Commerce & Economic Development, March 21, 2024

COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT Room 400, City Hall Philadelphia, Pennsylvania Thursday, March 21, 2024 1:35 p.m. PRESENT: COUNCILMAN MARK SQUILLA, CHAIR COUNCILMAN MICHAEL DRISCOLL COUNCILWOMAN JAMIE GAUTHIER COUNCILMAN JEFFREY YOUNG, JR. ALSO PRESENT:

240047 - - -

Good afternoon, everyone. We will be starting the public hearing on the Committee of Commerce and Economic Development. Today is March 21, 2024. All right. I note that the hour has come and a quorum of the Committee is present. To my left is Councilmember Driscoll. To my right is Councilmember Gauthier. Thank you. A quorum of the Committee is present. The hearing is now called to order. This is a public hearing of the Committee on Commerce and Economic Development regarding Resolution No. 240047. Mr. McMonagle, will you please read the title of the resolution.

Resolution No. 23 240047, authorizing the Council Committee on Commerce and Economic Development to hold hearings regarding the Abandoned and Blighted Property Conservatorship Act of Pennsylvania.

Thank you. We will now call the list of people to testify. Before we do that, I'd like to recognize Councilmember Young.

Thank you, Chairman Squilla. As the sponsor of this legislation, I just want to give some opening remarks to the listening public around this particular Act. It came to my attention as an attorney in private practice representing a few property owners who were subject to this Act. Also, was contacted by folks who wanted to pursue and be petitioners in this Act. So I have experience on both sides of it and really wanted to bring to everyone's attention some of the positives that the Act has. We are all for removing blight from our city. I think everyone in this room will be able to agree on that. But there are some, I think for me, fundamental, core and even constitutional issues that I see with the Act, giving that it affects someone's property rights. Act 135 essentially allows a petitioner to divest a property owner of their possession rights of their property, granted the property has to meet certain standards of the Act. However, I just believe that when we are taking possession of property, we are divesting folks of their property rights. There needs to be a little bit more scrutiny placed on those who are seeking to become the possessor of that property. And the way Act 135 is written currently, there is no risk or little risk to a petitioner to file 1 an Act 135 petition. Just to give you all some background on what happens, Act 135 allows neighbors, certain nonprofits, certain municipalities, Land Bank, redevelopment authorities to file petition against a property owner in order to restore and abate blighted conditions on a property. If the court finds that your property meets the standards of the Act, which the court goes through a number of standards, and I'll just read a few so folks have an idea of the standards here, but essentially your property cannot have been on the market for the past year, the property has to be deemed -- it could be deemed a public nuisance by the municipal authority or municipal body, the property -- and then there's also a set of standards that the court has to check to see if your property meets the definition of abandoned and blighted. There's nine standards. You have to only find three of them in order for your property to meet the definition of the Act. And so, it's mostly every vacant property in the City will fall underneath the standard of this Act. It's just the way that this law is written. And once your property is deemed to be abandoned and blighted by the court, the property owner is now liable for all of the costs of the petitioner, every single dime that the petitioner puts out plus interest if they take a loan out, because they are able to take a loan out on your property, and even have a priority lien position on any other liens that you have on your property, right. So it's not only we have the right to take possession of your property, we have the right to take a loan out on your property, in some cases in some communities where the property owner themselves would not even have the ability to take a loan out on their properties. And we have a priority mortgage on your property. And so, once the petitioner or the appointed conservator gets possession, they rehab the properties, bring the properties up to code. And once they go through the process, they then have the ability to ask the court to sell the property. And in some cases that I've seen where the properties have been sold, these properties have been sold with the bells and whistles. These were full gut rehabs of properties with very luxurious finishings. And so, when your property is ordered to be sold, there's a list of priority folks who have to get paid back first. You got the municipalities for any back taxes, lienholders, the conservator gets paid all the fees, all attorneys' fees, all engineering fees, the cost of rehab, plus they get a 7 percent developer's fee.

8 And then after all of that, 9 then the property owner is left 10 with whatever's left over, right. 11 And so, essentially if I have the 12 means, if I understand development, 13 if I understand how property works, 14 I am essentially able to get a 15 property for free as long as I have 16 the means to put up the upfront 17 capital knowing that I'm going to 18 get paid on the backend, because 19 that's what this law allows. It 20 allows you to get paid -- it mandates that you get paid on the backend, so there's no risk for anyone to divest property owners of their property rights. And me personally, I don't think that that's right. Here in America property rights are essential to what being an American is. They are essential to just the core of this country. I mean, our country went to war over property rights. I mean, let's just think about that. So I just wanted to have this hearing to talk about some of the great things that Act 135 can do for communities, but also talk about the harm that it causes on particularly a lot of low-income communities. When we look at Philadelphia as the largest poorest city in the country, naturally we're going to have a lot of impoverished property owners who just need the means to be able to afford to maintain their properties, have the knowledge and understanding of how to maintain their properties. And I believe that it is government's obligation to help folks maintain and build wealth, not provide opportunities for their wealth to be taken away and stripped. And so, with that I just wanted to show a clip of an article 7 from the Philadelphia Inquirer that just talks about the real effects of Act 135 and the effects that it has on communities, on people. This was brought to my attention as a Councilmember on day 1 from some community members in Fishtown. They were asking for any type of help, for anyone to listen to their cause regarding this Act 135. And having an understanding being an attorney, I wanted to heed their call, to be their ear to listen to. Although this body does not have the ability to directly affect the Act, we want folks to have the opportunity to talk about it, to discuss it, so we can figure out how to create some changes that need to be implemented in this Act. Again, the idea, the premise behind this Act, it's great. We all want to see blight remediation. In the legislative findings of the bill, it has some great findings. Basically substandard, deteriorating and abandoned residential and commercial industrial structures are a public safety threat and nuisance and their blighted effect diminishes property values in the communities in which these properties are located. I 100 percent agree with that. But again, it's how we deal with the blight. Make sure that we deal with it in a more equitable manner, make sure that property owners have the access and the tools available to them to rehab their properties, to bring their properties back to productive use and have some say in creating that generational wealth that particularly many have lost because of the conservatorship. So, Mr. Pullin, please show just a few minutes of the clip. )

Yeah. So we're having some technical difficulties with the video. However, this video is publicly available on the Philadelphia Inquirer's website. Essentially what it shows is a Fishtown resident, Ms. Linsey Franklin, and her story regarding Act 135 and how the Fishtown BID filed an Act 135 petition against her family's property essentially as a tool, I'll say, to get the family's attention to try to sell the property. The property, I believe, is under agreement to be sold to a developer, but this property given who you talk to is being sold for less than market value, right. And so, just from my understanding of how some of these deals have worked, folks have been feeling like they are being coerced essentially to sell their properties once they are aware that this petition is being filed. Again, if you go through with the Act 135 conservatorship petition fully, you're liable for percent developers' fees plus 14 all costs, right. And so, as a 15 property owner, you got to make a 16 decision on is it worth that to you 17 to go through this full process or 18 is it worth to you selling the 19 property. 20 And so, in this particular case this family decided that it was worth it to sell the property albeit whatever the value is. But again once these Acts are filed, folks feel like they're not given a choice to sell or to deal with some of the leverage and an arm's length transaction is being taken away once this Act 135 petition has been filed. So with that, Mr. Chair, I just want to hear from those on both sides of this issue to talk about how it affects them personally, talk about how the Act works in reality and to come up with some solutions that we can make and recommendations that we can make to our state partners to figure out how to make this Act more equitable, more fair but also allow us continually to expeditiously remove blight in our communities. Thank you, Mr. Chair.

Thank you, Councilmember. Appreciate you, and this hearing will be I think great information for all of us. Mr. McMonagle, can you please read the first panel to testify.

Yes. Can we please have Michael Gail -- Gall, I'm sorry. (Witness approached Witness table.)

Thank you, Michael. And just state your name for the record and then you can proceed with your testimony.

Absolutely. My name is Michael A. Gall with the Department of Planning and Development.

Hold on. Put that closer. There you go.

My name is Michael A. Gall with the Department of Planning and Development. Good afternoon, members of the Commerce and Economic Development Committee hearing. I am Michael A. Gall, Senior Legislative Planner with the Philadelphia City Planning Commission. I am here to testify on Resolution No. 240047, introduced into City Council on February 1, 2024 by Councilmembers Young, Gilmore Richardson, Bass, Gauthier, Harrity, Phillips, O'Rourke, Driscoll, Landau, Brooks, Ahmad and Council President Johnson. The Abandoned and Blighted Property Conservatorship Act known as Act 135 was originally enacted by the Commonwealth in 2008 as a tool to help rehabilitate vacant, abandoned and blighted property by allowing nonprofit entities and individuals to petition a court to act as conservators. In October 2014, the General Assembly amended the Act to further incentivize its use by extending conservatorship to additional parties. The amendment provided a framework for the payment of repair costs and developer fees, shortened the time frame for the court to hold initial hearings and allowed the bundling of properties into one petition for conservatorship. While the Act is still a valuable tool to place neglected properties into productive reuse, the changes to the law have led to some unintended consequences, especially in Philadelphia. The 2014 amendment has caused a proliferation of petitions particularly from a few parties. The change has created incentives for repeat petitioners and its new fee structure and reduced notification times are disproportionately impacting Asian- American and Black property owners in Philadelphia. We understand that an amendment being circulated at the state level is attempting to address several of the issues that impacted the proper use of this program on publicly-held land. We support the adoption of commonsense legislative remedies to relieve the encumbrance on these agencies. We also support further amendments to the Commonwealth law as well as direct City actions to reduce impacts on low-income homeowners. The City offers several programs to assist low-income property owners with the often daunting task of coming into compliance with health and maintenance codes, such as its Basic Systems Repair Program, the Restore, Repair, Renew Program and the Adaptive Modifications Program. We would hope that these are seen as the first course of action to prevent the deterioration of properties before they get to Act 135 actions. And in cases where rehabilitation by property owners cannot be encouraged or supported by any other means, Act 135 is an opportunity for citizens, organizations and local governments to deal with severe cases of property decay and neglect that can have a blighting effect on local communities. The Department of Planning and Development is ready to work with Council Offices to ensure commonsense adjustments are recommended to address the issues with Act 135 without preventing its benefit as a community tool to address blight. I'll be happy to answer any of your questions at this time.

Thank you. Thank you so much for your testimony. How many Act 135 conservatorships happen in Philadelphia?

One moment. I have it in front of me. 577 petitions were filed since the enaction of the Act.

Since 2014?

Since 2014 I believe, yes.

But you've seen more recently than you did, I guess, back -- how many were this year? Do we know how many --

I don't have those numbers in front of me.

Okay. And out of that, you said most of these are filed in underserved communities. So is it by zip code or is it by --

So the numbers I have in front of me is that Black residents own 35.6 percent of the homes in Philadelphia County but account for 42.7 percent of respondents. Asian-American residents own 7.2 percent of homes in Philadelphia County and account for 11.8 percent of Act 135 respondents. 32.8 percent came from a census block group that the Reinvestment Fund notes as at risk for displacement. And approximately 26.6 percent of addresses subjected to an Act 135 petition came from a census block group that the Reinvestment denotes as at elevated risk for displacement.

So 36 percent you said are from what percentage?

percent of 18 addresses are at elevated risk and 19 another 32.8 are at risk, so 20 different levels of risk from the 21 Reinvestment Fund. 22

So 23 it's almost half? 24

Yeah, sounds 25 about right.

So in that case these have to meet the threshold of the Act 135 in order to be -- they're petitioned and they have met the threshold?

Yes, exactly. These are successful filed petitions that the court accepts.

And what would you suggest as an amendment to this state legislation in order to give notice or to be able to prepare folks for the petitioner in a conservatorship?

We do not have a fully fleshed-out set of recommendations, but we are willing to work with Council Offices to explore those ideas.

All right. Thank you very much. Councilmember Young.

Yes. Thank you, Mr. Gall, for your testimony. I do know since you are the lone administrative representative here so I do have a couple of questions. Particularly do you know if the City has ever attempted to file an Act 135 petition against a property owner?

I do not know that, Councilman.

Do you know if the City has ever tried to intervene as a lienholder in an Act 135 petition?

Again, I don't have any information on that.

Yeah. I mean, I think you -- the Land Bank is authorized as an agency that has the ability to file Act 135 petitions. Are you aware if the Land Bank chooses to in the future exercise its power to file Act 135 petitions?

I can't speak on behalf of the Land Bank. I don't know whether they have any plans for that or not.

Do you have data on the number of vacant properties that are adjacent to current City-owned properties?

We could get that information to you. That would have to be something our department would look into.

Thank you. Are you -- I mean, I guess you're the only City representative here. I have questions for L&I but L&I is not here as well or someone that L&I's portfolio falls under. But just for the record, I just want to note that L&I plays a large role in Act 135 petitions. They are our code agency that files complaints against properties that are considered to be blighted, nuisance, code enforcement violations of such. So they play a huge role in determining if a property even meets the standard for Act 135. And so, I just would love to hear what L&I has to say regarding their role in blight remediation in the City. But I don't have any further questions for Mr. Gall.

Thank you. Thank you, Councilmember. Real quick, Mr. Gall. Do you know how many of these petitions were filed against people who applied for BSR, Basic System Repairs?

I do not have that information, but we can gather that for you, Chair.

Okay. Maybe some of those questions that were provided by Mr. Young, if you could provide them to the Chair when you have some of those answers. Councilmember Gauthier.

Thank you, Mr. Chair. And I apologize if -- I'm not sure if this question was asked earlier, but do we have a record of how many of these petitions were filed against people who are living in their properties?

No, we do not have that information. To my knowledge, that is one of the criteria, that the structure is uninhabited.

I mean, we definitely in my District have had petitions filed against people who are actually living in their properties, which is one of the issues.

Okay. No, I do not have that information at this time. We can try to look for that for you.

From my understanding if the property is not vacant, then a petition can't be actively or a judge would not -- that property does not fall under the Act if the property is not vacant.

I do not misunderstand. We've had petitions filed on properties that constituents are living in, which is traumatic and harassing for the constituents. So I just don't know -- I know that because we've helped constituents in my District with that issue. I don't know if the City is tracking that. That's what I'm asking.

Okay.

All right. Thank you so much. Are there any other questions for this witness?

I do. So one big issue I think with the vacancies is tangled title. And you mentioned a lot of programs that the City has, the Basic Systems Repair; Restore, Repair, Renew. But again, most of these properties are vacant properties that folks may or may not have equitable title to. Sometimes it is a property that they have inherited and they haven't gone through the appropriate process. And that's an impediment to get service through BSRP; Restore, Repair, Renew and et cetera. And again, if the properties are vacant, then these properties are not deemed to someone's primary residential home where they can then qualify for these programs. So are you aware if the City is willing to loosen up some of those restrictions if a property owner is willing to attest or sign sworn affidavits stating that once these repairs are complete, that this will be their primary residence for an X amount of time?

I can't speak to the willingness of the City Administration to act on that, but we are definitely willing to work with Council Offices to make any changes to the program that you deem necessary for being able to address those sort of actions.

Thank you.

Thank you. And Council will be willing to work with you and the Administration as we go through this hearing to make recommendations to our state colleagues on what they believe would be helpful to make this a better legislation. So thank you for your testimony.

Thank you for your time, Chair, Members.

Mr. McMonagle, can you please read the next --

Can we please have Raymond Johnson, Desarrie McDuffie and Erdis Hennigan. (Witnesses approached Witness table.)

Ray, if you want to just state your name for the record and then proceed with your testimony.

Certainly, certainly. My name is Raymond Johnson.

Please proceed.

Okay. Good afternoon, Council.

Good afternoon.

My name is Raymond Johnson. I am the owner of Lurube Development, a small Black family-owned real estate development company I started with my late father. In 1999 I began living in the Historic Black Doctor's Row and I was buying property there, restoring them as a way of paying homage to the area's demonstration of Black excellence that preceded me. I'm a craftsman. I approach my work with great attention to detail and artistry. Not only do I hire and work with experienced professionals, I also make sure I involve people in the community.

Hold on, Ray. Can you pull the mic down closer to you?

Gotcha.

Thank you.

