We need transparency in criticism as well as budgeting

Some critics of Mayor Michael Nutter are calling him out for hiding a real estate tax in his new budget since the budget proposes that after the new market based system of setting property values is put in place, tax rates will be set so that the city takes in an additional $90 million in real estate tax receipts.

There is a just a little bit of truth in the criticism. But most of it is really just hogwash.

In an ideal world, as the city switched to the new system of setting property values that moved them up to reflect market values, the tax rate would simultaneously be adjusted downwards so that the total take from the real estate tax from one year to the next would be roughly the same. Since the new system is supposed to, and most likely will, give us fairer assessments, some people would pay more and other less. But the overall real estate taxes take in by the city would remain about the same.

But we don’t live in an ideal world. Because the property assessment system has been totally broken, the values placed on property for the purposes of the real estate tax have not gone up as the actual market values of those properties have gone up. There has been no city wide reassessment since 2004 and in response to protests other upwards reassessments have been rolled back.

This failure to capture rising real estate market values, along with the recession’s effect on overall tax returns, is why the city had to enact two temporary increases in the property tax rate in the last two years.

The result is that any new, fair assessment will capture some of those increases market values. One could argue that transparency and fairness demand the city should cut tax rates to the point that the total take from the real estate tax does not increase, either relative to last year, or to a few years ago before the temporary tax increases. But one could just as plausibly argue that if we had a more transparent and fairer system of assessment in the last ten years, the real estate tax would be bringing in a lot more money today without any tax rate increases.

Given the mess the Nutter administration was handed, determining the right answer in this case is, frankly, pretty arbitrary. Arguments from fairness or transparency cut in both directions. But in a city that is still suffering badly not just from the recession but from the right wing lunacy of Governor Corbett’s budgets, the Nutter administration’s decision to seek some additional tax revenues from the real estate tax makes a great deal of sense. Given the need in our schools, I’d actually go further than they have in seeking higher revenues from the real estate tax.

However one comes out on that issue, it would be nice if the critics of the Nutter administration were transparent as well. Some of those critics—Brett Mandel comes to mind—were great supporters of wage tax and business tax “reform,” that is reductions to the wage tax and especially to the gross receipts portion of the business tax. If you look back at the reports written to defend these cuts, you will see that the reformers kept saying that Philadelphia should look more like other cities and take in more money from taxes on immovable objects—land and buildings—and less from taxes on moveable objects—people and businesses. And they predicted that reductions in the wage and business tax would lead to higher property values and thus higher real estate tax receipts.

Given that back in the day these folks called for higher real estate tax receipts base on higher real estate values, it is somewhat disingenuous for them to be criticizing Michael Nutter for carrying out the policy they supported.

The process in getting to that policy has been a lot messier than anyone would have wanted. And because it is messy it’s not as transparent as most of us would like. But the Nutter administration is doing what the critics called for ten years ago. And especially since the critics haven’t put forward any other ideas for funding city services and our schools, the lack of transparency in the critics is, to my mind, far worse than the lack of transparency in the budget.

Agreed.

Funny. I started this very discussion with Brett on twitter last night.

https://twitter.com/#!/Dan_UA

Ditto

Sometimes you just have to shut up and take the money.

Voice in the back of my head wonders if this wouldn't be an opportune time for someone to draft legislation experimenting with increasing % on land (sans ideology, rhetoric), maybe helping with some vacant land problems (?)...but I can ignore that voice, Pandora's box.

samuel.durso@gmail.com

It's a little messy

I'm def not an economist, but have some observations from my work and from our experimentation with the vacant property license.

For the vacant property license, a bill was passed to raise it from, like, $50 or $75 to 900 or so. The goal was to prevent speculation and sitting on land, and incentivize development. But it was a huge jump, and brought out of the woodwork all the diverse 'uses' of vacant land - I know cause they all called, furious and very into arguing the philosophy of the fee. We then amended the code to make the default fee $300, and include an exemption for "land continuously maintained as a garden," which seems to have created enough of an escape hatch.

My general take from that back and forth was that while there are definitely sites that could/would be developed if taxation incentivized that, there are a huge number of parcels where development is not foreseeably possible, and what we want is active ownership and stewardship of that land to keep it clean and free from drug activity. A lot of the folks we want to stand in that stewardship role can't bear increased taxation on vacant land any more than they can on their home. On top of that, much of the land is effectively abandoned, so while increasing the tax burden (i.e. the debt load) might make city foreclosure incrementally more likely, it doesn't really mean that additional money is getting to the general fund.

