Property owners are the winners in two court decisions regarding Philadelphia’s reassessment practices. In one case, commercial property owners may be repaid nearly $50 million in taxes because the city’s 2018 reassessment was ruled illegal. In the other case, owners of condominiums will likely benefit because the city used an improper method to value their land.
Senior Common Pleas Judge Gene Cohen ruled the city and school district must repay taxes plus interest to commercial property owners because their properties were revalued in 2018, while residential assessments were left largely intact.
After presiding over an eight-day trial in June, Cohen agreed with the commercial property owners that the 2018 reassessment, which resulted in about $118 million in additional revenue for the city and school district amounted to illegal targeting of a group of properties. The city violated the uniformity clause in the state constitution, which requires equal treatment for all types of properties, Cohen said.
The ruling said any appeals filed by commercial property owners at the Board of Revision of Taxes are moot because property values will be reset to what they were in 2017.
Judge Idee Fox ruled that a method the city used to value land, upon which condominium towers were developed, was wrong. The result will be a dramatic decrease in the tax assessment on the land of condo owners throughout Philadelphia.
The city was assessing condos as if each unit in a single building had different land values, even though each condo owner controls an equal fraction of the underlying ground upon which the building was constructed. In both cases, city officials say they are reviewing the court rulings and considering options on whether to appeal.
In the event of an appeal, analysts believe the city will likely request a stay so tax refunds will not be paid while the ruling is contested. Furthermore, school districts may file third-party appeals to challenge their loss of tax revenue.