Thank14 you.15 The Chair recognizes Councilman16 Green.17
Thank you,18 Madam Chair.19 Given the discrepancies we see20 in the difference between full-value21 information and data provided yesterday22 and the current method of assessment, and23 when you look at the chart on provided in Kevin Gillen's -- or the25 502 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 BRT's presentation that Kevin Gillen gave2 to us a couple of days ago, would you say3 that our current property tax assessment4 system is legal?5
Is it legal?7 If someone would sue the City of8 Philadelphia today about our quality of9 our assessments, would we be required to10 go to full value immediately? Is our11 current system legal?12
We were faced with16 this problem last summer when we were17 threatened with a lawsuit by Philadelphia18 Forward. And what they did, Joseph19 Bright was the attorney who was the20 attorney -- handling the lawsuit on their21 behalf, or the threatened lawsuit. And22 what they provided to us was basically a23 copy of what might be filed.24 Our position with that lawsuit25 503 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 was that we recognized the problem that2 we faced. We contacted the Law3 Department because the Law Department are4 the lawyers who are to represent us. Dan5 Cantu-Hertzler could, you know, answer6 your question more directly, as our legal7 representative.8 But this is the reason that we9 believe that we need actual value,10 because we know that if we were to go11 forward, Councilman Green, basically,12 this would be what we'd have to present.13 This is the status. And when you just14 look at that status, I think it answers15 the question, that we need to go forward16 to actual value.17
So our18 current tax system, then, according to19 your testimony, is not legal. Is it20 fair?21
We've been25 504 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 threatened with, you know, lawsuits for2 many, many years.3
And I prefer,11 again, for Dan Cantu-Hertzler -- he is12 the attorney for the BRT handling these13 matters, and I would prefer for him to --14
Okay. I15 appreciate what you're saying, but I have16 five minutes, so if you're not going to17 answer my question, just say so. Is it18 fair?19
Okay. If21 it's not fair, do you think it's22 reasonable that, on a current broken23 system, we increase property tax by 2024 percent?25 505 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
With all due2 respect, I'd prefer not to answer that3 question simply because I don't want to4 be in conflict.5
That's fine.6 Do you think the City would be7 in legal jeopardy if we increased8 property taxes by 20 percent on people9 whose homes are already overvalued?10 Would there be a massive class-action11 lawsuit likely to win if we increase12 people's property taxes above current --13 for people who are already overvalued14 according to the data that we now have in15 our hands?16
Okay. Again, with17 all due respect, I don't want to put the18 Board into that discussion, but I will19 answer the question in this way:20 We believe that we have to go21 forward with actual value because it's22 the right thing to do, because it's --23 uniformity is required by the24 Constitution, because equity of25 506 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 assessments is required by law, and2 because we want to do the legal thing, as3 the Valuation and Assessment Office for4 the City.5
Okay. So6 it's your testimony, then, that the7 current system is inequitable; isn't that8 kind of the same as "unfair"?9
But that's why12 we're going towards full value. We13 started with fall value, but that's why14 we determined that we have to implement15 actual value and do all of the things16 necessary to get to that point.17
I agree. I18 just don't think we should make a -- and19 this is not a question for you to answer.20 I don't think we should make an21 inequitable, illegal system worse and22 expose us to hundreds of millions of23 dollars of potential damages of people24 who could sue the City if we increased25 507 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 their taxes when they're already2 illegally unhigh -- I mean, too high.3 So that being said, could the4 Administrative Services Director who came5 up before come up and describe your job6 to me? Just kind of walk me through your7 job duties and typical job requirements.8 (Timer bell rings.)9
Madam Chair,10 I have this question for several people,11 so I'd rather come back to it than start12 now if other people are --13
Very14 well. I have other Councilpeople that15 want to be recognized.16 Councilwoman Sanchez? Oh, I'm17 sorry. Councilwoman Tasco.18
I know we19 were talking earlier about the number of20 employees that you have. Did we ever21 settle on how many employees you have22 over at the BRT?23
On staff right24 now, we have 135.25 508 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
Okay. Of2 those 135, how many of them are civil3 servants?4
135. Every -- all5 -- we have Civil Service staff, we have6 School Board staff. We have 80 School7 Board employees, and we have 135 Civil8 Service employees.9
The Civil Service11 employees, some are union, some are12 non-rep, but there are 135.13
Who are not Civil22 Service and are not part of our budget,23 so they're not shown on our budget.24
So they're25 509 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 not on your budget.2
Of the8 Civil Service positions, what categories9 do you have? Are they mostly technical?10