But maybe I'm just naysaying.

a rambling response

Exactly. There are a lot of policy improvements that should be made to dispose of city owned land (and other vacant, privately owned land that is just sitting there), to make clear what properties the city owns, to be more efficient, to be smarter, and to delete Jennifer's spreadsheets.

And, if those things are made, what will happen? On some level, more developers will buy properties, and more properties will go back onto the tax roles, etc. But, people who are sitting in and around gentrified neighborhoods are bizarrely naive about the scale our 'land problem,' and thus, what the solutions should be. At heart, the problem-- if by problem you mean tens of thousands of empty/abandoned/falling apart parcels-- is not a problem that really has much to do with just how damn annoying the city government can be to deal with, or, whether we tax land enough versus improvements.

Yes, in Point Breeze and some other neighborhoods, developers might jump in and buy a lot of properties if we did any number of things to make disposition easier. But, if you have a property in, for example, the eastern part of North Philly, and it has various liens on it ($$$), needs to be demolished ($$$), has asbestos or lead in the ground ($$$) or just needs major work to be habitable ($$$), etc., there is this reality: There is no way the private market will develop that property without huge government subsidies, whether on the front end (grants, tax forgiveness, etc), or on the back end (like with the promise of section 8 vouchers.) The economics simply don't make sense. A speculator might buy it, if the city clears off the liens and keeps land taxes low, but they certainly aren't building something there without huge government subsidies.

So, assuming we don't have an endless supply of money for those subsidies, one choice is that the city can keep property in inventory, until we find a mythical buyer who will develop it. Good luck. Another choice is that the city can clear off the liens, keep the taxes low, advertise it in a future land bank and sell it to a speculator for very cheap, and they can sit on it themselves. Under 'the market,' those are our choices for much of the city's (and privately owned) abandoned properties. There is no mythical third way which will suddenly build and rehab tens of thousands of properties.

We may think things should be sold at 'market rate,' but when there is no market, it screams out for a different approach. Thus, what we need to think about is what is our goal with these properties. Many, many, many of these properties will not become tax generating in the foreseeable future. So, it makes sense to start figuring out a better way to think about land stewardship, through community gardens, etc.

That takes us back into messy areas- because its harder to be transparent when there isn't an open market that something can be sold at. But, it is also our reality. I think the land bank is a start, but, obviously, only the beginning of this much longer conversation.

That may be true in Nicetown, but less so in Kensington

The problem of avoiding classifying every neighborhood the same falls along a similar mistake: classifying every vacant property the same. Each one has a separate story.

For West Port Richmond, the problem there is bad zoning from 100+ years ago, combined with the City's failure to aggressively recirculate property in that section, combined with the most recent saga where the City completely failed to stop a nuisance owner of multiple properties who was armed with loads of borrowed money and then wrecked more of that section of the neighborhood, convincing others that the neighborhood was at its nadir and they split, creating more blight, less tax revenue overall, more problems for City government, more blight, more disinvestment, etc.

I said in PW the City of Philadelphia is a 360-fail when it comes to any subject remotely connected to property. It's true.

- We have so many miserable examples of fail in zoning. The new Code addresses a portion of that. It never addressed spot zoning. Councilmanic privilege will still rule the day and spot zoning will still go on Old Code or New Code. Because of that, it means if you are private or public and you want to acquire land, any land actually, you must sex up your Councilmember. You will have to in order to ensure that your zoning variances are a smooth ride. The City is not moving to an ad-hoc zoning code, it's still a permissive code. There's more by-right in it but it's not liberalized as much as some would like to believe.

- We suck miserably at tax collection. So long as you aren't in Chestnut Hill, if you have the option to discontinue paying, you can do so. For years. And not worry about ramifications from it for a very long time. The Revenue Department seems quite uninterested in even developing a formula for separating the deadbeats from the indigent and using selective aggressive enforcement. Hell... the City doesn't even want you to know that for $800, if a property has $2,500 in back liens, you can go deposit it with the RETU and kick the property yourself into Sheriff's Sale. I do that to some drug houses along with a small handful of other activists and not one has never found a buyer at Sheriff's Sale.

If I hit the Powerball, trust me: I will stop paying the Philadelphia Real Estate Tax and see how long it takes before a Preacipe for a Writ of Execution actually materializes.

