Philadelphia City Council gave passage to a new bill on Thursday focusing on assisting homeowners who are facing financial hardships.
The new Tax Foreclosure Diversion program will offer housing counseling assistance and payment installment agreements, after an increase in property tax foreclosures throughout the city seen in low-income communities.
The bill was unanimously voted on for passage by Council in June of this year. There is a 90-day window for the city’s revenue department to begin regulations during the effective date.
“Those lower income people tend to be of the minority persuasion. So it’s effecting those areas that are low-income that tend to be in minority communities,” said City Council President Darrell Clarke.
"This issue about affordable homes that we’ve talked about also, the simple reality is just that the best way to ensure that we have affordable housing is ensuring that people that currently live in the homes that they tend not to have mortgages in, continue to live in those homes."
In 2016, the city filed 10,649 tax foreclosure petitions compared to 813 of those filed back in 2010. Last year, close to half of those petitions dealing with owner-occupied properties mostly coming from low and moderate-income communities of color holding annual household incomes of $5,000.
Soon after, the office of City Council President Clarke compiled data showing which homeowners were affected city-wide. The city’s numbers show that in some areas of District 5, a median household income can reach as low as $11,352, holding a population with majority people of color at 64.94 percent.
Other areas in that district can have 811 owner-occupied units, with 597 of those units without mortgage. That shows that the majority, 73.61 percent, of those homes are not mortgaged over recent years.
“This was used to inform how we thought about what we need to do and where it’s going to have its greatest impact,” said Herbert Wetzel, Housing and Community Development Executive Director. “It’s greatest impact is going to be in these low-income neighborhoods where you have long-term owners and a lot of elderly owners.”
A U.S. Census American Community Survey showed 40,994 homes under a $20,000 reported income bracket over 12 months in 2015. Philadelphia’s Community Legal Services (CLS) filed a report on protecting homeowners of tax foreclosure back in late February this year.
Property tax problems were the most frequent concerns of low-income residents, where the CLS wrote “low-income Philadelphians came to Community Legal Services’ north Philadelphia office,” seeing an increase in property tax intakes from 78 in 2010, to 398 during the year of 2015.
“CLS is encouraged that council president Clarke has introduced this bill that will ensure that more tax payers are able to pay taxes to the best of their ability,” said Catherine Martin, staff attorney for the CLS.
Some owners who are not able to pay their property tax leads to an issue of tax foreclosure, or situations where houses end up abandoned because people could no longer pay.
The tax foreclosure diversion program will also require the state to provide a real estate property tax rebate of $900 to a low-income Philadelphia resident if their current taxes are paid, looking to have an increase the city’s real estate taxes. Philadelphia’s Revenue Department is also allowed the discretion to offer a minimal payment option to those who are lower income taxpayers hoping to assist the city’s residents in keeping their homes.
“In our experience, the tax payers that we see are definitely low income and do come from predominantly minority neighborhoods,” said Martin. “It [the program] will allow more people to qualify for the tax rebate. We definitely think it’s a positive.”