Committee Hearing, May 4, 2009

That's the Revenue5 Department.6

That's7 right.8

Yes. And so we9 refer people to the Revenue Department.10 And when we hand out any information, we11 have to tell people that they have to --12 they're required to go to Revenue --13 (Indiscernible; parties talking14 over each other.)15

So you don't16 know how many people you refer to17 Revenue.18

No. I don't have19 those statistics, and we don't keep those20 statistics.21

All right.22 We'll get that from Revenue, I guess.23 Okay. I'm sorry. If we could24 have the Administrative Services Director25 540 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 back, please.2 (Ms. Daniel returns to witness3 table.)4

If you would5 please give us a brief job description,6 what it is you're responsible for, who7 you supervise, et cetera.8

Well, my position,9 Administrative Services Director, is all10 the administrative services at BRT. I11 directly supervise three Civil Service12 employees and two School Board employees.13 So all of the administrative services14 would be all of the personnel functions.15 I also prepare the budget.16 We take care of all of the17 Procurement purchasing, bill payments.18

Okay. So19 the two School District employees you20 supervise, what do they do for the21 school?22

They do payroll23 for the School Board.24

Okay.25 541 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1

So they do the2 personnel functions of the School Board.3

Okay.4 Mr. Mescolotto, could you please give us5 a brief job description?6

My own job?7 I'm the Acting Director of Assessments.8 I direct the day-to-day operations of all9 of our evaluation staffs, both10 residential, commercial and industrial,11 and our Evaluation Support Division,12 which handles exempt properties and other13 functions.14

So what15 employees -- if I'm looking at the budget16 or -- what employees do you supervise?17 Do you supervise Real Property 02?18

Real Property19 and the Commercial Industrial Division20 and our -- what we call our Evaluation21 Support Division.22

Do you23 supervise the -- do the School Board24 employees provide support to Real25 542 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Property 02.2

Yes, they do.3

And do you4 supervise them?5

I don't6 supervise them directly, but through7 management, yes.8

Who9 supervises them?10

We have line11 supervisors that supervise them.12

So that13 would be within Real Property 02?14

Yeah, the Real15 Property Evaluation Supervisor that16 you're looking at on at that list.17

Okay.18

There should19 be 14.20

Right. I21 got it.22 So Mr. Foglia, what is your job23 description?24

My job25 543 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 description? My ASD actually took over2 part of my explanation today. I run the3 ASD. She reports to me. I report to my4 chairman if there is a problem. If5 there's a problem with School Board6 employees, I answer to the ASD to look7 into it, and then we settle it.8 If there's a problem with Civil9 Service people, I report to the ASD and10 her help. I go to the supervisor, see11 what the problem is, and whatever else12 has to be done.13

So you have14 one employee reporting to you directly?15

No. I have my --16 my ASD reporting to me if there's any17 problems with School Board or Civil18 Service.19

Okay. Is20 there a requirement in the City Code or21 Charter to have an executive director of22 the --23

That I couldn't24 tell you, but from what I understand,25 544 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 since God was born, they had an executive2 director there.3

A lot's4 changed since God was born.5

Yeah.6

Okay. I7 just wanted to understand what people did8 there.9 Let's see here. Are you10 familiar -- can you tell me, does the BRT11 always do a reassessment when a property12 is abated of the land value prior to13 certifying what the abated value is?14

Not always.15

And are you16 familiar with many properties in Center17 City where there was a significant zoning18 change from industrial to commercial,19 where the land value certified for the20 abatement was what was paid for the21 property as industrial?22

If it's23 changing from industrial to another use,24 you wouldn't be paying for an industrial25 545 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 property.2

Well, people3 buy industrial property all over the City4 all the time. They go to the Zoning5 Board, they get it changed, or they come6 before Council and it's changed to7 commercial.8 In a few cases of major9 projects that we've looked at, the BRT10 has valued the property based on in terms11 of the abatement, what the land value is12 going to be worth for the next -- or what13 the land value is worth, the BRT has14 valued the profit based on what was paid15 for the property, and I believe there was16 testimony here earlier tonight that it's17 based on what you paid for the property.18 The law is that it's what the19 property is worth at the time the20 building permit is issued, which means21 that they've gotten a zoning change from22 industrial to commercial, and the23 property is worth a lot more.24

