Conference of the Council of Georgist Organizations
Philadelphia, Pennsylvania

Nadine Stoner

[Reprinted from GroundSwell, July-August 2005]

Your GroundSwell editor, Nadine Stoner, has compiled the following report from transcribed notes taken of the August 4, 2005 panel in Philadelphia, PA. at the Council of Georgist Organizations conference.

Joshua Vincent, director of the Center for the Study of Economics in Philadelphia, introduced the panelists with, "You will hear today why a group of very diverse people with a very diverse set of responsibilities in their lives have accepted the idea that land value taxation is going to be an essential part of any future that Philadelphia has." Josh Vincent is also director of the Henry George Foundation of America, which had sent out 150,000 letters to homeowners and swamped city hall for a hearing on land value taxation.

Jonathan Saidel has been elected to his 4th term as City Controller.for the city of Philadelphia. The City Controller's office is unique in that it is the bully pulpit and investigatory body and an accounting and financial body all at the same time. It is up to the City Controller to find out what is being spent in the city, how things are spent, but also because of who is in the office of City Controller currently, it is a body that explores the possibilities of what can make the city better instead of the disease of just about any city east of the Mississippi and actually most American cities. He is not seeking re-election as City Controller; he has other plans (see www. Saidel2000.com)

Diane Lucidi is the Executive Vice President of the Greater Philadelphia Association of Realtors, GPAR for short. Diane is essentially in charge of the legislative program of the Realtors here and in a lot of state issues in Harrisburg, and Diane has been on board for land value taxation for a very long time indeed.

James Tayoun has championed the land value tax since he was a Philadelphia councilman in the 1980s when he was the ramrod, trying to push the land value tax through City Council and get the Wilson Goode administration to adopt the land value tax. He is the publisher of The Philadelphia Public Record newspaper.

Kathy Harris is a neighborhood activist and for four years has been the president of the Greater Olney Community Council, which is a neighborhood in the north central part of Philadelphia. She has seen her solid working class neighborhood of Olney fall apart from crime and vandalism. She has been active in neighborhood Town Watch and national Night Out. Kathy's activism is simply trying to preserve her neighborhood, of what used to be a great place and can be again. Kathy picked up her first copy of Progress & Poverty at the Schalkenbach exhibit table during the conference.

Brett Mandel is the Executive Director of Philadelphia Forward which is the umbrella organization of groups that are pushing for overall tax reform in the city of Philadelphia -- reduction of business taxes, fair assessments, land value taxation and a whole host of other tools that need to be used in Philadelphia.. Brett for years was Director of Finance and Public Analysis in the City Controller's office, and he took the step of hiring Bruno Moser several years ago. When the fight for tax reform became hot, Bret left the security of city bureaucracy to become Executive Director of Philadelphia Forward, a 501.(c)(3) that has been working to get tax reform implemented. With reassessment coming up, Philadelphia Forward believes it provides an opportunity for equalized values and land value taxation.

JONATHAN SAIDEL: Let me give you a little history about what I have found in politics, which is why I am so happy that we have here a representative of the community of real estate and a neighborhood activist, because in the end unless you have neighborhood activists involved, government will do nothing for you. And all these statements are all bi-partisan. About 25 years ago when I began in politics as a volunteer, not thinking that I would even run for office, there were people in both political parties that I could look up to.

Even though I may disagree with some of the issues of a candidate, I could go home knowing in my heart and soul that though we disagreed we disagreed politely and that the other candidate and the other individual really believed in those issues and felt that they were for the greater good of all in the community if they were implemented for positive change in both the city and in the state and in a national election. Today I can't say that. Today nobody in the local, state, or federal government wants to even think outside of the box. They know there is a problem but they are not willing to think about alternative ways to do away with that problem and give us all the opportunity to move forward in a positive direction.

In Philadelphia when I have come up with recommendations, what I try to do is first say to those people that I am addressing, can you accept the fact that there is a problem. And most of the time everyone recognizes that there is a particular problem in Philadelphia. And then I come up with a list of recommendations and historically in Philadelphia people say no, those are not the proper answers to those problems. So I always say if you don't like my recommendations, give me your recommendations. And 99% of the time there is no response to that. For years I have been talking about the uneven way that we do real estate taxes in Philadelphia. It has always amazed me when somebody wants to improve their home, to fix their roof or to add a porch, that we raise their taxes as if they are correspondingly going to make more money because they fixed their personal residence. We have spent almost $500 million tearing down half the city of Philadelphia, but every person that fixes their home on their block, every business that builds additional stories on the limited space of the land that they own, we increase their real estate taxes and effectively create a disincentive for people to acquire wealth by increasing their property values. It is an amazing thing, so I have complained about that for over a period of time.