Okay. When I purchased 1700 Christian Street, I had a vision and plans for this historic corner property and I started restoring it with my own money. While I was in the process of restoring 1700 Christian Street, this property formerly owned by one of the first Black undertakers in Philadelphia, Mr. William Bill 3 Allmond in 1913, I was targeted by not one but two baseless Act 135 petitions. Act 135 is for abandoned and blighted properties. This property was not abandoned or blighted. In fact, I had complied with City Code that predated Act 135, Act 90. And I was performing work far beyond what was required. This was clear to the judge who swiftly ruled in my favor on the first Act 135 petition filed by Scioli Turco because they did not meet the burden of proof, the lis pendens was lifted. Scioli and Turco filed their second petition to take my property not even six months later. I sent some pictures in, but we'll get to that. While I was being subjected to the second petition, again I followed the law, took all the necessary steps to secure my property. In fact, I had bank money ready to go. I was approved for $440,000 in construction loan from Valley Green/Univest Bank to finish this restoration of property. However, when Scioli Turco filed their second petition as with every petition, a lis pendens was automatically placed on the property. I could not get access to the money approved so I can continue the restoration until this was lifted. I was placed in a catch 22. I was forced to negotiate and pay Scioli Turco to lift this lis pendens on the property that I owned and was already restoring. By the end, I spent out of pocket over 60,000 in legal fees fighting off the petitions. My bank was significantly or pardon me, my bank loan was significantly impacted by this petition and it cost me additional legal fees, tens of thousands of dollars more to fight off a chain of predatory and deceptive practices within the loan process that included bank sales and assignment of my note and a fraudulent transfer of the deed to my property despite the judge's orders not once, not twice, but three times. But for the predatory Act 135 petition, this would not have occurred. I'm still fighting justice. Like I said in the beginning, this property was not abandoned. This property was not blighted. And I asked myself the question, was stealing the intent behind Act 135. I lived and labored through this hard part of ownership of economic development in this area. I build equity and intergenerational wealth in my property. And once it started to look like something attractive, here comes the petitioners, the petitions and the steal. So my suggestion, and I have a few: First and foremost, let's make a motion for a moratorium so we can realign ourselves, so we can have a reset button, so we can examine. I'm open for questions.

Thank you for your testimony. If you could stay there and then as soon as Erdis is finished, we'll ask questions to both of you if that's okay. Erdis, if you can just state your name for the record and then proceed.

Yes. Good morning, Council. I stand before you today to shed light on a person --

So, Erdis, just state your name again.

I'm sorry. Say it again.

State your full name.

I'm sorry. Erdis Colgan Hennigan.

Please proceed. Thank you.

Yes. I stand before you today to shed light on a personal ordeal that has tested me in ways I never imagined. It concerns the conservatorship law Act 135 and its profound impact on my life. While my battle with breast cancer now in remission initially seemed like the greatest challenge, Act 135 emerged as a greater obstacle, imposing emotional, mental, physical and financial strains exceeding those of my chemotherapy treatment. It all began in 2018 when a developer approached me about selling our family home, a place steeped in history located in the historical neighborhood of Lancaster Avenue since my parents acquired it in the 1940s. Despite my firm refusal, the situation escalated when my brother who lived in the house fell ill. Accusations were held against him by the developer leading to his forced commitment to a mental facility after being diagnosed with Stage 4 lung cancer. Amidst to chaos, I faced constant harassment regarding my property. Despite my desire to preserve our family's legacy by renovating it for my children, I became ensnared in accusations of fraudulent transfer. As the last living heir entrusted with handling my brother's affairs, the property rightfully belonged to me. The developers' relentless pursuit dragged us through the legal system for five grueling years involving court appearances related to the conservatorship mostly conducted via Zoom due to the pandemic. Despite COVID-19 hindering the rehabilitation process, relief was denied under these circumstances. Additionally, it's worth noting that the developer was outside of jurisdiction residing outside of Philadelphia. Today I urge you to recognize the human toll of Act 135, affecting not only my family but countless others facing similar injustices. I've had to depart from a career I held for years and I'm now on disability due to issues caused by this greed-driven legislation. While I retain my property, it's bittersweet. The developer walked away with a settlement of $29,000 with $18,000 allocated to attorney fees. Moreover I had to provide a $50,000 bond, a burden I was not expected to bear. Despite not being granted conservatorship, the developer profited from ill-gotten gains. This law is unjust and must be rectified. Thank you for allowing me to share my story with you today.

Thank you so much. And hearing those stories, it's really understanding why this bill needs to be looked at and adjusted.

I also have pictures.

Okay. If you want to show them, somebody will come over and pick up pictures that we will submit to the record.

Okay.

All right. Thank you. Right behind you. And I know one of the suggestions was to put a moratorium on there. What other suggestion would you -- yes?

Well, I think one of the things that we should consider -- ready?

Please proceed.

Well, one of the things I would think as far as solutions could be to eliminate the immediate placement of lis pendens. Lis pendens, what does that do? It puts a claim on your property and encumbrance you to the claim. It gives the petitioner control. It puts the petitioner in a primary position of control, control over years of equity in your property. The property owner loses control immediately. The petitioner is given more power than the property owner and even if and/or when the claims are justified, the lis pendens has to be either satisfied or withdrawn. That's one thing. Obviously there's many conversations on the percent commission clearly is beyond that. Just compensation -- if, in fact, there's going to be some property (inaudible) have to be liquidated. Well, I mean just compensation should be the law I would think. There is no just compensation in this particular process. Why? Because these guys come in, they don't pay for it. I heard the gentleman, the Councilman earlier, very little, if any, risk is being beared. They strip all the equity. You understand, that people are deemed nothing. I don't think that's fair. I think also another idea I think was coming from other folk was notice, notice that there is a problem, there's some violations, could you address them. This was something that was done in Act 90. Act 135 said too slow, okay. And obviously those are some of the five things that I think --

Real quick too. Percent -- what time of notice? Is it a 60-day notice?

Pardon me?

How long of a notice before --

Councilman, I don't know because I haven't looked at it. But I do know when I was cited with Act 90, man, they gave me 60, 90 days, 120, depending on the level of restoration or violations that had to be addressed.

But a notice that it may be --

Pardon me?

-- that that Act -- a notice that Act 135 may be used on your property --

No, no, no. 25 They gave you notice that you are now in an area that's up and coming. This is what they call an emerging market at that time. And so, they would say this property is not, you know, is blighted. They consider -- that's the language they use, a blight act. So they say you need to address it, here, here, the easements, the doors, et cetera. They laid out the criteria. So they gave you time to address it. As a matter of fact -- it's so incredible. I resolved it. I satisfied all violations. That's Licenses and -- all violations on this property. This is back in 2010, 2011. Before I can pay the little check $750, I was cited with Act 135. Okay. So what happened, it was an informa -- this was a data dump. Someone said, okay, this is a blighted property. You satisfied 90. We know you was on the list. Here comes Scioli Turco, Joe Palmer. I don't know this guy from a can of paint. And the aggressive, unlawful, egregious behavior. I have the receipts.

Thank you. Thank you very much. I'll go to Councilmember Gauthier.

Thank you, Mr. Chair. I wanted to thank both of you for sharing your testimony. I'm really sorry that you had to go through such harrowing experiences and I also appreciate, Mr. Johnson, all of the recommendations that you issued. I specifically wanted to address Ms. Erdis. I know that my office has been working with you around this issue and I'm really glad that you fought to keep your property because that's your right. You deserve ownership of your property, but this never should have happened, particularly because you were doing everything in the right way. You were trying to untangle the title. You were trying to make repairs to the property. And so, in this instance this was definitely used in a very predatory manner and I think it's shameful. We should not allow for people in our communities who are already dealing with a host of issues, whether that may be health or just struggling to get by every day to be preyed upon in this manner just because they live in a neighborhood that someone has deemed as desirable and profitable for them. So I'm really sorry that that happened to you and that you had to experience that on top of your health challenges.

I just wanted to ask if someone is out of jurisdiction how did that court case continue to go on because the second court hearing he was deemed out of jurisdiction? We went on for court appearances. How is 5 that fair when he does not live in 6 the City of Philadelphia? 7

Yeah. 8 So I'm not aware of your court case 9 specifically, but the law does 10 allow for -- if he owns property 11 anywhere within your vicinity, then 12 he's able to be recognized as a 13 party of interest. 14

Okay. 15

As long 16 as he owns property within I believe it's 2,000 feet, they're considered to be parties of interest and may have the ability to file the Act 135 petition.

Because as I mentioned, this started in 2018. He started accusing my brother of things. Not to mention they were friends before all this even started. My brother became ill. He passed away. Before he passed away, I had to get everything in order so that was the first court we went to. The judge -- he tried to say I fraudulently transferred the deed. The judge said, no, I had to put my brother's affairs in order. He wanted my brother to sell me the property for what it was worth, not the dollar transfer. So he said I committed fraud. Well, if I did, everybody in the City of Philadelphia did because people do dollar transfers with their family all the time. So the judge said, no. He did, however, win a $50,000 lawsuit against my brother for defamation of character. But at the time I owned the property so my brother passed away, so he couldn't get anything that way. So here he comes, the next thing he did was file a conservatorship because of the first court thing. I was in court with him from 2018 until last year 2023. First, it was my brother's case but my brother was no longer here. He passed. So I had to take over all of that. And then he filed the conservatorship during COVID so I wasn't even -- I know it was, you know. I had filed for funding which I was approved for like December 2019. My brother died July 2019. I even went to Germantown to learn how to do the rehabs and everything, Jumpstart Germantown, even took those classes because I didn't really know what I was doing but they explained everything to me. So 2019 my brother died July. I was approved for funding like December. And then 2020 COVID hit so all the funding stopped. So at this point he files the year of COVID for this conservatorship because he didn't win the first case like he wanted to. So that's predatory to me. That's what I'm talking about. This is awful what I had to go through. It is absolutely awful. And I'm not blaming any of the attorneys on either side that they're on. They have a job to do. But this Act right here, something has to be done about it.

Councilmember Gauthier.

First, I'm sorry about your brother's passing.

Thank you.

I did want to just address the comment about the sort of geographic. One of our concerns is the geographic radius related to the Act. So currently someone can file a petition on a property within a multiple-mile radius. And we think that also invites speculation. That also invites predatory behavior and it also sort of works against the original intent of Act 135, which is to have people who live in a community be able to revitalize that community. So I definitely think that's one area of the Act that needs to be looked at.

I think the bond also needs to be looked at. Who has $50,000 to just put down on a bond? Thank God for my family and friends because I don't know how I would have did it. But I don't just have $50,000 I can put on a bond just to keep my property.

Absolutely.

That's not right. I don't think that's fair. I was making over $100,000 a year. Now, I'm out on disability. But I still have to pay the $29,000 which I'm going have to go on a payment plan. That attorney still deserves to be paid and I have to pay the -- forgive me. The developer, I still have to pay the developer. But now I'm out on disability. This is crazy.

I think what you shared, what both of you have shared are some of the most striking examples of why we need change here. So thank you so much.

Okay. Thank you.

Councilmember Young.

Yes. And just for the record, I just want to note once an Act 135 petition is filed, a lis pendens is essentially given to you as a right to be placed on a property. And so, what a lis pendens is essentially a term for pending litigation in Latin. It lets the world know that there is litigation involving your property. And so, if you're trying to get any financing, if you're trying to sell the property, it becomes an encumbrance on your property that makes it more difficult for you to move out with those transactions. So it puts the world on notice that essentially this property is subject to litigation and no one's going to really do business with you or transact business with you regarding your property as long as it is pending in litigation. So that's something that places another burden on the property owner. And as the witness testified to a bond, the language in the Code says the court shall make the petitioner pay a bond essentially, right. And a bond is whatever the cost of rehab would be, you have to place that money in bond if you are appointed or you are granted what's called conditional relief to rehab the properties yourself. So that's another financial burden that's being placed on the petitioner, the owner of this property, again with little to no financial burden on the folks who filed these petitions.

Pardon me. Before we conclude, I think what we're talking about is the abuse.

Absolutely.

We understand procedurally some of the characteristics of that. And on the surface it's a really good Act. I have written former Councilperson Petri in reference to this back in 2015, 2016. It is the abuse. It is the bad actors. These are the folks that are creating straw corporations. These are the folk that are like insider trading. These are the folks that are influencing and affecting Licenses & Inspections. Okay. I got the receipts. How can you have a property where you approve permits and then when someone get assigned a mortgage, I know my time, and now they're magically rescinded. So this is just the first. It is the abuse. It is the corruption that people are having issues with. And so, those are the things we got to look at. But those are the bad actors, so how do we make them accountable.

Councilmember Gauthier.

I agree. It's about the abuse, right, the abuse of Act 135. I don't perceive any of us as saying that it's all bad. In fact, I've seen it used in a positive way, right. In particular, there was a house on Walton Street in Southwest Philadelphia in my District that was abandoned and there were drug sales happening at this property, there were shootings connected to this property. The neighbors on the block reached out to me. I did everything I could for almost a year to bring the police together with the neighbors, to bring L&I to the table to see what we could do to shut this activity down and put this property back into productive use for these neighbors. We couldn't do it. We couldn't do it. Tax sales weren't happening. There was log jam in the court so all of our L&I citations weren't able to move forward in the courts. And the neighbors, they worked with Scioli Turco to file a petition and they were able to get this property and put it back into productive use and now that activity has ceased. So that was a very positive example, and that was an example of where Act 135 was like the only tool available to us to make that block safe again. But what you described and what Ms. Erdis described is not. It's very predatory. And that's the Act's activity that we have to strike out.

In response to that, Councilwoman, we're talking about the disproportionate -- I can cite some cases where they did the right thing, you understand, they did everything to letter. But I can assure you that the abuse far outweighs the good.

Yeah.

My property is worth $1.45 million. I'm fighting now. I'm fighting now. Meaning that it was fraudulently transferred.

Yeah.

Not fraudulently transferred very important against judge's orders.

Absolutely. This being used to steal wealth from Black and Brown people is absolutely what we have to stop, right. That's not a productive use and that wasn't the original intent.

Councilmember Young.

Yes. And I just want to echo the sentiments of my colleague. In your sentiments as well, it's the abuse that is causing issues which has brought this to my attention. I represented a client where for some reason he gets his taxes at his address, but for some reason L&I notices go to the property, right, why is that. He had no idea that the property had official code violations against it because they were sending it to the property where he does not live. But he gets his taxes where he lives. He gets other notifications from the City where he lives. And so, I just think that it's important to bring L&I into this conversation which is why I was hoping they would be able to testify today to talk about how they provide notification to property owners about certain violations and things like that. So it is the abuse that we are trying to eradicate. But we want to make sure that folks -- because the abuse is what is draining the equity from our property so we want to make sure that we get rid of this abuse.

Just -- and I know I've taken far too much time, but we're talking about Licenses and Inspections that's been weaponized. That would be a more appropriate way how it is done. I've taken far too much time right now, but I have the receipts. I know weaponization when I see it. Okay. So we're talking about that. And I understand we got some -- it's a very dysfunctional kind of organization over there and we're trying to get that back in some kind of order, but until then they're being exploited and weaponized. That's a couple things.

Thank you. I really appreciate your testimony today. You said some insight to a lot of things.

Thank you.

Of course.

Can we please have Pilla Parker and Shane Randall. (Witnesses approached Witness table.)

Okay. Thank you. Please proceed with your testimony.

Good morning. My name is Pilla Parker representing Elizabeth Cox, my grandmother who owned the property. All right. I'm pleased to provide additional context and information regarding our experiences with Act 135 and the petitioning nonprofit organization. Before sharing our testimony, we would like to sincerely thank Penn Law Center for their efforts and Powelton Village Civic Association for all their support, particularly Deb McCarty. The articles published by The Inquirer provide a summary of varying experiences and the disparity demonstrated regarding race and ethnicity. The articles were well- written but they failed to adequately share our experiences with Scioli Turco, particularly the attorney and the staff of the organization. Additionally, the articles failed to address the lack of oversight and support from public officials, particularly support for Philadelphia's elderly community. And I shared some articles, artifacts. But attached are a series of emails between myself and Rick Vanderslice, the attorney representing the organization. The emails provide an overview of our experiences. Additionally, you will see several public officials, including Assistant District Attorney were contacted along with the Councilmember's office. No one responded to my emails or voicemails left. Concerns were not addressed. The emails shared in the following bullets further support our claim that the organization and similar organizations are simply property predators who are thirsty for high-value historic properties owned for generations by African American families in the name of urban renewal. The family not only questions the merits of the law but also questions the practices of the organization that start to steal the family home. We also questioned the nonprofit status of the organization and the parent organization. Is the parent organization tasked with assisting people or simply a fraudulently- formed nonprofit to claim the wealth of the community it's tasked to support. Please note the following in our experiences: On December 24, 2022 we had a devastating fire in the family. The entire house was destroyed by fire except for the first floor and the basement. Three months later I received an email -- I live in Maryland. I received a petition via mail that was sent to me addressed to the unknown heirs of 3802 Effie Fox Way, Upper Marlboro, Maryland where I reside. No name was provided. No 16 additional information is included in the addressee portion of the letter. It was only by the grace of God that I opened the letter. To me, an example of fraudulent deceptive practices. Upon review of the letter, the documentation submitted to the courts and the petition there's no evidence that the home was legally vacated for over months. So I received the letter, and it said to the heir of 3802 Effie Fox, no addressee, nothing listed. My grandmother had to relocate to live with me in Maryland because the home was under remodeling, renovation. Aside from the written claim, no evidence was submitted to justify this condition in their petition. Several of the images presented in the petition were taken within two weeks of the fire as noted by the Christmas decorations I see on sidewalks and the lack of boarded-up windows. The documentation submitted for L&I clearly indicates blight, but it also states December 24, 2022 as the date which is the date of the devastating fire. The petition was received March 2023, so within three months. Although highly inappropriate and (inaudible), the organization requested evidence that the home was in remediation, restoration. It was provided. What's most alarming is that we had to justify that the home was not vacant prior to the fire, but that this organization can simply state in their petition that a public search was completed without evidence. And we spent resources to combat the property predators.