Which law are25 546 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 you referring to?2

The3 abatement law.4

I don't5 believe there's any requirement in the6 abatement law as you've described.7

What is the8 value that you place on the land as a9 matter of policy when someone applies for10 an abatement certificate?11

Councilman, most12 major developments, most major13 developments, the purchase reflects the14 value of that land assuming there's going15 to be a zoning change and assuming it's16 going to receive required permits for the17 development.18 So that sale price of19 industrial land is built into assuming20 it's going to be a zoning change for21 redevelopment.22

So it's your23 testimony that you do not reassess the24 land value to take into account the25 547 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 density and other things that are2 provided for in the zoning change prior3 to granting an abatement certificate.4

We do.5

Yeah, if we6 know that there is a change in the7 zoning, we will revalue it accordingly.8

And that's a9 a written policy somewhere that your10 assessors have, you do it in every case?11

I wouldn't say12 that it happens in every case, but I13 would say that I'd like to see it happen14 in every case. And when we go to actual15 value, we will assess in that fashion --16 value in that fashion.17

Okay.18

In every case.19

So in other20 words, even C-5 zoning doesn't21 necessarily tell you what the land is22 worth. The land is worth something based23 on the density that's provided for that24 space.25 548 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 So if you could have C-5 with a2 six-story building, the land's going to3 be worth -- people pay based on -- for4 land based on the number of units,5 density, as you guys well know.6

Floor area.7

So the land8 reflects the density permitted by this9 Council as by ordinance or by the Zoning10 Board or whatever.11 And it's my understanding that12 the land value certified by the BRT for13 the abatement at the time of the initial14 abatement certificate does not reflect15 the density of the lot, et cetera, and16 often does not reflect the change in17 zoning from residential to commercial.18 And I would like you to19 calculate for the Chair how much more we20 can get in taxes from commercial or21 residential properties as a result of22 charging what the land is actually worth23 compared to -- in other words, go back24 and look at major abated projects and do25 549 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 a little analysis for us and provide that2 to the Chair. I think you'll be very3 surprised.4 Also, how often does the BRT do5 a reassessment of what it is worth after6 a project is done and an abatement7 certificate is issued? Or, put another8 way, are all properties reassessed after9 they're abated?10

Yes.11

They are?12

They are.13

So I'm aware14 of many properties in the City that have15 not been reassessed; and as a16 consequence, their sales and use tax is17 way -- which it does not get abated, is18 much lower. And that causes the School19 District to have less money because the20 sales and use -- the use-and-occupancy21 tax, sorry, goes to the School District.22 So could you do an assessment23 of use-and-occupancy tax changes from the24 time a property's been abated to now.25 550 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Just go back a couple of years. I think2 you guys -- go back for four years, in3 the boom years, and you're going to be4 very surprised at how much the School5 District is missing out on revenue.6

One of the7 reasons why I think what you're saying is8 that there are properties that have9 applied for abatements and been granted10 abatements, but we have -- no one can see11 any change in the value when you look on12 our website for these properties.13 And the reason for this is14 because a lot of people who own these15 properties have not completed the process16 to get the abatement and, consequently,17 the revaluation, simply because they have18 not submitted the final piece of paper --19 unfortunately, it is a piece of paper at20 this point. It's a certificate of owner21 occupancy on the new construction and on22 the substantial renovation. It is a23 statement that the work has been24 completed and as of what date.25 551 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Last summer, the BRT was very2 proactive in identifying these3 properties, knowing that it is an issue,4 and sending further notification and a5 new certificate for the homeowner or6 owner of the property to fill out and7 send back. Consequently, hundreds of8 those that were out there have now been9 recovered and reassessed.10 If people do not complete the11 process within a certain amount of time12 going forward, we are going to -- what13 we've done at this point is -- what we've14 done at this point is, we've said, Well,15 we've given people a second chance to --16 you know, maybe a developer, and this is17 one of the kind of deficiencies of this18 whole process, is that I would think19 at -- and this is the practice of the20 developers that really understand this.21 When they go to settlement,22 they have somebody sign that piece of23 paper right there and send it in. The24 abatement goes on, the new value goes on,25 552 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 and everybody is happy. All of the taxes2 are collected and assessed properly.3 Most developers don't do that;4 they leave it up to the homeowner or the5 owner of the property to figure this part6 out.7 We've been proactive in trying8 to get this word out. There were -- it9 was included in some stories that the10 Inquirer wrote last year at that time,11 and we did get over 2,000 responses from12 people who sent in the last of piece13 paperwork of and had us revalue these14 properties.15 There are some properties,16 remember, that the abatement cannot be17 applied because they haven't been sold,18 they remain unsold in this market. And19 in that regard, it's an unfortunate20 situation, but our hands are tied by the21 ordinances.22

