations in September, we will have run, not only the numbers that have been run, but look at it really hard. And I do think we need to look at it as you're asking. What happens in Mantua? What happens in Strawberry Mansion? What happens in Norris Square? What happens in West Oak Lane? You know, those are the questions that we need to ask hard to get a picture of how this really would work.
How do you think this affects revenues dedicated to the School District?
Oh, it would increase them. Well, let me say this, if it works, it's neutral. The point is that you set the amount of revenue that is being collected now and you try to structure the tax in order to be able to collect the same amount. The issue of how much revenue the real estate tax produces is a somewhat different question. Chairman Glancey has been arguing for what he calls a budget based approach to this. The Mariano bill, so-called, that you passed, is consistent with that. You're saying that if the 32 revenues go up for a certain tax by such-and-such a percentage, then use that additional revenue beyond the 2 percent, I believe in the Mariano bill, to reduce the wage tax. So that's a question of how we structure the overall revenues. But this argument would say that it's revenue neutral for the City, it will be revenue neutral for the School District. The question is whether it works at all, you know.
Thank you. My final question is what other issue that's tangential to all of this is if we were to adopt this, how our whole BRT system would be set up, how we would begin to structure it. So we hope that as your Committee meets this summer, you'll consider that as well.
We are. That's, in fact, the subject of the first half of that meeting that I mentioned with the land tax, very much on those issues and that's a separate but important consideration. Do we need some radically different way of assessing, conducting the assessments, of giving people appeals? We're looking very, very hard at that. But as I say, the object is to come up with a recommendation that will be balanced and that will be effective and that we can stand on and, 33 to the best of our ability, say this will benefit the people who live in Philadelphia and benefit the City.
Well, I will say that we think you're the man for the job. If anybody can help us it's you.
Thank you. Mr. Schwartz, I think a couple other Councilmembers have questions for you. Councilwoman Tasco.
I was going to ask him how would it impact on a row house residential area that does not have the opportunity for development?
Well, we're taxing this citywide. So obviously, if the overall tax revenues go up throughout the City for whatever reason, the Council, over the last two or three years in fact since the wage tax reduction, have been in effect implementing a strategy around that. Revenues have 34 gone up so we've reduced the wage tax. And in this instance, any revenues that would go up would permit a reduction of taxes. But beyond that, according to the theory, a row house -- I mean, I live in one -- uses a sizable portion of the land for a house.
Absolutely. That's when the Controller says under the theory that 80 percent of the homeowners in Philadelphia would experience a reduction, it is because our land is largely fully used. So if you raise the amount that the land is being taxed but then lower the amount that improvements are being taxed, then we get a tax reduction. And by the way, Betsy Rivell years ago said exactly the same thing. So we've got two people who have looked at this who have come to the same conclusion.
There would be no 25 tax on the property anymore, no longer any tax on 35 the property?
There would be -- the Controller's proposal, it sounded more complicated but it really is simple. If you look at right now there is a proportion that is devoted to improvements and a proportion that's devoted to land. And they can share the exact number, but it's like 80/20. All they do here is simply raise the amount that's devoted to land to 50 percent. So you now have 50 percent. But at this point, if your improvements are largely taken up the land, then you get a much higher tax on the land, lower tax on the improvement. And if you're living in one of those row houses, you benefit. In fact, I do think that would happen. The real question is can we raise enough from the vacant land to make it revenue neutral. That's the issue. But I certainly think that is obviously what will happen if you go to this system. Our single family, renters, row homes, they will experience real estate tax reduction.
It's the revenue neutrality question that I want you to go more in-depth into. And give me examples of cities such as Philadelphia, very similar situated in terms of the history of how we have used land and what the economic basis of -- like Pittsburgh or Philadelphia. And where has this been done and what has been the experiences? If this question was asked --
It has not. And I can't say. To be honest with you, I'm learning about the other cities. You will be hearing more about that here. I know Pittsburgh had an experiment in it and a lot is made that they abandoned it, but there were special things that they did wrong. No system is perfect unless you did it right. A lot of vacant land was owned by federal government and whatever. It has worked in some places. And I think the panels that Jonathan Saidel and others have put together are designed to help us all understand that more successfully. I mean, Philadelphia's experience, as you well know, is that we had all this land was 37 occupied largely by factories and manufacturing and then people who lived around it. As those factories closed, we've developed industrial cesspools.
But I heard just now throughout your presentation is just the theoretical aspect of something. But it has to be shown where it has -- if we're going to move from one system to the other, we have to look at cities such that are similarly situated such as Philadelphia where this has been tried and how it has worked or not worked in those cities. And I want to hear whether the revenue neutrality that we speak about, because the school system, other aspects, depend very heavily on whether we're going to have the revenue stream to be able to maintain these systems in place. So before you shift, you've got to be able to with a certain certainty say, these things are going to happen.
Councilman, I absolutely agree with you which is precisely why we're undertaking the kind of careful study that we are. And it's certainly questions our research staff very much includes, look at where this has been done in other cities and particularly comparable cities and what happened as a basis for our deliberation. So 38 we fully agree. I'm not prepared to share the results of all that on April 29, but we will certainly be well along over the summer, and by the fall we will have some notion of those issues.
Because it will make a very big difference to be able to compare the systems and in terms of that.
Because if you say Potunk (ph), Iowa, is doing it and Potunk, Iowa, has a hundred or 50,000 residents and you don't know what the system has been and so on, but a City such as ours that has been an industrialized City, that has had factories that has been basically abandoned over the last 50 years or so and that we have had movement in, and non-use of certain parcels of land, I'd like to see where and how these things have happened.
So would we. And we've got some preliminary sketchy kinds of evidence, but that's a big part of what we want to do. I want to sneak in one other issue here that's related in a way to your question that I need to put on the table that has been raised with us by 39 people in the economic development community. And that is that our commercial real estate tax, the commercial real estate tax is probably way too low for what we could raise, if we could raise it. Now, that does -- we cannot under the current State Constitution have a different tax rate for commercial properties as for residential properties. But I met a couple of people, whose names I won't go into, but names would surprise you, given the role that they play, say that if we did that, we're able to get that kind of an amendment into the Constitution, we could easily raise commercial real estate tax, particularly if it meant more revenue to reduce the wage and business taxes. So again, there's a lot of evidence surrounding this that suggest that it may be a good thing. But you're right, we need to look very carefully at how this has been tried in comparable cities and not just places that have nothing to do with what we are.
