Commercial property owners could be in for some sticker
shock when they receive the city’s new property assessments in mid-April.
The taxable portion of the assessed value of
Philadelphia’s 60,000 commercial, industrial, and hotel buildings, as well as
other nonresidential properties, went up by 50 percent -- from $30.23 billion
to $45.3 billion -- with the reassessments, an increase that will contribute to
an expected $118 million in new tax revenue to be split between the city and
School District.
The city has no plans to immediately spend its portion.
Officials say the money will be reserved for use if funding cuts threatened by
the Trump administration come to fruition.
This is the first full reassessment of commercial
properties since the controversial Actual Value Initiative (AVI) in 2014, which
uses market values as the assessment standard.
“The goal was not only to ensure the assessed values more
accurately reflect sales and market forces, but to also to reduce value
inequities among comparable properties,” Michael Piper, chief assessment
officer, said.
The market value of all 580,000 city properties --
residential and commercial -- grew by $17 billion this year to $153 billion,
with the biggest increases coming from hotel, apartment, and commercial
buildings.
Of that total market value, $111.3 billion is taxable
property, a 15 percent increase from last year, according to city estimates.
The total property-tax revenue for the city is expected to be $653 million.
Nearly $800 million will go to the School District.
The Chamber of Commerce for Greater Philadelphia, whose
members are likely to be impacted by the city's reassessments, declined to
comment.
The new assessments, which were finished last week, are
not yet reflected in the city’s five-year plan. City Finance Director Rob Dubow
estimates that there will be a 20 percent decrease in the total taxable
assessed value due to appeals. Dubow is also counting on a 93 percent
collection rate. In all, the new assessments are expected to pump $54 million
in new tax revenue into the city’s coffers.
“Our recommendation is going to be, that money is
reserved as a contingency against what may or may not happen with the federal
budget,” Dubow said.
Philadelphia has the advantage of being exempt from a
state law that requires property reassessments to be revenue-neutral.
The School District is estimated to receive $65 million
in new tax revenue. The additional revenue has the potential to close by one-third
a projected $900 million budget deficit in the district’s five-year plan,
announced last week.
"It is good news for the schoolchildren of
Philadelphia whenever we can identify new, recurring, and reliable revenues,”
Uri Monson, the district’s chief financial officer, said in a statement.
The district learned of the additional revenue Thursday.
Monson said that once the district is fully briefed by
the city, the district’s five-year plan will be updated.
City Controller Alan Butkovitz said Friday that he had
not yet been briefed on the new assessments and therefore declined to comment
until he has the new data.
Similar to last year’s residential property reassessment,
which increased values by $2.2 billion and pumped an extra $14 million into the
city’s general fund, commercial properties also saw an increase in the land
portion of taxable assessments.
Piper, the chief assessment officer, said that as a
category, hotels saw the highest increase in value, largely because of the
increasing number of hotels going up in the city.
Individual data on the new property assessments were
expected to go live on property.phila.gov late Friday. The city will mail
notices on April 14 to property owners who had a change in assessment.
Anthony Campisi, spokesman for a coalition fighting the
city's sweetened-beverage tax, said the city should fix the its property-tax
system "before imposing regressive new taxes to take money out of the
pockets of working families."
"The city could fund many of the mayor’s new
initiatives, including expanded pre-K, with reliable revenue -- which will
increase when the city reassesses residential properties," he said.
City spokesman Mike Dunn said the $54 million in new tax
revenue would only cover about half of the programs the soda tax is expected to
fund. "We said from the start that
the new initiatives -- quality pre-K, community schools, and rebuilding rec
centers, parks and libraries -- need new funding sources, and that remains the
case today," Dunn said.
The city reassessed the land value of all residential
properties last year and is planning annual reassessments of all 580,000
properties starting next year.
Councilman Allan Domb, a real estate mogul whose campaign
platform included fixing the city’s assessment system, said he knows some
property owners will be pained by the increases. But he said many of those
owners have for years received a “tremendous advantage” due to their properties
being underassessed.
“I know one example where someone five years ago paid $40
million to the city for a piece of land. And we had it assessed at $4.5
million,” he said. “I realize it may be sticker shock, but for five years we
didn't get the right money.”
Domb stressed that the new revenue should be placed in
reserves, something he said he hopes will lead to the city’s bond ratings being
raised, ultimately lowering the city’s cost of borrowing.
“City Council and the mayor can’t spend this money,” he
said.
Source: Philly.com
No comments:
Post a Comment