- It wasn't until after some very nasty calls I made to Fmr. Councilman DiCicco's office that the idea of actually checking tax records when an L&I permit requestor shows up at the permit desk asking for something was introduced as a policy. The plans will not be looked at now unless a tax certificate is printed out showing the requestor is free of arrears. Jesus, that should have been instituted 35 years ago. Nobody thought of that until now?

- We suck VERY, VERY hard at L&I enforcement. Act 90 grants new powers, but it's up to L&I employees to actually utilize those powers and the City Law Department to aggressively pursue the cases that L&I sends it. Right now if you dodge the process server, your L&I violation is essentially "gone". I know builders who almost NEVER go to get permits because their friends are L&I employees and they don't need to worry about L&I enforcement, while at the same time I know other contractors [mainly their competition in the same neighborhood] who can't catch a break because L&I is always breathing down their neck. I think we all remember the poor cupcake truck lady who was being chased in Center City last summer by L&I. Meanwhile, I enter in a complaint about an imminent collapse on a building and the complaint disappears into the ether never to see daylight again.

- Councilwoman Sanchez helped pass a bill that does more to require landlords to identify themselves to the City. It would be easy if the City Records Department photocopied state drivers licenses of the buyer when deeds are recorded and then the OPA actually put the domicile address of the principal on there. Greenlee did some more by forcing Records to closely inspect deed changes where there is no title insurance documents present in the recording package (after all these years of Title Theft in the City). When we have to track down slumlords it's like I have to play Agatha Christie to find them. City Council staffers have similar legwork they have to do to locate them as well (usually they go check with the Water Revenue Bureau to see where the water bill goes to). It shouldn't have to be this hard.

Why is it that these issues are suddenly worth merit now, after the Great Recession, when they should have been the M.O. decades ago? What assurances does the public have that these issues will be rectified going forward?

It does NONE of us any good to hire more cops to fight crime, when the City's track record of property management is so poor that it creates more crime than PPD can solve. These reforms are just baby steps. The City needs to take it's book of 550K properties seriously and treat them as the most valuable asset in the world, not as a cancerous disease with tumors needing to be excised. Property affects our most immediate world around us. From inside our bedrooms to outdoors all the way to where we work. The City's epic failure in this department will take a long time to fix, and the last Council certainly didn't take any of these issues all that seriously except for the Zoning Code.

Heh... another bill connected to property in a way is 120017, where Councilman Jones wants to legalize Coroplast bandit signs all over creation. That bill is such a middle-finger to neighborhood residents.

I know the issues, and, with

I know the issues, and, with respect to Landvest, I know them intimately. However, see my other comment. The scale of the issue is much bigger than an inefficient city government. Period.

Second, you haven't

Second, you haven't responded to the fact that the "edits" that you hope make it into the bill, are, in fact, in the bill.

Read carefully Dan. I said

Read carefully Dan. I said these protections that Philadelphians need are not in the bill and they are still not. I responded to jennifer's comment that Council Bill 120052 is just the framework from where to start and I was supportive.

But if you want me to dissect the legislative citations, I will. Let's both pretend we're Carl Primavera, Philadelphia Real Estate Attorney to the stars, and his client is a slumlord trying to find a way around this Council bill.

16-508(2)(a)-(b): requiring full board review at a public meeting, with opportunity for testimony, if transactions depart from written policy or involve an applicant with a history of tax/water delinquency or code violation.

-- Dubiously absent of precisely what mandated steps the LBB must take once evidence is presented that a malfeasant applicant has approached them and it fails to define the word and intent of "significant". If the ownership of the real estate interests is sufficiently split horizontally enough across my partners, I can make anybody appear "clean" and get around this measure and you'll be none the wiser. "The transferee has a significant history of tax or water delinquencies", for instance. Well we all have different ideas of what constitutes a deadbeat vs. who is just indigent. Why not make this concrete because otherwise we can arbitrarily set this needle to $1,000,000+ worth of arrears or change the limbo bar so folks can dance on by?

This needs clarification or it's practically a null statement. I throw you an affinity LLC partner that I hired to represent me, and that disclosure is not in 120052 here, and I've defeated this requirement.

16-508(5): requiring a certificate of tax/water compliance from Revenue, and of code compliance from L&I for all applicants.

