The Actual Value Initiative: What are you worth?

Dur­ing the next sev­er­al months, Phil­adelphia City Coun­cil mem­bers will be fig­ur­ing out how much the city’s go­ing to charge you to live here. And some­time next month, you’re go­ing to be mailed a num­ber that will be key to Coun­cil’s arith­met­ic.

That num­ber will be your house’s new as­sess­ment. It’s sup­posed to be the ac­tu­al value of your prop­erty — about what you’d get for it if you sold it today.

Cur­rently, the city uses only part of your prop­erty’s value to com­pute taxes. And many of the as­sess­ments are out of date or in­con­sist­ent. For ex­ample, houses that sold for $250,000 in dif­fer­ent parts of the city could eas­ily have as­sess­ment val­ues — and res­ult­ing prop­erty taxes — that var­ied widely.

The may­or’s of­fice and some Coun­cil mem­bers have touted as­sign­ing ac­tu­al val­ues to prop­er­ties as a way of mak­ing real es­tate taxes fairer.

Us­ing the Ac­tu­al Value Ini­ti­at­ive, or AVI, a house worth $100,000, for ex­ample, would be as­sessed by the city at $100,000. But be­cause so many ele­ments of the change to AVI have yet to be worked out, it is un­cer­tain how in­di­vidu­als will be af­fected.

What’s sup­posed to be the sure thing, however, is that over­all taxes are “rev­en­ue neut­ral.”

In­di­vidu­als might pay more or might pay less, but the total the city takes stays the same. To do that, the city has to lower its tax rate when it raises the value of its prop­er­ties.
Some own­ers might find their taxes drop be­cause some prop­er­ties cur­rently are as­sessed too high.

“My staff is find­ing some prop­er­ties have been over­pay­ing over the years and, in­deed, should re­ceive a tax cut un­der AVI,” said Coun­cil­man Bill Green (D-at large).

Right now, the tax rate that is be­ing men­tioned most of­ten by city of­fi­cials is 1.3 mills. A mill is one one-thou­sandth, or 0.001. So, if the city coun­cil sets the tax rate at 1.3 mills, a homeown­er would mul­tiply his or her new prop­erty as­sess­ment fig­ure by 0.0013. For ex­ample, the tax on a prop­erty as­sessed at $100,000 would be $1,300.

Re­as­sess­ment is not the only thing that could af­fect tax bills.

One is a pro­pos­al to of­fer a break — a homestead ex­emp­tion — to prop­erty own­ers who live in their homes. Such ex­emp­tion would shave dol­lars off the ac­tu­al value.
Green said the city has about 320,000 own­er-oc­cu­pied prop­er­ties that would be eli­gible for the homestead ex­emp­tion. Already, more than 200,000 prop­erty own­ers have ap­plied for the tax break, he said.

The homestead ex­emp­tion would mean less rev­en­ue from those prop­er­ties, so to make up that money, the tax mil­lage rate would have to rise. Green said he is op­posed to the homestead ex­emp­tion for that reas­on.

Most Coun­cil mem­bers con­tac­ted for this story over the past two weeks are con­cerned about a homestead ex­emp­tion eras­ing taxes on some prop­er­ties.
Coun­cil­wo­man Maria Quinones Sanc­hez (D-7th dist.) said there are a few areas of her dis­trict, which stretches from North Philly in­to the Lower North­east, that would get close to pay­ing noth­ing if Coun­cil ap­proves a $30,000 homestead ex­emp­tion.

Last year, she said, dis­cus­sions about the ex­emp­tion star­ted at $15,000 and rose to $30,000. Be­cause the high­er ex­emp­tion would push up the tax rate, Sanc­hez fa­vors the $15,000 fig­ure.

If the fi­nal pro­pos­al is $30,000 to help high­er-value areas, Sanc­hez stated, “then I would con­sider, if leg­al, a min­im­um tax.”

An­oth­er play­er in the city’s tax com­pu­ta­tions could be the Pennsylvania Le­gis­lature. State law­makers might give Coun­cil the tools to sculpt fairer taxes.