Further evidence of fraudulent and predatory practices, especially on the elderly. Although evidence was provided to the attorney as noted in the supporting evidence shared, he was not willing to withdraw the petition. He only withdrew the petition once he spoke to the president of Powelton Village Civic Association Deb McCarty. The evidence, insurance claims, et cetera were not enough. He relied on the word of a community ally who knew the family and not on my word or the evidence provided. One could question the systematic racism from the example alone. The attorney discussed the case freely without my permission, agreed to waive the petition only after discussion with the community ally who happens to be Caucasian. Our written evidence and images were not enough. The attorney indicated that I needed to have our attorney respond to him. An experience reminiscent of the days gone by when African Americans' freedom and community standing need to be vouched for by a benevolent person of European descent. A public search shows Warren Cox, who's my uncle, also lived at the residence along with Elizabeth Cox, my grandmother. In the documentation submitted to the court, there is no evidence aside from statements that a public search was actually committed. A simple knock on the neighbor's door and contact with the Historical Society would have informed them that the home was occupied. This is further evidence that this organization had no interest in truths or facts that two family members lived there, my grandmother and uncle. Mail was delivered to the home until January 2023 as documented by the forwarding address. All utilities were up-to- date. There were no liens on the property. Insurance was maintained and property taxes were paid in full. No neighbors were contacted despite the comments made by Joe Palmer. As an active member of the community for 70 years, they would have confirmed the occupancy of my family, not to mention that the Daily Newspaper, the Philadelphia Inquirer was regularly distributed there. Who's paying for the delivery of a newspaper for a year in a vacant home? What's most alarming is that we have to justify that the home once again was not vacant prior to the fire, but this organization can simply state in their petition that a public search was done and completed without evidence and we have to spend resources to combat the predators. They also said my uncle was a squatter. As I mentioned, a simple knock on doors would indicate that he was not. Further evidence of fraudulent predatory practices, especially on the elderly. There is no coincidence that the Philadelphia Historical Commission designated the property as historic in the release of its March 13, 2023 Philadelphia Register of Historic Places. A week or so later the petition was filed. There are plenty of homes across the City that Scioli Turco doesn't appear interested in restoring. Please note the lis pendens is dated March 23, 2022 not '23, which shows there's really no 9 oversight in terms of documentation submitted. In November 2023 the organization changed its name. If it's doing such great work, why the name change. Recommendations: Better oversight is needed and financial resources to address the blight; better oversight and review of documentation. We question the true process to really review the documentation submitted to confirm blight is actually in place and that this organization has submitted the appropriate documentation. Also, community arbitration before court. There should be a way to discuss the concerns before having to spend time, resources to combat it in a court. Support for elderly homeowners. It's just by the grace of God I looked at the message. She did not receive any documentation. It was mailed to me without name, without context and I searched Google, right. I Googled it, but how many 98-year-olds can do Google, right. Then more responsive body of public officials.

So we do thank you for taking the time to hear this case.

Thank you. We'll wait for questions and comments until you're done testifying. Please state your name for the record and proceed.

Thank you. My name is Shane Randall. Greetings, City Council. I'm a law-abiding citizen and taxpayer of Philadelphia, born and raised here. I'm a social worker and first responder. I've been a social worker for 20-plus years and I consider myself a person who helps beautify the City through building souls and lives. That's what I was trying to do with my family home, rebuild it and make it beautiful. Then I was served with an Act 135 petition and everything went wrong. 712 South 23rd Street has been in my family since the 1920s. Most recently my mom lived there. It's where she grew up. She moved out, transferred the deed to me. It was going to be my family's dream home. I felt special and honored that I'd be living in the house where my ancestors lived. The house has so much character, history, so many stories. In 2016 I started work. I hired an architect in 2017 and a contractor in 2018. Displayed their permits in the window. In the summer of 2018, I received a call from someone who wanted to purchase my home. I said no. A few months later I received an Act 135 petition and thought it had to be a mistake. The court process was a nightmare. I was painted as an absentee homeowner who didn't care about his own home. My opponent painted my contractors as junkyard dogs that didn't know what they were doing, even though they are well-experienced licensed contractors that came highly recommended. I wondered was I being taken to court because of what I looked like, was it because they were African American. Back then I was a first responder with the Philadelphia Fire Department in Kensington. I didn't have the means to hire a high-powered attorney to fight their three to four attorneys who came to court. Based on what the other side argued, I had to attain a special make-safe inspector from L&I and hire my own engineer. They both said my home wasn't in any danger of collapsing, the neighbor's house wasn't in any danger and I had no structural issues to be concerned about. My home was safe. Even though I had that on record, the judge made Scioli Turco the conservator. You might say to yourself maybe there was another problem, the house needed work. My home sat untouched for almost two years before they started renovations. So much from my home collapsing, being a hazard to the neighbor's home and causing blight to the neighborhood. At the rate they moved, I would have finished my own renovation, built two decks and my family would have been living in my family ancestral home for over a year. I was granted conditional relief so I did all the renovations. They wanted me to stucco the rear of the house. I stucco'd the rear of the house. They wanted me to point the bricks. I pointed the bricks. They wanted me to paint the house. I painted the house. They wanted me to seal the windows. I bought new windows. I went above and beyond to satisfy my conditional relief. I brought pictures for evidence to court. The petitioner pointed out tiny problems with the work. The court believed them, not me. And just like that my conditional relief was revoked. I was devastated. In court my adversaries labeled me as someone with no credibility, no integrity, no honesty, when in fact all along it was them. I lost my job with the City. I was spending thousands of dollars before the petition was brought. I spent thousands of dollars to try to defend the property, make the required repairs. As the years went by and I kept fighting for my ancestral home, I started to feel like I wasn't just fighting a plaintiff. I felt as though they had the whole city behind them and I had no one. These companies taking advantage of regular people is leading to gentrification, displacement and segregation. Why do you want a segregated city? The data is out there that segregated cities do not work. The cities that are segregated are trying to integrate because in the end, it causes more problems. The findings from Penn prove this law is not being used properly.

People are being discriminated against and preyed upon. I appreciate the late Chris Sample and Council President Kenyatta Johnson for their efforts in trying to advocate for me, but more must be done. No one else needs to be a victim of this. You have the power. Please use it and help those of us who unfairly lost their properties because of this law. Thank you for your time.

Thank you. Thank you both for your testimony, Mr. Randall and Ms. Parker. Hearing those concerns really adds to the I think necessity of having our state legislators look at this in a way that could address what we're hearing today. So thank you for that. Councilmember Gauthier.

Yeah. I wanted to thank you both for sharing your testimony as well. I'm really sorry that you had to go through that. Ms. Parker in particular, who your property is in my District, I'm glad we were able to provide you with a letter of support for your hearing, but I'm really sorry that you had to experience all of that. The petition --

With all due respect, no one from your office responded when we requested assistance at the time.

Oh, my Director of Equitable Development said we provided a letter of support for the hearing and we invited you here today or am I missing --

No. 24

Okay. I'm sorry if we erred in some way. I'm receiving different information, but I'm also sorry that that happened to you in the first place. And I appreciate all of the recommendations that you gave. Thank you so much. We'll definitely take that into account, and I think those are good recommendations for how we should be considering this law moving forward.

And I have to be honest, what's most alarming is that when it was happening, I really did email and contact everyone that we could think of and no one provided any support, no 18 advocacy. Provided documentation to the attorney and the way they approached it was very smug and it was most alarming that this is supposed to be a nonprofit, right. So a nonprofit is tasked with supporting the people that's supposed to serve.

Yeah.

But they're making profit. And the question is what are they doing with the profit, you know. What's the salary. I mean, has anyone reviewed this, looked at the 990 to see exactly how much are they being compensated for all this work. If they really are nonprofit, you're supposed to help with property retention, support, remediation, remodeling. That's what other cities are doing. Other cities are offering grants to elderly homeowners to rebuild, remodel, recognizing that property values and taxes have gone up, but they're not doing it. And I just hope this conversation is not on deaf ears and that you do make a difference and change.

Absolutely. First of all, I do apologize for any miscommunication. I'm really being told something different and we would have wanted to support you in any way that we could in something happening to you that was so unjust. On the other issue of support to residents, we do provide grant support for residents to do critical repairs to their homes. It's a pretty popular City program called Basic Systems Repair, but it does get oversubscribed.

Yeah, but you have to meet a certain economic level. So if you're not disenfranchised, you're not in poverty, you don't qualify for certain support. So as my grandmother who's brilliant, retired from the IRS she doesn't meet some of the guidelines and requirements, so how does she get support. How do someone at 98 years old navigate systems to get support for building -- and it's only because she put my name as next of kin in City Hall on documentation that I'm even, one, able to advocate for her and, two, that they know I existed, right. But how many people who are elderly did not have that mindset to do that. So there are a lot of properties being lost and people don't even know about it because there's no true system in place to support the elderly especially.

I understand. Thank you so much.

No problem.

Councilmember Young.

Yes. Thank you. I want to thank you both for your testimony and, again, echo the sentiments of my colleague. We're sorry that you had to go through this. As I stated before, I've represented clients trying to protect their properties from Act 135, so I know the emotional toll that it plays on folks, particularly when you feel like you're being taken advantage of and you're being preyed upon. But a question for Mr. Randall. You had permits to renovate your property and was actively in a renovation process and your property was still found to be abandoned and blighted?

That's correct. I had contractors, permits. I had everything that you need to complete a renovation in the City and they were still able to bring the petition up front to court and I still had to hire an attorney and everything to fight it.

Thank you. Just wanted to get that on the record. I do think that one change that we can advocate for in the Act is that if there are active permits of renovation, that it does not meet the standard of the Act because currently I don't believe that's mentioned in the Act now. But that's something that I'll look to advocate for and make some changes to. So thank you for that.

Thanks again for your testimony and advocacy. Mr. McMonagle, can you please read the next panel to testify.

Yes. Can we please have Paul Toner, Michael McIlhenny and Richard Vanderslice. (Witnesses approached Witness table.)

Then we'll bring up Beth Grossman since she's already walking up.

Good morning, Paul. If you want to just start. State your name for the record and then proceed with your testimony.

Good afternoon and thank you all for your time. Act 135 is a very important Act for the City of Philadelphia and for the residents of the City of Philadelphia. And before I get into my presentation, I'd first like to acknowledge that the testimony we heard here today is incredibly important for understanding Act 135. The Act does and certainly does impact individuals in a meaningful way and I'm not here to state anything on what I heard in terms of their personal experiences. They weren't my clients. I knew nothing about their cases. They're certainly good people and they had a story to tell. So I'm glad I was able to hear their story today. What I'm here to talk about today is the legal side of Act 135 and I've presented written remarks. They're in the record, and I'm not going to read them verbatim. But I'd like to highlight a couple most salient points. One, there is a really high legal burden for the appointment of a conservator. The court system has a direct involvement in every single Act 135 case from the time a petition is filed through to whether there's an important appointment or there's a dismissal. And today we heard what appeared to be some overreaches of Act 135. And again, I don't know the particulars of those cases, but what was heartening to hear is that the system in some ways seem to have worked. When an action was an overreach, the petitions were dismissed. They weren't successful petitions. And so, as we look at Act 135, you can't ignore the fact that the system is set up for direct court involvement. Some of the most well- respected and distinguished jurists in this City have been tasked with the oversight of Act 135, including two that ascended to the position of President Judge of the Philadelphia Court of Common Pleas. And in terms of the burdens for Act 135, a comment was made earlier that basically every vacant property qualifies for Act 135 and I couldn't disagree more with that statement. In order for a property under the burdens of Act 135, the way the judges here in Philadelphia implement the law and the way the law is implemented throughout the Commonwealth of Pennsylvania, in order for a property to actually be subject to a conservatorship appointment it has to be a dangerous property. We're talking about properties that impose a direct negative impact on the neighbors of those properties. And that is the second part of my remarks today, the neighbors. The neighbors to an abandoned and blighted property are perhaps the ones who have the greatest impact or are greatest impacted by the abandoned and blighted property. For a neighbor who is forced to reside next to a property that's unoccupied, with drug use, that's structurally compromised, in many instances in a state of partial collapse, these neighbors, these citizens, these are all people suffering significant personal losses to themselves, to their family, to their property, to their safety and to their economic well- being. If one were to look at three homes that are all in a row like they are in every neighborhood throughout Philadelphia and you have a property that actually meets the standards for Act 135, it's a dangerous property. It's causing a direct nuisance on its neighbors. There are three stories to tell right there. The person to the left and the person to the right, they're suffering significant economic loss. They're suffering significant safety of their family.

And in many circumstances -- and I invite anyone who wants to understand the process to come to court, to listen to how these cases are actually presented, to read the petitions, but most important to listen to the neighbors who come into court and explain how they can't leave their house, that there's people who are shooting guns next to them, the way it's destroyed their ability to sit out on a stoop on a Tuesday night and hang out with their friends, I mean at the core that's what makes a lot of Philadelphia great is being able to sit there with your friends and your family. And if you have an abandoned blighted property and it actually qualifies under Act 135, you're depriving everyone around you of the chance just to have a basic normal livelihood. So I'm here and I'm happy to answer any questions. But fundamentally, I asked the Council and I know this Committee and especially I know Councilman Young, and I'm glad to see that you've taken this on and that you're putting your energy behind this, but I hope everyone looks at two important things and take into consideration two important things. When they evaluate any Act 135 case, one, it has a high legal burden. Was that burden imposed by the court, did the person whose property was put within a conservatorship, was that haphazard or is that because their property really was dangerous to their neighbors. And I think in terms of the way the Act should be viewed, the Act as an overall Act, and I'm not talking about the bad apples out there. Everybody wants to see the bad apples held to account, but overall the Act is the dangerous property Act. And Act 135 is doing a lot to address dangerous properties in the City of Philadelphia. And with that, I'm happy to answer any questions about this Act.

We'll defer questions until after Mr. Vanderslice speaks. I mean, nobody's opposing what the Act was intended for. I think what we're looking at is how to make it better, so I think that's the goal. But let's have Mr. Vanderslice.

Thank you, Councilman. And thank you, Councilmembers, for the opportunity to speak with you here today about this important Act. If I could, I'd just give a brief history of how I became involved in the Act. A person --

Just state your name.

I'm sorry, Councilman. Richard Vanderslice. Someone who's speaking later here today, Ms. Berkman, who I consider a mentor asked me to join a committee to form a general court regulation for implementation of the Act. And the Act appealed to me because I'd spent several years representing the person on the left and the person on the right who had no 23 recourse. People who were next to buildings with fractured walls, water intrusion, bricks falling near children at a school like 1700 Christian Street owned by Lurube --

(Inaudible).

-- Development, Mr. Johnson's company --

Hold on one second.

(Inaudible).

Well, you can't -- all right. Well, let him speak and we'll ask questions. But you can't -- if we call you back up to let you --

(Inaudible).

All right. You could do that, but you can't speak from that -- thank you.

Additionally, properties that have fecal matter in the rear of the property, been cited for falling bricks, broken windows, urine strewn towels along the fence line that tenants on either side have had to deal with.

Mr. Vanderslice, I don't want to stop you testifying, but we understand -- nobody's arguing that point.

Then I will skip to my recommendations.

Okay. Thank you.

I think that the important thing that would address a lot of the underlying conditions that cause these properties to become abandoned and blighted would be to pursue and help citizens with tangled title issues. There are already several programs available that could be funded through the volunteers for the Indigent for Philadelphia. Additionally, the former Register of Wills Ms. Gordon as well as Jim Leonard, the current Recorder of Deeds, have initiatives to educate our citizens about all tangled title issues, inheritance issues. A lot of these properties sit for decades with deceased owners. And as you've heard, it's difficult to find those people and try to communicate with them about their properties. Further, I think that the ordinance that was passed that has required LLCs to register, which is also difficult for not only the Department of Licenses and Inspections to find the properties that are causing these problems for the neighbors, to have a greater enforcement of that would be steps in the right direction. Thank you.

Thank you. Beth, are you going to testify or are you just here for support?

Just briefly if I may.

Okay. Just state your name for the record and then testify. Then we'll have questions.

