Real-Estate Roulette

The evaluators' work is done mainly at computer terminals, where they monitor sales data, track trends, and estimate changes in values on whole blocks of properties for the next round of revaluations.

Under standard appraising practice, recent sales are considered the best measure of market value.

From 2001 to 2006, however, BRT evaluators failed to keep pace with run-ups in real estate values and did not take into account varying rates of appreciation among neighborhoods. In a hopeless game of catch-up, they fell so far behind that their numbers became meaningless.

The BRT says the problem resulted from an out-of-control real estate market. The BRT's critics say the issue is more basic.

"They come up with numbers on a piece of paper," Bright said of the BRT's real estate evaluators. "But they don't really assess."

With last summer's mass reappraisal, the BRT had the incongruous task of raising assessments while property values were leveling off or falling.

It produced a surreptitious tax increase - without City Council having to take heat for it.

Since 1989, the millage has been frozen at 82.64. In other words, for every $1,000 of assessed value, a property owner pays $82.64.

Increasing the assessments on 388,000 residential and commercial properties last summer meant an estimated extra $45 million collected, which constitutes a 5 percent tax increase. Of that, $19 million goes to the city and $26 million to the schools.

Even if it functioned flawlessly, Philadelphia's property tax would be a bafflement to homeowners.

Under the city's so-called fractional system, an assessment is supposed to be 32 percent of market value. So a property assessed at $32,000 should be worth $100,000.

Mescolotto said last week that the BRT's assessments were close to that mark.

According to The Inquirer's analysis of the BRT's own data, however, the assessment on the average property is just 12.2 percent of its market value - nowhere near 32 percent.

Strauss, of Carnegie Mellon, reached a similar conclusion. How the BRT could contend that "assessed values in Philadelphia were close to 32 percent of market value is a mystery to me," he said. "It probably reflects some special kind of magic that only those officials in Philadelphia and Harrisburg possess. They probably also believe that the Eagles won the Super Bowl."

The wide spread between assessments and market values found in the Inquirer, Wharton and Carnegie Mellon analyses is largely the result of radical real estate appreciation from 2000 to 2006. As home prices rose, the assessments represented a smaller and smaller portion of the properties' worth.

In the most dramatic cases, such as in booming parts of South Philadelphia and Northern Liberties, assessments are as little as 6 percent of market value. Conversely, in low-end neighborhoods where prices were stagnant or fell, hundreds of homes are assessed at 32 percent or more of market value.

Such haphazardness has deprived homeowners of any understanding of their tax bills, any way of determining whether their bills are fair, and any standard by which to appeal them to the tax board.

It also flouts the state constitution's demand for "uniformity." For the constitution's purposes, what matters is that all properties are assessed at the same percentage of market value, be it 10 or 32 or 100.

The state is supposed to keep tabs on that.

Like the other Pennsylvania counties, Philadelphia is required to report all real estate sales each month to the State Tax Equalization Board, the agency responsible for the quality of assessments. However, it has no staff to monitor the accuracy of the data, former executive director Thomas Connolly said. Counties are essentially on the honor system.