A three-part investigative series examining Philadelphia’s tax delinquency crisis. Part one: the staggering true costs of endemic delinquency
The neighbors did what they could to dress up the gaping wound on their block. They painted the steps black and the porch a bold bluish-green. In the fall, they put a pot of mums out front.
But cosmetic touches only do so much for an abandoned shell of a house with sheet metal for windows and a slab of plywood for a door.
This wreck in the working-class 4400 block of North Orianna Street in the city’s Hunting Park section is just one of about 100,000 tax-delinquent properties in Philadelphia, a $5,780 drop in a half-billion-dollar bucket of defaulted payments to the city and school district.
Almost anywhere else in the nation, the listed owner of this husk of a house – a seemingly defunct, Main Line-based, property-holding company – would have long since been forced to pay up or lose the lot at sheriff’s sale. But in Philadelphia, holding owners accountable for delinquent property like this decrepit two-story rowhouse on a block with dozens of children has not been a priority.
For the roofers and substitute teachers who make their homes on the 4400 block of Orianna, the failure to enforce tax law has diminished both quality of life and property values. That single ruinous, tax-delinquent house has lowered the value of the homes within 500 feet by a total of $38,000, a new analysis finds. When the effects of other nearby delinquents are piled on, the total hit to the value of these working-class homes approaches 40 percent, lowering their worth to about $55,000 apiece.
For Philadelphia as a whole, city government’s decades-old practice of neglect has been even more disastrous.
A year-long PlanPhilly/Inquirer investigation into the city’s real-estate tax enforcement system and a professional economic analysis of property data has found that mass delinquency cripples the tax base, erodes the home equity of hundreds of thousands of owners, and starves both City Hall and the school district of badly needed funds.
The investigation and analysis found that:
- Delinquency depresses the overall property-tax base by at least $9.5 billion, a staggering sum that represents almost 10 percent of the city’s $98.5 billion in taxable real estate.
- On average, single-family homes are worth 22.8 percent less on the open market than they would be if they had no delinquent neighbors.
- If delinquency was eliminated – a goal that most U.S. cities approach and some cities achieve on a regular basis – the tax revenue generated by a healthier tax base could be as much as $298 million a year.
- Some delinquent properties are owned by low-income homeowners who genuinely lack the means to pay. But most are not. At least 59 percent of all delinquent real estate in Philadelphia belongs to landlords, speculators and investors who do not live at the delinquent properties they own.
- Delinquent properties are voracious consumers of scarce city resources and prodigious generators of blight, accounting for far more than their share of taxpayer-funded demolitions, code violations and court hearings.
- Very few neighborhoods are immune to the effects of delinquency. Ninety-six percent of all single-family homes have lost property value because of nearby delinquents.
- Despite these effects, tax delinquency has received little sustained attention from most administrations for at least the past few decades. Mayors have, on occasion, announced initiatives promising to crack down on the largest of deadbeats. But none of these programs have dealt a serious blow to the problem.
Everyone loses, except the investors
Philadelphia’s decades-long neglect of property tax collections has been a disaster for public schools, the city budget, and typical taxpaying homeowners.
But the system does have its advantages for low-rent landlords, out-of-town speculators, and anyone else interested in playing property Powerball, a game where the objective is to pile up real estate in hope of hitting a gentrification jackpot, while keeping out-of-pocket expenses – like taxes – as low as possible.
Some are big winners, such as the investor who picked up three adjacent Northern Liberties lots in 1994 for a combined $16,000, skipped paying taxes on the lots for more than a decade, and only made good on the debt after flipping the parcels for $750,000 in 2010.
Such speculative windfalls are rare, but it’s not for lack of trying. Of the roughly 100,000 tax-delinquent properties in Philadelphia, at least 57,500 are owned by investors, not occupants. These are parcels deeded to suburbanites and Floridians, developers and Brooklyn-based holding companies, small-time local speculators and real estate tycoons with dozens of properties to their name.
They are property magnates like Antoine Gardiner, a Villanova resident and owner of a property management company, Bizness As Usual. According to public records, Gardiner and his company owe $471,000 in back taxes on 58 properties, many of which are rentals, though Gardiner disputes the city’s accounting.
Or Edward Williams, the owner of record of 23 vacant lots that are $69,000 in arrears, most of them clustered in the blocks east of Temple University. City records show Williams snapped up many of the parcels in the 1980s for as little as $100 or $200 apiece, prices that reflected the bombed-out condition of the area at the time. The neighborhood is recovering, but the Williams-owned properties sit there, blighted and unused.
Investors like these form the stubborn core of Philadelphia’s tax delinquency dilemma. The city’s decades-old delinquency epidemic – the worst of any big city in the country except Detroit – has reached a level where it depresses the overall tax base by at least $9.5 billion, saps an average of 22.8 percent of the market value of single-family homes with delinquent neighbors, and deprives City Hall and the cash-strapped school district of $298 million a year, an Inquirer/PlanPhilly investigation has found.
Those calamitous effects are mostly the work of tax-delinquent investors, who owe at least $316 million in unpaid taxes, penalties, and interest, compared with the owner-occupant tab of $200 million. The average investor-owned delinquent property is 8.6 years behind on its taxes, compared with 5.4 years for owner-occupied delinquent property.
The review of city tax records further showed that:
- At least 11,000 of the tax-delinquent properties are owned by people and entities with billing addresses outside Philadelphia, from Salt Lake City and Los Angeles to Puerto Rico and Peakes Island, Maine.
- Tax-delinquent investors in the seven suburban counties surrounding Philadelphia owe $41.4 million to the city and school district in taxes, penalties and interest. Cumulatively, those suburban-based property owners are 44,500 years in arrears on their city real estate taxes.
- About a third of all tax-delinquent properties are owned by a company or individual with more than one delinquency.
- Of the 8,641 properties that are 20 or more years delinquent, more than 80 percent are investor-owned.
- The ranks of the biggest delinquents – the top 500, who collectively owe $62.9 million – are loaded with investors, 391, to 109 owner-occupants.
- A significant share of delinquent deed holders are dead. The Inquirer and PlanPhilly examined the paper trail of 380 tax-delinquent properties that were a decade or more in arrears, and found that 20 percent were still titled to defunct companies or individuals listed as deceased in the Social Security Death Index.
