BRT sent out more tax-bill increases

When Scott Sladek opened his property-tax notice for next year, he found that his Northeast Philadelphia house had been whacked with a 33 percent increase, his second hike in two years.

The news left Sladek fuming, mainly because the Board of Revision of Taxes had left unchanged other homes on his block of Annapolis Road.

"This whole thing just bugs me, just the whole idea of fairness," said Sladek, a battalion chief with the Fire Department. "Nothing seems to be right. Nothing seems to be equal." After a series of Inquirer articles documenting the agency's deal making, cronyism, and mismanagement, City Council recently approved a measure that asks voters to kill the 155-year-old agency and replace it with a new board to handle tax appeals.

Yet even as the troubled BRT faced political extinction over the summer, it continued the same practices that won it a reputation for incompetence and mismanagement, an Inquirer review shows.

The board started mailing yet another round of tax increases to 18,000 city homeowners in August, even though BRT members had said they didn't plan any more piecemeal tax hikes. Some bills more than doubled. The last batch of increases went out in November.

The notices were heavily concentrated in some wards, like Sladek's, with little discernible pattern. In some cases, an Inquirer analysis shows, BRT assessors singled out just a few houses on a block without apparent rhyme or reason.

Critics say the random nature of the tax hikes is a clear sign of the agency's continuing disarray, and an illustration of just how difficult it will be to repair the cockeyed system of property values the BRT has built.

The BRT panel will be around until at least Sept. 30, handling appeals, but Mayor Nutter's administration already has taken over tax assessments under a deal formalized this month.

A new BRT director chosen by Nutter, lawyer Richard Negrin, moved last week into the office once occupied by Enrico "Ricky" Foglia, a former patronage worker who got his job with the assistance of U.S. Rep. Bob Brady, the city Democratic Party chief. Foglia resigned in September.

Soon, Negrin acknowledges, he will have to confront the central question for Philadelphia property owners: How does the agency begin to repair the city's broken and inequitable assessments? The problems are well-known: The BRT's assessments are so out of kilter that only 3 percent of city homeowners pay the right amount, according to an Inquirer analysis last year.

During the property-boom years, the BRT's assessed values failed to keep pace with market values as prices zoomed in hot middle- and upper-middle-class neighborhoods. In lower-income areas, though, the assessed values are much closer to reality.

That means wealthier neighborhoods are getting a huge break and humbler ones are taking a beating.

All that is expected to be fixed when the city finally adopts the long-delayed Actual Value Initiative project. The goal is to assess each property at its real value in the marketplace. But because the BRT's records are a mess, establishing accurate market values for Philadelphia's approximately 577,000 properties will take at least two years to complete, city officials say.

Negrin said he and the rest of the Nutter administration now must decide whether it's better to freeze assessments until they all can be fixed at once or find a fair way to continue "incremental" increases in the meantime.

"Is there a way to do that a little at a time in a way to not overburden people in tough economic times?" he asked in a recent interview.

The new patchwork tax hikes surprised even people in City Hall. Just three months earlier, several BRT members seemingly promised City Council that they didn't plan any such increases this year.

Negrin said Friday that BRT supervisors told him the new round of incremental increases fell heavily in South Philadelphia because it was "one of the areas of the city that was one of the most underassessed."

In appeals hearings this fall, South Philadelphia homeowners repeatedly testified that BRT evaluators hopscotched around their blocks, hitting some homes and missing others. But Negrin said he was told that it was a systematic reassessment. "That's their story, and they're sticking to it," Negrin said.

He said two supervisors were unable to explain why the 57th Ward in Northeast Philadelphia had been targeted.

"It's day three," he said, speaking of his tenure as BRT director. "Help is on the way. That's all I can say."

Some of the reassessments were routine: They went to owners of new houses and condos, or to homeowners who had built additions or done other renovations.

But thousands of others seemed almost random. Many seemed to zero in on homes that had been sold within the last few years, leaving surrounding ones unchanged.

That's illegal, tax experts say; the values are supposed to be applied uniformly.

Many of those neighborhoods, in fact, have been dramatically undervalued for decades. But again, the BRT did not apply the increases evenly, hitting some houses in a block and skipping others.

In South Philadelphia, where most homes are dramatically under real market value, the BRT sent out about 8,000 increases.

