BRT Appeal: "Tax reformer wins a round"

Under the headline "Tax reformer wins a round," the Daily News reported the final outcome of my BRT Appeal this week:

Tax reformer Brett Mandel scored a partial victory this week in his crusade against the city's property-tax system.  Mandel, head of the tax reform group Philadelphia Forward, appealed the 2008 tax increase on his Center City home.   He argued to the Board of Revision of Taxes that his taxes shouldn't be raised until the board can provide fair assessments for all properties.  And he won.  His taxes will be reduced to the 2007 rate - a savings of $312. But Mandel said that other people who made the same case were not granted the same relief."The fact that we appealed underscores the idea that the assessments themselves are random," Mandel said. "The fact that I won and other people didn't shows that the appeal process is arbitrary."  (Full Article)

On January 8th, I appeared before the BRT to appeal my own personal Real Estate Tax Assessment.  Make no mistake, I am dramatically UNDERASSESSED.  My home could sell for many times its current BRT-established market value of $158,000 and I should pay more if all homes were taxed appropriately and fairly as demanded by law.  But, other homes are even more underassessed than mine so I presented evidence of the systemic non-uniformity in Philadelphia real estate taxation and concluded my appeal:

The Pennsylvania Constitution demands that "all taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax."  The city is in comprehensive violation of uniformity and the most-recent assessments do not correct the problems.  The assessment lacks uniformity with other properties within the taxing jurisdiction and is therefore illegal, improper, and unjust.  My increase should be rescinded and the city should complete a comprehensive and fair reassessment of properties so that assessments meet industry standards for accuracy and equity and the Constitutional mandate of uniformity.  (See Below For Full appeal Text)

On January, 17th, I received my reply from the BRT, which reads in part:

The Board has reviewed the evidence that was presented at the hearing, and accordingly, it enters the following order:  The market value of the subject property is revised to $158000 with an assessed value of $50560.

So I "won." Hooray!  A victory for truth and justice and proof that the people, united, will never be defeated.  The BRT agreed that the nonuniformity in the system called for my increase to be rescinded.  But there is certainly no reason to celebrate.  Other homeowners -- who used the same evidence that I presented, and who made the same point that their assessment increases must be rescinded due to the nonuniformity in the system -- saw their appeals denied.  In just the past few days I received these responses:

Just got my letter from the tax board and they denied my appeal. I made my appeal on the "non-uniformity" issue.

And...

I and those on the block who submitted an appeal, all received the same response:  Upon consideration of the evidence presented at the public hearing and in accordance with the current law, we must deny a reduction of the proposed real estate market value of the subject real estate for tax year 2008.

This is just one more clear indictment of the current system of real estate taxation.  Despite the legal demand for uniformity, the market values for tax purposes are set by the BRT in a seemingly arbitrary manner.  Despite the formal requirements of the appeal process, the arguments of appellants are considered by the BRT in a seemingly capricious fashion.

If I win, others cannot lose.  I did not question the value of my home, I questioned the uniformity of the system.  The BRT cannot agree with me on uniformity, but disagree with others about uniformity.  Our system of real estate valuation is broken and it must be fixed.  Justice -- and the law -- demand change.

My full appeal follows...

Brett Mandel
2303 Lombard Street
Philadelphia, PA 19146
BRT Account Number:  081138800
BRT Hearing Date:  Tuesday, January 8, 2008 (10:00 am)

I am appealing my assessment increase for tax year 2008 because the assessment lacks uniformity with other properties within the taxing jurisdiction and is therefore illegal, improper, and unjust.  My increase should be rescinded and the city should complete a comprehensive and fair reassessment of properties so that assessments meet industry standards for accuracy and equity and the Pennsylvania Constitution's mandate of uniformity.

In 2003, I served as the chair of the Philadelphia Tax Reform Commission's Real Estate Tax working group.  In the Commission's final document, we concluded that:

    "Philadelphia's property assessments do not meet industry standards for accuracy; all across the city, assessed values diverge widely from market values. Philadelphia's property assessments do not meet industry standards for equity; properties in poorer neighborhoods are, on average, assessed at a higher percentage of market value than properties in more affluent neighborhoods. The inaccuracy and regressive nature of Philadelphia's assessments violate standards of vertical and horizontal equity."

More troubling, when we revisited these conclusions for a conference put on by Philadelphia Forward last year, we found that the unfairness and nonuniformity of real estate tax assessments in Philadelphia has become even worse in recent years.  I have attached a copy of the research for your review.

The Board of Revision of Taxes has spent millions of dollars of public money to improve its capacity to fairly and accurately assess city properties for tax purposes, but instead of generating fair and accurate assessments for tax year 2008, the Board has unfairly increased my assessment and the assessments of hundreds of thousands of other Philadelphians as the new "Market Values" bear no relationship to true, actual values in the marketplace.  This has, again, made the situation worse, not better.

The BRT explains the definition of "Market Value" on its web site — " The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus."

If, by law, all properties are to be assessed uniformly, then all properties should share the same basic relationship between their current potential resale value and their "Market Value" for tax purposes.  But that is not the case in Philadelphia today.

Last year, a home at 2339 Saint Albans Street sold for $480,000 at the same time that a home at 3317 Holme Avenue sold for $88,500.  Because of the current, unfair assessments, the $88,500 home in Northeast Philadelphia pays a tax bill of $1,391 compared to the $480,000 home's $1,219 bill.  After the reassessment for tax year 2008, the problem gets worse as the more-modest home's bill would increase to $1,494 while the more-expensive home would see a smaller increase to $1,311.

At a family dinner this fall, I illustrated the problem to a relative from out of town by simply going around the table.  My home in Fitler Square is valued for tax purposes at about 20 percent of what it might sell for today.  I am underassessed compared to my in-laws, whose East Oak Lane home is valued for tax purposes at about 80 percent of what it might sell for, but I am overassessed compared to my brother-in-law who has a home south of South Street that might sell for ten times its current BRT Market Value.

While my home could probably sell for $650,000, my new assessment would increase my home's Market Value to $169,800, which would base my taxes on approximately 26 percent of its current value.  However, other homes within the taxing jurisdiction — even those not owned by a State Senator — are valued for tax purposes at a significantly smaller percentage of current value including:

• 1935 Poplar Street, which sold recently for $315,000, but would have a BRT Market Value of $25,600 or only 8 percent of its recent sale price;
• 2339 St. Albans Street, which sold recently for $480,000, but would have a BRT Market Value of $49,600 or only 10 percent of its recent sale price; or
• 523 S. 41st Street, which sold recently for $525,000, but would have a BRT Market Value of $59,800 or only 11 percent of its recent sale price.

Justice Nigro, you were correct when you were quoted in a recent article as saying, "I almost have to sit there and hear 5,000 appeals and tell everyone, 'You win,' because we have an inequitable dynamic going on here."

Unfortunately, while I am aware that in many cases the BRT has rescinded the assessment increases based on non-uniformity arguments similar to mine, other appellants have seen their appeals rejected.

The Pennsylvania Constitution demands that "all taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax."  The city is in comprehensive violation of uniformity and the most-recent assessments do not correct the problems.  The assessment lacks uniformity with other properties within the taxing jurisdiction and is therefore illegal, improper, and unjust.  My increase should be rescinded and the city should complete a comprehensive and fair reassessment of properties so that assessments meet industry standards for accuracy and equity and the Constitutional mandate of uniformity.

Our system of real estate valuation is broken and it must be fixed.  My assessment increase is unfair and illegal and it must be rescinded.