Article From: articles.philly.com
By: Susan Snyder

Drexel University, in partnership with a Texas-based developer, has launched a $97 million student-housing and retail-development plan along Chestnut Street.

Set between 32d and 33d Streets, the 19-story tower and two eight-story townhouse-style buildings will offer housing for 869 students and 11 storefronts, including an anchor restaurant and a retail store yet to be named.

The design is meant to enhance student life by making the neighborhood increasingly pedestrian-friendly and urban, school officials said.

The location is key: It’s where the campuses of Drexel and the University of Pennsylvania touch, a prime gateway.

Construction is to begin this month, with completion scheduled in September 2013.

It is the first of three such projects the university envisions over the next five years under president John A. Fry’s plan to eventually double student-housing capacity on the West Philadelphia campus.

Fry, who had a leadership role in Penn’s successful neighborhood revitalization more than a decade ago, promised to increase student housing and improve Drexel’s gateway to Center City when he was named president in 2010.

With the release of the school’s updated master plan in December and details of the retail and housing projects this week, Fry appears headed for a similar push at Drexel.

“Of course the caveat is, if we can afford it, if this can be done in a way that doesn’t create any financial strain on the university,” Fry said in an interview. “Each of these projects will get fully vetted by our board.”

The three projects are expected to add at least 3,000 beds to the campus, which currently has housing for 4,250. The school’s master plan calls for adding a total of 4,400 beds.

Drexel has been struggling with increased demand for housing, and this year “tripled” two of its buildings, meaning it put three students in rooms designed for only two.

The housing/retail projects are part of an $800 million building splurge planned for the campus over six years, $300 million of which is under way. Included are a new building for the business college and an urban center for the College of Media Arts and Design, said Robert Francis, vice president for university facilities.

An estimated $300 million of the $800 million is coming out of Drexel’s coffers in a mix of borrowing and operational funding.

Drexel officials hope the rest of the work will be paid for by others.

That’s the case with the Chestnut Street project. The university is leasing the land to a developer, American Campus Communities, which will fund and operate the buildings, adhering to university guidelines on supervision, programming, and student life, Francis said.

The developer will pay the university a six-figure lease payment each year, he said.

“This is a revenue-positive development for the campus,” Francis said.

Developers also will be sought for the other projects, he said, with the same model of retail space at the ground level and housing in the upper levels.

“We will look to do as many deals with the private sector as possible,” Fry said. “I can’t guarantee that’s the case. The trajectory is dependent on the private developers.”

Drexel had been in the midst of a building boom before Fry’s arrival. Until 2007, the university had only been building one new structure a year, said Francis. In 2008, it started with its law school expansion, integrated science building, recreation center, and other projects.

“The rate at least tripled,” Francis said.

The Chestnut Street project was in the master plan of 2007 but included only the development of retail space, he said.

When Fry arrived, he decided to augment that plan with student housing after hearing from neighborhood leaders about the stress an increased student presence was putting on neighborhoods, primarily Powelton Village but also Mantua.

“You can’t blame the neighborhoods at all. Honestly, we created the condition inadvertently by growing the enrollment and not having adequate housing on campus,” Fry said.

He’s also concerned about the poor quality of some off-campus housing.

“It’s important for students to have a high-quality residence where they can congregate, be it academically or socially,” Fry said. “It sort of rounds out the whole academic experience.”

The university enrolls about 26,000 students, including undergraduate and graduate students and those in the law and medical schools and in co-op programs. Francis estimates that about 23,000 of those students live in the area so they can attend class on campus.

The 12-story LeBow Building and the urban center were in the previous master plan but were started by Fry. LeBow is scheduled for completion in 2013 and the urban center in September.

Fry is known for his leadership on development.

From 1995 to 2002, he served as executive vice president and chief operating officer of Penn under president Judith Rodin. He led that school’s neighborhood development.

Later, as president of Franklin and Marshall, a small liberal arts college in Lancaster, Fry used many of the same strategies, targeting an industrial site for reclamation and development.

The Chestnut Street project on the first two floors will include a mix of stores, such as restaurants, banks, an electronics shop and perhaps a clothing store, and a new corner entry into the nearby Barnes & Noble bookstore. On the upper floors, student housing will offer a variety of bedroom options and configurations. There also will be a social lounge with gaming area, a fitness center, meeting space, a theater, and a laundry room.

The second housing project, targeted for completion in 2015, is planned for 34th Street and Lancaster Avenue, Francis said. A third is planned for near 30th Street Station, possibly opening by 2017.

The university also plans to add more green space, lighting, and plantings, Fry said.

“What you’re going to see is not only more building but more green,” Fry said. “We’re going to figure out a way to make the campus as hospitable as possible and a more attractive and competitive institution.”

Article from: www.Philly.com
By: Alan J. Heavens

Ask builders, real estate agents, or mortgage brokers why the housing market continues to occupy a basement apartment, and the wordappraisals comes up a lot.

As in appraisals done by people unfamiliar with the neighborhood in which a house is located. And increased use by lenders of appraisals generated by computer rather than by licensed professionals. Those were just two “common” problems raised by a panel discussing appraisal issues at a November gathering of the National Association of Realtors in Anaheim, Calif.

