AVI is going to SCREW us!

[unionspaghetti]

Hope this works:

Value 0.012 0.015 0.018(.012E)(.015E)(.018E)
10000 120 150 180 -240 -300 -360
20000 240 300 360 -120 -150 -180
30000 360 450 540 0 0 0
40000 480 600 720 120 150 180
50000 600 750 900 240 300 360
60000 720 900 1080 360 450 540
70000 840 1050 1260 480 600 720
80000 960 1200 1440 600 750 900
90000 1080 1350 1620 720 900 1080
100000 1200 1500 1800 840 1050 1260
120000 1440 1800 2160 1080 1350 1620
140000 *16802100 2520 1320 *16501980
160000 1920 2400 2880 1560 1950 2340
180000 2160 *27003240 1800 2250 *2700
200000 2400 3000 3600 2040 2550 3060
225000 2700 3375 4050 2340 2925 3510
250000 3000 3750 4500 2640 3300 3960
275000 3300 4125 4950 2940 3675 4410
300000 3600 4500 5400 3240 4050 4860
350000 4200 5250 6300 3840 4800 5760
400000 4800 6000 7200 4440 5550 6660
450000 5400 6750 8100 5040 6300 7560
500000 6000 7500 9000 5640 7050 8460

600000 7200 9000 10800 6840 8550 10260
700000 8400 10500 12600 8040 10050 12060
800000 9600 12000 14400 9240 11550 13860
900000 1080013500 16200 10440 13050 15660
1000000 1200015000 18000 11640 14550 17460

What I'm trying to show here is that beyond 180,000, the exemption actually hurts properties in terms of total tax burden if the tax rate is 1.8% and the exemption is 30,000. Beyond that point, the homeowner would be better off without the exemption and a lower overall tax rate. If the rate is 1.5% with a 30,000 dollar exemption, that inversion point seems to be somewhere around 150,000. Of course, I could include many more permutations (1.3, 1.4, 1.6, 1.7%) and these numbers would change, but this is assuming that the likeliest combo is 1.8% with an exemption versus 1.5% with no exemption. If without the exemption the rate is closer to 1.2%, then it's a no brainer. The inversion point is at 90,000. Thus, above 90,000, you are paying more with the exemption than you are at a 1.2% rate.

Obviously, these numbers are meaningless without knowing how many properties fall into each cell so that we could extrapolate overall revenues from those properties, but I suspect council is trying to use this as an opportunity to give huge tax breaks to those folks in the under 90K bucket, when in reality, many of them would likely see lower taxes anyway or at worst, marginally higher taxes, without any exemption at all.

It seems like the best course of action seems to be no exemptions at all, as it just increases the overall millage and then shifts the burden to the over $90K house crowd, when in reality, many of the under $90K property owners would see decreases anyways as a result of AVI WITHOUT the exemption. Just a guess, but as is usual, council seems to be overcomplicating this thing.

I think it's well beyond $180,000 since that's assuming every $30,000 in exemption is 0.3% millage increase. But I'm assuming 0.0165% without exemption and 0.018 with $30,000 exemption. That puts the intersection at $360,000. Here's a list of intersections for 1.8% millage with $30,000 homestead vs. other rates

1.65% = $360,000
1.60% = $270,000
1.55% = $216,000
1.50% = 180,000

It's just another thing where we can't know what the rate would be with or without homestead until we have assessment numbers.

There is zero blame to the state on this. Nutter took assessment duties over from the BRT and missed his own deadlines. The deadline of the rate setting is nothing new. The rates have to be set for the budget and end of June is the end of the Fiscal Year.

Right. It's not blame as in the state changed this to make it more difficult. It's that Nutter has the responsibility to get new assessments and decide a rate but doesn't have the flexibility to set the schedule. No matter what there was a good possibility that assessments would be figured out at some point in the year that wasn't June 30th necessitating a decision on how long you can set taxes based on old (wrong) assessments while you had the new assessment. Even for the most competent agency a long process of reassessment would be hard wrap up exactly before June 30 to give City Council the perfect amount of time to decide the new rate.

I think a minimum, to bring in significant revenue, would probably have to be in the $500 range. Of course, I highly doubt the minimum will be considered without a $30K+ exemption as well. Which leads to the question, are you better off keeping it simple with a no exemptions and no minimums or having and exemption and a minimum?

You're probably right. I agree I'd prefer no exemption and no minimum to having both. Like you I benefit from the exemption but think it's bad policy. I don't think local taxes are meant to be progressive.

