Council talks tax delinquency with city officials and collection agencies

Senior members of the Nutter administration’s property tax collection team defended their record before a skeptical City Council committee Tuesday afternoon during the first in a series of hearings that are part of the six freshmen Council members’ “Taxpayer Fairness Initiative.”

The hearings come in the wake of a three-part series on tax delinquency published last week by PlanPhilly and The Inquirer, and as various measures aimed at improving tax collection and dealing with the symptoms of delinquency are moving through City Council.

The policy-heavy hearing featured a few testy exchanges and exposed some stark differences between the enforcement philosophies of Council members, who are worried about blight and property values, and the city’s senior collections officials, who consider their top mission to be revenue, not redevelopment.

“I don’t think you can solve blight and vacancy with tax policy,” Frances Beckley, chief counsel to the Revenue Department, said at one point in the hearing.

“I don’t think you can attack it alone with just tax policy, but it certainly should be part of the equation,” shot back 8th-District Councilwoman Cindy Bass.

Philadelphia’s delinquency crisis has become a touchy political topic for City Council and Mayor Nutter in recent months, as the city moves toward the adoption of the new property assessment system known as the Actual Value Initiative.

At community meetings, over email and on the phone, Council members are now being barraged with questions about the city’s delinquency epidemic by constituents angered by AVI’s impact on their tax bills (about 60 percent of all residential property owners are likely to see higher taxes, some dramatically higher).

Council members are leaning hard on the Nutter administration to improve the city’s collections performance. At the hearing, city officials strongly contended that they have been doing just that, implementing new strategies and paying more attention to property tax collection than past administrations.

In his testimony, Revenue Commissioner Keith Richardson claimed that the city had made “tremendous progress in this endeavor” in recent years. The city’s three worst collection years since 1980 have all been recorded in the Nutter administration. When asked about those collection rates, Richardson attributed the low numbers to the weak economy and diminished departmental resources. When challenged on the collection performance of other big cities—which exceed Philadelphia’s rate by significant margins—Richardson noted that Philadelphia has 17 different taxes to collect, whereas other municipalities levy fewer taxes and can focus more intently on real estate.

The hearing, which will continue on Wednesday, provided an arena for a sprawling conversation that kept returning to a few themes.

Predictable procedures

Keith Richardson said that the Revenue Dept. selects which tax delinquents to go after based on who it believes is most likely to pay. That includes homeowners whose bills are newly delinquent and others with a demonstrable stake in keeping their taxes current, but can leave out the worst delinquents: absentee speculators sitting on empty properties and waiting for market conditions to change.

Councilwoman María Quiñones-Sánchez urged the city representatives to think about the broader costs associated with delinquent properties: blight, abandonment, code violations, property value impact, and more. Sánchez said she would hesitate to support any new initiatives—like the Mayor’s call for a $40 million investment in the Revenue Dept.’s technology system and staffing—that don’t take into account the symptoms of delinquency beyond the drain on the city coffers.

Sánchez also said that the Revenue’s pick-and-choose enforcement strategy contributes to the delinquency problem. Along with Councilman Bill Green, who did not attend Tuesday’s hearing, Sánchez has sponsored a bill that would implement a strict timeline for tax foreclosure and require the Revenue Dept. to offer income-based payment plans to all delinquent homeowners. Members of Revenue suggested at a hearing on that bill that that the language did not leave the city enough discretion.

“It’s too much discretion on the collection end …” Sánchez said at Tuesday’s hearing. “[Delinquents] know they have a lot of time before we catch up to them, because nothing’s prescribed.”

Ramping up sheriff sales

Members of the Sheriff’s Office as well as Linebarger and GRB—two agencies that each collect a portion of the city’s delinquent property taxes—all said they are capable of processing more sheriff sales. The Administration’s target has been 600 properties a month brought to sale, but it has consistently fallen short of that goal. Keith Richardson and representatives of the two collection agencies attributed that to a number of factors.

GRB and Linebarger have been given a target of 200 properties brought to sheriff sale per month. Their representatives said on Tuesday that they try to pursue enough properties each month to meet that goal, but that the threat of the sale itself makes it hard to accomplish: when taxpayers enter into payment plans, for example, sales are called off.

Michael McCabe, an attorney for GRB, said that Philadelphia has a “very active” group of bidders on properties at sheriff sales, but that the size of the market is not tested. He said GRB would be willing to pursue a greater number of properties if it knew there were buyers for them.

“If we go and put up 800 properties a month, we’re just giving a limited community a better inventory to select from,” McCabe said. “If the market will bear more properties, then obviously both our firms would like to put more properties for sale.”

Frances Beckley also pointed out that a significant portion of properties offered at sheriff sales never actually sell.

“You have to remember,” Beckley said, “if you put something up for sheriff sale and there isn’t a buyer, you haven’t accomplished anything.”

Interagency communication

Members of City Council repeatedly criticized what they called city representatives’ habit of working in separate “silos,” where Revenue cares only about revenue, Planning about planning, and L&I about code compliance. As mentioned earlier, members of Council think the city needs a more cohesive tax collection strategy that takes account of goals beyond revenue collection. At one point, Keith Richardson admitted that he has “blinders on,” and his goal is to go after the biggest, likeliest-to-be-paid tax bills his office can identify.

Council wants the agencies to work together more effectively. The city has issued 10,000 permits to delinquent taxpayers over the past five years, a violation of the city code, as reported in last week’s PlanPhilly/Inquirer series. Keith Richardson attributed that to a “hiccup” in the Department’s IT system that is being corrected.

Some worry that a singular focus on revenue collection misses the city’s larger goals.

“The folks at Revenue are not thinking about community impacts,” Sánchez said. “Delinquency and blight decreases the value of everyone. You have revenue collectors making policy decisions around community redevelopment, and therefore everyone loses.”

At the beginning of Tuesday’s hearing, most members of Council were present. By the end, however, it was just Bill Greenlee, subbing for Council President Clarke, and 6th-District Councilman Bobby Henon. Henon said that he had many more questions for the witnesses, and that the Administration officials were “general” in the level of information they were able to provide, but that he thought the hearing was a good start to a necessary discussion.

“You have a high focus on collections of tax delinquencies here as we move to AVI, and it’s a big concern,” Henon said. “We need to know publicly what the process is. Nobody knows what the process is. You ask five different people, you’re going to get five different answers. And yet the real problem is the people who are living next door to an abandoned property, or to a property that should be in sheriff sale, or a bad neighbor who is tax delinquent, when you have the Administration and our schools clamoring for more dollars and cents. So we need to be working together. There needs to be tax delinquency reform. All the parties need to be in one room to come up with better efforts on our tax delinquency.”

Contact the reporter at and follow him on Twitter @jaredbrey

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