Effect of an Expiring Tax Abatement

[raider.adam]

We need to depoliticize our tax assessment system and insulate ourselves as homeowners from the madness of City Council. These are the same folks essentially who taxed most residents and businesses out of Philly in the 1960s-1970s. Why repeat this?

That is what AVI is supposed to accomplish, in theory: ase the assessed value of the property based on comparable market values.

We need a reasonable tax rate (1%) on the books. We need to use the sales price of our homes, plus permitted improvements, as the market value of our homes. We do not need to pay a bunch of non-certified "appraisers" and pay for a $10 million dollar appraisal computer system to tax us out of our homes for their cheap political necessities of the moment. We need to reform our City government instead. There are plenty of areas where cost savings can be realized, and the ticking time bomb for anybody with a half a brain consists of the pension and benefits we have allowed our public sector unions to negotiate via collective bargaining with City Council and the Mayor, who in many cases are on the same side of the aisle as the public sector unions. They get to negotiate with themselves, rather than with the taxpayers, their true employers. LBJ didn't support collective bargaining for public sector employees, because it is nuts.

A bunch of what you say is correct. Pensions are still going to be the bomb. As for the computer, while I do think the price tag could be a point of issue, I actually prefer the concept of a computer handing out initial values based on an algorithm to handle comparables.

Don't be a sucker and buy into the BS OPA crapola and AVI - these are just more of the same junk from Goode et al that ruined our City previously, and will ruin it again. We need to chase these bastards out of town. Make them get real jobs.

Actually, the only reason they are doing AVI is because the State is forcing it and the city is going to start losing lawsuits. If Council had their way, they wouldn't touch it.

Seriously, people actually support the AVI and OPA when guys like Goode have their girlfriends on the payroll at 90K/year? What the F are you thinking? Do you want to get taxed out of your home? Do you trust City Council?

One doesn't have anything to do with the other.

The "homestead exemption" is nothing but a chance to kiss the pinky ring of your City Councilperson each year, just to stay in your home. Does that sound like a fun thing to do?

huh? Can you elaborate why you think that?

Whatever you think about AVI, the 9% tax hike went through this year, so there is no "hike" involved in the reassessments, just a shifting of the burden in that some people who were paying too little will be paying more and a whole lot of people who were paying just a little too much will be paying less.

Except it is possible they may try to jack it up again too next year.

Oddly, the first council person I heard mention visiting wage tax reform as a means to accepting AVI changes was Wilson Goode Jr. Odd because I so rarely recall agreeing with him in the past. That time, though, I did.

It speaks to the lack of vision in council that no one approached AVI realistically as a means to major wage tax reform and a further means to a revenue neutral property tax system change.

Vote against the party machine, by the way,

What exactly did he say?

[Lolly]

Wow looks like I have a lot of catching up to do here...

You thought $1000 would be a fair assessment in 2016 on a $400,000+ house? Seriously?

No, that's not what I said. I said "I don't know, we thought it would increase maybe ten fold" - meaning 10x whatever we would be paying for our land 10 years down the road. Give or take, based on nothing in particular. Meaning, we knew we were getting a good deal at the time, of course, but we did not anticipate (how could we?) that within the first year, our land tax would be raised 10x. So now, even assuming our tax doesn't go up any more between now and when our abatement runs out, 10x what we now pay on our land is closer 100x what we were originally assessed in taxes. No, I don't think that's fair, nor do I think we should have reasonably expected something like that to happen.

Lolly, I don't mean to pile on or be mean but my house is worth about half yours and in an undervalued area and was taxed at more than $1,000 back when you bought.

Is your house on an abatement? Mine is. When I bought THE LAND TAX for all the houses on my block were roughly the same. Within the first year, only those with abated new houses on them were raised ~10x. How does it make sense that the land under a new house is worth more than the land under an old house? (And as my illustration upthread shows, how is it fair that my particular identical plot of land should be taxed over 1.5x more than anyone else?)

