Thank you. Just one last question. You had mentioned twice -- I think both of you have mentioned -- the issue of transfer tax on lease. All leases require the payment of transfer tax or just certain ones?
Okay. Fine. Thank you. Any other questions? Councilman Goode.
Just one quick question on the issue of non-profits. Do you have for-profit 78 2/9/10 - RULES - BILL 090704, etc. subsidiaries?
We actually -- there is one. I'm not sure if it actually owns anything at this point, but there is -- there's something called Penn Tower Hotel, Inc. that --
Is possibly process an issue here? You collect rent from certain folks, right, for what we're talking about here? Couldn't we see that the rent pays the taxes first before it goes into your pocket?
That rent, just to clarify, that rent paid by a tenant to us, we would use it to pay their taxes? 79 2/9/10 - RULES - BILL 090704, etc.
Well, you don't want to have tenants that are deadbeats, do you?
So shouldn't there be some prerequisite that they have a deal with you that they have to pay their taxes? Don't you think you have the responsibility to lease to people that are responsible?
Absolutely, but we also -- they are also the -- once we lease to them, they're also the entities that are deriving revenue from the property. Typically the ground lease -- we're using -- we use the ground lease mechanism so that we don't put our capital into non-academic projects, for the most part. We don't add it to our debt service or have it affect our credit capacity. So they're the people that are actually making revenue. We get, you know -- what we get from them is their expenditure of capital to build the 80 2/9/10 - RULES - BILL 090704, etc. project.
What I'm hearing and thinking is that you possibly could do more to make this work rather than just saying exempt non-profits. I believe that there's more that you can do to cooperate with this financially struggling city to get us the taxes that are due. Thank you.
Councilman, we'd be very happy to do that. If there's any suggestions that you want to give to me, I'd be happy to take those suggestions.
Any other questions for these witnesses? (No response.)
Mr. James Wright. 81 2/9/10 - RULES - BILL 090704, etc.
James Wright and James White. You can both come up together, if you'd like. (Witnesses approached witness table.)
Good morning. Please identify yourself for the record.
Good morning, everyone. My name is James Wright. I am the Commercial Corridor Manager for the People's Emergency Center CDC. We manage the Lancaster Avenue corridor from 38th Street to 44th.
PEC nurtures families, strengthens neighborhoods and drives change. We are committed to increasing equity and opportunity throughout our entire community. We provide comprehensive supportive services to homeless women and children, 82 2/9/10 - RULES - BILL 090704, etc. revitalize our West Philadelphia neighborhood and advocate for social change. Since 1992, PEC's community development arm has provided real estate, economic development and quality-of-life programs to transform the West Powelton, Saunders Park and Mantua communities into a neighborhood of choice, a community in which people choose to live, work and thrive. Our comprehensive approach to neighborhood revitalization builds upon neighborhood assets and responds directly to the needs of the community. PEC works with property owners and potential new businesses to fill vacant commercial spaces on Lancaster Avenue. We keep an inventory of available properties and urge owners of vacant buildings to sell or rent to potential business occupants. PEC also continues to encourage property owners to restore the mixed-use character of their buildings. We have 83 2/9/10 - RULES - BILL 090704, etc. led the way with our own mixed-use project, Fattah Homes I, which is scheduled to complete in July 2010. Bill No. 090852 will require that any person seeking a variance from the terms of Title to be current in 8 all payments of all taxes. If approved, 9 this measure will add another step to the 10 already laborious task of revitalizing 11 anchor buildings, filling vacant 12 storefronts and improving the facades of 13 blighted structures on the Lancaster 14 Avenue commercial corridor. Additional requirements will increase project timelines and costs that can influence the feasibility of a project. Often variances are sought by retail tenants for the purposes of signage. This bill would penalize those tenants for a matter that they have no 22 control over. It is the obligation of the property owner to remain current on all taxes. Furthermore, under the current requirements, real estate 84 2/9/10 - RULES - BILL 090704, etc. developers must ensure that tax balances have been satisfied before applying for a variance. Therefore, this bill would be a duplication of methods. PEC urges the members of City Council to oppose Bill No. 090852 because it will adversely affect our commercial corridor revitalization strategy and decrease opportunities in the West Philadelphia community. Thank you.
Thank you very much. So I understand your testimony, are you saying that in struggling commercial districts where there may be a higher level of tax delinquency, the ability to improve a property to do better in business would be hampered and, therefore, continuing the slide down into insolvency or bankruptcy?
What I'm saying is, a lot of times properties are converted, improved by the tenants. The 85 2/9/10 - RULES - BILL 090704, etc. property owners simply collect the rent. And so the tenant isn't concerned or doesn't necessarily concern themselves with paying the taxes. They just want to beautify their space so they can attract customers to make money. The taxes should be paid by the property owners, and that's exactly --
Just real quick. Thank you, Mr. Chairman. Mr. Wright, I think that concern you just raised is covered in the amended -- I don't know if you were here when Mr. Kramer from the Planning Commission talked about the amendment that's being put in.
Doesn't that cover your concern, that all the tenant has to demonstrate is that his or her record is clean, not the owner? So it's not -- 86 2/9/10 - RULES - BILL 090704, etc.