One such tool, Sanc­hez said, would be giv­ing the city au­thor­iz­a­tion to tax com­mer­cial prop­er­ties more than it taxes res­id­en­tial prop­er­ties.

“As it cur­rently stands, large busi­nesses are get­ting tax re­duc­tions while small busi­nesses, par­tic­u­larly in neigh­bor­hoods, are get­ting an in­crease,” Sanc­hez said.

Coun­cil­wo­man Blondell Reyn­olds Brown (D-at large) said in a Jan. 4 in­ter­view that she is in fa­vor of what she calls “pro­tec­tions” like the homestead ex­emp­tion, but she doesn’t like the idea of people skat­ing on taxes.

An­oth­er pro­tec­tion that is sure to be dis­cussed is a so-called “gentri­fic­a­tion clause,” of­fer­ing mul­ti­year tax in­crease abate­ments on prop­er­ties that are in the city’s hot­test real es­tate areas. Without such an ex­emp­tion, own­ers of those prop­er­ties would see huge in­creases in their tax bills.

What form this “gentri­fic­a­tion” clause would take would have to be ne­go­ti­ated, but like the homestead ex­emp­tion, the ef­fect would be to push up the over­all tax rate.

“Ac­cord­ing to the ad­min­is­tra­tion,” Green stated, “each $10 mil­lion in re­lief adds 0.01 to the rate.”

And right now, no­tions of what that rate will be, or should be, range from it’s too early to say to more than 1.4 mills. Coun­cil­man Mark Squilla (D-1st dist.) wants the rate to be low — close to 1 mill, but no high­er than 1.2 mills.Coun­cil­man-at-large W. Wilson Goode Jr. sees get­ting close to 1.3 mills as real­ist­ic. Like Squilla, Goode said it’s early in the game.

Coun­cil­man Bobby Hen­on (D-6th dist.) said he will push for the low­est rate while con­sid­er­ing oth­er factors. In an e-mail, Hen­on said he wants to look at neigh­bor­hood de­tails and data while con­sid­er­ing tax im­pacts on his dis­trict, which is primar­ily in the North­east.

Get­ting the money the city needs and mak­ing the tax rate fair while mak­ing sure “people aren’t hit with a ham­mer” is a “com­plex, layered prob­lem,” Brown said.

No mat­ter what solu­tion to that prob­lem Coun­cil comes up with, tax­pay­ers aren’t go­ing to feel it im­me­di­ately. This year, homeown­ers’ taxes are based on the old num­bers. ••

The new real es­tate as­sess­ments res­id­ents re­ceive next month will in­clude a form on how to ask for a re­view of the num­ber.

Sub­mit­ting the form will trig­ger a “re­view with the as­sessor who did the prop­erty, or, if that per­son is gone, then the new as­sessor who is hand­ling that area,” May­or Mi­chael Nut­ter’s spokes­man Mark Mc­Don­ald said in an e-mail. “This is a newly form­al­ized pro­cess.”

Coun­cil­man Bri­an O’Neill (R-10th dist.) ad­vised any­one who wants to ap­peal to do it soon.

“If you feel you’ve been as­sessed too high, act quickly, ask for help,” the coun­cil­man said.

O’Neill said a prop­erty own­er should pay at­ten­tion to the new as­sess­ment “and ask if this num­ber is fair, be­cause it’s go­ing to stick for a really long time.”

Coun­cil­man Bill Green be­lieves many res­id­ents won’t like what they see.

“We should ex­pect a sig­ni­fic­ant in­crease in ap­peals,” the at-large Demo­crat stated in an e-mail. “The Of­fice of Prop­erty As­sess­ment could be com­pletely over­whelmed by the in­crease and may not have the ca­pa­city to handle it.”

Those who want to ap­peal their as­sess­ments would do so through the Bur­eau of the Re­vi­sion of Taxes. Ap­peals will be due by early fall, Mc­Don­ald said.••

Re­port­er John Loftus can be reached at 215-354-3110 or

You can reach at

comments powered by Disqus