The findings run counter to the long-standing assumption of many city political leaders that the delinquency rolls are dominated by low-income owner-occupants, a belief that has helped to undermine rigorous enforcement. In reality, only 21,600 tax delinquents – about 21 percent – are owner-occupants living in neighborhoods with low to moderate median household incomes.The Inquirer and PlanPhilly shared these findings with the Nutter administration six weeks ago, seeking answers about the high level of investor ownership of tax-delinquent properties.
Delinquents Enabled by City’s Failings
For decades, City Hall has been an indifferent steward of Philadelphia’s most elemental resource: the land itself.
The result has been low collection rates on real estate taxes, inaccurate property assessments, suspect property data, and poor management of thousands of parcels owned by city agencies.
The failures represent a breakdown in some of the most basic functions of municipal government, with enormous consequences for the city: thwarted development, the spread of blight, a stunted tax base, and diminished everyday quality of life for 1.5 million Philadelphians. Given the decades of municipal neglect, repairing these land-management systems and changing the behavior that caused the failure is a Herculean task.
But the job is not an impossible one, tax delinquency experts say. Indeed, these are duties most city governments perform as a matter of routine operations.
The Nutter administration’s release last month of new assessments for most of the 580,000 properties in the city was a critical first step in fixing the property management problems — provided the assessments prove to be reasonably accurate and City Council does not balk at enacting the Actual Value Initiative.
But the city’s progress on other fronts has been far less promising.
All objective indicators show that the delinquency epidemic has grown worse since Mayor Nutter was sworn-in, a year-long Inquirer/PlanPhilly investigation into the city’s property-tax delinquency and land-management systems has found. By some criteria, the city’s recent land-management and property-tax collection performance has been historically poor:
- Between 2008 and 2011 — the last year for which complete data is available — Philadelphia’s one-year property-tax collection rate has averaged just 85.5 percent. That average is lower than any big city in the nation, including Detroit, and a full 10 percentage points below the average collection rate of the 20 biggest cities over the same period. Some cities, including Boston, Baltimore and San Jose, routinely collect 99 to 100 percent.
- The city’s collection rate has hit a low point during the Nutter administration. The three single-worst collection years since 1980 have all been recorded on Nutter’s watch: 2009, 2010 and 2011. By this widely recognized standard, every mayor since William Green has had a stronger collection record than Nutter.
- Few chronic delinquents are taken to court by the city, a lax practice that appears to encourage non-payment. A survey of 593 randomly selected properties that in 2009 were delinquent for three or more years found that 86 percent were still in arrears on their taxes, and that 77 percent have not been sued by the city for non-payment.
- The city has issued at least 10,000 licenses and permits to tax-delinquent properties over the last five years, in apparent violation of the City Code.
- City land sales have ground almost to a halt under the Nutter administration, a trend that locks up thousands of publicly owned pieces of vacant land and empty homes in a state of disuse, and, frequently, disrepair. Since a peak in 2005, the annual rate of sales of public property has plummeted 74 percent, a review of deed transfers found.
City Commissioners Stephanie Singer and Al Schmidt were supposed to be this era’s best reform candidates, but thanks to the divisive voter ID law and political infighting, it looks like nothing’s going to change—at least, not due to Singer and Schmidt.
“Wait,” a man in the audience says, early in the evening. “Who are you? Are you Singer?”
She nods. A look of compassion flickers across the man’s face. Then he blurts out: “What happened to you?”
It’s a good question, and one that a lot of reform-minded Philadelphians have been asking. Almost 14 months after Singer took office vowing to bring “free and fair” elections to Philadelphia, she and her fellow commissioners are stonewalling a panel appointed by Mayor Nutter to probe Election Day irregularities. Meanwhile, Singer is now openly at war with her fellow commissioners, including reform Republican Al Schmidt, who took office with her and had been expected to play Joe Clark to her Richardson Dilworth. Instead, Schmidt masterminded a surprise coup, teaming up with sole incumbent commissioner Anthony Clark (a figure best known for spending as little time in the office as possible) to depose Singer from her chairmanship immediately after Election Day last fall.
One might expect a Republican-led putsch of a Democratic elections boss to generate major controversy in a city like Philadelphia. But the widespread perception was that Singer had bungled the job, and few Democrats objected. Consider that 12 days before the presidential election in November, Singer dashed off an email to 2,000 of her closest friends, including many in the media, that began: “As a woman, and as a Jew, I am horrified at the prospect of Republican control of government.” Singer went on, “If you are glad to see me doing the work I am doing, please consider this: It would have been much harder to dedicate myself to work through my entire adult life to date if I had to either prepare for the prospect of unplanned motherhood or forego that natural, healthy source of joy and comfort, sex.”
Uh, too much information, Commissioner? And too much partisanship as well, considering the email was sent on the eve of a contentious contest by the very woman responsible for overseeing a free and fair election in Philadelphia. And yet as glaring as her mistakes may have been, Singer’s quick political demise tells us as much about the city’s political culture as it does about her personal failings. In truth, reformers in Philadelphia usually disappoint, if not always quite so spectacularly.
St. Joe’s Prep produced scores of the city’s ruling class, including Michael Nutter, John Dougherty and Jim Kenney. But can it keep going?
John J. Dougherty looks ready to fight. His mouth is set in a grim line, his hard eyes are wide open, and his eyebrows are arched like the back of a cat prepared to pounce. Mayor Nutter wears a well-practiced smile. He comes across as friendly and self-possessed, but seems to be holding part of himself back. Councilman Jim Kenney resembles a shaggy, good-natured dog; his colleague William K. Greenlee looks a bit like a turtle, and Councilman Brian O’Neill sports a cocky grin. Then there is Vincent Joseph Fumo, with his handsome features—indeed, they’re almost delicate—arranged just so, hinting at the hauteur to come.
These early glimpses of Philadelphia’s political elite all have the same source: the yearbooks published by St. Joseph’s Preparatory School, the North Philadelphia institution that is the city’s preeminent power factory.