Good morning and thank you for the opportunity to testify. My name is James White and I'm the Policy Coordinator of the Philadelphia Association of Community Development Corporations. PACDC is a citywide association of 80 community development corporations and other organizations that have extensive experience developing affordable homes and commercial space and working to strengthen neighborhood commercial corridors as part of our larger mission of addressing resident needs and foster successful 87 2/9/10 - RULES - BILL 090704, etc. revitalization for our neighborhoods. Philadelphia's CDCs have frequent contact with the Zoning Board of Adjustment and realize the importance of a well-functioning Board, as well as the City's need to collect delinquent taxes to raise revenue for our city's budget. This bill directs the ZBA to not grant any application for a variance until the owner of the property for which the variance is being sought has submitted certification from the Department of Revenue that all of the person's taxes are current or are subject to a payment agreement or produces evidence that denial of the variance would be an unconstitutional taking of property. We have a number of concerns about this bill, including the following. I'll amend my testimony to accept the amendment from the Planning Commission regarding commercial tenants and hope that it's incorporated into the Honorable Councilman Rizzo's bill. 88 2/9/10 - RULES - BILL 090704, etc. We do have a couple of other concerns. Agreements of sales: Purchasers of property sometimes seek a variance from the ZBA when they have an agreement of sale to purchase a property, but are not yet the actual owner. Their willingness to purchase and redevelop the property is contingent on their ability to obtain the variance. Under the proposed change in this bill, they would not be able to obtain a variance if the current owner is delinquent in their taxes, which could delay, if not halt, the sale and redevelopment of vacant and underutilized properties in our city. Our other concerns are as follows: Clear title: Properties disposed of by public agencies in Philadelphia for redevelopment often do not come with clear title, because liens for old tax and water bills have not been properly extinguished by the City. As a 89 2/9/10 - RULES - BILL 090704, etc. result, old tax liabilities remain with the property and are passed on to the new owners, whether a CDC, for-profit developer or a new homeowner, which can also prevent them from obtaining a ten-year tax abatement. The proposed ordinance would exacerbate the City's current clear property tax dilemma. Tax certification: Because the Department of Revenue is understaffed and has outdated computer systems, the tax certification process as it is now can take up to six months, further delaying redevelopment projects and increasing the cost of development in Philadelphia at a time when the Administration is trying to lower development costs to attract new development and jobs. Duplication: In The Philadelphia Code, Provision Title 9, Section 102, Subset 9 requires that a person or an entity must be either current in their taxes or have a payment agreement with the Revenue Department in 90 2/9/10 - RULES - BILL 090704, etc. order to obtain a permit or a license from the Department of License and Inspection or to renew a license. A variance is not a permit, and the notice of decision from the Zoning Board clearly says so. In fact, if a permit is not obtained within one year of the variance grant, the variance expires by its own terms. This is known as the one-year rule. So there's a question of duplication with this proposed ordinance 13 that's before us today. Lastly, we appreciate the intent of the bill to reduce delinquent taxes and generate much-needed revenue for the City, and we thank the sponsor for his due diligence in bringing it forward.
However, given the duplication and the unintended circumstances of implementing this policy change, we urge the Committee to hold this bill to provide an opportunity for the sponsors to convey key stakeholders to craft an effective and realistic solution to 91 2/9/10 - RULES - BILL 090704, etc. collecting delinquent taxes without negatively impacting community development efforts in Philadelphia. Thank you.
First, thank you guys for your diligence as it relates to providing affordable housing for the citizens of the City of Philadelphia. A couple quick questions, and I was interested in hearing your testimony when you told me last week that you had some concerns about this bill, understanding the need to continue to aggressively create affordable housing. There's kind of a couple of things that I wanted to reference. With respect to the agreement 92 2/9/10 - RULES - BILL 090704, etc. of sale -- and I understand interacting with developers and zoning lawyers -- couldn't that simply be resolved by having a provision in the agreement of sale that says that contingent upon compliance with this bill, if it were so to pass, that the certification process was adhered to? So if I have an agreement of sale, this agreement of sale is contingent upon compliance with Bill 12 No. Such-and-such, so if that person didn't comply with that particular bill, then that agreement of sale will be null and void, so, therefore, the person who got the agreement of sale then went to Zoning, said, This guy is not up on his taxes, so, therefore, you wouldn't be left holding the bag.
I mean, theoretically, yeah, that would work in terms of making it work for the proposed ordinance. I think, though, what would happen, though, is that every time anybody went into a deal with a real 93 2/9/10 - RULES - BILL 090704, etc. estate broker, they'd want to know what the property owner's tax record was before they even looked at the site or considered the site. I think in some cases, with most of the projects that we get, a lot of them come from the City. So there's still the question of the recycling agreement and the Administration beginning to do payments into court, but --
I agree with what you're saying, Councilman, but I'm just proposing a question for you, the other side of the coin. The other side of the coin being for us mostly as non-profit developers of affordable housing or small business developers in commercial corridors and neighborhoods, quite often the person or the entity we deal with is the City and the Administration. Now, if the recycling agreement by the current Administration or the payments into court 94 2/9/10 - RULES - BILL 090704, etc. were to happen, that would also help alleviate some of our concerns, because then the recycling agreement would be honored and a lot of the problems with tax delinquencies would be reduced.