Lolly,our taxes are relatively similiar. We never had an abatement and out taxes were very low when we bought a decade ago. They are now floating around $1200. Our house has not been updated- it has one bathroom and a very old kitchen. I figure market value has it around $300,000-$350,000. I will know this week because I just re-financed. Of course , my fear is that it will be valued at a higher rate in line with the new houses on the block. Like you said, if one had faith in Philadelphia we could all sleep better at night.
Like others,I am holding my breath regarding increases. My kids are in public school where I frequently debate how well they are being served. When my eldest hits high school we may have to move anyway. We both work in the city so we pay city wage tax and I believe we will wait to see how big this bill is going to be and what our next steps will be.
In essence when we moved into, what was an affordable house, 10 years ago , we did not anticipate our tax bill to jump to $7000 which would be in line with NJ. If we did I would have also anticipated a school system that was more than just okay, with school facilities that were not mouse ridden etc. and a district that was not corrupt,riddled with fraud, and bankrupt.Let me add, that I would also like the drig corner at the end of my street removed so I do not fear a drive by shooting and maybe we could deal with some of the those PHA houses that are harboring known dealers. All of that may be palatable when my taxes are low but not so much when I am paying suburban prices. Finally, I would love if the 17th district would actually show when you call them. I had a car accident late at night recently and it took thm 30 minutes to show up.
Essentially, show me the services and I will show you the money.

I hear you, macdaire, and I most definitely sympathize, and have similar issues, and worries. Only difference is, I thought this thread was about the effect of expiring abatements, and so was talking to that. (Not that I don't think a discussion of non-abated houses doesn't have a place here.)

Ok, so everyone has an overly emotional response to taxes being raised...

I really do not think mine is an emotional response. I look at my income and my bills. I need to ensure what I earn pays those bills. I also need to balance and assess the services I get. I believe this is a pretty rational response. If I figure out that areas in the burbs do not meet my financial needs I guess I will be staying here. However I am not a fan of the uncertainty and I also love living here and it would make me sad (that was an emotion) to leave.

Ditto.

Raising my taxes has been hanging over my head since I bought my first place in this city 19 years ago. It's been continually pushed back, with nips and tucks made here and there, because City Council is scared to death of alienating voters. The doomsday scenario you paint would be completely unpalatable to a City Council that isn't particularly gutsy or inclined to riling voters. It just won't happen.

I sure hope you're right, and the incurable optimist in me has been banking on a scenario more or less like this.

Sorry, but all I can say is that I wish I had had it as good as all of you for the last 10 years.

I'm sorry for you too.

The tax I am paying now is roughly equal to what I will pay with AVI and 1% millage. And I've been paying that (not the amount, but I would say roughly a 1% millage on full value) since 1992. I made numerous improvements to my property over the years (new third floor, new kitchen, new bathrooms, finished the basement) but never applied for an abatement -- honestly, I didn't know you could apply for one for less than a total rehab.

Obviously all that's not my (or anyone else with an abatement's) fault, or our concern really. Sounds like you've got a good handle on what you think you should expect next though, which I'd say puts you ahead of the game - good for you.

In any event, instead of complaining about what you will pay, maybe you should be appreciative of what you haven't (but I and others like me have) paid. So, what did we think would happen in 10 years when our abatement expires?

Here I'm tempted to say that I thought my taxes would just go away completely, poof, vanish into thin air, but of course. Just because of the wonderfully lucky and entitled person I know I am. (Duh.) But I won't say that.

I agree, which is why I see 1% as the likely scenario; with the exception of abated properties, I suspect that rate won't hurt too many people who can't afford it.

I could totally live with 1% of ~$400K. Why should abated properties be excepted? Are you saying you think those with abatements, when those abatements expire, should start paying back what they saved in taxes over the previous 10 years? I'd call that a deferment, not an abatement. (And if something like this becomes so, which the paranoid Philadelphian in me fears might, then that would fall into the category of an "abatement & switch" in my book.)

I wasn't singling you out...there are just too many responses that read.

"If the city does XYZ then I'll move, they won't have me to kick around anymore!!!!!"

