Waiting on tax appeal? First, the BRT has to take a vacation

Faced with a backlog of more than 1,800 appeals of property assessments, the city's Board of Revision of Taxes decided to take a summer vacation for six weeks.

Unless the seven board members meet and vote, the appeals don't get resolved.

"I don't understand how they take six weeks off," said Uri Monson, chief finance officer for the Philadelphia School District, which receives the majority of the city's $1.5 billion property tax revenue and relies on an accurate account of what to expect.

The board, an independent group appointed by the city's judges, is charged with reviewing and deciding the value of a property when an owner appeals the assessment — a task that pays each member at least $70,000 a year for what amounts to part-time work.

The board members haven't met since July 13, and are not scheduled to convene until Aug. 24 and 31, before returning to their twice-a-week schedule on Sept. 12.

Four years ago, the Nutter administration and City Council cut the BRT members' pay from $70,000 a year to a $150-per-diem rate after the board's duties were reduced to hearing appeals, with the job of valuing properties done by the then-new Office of Property Assessments.

In 2014, the board was drowning in 23,000 appeals from the controversial reassessment of all city properties to market value known as the Actual Value Initiative (AVI), which caused big increases in owners' tax bills. Council gave back the board full-time pay so the members could meet more frequently to wade through the appeals.  That pay also comes with health care and a pension.

Since then, the number of appeals has drastically gone down — 4,580 for this year. Board members now only meet twice, sometimes three times, a week, and that slows the pace of decisions.

Despite the decreased workload and work time, the board members are still paid $70,000, plus benefits. The chairman, retired Common Pleas Court Judge Eugene E.J. Maier, is paid $75,000 and the board secretary, Robert N.C. Nix III, is paid $72,000.

"We had worked with them to keep their pay so they would engage and get through the appeals quickly," Councilman Mark Squilla, said. He said he was surprised the board had not been hearing appeals all summer.

"That's disappointing," he said of the six-week vacation. "So many residents and businesses … are affected by change in assessments."

Maier, the board chairman, said that "traditionally" the board takes a full calendar year to decide appeals for that same year. "We will be done within the calendar year," he said.

Board Vice Chairman Eugene P. Davey, retired city chief assessor, said that the hearing schedule was appropriate for the number of appeals.

"I've been putting in as much time is required," Davey said.

Retired Common Pleas Court Judge Gregory E. Smith, who joined the BRT last year, said that he's "the follower" when it comes to the scheduling.

"I just go along with the schedule," he said. "I'm not going to make a lot of noise."

Out of the 4,580 appeals the board received for 2017 taxes, more than half of those appeals — valued at $1 billion — have been heard and decided, resulting in a decrease in $44 million in value, according to data collected by the Pennsylvania Intergovernmental Cooperation Authority. The decrease in value is equivalent to $626,000 in tax revenue.

More than 1,700 appeals with a total property value of $1.5 billion await a decision by the board. If upheld, they would generate $21 million in tax revenue.

After AVI, Council passed legislation that allowed property owners to pay their previous tax rate while they appealed the new rate. However, that law is no longer in effect, city spokesman Mike Dunn said Tuesday. Property owners must pay all taxes based on the new assessments even if they are in the midst of appealing. (If the BRT rules in the property owner's favor, the city will credit the owner's account or the owner can request a refund.)

Squilla said he wants to introduce another bill in the fall that would again allow people to pay taxes on a previous year's assessment until appeals are resolved.

The delay in tax revenue, however, could make it even harder for city and School District officials.

"When we don't know to the tune of tens of millions of dollars what we are going to get, that makes it very hard for us to make those investments," Monson said. "It forces us to be making cuts or making other revenue decisions. … It is very frustrating."

Monson said that once the Kenney administration announced this year that the 2018 assessments of major commercial, industrial and hotel buildings resulted in $118 million in new tax revenue, the School District immediately budgeted its portion of that — $65 million — for the fiscal year that began July 1.

Decisions on the 2018 appeals could take a while. Though the board will start its first round of 2018 appeal hearings on Aug. 24, the board still has to finish the 2017 appeals plus about 80 appeals from prior years.

The hearings for 2017 will continue through December, said Carla Pagan, executive director of the BRT. She said many of those appeals are larger properties that require a review of independent appraisals.

"When people are arguing over millions of dollars, it doesn't happen at the bat of an eye," Pagan said.

She expects the number of meetings to increase for the 2018 appeals, given the large increase in assessments for the big commercial properties.