Annual property-tax bills in Philadelphia are determined by a relatively simple calculation: the tax rate (9.08 percent in 2012, 8.26 percent in 2011) times the assessed value of the property equals the amount due.
But there is a pretty big kink in that formula: The city’s assessments, which have been set by the Board of Revision of Taxes, are widely acknowledged to be inaccurate, inequitable, and unfair.
That decades-old failing has created a situation in which many properties — mostly in low-income neighborhoods — are over-assessed and other property owners pay less than they would under a fair system.
Which raises an important question: Is it proper to auction off property for nonpayment of taxes when those taxes are not determined accurately or fairly?
No, contends a lawsuit filed in January by Brett Mandel and Kenneth L. Metzner, two prominent critics of the city’s assessment system. Their suit, which seeks a court order to compel the city to come up with accurate property assessments, also calls for a prohibition on sheriff’s sales of tax-delinquent parcels until all owners of tax-delinquent properties are notified about what percentage, if any, of their delinquency is attributable to an inaccurate and unfair assessment.
“The city has told the world the assessment system stinks,” Metzner said. “We’re saying, ‘We agree with you, so before you make people homeless and take their property, why don’t you figure out what part of the delinquency is due to bad assessments?'”
The city rejects that argument. In court filings, the city contends property owners are responsible for appealing inaccurate assessments, and it warns that preventing the city from enforcing liens on over-assessed property owners would “wreak havoc with the city’s budget and could ravage the School District’s education efforts.” (The plaintiffs' response is here)
But even advocates of aggressive tax foreclosures said it was essential that the city get its assessments in order if there is to be any public faith in sales of tax-delinquent properties.
“Any fair tax-foreclosure system has to start with the premise that the system of taxation itself is fair,” said Daniel Kildee, a tax-delinquency expert and president and chief executive officer of the nonprofit Center for Community Progress.
Last year, city voters approved establishing the Office of Property Assessment, which is taking over responsibility for assessments from the BRT. The office is working to overhaul the assessment system and plans to eventually issue new assessments for every property in the city. But city officials say those figures will not be available until 2012 at the earliest.