Avi

[MariusPontmercy]

I'm in a similar situation. I believe I'm taxed at about 1% now, if we had a $30k exemption. But that extra .8 they're talking about right now makes a world of difference for me. I could pay it, but I won't. I don't think I get a return on my taxes now as regards to city services and I'm not willing to pay significantly more. A 20% hike or lower and I'm staying. An 50% hike or higher and we're leaving. Anything in between and I'm going to have to make a tough decision.

I know people in the NE who are paying about 3% on the assessed market value of their properties. I think everyone in the city still pays the same rate, so you may be paying at 1% now of around the current value of your house, but given the assessed value the rate should still be higher. See this is why I'm not against AVI. Some people in the city shouldn't be paying an effective 1% property tax while others are paying a 3% tax. However, I don't think anyone has been given adequate time to prepare for such a sudden increase, plus I think 1.8% is still way out of touch with where the tax rate in the city needs to be. I don't know that the city government realizes the benefits of lowering taxes. All that development around Center City is being helped by low tax rates. Should we move to a fair system? Yes, of course, but not one that will impair growth.

[Big Irish]

I know people in the NE who are paying about 3% on the assessed market value of their properties.

I keep hearing that the NE is overassessed but I'm not so sure I believe it, except for maybe the places that have gone in the crapper, like say Frankford or Oxford Circle. Where in the NE are they paying 3% of their current market value?

I think everyone in the city still pays the same rate, so you may be paying at 1% now of around the current value of your house, but given the assessed value the rate should still be higher.

I'm saying I'm paying approx 1% of my current market value. The tax rate is approx 9.4% of the assessed value but everyone agrees the assessed values have no basis in reality.

[MariusPontmercy]

I keep hearing that the NE is overassessed but I'm not so sure I believe it, except for maybe the places that have gone in the crapper, like say Frankford or Oxford Circle. Where in the NE are they paying 3% of their current market value?



I'm saying I'm paying approx 1% of my current market value. The tax rate is approx 9.4% of the assessed value but everyone agrees the assessed values have no basis in reality.

1% of your market value as the city sees it, or as you estimate it? I'm talking about Torresdale, definitely not a part of the NE that's threatening to go downhill soon. They're paying about $3500 now on a house whose market value is, according to the city, around $130k. The assessed value is about a third of that.

[Big Irish]

1% of your market value as the city sees it, or as you estimate it? I'm talking about Torresdale, definitely not a part of the NE that's threatening to go downhill soon. They're paying about $3500 now on a house whose market value is, according to the city, around $130k. The assessed value is about a third of that.

I'm paying approx 1% of what I believe is the actual market value if the house were on the market today. If I were to use what the city says is my market value on the OPA website I'm paying more than 3%.

Everyone agrees the assessed values and the city's idea of market values are fiction. I'll readily admit I don't know what realistic selling prices are in Torresdale but if your friends house would sell for $350k or up, then what he's paying is fair in my mind.

[Malloy]

I know quite a few people in steady/declining NE areas who are taxed harder than East Falls residents. (based on market price)

I keep hearing that the NE is overassessed but I'm not so sure I believe it, except for maybe the places that have gone in the crapper, like say Frankford or Oxford Circle. Where in the NE are they paying 3% of their current market value?



I'm saying I'm paying approx 1% of my current market value. The tax rate is approx 9.4% of the assessed value but everyone agrees the assessed values have no basis in reality.

[MariusPontmercy]

I'm paying approx 1% of what I believe is the actual market value if the house were on the market today. If I were to use what the city says is my market value on the OPA website I'm paying more than 3%.

Everyone agrees the assessed values and the city's idea of market values are fiction. I'll readily admit I don't know what realistic selling prices are in Torresdale but if your friends house would sell for $350k or up, then what he's paying is fair in my mind.

Well they bought it just a few years ago at $185k. I'm sure it's appreciated in the last several years, but not that much by any means. The average sale price on their block is around $190k. My point is that AVI is needed as the current system essentially sets different rates for different neighborhoods, and even for different houses on different blocks. The problem is that coupling a 1.8% millage rate on top of a new assessment system that will assess properties at their sale values is going to be a net trax increase, the burden of which falls on a few neighborhoods that saw the largest value increases. We're just replacing one unfair system with another. That extra $94 million isn't coming out of the NE, it's coming out of GradHo, NoLibs, and neighborhoods like them, which essentially makes it a tax increase on only a select few areas of the city. If the system were at least revenue neutral, you would still see increases, but you wouldn't be tacked on with what is essentially an extra tax the rest of the city isn't getting.

