To Mayor Nutter: Close Delinquent Properties, Not Schools

by Christopher Paslay

Instead of cutting badly needed school personnel and resources, Mayor Nutter should crack down on the city’s deadbeats who owe $472 million in delinquent property taxes. 

Despite laying-off teachers, nurses, school police officers and teacher aids, freezing salaries, cutting athletics, and shutting down after-school activities, the Philadelphia School District continues to struggle financially. 

Thomas Knudsen, the School District’s Chief Recovery Officer (who makes $25,000 a month), recently announced that the District faces a $218 million deficit for the 2012-13 school year, and that if Mayor Nutter’s new property-tax proposal does not pass City Council, the District may not open in the fall.

“It is not clear that we could, in fact, open schools this fall,” Knudsen said.

Nutter’s new property tax proposal, nicknamed “Actual Value Initiative,” would serve to reassess properties across Philadelphia and adjust taxes to an “actual” or current rate.  In theory, this is supposed to bring in an additional $94 million to the School District. 

But Nutter’s property tax reassessment plan is only a drop in the bucket, and continues to put the burden on hard working middle class citizens.  His plan does little to go after deadbeats who refuse to pay their fair share of property taxes, and does not adequately address the problem of vacant buildings. 

In August of last year, the Philadelphia Inquirer did a series on Philadelphia’s delinquent-property-tax collection system titled, “The Delinquency Crisis.”  In a report headlined “Taxes wither on the vine,” the Inquirer wrote:

Philadelphia runs the least-effective delinquent-property-tax collection system of the nation’s biggest cities, a system that has created a “culture of nonpayment” and cost the city and cash-strapped School District $472 million in unpaid real estate taxes, penalties, and interest.

It is a delinquency epidemic that reaches from Chestnut Hill to Point Breeze, infecting every neighborhood. In all, there are nearly 111,000 delinquent properties, or about 19 percent of all parcels in Philadelphia, according to an Inquirer and PlanPhilly.com analysis of city data.

The past-due properties include such pricey parcels as the proposed Foxwoods casino site, an Old City art gallery, a South Philadelphia hotel, and choice real estate a block off Rittenhouse Square.

But it is in low-income neighborhoods where the delinquency crisis has peaked and where the city’s response has been the least effective. . . .

According to the Inquirer report, Philadelphia has more tax deadbeats per property than any other big city in the country.  Here are some facts highlighted in the report

  • The delinquent tax problem has grown under the Nutter administration.  In May 2009, there were just over 100,000 tax-delinquent properties in Philadelphia. On April 30, 2011, the count had risen to nearly 111,000.
  • Tens of thousands of parcels are never subjected to any enforcement action beyond sternly worded letters from the city Revenue Department.
  • The city’s typical tax delinquent is 6.5 years behind and owes $4,249 in taxes, penalties, and interest.
  • 26,000 properties are at least a decade behind, and the owners of nearly 8,500 properties haven’t paid a dime for 20 years or more.
  • According to city records, the largest delinquent, owing $6.1 million in principal, penalties, and interest on five unpaid years including 2011, is Roman Philadelphia Property L.L.C. at 1499 S. Columbus Blvd., site of the potential Foxwoods casino.
  • Cumulatively, the city’s delinquent properties are 720,000 years behind in taxes.

Of the delinquent properties, Frank S. Alexander, a law professor at Emory University and a leading national authority on improving property-tax collection systems, told the Inquirer:  “That’s an astronomical level of delinquency. It is phenomenally high.  Those numbers tell you there is a very high rate of nonenforcement. It means that the city has made a decision not to go after these properties.”

Mayor Nutter may not be going after these tax deadbeats, but he is going after schools.  Nutter and Knudsen have targeted teachers, nurses, custodians, school police officers, noontime aids, cafeteria staff, athletic coaches, after-school activity sponsors, art programs, music programs, and unions, among others, in an effort to balance the School District’s budget, all of which will have a negative impact on learning. 

Not surprisingly, Nutter and Knudsen are now implementing scare tactics—à la Arleen Ackerman and the Great Full-Day Kindergarten Crisis—suggesting that schools may not be able to open in the fall.  Not unless, ahem, the School District’s five unions cough-up $156 million in givebacks, and Philadelphia’s hard working citizens (who actually pay their taxes) submit to another property tax increase.

It’s time for Mayor Nutter to get his priorities straight and make an honest effort to recover the $472 million owed to the city.  He must take the high road and finally confront the city’s tax cheats instead of balancing the School District budget on the backs of hard working citizens and their children.

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3 Comments

Filed under After School Programs, School Budget

3 responses to “To Mayor Nutter: Close Delinquent Properties, Not Schools

  1. LIsa Haver

    Anyone who reads this and wants to stop this crazy five-year plan should attend at least one of the community meetings on the subject. Go to the SD website for all of the dates and times. We don’t have much time.

  2. Sign my petition to demand that the City collect the $472 million in overdue property taxes FIRST before raising property taxes yet again!

    I support AVI, but it should be revenue neutral in its implementation as was promised. Keep your word, Nutter!

    http://www.change.org/petitions/the-philly-mayor-and-city-council-gov-corbett-pa-house-and-pa-senate-collect-the-472-million-owed-philly-in-overdue-property-taxes

  3. Excellent article. Would love to post to my fb account

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