This Jesuit-run school for boys has educated two of Philadelphia’s last five mayors, three current members of City Council, political operators like Doc and A. Bruce Crawley, and a large chunk of the more anonymous elites who make this city run: attorneys and high-powered bureaucrats, CEOs, judges and journalists.
And it’s no accident. “We want to influence power,” Father Bruce Maivelett, the Prep’s director of mission and ministry, tells me matter-of-factly. “And that is one of the primary reasons why we’re involved in the ministry of education.”
For most of its 161-year history, the Prep has influenced power by taking Philly’s smartest and most ambitious middle-class Catholic boys and turning them into men who are inclined to wield power, and unusually adept at doing so. It’s not an exaggeration to say that the Prep, for better or worse, has helped to define Philadelphia’s political culture. Its graduates—both those in the public eye and those who prefer the back rooms—exercise that much clout.
But the Prep is changing. Indeed, it’s been changing for some time. Tuition there has increased sharply, and so has the percentage of wealthy suburban students. There are far fewer bright, streetwise city kids in the Prep’s hallways today than when Nutter and Dougherty were enrolled. The Jesuits themselves are in shorter supply at the Prep as well. Even the long-bleak blocks surrounding the school at 18th and Girard Avenue are changing, as gentrification pushes north.
All of which means the Prep is now manufacturing different sorts of leaders than in years past. Some worry that the new generations will be less interested in pulling the levers of power in Philadelphia. And that’s possible. But there’s also reason to hope that those students who take up the Jesuit call to influence power will be better at it than the Prep-trained leadership class we have today.
Democrats are licking their chops for Pennsylvania Treasurer Rob McCord to run against Governor Corbett, but the state may not be ready for a thoroughly modern politician.
What makes this establishment enthusiasm for McCord so interesting is the fact that he in no way resembles gubernatorial candidates of the past. Pennsylvanians tend to be traditionalists when it comes to their elected leaders. Governors Corbett and Rendell are both redolent of the 20th century, with old-fashioned political résumés and brands (Rendell the charismatic operator, Corbett the sober uncle). So were Dan Onorato (a longtime lawyer and pol) and Lynn Swann (the ex-athlete trope).
McCord, though, is a thoroughly modern politician. He’s run a think tank and a series of investment funds. He’s considered a critical early leader in the development of the region’s tech industry. He has an African-American wife. And he entered politics late in life, meaning he has ascended without the benefit—or baggage—of a machine to call his own.
All of which makes him one of the most intriguing figures to appear on Pennsylvania’s political stage in some time. Can a candidate as novel and contemporary as McCord win in a state this conventional? He seems sure to test that question. But when?
New people. New attitudes. New ideas. New neighborhoods. Philadelphia is transforming faster than it has in half a century.
For too long, Philadelphia was a city besotted with its past, disinterested in its future, and stagnating in the present. Innovation was for other cities. San Francisco would corner technology. New York would figure out how to cut crime and scrub blight. Chicago would take the lead on gentrification and redevelopment. Philadelphia? We had Rocky. And Tastykake. And the memory of relevance.
But that’s changed. Somewhere in Philadelphia’s long escape from the urban Dark Ages of the ’70s and ’80s, the city began to craft a character that was a bit more in step with the times. We saw the emergence of higher education and medicine as the indisputable new economic anchors. Center City was recognized for the ideally sized and eminently walkable gem of a downtown it is.
Now, at last, there’s an unmistakable momentum to the city’s reinvention, an almost palpable dynamism that you used to have to travel to New York or Boston or Washington, D.C., to feel.
Finally, Philadelphia is doing what cities are supposed to do: evolving. But into what?
Skeeved out and intimidated by Philly politics, the city’s newest residents are redefining civic engagement. But how far can they go without taking on City Hall?
The new Philadelphians just keep coming. From too-big exurb mini-mansions and too-small Manhattan studios; from San Francisco and Shanghai; from the beat-up ’burbs of Delaware County and the dormitories of Penn, Drexel and Temple. They’re young professionals and empty nesters, Cambodian immigrants and Kensington-bound hipsters. And there are many more of them than you likely realize.
In 2007 alone, an estimated 56,000 new residents made Philadelphia their home. A year later, there were another 62,000. Then 64,000. In 2010, the tide reached 70,000. Somehow, someway, they’ve kept coming.
And thank God for that. It’s terrifying to think where Philadelphia might be were it not for these new residents, who have both reversed a 50-year pattern of population decline and breathed new life into a tired old post-industrial city. They are remaking neighborhoods, invigorating the arts and restaurant cultures, giving employers reason to again consider doing business here.
But where you don’t see much impact—at least, not in the traditional sense—is in the corridors of power. For all they’ve done to change the city, these new Philadelphians, as a class and voting bloc, are political also-rans—when they bother to run at all.
Six new City Council members took office this year. But not one of the new members is a new Philadelphian. Just one City Councilperson didn’t grow up in this town, and the vast majority of the 17 members have spent their entire lives in Philadelphia. The 2015 mayoral field could be one of the most crowded in city history, but all six of the most oft-mentioned contenders are native Philadelphians, or near enough to make no difference.
Indeed, with the huge exception of Mayor Nutter—a man whom new Philadelphians tend to like and support—the city’s political scene today looks much the same as it did before the new Philadelphians arrived en masse. A few of the players have changed (see Fumo, Vince). But old-fashioned political power is still pretty securely in the hands of a few big interests and institutions. Unions. The Democratic City Committee. Big business and the Chamber of Commerce. And long-established political factions, like the Dougherty and Fattah organizations.
So what is it with these new Philadelphians? They have time for night markets and guerrilla gardening, but direct participation in local politics is beneath them?
Well, yes and no. Both skeeved out by the nature of the city’s political culture and intimidated by its strength, the new Philadelphians have made an end run around the traditional political system, channeling their civic energy into nonprofits, neighborhood associations, and loose networks of like-minded activists. Consciously or not, the new Philadelphians have decided they don’t need to take over City Hall in order to remake Philadelphia in their image.
By now it’s nearly the consensus view in City Hall: Philadelphia’s wage and business taxes are too high, and should be reduced in order to create more jobs and lure more companies.
