Sometimes it takes the political leaders in Philadelphia a long time to admit or even take responsibility for anything when it comes to informing the public how bad things are. It took years for those busy beavers in City Hall to admit that there are 40,000 to 50,000 vacant properties in the city of Philadelphia.
Now it has come to light that there is $423 million owed to the city (and its residents) due to nuisance liens. There’s probably even more than that if you calculate taxes that are owed on these properties. For that figure there is another amount, $500 million, in uncollected real estate taxes which includes interest and penalties.
A nuisance lien is an unpaid bill that the property owner decided that they wouldn’t pay the city for coming out to their abandoned property in order to seal, clean, or demolish it.
That’s not even the entire problem. The rest of the problem is the L & I (License and Inspections) Department and the city’s Revenue Department. You remember L & I. They were the ones who are partially responsible for the building collapse at 22 and Market Streets in June of 2013 that killed six people and injured 13 more.
However, these departments are disputing the amount. Not because no money is owed, but because they’re not sure how much money is owed. It could be $423 million, $17 million or even $58 million. The operative word here is million.
Regardless of what the Revenue Department is disputing they knew as far back as 2009, maybe even further, that there was a lot of money owed. So they hired the collection agency, Progressive Financial Services, to recoup the money. As of 2013 the company got the city $1.26 million and was paid over $600,000 for a job not well done. Plus the company wasn’t even based in Philly where the poverty rate is 28% and there are a lot of people who could use a job. No. The company is based in Eddystone, PA which is in the Delaware County suburbs.
This wasn’t even information that the city wanted taxpayers to hear especially with big elections such as the mayor’s race only one year away and elections for city council only two years away.
In the hopes of providing a good news/bad news scenario government officials have offered up the fact that in 2013 the city began sending certain properties to sheriff's sale (good news), but only 38 properties have been placed on the sheriff’s sale list so far (bad news). Although there may be some people who may want to buy the dilapidated and useless buildings (good news) there’s no guarantee that they’ll want to pay for the house what is owed on it (bad news).
Just because a house gets on the sheriff’s sale list doesn’t mean that anything good will come out of it. After a property is sold, whatever money that was paid goes first towards the real estate taxes, then any gas or water liens and if there’s any money left over it gets applied to the actual nuisance lien.
So, for instance, if a property gets sold for $80,000, but the real estate taxes are $40,000, the gas lien is $10,000 (not inconceivable for those who are familiar with the magic of PGW), and the water lien is $15,000 (they keep billing until the end of time) the remaining $15,000 will be applied to a nuisance lien which could be triple that amount. Although one property doesn’t seem like much, look at even the small number of 38 properties currently waiting to go to sheriff’s sale and it adds up.
If there isn’t enough money to satisfy all the liens whatever is left over gets erased and the new owner (who may or not be related to the original owner) gets a property free and clear. The city is out of the money it spent on taking care of the owner’s responsibilities.
Since 2009 the city has collected money from the nuisance liens (good news), but it’s only been $15.6 million in five years (bad news).
It all comes down to faulty bookkeeping or so that’s what City Controller Alan Butkovitz would like people to believe. Faulty bookkeeping that the city and Mayor Nutter have been aware of since at least 2009. Nutter was a member of city council for 14 years (1992-2006) and he probably knew about the ineffectiveness of the city’s tax collections long before taking the job as mayor. He absolutely knew about it in 2008 when he was sworn in as mayor.
This also goes for council members Jannie Blackwell (23 years); Curtis Jones (6 years); Maria Quiñones-Sanchez (6 years); Marian Tasco (26 years); Brian O’Neill (34 years); Blondell Reynolds Brown (14 years); W. Wilson Goode, Jr. (14 years); Bill Greenlee (8 years); and James Kenney (22 years) who have served in council for several years.
The money that is owed to the city through tax liens goes beyond the Nutter administration. The city believes (once again the cursed faulty bookkeeping) that at least $25 million of the money goes back to Mayor John Street’s (2000-2008) administration.
During all of this City Council has refused to get rid of the DROP program, has voted to raise taxes over and over again, have refused to cut their budget even a penny, gave away huge million dollar tax incentives to companies who want to do business in Philadelphia, passed the Land Bank bill which will basically benefit them by controlling who can buy properties in their district, and have consistently worked about three days out of the week while collecting a base salary of $121, 000 while taxpayers went without. It is also important to point out that in 2000 the base salary was only $85,000.