My name is Beth Grossman, G-r-o-s-s-m-a-n. And I am Managing Director of Rebuilding Blocks, formerly Scioli Turco, Inc. and the name we rebranded was changed not as a result of this hearing, but we wanted something that gave a hint of what we do and that people could pronounce. So I thank all of you for your time. Just briefly, we are a mission-based nonprofit. We are 501(c)(4), which I joined in February of 2020. We report to a board. People can look at our 990 filings and we're legitimate. Our mission is to help community groups and residents identify abandoned and blighted properties and see what we can do with them if they are appropriate for an Act 135 hearing. And I understand and I commend people for coming in to talk about their experiences. Look, nothing in court is pleasant. People don't want to be there and I understand concerns. But again, as my colleague here testified what cannot be ignored are the sufferings of neighbors because neighbor properties as well, that's their generational wealth. I spent a year as Chief of Staff in the Department of Licenses and Inspections where I really learned a lot about buildings, including those are identified as unsafe or imminently dangerous, and the last thing that anybody wants in Philadelphia is a collapse and neighbors should not be suffering as a result of that. The majority, almost 99 percent of our cases come from referrals from neighborhoods, CDCs, BIDS, elected officials, people reaching out on our website. We do not take all cases because some cases do not qualify, yet some do. But I will make it clear, I know that there may be other nonprofits out there who seem to be using this perhaps in a predatory manner. I don't know very much. I don't engage with them. But I know that we are just strictly mission-based and we are always happy to work with respondents. If there is something that could come to an amicable agreement, we're happy to. I know in the past prior to my coming to what was then Scioli Turco we've worked with property owners to lift lis pendens as well as return any bonds that have been filed so they can get financing for their ability in conditional relief to cure their blight. And I'm always interested in seeing how a statute or an Act can be improved. It's really been quite some time since this has been and perhaps it's time to review it whether in Harrisburg. And it's always -- I think it's fresh. It's always good just like an organization should always review at least once a year its mission statement, its Articles of Incorporation, what it is subject to do. For example, I know the possible diversion program for Act 135. It's very important to me to level the playing field that people understand, respondents understand what this Act is. And if somehow Council would volunteer and come and step up, whether it's to the Bar Association or VIP or some other program, that makes me more comfortable. I don't enjoy having a case with a pro se individual. That's just not what it should be. And I know our court is very cognizant of that. But I am happy to work with City Council. Councilmember Young, I'm glad you brought this to the attention. It's been a pleasure working with you. You saw how we can work collaboratively in certain cases, which I am always happy to do. And I just thank you all for your time.

Thank you all for your testimony. And I think it was made clear by most members here that we do see a need for Act 135. We've used -- all our Districts have used them for the right reason, for the right cause, so we do see that. But then we also do see the other side where people feel like they've been unfairly taken advantage of. So I mean, our goal here is to hear both sides of the story. But really the goal is to say how can we make this legislation better, how can we make the law better. And you heard about the lis pendens. You were willing to lift the lis pendens, right, the bond issue. Not everybody -- because once you have the leverage, not everybody's willing to do that, right. Now, if there was some notice, and I think we had some ideas of how to improve this notice and notify -- because really the goal is to have the person have the ability to fix it up or if they wanted to sell it ahead of time before it goes to court and have those extra fees, then at least they could jump on that and say, hey, well, you had all the chances you did before. Is that something that you would be interested or would you see to benefit maybe changing the law to allow some of those things to happen that would give the property owner more time to act before a lis pendens or something was set on them?

That's costs. I mean, if somebody fixes it and I'm paying for legal fees to do that and it comes to nothing --

I'm talking about notice. You're not in court yet.

Yes. But notice, we have to find somebody. What if they're not locatable? There have been some instances where we've had to hire a genealogist to find heirs which we do, which is costly. What constitution --

But you're mission-driven. You're mission-driven, right? You're there -- the goal is to --

Oh, I understand that. But the other thing is I also have a fiduciary responsibility to my nonprofit and to my Board. And eventually if we get there, you know, it also has the chance of increasing legal fees. And the other thing is do you do that in cases where there's been no L&I violations? Because to me I can show an L&I violation a notice. Now, I acknowledge that L&I can't inspect every house in the City and County of Philadelphia, and I've come across some that are absolute disasters that L&I has never been there. That's just the way it is. So it's a hazy area that probably needs to be maybe explored with a task force or a group of people to see what we can come up with.

I would agree and I think our state legislators would like to hear that too. Because at the end of the day, there are challenges that we hear, right. And I think the goal here even though we can't physically change the law here, we could advocate for those changes and try to help the people who we believe and even the people who said that they see a benefit to it, right, the people who are involved in this. But at the end of the day, if we could either give them more time and I understand there's costs associated but there's costs associated with any job that you do. And then if it's mission- based, you're doing it because the goal is to end the so-called blight, right. And so, the neighbors on each side and everybody who's dealing with that can get the remedies that they want. But what we're looking for now is suggestions and maybe it's something we put together at the end of this, maybe a little task force to make full recommendations to the state. We just want people from both sides to be able to be a part of that. And I think just to say that, well, it's going to cost a little more money if we do this, I don't know if that's really something that would be against making those changes if it does cost --

Maybe not, but I just have to be realistic about it. Maybe it'll work. Maybe it'll be very effect -- look, we just want to eradicate the blight.

Exactly.

That's all. I mean, that's really what the goal is.

Councilman Squilla, could I --

Sure.

So the way the system is set up now the petition's filed and the property is posted. So if you own a property, the clearest way that you should know that your property is subject to an Act 135 conservatorship is when the big poster goes up on your front door. And so, people who claim that they don't know it's coming up, it means that they're not really at their property or not controlling their property, which tends to be one of the problems of how it becomes an abandoned property. In terms of the statutory process and the regulations here in Philadelphia, so we don't go from petition to appointment hearing. There's a status hearing and there's often two, three, four, five status hearings. And the way the statute's structured, it's a may statute. So at the end of the day, the judge always can just say we're not going to appoint a conservator. But because it's a may statute and because it's an in rem statute and because the judge is sitting in there has a court of equity, it has broad equitable powers. And so, for issues like the bond, issues like the lis pendens, if there is an equitable reason why either of those should be altered during the course of the Act 135 process, the system actually is currently set up to empower a judge to implement that. And so, here in Philadelphia these are really hands-on judges who are reviewing these matters. And going back to what I said in my opening remarks, these are not haphazard appointments. If it gets all the way to the point of an appointment, you have a judge who for a series of hearings will have spoken with the respondent, spoken with the neighbors, understood the legal problems, understand the financial difficulties as to why maybe they aren't able to immediately remediate the property. And the appointment is really a last case scenario for Act 135 hearings.

Councilmember Young.

Thank you. For the record, Mr. Toner and Mr. Vanderslice, legally for service can you describe is this personal service still necessary for Act 135 petitions?

So it depends where the respondent is. If the respondent's outside the City of Philadelphia, service can be affected. By a form of service like FedEx, UPS that requires a personal signature on the package. In the City of Philadelphia, there is a personal service requirement.

Thank you. And it was mentioned that when Act 135 petitions are filed, properties get posted with the petition, correct?

Correct.

And just from my practice area, I've seen that there are folks that go around the City that purposely look for filings on properties and take them down, right. So once you put them up, you take a picture of it, you satisfy your burden. But I know for a fact because I've seen it that when there are filings on properties, folks that are in the real estate business understand what that means. That means it's some type of litigation regarding a property and they tend to go around and take those down to try to see how they can use that to their advantage.

Yeah. So I think you're talking about the bad apple scenario. And, listen, I think that's the exception, not the rule. I can tell you when we present cases, we present pictures of the property posted. We present pictures of the property close to the hearing. And certainly none of my clients are taking down posters. And so, maybe in terms of recommendations, I mean we really want to go after the bad apples, not the people who are doing and implementing Act 35 in a proper way and ripping down Act 135 poster or a zoning poster or a notice from the City of Philadelphia when they implement a code enforcement action or a tax sale proceeding, that's an act of a bad actor, not someone that's doing things right.

And just for the record, I just wanted to note that the conditions of the properties, Mr. Toner, you stated most of these properties are dangerous. And I think that danger can be subjective in certain places. We do know that certain things have to be a hazard. For example, I'm just going to read off there are nine things that the court has and you need three regarding the physical structure, right, where the building is a public nuisance, the building is in need of substantial rehabilitation and none has taken place during the past 12 months. The building is unfit for human habitation, conditions exist that materially increase the risk of fire to adjacent properties; the building is subject to unauthorized entry; and the owner has failed to take reasonable measures or the municipality has secured it. The property is an attractive nuisance to children. The presence of vermin or accumulation of debris, dilapidated appearance or the property is an attractive nuisance for illicit purposes, including drug use, prostitution, vagrancy, et cetera. To me I think those are subjective, right, because -- and again, I respectfully disagree that I can point to multiple almost any vacant property in this City and find three of those as a condition that will allow it to be considered a factor in determining if that property is abandoned or blighted under the Act. So those subjective standards to me I think is what is creating I think the bad actors to act because it's so subjective.

Well, I think you have two categories. You have petition actions and full conservatorships where the judge has found that three of the six elements have been satisfied. And, listen, we can go back and forth over how dangerous each one of these elements are. But I look at these and with the exception of separate proof that the dilapidated appearance decreases property values, I mean, listen, I think anything that has illicit activity, has an increase in fire potential, is a dangerous nuisance to children, is a nuisance, like these are all objective criteria of a dangerous property. And the judge finds a cumulative number of these elements, cumulatively if your property is an attractive nuisance to children, it creates an increased risk of fire and there's illicit activity going on at the property, there's different ways to peel an apple. But in my world, that's a dangerous property.

Thank you.

Thank you. Councilmember Gauthier.

Sure. Thank you so much for your testimony. Ms. Grossman, thank you for your testimony. I talked about a time when we worked very successfully on a conservatorship case on the 5200 block of Walton, but that's not by and large the experience that we're seeing. We're seeing this being used in a very predatory way. We're seeing people go after properties that people are living in, where the owner is living next door so it should be clear that this is not an abandoned property. We're seeing people getting hit with these filings after they've tried to -- when they're trying to pick up the pieces from either an heir dying or a fire. And I don't think that it's an accident that we're seeing this in the most attractive and desirable places in my District where properties are very valuable. So I guess my question for you and then I'd also like for you to answer as well, Mr. Toner, is do you think that there should be more restrictions on when a petition can be filed? Some of these petitions a basic Google search would have shown that it's not sort of eligible for a filing, but we're getting these petitions filed in hopes of getting a hold of these properties and then constituents who may be dealing with the death of a family member or a sickness or any number of everyday sort of issues are now having to untangle themselves from this, which is predatory and unfair. So I certainly think that there needs to be more guardrails around when petitions can be filed at all, but I want to know what you think in hearing some of the experiences of the people who testified today?

Absolutely. (Inaudible). Certainly not Scioli Turco/Rebuilding Blocks. And in those cases I will always acknowledge when we make a mistake, we withdraw cases. I do not approach things in a predatory manner. If something was careless and not done correctly, I apologize for that. We are just here to do what is right and to do good. And for example, for one prior -- I actually hired an investigator to do surveillance to see if it was occupied besides knocking on neighbors -- I actually went at night to do surveillance to see if I could tell if somebody was there and it just looked awful. It was a disaster. There was an illegal electrical hookup. We did subsequently find out that somebody was living there and will withdraw. On the other hand, there have also been cases where I've learned where it's been like almost like a very sympathetic thing. There was one I believe in the Northeast where the owners of the home, a husband and wife, tragically lost their lives in a fire in the property. And it sat and sat for several years. It was referred by a Councilmanic Office. And then as we began literally at the time that we filed, the family notified us that finally they were getting it together and selling it and we withdrew. If there is a sympathetic or, you know, every case is different. It's like snowflakes and fingerprints, you know. And if there is something particularly tragic or awful, listen, we're always happy to listen, I'm always happy to withdraw. I don't know. Maybe one of the requirements should be in this that complaints should be only referred by community members or other groups, not just somebody driving around on a bike looking for attractive properties in areas that are up and coming, that type of thing. But that's why again I think it's time and it's good to let's take a look at the Act and see what we could do.

Do you think there's a danger or risk to these type of conservatorship cases being a business model?

What do you mean? I'm sorry.

I mean, this is like -- I know that you're registered as a nonprofit, but this is your primary line of business.

Correct.

Okay. Do you think there's danger in having that be an organization's primary line of business?

That's what we're here to do. That is a mission. Again, I will make it very clear that we are limited by what the statute sets forth, a 10 percent conservator's fee. Also, 11 because we are a nonprofit and we 12 don't have a lot of money to spend, 13 our practice has always been to 14 rehabilitate or it has been since I 15 joined, rehabilitate to a clean 16 shell. Meaning, we clear up the 17 L&I violations and some other 18 things that can be done, so that's 19 also keeping down the cost of the 20 rehabilitation and removing the blight. There are often instances where I've said, you know what, fine, we'll deduct our conservatorship fee to 15 percent which we're happy to do in circumstances. And again, I must also note that we have to present everything to the court prior to taking any work so she approves the work. I know, for example, in a case that was referred to today was also during COVID and there were supply chain issues and the cost of lumber went up. We had to go back in front of the judge and explain why this jumped. So the cost of everything is overseen by the court as well, and sometimes there's also been cases where the court has refused to award full attorneys' fees. I've also seen that back in the day. So there is everything. And if anybody wishes to look at our 990, we are about as nonprofit as it gets.

Do you think there should be a penalty for unjust or frivolous filings?

Well, I think that's what there is in civil court. You can file a civil action. I mean, for example, I know if you file something that's absolutely frivolous in federal court, there's something called a Rule 11. I'm not sure if there is something in civil court. But sometimes mistakes are made. There's frivolous and then there's like, okay, listen, it's a mistake. So I think you have to weigh it. But if somebody's just going around in a predatory manner trying to gain stuff, yeah.

What about you, Mr. Toner? Can you talk about the due diligence that you use to determine whether a petition should be filed and what changes do you think should be made to the state law to try to thwart some of what we've heard today?

So there's a 60-day statutory requirement between when you file and when there needs to be the first hearing in an Act 135 case. And it's a petition action so there's no 6 discovery. There's no post-filing actions that are to be taken so you learn more about a property. A petitioner has an obligation already, that when they file their petition they basically have already made out their case. So their petition should prove all the elements on its face. And if it doesn't prove all the elements on its face, it's going to get knocked out real quick. So in action with no 19 discovery with these quick timelines -- and I think the most important thing is to look back on that discretion giving the judge in petition actions the equitable powers. If she sees a petition that it's clear the person is away on military service or it's clear that the property had been transferred, she not only has the authority to immediately, immediately terminate the case, but she's a judge and the rules of civil procedure already authorize her to impose sanctions against someone who abuses the process. There are separate statutes. There's the Dragonetti action in Pennsylvania. There's Section 2503, a judicial code, that authorizes the award of attorneys' fees and costs for a misuse of process. So there's already set institutional safeguards in place for people who abuse the process. And my recommendation, my encouragement is people should hold abusers of the process accountable, and avail themselves of what's already readily available.

Okay. But a lot of what you -- one, we've heard quite a lot of testimony here where this Act was abused and this happened within the current legal structure. So perhaps a judge's individual discretion didn't wind up resulting in a just situation. Do you think there should be changes to the law that would stop predatory, frivolous filings from happening in the first place? And what do you think those changes should be?

So if there are predatory, frivolous filings, I am 100 percent against predatory and frivolous filings. I personally would never represent anyone who engages in that type of conduct. It's not something that is good for anyone in the City of Philadelphia, including people that live next door to abandoned, blighted property. It's bad for everyone. What I think everyone should be careful about though is to enact requirements that make it more difficult to hold the truly bad actors accountable. And right now the Act is so quick if you were to speed things up and get it in front of a judge earlier than 60 days, I just don't think the court system would be able to handle that type of quick succession. And if you were to automatically penalize people for subjective policy calls, in terms of legal calls in terms of how a case proceeds, if it were just minor deviations, it would have a chilling effect on legal process in general. It's got to be about the bad actors. And that's why there is that Dragonetti Act. And I know from the Inquirer article, again it's not my client, I don't know any of the details, but I know people have been hit in the City of Philadelphia with big awards when they've done bad things. So I don't know if we want to add more punishment onto what's probably already a good deal of available just punishment.

I would disagree, but thank you.

Thank you.

Thank you, Mr. Chair.

Councilwoman Bass.

Thank you. Thank you, Mr. Chairman. I appreciate the opportunity to speak because I'm not a member of this particular Committee. But I've had some concern about this practice for quite some time. And so, I thank you for bringing forward this piece of legislation. I wanted to just ask a couple of questions to the panel about just what I heard because I was a little bit late, tied up with other meetings. So just from what I heard, I just had a couple of questions because again I have my own significant concerns about conservatorship. And so, I heard a couple of things I think first stated from you, Beth, regarding the work that you all do and the fact that if you see something's not right, that you all would withdraw your petition for conservatorship. How often has that happened?

I would say in the past year probably twice, probably twice. I'd have to go back and look. I do keep stats of everything so I would have to go back and look. And we also lose cases too, mind you. It's never a dead bang winger. Sometimes the judge doesn't find it makes it, you know.

Okay. In Philadelphia specifically?

I only do Philadelphia, yes.

So out of how many cases would you say you had in the last year?

