COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON FINANCE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, November 28, 2007 10:25 a.m. - - - PRESENT: COUNCILWOMAN JANNIE BLACKWELL, CHAIR COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN JUAN RAMOS COUNCILWOMAN BLONDELL REYNOLDS BROWN BILL 070203 - An ordinance amending Chapter 14 19-1300 of The Philadelphia Code, entitled "Real Estate Taxes," to provide for a homestead exemption with respect to City real property tax... BILL 060108 - An ordinance authorizing the Water Commissioner and the Procurement Commissioner, on behalf of the City of Philadelphia, to enter into a Service Contract with the Philadelphia Municipal Authority... BILL 070109 - An ordinance approving an extension of the term of the existence of the Philadelphia Municipal Authority... V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning. Good morning. We certainly would like to thank you all for being here with regard to Bill Nos. 060108 and 109, commonly known as the Biosolids bills, and we thank you all for always being here and all the sacrifice that that requires for you to do so. We have a quorum, so certainly our Finance Committee is formally called into session. To my left is Councilman Goode. Councilwoman Blondell Reynolds Brown is here to his left. To my right, Councilman Greenlee. Councilman Darrell Clarke is here, Councilman Frank DiCicco and Councilman Juan Ramos. So, again, we thank you, and we will have the Clerk read the titles of both bills.
Bill 060108, an ordinance authorizing the Water Commissioner and the Procurement Commissioner, on behalf of the City of Philadelphia, to enter into a Service 3 11/28/07 - FINANCE - BILL 070203 Contract with the Philadelphia Municipal Authority, pursuant to which the City will assume certain obligations under an agreement that the Authority will enter into with Philadelphia Biosolids Services, LLC to design, finance, build, own and maintain facilities and equipment, and provide operating services, for the management of the City's wastewater treatment solids; all under certain terms and conditions; and Bill 060109, an ordinance 14 approving an extension of the term of existence of the Philadelphia Municipal Authority and authorizing the Authority to design, build, finance, own, operate, maintain and lease facilities and equipment, and provide related services, for the management of the City's wastewater treatment solids; all under certain terms and conditions. Those bills will be recessed to the call of the Chair. (Applause.) 4 11/28/07 - FINANCE - BILL 070203
The Chair calls to testify Mr. Pete Matthews, President. (Applause.)
We thank him and all the union members who are here, as well as all of the members who work so hard for our City. Thank you very much.
Good morning, Madam Chairperson and the rest of the Councilpersons. We just want to take this opportunity to thank you, thank the rest of the Councilpersons for working so closely with us. We really appreciate it. I think we've been given more opportunity than we ever had in the past with your group to present our case. I think we presented a very good case. You responded well to us. We really appreciate it. It showed our support for you and your support for us, and we look forward to working with you and the next 5 11/28/07 - FINANCE - BILL 070203 Administration. We have a saying that we say Philadelphia works because we do. You've proved that this time, and we will continue to work with you and the President. Again, on behalf of the members of Local 394 and District Council 33, I want to thank all you Councilpersons for the help that you've given us. Thank you. (Applause.)
Thank you very much. We appreciate your comments and your support. We realize that this is still a union city and that it takes the membership of the union and people who live in our city who need their jobs to certainly make sure that everything works to enhance the quality of life for all of us, and we thank you very much.
Thank you again. Thank you. 6 11/28/07 - FINANCE - BILL 070203
Thank you very much. Is there anyone else here who would like to testify on these bills? (No response.)
Seeing none, then as the Clerk has read, Bill 12 Nos. 060108 and 109 will not be heard and they will be called back, subject to the call of the Chair. Are there any statements from members of the Committee? (No response.)
We're fine. Okay. We're finished with Biosolids for this year. (Standing ovation.)
Thank you all for coming. Thank you. So we hope you all have a blessed holiday, and I'll see some of you who help us out at 7 11/28/07 - FINANCE - BILL 070203 our annual party for the homeless. We did 4,000 people last year, and we're at the Convention Center. We're finally there. Thank you all. Thank you very, very much. We'll now ask the Clerk to read the title of the next bill that is before our committee today.
Bill 070203, an ordinance amending Chapter 19-1300 of The Philadelphia Code, entitled "Real Estate Taxes," to provide for a homestead exemption with respect to City real property tax, under certain terms and conditions.
Thank you very much. Is there anyone here who would like to make a comment? Councilman Clarke, are you interested in making a comment about this bill, homestead bill?
