Northeast Times

Talking the terrible ‘T’

— As­sessed value, ac­tu­al value, mar­ket value. Prop­erty taxes have you con­fused? Join the crowd …

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 And many of the as­sess­ments are out of date or in­con­sist­ent.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. Coun­cil­man Den­nis O’Bri­en (R-at large) said the move is “long over­due in Phil­adelphia.”

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.

Jim Dover, a re­tir­ee who lives near Arch­bish­op Ry­an High School, is wor­ried that the taxes on his row house will soar.

“Every year, it’s been go­ing up a hun­dred, a hun­dred, and last time, it was two hun­dred,” he said in a Jan. 4 in­ter­view.

He said he and his neigh­bors, many of whom also are re­tir­ees, are pay­ing about $2,000 a year in taxes on their houses. He said he’s afraid a new as­sess­ment might push his taxes to $3,000, a fig­ure close to what he said sub­urb­an prop­erty own­ers pay.

“That’s crazy!” he said. “This is Phil­adelphia. We don’t have prop­er­ties; we have homes.” 

BIG CHANGE 

Changes in as­sess­ments, by law, are sup­posed to be “rev­en­ue neut­ral,” which means the total rev­en­ue the city takes in via prop­erty taxes can’t rise. To do that, the city has to lower its tax rate when it raises the value of its prop­er­ties, ac­cord­ing to Coun­cil­man Bri­an O’Neill (R-10th dist.)

Some prop­erty 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).

Ac­cord­ing to O’Neill, the may­or has put the city’s total real es­tate value at more than $96 bil­lion. The may­or’s pre­vi­ous cal­cu­la­tions were based on es­tim­ates of about $80 bil­lion, and this new, high­er es­tim­ate is likely to mean a lower tax rate for in­di­vidu­al prop­er­ties. 

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.

O’Neill fa­vors a rate set at no high­er than 1.3 mills, but said, “1.2 should be our goal.”

WHAT’S YOUR NUM­BER?

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. The homestead ex­emp­tion would shave dol­lars off the ac­tu­al value fig­ure, O’Neill ex­plained, but the ex­act num­ber hasn’t been set yet. 

If that ex­emp­tion were as high as $30,000, O’Neill said, more than 35,000 prop­er­ties would gen­er­ate no taxes at all be­cause they’re worth no more than $30,000. 

“That’s ludicrous,” said state Rep. Ed Neilson (D-169th dist.) “That means not pay­ing for trash col­lec­tion, for plow­ing. Every­body needs to pay a fair share.”

City Coun­cil­man Bill Green­lee (D-at large) said every­one should pay at least some tax. Some homeown­ers pay­ing noth­ing wouldn’t be fair, “and it wouldn’t sit well with people.”

Phil­adelphia is the only Pennsylvania county that doesn’t have a homestead ex­emp­tion, Neilson said. The state le­gis­lature, however, has giv­en the city the OK to in­sti­tute one.

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.

LESS = MORE

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 by the North­east Times 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.

THE COST OF UP­GRADES

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.

But Coun­cil mem­bers aren’t the only ones talk­ing about taxes.

City Con­trol­ler Alan Butkovitz, a long­time AVI crit­ic, last month told mem­bers of the Take Back Your Neigh­bor­hood civic as­so­ci­ation that he wants a tax rate no high­er than 1.2 mils.

HOW LOW can it go?

Coun­cil­man Mark Squilla (D-1st dist.) wants it to be even lower — closer 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. 

“It’s still very, very, very, very, very, very, very, very early,” Brown said, adding she wouldn’t even want to guess at what the rate will be.

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

O’Bri­en, too, said it is too early to de­term­ine mil­lage, but he said any ex­emp­tion would in­crease mil­lage.

Through aide Crys­tal Jac­obs Ship­man, Coun­cil­wo­man Mari­an B. Tasco (D-9th dist.) said provid­ing an opin­ion on AVI would be pre­ma­ture be­cause Coun­cil has yet to re­ceive all the data it needs.

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.

AWAIT­ING THE MAY­OR

May­or Mi­chael Nut­ter is ex­pec­ted to bring his new budget to Coun­cil in March. A re­com­men­ded tax rate will be part of that budget, ac­cord­ing to the may­or’s spokes­man, Mark Mc­Don­ald.

Coun­cil will hold hear­ings and the ma­jor­ity of the 17-mem­ber body will ap­prove a budget and ac­com­pa­ny­ing tax rate by the end of May, Mc­Don­ald said. That rate won’t be ap­plied un­til March 2014.

Butkovitz said tax­pay­ers should “be all over City Coun­cil” on this is­sue.

The best way to con­tact mem­bers is by a hand­writ­ten signed let­ter, said Neilson.

“Start out with your dis­trict Coun­cil mem­bers, then the at-large mem­bers, and then, the may­or,” he said.

O’Neill sug­ges­ted res­id­ents con­tact elec­ted of­fi­cials by phone, mail, e-mail or by mak­ing ap­point­ments. He stressed res­id­ents should give their names, ad­dresses and phone num­bers.

“Let people know you’re real, not an­onym­ous, and that you vote,” he said. ••

Re­port­er John Loftus can be reached at 215-354-3110 or jloftus@bsmphilly.com

You can reach at jloftus@bsmphilly.com.

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