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Wednesday, December 10, 2008

City Controller Says L&I Has Failed to Collect Millions

City Controller Alan Butkovitz just put out a new press release, saying that the Department of Licenses and Inspections has failed to collect $20 to $30 million in revenue.

Check it out:

Butkovitz Uncovers Almost $30 Million Owed to the City
City Controller reveals millions of dollars not collected from the Department of Licenses and Inspections.

PHILADELPHIA – City Controller Alan Butkovitz reports the Department of Licenses and Inspections failed to collect $20 to $30 million in revenue because of inadequate procedures with invoices to property owners for demolition services.

In a Licenses and Inspections Auditor’s Report for the 06-05 fiscal year, it is determined that the money is owed from property owners who had dangerous, at-risk structures demolished. The City is facing at least a $108 million deficit for the ’09 fiscal year partially due to money not collected by City departments in previous years.

“Any money that is owed to the City from past years could have helped alleviate the budget deficit we are now facing,” said Butkovitz. “This is millions of dollars that should have been paid to the City. We’re already facing at least a $1 billion deficit over the next five years and every amount collected now helps us in the future.”

Butkovitz notes a number of deficiencies involving internal control over financial reporting and other matters that L&I management needs to address. Some of the other crucial deficiencies include:
-Inadequate and incompatible recordkeeping systems, coupled with poor procedures and untimely billings, including some that L&I never sent to property owners.
-L&I management could not explain the differences between internal records and the City’s accounting system for various licenses, which netted to nearly $885,000 for the tested revenue accounts.
-On at least one occasion to correct the non-performance of a contractor awarded a demolition project, the department awarded a second contractor a cost-plus basis contract for the same demolition work, which cost nearly $9,500 more to complete the project.
-A shortage of nearly 500 sheets ($8,000) of plywood used in L&I’s Clean and Seal Operations occurred without the Department’s knowledge.

“A main concern appears to be that L&I may not have even billed for some undeterminable portion of the amounts owed,” said Butkovitz. “If L&I fails to send an invoice to the property owner, it is almost certain that the owner isn’t going to pay.”

To correct the deficiencies, Butkovitz recommends that L&I should meet with the City’s Revenue Department to discuss options for a better system to account for demolition receivables. Internal meetings should be conducted with managers responsible for the demolition expenses as well as take a look at system vulnerabilities. The department also needs to identify reasons that billings are untimely and implement a corrective action plan.

“City Government needs to be held accountable for all of its actions, especially when it comes to financial responsibility. The City has already tightened its budget belt and now it is crucial we secure wasteful spending practices and unaccounted for dollars in every department.”

To view a copy of this and other audit reports please visit the Controller’s Office Website: www.philadelphiacontroller.org

Posted by Catherine Lucey @ 12:29 PM Permalink | 3 comments

Comments

0 like this / 0 don't • Posted 1:05 PM, 12/10/2008

This is what an auditor is supposed to do. L&I can put these fines as a lien against the property, so that when the property is sold, the lien is paid at closing along with other lien debts. It comes out of what the seller gets for his sale price. The city has to rely on liens for payment, and that means we have to be industry standard at lien placement and foreclosure. We can't afford not to be anymore. In my opinion, we could contract out to law offices for this work at a much greater savings that trying to have a huge bureaucracy do it in the City Law Department, L&I, the Sheriff, etc. Look how far behind we are in collecting the overdue property tax liens -- $568 million owed the city in uncollected property taxes. http://www.hallwatch.org/proptax/about/redelinq/stats/summary

— CleanupPhilly

0 like this / 0 don't • Posted 1:11 PM, 12/10/2008

If you're going to try to expose this property to Sheriff sale for payment, you have to look at how the Sheriff is doing. This month, the Tax Lien sales haven't even been posted online and the sale is supposed to be in a few days by law. http://www.phillysheriff.com/ -- L&I is dropping the ball for sure, but you're going to drop the ball once more when the Sheriff has to take it on using their current system. Of the sales that are listed online by the Sheriff for overdue property taxes (L&I nuisance and other liens get paid at these closings also, so the city depends on that mechanism for this revenue stream as well), the Sheriff only lists EXACTLY 150 properties a month for auction in two sales. At that rate, how long is it going to take to catch up on the 150,000 properties that owe the city property taxes (if no new indebted properties are added)? 83.3 years. Folks, EIGHTY THREE POINT THREE YEARS. The Sheriff sale mechanism as it currently exists can't be an effective source of this revenue as it stands. The axis of Department of Revenue to City Law Dept to Sheriff is broken. And the city will come to depend on this axis even more as each day goes on. We don't even have time to wait for the next election to change this by referendum.

— CleanupPhilly

0 like this / 0 don't • Posted 10:22 AM, 05/26/2009

Please address "conreractor's licenses required for any contractor who does over $800 work in Phila per year. I cannot fine one. I cannnot get a PHA Home Improvement Low Interest Loan unless the contracot has this license. It costs $250. They all say they have one untill I ask for the numbers which I need, and they give me their Business Privilege number ofr something else. I could not even get one from Phila. establishments who have been in business here for 40 years. This is mainly carpet sellers & installers, paiters, dry wall installers, etc. Apparently there are hundreds of "fo lks" who do not veflieve in it. Appently, they are not not penilized for not having one.

— Joancrat

3 comments

About The Philly Clout Team

Chris Brennan, a native Philadelphian and graduate of Temple University, joined the Daily News in 1999. He has written about SEPTA, the Philadelphia School District, the legalization of casino gambling, state government, the mayor, the governor, City Council and political campaigns.

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David Gambacorta spent a small eternity writing about cops, drug dealers and serial killers. Now he’s writing about power and politics – which sometimes reminds him of the old crime beat. He joined the Daily News in 2005. And yes, he knows you’re not quite sure how to pronounce his last name. E-mail tips to gambacd@phillynews.com

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Catherine Lucey joined the Daily News in 2002 and has written about murderous drug gangs, political protesters and Harry Potter. After covering the 2007 mayoral election, she moved over to the City Hall bureau where she has been reporting on the Nutter administration.

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Jan Ransom, a native New Yorker, joined the Daily News in 2010 after graduating from Howard University. She has since written about the difficulty of filing police complaints, tax deadbeats and life after violent home invasions. She joined the Daily News City Hall Bureau in 2011 and has plunged headfirst into reporting on administration budget battles and City Council shenanigans.

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