That's really the type of mindset that I was referring to.

I have no such spiteful mindset. I was just stating a possible fact of life. Hopefully the City ultimately determines such a scenario really wouldn't be good for anyone.

wouldn't it make more sense to just get a smaller, cheaper house?

That's another possibility for us. We'll have to wait and see what makes most sense when the time comes.

Lastly, if you knew that the abatement would ... uh, abate ... then what was your long-term plan to handle the costs? It can't be the case that people bought a $400,000 house with the expectation that taxes would remain at $1,000 indefinitely.

See my previous response to my BFF ShoshTrvls above. (No, duh.)

I'd love for you to be right, but I have my doubts. 1.8% was getting thrown around pretty seriously last year. I'd also be very, very surprised if my city councilman is concerned about pricing out my family.

1% I can handle, and would even welcome if the money makes my neighborhood school better. Rates close to 2% seem like a "GTFO, gentrifier".

Ditto. (Except I'm hopeful that Kenyatta really doesn't want me, and/or many others like me, to leave.)

My house never had an abatement and I bought a decade ago. We paid 130 for it. I did not really think that I would end up with NJ style real estate taxes. Again, I am happy my area is nicer and that my house is worth more. I hope that the council considers older residents and one like myself who put back into the community before blasting us with an increase that would make a move the only viable option. The discount for those in the property more that 10 years does not seem like a lot.

Agreed.

While I'm not looking forward to my taxes going up 800%, I knew my abatement would expire eventually and have had to plan accordingly. What amazes me is how messed up the system has been for years. Looking at my neighbors properties and how most if not all haven't been reassessed since the 80's. They're in a larger house paying the same as me and I have a tax abatement. I'm curious how people like that, who have lived here for 25 years, will react to such a dramatic hike. A ramp up period for long time residents might be an option. But I don't think it's unreasonable for there taxes to increase.

100% agreed.

But Lolly, macdaire, your posts sound like you think $1,200 is reasonable?

No, not at all. I think it's a joke that my taxes started out as $111 and can't believe anyone in their right mind is surprised the City is in such bad shape considering the pittance most folks around here have been paying (if they have paid) all these years. I'm just saying that paying 10x what others on my block are paying is unreasonable and wrong.

I agree 2% on realistic assessments will cause lots of people serious pain but of course for many of the folks who bought back in the day for a fraction of what they might be assessed at now it will feel like its "GTFO so we can gentrify". Some folks bought on the idea that assessments couldn't be this whacked forever. Others might have overpaid on the risky assumption that they would.

Something is up with the assessments when their estimated cumulative total dropping so dramatically mid-process. Council was right to say they need a complete set of assessment numbers before they figure out what to do.

Yep.

I was paying $1400 on a house I sold 5 years ago for $170,000.

Curious, where was that - and what was the house like?

You are forgetting the folks that bought a home in the city knowing that AVI would one day be implemented, but apparently naively assumed the millage rate would be something reasonable like 1%.... e.g. me.

I may not have understood (or even heard of terms like) "millage" back then, but yeah, count me in here, more or less, too.

Revenue neutral does not include additional revenue from expired abatements. Those revenues are part of the budget already.

Can you explain what you mean by this?

Agreed that $7k would probably be on the high end, but its certainly not going to be out of the question. However, you are underpaying for taxes now, so making this change in a year shouldn't really be the issue. The issue should be who/what decides the value of your house compared to others and what is a fair mileage rate. I'm right there with you, it does seem high for the "quality" of public service we receive in return compared to suburban areas who would pay that much. The assessment/value system needs to be fixed definitely, but it would be nice if they went after the delinquent properties instead of always first going after those that actually pay their taxes and play by the rules.

Yes and no. I agree that it would be smart to go after delinquents rather than squeeze more out of those who already pay what they're obliged to pay, but I don't necessarily agree that folks with abatements should be hit harder than anyone else for some reason. (If that's what you mean when you refer to those who "are underpaying for taxes now, so making this change in a year shouldn't really be the issue.")

