We recieved a note in out mailbox yesterday from someone who must live in the neighborhood describing a huge increase in property taxes and asking us to phone council members.

I sort of figured that they would eventually hike property taxes in Graduate Hospital since the house values have been skyrocketing and the taxes are still cheap. But is it comming sooner than I thought and will the increase be huge right away or will it slowly rise? And is there really anything we can do about it? Isn't that just the way it goes when a neighborhood improves?

There is a really good treatment of the property tax subject in www.hallwatch.org under the articles previously posted.

If from the releases to the public you can determine definitively what the city is planning, you are a swami.

I take it, my interpretation, which is certainly not probably whole or complete, is that yes,

1. Increases are expected this year

2. The 10% cap has expired as it was a one-session bandaid fix

3. No, revenue from other sources is not sufficent to cover huge increases in city school and public redevelopment debt

4. The city will not do a large chunk at once in increases unless there was a weird situation such as a huge, very old senior tax discount expired due to sale or transfer of deed, and the new owner has very high comparative sale values in the neighborhood

5. The BRT is to correct market values and adjust the freight accordingly, so that will not wholly drive increases

6. Real estate taxes have to go up, with more aggressive collection of grossly overdue accounts, in order to pass a reduction of the wage tax in Council. Now that Cohen and Mariano are gone, that throws Brett Mandel's campaign into a whole new inning, see www.philadelphiaforward.org please for a better treatment of wage tax reduction, but it appears we need to accept a more comparable increase in property tax more in line with the suburbs in order to abolish the economic disaster of the wage tax.

7. The city is going to allow credit card payments of property taxes now, and is doing a monthly payment plan versus the quarterly payment plan. I recommend billing people in November for the following year, not after Christmas. Having that bill on the kitchen table might reign in the urge to go nuts for Christmas. Guilty, as charged!

Posted on Mon, Oct. 24, 2005

The revamping of city's tax system

A Q&A on the ins and outs of new property levies

By EARNI YOUNG

younge@phillynews.com

"PHILADELPHIA property owners can say goodbye to the property-tax system they've loathed for so many years. It's history.

'Course, we still don't know if the new one will be any better.

David Glancey, chairman of the city's Board of Revision of Taxes, is preparing to ditch the current tax-assessment formula for one that values properties at 100 percent of their actual market value - the price a property could bring if it were sold.

Glancey's group says it will set new values for all of the city's 580,000 houses, condos, apartments and businesses by the end of the year. But that's only half of what's required to issue you a new tax bill.

After that, the Street administration, City Council and the school district have to figure out how much money they need to collect from the new tax bills and reset the property-tax rate. The current rate - .08264 - hasn't been changed since 1991.

You know what any change in tax policy or rates means: Get ready for the shoutin'.

There's a public hearing on the change at 11 a.m. tomorrow in Council chambers.

Given the expected furor, Glancey wants taxpayers to know that any change in their tax bill for better or worse won't be his doing.

But he is the guy who can explain the process.

So the Daily News asked Glancey to answer our questions about the changes.

Q. Once the Board of Revision of Taxes reassesses properties at their full value, won't it also raise property taxes?

A. The BRT doesn't send out bills; we send out real property- evaluation notices. Then the fine ladies and gentleman of Council and the mayor are going to do the tax rates.

The Revenue Department uses the tax rate to figure the amount of taxes to collect and sends out the bills.

Q. Folks have been unhappy with the current property-tax system for decades. Why change now?

A. First of all, the law says we should. We should either be valuing properties at actual value or using a base year. We've tried to stay within the mandate of the law by keeping everyone within a certain average, believing that uniformity kept to the spirit of the law. We were wrong.

Several Pennsylvania counties have had court-mandated re-evaluations because they were operating the kind of the same way we've been operating. They all changed to full-value systems. I don't want to wait for a court order.

Q. OK, the system is broken, but is this "full-value formula" the best solution?

A. I don't know if anything is a perfect fix, but it is better public policy. Today nobody really understands how the property-valuation and property-taxation system works. It's a fraction of a fraction times a tax rate equals taxes. What we will be saying is: Here's the value; here's the tax rate; end of story.

Q. What will taxpayers see on their 2007 assessment notice?

A. The notice will show their new value and at least three properties of 25 to 50 homes we are comparing theirs to for valuation.

Q. What if they disagree with the new value?

A. If they feel their home is different from those comparables for some reason, they can talk to a evaluator. If they don't get a satisfactory result, they can appeal. Nothing about the appeals process will change.

Q. With all due respect, can property owners trust the BRT to arrive at the correct market value for their property?

A. Yes. We're going to do all kinds of internal testing to make sure our figures make sense. We're also going to hire outside appraisers to test our numbers with the real world they appraise every day. (For more details on how the BRT will value your property, visit go.philly.com/brt.)

Q. Why the rush, when 2007 tax notices won't be mailed until next summer?

A. The mayor and City Council need the valuation numbers to determine what revenue they need. The school district's needs must also be considered, since schools get 58 percent of property-tax revenue.

