Phila. official: Demolition program failed to collect millions

Cut costs. Raise revenues. That's the mantra in any monetary crisis.

Last month, the Nutter administration proposed drastic cuts in city services to close the projected billion-dollar deficit in its five-year budgetary plan.

Yesterday, City Controller Alan Butkovitz cast harsh light on the revenue side of the ledger, noting that $20 million to $30 million a year has gone uncollected by the Department of Licenses and Inspections since 2005 because of "inadequacies" in the program that manages the demolition of condemned buildings.

While L&I pays for the demolitions out of its budget, the department is responsible for seeking reimbursement from the owners of the unsafe properties.

The controller's audit found that in some cases the delinquent owners were never billed.

"This is millions of dollars that should have been paid to the city," Butkovitz said in a statement. "If L&I fails to send an invoice to the property owner, it is almost certain that the owner isn't going to pay."

The audits for 2005 and 2006 noted additional weaknesses, including incompatibility between L&I's billing software and the software of the Revenue Department, which is responsible for collecting the payments. It criticized L&I for failing to take action against demolition contractors whose job performance is substandard, and for apparently losing track of 500 sheets of plywood, valued at $8,000, that were to be used to board up abandoned buildings under L&I's "Clean and Seal" program.

While noting the alleged deficiencies occurred during the previous administration, L&I Commissioner Fran Burns acknowledged the need for continuing improvements.

"Admittedly, L&I was experiencing internal staffing issues and work assignment transition that resulted in a delay in the billing," Burns noted in a written response released as part of the auditor's report. She added that "all bills for the years in question are current."

The computer-compatibility issue is being addressed through reformatting, the plywood discrepancy is under investigation, and "any contractor who has failed to perform satisfactorily will be disqualified" from further work, she wrote.

In announcing the cuts to libraries, city pools, and fire engine and ladder companies last month, Mayor Nutter and his staff said increased attention to uncollected revenues would be an important part of weathering the city's fiscal crisis.