[macdaire]

duplicate post. deleted

[macdaire]

[][where do you plan on going that your taxes are going to remain as cheap as they are?
I never said I would move but I have looked in Narberth and Media where I would pay the same and get more public services, scuh as K-12 schooling. There are some wonderful public schools in the city but I am not always assured that all 3 of mine will be admitted to them. Naturally this is anxiety provoking. A neighborhood high school would not be an option.
I never said I had an abatement.

I don't know anything about daycare costs, they seem expensive.

You do not know anything about daycare costs.

But knowing that your taxes were not properly assessed (while paying $1200 or less), did you think your kids would be out of school before taxes went up or something?

I bought over a decade ago and I do not remember too much real chatter at that time about increasing taxes. 12 years ago, the climate was a little different. I was a little younger and less educated on the process. Again, I am not alone in thinking that massive increases can and will upset people. Like I have said, increaseswill happen. let'sjust wait to see how big they are and then wait some more to see how they will improve the city.

Everyone else is having a way more interesting and informative debate so let's move on![/QUOTE]

[annie]

A neighborhood high school would not be an option.

Oh, they're going to kill all of the neighborhood high schools outside of the Northeast. Dunno if that's reassuring.

[Hospitalitygirl]

Lolly, my old house was in the NE (Near NE as opposed to Far NE); it was a relatively simple 3 BR, 1.5 bath house with a garage in the rear, under the house. No big yard, it was comfortable for us. Having a deck (which I'm sure made my assessed value a little higher) compensated for the slope and somewhat unusable yard in the back. Keep in mind that I paid that much over 5 years ago, and I also didn't use the public schools for my daughter.

[2happy4u]

As discussed before...if taxes go up on average up to say $8000 a year on a typical rowhouse I think many people will consider moving.

BUT! Once the math is done, where are they going to move that costs less? Camden?

Surrounding nice burbs will cost just as much tax wise if not more, plus the need for one or two cars, car insurance, gas. Suburban homes cost more to heat and cool than a row, yard maintenance...etc.

Think of how much more your quality of life will be for the 4 to8K the burbs will bring? I love the city but the more I look the worse it gets. City Hall is a mess, This mayor is spending millions of tax dollars with the silly idea of "healing the planet" lawlessness runs a muck in 75% of the city. Yes certain tiny areas have improved but overall the cancer is spreading.

[Lolly]

I was paying $1400 on a house I sold 5 years ago for $170,000.

Curious, where was that - and what was the house like?

Lolly, my old house was in the NE (Near NE as opposed to Far NE); it was a relatively simple 3 BR, 1.5 bath house with a garage in the rear, under the house. No big yard, it was comfortable for us. Having a deck (which I'm sure made my assessed value a little higher) compensated for the slope and somewhat unusable yard in the back. Keep in mind that I paid that much over 5 years ago, and I also didn't use the public schools for my daughter.

Gotcha. Interesting. Sounds like this might be one of the properties that will be assessed down once everything shakes out.

[Lolly]

Well that's new/different/interesting/refreshing...

The Office of Property Assessment (OPA) is the City agency charged with establishing real property values which serve as the basis for real estate taxes levied by the City of Philadelphia. On behalf of the OPA, we wanted to let you know that the answers to many frequently asked questions are available here: OPA Website: Help & Information - FAQ Search Service. And we have staff available by phone as well at: 215-686-4334 for General Questions and 215-686-9200 for the Homestead Exemption Hotline.

FROM: http://www.philadelphiaspeaks.com/fo...tml#post536660

[macdaire]

[][where do you plan on going that your taxes are going to remain as cheap as they are?
i never said i would move but i have looked in narberth and media where i would pay the same and get more public services, scuh as k-12 schooling. There are some wonderful public schools in the city but i am not always assured that all 3 of mine will be admitted to them. Naturally this is anxiety provoking. A neighborhood high school would not be an option.
I never said i had an abatement.

i don't know anything about daycare costs, they seem expensive.

you do not know anything about daycare costs.

but knowing that your taxes were not properly assessed (while paying $1200 or less), did you think your kids would be out of school before taxes went up or something?

i bought over a decade ago and i do not remember too much real chatter at that time about increasing taxes. 12 years ago, the climate was a little different. I was a little younger and less educated on the process. Again, i am not alone in thinking that massive increases can and will upset people. Like i have said, increaseswill happen. Let'sjust wait to see how big they are and then wait some more to see how they will improve the city.