Properties that were condemned by the City or that have outstanding tax delinquencies where they're vacant and the owner is gone. So there's a lot of things, and I really --
But hang on. There's a lot of issues here that I think that if we take the time and look at this and work together, because, believe me, I don't think anybody in this room doesn't want to see the City get delinquent taxpayers paying their taxes. I mean, the first thing I said to Councilman Rizzo was, I get it, I understand it, but there's some other things going on here 95 2/9/10 - RULES - BILL 090704, etc. that we have to fix in order for this to work. And I agree with you. In answer to your question, yes, that would work if it was contingent, but I think there's some other things that we need to fix, too. If we're going to just fix that one problem, we need to get all of them fixed so this works for us, and that's all I'm saying. I don't mean to be taking you down a different road, and I have all respect for what you're suggesting. I think it's a great idea.
No. I know what you're about. Trust me, I understand. My thing is that as one of the co-sponsors of the bill -- and I know how hard Councilman Rizzo worked on this -- we want to get this moving. Sometimes -- and Councilman will ultimately determine whether or not it comes out of Committee, but sometimes if we don't move it out of Committee, it kind of stays there for a long, long time and there's no burden on people to move 96 2/9/10 - RULES - BILL 090704, etc. the process, and I am a little concerned, actually talking to Councilman Greenlee, about the City's ability to implement this bill, because I do agree we have some challenges as it relates to staffing levels and unfortunately given what's probably going to be said on March the 4th at the Mayor's budget address, it's going to impact the staffing levels a little more. I guess in terms of -- Councilman, do we have an effective date on the bill?
That's what I was going to bring up, that that effective date could always be amended to when we're all satisfied that it's ready. But from what I'm hearing, this bill 20 could motivate a lot of owners, property owners that do lease their property, to get their act together and start paying their taxes, especially when their tenants start coming to them and saying, Look, I want to get a variance and I 97 2/9/10 - RULES - BILL 090704, etc. can't because you owe taxes and I'm not going to pay you my rent. So I think that all of the things we heard today can be implemented, especially the effective date. And I think moving forward, especially with what we're facing, is important.
I just want to comment on that. A lot of property owners are really unconcerned with those sort of matters in taxes. On Lancaster Avenue. I can speak for Lancaster Avenue. They're just concerned with collecting the rent check, and they leave maintenance and other issues up to the tenant. And so any kind of obstruction to the tenant doing a facade improvement, getting the building permit to improve their space because of this bill, it wouldn't really -- I don't believe, I'm not sure, but I don't believe that it would encourage the property owners to get their act together. 98 2/9/10 - RULES - BILL 090704, etc.
Any other questions for these witnesses? (No response.)
One last thing. I do have copies of my testimony. Thank you again for your time. Thank you to Councilman Rizzo.
Thank you very much. Mr. Pinkus, please. (Witness approached witness table.)
Good morning, Councilman Kenney, members of the Committee. I'm Ralph Pinkus. I thank you for hearing me. I'm a last-minute substitute for a colleague. I'm an attorney. I'm a member of the Philadelphia Bar Association active in the Zoning Committee, the Real Property section and have been attending almost 99 2/9/10 - RULES - BILL 090704, etc. all of the Zoning Code Commission hearings, so I'm very interested in any legislation that may have some effect on the zoning process and the development process in the City of Philadelphia. And while I logged the Councilman in the proposal of the bill to in some way monitor tax payments, the word "variance" and the word "permit" I think are being used interchangeably here and I think it's important that a distinction be made, because as Mr. White has testified and as Mr. Thom has testified, the process of making application for a zoning variance frequently involves a property that may have become derelict or abandoned by an owner. The owner hasn't paid taxes. But there's a developer, there's an owner who says, I now want to improve this property, I need to improve this property. If I improve it, I will put a tenant in it. I have a tenant and I will now be able to put it back on the tax rolls. I'll put people to work in my 100 2/9/10 - RULES - BILL 090704, etc. property. It's all good for the City, but right now it's a problem. If I get the zoning variance, my request for a variance approved. Remember, there's an application that was made at the Department of Licenses and Inspections. You don't go for a variance unless your application was denied, because the Code says this is not an approvable use or there's a dimensional problem. You then appeal to the Zoning Board and you have a hearing. The Board will grant a variance, but the grant of the variance does not permit you to go forward with what was approved by the Zoning Board. You must still go to the Zoning -- you must still go back to the Department of Licenses and Inspections and get a zoning and use registration permit. You must also, if you want to do any construction or development work on that property, get a building permit. There are provisions, as Mr. White testified, in the Licenses 101 2/9/10 - RULES - BILL 090704, etc. and Inspections section of the Code in Chapter 9 and also in Chapter 14 at Section 1700 requiring that an applicant be tax compliant when they apply for a permit. So what I would say is -- and I would be happy to work with the Councilman and the Committee to make a more effective language that deals with the permitting process rather than the variance process, because I believe there are a lot of well-meaning applications that will benefit the City that if a variance were to be granted, that person would be able to then make tax payments. A question was asked about the agreement of sale. The agreement of sale, because my other part of what I practice is transactional law, has always in it a contingency for title being good and marketable for the purchaser. That would mean that a title report is issued and if there are delinquent taxes, they will be disclosed in that title report, 102 2/9/10 - RULES - BILL 090704, etc. and most developers do not take title to a piece of real estate subject to the delinquent taxes. They get paid when they take title. So if there's a contingency in an agreement of sale, it says contingent on zoning approval and contingent on getting good and marketable title, that means at that particular time taxes will get paid. So I believe there are mechanisms in place that have the same effect and there's an opportunity here within the permitting process to make sure taxes are paid.