Doing that, though, is devilishly tricky. There are only two real options. The first is to cut spending, a politically unappealing choice in a city where public resources are already stretched thin.
The alternative – one that’s been endorsed by a pair of tax commissions and independent experts – is to change the tax mix. Charge less in business and wage taxes, and increase other taxes, principally the tax on real estate.
But there’s a big and yet often overlooked problem with the approach: nearly a third of the total value of property in the city of Philadelphia is exempt from property taxes, a ratio that’s been climbing in recent years and is among the highest of any big city in the nation.
In the last decade, Philadelphia’s inventory of tax-exempt property has nearly doubled, the explosive growth driven by the city’s surging non-profit sector and the popular 10-year real estate tax abatement program.
There are now 41,074 parcels in the city that are fully or partially exempt from property taxes. The total value of this class of tax-exempt properties has grown by 54 percent over the same period, an Inquirer/PlanPhilly analysis of city property records found.
Today, Toomey is the most prominent Pennsylvania Republican in Washington, D.C.—one whose credentials as a conservative are unquestioned, owing mostly to the fact that he was howling about the deficit and fiscal discipline more than a decade before the majority of his party took up the tune. There is even talk that he would make a fine vice presidential pick, the perfect choice to ease the anxiety of conservatives who worry that a onetime Massachusetts moderate like Mitt Romney might go squishy.
Toomey’s rapid ascent—from the periphery to the vanguard of the national GOP—has little to do with his own evolution. He’s changed hardly at all since 2004. He has the same alarmingly white teeth, and a lean, rigid bearing that calls to mind a retired military man. (He comes by that through temperament, not a service record.) He’s 50 years old, and the lines on his steep forehead have deepened into trenches, but otherwise Toomey is much the same. And so are his politics.
The nature of the Republican Party, though, has changed dramatically. Toomey might have been a radical by the mainstream GOP standards of 2004, but in 2012, stacked up against the likes of Jim DeMint and Sarah Palin, Donald Trump and Michele Bachmann, Toomey comes across as the most sober adult in the Republican room.
Combine that with the admirable rigor he brings to his thinking about public policy, and it’s no wonder leading Pennsylvania Democrats have come to view Toomey as a worthy adversary, and perhaps even a partner—some of the time. Ed Rendell says, “Pat Toomey has got a chance to emerge as one of the constructive conservatives who are willing to be realistic.” And Alan Kessler, one of the leading Democratic fund-raisers in the nation and a finance chairman of Hillary Clinton’s 2008 presidential campaign, says, “Quite frankly, we need more Pat Toomeys.”
Which means for now, Toomey is pulling off a trick that is supposed to be impossible in our poisonously partisan politics: keeping the trust of his base while winning the respect of at least some of his political opponents. And that gives him a chance to be one of the most powerful players Pennsylvania has sent to Washington in a very long time.
As the Council meeting wraps up, I approach Brown and ask if she’s planning a run for mayor, expecting a wink and a sly “We’ll see.” Instead, she tells me about her 16-year-old daughter, who’s getting ready for college. She talks about the financial challenge of resigning her Council seat to run for mayor, and the personal sacrifice that’s required. She says she’s already walking a tightrope backwards in heels, and how can she run for mayor on top of that?
And this, I think to myself, is the city’s leading political champion for women. What a cop-out.
In 1999, former Councilwoman Happy Fernandez became the first credible female candidate for mayor in Philadelphia’s history. She was clobbered, winning just six percent of the vote and finishing fourth in a field of six. But Fernandez still acquitted herself well: The campaign was thoughtful, her credentials were impeccable, and the press and her rivals treated her seriously. She ought to have been the first of many credible female candidates for the job. But so far, she’s been the only one. With the cartoonish exceptions of fringe candidate Queena Bass and accidental 2011 GOP nominee Karen Brown, no woman has so much as gathered signatures for the city’s top political job since.
And the mayor’s office is no anomaly. There are 21 Pennsylvanians representing the state in Washington, D.C. (two senators, 19 House members)—and just one woman among them, Democratic Rep Allyson Schwarz. There are so few women in elected office in Harrisburg that the Commonwealth annually competes with the likes of Mississippi, Alabama and South Carolina for the title of Most Mad Men-Like State Capital. This year, Pennsylvania ranks 42nd in the nation in female statehouse representation, which is actually a high-water mark.
Powerful local women blame the old-boy network. And the Democratic machine. And the testosterone-fueled political thuggery endemic to Philadelphia. They blame the conflict between family life and the relentless demands of political life. But the more thoughtful ones also blame themselves.
After all, there are informal networks that protect entrenched interests in every corner of America, and that hasn’t stopped Chicago, Baltimore, Pittsburgh, D.C., Atlanta, Houston, Dallas and Phoenix (among others) from electing female mayors. Politics is every bit the blood sport in New Jersey and Illinois that it is in Pennsylvania, and yet those states rank in the top 10 for female statehouse representation.
The biggest difference is that elsewhere, women actually run.
Early on the morning of June 13, 1984, John Keyser and eight other firemen entered a burning rowhome on the 2000 block of Tulip Street in Fishtown, in search of an old woman supposedly trapped on the second floor.
The smoke was thick, and there was garbage and clutter all over the place, so the going was slow. Keyser remembers crawling over a motorcycle in the kitchen. He was approaching the staircase when, with no warning, the house caved in. The floor gave way beneath him, he tumbled into the basement, and multiple stories’ worth of plaster, wooden beams and junk came crashing down on top of the firefighters. Keyser and seven others survived. Fifteen-year veteran Joseph Konrad didn’t.
That, Keyser says, was probably the closest call of his 34 years of fighting fires in the City of Philadelphia. He retired in 2008, satisfied with his career, but happy to end it at the age of 55. “If someone’s hanging out a third-floor window in a burning building, do you really want it to be a 65-year-old guy that goes and gets her?” says Keyser. His family’s financial security was assured, thanks to the city’s pension system. Keyser is paid just shy of $50,000 a year. He’ll get that check for the rest of his life.