And that's before we even talk about uncollected taxes which is the real shame. If we had a 95% collection rate this would be a non issue. The rate wouldn't have to be so high. But the city would rather punish those who are paying than go after the deadbeats, and its an attitude like that which fosters resentment against the city and drives many taxpayers out. Why should they keep footing the bill while so many deadbeats are getting a free ride at their expense? Nobody wants to have to deal with a system in which you're always the sucker.

[nuosc]

Interesting article on philly.com today---the delinquency rate is now 18%. Almost one out of every five properties in the city does not pay its property taxes. The overall total has gone up 9% in the last year, to $515M.

At that level, there is no way all of those properties are ever going up for sale or that the taxes, interest, and penalties can be collected. AVI can help here, though, because a lot of those properties are probably worth less than the $15k Homestead exemption, so their taxes will drop to zero. Then the city can claim there are many fewer deadbeats, and will likely grant some kind of tax amnesty for those who have taxes due. If you're told that you just need to pay off what you owe, and then your property tax will drop to zero, that's a deal a good fraction of these people will take. Or perhaps the slate is completely wiped clean: the system was, after all, "illegal", so why should those people be forced to pay back taxes they should never have been asked to pay in the first place?

[Big Irish]

My point is that AVI is needed as the current system essentially sets different rates for different neighborhoods, and even for different houses on different blocks.

The tax rate is the same for everyone, what changes is your assessment. Rate (aka millage) x assessment = RE tax bill. So no, there aren't diff rates for diff areas. Some areas are assessed closer to market value than others, or assessed over market value, like your friends seem to be.

The problem is that coupling a 1.8% millage rate on top of a new assessment system that will assess properties at their sale values is going to be a net trax increase, the burden of which falls on a few neighborhoods that saw the largest value increases. ... That extra $94 million isn't coming out of the NE, it's coming out of GradHo, NoLibs, and neighborhoods like them, which essentially makes it a tax increase on only a select few areas of the city.

I'll tell you a secret. There is no "extra" $94 million. The mayor wants to make the last two year's temp tax hikes permanent and when he does that the city is obligated to give the school district 60% of the money raised from that increase ($94 mill). The other 40% (approx $63 mill) will go into the city's general fund. This isn't really about getting more cash for the schools, it's about getting more cash for the city. The city is only giving the schools more cash because they are legally obligated to do so.

It's really hard to have any sympathy for people who paid $400k or up for their home in the "hot" gentrifying neighborhoods and are paying (in some instances) hundreds in RE tax. I believe a fair tax would be approx 1% of actual market value.

And that's before we even talk about uncollected taxes which is the real shame.

The city should collect that money or take the property & sell it. They should also revisit the tax abatements and either reduce their 10 year term, reduce the 100% abatement on improvements, or both. They should also revisit the payment in lieu of taxes program for the large tax exempt entities in this city. They currently pay the city nothing in RE tax and (for the most part) nothing in PILOT payments. They should do their civic duty and pay a few mill a year in PILOT payments. Do these things and the city could actually keep the millage at 1% of actual market value and raise more money than they would at the 1.8% millage they're currently discussing.

[BarryG]

The city should collect that money or take the property & sell it. They should also revisit the tax abatements and either reduce their 10 year term, reduce the 100% abatement on improvements, or both. They should also revisit the payment in lieu of taxes program for the large tax exempt entities in this city. They currently pay the city nothing in RE tax and (for the most part) nothing in PILOT payments. They should do their civic duty and pay a few mill a year in PILOT payments. Do these things and the city could actually keep the millage at 1% of actual market value and raise more money than they would at the 1.8% millage they're currently discussing.

PILOT is an interesting wrinkle that hasn't come out yet in this debate. I hesitate to effectively tax Penn, CHOP, etc given the tremendous amount they do for the city--these institutions have fueled a lot of the growth of tax base not just in UC/West Philly but Center City too. Then again, they aren't going anywhere. But how much could a PILOT realistically be? Would it make a dent in the property tax rate?

