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Philadephia Raises Property Taxes, Postpones AVI

by Tom Branham, Washington DC, August 2012

The Philadelphia City Council is raising property taxes and delaying a change from the current Common Level Ratio system to an Actual Value Initiative. The AVI assesses property at 100% of value, rather than the current common level ratio of 25.2%


More Tax Hikes


The city council passed a $3.6 billion budget that raises property taxes 3.6%. In addition, the Use and Occupancy Tax on businesses will go up roughly 19%.


Passage of the council's property tax bill comes on top of two years' worth of previous tax hikes that were billed as temporary when they passed. The combined tax hikes leave property owners with a bill 18% higher than their 2010 taxes.


AVI Delay Upheld


Gov. Tom Corbett signed Senate Bill 1301 into law on July 5. The legislation supports the city's right to put off moving to the AVI system for one fiscal year.


The city council felt it could not accurately set tax rates without current numbers on assessed values. Those numbers won't be available until after the citywide reassessment is complete.


Higher Values on the Horizon


Through the years, Philadelphia has reassessed portions of the city. However, it has been decades since a major citywide reassessment has been performed so the new values may come as quite a shock to many property owners.


According to preliminary estimates, assessments may double the values for commercial properties and drive residential values up 350% or more. Although reassessments are generally meant to be revenue neutral, a 10% increase in the total tax base is allowed.


Don't Miss Appeal Opportunities!


The trend toward rising property taxes accentuates the need for assertive appeals. Even though reassessed values won't be used to calculate taxes until 2013, appeals must be filed this fall.


The assessor's office plans to release the new values around September 17th. Notices will only be mailed to approximately 20,000 of the 570,000 parcels in Philadelphia where there has been a substantial change such as renovations, permit work or demolition. Taxpayers will have 30 days from the date of the notice to file formal and informal appeals for 2013.


Notices will be sent to owners of all 570,000 properties in the city around February 14, 2013 informing them of their assessment at 100% of market value.