In what many viewed as a burst of candor during his mayoral campaign, Street said publicly that those who contributed to his campaign stood a better chance of winning city contracts than those who were not on his side. He added: "Anybody who doesn't acknowledge that's the way it works is either a liar or thinks you're really stupid."
Tommie St. Hill said last week that he was sure his campaign largesse played no role in the selection of his firm, which he said had hired about 90 temporary workers to process personal-property tax returns at its Spring Garden Street location.
"We're the largest collection firm in the city," he said.
Revenue Commissioner Nancy Kammerdeiner said the city hired an outside firm because its personal-property tax division had been disbanded when the city stopped collecting the tax in 1997.
That is also the case in Montgomery County, which has decided to go further than Philadelphia in collecting past years' personal-property taxes following a Supreme Court decision in a lawsuit brought by billionaire Walter Annenberg.
Montgomery County rejected a similar proposal from St. Hill, County Solicitor Steve O'Neil said. County officials viewed St. Hill's proposal, which sought fees of more than $3 million, as too expensive, he said.
"We're going to do it in-house," O'Neil said.
Philadelphia officials said they hired St. Hill without a formal bid process because they were facing a tighter deadline than Montgomery County, since Philadelphia had repealed its personal-property tax ordinance, while Montgomery County left the tax on the books but stopped collecting it. For the city, the five-year statute of limitations on collecting for 1996 expires this month.
Because of that time constraint, Kammerdeiner said, the city was unable to seek formal competitive proposals for the contract. Instead, it turned to two firms that already had collections contracts with the city: NCO Financial Systems of Fort Washington and St. Hill & Associates. St. Hill seemed better prepared and won the job, she said.
The contract is part of an outpouring of good fortune for the St. Hills under the Street administration.
Under various arrangements to collect back taxes for the city and the Water Department, the firm was paid a total of $1.3 million from 1995 through 1999, according to city records. It has been paid $882,932 in 12 months under Street, the records say - not counting the personal-property tax contract.
Also not counted in that total is a collections contract worth up to $3 million per year the firm just won from the city's Law Department. That contract was awarded without competition, said Mary Schmidt, a spokeswoman for the City Solicitor's Office. Unlike most city purchasing, contracts to procure professional services are exempt from laws requiring competitive bids.
Under that arrangement, St. Hill & Associates is being paid a 25 percent contingency fee to collect delinquent business taxes, taking over work that had been performed by the Municipal Tax Bureau and Nicholas Panarella, a lawyer who pleaded guilty earlier this year to mail fraud in connection with what prosecutors called a corrupt consulting relationship with former State Senate Majority Leader F. Joseph Loeper.
In addition to giving to Street's campaign, the St. Hills raised $100,000 for him by hosting a party in their six-bedroom Wynnewood home. A few days before the primary, they hired a plane to tow a pro-Street banner across the sky.
The St. Hills made news after the mayoral primary when it was revealed that, although they live in Montgomery County, they voted for Street in Philadelphia, where they were still registered to vote.
The personal-property tax has been controversial for years. Annenberg sued Montgomery County in 1996, arguing that the tax was unconstitutional. When the state high court decided the case last June, it ruled that the way the tax was levied was illegal. Counties could not tax stock in out-of-state companies while exempting stock in in-state companies, the court ruled.
Every county had stopped collecting the tax - which was $4 per $1,000 of stock value - by 1997. But the justices told them to go back and fix the inequity for three years before the 1996 challenge.
Philadelphia, deciding it could not afford to pay an estimated $50 million in refunds, is trying to collect the tax on in-state companies for 1996, and to refund all taxes paid in 1993, 1994 and 1995.
Montgomery County has decided to collect all formerly exempt taxes back to 1993 but will hold taxpayers harmless if they agree not to seek refunds.
In November, St. Hill sent letters to 29,000 taxpayers, asking them to search their records to figure out whether they owe 1996 taxes. St. Hill is now processing the responses to those letters. So far, about 12,000 people have responded, Kammerdeiner said. Taxpayers have until April 1 to pay, but a court action has been filed to oppose the city's effort, and lawyers are due in court today seeking an injunction to stop the city from further collecting the tax.
Ken Dilanian's e-mail address is kdilanian@phillynews.com.
* Inquirer news researcher Frank Donohue contributed to this article.