Well, do you23 know how many -- so what we're talking24 about is multiple -- in my opinion,25 553 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 multiple cases indicating the BRT is2 failing to calculate the new value based3 on improvements for U&O purposes.4 And my understanding is that if5 a tax filer has been using the abated6 value for U&O purposes, which is what7 happens in many cases -- you've got U&O8 purposes, you've got the abated value for9 use and occupancy, not the actual value10 for use and occupancy, and/or even the11 market value for use and occupancy.12 And it's my understanding that13 the City can collect -- essentially go14 back six years for the use-and-occupancy15 tax if somebody has been doing that; in16 other words, doing it on the abated17 value, not the market value.18 And I'd like you to provide the19 Chair a calculation of how many20 properties you think fit that category,21 or simply look at U&O on abated22 properties and see whether the value is a23 market value or an abated value, and24 provide the number of such properties25 554 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 that exist today to the Chair.2

I might point3 out that U&O only applies to tenant-4 occupied properties, not to all the vast5 majority of abatements, which are6 residential properties.7

I8 understand. I'm aware of many industrial9 properties where this is the case.10

We can provide11 the market value calculations and -- on12 that data.13

You can look14 abated properties --15

Yes.16

-- you can17 look at U&O, and you can look at -- okay,18 good.19 COUNCIL PRESIDENT VERNA:20 Councilman Green?21

Madam Chair?22

I two23 of our colleagues have been patiently24 waiting to be recognize. Thank you.25 555 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Councilman Jones.2

And, Madam3 President, I want the Bill Green clock.4 (Laughter.)5 COUNCIL PRESIDENT VERNA:6 Excuse me, Councilman. Just one moment.7 Councilwoman Blackwell?8

Yeah,9 we thought we had a filibuster going.10 (Laughter.)11

This was my12 first time in Council experiencing a13 filibuster. I was taking notes.14 I just have two things to say,15 and then I'm done. I'm feeling like I16 felt when I heard about the hedge funds.17 And it's one of those Robin-Hood-in-18 reverse scenarios.19 We have business taxes, real20 estate, commercial taxes going down 3721 percent, and homeowners' taxes going up22 40 percent. It's like a, you know, rob23 the poor and give away our base, tax24 base, to the rich. And that can't be the25 556 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 way we solve this budget problem.2 And we are counting on you,3 counting on you to help us out here so4 that we have some tax equity and tax5 fairness.6 And what we're hearing now at7 least gives me a great deal of concern8 for major, major sections of Philadelphia9 that are going to feel overall oppressed10 with this Sheriff-of-Nottingham approach11 to dealing with assessments.12

And we know this is13 not Sherwood Forest.14

All right.15

And we don't16 perceive ourselves as Robin Hood. We17 perceive ourselves as the Assessment18 Office for the City of Philadelphia. Our19 goal is to assess and to appraise the20 properties -- every property within the21 City so that the properties are all22 uniform and equitable when compared to23 one another, so that everyone receives an24 individual accurate and fair assessment.25 557 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1