-- This is a roadblock already in place for L&I permit applicants as a policy directive that previously came from demands of Council unless the meaning of 16-508(5) is hopefully intended to be a catch-all more restrictive than 16-508(2)a-b. But here again, L&I will ask you when obtaining a certificate "What's the Property Address?" Have you ever done any business in the basement of the MSB building at all with L&I? There's no requirement to vet the applicant here. There's no check to see if the person just set up an LLC 5 days ago and the requestor is that LLC. This is a nonsense requirement unless it's broad enough. Again, I can have 6 shell companies here... like my slumlord friend Yechiel Lichtenstein (who just recently went insolvent on their real estate holdings in Phila.... oh and they own the massive abandominium hugging the EL at York & Jasper St), so my good LLC goes and gets all the Land Bank permits while the Bad LLC snaps up private abandomiums with CA$H FOR HOME$$$ bandit signs in the marginal areas of the city.

This requirement wouldn't have stopped a Robert Coyle from getting past this, and I think you're as well aware of that as I am.

16-508(7): requiring that the land bank use legally-binding mechanisms to enforce conditions of transfer, which allow reversal of a transaction if the transferee does not live up to obligations or code.

There is only one legally-binding mechanism available past the to a transfer to ensure compliance here and that is to record a deed restriction before transferring the property and then zealously enforcing them. DR's are open ended statements conditional of the sale, they're only as good as the paper they are printed on unless you launch civil suits at the first sign the counterparty strays from it. And what is with the wording "live up to obligations" (which? it's not specified!) or code [again, which code? the Penal code?]. I think real estate legal sharks in Philadelphia like Carl Primavera are probably laughing at this clause.

A better solution would to follow a mandate model in the language and force the yet-to-be-transformed RDA to comply to that model in the language. Broaden the requirement to force counterparties to reveal their complete identity further up in section 16-505. Specifically: "The names and domicile physical addresses registered to the president, treasurer, principal agent(s) and other assigns, including the names of all entities owned in whole or in part by the president, treasurer, principal agent(s) and assigns that hold property within the City of Philadelphia or have held property within the City of Philadelphia within the last 7 years of the application." You can't really get much clearer than that.

As far as the standards for what constitutes delinquency, that's a Council debate and I hope it's not left open ended like this or the tendency to set the bar so high that everyone skates through it will be there.

All really important points

You should definitely feel encouraged to send or work with some of the organizations/coalitions drafting recommended amendments, since we want the language tightened and improved -- but you are generally talking mostly about operational policy and implementation issues. It's somewhat unfair to claim that those problems are tied to the "land bank" structure per se; we are selling property now (slowly), and we will be next year, whether or not the vehicle is a land bank, and we should get those procedures more right than we have. But while the system is going to be imperfect, it should at the very, very least be more rationally organized than it is now.

As an aside, I do see slow movement towards some of what you are talking about - trying to track relationships between shell companies. No question, it is not operationalized throughout L&I or Revenue's systems, and its not nearly enough given the need. But there is interest, and steps in that direction at least with large-scale owners where they started to use Lexis and other database tools to actually get service on people. You mentioned the service issue, and I was literally shocked when I realized the scale on which that totally obstructs code enforcement, that there's rarely good service and everything gets dismissed without prejudice.

No, I WANT the Land Bank... I just want it clamped down

I think we're crossing wires... I WANT the Land Bank. Badly! It's complete insanity that 40 minutes to an hour of every general Council session is soaked up with property transfer measures meandering their way through Council chambers.

I'm just pushing more towards a meritocratic outcome in the final bill that we all have to live with for the next 75+ years.

Speaking of tracking down and cross-referencing that you mention... projects the City has worked with like Tim W's Phillyaddress.com and M.phillyaddress.com (go put that in your browser and try it out) need to be greatly expanded. The prices of PhilaDox is too high for many civic groups to access. RCO zoning variance approval meetings are a useful weapon to keep malfeasants out of neighborhoods, but with few civics armed with good information about the strangers that approach them seeking a project, the usual way they decide who is good and who is bad is by asking friends, and you can "buy" your friends in Philadelphia.

The Commissioner of Records has been good

About getting community groups and nonprofits access to Philadox. I'm happy to try to channel those requests...

I'll give it a spin

For now I've been letting people borrow my account (that I pay $125/mo for). Thanks for this tip!

Almost Forgot...

I think York and Jasper is in the Councilwoman's district, correct?

I'll pass along this research I did on this particular property owner. You may already have it. The Inquirer did some fishing around on it but couldn't put a bigger puzzle together than what I've got now, but one particular factory at York and Jasper Street is curiously connected to some luxury-condo development down in Rittenhouse Square along with a smattering of slum property where spinoff LLC's connected to a Mr. Yechiel Lichtenstein and his affinity partners have interest.

