Pew Report: Philly Could Recoup $155 Million in Property Taxes

A report released by the Pew Charitable Trusts’ Philadelphia Research Initiative addressing the city’s property tax delinquency found that the City of Philadelphia could collect roughly $155 million of the $515.4 million that it was owed in unpaid property taxes as of April 2012.

The study released Thursday, Delinquent Property Tax in Philadelphia: Stark Challenges and Realistic Goals, compared the city’s property tax delinquency to 36 other metropolitan cities and found that Philadelphia had the fifth highest delinquency rate in 2011, the last year for which statistics were available.

Tax delinquency -- property owners failing to pay the local taxes on their real estate -- has become a growing issue in Philadelphia and other major cities, but the study found that many of the cities with lower delinquency rates than Philadelphia had adhered to stricter enforcement methods. Primarily, they start the foreclosure process on people's homes much earlier.

On a call with members of the press, author of the report and researcher at Pew, Thomas Ginsberg, said the City will have to make aggressive changes to its policies in order to collect the money it is owed.

“This is not about speed, this is about strictness. The places with high collection rates tend to stick to a strict collection method. Our research shows that the City can certainly do better, but it is making steps in the right direction,” Ginsberg said.

Mayor Nutter’s spokesman, Mark McDonald said the report is helpful because it explains some of the Administration’s efforts to collect on the delinquencies.

“The report does a reasonably good job of describing the improvements in tax collection that we are working on through both new laws from Harrisburg and new investments that we want to make in staff and software to better collect taxes,” McDonald said.

The Nutter administration crafted a five year plan that makes a number of changes to improve its collection process, including reorganizing the city’s tax-collection staff and requesting $40 million in new technology and staff to track and pursue tax delinquents.

“We need to make these investments to increase the City’s analytical capabilities -- the ability to identify tax delinquent property holders who are most likely to pay and have the resources to pay,” he said.

Earlier this month, city council passed a tax delinquency reform measure that established a stricter, more streamlined set of rules that would apply to all agencies assisting with its collection processes. The bill also guarantees what Councilwoman Quiñones-Sánchez called, “a clearly defined timeline for enforcement.”

While in the past, Philadelphia has delayed taking action on delinquent properties, the new bill requires any delinquent owner that fails to enter into a payment agreement or settle its debt to face “prompt” foreclosure action. Taxpayers who default on payment plans could face foreclosure within a year of the default.

McDonald noted that $19 million of the $28 million in collections it expects to make on behalf of the School District in the next fiscal year will come from property taxes. This compared to only $3.5 million the city anticipates will be collected from the liquor tax.

While the report found as much as 70 percent of the $515.4 million owed to the City may still be uncollectable, McDonald says the $155 million goal is attainable.

“I think based on what we’re in the process of doing; certainly by 2018 we think conservatively we can increase collections by at least $230 million.”

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