Good morning, members of the Finance Committee. Madam Chair, today you will be hearing the homestead exemption provision. This particular bill, as you know, will not be able to be implemented until there is authorization from the General Assembly. This is something that we actually introduced, along with several other measures, one of which we'll actually be calling up for a final vote to be announced. In the event that we go to full valuation, which it 9 11/28/07 - FINANCE - BILL 070203 increasingly appears that may happen, we want to make sure that there are the necessary safeguards for those individuals who do receive significant increases in their real estate taxes. Understanding that full valuation is supposed to be revenue neutral to the City, there will be some additions and some subtractions from a number of individuals' personal real estate taxes. So we want to make sure that as a result of that program, in spite of the change in the millage, those individuals who will suffer significant increases in their taxes will be able to receive some assistance. The homestead provision is one of the provisions that had been used throughout the United States in supporting long-term residents in neighborhoods, as per established by the Board of Revision of Taxes, to enable them to not suffer some of the things that people suffer when they get 10 11/28/07 - FINANCE - BILL 070203 significant increases in their real estate taxes. So what we wanted to do today is to have the bill pass, establish the provision on the local level. We did not, as you see, did not put specific numbers in the actual language in the bill in terms of percentages of the exemption, because we wanted to make sure until we got a more accurate picture of what the effects will be of the full valuation implementation on the homeowners before we put that particular number. We have an amendment that reflects the fact that it's not in the original bill, and the amendment addresses the lack of the number in the particular bill that was introduced. So it's my hope, along with many sponsors, because I believe many members of this Council sponsored the ordinance, that we get this in place in the event that we do get full valuation 11 11/28/07 - FINANCE - BILL 070203 to protect the citizens of the City of Philadelphia.
Thank you, Madam Chair. Councilman, if I could just ask you a question. I certainly agree with everything you just said, but do you know as far as the state authorization, as we know, and given that subject of guns and all, the state is not always the most cooperative in working with us on that. Do you have any indication on this issue how they might feel?
Well, there are a couple of things. One, I want to say given the fact that I am currently one of the Councilmembers that have essentially taken the state Legislature and the state Senate to court, I will not be carrying the water for the City Council of Philadelphia to get the state 12 11/28/07 - FINANCE - BILL 070203 authorization. I think that would be better served by a number of members who do not have an adversarial --
Exactly. Well, and there actually have been informal discussions among both members of the Legislature and individuals in the current Administration, and the assumption is that the new Administration will take up those discussions that if in fact there is full valuation, that there is an informal agreement that the state will authorize an exemption program, because they understand that there will be some significant increases to a substantial number of individuals.
Yes. I'm pretty comfortable that that will in fact be the place. I just don't think I 13 11/28/07 - FINANCE - BILL 070203 should be the person that asks the state to do that.
Do you think they would hold that against you? I don't know.
Are there more questions for the bill 15 sponsor? (No response.)
Okay. Thank you very much. Now we will call on Commissioner Kammerdeiner to come forward and testify. Good morning. COMMISSIONER KAMMERDEINER: Good morning, Councilwoman Blackwell and members of the Finance Committee. I am Nancy Kammerdeiner, Revenue Commissioner. 14 11/28/07 - FINANCE - BILL 070203 I don't have formal written testimony today on this legislation. In fact, I come with a number of questions about just how this will be carried out and be implemented. One of those questions was, in part, answered by the proposed amendment that will say that future ordinances would set the amount of the homestead exclusion that would be set forth by this, but my questions come about, in large measure, because we were expecting that this bill, along with some others, would be looked at as a package in terms of just how the support or buffering, as many people have called it, will take place at the time that there is a reassessment and how those would interact one with the other. Looking at one in isolation does raise concerns about how this will all fit together. Not a statement against homestead exclusion. That's an idea that I think we can and should be supporting as one of those mechanisms. It's the 15 11/28/07 - FINANCE - BILL 070203 issue of just how everything fits together and whether or not the legislation as currently crafted with the definitions as currently stated are in fact the ones that we will all want to see when we look at this in a comprehensive way. And I have a particular concern and a number of questions about how we implement this, since that's really my role in a lot of this activity. Our current real estate tax process is developed around one assessed value for a property and then different rates for City and for school and for other types of credits or exclusions, but this legislation would, in effect, require us to identify two separate assessed values, one for City and one for School District, and have a very different interaction in terms of the computation of the bill and the splitting of the receipts when they come in. Those are my technical issues. 