And then several years ago a young man named Bruno Moser, who is in Viet Nam now, talked to me about the land tax. And in the end if someone fixes their home, and increases the value of their home, they save the street that they live on. And the more people that fix their home save not only the street that they live on but the community that they live in. And the more people in the community that save the community, save a city. And yet in Philadelphia for the last number of years, we have had things called land banking, where companies will come in from outside of Philadelphia and they buy up large tracts of land, allow the property to decay and their real estate taxes will come down every year as the property decays because the property sitting on that land is not worth anything, and they will completely destroy a complete neighborhood. Then when the people leave, they will do what they want to do. In the meantime a place like Philadelphia suffers. But if we had a land tax I could charge them money after money because if they are going to be obliterators of the future of this city, they should at least pay the piper. We are land locked by suburban counties that surround Philadelphia and we are river locked. We are landlocked of 120 square miles. Land is unique, and we need the best opportunity to utilize that land for all the people that live here in Philadelphia and for the business community that we want to bring in. And the only way we can do that is to make sure that those who want to build get a benefit and those that don't want to build on the land that they own have a disincentive to continue that horrible practice. The land tax system is the only way that can begin. And it is the core part of what I want to bring to Philadelphia besides the reorganization of the government, besides the reduction of our cost of government, beyond the fact that I want to reduce a variety of other taxes that make it so onerous. In Philadelphia anywhere within a 10-minute ride, you are outside our taxing jurisdiction. The way our taxes are done in Philadelphia, people can live outside of Philadelphia, not pay most of the taxes that exist in Philadelphia, and just travel down our expressways and our byways to take advantage of the cultural and wonderful opportunities here in Philadelphia that bring people here.

The reality is that if you want to run for high political office then you have a responsibility to do what you think is right. For too long in the worlds that we come from politicians are elected from both political parties whose main aim is to stay in office. Make sure that your voices are heard. Drexel University did a study that showed that if the land tax was placed in existence in Philadelphia, the average homeowner would have a $100 reduction in their real estate tax. So it was not just me that said it as a politician, but it was a University with high status within the Delaware Valley and within the United States. We have to think outside of the box; we have to move forward. Information is a valuable tool as you move forward. It is the ammunition against those naysayers that say that the best days of a place like Philadelphia were yesterday. I am very proud that the Constitution and the Declaration of Independence were created here by our founding fathers. As proud as I am of that history, I want to be proud of the future that this city can bring for the people that live here, people that live in the surrounding area, the people that I need to bring here for the city to move in the right direction. The land tax will be part of that revolution of creating an environment to improve their lives and not be destroyed by our taxing authority because they want to improve their lives.

Asked by a audience questioner about the upcoming city reassessment, Saidel responded that 90% of it is residential, that is going to be a sensitive issue to people mostly with fixed incomes who will not be able to pay the additional taxes . Mayor Street said to me that if you (Saidel) are elected (in the upcoming campaign Josh Vincent alluded to) there is going to be more money for me as mayor of Philadelphia. I replied that is not really how it works. If you continually raise taxes there won't be anybody here but me because I have to live here. No political people are the same, even if they are raised by the same parent. We have to be involved and we have to influence decisions that people make. In the end if we don't, we get the government we pay for.

DIANE LUCIDI. Real estate is about location, location, location. In the past several years Philadelphia has continued to lose population, whether it is residences or businesses, and if there is no one left here in the city who is going to buy the property? So we approached City Council members and the City Controller's office and we asked for a ten year tax abatement. There are three different types of abatements. One was for commercial/industrial properties. One was for new construction, and the third was a thank-you for the residents who chose to stay in the city so that if you fixed your property, whatever part of the property that you fixed was not going to be taxed for ten years. We caught a lot of grief with the administration, some Council members, but all in all, we won and it has proven to be extremely successful.