Let me ask you a question. What then, in your opinion, does this bill do that's not already in effect?
Not from that -- you can give me that perspective. I'm just saying as far as the mechanics of a variance moving forward or a project 103 2/9/10 - RULES - BILL 090704, etc. being started or a sale being completed, what does this bill add on or not add on to what we currently have with the ability to deny a use permit or to deny a building permit?
Because I believe if someone knows that the taxes aren't paid and the Board is precluded from granting a variance, the applicant will not file with the Department of Licenses and Inspections. They will say getting a variance -- I can't get a variance because the taxes are unpaid. The Zoning Board will not approve my request. My development proposal, I can't go forward with it.
Without this bill, the actual proposal still can't go forward because you can't get a building or use permit.
But you know you now have permission to do the development or the particular activity on the property. You knew that -- in most 104 2/9/10 - RULES - BILL 090704, etc. instances you know that taxes are outstanding. So now you know that you have to pay the taxes, but at least you can proceed with whatever your proposed activity is. You don't get the opportunity to have a day on whether or not that activity can proceed, which might be an activity that enhances a property, a hospital. They're talking -- Mr. White was talking about community development projects on Lancaster Avenue, but we can be talking about a shopping center or something else anywhere in the City that requires a variance, a small variance, maybe it's a dimensional variance, nothing very big, but you can't go in there -- or you go in and you say, Well, I don't know if I'm going to get a variance. So I think it's a discouragement for applicants.
Do you have other testimony? I seemed to have interrupted you, so I wanted to make sure 105 2/9/10 - RULES - BILL 090704, etc. you finish.
I think I covered the points that I wanted to make, and because I'm a late-minute sub for someone, I didn't have any prepared remarks submitted beforehand.
Thanks, Mr. Chair. Real quick. You say it's a discouragement to proceed with your development, but don't you think it's also an encouragement to pay your taxes or, at a minimum, make a tax agreement?
I think it's a reasonable approach in the bill 20 that says if you have a valid agreement on your taxes with the City of Philadelphia, you can proceed.
Isn't that reasonable? 106 2/9/10 - RULES - BILL 090704, etc.
I think you can do that as a requirement of getting the permit, not of getting the variance, because --
But what you said is that you're not allowed -- and you know once you get a zoning variance, that can exponentially increase the value of your property and the variance is very important. If you get a variance, you don't necessarily have to get a permit. Now I have a property that's zoned for multi-family units. That property is significantly more valuable than a single-family home, say, for instance, two blocks from the Temple University campus.
I understand that, but I'm saying you have a property that's now been zoned for a use that creates a significantly higher value. 107 2/9/10 - RULES - BILL 090704, etc.
So you don't necessarily have to get the taxes. You can just simply sell the property for twice. And the only reason I say that -- and I know you're familiar with the Temple University area. You have single-family homes in that area that will sell for $45,000. You turn that property into a multi-family unit when you can rent to Temple students, you can sell that property for $200,000 and pay the taxes out of the settlement. I mean, and then walk away with a significant property. What we want to do, why don't you just make an agreement and pay your taxes?
I assume that it's our -- and I'm making this as more a rhetorical question. I assume it's the City's desire to collect what 108 2/9/10 - RULES - BILL 090704, etc. it's owed, what's owed to it. And I understand Councilman Clarke's upsetment with folks who don't conduct their properties the right way, then convert them to multi-family and walk away with money, but if they're walking away with money and we're getting what's owed to us, does it matter?
Yes. I don't think the person should be able to make a significant profit based on them getting around the system. I mean, if you owe taxes, you shouldn't be able to enter into an agreement that's going to allow you to profit dramatically when you owe taxes to the City of Philadelphia.
But I don't know that those taxes won't get paid, because if you get the variance --
Well, then it 109 2/9/10 - RULES - BILL 090704, etc. doesn't get developed and it doesn't happen. But if you get permission to make it a multi-family unit, then you sell it to the developer and there's an actual sale, there's a settlement and there's a title insurance that's issued, and those taxes will get paid at that particular time. It's not that the City won't get paid. The City will get paid the delinquent taxes when the title is transferred to that new owner.
So your suggestion is that the people who owe taxes -- and I know I'm a getting a little beyond the beaten path on this -- who owe taxes should be able to get a City job?
Well, you're saying I owe a bunch of taxes to the City, I should get a City job. Once I get that job, then I can pay my taxes.
I am saying that 110 2/9/10 - RULES - BILL 090704, etc. there is another way to make sure that tax is paid and it isn't necessarily triggering it or tying it to the grant of a variance, but it's the issuance of the permit that you must obtain after you get a variance.
All right. But I'm just bringing up I should get a contract with the City. If the City of Philadelphia gives me a contract, I'll pay you the taxes. That's okay, right?
That's what you're saying. You're saying the person should be allowed to profit from a property and then they'll pay the taxes.