16 11/28/07 - FINANCE - BILL 070203 They're probably things that can be dealt with and surmounted over time, but I don't know how long it will take us to do those things and how expensive it will be to put those changes into place. And so, again, I come to you with questions about just how we make it work and work effectively, both in terms of interrelating the various mechanisms for providing support for people who see large increases in their personal tax bill at the time we go to a reassessment and a full value with a revenue-neutral citywide effect, but different effects on different people. And so I just would suggest that we work together going forward, whether it's in the near term with this Council or in the next Administration, to assure that we come up with something that's workable and that does indeed do what you want it to do in terms of providing that kind of buffer and support. 17 11/28/07 - FINANCE - BILL 070203
Thank you, Madam Chair. Commissioner, could you just be a little more specific in what you mean by the -- you said you didn't really want to see this -- you had questions about passing this just as an individual. What would be the problem in doing this now and in dealing with those other things later, since this isn't going to be implemented right away anyway because of the state authorization issue? COMMISSIONER KAMMERDEINER: Certainly any legislation can be amended going forward, and so I think really what I'm saying is that if you work through some of these issues ahead of time, you do it once instead of doing it two or three times. But if indeed there's a strong feeling about putting the 18 11/28/07 - FINANCE - BILL 070203 intention on the record, it probably will mean that in trying to implement it, there will be a series of changes to the legislation going forward. So it's a matter of preference in terms of timing. Because I'm not talking about saying that this is inappropriate. I'm just saying that I think the timing could work better if a lot of other issues were thought through at the same time.
I understand what you're saying, but I think -- and you kind of said it in your answer to me, and certainly Councilman Clarke can discuss this better, but it seems like what we want to do is make it clear right now we're for this kind of program. Not saying that this is in concrete, that there might not be some changes, but we're recognizing certainly the potential problem that's there. And it's there to a certain extent already, but certain if we go to full valuation, 19 11/28/07 - FINANCE - BILL 070203 it's going to be there. I mean, I understand what you're saying, but it would seem to me I don't see an inconsistency in going forward with this and doing the rest of the, as you call it, package as time goes on, because, again, we'll know more with the new Administration exactly how it's going to proceed. COMMISSIONER KAMMERDEINER: Again, I feel it's incumbent upon me to indicate that there will be issues in terms of implementation. You need to understand that. And those issues may result in some timing requirements or some changes in definition in order to be sure that we can put forth a program and implement it and carry it out without sacrificing the things that we have today. Just an aside on that, one of my concerns is that we have a very sophisticated calculation process for calculating bills within our tax system, 20 11/28/07 - FINANCE - BILL 070203 and any time you start changing the premise on which it's based, you have the potential of not being able to produce any bills, and that's something that I certainly would want to --
Some people say that's not a bad thing, but that's all right. COMMISSIONER KAMMERDEINER: Perhaps, but if we want to have income, we need to be able to bill.
I understand. COMMISSIONER KAMMERDEINER: And so I just raise a caution flag that we need to go slowly and work together to make sure that what you want to see from a legislative perspective is something that we can implement without huge costs to the City.
I understand. But I think we all recognize, and I think you do too, this is just a piece of the thing. 21 11/28/07 - FINANCE - BILL 070203 COMMISSIONER KAMMERDEINER: Yes.
But I think it's an important thing to start with, in my opinion. Thank you, Commissioner. COMMISSIONER KAMMERDEINER: You're welcome.
Further questions from members of the Committee? (No response.)
Councilman Clarke, would you like to make a statement?
Yes. Thank you, Madam Chair. Good morning. COMMISSIONER KAMMERDEINER: Good morning.
A couple of responses to your testimony. Number one, 22 11/28/07 - FINANCE - BILL 070203 you talked about the fact that it will be difficult to implement the program because of the technical nature and the information associated with gathering specific BRT and making sure that the revenue component is not problematic for the City. Isn't that like your responsibility? COMMISSIONER KAMMERDEINER: The system that I'm talking about for calculation of the bills is my responsibility, and that's where I have a concern, because we have a computer system that has a very sophisticated calculation program that's often referred to as a "black box," in that there are a lot of things that happen within that that are interrelated. You start changing those things and you can throw off something else in another area. And so my concern is that when you make a fundamental change like this would be, because you'd have to have two different assessed values, one for the 23 11/28/07 - FINANCE - BILL 070203 City and one for the School District, you run the risk of somehow affecting other things that you didn't intend to. And so it's an underlying concern. It's an administrative concern, not one that can't be dealt with, but it's just my concern for implementation.