And I would imagine the interplay between, as you say, the commercial taxes and so on down the line and how these things all play into one comprehensive set of taxation -- 40
That is precisely what we've been asked to do. The Controller's report from his office does that. Whether you agree or disagree with it, it's a very serious attempt to do that. This is our charge. You actually put the legislation together that put this on the ballot and that's the way this has been structured. And we must do it, by the way in a framework that is fiscally and socially responsible. Meaning, we just can't come out here and say we're going to lower everybody's tax and it's not our job to figure out what happens to the rest of the City budget. That's your job or somebody else's job. No. We're not to give you advice on how to cut spending. But we are certainly to be conscious of what the impact on the revenues that would be available for this. So that is very much along the lines of the question you're asking, Councilman.
Actually, I'm going to hold my question. I had another question about the speculative nature of the increased revenue. But I'll hold it until further testimony. 41
Good morning. I just actually have a question as a follow-up to Councilwoman Tasco, just trying to understand this whole business about land value tax. Land value tax is a tax on the land itself? Is that an equal tax on land across the City or is it taxed by the amount of acreage? When you talked about living in a row home, is it by the amount of land that you own?
Well, I think that under the current proposal -- and frankly, some of the questions that you're asking me I'm happy to share it, but we have a lot of people who are here specifically with the expertise in this and, you know, I'm always happy to stay here and whatever. They've come here to specifically address it. The proposal as I understand it is that right now if you look at your own assessment, you will see -- you go even to the database of it you'll see part for improvements, part for land. And all they're doing now is just the total amount will remain the same except the amount to land will increase significantly and the improvements will 42 decrease. The assessment for every property, that difference will remain, but what contributions to that difference is how it uses the land. It will contribute more than right now it does. And I would suggest, again, you have a lot experts who spend far more -- I'm learning this. You have a lot of experts who spend far more time on this than we have. I'm here to learn from them as well.
So typically with the institution of new taxes in real sharp terms, there are winners and there are losers. What response or explanation would you give to those -- the auto dealership industry which owns a lot of land and contributes in a substantial way to our City's tax base?
For the moment at least, 43 that's something we're going to have to look at. I mean, I understand that that's one of the industries that might have a problem. We have not looked at that and so I don't have an answer for you. That's the kind of question that we need to develop an answer for if we're going to move this way.
I too share Councilwoman Jannie Blackwell's concern about the ultimate impact on the Philadelphia Public School System, so I'll be looking closely to see what those numbers reflect and what that impact will be on the system. Additionally, as you look to provide numbers on what the impact would be on University City and other neighborhoods, indicate as well what the impact will be on different industries in the City on the commercial side so that we can see that kind of comparison. And my second question is, recognizing that nothing is free in government and everything in America comes with a cost, is there any speculation about what it will cost the City to institute this new procedure across the board?
I think those are -- you 44 see the list of questions that we raise. And you've added some others. Obviously, we have to have answers to all of that by the fall. And I can't say that I have those answers now. And frankly, I invite any member of Council and all of you to share with us any of these issues or others that come up. That's what we've been asked to look at and we are and will.
You're comfortable with the expectation that you will be able to get your arms about what really is a huge issue and provide recommendations by the fall?
Very well. Thank you very, very much. Thank you, Madam President.
I will stay and listen to what others have to say and learn along with you.
Thank you very much, Councilman Schwartz. (Applause.)
Mr. McPherson, will you please call the next three witnesses? 45
Thank you, Madam Chair. I am Dr. Roger McCain. I am on the --
I'm sorry. You're going to have to pull the microphone much closer to you.
Sorry. Yes, I can hear it now, thank you. Thank you, Madam Chair, my name is Dr. Roger McCain. I'm on the faculty at Drexel University in the Department of Economics and International Business. I was a coordinator for a faculty research group who were asked to do a fairly narrowly-defined job. I believe there are copies of my testimony available.
Were they distributed, Doctor? Were copies of your testimony distributed?
I guess they will be coming. As I say, the job we were asked to do was very narrowly defined. There had been estimates of who gains and who loses based on ratios of land 46 to property value that were based in turn on Board of Revision of Taxation data. It's concerned that the data might be inaccurate, so my job was basically to go over those data using different methods, statistical econometric methods and, number one, to determine whether there's any reason for concern that they would be inaccurate. Number two, to improve on them if we could. The executive summary is that while, of course, there are differences -- we expect some differences when different methods are used for the same data -- they're fairly small and we don't see any reason for concern about the accuracy of those Board of Revision of Taxation data. I can go on to detail the method that we used is basically one that's very standard, not only in real estate economics but very widely in economics. It's called a hedonic method. And that simply means that we take market prices, in this case arms length real estate transaction prices, together with information about the characteristics of the item that's sold that make it desirable. That's why it's called hedonic. 47 And in order to break out the land and structure value, that's a little more difficult and the method that used is called a hybrid hedonic method because it combines basically two statistical approaches. That makes for fairly complicated statistical work, but fortunately, my colleague is an expert on that so I relied on him. The problem we faced was that the data were very limited. Typically in studies of this kind, there are data from 30 to 50 different characteristics of each property. Variables available for analysis in each of the three databases included geographic area, lot size, living area, secondary areas, basements, porches, garage area, construction quality, building style, age, sale date and in one case the distance to the nearest golf course and certainly things like the number of bathrooms and so forth would be included. From the Philadelphia data we were able to get only three things: Usable living space, land area, and a rough index of the external condition. So it looked like a very tough job. Fortunately, we were able to get some help from the chorographic lab at the University of Pennsylvania. And working with 48 them, we were able as a first stage to estimate an overall quality of the neighborhoods. That's important because that neighborhood quality is correlated and associated with so many of the things that are missing from the data. Houses with two or three bathrooms are darn likely to be in very nice neighborhoods. So that because of that, we were able to get estimates that we have a great deal of confidence in. In technical terms, we were able to account for about 80 percent of the variation, and that's pretty close to standard in these real estate studies. It appears that about to percent 15 of the values are just pretty much random and 16 unpredictable. In any case, human beings are pretty 17 unpredictable and so I'm happy with those results. 18 The outcome, you can see in Exhibit 1, 19 those are the ratios of land value to total property 20 value that we have in Exhibit based on our 21 statistical analysis. The ones that are based on 22 the Board of Revision of Taxation assessments are in 23 Exhibit 2. You can make your own comparison. As I 24 said, there are some differences. But we regard 25 them as being pretty minor. One big point to 49 1 observe is that one thing that's confirmed that our estimates agree with is that Philadelphia is a pretty unusual City. In that, the ratio of land value to total or to structure value is lower for Philadelphia than for many other cities. And our estimates came out that way as well. It's a little more complicated than just looking at averages like this suggests.