Amen.2

Thank3 you.4 The Chair recognizes Councilman5 Sanchez.6

Thank7 you, Madam President.8 And I too will be brief, but I9 will say this, and it was a conversation10 that was had when the BRT came in front11 of Appropriations, asking for additional12 allocation.13 It appears that you have the14 ability, through policy and practice, to15 give us some equity around some of this16 stuff even before we get to fair market17 value. And for me, it is disheartening18 because we are making decisions about19 pools, about $1.2 million in pools, and20 my colleagues here are talking about21 problems that, if fixed immediately and22 that are currently under your purview,23 could add millions and millions of24 dollars to the table at a time when we're25 558 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 making these drastic decisions.2 So, you know, I will repeat it3 again in terms of we are held accountable4 to the electorals of the City of5 Philadelphia, and we are dependent on an6 independent body who has to fall in line7 with us in terms of how we make these8 decisions.9 All of a sudden, it's until we10 fix the whole system, it is okay to allow11 this level of discretion among your12 assessors for blatant problems. And13 that's not -- I'm not satisfied with that14 response. I'm not satisfied that all of15 a sudden, only full value will get us to16 equity when we've been enumerating case17 after case after case around situations18 that you can immediately fix and19 immediately help us address this20 financial crisis.21 So I'm going to say that it's22 really, really hard. I'm all for, you23 know, we got to fix this broken system,24 but there has to be some trust factors to25 559 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 the BRT's ability to do that, do that2 quickly, and address this issue. And I'm3 just really frustrated by what I've heard4 here today.5 So my last question's going to6 be: Are there any constitutional, legal7 requirements why you have to continue to8 assess at a time when we are fixing the9 system?10

What I would like11 to do is have our legal counsel answer12 that, so I'll contact the Law Department13 tomorrow and ask them to provide the14 answer to that question for you.15

Okay. I16 would really like to get that.17 The other thing that I want to18 know in terms of policies around the19 assessors. Going back to if we're going20 to continue to assess, how much21 discretion do these assessors have?22 Because what you were articulating to us23 is, you know, there's these broad24 parameters. I'm an assessor, I can make25 560 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 decisions that it could go as little as2 $10,000 to several million dollars, with3 no policy direction.4 So I'd like to see those5 policies, if they're written, and the6 protocols because I want to see how7 they're applied in my Councilmatic8 District, 'cause I just feel like these9 assessors have a lot of power that we may10 need to lock at how we narrow that.11 And, again, you know, this12 Council is prepared to make some really13 tough decisions, but we can't have an14 independent agency like the BRT that15 impacts our ability to do our jobs, not16 take this -- not correct these short-term17 ones.18 You know, forget about the19 market value stuff. There are millions20 and millions of dollars on the table, and21 then I got to sit here and decide whether22 I get a pool in a poor area.23 And I'm frustrated, I'm angry,24 I'm disappointed that this is such a bad25 561 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 system and that we're okay with it. I2 mean, I'm just frustrated. I'm sorry,3 I'm not going to rant. I'm just4 frustrated. This is ridiculous.5 COUNCIL PRESIDENT VERNA:6 Councilman Green.7

Thank you,8 Madam Chair.9 At last year's budget hearings10 --11 (Timer bell rings.)12 (Laughter.)13

-- and on14 May 13, 2008, I asked a bunch of15 questions about accurate assessment data.16 The current property -- this is one of17 them. The current property tax is 8.26418 percent.19 Based on the actual value20 information, what property tax rate would21 Council need to set in order to achieve22 revenue neutrality?23

You mean to have24 the revenue neutral for the entire city?25 562 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1

Yes.2

We would have to do3 the math in theory. No, it won't be4 revenue-neutral for every property.5

How about6 revenue-neutral to the City?7

Well, in theory, if8 market value doubles and Council has the9 millage, we would be revenue-neutral, so10 it would be a question of doing the math11 for the City.12

So I guess13 I'm surprised you're surprised I asked14 this question 'cause I asked it last15 year, and I asked it on May 13, 2008, and16 I came and testified about it over the17 summer, and I was told by the Board that18 as soon as you had accurate value data,19 you would, in fact, provide me this20 information immediately.21 And you have the data, but I22 don't have the answers to any of the23 questions that I asked at least three24 times.25 563 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1

But on setting the2 rate, we don't set the rate.3

I'm not4 asking you to set the rate; I'm asking5 you to tell me what we would have to --6 based on the value of the total market7 value in the City, what rate would we set8 to be revenue-neutral?9

