Great Expectations

Here are some email comments on the Sunday piece:

I have some feelings for people worried about increasing tax bills due to 'gentrification'. Yes, the city should be able to devise a system to protect long time residents from increases that may price them out.

But, if you're talking about the health of the whole city, a couple things. This gentrification is far more, far more, good than bad. And, about these other neighborhoods like Frankford? They are in irreversible decline. Frankford may eventually be saved by gentrification, say, maybe 50 years from now. That the city was unable or unwilling to save these neighborhoods when they went into "flux" has led to a disaster. The town will be more Detroit than NY in 20 years.

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I enjoyed reading your piece "Helping residents of areas in flux" in the Sunday Inquirer. I just wanted to write a quick note and point out a very key element that I feel was left out. Often those who have the most to fear from gentrification are not homeowners.
The influx of new residents, $400,000 homes, and increased demand is especially threatening to renters.

Many of these neighborhoods have substantial numbers of renters - people who have not bought for whatever reason, from lack of financial resources to lack of information. These renters may have lived in a particular neighborhood for many, many years or perhaps all of their lives. Again and again changes to once neglected neighborhoods drive up rents and force out the renters who have made the place a home for themselves and their families.

I don't feel this is an insignificant number of people. Gentrification seems to hit renters the hardest for as you say, homeowners do at least have that asset and can take advantage of new found equity.
People in these neighborhoods are acutely aware of the perils of gentrification, not simply because of a remembrance of 20 year old policies but from their own experiences and from those of friends and family as this is the story of urban life again and again in Philly, New York, and on and on.

While there are creative options to deal with the problem for existing homeowners (one I particularly endorse that was not mentioned is only triggering a real estate tax re-appraisal on homes upon the sale of the property), unfortunately renters have no defense from the market. I'd be all for market-defying rules to limit rent increases but that would seem to be a battle unlikely to be fought by many politicians.

Thanks for the interesting Sunday reading and for taking on the topic. Let's not forget the renters!

Mike M.
Eastwick, Southwest Philadelphia

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Chris,
I read your article with much interest as I live both sides of the argument everyday. As a developer of affordable, for sale housing in Philadelphia we are constantly fighting NIMBYism. Ironically it's not the NIMBYism that most people are familiar with where upper middle class residents are concerned that a low income project might be coming to their neighborhood. This is NIMBYism where lower income residents think that ALL new housing represents gentrification or ironically they don't want low income development to be built in their neighborhood. After a long 4 years we recently completed the first of 3 phases of 151 for sale, twin homes in North Central Philadelphia. These are homes targeted to the working class, the American Dream that is out of reach for many Americans. Besides the typical hurdles imposed by the various City Agencies and quasi City Agencies it wasn't until people realized that we were trying to revive a neighborhood and not destroy it that there was a reasonable level of acceptance. This same scenario played out earlier this year with a similar project we are involved with in Lower Frankford/Juniata Park. Once again it was about educating the residents and overcoming the rumor mill. The Twins at PowderMill will be the first large scale new housing in that part of the City in 30 years and is targeted to Philadelphia's working Class. With 20 of the 50 homes being reserved for residents making up to 80% of Area Median Income this will be a true mixed income neighborhood. You may not be aware but Councilman Darrell Clarke is the biggest proponent of this type of development and I have the pleasure of serving with him on the Mayor's Task Force for Inclusionary Zoning along with a diverse group of representatives from the development, City and non-profit communities. As the Councilman constantly points out, "it's the working class of our City that gets the short end of the stick" when it comes to affordable housing choices. They usually make too much to qualify for government assisted programs and too little to afford new market rate development product. With the help of Councilman Clarke, Philadelphia OHCD, and some creative thinking the chance for older Philadelphia neighborhoods to be revitalized and be positioned to continue to serve the residents that have lived in those neighborhoods for multiple generations will become a reality.

Michael S. Schurr, Partner
OKKS Development, L.P.

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Thank you for your insightful article on the downside of gentrification.

For the first ten years that we lived here, this block was a microcosm of what the world should be like. It was a mixture of black and white, old and young, sexual preferences, and socioeconomic status (college professors and a doctor to a video store clerk and a retired hospital cafeteria worker). It was stabilized by a phalanx of six older black ladies, who spent a great deal of time on their porches overseeing the street. A candy wrapper lasted only a few minutes before it was whisked away. Everyone looked out for everyone else: a gay white couple oversaw the transition of one black lady (from her home to assisted living. People assumed roles unrelated to socioeconomic status: the key-keeper, the community garden organizer, the block party leader.