[Big Irish]

PILOT is an interesting wrinkle that hasn't come out yet in this debate. I hesitate to effectively tax Penn, CHOP, etc given the tremendous amount they do for the city--these institutions have fueled a lot of the growth of tax base not just in UC/West Philly but Center City too. Then again, they aren't going anywhere. But how much could a PILOT realistically be? Would it make a dent in the property tax rate?

Yale pays New Haven $15 mil, and while I don't expect any single institution to pay that much, I think taken together the various large tax exempt colleges, universities, hospitals, etc would/could contribute a very sizable amount, say tens of millions.

The idea that they contribute by their employees paying wage taxes is utter nonsense. Every large employer could claim the same exact thing. These institutions pay their CEOs, CFOs, etc. enormous salaries. Some have enormous endowments. All are businesses, in business to make money, just not pay taxes. There's nothing altruistic about the vast majority of them. Hell, college tuition goes up every year, way above the level of inflation. They could afford to kick in some cash. If they are as civic minded as they claim they would have already offered.

[BarryG]

Yale pays New Haven $15 mil, and while I don't expect any single institution to pay that much, I think taken together the various large tax exempt colleges, universities, hospitals, etc would/could contribute a very sizable amount, say tens of millions.

The idea that they contribute by their employees paying wage taxes is utter nonsense. Every large employer could claim the same exact thing. These institutions pay their CEOs, CFOs, etc. enormous salaries. Some have enormous endowments. All are businesses, in business to make money, just not pay taxes. There's nothing altruistic about the vast majority of them. Hell, college tuition goes up every year, way above the level of inflation. They could afford to kick in some cash. If they are as civic minded as they claim they would have already offered.

I agree with much of that but beyond the wage tax these organizations also give back a lot to the city, Penn, Temple, and (to a lesser degree so far) Drexel especially, at much higher level than any corporation. Things like Penn Praxis, Penn Alexander, public spaces/parks, housing assistance to buy in the city, Phila history photo archives, Univ City District, the list goes on. The renaissance of Center City and surrounding neighborhoods would have been muted without the employment driver of these organizations, and their educated workforce. Yeah they could spare a couple million each for the city but in reality most of them have probably given far more to the city than the value of any tax or PILOT.

That said, many of the hospitals don't give back like the universities do and truly are run like businesses... a PILOT on CHOP, HUP, Jeff, that I have an easier time getting behind.

[Big Irish]

The renaissance of Center City and surrounding neighborhoods would have been muted without the employment driver of these organizations, and their educated workforce. Yeah they could spare a couple million each for the city but in reality most of them have probably given far more to the city than the value of any tax or PILOT.

Just to play devil's advocate I could make the argument that contributing some money to the city to help guarantee that the renaissance they contributed to doesn't backslide would not only be a good investment, and a very civic minded thing to do, and create some great PR, but would also help all those employees who live in the city and pay that wage tax they claim as their own contribution?

[raider.adam]

The tax rate is the same for everyone, what changes is your assessment. Rate (aka millage) x assessment = RE tax bill. So no, there aren't diff rates for diff areas. Some areas are assessed closer to market value than others, or assessed over market value, like your friends seem to be.

I think the person's point though is that since the assessments are messed up, in actuality, it is the same as having a different rate. I agree the terminology isn't correct, but I understand their point.

PILOT is an interesting wrinkle that hasn't come out yet in this debate. I hesitate to effectively tax Penn, CHOP, etc given the tremendous amount they do for the city--these institutions have fueled a lot of the growth of tax base not just in UC/West Philly but Center City too. Then again, they aren't going anywhere. But how much could a PILOT realistically be? Would it make a dent in the property tax rate?

Eh, notice how all the companies that major companies that are relatively healthy are tax free? So the question is, do you not tax them because they are delivering jobs or are they delivering jobs because they aren't being taxed?

[BarryG]

I think the person's point though is that since the assessments are messed up, in actuality, it is the same as having a different rate. I agree the terminology isn't correct, but I understand their point.



Eh, notice how all the companies that major companies that are relatively healthy are tax free? So the question is, do you not tax them because they are delivering jobs or are they delivering jobs because they aren't being taxed?

Good question but again my point is not so much that they create jobs but also that they give back to the city in many ways.

[Big Irish]

Good question but again my point is not so much that they create jobs but also that they give back to the city in many ways.

But none of those ways contribute cash to the school district, which is the reason given for the RE tax increases. One could also argue that the majority of the ways they "give back" are part of their mission/mandate. They're supposed to do those things.