Doesn't it make sense then because of the nature of the implementation of the program that you start thinking about that sooner than later? Because if you wait until full valuation goes into effect and then all the sudden, oh, wow, we have to do something, we have to introduce a homestead provision. So doesn't it make sense to kind of put this on the radar screen now? COMMISSIONER KAMMERDEINER: It certainly does. I'm just saying that I would like to know what it is we're doing as a package so that we look at it in a unified way and don't make changes in one direction and then find out we have to go 24 11/28/07 - FINANCE - BILL 070203 in another.
All right. COMMISSIONER KAMMERDEINER: And so that's why I was hoping we would be able to look at this as a series of measures that would work together. We would make all the changes at the same time so that we don't adversely affect the balance of the system.
Well, I mean, you do understand that we need state authorization. COMMISSIONER KAMMERDEINER: Correct. I understand that.
And the likelihood that this is going to happen next week in the state is slim to none. COMMISSIONER KAMMERDEINER: And certainly I would hope that the state authorization, when it comes, would be set up in such a way that the implementation date was a logical one that gave us lead time, both in terms of setting whatever rates or making any 25 11/28/07 - FINANCE - BILL 070203 changes that we need to here locally and also making sure that we can properly and effectively explain this to taxpayers, because there are going to be a series of things that will have to happen that will be very difficult for people to understand. A lot of them right now don't realize that the real estate tax is split between the City and the School District, and if they hear about a measure like this one that would exclude a portion of their property value from the calculation of the tax, they will look at that as going against their entire tax burden, and instead it will only affect 40 percent of their tax burden, because right now the split between City and School District is 40 percent to the City, 60 percent to the School District. So I'm saying there are other things that will have to happen and you need enough lead time to be sure that people -- 11/28/07 - FINANCE - BILL 070203
That's kind of why we're talking about it now. COMMISSIONER KAMMERDEINER: I'm saying even after the state approves the authorization for implementation, you still need lead time to do it in a logical way for the proper tax year so that everything falls into place effectively.
Right. But the state authorizes it. That does not mean that upon the authorization of the state or the state-enabling legislation being passed, that we have to implement it at that point. COMMISSIONER KAMMERDEINER: Sometimes the state-enabling legislation says exactly that. And so that's one of the things that I'm just cautioning, that the legislation when it should have an effective date that deals with the tax year and with enough lead time that you can go into the tax year so that we don't have an authorization, say, in December 27 11/28/07 - FINANCE - BILL 070203 for the next tax year and not be able to fully implement. That's really the point I'm making.
Well, again, it sounds like your testimony gives credence to the fact that we need to move as expeditiously as possible in putting together a program. If in fact the state mandates a particular date, we really need to be in a position to respond to that. COMMISSIONER KAMMERDEINER: But I would caution that the state program or state date, we should work with them to ensure that it's one that we can implement. We've had experience with being told --
As I said, I will not be carrying the water in that component of this particular strategy. COMMISSIONER KAMMERDEINER: But we've had experience with getting authorization in December for something that had to happen a few months later and 28 11/28/07 - FINANCE - BILL 070203 it makes it very difficult to implement. So just a caution point.
Okay. It's my recollection in the hearings maybe earlier this year or last year there were some discussions about full valuation and the Administration sent out a packet to, I believe, members of Council. We actually had briefings, the members of Council, and the homestead provision was actually one of the recommendations of the Administration. COMMISSIONER KAMMERDEINER: It's certainly one that should be considered, and I know that, if I'm remembering correctly the information you're referring to, there were a number of different types of measures that could be used to buffer or support the people who were adversely affected.
But the homestead provision -- COMMISSIONER KAMMERDEINER: And that is one that was part of the array. 29 11/28/07 - FINANCE - BILL 070203 I don't think that was intended to be a hard and fast these should be used, but these are the types of things that should be looked at.
But they did recommend that the homestead exemption provision be one of the tools that we may use. COMMISSIONER KAMMERDEINER: One that could be used.
All right. COMMISSIONER KAMMERDEINER: I don't think that list was ever intended -- I could be incorrect on this, but I don't think that list was intended to be a hard and fast that these tools should be used, but these are tools that should be explored to see how they might interact and which ones would be most effective.
Okay. I just want to be on the record that the Administration did talk about this being -- 30 11/28/07 - FINANCE - BILL 070203 COMMISSIONER KAMMERDEINER: Yes. It's certainly one of the key measures.
Are there further questions for the Commissioner or certainly for Councilman Clarke? (No response.)
Thank you very much. COMMISSIONER KAMMERDEINER: Thank you.