We'll get you that.10 We'll do the mathematics and we'll get11 you the answer.12

When?13

Tomorrow morning.14

No, not tomorrow.15

Thank you.16 I also asked some LVT-type17 questions, because one way to go at the18 abatement issue is to go to a land value19 tax, so we can tax -- if we20 proportionally tax the value of land21 more, we're not increasing taxes and22 we're not taxing the improvements that23 are abated, so we can, in Center City and24 a lot of places, get a lot more revenue.25 564 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 And so, I asked some specific2 questions about that, and I'd like that3 information also. Using accurate land4 improvement values, if Council wanted to5 receive 50 percent of property tax6 revenues from land values and 50 percent7 from improvement, what would the tax8 rates have to be?9 And same thing with 5-to-110 land-to-improvement ratio. And same11 thing with 99-to-1 land-to-improvement12 ratio.13 Then can I get those tomorrow14 also? It seems like that would be simple15 math.16

I -- because the17 staff does this work, we will get it to18 you as quickly as possible. I won't say19 tomorrow.20

Who on your21 staff will be responsible for it?22

Well,23 Mr. Mescolotto will --24

Okay.25 565 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Mr. Mescolotto, when can you get me that?2

Can you just3 give me the last two things that you4 asked for?5

I'll give6 you another copy of my letter; I have 'em7 here with me.8

That might be9 helpful. And I will get back to you10 absolutely as fast as I can. I don't11 think it should take more than a day or12 two.13

So within14 two days at the outside, I'll have this15 information.16

Yes.17

Thank you.18

And that will19 be based on the current budget as it20 stands?21

Right. And22 I just -- well, I would assume a zero23 percent property-tax increase. Base it24 off FY '09 figures.25 566 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 Okay. So also, on July 23rd2 last year, and I talked to about this3 when I was over there testifying on full4 value, I wrote to your office about the5 Historical Commission and information-6 sharing between the two agencies.7 Specifically I asked that historical8 designation information be included on9 BRT's online property search so that10 people didn't unwittingly make11 improvements to historical properties12 that they then had to take out, which13 happens all the time.14 Have you made any progress on15 this?16

Yes.17 Mr. Mescolotto has made progress on that.18

Yes. We19 immediately contacted the Historic20 Commission after we got your letter.21 And the problem that they had22 was providing that data to us. They did23 not have many of the -- the majority of24 the properties were not associated with a25 567 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 legitimate address. It took them until2 about two months -- not even two months3 ago to finally come up with a file that4 was of about 80 percent -- or 80 to 855 percent of the properties involved.6 Others of the properties are7 being researched by -- we're being8 collaborative with them, and there's a9 list of, oh, I don't know, maybe like 3010 or 40 properties that are contained11 within Fairmount Park which are12 exceedingly difficult to get 'cause they13 don't have individual addresses, but14 we're now -- we've researched them.15 We should be ready within --16 the actual changes to our website are17 already -- have already been engineered,18 they're ready to go. And now, it's just19 a matter of associating the data and20 putting it up on the site.21 I'm told that within a couple22 of weeks, we should be ready to post23 that.24

That's25 568 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 terrific. Thank you for following up on2 that. I appreciate that.3 Can you tell me why the BRT4 decided to do its own evaluation of5 commercial and industrial properties with6 respect to the new system rather than use7 eConsult, as it did for residential8 properties?9

Well, the ultimate10 goal is to use consultants, but we didn't11 have the time to prepare the models for12 the commercial properties, and --13

In fact, we14 did use some consultants on it. We have15 our in-house consultants, Bernard Caymans16 and Eileen Lynn and others, who were17 consulted with on these properties.18 Remember, that the commercials19 in many ways are individual appraisals.20 We constructed rudimentary multiplicative21 models for many of them and group22 properties by like type. For instance,23 all the gas stations, all the, you know,24 Wawa-type retails, all the 7-Elevens, all25 569 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 that kind of stuff.2 We were able to use our3 in-house consultants that we've had for a4 number of years to guide our evaluators5 and supervisors in the CNI Division and6 to tap into the knowledge that we have in7 that specialty unit who deal with these8 properties on a regular basis.9 Remember, it's a much smaller10 group of properties; it's only about11 15,000. And we felt that our people,12 with the help of our consultants, were13 the best people for that job.14