It didn't get interesting until I discovered they also own 728 Market Street and defaulted on a very large mortgage taken out on it. The property I was more concerned with, 1817 E York Street, which has Act 90 written all over its crumbling facade, has become a neighborhood issue since the seals were broken on the perimeter of the property last summer.

So when I looked into the former Thomas Buck Hosiery factory (also used to be a LOMAX Carpet factory at some point, when I did the historical research of the site), I uncovered this embarrassing web of ownership. It looks like Mr. Liechtenstein got himself over his head when he bought this place, then he approached EKNA seeking a variance to convert it to loft factory studios, which would have been a huge win for Kensington considering that it would be the first major structure that towers right over the EL, on Kensington Avenue, to see a massive refit and purposeful use. Most of the lifelong residents voted in favor because they were aware what a dramatic visual impact a re-birthed factory would have in such close visual range to the EL corridor, plus make Kensington Avenue all that safer with the ancillary redevelopment that would bring.

But when I peeked under the covers, I concluded that YML had a Dr. Jeckyll-Mr. Hyde Real Estate Personality. The Bad YML that ran slum properties and had mortgages taken out was diverting funds into the "Good" YML that was building high-end condos for rich folk.

Now we have a deadbeat owner with zero financial interest to respond to any of the City's code violations, plus angry ex-tenants of all the houses connected to YML that were littered with code violations.

Basically: A mini Robert Coyle Sr., but also sold units to urban professionals.

https://docs.google.com/spreadsheet/ccc?key=0AvfZUyLKR4I5dFBSMVJJUHNpOXR...

Escape hatch = brilliant

Gardens are a beautiful solution.

Whenever I think about this (lvt stuff) I wonder about the burdens of increasing taxes on poor people who own land that currently can't be usefully developed vs the benefits of incentiving development where it's possible (+ maybe shifting burden in a good way).

Not to pursue this too far, but 3 questions come to mind (for when you have time, ha): do you have any idea what percentage of the vacant land in the city seems to be currently beyond development?

Are you aware of any best practices by other cities re: such land? You mentioned Cleveland earlier.

And is moving such land towards foreclosure -- putting it in the hands of the city -- a good, workable policy, do you think? Would more escape hatches be needed?

Sorry, that's four.

samuel.durso@gmail.com

I can handle those!

It's an imperfect measure, but there's a map that Econsult made showing where cost of land acquisition plus development costs is greater than potential home sales value, or I guess vice versa (page v - it's a pretty stark map). I've also bumped squarely up against that in trying to figure out a plan to stabilize/redevelop the Coyle/Landvest houses in Kensington and Port Richmond. Almost none of them are candidates even for heavily subsidized redevelopment, because acquisition + development costs - subsidy is still > than sales price. It's also a gap in lending - effective redlining - since there isn't capital available for the kind of non-speculative acquisition and rehab that the harder-hit areas of the city really need, even if there is will and available labor.

On best practices, I haven't had the time to really separate out apples and apples. Cleveland in general was the most interesting I looked at, in terms of policy/procedure for acquisition and disposition, some realistic sense of negative value land, and code enforcement. People who care about these issues (PACDC, WCRP for example) have looked at Atlanta, and other places. We've met with the guys from Flint/Gennessee County, and Pittsburgh/Allegheny County. That kind of analysis definitely needs to happen more systematically - sadly I'm awful at managing interns. Anyone want to teach me management skills?

For the last two, that's a separate post I need to do. It's also really shocking that there has been so little public discussion following the Plan Philly/Inquirer tax delinquency series. The pretty short answer is yes, we absolutely need to move vacant/abandoned/blighted land to foreclosure, and we absolutely need better, if not more, escape hatches for low-income owners. That's the next, as-yet-unaddressed, step in the mayor's vacant land policy planning. It's crucial that we be able to foreclose on land for the purpose of clearing title, and that we are willing as a city to bid our debt and take land into inventory when it makes sense to have a directed disposition at terms we choose rather than open bidding at sheriff sale. I also worked on legislation we recently co-introduced with Councilman Bill Green's office which aims to transform tax foreclosure in several ways - accelerating it, increasing the escape hatches, and overall improving coordination and notice/access to information about the overall debt load of a property. Right now, every segment of municipal debt operates separately and is settled separately, limiting both the ability to put property into compliance and the ability to make rational decisions about the best outcome for any particular piece of property.

The scale of the problem is MASSIVE, with or without a landbank

I don't know that I totally agree with their methodology, but, either way at least from a quick look, according to the Econsult study there are somewhere between 40k and 60k vacant parcels.

