Models for fixing the BRT

It's no mystery what Philadelphia's property-tax system ought to be built on: realistic assessments, an ethical and competent staff, and an end to backroom deals for property owners with pull.

It is a formula that cities, counties, and states across the country figured out long ago. In Seattle, in Maryland, in Chicago, and in many other places, the setting of accurate property values has been a basic and unremarkable government function for decades.

What has been missing in Philadelphia, reform advocates say, is the political will to make necessary changes - to restructure or abolish the Board of Revision of Taxes, the obscure independent agency that sets property values in the city.

"It's one really busted agency, and it can be fixed," said Zack Stalberg, president and chief executive officer of the Committee of Seventy, a Philadelphia government watchdog organization.

"Schools are tough to fix. The prison system is tough to fix. The BRT is not hard to fix."

Last week, Mayor Nutter and City Council vowed to do just that. Citing Inquirer reports that detailed chronic mismanagement and ethical shortcomings at the agency, Council began considering a bill that would dissolve the BRT, while Nutter called on its leadership to resign.

The BRT's leadership, however, defied the mayor, refusing to step down. And the agency, which doubles as a jobs bank for people connected to the city's Democratic and Republican Parties, has powerful political allies.

"The findings of the series and the revelations of patronage are appalling, but in Philadelphia that doesn't mean that change will come," Stalberg said. "It means the fight is on."

Nutter has taken to the brawl with gusto, quickly deploying what one political operative called "the nuclear option" by publicly demanding the seven-member board's resignation.

If anything, though, that step appears to have steeled the spines of the agency's leaders.

After promising for five years to develop property values that matched sales prices, the BRT released those numbers April 29. BRT leaders insist the new computer-based system will make property taxes more accurate and uniform - and less susceptible to manipulation.

They now say they want to stay on to repair the failed system they supervise.

"The board is saying, 'We spent a lot of time and invested a lot of resources fixing these problems,' and they want the chance to see that through," said BRT spokesman Kevin Feeley, referring to a new property-assessment system called the Actual Value Initiative.

That argument may buy the agency some time, but veteran political observers think scrutiny of the BRT is now so intense that it cannot come through unscathed, despite its supporters in the political establishment.

"It's too public. I think Brady will have to distance himself from it," said Democratic political consultant Larry Ceisler, referring to Rep. Robert Brady, chairman of the city's Democratic Party. "I think Council will have to distance themselves from it. I don't see how they can go back to the way it was."

Interviews with elected officials and government veterans suggest a BRT shake-up would be likely to end in one of three ways.

The agency could remain largely intact, with a new board appointed not by the judges who make the selections now, but by the mayor and Council.

Under another scenario, the agency would be abolished and its staff of assessors would move into the Finance Department under the supervision of the mayor. An independent appeals board would hear challenges from property owners who think their tax bills are wrong.

The third option is a state takeover not just of the BRT but of property-assessing offices in every county and city in Pennsylvania.

Gov. Rendell and Mayor Nutter said a state system deserved serious consideration.

"The governor believes that it's a good idea," said Rendell spokesman Chuck Ardo. "He's not sure that it's achievable legislatively, but nonetheless he believes it's a worthwhile goal."

Maryland's state-run system is a model of simplicity.

Properties are inspected at least once every three years. Assessment increases are phased in over three years, and owners are protected from particularly sharp jumps by annual caps that vary by county.

"It's a good, simple, clean system," said activist Harold Lloyd of Freeland, Md., founder of Property Taxpayers United. "It's better than Pennsylvania's."

But that was not always the case.

In a 1972 class-action lawsuit, property owners in several Maryland counties contended that unfair assessments violated the state's constitution, which is similar to Pennsylvania's.

The suit and public pressure pushed the legislature to pass a law giving the state complete authority over the system, with local assessors becoming state employees.

One big advantage of Maryland's approach is that assessors do not work directly for the local governments that are funded by property taxes.

"They're professional," said Robert Strauss, a professor at Carnegie-Mellon University in Pittsburgh and an assessment expert, "and there's political distance."

There are other options.

King County in Washington, which includes Seattle, has a nationally recognized assessment office that inspects every property on a six-year cycle and updates values annually using a computer model.

In Philadelphia, The Inquirer found 9,000 properties that haven't been reappraised in at least two decades.

But like Maryland, King County was not always a model system.

Rich Medved, the county's deputy assessor, recalled a chief assessor from more than two decades ago who "had family members working for him."

"He would make deals where certain developers were getting better treatment than others," Medved said.

After a public clamor, the assessor was ousted.

Even Chicago has cleaned up its appraisal system.

Twenty years ago, it was known as "the Bank of the Democratic Party," where appraisers were reputed to hike assessments on valuable properties, forcing the owners to hire politically connected lawyers to get the assessments lowered. In turn, those lawyers were expected to make political contributions to the party.

"It's changed," said Richard Almy, a national consultant on real estate taxation. "Now, with the big downtown office buildings, they just go public with a lot of details about assessment."

It took lawsuits and scandals to create the public pressure necessary to clean up property assessments in Maryland, Chicago, and King County. Now it might just be Philadelphia's turn.

"It does take something big to change the system," Ceisler said. "I think we have that here now. I think everybody agrees there needs to be change."