And really, who would begrudge him a comfortable retirement? Here’s a man who literally risked his life for the residents of Philadelphia. It seems eminently fair that Keyser is paid enough in retirement to afford a handsome Cape Cod two blocks from Burlholme Park in the Northeast. His condo in Ocean City, Maryland? Well, that’s more than a typical taxpayer can manage. But it’s no palace, and it’s hard to argue that he didn’t earn it.
But there’s a problem. While John Keyser on his own may seem worth every cent, he was just one of the 1,407 municipal employees who retired from the City of Philadelphia in 2008. Each of them is owed a lifelong pension. In all, there are 34,966 city pensioners now receiving monthly checks.
And together, John Keyser and the 34,965 other retirees are making beggars of City Hall.
PHILADELPHIANS HAVE LEARNED through bitter experience to expect less and less of their city government. Year after year, more services are cut than expanded. Libraries are subjected to commonplace “emergency closings” due to staff shortages. Mechanical leaf collection is gone; street repaving and pothole repairs are completed on slower schedules. Even for that much, we pay more. Three years running, planned tax cuts have been scotched, and rates were raised on other levies, like property, parking and sales taxes. Increasingly, Philadelphia has a government that demands more from its citizens even as it gives them less.
What’s to blame? The causes are complex, and include everything from generational poverty and white flight to the Great Recession. But more than anything else, it’s Philadelphia’s dull, maddeningly complex and immutable pension system that has sapped the strength of city government. There is no single greater drain on the city’s capacity—to fight crime, to fund education, to clean the streets or to cut taxes—than pensions.
Philadelphia’s pension fund—the $4.7 billion pot that writes pension checks for retirees—has only half as much money as it needs to be self-sustaining. That’s a dangerously low funding level, one of the worst in the nation. Left on its own, the fund would be insolvent by 2015. But the city won’t—and legally can’t—let that happen, so it writes massive checks each year to cover the pension benefits the fund can’t.
This year and next, Philadelphia will spend 18 percent of its total budget paying for pensions. Those payments—$630 million this year, $660 million next year—are non-negotiable. (The state constitution forbids cities from shorting pensioners.) And they are devastating for a city with so many other needs.
Let’s start with tax relief. With $630 million, the onerous city wage and net profits tax could be cut in half. Or you could eliminate the business privilege and city sales taxes altogether. Either option would, overnight, make Philadelphia—long regarded as one of the most hostile business locales in the nation—financially competitive with any city in America. That means jobs, and in the long run, the sort of prosperity that has eluded Philadelphia for more than 50 years.
Perhaps you think it would be wiser to invest the money in city services. With $630 million, the city could just about double the departmental budgets for the police, the Free Library and Parks and Recreation. Imagine: more cops per capita than any big city in the nation; a library system to rival those of ultra-educated cities like Seattle and San Francisco; a Fairmount Park to be proud of, every bit the equal of Golden Gate or Central Park.
Another option: Increase spending on capital projects by a factor of five. Stop babbling about redeveloping the Delaware waterfront and just do it. Those comparisons likening the Ben Franklin Parkway to the Champs-Élysées are embarrassing, but $630 million (in one year alone) sure would narrow the gap.
But because of the pension problem, such investments are utterly out of reach. “We can’t do any of it as long as we have these obligations that essentially strangle us,” says City Councilman and mayoral aspirant Bill Green.
If the failures of the past are any indication, Philadelphia won’t be able to escape its fate. Not because there aren’t solutions, but because to date, the system has proved unable to enact them. Union workers could start contributing more to the fund. New city employees could be steered into 401(k)-type plans. Limits could be placed on the egregiously generous pension benefits for elected officials. City Council could kill DROP, the costly pension perk that so outraged the public last year. Bigger fixes, which would have a more immediate impact, include selling off core city infrastructure—like the Gas Works and the Water Department—and putting the proceeds into the pension fund.
None of the solutions are easy. Each is fraught with political risk and loaded with very real consequences. The alternative, though, is to limp along indefinitely, a diminished city, in hock to the past.
As he loped onto the opulent stage at the Academy of Music and took his place beneath the gold-and-red silk bunting, Darrell Clarke was wearing an impossibly toothy grin and, as always, an overlarge suit that hung off his lanky frame, as though he’d inherited it from an older, even taller brother. It was Inauguration Day in January. Mayor Nutter would take the oath of office in a few minutes, but first Clarke had to be confirmed as the new president of Philadelphia’s City Council, a promotion that would make him the second most powerful public official in the city—and the man best positioned to advance, or destroy, Nutter’s second-term agenda.
By the flamboyant standards of Philadelphia politicians, Clarke has been a reclusive figure, so his appearance at the podium in front of the city’s assembled officialdom had the feeling of a debut performance. He seemed awed. Compared to departing president Anna Verna, Clarke appeared youthful, perhaps even a little sophomoric. “Wow,” he said as he reached the podium. “This is truly a good morning for me.” Then Clarke turned, looked directly at his political mentor, and gave him a big thumbs-up. “John Street,” Clarke said, with genuine affection. “I would not be standing here today were it not for John Street.”
It was a public acknowledgement of the obvious. After all, it was the former mayor who first brought Clarke into city government, hiring him as a lowly Council aide more than 30 years ago. It was Street who groomed Clarke, showing him the levers of power in their North Philadelphia district. And it was Street who made Clarke his political heir, bequeathing his lieutenant his North Philadelphia Council seat when he ascended to the mayor’s office.
But Street could only give Clarke so much. He couldn’t pass along his encyclopedic knowledge of city finances, or his natural talent for political manipulation and bullying. Nor could Street transfer his deft touch for rallying much of African-American Philadelphia to his side with a carefully chosen—and occasionally divisive—phrase. So when Clarke joined Council in 1999, the media and political class figured him for the second, lesser coming of John Street. A man with the same politics, associations and inclinations, only with less attitude, less aptitude and less Afro.
But there is a problem with this neat analysis: It’s dead wrong. Despite lingering perceptions to the contrary, Clarke has turned out to be a largely independent operator who knows the city and its government as well as anyone else on the political stage today. Elected officials in Philadelphia are hardly known for having wide-ranging interests, and few have knit those interests together into a coherent philosophy. Is Clarke among them?
