The Actual Value Initiative, Mayor Nutter’s push to fix Philly’s widely criticized property-tax system, can be confusing. Even more confusing are the myriad studies on AVI that have come out recently.
So here’s a breakdown of what's out there so far (if you know of a report I forgot to include, please email me at walshSE@phillynews.com ).
The questions these studies sought to answer largely fall into two categories:
- Was the reassessment accurate?
- If so, what impact will it have on Philadelphia taxpayers?
Was the reassessment accurate?
The Office of Property Assessment contends that the reassessments are, on average, within 13.9 percent of market values. The industry benchmark is 15 percent. To date, the city’s analysis is the only one that has found the reassessments to be within the industry standard.
Axis Philly, a Daily News partner, studied the assessments, compared them to recent sales and found that 40 percent of the new valuations were at least 20 percent off, in a Feb. 26 story. Axis has also reported that 15 percent of the reassessments were at least 50 percent off from market values, according to its numbers.
The Inquirer also did an analysis based on sales prices in a Feb. 24 story:
“An Inquirer analysis of about 10,000 residential sales from 2012 showed only 40 percent of the homes would be assessed within 15 percent of the sale price. The Inquirer excluded sales below $10,000 and other transactions, including sheriff's sales and those between related parties.”
And finally, City Controller Alan Butkovitz, an early and outspoken critic of AVI, hired tax expert Robert Strauss to look into it. The result was a damning report that found that the new assessments are actually less accurate than the current numbers, which are almost universally assailed as wildly erroneous and unfair.
Nutter spokesman Mark McDonald said the Butkovitz report may have been politically motivated, as the controller is running for reelection.
City Council members and others have pressed the administration to release details on how it conducted the reassessment and how it determined whether it was accurate. OPA issued this slideshow last month. It describes in broad terms how OPA sliced the city into tracts of similar properties (geographic market areas), how filed inspections were executed, how the city analyzed past sales data to determine market values, and other processes. Critics say the report was too vague.
What impact will AVI have on taxpayers?
City Council released a report on AVI last month. Rather than delve into whether the assessments were accurate, the report, prepared by Council staff and Econsult Corp., found that a vast majority of homeowners could end up with lower tax bills under AVI if the city adopts the right relief measures.
Only two of the 10 councilmanic districts may see their average tax bills increase, according to the Council report. The unlucky pair is Kenyatta Johnson, whose Second District covers gentrifying Point Breeze and Graduate Hospital, and Mark Squilla, whose First District practically has an all-star lineup of up-and-up neighborhoods (Northern Liberties, Fishtown, Passyunk East, Queen Village, Bella Vista).
The Pew Charitable Trusts on Monday released a study confirming the long-held belief that AVI will shift part of the property-tax burden from commercial properties to residential ones. Under AVI, residents will pay about 60 percent of all property taxes, up from about 54 percent, according to Pew. That’s a total of $72 million more in property taxes for homeowners.
Pew had previously released a report that found that AVI was an unprecedented attempt of reforming property taxes in a big city in terms of how much the initiative sought to change.
The Daily News has also written stories on other aspects of AVI, including its impact on renters, skyscrapers and small-business owners, as well as how the homestead exemption works and what AVI will mean going forward.