You may have heard talk of Mayor Nutter’s new Actual Value Initiative (AVI), since it pretty much has every Philadelphia homeowner either anxious, or really annoyed. It’s an admittedly complex issue, but here’s what you need to know about it.
Nutter’s proposed policy would reappraise all real estate in Philadelphia to the current-market value, generating an additional $94 million in tax revenue to bolster funding for our FUBAR school district. This would mean higher property taxes for residential homeowners- an increase that would likely trickle down to renters.
As The Inquirer points out, the greater the discrepancy between your home’s current-market value and its assessed market value (the current value used for tax purposes only), the higher your tax increase will be. Although Philadelphia properties are generally undervalued, commercial and industrial properties are appraised closer to their actual worth. So, the AVI could actually drive down taxes on industrial properties, and the vast majority of that $94 million windfall would come from residential home owners.
Alarmingly, current estimates project that approximately $200-300 million in total tax revenue would be transferred from commercial to residential property owners. Council Bill Green is not happy with that figure. So he’s proposed to transfer the tax burden from residential property owners to commercial property owners by increasing the Use and Occupancy Tax (which only affects commercial property owners) by $94 million.
Adding to this mess is City Council’s looming deadline to submit a budget and tax rate by July 1st, even though the new property reassessments AVI demands will not be completed by then.
During a recent City Council meeting, Councilman Mark Squilla proposed a one-year delay in the implementation of AVI. Although he considers the initiative essential, he does not approve of the way in which the Nutter Administration handled the matter. The Tax Fairness Coalition also supports a one-year delay, as it would allow new property reassessments to inform the city’s future policies.
Photos by PWBaker via Flickr