The Manasquan Meetinghouse feels as though it were built from the ground up to optimize the acoustics — not for the sake of the choir, or the organ, for there are none — but for hearing what Quakers often call the still, small voice of God.
Worshippers, typically no more than 20 or so, sit on spare wooden benches, and they face not an altar, or an expanse of stained glass, but one another. The walls are white and unadorned, the trim is beige, as is the industrial-style carpeting. There are no priests or pastors at Quaker services. Indeed, there is no real ceremony at all.
Following a short reading of Scripture, the worshippers fall quiet. And there they sit for an hour, in a state of silent “expectant waiting,” trying to block out the whirl of the world — the headaches at work, the piles of laundry back home — opening themselves up to the spark of the divine that Quakers believe can be found within everyone.
The Society of Friends has been meeting this way in New Jersey for almost as long as Europeans have lived in the state, and there’s been a meeting in Manasquan since about 1730.
But the Quaker faith and its customs are nonetheless still something of a mystery to many. “We joke that people think we’re the secret Society of Friends,” says Eleanor Novek, a member of the Manasquan meeting and a professor of journalism at Monmouth College.
But there’s nothing clandestine about Quakers. There just aren’t very many of them: about 3,300 in New Jersey, and an estimated 360,000 worldwide. The faith has never boasted the numbers of more mainstream Protestant traditions. And in recent decades, many meetings — particularly those that practice liberal Quakerism, as is common in New Jersey — have shrunk.
Declining membership is a problem for many faiths, of course, but in the case of Quakerism, the attrition seems due at least in part to the huge chasm between core Quaker values and the materialistic and pugnacious tone of contemporary culture, particularly in the Garden State. “We don’t feel isolated, really, but in our meeting there is a sort of a general sense that, ‘Boy, there really is a different world out there than in here,’ ” says Heather Cook, who attends the Chatham-Summit meeting in Morris County.
It’s Election Day in Philadelphia, and Zack Stalberg—the CEO of the Committee of Seventy, the city elections watchdog—has nothing but time on his hands. The war room is up and running inside the committee’s small suite of offices in an aging Penn Center high-rise. Attorneys putting in their pro bono hours are at the long tables, waiting for the phones to ring. Dozens more volunteers, 200 in all, are on the streets making precinct checks, looking for trouble, just as the Committee of Seventy has been doing for over 100 years now. Nobody would deny that it’s important work, particularly in Philadelphia, which has had more than its share of Election Day fraud and intimidation. But the entire operation is kind of mechanical, kind of routine. Stalberg watches the room for a while, because it seems like he should. When his wife calls a little later, he tells her he’ll probably be home early.
Not all that long ago, the Committee of Seventy, which was founded in 1904 as a check on the corrupt Republican machine, pretty much existed for Election Day. Now, election operations are an ancillary job to the committee’s broad new vision, which is nothing less than an honest political culture and a better, more efficient, cleaner government. To some, that seems like a conflict: serving as an utterly nonpartisan elections observer two days a year and a relentless advocate for change the rest of the time. Stalberg, though, doesn’t see it that way: “This is basically about helping people who want to vote. It’s a positive thing. And frankly, it helps balance out some of the unpleasant things I say.”
Indeed, much more than by elections, the Committee of Seventy today is defined by what comes out of Stalberg’s big, marvelously quotable mouth. Seven years ago, before Stalberg left his job as editor of the Daily News, the Committee of Seventy was irrelevant at best, the tame house pet of the city’s political class at worst. Today, Stalberg and the Committee of Seventy aren’t just relevant players in the city’s civic dialogue: They’re omnipresent. It was the Committee of Seventy—with the help of the press and the Nutter administration—that turned participation in the city’s loathed DROP retirement program into a modern-day political mark of Cain. Stalberg was the loudest to call foul when Mayor Nutter tried to line up anonymous private contributions to buy out the contract of catastrophic schools superintendent Arlene Ackerman. And that’s just to name two recent controversies. Really, there are precious few public debates in which Stalberg’s voice isn’t heard.
But are Stalberg’s broadsides having any actual impact? Here, the record is mixed. The Committee of Seventy’s newfound willingness to enter the public dialogue hasn’t swept the city clean of shady political behavior. City Council will tell you that’s partly because Stalberg’s nonstop critique of City Hall has led many of its denizens to tune him out. “As far as City Council is concerned, the Committee of Seventy is irrelevant. I don’t believe anyone here values their opinion or what Zack says at all,” says Councilman Wilson Goode Jr. Even within the Nutter administration, where the committee is generally well-regarded, there’s a sense that the organization is too easily distracted, too prone to chasing the day’s headlines instead of picking one or two causes and beating on them until victory comes.
To start with the superficial, Corbett, who is 62, looks the way people think a governor should look. He has thin dove-white hair, which he sets with gel to achieve a crisp 1950s-style part. His eyes are a startling pale blue, but they come across as friendly instead of cold. His cheeks are ruddy and his jowls are full, but not too ruddy, not too full. “I don’t know if it’s the grandfather thing, the Middle America charm or what, but people see him and think, ‘That’s a decent guy,’” says Charlie Kopp, a Philadelphia attorney and Corbett fund-raiser.
Decency is Corbett’s calling card, his hallmark characteristic. It may not count for all that much in Philadelphia, where “decency” isn’t the first quality we associate with politicians, but it matters plenty in the rest of the state. These days, in Pennsylvania, being a decent man is political gold; being Tom Corbett—a decent man who has indicted indecent public servants—is just about unbeatable.
But there’s more to governing than decency, and it isn’t at all clear yet that Corbett has the smarts, vision or common touch that the job requires. His executive experience is limited. He disdains the political black arts. And he seems not to have spent all that much time actually thinking about policy. Outside of Philadelphia, however, none of that much bothered Pennsylvania voters. They looked at Corbett and saw a suburban everyman, a walking, talking antidote to Fast Eddie Rendell.
A two-part investigation into Philadelphia’s worst-in-the-nation record on collecting delinquent property taxes. The failure has had a catastrophic effect on neighborhoods, spreading blight and depressing home values, while also depriving a cash-strapped city government of badly needed funds. The report won a “special recognition” prize in the Weiss Award contest, which recognizes outstanding investigative journalism in the Philadelphia area.