[raider.adam]

The one time I did it the clerk set a schedule to be caught up before next Feb. and they sent a threatening notice as soon as a payment was late because I was out of town.
Maybe my experience was a fluke, maybe they've tightened down since people remember but its not quite the revenue seive many describe it as in my one experience.

Also the city did make extra interest on me getting caught up over time. It seemed to work out OK for the city in all.

I highly doubt I will be able to fund the article, but I thought I had read the follow up rate on payment plans isn't great either. I can of course be misrecalling it.

Why is this necessarily true? Is it just to make people feel better? I wouldn't even know how a minimum AND an exemption would work. It's just a big Kabuki dance.

It should be a simple rule. $250 or $500 if your property is assessed below X (It looks like that number is somewhere around $30 - $50K). Above X, your property is assessed at 1.6% of full value.

Because I expect any talk of a minimum payment will get some groups of people screaming about screwing the poor, so to offset it, there will have to be the exemption bone thrown, which just convolutes it. It's just a political estimataion of how it would play out.

Right. It's not blame as in the state changed this to make it more difficult. It's that Nutter has the responsibility to get new assessments and decide a rate but doesn't have the flexibility to set the schedule. No matter what there was a good possibility that assessments would be figured out at some point in the year that wasn't June 30th necessitating a decision on how long you can set taxes based on old (wrong) assessments while you had the new assessment. Even for the most competent agency a long process of reassessment would be hard wrap up exactly before June 30 to give City Council the perfect amount of time to decide the new rate.

The thing to keep in mind is this has been worked on for more than a year. It isn't like he missed a six month deadline.

[phillycat]

I don't even understand a $500 minimum. That's $41/per month.

If you own a home and you can't afford $41/month you can't afford to maintain a house, period. Chances are property that would be caught in a sub-$500 tax minimum are either NOT homeowners or homeowners living so close to the edge their houses are falling down around their ears.

If minimums went to, say, a reasonable 60-80 month the overall rate would be lower and it would reduce the incentive for people who are warehousing property to just keep hanging onto their grandma's house.

[StrangeTanks]

I just have to pipe in here. So far I've kept my mouth shut about this whole thing.

So my first gripe is, I am absolutely astounded that people are trusting the city to properly determine the actual value of any piece of property in this city! Your telling me that 10 years from now were not all gonna find out that well connected folks are paying way less than they should?!?! Again?!?!

Second, people don't warehouse grandma's house, they ignore it and figure it will go to sheriffs sale. How do I know this? Because I spent years calling people with old abandoned houses asking if they want to sell them. 99% of the time its "I still own that?!?!"

A minimum annual tax is ludicrous. The cheapest house I ever bought was 2k. Your telling me I should be paying a 50% of what I paid annually on that property?

This is such a case of sour grapes its not even funny. Oh boo hoo, I have to pay 5k in taxes on my 500k house, those people in the hood should have to pay way more cause this simply isn't fair. I have a simple solution, taxes should be a percentage of the purchase price, period. It would encourage long term owners, and provide predictability for those who are buying. By its nature, it would be instituted over a number of years as properties turn over, and would automatically reflect changes in property values. All this money that is currently going into making a ridiculous system could be put into stopping fraudulent purchases and those looking to game the system.

Of course this will never happen however, because there would be no loopholes for council people to give away to favorite doners. So alas...another crap storm in Philly.

[nickster]

I just have to pipe in here. So far I've kept my mouth shut about this whole thing.

So my first gripe is, I am absolutely astounded that people are trusting the city to properly determine the actual value of any piece of property in this city! Your telling me that 10 years from now were not all gonna find out that well connected folks are paying way less than they should?!?! Again?!?!

Second, people don't warehouse grandma's house, they ignore it and figure it will go to sheriffs sale. How do I know this? Because I spent years calling people with old abandoned houses asking if they want to sell them. 99% of the time its "I still own that?!?!"

A minimum annual tax is ludicrous. The cheapest house I ever bought was 2k. Your telling me I should be paying a 50% of what I paid annually on that property?

This is such a case of sour grapes its not even funny. Oh boo hoo, I have to pay 5k in taxes on my 500k house, those people in the hood should have to pay way more cause this simply isn't fair. I have a simple solution, taxes should be a percentage of the purchase price, period. It would encourage long term owners, and provide predictability for those who are buying. By its nature, it would be instituted over a number of years as properties turn over, and would automatically reflect changes in property values. All this money that is currently going into making a ridiculous system could be put into stopping fraudulent purchases and those looking to game the system.

Of course this will never happen however, because there would be no loopholes for council people to give away to favorite doners. So alas...another crap storm in Philly.