All that led me to meet Brett Mandel and Bruno Moser, who the Controller alluded to earlier, and Josh Vincent. They told me about the land value tax, and my immediate response was, well that is a no-brainer. Why don't we have that? From the conception of a no-brainer here we are three years later and we still can't get this through. My realtors believe that the land value tax for Philadelphia is a silver bullet. It must makes sense. It is not the structure that is worth the money. It is the land. Location, location, location. We have boundaries, a river on one side, a river on the other side, and Philadelphia has a lot of abandoned properties. One of the problems that I see for Philadelphia is that the City has the largest land bank. They don't even know what they own. They called me to ask who owns the property at 123 South Third Street. I said, you have a Real Estate Dept. Those guys are paid to tell you that. They know we have the Multiple Listing Service. I can tell them whoever owns whatever property but why should I? It is their property. So whether PHA [Philadelphia Housing Authority] owns it or RDA [the Redevelopment Authority, which is an oxymoron], it is ridiculous. So we have been fighting the good fight for this land value tax, and we almost were successful.

But for those of you who don't live in the city, I am a native Philadelphian. I refuse to leave. We have an election coming up. We are going to elect a new mayor, some new City Council people, and I think with this reassessment that is coming in next year, this is the time for the land value tax. What my group is doing under the radar screen is lobbying City Council now. This reassessment is a nightmare. In Philadelphia they don't assess, they ride by your house. So you are actually getting penalized if you fixed your property. If you live in a nice neighborhood you are penalized. It doesn't make any sense. In our surrounding counties, they actually go into the house. In Philly if you get a new front to your house, if you put new windows in, you're dead because you are going to get penalized. So it is such a disincentive here. They cannot reassess a property totally 100% based on a sale price. Seniors in this city are going to be hit the hardest.

The seniors are moving in. They moved out 20 years ago because they had to raise children. They weren't going to send their children to the Philadelphia public schools. They couldn't afford private schools. So they moved to the suburbs. They are paying property taxes, but their kids go to a nice clean safe school. They don't have to worry about them for eight hours a day. In Philadelphia you don't have that. So these seniors are moving back in. But these seniors have a fixed budget. They are coming back in the city because their children are grown.

They want the accessibility the city offers. They want the theater and restaurants, they want the shopping, and they can't afford $6000 a year in property taxes for a row home in the esteemed area. We will try to tell City Council members that the land value tax is fair. Step to step neighbors are paying the same amount of money. We are looking forward to next year because we are hoping the land value tax will be our silver bullet once this reassessment process takes place, and we will be out there raising awareness to the voters.

Responding to an audience question, Daine Lucidi said it is state law that assessment happens every year. Now the county was just reassessed, and it wasn't as bad because their records are not as bad as those in the city of Philadelphia. In Philadelphia we do the same areas over and over and over again. People are paying bills over and over and over again.

Asked a question about the tax abatement, Diane said there was a point where there wasn't anything being developed in the city. Businesses were leaving. We needed an incentive for people to come in and develop this city. The abatement expires in year 2010. For new construction, the developer goes and applies for all the building permits and whatever is needed. At that point he will also apply for an abatement. The new resident coming into that property has a 10-year abatement. If they chose to leave within 3 years, that abatement is still valid for the new person coming in. At the end of the 10 years it is done.

JAMES TAYOUN: If this were called the LVT church, and it was the only road to salvation, all of you would be saved. The problem is not too many people outside of this room are not even aware of the church nor of its benefits nor how to achieve it. The kernel, the problem itself, is that we have uneducated elected officials. A lot of them are college graduates, a lot of them are lawyers, but put together they are all bound by one thing, and that is the need to get themselves reelected. How do we reach them? I think we have to change the name of LVT. Really, seriously, someone in this room has to come up with something that says the tax that gives you everything in one word or two words. The name LVT confuses people. The bill itself that can transform Philadelphia simply says millage on land this figure, millage on property this figure, instead of 4 to 1, which is the present ratio. Just change the millage. Now with the increase in assessments that was discussed by the previous speakers, this 100% assessment, the City Council's first reaction will be, and I am surprised they haven't done it already in anticipation of this, to reduce the millage. Otherwise, the city would have a tremendous financial bonanza which nobody among the electorate will allow. So they are going to reduce the millage to compensate for this 100% increase so the jolt on people won't be as big as you have been told it might be, but there still will be a jolt. This is still the time, as Diane alluded to, for us to go ahead and try to awaken the public.