We have -- well,11 we have management staff, we have IT12 personnel, we have the Real Property.13 It's actually three units. It's the14 Personnel Unit, which I manage. It's the15 IT staff, and it's Real Property staff,16 so...17
And so,18 when you need to have an opening for a19 Civil Service position, who writes the20 specifications for the position?21
The specs are22 already written. We just go to the23 regular position that's listed with24 Central Personnel. We have not created25 510 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 any positions.2
Okay. So3 the current specs are the specifications4 that have been -- that were written by5 the Personnel Department?6
Okay.8 Then how do you select them? The9 applicant has to have the appropriate10 qualifications to fit that position?11 Let's take management, for12 instance. If you get three people who13 take the test, how do you choose between14 the three?15
We have the16 testing. And everything, with the17 exception of the executive director,18 every position --19
I know20 that, but I'm saying -- you state the21 Civil Service Department administers the22 exam. Three people maybe -- or maybe two23 or three (inaudible).24
We use the Rule of25 511 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Two that most departments would use. You2 have the -- you take the first two3 applicants at the top of the exam, and we4 would interview the first two applicants,5 and we would make a selection.6 But that also would be based on7 how many vacancies we have. So if there8 were more than one vacancy, then we would9 add another person, but we would use the10 Rule of Two.11
All right.12 And the exempt employees don't have to13 take any examination?14
We only have one15 position in the department that is not an16 exam, and that's the Executive Director.17 But I just want to clear up one18 thing. When I say the 135, the board19 members are also Civil Service, so they20 are a part of that 134, so with the21 exception of --22
Yes, ma'am. They25 512 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 are Civil Service.2
I'm sorry, I'm8 sorry. I'm thinking in my head. I'm9 talking City budget. They're on our10 budget, they are shown on our budget.11 They are Civil Service but they are shown12 on our budget.13
But they are a15 part of the -- right. They are a part of16 the 134 that's paid from the City budget.17
That18 includes the -- Charlie says they're not.19 MR. McPHERSON: (Inaudible,20 off-mic.)21
That's news to me.22 I am -- I mean I took over the preparing23 of the budget and the way that it was24 prepared. Prior to my arrival, the board25 513 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 members were listed on that budget and2 they continue to be listed on that3 budget. So they are there and they are a4 part of the number count.5
The board members8 are a part of the Civil Service budget, a9 part of our operating budget. So the10 board members number and the dollar11 amounts are on that budget.12
Your 13513 employees include -- how many board14 members do you have?15
There are seven,16 and then the board of (indiscernible), so17 it's ten altogether.18
So you19 have 125 Civil Service employees who take20 a test and come to the department, and21 then you have ten board members?22
So that's24 how you get to 135 employees?25 514 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
They are not5 full-time, but they -- I mean, I don't6 know how else we would prepare a budget7 without showing -- because they are a8 part of our budget.9 (Timer bell rings.)10
Okay.13 Thank you very much, Madam14 President.15 COUNCIL PRESIDENT VERNA:16 You're welcome.17 The Chair recognizes18 Councilwoman Sanchez.19
Thank20 you very much.21 Just for clarity purposes, the22 budget that you are requesting today, is23 that different than the budget that the24 Mayor is proposing that your department25 515 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 has?2
So you5 have agreed with the number that the6 Mayor --7
We have reduced8 our budget to do -- under the9 instructions that we were given from the10 Finance Department. And so, we've shown11 the numbers as the Finance Department12 directed us.13
Okay. I14 just wanted clarity 'cause they're not --15 some of the other independent offices are16 challenging the number that was given by17 the Mayor's Office, and I wanted to make18 sure that in your case, that is not the19 case.20
Okay.23 In light of the fact that we're talking24 about the system and it being broken, are25 516 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 properties going to continue to be2 reassessed during this evaluation process3 between now and us going full market4 value?5
No. Our intent is6 to go forward with actual value, to7 continue doing --8
But9 we're assuming we're going to take care10 of this in the fall. Between now and our11 going to full market, will properties be12 reassessed and potentially people's taxes13 increase during that time?14
We're not15 stopping our normal operations, but that16 does not include a citywide revaluation17 other than as we go to actual value. We18 will still be revaluing properties that19 are increasing in size because of putting20 an addition on, properties that are being21 torn down, properties that are being22 consolidated, subdivisions, and so forth.23 All of our normal operations24 continue normally.25 517 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