Mayor Nutter also attempted to get more money out of the taxpayer by trying to get a soda tax passed as well as a cigarette tax and a liquor tax. The city desperately needed the money. Well of course it does. The taxpayers also need money. About $923 million.
So, if the $423 million and $500 million ($923 million) that’s owed is correct and it probably is because the city isn’t flat-out denying it nor are they offering any substantial proof except, “Oops, my bad,” then none of them have the ability to run a city let alone run a hot dog stand.
Through his own actions in April 2013 Mayor Nutter knew that the city had a major problem with collecting on the debts that were owed to the city because he hired Thomas Knudsen, the ex-chief of PGW and the ex-chief recovery officer of the Philadelphia School District as the new Chief Revenue Collections officer. His role was to be responsible for getting that money owed to the city. However back then the public was just told that it was “tens of millions of dollars” which is a whimper to how much was really owed.
Knudsen didn’t stay around too long though. He exited from the position in December of 2013. At that time Nutter offered the explanation that Knudsen was only supposed to be in the position on a short-term basis and it was never disclosed how much money Knudsen even got back or how much money he was being paid in the first place. Perhaps once Knudsen saw the mess that he was going to be responsible for he beat a hasty retreat.
Knudsen seems to have a knack for agreeing to short-term gigs with a long-term salary. The six month position was the same deal he had with the school district.
Nutter then hired Clarena Tolson to replace Knudsen and the public was told that the city was going to seriously step-up it’s collection efforts; that there were going to be major changes in 2014, but so far that has happened. It was after Tolson’s appointment in December that the tens of millions of dollars became hundreds of millions of dollars without a specific amount being given.
Tolson, who had previously been the streets commissioner, made a lot of promises. She swore that she was going to deal with the tax deadbeats as the AVI bill was coming to fruition; that these debtors were going to be quickly taken to court, might get their homes seized, and properties would expeditiously be sent to sheriff’s sale.
Typical of promises that a politician would make, nothing that Tolson said has really happened at least not at the speed it should be happening. The city has had years to put a plan together and get records in order that would satisfy the courts. If they had worked with the sheriff’s department then perhaps more properties would be on the list and they wouldn’t be a low priority for that department.
It should also be noted that anything that’s good for City Council, like the Land Bank, gets voted on and passes at lightning speed, but anything that would be good for the residents goes at a snail’s pace. Funny how things work, isn’t it?
Perhaps Mayor Nutter and City Council should look at the people who are running and working for the departments that have placed this tremendous debt on the taxpayers. If $923 million doesn’t scream incompetence, what does?
Perhaps they should tap into the unemployed Philadelphians who not only want a job, but would actually do the job.
The fact that they have avoided informing the public of L & I and the Revenue Department’s ineptitude speaks volumes as how concerned they are for the burgeoning poverty and unemployment rate as well as forcing taxpayers to pay for their ineffectiveness.
So let’s pretend the city was able to get their hands on all the money. Whatever would they spend it on?
1. The Philadelphia School District. Not the entire amount they need, but just enough to get them back up running at least to 80%. You have to remember that the school district comes in second to the city when it comes to money mismanagement. Some of that money can go to hiring advisors that will help the district devise ways to make itself more financially independent as cities like New York and Los Angeles are now in the process of doing.
2. Give some of the money to help the Office of Supportive Housing. Take a couple of the abandoned factories, rehab them and make them shelters for single parents and their children. This would show people that you really care about the women and children you send out into the street every night to fend for themselves while you give priorities to single women with no children.
3. Award some of the money to the ImpactServices Corporation who are contracted to help those trying to crawl their way out of poverty and to get off of welfare to find employment. Every year the state cuts their budget and also their ability to help those who want help. The money can be awarded through the Shared Prosperity Philadelphia initiative.
4. Award money to The Multi-Services Center for Veterans. They provide a lot of services for veterans and have just opened an area for women veterans who are the most under-served out of all the veterans. In fact, women in this city are the most under-served in general.
Finally, start being honest with the residents who voted you into office in the first place. Stop making it about you and make it about them. Stop sugar-coating problems and spending money on hiring firms or people without advising the residents beforehand. Let them have a say in how money, their money, is being spent.
The residents of this city deserve better than the way you’ve been treating them. If not, well, there's always Election Day.