If we can convince a couple of the City Council people in this city, and other cities where you have got the same problem, that they can become heroes by simply moving this legislation they might just buy in and do it, if they understood the simplicity of it. Maybe they will have to go to the Henry George School on 10th Street and get some lessons like I did about the value of land, then possibly we would win. This is the time to influence these 17 Council people in the City of Philadelphia. They are not here nor care to come here. They think if they came here, they would have to have PhDs from Harvard to be in your company so as to not be embarrassed. Here we know different. The newspaper I started publishing about 6 years ago that focuses on city politics, state politics, the school district, active community groups, etc. has developed a niche. In that niche I have received tons of mail. Everything I see points to one thing. We have to educate 17 people. There are 2-3 vacancies coming up on this City Council next time around, and I think it is important that the Georgists join with other groups to support one or two people that have indicated that they have a propensity to possibly consider becoming LVT proponents on the Council. Let's just get one or two more people on the City Council who have an understanding of what LVT is all about, who have the business sense. The problem with this City Council is nobody is in business. Not one of them is a business person. I was on the City Council back to my restaurant days, and my 40-year institution collapsed because of taxes among other things. I had 16 taxes to pay for, and when the School Board came in and took 10 percent of our bar gross, that was the end of it, because that made them 22% partners in my business. So we have got to get business sense into this City Council and we have got to go ahead with the next most improbable thing and that is an awareness in the general population. Each and every one of you is a vital crusader in the effort to evangelize the city of Philadelphia and other cities. Thank you.

Responding to the moderator's question, Tayoun said that we lost the vote to pass a land value tax by one vote, 9-8. The 9th vote against us, rest his soul, Lucien Blackwell -- a champion of the people and who made a great name for himself as a benefactor of the community -- unfortunately when he had the chance to really help us produce something of good for everybody, including the poorest, he said, Jimmy, I don't have enough time, I don' t understand it. What is there to understand? The land is here. The problem is here. Let's increase the value of the land.

We have been on a crusade in my newspaper banging at the Philadelphia garage industry. There are parking lots in this city assessed at 65% of what the other vacant lots in center city are assessed at, similar vacant lots. One is a parking lot, and for some reason it is assessed far lower than another vacant lot which hasn't been developed. The Philadelphia god of parking lots has attacked us that the land value tax failed in Pittsburgh. We have never successfully been able to get that story out as to why that happened in Pittsburgh, but I think that is very necessary. They use that automatically and that shuts down any argument you have with the politicians. We know what went wrong in Pittsburgh. We know the people who created the problem and why they did it. Explaining it is a very important factor because they use that against us.

Tayoun responded to a question from the audience as to how to get the City Councilmen to listen while the people explain to them about the land value tax. It is the tradition of many hearings that once you have got a quorum everybody can take off except the poor president and the chairman of the committee. You are supposed to really look at all the notes and testimony you have missed, read them, soak them in and come up with a decision. But it is the leadership that controls the council members at those meetings. For us to stage these great shows of force at the council hearings was fine. But it did not impress the people that were missing. I would get handfuls of people from their community, their districts, and go to their offices to talk to them. Those of you in Philadelphia who belong to the organization and are proponents of LVT, I urge to start lining up the various districts and then go in and say, listen, we are here to tell you something. You are running next year. We are not going to be here as your friend any more unless we get a commitment from you. You are not paying attention to a simple thing that is very positive, and we want you to do something about it. We need your support this time, if you want our support. You are going to have to vote on another situation before you come up for election in a primary and we want you to make a stand on LVT. Then we have got to engineer to get the bill in before the primary so that it is voted on.