I'm saying that at the time that they get the variance and then they go in to get a permit, the condition can be at the time the permit is granted that the taxes be paid within six months or there's some process you don't get the permit unless the taxes are 111 2/9/10 - RULES - BILL 090704, etc. paid, and at that point, between a developer or a user of a property, you can obtain the payment, because the user can go to settlement, the purchaser can go to settlement and pay the taxes that are due, because he now has the ability to develop his property.
All right. I hear you. I mean, I disagree with you. I think you should, at a minimum, make an agreement, particularly if you're a property owner if you're in a position to profit from that property.
Someone has to make an agreement or pay the taxes in order to get the permit.
Thank you, Mr. Chairman. I just have one quick question. Why is it that when a person purchases property in the City of Philadelphia, why 112 2/9/10 - RULES - BILL 090704, etc. can't they pay taxes each and every year that it's due? Now, what's happening here is, speculators evidently, they go in there, they buy properties, they don't pay the taxes, and as Councilman Clarke just alluded to, that it's more or less, Okay, we'll wait until we can get a variance, we can do something different with the building, we'll make a lot of money out of this thing, then we'll pay the taxes. This is something that I don't think should be tolerated by this Council or anyone at this point.
One, if you're talking real estate taxes, yes, that happens. Of course, the City has the ability to use the sheriff's sale process to foreclose and take the property, but on the other hand, that person when the property gets sold, it's not the one who is delinquent, it's the new purchaser who ends up paying the taxes because the purchaser has a development plan for that 113 2/9/10 - RULES - BILL 090704, etc. particular property. So the bad guy sort of does get off the hook, except the City gets paid taxes at the time the sale is made.
I don't think that you should participate in any process that allows you to benefit financially by basically being a tax deadbeat. I just don't think --
I'm not suggesting and I'm not here to support tax deadbeats.
Mr. Perleman, please. David Perleman. (Witness approached witness table.) 114 2/9/10 - RULES - BILL 090704, etc.
My name is David Perleman. I'm the President of the Building Industry Association, which I represent the region's residential home builders. Thank you, Chairman Kenney and members of the Rules Committee, for allowing me to speak today. I am here to testify today on Councilman Rizzo's Bill 12 No. 090852, which would require that any person seeking a zoning variance must first certify that they are current in payments of all taxes. The members of the BIA certainly sympathize with the intent of this legislation, as well as similar legislation that has been introduced over the years. It is extremely frustrating to read newspaper accounts about deadbeat developers who aren't paying their taxes, but still asking for help from the City government. It hurts the reputation of the vast majority of developers and 115 2/9/10 - RULES - BILL 090704, etc. builders who do indeed play by the rules, and especially given the City's severe economic crisis, we certainly understand the motivation behind the bill. But we must testify in opposition to this legislation because of the many problems that every developer has had dealing with the Board of Revision of Taxes. Too often we find the BRT raising taxes on properties that are abated, assessing vacant lots as building structures are on them, charging occupancy taxes on vacant lots and mysteriously instituting back taxes when title reports have shown no taxes owed. The BRT often does not respond to phone calls, e-mails, visits to their office or appeals. Unfortunately, too often it takes developers months to resolve all potential or perceived issues even after paying their bills. And so until the BRT gets its act completely together, we cannot provide support for this legislation. 116 2/9/10 - RULES - BILL 090704, etc. Further, our zoning lawyers tell us that this legislation is an unconstitutional taking of property rights. Just like any other creditor, the City must go to court to get a judgment, but until then, the owner of the property should have the ability to pursue all of the options available under the law and like any other citizen. For these reasons, the members of the Building Industry Association ask that the Rules Committee hold Bill No. 14 090852, and instead we respectfully ask for Council to support for other measures that would make the development process easier and faster than it currently is. I'd like to thank you for your support in that. I am a builder. I am a developer. I've been building in the City for ten years. I don't have a delinquent tax sitting here. All my taxes are paid. It is a process for us to pay 117 2/9/10 - RULES - BILL 090704, etc. our taxes. There is always, on an annual basis, issues with our taxes. Not just any one of them, but if I have to pick one, mostly the BRT tax. What I read to you today was testimony that was written. I can tell you that as a developer and builder, a lot of these things are very prevalent in building. We are dealing with a tough economic situation in the City. We're dealing with a tough economic situation for builders and developers in the City. We're looking to grow this city. We're looking for the developers and builders to grow. I've heard a lot of testimony here today. I understand we're looking to collect the taxes. We want the City to thrive by collecting their taxes. I just think by burdening a builder and developer that goes into an area and tries to develop a piece of property that is delinquent currently in its taxes can only help by bringing jobs to the City, 118 2/9/10 - RULES - BILL 090704, etc. getting those taxes finally paid, if they do get their zoning variance approved. I have in many cases made sure that the City collected revenue. The transfer tax certainly collects revenue. Certainly if there's a project being developed and we have a zoning permit, we're creating jobs, because eventually we're going to be building that project.
So all in all, we're collecting our taxes, we're creating economic development, and we're putting people back to work. So this bill does not allow us to accomplish that. It may just prolong the tedious process that is currently in L&I and Zoning. Thank you.
Does the recent announcement from the Mayor that the freezing of all BRT action over the next two years change in any way your testimony relative to the BRT side of the problem?
I think the 119 2/9/10 - RULES - BILL 090704, etc. announcement and I think moving forward it could help, but the question that I pose is, when? I have hearings with the BRT on Thursday in reference to tax issues. So it's very difficult. It's very difficult.
