Property Condition Codes (2)
This is a continuation of my prior blog entry exploring the “condition codes” used by the City of Philadelphia’s Office of Property Assessment (OPA) to evaluate Philadelphia real property for purpose of assessing its taxable value. Last time, we explored the differences between condition codes 2 (rehab) and 3 (above average), and this article will explore the differences between 3 (above average) and 4 (average).
As you will recall, we are evaluating the condition codes as applied to a hypothetical Germantown “fixer-upper” residential property with the following characteristics: a few years ago, the former owners had pulled permits to put in a new kitchen and some new windows. However, two bathrooms are outdated, with toilets that wobble, cracked tiles, and a window that is permanently fogged up because one of the window sashes has popped out, causing deterioration of the seal between panes resulting in calcium deposits. The carpeting in your guestrooms and hallway is atrocious and bubbling, there is knob-and-tube wiring in one room of the house that is difficult to ger insured, the water heater is also at the end of its useful life, and there is no central air. However, beyond the recent kitchen renovation, there is a new water heater, a new washer and dryer, freshly refinished (and gorgeous) original wood floors in the bedroom and living room, and a fresh paint job throughout the property. Let’s add in, though, that the gas furnace is at the end of its useful life and must be replaced within the year.
As a reminder, the “Above Average” condition code (3) provides:
The improvements are well-maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well-maintained.
The improvement is in its first-cycle (sic) of replacing short-lived building components (appliances, floor coverings, HVAC, etc.) and is being well-maintained. Its estimated effective age is less than its actual age. It also may reflect a property in which the majority of short-lived building components have been replaced but not to the level of a complete renovation.
As previously noted, it is true that “[s]ome components” have been “updated or recently renovated,” in our hypothetical property, but it’s certainly not in its first cycle of replacing building components. Plus, it was originally built in the 1910s, and with the lack of central air, carpet bubbling, and knob-and-tube wiring, so can you really say that it is a true “Above Average”? Let’s take a look at the definition of an “Average” condition property.
The “Average” condition code (4) provides:
The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The dwelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems and cosmetic repairs. All major building components have been adequately maintained and are functionally adequate.
The estimated effective age may be close to or equal to its actual age. It reflects a property in which some of the short-lived building components have been replaced, and some short-lived building components are at or near the end of their physical life expectancy; however, they still function adequately. Most minor repairs have been addressed on an ongoing basis resulting in an adequately maintained property.
As you can see, this is getting closer to a proper description of the condition of our hypothetical fixer-upper. The cracked tiles, wobbly toilets, and single calcium-deposit-ridden window could probably, indeed, be classified as indicating “minimal repairs” are required, the bubbling carpet is perhaps normal wear and tear, and the property does have the new water heater and washer and dryer. However, what about the gas furnace? If it is in dire need of immediate replacement, is that "still functionally adequate”? It might make a difference if (a) you are going off of the manufacturer’s recommendation, or (b) if a PGW employee informed you that you must replace it and shut it off so that you cannot use it. And is its state properly characterized as overall being “adequately maintained”?
The foregoing are specific guidelines the OPA goes by internally, and, so, it may be helpful for you in speaking with an evaluator about your property or addressing in an appeal before the Board of Revision of Taxes. If you have an appraiser (or if you are an appraiser), this language could be helpful to identify your property’s condition according to the OPA’s standards, not by USPAP standards or just your own lay impressions, in any expert appraisal report.
Next time, we will look more at the “Below Average” (condition code 5) description.