Philly Mayor’s Reassessment Update
Philadelphia Mayor Cherelle Parker gave a press conference today on the 2025 reassessment. From what was said, my biggest takeaway about the reassessment is that residential property owners’ taxes are expected to increase, on average, 19%—though some will see “significant” increases. What was left unsaid was perhaps more revealing.
Today, August 5, 2024, Mayor Parker gave a press conference to “discuss reassessment of properties & expanded tax relief programs.” I attended this press conference virtually. Mayor Parker first asserted that she kept her promise that there would be “no new taxes,” because while there was a revaluation that will result in increased tax bills for many, the tax rate didn’t actually increase. While that is, technically, true, I am not sure those facing tax increases will be particularly impressed. Especially because Rob Dubow, the City’s Director of Finance, noted that twenty thousand (20,000) residential property owners will see decreases. While that may seem good as a single piece of datum, put in context, it means that the other three hundred and twenty-five thousand (325,000) residential property owners’ tax bills will stay the same or be subject to an increase. Keep in mind that the overall increase to property tax assessments in 2023 was around 30%, but many taxpayers saw their tax bills double, notwithstanding the average. Mayor Parker herself was careful not to speak in terms of percentage increases, stating that “average residential property tax bills will go up next year by about $330 for homeowners signed up for the homestead exemption.” City Council increased the homestead exemption from $80,000 to $100,000 at the end of the budget process this year. That additional $20,000 of exempt value comes out to around $280 in tax revenue under the current tax rate. That means that that average dollar value increase will be about $610 per residential property, absent the homestead exemption. And, again, that is only an average; if 20,000 residential properties see no increase, and many stay neutral, others will see, as Mr. Dubow observed later in the press conference “significant” increases, with the overall average being 19%.
Second, Mayor Parker stressed that the reassessment is required by law and the City does it to ensure its property assessments are “fair, equitable, and accurate,” not to raise revenue. Of course, almost in the same breath, she touted the additional $240 million the reassessment and millage adjustment (allocating an additional percentage of every tax bill to the Philadelphia School District) will raise for Philadelphia schools. This was echoed by Philadelphia School Superintendent Dr. Tony Watlington, Sr., Ed.D., who was certainly not involved in the reassessment or property tax relief programs, the purported purpose of the press conference. James Aros, Jr., the head of the Office of Property Assessment (OPA), which actually conducted the tax year 2025 citywide, property tax reassessment, spoke for less than 4 minutes, and while he noted that the deadline to appeal property tax assessments is October 7, 2024, he did not go into much detail on anything in particular. In saying this, I want to clarify that I do not think this is in any way his fault or a reflection on the work he does for the OPA. Say what you will, and I know I myself have been critical of some of the OPA’s processes, but there are many people at the OPA, including, I believe, Mr. Aros, who work very hard to complete the tasks given to them by the City’s administration, both the Mayor’s office and by the Finance Director (who also spoke much longer than Mr. Aros at this conference purportedly about the 2025 reassessment). However, the OPA is given deadlines unheard of in the rest of the Commonwealth.
That brings me back to what Mayor Parker said about this reassessment being required by law; that is, at the very least, extremely misleading. There is nothing in the statutes governing Philadelphia’s property tax assessments that requires reassessments every year, every other year, or even every 5 years. What is stated is that OPA “shall certify market values at actual market value” by a certain time every year. 53 Pa. C.S. § 8565(b)(2). That particular statute was enacted to effect the City’s actual value initiative (AVI), together with the statutory provisions establishing the homestead exemption, which Mayor Parker quite proudly touted as part of her achievements in the General Assembly. That term, “actual market value,” is not defined in the subchapter in which the provision is found. It is, however, found throughout the case law established over the past century and change of case law on and about property tax assessment in this Commonwealth, and it can refer to the market value of the current year, or a “base year,” which is the year of the last reassessment. I have seen nothing in the statutes that would require Philadelphia to conduct a property tax reassessment every year. It certainly isn’t the practice in the rest of the Commonwealth. In fact, it seems common sensical that doing so promotes uncertainty and instability in a way that negatively impacts residential and commercial property owners.
I would also observe that, to the extent the Mayor interprets the AVI statutory provisions as requiring yearly reassessments (which is, as I said, unnecessary), those are the same provisions she claimed credit for in creating the homestead exemption. Accordingly, it could be changed. What could also be changed is the fact that Philadelphia is the only county in which there is no “anti-windfall” provision that prevents the administration from unlimited revenue increases from reassessments, which I previously wrote about here. Such unlimited increases only incentivize the administration to undertake more frequent reassessments.
This leads me to my third point, which is that the negative impacts of yearly reassessments, or even reassessments every other year, are largely borne by commercial property owners and renters, the latter of which likely already struggle to afford homeownership these days. For example, why would New York City landlords, slumlords, or absentee landlords care about trying to appeal a property tax assessment when they can just raise rents? Several helpful programs were discussed at the press conference, including the: (1) basic systems home repair for owner-occupied homes program; (2) adaptive modification program; (3) tangled title program; (4) restore/repair/renew program; (5) neighborhood infrastructure driveway repair program; and (6) built to last program. These are fantastic programs, and I’m happy they exist. I am also pleased to hear that the Mayor plans, as she also said today, to increase marketing for these programs, to make sure Philadelphians who qualify can take advantage of them; that is the caveat, however—not all homeowners will qualify. These programs all come with income guidelines that mean most middle class property owners won’t be able to take advantage of them. And they certainly won’t be available to small business owners.
Fourth, there were a few glaring omissions in today’s press conference. Nobody mentioned that two programs that can help property owners of any income are the 1o-year tax abatement programs for residential and commercial (a) renovations and (b) new construction. In my experience, many residential property owners do not realize that it’s not just big developers that can apply for tax abatements, it’s any property owner, no income restrictions. Similarly, nobody mentioned if homeowners who appeal timely to the BRT will be allowed to make “safehaven” payments equal to their prior tax bills while their appeal is pending. Interestingly, in the press release issued after the conference today, several “important dates” are identified, none of which is the assessment appeal deadline of October 7th (which, this year, is also the first-level review deadline). On that note, I would be remiss if I did not warn that the City’s first-level review process is not part of the statutorily authorized assessment appeal process; in fact, if taxpayers file a first-level review (FLR”) but fail to file a BRT appeal, they will forfeit the appeal rights to which they are entitled by statute. Given that the City is explicitly prohibited under the PA Constitution and Home Rule Act from deviating from assessment law statutes, I believe the FLR program, as currently implemented, is not lawful. At the very least, it is confusing to taxpayers, many of whom (including some of my clients) conflate it with the official BRT appeal process, to their detriment. Interestingly, that post-press conference press release also advises that the FLR form will be provided to taxpayer with their Notices of Change of Assessment that the City will begin to mail out this week, though the actual BRT appeal form will not be circulated. From these omissions, a jaded individual might think the City is trying to discourage taxpayers from filing assessment appeals and taking advantage of income-unlimited tax assessment programs.
Finally, while nobody at the press conference specified an exact date that the new assessed values will be released, the press release I linked to above provided a release date of this Wednesday, August 7, 2024. We shall see.
I will be following up in more detail on some of the issues I identified here in the coming months. And, as always, you can always contact me with any useful anecdotes or questions about Philadelphia real estate tax assessments.