The School District of Philadelphia doesn’t think it’s getting its fair share of property tax revenue. And it intends to do something about it.
The district announced Tuesday it will hire an outside firm to track down city properties whose assessed value is at least $1 million below what it ought to be. The yet-to-be-named firm will also help the district file formal appeals for properties it believes the city has undervalued.
It is not yet known how much the district will pay for these services and the district will not estimate how much it thinks it can make based on this pilot project.
The school district receives a little under $700 million annually from local property taxes–about 27 percent of its general fund revenues–and under-assessed properties harm district finances. If a city property is undervalued by $1 million it costs Philadelphia schools at least $7,500, according to the district.
“Our goal is to ensure all taxpayers and properties are fairly assessed and taxed so taxpayers across the city are equitably providing funding for the School District. This 3-year pilot program will assess the degree to which certain properties might be undervalued across the city of Philadelphia,” said Uri Monson, the district’s chief financial officer, in a statement.
The district’s announcement comes as the city conducts a blanket reassessment of Philadelphia’s commercial properties. Those reassessment will go into effect for Fiscal Year 2018.
Because the focus is on properties that have been undervalued by $1 million a more, it’s unlikely that a single-family residence in Philadelphia would be affected.
“This isn’t about any row house in Philadelphia,” said Councilman-at-large Allan Domb, an enthusiastic supporter of the district’s plan. “This is about big buildings that were sold and don’t have correct assessments.”
The district will not formally say it’s eying commercial spaces, but Monson did acknowledge the district wants to maximize its “bang for the buck.”
“We’re looking for properties that will have the most return for the district and make it most worthwhile for us to invest the dollars it will take to do this assessment,” said Monson.
The district’s new initiative does make for some potentially uncomfortable interactions between local agencies. By announcing it will seek outside counsel the school district is essentially saying the city’s Office of Property Assessments has misfired on a significant number of building appraisals.
“We are in effect challenging their assessments as being under-assessed,” said Monson.
Thanks to its outside help, the district will be able to identify those under-assessed properties and formally appeal. The city, however, says it has no problem with the district’s new get-tough approach. In fact, city officials are saying they welcome the help.
“I think the district wants to make sure assessments are as accurate as possible. We share that goal,” said Rob DuBow, the city’s director of finance. “If this helps get us there then it’s a good thing.”
DuBow says the district will be able to discover data about properties through the appeal process that isn’t available to city assessors.
Monson notes that it’s normal in other Pennsylvania cities for the school district to take charge of assessment appeals. He says he observed the practice at his last job as finance chief for Montgomery County, Pennsylvania, and has been seeking to implement the practice in Philadelphia since he arrived at the district earlier this year.
“It’s pretty common for the school districts in the counties to do this,” said Monson.
Domb believes it’s vital the city have outside help when it comes to property assessment. City appraisers have to assess $134 billion worth of property, said Domb. That means they’re often over-extended and unable to stare down companies who might dispute their assessments.
“The city raises somebody’s taxes and individuals hire the best lawyers and the best appraisers they can and they go into the city and try to appeal it,” said Domb. “The city doesn’t always have the firepower to stand up to it.”
Domb has made tax collection and assessment a key plank in his policy agenda. He said the city has also put a request out to hire more outside assessors. On Tuesday he singled out Monson for praise.
“Thank God Uri Monson is at the school district because he’s doing a great job,” said Domb. This is just another example of some of his good work.”