Foreclosures and short sales, in which lenders agree to accept less than is owed on properties, now are the predominant form of transactions in many markets and also are throwing off appraisals. Such homes often sell for about 20 percent less than others in the same area, which can make accurate valuations more difficult, members of the discussion panel said.

The Realtors’ group noted that a survey of members late last year found that 18 percent had sales contracts canceled because of appraisals that did not come up to snuff with lenders.

Do not shoot the messenger, responds the group representing appraisers nationally: Low home values are not appraisers’ fault, the group says.

“The fact is that appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value,” said Sara W. Stephens, president of the Chicago-based Appraisal Institute, which has 23,000 members in 60 countries.

Stephens called the finger-pointing at appraisers by real estate agents and builders “nonsense.”

“Appraisers don’t set the real estate market; they reflect what’s happening in the market,” she said. “Obviously, the market is depressed – home prices have fallen far below the values of a few years ago. Many homes simply aren’t worth what their owners think they are.”

Mark Zandi, Moody’s Analytics Inc.’s chief economist, said that while low appraisals have impeded home sales and a housing recovery, this is “steadily less so.”

“House prices are more stable in most parts of the country, and distress sales have leveled off, making it easier for appraisers to get a better fix on market prices,” Zandi said.

Most appraisers “do a good job and are knowledgeable in the areas they work,” said broker Jerome Scarpello, of Leo Mortgage in Ambler.

Changes in federal law were made in the aftermath of the financial meltdown, and the resulting mandate that a lender not be in direct contact with an appraiser – designed to prevent any potential influence on establishing values – has made everyone’s job more difficult, Scarpello said.

One consequence of this firewall: Appraisers are randomly selected, regardless of how far they are from the subject property, he said, adding that he had an appraiser from Mullica Hill, Gloucester County, assigned to a home in Skippack, Montgomery County.

Philadelphia mortgage broker Fred Glick, a board member of the National Association of Independent Housing Professionals, said that before the changes, “I was able to order an appraisal from a company that I had faith that they understood the area and could provide great service at a fair price to them and the consumer.”

The problem now, Glick and others say, is the third-party appraisal-management companies from whom lenders order property valuations. Although the cost of appraisals has risen 40 percent, appraisers get 50 percent less than they once did, he said.

The Appraisal Institute’s Stephens agreed the process causes trouble for everyone.

Because the management companies’ business models are based “on keeping as much of the appraisal fee as possible and paying as little as possible to the appraiser, this can lead to the least qualified, least competent appraisers being hired,” including those from cities and often states far from the property being valued, she said.

Zandi said he was certain that “the appraisal process is due for a thorough revamp, given its ignominious performance in the housing boom and bust.”

In the meantime, said Ruth Feldman, of Weichert Realtors-McCarthy Associates in Philadelphia, the job for real estate agents “is to talk to the appraiser, get a feel for whether or not they know/work in the immediate area, and always ask if I can send them comparable sales.”

In her experience, “the appraiser always says yes,” she said. “Why wouldn’t they want to at least see what I come up with?”

Article From: www.Philly.com

By: Patrick Kerkstra

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.

“Those numbers tell you there is a very high rate of nonenforcement. It means that the city has made a decision not to go after these properties.”

The Nutter administration agreed that enforcement was lax in the past, but the mayor insisted his administration had “been relentless in our pursuit of taxes owed to the city” and was diligently “making fixes to systems that have been broken for decades.”

It is certainly true that the massive backlog of uncollected property taxes predates Nutter’s first term by many years. Indeed, 26,000 properties are at least a decade behind, and the owners of nearly 8,500 properties haven’t paid a dime for 20 years or more.

But the Inquirer and PlanPhilly.com analysis of property-tax data between 2009 and 2011 found that the delinquency crisis has gotten worse under Nutter, even as the administration has talked tough about going after deadbeats.

In May 2009, there were just over 100,000 tax-delinquent properties in Philadelphia. Eleven months later, the number had grown to 104,000. A year after that, on April 30, 2011, the count had risen to nearly 111,000.

The total amount of taxes, penalties, and interest due to the city and schools grew as well, from $425 million in May 2009 to $472 million in April 2011, an 11 percent jump.

“It’s not surprising that during the worst economic downturn in generations, people would have a hard time paying their bills and delinquencies would increase,” Nutter said in a written response to questions.

The Inquirer and PlanPhilly.com review of the city’s tax-delinquency system further found that:

Philadelphia has more tax deadbeats per property than any other big city in the country.

Enforcement remains scattershot and ad hoc. The city pursues some deadbeats relentlessly, but many others get nothing more than a slap on the wrist.

Tax-delinquent empty shells and vacant lots are often left to languish on the delinquency rolls for decades, even when there is market demand for the land.

Philadelphia makes no organized effort to fight blight and target nuisance properties through tax foreclosures, squandering one of the most powerful redevelopment tools cities have.

The process is vulnerable to political influence, especially from City Council members.

City property records are poorly maintained and organized, making it harder to sell tax-delinquent properties cleanly at sheriff’s sales.

Despite the shortcomings in its collection system, the city insists it expects all property owners to pay.