[phillycat]

So my first gripe is, I am absolutely astounded that people are trusting the city to properly determine the actual value of any piece of property in this city! Your telling me that 10 years from now were not all gonna find out that well connected folks are paying way less than they should?!?! Again?!?!

well, presumably the whole thing -- assessments and taxes -- will be available online, as they are now. It was a lot easier to hide a wacky assessment when they were ALL wacky. Uniformity should make a lot more obvious if someone is gaming the system.

Second, people don't warehouse grandma's house, they ignore it and figure it will go to sheriffs sale. How do I know this? Because I spent years calling people with old abandoned houses asking if they want to sell them. 99% of the time its "I still own that?!?!"

Bet if they were getting a real tax bill they would not be as likely to ignore it, which is the whole point. Don't see how it matters whether it is intentional (I'll hang onto it until there is some kind of bonanza!) or neglectful (don't want to deal with grandma's house) in terms of the effect on the neighborhood.

A minimum annual tax is ludicrous. The cheapest house I ever bought was 2k. Your telling me I should be paying a 50% of what I paid annually on that property?

Did the house have water? sewer? electrical lines? was it on a street with garbage pickup? then yes, it was using city services and should contribute a minimal amount to that, yes, and that's not $50 per year. don't most municipalities have a baseline for property taxes?

This is such a case of sour grapes its not even funny. Oh boo hoo, I have to pay 5k in taxes on my 500k house, those people in the hood should have to pay way more cause this simply isn't fair.

I doubt many people on this board have a 500k house, or think the "people in the hood" should pay more -- just that everyone should contribute something since everyone uses city services.

I have a simple solution, taxes should be a percentage of the purchase price, period. It would encourage long term owners, and provide predictability for those who are buying.

are there really a lot of places where you buy a house and you get to freeze the property taxes forever if you stay in the house until you die? Please tell us where this Shangri-la exists.

[Cro Burnham]

Oh boo hoo, I have to pay 5k in taxes on my 500k house, those people in the hood should have to pay way more cause this simply isn't fair. I have a simple solution, taxes should be a percentage of the purchase price, period.

It would be alot more than 5K, but in any event whether you like rich snots or not they pay through many different taxes for a lot of city services to the rest of us. The city needs alot more rich snots.

I agree with your taxes on purchase price, assuming the rule applies to purchases going forward (NOT retroactively) and could only increase by inflation rates if at all. If everyone knew exactly what their property taxes would be when they signed a purchase agreement, then the price they offered would reflect exactly that tax rate. Then there would be no unfairness.

Cue the chorus of explanations as to why this is patently unfair and illegal.

[StrangeTanks]

This is why I didn't want to bother posting. I don't even know what your talking about. Personally, and I can't speak for everyone in Philly, I receive seperate bills for water and electric and gas and internet and the myriad of other services I like in my life. What I don't get here in Kensington are schools that actually educate, police that actually come when you call 911, but blessedly the PPA doesn't bother coming around either. Its all stuff I knew when I bought my place.

I'm not personally looking to pay nothing, in fact I'm happy to pay for what I get. I don't think anyone is arguing the fact that we need roads, and police, and fire depts, and schools ect. However, even with the relatively low RE taxes in Philly, I would say most folks don't think they are getting what they pay for.

This idea that we should be happy to pay more taxes in the face of outrageous fraud and ineptitude is ridiculous however. There have been innumerable threads about corruption and waste in Philly, but here we are attacking each other about who should pay what and how much.

And yes, what an absolutely outrageous idea! What a great job of brainwashing has been perpetrated on people. You can buy a home, and actually live there, and know what your costs may be in the future, thats craziness! You can always get rid of your cable television, or turn the thermostat down, or invest in some LED light bulbs. But how do you reduce your tax bill when they go up a couple thousand percent in a year?

[ArcticSplash]

This is anecdotal, but I believe interest in payment plans have spiked since the EConsult map was published. There were only a couple of thousand active ones and there's double that now, and none of that was done by pressure from the City I don't believe, but just by better publication of who the delinquents are and where they are.

I know just the publication of the map itself last year caused a lot of people (mostly primary-residence occupied homeowners) to up and make arrangements or pay off their bills just because of the sheer embarrassment of everyone around them seeing the pushpin sitting over their property on the Google Map.

But that just affected the people who really feel shame/guilt about it. If you don't have a conscience, then who cares.

[phillycat]

This is why I didn't want to bother posting. I don't even know what your talking about. Personally, and I can't speak for everyone in Philly, I receive seperate bills for water and electric and gas and internet and the myriad of other services I like in my life.

If you only want to post if people will all agree with you, there really is no point in posting.

