Business as usual at the BRT

The economy is reeling and the real estate market is in shambles, but these are boom times for the 900 block of Kimball Street.

At least that is the view of the city Board of Revision of Taxes.

Ten houses on this tidy but typical South Philadelphia block abutting the Italian Market were slapped with property-assessment increases ranging from 25 percent to 236 percent late last month, changes that will triple the real estate tax bills of the hardest-hit homeowners.

Such knee-buckling increases would be tough to take at any time, but now that the agency itself has acknowledged that its assessment system is deeply flawed, the residents of Kimball Street are furious at being asked to pay so much more.

"I believe in fair taxation. I want schools, libraries, and clean streets. I'm willing to pay for that," said Barbara Benton, whose tax bill on her Kimball Street house will rise 83 percent.

"What I'm not willing to do is pay my share when other people are not paying theirs. I'm not willing to pay three times what my neighbors pay. I'm not willing to pay until they get this thing right, and it doesn't seem like it should be so hard."

The unlucky residents of Kimball Street are among 14,095 property owners who have gotten reassessment letters from the BRT this year; another round of notices is set to be mailed within the next few weeks.

Of the notices sent, only 795 were for properties that the agency said had lost value since last year. The remaining 13,330 had higher assessments, yielding an average residential property-tax increase of $680, which will be due to the city March 31.

All of which is routine. And that, the BRT's many critics contend, is a huge problem. This is no time, they say, for BRT business as usual.

Over the last year, Inquirer reports have exposed mismanagement and potential corruption at the agency, as well as serious inaccuracies and inequalities in the BRT's property-assessment system. The problems are so systemic that Mayor Nutter and City Council are considering dismantling the BRT and assigning its duties to other parts of city government.

Given that, critics argue, property assessments should be frozen until the BRT develops a credible method for judging property values in Philadelphia, or is abolished and replaced with an entity that can better manage the job.

"Everybody knows the current system is unfair and illegal. Issuing higher assessments for some without fixing the system first is no different than theft," said Brett Mandel, a former Democratic candidate for city controller and a longtime critic of the agency.

For the last four years, the BRT has been working on new assessment system, called the Actual Value Initiative, which it contends will be far more accurate and equitable. It hopes to have the project completed in time for the 2011 tax year.

Until, then, the BRT says it is bound by law to continue assessing properties using its old system.

"Just because we do not have Actual Value finished does not mean the assessor's office stops working," said Barry Mescolotto, the BRT's acting director of assessments. "We will make sure people get their home values in the proper way under the current legacy system."

The quirks of the BRT's "legacy system" are vividly on display on the 900 block of Kimball Street.

The narrow, alley-size block is filled with two- and three-story rowhouses. Most appear in good condition, and from the outside there is little to distinguish one property from another.

Yet, in the BRT's view, 938 Kimball is worth just a third as much as its neighbor, 940 Kimball, even though both are three-story rowhouses on similarly sized lots. The same jarring juxtaposition plays out up and down the block, with owners of some rowhouses owing three times as much as their next-door neighbors.

Mescolotto attributes the dramatically different values to the fact that some Kimball Street houses have been renovated.

"In South Philadelphia you can have a property that's hardly been touched in 40 years sitting next to one that's been completely rehabbed," he said.

Kimball Street residents say the BRT got their block wrong, misjudging which houses were renovated and which were not.

But even if the BRT correctly identified the rehabbed houses, the chasm between the assessed values on seemingly similar Kimball Street houses seems too large to be explained away by new hardwood floors or granite countertops.

According to the agency's preliminary Actual Value Initiative assessments, which the BRT has touted as more accurate and equitable than its legacy system, the properties on the 900 block of Kimball should be valued far more similarly than they are now.

Using the preliminary AVI values, three-story houses on the block have assessments ranging from $248,000 to $401,000, a range of 61 percent. Using the legacy system, the spread between the same group is a staggering 300 percent.

"Yeah, well, and this is one block out of many, all right?" Mescolotto said, adding that the preliminary AVI figures made available last spring were not final and would likely change.

In one sense, the BRT is right to target Kimball Street for steep increases.

Although most properties on the block were reassessed in 2005 or '07, those increases were modest and did not fully reflect the rapid growth of property values in the Italian Market area. Many residents of the 900 block of Kimball have undoubtedly paid less than their fair share of property taxes for many years.

"We recognize that taxes on a lot of properties in this area may deserve to go up. Many of us should pay more. The question is how much, and the BRT clearly can't determine that with any accuracy or proportionality," said the Rev. Ken Metzner, whose tax bill on his Kimball Street house will more than triple.

Metzner, who spent 17 years as a lawyer before entering a seminary, is trying to orchestrate resistance to the reassessments, distributing fliers in the neighborhood, and scheduling a series of meetings to instruct residents how to appeal their reassessments.

"If they're aggrieved in any way, shape, or form we'll be glad to look their cases over," Mescolotto said.

Unlike in previous years, the BRT does not appear to be under pressure from the mayor and City Council to raise assessments. That long-standing practice had the effect of increasing the city's total property-tax revenue without forcing electing officials to increase the tax rate.

This year, though, the Nutter administration predicted no growth in property-tax revenue, meaning City Hall had no expectation that the BRT would increase assessments this year.

"Given that the BRT is working on the Actual Value Initiative, we did not think there would be many new assessments this year," city Finance Director Rob Dubow said, explaining why the city did not predict a rise in property-tax collections. "That was not to send them a message about how many assessments they should or should not do. It is their job to determine that."

Read "Tax Travesty," a three-part series on chaos and cronyism inside the BRT, at http://go.philly.com/brtEndText