Win or lose, Council has reassessment blues

City Council is afraid, and for a very good reason.

Mayor Nutter has asked a chamber never known for courage to be brave and swallow the most politically poisonous pill in Philadelphia's recent history: a citywide property reassessment virtually guaranteed to infuriate lots of voters.

This "issue is probably going to be the most difficult and angry issue that we're facing maybe since I came in here," said Jim Kenney, who joined Council when George Bush was president.

The first George Bush.

Kenney isn't exaggerating. But Nutter isn't doing this to be cruel to Council, or property owners. In Philadelphia, property assessments bear about as much of a relationship to reality as a Salvador Dali painting. The atrociously inaccurate numbers, which experts say may be some of the craziest in the nation, are a legacy of ineptitude at the patronage den known as the Board of Revision of Taxes.

Back in 2010, voters stripped the BRT of its assessing power. Now that job belongs to a new office within the Nutter administration. The fresh batch of valuations isn't finished, but the new office seems professional and well-run, so it's reasonable to expect the new figures will be pretty accurate, once they're released later this year. And that's great. Distorted assessments are patently unfair: Some property owners pay less than they should, while others pay more.

But with new assessments come winners and losers. It's the losers that City Council is rightly terrified of. All indications are that new assessments will hammer homeowners in gentrifying neighborhoods; some could see their tax bills double, or more.

Here's an example: On the 2100 block of Fitzwater Street in the now-prosperous Southwest Center City, a renovated three-story rowhouse sold for $420,000 in 2008. Today, the owners pay just over $1,500 a year in property taxes. But if the new assessment office pegs the property at a value close to what it sold for (in other words, if the new valuation is accurate), then the tax bill would soar past $4,000.

Now imagine that scenario playing out over and over on redeveloped blocks throughout Philadelphia. Maybe these well-heeled taxpayers (and reliable voters) will accept the new reality, acknowledging that they've paid too little for too long. Then again, maybe they'll storm City Hall.

What about the winners? Will their gratitude balance the losers' rage? Don't count on it. A lot of property owners who get breaks on their new assessments live in neighborhoods with weak property values, so their real estate taxes are already fairly low. They're likely to get discounts of $50 here, $100 there.

The other big reassessment winners are likely to be commercial property owners. Somehow, I doubt the prospect of a lower tax bill for the Wal-Marts and PNCs will ease the anger of the homeowners who get socked.

Given all that, is it any wonder that Council considers the whole enterprise - known as the Actual Value Initiative - a high-risk, low-reward nightmare?

Council is even more peeved that Nutter has made an already difficult vote that much harder, by using AVI to find some extra cash for the city and school budgets.

Once upon a time, Nutter said the city's transition to AVI should be revenue-neutral, meaning that while individual taxpayers might owe more, the total collected for the city and school district would not change.

But Nutter tossed that promise out the window in 2009, during the economic collapse. Now the mayor intends to use the cover of AVI to make permanent two "temporary" tax hikes (one enacted in 2010, the other in 2011). On top of that, his budget projects an additional $93 million in new real estate tax revenue. The mayor has good reasons to do this: The city really does need the money, and the school district needs it even more.

But there's no avoiding that fact that the additional revenue Nutter wants to "capture" through AVI clouds the issue, both for property owners and Council. Is it a tax hike? A good-government reform? A bit of both? Now, instead of making a clear case for AVI on the merits, the Nutter administration is caught up in a semantic fight with its critics.

None of that changes the fact that Philadelphia now has the chance to right hundreds of thousands of wrongs. This is exactly the kind of moment we elect leaders for: to do what is in the public's long-term best interest, even when a lot of the public is not going to like the results.

Earlier this month, Nutter told Council the time had come to man up. Literally. "Every now and then in this business, regardless of gender, you really just have to have the balls to do the right thing," Nutter said. "Some people have them, some people don't."