Mm-hmm, but we did15 no use the computer with using the16 statistical analysis to do those17 properties.18

We will,19 though.20

We used those21 consultants, and we do plan in the future22 to create those models so that we can do23 those computerized as well.24

Again, it's a25 570 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 different kind of a model situation than2 in the residentials. Income modeling is3 a little more challenging.4

I have a5 question about that. When you do a6 commercial property based on an income7 stream-type assessment, you're looking8 at, you know, the present value of future9 payment stream and et cetera, how do you10 verify what data that the property owner11 has to give you for you to do that12 analysis.13

Well, there's14 a lot of different sources for that kind15 of data. We do get appraisals on these16 properties in the appeal process, and we17 do use that information too against other18 properties that are of like type. We do19 get information from commercial services20 on this, such as the CoSTAR Services. We21 do get -- we get income and expense22 statements from people that submit23 appeals.24 All this stuff put together --25 571 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 all these different data sources put2 together gives us enough to profile --3 make a profile for the various different4 kinds of income-producing properties.5

Do any of6 your assessors work for any of these7 independent on their free time? Any of8 these agencies that you just mentioned,9 CoSTAR.10

Not that I11 know of. I don't believe so.12

Okay.13

We didn't see14 any of that on any of the disclosure15 statements that we have them file for --16

That's fine.17

-- their18 outside -- any outside activity they19 have.20

And,21 finally -- and this is finally -- is22 there any reason why you wouldn't, since23 you have an actual value for residential24 properties, make that the market value25 572 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 under the current assessment system? In2 fact, one would argue you might be3 required to.4

Not at this stage,5 not until the evaluators complete the6 validation process and we know that we7 can confirm that those are the values.8

Who are the9 evaluators?10

That's our11 staff.12

That's our staff of13 assessors and appraisers.14

Okay.15

Our people.16 When we made the presentation,17 if you recall, one of the things we said,18 the next step to start immediately is to19 have the evaluators go through the20 computerized list, make a determination21 of which properties are out of kilter or22 just not appropriately assessed according23 to the market, and then to review those24 properties individually, to go out if25 573 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 necessary to do inspections, or to gather2 the information, using the system that3 Mr. Mescolotto explained.4 Once they're able to do that5 validation process, which means that they6 can stand by, as the professional staff,7 those assessments, even though the8 assessments may remain the same, and most9 of them will remain the same, are the10 projections, as made by computer, but11 that they adopt those as their12 professional opinion. And if there have13 to be changes, then to put in the changes14 and explain.15

What is your16 written policy with respect to going17 from, if an assessor, an evaluator wants18 to make a change from what the computer19 system says?20 The way I read the policy in21 the paper today, it would appear that22 that would not require going to the23 Board. So if someone wanted to do an24 over-50,000 change from the computer25 574 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 system, that wouldn't require going to2 the Board. If someone wants to do a3 50,000 change once the assessor makes his4 determination, that would require going5 to the Board or evaluator.6 So what I would like to ask you7 to do is do a written policy so that8 wherever there is a change from the CAMA9 system of more than, say, 50,000 or some10 number that you feel is appropriate, that11 that change should be required to be12 kicked up.13

Yes.14

Because that15 is a place where the system could break16 down.17

Yes. And,18 Councilman, we're working on precepts,19 which are -- the precepts are the20 standards that the appraisers or21 assessors in our department are supposed22 to utilize as a part of assessing the23 properties.24 They have not been revised25 575 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 since --2

1993.3

-- 1993. And we're4 working on revising those in conjunction5 with use of the computer system.6 One thing that came up7 preliminarily that the Board recognized8 was that there was a problem with one of9 the precepts, and that was the precept10 that allowed evaluators to make a change11 for any property above -- and reductions12 for any properties up to $150,000. We13 saw that that was not being handled14 consistently and that it was problematic.15 The Board, on its own16 initiative, put forward to have the17 valuators come before the Board for any18 changes over $50,000. And now, what19 we've requested is that Mr. Mescolotto20 and his staff are reviewing that whole21 policy to determine whether 50,000 is22 appropriate, whether it should be on23 increases and reductions alone, whether24 it should go back to the 150,000.25 576 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 So that study, once it comes up2 with the final determination, then we'll3 put that as part of the precepts. And we4 hope to publish those precepts once5 they're completed with the standard --6