Everyone else is having a way more interesting and informative debate so let's move on!

[/quote]

oh, they're going to kill all of the neighborhood high schools outside of the northeast. Dunno if that's reassuring.

Annie, you are correct! That was an interesting mapin The Notebook. However, my anxiety is around getting all 3 into magnets.

[NorthPhilly]

Yes and no. I agree that it would be smart to go after delinquents rather than squeeze more out of those who already pay what they're obliged to pay, but I don't necessarily agree that folks with abatements should be hit harder than anyone else for some reason. (If that's what you mean when you refer to those who "are underpaying for taxes now, so making this change in a year shouldn't really be the issue.")

Of course folks coming off abatements should and will be hit harder, they're not paying taxes based on the value of the home. So you will likely be hit harder (meaning a larger increase) than someone without an abatement. I'm not implying you should pay more than someone with a similarly valued home, I'm saying your increase in monthly property taxes may be higher than someone without an abatement because they're already paying more than you. I think we're in agreement, I'm just still trying to wrap my head around why some people who have property tax abatements are saying they're going to have to move to escape a tax increase that they've seen coming for 10 years or whenever they purchased the abated home.

[bootsywannabe]

Less is more, and that is why an actual AVI - using what you paid for your home plus improvements as cost basis - would be a much better deal for everyone, except City employees, because we wouldn't need a bunch of them.

What we need is a reasonable rate on the books (1%). That would take leadership from city council though.

How many employees does the AVI have now, or the OPA? Any idea? We're talking tens of millions to 100s of millions in total budget, salary, benefits etc over the last few years, and growing. This is a waste of money. We don't need to hire a bunch of people to tax us out of our homes. We need to insulate our investments as homeowners and business owners from idiotic, maniacal, confiscatory taxation by nutjobs in city counicl and the mayors office.

[Burholme06]

I’m not trying to gang up on you, Lolly but if you thought that your taxes would be anywhere near $1,000, that’s just uniformed. The two houses I’ve owned over the last 10 years have been taxed between 1.1 - 1.3% of real value. My parents two bedroom home in the NE that is worth about $150k pays about $1,700. Also appreciate that my parents home was worth about $90,000 ten years ago and they were still paying more than $1,500.

For me, I was thinking that the rate would be somewhere south of 1.5%. I don’t feel like looking for the article but I think the rate would be around 1.3 or 1.4% without the $40k homestead deduction. I’m not sure if people realize that the deduction takes out a significant value of the total property in the City which causes the rate to go from reasonable (IMO) to pretty darn high.

[Lolly]

Of course folks coming off abatements should and will be hit harder, they're not paying taxes based on the value of the home. So you will likely be hit harder (meaning a larger increase) than someone without an abatement. I'm not implying you should pay more than someone with a similarly valued home, I'm saying your increase in monthly property taxes may be higher than someone without an abatement because they're already paying more than you. I think we're in agreement, I'm just still trying to wrap my head around why some people who have property tax abatements are saying they're going to have to move to escape a tax increase that they've seen coming for 10 years or whenever they purchased the abated home.

Okay, I guess we agree then - I think.

I’m not trying to gang up on you, Lolly but if you thought that your taxes would be anywhere near $1,000, that’s just uniformed. The two houses I’ve owned over the last 10 years have been taxed between 1.1 - 1.3% of real value. My parents two bedroom home in the NE that is worth about $150k pays about $1,700. Also appreciate that my parents home was worth about $90,000 ten years ago and they were still paying more than $1,500.