But I think you misunderstand. You get bills for your USAGE of gas, electric, sewer. The fact that there are sewer lines, gas lines, electric lines, garbage pickup -- those are services provided to all residents regardless of usage. That's where the minimum comes in, regardless of the value of your house (which is only a reflection of what someone is willing to pay for it -- you could also say the value of a $2k house is nothing, if no one wants to buy it).

What I don't get here in Kensington are schools that actually educate, police that actually come when you call 911

That's pretty true no matter what neighborhood you live in -- so why should people living in different neighborhoods pay many thousands of times more property tax if that's the baseline?

You can buy a home, and actually live there, and know what your costs may be in the future, thats craziness! You can always get rid of your cable television, or turn the thermostat down, or invest in some LED light bulbs. But how do you reduce your tax bill when they go up a couple thousand percent in a year?

if AVI had been implemented before, everyone would have known more or less what their taxes were, right? everyone with low taxes was benefitting from a broken system for a very long time. I agree that it is crazy to make it go up drastically in a short period of time -- and it's a lot worse if you are going from $2k to $6k than from $200 to $600-- but again, tell me where the place is that your property taxes never go up ever -- except Philadelphia over the last 20 years.

[3rd&Brown]

This is such a case of sour grapes its not even funny. Oh boo hoo, I have to pay 5k in taxes on my 500k house, those people in the hood should have to pay way more cause this simply isn't fair. I have a simple solution, taxes should be a percentage of the purchase price, period. It would encourage long term owners, and provide predictability for those who are buying. By its nature, it would be instituted over a number of years as properties turn over, and would automatically reflect changes in property values. All this money that is currently going into making a ridiculous system could be put into stopping fraudulent purchases and those looking to game the system.

Of course this will never happen however, because there would be no loopholes for council people to give away to favorite doners. So alas...another crap storm in Philly.

lol. right. because when you inherit grandma's house and pay a dollar for it, you should be taxed on it's dollar value.

[sharkey]

Water, electricutilities., and gas service have nothing to do with your annual property taxes. Those services are all billed independently. Water Dept. is a branch of City Gov't. Peco and PGW are

[Cro Burnham]

I'm not personally looking to pay nothing, in fact I'm happy to pay for what I get. I don't think anyone is arguing the fact that we need roads, and police, and fire depts, and schools ect. However, even with the relatively low RE taxes in Philly, I would say most folks don't think they are getting what they pay for.

I think this is the crux of the issue. Asset values (houses) and earnings on assets (interest from bank accounts, etc., which is taxed under the school tax), have no actual connection with the services we receive as citizens. We don't get a whole lot in this city, particularly in terms of schools. Although, as has been pointed out by some, the property tax value concept to fund schools is in use pretty much everywhere in the US, that does not mean it isn't a fundamentally flawed mechanism. It's really a stupid way to raise revenues, because there is no logical connection between the value of a house and the cost of the services received by the household.

I'm not suggesting an extreme version of the following idea, which could be very regressive and would hurt people in poverty, but logically, it would make more sense to tax people on what they use to the extent practicable. This might also create some incentives for people to moderate their use of such services. To illustrate that this idea is not totally obscene, most of us pay for utilities and cable based on what our households use - i.e., our cost is not based on the value of our house. By extension, the more kids you have, maybe the more you could be asked to pay for schools. Obviously such a policy would need to be considered VERY carefully, but in any event there is no logical connection between fluctuating housing values and education costs.

But because people now take an idea (property taxes for education) as sacrosanct that is at its root completely illogical, we end up having ridiculous debates like this one about how people should fairly be asked to pay for services. The debate should really be about to what degree payment for public services should be based on direct level of use (e.g., as water, utility bills, public transit are now funded for the most part), asset values (as schools and their associated benefits and pensions are now funded), or some hybrid of income and assets (e.g., city trash, police, fire, social service costs, etc).

Taxing direct level of use is the most logical but also the most regressive method. But as it is, a very large impoverished portion of the city pays far less in taxes than the cost of the variety of services it consumes, particularly in terms of social and healthcare services, but also in terms of policing and subsidized utilities. So this forces the city to find various illogical ways to to extort/extract more money from the rest of us, and the most money from the people with the most to lose, as is the case with the PPA (people's cars) and as would be the case with AVI (people's houses).

Then we argue amongst ourselves about how to divvy up the burden "fairly".

This is stupid, because the bottom line, most of us agree, is that the city's budget is bloated and many of its services really really suck (particularly education). We need to cut the fat and incompetence, and then decide how fairly and logically to allocate to costs of addressing poverty amongst the rest of us who can afford it.