The Chair calls Brett Mandel, Philadelphia Forward. I see Rick Sauer. He'll be next. Is Rose Gray here, APM, and Laura Weinbaum, Project H.O.M.E.? Okay. In 31 11/28/07 - FINANCE - BILL 070203 that order. Good morning.
Good morning, Councilwoman Blackwell and members of City Council. My name is Brett Mandel and I'm the Executive Director of Philadelphia Forward. I do not have written testimony as well. Like the Commissioner, I come raising more questions than comments. Certainly this Council understands and the author of this bill 14 understands that homestead exemptions are one of the tools that can be used to help the vulnerable homeowners who are struggling to pay their tax bills, especially in the face of the coming of full value assessments. Homestead exemptions have been helpful in other jurisdictions and certainly could be helpful in Philadelphia. I agree with the Commissioner, that there are a number of questions that I think would be better raised as part of 32 11/28/07 - FINANCE - BILL 070203 a grouping of bills in terms of doing this. I will just give a few notes of caution and be happy to answer any questions. In the past, I was the Chair of the City's Tax Reform Commission's Real Estate Tax Working Group, and so we dealt with a lot of these questions on our group. One of the things that I would say to be wary about in terms of the homestead exemption if it's done in a revenue neutral way, if we are going to end up having a shift that would reduce the tax burden on homeowners that would then increase the tax burden on others, including owners of rental properties, it could be a subtle shift of taxation away from homeowners and to renters. That could be good or bad, but it's useful to note that going into it. If it's not going to be revenue neutral, obviously there would be a budgetary impact for you to consider. One thing that I think is 33 11/28/07 - FINANCE - BILL 070203 troubling about the homestead exemption is the fact that it must be applied for. If you have ever dealt with individuals, your constituents, applying for the senior citizen tax freeze, you know that a number of people who are eligible for it don't actually go and get it, and so there's a lot of folks who could be helped by it who don't get helped by it. I spent some time this week down at the BRT's hearings and it was a common theme, person after person coming before the BRT saying, I can't pay my tax bill, only to find there that the Chair and the members of the BRT said, You're eligible for the senior citizen tax freeze, let's help you get it. In practice, in many places, homestead exemptions end up helping people like me who see that, hey, we could save some money, great, I'll apply and go get it, and don't end up helping a lot of the other folks. Instead, deferments and other buffering measures 34 11/28/07 - FINANCE - BILL 070203 tend to be more effective. So just be mindful of that moving in. One thing that you should clean up, assuming you pass the bill today, is the tax rate has changed pursuant to Councilman Goode's legislation. We have a new lower City tax rate and a higher School District tax rate. I think if you pass this bill in its current form, you end up raising the City tax rate again. So if you do want to enact this today, you should clean that up, I would assume, and get the new revised tax rate in there. Certainly I think that, as the Commissioner said, these issues, along with other issues, buffers, deferments, other policies to help vulnerable homeowners, should all be part of a conversation moving forward about how to deal with the coming of full value, and certainly Philadelphia Forward and I remain large proponents of the idea of fixing the real estate tax fairness in 35 11/28/07 - FINANCE - BILL 070203 Philadelphia. I am happy to help in any capacity to address any of these issues moving forward as a resource to this Council or Councilman Clarke. Thank you.
Just very quickly, Mr. Mandel. I don't want to belabor the record, and you might have heard my question to the Commissioner and similar to what Councilman Clarke's comments were. I guess I still don't understand why it is a problem Council basically saying, We're for this program, knowing, again, as I said to the Commissioner, it's not set in stone. There's going to be a lot of other parts to it obviously, including the state authorization. We know that we're probably going to still be working on this in various forms. In fact, we will 36 11/28/07 - FINANCE - BILL 070203 if we're going to make it work. What's wrong with now, just taking this piece, an important piece, and getting it out there and saying, This is what we want to do, we want to take care of those homeowners, we're getting that on record, we're making sure that everybody understands that, which I think -- I'm not trying to put words in Councilman Clarke's mouth, but I think that's kind of what we're saying here. Right, Councilman? We're trying to make this a priority.
I think the only thing that's wrong moving forward is the tax rate. I think that if you want to pass this bill, I think you have to adjust that. Obviously you can check with Council's counsel, but I think that if you correct that tax rate, you avoid an accidental tax increase. The only thing that I would consider is, a lot of the bill deals 37 11/28/07 - FINANCE - BILL 070203 with, well, this is what would happen if we move to full value, if we get rid of the ratio of 32 percent, if we this. Certainly it would be a lot neater if you did it all in concert. There's nothing wrong with it, except for the tax rate.
