Tax reformer is pushing
a Forward agenda

By Tom Waring
Times Staff Writer

To prove what he views as unfair real estate taxation in Philadelphia, Brett Mandel likes to show a chart of four homes that sold for about $250,000 in 2007.
The Board of Revision of Taxes has set dramatically different market values for the homes.
For instance, a house on the 1700 block of Annin St. in South Philadelphia has a value of $6,400. By contrast, a house on the 6700 block of N. Sixth St. in East Oak Lane has a value of $125,000. In between, houses on the 1200 block of Crease St. in Fishtown and the 1800 block of Napfle St. in Rhawnhurst are valued at $36,600 and $87,700, respectively.
Those varying market values translate to dramatically different 2008 tax bills. The bills range from $169.25 (Annin Street) to $967.88 (Crease Street) to $2,319.21 (Napfle Street) to $3,305.60 (North Sixth Street).
"That’s a disgrace," Mandel said Friday during a meeting with the Times editorial board.
Mandel, 39, is a Northeast native who lives with his wife and three children in Fitler Square in Center City. A former employee of the city controller’s office and the Pennsylvania Economy League, he is executive director of Philadelphia Forward.
Established in 2004, Philadelphia Forward is an organization that focuses on taxation, budgeting, ethics and governmental integrity. Its goal is to stem the city’s loss of jobs and residents.
The organization has successfully lobbied to lower the city wage tax and the business privilege tax and supported a change in the Home Rule Charter to create an independent Board of Ethics.
Mayor Michael Nutter and City Council appear ready to scale back the planned reductions in the wage tax, which is presently 4.219 percent for residents. Thanks to revenue from slots machine parlors across the state, the tax will drop to 3.98 percent in July. The city’s reduction will lower the tax to 3.93 percent by January. By 2013, the tax should be 3.6 percent.
The rate hasn’t been below 4 percent since 1976.
Now, Philadelphia Forward wants the city to change the way it taxes the 550,000 residences, businesses and other properties.
Making good on a months-long promise, the organization has hired a real estate lawyer and plans to sue the Board of Revision of Taxes in Common Pleas Court.
Mandel argues that the city’s real estate tax policy is not only unfair, uncertain and confusing, but it’s illegal, based on the Pennsylvania Constitution’s demand for uniformity in taxation.
In his opinion, city leaders are wary of changing a system that will result in higher taxes for some people. Elected officials fear a backlash at the polls, he believes.
The BRT wants Council to act to create a smooth transition by enacting legislation such as deferments and exemptions. Council wants the BRT to set values first so they can protect vulnerable homeowners.
The average city home is assessed at only 32 percent of its potential sale value. According to Mandel, a rate 15 percent above or below 100 percent would be acceptable.
"We’re way off," he said.
While homes sold for the same price can have different tax rates, houses sold for dramatically different amounts can have rates close to the same tax rates, Mandel points out.
For example, a home on the 2300 block of St. Albans St. in Southwest Center City sold for $480,000 in 2007. That same year, a modest row home on the 3300 block of Holme Ave. sold for $88,500. Yet, the Holme Avenue property owner pays more in real estate taxes, $1,494 to $1,311.
State Sen. Vince Fumo’s home is on the market for $6 million, but valued for tax purposes at $250,000. Thus, the taxes are a relatively paltry $6,611. By market rate, the bill for the 27-room mansion should be $158,669, Philadelphia Forward argues.
In general, according to an analysis, homeowners in Center City, South Philadelphia and Manayunk have a lower tax rate while those in the Northeast, North Philadelphia, Southwest Philadelphia and Northwest Philadelphia have higher rates.
Any change to the system would make some homeowners happy and others unhappy, such as the wealthy Society Hill woman who complained to Mandel during a presentation that she wouldn’t be able to afford her second home at the Jersey shore if her city property taxes increased.
"Everybody should be happy that the system’s fair," Mandel said.
Looking back at last year’s election, Mandel notes that Nutter expressed interest in changing the assessment system.
So, even if Philadelphia Forward’s lawsuit is successful and a judge orders the city to change the way it taxes real estate, Mandel would expect a newly elected reform mayor not to appeal the court decision.
"Mayor Nutter has a lot of political capital right now," he said.
Other changes Mandel favors are the hiring of a taxpayers’ advocate and the creation of separate agencies to assess values and hear appeals. Right now, the BRT handles both chores.
The main focus, though, is fair real estate taxation. Mandel, who spoke to a large crowd last week at the Tacony Civic Association, believes most people know the system is broken.
"It needs to be fixed," he said. ••
Reporter Tom Waring can be reached at 215-354-3034 or twaring@phillynews.com