Using the methods that we used we can estimate what would be the average value for individual properties based on the characteristics, and again, the quality of the neighborhood. So I set those out in Exhibit 3. This is a little technical, but what you see on the horizontal axis in Exhibit 3 is the ratio of land to total value. And on the vertical action is you see according to two different approaches, how many houses are within a half percent of that ratio. So for example if you look at a 20 percent ratio, the height of the dotted line should show you, according to our estimates about the number of houses that are from 19 and a half to 20 and a half percent from which that ratio, land to total value is from 19 and a half to 20 and a half percent. If you look at the 50 height of the solid line, you'll see about, according to the Board of Revision of Taxation data about how many are from and a half to and a 5 half percent. So in that way we can compare the 6 whole range, and what we see is, yes, again there 7 are differences. The top of the curve is a little 8 different. That's what statisticians call the mode 9 and it's just as good an indicator as the mean, but 10 perhaps what's more important is that there's a lot 11 of overlap. And in fact, we see that although the 12 Board of Revision of Taxation shows a large number 13 of houses with slightly smaller ratios than we do, 14 they show some with substantially larger ratios than 15 we do. They're more spread out on both sides. And 16 I think if we had better data we probably would see 17 a distribution that looks more like what the Board 18 of Revision of Taxation links to rather than less. 19 That would be worth doing, but I'm as confident as I 20 can be under the circumstances that it would not change the conclusions that the ratios that have been used for these estimates of who pays and who doesn't cannot be improved on by the kind of statistical methods that we use. Thank you very much. 51
Thank you very much. The Chair recognizes Councilman Clarke.
Madam President, were all three of the individuals going to testify?
That would be fine. Who's going to present the next testimony? Mr. Mandel?
Brett Mandel from the City Controller's Office. I'm going to present the testimony of David Zwanetz who is the Vice Chairman for the Board of Revision of Taxes. I will also present testimony from time to time during these panel presentations of others who submitted testimony but could not make it personally to the Chambers. I'll also be here now and all day to answer any questions Councilmembers have about the City Controller's proposal itself. This is the testimony from David Zwanetz, who is the Vice Chair of the Board of 52 Revision of Taxes in Philadelphia.
Do you have copies of the testimony you're reading? If so, may we have a copy of it, please?
David Zwanetz Vice Chair, Board of Revision of Taxes of Philadelphia. I'll actually summarize this. I don't have to go through the entire testimony. You'll have it at your leisure and I'll be here. "City has been in the forefront of the efforts to bring tax relief to the homeowners of Philadelphia. "I support the land value tax and City Council authorizes an in depth study of its implementation and effects on each parcel of real estate in Philadelphia. The City Controller should be commended for bringing this issue up for public discussion. The last person to do so was former Councilman James Tayoun. "The two tier land value tax is a disincentive for land speculation and for owners to allow their properties to run down and avoid taxation while they wait for a rising market to sell into inflated prices. They can do this because the 53 present systems rewards them with little or minuscule taxes while it penalizes those who make improvements. The land tax is an incentive for efficient utilization of land. "I believe the land tax will discourage the inefficient use of land and will encourage land to be utilized for its highest and best use. It should encourage the vertical development of land and attract building in our City. The existing abatements are an incentive but engender great ressentiment among adjacent homeowners who feel they are being treated unfairly. "If word gets out that you can build corporate headquarters in Philadelphia without being penalized, I believe we will attract corporate giants the world over to locate in Philadelphia, assuming we also concentrate on solving quality of life problems such as crime, cleanliness, schools and burdensome taxation. "There is an old quotation in the fairy tale land of real estate taxation and it goes like this: Tax man, tax man don't tax me, tax that man behind the tree. "We are all behind that tree, and to 54 some extent we must all share in the burden of supporting this wonderful City. If Council feels there is merit in the land value tax, then permit me to humbly suggest that Council might want to first consider even acting a millage rate on land and improvements that duplicate what we have now, that is .08264 percent on land and the rate on improvements. This would be revenue neutral and establish the principle of separate taxes on land and improvements there on. This will permit a period of investigation into the implementation and effects of the system. In the meantime, things would not change drastically. "A comprehensive study of the effects on taxpayers and revenue can be conducted over a period of years with a view in mind of how each of the more than 550,000 parcels of accessible real estate will be affected and who other than the man behind the tree will pay what. I conservatively envision a period of at least two years to be confident with the new system. It will require a great deal of work on the part of the Board of Revision of Taxes, but I feel confident that under the leadership of our outstanding chairman, David Glancey, and 55 additional funding, this can be done. I'll be happy to participate in this process since I have some very specific ideas on what we need to know to truly be confident. "I thank you, Madam Chair for the opportunity for presenting my views. I also wish to thank City Controller Jonathan Saidel for bringing this issue before the public, and you especially for allowing citizens to express their views on such a timely topic. "I'll be happy to meet privately with any member of Council for discussion at a later date. I should state, however, that although this letter is from the Vice Chairman of the Board of Revision of Taxes, these are my personal views and do not necessarily reflect those of any other member of the Board of Revision of Taxes. "Respectfully, David Zwanetz, Vice Chairman, Board of Revision of Taxes." (Applause.)
Good morning. 56 Please identify yourself for the record and proceed with your testimony.