That I do have. If I -- thank you for your patience. Okay. So we currently have cases pending in court. 9 Since I joined in February of 2020, 10 we filed 46 Act 135 petitions. 11 Eight had already been pending in 12 court prior to my arrival. Since 13 2020 we've been appointed 14 conservator 12 times. 15 We sold 9 properties. 16 properties I think down to are 17 currently listed for sale. 18 Conditional relief was granted 4 19 times. We withdrew 4 cases since 20 2020. We lost 4 cases and then we 21 settled 9. 22

Okay. 23 So I'm going to just state my 24 thoughts and opinion, which is that 25 the likelihood of a withdrawal 1 seems unlikely because it doesn't seem like it happens -- it's not as if you take a look at a case and say, this doesn't look right, this doesn't look fair, this doesn't look equitable so we're going to do what we should do and withdraw. I don't think that that happens probably as often as it should happen. The other question that I have for you is I forget which one of you said that everything was presented to the court and the court could strike down, not approve this application for conservatorship. And based on the stats that you just gave, Beth, it doesn't seem as if that's happening on a regular basis either. The other part to that is that when you have someone let's say who's not an attorney, who's less skilled, who's less savvy to try and navigate through all of this and the expectation that the court system is fair to those who are underresourced, it's just not true. So I just really wanted to state that on the record as well. And for I guess, Richard, you said that there were a number of cases that have been terminated or the judge could terminate a case immediately based on if they're in the military or if there's other safeguards and I'm wondering how many cases do you know that have been terminated by a judge for those reasons?

Because of being in the military or --

Well, because they're in the military or you said other safeguards. I'm not sure what those other safeguards are. But how many cases would you say have been terminated because something was amiss?

So, Councilwoman Bass, I want to be careful that I'm here as an attorney who practices in this area. I'm not here representing any of my clients or speaking on behalf of any of my clients.

Okay.

I can tell you that in the last five years I cannot think of any case that was filed by our office that was not vetted to the point where we missed a military serviceship or a deed transfer or publication to the best of my recollection. That being said, I also defend these cases. And just last Jan -- or just this last month or two months ago, someone did file 10 Act 135 cases. It was someone who clearly was not very sophisticated in how they were going about filing the Act 135 cases. They didn't do their homework. They missed multiple issues and the case was immediately transferred or assigned to Judge Anders, who is in charge of the Civil Division, and all those cases were terminated before they even got to a record hearing. So there the initial review by Court staff was exemplary. It saved everyone from having to even go into court to defend it. I entered my appearance. Then two days later the case was terminated by Judge Anders, so I really had no 13 chance to do anything on it. But there is that safeguard and I have seen it effectively operate.

So I would say at that point the fact that 10 cases were put together based on your description rather sloppily, like not really well put together, you know, and I think one of the problems with what's happening now is that there are even tutorials that will tell you online that say, this is what you can do to file a conservatorship and you can get compensated regardless of the outcome, that there is compensation that could be made available, so this is like a new hustle, if you will, and that people have been taken advantage of. As I understand it, there's even tutorials on social media that will show you how to do this. So that's what that sounds like.

Yeah, I'm aware of those tutorials. People have sent me links to those. Not my clients, I don't have any direct involvement in it. But I can tell you that that's the bad apple right there. That's the exception to the rule. But of the cases that come out of my office, there's no 22 missing military serviceship or --

But I just want to state just because you're less savvy in putting -- if you're more savvy and putting together a case and getting it before the court, that doesn't mean you're not a bad actor too. Because when you look at the folks who are most affected, these are mostly happening in Black and Brown neighborhoods and it's very much predatory. This is sort of like the new hustle. It's a legal hustle, but it's the new hustle to be able to take someone's property, someone's wealth, someone's generational wealth. And so, this is what has been happening for quite some time. I'm really glad that Councilman Young decided to move forward with this hearing because I think that this is something that really needs to be exposed and talked about and people need to be made aware that this is something that's actually happening.

I 100 percent agree with you, and I hope that the focus of remedial efforts are the bad apples and that the people who actually do these petitions responsibly incur a very significant cost of putting together detailed petitions and pursuing them responsibly are not cast in with the bad apples, because I think that would be a true disservice.

Well, I guess I just want to make it clear just because your petition looks clean doesn't mean that you're a good actor in this matter as well. And so, in a lot of these cases I think the majority, in my opinion, in the majority of these cases these are not applications that should be even considered, these are not things that should be moving through the courts, these are not applications or petitions for conservatorship that should be seriously looked at because again, you're basically taking away someone else's property. And this is something that's relatively a newer phenomenon and I just don't think it should be happening, particularly because we know that the number one demographic that's affected are poor people and people who are from Black and Brown communities. And because you may not have access to an attorney or be savvy in terms of writing a legal brief or have the ability to put this together and get it in front of the courts to defend your property which you shouldn't have to do in the first place, this just really does wreak to me of something that's very, very predatory. So, yeah. Thank you, Mr. Chairman. Thank you.

Thank you. Thank you, Councilmember. Councilmember Young.

Yes. Thank you. Ms. Grossman, can you tell us what the average cost of renovations when you have been I guess appointed the conservator?

Sure. I would say -- again, as I always say this, every case is different. But I would say anywhere probably maybe between $35,000 and $50,000. Now again, they're the outliers where some are just complete disasters.

And for some of the properties that you filed for conservatorship that you file petitions against, can you tell us what the average I guess after renovation value of those properties are?

I'm sorry. What was that?

The average after-renovation value of those properties?

Well, it depends. I mean, because sometimes if we engage in conditional relief or settlement agreement and the person fixes the blight and we move on, I don't know. I mean, if they choose to sell it later, it's hard. But the ones we have renovated and we have sold, again we sell it at fair market value through a listing service. I don't do back door deals. I don't sell to developers. People come and they make offers through our realtor, and then they redo them however they see fit. And then, yes, of course the property has much more value.

And I guess in determining what properties your organization file 22 petitions against, do you take in consideration the value of the property?

I do. I mean, some that are probably worth nothing I probably don't move against because I would lose money. Essentially it depends upon. Now, if I -- the other thing, it's so complicated because it's very so hard to get grants because of -- we're just an outlying kind of organization of what we do so it's hard, so it's kind of hard to say. But do I drive around and look for properties that I know are going to be valuable, no. Properties come to me again through community referrals. They come from neighbors. They come from Business Improvement Districts, CDCs. Sometimes elected officials or other agencies will just let me know this is a problem, can you take a look at it.

Thank you.

Thank you.

Just for the record, and I do note that we were talking about some things that can be done when petitions are filed unjustly like Dragonetti and those type of things, but the property owner has to know that these things exist and that to affirmatively file for sanctions and things like that against that particular petitioner and/or their attorney. So if they're not an attorney themselves, they don't know this process. So I do agree with Councilwoman Gauthier that there should be some safeguards in the Act itself for bad actors who participate in Act 135 petitions. Again, our courts -- the way our court system is set up is you file 21 a petition and you have to defend yourself. And if you're not there to defend yourself, then the other side wins. And that's essentially what happens in a lot of these cases. So thank you, Mr. Chair.

Thank you. And thank you all for your testimony and thank you for answering questions. Much appreciated. Look forward to continue working with you and any ideas you have. Mr. McMonagle, can you please read the next panel to testify.

Yes. Can we please have Judy Berkman and Winnie Branton. (Witnesses approached Witness table.)

Good afternoon. Judy, we'll start with you. Just state your name before your testimony and proceed.

Pardon me?

State your name before your testimony and then proceed.

State my na -- Judy Berkman.

Now, you can proceed with your testimony. Thank you.

Good afternoon, everyone, and I appreciate listening to all the testimony beforehand. It was very meaningful to hear from everyone so far. I'm senior counsel at Regional Housing Legal Services, but please note that the views expressed here today are my personal opinions. And I'd like you to please refer -- I provided an article that Winnie and I wrote with another author for more indepth analysis of what is now 15 years history of the Abandoned and Blighted Property Conservatorship Act known as Act 135, and we included some options for reform. And I do note that Regional Housing is a statewide legal services organization, which provides quality legal and technical assistance to nonprofit organizations that are developing housing and community economic development opportunities for lower-income persons. We do quite a bit of policy work regarding community development which includes blighted property. In 2022, the First Judicial District of Pennsylvania adopted a revised rule -- sorry, it's a revised local rule for Act 135 petitions that are filed in Philadelphia, and I've provided a copy of that as well for Council. Some of the highlights and specifics -- thank you -- regarding changes in the general court regulation which was basically required because the law was amended in 2014 and it needed to be updated, and there was a stakeholders group working with Judge Butchart and others at the court to make the changes from both sides, respondent and petitioner side. So one change was there are a lot more specifics about good faith efforts required to provide notice to the owner and that would include obviously not just the person whose name is on the deed, but naming all decedents, partial owners, known and unknown heirs, lienholders, goes into some detail about that. However, the revised general court regulation actually deleted the requirement that was in the original one that required service of process by the Sheriff according to court rules, and it reverted to what was in the law itself which is certified male return receipt requested service. But I'd like you to know that all the attorneys who have testified here today, everyone still uses service of process as required by court rules as a best practice. But that doesn't mean that some, like Mr. Toner referred to the that were filed, could be 7 served by certified mail return 8 receipt requested. So that's one 9 change that we would obviously 10 advocate. The general court regulation also -- we worked very hard on revising the cover page, which includes -- they worked out a way to include the date, time and place of the first hearing and this is a more elaborate court cover page than is generally you've been sued, you should get a lawyer. It basically says you could also lose your property rights and we tried to be as clear and plain language as possible given the legal complications. And it also clarified a lot of procedures on the out sale by the conservator at the end of the conservatorship because the law is sort of minimal on what those procedures are, and it gives the court, the judge, some discretion in how much detail to require. So the recommendations, we talked about one of course is changing the service of process to the rules under the Pennsylvania Rules of Civil Procedure. One thing that I'm interested in because my office represents community-based groups is right now it's discretionary whether a community group can intervene, and it might be a better idea to give them the actual right to do it because one community group I represented the court denied the intervention. But nevertheless, even if you can't intervene, it's good for community groups to watch for these notices on properties and contact the lawyers and get involved so that they can advocate for a community-based result that they would like.

The law might be amended at some point to allow if it's a nonprofit use that it could be sold for less than fair market value, but that's not an official recommendation. It's just a consideration that I know has come up a few times. The main thing that I'm concerned about and it's been mentioned here before is the percent developer fee for the 16 conservator and the current 17 statutory petitioner and 18 conservatorship fees, as been 19 mentioned, can result in unjust 20 enrichment for the petitioner or the conservator. The law doesn't require them to justify the fee and I think the legislature should consider establishing a lower base fee with a framework of bonuses or add-ons that could be earned by demonstrating extra work and not work -- it should maybe exclude work that's done by the attorney and also work that would be done by an owner's representative which should be included. It should be paid out of the developer's fee, not as a separate cost. I was asked to comment a little bit about my testimony in 2016 on Act 135 and what I thought about the recommendations I made then. So one was about funding. Because conservatorship leaves the title in the record owner, it's difficult, if not impossible, for a petitioner to obtain financing and sometimes they use a line of credit or other sources of funds, and likewise due to the fact that the house is vacant and uninhabitable, legal services and public interest organizations aren't able to provide representation for low-income respondents so it sort of falls between the cracks. Two other small points, municipal --

Excuse me. I'm just trying to make it clear. You were saying funding to fix up the property or funding for legal representation?

For the respondents funding for legal representation, but also there could be funding like Whole Home Repairs and the RRR and the Basic System Repairs. There should also be more funding for people to fix up their homes. The other funding would be petitioners can't get typical bank funding because -- bank financing because the title's not in their name, so it's both.

So a tangled title issue --

Preconservatorship for the owners and also funding for -- in Pittsburgh I believe they had a collaborative of lenders that provided funding for petitioners to do Act 135.

Thank you.

Just briefly, municipal liens. Right now if there are municipal liens on a property, it's sort of ad hoc in terms of how they are resolved. And many times the City agrees to remove -- you can negotiate to remove some of the municipal liens or interest and penalties on them. But there should be transparent criteria for how and when municipal lien forgiveness it can be afforded to the conservator. But also this could be a consideration City Council might want to look into, to provide an incentive to low- and moderate-income owners that would allow them to get financing to rehabilitate their houses because sometimes the houses are worth a lot. It's just they have tangled title, which I'm proud to say I invented and named the program a number of years ago. But they also -- if there are City liens on the house, any financing they would get would pay off the liens first and then there would be less for the -- whatever is afforded to conservators in terms of lien forgiveness should be thought of as a potential way to incentivize people to fix up their houses preconservatorship. And it was mentioned that public nuisance is one of the nine criteria. Councilmember Young mentioned that. That term itself is in the law, public nuisance, but it's not in the City L&I Code. So that's a discrepancy that should either be fixed by amendment to the statute or work out a way with L&I what would constitute a public nuisance so they could have internal procedures and provide that information to petitioners. Finally, I'd like to just comment briefly on a proposal I've heard floating around, that owners be given pre-notice prior to filing a conservatorship action. As mentioned above, all the potential respondents, any partial owner, heirs, known, unknown would have to be given that kind of notice. Then they would get notice again when the petition is filed. So this could be confusing for some recipients, and I worry that they may actually ignore the subsequent actual legal notice providing for a court hearing, especially if certified mail return receipt request is used rather than service of process. So in thinking of some of these things, I welcome the idea to have a task force so that lots of us can think things through and not have unintended consequences. Also, when the pre-notice would be received, some recipients may just list the home for sale and then that might take it out of consideration for a conservatorship, and then the people on both sides might be damaged further because a little bit of action is taken that precludes a conservatorship action and then the leaks and the damage is still occurring. So thank you for the invitation to testify and the opportunity to provide the Committee with, as I remind you, my personal views, not Regional Housing's views on blighted and abandoned property.

Thank you. Thank you so much for your testimony and offering ideas. It's very helpful. Ms. Berkman -- I mean, Ms. Branton, if you want to testify, state your name for the record and then we could ask questions and comments. Thanks.

Thank you. My name is Winnie Branton and thank you all for allowing me to testify today. I am an attorney, a consultant, a trainer and a City resident. I actually travel the state and I teach local governments, officials, staff, elected officials about blight strategies so that they can implement them in their communities to prevent blight. So I'm in many communities across Pennsylvania. And I've helped counties and cities create land banks, develop blight plans, seek grants and use just about every tool in the toolbox, including Act 135. So in my work I wanted to testify today about three things and I'm going to skip one because we've all agreed that the neighbors need to be considered, because they are impacted. They lose household wealth. It's no 8 picnic to live next door to a blighted property. So I'm going to skip over that and get to what do we do -- when I'm out in a community, they say we have these property owners, they're just not complying. So the first thing I ask is do you know why they're not complying. Is it because they can't afford to comply, they don't understand what's required or is it because they're just bad property owners, right, they're irresponsible property owners. So we don't want to punish the folks who can't afford to do the work or don't understand what's required. So for me I look around at what is available in Philadelphia if you fall into that category, and there is little, right. There's no access to counsel. If you -- as Judy just said, if you aren't low, mod income and you have this property that isn't your home, you're stuck. So you can't borrow or you can't get grants through Whole Home Repairs or any of the other City programs because you're not an owner- occupant. So what do we do: Well, first we want to make sure that everybody understands what's required, right. So through Judge Butchart and the real property section and Judy's work, we work through a working group to try to make sure that the parties understand what's required, especially the respondents, the owners. So working with public interest lawyers and the Bar Association, Judge Butchart led the effort to provide a handout that is in layman's terms what is involved. So at least there's some resource that folks can access. And there's a lot of online resources as well, the Regional Housing Legal Services, the Housing Alliance and many other resources online. But again, not everybody has access to the Internet or is savvy to go on and look at it, so how do we do that. So I really appreciate that earlier this year Councilman Harrity and Councilman Driscoll released a proposal for an Act 135 diversion program that would be a one-stop shop, right. you're going to connect the property owners to legal resources. And then to think about what are the resources out there for rehabbing. So their proposal, I think it outlines some thoughtful ways to give property owners at the very least information, right, and maybe access to counsel. So for me, I think access to counsel and some pot of money that can be put together by the City or with lenders, CDFIs, others that want to see these properties stay in the hands of the owners because they're blighted, they need to be rehabilitated and if the owner can't access resources to do it, the conservatorship process is an alternative that is working in other parts of Pennsylvania. And I will say that it's only in Philadelphia and Allegheny County where it's being used by nonprofit organizations. Most of the state it's being used by municipalities and being used by redevelopment authorities. The land banks just got the power to use it, so I think there's maybe one or two. So for me, I love the law that allows for this intervention when everything else has failed. But here because the market is so strong, there are bad actors that are taking advantage of it.

