If Brett Mandel, tax reform activist and former candidate for city controller, is correct about how the Actual Value Initiative will impact the riverwards, residents might be looking at higher property taxes next year.
Mandel was present at last week’s monthly meeting of the Fishtown Neighbors Association July 19 to discuss the effects the AVI could have on residents.
“We are probably going to see some wonky things going on with taxes, especially in our neighborhood,” Fishtown Neighbors Association president Jill Betters told the gathered crowd at the Fishtown Recreation Center, near the intersection of Montgomery Street and Girard Avenue.
In explaining why property owners might need to brace themselves for higher taxes thanks to the AVI — the city’s property tax assessment plan which has been pushed back until next year — Mandel discussed the city’s current assessment system and the problems that exist.
“We have to fix this system,” said Mandel. “Everybody agrees this system is broken.”
Currently, he said, the city taxes homes at about 23 percent of their market value. Since the assessed value of homes is often far from the true value, this can make for wildly different tax rates on homes throughout the city.
“There’s unfairness from neighborhood to neighborhood, block to block and house to house,” said Mandel.
In detailing the issue, he said in some areas of the city, where homes have been overvalued, homeowners end up paying higher property taxes than they should.
This can be tricky, he said, because a homeowner might be placated by the fact that the home is assessed at a high market value.
“But, the reality is, they’ll never sell it for that price,” said Mandel.
In other areas that have grown in popularity and population, like Fishtown and Northern Liberties, currently assessed taxes may be too low, as property values of homes have increased as the neighborhoods have become more desirable.
“The system is screwed up, we have to work on fixing it the right way,” said Mandel.
The AVI, he said, would allow a reevaluation of properties throughout the city, allowing a more open and transparent means of taxation, since properties will be taxed at current market values.
Mandel stated that some parts of this new program are still up in the air, as the city must set a tax rate. Also, the city plans to release home reassessment values in February of next year, meaning homeowners might not be able to estimate what their new property tax costs will be until then.
However, some at last Thursday’s meeting seemed more than happy to stay with the current system, if it kept property taxes lower.
“The value of my home shouldn’t matter unless I want to sell,” said neighborhood resident Zoa Schisler. “My neighbors aren’t investors, they’re staying…If you want to keep Fishtown stable, you can’t treat it like an investment.”
Mandel acknowledged that there are some exemptions, like a homestead exemption that will provide a cut – though just how much isn’t defined yet – to homeowners who don’t plan to sell their homes, and an anti-gentrification proposal that could see further cuts for anyone who has lived in their home for 10 years or more.
“I don’t know exactly where council’s going to end up,” admitted Mandel, noting that much of the AVI discussion will need to wait until City Council returns after the summer. “As painful as it’s going to be, and it’s going to be painful for me and people in this neighborhood who will probably have to pay more, we need the system to be fair.”
With so many unknowns – property values will not be clear until February – Betters reigned in the conversation, saying that there will be more information in AVI issues at upcoming meetings and Mandel offered to come back and discuss the issue again.
“I don’t think this conversation is over,” said Betters.
Asked just how local residents will be able to swallow this potentially bitter tax pill, at the end of the meeting Mandel said that residents who see their taxes increase might just have to console themselves with the knowledge that the reassessed taxes mean that while taxes increase in one area, other homeowners who have long been overtaxed are finally seeing some relief.
“It’s bad news for everybody undervalued. In the short term, it’s hard to convince anyone that this will be better, if they have to pay more,” he said. “But, on the other hand, there are people all over the city who are working just as hard, but have been overtaxed for years.”
Star Staff Reporter Hayden Mitman can be contacted at 215-354-3124 or email@example.com.