Thank you. My name is Joshua Vincent. I live in East Falls, 19129. I'm the Executive Director for the Center for the Study of Economics. We're a non-profit foundation that has been doing research and advising municipalities on implementation issues of land value tax since 1980, and we were originally founded, our mother organization, in 1926 in the City of Pittsburgh by the City Assessor and several City Councilpeople in Pittsburgh who at the time thought that land value taxation was a successful idea and should be studied nationwide and internationally. Our center has been established at 1422 Chestnut Street since the year 2000, and we've done research parcel by parcel on how land value taxation would affect various communities, neighborhoods, types of houses all throughout the City. We've spoken to many, many community groups, mostly homeowner groups. And generally the reception to land value tax has been very, very good indeed. I can see by the presence today of so many homeowners that the idea that they should be rewarded for once 57 for keeping their houses fixed up and keeping their neighborhoods in good condition is an idea that's getting out there. The program that we're talking about could be implemented this year by the Council. It's a program that is what I call an annual event. It's just changing your annual property tax ordinance so that you have a higher rate on land values and a lower rate on building values in a revenue neutral manner. Wherever this has been tried throughout the Commonwealth of Pennsylvania and indeed overseas, it has been revenue neutral to the jurisdiction involved. Indeed, I won't go into the other cities since we have representatives and testimony from there. In Harrisburg, for example, they have had a ratio of land tax to building tax at about 6 to 1 for five years. And they've had it in toto since 1975. In that time, the tax base of Harrisburg has increased systematically and dramatically enough that the effective tax rate in Harrisburg has stayed stable and indeed dropped in the past years. For any post-industrial City, 25 especially a City like Harrisburg with so much tax 58 exempt property, that's good news indeed. So the revenue neutrality has never really be a question throughout Pennsylvania. In January of this year, the City of Altoona was the latest to adopt land value taxation. They've already sent out their tax bills and the report from the city government there is that the take, the revenue, has not been decreased at all and, in fact, is very stable. In the City Pittsburgh expanded land value tax in 1979 to about a 4 to 1 ratio. Jack Saunder at the time, the head of the Allegheny County Assessment Office reported that appeals and delinquencies dropped in the City of Pittsburgh. And the reason for that is the reason why we want to enact land tax here in Philadelphia. Once people know that their hard work on their dime and their time in fixing up a house or even buying a house will not be punished by the tax man, they have a tendency to stick around to stay in the City, to take a stab and to maybe fix up new neighborhoods. And that's what's happened in the City of Pittsburgh, Allentown, and Harrisburg. Most of our work has been done in row 59 home communities in Philadelphia, as I said. They see dramatic drops if there were a land value tax. I've been working actively in zip code 19120, which is Olney, East Oak Lane, and we're looking at about 90 percent of the homeowners seeing a reduction on their taxes. And it's the kind of reduction that applies to everybody. This is a universal tax abatement. They don't have to apply for a TIF, they don't have to live in a KOZ, they don't have to apply for a 10-year tax abatement; all they have to do is exist in the City of Philadelphia. And with the change in the property tax rates, they will get that benefit.
I should say that as far as cost of implementation, there has not been any added cost of implementation in any cities that have used land value taxation. Essentially, that's about the message I have. I think that we've shown over the past two years that land value taxation will be a great benefit to people who have never had a program for them before. These aren't the big dogs in the City. They don't apply for programs, are afraid to come to City Hall like most people, and this is a chance for 60 the City simply to say, "Thank you for staying in the neighborhoods. Thank you for keeping the faith in Philadelphia. " Now, behind me is an illustration. This is the impact of land value taxation on residential properties in the City of Philadelphia. Green essentially means tax savings. Each dot represents one parcel. What you're seeing is an overwhelming number of tax reductions in our poorest and our most working class neighborhoods. You do see increases, for example, in North Philadelphia, 19122, 19121. Why? Because there's so many vacant parcels. There's so many abandoned homes. They would see a tax increase for sure. And that's good. These people for years have benefited while other people against all odds keep investing in their homes. Now when you get to 19121 or 22, who saves? It's the owner occupiers. The people that have kept the faith in North Philadelphia, they are aye sayers, just like everybody else in Kensington, Port Richmond, Olney, Overbrook. I could go on to the many neighborhoods, especially South Philadelphia. Eastwick, the many neighborhoods 61 where almost every homeowners would see a reduction on their taxes and the people that have contributed to blight and the corrosion of our communities would finally have to pay the piper. Thank you very much for your time. )
Thank you, Mr. McPherson. Good morning, gentlemen. Gentleman, I'm glad to see a proposal before us, because I agree that we have to come up with some strategy to give relief to property owners, particularly property owners that have maintained their properties in the City of Philadelphia. But I do have to ask the questions as it relates to this particular proposal. One, you just made a reference to the North Philadelphia, a substantial part of which I happen to represent. And you implied that North Philadelphia residents who own homes may receive property tax relief as a result of the increased tax imposed on the vacant land in North Philadelphia. And the reality is, is that we're not collecting any revenue from that vacant land now because people 62 simply will not pay the taxes on that vacant land. So frankly speaking, I don't see any rush to pay additional taxes on vacant land that they're currently not paying on. An overwhelming of that vacant land in North Philadelphia is extremely delinquent because people have just chosen not to pay or absentee landlords. So reality is, I don't see a real increase in our ability to collect from that vacant land in North Philadelphia. There would have to be an extreme -- and we're wrestling with that now -- to make that land valuable in order to make the owners or any potential developers want to build on that land, i.e., the cost of doing business; i.e., the cost of construction. There would have a number of things that are put into place before that land is then brought to some productive use. I just want to get to one question that was made earlier, one statement. With respect to the map determining the vacancy, what methodology did you use? Did you use the BRT or the Department of Revenue? Because I've known when we talked about this earlier, there was a very difficult time determining the vacancy on a yearly basis. While we 63 have an estimate currently about how many vacant lots and how many vacant properties are in place on a yearly basis, there seems not to be the ability to do that in a timely way. Can you tell me how we deal with that? Utility bills? I mean, how do we do that? Do we do it by site visit?
The numbers that my center used were based on BRT numbers using the classifications that they give you, 1 through 6 residential, commercial, industrial and vacant. Plus, we also hand sorted, essentially, through all the properties just to make sure that there was no 14 structure. So when we talked vacant on this chart, what we're talking about are vacant lots and we would have to do -- our center would have to do further analysis on what are determined by the planning department or NTI as to absolutely abandoned properties. I should add that interestingly, 19121 or 22, it's gotten to the point where the property tax take from those areas is so low at this point across the board that a land value tax actually would not impact those zip codes very much because of the delinquency that you're talking about. I 64 mean, we already know that they're not paying. I think that in this -- we've done a rough study, and it's a fairly recent one that I'll provide it to you, that shows that if we took all the vacant delinquent lots throughout the City, we would probably have out of about 780 million in tax revenue, about an increase of $2 million a year in delinquency on vacant lots. But on the flip side, you're going to finally be stemming the tide of people abandoning houses that are livable and people that are still living there. And by reducing the tax on those folks, we'll be able to maybe stop the tide further. I've included in my testimony a little study that I did for Councilman Cohen on just the subject of owner occupiers in North Philadelphia. So you can refer to that, and I'll always be available for questions.