Do you2 understand this is a problem for us3 politically as we try to get our4 constituents to buy into that this --5 we're trying to fix the system?6 If you are continuously7 reassessing properties, in their mind,8 it's a tax increase. I'll go back to9 councilwoman Blackwell's point. In their10 minds, it's a tax increase med.11
But no, the12 property to which he is referring are13 properties that are new properties that14 are going online, because they -- it's a15 consolidation, because it's been16 requested by the taxpayer. If it's a17 subdivision, it's because it's been18 requested by a taxpayer.19 It means that a new deed has20 hit the Records Department. And if a new21 deed hits the Records Department, they22 have to act on those properties.23
And if permits hit,25 518 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 we also have to act upon those2 properties. If there are permits that3 have hit L&I, then those are sent over to4 us, and we are responsible for keeping up5 with those.6
But what7 you're saying to me is, in some cases --8 and I represent one of those districts9 where properties are overwhelmingly10 assessed at the highest rate, so we are11 going to continue to reassess them12 because of the -- 'cause that's a policy13 decision that this board can make, and it14 can say that in the process of us going15 to full, all of the different triggers16 for reassessment we're not going to17 acknowledge until we fix the system.18 Because I have a district19 that's redeveloping, so potentially,20 every single one of my constituents that21 requests a permit is going to get22 reassessed, and their taxes are going to23 increase in the middle of all of this.24
No, not every one25 519 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 because what we're saying is, those are2 only the properties where deeds or3 permits hit. If a deed hits, we have to4 react and make sure that the address --5
You6 don't have to. But if a permit hits, you7 don't have to.8 I mean, the fact of the matter9 is that this board can say, In the10 process of this new market value11 initiative, we are going to call for a12 moratorium on this so people don't get13 reassessed. You could make that14 decision.15
Well, you18 know, the only thing is, you know, if19 someone builds a new house, it's20 incumbent upon us to put that on the21 record.22
There's23 a difference between a new deed. See,24 we're going -- there's levels of this.25 520 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 There's a difference between a new deed,2 which is -- would fall in that category3 of a new house and my making an4 improvement on my house.5
Yes, but8 it's a broken system. So if I'm in a9 neighborhood where I'm being assessed at10 75 percent, and you've acknowledged11 through numerous testimonies that that12 system is unfair, then why are we adding?13 Why can't we make a policy decision that14 says, in the interim, improvements will15 not be reassessed until we fix it.16
You've25 521 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 operated a broken system, a potentially2 illegal system. All I'm saying is, we3 have new market values, we want to move4 in that direction. In the interim --5 (Timer bell rings.)6
We wouldn't be7 able to process their abatement either if8 we don't reflect the --9
But10 that's on new ones. I'm talking about11 improvements.12
There's an13 abatement for renovations and additions14 also.15
So if16 there's an abatement, why are we17 reassessing them?18
We're19 reassessing them to reflect them on the20 record. They need to have the21 improvement come onto the record in order22 for the abatement to go into effect.23 That's a part of the ordinance that24 supports the abatement. We don't have25 522 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 any way around that.2 However, if we encourage people3 to file for abatements, there will be no4 effect from the improvements that they5 get.6
Yeah,7 but that goes to the point of who knows8 how to do that.9 I represent a district that is10 going through major redevelopment. And11 what I'm saying to you is, I want to be12 supportive of us fixing the system, but I13 can't do that if my constituents are14 going to be continuously receiving these15 reassessments and, in their minds, a tax16 increase. I don't care how we call it.17
Can I just say18 that the number last year, there were19 18,000 such changes around the City20 that's it. That's it.21
I have a24 point of information too on that.25 523 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
Thank you.4 COUNCIL PRESIDENT VERNA:5 Councilwoman Tasco.6
I have a7 meeting at 7:30, which brings me to mind,8 the City p-OHCD is going to get9 $16 million for home rehabilitation for10 properties that have been foreclosed.11 Those houses will be rehabbed, receive12 renovation. What happens to them; do you13 reassess them at that time?14
Because17 there's certainly a lot of those in my18 district and in some other districts too19 where that will take place, and so that's20 on top of all of this other stuff.21
They will be22 reassessed, and for the most, all of23 those improvements will be abated.24
Well, will25 524 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 the reassessment be on the new system,2 the fair market value system?3
Councilwoman, from4 here on out -- and maybe this answers the5 questions -- there will be no interim.6 We're going to move forward only on our7 actual valued numbers.8