From my conversations with the administration and with Council, no one is looking for a windfall. What everybody wants to do is raise the values, lower the millage rate and try to get as close to revenue neutrality as you can.

Q. If that's what the goal is, why wouldn't everybody's tax bill stay the same?

A. The new valuation system will create a new class of winners and losers depending on where their current values are set.

As a citizen, I think there will have to be some policies put in place for property-tax-relief measures as we go through this process. The BRT will provide research on various tax buffers used across the United States, then let the policy makers decide what to do.

Q. Are there any you would recommend?

A. The one that I've seen most is the Homestead Exemption, where a certain percentage or dollar amount of the market value of a property is exempted from taxation. The best example is Florida, where the first $25,000 in value is exempt, without age or income qualifiers, for a taxpayer's primary residence.

Another is tax deferral, where for certain classes of taxpayers - senior citizens or folks with lower incomes - any increase in property taxes does not have to be paid until the property is transferred to a new owner. Sometimes there are no income or age restrictions, but there is a time limit on the deferral period.

Q. Will property owners have to wait until next summer to see their new values?

A. No. The new values will be posted on http://brtweb.phila.gov/ sometime next spring. These values will be unofficial, but will give folk an idea of what to expect.

BRT also plans to post a selection of hypothetical millage rates - a high, middle and low - that fall within the ballpark of where it believes Council will settle in June. An online calculator will allow taxpayers to enter their new values and the hypothetical millage rate to compute their hypothetical tax bill for 2007.

Q. Are you sure we can't put this off for another year or two, and continue using the current property assessments?

A. That would be terrible public policy and I would shout that from the top of the highest building in the city. Getting this process to become understandable is good public policy."

Frankly, real estate tax revenues have to go up if the City is to have any hope of improving its business climate. Every time a bill is introduced to reduce the hated wage tax, someone from the administration points out, quite accurately, that the wage tax generates over a billion dollars in revenue and any cuts would drive a gaping hole in the budget.

Well, obviously, if you want to reduce the City's dependence on the wage tax and the business privilege tax, you have to find other revenue sources and guess what: the principal revenue source for most municipal budgets is the real estate tax. If the City could generate more than its current $400 million a year from the real estate tax, there would be plenty of room to reduce the other taxes which are driving businesses away. Some of you might retort: Why replace one job-killing tax with another. BECAUSE THE REAL ESTATE TAX IS NOT A JOB-KILLING TAX. Look at Camden or the inner suburbs of Delaware County. Sky-high real estate taxes, but no complaints about the business tax burden. Industrial firms that left Philadelphia are happy to be in Yeadon despite the high property taxes. Besides which, as people have pointed out on other threads, suburban communities have been raising their property tax rates every year. On many suburban homes, the annual tax rate is equivalent to 1 to 2% of the property's market value. Contrast that to Philadelphia. Recently, I saw a large warehouse for sale for $675,000. Annual taxes? About $650. Less than 0.1% of market value. If that warehouse were carrying its fair share, it could mean another $7,000 in the City's coffers. Multiply that by thousands of undervalued residential and commercial properties and you could probably make a significant cut in wage or business privilege tax.

Sharkfood is right. But ordinary people like Shark are not heard on our Council often.

Jannie Blackwell, Donna Reed Miller, and formerly David Cohen and Rick Mariano stated the same sentiment Miller states in today's Inq piece by Anthony Twyman, where people who buy houses and fix them up are lumped together as "speculators" who "drive taxes up" in neighborhoods that are not generating enough tax revenue to pay the fare for a single neighborhood school, much less any improvements such as more teachers, more resources, or new inititives.

Speculation is bad, but in my experience, speculation occurs when the city won't collect agressively the property taxes from the owner scofflaw. It's not because of renovation that the community needs to be valued at real market values.

A policy of non-collection promotes speculation because there is literally no incentive to spend the money to build when you can just buy, hold, not pay taxes, and wait for a reputable buyer to come along as other people raise comps by renovating.

Check you block for the unkempt properties that won't turn over, and see how much property taxes they owe and who owns them. In my experience, there are properties owned by the unscrupulous owner/speculator who just buys, holds, and does not pay taxes until he unload the property. This leaves the city as the backdoor bank of unscrupulous speculation.

Posted on Wed, Oct. 26, 2005 in www.phillynews.com

"Property to be taxed on actual values

"The city tax board wants to reassess property at 100 percent of its market rate. Some Council members fear spikes in bills.

By Anthony S. Twyman

Inquirer Staff Writer

"It is the kind of touchy topic City Council members running for reelection in 2007 might normally try to avoid.

David Glancey, the chairman of the city's Board of Revision of Taxes, told Council members yesterday that the board plans to change the way it assigns value for tax purposes to the 568,000 commercial and residential properties in Philadelphia.

The plan: Calculate the assessment at 100 percent of a property's actual market value.

During a public hearing in City Hall, Glancey said he hoped to begin testing the new system online next year. Taxpayers, he said, also would be able to use an online calculator that the board would have on its Web site, http://brtweb.phila.gov/, to get an estimate of their new assessments.