Okay. And just on your point of -- and I understand. I agree with you, a lot of people don't take advantage of programs that are there. I've heard those same complaints that you said you heard in the Board. I guess what you're saying is there should be some kind of automatic thing, and I guess I wonder how you could do that.
The homestead exemption I don't know that you could do automatic. Certainly you could explore that. The deferments are traditionally the policy that's one that kicks in automatically. Again, this is why I think that it should be part of a fuller discussion, Here's the package of bills 38 11/28/07 - FINANCE - BILL 070203 we're going to have go forward. It's certainly up to you to decide how to implement this. If you put this in place now and revisit it later, that's not a bad thing. Certainly you understand that by doing this, this doesn't solve all of the problems.
Again, I just think it's, not to repeat myself, it's a way to say this is something that we definitely want to say right now that we're going to get done and we're going to be interested in it.
It's not a bad thing. Again, I just address that tax rate so you don't accidentally increase everyone's taxes.
I understand. I appreciate that. Thank you. 39 11/28/07 - FINANCE - BILL 070203
Thank you. Thank you, Madam Chair. So in saying that it is not a bad thing, interpret that for me. That means that you are in favor of the bill, given the reservations?
I think that a homestead exemption can be a positive thing. I would certainly reserve judgment until I saw all the things that would be done with the coming of full valuation. If the only thing that this Council did was provide a homestead exemption, I don't think you're really helping out enough people. When you look at it, if you say a homestead exemption, let's just say you exempt the first $50,000 of value on a home. You'll be helping people who have inexpensive homes. For someone who bought their home 30 years ago in Fishtown who sees that she now has a 40 11/28/07 - FINANCE - BILL 070203 house that's being taxed at a worth of $500,000, being exempt from the first $50,000 doesn't help that person. She still has to pay a bill of $450,000 -- or on a $450,000 house that she can't afford. That's where deferments and buffering, land value taxation, other policies make some sense to help her. If the homestead exemption is part of a larger package, certainly I would be in favor of it. Certainly Philadelphia Forward thinks that makes sense. If homestead exemption is the only thing this Council does, you're not solving enough of the problem, I think, to help the transition from an unfair system to a fair system.
Okay. With any major initiative that the City undertakes, education across the board becomes essential. Has Philadelphia Forward given any thought to the role it can play in educating citizens and consumers about an initiative like this 41 11/28/07 - FINANCE - BILL 070203 or any other?
We're happy to use our resources. As you know, we're not shy about telling our folks who pay attention to us what's going on. We're thrilled to use any of our networks to help spread the word about this or any other program that makes sense going forward.
So you're saying that you would be willing to participate in a comprehensive education effort designed to address this issue and the package that you propose?
You're welcome. Are there further questions for Mr. Mandel?
Madam Chair, just real briefly. 42 11/28/07 - FINANCE - BILL 070203
First, I want to thank you, Mr. Mandel, for coming in and your testimony and offering the support, because I know you are quite knowledgeable of these issues. We look forward to working with you. We in Council did actually introduce a series of bills. We do have a deferment bill that has been introduced. We do have a senior citizens tax abatement bill that will actually be called up for a vote very shortly, in addition to the homestead provision. So we understand that there should be a full array of bills that could conceivably be helpful to individuals who suffer problems. I agree with you. And I also agree with you the fact that we have to come up with a better way to make people aware of the fact that there are programs that support them. I too have had opportunities to talk to a number of senior citizens who 43 11/28/07 - FINANCE - BILL 070203 have come in my office and showing me their tax bills and say, I can't pay this, and when we look at the specifics of their income, they in fact qualify for the existing program. We are hopefully going to be in a position to address that in a broader level. So I agree with all that. So I just want to say thank you for your testimony and look forward to working with you.
Thank you very much. Thank you, Mr. Mandel. Rick Sauer, Philadelphia Association of CDCs. Good morning.
