For most homeowners, their property is their biggest investment. So when the latest sky-high reassessment letters came from the City of Philadelphia, tempers flared in most neighborhoods.
Can City Council intervene? Yes. And will it?
In response to Philadelphia's Office of Property Assessment, Councilman David Oh will hold hearings Tuesday on a bill to allow City Council to stop assessments deemed too high. The 10 a.m. hearing will be open to the public.
Oh's bill (Amendment 180412) would require Council to approve any real property assessments whose year-over-year percentage increase exceeds twice that of the national urban consumer price index — which totals roughly 2 percent to 3 percent annual current inflation. His bill is cosponsored by Council members Mark Squilla, Kenyatta Johnson, and Allan Domb. The OPA's latest property tax reassessment averaged more than 10 percent a home.
"It's essentially a trigger mechanism. If reassessments are higher than two times inflation, then City Council has a right to invalidate those," he said. Council would only reject the overall rate of assessments, not individual assessments on people's homes.
Why is Oh putting forth this bill?
"A nurse came to my office, a professional single woman, and she calculated the increase in her taxes under the new OPA rates would force her out. 'I'm going to be out of my house. I can't afford the taxes,' is what she told me." And she was one of many of Oh's constituents in the same fix. "Not only that, but she just moved to Philadelphia. What about all the longtime residents, the seniors and those on fixed incomes?"
The OPA's latest 2019 real property assessments "amount to a big real estate tax revenue increase without a real estate tax rate increase — essentially a backdoor tax increase. While Council must approve any real estate tax rate increase, it currently cannot ratify any new assessments," Oh said. "We need checks and balances."
Some say Mayor Kenney is using the Office of Property Assessment for backdoor tax hikes, on top of the sweetened-drinks tax and the wage tax. OPA's 2019 assessments resulted in the median market value of Philly's single-family homes increasing from 2018 by 10.5 percent in one year — from $112,800 to $124,600 (half the homes sold for more, half for less). Out of 57 neighborhoods in Philadelphia, 48 saw increases in assessments, with the North Philadelphia/West neighborhood — containing Brewerytown and Strawberry Mansion — rising the most, increasing 47.1 percent between 2018 and 2019.
Without this bill, City Council won't have power to stop OPA's reassessments, no matter how high (or low) those residential tax assessments. OPA's head Michael Piper declined to explain exactly how his office arrives at those assessments, calling the formula "complicated." His property on the 5500 block of Hazel Avenue saw a tax increase of more than 29 percent, according to the database, which is searchable by name and address. Piper's salary totals more than $152,000 a year.
Access the Inquirer and Daily News database of proposed property reassessments on our website: data.philly.com/philly/property/tax. In addition, read our guide to appeal your 2019 reassessment: http://www.philly.com/philly/business/appeal-philly-property-assessment-guide-20180521.html.
Oh's legislation adds this language to the Philadelphia Home Rule Charter: "Real property assessments are to be made on the basis of the actual value of individual real properties," and "would require the percentage annual increase in total preliminary assessments to be greater than twice the annual percentage increase in the most recently reported CPI-U before Council may select a reputable third-party auditor."
In addition, the bill requires the independent auditor and Council to perform a comparative analysis between OPA's new proposed assessments and the previous year's assessments, and authorizes Council to reject new proposed assessments if less accurate than the previous year.
"If City Council does not have the authority to approve of property-tax assessment increases, tax revenues go up without Council's approval," Oh said.
Councilman Derek Green said his constituents "are concerned about the level of the assessment and how it impacts their property taxes. We have a number of seniors on fixed incomes. We're the largest big city with a greater than 25 percent poverty level, with older housing stock. I'm very concerned about the process of how OPA arrived at the numbers. I definitely support the concept of reviewing how we got to this point," Green said. He said he was waiting for the public comments at Tuesday's 10 a.m. hearing "before determining whether I'm pro or con" on the Oh bill.
Squilla agrees that "something's wrong with OPA's assessment formula, so let's fix it. We're elected officials representing homeowners. We need some authority over large increases — not OPA the agency itself — but to make sure this is done properly. An 11 percent increase city wide is a large increase. Over half of my district have over 20 percent increase in value. We have to do something." He says he will be voting for the Oh bill.
Councilwoman Helen Gym said she prefers an audit of the methodology.
"I don't think assessments should be politicized. Instead, assessments should be easily understood. I support the audit" instead of the bill, she said.
Oh said it will be too late for homeowners if Council simply waits for an audit.
"I agree we need an audit. But what then? We also need this question on the ballot, so we let voters decide," he said.
Former city comptroller Alan Butkovitz said he would testify Tuesday and support Oh's bill, but at same time "I would go for a flat ban on assessments in excess of twice the CPI, and would seek to amend the state law."
The Inquirer called the office of every Council member on the Committee on Law and Government, which is holding the Tuesday hearing, and asked: Would they vote for or against an amendment giving Council the power to halt OPA reassessments?
"We hope constituents come and tell us what they think of the assessments," said Green. "We need to hear from you."
Council President Darrell Clarke: He declined to comment on Oh's bill. Instead, his spokeswoman gave his statement by email: "Council President Clarke is deeply concerned about the Office of Property Assessment's methodologies and procedures, which is why he has initiated an independent and thorough audit of OPA. Ensuring that OPA's assessments are accurate and conducted uniformly is of paramount importance."
Councilman Bill Greenlee: Did not respond.
Councilman Derek Green: "I definitely support the concept of reviewing how we got to this point."
Councilwoman Helen Gym: Will vote no on Oh's bill.
Councilman Curtis Jones: No response.
Councilman Brian O'Neill: No response.
Councilwoman Cindy Bass: "I strongly support Councilman Oh's bill which allows Council to protect our constituents by giving members the ability to flag and reject unusually high property assessments. This year's property assessments came in drastically higher than in previous years, adding thousands of dollars to some taxpayers' bills. It amounts to a backdoor tax increase for constituents who already feel overtaxed.
"Philadelphia wants to encourage home-ownership by making it easier and more affordable, not discourage it with possibly inflated property values. If the City Council independent assessment finds that the OPA process was flawed, this bill would allow Council to take action to rectify that."
Councilman Mark Squilla: Will vote yes on Oh's bill.
Councilman Kenyatta Johnson: Declined to comment.
Councilwoman Blondell Reynolds-Brown: Declined to answer, saying she "needed more time" to review the bill.