I know,7 Ms. Meade, but I don't want there to be8 any misunderstanding about what I'm9 saying.10

Yes.11

I'm talking12 about before an evaluator gets a hold of13 it, a change from what CAMA says the14 value is to the evaluator's first15 opinion.16

I understand, yes.17

Okay.18

Mm-hmm.19

'Cause20 that's not currently a part of the21 process. It would only be after the22 evaluator made their first determination.23

Mm-hmm.24

So I just25 577 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 want to make sure that we're not changing2 things before it would get to that level.3

You're right,4 Councilman. And one of the problems that5 has existed with the Board is that we6 have not had a true quality control unit7 that could operate independently.8 That is one of the units that9 we hope to create. And that's one of the10 issues that they'd be dealing with: To11 assure that those values, when changes12 are made, that they are appropriate, and13 that there are substantial reasons14 consistent with appraisal property15 principles to substantiate those changes.16 But we want to put a quality17 control unit in there to handle those18 separately.19

And maybe this20 would help us out here. You know, one of21 the changes that we've made in the way22 our work flows and our systems work is23 that there is complete security over the24 models that are created to project these25 578 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 values before any of the evaluators get2 involved with reviewing them.3 And the process after the --4 everything is projected and then needs5 review by our staff is that if you find a6 value that you feel has not been7 projected properly or some data on it8 that you feel is not correct, you're not9 going to change that value right then and10 there. What you're going to do is11 investigate it, find out why the12 projection didn't work out right, and13 then we correct the projection, run it14 back through -- it's usually a data error15 of some sort where, you know, the square16 footage is different than it should be,17 or the condition is different from what18 it actually was. And then it runs19 through the model again, and the value is20 projected.21 It's not an arbitrary move on22 anybody's part.23

And there's24 a complete audit trail of every change25 579 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 that's made?2

Oh, yeah.3

And you'd be4 able to go back in and --5

Oh, yeah.6

Okay.7

And, again,8 it's the security over the models that is9 our real -- the factor that we have to --10 that that is a big change in everything11 that we've done.12 There's very few people, very13 few, that actually can have access to all14 of the models and what is in the work.15 There is also a copy of that, so that if16 anybody actually -- if we ever thought17 that there was any kind of tampering, we18 go back to a copy that says this is the19 true version of it and compare it.20 And in order to do something21 like that, you would have to leave your22 footprint behind.23

With24 log-ins, et cetera.25 580 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1

Yes.2

Yes.3

Okay. Could4 you describe to the Chair, not now, that5 process for security in the system that6 provides the audit trail you're7 discussing.8

I can.9

'Cause when10 you go to a totally electronic system,11 that's one of the areas where, you know,12 shenanigans can happen.13 Thank you.14

Right.15

I'm16 going to ask anyway: Are there any17 further questions?18 (No further questions.)19

Thank20 you all so very much. You've extremely21 patient. We do appreciate it.22 This committee will stand in23 recess until tomorrow, Tuesday, May 5th,24 at 10 a.m. Thank you all very much.25 581 5/4/09 COMM. OF THE WHOLE - FISCAL '10 BUDGET1 (Proceedings end at 8:05 p.m.)2 * * *3 4 5 6 582 C E R T I F I C A T E2 I HEREBY CERTIFY that the4 proceedings of the City of Philadelphia5 Council Committee of the Whole are contained6 fully and accurately in the stenographic notes7 taken by me on Monday, May 4, 2009, and that8 this is a true and correct statement of same.9 __________________________________14 JOSEPHINE CARDILLO15 Registered Professional Reporter (The foregoing certification of20 this transcript does not apply to any21 reproduction of the same by any means, unless22 under the direct control and/or supervision of23 the certifying reporter.)24