So I support whatever efforts can be made to preclude those if there's some way to allow the owners to, I don't know, have access to legal counsel is really the answer. But again as you said, Councilwoman Gauthier, it's stressful if you get that petition. And my family members if they got a petition in the mail, they would like lose their mind, right, so that is really what we're trying to prevent. So how do we prevent that. Councilmanic Districts, you're all trying to help your constituents understand if they get a petition what to do, right, that's one step. But I think having some kind of more formal access to counsel and pot of money that could be tapped into by owners to avoid conservatorship would be really helpful. And then I just want to end by saying that the City has some of their own properties that have been the subject of conservatorship petitions. So for me I see that and I think the first step should be the City should assess every structure that they own. Board, seal and make sure that it is not a danger to others around them, and that gives you more credence to go out and ask others to do something different. And I want to commend the Land Bank. They increased their budget for maintenance by -- I forget how much it is. I want to say this correctly, but they increased their budget this year in order to allow for more property maintenance to be done to avoid their properties from going into conservatorship. So for me it went from 300,000 -- they upped it by 300,000 for Fiscal Year '24 to 500,000. And then to avoid those filings, you don't want to be the respondent, right. The City should not be a respondent. But I also agree that -- and I'll just give my one recommendation that I really feel strongly about. The conservators fee, yes, it should be addressed in some way. The next one is for municipally-owned properties I think there should be a 60-day prior written notice and give the City a chance to resolve the blight and come into some kind of compliance, because for me the City has limited resources to deal with blighted properties, right. We all agree with that. There's not an endless supply of money. A conservatorship petition makes the City direct its resources to that property even though it might not be the worst property. So I think for publicly- owned properties there should be some sort of 60-day notice and even a heightened standard of blight that would make it more palatable to me as somebody who really works hard with local governments to try to figure out what to do. There's not enough money, and trying to figure out how to do this in a way that protects the property owners and their wealth. We don't want to take wealth away from people. We want to build it up, the neighbors as well as the owners. So I'll just wrap up by saying thank you and that if there are any efforts to try to figure out amendments, I mean I'm all ready to participate in any possible way I can to help. Thank you.

Well, thank you much for your testimony and again offering suggestions because I think that's why we're really here, is to do that. And our Councilmember who introduced this resolution will be speaking also. But the key is what are things we can -- and I like the right to counsel because we just added some money into CLS's budget for adjoining neighbors' issues when people are developing. And so, CLS now has additional dollars for that, but that fits right into the same model where they could also -- since it's an adjoining neighbor or a neighbor whose house is being conserved, it could be either one, and then CLS could help them be able to address that. So that's something we could do. We would love to put something together where we come up with all these recommendations of how to help residents deal with this or even put guidelines or guardrails in so that we don't get into this position. The best case is not to get into this position, right. So I think your testimony and I think some of the options you were offering are very well heard, and we appreciate both your testimony on that. Councilmember Young.

Thank you, Mr. Chair. I want to thank you both for your testimony today. It's very enlightening for us. I have a question for Ms. Berkman. Can you tell us -- I know you're here in your individual capacity, but can you tell us why some legal services agencies aren't able to represent property owners even though they're low income?

Well, I was at CLS a long time ago. They have certain priorities, and handling something that is a property that is vacant or not legally occupied is not on their priority. I checked with VIP which does handle -- finds pro bono attorneys when the legal services attorneys can't handle them. And they said that when they get referrals from respondents, the respondents generally -- first of all, they think they're screened out by CLS and the other legal services organizations so VIP doesn't get very many at all. But when they do, the people don't have sufficient resources or capability of rehabbing the property under conditional relief which would be required.

Thank you. Ms. Branton, can you talk to us about or I guess give us some of the names of the other municipalities that are using this Act to remediate blight in their communities?

Sure. Right now the Upper Chichester Township has one or two petitions pending. There are a number of municipalities out in Western Pennsylvania. Butler County was one of the early adopters of Act 135. Their Redevelopment Authority uses it frequently. The other Redevelopment Authority that I've spoken with recently is Cumberland County. They're using it as well as -- oh, what's the -- Clearfield, it's not Clearfield. I can send those to you. I have many of those petitions.

Thank you.

And usually in those cases they acquire the properties, they either demolish the structure and then it's vacant land and they usually sell it to the next door neighbor or if it's a structure that can be rehabbed, it's usually rehabbed using home monies or other federal dollars that allow for support to develop affordable housing, and then they're transferred to owners that are income-qualified.

Thank you.

Sure.

Councilmember Gauthier.

Thank you, Mr. Chair. Thanks so much to both of you for your work and your recommendations. I agree with you on everything. I definitely think we should be providing more support to owners. I think the majority of folks even when these conservatorship cases are successful are not bad folks. They just don't have the wherewithal, so I think we should help them to have the wherewithal. And couldn't agree with you more around the City modeling good behavior through our own vacant properties and I would add vacant land. I have blocks where the City is the blight on the block, right, and that's not how we model excellence. And on the community engagement piece as well, we're currently trying to support residents and community members in West Philadelphia around a conservatorship case with Scioli Turco around the Gosnell building, which just has a deeply painful history in West Philadelphia given what happened there. And it's crucial for the community to be at the table to make sure that what happens there in the future doesn't repeat that trauma. And the judge has been very gracious to us. The community members are being represented by the Penn Law Clinic. The judge has been very gracious to us, but we don't have a formal sort of right to -- we haven't been granted a formal right to intervene, so I truly hope that that's one of the changes that can be affected over time as well. I wanted to ask you your thoughts on some other potential changes. My office was able to broker something with the Law Department where we get notified every time there's one of these filings in our District, right. But we had to ask for that and we did that after basically beating our heads against the wall trying to help constituents untangle what was going on, right, with their properties. And so, we have this data- sharing agreement with Law because the Law Department does get automatic notification around these filings, but how should we be using that automatic notification in a better way to inform Council Offices or residents or RCOs or whomever? And then I also wanted to ask your opinion about sort of the geographic radius that's allowed for these filings. It's quite broad and I think works against the interest of having very near neighbors fighting against blight. So those would be the two questions that I would put before you.

I'll respond to the radius and then maybe Winnie can respond to the City notice and sharing that. Originally the original law was for community- based groups, was for all counties other than Philadelphia it was just you "participated" in -- a nonprofit had to "participate" in a development in the county. For Philadelphia because we're so large, the original law provided that the community group could be a party in interest if it was within 1 mile radius of the subject property, and that was changed in 2014 I believe to 5 miles.

Yes.

And my office represents community-based groups that all have target areas, most of them. And the mile would be very adequate for them because they develop all through their neighborhoods. And I think it was added to let some of the nonprofits that are not neighborhood-based sort of jump from one to another one that was 5 miles away. So I would support personally going back to the 1 mile in Philadelphia.

Thank you.

In terms of the notice to Council. Maybe I'm naive, but if the Law Department is getting the notice, it would seem as if every time a notice came in, a copy was sent to the Chief Clerk of Council and then distributed to the appropriate District Councilperson.

We had to specifically request that. So, yeah --

I'll be happy to add that as a recommendation if that helps you.

-- maybe that's an easy change.

Because that to me just seems like a no-brainer, right. The Law Department gets the notice. I don't know if you're all on the same intranet, but to get it over here seems like an easy fix for that. And I think it would be great to have that added because you want to be able to serve your constituents, and that is one way to direct them to resources as you've all been doing. So I commend you on that. And on the distance, for me I mean if you live within 2,000 -- if you're a resident or a business owner within 2,000 feet of the building, I think that's fair because you're the most impacted, right, if it's a truly a related property. On the mile radius, I don't know how the RCOs are set up and the CDCs. If somebody was more than a mile but it was really the CDC that operated here, I would want them not to be excluded. But I'm going to rely on Judy because she knows more about how those things are set up than I do. But to me, I think it's something that we should look at maybe with a mapping to see if that would exclude groups that are actually using conservatorship appropriately.

Thank you.

And I'd just like to add that since the general court regulation was revised and the notice now includes the date, time and place of the first hearing, once you folks get the notice you can target people in your neighborhoods that would be near that and say, this is the hearing date. So that is an improvement because it used to be just a notice that it was filed, but now it includes the date, time and place of the hearing.

Thank you so much. I look forward to working with both of you and I support the task force idea.

Thank you. Councilmember Young.

Thank you. So to my colleague Councilwoman Gauthier, I've actually thought about drafting legislation that mandates the Law Department provide us notice for Act 135 petition. That was one of my internal recommendations that I've had to make changes, not to the state law because we don't have the ability, but to see what the City can do on our level when it comes to Act 135 petitions. So that's something that I have already contemplated and have a framework of drafting, so I will be happy for you to co-sponsor that legislation. (Witnesses approached Witness table.)

Thank you. Thank you so much for your testimony. And I guess the next panel is here. So I guess we'll start with Cara. If you want to just state your name for the record. Then proceed with your testimony. MS. McCLELLAN: Thank you. Good afternoon. Thank you, Councilmember Young, for holding this hearing and thank you to the Committee for the time and attention you've given to this important issue. My name is Cara McClellan. I'm a practicing professor at Penn Carey Law School. I direct the Advocacy for Racial and Civil Justice Clinic, which does civil rights litigation, representation as well as policy advocacy in four areas; economic justice, health equity, education equity and ending overpolicing and mass incarceration. So this issue came to our attention as a result of outreach from residents, some of whom we've heard from today. And it fits under our economic justice bucket and our housing work. And as a result of hearing from residents, we then did a study, which I think Councilmembers already have a copy of, to really look at the docket and what has been the impacts in Philadelphia. And so, the two students who are with me are certified legal interns who have really been leading this research. And so, I'm going to turn it over to them. First, you'll hear from Elizabeth Shackney and then from Megan Bird. Thank you.

Thank you, Elizabeth. Just state your name and then proceed with your testimony. MS. McCLELLAN: Oh, is it possible -- we just have some visuals. Is it possible to display graphs?

Sure. MS. McCLELLAN: Okay. Thank you.

My name is Elizabeth Shackney. Good afternoon. This is Megan Bird. She'll introduce herself in just a moment. We're both third-year law students and certified legal interns with the ARC Clinic. I am also a co-author of the Clinic's report on the impact of the Abandoned and Blighted Property Conservatorship Act or Act 135. The Clinic has repeatedly heard from individuals who were approached by someone interested in purchasing their property. After the homeowner says they do not want to sell, they learned that an Act 135 petition has been filed against the home. Act 135 was not intended to provide an endrun for developers to acquire houses from vulnerable homeowners. Act 135 was enacted to combat blight through community-led development. Abandoned and blighted properties can seriously impact property values and community safety. However, the Act has had concerning unintended consequences. We believe there's pressing need for reform. The Clinic initially analyzed 577 Act 135 cases between October 2009 and December 2022. We released a report on our findings last November. Today we're going to speak to the conclusions of this report and feedback that we've heard from community members, and we are also going to provide some updated information based on analysis of 93 additional petitions that were filed through February 2024. It's a little tough to see, but we will make it work. It's also included in the written testimony about halfway through one of the packets if you can find it. So the data that we're going to talk about in more detail led us to four important conclusions. First, those who have petitions filed against the homes that they own called respondents, they are disproportionately Black or Asian. Two, petitions are primarily filed in majority Black and majority non-White neighborhoods, but those filings are not evenly distributed. Our third finding shows that petitions are primarily filed in gentrifying areas where residents are already vulnerable to displacement. And four, petitions are filed primarily by two nonprofit corporations. So the slides up here include a summary of our findings in greater detail. The first graph if we can go to Slide 1, this -- we had it, No. 1. -- no, the first. That one, thank you. So here we can see that approximately 11 percent of Act 135 petitions 12 involve Asian homeowners, but only 7 percent of homeowners in Philadelphia are Asian. Approximately 43 percent of Act 135 petitions are filed against Black homeowners, but only 36 percent of Philadelphia homeowners are Black, so this represents the disparities between the petition composition and the City's homeownership composition. The next slide here shows that whereas 65 percent of census block groups are majority non-White, approximately 70 percent petitions are filed in majority non-White census block groups. If you can go to the next one, this map shows that a bit more clearly and shows that distribution of petitions. The navy represents majority non-White census block groups, and the pink represents majority White census block groups. Those yellow dots, a little bit difficult to view from a distance, represent petition filings. And you can see how they kind of cluster along the areas where the population shifts from majority non-White to majority White. There's also a concentration of filings just north and south of where we are now. So keep that in mind as we move to the next map here. Our fourth finding or our third -- our third finding gets to a metric that the Reinvestment Fund created called the displacement risk ratio. So the darker the purple census block group, the greater the risk of displacement. And the red dots here represent petition filings. So approximately 27 percent of the homes subjected to an Act 135 petition came from a block group at elevated risk for displacement and 33 percent came from a block group designated as at risk for displacement.

So together greater than 50 percent of petitions are filed in tracts vulnerable to displacement. Since releasing the report, we've heard from vulnerable property owners and descendants subject to Act 135 petitions, all of whom were Black. For many middle- and low-income respondents, the cost of hiring an attorney to challenge an Act 135 petition is prohibitively expensive as we've heard today and the process is time-consuming and stressful. This raises concern at a time when Black homeownership rates in Philadelphia are falling and additionally, a legacy of racist housing policy has diminished Black Philadelphians' opportunities to build intergenerational wealth. Act 135 petitions are often filed against elderly homeowners or after a homeowner passes away. The recurring issue today of tangled titles or heir's property where the recorded property owner is someone other than the actual owner also appear to play a role in the difficulties that descendants face in challenging Act 135 petitions. Black neighborhoods in Philadelphia are hardest hit by tangled titles and we found that 20 percent of Act 135 petitions involve heirs property. As we all know and again as we've heard time and time again today, maintaining an old home is expensive. Many respondents desire to keep a home in their family but may not be able to afford to repair the property without additional support. We think that supporting homeowners with renovations is critical to preventing displacement and should be part of any effort to reform Act 135. And I'm going to pass it over now to Megan.

Thank you, Lizzy. We are concerned about how Act 135 has evolved to incentivize private developers to file 18 petitions, particularly after the 2014 amendments. Importantly, the current fee structure ensures that a petitioner receives a profit once the court determines that a property qualifies for conservatorship. This is because the law provides for a conservator's fee equal to the greater of $2500 or a percent markup of the cost and expenses or 20 percent of the sale proceeds. Additionally, conservators are entitled to legal fees and rehabilitation costs. The original owner only receives what is left over from the sale price of the property minus these conservator fees. Unfortunately, these fees are often so high that they equal or even exceed the final sale price, leaving the original owner without real property or any monetary benefit. Respondents whose property meets the conditions for conservatorship may be granted conditional relief, as happened with Mr. Randall, if they can convince the court that they can remedy the conditions themselves. However, they still must pay substantial fees to the petitioner and meet demanding deadlines. Even if a respondent completes all required work by deadline, they still must reimburse the petitioner for all costs they incurred in filing the petition plus the conservator's fee. Thus, although conditional relief provides an opportunity for respondents to maintain ownership of their property, they may still owe petitioners significant fees even when they have already invested in the renovations themselves. Additionally, the amendments expanded the definition of who qualifies as a party in interest to file a petition. A party in interest now includes a resident or a business owner located within 2,000 feet of the blighted property, which is an increase from 5,000 feet -- excuse me, 500 feet as well as a nonprofit corporation that has participated in a project within a 5-mile radius of the property, which is an increase from a 1-mile radius. Finally, the law may also include too broad a definition of nonprofit corporations that qualify as a party in interest. Importantly, 303 of the 670 petitions reviewed by the ARC Justice Clinic were filed by only two nonprofit corporations. If you wouldn't mind going to the next slide. This slide shows -- oh, right -- no, it's the chart right there. This slide shows the breakdown of those repeat petitioners. This outcome is inconsistent with the law's stated purpose of providing an opportunity for communities to modernize, revitalize and grow and to improve the quality of life for neighbors who are already there. If you could please go to the next slide. This slide shows the number of petitions filed in each Council District since 2009. You can see that certain Districts receive far more petitions than others. Councilmembers, you may recognize your Districts up there. Although these 2014 amendments can only be changed at the state level, we believe there are at least four remedial steps the City can take to better align Act 135 with its original purpose. First, provide homeowner respondents access to legal counsel. To address the heirs property issue, they should include increased access to estate planning services and legal services to resolve tangled titles after a family member passes away. Second, improve access to funding such as that from the Whole Home Repairs program for repairs and rehabilitation to allow individuals to hold on to their family homes. Third, ensure that development under Act 135 increases access to affordable housing when maintaining ownership of the property is not feasible. Remediating blight should not come at the cost of displacing longtime residents of the community. Fourth, require inperson service of prefiling notice so that owners can address blight while maintaining ownership of the property.

It is critical that we ensure that those at risk of displacement do not lose the equity in their homes while their neighborhoods develop an increase in value. Thank you for providing us the opportunity to speak today and we welcome any questions about our research.