“Our policy is that we expect everyone to either pay or make payment arrangements. The bottom line of our approach is that people should pay their taxes,” wrote Nutter, who declined to be interviewed for this article.

“It’s frankly unfair to others when they don’t, and, as a famous jurist once said, taxes are the price we pay in order to live in a civilized society.”

Officially delinquent Jan. 1

It isn’t supposed to work this way.

The city mails out annual property-tax bills in December. Payment is due by March 31.

Most property owners pay up promptly, often through their mortgage companies, which deduct from escrow funds to cover the tax.

For those who don’t pay, the property is officially considered delinquent – instead of merely past due – on Jan. 1 of the next year.

From there, it should take only about nine months to slap a lien on a property, get a court order to sell it at a sheriff’s sale, then auction it off, all while giving notice to the owner to pay up, or else.

In theory, properties are eligible for sale just 18 months after the first missed payment.

But in practice, few parcels are sold that quickly in Philadelphia.

In most cases, it takes many years before the city Law Department asks Common Pleas Court for what is called an “in rem” judgment against a property.

Even after the court issues a judgment against a tax-delinquent property, it takes an average of 2.4 more years before the land is finally sold at auction, an Inquirer and PlanPhilly.com analysis of a decade’s worth of Sheriff’s Office data found.

And that’s for the few long-term delinquent properties that make it to the auction block.

Tens of thousands of parcels are never subjected to any enforcement action beyond sternly worded letters from the city Revenue Department.

That permissiveness has allowed what City Controller Alan Butkovitz calls a “culture of nonpayment” to flourish.

“The city at some point got the idea, ‘Let’s have a heart, let’s give people a break,’ ” Butkovitz said, “and we’ve been doing that ever since.”

Over time, a high degree of nonpayment became normal – expected.

“It’s an untenable situation, but we haven’t treated it that way,” said State Rep. John Taylor (R., Phila.), a critic of the city’s handling of tax delinquencies. “We shrug and say, ‘It’s just the way it is. It’s just the way it’s always been.’ ”

That complacency has made Philadelphia one of the most tax-delinquent big cities in America.

A review of the 10 most-populous U.S. cities and five peer cities – Detroit, Baltimore, Cleveland, Boston, and Washington – found that Philadelphia had the most property-tax delinquents on a per-parcel basis.

New York City, for instance, has twice as many properties as Philadelphia, but fewer delinquencies overall: There are about 80,000 tax-delinquent parcels in New York City, compared with 111,000 in Philadelphia.

Boston, which has a tax-foreclosure system structurally similar to Philadelphia’s, had 5,000 delinquent accounts out of 145,000 properties citywide. That gives Boston a per-parcel delinquency rate of 3.4 percent, compared with Philadelphia’s 19.2 percent.

Philadelphia fares just as badly when compared with such distressed postindustrial communities as Wayne County, Mich., home to Detroit.

Wayne County has 23,000 delinquent properties – all of which will be sold at auction this year or taken over by the city, state, or county – out of a total of 836,000 parcels, for a 2.7 percent delinquency rate.

With 177,000 delinquent property accounts, Los Angeles County may be the only local tax-collecting entity in the United States with more than Philadelphia. But Los Angeles County has 9.8 million people, compared with Philadelphia’s 1.55 million. On a per-parcel basis, Los Angeles County’s delinquency rate is 5.4 percent, or less than a third of Philadelphia’s.

There is wide variation in the delinquency systems and laws used across the country, which means municipal governments are out there collecting taxes with different tools and different methods.

Some are arguably much more effective than those Philadelphia uses.

Washington, Phoenix, and Baltimore, for instance, have gotten out of the business of collecting taxes on delinquent real estate.

Each year, they sell the tax liens on their entire delinquent inventories to investors, effectively reducing their annual delinquency load to zero, and leave it to the investors to collect from past-due taxpayers and, if necessary, foreclose on properties.

Other cities, including New York, have systems that convey select pieces of tax-delinquent land to carefully selected developers, both for-profit and nonprofit, at a nominal cost to build low-income housing.

Detroit is one of a growing number of cities that put a large share of their tax-delinquent properties into a public land bank, which holds, maintains, and assembles tax-delinquent land before selling or giving it to developers.

Cleveland uses a mix of methods, selling some liens to investors, land-banking other properties, and auctioning off the rest.

There are advantages and drawbacks to each approach, but this much is clear: The cities that have developed a coherent strategy for managing tax-delinquent properties have far fewer of them than Philadelphia.

An ad hoc approach

In the absence of uniform enforcement, the city has developed an ad hoc approach to pursuing property-tax delinquents.

The city Law Department, which takes over collection efforts from the Revenue Department after nine months, has no written policy to guide which properties it will pursue and which it will let slide.

Some are outsourced to private collection agencies. Other accounts are kept in-house. Some properties are all but ignored for years or decades, while others are targeted vigorously.

“It’s a basic value that the obligation to pay property taxes should fall uniformly on all property owners, that the system ought not randomly pick those taxpayers who will be subject to enforcement or not,” said Daniel Kildee, who formed a trailblazing delinquent- land-management system in Flint, Mich., and who is now president and chief executive officer of the Center for Community Progress, a nonprofit that advises state and local governments how to cope with vacant land.

