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Behind the curtains of AVI: a peek at the messy politics of the city's real estate tax overhaul
Once and a while, the Council floor becomes the scene of an actual political showdown.
Behind the curtains of AVI: a peek at the messy politics of the city's real estate tax overhaul
(Follow Isaiah Thompson on twitter, where he's confined to a mere 140 characters).
For readers with (deservedly) short attention spans: you'll find a summary of the following at the bottom of this post.
The weekly Thursday meetings of Philadelphia's City Council can often be theatrical affairs, heavy on pomp and low on substantive debate. Most of the time, votes have been arranged beforehand, and move through Council with the ease of a slice of bacon.
But every now and then, maybe once or twice a year, it doesn't work like that. Once and a while, the Council floor becomes the scene of an actual political showdown.
Such was the case on Thursday, when – after an eleven-hour marathon – Philadelphia's City Council passed three bills representing three different alternatives for dealing with an issue that might turn out to be one of the most significant they've had to vote on in years: how to collect the city's real estate tax.
Council President Darrell Clarke, after the meetings, described Council as having come together to pass a variety of options. But behind the three (rather confusing) votes, say Council sources, is anything but unity. Council is, as one source put it, “A zoo. There's no consensus on anything.”
At least two factions are now competing to get the votes of Council members who are on the fence over a tangled knot of tricky questions. And the questions really are, to be fair, quite tricky.
The Nutter administration is asking the city's legislative body to pass its Actual Value Initiative (AVI), which would base property taxes on a city-wide reassessment that is supposed to fix years of screwy property values across the city. Many residents would wind up with a lower property tax bill, but many – including longtime residents of more affluent neighborhoods – will pay more, in some cases much more.
But the administration wants AVI to pass Council before it has been able to finish the citywide re-assessment, which means no one knows exactly how AVI will affect which residents, or even – as grilling by Council over the past weeks has revealed – what the new property tax would be. Over the last few weeks, the administration has quietly lowered and lowered its own estimate of what the total value will turn out to be – which means, since the tax will be targeted to a fixed figure, that the likely tax rate is getting higher and higher.
That fact alone has been enough to turn some, including Councilman James Kenney, who is often an ally of Mayor Nutter, from a tentative supporter of the transition to a no vote. After learning the anticipated tax rate had climbed from an initial 1.2% to 1.8%, Kenny told reporters on the floor of Council Thursday night that he was "out."
Complicating matters significantly more is the fact that AVI, as the mayor has proposed it, effectively maintains a two-year “temporary” tax increase, includes a new real estate revenue increase, and seeks to generate an additional $94 million for the ailing School District.
And further complicating that mess are a number of proposals generated by Council members to alleviate the impact of AVI on residents, especially longtime homeowners (and not, pointedly, renters, who will bear a disproportionate burden).
Nutter's inclusion of school funding in AVI has been criticized, within and outside of Council, as a political move — there's no particular reason the two should be connected, and the politics behind his doing so are obvious: by tying school funding to AVI, Nutter can more easily secure the votes of a number of Council members for whom extra school funding — coupled with new leverage for Council in the form of "accountability agreements" — is a winner.
But maybe the biggest incentive for Council members to pass AVI now is simply a general sense of inevitability. It's either this year or next year, they figure — and waiting an extra year only gives more time for those opposed to the switch to raise a ruckous.
Three options came out of Council on Thursday: One, an amended version of the mayor's proposal, would implement AVI, but raise only $45 million for schools; another would simply increase the city's “Use and Occupancy” tax on commercial properties to raise $40 million for schools. A third, proposed by Councilman Mark Squilla, would delay the implementation of AVI for a year.
But virtually no one on Council is satisfied with any these proposals as they stand, and it's not totally clear what will become of any of them. Council may resolve these options by this Thursday — but, should negotiations go awry, could postpone a vote until the following Thursday as well.
And don't judge who's where by last week's vote: as Councilman Bill Green put it Thursday night, “Don't think that tonight's votes reflect where Council members are.”
Instead, Council members traded votes for bills they don't support in order to keep their own favorite alive – including votes for Squilla's bill to delay AVI, which most Council sources say has a slim chance of passing.
Pushing for AVI and school funding is a block made of up Council members Cindy Bass, Blondell Reynolds-Brown, Wilson Goode Jr., Bill Greenlee, Curtis Jones, Jr., Maria Quinones,-Sanchez, Marian Tasco, and Council President Darrell Clarke.
That's eight votes – one short of the nine needed to pass AVI. Republican At-Large Councilman David Oh is one likely 9th vote – he told CP on Thursday that he was willing to vote for AVI with $45 million for schools, but not for an increased tax on Use and Occupancy, which he says will hurt small businesses.
On the other side, opposing the AVI vote, are Council members Jannie Blackwell, Bill Green, Bobby Henon, James Kenney, Kenyatta Johnson, Mark Squilla, Dennis O'Brien, and Brian O'Neil.
But their side of the equation is a little more complicated: while that group opposes the AVI vote, they don't all support the U&O tax, which will hit businesses, including small ones. In fact, there's probably more support for the U&O tax on the other side, which wants to raise as much money for the schools as possible.
“There is support for AVI,” says Councilwoman Maria Quinones-Sanchez. “The question is how much money we can get for education.”
Sanchez and Brown are drafting an “accountability agreement” with the District that would allow Council to be able to impose restrictions on how the increased revenue is spent.
But in order to get more than the $45 million included in the AVI bill, that faction will either have to support the Use & Occupancy tax or attempt to amend more revenue directly into the AVI bill.
It's not clear the pro-AVI faction has the votes to do that (Oh has expressed reluctance to turn more money over to the School District, joining several Council members critical of the District's asking the city for money when its deficit was caused in large part by state cuts).
That could put Councilman James Kenney in the spotlight. On Thursday, he traded votes in order to get voted out a gentrification protection bill he's been pushing. The bill, supported by the Council president, would do much to ease the burden of a sudden property tax hike in neighborhoods that have seen rapid gentrification – but it's also expensive, say some Council sources, and the burden of that expense would fall on neighborhoods that haven't gentrified.
The upshot: Take the Council members whose constituents won't take a major hit from AVI, throw in the general desire among many in Council to be seen trying to help schools and to excercise more control over the District, and add to that a disinclination among many Council members to have to defend AVI for another full year — and you've probably got the 9 votes needed pass AVI, despite the fact that an almost equal number of Council members aren't willing to pass it right now.
Although there's a small chance it won't pass, the odds are that AVI is about to become a reality. The question now is under what terms, with what political fallout, and what all of that is going to mean a year from now if or when AVI, for better or worse, has landed on Philly.
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