Thank you so much. And thank you for sharing your report. It's very helpful and beneficial to the Committee and hopefully to the task force that's being created. And as you go through this and the list of recommendations, what would you see as a high priority recommendation to help start the process of correcting some of these challenges? MS. McCLELLAN: Just to emphasize what Megan just said so well, I think ensuring that on the front end displacement is prevented in terms of folks getting the support to do the rehabilitations when they want to stay in their homes, but then just to emphasize also when it is the case that a conservator is going to take ownership, I think having some requirement for affordability and however the property is developed afterwards would be the two critical pieces.

Thank you. Councilmember Young.

Thank you, Mr. Chair. I want to thank you all for your work that you're doing at Penn. I think it's critical to highlight the data because Council just doesn't have the manpower to do the research for this data. But I think this is critical for us as District Councilmembers to see and folks can understand why this issue was so important to me. As the Councilmember for the 5th Council District, as you see there the most filings for Act 135 petitions are in the 5th Council District. That's why this issue is very important, why I wanted to bring it to the forefront to Council's attention as one of the first Acts that I've done as a Councilmember. But just a question, is your Clinic able to represent respondents in matters regarding Act 135? MS. McCLELLAN: Yes, we potentially could take on cases in the future. We're developing the expertise to do it because we don't ever want to do something that we don't have the expertise to represent people well. And so, we've been learning from Judy and others. And the other piece just to emphasize, the opportunity for community voice through intervention is critical and that's another area where we would be willing to take on representation in appropriate cases.

So I'm just going to volunteer my time to you, that if I could lend some of my expertise that I have in this field, I would love to help you out in trying to develop a program to help defend some of these cases. MS. McCLELLAN: Thank you so much.

Councilmember Gauthier.

Thank you so much for your work. I hate looking at this chart but it's really important to understand where this is happening so that we can get a handle on it. And the 3rd District is not only No. 3 in terms of the highest amount of these cases, we also have the most tangled titles in the City, we also are experiencing gentrification in many neighborhoods. So all of this is sort of layered. I really, really support the ideas around the right to counsel and more assistance to owners with resources to do renovation and rehabilitation of their properties. I do think we'll have to think about the timing, right. So with many of these programs it is quite a lengthy process and I don't know that it lines up with the pace of how these cases move, but that's something that I think we should look at the City level. I wanted to ask a question because this is something that I've been struggling with. I agree with you all that in looking at the highest and best use for these properties, the community should be at the table and we should not be displacing folks. We should be in cases where these properties are turning into housing pushing for affordable housing. But do you also think there's an inherent tension between wanting the owners to get fees that they may deserve in this sort of highest -- and having this be a truly beneficial community use which doesn't always come with the highest level of sort of revenue for the property? And do you have thoughts -- is that a tension that you see as well and do you have thoughts on how to address it?

I can respond to this as someone who went through every single petition to pull out names. So I kind of felt some of that tension as well, but I think that first there are some clear distinctions between cases. There are cases filed against LLCs where the respondent is an LLC. There are cases where the City's a respondent. There are different groupings of the types of respondents that you see, and something we've discussed around pushing for affordable housing and community voice is doing that in the cases where it's not -- like some of the community members we've heard today, cases where someone's trying to fix up their family home and just trying to get together the finances to do that, so genuinely meritorious cases where there's a blighted property. There are cases in the docket filed against a cemetery. There are religious institutions that have been respondents. So there's a lot more research that could be done to better understand the different buckets of respondents here. And I think what we're speaking to today is the two buckets of respondents who are trying to fight for their home and respondents who really may not be anywhere nearby.

Thank you.

Well, again thank you so much for your testimony and information you provided. I think it'll be very helpful in continuing this conversation. So thank you so much. Okay. Next panel to testify. Mr. McMonagle, please read names of the next panel.

Can we please have Alex Balloon and Job Itzkowitz.

Thank you. Mr. McMonagle, do you know if there's any other person to testify after these two?

I'm sorry? Say --

Do we know if there's any other panels to testify after these two?

There are a few other folks that have signed up, yes.

Okay. All right. Thank you. Alex, I guess if you want to state your name for the record and proceed with your testimony.

Thank you so much, Chairman Squilla. I'm going to do my best to summarize because my written testimony has been submitted. My name is Alex Balloon and I'm the Executive Director of the Passyunk Avenue Revitalization Corporation in South Philadelphia. Prior to that position, I was Executive Director and Corridor Manager of the Tacony Community Development Corporation in Northeast Philadelphia. There I was a participant as a witness and at one time a petitioner in more than 10 Act 135 cases. As a commercial corridor manager, we often serve as the eyes and ears of our commercial corridors. We're out meeting with our merchants and our neighbors and they're bringing blighted vacant and abandoned buildings to our attention. One of the most significant challenges in many of our commercial corridors is the epidemic of gun violence. Make no 4 mistake, vacant blighted buildings increase gun violence in Philadelphia neighborhoods. 5 percent more monthly weapons violations, 12 percent more gun assaults and 7 13 percent more shootings. This is no 14 surprise. In Tacony, I spent a lot of time working with our police lieutenants and our bike officers and these properties generated the most calls for services and public safety-related issues. In communities facing the dual crisis of gun violence and the opioid epidemic, vacant buildings compounded those issues exponentially. This was widely documented in the intersections of injustice article from the Philadelphia Inquirer. It is critical that blight remediation be part of the strategy to reduce gun violence in our city. In addition to gun violence, these properties present tremendous fire risk. I would like to speak to just one particular case in Tacony, St. Leo the Great, a landmark church on Keystone Street was sold in 2019. After the sale of the building was not well-maintained and frequently people trespassed onto the property, I like many neighbors placed multiple 311 calls. Four teens went in the property and lit a fire on May 9, 2021 and it burned to the ground. The flames were so intense that multiple fire companies responded and the heat from the fire left neighboring families homeless. This is the result of a large vacant and blighted building. Lives that may have been different had Act 135 been used to address the problem. Speak to any fire captain and they will tell you the tremendous risk that our public safety partners and first responders face with blighted and abandoned buildings. These, according to a National Fire Protection Association report, only accounted for 6 percent of structure fires, but 13 percent of firefighter injuries. Other speakers have testified to some of the effects, but any corridor manager will tell you that most of our merchants, about 70 percent, are new Americans. So when they bring these properties to our attention, it's a major equity issue. A study from Columbus, Ohio indicated that vacant and blighted buildings can take as much as percent of value from a neighboring property. For an average Tacony homeowner, that's about $40,000 in a neighborhood with a median income of only $50,000. I would invite this Committee to imagine to tell these homeowners that Act 135 was not available to them. 6 Billion in reduced 14 household wealth. If we inflation- 15 adjust that figure to 2024, that is 16 more than $5 billion in our City's 17 household wealth removed by vacant 18 and blighted buildings. 19 To that point, I'm glad to 20 have the opportunity to speak to the author of the Penn Study and express that I think it was an important equity issue, but I think that the study overlooked the equity of the neighbors, particularly those in Black and Brown and low- and moderate-income communities. Those are the merchants that are faced with the loss of customers and income. They face the uncompensated cleanup work due to negligence and they face the nuisances that these properties generate.

In the cases I participated in, Act 135 was the only tool that helped actually solve the problem of what felt like a never-ending merry-go-round of 311 calls, Councilmember emails, CLIP cleanups and L&I clean-and-seals. In the end I think that the best solution as some have spoken to Act 135 is to prevent properties from getting to the point of being blighted and abandoned. Our City's robust investment in homeowner assistance, tangled titles and Basic Systems Repair are key to prevent blighted buildings from becoming blighted buildings. And it is critical when a tool that has -- when the tool of years of property maintenance code violations, fines and outreach efforts have failed, that Act 135 is available. As Mayor Parker has stated, our merchants and neighbors deserve to live in neighborhoods that are clean, green and home to economic opportunity for all. So thank you again for allowing me the time to testify today and I welcome any questions you may have.

Thank you. We'll let Job testify -- all three testify and then we'll ask questions.

Sure. Good afternoon, Chair Squilla and all members of the Committee. I have submitted my written testimony and as a former staffer, I normally rely on it. But in this case I would like to read some of it into the record with an eye on hearing what the members of the Committee have said, right. You're focusing on bad apples. But like Alex, I share concerns about the impact that these properties have on the community. So as you're looking for solutions for how you might recommend to the Commonwealth or whatever bills you can pass locally, I'd like you to keep in mind that the speed of Act 135 is vitally important. I'm also going to read some of the testimony that was submitted by a resident of Old City who was unable to be here today. She had a family emergency, so I have some excerpts from that that just speak to that point. Again, my name is Job Itzkowitz and I'm the Executive Director of the Old City Special Services District. As you know, Old City is one of Philadelphia's more expensive neighborhoods with some of the City's highest demand for real estate. So you may be wondering why a representative of an Old City neighborhood organization is here to testify about blight and the role that conservatorship can play in remediating it. It's perhaps because like litter and dumping, blight impacts every neighborhood in the City. I've served in my current role in Old City since 2014. But in April 2013 I was serving in City Council as a staffer with two members of this Committee and that month City Paper published a story called The Trouble with Old City. It was a cover story. I have this on a desk in my office because it is something that I was speaking about when I interviewed for the job and something we still talk about pretty regularly today. The story starts with the following paragraph: Behind the Continental, one of culinary impresario Steven Starr's oldest and most recognizable concepts, two decaying buildings sit on South 2nd Street in Old City. In stark contrast to the surrounding block alive with bars and restaurants, infamous for its weekend hordes, the buildings at 9 and 11 South 2nd Street are boarded up and dark with rusted, mangled security grates warding off passersby. The blight, now half a century in the making, seemed inexplicable, situated as it is on a prominent corner in the heart of one of Philadelphia's oldest, most iconic and arguably most desirable neighborhoods, a half a century. The property was owned according to records by Lillian Snyder but was really managed by Ted Snyder, her then 79-year-old son, suggesting that the property really belonged to his 100-year-old mother or her estate. The article later continues, You might wonder where is the City in all this? Why isn't it forcing owners to clean up their acts and does it have a plan for this neighborhood at all. A look at the Snyder family's court records offered some insight. The City's various code enforcement lawsuits hit walls after servers failed to make contact via Ted Snyder's numerous false addresses, including the now vacant Northeast Philly offices of Segal & Drayer Accounting and his sister's former home in Lancaster. Enforcement efforts were gummed up for decades as the City vainly attempted to serve Snyder centenarian mother and dead father times by certified mail sent to empty offices and alias residences. The City has pursued Ted Snyder directly on only two occasions over the last decade, both times unsuccessfully. Both service attempts for failure to renew a business privilege license went to a dummy address. So in 2015 I had been with the District for about a year. My Board of Directors voted to explore conservatorship action against these properties. Unfortunately, later that year the Court of Common Pleas upended the City's windows and doors ordinance, upon which some of our case would have rested. At that point, we decided not to pursue any action.

21 Unbeknownst to anyone, the property was causing harm to the residential neighbors to its rear. Though she cannot attend today, Old City resident Evelyn Hammer has submitted written testimony to the Committee. Ms. Hammer lives at Letitia Lofts, a six-story, unit 4 converted warehouse at 8-10 South 5 Letitia Street that abuts this 6 property. 7 I'd like to read a few 8 brief excerpts from her testimony. 9 Ms. Hammer writes, Around February 10 of 2023 we discovered a 11 sub-basement in our property that 12 expands the full footprint of our 13 building. The area was filled with 14 debris and without lighting. Once 15 the area was cleared and lighting 16 installed, we noticed a tremendous 17 amount of moisture in the back area 18 of the sub-basement, the area that 19 abuts the abandoned properties at 9 and 11 South 2nd Street. In addition to significant bulging and the parging, the area was wet to the touch, especially after it rained and the nearby wooden joists were rotting with the excess moisture. Investigating all possibilities of the source of the water intrusion, we discovered that the downspouts coming off of and 5 11 South 2nd Street were not 6 connected to proper storm drainage 7 and instead were and still are 8 dumping inordinate amounts of water 9 behind our building with every rain. Viewing down from our roof, we also discovered that there was an illegal extension built behind 9 South 2nd Street, including a toilet and sink installed in what would be considered the far back area of the backyard. This extension has collapsed in on itself. The area was open to the elements, a total disaster zone filled with dangerous materials and pooling with every storm. In late summer of 2023, we discovered the access door to our breezeway had been spray-foamed shut and blocked from the inside, that is, the South 2nd Street side. This breezeway is meant to give us access to the back of our property and provide emergency egress for anyone on the South 7 2nd Street side. 8 We contacted our insurance, 9 the Historical Commission, the 10 Preservation Alliance, the Water 11 Department, Leo Procopio with Councilman Mark Squilla's office -- she wrote that -- L&I, the Fire Department and attorney and even the Philadelphia Inquirer. The latter of which recently published an article about the negative impact Act 135 may have on undersupported property owners without representing a serious situation such as ours. Scioli Turco investigated the matter and filed a petition for conservatorship in November of 2023, and thank goodness they did. I along with neighbors from another Letitia Street condominium association testified during a December 19th status hearing, which was advanced to an evidentiary hearing held this past February 14th. The judge agreed that the stipulations for conservatorship had been met. However, as a testament to how seriously the matter is considered, the judge has given the Snyder Estate until late May to submit a complete plan of action in repairing the buildings, correcting the downspouts, opening our access door, approving property insurance, et cetera. While there appears that at some point in late spring one way or another the court will supervise repairs in the correction of the downspouts or a conservator will see to this work, there is a lot of rain, no doubt, in the immediate future and the damage to our foundation will continue. Without Act 135, our historic building and our property value would continue to be in serious jeopardy. It is a critical and important mechanism to protect our neighborhoods. Unfortunately, Ms. Hammer and her neighbor's experience is not an isolated incident. Though he had to leave, another resident from Old City was here to testify about a petition he filed a few blocks away. A lot has changed in the last 10 years. I'm sitting here as an Executive Director of a Business Improvement District.

Two of my former colleagues are now Councilmembers and I'm immensely proud of how far we've come since we worked together in this building. Unfortunately, certain blighted buildings in Old City have not made any progress over the same period of time and without Act 135, those properties would continue to rot for years to come. I am happy to answer any more questions. I thank you for your time. I did just want to join Alex. Alex and I met with Professor McClellan a few months ago. And as a Penn Law alum, I could not be more proud of the work that students there are doing today. I just did want to point out there was a lot of discussion about homeowners and homeowners being the respondents in these cases. And as we talked about, as the Committee talked about earlier, these are not for the most part the residences where people are living. These are properties owned in families. I think that's an important issue to be discussed, but we should not be displacing anybody from those buildings because they are supposed to be unoccupied and vacant. Thank you very much.

Thank you for your testimony. Just proceed. State your name for the record and proceed with your testimony.

Hello. My name is Dawn Fassett. Thank you very much to Council for having this meeting and allowing us to speak because I oppose Act 135. I'm sorry I'm not better prepared, but I just found out about the meeting and I had to be here. My house is 5105 Overbrook Avenue, a block away from St. Joe's University. We received a notice for Act 135, it was placed on our door. Our home was not vacant nor was it -- or blighted. Okay. When I received the notice -- when I saw the notice on the door, I read it, had no idea what it was or what it was about. Maybe a week later I received hand-delivered letter to appear in court over the house. So I sought advice from an attorney and I showed them the house. It was explained to me that I should have no problem, explain to the judge, show him the house and just tell him the situation. Done so. So the first court appearance not knowing any better, you have to appear in court with an attorney, not only an attorney, a real estate attorney and an attorney that's well-known to the 135 Act. When I appeared, I appeared with one of the Councilman's -- somebody that worked in the Councilman's office. I just felt bullied from the time I walked in the door. Four attorneys, Paul Toner & Associates, PCDC. I was told by the clerk as soon as I walked through the door, have you come to an agreement. No, I haven't come to an agreement because I don't need any help with this house. I told him my situation. My mother was in the hospital. We had two deaths. We planned on moving into this house. So I was really upset because the clerk asked me did I come to an agreement. You put me in a den with the devil. This is who I make an agreement with, somebody that I spoke to on the telephone and told him I don't need no help but you're here so-called to help me. The second court appearance -- well, the first court appearance was this -- well, I had to come back again because I didn't have an attorney and the judge allowed me 30 days to get an attorney, because I had received the notice within 10 days and had to appear in court. So the second time I appeared, I was ready. Again, I had to sit down and talk to them. It wasn't an issue -- this Act looks a lot different on paper than it does in the courtroom. I had to appear in court and talk again to the people that gave me the 135 Act, which included -- I was prepared because we had over 200 -- we had over $300,000 to show him proof of loans to take care of this house and take care of business. But again, it was on deaf ears. I was told by Mr. Toner that I could have got this piece of paper from the bank. I could have downloaded that off the computer. So this is the type of things we're dealing with, and we need help. So I'm going just leave it there because I'm still in court over this issue. I've been fighting it since 2019. I really believe in my heart that I came down to City Hall on November 2018 to take care of the taxes of that house. Okay. One of the other Councilmen's associates went to court with me to get the issue straight, helped me out with getting my taxes straight in court and told me it was a beautiful house. I ride past this every day. Later I found out that one of the Toner associates went to school with this individual and I had -- that's when I received the 135 Act on my door. And I'm going to leave it there. Thank you very much for your time and thank you for listening.