Good morning, Chairwoman Blackwell and members of Council. As mentioned, my name is Rick Sauer. I'm the Director of the 44 11/28/07 - FINANCE - BILL 070203 Philadelphia Association of CDCs, and our members have been involved in housing issues and have been working around the whole issue of managing neighborhood change for a number of years now. And the whole property tax issue, I know a lot of folks are focused on the full assessment valuation issue, but property taxes are actually already going up pretty significantly for a number of homeowners here in the City. So I think it's an issue that should be addressed now and not put off for too long. Just a few comments I wanted to make. I don't have written testimony to submit. One is that, as we said, citywide property values have probably doubled in the last six years or so. And I think Brett is right, this homestead exemption is not a cure all, but I think it is an important tool that we need to put in place, and it would make the property tax a bit more progressive than it is right now. So if you have a 45 11/28/07 - FINANCE - BILL 070203 low-income homeowner in a low-income neighborhood whose home is only worth, say, $60,000 and you're exempting the first $40,000, $50,000 of value, they're only paying taxes on $10,000, $20,000. So that would be a significant tax break to them and a benefit. Clearly, it doesn't address the situation of a homeowner in a neighborhood where values have gone up a lot, like Fishtown, which he mentioned, and so you do need other mechanisms to address that. Secondly, my understanding is that there has -- about ten years ago the state did pass legislation to amend the Constitution to allow homestead exemptions. They just excluded Philadelphia from that law, which happens often times, right? Cities of the first class or counties of the first class is the location that's excluded from state laws. But there is already a state law in place allowing all other counties around the Commonwealth to do this, I 46 11/28/07 - FINANCE - BILL 070203 believe. And so I think it's an easier thing to get that amended to allow Philadelphia to participate versus getting something statewide starting new to participate. It's not always the case, but in this issue, I think it's more doable, and we'd certainly be willing to work with City Council and the Administration to help make that happen. I think the amount of the exemption is critical. My understanding is, the City can set the value at up to half of the assessed value or the average assessed value of properties. So, clearly, if the exemption is at $50,000, that's going to have a lot more benefit to homeowners than if it's at $10,000. So that's an important consideration. I know the City needs to weigh sort of its tax revenue and all that issues, but if we're trying to give real tax relief in this situation, I think we'd want to set it at a fairly high level. Certainly the public education 47 11/28/07 - FINANCE - BILL 070203 issue is critical. We do have a number of programs already in place that aren't fully being taken advantage of. So whether that's the state property tax rebate/refund program, whether that's the senior freeze program here locally, we need to do a better job at getting the word out about the availability of this. And with the homestead exemption, since it does have to be applied for, we need to make sure that process is very simple to go through. If it is complicated, it will mean that that many fewer people do participate. I guess my final comment I wanted to make is that I agree that this should be looked at in a package way. I don't think that's reason to hold up this particular bill today, but the deferral of property taxes is another key tool that I think needs to be put in place.
And there's different ways you can structure that, but you could defer the increase over a certain amount, say, over 48 11/28/07 - FINANCE - BILL 070203 five percent, over ten percent increase, and you can defer it for a different amount of time, but what I would recommend is actually deferring that to the time that the homeowner resells the property, and that way, if you have a situation where especially in certain gentrifying or appreciating neighborhoods, a homeowner who can't afford to pay the same increased property tax now could tap into that new wealth that they build and afford to pay it at that time of property sale. Thank you very much.
Thank you very much. Are there any questions for Mr. Sauer? (No response.)
Thank you very much. Rose Gray, APM, are you here? (No response.)
If 49 11/28/07 - FINANCE - BILL 070203 not, Project H.O.M.E., Laura Weinbaum. Thank you very much.