On some occasions, uniformity of enforcement is thwarted by direct political interference, as in the case of Martin Cabry, a senior aide to Councilwoman Jannie L. Blackwell who after 25 years of delinquency had racked up a debt of $100,000 to the city as of 2010. (The debt was later paid off when Cabry went into bankruptcy.)

Blackwell acknowledged that she routinely asks the city not to foreclose on delinquent properties in her district, including Cabry’s. Blackwell said she does not endorse nonpayment of taxes, but argued that the city should offer generous repayment terms to those who have fallen behind, and should waive penalties and interest.

“My political philosophy is that when everyone works together, everyone wins. So we put people in touch with the city to work it out,” Blackwell said. “We do it routinely.”

Blackwell has assigned a member of her staff to deal exclusively with her constituents’ real estate problems, from falling behind on taxes to mortgage trouble to landlord problems.

“This is kind of what I do. This is my thing. We do what we can to keep people indoors. And the city works with us.”

When Council interference is not a factor, city officials tend to target the biggest delinquent accounts first. That typically means higher-value real estate in more affluent parts of the city.

There is anecdotal evidence that suggests the city has recently gotten more aggressive with high-end delinquents.

Over the last year, for instance, the city has collected on, sold off, or won court approval for future sale of a number of big tax-delinquent accounts, including an abandoned brewery site in Strawberry Mansion ($348,000 past due), an empty warehouse at the North Philadelphia intersection of Broad and Lehigh ($237,000), a shuttered ironworks in Southwest Philadelphia ($533,000), and a row of Old City condos at Third and Walnut Streets ($39,000).

But other large debtors have gotten away with nonpayment for years without losing their land to sheriff’s sale.

According to city records, the largest delinquent, owing $6.1 million in principal, penalties, and interest on five unpaid years including 2011, is Roman Philadelphia Property L.L.C. at 1499 S. Columbus Blvd., site of the potential Foxwoods casino.

That debt is in dispute. Foxwoods, through its attorney, contended that the city has assessed the parcel at an exorbitant and inappropriate rate, given that it’s still empty land.

“We maintain those values should not be triggered until the Foxwoods casino is permitted to be developed and opened,” said F. Warren Jacoby of the law firm Cozen O’Connor.

Second on the list of delinquents – owing $1.6 million on 13 years of past-due taxes – is a long-bankrupt medical company once known as RHA Nursing, which still owns a large empty tract on Cobbs Creek Parkway at the western edge of Philadelphia.

Third, owing $1.29 million on four years of unpaid taxes on two parcels, is Walnut Rittenhouse Associates, a defunct consortium of overseas investors that bailed on a plan to build a condominium tower just off Rittenhouse Square.

William Martin, a lawyer representing Walnut Rittenhouse Associates, said the group had entered into a payment agreement with the city and began paying down its debt in June. (That payment has yet to be reflected in public records, however.) Martin said the full past-due amount would be paid off within 18 months.

There are plenty of other head-scratching cases, instances of valuable properties with sizable overdue-tax balances, including:

An office building and art gallery at 306 Cherry St. in Old City that is a decade past due and $108,000 in arrears. “They have every intention of paying their debt, and one way or the other, they will,” said Vern Anastasio, a real estate lawyer who represents the company that owns the building.

A boarded-up eyesore at 18th Street and Delancey Place, on one of Philadelphia’s most exclusive blocks. That property, which is three years behind, is $27,000 in arrears. The listed owner did not respond to phone calls or letters seeking comment.

The Skyview Plaza Hotel in South Philadelphia, which owes $859,000 in back taxes, penalties, and interest. The owners got into financial trouble for reasons ranging from the economy to unanticipated maintenance expenses, said lawyer John Calzaretto. “They’ve just had a very tough ride in Philadelphia,” he said of the owners. He added, “We’re hoping the city is reasonable” and will agree to cut some of the penalties and interest owed.

Citing privacy concerns, city officials declined to discuss these and other tax-delinquent accounts in any detail. In instances where the city had taken court action against a delinquent, Nutter administration officials pointed to the public record as evidence of their enforcement activity against tax delinquents.

In the case of Skyview Plaza, for instance, the city has been in litigation for years to get payment or sell the property at a sheriff’s sale, a process that has been thwarted by broken payment agreements and bankruptcy.

The city’s actions against landlord William Rowell are another example of how its enforcement system doesn’t always yield prompt payments.

According to city records, Rowell owns 133 properties in Philadelphia, mostly low-income rentals in the Southwest. As of April 30, 57 of those properties were delinquent, with a cumulative debt of $153,000.

Law Department officials say they pursue delinquents who own multiple properties, such as Rowell, particularly aggressively, even when the amounts owed on individual properties are relatively small.

The courts are littered with city lawsuits filed against Rowell for everything from alleged lead contamination to unpaid gas bills. City attorneys also cite 17 suits filed against Rowell in Municipal Court for nonpayment of property taxes in the last three years alone.

But the lawsuits in question – 10 of which were discontinued after Rowell made some payments – are not the “in rem” cases that give the city the right to sell off tax-delinquent property.

