AVI: Employing the Fine Art of Understatement

Philadelphia’s AVI debacle is beginning to garner national attention. Last week the Wall Street Journal ran a story headlined “City’s Tax Plan Vexes Homeowners”. The article noted, as others have, that the contentious impact of the overhaul is due in part to Philadelphia’s historically haphazard property-taxation practices. 

Maybe we’re splitting hairs, but the Journal didn’t get it exactly right. It’s not the historically haphazard property-taxing practices that are causing the contentious impact. Hell no, plenty of people were fine with haphazard–as long as they were being underassessed all these years.

The Journal reported that the last reassessment of any scope in Philadelphia was in 2004, and it didn’t hit every parcel, leaving the valuation of many properties significantly out of date. That’s an understatement. According to a report by the Pew Charitable Trusts, many properties have not been reassessed since the 1980s.

So if your property is among the many that haven’t been reassessed since, let’s say 1989, and it has steadily increased in value, of course you’re going to be upset that the city is expecting you to pay taxes based on what it’s actually worth in 2013. And you’re not alone. A lot of homeowners, without any malice, have been getting away with murder all these years, and now that the city is catching up with them, they’re naturally displeased. But that doesn’t mean they’re entitled to be subsidized by their neighbors forever.

Even if the new assessments were 100 percent accurate, there would still be a lot of contentiousness. People are averse to change, especially when that change may mean having to pay more in taxes.

Earlier this month Philly Taxgirl Kelly Philips Erb wrote in Forbes that City Controller Alan Butkowitz suggests the error rate of the assessments is as high as 30 percent. But the Mayor’s office claims that the number of inaccurate assessments is closer to 14 percent.

Closer to 14 percent? If the assessments are actually 21 percent, that would be closer to 14 percent than Butkowitz’s 30 percent, wouldn’t it?

You know what? Let’s throw them a bone and say that the error rate is only 10 percent. With almost 600,000 properties in the city, that would mean about 60,000 Philadelphia homeowners just got bad assessments in the mail.

Sure, not all 60,000 are going to appeal. Fifteen-thousand to 20,000 are probably breathing a sigh of relief because they know that they got underassessed again. On the other hand, you can bet the house (or something) that the city is already overwhelmed with appeals, and it’s going to get a lot worse before it gets better.

Councilman Kenyatta Johnson nailed it last week when he said, “AVI suffers from a legitimacy problem.” Then again, Johnson is also guilty of understatement. No, make that gross understatement. — Gerry Senker

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