Phila. gets tentative new property assessments

For decades, Philadelphians have lived with an inequitable and baffling real estate tax system built on woefully inaccurate assessments of property values.

For years, politicians and policy experts have proclaimed the need for a fix.

Yesterday, a potential fix arrived, as the Board of Revision of Taxes dropped off tentative new assessments of more than 577,000 properties at the offices of Mayor Nutter and City Council.

Now City Hall has to figure out if the cure is worse than the disease.

Dubbed the Actual Value Initiative, the numbers are based on sales data and are intended to reflect the projected worth of properties on the open market.

If adopted, the new figures would change the real estate tax bills of virtually anyone who owns property in Philadelphia. Some would pay much more than they do now, others considerably less.

Although the amounts property owners would pay under this new valuation will not be settled until Nutter and Council formally set a new tax rate, there is a simple way to get a rough estimate: 1 percent of your home's market value.

A home valued by the BRT at $250,000 would have an annual tax bill of about $2,500, assuming Council and Mayor Nutter do not use the transition to a new system to increase the city's total property-tax collections.

Even though the numbers are available now, they are unlikely to be adopted this tax year. Nutter has argued that there is too little time for his administration to thoroughly vet the fresh data before assessment notices are mailed out in July and August.

"We have to look at the numbers and make sure they make sense," said Rob Dubow, the city's finance director. "It's a large volume of information, and we'll have to take some time to look at it before we can offer any meaningful opinion on the new numbers."

In theory, neither Nutter or City Council can prevent the BRT from adopting its new values. The agency is independent, and its board is appointed by city judges.

But the BRT says it intends to cooperate with elected leaders, even if that means another year of taxing residents based on inaccurate assessments.

"We always said we'd give the mayor, Council and the public a chance to review the information before we implemented anything," said BRT spokesman Kevin Feeley. "We're not trying to jam anything down anybody's throat. This is all very new, and change is hard."

The BRT has not released its data publicly, so property owners cannot yet check their new valuations.

But according to a copy of a database of new values obtained by The Inquirer, the changes in store are enormous.

Under the old assessment system, for example, BRT pegged the average value of a Philadelphia home at $48,000. That has grown 205 percent, to $146,000, using the Actual Value method.

The new system would mean higher property taxes for most residents of Center City, gentrifying sections of South Philadelphia, the Art Museum and Fairmount, and parts of North Philadelphia, according to the BRT figures.

Property owners throughout Northeast Philadelphia could see significant reductions in their bills, as would many homeowners in West Philadelphia, excluding University City.

The new database also underscores just how inaccurate the city's current assessments are, a subject explored in an Inquirer series last summer.

For instance, using its current system, the BRT calculates that the total market value of all property in the city is $34 billion.

If the Actual Value method is correct, that figure is 188 percent wrong. The BRT's new estimate for the total value of all Philadelphia property is a whopping $98 billion.

"Look, the system that the city has been using for many, many years used the best available information. What's changed is there's been a tremendous jump forward in the city's capabilities," said Feeley, the BRT spokesman.

Valuation technology has indeed improved, although few big cities have been as slow to adopt it as Philadelphia. At a cost of $4.4 million, BRT's new figures are generated by a system called CAMA, for Computerized Mass Appraisal System.

To help develop the system, the BRT hired a pair of well-regarded independent real estate experts, including Kevin Gillen, of Econsult Corp.

In his view, the new system is a major step forward, but he suggested work remained before it was completely ready.

"There's remarkable improvement in assessment accuracy, equity and uniformity. Some areas still appear to need some fine tuning, but this is a process," he said.

Whatever the new method's merits, intense political debate is sure to accompany any switch to Actual Value.

Mayor Nutter has made temporary property-tax increases a linchpin of his plan to close the city's $1.38 billion five-year deficit. Pushing those tax increases through City Council would be hard enough in normal times, but getting it done amid a transition to Actual Value will be doubly difficult.

The new assessments could also split Council, with district members supporting or opposing the transition based on how it will affect their constituents.