Rather, they are a low-cost, high-volume alternative, typically used to ensure that the city collects what it is owed when the delinquent property is sold or another party with a stake in the property, like a bank, forces a sale.

As a practical matter, that has meant Rowell’s properties are rarely, if ever, sent to the tax-auction block. In fact, there is no record of any of Rowell’s properties’ being sold for tax delinquency in the last decade, according to Sheriff’s Office data.

Rowell referred questions to his lawyer, Bob Willworth, who declined to comment.

Overwhelming debt

Lawyers and advocates for property owners who fall behind on their taxes say the city does their clients no favors by letting debt rack up for years on end. As interest and penalties accumulate, the total due on even a modest home can eventually become enormous.

“If the city went after people after two or three years, it would be much easier to collect,” said Philadelphia lawyer David Rubin, who specializes in tax-delinquency cases.

Rubin said his clients might miss a year’s payments because of job loss or illness.

“These are people who are choosing which of their bills to pay. When it’s the city’s bill, a lot of people tend not to pay, since there’s very little follow-up from the city,” he said. “They think they’re getting away with it.”

And many will, for an indefinite period.

But some, particularly owners of commercial or rental properties, won’t be as lucky. The city or one of its private collection agencies may eventually come calling, and by then, the debt is often so big the property owner can’t hope to pay it, Rubin said.

The exception is the owner-occupied home.

Auctioning off voters’ homes is the third rail of Philadelphia politics, the local equivalent of cutting Social Security.

Electoral concerns aside, there are a host of good reasons not to foreclose on owner-occupants: the possibility of increased homelessness and added strain on social services; the destabilization of neighborhoods already stressed by mortgage foreclosures; and, of course, the sheer emotional toll on families evicted from their homesteads.

Given all that, delinquency experts like Kildee and Alexander – both advocates of prompt foreclosures in most circumstances – think it is appropriate to give special consideration to owner-occupants, particularly low-income ones.

But they object to enforcement so permissive that it unofficially tolerates a kind of permanent delinquency without requiring delinquent taxpayers to enroll in a formal hardship program.

Of Philadelphia’s 111,000 tax-delinquent accounts, only 1,074, about 1 percent, have a hardship agreement with the city. The program lets low-income property owners stay in their homes, even as property assessments and tax bills rise, by permitting them to pay based on ability, as little as $25 a month in some cases.

“It’s not that you want to evict people from their homes. But why hasn’t there been more outreach to these low-income owner-occupants to get them to come in and work out a plan, get them into an agreement?” Alexander asked. “And if they’re not willing to come in and talk, then the city should go after the property.”

Talking a tough game

Since its earliest days, when it began to grapple with the budget crunch that has shaped so much of Nutter’s first term, his administration has talked up the need to improve collection of past-due taxes.

The administration has posted public lists of big delinquents, enlisted the boxer Bernard Hopkins to publicize a crackdown, and even dispatched Nutter to the doorsteps of some of the largest deadbeats, with TV cameras in tow.

In 2009, after an Inquirer report identified about 2,000 city employees who owed the city $5 million in property taxes, fees, and interest, Nutter and Butkovitz began withholding cash from the paychecks of delinquent public workers. About 60 percent of those employees are now tax-compliant, and most of the rest are on schedule to have their remaining debts paid off within five years.

The administration has also expanded a program begun by Mayor John F. Street that contracts out 66,000 of the past-due accounts to two private collection agencies. In 2010, the city collected $42 million in a tax-amnesty program that eliminated penalties and halved the interest due on tax-delinquent accounts.

But it turns out that despite Nutter’s tough talk, sheriff’s sales of tax-delinquent properties have been sharply scaled back since he took office. According to Sheriff’s Office records, only 128 tax-delinquent properties were auctioned last year, the lowest total in at least a decade and a 90 percent decline from 2004.

City Finance Director Rob Dubow attributed the decline to the amnesty – the city wanted to give people a chance to pay instead of losing their land – and to widespread problems in the Sheriff’s Office, which led to a moratorium on foreclosures between December 2010 and April. (A grand jury is now investigating the Sheriff’s Office’s real estate operations and accounting practices.)

Now that the moratorium has been lifted, the city intends to ramp up sheriff’s sales, with the goal of auctioning off about 600 properties a month. Not even owner-occupants will be immune.

“Historically, we rarely took owner-occupied homes to sheriff sale. We’ve changed that,” said Daniel W. Cantu-Hertzler, chairman of the city Law Department’s tax group. “We still prefer to keep people in their homes, but it has to be a real threat.”

The administration is also in the midst of overhauling its property-assessment system and its processes for managing vacant and publicly owned lands, all of which have important links to the issue of tax-delinquent real estate.

Nutter’s staff is also deeply involved in the continuing effort to modernize and clean up the independent Sheriff’s Office, where badly outdated technical systems have rendered record-keeping suspect and slowed the transfer of money to the city once tax-delinquent properties are sold.

These are big undertakings, and progress has been slow.

“We’re making fixes to systems that have been broken for decades, changing policies to ensure maximum collection efforts, and investing in people and technology in order to be more efficient and effective in our commitment to collect the taxes that are owed – by everyone,” Nutter wrote.