And, if we fixed our land policy, they think that a total of how many parcels would be developed into housing without public subsidy? 3,400.

Thus, we fix this all perfectly, and, everything goes well, and we still have.... between 35,000 and 55,000 vacant parcels.

In other words, yes, a land bank, and efficient distribution is important, and it will help get some properties to market; to make things more efficient; to keep Jennifer from going gray, etc.

Again, even if we fix this, we still have tens of thousands of properties that will be vacant. Why? Because the huge issue/cause for 40 to 60k vacant parcels/properties is not the inefficiency of our government, or councilmanic privilege. The issue is the massive disinvestment in our beloved city, and cities across the US.

Good exchange with Brett, Dan.

It looks like Brett is saying "if you don't do it they way I want people, like me, are going to complain and that will undermine the legitimacy of the reassessment."

The obvious answer is, given the fix we are in, don't encourage the complaints and support Nutter doing what he has to do.

BTW, the discussion above about difficulties with LVT is very interesting and raises more plausible objections to it than I've seen before. However I think the answer the LVT folks would give is this: if land cannot be developed without huge subsidies, it's not all the valuable. So a LVT won't tax it very heavily even if it is vacant.

I agree with you generally

But what I've seen in looking at the actual numerical values that have been assigned in every recent valuation attempt I've looked at (yet another post!), makes me reallllly skeptical of the accuracy of our at-hand methods of valuing land in weak/nonexistent markets. I tend to think this is going to explode when we get deep into the AVI/tax reassessment process, since so far all the numbers I've seen for structures at least are radically different from each other.

Makes sense, but is it easier / fairer to do

valuation of buildings?

I suppose you can estimate the cost to rebuild for a building while the land value is totally based on a market. And when there is a weak market, it will be hard to find comparable properties.

But can't fairness problems arise with the cost of building?

For example, there are some blocks of Nicetown that have wonderful brick and wood row houses with incredible woodwork inside as well as plaster walls, etc. (I saw a lot of them when I ran for state representative in 2004 and spent a lot of time talking to folks.)

No one will ever build housing like that again, I'm afraid. The quality is so far above that found in a Pulte mcmansion that it isn't funny. (Out of desperation before we found our house I looked at one of them and asked my realtor what the doors were made of and she said "compressed shit")

So if we are really going to do the real replacement cost to figure out the value of a building, those row houses will be valued very highly, won't they? And that seems a little unfair to folks whose properties are not worth all that much because of the low land values.

I suppose if you just figure the building cost by estimating what it would cost to build the same size building with contemporary building methods, the replacement cost is a lot lower. I don't know exactly how they figure building costs.

But even then, given just how low the land values are in some places, isn't it possible / likely that on that basis the value of the building would strike us as intuitively too high?

All this is another way of saying that "location location location" and all the public / private amenities that go with really is what makes properties valuable and that value is in the land not the building which means that a LVT is likely to be intuitively fairer than a combined land / building tax.

If, that is, one can figure out the land value. And I see your point about that being difficult where the market is very weak. I'm just no sure how much of the city would have to deal with that problem.

jennifer, 2 questions

jennifer , at present the revenue dept requires unpaid taxes of $ 800 on a house before someone can pay 800 bucks to the rev dept and bring the home to tax sale. i am looking at a house in kensington where the owner passed away in march 2011. so far the cost of aquisition and fix up is WAY below the market sales price , as it has been only broken into once, so far, with only minimal damage. however due to low taxes , it will take another 2 years before there will be 800 bucks of unpaid taxes , enough for me to bring it to tax sale. by then obviously there will probably be enough damage to make it just another unsellable shell. if the city could certify a property as abandoned ,would nt it be prudent to let someone bring a home to tax sale in jan , the year after the feb taxes were due, with no minimum amt of taxes owed?
does the city have any plans to reintroduce the "house for a dollar" for owner occupiers , program that was in effect years ago for owner occupiers? the reason i ask is that the econsult map is only accurate , i believe , if you are using licensed contractor cos to do the rehabbing of the houses. i have seen plenty of houses , in similar condition to the land vestor properties , that have been totally rehabbed by local kensington handymen for 15k when "real " contracting cos were quoting 40 k for tha same work. of this 15k , 10 k was for labor , only 5 k for parts. so there are probably thousands of properties that have been deemed to be not candidates for redevelopment that an owner occupier , given the house for a dollar could fix up for about 5 k. my wife actually bought a property from the city for a dollar about 20 years ago and the city gave courses in dry walling etc and she and her brother rehabbed a house that was basically a shell, without spending a cent with licensed contractors. i believe that house for a dollar for owner occupiers , no longer exists.