But times change. The black ladies, all but one, have gone to their relatives or passed on. Houses continue to be rehabilitated and then occupied as starter homes for doctors and lawyers, two-income couples who are rarely at home and who may have two cars. The block captain-cum-dictator developed Alzheimer's and then died (when her husband had a heart attack on the street, he was given mouth-to-mouth resuscitation by the white guy next door).

It is still a diverse block. Though the number of black households has gone down from the 11 when we moved here to 4, there is still socioeconomic and ethnic variety. Living on the street are people who have immigrated from Cuba, France, Japan, Morocco, and Sweden. Our new next-door neighbors are labor organizers (we welcomed them with open arms.) One couple did an extensive renovation--costing more than their house did originally--because they wanted to stay on the block rather than move to gain a larger home. And a plus: there were no children on the street when we moved here. Now there are 7 young children and infants.

It remains a very urban area. Our suburban visitors are sometimes fearful when they visit, and those from the Midwest are amazed (what do you do when it snows, they want to know when they view our narrow street. Take the bus, we reply.).

But it's not the same. I will soon be fully retired; It may be that my husband and I will soon be an anomaly: an older couple on a block of yuppies all of whom get into their cars early in the morning and are not seen again till late at night. I miss what was.

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I read your article in Sunday's paper with great interest. It bothered me a bit with your characterization of the residents affected by gentrification as though they were all illiterate and financially unsophisticated. If you would travel a bit further than just the southern fringe of North Phila. and University City, you would find a areas full of professionals, who could have also left, yet have fought the good fight, stayed in the city, yet are educated and financially sophisticated yet equally impacted by the gentrification of formerly blighted areas. I guess you can imagine I'm speaking of Northeast Philadelphia. I know myself and many of my neighbors make well over the magical 100K threshold which would allow us to live comfortably, if not well, in a suburban setting, also while saving over 4K/yr in the onerous wage tax, yet you wait until the last 2 paragraphs of your lengthy article to even mention the possible ramifications on these areas. I think maybe you should get out and about more and speak to those who aren't necessarily in need of the gov't assistance you speak of yet still very negatively affected by this new found affection for our city. Hope to hear from you, Mike.

My reaction to the article was much the same as Mike's (from the Northeast). Yes, Center City's vitality is important for many reasons - to the City and region. At the same time the central district is a continuing concern, individuals who live beyond the central city area are overlooked. In the past ten years large areas of the Northeast are less safe, more unstable and offer an overall lower quality of life. Those who have "stayed and fought the good fight" would in most cases want to stay in the City - they have invested their lives here. But, there are very few individuals in power (from elected officials to police) who offer them concrete reasons to stay. Their concerns for their families' safety and quality of life issues are passed over as "subtly racist"; there are few affordable middle class options left in the city limits for these individuals to move to. All new construction goes to the "higher end", $300K/$400K. While we look to revitalize and reinvigorate the central city and immediate surroundings, the elected and non-elected poweres that be in the City have to keep ALL districts, neighborhoods, streets in their thoughts for improving conditions and maintaining character

The impact of gentrification and rising property values is not only a "positive" for Philadelphia, it is an absolute necessity if we are to continue our emergence from the economic death spiral we have been in for the past 40 years! The increasing tax burden on property owners, while a challenge to some, is far more beneficial to the city as a whole. The tax collections will permit the city to continue to invest in infrastructure, fight crime and promote a positive city image. The increase in collections will allow for a rebalancing of the tax burden, decreasing our dependence on businesses, which either avoid Philadelphia or are struggling. The incease allows for a decrease in the wage tax, and will even allow for an eventual decrease in property taxes.

And, lest we forget, homeowners have an appreciating asset and are free to use the equity as they so choose. Many people have taken advantage of this through home equity loans, using the moneys as they deem appropriate.

This is not some supply-side, trickle down mantra. Rather, this is a basic economics. The tax burden in this city is already out of whack. An increase in the property valuations, with a subsequent increase (and potential decrease!) for property owners is a reflection of the positive trend Philadelphia has been experiencing.

City leaders shouldn't blow this by creating a "tax neutral" strategy for property taxes (which are, incidentally, much lower on average than the suburbs!). While I sympathize with those that will struggle, the city can easily put in place an assistance program or lessen the impact with a phased-in approach. However, the city must embrace this wonderful economic reality and use it to continue to improve our city!

