Council AVI analysis finds little negative impact for most

A City Council analysis of Mayor Nutter's property-tax plan shows that - with the right mix of tax relief - as many as 72 percent of homeowners could see lower bills and just 10 percent would see bills rise by more than $400.

That would occur only under the best of scenarios - assuming that all homeowners take advantage of a Homestead exemption set at $30,000 and that so-called gentrification relief is given to longtime owners in growing neighborhoods.

But, generally, the analysis - more than 400 pages - predicts that the Actual Value Initiative will either benefit or have little impact on the majority of homeowners next year in nearly all of the city's 10 Councilmanic districts.

With the most generous tax-relief package in place, only Councilman Mark Squilla's First District and Councilman Kenyatta Johnson's Second District would have more homeowners facing tax hikes (71 percent in Squilla's district) than cuts.

Their districts include parts of Center City and nearby neighborhoods like Graduate Hospital and Northern Liberties, which have seen explosive growth in the last decade.

The analysis, compiled by Council technical staff with the consulting firm Econsult Corp., is based on data from the Nutter administration, which has been producing its own picture of how AVI will affect the city.

All Council members have received a copy in a thick, three-ringed binder, but the information has not yet been made public. Briefings are expected to be held by early next week.

The analysis, the first detailed look at the complete reassessment key to AVI, arrives with budget season in full swing and the tough work looming of deciding how AVI ultimately will take shape. Council must settle all those issues and pass a budget before July 1.

Nutter and Council have been talking about AVI for more than two years and discussing the need to fix the old property-tax system, rife with bad data and political interference, for even longer.

AVI required the monumental task of reassessing all 579,000 parcels in the city in an attempt to tag a market value to each. Many of the results were mailed out nearly two months ago - the first hard numbers after all that talking.

The reaction in many corners of the city has been a mixture of confusion and anger, much of it witnessed or directed at Council members and administration officials who attended AVI community meetings around the city.

Council members - Squilla and Johnson prominent among them - since have been questioning the reassessment's accuracy and making proposals to alter AVI's makeup.

Councilwoman Jannie L. Blackwell also has taken a hard line against AVI, even though the analysis found that 80 percent of the homeowners in her West Philadelphia district would see their taxes go down with a $30,000 Homestead and gentrification relief.

In his budget address in March, Nutter said he would start the budget negotiations by proposing a $15,000 Homestead exemption and $30 million in other relief, including $20 million for gentrification relief.

The Homestead exemption allows owners to deduct a certain amount from their assessments before the tax rate is applied. Council proposals have ranged from no Homestead relief to $30,000.

Nutter said his plan would have required a tax rate of 1.3204 percent, or $1,320.40 in taxes per $100,000 in assessed value.

Since the budget address, the city has completed assessments on a final 5,000 properties, raising the aggregate value of all taxable property in the city to $99.89 billion.

That also pulled down the proposed tax rates - Nutter's plan now would create a tax rate of 1.3019 percent. The tax rate with $30,000 Homestead exemption and gentrification relief would be 1.359, according to the Council analysis, and the base rate with no relief of any kind would be 1.216.

Gentrification relief, the Council analysis said, would apply to anyone who has owned their homes for more than 10 years and has seen their values increase by 200 percent or more.

Of the city's 347,777 owner-occupied homes, the analysis found, about 200,000 have been owned for a decade or more.

Philadelphia has an unusually high rate of long-term homeowners - 40 percent have owned their homes long enough to no longer have a mortgage, the analysis found.

Council staff also found the total market value of property in the city had reached $137 billion, including $30.6 billion in tax-exempt property and $6.7 billion in tax-abated properties ($4.3 billion in abated residential properties).

The analysis also showed what many people have been predicting - AVI hits stores with dwellings the hardest.

One avenue to alleviate the tax hit on those properties is a bill, introduced by Councilwoman Maria Quiñones-Sánchez, that would give a break to small businesses on the city's Use and Occupancy tax.