Raymond Felice, 86, got a notice of a 78 percent hike on his rowhouse at 203 Wilder St., pushing his bill to $1,229. In Felice's First Ward, 2,000 homes got tax-bill increases.

Felice appealed, but the BRT trimmed his hike by only 6 percent. A World War II veteran of South Pacific battles, Felice said he's going to war again - against the BRT, in Common Pleas Court. "This is incompetence up and down the line," he said. "Somebody's got to do something."

In the 57th Ward, where Sladek lives, the BRT also sent out more than 2,000 increases.

But homeowners in that area, characterized by detached frame houses built in the 1950s, near Northeast Philadelphia Airport, were already paying about what they should, relative to other areas.

No other ward north of Center City is being hit like the 57th. "We've got to find out what's going on here," said State Rep. Dennis M. O'Brien, 57th Ward Republican leader.

Meanwhile, the BRT's assessors passed over some of the most extremely undervalued neighborhoods in Center City, near Rittenhouse Square.

It was the lack of consistency that irked Sladek. The original notice would have hiked his property value from $93,500 to $124,500, even though some of his neighbors' assessments went unchanged.

"How do I know I'm not going to get another 33 percent increase next year?" he asked the board during his appeal.

Board members didn't have an answer. As the hearings went on day after day, with residents complaining about inequity, even the BRT board members seemed to lose interest in defending the current system.

"Kind of a reverse lottery," remarked board member Robert N.C. Nix 3d, hearing the appeals of two dozen homeowners from the area of 10th and Kimball Streets in South Philadelphia, another area hit hard by the new appraisals. The board rolled back every one of those hikes.

The Rev. Ken Metzner, who became an advocate for that neighborhood, called it a very limited victory; he says it's outrageous that the BRT sent the notices at all. He has filed a court appeal. "If they know the system operates in a completely illegal fashion, how can you justify relying on that system to raise anyone's taxes?" he asked.

Even if the BRT goes away and assessments are finally made accurate, there is still lots of pain ahead for city homeowners, and for politicians.

Once the new values are set, most homeowners will see their taxes drop or stay roughly the same. But for others, the bills could double or triple. Just as in other cities that have undergone wrenching reassessments, Philadelphia courts are likely to be flooded with thousands of appeals.

For the first time in decades, elected leaders will have to take responsibility for Philadelphia's property taxes instead of hiding behind the BRT.

Year after year, often at the urging of political leaders, the BRT quietly raised assessments slightly, with little regard to how much properties were really worth. That brought in more revenue, without City Council having to raise the tax rate. But the system became increasingly unfair.

Board member Alan K. Silberstein now says the BRT members were chumps to play along. "Let them do their job, and maybe the burden will then shift where it belongs," Silberstein said of Council, during a BRT meeting. "They wanted us to be the bad guys.

"And we foolishly went along. That's the real problem."

Painful or not, the city has little choice but to clean up this mess now.

Allegheny County, which includes Pittsburgh, is an example of what happens when politicians try to delay the inevitable.

The county, with about as many properties as Philadelphia, has been struggling with its tax assessments since 1997, when a Common Pleas Court judge ruled they were fundamentally unfair.

The county hired a private appraisal firm at a cost of $24 million, but a flood of 90,000 appeals followed. There were more lawsuits, arguing that the system still was tilted against the poor.

County politicians fought back, but the state Supreme Court, in a decision in April, said the county needed to try again: The disparities were hurting lower-end neighborhoods, the court decided.

Allegheny County is now likely to go through another reassessment in 2012.

Legal experts say that if Philadelphia doesn't develop a fairer tax system, it is certain to be dragged into the courts and will lose.

At the BRT, Negrin said he would work to understand why some blocks have been targeted for hikes while others were left alone.

He said, though, that he believed the root of the BRT's inconsistency had been not a lack of ability, but a failure of leadership. He said the agency had no performance standards for assessors and no program to test their results for accuracy.

His ultimate goal is for taxpayers to feel confident that, tax hike or no, they've been treated fairly.

Given the BRT's legacy of confusion and ineptitude, that won't be an easy sell.

After an appeal, the BRT trimmed Sladek's proposed increase by half, to 17 percent. But he still believes he's been wronged by the BRT and is considering a lawsuit.

"They think they're going to appease me or appease us by giving us minimal wins in their appeal hearings," he said.

Told about the "reverse lottery" description, Sladek snorted. "I don't feel like I was a winner," he said.