In all seriousness, I find it shocking that people consider gentrification being one of the biggest problems facing Philadelphia today. The idea that people moving into once abandoned or struggling neighborhoods, rehabbing homes, building new ones and starting new businesses being a bad thing is plain ridiculous. Philadelphia has been losing jobs and residents for decades, there are neighborhoods with scores of abandoned homes and our murder rate is 3 times higher then New York's, yet politicians like Jahnie Blackwell want to focus on "yuppies" taking over University City. Our schools have 50% drop out rate, yet wants Blackwell blocks creation of a new high school partially funded by Penn, based on the succesfull model of Penn Alexander Elementary.

The stereotyping of newcommers as soulless yuppie dinks, who drive everywhere completely misses the point. Perhaps that's true for some, but just as many would rather live in the city instead of the suburbs. For every $400,000 condo, there is a rehabbed rowhome that the owner-occupent has invested many hours of sweat equity to restore it, make it attractive and remove the blight of an empty shell from a city block. Many people want to live in the city because they're tired of driving everywhere and want the option of taking public transportation or being able to actually walk to places. Many who move back to the city dump their cars entirely. We should be welcoming the idea of making this city attractive to the middle class again. We should be welcoming the embrace of the urban lifestyle, instead of falling back on the parochial demagoguing of newcommers.

Thanks for all the comments.

Rarely do I write a column this long where I feel that I've only scratched the surface of the topic and left out three-quarters of the points I had wanted to make.

My sense is that Roman is right: Of course, it's a wonderful, overdue and needed thing that middle-class people want to live in and invest in the city. A city that can retain a middle class only through paying city workers middle-class wages and requiring that they live inside city limits is a city that's dead, but doesn't know it.

The fact that middle class workers who don't have to live in the city by law are flocking back is of course an encouraging development.

And yet ..... for those who've long been here, fighting the good fight, the whole situation is more fraught than the middle class newcomer or outsider might imagine. It's as Jeremy Nowak put it: "Where's my break? I've been struggling to hang on here for years. Why is it only newcomers get lavished with breaks?"

There's something to that anger. It should be respected. That doesn't mean that every concern, every anxiety that the long-time resident expresses is fully merited. There is some embedded neurosis here. But there are also some real grievances, real issues that the newcomer - and the celebrant of newcomers - ignores at his peril. Often the grievance has do with being ignored by city government, with having long-expressed needs unmet. That is the basic story of living in the Northeast, to mention one place where this syndrome applies.

Since City Hall seems an unapproachable and useless target for frustration, it often gets expressed at the target a little closer at hand, the newcomer. If the newbie doesn't get what's going on, and doesn't understand the basis of genuine grievance for which he's become the unwitting target, things can get rocky.

Unfortunately, the tax reassessment may become a flashpoint for all these emotions - which would be a shame. It's a lousy context in which to vent these issues. Basically, Philadelphians may not like to hear it, but their property taxes are low compared to the rest of the region. Sure, their wage taxes are high - but the whole point of letting property tax revenues rise a bit is to a) let other taxes shrink and b) better fund the schools, which are the key to housing retaining its value long-term. Even more to the point, city assessments are a crazy quilt that bears little resemblance to current market values and/or ability to pay. That's why reassessment is desperately needed; without doubt, some of the people who will howl loudest about it will the people who've been making out like bandits under the status quo, paying too-low bills that are subsidized by excessive taxation on people who live in less-favored 'hoods and have lower incomes. Their howls will be human nature, but they can't be allowed to drive policy. And don't let this small group cloak its anger in righteous claims to be worrying about elderly widows who are losing their homes to taxes. That's an urban myth; the elderly widow is protected.

In a few areas where values have skyrocketed, the increase will be stunning. That's why a buffer, such as a five-year rolling average of assessments, is needed.

Someone says the reval shouldn't be revenue neutral. I disagree. It should be revenue neutral in the transition year, to make sure the pols don't claim for themselves an unearned windfall which they are sure to blow. After that, once you have a fairer assessment system, taxes should rise as needed to meet urgent needs of the schools, but those increases would be incremental and orderly.

Other points: It's true, as a reader says, that renters are the first ones hit and hurt by rising values; they lack the deed and the equity that should protect the homeowner who avoids doing something stupid. The lack of decent, affordable rentals for families, cited in the column, is one of the unhappy outcomes of living in the city with the highest rate of home ownership in America. The supply is limited, and the political voice of renters is equally limited.