[EJW]

Once AVI is instituted, property values in this neighborhood (and University City, NoLibs, Center City, etc.) will go down---by how much, it isn't clear, but the math looks bad. The question is, for all of you fans of AVI, will the City then lower our property taxes each year, in response to the decline? Even if they do a re-assessment each year (seems pretty unlikely), the lowering of the value will mean the rate needs to go up. So as SWCC starts to look more like Point Breeze than Center City, we'll still have high taxes. It will be exactly the opposite of what it has been the past several years: a decaying neighborhood with perplexingly high taxes, rather than a growing neighborhood with surprisingly low taxes.

I read somewhere that every $1000 increase in taxes per year equates to about $18k decrease in value, given ~4% mortgage rate - all things being equal.

I'm still confused though - given that the proposed rate (1.8%) is so high, doesn't that indicate that there are like thousands of properties currently overpaying by thousands (relative to actual value of the property... like $3k in taxes on a house worth $90k)? People keep mentioning the NE, but I haven't really seen anything other than speculation about this. I just can't comprehend how, in order to obtain enough revenue to match what they are currently pulling in, they need to tax everyone at such a high rate.

[BarryG]

But none of those ways contribute cash to the school district, which is the reason given for the RE tax increases. One could also argue that the majority of the ways they "give back" are part of their mission/mandate. They're supposed to do those things.

Yea I understand that. But you're thinking in crisis mode--that the schools need money. I am speaking generally. As for mission... Penn doesn't really need to be as involved in urban planning, Penn Alexander, or the immediate neighborhood as much as they are. Much of it is in their interest, but it's not really their mission.

I'm not against PILOTs, just hesitant.

[Spicoli]

But none of those ways contribute cash to the school district, which is the reason given for the RE tax increases. One could also argue that the majority of the ways they "give back" are part of their mission/mandate. They're supposed to do those things.

Penn did a lot more than just contribute cash to the school district. They contributed a school. I worked on this project back when it was being built. Penn created a K-8 school within University City and combined it with its GSE. Once built, the PSD bought it from Penn as a turnkey for less than 50% of what it cost Penn to build it.

Penn Alexander School | Penn GSE

I think Penn can fairly argue that they contribute much to the community. And continue to do so....at least at this school....with an annual $1300 per student contribution to operating costs.

EDIT: Didn't mean to try to Steal BarryG's thunder. He must've been posting as I was typing.

[raider.adam]

I read somewhere that every $1000 increase in taxes per year equates to about $18k decrease in value, given ~4% mortgage rate - all things being equal.

I'm still confused though - given that the proposed rate (1.8%) is so high, doesn't that indicate that there are like thousands of properties currently overpaying by thousands (relative to actual value of the property... like $3k in taxes on a house worth $90k)? People keep mentioning the NE, but I haven't really seen anything other than speculation about this. I just can't comprehend how, in order to obtain enough revenue to match what they are currently pulling in, they need to tax everyone at such a high rate.

I believe the general line of thinking is that for every house that will jump up several thousand, there are multiple properties that will go down a couple hundred.

The other issue is that commercial property the City has been hammering and appraising more accurately, so when it gets all normalized, a bunch of commercial properties will end up with lower bills because they have been over paying for almost a decade.

[Big Irish]

Penn did a lot more than just contribute cash to the school district. They contributed a school. ... I think Penn can fairly argue that they contribute much to the community. And continue to do so....at least at this school....with an annual $1300 per student contribution to operating costs.

What they did with that school is commendable, no doubt about that. But, again just playing devil's advocate, 500 students @ $1330 each = $665k. I know that doesn't represent their entire contribution, but compare that to when they were paying into the PILOT program (late 90's?). I think they're contribution then was close to $2 mil a year.

And I don't mean to just single out Penn. It's just easy to use them as an example because they're Ivy League, just as Yale was in my first example, and they have major plans for a huge chunk of riverfront property.

I think EVERY large non-profit should be asked to contribute. In 1995 the PILOT program took in $9.5 mil. Last year they took in $383k. I have no idea why the program has been allowed to die a slow death but I believe the NP's have a civic duty, perhaps even a moral duty, to share in the sacrifice. Before asking the homeowners to shoulder a 3rd straight tax increase, and one that's being talked about in terms like 2x, 3x or higher, the city should at least ask these institutions to help.