Good morning, Councilwoman Blackwell and members of Council. , a multi-service agency providing street outreach, supportive housing, comprehensive services, and community and economic development. I come before you today to offer testimony concerning Bill No. 070203 proposing a homestead exemption for Philadelphia homeowners. I have with me Ms. Helen Brown and Ms. E. E. employees. , I want to thank Councilman Clarke for showing his clear support and concern for the people in the neighborhood where we work, St. Elizabeth's and Diamond Street, 50 11/28/07 - FINANCE - BILL 070203 and people struggling with their bills all across the City. Your leadership on this issue and other issues to preserve the quality of life in North Philadelphia are greatly appreciated. Especially in light of the BRT's full valuation project, which obviously we've heard quite a bit about, measures offering targeted relief are desperately needed. Homestead exemptions will be particularly needed for people living on low and fixed incomes and in areas that are experiencing increases, including the neighborhood where we work in North Central Philadelphia. We hope that Council will receive this bill and its intended purpose favorably. In our neighborhood, some long-term residents risk being forced out by escalating property taxes and will need aid to stay in their own homes. The median value of a property in 19121, our primary zip code, is about $22,000, and our median income is just under $16,000. 51 11/28/07 - FINANCE - BILL 070203 Non-mortgaged properties outnumber mortgaged properties by about two and a half to one, reflecting the fact that many of our residents are people with limited means who have either inherited the property, acquired it through off-the-books methods or lived there enough years to have paid off their mortgage. Many people who live in our neighborhood have small incomes and large property tax bills, increasing ones. As values increase, which we believe is a positive reflection of the increased neighborhood assets and community development work, measures are needed to protect existing and incoming homeowners and maintain the fabric of the neighborhoods. In other words, if the homestead exemption were, say, $20,000, the majority of the low-income homeowners in our neighborhood would pay very little tax and could use that same money which used to go to taxes for education, property improvements, food, clothing or 52 11/28/07 - FINANCE - BILL 070203 healthcare. Most of these purposes would contribute in a significant way to improving the community as a whole. Though we're excited about the homestead exemption as a tool, we're sure that you don't offer it as a panacea and that you will take real steps to ensure its fullest success. Because poorer people will be less likely to submit applications for this exemption, community organizations should be encouraged, as we've discussed, to provide outreach in poor communities, and other measures should be put in place to encourage participation. Because depending on the forecasted impact on the City's revenue, the homestead exemption might necessitate an increase in the tax rate or pre-determined ratio. Commercial interests might pass along costs to renters, many of whom also live on lower fixed incomes in Philadelphia. We hope that you might explore a way to protect renters from this added burden. 53 11/28/07 - FINANCE - BILL 070203 Further, we understand that many of the folks in our neighborhood and many low-income residents across the City have complicated tangled title issues and may not be included in this exemption since they might have a hard time proving to be the owners of the property in which they live. Although we do not have a proposed solution for this problem, we hope that consideration can be given to alternatives which might protect these owners as well.
Again, I would like to extend our sincere thanks to Councilman Clarke and others on this Council who seek to protect hard-working Philadelphians every day. E. and hope that we can use this homestead exemption as a tool to maintain the neighborhood fabric which is so integral to Philadelphia's vitality. E. in general supports deferments and all the other measures that have been mentioned by Brett and Rick that would offer some relief to the low-income folks who are really experiencing a hard hit.
Thank you very much. Are there any questions? (No response.)
Thank you very much, Ms. Weinbaum. Is there anyone else here who would like to testify with regard to this bill? (No response.)
Are there any other comments from members of the Committee? (No response.)
Seeing none, this will conclude our hearing and we will enter into our stated meeting. 55 11/28/07 - FINANCE - BILL 070203 Councilman Clarke.
Thank you, Madam Chair. Madam Chair, as I indicated earlier, there is an amendment that I would ask one of the members to offer in the public meeting. The amendment essentially deals with the specifics of the amount on the exclusion. In (b), Subsection 19-1301, we have deleted the section where it's indicated there is a dollar amount. What the amount says is "such amount as shall be provided by ordinance." So that specific number shall be established at a later date once Ms. Kammerdeiner and the Revenue people get a better handle on the impact of the bill financially to the City.
The Chair recognizes Councilman Greenlee with regard to -- we are in our stated meeting 56 11/28/07 - FINANCE - BILL 070203 part of this gathering, and the Chair recognizes Councilman Greenlee for the purposes of asking for the adoption of an amendment just discussed by Councilman Clarke and distributed to everyone with regard to Bill No. 070203.
Thank you, Madam Chair. I move the adoption of the amendment to Bill 070203 just previously discussed. (Duly seconded.)
It has been moved and seconded that the amendment to Bill No. 070203 be adopted. All in favor say aye. (Aye.)
And the amendment is adopted. The Chair now recognizes Councilman Greenlee with regard to the amended bill and its passage.
Thank you, Madam Chair. I move that Bill No. 25 070203 as amended be reported out of this 57 11/28/07 - FINANCE - BILL 070203 Committee with a favorable recommendation and that the rules of Council be suspended to allow for first reading at our next session of Council. (Duly seconded.)
The ayes have it and, therefore, the bill is amended. That is, Bill No. 070203 is reported out of Committee with a favorable recommendation and, furthermore, a recommendation for the suspension of the rules so as to permit first reading at our next session of Council. Thank you all very much. This will conclude our meeting and hearing with regard to this bill on homesteading, and our next hearing will be on 58 11/28/07 - FINANCE - BILL 070203 inclusionary zoning, for many of you who are here for that bill. We thank you, members of the Committee. That concludes this hearing, and we ask for a few moments to set up for the next hearing, and we'll begin momentarily. Thank you all. (Committee on Finance adjourned at 11:15 a.m.) - - - 59 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on November 28, 2007, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)