Are you saying that instead of "no new taxes," I could have higher property taxes?
Yes, if the city decides your property is worth a lot more than it was the last time it was assessed, you could have a “new” tax in the form of a bigger property tax bill.
My property taxes are already high.Why is city messing with this?
Many properties in the city – residential and business – have been assessed based on years, sometimes decades, of bad information. For example, the Inquirer reported in 2009 that eight of 22 houses on one block had inaccurate property descriptions, such as garages attached to wrong houses or extra floors.
And the result of this was... what?
Many people who live on the same city block – and in virtually identical houses – have been paying wildly different property tax bills. And some politically connected property owners have managed to get bills that were lower than they should have been.
Is that still happening?
No. Property assessments have been frozen for about two years. And city voters in May 2010 put the office in charge of assessing properties to figure out their value – the Board of Revision of Taxes – out of business. The Board still exists, but it only hears appeals from property owners challenging their assessments. Learn more about the BRT here.
What office assessed properties now?
The Office of Property Assessments (OPA – which, by the way, means “hooray” in Greek) is in charge of correcting the glaring mistakes in the old assessments, eliminating abuses and coming up with a fair, uniform and trustworthy system to value all of the city’s 577,000 residential and commercial properties. You can read more about the OPA and the goals of the reassessment process here.
How are they going about this?
Professional property evaluators have been sent to neighborhoods across the city to get information on every property. If you’re there, they will ask some basic questions, such as how many bedrooms you have, if you’ve done any remodeling or whether you have a finished basement. If you’re not there, or you don’t want to talk to them (you don’t have to), the evaluators can get a pretty good estimate of the value of your house just by looking at it. (A schedule of when the evaluators were in your neighborhood can be found here.)
Eyeballing a single property is enough to tell its value?
It’s a start. But evaluators also look at real estate listing services to find out how much properties in your area are selling for, along with permits obtained for building improvements. Aerial photographs can show a new deck or addition that an on-site visit may have missed.
Just to be very clear: The city isn't looking at my car, right?
No. They are looking at what is called “real property:” the land you own plus any improvements on your land, such as a house or a garage. (If you haven’t noticed yet, we are focusing in this piece on residential, not commercial, properties.)
I bought a house last year for $300,000. Will its "assessed value" be the same?
Great question. The answer is “no.” A selling price is what a seller and buyer agree on. Lots of factors enter into this (for example, a seller may have to move quickly and accept a lower price.) An “assessed” value is essentially a number created for certain purposes (like taxes) that is calculated by comparing similar houses on similar properties in similar areas to make sure they are treated fairly.
Do we have any idea about whether taxes will go up or down?
Not necessarily, since neighborhoods have all different types of houses. And then there’s the drop in housing prices during the lousy real estate market over the last few years. (A local economist, Econsult’s Kevin Gillen, reported that house prices in Philly dropped by an average of 18% since their peak in August 2007 though the end of 2011.) But even before the recession hit, Gillen found that properties in Center City and South Philadelphia tended to be under-assessed – leading to proportionately lower property taxes – while properties in North Philly, Northeast Philly and West Philly were over-assessed – leading to proportionately higher property taxes.
Is the city expecting to bring money from the overhead assessments?
Yes. The city has included a boost in property tax revenues in their budget plans for the next five years. And the Philadelphia School District’s Chief Recovery Officer said the public schools could potentially see $94 million in additional revenue as a result of more accurate assessments. (The School District gets 60% of revenues brought in from property taxes; the city keeps the other 40%.)
You said other steps need to happen before I get my new bill.
That’s a story for another day. But just to give you an example: The OPA’s job is to decide how much your property is worth. The property tax you have to pay is a percentage of that value. That percentage is called the property tax rate. The current rate is 9.432%.
Who sets the property tax rate?
City Council. It has to be done in time for next fiscal year, which starts July 1. That means Council has to set the tax rate without knowing what city properties are worth (since OPA won’t finish that process until the fall). Some Council members say this would force them to put the cart-before-the-horse.
Do I have a say about this tax rate is?
Council will hold public hearings before they make a final decision. You can testify to let the members know what you think. Seventy’s HOW PHILLY WORKS on how to do this can be found here.
That's enough. In the meantime, how can I look up what my neighbor pays in property taxes?
Current property taxes can be found on the city’s website here. But obviously you won’t find any reassessed values.
I guess it's too early to say OPA!
Maybe.
The non-partisan Committee of Seventy wants to get more people thinking and talking about local issues. That is why we regularly publish our HOW PHILLY WORKS series.
If you have thoughts or ideas for other topics, or have friends who might want to get our HOW PHILLY WORKS directly, please e-mail us at futureofthecity@seventy.org.
03/07/2012