I'm all for creating an environment to give relief to property owners, particularly owner-occupied property owners. My issue is, our ability to reasonably determine the vacancy of properties -- vacant lots that's relatively easy, but properties on a yearly basis. 65 I'm told that that would require substantial amount of resources by the Revenue Department and I think also the Board of Revision of Taxes. I need you to address that, not necessarily today, but to tell me how we do that on a yearly basis because there are a lot of properties that are in flux, particularly on a yearly basis. One of the other issues I have, when you talk about a revenue neutral proposal, somebody's obviously going to have to pay. And one of the issues I need you to address is some of those marginal retail commercial properties that could potentially -- and I haven't done the analysis, so I'm not sure what that would be -- who have substantial amount of vacant land as opposed to the amount of occupied structure. As an example, a supermarket. I've been told based on our inability to get supermarkets in large portions of our urban community that the profit margin is extremely thin. Most supermarkets tend to have a 4 to ratio 22 parking lots versus building. What now happens to 23 that supermarket or a similar type of retail 24 operation that has a substantial amount of vacant 25 land as compared to the occupied structure on that 66 1 building? Does that then create an environment where their ability to stay a float is diminished or --
Well, my philosophy, if I may, is that you have supermarkets, and the idea, I think, is that we have to really work hard to get people to live in the City. In other words, if we had strong vibrant neighborhoods, then a supermarket would come to serve them and their profit margins would go up because there would be more people. In practical day-to-day terms where we've done studies before, say, in Allentown, about half would say, about half would pay a bit more. Individual analysis would have to be done. At the same time, I think that we all support a lot of the aspects of the Controller's program of cutting wage taxes and cutting business taxes, which would make it even more attractive. I think those taxes have much more impact on especially a retail cash environment like a supermarket than the profit tax might. But maybe Mr. Mandel can comment on that.
I would echo Josh's comments. Certainly, what we want to do is create 67 an environment where people want to be in the City. And the more people who want to maintain residences in our neighborhoods make this a more vibrant place for people to do business to serve them.
Okay. I'll be more specific. Right now, actually in a week or two, we have a public hearing on a particular supermarket/shopping center that we're hopeful will develop, and it's called Progress Plaza. And that surrounding area, particularly in the immediate surrounding area is bordered by Yorktown, Temple University, some other developments on the southern end. But it has taken us six years to get an operator who is interested because they view that as a viable location. In spite of that, we're being asked to provide a tax increment finance legislation to create a viable economically viable deal for that particular supermarket. My concern, if now we impose an additional tax on the vacant land, i.e., parking lot, would that deal fall by the wayside because of our inability to provide the necessary incentives?
I'll take a crack at 68 answering the question and then I'd actually redirect it to the professor. In terms of simple economics, the reason that we have to provide a tremendous public subsidy to get Progress Plaza done is a market failure. The private sector will not enter the marketplace in that neighborhood because for whatever reason they don't think the numbers work for them. The public then has to provide a subsidy to make it so that they can turn a profit.
I agree. So that's why I'm asking the question. If we're going to impose an additional tax, what happens to --
If Progress Plaza would pay more under the situation, it would move the numbers a little bit that make it a little bit more difficult for them to turn a profit. On the other hand, I think Josh's point, and this is the point that the Controller's Office report makes again and again and again, census data just out that said since the last census appeared, we've lost an additional 25,000 residents in the City of Philadelphia. If we continue to lose residents, it makes it harder and harder for people who try to make a business serving these residents to serve 69 them. And if the professor wanted to give the classic economics of why people would enter the market or not enter the market -- there's a supermarket at 21st and Callowhill, the Fresh Fields. I don't recall having to subsidize them. They came because there was a vibrant marketplace for them to serve. The more vibrant marketplaces that we create in the City by creating a tax structure that attracts and retains residents, that doesn't discourage businesses to enter Philadelphia means that there would be more entry into the marketplace.
Well, with respect to 21st and Callowhill, an area that I also represent, the real estate market down there is extremely hot, without a land value tax, without any incentive from the government. As a matter of fact, I think that particular area, if you look on your map, may be one of the areas where the value of real estate may possibly increase as a result of this proposal. But I'm looking at marginal type of retail commercial opportunities and I'm concerned that they could be impacted upon by this proposal. I'm just simply asking you to look very clearly, 70 because I have a district that's extremely diverse and I need to be in a position where we have viable commercial opportunities because I'm being told in my years of government every time we try to do 6 something in a very tough area there's an issue 7 about economics. And while we're hopefully pushing 8 ahead in terms of getting residential development in 9 those communities, the numbers still don't work. So 10 I'm just a little worried about the impact on some 11 of those commercial developments. 12
Well, I can just add one 13 thing. The tax is based on the value of land and, 14 of course, where the land is relatively -- 15
Sorry. The tax is based 18 on the value of land. If the land is low value, 19 then that in itself would keep the tax burden down. 20 There is evidence that the market values will compensate for changes in the taxes. So that the cost of a piece of land is really a basket of what you pay to buy that land or what you have to give up to keep it and what its future tax liability is going to be. And those two do tend to shift in 71 ways that offset one another. So simply saying this is going to increase the burden of tax on this particular piece of land is not the whole story when we're talking about future development. Existing developments -- you know, bygones are forever bygones. But in the future developments, you're going to see those land prices shift.
This is in the future. We haven't gotten this deal done yet. And the reality is if there's a supermarket and there's a parking lot, the reality is if there's a viable supermarket, I doubt if they're going to build on the parking lot because they have this ratio where they require so many parking spaces per square foot for certain types of retail development. I understand, you know, the proposal in terms of increasing incentives for individuals to develop or to, frankly speaking, get off of the dime and get rid of the land. Because as I said earlier, we did some legislation earlier to impose an additional tax on vacant land. I just need to get a clear sense that if we're talking about a revenue neutral program, based on your map, where a substantial amount of individuals property owners in the City of 72 Philadelphia will receive reductions, that revenue has to come from somewhere. And the question is how much of that revenue comes from those individuals who receive increases and what type of or potential burden does it create for those particular businesses? Because I, frankly speaking, don't think we're going to get a substantial -- and I think some of your testimony indicated that we're not going to get a lot of revenue from a lot of the vacant land throughout the City of Philadelphia because that's just simply not been the history, particularly in some of the most blighted neighborhoods. So I just want you to give me some real analysis on that because I'm very concerned about that. Thank you, Madam President.
Thank you. Mr. Mandel, I was just very quickly reading part of the testimony from Mr. Zwanetz. It says, "If word gets out that you can build your corporate headquarters in Philadelphia without being penalized" -- I don't know how we're penalizing people -- "I believe that we will attract corporate giants the world over to locate in Philadelphia, 73 assuming we also concentrate on solving quality of life problems, such as crime, cleanliness, schools and burdensome taxes. However, it requires a massive national and international advertising campaign to publicize our land tax value two tier system. My slogan would be, Philadelphia means business. Come build with us." Perhaps I have painted too rosy a picture. Let me caution you that I believe the two tier tax system needs to be implemented gradually and be revenue neutral. Any promise that most people will pay lower taxes maybe misleading." And he goes on. And we talk about wanting business to come in and build with us. Recently, we had a bill 16 for Ikea, how -- that just came to my mind because I think we sat on that for, I don't know how many hours. What happens to a commercial area like Ikea.
