Landmark buildings top Philly's list of tax delinquents

The list of Philadelphia's top property-tax delinquents is studded with several well-known landmarks that fell into arrears when their owners got walloped by the city's new assessment system.

Sitting atop the pile: Center City's iconic Wanamaker building. It has an outstanding tax bill of over $1.2 million.

The Wanamaker Building, $1,271,149: At 1301 Chestnut Street, the iconic department store building tops the list of Philadelphia's biggest tax delinquents. The building, owned by TIER REIT of Dallas and Amerimar Enterprises of Philadelphia, was hit by a city reassessment last year that rocketed its actual market value from $12 million to $122.9 million. Taxes rose from $375,000 to $1.6 million. The difference is under appeal. Put up for sale in April, the building is expected to sell for at least $200 million.

Also ranking high among the delinquents: the University of Pennsylvania Bookstore and the Gallery at Market East, who have both recently reached agreements with the city.

The properties were among 92,500 parcels that, as of July 1, owed nearly $521 million in back taxes to the cash-strapped city.

Many at the top of the list are owners who were surprised when their assessments skyrocketed after the city's property assessment reform known as the Actual Value Initiative (AVI).

It's left them - and the city - scrambling to come up with solutions to get the taxes paid.

"It was pretty brutal," said Andrew Eisenstein of Iron Stone Strategic Capital Partners. Assessments soared on three buildings his firm owns at the Falls Center in East Falls, the former campus of the defunct MCP Hospital.

3300 Henry Ave., 2, $323,199: The market value soared on a renovated building in East Falls at the Falls Center, the former Medical College of Pennsylvania, causing the property tax to more than quadruple. The city's AVI reassessment increased the value of the building 10-fold, sending it from $2.4 million to $29.8 million. The subsequent tax bill shot up from $75,000 to nearly $400,000. The owner, Iron Stone Strategic Capital Partners, has paid the 2013 amount as it appeals to the Bureau of Revision of Taxes. | Property data

The market value on one, a former administration building, catapulted from $2.4 million to $29.8 million. The tax bill jumped from $75,000 to nearly $400,000.

"We have a lot of properties across the city, and on the whole, the reassessments have been pretty fair," Eisenstein said. "But the assessments on these properties were completely out of line."

Eisenstein is appealing, and in the meantime paying the pre-AVI amount.

But the historic Wanamaker building, now home to Macy's and offices, tops the bunch for the spike in its assessment.

Its assessed market value rose more than 10-fold last year, vaulting from $12 million to $122.8 million. The tax bill quadrupled from $375,000 to $1.6 million.

The building's owners, TIER REIT of Dallas and Amerimar Enterprises of Philadelphia, have paid the old amount and are appealing the $1.22 million difference before the Board of Revision of Taxes.

Carla Pagan, the tax board's executive director, said most commercial properties in the city saw their tax burdens fall last year. She described the Wanamaker Building and a few others as "outliers," but said all owners have the right to appeal.

Still, she didn't hold out much hope for the Wanamaker Building's owners. That's because its actual value may be much greater than even the city's recent assessment.

Put up for sale in April, it's expected to fetch more than $200 million, which would be nearly $80 million more than the city's current appraisal. So taxes could rise.

"I'm sure if they have an appeal pending, is the first evidence the city will probably put on," Pagan said.

Wanamaker's general manager Marita Osborne cited a city ordinance allowing taxpayers to pay the previous year's tax bill if the current one is under appeal. So the contested amount "does not constitute delinquent taxes," she said.

Revenue officials, however, disagree, saying they would continue to consider the outstanding balance "delinquent" until the issue is resolved.

The Penn Bookstore and the Gallery at Market East are caught in a similar bind, thanks partly to AVI.

University of Pennsylvania Bookstore, $488,065: The property, at 3601 Walnut Street, was hit by a 2014 reassessment that caused its taxes to rise from $645,000 to $994,000. Ron Ozio, a Penn spokesman, said the university had appealed the reassessment. According to Deputy Revenue Commissioner Michael Zaccagni, Penn has settled with the city and will pay $357,000. "The exempt portion of the property relates to about 2/3 of the bookstore that is used for/by the university, and equates to about 28% of the property," Zaccagni wrote in a statement.

