Philly schools to look for revenue from undervalued properties
The cash-strapped Philadelphia School District will begin trolling for more tax dollars from city properties that have been significantly under valued, officials announced Tuesday.
The cash-strapped Philadelphia School District will begin trolling for more tax dollars from city properties that have been significantly under valued, officials announced Tuesday.
The district will seek proposals from law firms, real estate appraisers and other professionals to help identify properties that are assessed at least $1 million under their actual value and appeal those assessments.
District officials aren't sure how much money the effort will bring in, but said the district needs all tax revenue to which it is entitled. Every $1 million in taxable value is worth $7,500 to the district.
"Our goal is to ensure all taxpayers and properties are fairly assessed and taxed so taxpayers across the city are equitably providing funding for the school district," Uri Monson, chief financial officer, said in a statement. "This three-year pilot program will assess the degree to which certain properties might be undervalued across the city of Philadelphia."
Though the district isn't only looking at commercial properties, it's likely that most of the parcels affected would fit that description.
The upscale Kimpton Hotel Palomar in the 100 block of South 17th Street, for example, sold for $97 million last year, yet it is currently only assessed at $32.8 million, city records show.
Because the 230-room hotel property currently has an abatement, not all of it immediately would be subject to taxation, but a reassessment likely would bring in additional revenue.
For the school district, local property tax revenue makes up more than a quarter of its $2.8 billion budget.
Though the school district will be challenging assessments done by the city, city officials welcome the effort.
"It will be helpful in the process of getting assessments that are more accurate," said Rob Dubow, the city's director of finance.
The city is currently conducting assessments of commercial properties, but the district through the appeals process may be able to glean helpful information - such as property improvements and rental values - that otherwise might not be available to the city's assessors, Monson explained.
In Pennsylvania, school districts can appeal assessments if the values are thought to be out of line, said Monson, who previously was the top finance official for Montgomery County where schools districts have pursued appeals. Before doing it in Philadelphia,Monson said he first checked to see if it was possible under the Home Rule Charter. It was.
Following years of cut backs, the district currently has a surplus, Monson said. But projections show that the district could begin to run a deficit again if additional revenue isn't attained, he said.
City Councilman Allan Domb, a real estate magnate, has long been concerned about inaccurate assessments.
"I would estimate we could capture close to $75 million in real estate taxes that we're not collecting on commercial properties," he said.
The school district would be entitled to 55 percent of that revenue, he said.
The city needs to provide more resources to its office of property assessment, Domb said. He was pleased to see the city seeking to hire additional help for the commercial reassessment, he said. The school district's effort will help, too, he said.
"Everyone's pulling in the same direction," he said.
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Staff writer Jacob Adelman contributed to this report.