Obviously, it depends on what the value of the land is right now and what the value of the structure they would create. I wouldn't pretend to know exactly what it is that Ikea is doing, although I know right now that there's nothing on that land, so right now before any building is built if we're going to increase the 74 tax on the land, decrease tax on building, obviously if it's a parcel that's just land, their tax burden would go up. If they build on that parcel, their taxes would not go up as much under the new system than it would under the current system because we would be taxing their building less.
How about Sunoco that's located in South Philadelphia that has that massive land and all the old tanks and the tanks are presently being used? Are we going to then tax them out of the City?
I certainly wouldn't pretend to know what it would be that Sunoco would do based on what would happen if we changed their taxes, but I would caution you to understand the logic from the other side as well. If you by the argument that says a firm that sees their taxes go up or an individual that sees his or her taxes go up would make a decision to leave the City, you would have to look at it from the other side and say the firms who see their taxes go down, the individuals who see their taxes go down would be more inclined to make a decision to stay in the City or those who might otherwise not be looking at the City would 75 look at lower taxes and say, "Those taxes are lower, I would be inclined to move in the City." So if you're looking at who wins, who loses and you say Liberty Place wins, that means that Liberty can charge lower rents and make it more attractive to go into the City while a surface parking lot loses which makes it less attractive for this parking lot owner to run a surface parking lot. You have to look at the argument from both sides.
And we assume those savings would get passed on? We can only assume that.
Certainly. Just as from the other side, we can only assume if we raise the taxes on anybody that they would either cut into their profits or pass those extra taxes on to the consumer.
Actually, last year we talked about Sunoco a little bit and I didn't have the answers then, and I did the research and I promised Council and I sent them out. And I brought them here and it's in my testimony again.
Could you pull the microphone just a little closer, please? Thank you. 76
I actually did the numbers for Sunoco, and their taxes, interestingly enough, Sunoco gets a bit of the benefit of what a land value tax is because so much of the tanks and the machinery is not taxed. It's not real property. So actually they kind of enjoy the program that we're trying to get everybody else to be able to have. But their taxes, yes, of course, they will go up a little bit less than $500,000 a year. And we got their profits from the northeast refining division last year I could find. For the year 2000 and their profits, net corporate profit was $260 million. So the reduction of their profit would be by .186 percent of an increase land tax. Meanwhile, almost all of the workers at the refinery on Passyunk Avenue and the workers that live in the neighborhood would see tax reductions. And I think they're the ones that are going to benefit. And by extension, Sunoco will even benefit because they're still going to have a workforce that's healthy, happy and owns good homes.
I don't think there's any one of us that would not love to see real estate property taxes decline. You know, we've 77 been saying that we certainly have been overburdened with taxes for, I guess, forever. I think Councilman Goode has certainly been very patient in waiting to be recognized.
Thank you, Madam President. Good morning, gentlemen. I am generally supportive of this proposal. And I understand within this proposal there are winners and losers. And within our decisions as lawmakers, particularly around tax issues, there are always going to be winners and losers. My concern is being honest about who the winners are and who the losers are. So I have two primary concerns. And I don't believe you directly addressed Councilman Clarke's question about how this impacts retail development in Philadelphia. I am very big on retail development. Even though people don't like the fact that they only create entry level, low-skill jobs, there are thousands if not tens of thousands of Philadelphians who need those entry level, low-skill jobs. And I believe to the extent that while we have been losing businesses and losing population within this region, we still have the most businesses, the most 78 population, the most jobs, and we still have as an asset our disposal income here. And so I will in the future continue to make the case for retail development as economic development strategy within Philadelphia. But a lot of retail development that has been successful in recent time, you know, there is an issue of parking. There is an issue of how the structures are set up. And I'm just curious as to have you done an analysis of how this impacts retail development in Philadelphia? Because if that is going to be a loss, I'm not going to say that makes me against this proposal, but we have to clearly identify the winners and the losers and be honest about it before we take a step that is this large.
Well, my office, Councilman Goode, has actually done an analysis under the assessment existing for every type of commercial use.
I'm for future development in terms of looking toward what we're trying to develop in Philadelphia in terms of economic development and how this will impact future retail development. 79
If the tax structure can be reformed such as the Controller is suggesting, then you will not discourage people coming in.
We are actually talking about, when we're talking about retail development, not whether just more people moving into the City, whether we can provide goods and services to them in a convenient way. That retail development might exist in the suburbs or exist in only certain sections of the City because it is not feasible to have retail development everywhere because of this shift. So I'm asking not just in theory whether you think more people bring more revenue to businesses. That's not an answer to the question in terms of how it impacts retail development. And that's the same answer you gave Councilman Clarke, and it's not acceptable.
I'll answer. If you have an existing retail development where the significant portion of the value of that development isn't the fact that it provides parking, chances are their taxes would increase. There's going to be other people here the Controller's Office bringing forward from other cities that I would encourage you to ask 80 how the actual implementation of land value tax affected retail developments in those communities. We're also going to have developers come before you that you can ask the question of what this is going to do for development. Because in terms of moving forward, one of the attractive aspects of a program such as this is, at least in theory and borne out by what has happened in other cities, you should be able to free up some of the land that currently is being speculated on which should drive down some of the cost of land and make it easier for people who are going to open up business to acquire land and build.
I guess real simply I'm saying -- and we can look for some further analysis from other examples. But this is good for homeowners, which is why I'm for it. But to suggest that it's automatically good for economic development, I don't think it's fair to say to suggest that whether it's good for retail development or not does not have significant impact on the City. It can have significant impact on the City when we need to probably create, in my view, thousands, if not tens of thousands of jobs that 81 could possibly come from retail development. Second part -- I was not even going to ask that question until listening to Councilman Clarke's question. The second thing I'm concerned about in terms of winners and losers is it's clear that most of the homeowners in Philadelphia benefit from this proposal, benefit from this shift, particularly low income homeowners. But I'm concerned about in the testimony Mr. McCain says that the BRT data proved limited but says that the basic question we were to address was, are the estimates of the impact of a shift toward land taxation biased or inaccurate because they are based on BRT assessments rather than statistical analysis of market prices of properties. Can you further explain that. I have a follow-up question to that.
Let me ask a more direct question. Are you saying that BRT assessments are in line with market values?
I'm not saying that. I'm saying whatever differences there are do not lead to 82 any errors in judging the ratios because whatever differences there are -- if for example, the land values are only valued at half of market but the structure values are only valued at half of market, then when we look at the ratio, that cancels out.