And this all needs to be considered within the context that people are relatively mobile: those with the means (wealth, high level skills) can easily relocate away from a localized tax burden, so "fairness" cannot equate to "load most of the burden on the wealthy": many will simply leave, as they have over the decades. Then the burden gets shifted to a shrinking and increasingly resentful balance of people who have the fewer resources to begrudgingly bear a greater burden. Meanwhile, the poverty issue continues unabated, as the legal and tax system essentially does nothing to ask people to modify costly negative behaviors like committing crime and having lots of kids who require endless city-funded social services, including surrogate parenting.

This is the cycle that has been going on for 60 years, and it is obviously no coincidence that the proportion of middle and upper income households in the city has been shrinking. It's the well-known story of urban decline.

All this BS about "fairness" in AVI completely misses this point. We shouldn't be arguing about so-called fairness in one cog of an overall completely dysfunctional machine. To do so actually helps validate and further institutionalize completely dysfunctional behaviors and concepts of taxation and governance. The end result is an overall shrinking middle and upper income population base who can and do escape the dysfunction.

[Big Irish]

According to Philly.com City Council has decided to hold off on AVI til next year. The vote will come soon.

Now we'll see if Dubow's dire predictions of plague, famine & pestilence if AVI was not implemented this year actually come true. We'll see if Ramos & the SRC's threat to not open the schools unless they got their $94 mil actually happens. We'll also see if their claims of not being able to borrow more than $218 mil were true or just gamesmanship, because my intuition tells me the PSD is not going to try and live with a smaller budget. Instead they'll borrow whatever shortfall there is between what they wanted and what they actually got.

[ArcticSplash]

Council agrees to push AVI off one year

The Squilla plan won out. Victory for Squilla, defeat for Nutter.

[BarryG]

Council agrees to push AVI off one year

The Squilla plan won out. Victory for Squilla, defeat for Nutter.

Nutter caused this by not having the assessments ready. In light of the timing, delay is the right thing to do.

3.59 point property tax increase and 0.9 point U&O tax increase, and a promise to institute AVI next year. This isn't such a bad plan given the circumstances.

[phillycat]

Nutter caused this by not having the assessments ready. In light of the timing, delay is the right thing to do.

3.59 point property tax increase and 0.9 point U&O tax increase, and a promise to institute AVI next year. This isn't such a bad plan given the circumstances.

I would have predicted this would happen.

The question is, is that increase on the "real" property tax, or on the already increased "temporary tax" total?

[BarryG]

I would have predicted this would happen.

The question is, is that increase on the "real" property tax, or on the already increased "temporary tax" total?

The latter. The "temporary" taxes are made permanent under this plan.

[ArcticSplash]

Nutter caused this by not having the assessments ready. In light of the timing, delay is the right thing to do.

3.59 point property tax increase and 0.9 point U&O tax increase, and a promise to institute AVI next year. This isn't such a bad plan given the circumstances.

I know some people will claim conspiracy... like Council took a page from Arlene Ackerman's playbook (scare people with the worst possible scenario, then compromise to get the deal that you wanted to begin with), but this time around I think Council had no idea what the end game was really going to be, not until Councilman Green put out his spreadsheet and the rest of Council understood that commercial assessments would be going down, and the AVI rate on those assessments would also mean a big tax cut on C&I property and a shift over to residential, heaping most of that tax that they paid on Philadelphia's middle class and retirees who live in middle class areas.

Green's spreadsheet was calculating on 1.2%, so the sudden jump of 1.8% because of the "guesstimates" coming from OPA, it just looked like nobody knows really with any certainty how much all the property in the City is worth. And it just goes downhill from there. Squilla's option was really the only thing sensible.

[seand]

When estimated total aggregate property value dropped so much, meaning a higher rate, it underlined how much of a mystery it remains what the final tax bill numbers will be. They couldn't pass it under that uncertainty but from I have read the budget deal will include language that means Council can't back out of AVI next year. So we get a tax hike on assessments that state courts have declared illegal and unfair and they slightly more mildly jack up U&O taxes on businesses anyway.

So Dubow predicted losing $100 million to appeals if they kept the old bad assessments another year. How much was that a scare tactic. I don't see a huge number of appeals from the less than $120k a house crowd because why bother, you taxes are not that high and going down next year anyway. I do see a lot of commercial properties and rental property owners appealing using the old assessments because they would see lower taxes under AVI and merely doing business in Philadelphia requires them to lawyer-up to a certain extent. Also they will be pissed about the U&O hike and looking to make that back somewhere else. Split the difference and say because of appeals collections will come in $40 million short maybe?