The City of Philadelphia will notify approximately 569,000 homeowners of their new property value assessments starting Feb. 15.
“People will take their new assessment, go get their old bill and multiply the new number by the old rate and have a heart attack,” said city controller Alan Butkovitz. Because homeowners don't know what the new tax rate will be, Butkovitz predicts confusion and panic.
"I have to keep an eye on that," said Matt Kane, a Northern Liberties resident and Old City rental property owner. "It's going to have an effect on rental prices, they are likely going to jump."
Kane pays $470 per year on his Northern Liberties property, which is under a 10-year tax abatement, and about $1,200 on his Old City condo. He said the abatement is what attracted him to new construtction in the neighborhood.
According to Richie McKeithen, the city’s first chief assessment officer for the Office of Property Assessment (OPA), homeowners can expect to receive notice of their old home value, new home value, a brief description of the property, homestead exemption information and what they can do if they want to appeal the property value.
“When you have missing information, you have to fill in the blanks. People are assuming higher rates,” said Butkovitz.
Mayor Michael Nutter and City Council have yet to set the tax rate, which is to come in March as part of the city budget process. Nutter has proposed the Actual Value Initiative (AVI), a new property tax system that would begin in 2014, based on market values. Current tax bills are due March 31 this year.
Mark McDonald, the mayor’s press secretary, says the city is studying the impact on individual taxpayers and neighborhoods. Some will see assessments go up and others down. The city expects to collect 1.2 billion in tax revenue in 2014.
Kane plans to watch his reassessment of both properties closely, and will file an appeal if needed. "When the reassessment does happen for those under the abatement, you may not see the effect right away. You could be blind-sided once the abatement is over," said Kane.
At a time when the housing market is starting to see a comeback, there’s debate among realtors regarding the forthcoming assessments and their impact on the Philadelphia housing market.
“This is going to cause people to leave the city and we’ll have a mass exodus if taxes are too high,” said Donna DeStefano, a South Philadelphia realtor [pictured right] with PA RealtyWorks, and a lifelong resident.
“A slight increase in people’s taxes isn’t going to stop everything. There are a lot of homeowners who are not paying their share. AVI sucks for some, but for most is fair,” said realtor Timothy Garrity of US Spaces.
Butkovitz asserts Grays Ferry may top the list of value increases due to gentrification. “They’re gonna be pushed out of their homes. People who are paying $500 now in taxes may be paying more than $5,000.” Northern Liberties, South Philly and parts of Center City may also see significant increases, said Butkovitz.
“We don’t have a crystal ball to determine what’s going to happen. People are afraid of purchasing based on sales price. I’m so frustrated with this process,” said DeStefano.
“There are a number of things that could be put in place to lessen the pain,” said Councilman James F. Kenney, like collecting on the delinquent taxes to start.
“Philadelphia’s focus is on the budget more. If we keep going like they are going, they will be bankrupt,” said Garrity.
What can homeowners do right now? Butkovitz advises, “Lobby your council people for the lowest possible tax rate.”
According to McKeithen, the OPA has been “staffing up” to handle assessment appeal requests.
New this year, the OPA will offer a first-level review, or the opportunity for a homeowner to talk with an evaluator and go over things. McKeithen said, “There could be an adjustment made or if you are not happy, go to the board (for a formal hearing).”
Kenney said he plans to coordinate with other council members to arrange for mass assessment appeals.
Have a problem with the tax rate? McKeithen said, “Talk to your local politician.”
For more OPA information, click here to get to their website.