So if I12 get some funds or if I'm a developer or a13 CDC and we're rehabbing a number of14 houses in West Oak Lane, and those houses15 go on the market, 'cause for the most16 part, they are vacant, I think, is what17 the requirement is to date, that they are18 vacant or in the foreclosure system, does19 the developer apply for the abatement?20 That's another question.21
Okay. And24 so once they get the abatement, once they25 525 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 do the rehab, then do you assess it on2 the rehabbed property?3
Well, it would be4 abated. The land value would remain5 constant. The improvement -- the6 proportion attributable to the7 improvement would be abated for ten years8 or whatever program that was under.9
Well, I'm10 not real good at this, so I'm going to11 have to --12
I got to14 check it out. So that's what's going to15 happen.16
The19 $16 million is going to be sent to20 Philadelphia to rehab properties that are21 vacant and that have been in foreclosure.22 And so, we just need to know what happens23 with all of that. And I think maybe the24 CDCs ought to have a conversation with25 526 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 you also so they'll know what's going to2 happen.3
If this is6 abated, we may have (inaudible). So7 we'll see, okay? I have my two CDCs --8 three CDCs check with you.9
Thank you,12 Madam Chair.13 This point of information was14 along the same line of questioning, and15 that is, in the 7th District, there are16 areas that are 75 percent assessment.17 The average assessment in the City is18 like 33 percent, something like that.19 That means that when -- in20 order to get an abatement for a21 renovation, you have to have spent 5022 percent of the assessed value on the23 renovation. So, in the poorest24 neighborhoods of the City today, if you25 527 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 spend 50 percent of what it's really2 worth compared to what it would really be3 worth in full value, 'cause the values4 are going to go down in full value5 basically compared to the market value6 you have for that property now, the full7 value will be less.8 If you spent 50 percent of what9 its actual value is, you'd be entitled to10 it, but because of what you have on the11 books, people could be denied abatements12 that they're legally entitled to because13 the assessments are wrong.14 And so, the question really is,15 how could -- is Mr. Levin's testimony16 that you will use full value for the17 purposes of determining whether or not18 the renovation qualifies for the19 abatement; in other words, is over 5020 percent. And can you legally do that if21 the tax notice you send out this year is22 based on the illegal system?23
I don't know24 what you mean by this 50 percent25 528 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 requirement, but -- so I'm not aware of2 anything that requires it to be 503 percent.4
So if I5 improve my property and the home is --6 and I spend 10 percent of what the home's7 worth, I'm entitled to an abatement?8
Any14 improvement, any increase in value,15 you're entitled to an abatement as long16 as you qualify for the rest of the rules.17
Now, there is a18 caveat, and that is: There's not a19 dollar-for-dollar increase. You may20 spend a dollar and your property value21 may not increase by $1; it may increase22 by more or less.23 Under the new system, it will24 be assessed at actual value, the most25 529 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 probable selling price.2
Okay. So it3 goes back to the same basic question,4 which is: You're sending out tax notices5 based on the old system this year. When6 someone comes before you, how can you7 legally say you're going to use the8 actual value? You're going to redo the9 assessment at that time and then see what10 the new value -- in other words, you're11 basing the abatement based on a change in12 value. How are you going to do this?13
Basically, the14 property has a value before the15 abatement.16
Based on what23 they paid for the property, if the24 property changed hands --25 530 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
-- it could be4 reduced in value prior to the abatement5 being applied.6 This came up in some other7 discussions we had regarding low-income8 housing. And there are situations out9 there right now where the properties are10 selling for less than what the market11 around it is commanding for smaller lots.12 And our words on were that we encouraged13 the people, that when they start this14 process and they get -- become certified15 as a low-income housing project, you16 know, a credit-financed, a tax17 credit-financed, they contact us to then18 have the property revalued based on that.19 In most -- you know, the20 generic situation, where you -- someone21 buys a vacant property, and --22
If someone23 who's lived there for 30 years gets24 weatherization money from federal25 531 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 government --2
If his6 property's overvalued, we will encourage7 them to speak with our department to have8 the property revalued at that time.9
So you're10 going to base it off current values that11 you're -- for the tax bills you're12 sending out this year. So as we spend13 this federal stimulus money --14 (Timer bell rings.)15
-- improving16 these houses, tens of thousands of them17 potentially, they might not be eligible18 for an abatement of the improvement19 because they're currently over-assessed;20 that's what you're saying. They would21 have to proactively take a step.22