Thank you and thank you for your testimony. As we heard both sides of the story here at this table, it's really important to understand and I think even as you heard from the Councilmembers here how we in our capacity have also used the conservatorship to better the community and better the neighborhood. And I think the challenge is how do we keep something that can be used as a benefit to the community but also not be used as a a detriment to residents who are living in a home that's being conserved. It's not easy. We always have this balancing act that we try to do. And the goal is to come up with ideas and ways to do that. So as we hear from -- and I know, Job and Alex, you both have heard from a lot of the folks that you heard today, do you see any opportunities for possibly changing Act 135 that you think would benefit?

I thought the witnesses today were excellent. I think there were a lot of good ideas. The one that really reverberated with me was the idea that the City could be the petitioner and I think that solves a lot of problems, especially what Councilmember Gauthier was concerned about was how can you position this as affordable housing. I don't think you can force something privately-owned or petitioned by someone private to force them to use it as affordable housing. But if the City is the petitioner, then maybe there's a real opportunity or whether it's PHA or an agency as the petitioner, they might be able to say we're going to clean this up. We're going to lien this and we're going to lease this on an affordable basis. So I think that's really beneficial. It could be helpful both on a housing stock situation and also with regards to cleaning the neighborhood. The concern of course is that the City is on clean hands as a petitioner. Because it has blighted properties in its possession, so it's sort of hard to go to court and say, we're going to clean up this property. Well, you haven't cleaned up your own house. So that's a challenge. So the City can get its hands around that. The other option I thought of was we're about to enter budget or budget was just introduced. I haven't looked at the new budget structure with regards to L&I, but we're short, right, we're short on inspectors. And so, a lot of the discussion focused on how can we get out ahead of this so the properties don't get into this blighted situation. And one of that is to have more inspectors writing more, you know, if there's violations, real violations, write those violations. And there's two options, right. When the City does a clean-and- seal, you lien the property for the value of that clean-and-seal. Chicago does the same thing with sidewalks, I think. I think Chicago will fix your sidewalk and lien the property, they'll give you notice. But if you didn't fix your own sidewalk, they'll fix it for you and lien it. There's a situation here where the City can -- let's say it's doors and windows, right. The City can exercise its authority and say we're going to fix these doors and windows, give you warning and lien the property, but eradicate the blight even if there isn't someone using it as housing, right. And so, that way when that lien gets filed, the property owner says, oh, what's this, you've eradicated the blight, you've fixed some of the problem. And then the last part, the ultimate part of that is if you're liening something, the real threat is sheriff's sales. So without sheriff's sales, the lien sort of -- as an organization that files a lot of liens, sort of loses some of that blight. So if the City's able to resolve the sheriff's sale issue and either lien the properties themselves or serve as the petitioner, I think you get around a lot of the issues and avoid the point where we're so blighted that someone has to file 15 an Act 135.

Thank you. Alex, just state your name and then proceed.

Sure. Alex Balloon. I agree with everything Job said. I do think we need to bring back the windows and doors ordinance because it really nudged property owners to do something and we weren't taking their property. I mean, there's still people that will --

Well, let me just stop right there. That was actually done through court and it was challenged in the courts and, therefore, the City had to rescind it --

(Inaudible).

Yeah, it was.

The court ruled that it was unconstitutional.

That was Common Pleas Court Judge Carpenter, but I think that was overturned.

Wasn't it under appeal?

I thought it went to Supreme Court of Pennsylvania and was overturned.

I think it's still under appeal so --

Okay. Well, I could be wrong. Anyway --

We'll bring it back to them.

I would just say that that particular ordinance 7 was a big success in nudging property owners to do something, so it prevented -- it nudged people to do something with their property. If they didn't have the means to repair it, they would sell it or take other means. I just wanted to address Councilwoman Gauthier. You talked a lot about concerns about workforce affordable housing. I remember working with then Councilmember Parker on middle neighborhoods legislation. And in Tacony when we used Act 135, those homes were renovated and sold from anywhere between $175,000 to $200,000. Typically it would be a clean shell. Someone would come in, renovate it and sell it to a new family. So I want to point out that those homes were sold with no 5 taxpayer subsidy at a lower price than Turn the Key. So I think there are ways to be strategic with Act 135, bad actors aside, that we can actually make it part of Philadelphia's affordable housing solutions if we target it for middle and emerging market neighborhoods. And I totally share the concerns about gentrification and displacement and I think there are ways that it can be used to get ahead of it.

Can I add one more thing. There's a lot of discussion about right to counsel which I think is great. People who can't afford to be represented in these cases should be able to get representation to protect their assets. The question is how you cut the bill, right, because by definition the respondent has an asset that has some value. And so, I think there should be thoughtful craftsmanship of a bill around that to ensure that the people who really need it are able to get representation on the City's dime, but also keep in mind that the story I just told was $1 million property so many millions of dollars of properties. And that is not someone who should --

And during this hearing we heard the full gamut from a residential property to a multi-million dollar property, so thank you for that. Councilman, you're going?

Thank you. I guess this question is for anyone on the panel. Well, I guess for Job and Alex, specifically you represent nonprofit organizations who are tasked with a certain boundary, a certain -- you have a certain fiduciary duty to a neighborhood, a community. Have your organizations -- I guess for the record I know, Job, you mentioned you have. But have you ever filed an Act 135 petition for your organizations, I guess, Alex?

I have not filed an Act -- we did actually file one into Tacony because we didn't have -- the partner we used didn't have standing. What I would tell you is, is we are not experts in Act 135. And so, I come from community development, no partner left behind. And so, I would typically refer a property and get neighbors together to testify. That's my job as a community, you know, corridor manager, business district manager. But I don't think I would ever be a direct filer because I don't want to assume the financial risk and I don't have the expertise.

But as a nonprofit, I guess, it has a fiduciary duty to the community, right, and this Act pretty much allows a windfall, I would just say I think that windfall would be better-suited to go to a nonprofit incorporated to enhance the community versus a nonprofit that is a (c)(4) that's a social welfare organization that kind of internally deals with themselves. So that's why I bring that up. So would you -- this is for anyone on the panel. So should petitioners be able to essentially get -- in your opinion, do you think petitioners should be able to get these properties with this little to no risk that the current process allows?

Yeah. I mean, I think you heard Beth Grossman testify a little bit about that. And just to answer your first question, we haven't filed. We're not a nonprofit. From an IRS perspective, we're a municipal authority under state law, so it might be a little bit different because we're a governmental agency.

That gives you more standing.

Yeah. But I'm an attorney and one thing I always do when faced with an issue like this is I hire an attorney. And so, there's something to be said -- someone asked a question about whether this should be an industry. Okay. I understand why that doesn't appeal, right, the idea that there is an industry that has evolved around pursuing these properties. But for people in our position who don't want to file it themselves, there's a real efficiency and a real expertise that comes with saying, hey, when I was able to talk to Ms. Hammer, I said, look, I know this organization that does this and you can work with them because Ms. Hammer wasn't interested in a windfall. She's interested in protecting her nest egg. She wants to make sure her property doesn't collapse. She wants to make sure that she doesn't lose everything she's worked for to buy that condominium. And so, I understand the optics, right, and why it's not a great look. But I think if we were going to file a petition, I would reach out to one of the groups of attorneys that does this type of work and ask them to do it rather than take it on ourselves.

Thank you. Councilwoman Gauthier.

Thank you, Mr. Chair. Thanks to all of you for your testimony. It's clear to me -- I know you, Alex. I know Job. I went to high school with Job. I know that you are utilizing this as a tool for true community revitalization which was what was meant in the first place. But I think there's a stark difference between what you all are doing and folks who are just riding around neighborhoods that have become hot neighborhoods and filing these petitions frivolously for a profit motive. And also, all of the stories that we've heard today are like, you know, these wonderful ladies, right. All of the folks that we've heard from today are Black and Brown folks. All of them are in neighborhoods that are highly desirable. And I just think that's what we have to attack, right. I wouldn't wish what you described or what we heard earlier on anybody. No one should be tied up in court for years just because somebody saw their property and said, I want it, right, and I can benefit from that. And so, I definitely know of the merits of it because I've seen that myself. But it's this more sort of predatory use that we have to go against that was really clear from the data that was presented as well. I also really loved all of your ideas about how the City can have more of a role in this. I certainly would like to see that, right. It's an L&I piece, but it's not just L&I, right. Because with some of these properties we are giving them violations. They're ignoring the violations, and we're not able to move things further than that because we have limited capacity in the Law Department to really pursue these cases. So I would love it if we could do more from a City perspective to stop properties from even getting to this level and to assist owners in a better way. But just thank you all for your testimony.

I would just say to please read Oscar Beisert's letter. This is an incredible tool for endangered historic properties. And as a champion of historic preservation, we have a lot of historic properties under threat, and this has been a great way to see some of them restored and fixed up and put back into productive use.

Thank you. That's a good point, and we are certainly dealing with that in the 3rd District as well. So thanks so much.

I just wanted to add I think we're all on the same page, right.

Yeah.

We just wanted to make sure that there was testimony on the record about the benefits because I know there was a lot of remarks like we understand that it's a good tool, but we wanted to tell some of those stories so that as you craft that bill or craft that advocacy piece to Harrisburg, we protect the good --

Absolutely.

-- not just get rid of the bad.

Absolutely.

Dawn Fassett again. I think it's real important that -- something that I left out, that the third time I appeared in court I was told that I owed $52,000 to the conservators for stepping on my property and doing what they did without even touching the house. And I just pray that you guys really pay attention to, you know, and I'm quite sure because I heard the responses that you will because it's critical.

Yeah.

It's just abusive.

That's outrageous. I'm sorry that happened to you and to Ms. Erdis as well.

Thank you all. Thank you for your testimony. Jay, you want to -- all right. Mr. McMonagle, can you please read anyone else here to testify in person.

Can we please have Deborah McCartney -- McCarty, Dawn Fassett --

Dawn just testified.

You're still here. Was that Dawn?

Yeah, she just testified.

Okay. And Ephraim Bart, if he's still here. (No response.)

All right. Deb, I think you're the last one. Thank you for hanging in there and appreciate it. Just state your full name for the record and then you can proceed. MS. McCARTY: Yes. Good afternoon, Councilmembers Squilla, Young and Gauthier. My name is Deborah McCarty and I am the immediate Past President of the Powelton Village Civic Association and have been an active member of their Zoning Committee for some years. I'm here today to testify regarding some of the challenges communities face regarding Act 135. We believe that the intent of the Act is definitely worthy and can be beneficial. Unfortunately, as it has evolved, it is too frequently being used to the detriment of communities, and as the Penn Law Clinic has shown, to some homeowners. It is our understanding that the intent of Act 135 is to reactivate vacant blighted properties, thus returning them to the tax base. More importantly, to neighborhoods to prevent the decline of the block on which these vacant blighted properties exist as well as to the adjacent properties. One of the problems with the program as it currently exists is that in addition to legal fees and cost of stabilization which any conservator should fairly receive compensation for, the conservator receives percent of the sales 7 price or markup of their cost. 8 This built-in incentive to sell the 9 property to the highest bidder 10 invariably drives up prices in that 11 neighborhood and makes many homes 12 unaffordable to lower- and middle- 13 income folks, the same folks who 14 have resided in that community and 15 worked hard to make it a desirable 16 place to live and raise a family. 17 Another issue is the 18 predatory practices, many of which 19 we've heard of today, that are 20 being employed to obtain control of some properties. These practices disenfranchise owners and cause undue duress as you all well know. Is there a way to improve Act 135? We believe so. Why not require a potential conservator to work with the RCO designated by that District Councilmember. We envision a process for designating the RCO to be similar to that which occurs with the ZBA and CDR approval. This could ensure community involvement, which we've heard today is important. Neighbors know best for their neighborhoods usually. Would it be possible to have bidders commit to how they plan to use the property, rental, owner-occupied, convert to multi- family, retail? Is it possible for the conservator, RCO and court collectively select a buyer? Right now the court approves, as you know, but the RCO or neighbors have no say. And for the deed to be restricted to what the bidder committed and to hold them accountable for what they said they're going to do, which we know sometimes doesn't happen. This could alleviate many of the negative impacts that neighborhoods and property owners have experienced with Act 135. Thank you for your interest in this question and issue. And if you have any questions, I'm happy to answer them.

Thank you, Debbie, and thank you for your civil service to the City for a couple years. And we really appreciate your input from the community aspect as we do believe the community should be part of that resolution also. Is there any other questions from this Committee?

Just thank you. MS. McCARTY: Of course.

We appreciate you. MS. McCARTY: Thank you. Appreciate your time.

Councilmember Young.

I also want to thank you as well for sticking around and providing your testimony from a community perspective. I think all throughout the day we've been hearing that the neighbors are important in this process which they are. So I welcome the opportunity for neighbor participation in this process to allow for a better outcome for the community, everyone in the community to benefit from the blight removal and not to have just certain folks benefit from it. So thank you. MS. McCARTY: Thank you.

Thank you again. And thank everyone for testifying because as we see, this is a complicated but important issue on both sides of it with the benefits and the detriments of it. And, Mr. McMonagle, do you please want to read the group of written testimony that will be added to the record?

Yes. Also providing written testimony for the hearing is Linsey Franklin from the Pomroy family; Deborah McCarty who just testified; Michael Froehlich from Community Legal Services; Michael McIlhenney from Orphanides & Toner; Ken Weinstein from Philly Office Retail; Evie Hammer from Letitia Lofts Association; Allison Weiss from the Germantown Civic Association; Oscar Beisert from Architectural Historian; Olivia A. Adams, Esquire; Joseph Mistick from Duquesne University School of Law; and Lance Chimka, Allegheny County Economic Development.

All right. Thank you. So I want to add Andy Toy from PACDC. And are there any last comments before we end the hearing today? Councilmember Young.

Yes. Thank you, Mr. Chair. I appreciate your patience with this hearing today. I know it went longer than I expected, but I think this is a very important issue, very important matter that we face throughout our City. As I mentioned, from the data you see that the 5th Council District has the highest number of petitions that are filed regarding Act 135 in our City of Philadelphia. And also, I want to note for the record that the 5th Council District has some of the most gentrified neighborhoods and communities in the City. And so, we all want to remove blight from our City. We all want to make sure that our City is the safest, cleanest, greenest city, right, in America. But we have to do it in a manner that is fair for everyone, in a manner that is equitable for everyone. And I just believe that again to reassert that property is the most -- real property anyway is the most valuable thing that someone can own. It is the most precious thing. It is the backbone of this country. And again, to divest the interests of property owners in their right to possess, use and ultimately even sell their property how they choose, I just think there needs to be much higher standards, much higher burden that a petitioner should have to avail by. Blight isn't just a gentrifying community thing. It's not a middle neighborhood thing, but it's all over the City. But as you see, this tool is not being used in areas where the property values aren't as high as they are in certain communities. And so, when I see that type of pattern, that makes it seem as if it's predatory and it's only about money and not about the removal of blight. And so, if the tool is really about blight removal, then we should be able to provide resources to those who are really -- as a city, we should provide resources to those who are really in it for the removal of the blight. Those are our nonprofits or our CDCs and those organizations like that. I just don't believe that someone should be able to get property for free. And when it comes down to it ultimately when the petitioner files, they can get a property literally for free because they get every single penny that they put in this property back plus some. And so, for me I just don't think that -- if we're going to allow that, I think we should have a higher standard, a higher burden to allow again someone to divest your interest in your property, a property that your family has worked hard for, a property that you have worked hard for again in the biggest poorest city in the country. We need resources to help eliminate that blight. And I think it's on the government to help us eliminate that blight, not to provide tools that take away and access our equity in our property. So I thank the Chair again for allowing us to have this hearing. I want to thank Councilwoman Gauthier for participating in this hearing. We got a lot of great recommendations today. I have some recommendations that I'm going to try to figure out how we can make changes to our City Code to address Act 135. But again, we're going to take up some of these recommendations and use it with our advocacy to our state partners to make some changes to this legislation that can be beneficial to all parties. I love the task force idea. I look forward to working with the public on creating a task force on what we can do to create some changes, some positive changes. I love the idea of providing counsel to respondents in this matter. But we as a City have to do better again because we are a blighted contributor as well. And so, to ensure that the private sector, the private market is doing its job, we have to do our job as well. So again thank you, Mr. Chair, for allowing this hearing to continue.

Thank you also. And for the record, I do want to note that the Supreme Court did rule on the windows and doors bill and they did overturn the prior court's decision. And so, therefore the windows and doors bill does stand as the legal process for L&I. But thank you all for being here. There being no further questions from the members of the Committee and no other witnesses to testify, this concludes the business before the Committee of Commerce and Economic Development. We will now recess the hearing to the call of the Chair. Thank you so much. Good job. (Committee on Commerce and Economic Development concluded at 4:12 p.m.) C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. __________________________________ TANEHA CARROLL