Thank you, Mr. Chairman. Good afternoon. I'm not sure what your recommendation is related to the original intent of the bill. How do we achieve the original intent of the bill?
Right, is to get paid. I am assuming that tax delinquency is what the bill is for.
I'm not sure 120 2/9/10 - RULES - BILL 090704, etc. I heard your recommendations related to the original intent of the bill.
Well, my intent is is that -- our recommendation was not to have the zoning variance denied.
Not at this point, other than I believe that when you're getting a zoning variance --
That was my first question. The second question is, you believe that this Committee and this Council not endorsing doing business with tax delinquents is anti-development?
Not endorsing doing business with tax delinquents is anti-development?
No, but here's 121 2/9/10 - RULES - BILL 090704, etc. my concern: There is a piece of vacant ground that is delinquent in taxes. I as a current taxpayer decides to put that piece of property under agreement. Knowing that if I get my zoning variance, in a month I go to settlement, and in 30 days, all of those delinquencies have been addressed.
-- transfer title on a piece of property, it is the title insurance responsibility to collect those delinquent taxes.
You take control of a property by paying off 122 2/9/10 - RULES - BILL 090704, etc. someone else's taxes --
And so you should be allowed to proceed with your business venture, mitigate your risk by only promising to pay someone's else's past taxes?
You should be able to proceed with your business venture, mitigate your risk in that business venture by only committing to paying someone else's tax delinquency. There's no guarantee that you're going to pay your taxes after that? 123 2/9/10 - RULES - BILL 090704, etc.
But there's no guarantee you're going to pay your taxes after that?
Just real quickly. I know we've been at this a long time. Mr. Perleman, you basically raised two issues, the legal issue, and I guess we just disagree on that, but on the issue of the BRT, you said you have hearings pending. If this bill is passed out today, I'm sure there'll be more discussion about some other things we might do. If an amendment was added that if you can show you have an appeal in this BRT, wouldn't that cover your concern?
I think the 124 2/9/10 - RULES - BILL 090704, etc. biggest part of the concern is, you apply for a zoning permit, you require a variance, the process is long and tedious.
I think the element is, you pay your taxes. That's not a big element to me. Or show that you have an agreement or that you've appealed to the BRT. That doesn't sound like a big deal.
I respect that, and I'm not totally against trying to get the City paid. I'm not against the City getting paid.
I am not. But what I'm against is adding another four-month or five-month process that will stop people from investing in our 125 2/9/10 - RULES - BILL 090704, etc. city and our development process moving forward.
Okay. I guess it's just a fundamental disagreement that asking people to pay their taxes is that a burdensome thing.
And proving it, I don't think it's that -- I don't know. It just doesn't seem like that's that burdensome a thing.
You just don't want anything else added; is that basically it?
I think that time and in an effort -- here's where you have. You have an old owner, doesn't want to pay his taxes, doesn't have money 126 2/9/10 - RULES - BILL 090704, etc. to pay his taxes. His business did not work out. Whatever he decided to do on that piece of property as a business did not work out. So he's delinquent in his taxes. He's delinquent in his mortgage in his home probably. We don't know that. Okay. But what we do know is, the quicker we can get the process through in zoning to get developments approved, the quicker we can go to settlement and collect our back taxes. That's all I'm saying.
And we're not sure those taxes will be collected, as Councilman Goode said, but okay.
Just in fairness, as far as the overall concept, that people paying their taxes in a bad economy, when everyone is on edge and people are losing their jobs and people pay their taxes, I understand the total morality issue and the fairness issue, but in some respects and despite where this bill will go, amended, effective 127 2/9/10 - RULES - BILL 090704, etc. date -- Councilman Goode and I were having this discussion -- I kind of understand at least the argument that in certain sections of our city where there is a desperate need for development, where properties have been dilapidated and delinquent and tax owed for years and years and years, a person that's coming in and wants to make an investment in that particular three or four streets and there's a plan of development that ultimately will pay our taxes to us and then create a development that creates jobs and additional tax ratables, I agree with Councilman Goode, there's no 17 guarantee that going forward that doesn't become a deadbeat, but I think in an area where we're desperate for development, sometimes that risk may be worth taking. Do I think that a big-time developer who wants to do a project who intentionally doesn't pay his taxes should be given the benefit of that? No, but I do believe that in some areas of our city that 128 2/9/10 - RULES - BILL 090704, etc. hasn't seen really good development for years other than what the CDC people and others have been struggling to do, I think sometimes an argument can be made. Whether that argument is valid or not or accepted is another story, but I'm listening to you and I kind of understand what you're saying. I guess the issue that Councilmen Clarke and Goode and Greenlee have expressed is, should we allow that delinquent folk to enter into our -- conduct a governmental process that ultimately gets them out of their arrearage and makes them some money. So I guess on that end of it, that's the immoral side of it, but I still would like to see those neighborhoods that are struggling who have -- if a variance request on a delinquent property creates a development and a tax ratable and employment, then I can kind of understand some validity to what you're arguing. I mean, this bill is probably going to get out of Committee. It's 129 2/9/10 - RULES - BILL 090704, etc. going to be amended to what the Administration has suggested in negotiation with Councilman Rizzo, but there is a point where you can understand some of the validity of what you're saying.