I salute the story/observations written by the woman who lives on the changing block of Southh Philly. Her words speak for the experiences of many.

Re: NIMBYism - That is the pecularity of Philly that struck me so much during the forums. NIMBYism isn't just the well-off trying to prevent the less well-off from moving close. It's the working class trying to fend off anyone who does not belong to the same class from moving close.

Class is as powerful a dividing force in this town as race.

There's also a powerful element in Philly of people regarding any attempt to build anything that does not basically emulate the 20th-century rowhouse as a betrayal of the city's spirit.

People, we don't need to build at that density anymore. We're never again going to have more than 2 million people occupying this land. Yes, developments shouldn't be ragingly suburban; they should respect the context and design legacy of this great city. But it's crazy to build housing now that lacks the amenities that middle class buyers will insist upon, and will improve quality of life for moderate-income buyers: porches, play spaces, off-street parking etc. We have the rooom for that. We have room for more parks and playgrounds. Why hassle developers who are trying to provide them.

We can build in a way that is urban, but not cheek by jowl. But frequently the neighborhood and the city authorities freak out when builders propose such things. Let's grow up.

Chris

On gentrification, it's nice to focus on infrastructure and property values and so on. But what about the effects for those residents already there? Seems to me that gentrifictaion always focuses on the "needs" of the incoming gentry. I'd like to see opinion/ideas from residents in gentrifying areas such that an appropriate balance is struck. There's an excellent recently published book on this, entitled, There Goes the 'Hood: Views of Gentrification from the Ground Up by Lance Freeman (Temple University Press). Excellent ideas from sociological study in Harlem and Clinton Hill in New York City.

This characterization of every low income home owner as "fighting the good fight" is not really an accurate generalization.

Many people inherit grandma's house, and it becomes the flophouse for the relatives no one wants in there own house.

These are the people not paying any taxes, and never losing their houses to sheriff sale or foreclosure because the city is so slow to collect.

Here's what is more generalizable observation:

People only get charged taxes on assessments that have no meaning, are years old, and were too low then.

So someone on Carpenter St, west of Broad, whose "been fighting the good fight" as you say pays a couple hundred a year in annual property taxes.

Meanwhile, they cost the city thousands to hundreds of thousands per family in costs. Schools, police, prisons, social work, etc.

This hopeless romanticizing of the numbers without mentioning any numbers is always suspicious.

Look at the cost of educating one child properly, say, an estimate of 15,000 per head. How many of the good old folks who've got tax freezes if they are seniors already does it take to pay for one kid? This is from doing life long renovation, none of it permitted on a house that never got reassessed when it should have.

How many newbies who pull permits does it take to pay for one school child properly schooled?

15,000/300 = 5,000 low income owners who Satullo wants to keep paying taxes not assessed since the 80s when they weren't assessed right to begin with.

15,000/1500 = 10 newbie homeowners who buy in today's dollars so pay in today's dollars.

What pols love are the the 5,000 votes. That's when every owner becomes a victim no matter how much their house is actually worth in reality.

What the city's school children need, however, are the real time taxpayers with market value assessments.

A lot more. Each kid needs ten middle class new owners.

Or, each kid needs a mayor and city council with the integrity and intellectual honesty to demand that people hugely underassessed for so long pony up on the value of what they own.

Does Fumo need five houses, really? Or, does he need to be a basic good guy and pay the real amount he should on the manse?

The truth: the owners in Carpenter St. who pay $300 a year, every year, since the 80s, and that's it, often are not even paying that.

In comes the anti-collection crew with that as a cause.

Who suffers? The schoolkids who rely on that taxbase.

We need a mayor who can grow the tax base like a garden. Chicago did it. NYC did it.

Now we need to be honest about what property in Philly is worth, and what the city costs are.

And, if then, you feel those taxes are too high, how about let's make city government more efficient and open? Dare I say, smaller?

That's the reality in the choices we face.

I'm sick of liberals killing quality education in the name of a reliable low income voting block.

The people who cost the most have to pay on the value of what they own now because that's fair to all of us. It's progressive, it's based objectively.

What it's not though, is able to guarantee that people can inherit a house for nothing, and continue to pay what grampa paid in 1979.

All of that fraud in non-arm's length transfers has to be stopped. Satullo never writes about that, even though it's critical to police and schools funding.

