Philly homeowners hit snags with new law allowing payment of 2018 taxes while appealing 2019 values

When City Council members passed legislation aimed at pausing some of the property tax increases caused by last year’s reassessment, they did it with homeowners like Josephine Rivera of South Philadelphia in mind.

The assessment had raised the value of Rivera’s house on South Fourth Street by more than 68 percent. Her tax bill, in turn, jumped by more than $2,200 this year. She is challenging that increase.

The Council ordinance that went into effect last month allows the owners of more than 9,000 properties with pending appeals to pay taxes based on their previous assessments until their cases are resolved.

But a quirk in the timing of the new legislation — and mixed messages from the city — suddenly has Rivera and others wondering if they can actually get their promised relief.

Like many homeowners, Rivera’s mortgage lender pays her property taxes from an escrow account, and her monthly mortgage payment is adjusted to reflect changes in her tax bill. The company typically makes the payment early in the year, and may have already paid her 2019 bill, Rivera said.

“My mortgage payment is going to balloon because they’re not going to understand what the city is doing and I’m going to have a fight on my hands,” she said. “I’m not going to be able to afford my mortgage.”

The city’s Department of Revenue, which issued its 2019 tax bills one month before the Council legislation took effect, said it won’t send out new bills for properties with pending appeals, but will notify property owners and mortgage lenders that they may choose to pay only the amount of last year’s bill.

The bills are due March 31, and property owners can get a one-percent discount on taxes paid before the end of February. That means mortgage lenders likely have already paid bills — or will do so in the next few weeks.

Amy Gilthorpe learned last year that property taxes on her Bella Vista rowhouse would nearly double, increasing by more than $3,600. An informal appeal resulted in a lower assessment, but she believes the revised amount is still too high and is awaiting an appeal hearing. When Gilthorpe called her mortgage company, she said she learned that her property tax bill for the increased amount was already paid.

“They got this legislation passed, that’s great, but now nobody knows what to do,” Gilthorpe said. “It’s complete chaos.”

Adding to the confusion for homeowners, some have received misinformation from the revenue department since the legislation took effect. In an email response last week to one property owner who asked the city to reissue tax bills to reflect the Council action, the department incorrectly stated:

“Please be advised, there has been an update to the city’s regulations regarding Real Estate Tax appeals. The taxpayer is required to pay the full amount due by the due date, even if under a pending appeal.”

Rebecca Lopez Kriss, director of strategic outreach for the revenue department, this week acknowledged the mistake. She told the Inquirer that response “was obviously outdated when the taxpayer reached out one week after passage” of the new law.

“We have since taken steps now to ensure that staff understand this particular issue and are providing correct advice based on the new law,” she explained in an email.

About 370,000 Philadelphia properties received assessment increases this year, increasing the median value of a single-family home by 10.5 percent and prompting complaints from homeowners. Council responded by rejecting Mayor Jim Kenney’s proposed tax rate increase and commissioning an audit of the Office of Property Assessments, which found that the city’s assessments do not meet industry standards and are plagued by deficient data.

Councilman Mark Squilla, who sponsored the legislation related to assessments under appeal, said the issue reconciling the legislation with mortgage lenders’ payment schedules “can become a challenge, unfortunately.” He added: “What would make it better is if the city could send a new bill out.”

Squilla said he advises property owners to send copies of the legislation and their appeal to their mortgage lenders, and said some homeowners have had success with that approach. Some mortgage companies, however, still insist on paying the amount in the original bill.

Squilla’s bill, which went into effect over Kenney’s objection, was another attempt by Council to help homeowners facing large tax hikes. Rob Dubow, Kenney’s finance director, told Council that the measure could jeopardize $22 million in property tax payments, more than $12 million of which would go to the School District of Philadelphia.

Lopez Kriss said the revenue department has alerted mortgage-service companies via email and written letters about the new legislation. Property owners with pending appeals will receive letters next week explaining that they have two options: Pay the full 2019 bill now and receive a credit to their account if the appeal results in a lower assessment, or pay last year’s tax amount and pay the difference within 30 days of their appeal decision if the 2019 assessment remains higher than in 2018.

Meanwhile, Rivera’s appeal is one of thousands still pending. She said she feels optimistic that her assessment will be lowered, because it is higher than neighbors’ homes that are similar to hers but larger. But her frustration with the system — and her fear of a looming mortgage-payment increase — remains.

“Why is the burden," she asked, "always on the taxpayer?”