KATHY HARRIS, who started with Town Watch in her community, distributed a set of pictures of the problems in her neighborhood. She said one of biggest things is you tend to live in your block and tend to protect what is yours on your lot. We can't live in a vacuum, we have to live with what goes on outside our block, in our community. We started to see kids hanging out, drinking beer, drinking on the highway, shooting crap on the highway. Public urination was going on. We were told they were looking for areas with boarded up windows. Then we got a dumping problem. Then we had abandoned stolen autos they would set on fire after they had gotten pieces off. Insurance also became problem. People would burn their own auto. Trash was dumped here, in front of a no dumping sign. What used to be an active railroad ended up a surface where there were used cars. Kids would hang out. Problems included graffiti, quality of life, crime. I looked around and found out all the things that affect my neighborhood. It is like a roller coaster ride. You can see beautiful things from above and can go from a nice city block. Then you go down to the ground and it is a scary ride. You can't think just about your own front door. You need to see what is happening in the larger area.

I looked at my real estate taxes. I looked at absentee or derelict landlord properties and they are paying less. They are own boarded up homes, with no windows in the home. They are paying less than we are. What is my incentive in Philadelphia. Then I understood why people are leaving. I have been here all my life, having moved from another community and raised my children in Olney. I am even doubting if I want to invest in Philadelphia as future. Maybe my kids will move out as did many kids. In my neighborhood, we dodge bullets, not play dodge ball. I started asking questions. I came to a meeting and met Josh, Jonathan and Brett and eventually Diane. Why should I improve property and be penalized. Business owners that are coming in and not living in the community squeeze as much as they can, check cashing agencies, this is their investment in our community. Our taxes are way too high. There is no equalization. I want to know why land can sit vacant and abandoned so many years. We need trash cleaned up. If we had homes and businesses on those properties, it would help pick up the slack. A lot of people don't understand enough to take the next step. They can't afford to lose a day from work. Predatory lending has hurt a lot of folks which led to them losing their homes to bank foreclosures. The role of crimes affects our real estate. I had to appeal my taxes. I went in with my pictures. How can you say my taxes are going up, this is what I am living with. The properties going down are getting low taxes. The rewards and penalties are going in the wrong direction. I don't like to see low and middle income people having unfair taxes. Folks that moved to my community from worse communities than mine are now struggling to hold onto their home. We have people driving through neighborhoods looking to see if they can break up single family residential units into rentals, creating transients. We are looking for fairness in what we have just in our community and asking for fairness back.

Asked if she won when she appealed her assessment two years ago, Kathy Harris said yes. She went with about 70 pictures throughout her community. They were only doing three blocks area when they did the reassessment. She took pictures around her area, took Police crime data with her, copies of auto theft, buyers, arson. The Greater Olney Community Council publicizes meetings with flyers and in the local newspaper. If Josh Vincent or Jonathan Saidel or someone from the Police Dept. comes to speak, they pack a room.

BRETT MANDEL: This is a room of people that understand the power of a good idea enduring and that it will eventually prevail. Politicians come and go. Philadelphia is in desperate need of a good idea. In Philadelphia we have lost one-fourth of our residential and one-fourth of our business over the past half century. People moved out because people want one-quarter acre lots in suburbs but also because of a tax system that is punishing. Over the past 50 years Philadelphia lost 1/2 million residents and 1/4 million jobs. We continue to lose while Philadelphia revenue is gaining, Philadelphia is losing children. When I was with the City Controller's Office, we wrote a Tax Analysis Report. We created a tax reform commission and then put it on the ballot for people to vote. People voted 80% yes to create the commission. My ex-boss Jonathan Saidel appointed me to the commission. What is the reason behind Philadelphia's tax problems? In 1939 Philadelphia politicians imposed a wage tax because they said they didn't want to tax little old ladies' houses. Philadelphia creates jobs and revenue. It was to be a temporary tax. Sixty some years later it became the tax that ate Philadelphia: $1 billion tax on wages, more than 4% for residents and almost 4% for non-residents. It is a tax for the privilege of doing business. Fifty years later we have seen how these businesses moved. Most locations tax on the value of place. We have a lot of wage tax and BPT (business privilege tax). On the street side in Philadelphia there is less stuff than on the street side outside of Philadelphia. In Philadelphia the decision was made not to tax property. The decision to fix that is going to put more pressure on the real estate base. If we reduce the burden of doing business in Philadelphia, there would have to be lot of pressure on the tax base. If I gave you dollars to go out to buy a house, you would find we do not have horizontal equity in housing assessments. If you look at a house in this neighborhood, it might be taxed 70% higher than a house in another neighborhood which might be 40% of what it could sell for. In Philadelphia, assessments errors are widespread. As an average, city property is at about 70% of what the house could sell for, a systematically regressive way where people that live in area may be at 25% or 150% of what they could get for house. It creates unpredictability in the housing market. You want to know what the tax bill will be next year or the year after that. We have to assess fairly.

