Property owners in Brewerytown and around University City — rapidly gentrifying areas where local leaders fear increased property taxes will quicken the displacement of long-standing Black communities — could see some of the sharpest increases in their tax bills as a result of Philadelphia’s new citywide reassessment, an Inquirer analysis found.
The city on Monday allowed residents to search on its website for their new valuations after pausing reassessments for three years. But it has not yet published citywide data from the reassessment, despite requests from City Council members and news media. To complete its analysis, The Inquirer pulled the data from the city’s website and compared it to the city’s previous reassessment, from 2019.
The analysis showed the median residential property value increased more than 60% in five ZIP codes in the reassessment, the city’s first in three years. But of those, only 19104 in West Philadelphia and 19121 in North Philadelphia would see median valuations rise to levels substantially higher than the city’s homestead exemption, which eliminates the first $45,000 of taxable value for owner-occupied houses and is likely to rise to $65,000 or more next year.
In 19104, which includes the neighborhoods surrounding the University of Pennsylvania and Drexel University, the median assessment of a single-family home rose from $80,600 in 2019 to $143,450 in the new assessment, which will apply to taxes due in March 2023.
Just across the Schuylkill in 19123, which includes in Brewerytown and Sharswood, the median residential valuation jumped from $69,900 to $112,400.
The disproportionate impact of the reassessment on historically underserved neighborhoods facing intense development pressure will shape the debate over how the city attempts to soften the blow of the new valuations.
City Council members slam reassessment
City Council members on Monday criticized Mayor Jim Kenney’s administration’s handling of the new reassessment, which resulted in an overall 31% average increase in residential property values.
Councilmember Jamie Gauthier, whose West Philadelphia-based 3rd District includes the University City area and saw an overall jump in assessed value of more than 50%, said the administration’s management of the process was “unconscionable” and proposed lowering the property tax rate “so that residents are not unfairly burdened.”
“Assessments were uploaded online today without any explanation of methodology, and the City does not know when residents will receive hardcopy assessments,” Gauthier said. “The lack of communication around an assessment increase that disproportionately impacts Black and brown neighborhoods and the lack of a plan for systemic outreach shows that this administration is not centering racial equity as much as it proclaims.”
In a virtual hearing on the Office of Property Assessment’s budget, lawmakers lodged complaints about the timing of when residents will receive written notices of their new valuations, questioned the accuracy of the city’s new assessment system, and said the administration needed to do more outreach in neighborhoods that could see particularly large increases in their 2023 tax bills.
Lawmakers said they already were receiving calls from unhappy property owners during the hearing.
“I cannot tell you how many constituents are going into your system, looking at their properties, and automatically calling me back [saying], ‘You let this happen,’ ” Councilmember Curtis Jones Jr. said. “It shouldn’t happen as a surprise.”
It is too early, however, to say whether the reassessment — the first since the city implemented its new Computer-Assisted Mass Appraisal system ― is flawed, as some members suggested Monday.
But given the substantial growth in the real estate market during the three-year gap since Philly’s last reassessment, it’s likely that many of the increases in valuations that have alarmed property owners are justified.
OPA Director James Aros Jr. said the average 31% bump in residential property values is in line with external analyses of the Philadelphia market’s growth in that three-year window.
“For the residential market of the city overall, and particularly in certain sections of the city, the changes have been historic,” Aros said.
Debate over wage tax looms
Kenney has proposed a $5.6 billion budget for the tax year beginning July 1, and he has proposed using some of the new revenue generated by the reassessment to pay for a cut to the wage tax for city residents. He is also proposing expanding eligibility or increasing funding for programs that help homeowners deal with increased assessments, such as raising the homestead exemption from $45,000 to $65,000 and boosting the Longtime Owner Occupants Program.
Council members on Monday did not dig deep into Kenney’s proposal to use new revenue generated by the reassessment in part to lower the city’s wage tax, rather than lowering the property tax rate. But that debate will take center stage as lawmakers negotiate with the administration ahead of the June 30 deadline to adopt a new budget.
Fights over property assessments have been a fixture of Philadelphia’s political discourse for two decades.
Council members traditionally are highly responsive to the needs of longtime property owners, a demographic with a high voter turnout rate, while mayoral administrations have worked to fix a system that has long been criticized as highly inaccurate and unfair.
Inconsistencies in assessments caused in part by decades of political favoritism led to Mayor Michael A. Nutter in 2014 implementing the Actual Value Initiative, the first major citywide reassessment in recent years.
The Kenney administration last assessed all properties from scratch for the 2019 tax year, and for the following year, it estimated values based on those assessments and market trends. Annual assessments have been frozen since then in part to allow the city to implement CAMA, its new appraisal software system, and in part due to the pandemic.
Property taxes fund a smaller portion of the city budget than they do in other big municipalities thanks primarily to the city’s reliance on the wage tax. The city also has an unusually high number of low-income residents who are homeowners, although renters are making up an increasingly large part of the city population in recent years.
A delay in mailed appraisal notices
Monday’s rocky release of the assessment figures appeared to have the potential of turning this spring’s budget negotiations into a tense showdown between Council and the administration over taxes.
During the hearing, Gauthier pressed Aros on why the city has not yet released a detailed version of its new assessment methodology, which Aros said would be published within a month.
“Although it feels like OPA has been working on these assessments for over two years, we’ve not received OPA’s updated methodologies,” Gauthier said. “This is core government transparency and public communication.”
She also slammed OPA for delays in mailing out new appraisal notices to property owners, which could give residents only about a month before the Oct. 3 deadline to appeal assessments with the Board of Revision of Taxes.
Although the valuations are already online, Aros said it may not be until Sept. 1 before the city mails out the notices due to the agency’s mailing vendor struggling to obtain envelopes amid the global supply-chain crisis. For less tech-savvy residents and those without digital access, that could be the first time they learn of increased valuations.
“Do you agree that it’s not our residents’ fault that we don’t have envelopes?” Gauthier said.
Staff members John Duchneskie and Max Marin contributed reporting.