2013 heralds something considered cataclysmic in Philadelphia but is routine in the rest of the world: a new assessment for property tax purposes. From Podunk to Portland (Oregon or Maine), assessment officers and departments apply land and building values to each property, the community figures out how much revenue it needs and divides it by those values. Voilà, you get a property tax rate, and then send out a bill.
A very little history
Nothing is ever quite that simple in the city that UrbanTools loves. For one thing, Philadelphia – nearly unique in United States – taxes wages on a local level at a flat rate. For another thing, Philadelphia – nearly unique in the United States – taxes businesses coming and going i.e. on gross receipts and net receipts. Using the property tax as an alternative to these outmoded and corrosive taxes ought to be a strategic goal for Philadelphia. In the past 75 years, the city of Philadelphia has seen fit to adopt and then fiercely maintain bad tax policies that correlate directly to sinking revenues, jobs, neighborhoods, and business. Like a giant oil tanker headed for the rocks, it takes a long distance in a long time to turn the ship around. Yet, it has been happening.
Property and Protection
Philadelphia is introducing the new assessments under the moniker Actual Value Initiative (AVI). Neighborhoods that have been over-assessed for years will likely see some form of tax relief, and the small bits of Philadelphia that have gentrified will likely see their ossified values approach something close to reality. Because of the lag between valuations, there will be some sort of sticker shock to some residents. That's the price of decades of inaction. It's not the fault of those residents. So, the Philadelphia delegation in the Pennsylvania assembly is introducing several bills to help alleviate that predicted shock. Some ideas in the bills are long-overdue. We're going to examine each of these bills, and give our analysis on the various strengths and weaknesses of each.
Lien on me, when you're not strong…
The ability of the city to put a lien on the owners of tax delinquent parcels has been on reformers’ wish list for years. What would this bill do? If you were "1215 Associates LP" and you owed tens of thousands of dollars on a couple of condo units at 1215 Spruce St., not only would the city put a lien on those units (and they have put about 10 on them), but the government would have the power to lien the owner's property (somewhere in Brooklyn, specifically 1555 39th St.). This is a powerful and appropriate tool in our city because the only working business model for residential property – aside from high-end tax abatements – has been to buy residential property, slap some paint on it, collect rent or do a quick flip, don't really renovate , and heaven forbid never pay your taxes. In Philadelphia, these operators have become used to ignoring the law, as the law was never used. Going after them at home would put some real teeth in the tax collection process. We close with one caveat: for decades property tax scofflaws have been able to befuddle the Philadelphia Sheriff's Department and other agencies charged with collecting taxes. A new law is a great idea, but some resources have to be devoted to tracking down the owners wherever they may be. Some years ago, UrbanTools help track down dozens of delinquent property owners to their front doors, and the city did nothing. Next: Proposed relief against gentrification: does means testing work?