The board, he said, expects to put the full-valuation system in place starting in 2007. Residents also will have the right, as they do now, to appeal their assessments.

The change would leave Council and Mayor Street with the task of working out the new tax rate.

"To my knowledge, there has never been a system in which the properties have been valued at 100 percent in Philadelphia," Glancey said. "This is good public policy."

Properties currently are assessed at 32 percent of what the board determines is their market value. But reports, including the one released by the city's Tax Reform Commission in November 2003, say that the current system has led to wide property-assessment disparities.

Yesterday was the first of a series of public hearings on the topic of changing the tax-assessment system. The next hearing is scheduled for 1:30 p.m. tomorrow. A third hearing is scheduled for 10:30 a.m. Monday. Both hearings will be in City Council's chambers.

"Even though full value does not begin until 2007, the time to begin thinking about these issues is right now," Glancey said.

Citing concerns about a decades-old state law that requires properties to be assessed at their actual value, the Board of Revision of Taxes is paying $4.4 million over the next four years for a state-of-the-art, computer-assisted mass appraisal system that will allow the board for the first time to set and maintain accurate property values, Glancey said.

The current tax rate of 0.08264 per $100 of assessed value has not been changed since 1991. The rate would have to be adjusted downward so that taxes on individual properties are not raised simply because of the shift to a 100 percent-market-value system.

As uncomfortable as the prospect of tampering with taxes may be for Council in 2007, the board is determined to implement its full-valuation plan. There are, however, some concerns.

Several Council members said they were worried about elderly and low-income residents who may have lived in a blighted area for many years where the property values began increasing only recently because of new development.

"A lot of speculators are coming in and purchasing homes and driving the costs up," said Councilwoman Donna Reed Miller, who represents parts of North Philadelphia.

Glancey acknowledged that the mayor and Council may want to consider ways to prevent property-tax "sticker shock" for some taxpayers. He stressed, however, that full valuation is not a "backdoor tax increase," or an attempt by the city to "cash in" on a hot real estate market, or an "unfair tax" on senior citizens and the poor. The plan, he said, is "merely about setting accurate property values."
Contact staff writer Anthony S. Twyman at 215-854-2664 or atwyman@phillynews.com.

I'm not going to enjoy paying more in property taxes especially since i think the city wastes a great deal of money.

However, I am happy that property values are going up. I can understand why home longtime homeowners are worried. However, they should realize that higher property values will alllow they to have more equity in their homes and if they need to sell their property, they will get more money than if they would have sold it even a few years ago.

I currently pay $24 in annual property taxes - -YES, YOU HEARD IT RIGHT, $24 - - on a 2,100 square foot building with three apartments which is rented to Temple University students. I bet a lot of you on this Board could be paying less in wage taxes, if buildings like mine were assessed properly. It's a scandal.

You must have tax abatements for renovations in place on a property that already had low taxes.

This is the issue that lurking like the elephant in the corner and full-value assesments are right on schedule to be a major issue in the 2007 local elections. I agree that long term realistic full-value property taxes in Philly are going to be necessary step towards a Philly thats fairer and set-up to grow in the 21st Century. I also think that we are only beginning to appreciate the severity of "growing pains" this step is going to entail.

Tom Ferrick had a decent article today pointing out just how hot-button this soon to be very hot-button issue is going to be.

http://www.philly.com/mld/philly/new...k/13030662.htm

If not done correctly, this could be very scary. Believe me, I am a big proponent of paying more in property taxes, because typically they are criminally low. BUT, I hardly doubt the Street Administration will view this as an opportunity to decrease the wage tax. THus, this is definitely not a zero sum game, which it should be.

If Tom Ferrick's article is correct, I can look forward to my taxes going from $900 per year to $4000-$5000 in addition to the $4000+ I pay per year in wage taxes. That means my individual tax burden will go from about $5000 per year to $10,000. That's ridiculous! Quite frankly, I've been thinking about this all weekend and I am petrified.

Assuming my wage tax isn't going to go down considerably, I'd be willing to pay up to $2000 per year in property taxes to give the schools more money and to help the city reduce taxes on businesses. But, given that the schools are in shambles (though improving) and I get no service from the city - my street is never plowed, trash men create havoc, police barely patrol, Septa is a hellhole and PGW is an embarrasment - I'd seriously have to consider moving. It's hard to justify paying a property tax level that is equivalent to the burbs when we get none of the advantages that suburban residents get (efficient government, good services - though limited, and good schools). I might as well live in the burbs. People will not be able to afford this increase unless the wage tax is cut drastically when the increases go into effect.

If Ferrick's article is correct, many people who live in 300-400K homes will be paying 5-7 Gs per year. Most people can't afford that. This is going to be a huge problem - especially considering most people never thought their homes would be worth that much (a likely scenario considering many paid nothing for their homes).

The ONE advantage economically the city has had on the burbs is property tax burden (low). I worry that if we tilt the balance too much in that direction, NO ONE will want to move into town. Retirees, young professionals, who may have looked at the low property tax as an enticement will now have to second guess their decision considering this additional burden with the wage tax, etc.

Is anyone else worried about this?