https://vimeo.com/65415914]
Philadelphia’s Office of Property Assessment has implanted a new property tax reform effort, the Actual Value Initiative. Under this reform, many are paying more in property taxes as the values of most homes have increased drastically, while some areas have seen their bills decrease. Particularly in Powelton Village, there is an interesting dynamic of homeowners ranging from longtime property owners to a younger generation just buying property in the area.
Although the reassessments have left many Philadelphians with an increased financial burden, this reform is aimed to aid city revenue. Mayor Michael Nutter has repeatedly pushed for property tax reform to replace the city’s broken system, even bickering over the issue with City Council members.
In Powelton, there are about 5,730 properties with an average market value of $28,036 and average cost of $877 in property taxes. Under the property tax reform and reassessment of houses, the average property value is expected to rise to $119,073 and $1,488 in taxes in 2014. This results in a 70 percent increase in property tax rates in one year under the city’s new assessment process as many homeowners are struggling to pay these rates.
Gloria Genovese is a newer property owner in Powelton who has already seen an increase in the value of her home and taxes.
“Since I became a homeowner in 2011, I expected my taxes to go up every year; I knew not to expect any type of tax break,” said Genovese. ”However, I was not prepared for just how much they would rise this year and it has become too much.”
Genovese is also concerned about the fairness of the assessment within the neighborhood and highly doubts the true market value of her property. Although it is understood this is more of an estimate than an actual evaluation, Genovese said she believes the city could alter the process to make for a fairer assessment.
“If my house was put on the market right now, I doubt it would sell for as much as it was assessed for by the city,” said Genovese. “I want to know who is making these property decisions because they obviously are not looking at the facts and affects it has on this neighborhood.”
As the city estimated in December 2012, the preliminary total taxable market value for all properties in 2014 is $96.5 billion.
The Actual Value Initiative is not limited to its effects on homeowners, but also impacts a community institution, the businesses along Lancaster Avenue. George Stevens is the president of the Lancaster Avenue 21st Century Business Association and he said he believes there are major problems with Philadelphia’s reassessment plans in regards to small businesses.
“Because of the hikes in property taxes and unfair assessments, many small-business owners do not want to come and do business on Lancaster Avenue,” said Stevens. “Philadelphia needs to understand how small businesses help a community like Powelton Village thrive, particularly here along Lancaster Avenue.”
For example, the Farcas Art Studio at 3806 Lancaster Ave. was purchased for $38,861 in 2007, but the property will be valued at $114,000 by 2014. In just seven years, this property’s value has nearly tripled. Although this is just a minor example of the impacts this assessment has on small businesses, they are representative of what most small-business owners are facing on Lancaster Avenue and around the city.
Deb Lacava is a former Philadelphia real estate agent who worked with Mercury Real Estate Group and sold houses in various areas of the city, including Powelton Village. Lacava said she believes the city will continue to economically thrive so long as small businesses are supporting it and staying in the area.
“Philadelphia has long been a city of low taxes and this has been a key reason why people have not moved to surrounding states and suburbs,” said Lacava. “Also, with respect to small businesses, they have stayed in the city because of lower property taxes and it being cost-effective to conduct business here.”
Lacava alluded to how homeowners will react to the sudden and dramatic increase in property taxes. This will not only leave many in a financial bind, but more importantly, could make the city less appealing to people.
“A tax hike will force homeowners and businesses alike to leave Philadelphia and with it will take revenue out of the city,” Lacava said. “This will force many houses to be sold and an increase in foreclosure, which is something the city does not need.”
The property tax reforms will have a lasting impact on Powelton and the entire city. About 25 percent of homes in America are unfairly over-assessed, and pay an average of $1,346 too much in property taxes every year, according to The Federal and State Tax Information Portal.
For more information about Philadelphia’s property tax assessments, click here to visit their website.
Be the first to comment