But the administration does not expect its reforms to yield a financial windfall for the city, at least not any time soon. The city’s five-year budget forecast anticipates no increase in collections of back-due property taxes between now and 2016.

Nonetheless, outside observers said there was reason to hope a second Nutter administration could show progress after a first term in which property-tax delinquencies only grew worse.

“I think they’ve admitted they have a lot of work to do, and they seem committed to doing it,” said Taylor, the state representative, who is pushing land-bank legislation in Harrisburg intended to improve management of vacant land. “I think this administration recognizes the enormity of the problem.”

Article From: www.philly.com

By: Alan J. Heavens

Eight out of 10 real estate agents are independent contractors, not salaried or commissioned employees.

Which means that a real estate agent can be “fairly described” as a small businessperson, said Walt Molony, spokesman for the National Association of Realtors. Or, in the view of the IRS, a 1099 employee.

And although there was considerable consolidation in real estate a decade or more ago, with many mom-and-pop offices merged into larger ones, there are still plenty of small brokerages in operation, too.

“This business is 24/7,” said broker Christopher J. Artur, owner of Artur Real Estate in Mayfair. “No one else but you is there to open the door, wait for clients, determine staffing, buy and pay for supplies, and find, purchase, learn about and use the latest technology.”

Add to that the costs of errors-and-omissions insurance and its higher premiums if you manage properties, as well; commercial insurance for your office; fees for the Multiple Listing Service and local and national Realtors organizations, and a whole host of expenses “before you even talk about trying to sell a house,” Artur said.

Fixed costs consume most of the money a small broker takes in, he said. “I sell low-price housing” in Mayfair and surrounding neighborhoods, so Artur depends heavily on volume.

According to the Bureau of Labor Statistics, real estate brokers and agents do the same type of work. But brokers are licensed to manage their own businesses; agents must work with brokers.

An agent typically provides services to a broker on a contract basis. In return, the broker pays the agent a portion of the commission earned from the agent’s sale of a property.

The bureau further says that the broker or agent who obtains a listing usually shares the commission with the broker or agent who sells the property, and with the firms that employ each of them. It recommends that an agent just starting out “should have enough money to live for about six months, or until commissions increase.”

“Each month, we start at zero. No salary or any type of compensation other than the sales generated by our individual effort,” said Diane Williams, of Weichert Real Estate in Blue Bell. “One has to be strongly motivated and a self-starter – willing to work long hours, especially in this challenging market.

“Each month is different,” Williams added. “One must be disciplined financially to plan your spending around an irregular income.”

Expenses are hefty from the very start.

Not only do agents pay for their licenses, which are required before they can sell real estate, but many states – Pennsylvania and New Jersey included – require continuing education as a condition of license renewal periodically, and the costs of those courses are borne by the agent alone.

Agents and brokers pay for their own medical coverage, unless a salaried spouse in a different field has a family plan. If a brokerage has clerical staff, it has to provide medical coverage for those who work 30 hours a week or more.

“Major medical costs can break a small brokerage, especially when sales are down and premiums rise,” Artur said.

For agents who use a broker’s office part time, there may be desk fees, copier fees, and shared costs of electricity, he said.

Though today’s technology means less time in the office, cellphones, keeping a website fresh, and equipment cost money. Traditional advertising expenses and signs can cut deeply into commissions.

And agents need reliable cars to get to appointments and transport buyers to listings.

“We can work for months on a transaction, and if it falls apart, there is no compensation for all the time and effort expended,” Williams said.

“You must be upbeat and optimistic,” she said. “You’ve got to be able to pick yourself up and start all over again.”

Article From: www.philly.com

By: Adrienne Lu

As a Chester County real estate agent for nine years, Sal Triolo has had families ask him all kinds of questions about schools.

Parents often want to know which schools are strong academically. But some have more specific questions, such as which schools have good hockey teams or strong band programs. A few years ago, one mother told Triolo she wanted a local school where her daughter could join a diving team.

To help agents like Triolo, West Chester Area School Superintendent James Scanlon last week hosted the district’s first gathering for real estate brokers.

About 20 agents gathered in the cafeteria of Bayard Rustin High School in Westtown as Scanlon and other top district administrators pitched the district’s 16 schools. After the presentation, student volunteers offered a tour of the high school, which opened in 2006.

“With the academic achievement that we have in our schools and the relative low spending that we have, I would argue that coming to West Chester . . . you get an educational best buy,” Scanlon said, citing the district’s performance in the top 10 percent of the state on standardized tests combined with the second-lowest millage rate in Chester County. “If we can help you get information out in the hands of people, it will make our jobs easier and the experience of the kids better in our schools.”

Real estate agents are prohibited by fair-housing laws from steering families to specific school districts. But some who attended the event said they would direct families with questions they might not be allowed to answer to the district’s website, which details information about test scores, curricular offerings, and extracurricular activities, for example.

With the national real estate market still chilled, Triolo said it could only help to know that the school district – from the superintendent down – invites prospective residents to visit schools and welcomes questions.

“They’re the only ones that have done this,” Triolo said. “I like the accessibility and availability. When I get people who want to visit a school, I know where to go.”

