The Inquirer's Laura McCrystal quietly broke a few big news items this week in her update on assessments that are worth flagging, with the imminent arrival of the long-awaited Computer-Assisted Mass Appraisal (CAMA) software in February, and the impending announcement of a new Office of Property Assessment head to replace Michael Piper later this year.
McCrystal reports that the Kenney administration will be skipping a year of real estate reassessments next year, leaving the 2020 values to stand in for 2021 as, they say, they continue to pursue more accurate valuation methods. She notes that it will be the first year since 2014 that the City hasn't updated their recorded values for at least some class of property. Property taxes could still go up if the Mayor pursues a tax increase in the forthcoming budget, but if not, property tax bills should stay the same.
OPA had planned to use a so-called trending methodology to complete a 2021 assessment, which would have been completed by the end of March. That method, which was also used to assign 2020 values, involves studying trends in the real estate market and applying them to geographic zones in the city.
The administration announced in January, in response to City Council’s audit, that it would use trending methodology for 2021 because it would free up assessors’ time to work on other needed improvements at OPA. Dubow said the trending work for 2021 had been about 90% complete when OPA determined that it would not meet industry standards for accuracy.
“If you build on it by doing [trending] multiple years then you run the risk of having the kind of anomalies we saw," he said.
Without a revaluation to complete, OPA will instead spend more time implementing a long-delayed technology project known as Computer Assisted Mass Appraisal (CAMA). It is on track to go live in February, Dubow said. That will allow the agency to complete mass appraisals for 2022 instead of using the trending method.
Rob Dubow, the city Finance Director, also says later in the piece that he expects to hire a replacement for Michael Piper as the head of OPA within the first half of 2020. Years of increasing property taxes in wealthy and gentrifying neighborhoods just outside, resulting from the City marking the real estate assessments to current market values every year, have made assessments a thorny political issue. Piper was drummed out recently under pressure over OPA's continued inability to produce accurate enough assessments, or at least that's how it's been framed.
The truth is that Piper and OPA have come under fire just as much for what they've done right as much as what they've done wrong. What some people are really upset about in all this is accurate assessments, not inaccurate assessments, as the neighborhoods ringing Center City and University City, along with some other places, really have seen big annual increases in property values, and the tax bills there are increasing commensurately. There's an important side issue about OPA's methodology that we've written about a lot in this space concerning how OPA is assessing land values and building values, which has implications for the property tax abatement and land use economics more broadly, but OPA has generally been in the right ballpark, and some portion of the blowback they're getting about alleged inaccuracies is really just regular old anti-tax politics.
This is worth recognizing because it doesn't necessarily follow that a more brutally accurate assessment system that gets the values right on the nose every year will be more politically popular—more likely the opposite will be true!
While the last two administrations have talked a big game about how accurate assessments are a priority, almost everything both Mayors' OPAs have done since 2013 makes more sense if you assume their highest priority has been shielding homeowners in gentrifying areas from large year-to-year jumps in their property tax bills. The most direct example is the big package of bills like LOOP and the Homestead Exemption they helped pass with Council and the state legislature right as the Actual Value Initiative was originally being implemented, but the more indirect example is how the assessment methodology—shrouded in mystery—has been observed by the Controller's office and others to inexplicably lower the land value per square foot of older properties compared to newer properties even on the same block.
Once the Computer-Assisted Mass Appraisal system is in place, we should start getting substantially more accurate readings on real estate values from year to year, but there's still an open question about whether Michael Piper's replacement, under the direction of Mayor Kenney and his staff, will continue on with Piper's weird land valuation methods that continue to reproduce unfair and inaccurate valuations of older properties, surface parking lots, and under-used properties.
While the areas with fast-appreciating home values are of great media interest because that's where all the heat is, the reality in Philadelphia is still that most areas of the city are more at risk of tipping into decline, and a policy of focusing most of the efforts on holding down property taxes in gentrifying and wealthy areas means we're going to be overcharging people for property taxes in the majority of Philadelphia neighborhoods that are not seeing hot real estate markets.
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