You're essentially saying if it's 71 percent, it's 71 percent is 71 percent; or 50 percent is 50 percent. But do you believe, from your analysis of the assessment process -- one thing that we have responded to here but not dealt with here -- I'm not sure we can deal with here, is changing the assessment process. I think what the actual problem is. And in that discussion of trying to change the assessment process, wanting to change the assessment process, one of the things that has come out is the fact that it is believed and to a certain extent has been proven that the burden of property taxes is actually borne by lower income people. Do you agree with that?
I'm not in a position to judge whether more of the burden is borne by lower income people or not. If I can go back and try to answer your 83 original question, basically the BRT use the expertise they have. And the way that experts operate, I'm sure they use a wide range of information. When I say the data that were available were inadequate, that is the data that's systematic enough to make a statistical analysis of it. And there seems to be -- I'm sure they use a lot more information than just that. So that's an advantage they have in making those assessments. Taking into account what data were available to us, we saw no reason to think that the ratios were misleading.
The ratios are not misleading, but if we wanted to deal with the inequitable burden that low income homeowners deal with, can we just -- can we afford to use BRT assessments and still even believe we're going to be in a revenue neutral situation?
Well, I don't see -- I guess I don't quite follow your question. The methods to make it revenue neutral based on the assessments are pretty straightforward. As to whether the assessments are just, well, that's not something we addressed. What I 84 know of assessment processes around the country is that there's a certain amount of unpredictability in them, and that is unjust.
We get to a point of revenue neutrality because we spur people toward development or toward improving their homes, but are we satisfied that the BRT assessment process gets us there in a way that we should feel comfortable and ending up in a revenue neutral situation? I mean, do we trust the BRT assessment process enough?
I really can't speak to that. It sounds like pretty much a matter of personal judgment, and I'm not in a position to make a personal judgment that I have a great deal of confidence in one way or the other.
I understand what you said was you don't believe it affects the ratios, but there is a larger question I was asking.
Joshua Vincent, once again. 85 We did a pretty exhaustive study of Olney, actually. And you're right, the values for working class or a poor homeowner, especially a row house, are generally higher. In other words, they're assessed more accurately, therefore, unfairly than more prosperous areas such as Chestnut Hill, for example. And so what we discovered is that a land value tax would not necessitate a wholesale reassessment, but it would reduce because the proportion, the ratio in these poor and working class homes is so high on the building that their reductions would be percentage-wise very high. You're talking if we had the Controller's idea of 50/50, land and buildings, equal revenue, that we would see about percent in Olney and Oak Lane. 17 In other words, these people would have 18 disproportionate benefit reduction of taxes simply 19 because they're clearly, in my opinion, overvalued, 20 and I think in the opinion of a lot of people that 21 just look at the numbers. For example, you have a 22 sales price for a typical row home that's surrounded 23 by abandoned houses or things of that nature, and 24 they bought the house in 2001 for $45,000, yet it's 25 market valued at $65,000 by the BRT. So, yes, this 86 would help that situation.
The fact that poor and working class homeowners are overvalued. They just are. They never appeal their assessments. I don't know exactly why. I'm not equipped with the expertise --
So it would shift the burden somewhat from working class homeowners, but the truth of the matter is they would still bear the disproportionate burden. More of them would get decreased, but they would still bear more of the burden?
You're welcome. Are there any other questions of the panel? (No response.)
Gentlemen, thank you very much. 87 Our next witnesses.
Please identify yourself for the record and proceed with your testimony.
Council President Verna, Members of City Council, my name is John Kromer. I'm here on my own behalf. I'm currently employed by the Fels Institute of Government at the University of Pennsylvania. I know that you see people who used to appear before you as City employees return before Council as experts on urban policy and urban affairs, and that is not my position here today. I'm glad to have an opportunity to testify, and I'm very glad that Council has devoted this amount of time and attention to this issue, which clearly needs to be aired fully before any further action is taken. I've been out of City government less 88 than two years, and I've done most of my work in that period of time out of town. But I certainly kept in touch with the goings-on in Philadelphia, and I must say that in many neighborhoods across the City, the improvements that have taken place just in that brief period of time since I left the public sector are really quite remarkable. And from City Hall with all that goes on here, you may not have the full appreciation that a current outsider such as myself has. To see some of the worse off most dangerous buildings demolished and to see the kinds of open space improvements completed as we have in places such as eastern North Philadelphia and Mantua really is very gratifying. It's a temporary but very important change. It's great to see all the work that has been done with respect to public housing, the demolition of the worst high-rises and some of the most poorly designed public housing sites is a really big accomplishment. So I feel that a lot of improvements have been completed in neighborhoods over the past couple of years, and the stage is really very well set for future investment in the neighborhoods that we're concerned about. It was great to read in the Daily News 89 last week about Universal Community Homes and the great strides that Kenney Gamble and his team have made and the completion of the first phase of King Plaza. And closer to my current place of business, it's great to see the University City area perking up again and to see housing market values stabilizing and correcting the disinvestment that had been occurring during the prior decade. But there's certainly a downside to this, and I know you're aware of this. And that is that as neighborhood improvements begin to take place, people get interested in acquiring land and holding it. Speculation begins to become a problem and vacant properties that have previously been abandoned suddenly begin to be regarded as things of great value and you begin to see overpricing and the difficulty of acquiring land and assembling sites for development increases. That problem of speculation certainly is in existence in the area that I've referred to. South of South Street and some areas of West and Northwest Philadelphia, and that will continue to be a problem as housing markets go strong in the City. So I don't have an analysis of the land 90 value tax. I don't have new information that will convince you that this is the best possible policy as it has been presented. But I do have a word or two to say about vacant property. It's really critical that we continue to do as much as we can to address vacant property in Philadelphia. It's still a widespread problem. I applaud the action that Council has taken to which Councilman Clarke referred in imposing more costs on owners of vacant, undeveloped land. And if this proposed legislation can do more, it would be great to do even more about that. On the other side of the coin, preservation and home improvements and the upgrading and stabilization of existing housing is going to be absolutely critical in the years ahead. We've got to see even more preservation than new construction, and that preservation has to cut across all neighborhoods.
