Much Ado About No Values
In my March 26th blog post, I wrote that although the City has confirmed that it is conducting a citywide property tax reassessment for tax year 2025, I had heard that the City of Philadelphia’s Office of Property Assessment (“OPA”) would not release the values from that reassessment on time. Pursuant to the applicable statue, the OPA should have certified the 2025 values on March 31, 2024. See, 53 Pa. C.S. § 8565(c) (“the assessment office shall certify assessed values by March 31 of the preceding year”). For all practical purposes, that means the 2025 values should now be publicly available on the OPA website. It’s now April 15th, and, sure enough, the City has not released its 2025 values.
What does this mean for you?
First, if you have an appeal pending, you may want to think about either (i) asking, if a settlement is on the table, that your 2025 value be included, or (ii) if that is not possible, requesting a continuance in whatever forum your appeal is pending. Why would you request a continuance? Real estate tax assessment appeals are subject to what is commonly known as the “automatic incorporation provision” or the “automatic appeal provision.” See, 72 P.S. § 5020-518.1(b); Chartiers Valley Sch. Dist. v. Bd. of Prop. Assessment, Appeals & Rev., 622 A.2d 420, 425 (Pa. Commw. Ct. 1993) (“the palpable intent of the automatic appeal provisions is twofold—the elimination of duplicative appeals and the consolidation of subsequent tax assessments with those originally appealed for trial purposes”). This provision requires that any values certified during the pendency of a real estate tax assessment appeal be rolled into the appeal automatically, when the taxing authority certifies those values. Id.; Kmart Corp. v. Washington Cnty. Bd. of Assessment Appeals, 950 A. 2d 1089 (Pa. Commw. Ct. 2008). When the automatic incorporation provision puts a newly-certified year’s value before the factfinder, the factfinder cannot avoid determining that year’s value. Chartiers Valley, 622 A.2d at 428 (“the court must determine all the issues relevant to all the assessment years before it at one trial”).
Now, when things are running on schedule, that means that any taxpayer whose tax assessment appeal comes up for a hearing before the Philadelphia Board of Revision of Taxes (“BRT”) or a Philadelphia Court of Common Pleas (“CCP”) judge after March 31st, has the following year’s value rolled into their appeal. Why does this matter? Primarily, it ensures that, if your property value is reduced as the result of your appeal, that reduction will show up in next year’s tax bill without you having to ask for either a credit or a refund.
For example, if my tax year 2023 appeal had been lodged timely, around October 2, 2022, and it came up for a BRT hearing in January of 2024 (an entirely realistic timeframe), which I then decide to appeal because I think the value wasn’t reduced enough, then at my April/May 2024 hearing before the CCP, all years then-certified, which would include tax years 2023, 2024 and 2025, would be included by virtue of the automatic incorporation provision. However, this year, the OPA hasn’t yet released its 2025 values. So…what does that mean for me, as a practical matter?
Well, say the hearing results in a reduction to my value. If the OPA doesn’t extend this valuation to 2025 (and, in my experience, it generally does not do so these days unless the reduced value is expressly included in a settlement or BRT/CCP decision), then I would have to appeal my 2025 value separately, notwithstanding that I just went through almost two years of the appeal process. And, if I didn’t lodge a new appeal, or failed to file it on time, that means that I might have to pay real estate taxes for 2025 based on the non-reduced value. That might be the value I originally appealed, from 2023, or it could be something even higher, as the result of the 2025 reassessment.
Even if I did appeal, that will almost certainly guarantee that I go through another year of property value litigation. I say another year, because appeals submitted to the BRT just recently, in March/April, are being heard as late as December of this year. Because the OPA didn’t conduct a citywide reassessment for tax year 2024, that 8–9-month timeline is without the additional volume of appeals that always result from a reassessment. Accordingly, if you wait to lodge your 2025 market value appeal until the absolute deadline, or October 7, 2024, you may not get a hearing until 2026. Perhaps more importantly, if your property is valued at over $1 million, you already got an appraisal for tax year 2023 or 2024, and you don’t get tax year 2025 included in any tax assessment appeal settlement, you—or, if you an attorney, your client—will have to spend money to obtain yet another appraisal, given the BRT’s rules. (Note that a future blog post will address how that particular rule flies in the face of existing case law). For a residential property, a new appraisal is likely to cost at least an additional $400-$500, but for a commercial property, the additional expense could be anywhere from $3,000 to $10,000, or more.
Accordingly, if you have an appeal hearing any time from now until the OPA certifies its tax year 2025 values, make sure—especially if you think a reduction is likely—that you consider taking action to ensure you don’t have to lodge another appeal immediately after you sign your settlement paperwork or get your BRT/CCP decision. That will require either convincing the City Solicitor or OPA attorney to agree to include 2025 in your settlement paperwork, or requesting that the BRT or CCP judge grant you a continuance until after the OPA is projected to release its 2025 values. When is that? Per the Philadelphia Bar Association, probably sometime in May. Keep in mind, though that in 2019, the OPA, while it was still untimely per the statute, did manage to release its values in May; however, in 2023, the OPA thought its values would be released in May, but the numbers ended up not being released until August.
That leads me to second, even if you don’t have an appeal pending, you should keep in mind that 8-9-month or longer timeline. If you don’t want to wait until you get your 2026 real estate tax bill, usually mailed out in November or December, to get a decision on your 2025 property value, then you should think about setting some kind of reminder to look for your 2025 value. That way, you can file your appeal paperwork as soon as possible, (after, of course, you evaluate individually or in consultation with an attorney whether an appeal is appropriate).
In fact, the BRT website has already published the form for tax year 2025 market value appeals. So, if you already think your value is high for 2024, you could go ahead and file your 2025 appeal right now.
Bottom line: just because the City is running late, don’t let this cause you or your client an additional expense of time or money.
As always, if you need assistance reviewing any of your properties to determine whether a 2025 appeal is warranted, or you have a portfolio of properties you don’t want to forget to check once the 2025 values come out, feel free to contact me here, or by phone or email (below)