For me, I was thinking that the rate would be somewhere south of 1.5%. I don’t feel like looking for the article but I think the rate would be around 1.3 or 1.4% without the $40k homestead deduction. I’m not sure if people realize that the deduction takes out a significant value of the total property in the City which causes the rate to go from reasonable (IMO) to pretty darn high.

Sheesh, I really thought I was a better communicator than that. Either that, or I'm just not very good at writing well for those who just skim and miss the substance of what I've been trying to say all along... In any event, I never said I thought $1,000 a year in taxes when my house comes off it's abatement would be fair, or even what I'd expected. I'm not sure exactly what I expected at the time I bought (when my tax was a ridiculous $111/year), but I did not expect it would end up being 100x that! If I could afford to pay close to $10,000/year in taxes I would have bought the place in Collingswood that we were looking at, at the time we discovered the Philly abatement program in 2006.

[raider.adam]

Sheesh, I really thought I was a better communicator than that. Either that, or I'm just not very good at writing well for those who just skim and miss the substance of what I've been trying to say all along... In any event, I never said I thought $1,000 a year in taxes when my house comes off it's abatement would be fair, or even what I'd expected. I'm not sure exactly what I expected at the time I bought (when my tax was a ridiculous $111/year), but I did not expect it would end up being 100x that! If I could afford to pay close to $10,000/year in taxes I would have bought the place in Collingswood that we were looking at, at the time we discovered the Philly abatement program in 2006.

People are responding to your comment that you paid $100 originally and expected 10 times as much, which would be $1,000.

[Lolly]

People are responding to your comment that you paid $100 originally and expected 10 times as much, which would be $1,000.

Well yeah, I got that. Except that's not exactly what I said. In an answer to the question, "What did you expect?" I said...

When my husband and I closed on our house in 2006, our tax bill was $111.07. So, what did we think would happen in 10 years when our abatement expires? Oh I don't know, we thought it would increase maybe ten fold. But as you can see what happened instead is that it increased by nearly 10 times already - and this happened in the first year. Hmmm... NOW what's going to happen when the abatement expires??

Context is everything.

But now I'm beginning to feel like maybe I'm running for the office of the President of the United States.

[raider.adam]

Well yeah, I got that. Except that's not exactly what I said. In an answer to the question, "What did you expect?" I said...

When my husband and I closed on our house in 2006, our tax bill was $111.07. So, what did we think would happen in 10 years when our abatement expires? Oh I don't know, we thought it would increase maybe ten fold. But as you can see what happened instead is that it increased by nearly 10 times already - and this happened in the first year. Hmmm... NOW what's going to happen when the abatement expires??

Context is everything.

But now I'm beginning to feel like maybe I'm running for the office of the President of the United States.

Correct, but people are being taken aback by the first part where you think in ten years after the abatement expires you would only be paying $1000.

What is actually taking place with your taxes is a separate topic.

[Lolly]

Correct, but people are being taken aback by the first part where you think in ten years after the abatement expires you would only be paying $1000.

What is actually taking place with your taxes is a separate topic.

Right, because what I said doesn't matter, just what other people think. Gosh folks are so literal. But OK. Guess in the first place I should have said...

When my husband and I closed on our house in 2006, our tax bill was $111.07. So, what did we think would happen in 10 years when our abatement expires? Oh I don't know, we thought it would increase maybe ten fold, maybe twenty fold, maybe thirty fold... I don't know. But as you can see what happened instead is that it increased by nearly 10 times already - and this happened in the first year. Hmmm... NOW what's going to happen when the abatement expires??

Mea culpa everyone. So sorry I made a huge faux pas apparently.

Like I said earlier: Sheesh.

[Dolemite]

Sheesh these people saying you expected to pay $1000 a year at most when you clearly stated $1110.70 at the most.

[Lolly]

Sheesh these people saying you expected to pay $1000 a year at most when you clearly stated $1110.70 at the most.

Wow now words are actually being put in my proverbial mouth. Where did I ever say "at most?"

Jesus H. Christ.

Rather than jumping on every little thing people may or may not say in the most eloquent way here, how about let's all just get back on the topic of this thread?