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.
In communities such as North Philadelphia, Fairhill, and Tioga/Nicetown, the city has done little as tens of thousands of tax-delinquent properties – many of them abandoned lots and vacant shells – have rotted away, blighting neighborhoods and making redevelopment all that much harder.
In most U.S. cities, the vast majority of those properties would have long ago been seized for nonpayment and sold at sheriff’s auction.
Elsewhere, tax foreclosures are routine, even automatic. Property owners must pay what they owe or they can expect to lose their land, often within just a few years.
The process can be ruthless. But it serves two critical public needs: It collects money for essential services, and it cycles property out of the ownership of irresponsible parties.
In Philadelphia, that process works slowly when it works at all.
The city’s typical tax delinquent is 6.5 years behind and owes $4,249 in taxes, penalties, and interest.
Cumulatively, the delinquent properties are 720,000 years behind in taxes.
“That’s an astronomical level of delinquency. It is phenomenally high,” said Frank S. Alexander, a law professor at Emory University and a leading national authority on improving property-tax collection systems.
This article was a finalist in the Civic Journalism category of the 2012 National City and Regional Magazine awards.
PANIC SEIZED ME twice on my last trip to Atlantic City.
The first occasion: I’m in the fifth-floor bar of the Chelsea Hotel at happy hour, enjoying what began as a quiet drink alone. Suddenly the room fills up around me. People pack in on all sides. The women, I can’t help but notice, are young and simply stunning. Eventually it sinks in: They’re models. Almost all of them are models.
I am in Atlantic City, and I am surrounded by models.
The crowd grows larger still. The new arrivals are more earthly, but still elegant. I see big watches on the men and big diamonds on the women. There is a coral-blue handkerchief in the pocket of a black Armani suit. I look down at my flip-flops. I observe my worn four-year-old striped, collared shirt. Was it from Old Navy? The Gap? It’s one thing to feel underdressed and outclassed in Miami Beach. You expect that. But I was not prepared to feel seriously out of my league in Atlantic City, not at a hotel bar at 5 p.m. on a Thursday. This is the dying city?
At the bar, I hear that the Hard Rock Hotel and Casino wants to build in Atlantic City. Patrons swear to me that the nightclub scene is far hotter than anything Philadelphia offers. They tell me about the huge musical acts that perform weekly, the amazing- spas, the cool multi-ethnic vibe of the Chelsea district. They point north and tell me about Revel, the under-construction super-resort billed by many as Atlantic City’s savior. They say: A.C. is back, baby.
The second moment of panic comes 24 hours later, as I near the Revel construction site, when a cop in body armor wielding an assault rifle screams at me—with actual urgency in his voice—to get the fuck away lest I get hit by a stray bullet.
LONG BEFORE THIS TRIP, and without ever really thinking all that hard about it, I had somehow decided that Atlantic City just wasn’t the place for me. I enjoy gambling only when I win, so I couldn’t see too much reason to go. That ambivalent take was all wrong. As I soon figured out, Atlantic City is packed with good reasons both to stay the weekend and to stay the hell away altogether.
A few years ago, Atlantic City would have been more or less indifferent to a non-gaming- tourist like myself. Not anymore. Gaming- revenue, the city’s lifeblood, has been in free fall three years running. Casinos with famous names—Resorts and the Trump Marina—have been sold off for less than some Shore vacation homes. The Hilton-, the spot where Frank Sinatra used to perform, stopped paying its mortgage in 2009.
Citywide, casino profits plummeted nearly 61 percent between 2006 and 2010. Adjusted for inflation, those profits are now at their lowest level since the early ’80s. Not even the mighty Borgata is immune: Last month, for a fifth straight quarter, it reported falling revenue compared to the same period one year earlier. Gaming executives say Atlantic City is now getting by on about $2 billion less in annual gaming revenue than it was in 2006.
To prevent gaming’s collapse from taking the whole town with it, Atlantic City is banking on a pair of big changes: a state takeover of half the city, and a fundamental market readjustment on the part of the casinos, which now recognize that their gambling-dominated models won’t work in a world where there are craps tables in Chester and baccarat in Bensalem. Revel, the striking new resort on the north end of the Boardwalk, slated to open next May, most completely represents the new thinking: gaming as just a piece of a total resort experience, one that actually embraces Atlantic City’s greatest assets—the Boardwalk, the ocean and the wide beach. The new state “tourism district” may be just as important. It exists primarily to eliminate, or at least better hide, Atlantic City’s enduring seediness, which Governor Chris Christie is convinced is the real reason for the city’s problems.
If these changes work, Atlantic City might finally become what its boosters have always billed it as: a playground for the masses-, equally enticing for families, bachelorette parties, and sophisticated couples on a weekend escape. If they don’t, well, the doomsday scenario is easy to imagine. Casinos begin to abandon Absecon Island. Unemployment rises, crime spikes, and the city becomes Camden on the ocean, with a Boardwalk instead of an aquarium. The great irony, of course, is that gambling was billed as the only alternative to just such a fate when it was legalized back in 1976.
A SMALL DEMOLITION CREW is slowly gutting the old Tastykake factory on Hunting Park Avenue for scrap.
The six-inch stainless-steel tubes that piped batter throughout the factory are worth about $1 a pound, and the aluminum pie molds — blackened by the seasoning of innumerable crusts — should fetch a few pennies more per ounce. On this overcast morning in early March, the crew works beneath ceilings where peeling paint hangs like suspended confetti over what remains of the equipment that, for 88 years, baked countless Krimpets and Juniors, Kandy Kakes and Kreamies. Bob Bolduc, a former Tasty Baking maintenance chief now dismantling the machines he once tended, thinks it is the shock of cold that has accelerated the decomposition. The bakery was a 24-hours-a-day, six-days-a-week operation, and with the ovens roaring at 600 degrees, it was always warm inside the Tastykake factory. But this winter, for the first time in nearly nine decades, the cold crept in and blistered the varnish right off the walls. And so the bakery feels as though it was abandoned decades ago, the sense of forsakenness belied only by the faint but unmistakable sweet smell of cake that somehow still lingers in the air.