And to the extent that the land value tax and some variation of this proposal is going to make it easier for existing homeowners and new homeowners to upgrade and improve and expand, I think that would be great for Philadelphia. So I hope that you'll consider those two 91 issues, imposing the penalties we can impose on people who hold unimproved vacant land and making it more easy and reducing barriers to upgrading existing housing is a really critical part of our neighborhood reinvestment policy going forward. I've done no analysis on the retail pictures, Councilman Goode, but as I know you're aware, if there are more people then more retail will follow. And that's clearly not the whole picture, but an incentive that brings more people into the City and helps existing residents feel comfortable in staying is certainly going to be good for retail. Clearly, more work needs to be done on this proposal. It would be great to see something constructive come out of the dialog that has continued here today. If the Fels Institute can be helpful in looking more closely at some of these neighborhood impacts that I mentioned, then I'm sure there would be a great deal of interest in doing so without, I may say, a City grant or contract. We'd be very interested in anything we could do to help Council with further consideration of this matter. Thank you. 92
Thank you very much. Are there any questions? The Chair recognizes Councilman Goode.
Good afternoon, Mr. Kromer. It's good to see you again. I actually have never followed that argument that retail follows people. And I know that has considered to be a housing bias argument in terms of community development. And, in fact, we have seen our greatest population growth in this City probably in Northeast Philadelphia where there are abundant options in terms of retail and large malls and those types of things where we've done most of our investment in housing in terms of affordable housing. We have not been able to attract the same type of retail development. So I just don't buy the argument that the retail will follow the people. I believe that people want convenient shopping and the provision of goods and services where they are. It has to be a coordinated strategy that can't be led by housing development. It has to be a coordinated strategy, and that you cannot create disincentives to create convenient 93 shopping for people.
Absolutely. There's got to be a synergy there that works on both sides.
Thank you. Any other questions or comments from Members of the Committee? The Chair recognizes Councilman Cohen.
Mr. Kromer, how would the NTI program affect this? Assume that the program goes through in a couple of years and the City has thousands of vacant lots. Maybe a few have been developed, most of which have not been developed, most of which have probably come to be City property as a result of defaults. How would this affect the situation?
My personal opinion is that a measure like this would compliment NTI very effectively by, as I said, making it easier for people who currently live here and people who are thinking about moving in and upgrading to fix up housing that is here already. New construction clearly has to be a priority, but I'd argue a greater priority across the board has got to be housing preservation, home repairs and home 94 improvements, and expanding existing housing.
How would it improve that? How would it bring that about?
As I understand it, it would not penalize homeowners from making home improvements and upgrading their homes by reducing the increment of taxation on those improvements.
Would it help, for example, to create more -- for want of better word -- suburban-like housing where there would be more yard space, more garden space, more of the kind of amendments that seem very attractive to younger couples with children even before the school age?
I think the NTI-funded housing such as the Brewerytown proposal will certainly help achieve that. But I think an even broader need is for upgrading the existing housing stock. And as the example society proves, people love to love older houses that are well-maintained and well-reserved. And that's what we need, not only in Society Hill, but everywhere where there are viable neighborhoods.
Well, the specific benefit from your proposal comes from the fact that 95 people would not be taxed for improvements?
Yes. This is not my proposal, but that is my view of one of the positive benefits of this approach, yes.
Haven't we already passed some legislation that runs in that direction?
Yes. And I think that's a very positive move. But I believe there may be an opportunity to do even more. From my perspective, the more the better.
Thank you. Are there any other questions from Members of the Committee? (No response.)
Mr. McPherson, would you please call our next two witnesses, please?
Brett Mandel from the Controller's Office. I'll read into the record a summary of the testimony of Janet Milkman, the 96 Executive Director and interim President --
I have it right here. This is the testimony of Janet Milkman, the Executive Director and interim President of 10,000 Friends of Pennsylvania. "Chairwoman Verna and Members of City Council, thank you for the opportunity to present the views of 10,000 Friends of Pennsylvania on this important subject. I am Janet Milkman, the Executive Director and interim President of 10,000 Friends. 10,000 Friends of Pennsylvania is an alliance of organizations and individuals from across the State committed to land use policies and actions that will enable Pennsylvania to strengthen its diverse urban, suburban, and rural communities and reduce sprawl. We seek development that will support the social and economic viability of Pennsylvania's cities and towns, protect environmental quality, conserve fiscal resources, and preserve our State's exceptional rural and heritage resources. 10,000 Friends' principles have been endorsed by over 200 organizations represented 97 well over 310,000 Pennsylvanians. "I am here today to support the Controller's proposal to institute a land value tax, changing the way land and real property are taxed in Philadelphia, to a system where the tax on land and the tax on structures and improvements each generate an equal amount of revenue. As an organization committed to policies that direct public and private investment into existing communities such as Philadelphia, we believe that the land value tax could be an important tool for revitalizing City neighborhoods. This reform would lower an economic barrier to reinvestment in Philadelphia. At a time when Governor Rendell is proposing a large program to spur economic development in older communities across the State, it is especially important that local tax policy also encourage that economic growth. Moreover, by directing that growth into developed places, we will help to preserve our State's natural resources. "10,000 Friends of Pennsylvania has long supported land value taxation. From our perspective, the land value tax is an important tool for urban revitalization primarily because it 98 addresses both higher taxes and declining values. "Land value taxation could provide a host of benefits for the City, while penalizing land owners who intentionally hold property in an underdeveloped state. From a statewide, a regional and local perspective, any policy that discourages this behavior while making it easier to invest in Philadelphia is a good policy. We encourage the City Council to take action on this proposal."
Thank you. Any questions from Members of the Committee? (No response.)
I would ask Mr. McPherson to please call the next witness. Mr. Mandel, you have written testimony.
I also will read a summary of the conclusions of Dr. Kenneth Lusht who is a professor at the Pennsylvania State University and he has done extensive research into land value taxation. I will not burden you with the entire document. I'll just give you a conclusion. If Councilmembers so desire, I would be thrilled to give you the full couple hundred pages of stuff that 99 leads up to this.
I would ask that the Sergeant-at-Arms to please circulate that testimony.
Dr. Lusht's conclusion after looking at land value taxation and its implementation in Melbourne, Australia, is that there is evidence of a long run association between the use of site value tax and the intensity of development and indications that the use of the site value tax stimulates faster development. Taken together, these results support to varying degrees recent analysis of the site value tax which conclude that the tax is non-neutral, encouraging faster and more extensive development. I would certainly encourage Council to pose the questions of actual experience in land value taxation to our next panel which is going to be peopled by officials and folks from other jurisdictions who have actually had experience implementing this policy.
Thank you very much. Any questions from Members of the 100 Committee? The Chair recognizes Councilman Cohen.
What factual data is there as to how this has worked in Allegheny County?
Well, I would encourage you to ask that question to our next panel which will have a representative on it from Allegheny County as well as the City Controller from the City of Allentown who is, like yourself, an old Northeast archive.