Philadelphia Property Taxes- Land and Improvement Value

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Philadelphia Property Taxes- Land and Improvement Value

Kevin MoyerBusiness Member
Property Manager · Philadelphia, PA · Member since 2019 · 269 posts · 301 votes

This is mostly just to vent...

Can anyone explain how the OPA (Office of Property Assessment) comes up with home values? It seems to me that certain properties are targeted for higher increases. Particularly properties with an abatement (City jacks up the Land  Value). 

I've attached a perfect example. 

Photo 1- my property located in the middle of a north Philly block. My "Land Value" is up to 5x higher than other identically sized parcels on my street. 

Photo 2- My neighbor TWO LOTS DOWN. Same side of the street. Same lot shape, but my neighbor actually has a LARGER lot. Not only does he have a larger lot- he has a newer, larger building built there. We are zoned exactly the same. His "Land Value" is only 73% of mine. 

I appealed my value. Sent the board an example of 5 other lots on my block. Within 50 feet of my property. Same zoning. Same size (or larger). Same frontage. Same EVERYTHING. My appeal was denied. 


Any other stories dealing with the OPA? Am I taking crazy pills?

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Jared Forman
Rental Property Investor · Philadelphia, PA · Member since 2017 · 139 posts · 107 votes
6y

This is going to blow your mind...

Nothing the city of Philadelphia does makes any logical sense, no two departments communicate with each other. 

The city is a legal racketeer. 

Example: The city owns Philadelphia Parking Authority. The city will give you tickets that are not warranted. Then they say " ohh sorry buddy, we already printed it. You are going to need to appeal it."

If you do not pay or appeal the ticket within 15 days they add a late fee sometimes greater than the ticket. Then if you don't pay it within 30 days they hit you with a higher late fee. At the end of the day if you don't pay it they boot your car, tow your car, and will put a warrant out for your arrest.

If you try to appeal  it they give you a date 6 months out and the judge is a city official who doesn't care what you have to say. 

USE THIS KNOWLEDGE TO YOUR ADVANTAGE

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  • Steve F.
    Rental Property Investor · Philadelphia · Member since 2018 · 22 posts · 9 votes
    6y

    they are insane and devoid of logic. while they certainly were undervalue for years, they have been less then transparent in their assessments. 

    2Reply
  • Jimmy O'Connor
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    6y

    @Kevin Moyer I read this one a while back-  Audit OPA- Over 35% of properties overassessed.  You're not alone in this struggle my man, the city takes the first big bite with the 4% transfer tax and continues to chew throughout your 15-30 year fixed with the haphazard assessments. 

    2Reply
  • Jared Forman
    Rental Property Investor · Philadelphia, PA · Member since 2017 · 139 posts · 107 votes
    6y

    This is going to blow your mind...

    Nothing the city of Philadelphia does makes any logical sense, no two departments communicate with each other. 

    The city is a legal racketeer. 

    Example: The city owns Philadelphia Parking Authority. The city will give you tickets that are not warranted. Then they say " ohh sorry buddy, we already printed it. You are going to need to appeal it."

    If you do not pay or appeal the ticket within 15 days they add a late fee sometimes greater than the ticket. Then if you don't pay it within 30 days they hit you with a higher late fee. At the end of the day if you don't pay it they boot your car, tow your car, and will put a warrant out for your arrest.

    If you try to appeal  it they give you a date 6 months out and the judge is a city official who doesn't care what you have to say. 

    USE THIS KNOWLEDGE TO YOUR ADVANTAGE

    3Reply
  • Chris K.
    Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    @Kevin Moyer

    Getting the full answer to this question requires a long overview of real estate taxes in Pennsylvania. And I'm not an expert on the exact circumstances of how all this happened. But I believe the short version is that:

    1. Philadelphia had very "uneven" real estate taxes for various reasons including the Uniformity Clause.  

     2. They tried to fix the problem by having the OPA reassess the properties.

    3. In theory, OPA should've come up with some kind of formula to accurately value the underlying land. Instead, it appears that they just decided to take the Market Value and multiply it by a certain percentage. 