We looked at LVT (land value taxation). In Philadelphia, a city of tens of thousands of vacant properties, it makes great sense to implement any policy to reduce the tax burden and create a fair system to discourage speculation. Philadelphia has lost none of our land but is taxing more and getting less of what we want, so go put pressure on people to sell or use productively. LVT became part of the commission proposal. The claim is that about 80% of people in Philadelphia would save. For people asked to pay more, for most it is not significantly. Those paying more were those reassessed in recent years, and are better off. Under LVT you customarily are going to save. Some of the contributors to councilmen are going to call them, refinery owners and land speculators. Since the day the reform commission released their report lots of groups see it makes good sense.

We recognized policy doesn't move forward without support, and that is why I left the Controller's office. In politics and government things won't happen because it is a good idea. Things happen because good policy meets good politics. We created a web site and speakers bureau. Last year we spent a lot of time screaming to eliminate the job killing business tax. It passed the Council twice and the mayor vetoed it twice. Questions about the real estate tax were put off until reassessment. Only when the reassessment is done will it be OK to talk about LVT. Philadelphia's real estate tax is unfair vertically and horizontally; there are problems house to house and neighbor to neighbor. In the entire city, some are underassessed and some are overassessed. The effort to reassess the city will have to be fair across the city; do it revenue neutral. The politicians may reject the assessment. Or maybe they will have a freeze -- take unfairness now and leave it. Philadelphia Forward is creating resources where we are taking the population in every Council district where housing is overassessed and underassessed, so we are seeing what is going to happen to folks. If it is done in a revenue neutral way, there are other policies out there to help them. It can be buffered in to go up less so as not to spike. You could have LVT and help out your constituency. You can combine policies. We want to create resources for politicians and also have politicians hear the message. In 2007 every councilman is up for reelection. A new mayor will be chosen. The Tax Commission recommended to do the reassessment.

A person in the audience asked a question about the effects of gentrification. Brett answered that people living in a nicer neighborhood, where crime has gone down, the streets are cleaner and the schools are better, are asked to pay more. There are policies, whether it is a reverse mortgage or whether it is some kind of homestead exemption or whether we do some kind of set aside in neighborhoods or linkages that if you are going to develop property in this neighborhood you are going to have some of property that is low income or affordable housing. All those things there are policy answers for. The reverse is what do I do when no one wants to move into my neighborhood, when no one wants to pay anything to be here; I can't sell my house even if I wanted to because no one would buy it; we don't have an answer to those problems. A lot is happening around center city that is exciting to some and troubling to others with lots of people moving in and being willing to pay a lot more than anybody had ever wanted to pay to be in these neighborhoods. Do I accept $300,000 for a home that I couldn't have sold for $50,000 two years ago, or do I continue to stay in a neighborhood where I will have to pay taxes as if my home really was worth $300,000? People can borrow against the value of their house. For good or for bad, what the city does locally is create a place where people want to be and build schools and build parks and build roads for people who want to be here. And when people decide, yes, I want to be here and a lot of people want to be in your neighborhood, so many so that they are bidding up the price of houses, then it is a good problem, and a problem that we can solve with other policies. It is a problem that we shouldn't try to solve by artificially holding down the increases in value of properties by underassessing properties and it certainly is not a problem where we can say we have got to stop people from coming into this neighborhood because we want to maintain this neighborhood in this decaying state. One policy solution is called the reverse mortgage. People are able to take the value of their house today and generate taxes today that is paid back on the house as first debt. There are policies like Homestead Exemption where you recognize that a certain amount of the value of your house is not really an asset, it is your home, to hold everybody harmless for, whatever, the first $20,000 or $50,000. There are other policies that would have to enacted at the state level that the Tax Commission recommended. One is called circuit breaker legislation where you would hold down the increase in the property tax that an individual would be paying if their income is not increasing as well. That solution would have to happen at the state level. The nice thing is that there are policies that can address these problems, they are problems that we can solve. But by maintaining a system that allows neighborhoods to decay, we don't have a solution to that.