Pew: City residents still confused by new property-tax system

The 2013 overhaul of Philadelphia's property-tax system hit residential homeowners hard, with valuations tripling for nearly a third, according to a report released Tuesday by the Pew Charitable Trusts.

Yet many homeowners are slow to use relief programs, and 68,000 eligible Philadelphians have failed to apply for an exemption that could trim their tax bills, the report found.

"It's not really clear why some homeowners have failed to apply," said Emily Dowdall, the report's author. "City officials told us they have tried to make the process as easy as possible."

The low participation might be due to Philadelphians' lack of familiarity with the city's tax program, Actual Value Initiative (AVI.) Two years after its launch, 60 percent of residents - including nearly 40 percent of homeowners - said they were unfamiliar with AVI, Pew found in a recent survey.

AVI was designed to correct decades of inequitable assessment by taxing property based on actual market values.

Pew's report, which comes as the city prepares to undertake another citywide reassessment in 2017, found the transition to the new system has been slower and more challenging than expected. But some concerns raised before it was launched appear to have been unfounded, Dowdall said.

Critics had predicted AVI would lead to an exodus of Philadelphians who could no longer afford their taxes, resulting in a destabilization of the real estate market and reductions in home prices. The report found the city's population has continued to rise since AVI. (The report said it was hard to pin down whether the population would have grown more had AVI not been instituted.)

And in the neighborhoods with the biggest tax increases - among them Southwest Center City, East Passyunk, and Fairmount - residential sale prices have risen.

"We found AVI is still a work in progress," Dowdall said. "But it appears some of the biggest concerns have not come to pass."

The report also found:

About 234,000 Philadelphians have taken part in two main relief programs. The Longtime Owner Occupant Program (LOOP) - open to homeowners who have resided in their homes for at least 10 years and whose property values increased at least 300 percent in one year - has provided $16.8 million in relief for 18,000 homeowners.

A second program that exempts $30,000 of a property's value from taxation has been used by about 216,000 homeowners. But an additional 68,000 who are eligible for the discount, which amounts to about $400 a year on average, have yet to sign up despite city efforts to raise awareness, the report found.

Public opinion of AVI has been mixed. In an early 2015 survey of city residents, 30 percent said their taxes were more fair under AVI, 36 percent said they were less fair, and 23 percent said AVI made no difference.

Nearly 60,000 property owners appealed their valuations in 2014, starting a process that has led to thousands of valuations' being lowered by the Board of Revision and Taxes. Of the approximately 11,600 valuations ultimately heard by the Board of Revision and Taxes, nearly half were revised, all downward.

According to the city, those downgrades have led to about $4.6 million less in property-tax revenue for fiscal year 2015 than originally expected.