The Chestnut Hill Community Association (CHCA) hosted a second meeting on the city’s Actual Value Initiative (AVI), this time with representatives from the Office of Property Assessment (OPA). About 60 attendees came out to Norwood-Fontbonne Academy on Tuesday evening to learn what’s in store for real estate taxes come 2014.
A last minute scheduling change saw Richie McKeithen, OPA’s Chief Assessment Officer, Kate Drayer, OPA’s Outreach and Communications Coordinator, and Anna Wallace Adams, Chief of Staff for the city’s Director of Finance, as the session’s panelists. In a change from CHCA’s first AVI panel, attendees were required to anonymously submit questions to be read aloud by moderator and CHCA Board President, Brien Tilley.
Actual Value Initiative
Reforming Philadelphia’s property tax system under AVI will ensure that all city property is assessed at 100 percent of the current market rate. The goal is to create a fair, accurate and simplified system, explained Adams. AVI will be revenue neutral when it goes into affect, she stated.
Now that the reassessments are complete, aggregate value for all city property has been set at $98.5 billion. City Council will decide the millage rate this spring. It is expected to be between 1.2 and 1.25 percent, but could wind up higher depending on which relief measures, such as exemptions, are implemented, Adams said.
To put it in perspective, an estimated 70 percent of all residential property owners will see a change of less than $400 either way in their real estate taxes. Some 40 percent of residential property owners will see either no change or a decrease in their tax.
‘Location is a driving force’
Just how assessments are determined is a question many residents felt went unanswered at the last AVI panel session. With OPA representatives on hand this time around, attendees were able to learn a lot more detail about the evaluation process.
For residential properties, the value is based on comparable sales over the last five years, time adjusted, filtered for foreclosures and sales which are not considered to be “arms length transactions”, such as those between family members, McKeithen clarified. Characteristics of the home, such as whether single family or multi-family, twin, row or free standing and number of stories are factored into comparisons.
“Comparability is everything with residential single family properties,” McKeithen remarked.
With commercial properties, value is based on income stream. Value for industrial and smaller retail properties are based on a hybrid of income and comparable sales, he said. Exempt property values are also based on comparables.
“Location is the driving force” behind much of the real property value, McKeithen elaborated.
Philadelphia is broken into around 640 geographical mapping areas or GMAs. These GMAs represent small pockets of sales activity within a neighborhood. OPA will look at sales activity within GMAs based on property type.
OPA also takes into account building permits filed over the past five years and whether they have added value to the property.
Finally, OPA conducted field analysis of properties to ascertain their conditions, square footage, era built and whether parking is available to further determine actual value.
A process for disputes
Should a property owner feel their assessment is incorrect, they will be able to address their concerns starting with a first level review. The review is an appeal process with the OPA and offers a one-on-one conversation with the property’s evaluator to discuss why the owner feels the assesment may not be accurate. If need be, the assessor will come out to the property to revaluate. The hope is that it will mitigate the need for a formal appeal hearing with the Board of Revision Taxes (BRT).
First level review forms will be mailed along with assessment notices. The deadline for filing for a first level review is March 31.
If property owners wish to take the dispute further, the deadline for formal appeals to the BRT will be the first Monday in October.
Homestead exemption concerns
As in the first AVI panel meeting, the impact of a homestead exemption was one of the chief concerns for residents. The exemption is set at $30,000 but is currently being debated in City Council. One issue to be considered by Council is whether those properties that are valued under $30,000 should have to pay a minimum tax.
The challenge of a homestead exemption program is a higher tax rate, said Adams. If the exemption remains in place, the millage rate is anticipated to be set between 1.35 and 1.4 percent.
Much of the tax burden will also get shifted back onto commercial properties and non-owner occupied residences.
Deadline to apply or re-apply for the exemption is July 31.
What happens next
Assessment notices for the city’s 579,000 properties will be mailed out starting this Friday. All property owners should receive their notices by March 5.
Assessments will be public record on the OPA website.
Real estate tax bills, based on the new millage rate, will be sent out in December.
Property assessments will take place annually, however, “that does not necessarily mean your assessment will change,” noted McKeithen. Market fluctuations and any future permit work will change things.
Tilley says CHCA welcomes feedback residents have regarding their assessment notices. Depending on community response, the association may host another public conversation regarding AVI.