People play the system, just ask any title agent. They pose as relatives, and the relatives "sell" the property for an amount TOO SMALL TO TRIGGER ASSESSMENTS.

This is the story all over the city. The truth is that the city looks the other way because it makes last year's election list still current.

But the effect is that people who won't move often perpetuate the toxic environments that kill neighborhoods. We have to be honest.

Not every poor home owner is virtuous, nor able to pay taxes, nor able to do the upkeep on a 100+ year old house.

Why pretend that protecting them from contributing what they own as an asset (excepting seniors, who get a freeze on property tax) is good for kids?

If kids voted, the mayor would be crying a different tune.

Satullo never looks at the percent, either of what is paid in taxes to real market value as determined by recent sales of similar houses in similar condition.

Even if you are strictly conservative, people who live in a house that will sell for $200,000 need to pay more than $400 a year in taxes. People who live in houses that sell in as-is condition for $150,000 need to pay more than $300 a year in taxes.

Most importantly, people who own vacant lots, and agencies, who own vacant parcels that sell in real time for $150,000 to $250,00 PER LOT, hello, need to pay more than $50 a year, $70 a year, $200 a year in property taxes.

This creates LOTS OF VACANT LOTS.

That precisely describes what you see, and those numbers come straight from www.hallwatch.org on the area in 19146. Comparative values are common data sets kept by industry, and the city compares by sf, by land size, building size BUT NOT BY COMPARISON SALES PRICES unless YOU JUST BOUGHT your house.

So far from the newbies getting this big break with tax abatements, I really see the middle class that has partial assessments paying way more than those who could and should either sell or pay in real time values.

What has to change in Philly is the idea that every city agency, the whole city, the RDA, PHA, or nonprofit owners who own underused, undermaintained land need to KEEP HOLDING IT.

No, they don't. They need to sell the stuff if they can't afford their fair share of property tax. That includes the Kenny Gambles, the Joe Fraziers, the pets of the current administration, the pet ideas that never seem to happen so the lots molder.

This is what this system protects.

Because if you are not a political pet person or project, you'll lose your house at sheriff sale fast so Street buys more time and money for his pets.

Not every new buyer gets a tax abatement, either.

Plenty of properties owe years of taxes when taxes where cheap.

How do you cope with that while being fair?

Newer owners like myself got no abatement, did the work (legally) got reassessed, pay more ($1800 per year) and consider this quite cheap.

Meanwhile, my neighbors with two cars, five kids in school, two kids in prison, and HDTV, a dish, cable etc. pay $1000 per year, but live in houses identical in size and value to mine.

This shows that people like me, the middle class non abated owner pay for the cheap tax bills of the so called long term non senior resident, as well as the abated new owners.

I'm fine with the new owners' abatements, because they add equity.

I'm not fine with the obvious favoritism of long term non seniors curried for votes who cost the city the most. Instead of struggling to keep any non senior, non disable owner here at any price, we have to be wise enough to put a minimum tax on all houses, and people below that minimum will have to be rapidly brought up to it at more than 10% a year.

It will have to be more like 25% per year until they hit the base required property tax for any property in the city, vacant, commercial or house.

That minimum should at least be $1000 per year.

This means that the highly low income resident will be in a rental. That's fine. They'll be in a PHA house, have a section 8 voucher for rent, or rent in the low cost private rental market.

Preferably, the city needs low cost private rentals, because those properties pay property taxes (or get sold at foreclosure).

Yet the "advocates" (for bad schools) want fewer private rentals, and more government subsidized housing that pays NOTHING in property taxes. (Sect 8 vouchers sometimes do pay property taxes, sometimes don't if with a religious organization -- a bad policy for the city).

Either way, HCV (Sect 8) voucher rentals pay much lower than the market assessment, and landlords who want that voucher payment really keep them in poor condition, imo to avoid re-assessment.

Again, this kills equity for EVERYONE.

Killing equity, liberals, KILLS THE SCHOOLS.

Ok, now that we have schools finance 101 down, let's try this again.

Property taxes that reflect values, and have some mandatory minimum amount for the privilege of living in a great city -- GOOD.

Property taxes that are 1/1000th of what surrounding counties pay who have good schools -- BAD.

The politically motivated low assessments and noncollection had to have ended 10 years ago. We might be able to save this generation in Philly schools if we act in time.

I'd rather have more reverse mortgages and fewer drop out factories.