Philly won’t reassess properties until next year, but some already worry homeowners will be ‘blindsided’

Philadelphia property owners are enjoying a two-year reprieve from reassessments — and the tax hikes that often follow.

But revaluation notices will go out again next year as another citywide reassessment is completed. So City Council members are starting to voice concern that it could again result in tax increases for hundreds of thousands of their constituents.

Mayor Jim Kenney’s administration isn’t reassessing all properties for tax years 2021 or 2022, instead giving the city’s Office of Property Assessment time to implement a long-awaited new computer system, make other promised reforms, and catch up on a backlog of appeals. The department also has a new director, after Council voted this month to confirm James “AJ” Aros Jr., who had served as acting director since last year.

At a Council hearing on Aros’ appointment, members grilled him about the next reassessment. They expressed concern that the city’s booming residential real estate market, especially in gentrifying neighborhoods, will lead to burdensome assessment and tax increases.

While Aros told lawmakers he can’t predict the real estate market or how assessments will change, he said he’s seen data that suggest home sales prices in the city — which are used to set new values — have increased more than 10% in the last year.

“Many residents could be confused, blindsided, or surprised by changes that might exist in their property assessments regardless of what’s happening in the market,” Councilmember Helen Gym said.

Property assessments and the resulting tax bills have long been sources of confusion and complaints. Rising home prices in gentrification-point-breeze-home-buyer-20191223.html" target=_blank>gentrifying neighborhoods have resulted in steep increases for longtime homeowners in the last few years, and a 2018 Inquirer analysis found that lower-priced properties tend to be overassessed, while owners of higher-priced properties are more likely to be paying less than their fair share in taxes.

The next citywide reassessment, which will review all parcels in the city and assign values that reflect the market value, will be completed next year and take effect for property tax bills in 2023. Tax bills will stay largely the same for most property owners in the meantime, unless Council votes to increase the tax rate. Only owners of properties with new construction or expiring tax breaks will receive new assessments this year.

The city’s revaluation that took effect in 2019 saw a 10.5% increase in the median assessed value for a single-family home. That increased by an additional 3.1% for the last reassessment, which was completed in 2019 and used for 2020 and 2021 tax bills.

The Kenney administration said those changes, which resulted in hefty tax hikes for many, reflected the real estate market. But they drew outrage from Council, which commissioned an independent audit that found the city’s reassessment practices were flawed. And an Inquirer analysis of the 2019 values found that more than 165,000 residential properties were overassessed.

» READ MORE: 165,000 Philly homeowners may be paying too much in property taxes. Is the city assessing property fairly?

The Kenney administration has defended its assessment practices but began working in 2019 to implement reforms recommended by an outside consultant. The administration also launched a search for a new director of property assessment in 2019, after Council declined to hold a vote on renewing the appointment of then-director Mike Piper. The Kenney administration said an initial search that year yielded no candidates, and the city retained a firm to conduct a national search.

Aros, who has worked as an assessor with the city for 17 years, became acting director in early 2020 when Piper left. The national search yielded “several very strong candidates,” said city spokesperson Mike Dunn.

“Ultimately, the search committee found that AJ’s professional expertise, leadership style, and exhaustive knowledge of the city and its property valuation history placed him squarely above the other candidates,” Dunn said. “The Mayor is unwavering in his belief that AJ is the right person to lead OPA forward in the coming years.”

But at a hearing on his appointment last month, lawmakers made clear they intend to continue scrutinizing the office.

“And you know the reason that you are here is because members of Council didn’t have faith in the leadership of your predecessor in leading OPA — do you understand that is the reason you have been nominated for this particular position?” Councilmember Kenyatta Johnson asked Aros.

Aros replied that he was appointed because Kenney thinks he’s qualified for the job, and Council ultimately voted to unanimously confirm Aros.

The city scrapped plans to complete a reassessment in 2020 as the Office of Property Assessment began implementing a new program called Computer Assisted Mass Appraisal (CAMA), which is aimed at improving assessment accuracy but had been delayed for years. Its implementation began early last year but was slowed by the coronavirus pandemic. Dunn said implementation is expected to be complete in the next fiscal year, which begins in July.

“The pandemic caused several delays in OPA’s operations,” Dunn said, including training employees on the CAMA system and processing assessment appeals.

» READ MORE: Philly is facing a $450 million budget gap and the pain won’t stop there

The last few years have seen a large number of appeals — which can be requests for informal OPA reviews or more formal appeals to the independent Board of Revision of Taxes — as many property owners fought increases. But they’ve been left in limbo as the pandemic slowed the appeals process.

As of mid-February, 75% of the more than 11,700 informal appeals, known as first-level reviews, that were submitted in 2019 had been completed, Dunn said. He said the rest would be completed this spring. Without a reassessment in 2020, the city received only 591 first-level reviews last year, Dunn said, and has completed 90% of them.

The Board of Revision of Taxes, meanwhile, has resolved less than half of the roughly 7,500 appeals for tax year 2020 and only 200 of the more than 2,000 appeals for 2021. Executive Director Carla Pagan said the board lost three months of hearings due to the pandemic but hopes to complete all of the 2020 appeals and most of the 2021 appeals by the end of December.

Aros told Council members this month that his office’s efforts to improve accuracy will include an audit of the city’s assessment process and procedures. But several lawmakers said that they remain concerned about how new values will impact longtime residents, especially as the city’s economy recovers.

“It’s going to have a significant impact and I just don’t want that to be lost in the conversation,” Councilmember Cindy Bass said. “And we have to make sure that people are not displaced out of a neighborhood that they have been living in for generations and that they are not taxed out of that neighborhood.”