Landlord ire over PGW's lien policy

Gail Newman , standing in the yard of her rental property in Chestnut Hill, is fighting PGW's $15,000 lien based on a former tenant's unpaid gas bills.
Gail Newman , standing in the yard of her rental property in Chestnut Hill, is fighting PGW's $15,000 lien based on a former tenant's unpaid gas bills. (DAVID MAIALETTI / STAFF PHOTOGRAPHER)
Posted: February 17, 2012

YOU'D ASSUME that Gail Newman is using hyperbole when she calls the Philadelphia Gas Works a "fascist" regime run by "devious gangsters" relying on "Mafia-like" tactics to shake her down for $15,000 worth of natural gas she never used.

Bit over the top, right? Turns out, Newman's not the only one who feels that way.

"They know they can extort the money . . . " she said. "I'm just a middle-class person trying to make a buck, and they're taking their boot and squashing us. I'm so pissed!"

Newman speaks her mind, but she's not a raving lunatic. She's a dental hygienist from the suburbs. Her husband works with autistic children at the Devereux Foundation. They rent out a rowhouse they own in Chestnut Hill to supplement their income.

But the Newmans and other Philly landlords are livid over PGW's cutthroat policy of supplying free gas to deadbeat tenants - likely millions of dollars worth citywide - then pressuring landlords to pick up the tab, sometimes years after the tenants have left the building.

And if the landlords don't pay their tenants' bills - including penalties and interest - then PGW files a lien on the property, making it difficult to sell or refinance. In some cases, landlords say, PGW has filed liens without any warning, explanation or opportunity to contest the amount owed.

"This is a scam," Newman said. "Would a grocery store deliver thousands and thousands of dollars worth of groceries for years and not get paid? What legitimate organization would ever do that?"

Newman and others feel like they're victims of a shakedown. And, in some respects, that's exactly what it is. Except, it has been authorized by lawmakers in Harrisburg and carried out by the city-owned gas utility.

Legal . . . but is it right?

Here's how it went down at Newman's building on Germantown Avenue near Abington:

In 2006, a tenant moved out of the apartment and requested that PGW take the service out of her name. They did. But for the next three years, PGW continued to supply gas to the new tenant through a placeholder account. They didn't even know his name.

"Could you imagine Comcast doing that?" Newman asked.

In 2009, PGW finally threatened to shut off service to the apartment. The tenant then admitted that he'd moved in three years ago and had been using gas without paying and without his name on the account. PGW put the account in his name and he continued using the gas. It was shut off last year for nonpayment.

Final bill: Nearly $15,000, including penalties and interest. Newman is expected to pay, or sue her ex-tenant for the money.

"I pay a business-privilege tax for the privilege of being treated like crap," Newman said. "They're using these laws to screw me, and they're chasing a good property owner out.

"I wasn't going to sell the building, but now you can be damn sure I will, as soon as the economy improves. It'll be the happiest day of my life."

Cheryl Perfetti, who's been renting out a storefront on Passyunk Avenue for decades, said she feels like she's living in "some Third-World country." Perfetti is fighting $7,000 worth of liens, apparently for tenants she'd rented to who didn't pay PGW - going back to 2002, she said. Perfetti said PGW didn't contact her before sending a lien notification to her South Philly home.

"They let one guy run up $3,000," Perfetti said. "And it's a store, so they had no reason to leave that gas on. I really think it's unconstitutional. How can they put a lien on my property without telling me about the debt?"

Perfetti said that she tried to arrange reduced payment with PGW. For instance, she doesn't think that she should be held responsible for the penalties and interest on her prior tenants' bills. She said PGW rebuffed her.

"They said they want it all and told us not to get a lawyer because we're not going to win," she said. "They're very arrogant."

Perfetti's attorney, David Denenberg, who is planning to challenge PGW's lien process in court, said that even if Perfetti could track down the former tenants, some of the bills are too old for her to sue. In a similar case, Denenberg has been waiting for months just to get copies of the old PGW bills.

"I want proof, but I can't get it," he said. "If they're aggressive because they need money, they're going to go back as far as they want. Is that fair?"

Landlords vs. public

There is, of course, another side to this debate: PGW is owned by the city, so uncollected bills can ultimately drive up gas rates for PGW's 514,000 customers. The rates are already the highest in the state.

"It's balancing the rights of individual customers to be treated fairly against the larger public interest," said Janet Parrish, executive director of the Philadelphia Gas Commission, which oversees the management and operation of PGW.

PGW spokesman Barry O'Sullivan said about 17,000 residential landlords are enrolled in the Landlord Cooperation Program, which protects landlords from property liens triggered by their tenants' gas bills. He acknowledged, however, that thousands of landlords remain vulnerable to such liens because they haven't enrolled, despite PGW's efforts to publicize the program.

In recent years, PGW has collected an average of $27 million annually through property liens, but that figure includes resident-owners, in addition to landlords with deadbeat tenants. About 20 percent of that revenue is collected when property owners pay off the bill before liens are filed, O'Sullivan said.

Landlords are supposed to receive a pre-lien letter 10 days before PGW files a lien, according to O'Sullivan. But some landlords say that they received no warning.

"That has been a very significant problem," said Darrell Zaslow, legal counsel for the Homeowners Association of Philadelphia. "People go to a real-estate closing and the title company announces you owe thousands for a gas bill."

Zaslow, however, said that PGW has been trying to improve the notification process, and O'Sullivan said that officials are working on developing a program to protect commercial landlords like Perfetti, who could enroll and agree to provide PGW access to their tenants' meters when they don't pay.

"Too many people are getting caught unaware," said Chris Artur, a Realtor and past president of the Philadelphia Board of Realtors. "The whole system is screwed up, top to bottom. A private company would never run it this way. Only the government."

Mayor Nutter announced this week that the city is considering selling PGW, but that process could take at least two years. Under state law, privately owned utilities like Peco and Aqua Pennsylvania do not have the power to file liens against property owners.

Last month, state Rep. Scott Petri introduced a bill that would prohibit PGW from using property liens to collect gas fees. Petri met with PGW after property owners from his Bucks County district began complaining about the liens in Philadelphia.

"You're still supposed to have some sort of due-process rights," Petri said. "What if the amount they're seeking is incorrect? There's a fairness issue here. This is still America."

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