Thank you, Mr. Chair. Mr. Chair, I actually share some of your concerns and I understand the challenges that are before all of us, and as a Councilperson that represents such an area that you referenced, the reality is that we've had difficulty on trying to figure out what we do with all this vacant property, and more often than not, although technically there's an owner, but the owner has basically abandoned any hopes of -- or we've abandoned any hopes of collecting any taxes off of that. One of the things 130 2/9/10 - RULES - BILL 090704, etc. that happens in those neighborhoods, the values are relatively low, so the taxes are allowed to accrue. And this is the thing that I have a problem with, where people sit on properties that are basically speculating, knowing that the taxes are only like $50 a year, and then Temple University decides to expand and then they benefit dramatically, when they intentionally allowed their property to sit and they had the ability to pay the taxes. And I know it's a double-edged sword, but I just think without this provision, I wouldn't be comfortable with the bill, that if you have the ability to make an agreement and then move ahead in the process of getting a variance, I think that's a reasonable compromise. I mean, I understand and I agree with you, Councilman, the ability to pay all of that money, that's just not happening right now, but if you're going to make an agreement -- and I think the City has been somewhat reasonable in 131 2/9/10 - RULES - BILL 090704, etc. terms of its agreement process -- that we should be able to implement such a program. And you'll hear during the amendment process of the effective date. I understand that the Administration included that, and I think that as time goes on -- because I support the BIA. I try whenever possible to make sure you guys have opportunities in my district -- that there's time to fix some of the challenges associated with implementing the bill. So thank you.
Thank you very much. Any other questions? (No response.)
Hold it. We have one before you. 132 2/9/10 - RULES - BILL 090704, etc. Mr. Stewart? I know who you are. (Witness approached witness table.)
Sure, Councilman. My name is Rob Stewart. I live in Logan Square in Councilman Clarke's district, 113 Van Pelt Street. I'm very active with the Logan Square Neighborhood Association and also a new coalition of neighborhood groups called Neighborhoods Matter. This legislation when it was presented to the Logan Square Neighborhood Association and at our coalition meeting, there was enthusiastic support. It is as simple as I think most Committee members have noted throughout the morning. This is about fairness. This is about people putting a priority on paying their taxes. I pay my taxes. Most of our 133 2/9/10 - RULES - BILL 090704, etc. neighbors do. I think that most developers, as the BIA representative just stated, does as well. For those that don't, this forces a conversation and a conversation that in this day and age is important, because we all lose when taxes aren't paid. We have to pay more. The City has less. We had expressed and I had written you earlier in the day about expanding this to cover other types of City approvals. I understand that those amendments or those provisions were contained in what the Administration put forward. So it seems as though this bill 17 has been improved. This conversation about the complexities -- and we understand. We have drafted proviso agreements relating to for special use of properties where it's with the tenant and not the owner. We understand the complexities. These conversations can be had. Things can get worked out when in fact people put a 134 2/9/10 - RULES - BILL 090704, etc. priority on what they need to do in order to move forward, and it's as simple as that. People need to pay their taxes or at least have an agreement. So I would urge you to not delay this bill and to move forward and think that the whole conversation that the City is having about the development process and about zoning reform will actually allow this provision to be implemented along with those and without too much disruption.
Thank you for your testimony. I agree with you on one hand and I slightly disagree with you on another, and, that is, it is simple that people should pay their taxes. It does get complicated when we're in an environment where people maybe even want to pay their taxes but have lost their job or have had catastrophic issues and they happen to be property owners or they happen to be -- and every situation is different. Although the fact that the 135 2/9/10 - RULES - BILL 090704, etc. taxes aren't paid, the situation is the same, and in certain neighborhoods and certainly like in Logan Square where vibrant and high taxpayers and that's a -- and we're happy to have you and we're happy that you have the ability to pay your taxes. I think in certain areas of our city, property has languished for years and needs to be developed, and some arguments can be made that allowing that property to increase in value so someone wants to have it and develop it and pay us our taxes after that, I understand that argument, too. So I don't think the bill is going to be delayed. I think it's going to be amended and get out, but I think this is an important -- actually, lengthy but interesting conversation to have, because it has some of the elements of city life and development and where our future is going, but I do appreciate your testimony.
And I appreciate 136 2/9/10 - RULES - BILL 090704, etc. your point, and I guess my only comeback is, we need to have standards for development and we need to have standards for developers. There is good development and then I think from a neighborhood perspective, we sometimes see bad development, and sometimes the bad development actually flows from a developer that doesn't have their act in gear, doesn't have things figured out, and paying your taxes is one of those, let's maybe canary in the coal mine.
I agree, and I think, again, as was testified earlier, there are other levels of obstacles that are put in the way of bad development, including good District Councilpeople and neighborhood civic associations who fight that and other types of approvals that are necessary. But I'm not going to belabor the issue, because we've had --
And I don't want to take time. 137 2/9/10 - RULES - BILL 090704, etc.
Yes. Well, I wouldn't want to hold him up yet. But neighborhoods do matter and that the interaction in these conversations can often yield stronger development projects. So thank you.
Councilwoman Miller has a suggestion. Mr. Pollock, would you please come up. (Witness approached witness table.)
