Audit Claims City Botched Latest Property Tax Assessments

City Council president Darrell Clarke is calling for major reform of the city’s Office of Property Assessment. | Photo by Jeff Fusco

City Council is calling for a complete overhaul of leadership in the city agency tasked with overseeing property tax assessments.

The push comes as City Council released on Thursday an audit of the Office of Property Assessment’s 2019 figures, which sparked an uproar among residents when they were released last April.

Overall, the assessments for 2019 increased the median market value of single-family homes by 10.5 percent (from $112,800 to $124,600) and the median tax bill (excluding the homestead exemption) by $165, according to city data analysis by the Inquirer and Daily News. But they also threatened much higher spikes for some individual blocks and homeowners.

The just-released audit of the figures, which was commissioned by City Council and conducted by J.F. Ryan Associates — a property appraisal and management consulting firm based in Newbury, Massachusetts — can be read in its entirety here. In summary, it found that:

• The agency’s property assessments were not uniform, resulting in “inaccurate and unfair” property tax bills.
• The assessments on one- to four-family homes and commercial and industrial parcels “do not meet industry standards.” The only category that does meet industry standards is condominiums.
• The OPA fails to meet 11 of its 18 responsibilities as determined by the City Code. This includes listing on its website how the city calculates individual assessments.
• Properties valued under $100,000 are overassessed, and those property owners are “paying more than their fair share in property taxes.”
• As of mid-September 2018, the OPA was lagging on completing requests filed by property owners who sought clarification or correction of their assessments in May 2018. The audit praised the actual review process, however.

The findings spurred conflict with Mayor Jim Kenney’s administration, which oversees the OPA. City spokesperson Mike Dunn said the administration welcomes the review but has “serious concerns” with it, including that its conclusions are based on “faulty assumptions” regarding sales data.

He also said that “it would be inappropriate, and frankly unfair, for the OPA team to become political scapegoats in light of the progress they have made” and said that the OPA has hired its own consultant to propose changes. He added that the OPA’s current chief assessment officer, Michael Piper, was approved by City Council in 2014. 

City Council and J.F. Ryan Associates said that under the city’s Actual Value Initiative, which is the property assessment system which Philadelphia adopted in 2013, many properties are being “either unfairly overassessed or underassessed, particularly in gentrifying neighborhoods.”

Under AVI, the city assess properties at 100 percent of market value. Philly.com reports that when the system was implemented, city officials said assessments would be updated every year — but last year was the first time all residential properties were assessed since 2014.

“Council has been sounding alarms about OPA and the City’s inability to collect and maintain accurate data for several consecutive budget cycles,” City Council President Darrell Clarke said in a statement. “The failure to ensure property data are accurate isn’t just about fairness — it’s about ensuring stability in our neighborhoods and earning the trust of residents and business owners.”

Clarke recommended that the city take following actions on Thursday:

• Recruit new leadership for OPA, including Chief Assessment Officer and at least three Deputy Assessors, with the assistance of a nationally recognized executive search firm

• Contract with a mass appraisal firm or firms to assist with increasing the accuracy of annual assessments, as well as staff training

• Contract with a broad appraisal industry experience firm to assist with procuring mass appraisal services and monitoring the performance of the successful bidder or bidders

• Aggressively identify and correct potential assessment outliers between now and the March 31, 2019, certification of values for next year

Clarke said he looks “forward to working with my colleagues on Council and with the Kenney Administration to ensure that OPA becomes the efficient and effective office we know it can be.”