For a company whose business model is utterly reliant on nostalgia, there was surprisingly little ceremony when Tasty Baking shut down its historic Nicetown plant in June 2010. By then, most of the operation had already moved nine miles due south into the new Tastykake plant at the Navy Yard. Then, last June, the final two Nicetown production lines made the move south as well.
And that was it. Tasty Baking had left the past behind. Charles Pizzi, Tasty’s amiable and politically connected 60-year-old CEO, had finally managed a transition that eluded the company for decades. With the help of $32 million in taxpayer financing, Pizzi had upgraded from an inefficient and obsolete facility to the most modern mass-production bakery in the nation, complete with a mini Tastykake museum for the kids and a glass-enclosed catwalk for tour groups overlooking the bakery floor. Now the company would churn out new products more easily and spend less on labor. Since the new bakery was in a Keystone Opportunity Zone, Tasty Baking would save a bundle on taxes as well. All of which, Pizzi said at the time, would help make the company “as relevant to today’s consumer as we were in 1950.”
Only it hasn’t worked out that way at all. Less than a year after the move to the promised land of the Navy Yard, Tastykake has been sold off — like the scrap metals now being harvested from the Nicetown factory — to a Georgia-based baking conglomerate called Flowers Foods for $34 million. Tasty Baking had no choice in the matter. The only other option was insolvency, a fate the company avoided in January only by the grace of a publicly funded bailout and the patience of its lenders. The good news is that Flowers Foods will pay off Tasty Baking’s many debts, including the bill due taxpayers. Better yet, for Tastykake fans, Flowers promises to continue making Krimpets, many of them no doubt at the gleaming Navy Yard bakery that Pizzi built on hope and $122 million in borrowed money.
The Problems of the Post-Racial Politician Operating in an Economic Downturn and Facing an Electorate Still Largely Segregated Along Lines of Class and Skin Color: Or, why black folks don’t like Michael Nutter
Back in 2007, the fact that Nutter was not seen as a prototypical “black mayor” was political gold, not a liability. Nutter was the anti-Street. The departing mayor was surrounded by corrupt actors; Nutter was Mr. Clean. Street dawdled as the murder rate soared; Nutter wanted to let the cops frisk at will. Street was “The brothers and sisters are running the city.” Nutter was the accessible black candidate, just as attractive to whites as to African-Americans, and as popular in the suburbs as he was in the city.
Then along came Barack Obama, and the national press made Nutter part of a national storyline. Nutter and Obama were at the forefront of a new generation of African-American leaders who were more interested in governing than in civil rights — guys like Newark mayor Cory Booker, Alabama Congressman Artur Davis and Washington, D.C., mayor Adrian Fenty, all of them just kids during the Black Power movement of the late 1960s and early ’70s. If anything, Nutter was seen as the least race-conscious of them all. After he endorsed Hillary Clinton over Obama in the presidential primary, a New York Times Magazine piece suggested that Philadelphia’s mayor might just be “a genuine post-racial politician.”
In theory, post-racial leadership is really attractive, particularly for well-off white progressives who can congratulate themselves on their open-mindedness while casting a ballot for someone like Nutter, whose policies and interests align neatly with their own. But it turns out there are major political risks for black politicians who are seen as above the racial fray. Fenty lost the mayor’s office after his support among African-Americans evaporated, and Davis, a Congressman turned gubernatorial hopeful, was obliterated in Alabama’s Democratic primary as black advocacy groups supported his white opponent instead.
“I’d be proud to say, ‘Hey, look, I’m the guy who transcended racial politics.’ It’s nice,” says Oliver, Nutter’s former press secretary. “But it cuts two ways. If racial identity continues to polarize communities, well then, now you’re just seen as the guy who wants me to assimilate, you’re the guy who wants to erase all the hard work of our ancestors, you’re the guy who thinks the playing field is level.” You are, in other words, seen just as a mayor with dark skin.
Desolate to Dynamic: The planning, patience and politics behind the reinvention of North Philadelphia’s badlands
In the 1990s, the best that could be said of Eastern North Philadelphia was that there was almost nothing there.
Acres of vacant land stretched in all directions, the empty expanse broken up only by a scattering of rundown row homes. The few remaining residents lived largely in dilapidated public housing rental units while those who could fled for other sections of the city where there were more amenities, more buildings and more neighbors.
It was a landscape desolate enough to startle even the most calloused observers of urban decay, “a true no man’s land.”
… Today, old men play dominoes on plastic chairs and tables in PHS cleared lots. Freshly painted murals abound. Residents grill food in their yards and spray their kids with hoses while watering the lawn.
Such commonplace city scenes might seem like scant evidence of redevelopment. But for the wasteland that was Eastern North Philadelphia, the return of normal street life signals enormous progress.
…The remaking of Southwest Center City is easy to see on the stretch of Christian Street between 20th and 22nd.
At one end sits the Sidecar Bar, one of the neighborhood’s four gastropubs. Adam Ritter bought the space in 2005, when it was a dive bar called “Victor’s Tavern, A Place for Good Folks.” While renovating the place, Ritter said he found packets of crack cocaine secreted away beneath bar stool covers…
Now, though, the Sidecar bears little resemblance to Victor’s, with its sidewalk seating, boutique beer list and a menu with upscale touches like vegetable risotto with tomato fennel broth and a parmesan tuile…
A block away, Rev. Charles McNeil led his dwindling African-American congregation in prayer at Shiloh Baptist Church, an enormous compound built in 1870 by the renowned Philadelphia architecture firm of Fraser, Furness & Hewitt.
McNeil was raised a block away from his church, and he has worshipped at Shiloh since 1975.
But the church today is not the church he grew up with.
For one, regular services are no longer held in Shiloh’s main chapel. The pews inside that huge hall are draped in plastic sheeting. The room smells of mildew, and parts of the roof are blackened by water damage…
But today’s congregation might seem out of place in the enormous sanctuary, even if the roof were in perfect order.
Back in its 1950s and 1960s heyday, Shiloh’s congregation was 4,000 strong. Today the church has just over 100 members, McNeil said…
“The fear is this becomes a museum. A used-to-be. We don’t want to be a used-to-be place,” McNeil said…