Uh-oh, it’s tax time!

By Brian Rademaekers
Times Staff Writer

News that the city planned to hand out more than 400,000 letters announcing increased property taxes had homeowners understandably jittery early last month.
When those notices came, however, the response was largely a collective sigh of relief.
In some cases, the increase was as little as $10. On average, most property tax bills jumped by about $70.
According to the city, the spikes came as a result of a long-overdue reassessment of home values, which have gone up nearly citywide.
But for many, the feeling of having dodged a bullet is only temporary. What looms in the future — and has many residents nervous — is talk of a "full value" assessment of homes for tax purposes.
Currently, the city bases property tax at only a fraction of a home’s actual market value. That system has come under pressure from the state in recent years to move toward a method that bases property taxes on a home’s full market value, as is done in most parts of the state.
And while the city has made repeated assurances that the change will not create a large increase in tax obligations, that hasn’t calmed speculation that poorer residents are going to face suffocating bills.
"I’m very worried that other people aren’t going to be able to pay their taxes when this new reassessment comes around," said Anita Wasserman, who lives in Rhawnhurst.
Wasserman’s tax bill went up by $119 this year, bringing her total bill to about $1,700.
"Nobody wants their taxes to go up, but that’s not too bad," said Wasserman.
Her fear is for those residents — including members of her family — who are able to live where they do only because of currently low property taxes.
"I have a lot of friends that are poor, and the only reason they have been able to own a home is because the taxes have been low," said Wasserman. "If the taxes go up, they’re going to lose their homes."
Wasserman said she and her husband moved to the Northeast after getting burned on real estate taxes in New Jersey, where they paid more than $4,000 per year.
"You don’t know the meaning of ‘bad’ until you’ve lived in Jersey," said Wasserman, noting that her four years in the Garden State made her "wary" of high property taxes.
Before that, she lived in South Philadelphia, where she grew up.
In part, Wasserman avoided moving back to her old neighborhood because she was aware that the city is moving toward a full-value assessment.
Homes in South Philadelphia, she said, tend to be undervalued, whereas homes in the Northeast are overvalued by the city.
If the city were to go to a tax system based on full-market value, she estimates that her tax bill would drop by about $50 a year. While she might end up saving money, she remains concerned that the new system will end up hurting poorer residents who live in neighborhoods that have seen dramatic increases in property values.
Paul Schemm, who lives on the border of Kensington and Port Richmond, shares Wasserman’s fears. Besides owning his own home in the area, Schemm owns seven others that he rents.
His properties saw increases of $10 to $20 last month, an amount that Schemm is "not too concerned about."
But under a full-value assessment, Schemm fears that his quickly gentrifying area could see a huge increase in property taxes.
"I’m very concerned about what is going to happen with that," said Schemm. "Right now, I can fix up a house and offer a very reasonable rent because property taxes are fairly low. Any increase I get, I’m going to have to pass on to my tenants."
Brett Mandel, executive director of the tax-reform group Philadelphia Forward, said places with historically low property values that have gentrified are likely to see the biggest increases.
"Usually, it’s the people in rapidly improved areas that are getting the best deals," said Mandel.
Still, that category is not limited to places like Kensington and Fishtown, Mandel said. In many instances, Center City homeowners also pay less than they should, says Mandel.
His group is pushing for the city to move toward full-value assessment sooner than later, a move that he believes will make for a much fairer tax process.
In response to the city’s most recent tax hike, Philadelphia Forward is urging all residents to appeal the increase, citing "non-uniformity."
Mandel described the recent tax increase as "arbitrary," and said that it underscored a lack of order in the city’s tax system.
To illustrate his point, Mandel noted the discrepancy between the tax bills for a Center City home that just sold for $480,000 and a residence on Holme Avenue in the Northeast that sold for $88,500.
The annual tax bill for the Center City home was $1,219.11, where the much less valuable home in the Northeast paid nearly $200 more, at $1,391 per year.
"That person in Center City should be paying a little bit more, and the lady living up on Holme Avenue should be getting a break," said Mandel. "We have to fix the system. Similar houses should have similar taxes."
Mandel acknowledges people’s fears of being taxed out of their neighborhoods, but said that the full-value assessment could be done painlessly if the city takes the proper precautions.
"If they do this right, nobody should end up getting punished in the way that people are afraid of," said Mandel.
The Board of Revision of Taxes, a city-appointed agency that oversees property valuation, has pledged not to move forward with the full-value project until City Council puts in place protections for the city’s residents.
Two such protections suggested by the board include "homestead exemptions," to protect longtime residents, and phased increases for homeowners who see large spikes in their tax bills.
Councilman Darrell Clarke, whose Fifth District covers parts of Center City, North Philadelphia, the river wards and part of the Northeast, has several bills designed to help low-income residents with rising property taxes.
One would freeze increases for longtime homeowners and the other would double the amount of maximum income needed to qualify for tax protections from $15,000 per year to $30,000.
Whether city residents like it or not, Mandel said, the full-value assessments are coming because state law requires that properties are assessed at their actual value.
"There is no question that it is going to happen, it’s just a matter of whether we do it on our own terms or if the courts force us to do it," said Mandel.
And while some see the full valuation as the path to a fairer property-tax system, others like Wasserman continue to fear that higher taxes will leave many residents running for the suburbs or — even worse — camped out on the curb.
"When you factor in the city wage tax, the fact that the schools aren’t that good, and the number of homicides . . . if real estate taxes go up a lot more, it won’t leave any reason for people to stay in the city," says Wasserman. "They say they want to make it fair, and I support that, but I have to be concerned about the people who already have trouble making ends meet." ••
Get a tax increase in the mail? You can go to brtweb.phila.gov to appeal the decision, or use the form included with the letter. Philadelphia Forward also provides a calculator that estimates what your tax bill would be under the full-value assessment, available at Philadelphiaforward.org
Contact reporter Brian Rademaekers at 215-354-3039 or brademaekers@phillynews.com