A tax abatement — an exemption from paying taxes on a property for a given number of years — seems like a pretty terrific perk. Who wouldn’t want an abatement? But the notion gets complex in neighborhoods “in transition” — places where property taxes are going up for longtime residents and new construction for new residents comes with an abatement in place.
The abatements also complicate the school funding picture, as they reduce the amount of money that goes to the District.
Warning: What you are about to see is real.
FRIDAY IS THE FINAL DEADLINE FOR THE HOMESTEAD EXEMPTION APPLICATION.
If you don’t know what we’re talking about, allow us to channel the City of Philadelphia for just a moment (including its awkward capitalizations):
What is the Homestead Exemption?
The Homestead Exemption offers Real Estate Tax savings to all Philadelphia homeowners by reducing the taxable portion of their property assessment by $30,000, starting in Tax Year 2014.
Should residents still have questions about the changes to their property taxes, the City will try to clarify matters during the course of two Telephone Town Hall meetings hosted by city officials. This is a great opportunity to take the mayor at his word:
“Our Administration has been working diligently to ensure that every citizen understands the changes at hand and participates in the relief measures available to them, especially the Homestead Exemption. These Telephone Town Halls, like the information sessions earlier this year, are critical to creating a dialogue and keeping the public engaged.”
True, the numbers are still execrable: As of April 2013, the city is owed $522 million in delinquent property taxes–which far exceeds the $50 million price tag the School District requires. The notion of reclaiming such delinquencies is depressingly fantastical, but there is good news. As Patrick Kerkstra writes:
For the first time since Mayor Nutter took office in 2008, the rate of growth on the delinquency debt slowed sharply. The city also has made notable gains in reducing the total number of delinquent accounts, from 102,787 in April of last year to 97,310 in April 2013.
We especially like the word “sharply” there. Keep it goin’.
We haven’t spoken about AVI in a while, which seemed to be for the best because the mere mention of the acronym was enough to spur hysteria. For a time, it had people running in the streets, though the mayor said it had to be done because–among other reasons–the district needed the money to save our schools.
So it was done. Like zombies becoming human again, the hysterical people returned to sanity and went inside their reassessed homes and shut it. The schools crumbled anyway because–and I don’t mean to discredit AVI, which I believe in–the School District needs so much more than the reassessments could promise.
The choices, realistically, were current City Controller Alan Butkovitz and challenger Brett Mandel. They had significant differences of opinion about many things, but they both drew especially stark lines in the sand regarding the Actual Value Initiative (AVI), the city’s property reassessment program meant to correct years of preposterously incorrect property values.
Butkovitz was extremely critical of the plan, and recently paid an outside consultant almost $30,000 to assess the assessments. That consultant found that the process was carried out with good intentions but ultimately ineffective. Butkovitz made great hay out of this result prior to the election, which made some in the media suspicious of his motivations. After all, that almost $30,000 was paid for by the taxpayers.
A new Pew study shows that residences will bear more of a property tax burden than businesses when the Actual Value Initiative, the city’s new property assessment program, is implemented. But before you go crying about The Man and occupying Dilworth Plaza, here’s something to remember: AVI is meant to correct past mistakes and those mistakes overwhelmingly pertained to residential properties.
On Wednesday, City Controller Alan Butkovitz’s office released a study that concluded “the actual value initiative (AVI) did not improve accuracy, uniformity and fairness.” The full study (a real page-turner), which cost the taxpayers $27,000 (according to Philly.com), was done by Carnegie-Mellon Economics Professor Robert Strauss. It is 47 pages long and has lots of colored graphs and charts.