Scanlon also used the opportunity to solicit feedback from the real estate community. One suggested an easier way for prospective residents to determine which schools a particular address would send children to, and another asked about a new club for preschool parents.

Among the West Chester school district’s newest residents is Gus Laserna, a home-mortgage consultant who moved from Westchester, N.Y., in December with his wife and two children. Laserna said he and his wife researched several school districts in the Philadelphia suburbs and spent a week of their summer vacation in the area to get a sense of the region.

In West Chester, Laserna said, he believes they have found strong academic achievement with taxes that are about a quarter of what they were paying in Westchester.

“We wanted to make sure we didn’t compromise quality of education,” Laserna said.

Scanlon, who has held similar meetings in two other school districts where he has worked, said the program was an important part of the district’s efforts to reach out to the community.

“School districts 50 years ago were the central hub of any town,” Scanlon said. “I think we’ve gotten away from that, and we have to look for ways to re-create that hub. Face-to-face contact is still the best way to get the word out.”

Article From: www.philly.com

By: Vernon Clark

The ballroom at the Westin Hotel in Center City was abuzz Wednesday as the Philadelphia Housing Authority held its first auction of houses, lots, and other real estate.

Amid the auctioneer’s rapid-fire cadence, more than 500 people – including real estate speculators and couples and individuals looking for starter homes – sat in rows under crystal chandeliers. Dressed casually, most in blue jeans, potential bidders tried to keep up with the fast-paced action.

Alon Glasberg, 27, president of a real estate investment company, clutched his blue bidder card and said he was interested in some good properties.

“I’m looking to go after a few,” Glasberg said, including an apartment building and a single family house in Fairmount.

Article From: www.philly.com

By: Diane Mastrull

Cathryn Coate most certainly is not a cheerleader for the commercial real estate business, describing it as “very competitive, very cutthroat, real nasty.”

Her initial impressions of the industry’s brokers? “Sort of an oily salesman,” was one way she put it in an interview last week. Another was: “Manipulative.”

So it was a stunner to many who knew her when Coate became a commercial real estate broker 14 years ago.

“I don’t think anyone could have imagined this is what she would do,” said Diane Dalto, a consultant to the arts community, which Coate was influential in getting Ed Rendell to embrace when he was mayor. “In retrospect, it seems like the perfect thing.”

Specifically, what Coate is doing is something few in commercial real estate are devoted to: serving small nonprofit organizations.

That’s not a group typically at the center of eye-popping deals for high-end office space that set the real estate world atwitter – conventionally or social-media-wise.

Quite frankly, it’s a venture Coate’s current boss wasn’t sure about when he hired her in 2009, in an economy unkind to even veteran real estate deal-makers focusing on more traditional markets.

“I thought we were taking a bit of a chance,” Doug Sayer, president and chief executive officer of Colliers International-Philadelphia, said last week. “I really did not understand the nonprofit real estate business. I do now.”

Not only that, Colliers matches every donation to a nonprofit that Coate makes. She usually contributes 5 percent to 10 percent of her commission to each organization whose deal she brokers.

“I’m sure I’m the only real estate broker with a master’s in social work,” quipped Coate, 57, a South Philadelphia Quaker and mother of three, who started her career as a social-services caseworker in Chester County.

In general, nonprofit groups are a burgeoning sector in Philadelphia, growing 40 percent between 2000 and 2009, said Sean Coghlan, a market-research analyst at Jones Lang LaSalle Americas Inc. Nonprofit groups occupy 3 percent to 4 percent of the office market in the city’s central business district, or 1.4 million to 1.8 million square feet, he said.

Coate’s target clients are nonprofit groups typically in need of 2,500 to 15,000 square feet.

The organizational structures of nonprofit groups, their funding challenges and notoriously slow decision-making tendencies, aren’t for everyone.

For Coate, it’s a world she has known since graduating from the University of Denver with a bachelor’s degree in social sciences in 1978 – and one she was determined to continue to serve when she first decided to go into real estate in 1997, after seven years as executive director of the Greater Philadelphia Cultural Alliance.

You could say her real estate career was an evolution born of necessity – her nonprofit group’s necessity. Shortly before Coate left the Cultural Alliance, the building housing it was sold, and the agency had three months to find a new home.

As Coate walked around the city looking for properties with broker Jeff Seligsohn, of Seligsohn, Soens, Hess Co. in Philadelphia, he noticed that she seemed well-known and urged her to make real estate her next career.

Her initial reaction: “Ehhhhh.”

About a year later – and after persistent nudging from Seligsohn, Coate said – she finally did.

“It was really hard at first, really hard,” recalled Coate, who at the time was one of just a few female commercial brokers in the city, a group that still remains a minority. But that wasn’t the problem.

“It really took me years and years and years to reconcile my nonprofit sensibility, where the idea is you get paid a little bit of money to be really helpful,” Coate said. “In the corporate world, you just want to make a lot of money. It’s hard to make a lot of money when you’re really focused on being helpful.”

She stayed 10 years at Seligsohn, helping create a nonprofit-services group. She would spend two years at Smith Mack Real Estate before joining Colliers in April 2009, where she is a senior vice president – and has a loyal client following because of her unique perspective, gained from having run a nonprofit organization and advocating for many others.