No this was changed

Ian, this is what I got from Fmr. Councilwoman Joan Krajewski's office when I would ask her office to send up nuisance rentals requesting her staffers to kick it to the RETU for a tax sale.

The City Law Department will not pick up a BRT account unless the LIENS on the property are at least $2,500. The minimum starting auction price at Sheriff's Sale is $800 for any piece of real estate being put up for auction. That covers basic administrative legal cost and that's it. Historically it's been possible for any citizen to put down the $800 as an advance deed poll and the RETU accepts those if it holds the liens, or Linebarger if it was contracted and holds the right to collect the lien.

I am fighting GRB Law right now (the newest law firm to handle RE collections) and they seemed flummoxed that you can indeed hand over a cashier's check to start the Sheriff's Sale process quicker than normal. Honestly, if a market buyer approaches the Real Estate Tax Unit for a property that has sat for longer than 2 years unpaid, REGARDLESS of how much, the City Law Department should automatically print out a complaint seeking a Preacipe for a Writ of Execution and hand it over to the Court and start it immediately. The money indicates that there is market interest to transfer this property. The City should just do this automatically and without question.

What's the harm? If the new buyer turns out to be just as crappy as the old one, someone else will come along and put a deposit down on their real estate tax arrears. It's called "recirculation" and it works. Then you would have less properties falling into the City's hands to begin with to manage if it just set a quota of 1,000 tax sales a month and churned through them like high-speed sausage. The City picks up real estate transfer tax after the auction completes as well, you know. Plus the recording fees.

gee, i hope your wrong as i got the minimum $800 lien figure

from whomever picked up the phone at the revenue dept- re tax unit, when i called and asked them about the program last week. i didnt call the city law dept. this is for properties that arent with grb law firm yet. that firm is pathetic . they refuse to allow properties with them to be put to tax sale , even if you pay the 800 bucks and provide a death certificate of the deseased owner.

My understanding

For our constituents, currently, I'll either try to request through VPRC/OHCD for the property to be certified for sale, or will send them directly to the sheriff's office to put down the $800. I think that more or less functions the same way as if you go to Revenue. If you look at the draft disposition policy, this is the proposal going forward:

Citizen-Initiated Tax Sales
To facilitate the reuse of privately owned tax delinquent properties, the City will allow citizens to initiate a tax sale proceeding by posting a deposit with the revenue department. When such a deposit is received the City will prioritize and process the subject property for an upcoming tax sale. This deposit will be considered the opening bid at the sale, and will be returned to the person who posted it if that person is not he successful bidder at the sale.

With the VPRC requests, mostly they stall out. With the right factors lined up - enough tax accumulated, and/or an important end use - I've been able to get a formal request sent to the Law Department to start the foreclosure process. In my two years though, I'm still not aware of any actually getting to actual sale, and possibly not even to complaint or judgment.

The other piece of that equation is that at least under this administration the City has been unwilling to bid its debt, when that is large enough, at sheriff sale, which would avoid speculators scooping up property and let us direct and put conditions on the ultimate disposition.

I think that the issue you guys are discussing is hugely important, and actually one of the big motivating factors behind wanting a land bank. The land bank would be able to stand in the shoes of the city to bid at sale, or even to choose when to foreclose. By having that decision sit with an agency whose goal is redevelopment, rather than just revenue-collection, the whole game changes. Right now I am told over and over that it isn't worth the administrative expense to foreclose on properties with low tax debt or which have low 'market' value. Since we're on the topic - here's the link to the legislation trying to amp up tax collection, and low-income protections and notice.

(BTW, another interesting map, which I'll try to scan, is from Philly VIP - the pro bono referral firm - and shows the number of properties in Philadelphia owned by someone who is dead. It is based on comparing the names of last record title holders with the Social Security Death Index. There are a lot of those properties, and we'll never be able to use the "Tangled Title Project" to handle them all; municipal foreclosure is a crucial tool.)

Another piece of this puzzle is aggregating collectible liens. So, tax debt can be low based on our rates, but on a lot of these parcels there are also water and nuisance liens. I believe water liens could be aggregated already, to increase the judgment size, but they are supposedly still working on making the nuisance debt (including clean and seal and demos) lienable in a way that it can be foreclosed upon. If anyone has insight here, let me know.