Property taxes on the Penn Bookstore rose more than 40 percent between assessments, because revenue officals saw it partly as a profit-making business.

Taxes doubled on the 907 Market Street portion of the Gallery, owned by PREIT. Both appealed and have reached settlements with the city, officials said.

Penn will pay $357,000, down from the city's previous tax bill of $488,000, and the Gallery will shell out $275,000, down from $317,000, the city said.

907 Market St., $317,202: A segment of the Gallery at Market East saw it's taxes nearly double from $237,630 to $554,932 after the city's AVI reassessment. According to Deputy Revenue Commissioner Mark Zaccagni, owner PREIT settled with the city. The amount real estate tax due will be reduced to $275,000, he said. | Property data

"PREIT pays its taxes, it always has," said spokesman Kevin Feeley. "We're in the process of finalizing the reconciliation."

The second-largest amount is owed by Hardeep Chawla's company, which has been delinquent for four years on a plot at Blue Grass Road and Grant Avenue in the Northeast. Chawla's company, 10551 Decatur Rd. Investment LP, owes $791,647 on the parcel. Only the Wanamaker building owes more, records show.

Chawla recently entered into an agreement with the city to pay down the delinquent taxes and penalties, the city said. Chawla did not respond to multiple calls and a registered letter seeking comment.

Another large debtor is Mattie Morris Frisby. whom records show is 89, and resides at the nonprofit Germantown Home.

Her son, Avery Lofton, said she is suffering from Alzheimer's Disease and can't communicate.

Frisby is over 25 years delinquent on several adjacent abandoned buildings in North Philadelphia.

She and her son ran a boarding home for elderly and infirm residents at 2248 N. Seventh Street until January 1988, when a two-alarm fire tore through the building, killing one resident and injuring five others. In 1990, the state ordered the Morris Arms personal care home closed for lacking a license and failing to correct city code violations before the fire.

9490 Blue Grass Rd., $791,647: A lot at the intersection of Blue Grass Road and Grant Ave. in the Northeast has been delinquent for four years. The property is owned by 10551 Decatur Rd. Investment L.P. Hardeep Chawla of Huntingdon Valley is the company's principal owner, according to city records. The company recently entered into a payment agreement with the Department of Revenue, according to Commissioner Clarena Tolson. Chawla did not respond to multiple requests for comment.

The home has since sat empty, scarred with graffiti and broken windows and now deemed "imminently dangerous" by the city.

More than $476,000 has accrued in taxes, interest and penalties.

The site was sold Tuesday for $56,000 in a sheriff's sale. The new owner, whom the city would not identify, was relieved of paying the back taxes.

Lofton, 62, said he did nothing to prevent the sale. "That's all behind me now," he said. "I don't want to talk about it."

The city's delinquency database is further muddied by the presence of a slew of nonprofits and government agencies - usually considered tax exempt.

According to city data, SEPTA owes nearly $1 million on the Chestnut Hill West train station.

But in a deal struck in July last year, the city forgave all of SEPTA's disputed delinquencies. Over $22 million in back taxes was wiped off the books in return for SEPTA's promise to pour millions into maintaining subway concourses. The train station, noted in city data as 37 years delinquent, should have been removed, SEPTA officials said.

"This is just a matter of updating records," said SEPTA's assistant general manager Fran Kelly.

Revenue department staffers have reviewed over 1,100 accounts to make the city's books more accurate, said Commissioner Clarena Tolson.

Tolson said she was uncertain how much of the $521 million on the books might ever be collected. She hopes the city might net $234 million, or a little more than half.

"We've already written off $100 million," she said. "It's a work in progress."

In some cases, the city has put delinquent properties up for sheriff's sale.

For 16 years, an empty lot at 6900 Cobbs Creek Parkway in West Philadelphia, formerly the Cobbs Creek Nursing Center, racked up back taxes and penalties totalling more than $1.5 million. At a sheriff's sale in March, it sold for $93,000 to an unidentified buyer. The city forgave all the back taxes.

"It's under a floodplain," Tolson said. "We're thankful we got what we did."

samwood@phillynews.com 215-854-2796 @samwoodiii