“She understands how we can be working on limited budgets or how space helps a nonprofit succeed in executing their mission,” said Gretjen Clausing, executive director of PhillyCAM, a public-access-television nonprofit group with an annual budget of $750,000.

PhillyCAM moved into a storefront last month at Seventh and Ranstead Streets. Coate negotiated the lease price down to $19.50 a square foot, in an Old City neighborhood where, she said, retail space goes for as much as $40 a square foot.

She considers enlightened landlords critical to helping nonprofit groups meet their office needs. She spends time educating them about the peculiarities of the groups – for example, that the decision-makers are usually a board of directors rather than a single executive, meaning consensus on a lease can often take longer than it would with a for-profit company.

What she also stresses is that nonprofit organizations are worth the “risk,” because most are reliable tenants who often stay put.

Michael Fox, president of M.S. Fox Real Estate Group Inc., a Philadelphia brokerage firm that often represents landlords, agreed.

“They’re good tenants,” Fox said of the groups.

Of Coate, he said: “She is a pretty tenacious broker. The truth is, you have to be as a tenant broker.”

How can a high-tech scammer that is thousands of miles away be ripping you off right in your own neighborhood?

It’s an age old scam, but now it’s more popular than ever. People are getting conned in this apartment scam because of thieves claiming to be renting an apartment that they don’t actually own.

It’s a story we’ve told you before (see some of the past stories embedded below). But with a lousy economy and renting becoming more popular, people are still getting scammed out of their money.

Postings from online websites about cheap apartments for rent seem like an offer you can’t refuse. Beware though — many of these postings are scams.

Here’s how it works: the scammer steals the information about a real apartment for rent usually from a legitimate online real estate site. Then they advertise the place for rent on online websites like Craigslist with the actual information that is copied and stolen.

Article From nbc10.com

By: Courtney Mimidis

A development plan created by the Philadelphia Housing Authority to auction 400 properties in North Philadelphia on November 16 has left many residents upset.  The plan bundles up to 25 properties for purchase, making it easy for large investors to buy but difficult for neighborhood residents who want to buy just one property.

According to an article on Temple University’s Philadelphia Neighborhoods website, the PHA along with Max Spann Real Estate & Auction Co., developed a bundling strategy for 386 of the properties, leaving only 14 available for individual purchase.

“I just want the one empty lot,” resident Betsy Esteves told Philadelphia Neighborhoods.  “What am I going to do with all these empty lots?”

The bundling plan makes it possible to offer “something for everyone,” according to Max Spann, CEO of Max Spann Real Estate & Auction Company. He says the bundling method is an effective way to accommodate the interests of individual home buyers as well as larger re-modelers and builders while being fiscally responsible.

PHA says the plan will return the properties to private owners, generate capital, and reduce blight throughout the city.  However, residents argue that the bundling strategy creates a real advantage for large investors but will make it difficult for people who want to buy just a single home or property.

“I want my neighborhood to go up, but I’m just saying [PHA is] putting this in the hands of investors.  That’s [going to] literally destroy the little people that have been living in Philadelphia, in their communities for years,” Yvonne McGough, a resident of the North Philadelphia neighborhood, told Philadelphia Neighborhoods.

According to Judith Robinson, a licensed real estate broker and North Philadelphia resident, there are many in the community, like Esteves, who want to buy, but cannot afford bundles of properties.

After complaints from angry residents, the PHA has set up a second auction on December 7, where they will sell off additional individual properties, though the number of properties has yet to be determined.

Article From: Philly.com
By: Peter G. Miller

QUESTION:

With mortgage rates now below 4 percent, is now the right time to refinance my loan?

ANSWER:

In late September Freddie Mac said that weekly fixed rates for 30-year mortgages had reached 4.09 percent, while 5-year ARM start rates were at 3.02 percent.

These rates are near or at historic records, but right now such financing is accessible to some borrowers but off limits to others.

If you’re a qualified first-time borrower you can get today’s rates. Combine low-cost financing with the purchase of a foreclosed home or a property being offered through a short-sale and you should be able to acquire a property at a discount and with a low rate.

If you now own a home and want to refinance, you’ll need to look at your equity. Lenders will make loans when qualified borrowers have sufficient equity, but many homeowners today are underwater – meaning the size of their debt is greater than the value of the property. However, even underwater borrowers with good credit may be able to get a back-door refinance with a loan modification. Go to MakingHomeAffordable.gov and check out information regarding the Home Affordable Refinance Program.

The related question, of course, is whether rates can actually go lower. The Federal Reserve – an institution that is supposed to know something about interest rates – recently announced that it will spend $400 billion trading short-term debt for long-term debt. Put simply, the Fed is locking in today’s rates. Like homeowners, if rates continue to go down it can refinance, if rates rise the Fed will simply continue to pay off current loans at today’s low cost.

While low rates are certainly desirable for borrowers, in the general scheme of things it would actually be better if rates began to rise. The reason is that rising rates suggest more capital demand, more capital demand would likely mean more jobs and more jobs could lead to increased real estate demand.