Well, the language23 in the abatement statutes -- or24 ordinances refer to substantial25 532 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 improvements to the property versus2 repairs.3
Now, oftentimes,5 that same property that you described6 that received the new roof, the new7 windows, most often if it -- if that8 property came before the Board for an9 appeal, the property value would be10 decreased because of those disabilities,11 looking at the cost to repair those12 properties.13 And so, the things that you've14 described, like the weatherization and15 like the new roof and like not upgrading16 the bathroom, but some people have, you17 know, not modernizing the bathroom, but18 simply correcting problems with the19 piping and all, those would be considered20 repairs to the property and not21 substantial improvements. So the22 abatement may not even apply.23
Okay. So I24 thought that's where the 50 percent came25 533 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 in. I thought the threshold for2 substantial improvement was 50 percent.3 What's the threshold for substantial4 improvement and how do you determine5 that?6
I don't think7 there is one. It's substantial. That's8 the word that's in the ordinance, that's9 all there is. There's no percentage, no10 quantifiable number there.11
Well,12 everything I've read about it says 5013 percent, so maybe that's not a standard14 you use, but that's what people are told15 out in the marketplace.16
Yeah. What19 does "substantial improvement" mean?20 What is your written guideline on what21 "substantial improvement" means?22
It's any23 improvement to the property value, as24 determined by our staff, our evaluators,25 534 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 who are appraisers.2
I didn't say5 that we didn't have written guidelines.6 There are written guidelines.7
Would you8 please provide the Chair with a copy of9 all written guidelines --10
-- with12 respect to what "substantial improvement"13 means?14
It's improvements15 that are sufficient to be quantified in16 terms of market value.17
But we could18 put that in written terms for you.19 That's not problem. We have those.20
So let's21 take the low-income house that we just22 described that needs new windows, a new23 roof, new basic systems, okay? And it's24 assessed today at $38,000. And if you25 535 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 were to go buy that house, because of the2 systems that need to be added, its value3 would likely be $25,000.4 Now they fix everything, it's5 worth 38. But if it was properly6 assessed at 25 today, the taxes would7 remain 25 for that low-income homeowner8 we've just assisted because there are9 substantial improvements.10
Well, what14 about the people who are going to get15 that help this year?16
We would hope17 that we can go to actual value and fix18 that problem for you.19
And if it were20 appealed, they would get that relief. I21 think that's where we're going with this.22
Most people23 don't go to appeal, don't know.24 Just please provide a written25 536 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 plan to address this at the BRT level to2 the Chair for people coming up next year,3 because, in my opinion, we are exposing4 ourselves to tremendous liability for a5 class of citizens who would otherwise be6 entitled to a tax abatement or tax7 writeoff if we don't do this correctly8 going forward now that you have shown how9 out of whack our system is.10 This is great data, it's great11 information, and it's also a plaintiff's12 lawyer's dream.13
So, okay.15 Are you familiar -- so someone earlier16 mentioned, when seniors or other people17 come before the BRT and they say, We kind18 of agree with the value, but we can't19 afford it, what do you dell them? And20 they're not eligible for PaceNet or --21 what do you tell 'em?22
Yes.25 537 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1
We've referred2 people -- we've provided appeal forms to3 people if we see that they meet the4 guidelines for Pace or PaceNet to apply.5
And if they're not8 eligible for those, then our recourse is9 to refer them to the Department of10 Revenue and explain to them that there11 are programs that the Department of12 Revenue has to work with them in terms of13 creating a payment plan. That's all that14 we have, is what Council provides us.15
And do you16 keep records of the number of people you17 refer to the Department of Revenue that18 can't afford it?19
No specific records23 of that, no.24 But I can say that during25 538 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 appeal hearings, whenever that occurs, we2 provide that information. And normally,3 when we have residential homeowners in,4 that's one of the opening statements5 that's made. And then anyone who6 requests an appeal form, we'll provide7 them with that appeal form --8
Not appeal form,10 but the Tax Reach form, we'll provide11 them with that there.12
So what13 you're referring to -- I'm confused by14 this whole debate that there aren't any15 circuit breakers right now.16 Under 1913-07 of the17 Philadelphia Code, which is, I think,18 what you're referring to, any homeowner19 can be granted relief for any increase or20 portion thereof of real-estate taxes due21 to an increase in assessed value of real22 estate that is greater than 15 percent in23 any given year. The factors the24 department is to consider in granting25 539 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 deferrals are household income reasonable2 household expenses, and available liquid3 assets.4