I believe that Councilman Clarke and Councilman Greenlee did talk about provisos and those kind of attachments to zoning. And one of the things I want to suggest too is that we do offer conditional approvals based on payment of taxes. So we'll talk about it later. Councilman Rizzo will put it in writing. Thank you. 138 2/9/10 - RULES - BILL 090704, etc.
Thank you, Councilwoman. Please identify yourself for the record.
Mr. Chair, members of the Council and Committee, my name is Steve Pollock. I come here as an individual citizen who has practiced, I guess, in the vineyards of the neighborhoods for about 33 years in this town and was at one point a co-publisher of the Zoning Code when the City couldn't publish the Zoning Code and we co-published the Blue Code. I come here -- and not usually do I come and testify in City Council when I see something happening to the Zoning Code, but coming here, having worn several hats in my career. As a member of the State Planning Board right now for the Commonwealth of Pennsylvania, I have yet to see anything in the Commonwealth of Pennsylvania where any other municipality has leveled something like 139 2/9/10 - RULES - BILL 090704, etc. this as a criteria for granting a zoning variance. One of the things that you have to look at here is the macro and the micro. I understand there are developers and we bash developers and we've bashed development and what's going on in a neighborhood. But since this is going to impact both residential as well as communities and commercial and the big bad developers, as we call them, you are going to have people that want to add the addition for their living room or their kitchen or they want to put up a fence or they want to put up a deck or a pool and they're going to get caught in the squeeze of what's happening with regard to whether or not the records at the Revenue Department are accurate. So I think what Councilperson Miller just suggested about possibly allowing people at least to get to the Board and then at least -- and then holding that up, that may be something that at least allows people to go. Because one of the other 140 2/9/10 - RULES - BILL 090704, etc. things that people do do is, they do pay fees to get to the Zoning Board. They do pay -- and you also do have -- so you pay a fee to be reviewed down below at L&I. You pay a fee to make an appeal. You pay a fee to make an accelerated appeal. If you have storm water management issues, you're paying fees to get reviewed by the Water Department. So it's not like the City is devoid of any income throughout this entire process, and it's not like somebody is trying to have to spend money to get through this process, even if it be the little person, not just the big bad developer. We've got an in-fill. We're an older city. We have a lot of things that are not necessarily on grand scales of big projects, and I think that we're impacting people. I also -- and you'll have the Law Department to deal with this, but I would strongly disagree with any kind of a change that puts this as a criteria for 141 2/9/10 - RULES - BILL 090704, etc. granting a variance. First of all, if you look at the City Charter, the City Charter specifically lays out that you can grant -- that the Zoning Board's jurisdiction is to grant variances or grant relief where there's a unique hardship to the property, not detrimental to the health, safety and welfare. These are not land use issue. This is not a land use issue. I think it violates not only the City Charter -- and this is, as I said, 50 million lawyers in the directory, so you'll get 50 million different opinions, but this is just one person's opinion who has been to the Supreme Court of Pennsylvania on a whole legal issue about who has standing and who is aggrieved in this city with regard to that. So I've seen provisions that have had to be stricken because City Council wants to do something, it may be good policy -- and I'm not questioning anybody's obligation and duty to pay taxes. What I'm questioning is making 142 2/9/10 - RULES - BILL 090704, etc. this something that is a criteria for the granting of variances. You won't find it in the municipality's Planning Code as one of the criteria which governs every municipality but Philadelphia.
You won't find it in the zoning enabling act that set up the Philadelphia Zoning Code, the First Class City Charters Act that gives Philadelphia the power to even have local zoning laws. You won't find this criteria in it and you won't find it anywhere as granting variances. So I know you've heard a lot. You've heard a lot about the micro levels and the macro levels with the big bad developers. The little person, if you've ever tried to deal with the Revenue Department in this town to know whether they have accurate records or not, that is something that also worries me as to what the tax clearance certificates, if you ever tried to get those things, and whether or not the burden gets put on the taxpayer where they may have been able -- 143 2/9/10 - RULES - BILL 090704, etc. actually paid the tax. So I think that you're setting up a whole bureaucracy that will thwart or stymie or at least retard economic development or slow down economic development. I think you're putting a barrier up there for developers who are saying, in essence -- or even people that want to do something in their home, that are saying that the process has really become onerous in this town. Now, I'm not saying do we want to give them a free pass. I think it's been pointed out to you, people have already cited the provision, it's 9-102(9) of the Zoning Code. Add the word "residents" to business and you've got it. It says no license or permit can be issued or renewed, issued or renewed, because I know the worry from Councilman Goode is that some people -- this is our one shot to get people. That provision is already in there, so it's sort of like, as I always say to some people, 144 2/9/10 - RULES - BILL 090704, etc. it's like Dorothy. Dorothy, you could always click your heels and go home. All you got to do is click your heels. The provision is there already for you to do what you're trying to do, but I urge you not to put it in as a criteria for granting variances.
Mr. Pollock -- and I'm using the language that you used -- do you consider a swimming pool a luxury?
Above-ground swimming pool or an in-ground swimming pool behind your home is not a luxury?
I don't think some people consider it a luxury. I mean, I don't think I'm in the business of telling people whether anything is a luxury or not. I think we're in the 145 2/9/10 - RULES - BILL 090704, etc. business of people -- but I think a fence is not a luxury either. A deck is not a luxury.