    4. For example, your property is taxed at about 28% of your market value ($124k/$437k). The neighboring property is taxed at about 29% of its market value ($91k/$304k). OPA says "Great --- uniformity!"

    5. Except it leads to situations like yours where the underlying value of the land is very different from the neighboring land. That's clearly not uniform. Many people also got mad since that method of taxation basically screws over people who took advantage of the 10-year abatement. 

      Again, I'm not an expert on the history behind this. But I believe the above basically describes what happened in Philly in the past few years.  

      Now the only reason I know about all the above is because of the battle involving the commercial/industrial properties. Whatever the OPA did, they went hard after the non-residential properties. There have been big lawsuits where the property owners won. Now the matter is before the Commonwealth Court with the owners, the City, and the School District duking it out. Everyone is waiting to see what will happen since it will have a big implication for everyone in Pennsylvania.  

      Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

      2Reply
    1. Kevin MoyerBusiness Member
      OP
      Property Manager · Philadelphia, PA · Member since 2019 · 269 posts · 301 votes
      6y
      Originally posted by @Chris K.:

      @Kevin Moyer

      Getting the full answer to this question requires a long overview of real estate taxes in Pennsylvania. And I'm not an expert on the exact circumstances of how all this happened. But I believe the short version is that:

      1. Philadelphia had very "uneven" real estate taxes for various reasons including the Uniformity Clause.  

       2. They tried to fix the problem by having the OPA reassess the properties.

      3. In theory, OPA should've come up with some kind of formula to accurately value the underlying land. Instead, it appears that they just decided to take the Market Value and multiply it by a certain percentage. 

      4. For example, your property is taxed at about 28% of your market value ($124k/$437k). The neighboring property is taxed at about 29% of its market value ($91k/$304k). OPA says "Great --- uniformity!"

      5. Except it leads to situations like yours where the underlying value of the land is very different from the neighboring land. That's clearly not uniform. Many people also got mad since that method of taxation basically screws over people who took advantage of the 10-year abatement. 

        Again, I'm not an expert on the history behind this. But I believe the above basically describes what happened in Philly in the past few years.  

        Now the only reason I know about all the above is because of the battle involving the commercial/industrial properties. Whatever the OPA did, they went hard after the non-residential properties. There have been big lawsuits where the property owners won. Now the matter is before the Commonwealth Court with the owners, the City, and the School District duking it out. Everyone is waiting to see what will happen since it will have a big implication for everyone in Pennsylvania.  

        Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

        Thanks so much for the insight. I remember reading how the OPA defends their land value calculation by explaining the ratios. Doesn’t that eliminate the whole purpose of having separate valuations between land and improvement? If land is always valued at 28% of the improvement why even have the two measures?

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      1. Joseph ODonovanPro Member
        Property Manager · Ridley, PA · Member since 2017 · 427 posts · 449 votes
        6y

        @Kevin Moyer You are not crazy. There are many many departments in the City that are, let's say, incompetent. As a lifelong Philadelphian, I would have to say the reasons vary but for the most part, corruption, patronage and poor leadership are rampant. Unfortunately, we just have to accept it as we can't change it and as an investor, it's an added cost of doing business here.

        1Reply
      2. Chris K.
        Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
        6y

        @Kevin Moyer

        From the experts I heard from, OPA used a terrible method to reassess. They arguably brought the assessed value closer to what it should be since Philly did have some odd assessments. On top of this, OPA failed to properly do what it wanted to do in the first place due to the scope involved. So it failed to achieve its goals both at a theoretical and practical level. 

        At a more pragmatic level, there are many reasons why municipalities need to separate out the land value from the improvement value. So you are correct that the way Philly did the reassessment makes no sense. But there is a reason to split out the two values. 

        I guess one other factor to consider is that Philly is a special "snowflake" in Pennsylvania. It has special laws and powers that only apply to them. I would also say the political climate there is unlike any other area in Pennsylvania except maybe Pittsburgh. I know this doesn't relate to your situation, but I do think that was one reason why OPA went hard after the commercial/industrial properties. 

        Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

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