Last, about dollar houses/entry authorizations. I don't think resurrecting those programs has been on the table in any discussions I've been in. I also know there's a perception that there aren't a lot of structures, versus lots, in public inventory now. (Though, if we were willing to use foreclosure as a tool, maybe there would be....) (And don't get me started about the PHA vacant surplus.) I personally am interested in thinking through a new, viable model for that kind of sweat equity rehab, since as I mentioned, the Landvest mess has shown me that a lot of areas of the city are simply not candidates for even subsidized redevelopment. The only model that could work is similar to what you describe - low acquisition cost, in kind/donated labor (though you do need licensed contractors to the extent the code requires it). I do however deal with a lot of 'uncompleted' transfers like these, where the person really didn't have the capacity to get the house to code, and in those cases I can really see how this can be a nightmare of administration and liability. All that is to say that someone is going to have to think through and propose a new program model, and it might want to be through a nonprofit outside of government. I am interested in the idea of revolving loan funds that could finance this sort of thing, because, again, none of the traditional housing redevelopment subsidy programs fit.

Also lemme know

If that Kensington house is on our side, and I'll try to help :D

It's actually in Fishtown I think

The target property is on Fletcher Street in 19125. I don't think it falls into your boss's district but in Mark Squilla's. I have to go back and check the maps because at some point I am going to give up with GRB Law and just contact council staff and ask that it be pushed through. It's sitting across the street from a gentrification house that just sold 3 months ago and the new owners moved in (that's who happens to have raised the complaints about the drug dealing going on complaining).

There's already 4 liens on it and next month it will get a 5th one to the tune of $5,000.

L&I already did a seal job sometime within the past 2 years since the door tag is on the plywood on Street View. It's owned by an investor who happens to own a firm in Center City (I won't say who due to politics).

BTW the deposit

The $800 deposit at Sheriff's... can that be made directly by any Philadelphia citizen to Sheriff's or are the direct Sheriff's office referrals only taken from council staff and Court Writ?

Nah, it should be anyone can go in

Though, really, god only knows what actually gets through that office's systems since they've been in such dissarray, and it all ends up at Law anyway since they're the ones to actually foreclose. That unit of the Law Dept is now formally connected with Revenue, so I assume the policy calls are pretty much the same either way (deposit at Revenue vs. deposit at the Sheriff).

We tend to refer to the sheriff because there's a Spanish-speaking person there who has done a lot of community-education work in the Hispanic community around how to navigate the sheriff sale process, and that's the constituency who is most often approaching us for help with these.

Come to think about it, I did recently have an epic battle with Linebarger to get them to either foreclose, or take a deed-in-lieu-of-foreclosure, from an elderly man who had inherited tax-delinquent properties that he could not manage and wanted off his hands before he died, so his heirs would not have to deal with the mess. It seemed to actually keep him up at night. We had to move heaven and earth and finally I think they said they'd foreclose. So it goes.

Now I know why you think the market's so great in Kensington

...you actually mean Fishtown! Haha. I was really wondering...

Actually several properties

That I am looking to send up are north of Trenton Avenue but east of Kensington Avenue. EKNA's area is also market-viable, as in there's strong interest in market-rate development. That also seems to be spreading to the formerly-dead business corridor on Front Street. Since Kensington CAPA was completed there will probably be an intersection between subsidized and market development in some pocket on either side of the EL, that much is forseeable.

We got one house in your district at 2030 E York that had squatters who damaged an adjacent property with a sewage problem and then left after 3 residents on that block managed to scream loudly enough to have the street dug up and the water shut off to the property. I don't think it's in Orphan's Court (owners are deceased), but the damaged property next door is renovated and up for sale. The damaged property is fixable (needs a basement cleanout). 2030 E York needs to be sent up to Sheriff's so that someone with means can gut and redo the plumbing, bring the remainder of the house back up to code (it's also an Act 90 violator... missing window on the 2nd floor), and get it back to market, where it will probably turn into a performing rental property.

I know similar situations that are going on in West Kensington where, if a block could be cleared of just the 1 or 2 nuisance properties that are on it, the remainder of the block would spring to life and perhaps later down the road, property owners would take the bars off their windows.

you are right

although the revenue dept will take your 800 bucks once a property has 800 bucks of liens on it, i called the law dept and they told me they would refuse to move the property to sheriff sale until "a couple " of thousand dollars of liens are on the property. they said there was no exact no! for a house in kensington , that means the house has to sit for about 6-7 years before the law dept will allow a property to be moved to sheriff sale. obviously by then the property will probably be worthless

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Syndicate content