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Squilla to give personal AVI savings to an inaccurately assessed property owner
City Councilman Mark Squilla's already-low tax bill is set to decrease under an AVI loophole, even though many of his neighbors would get stuck with 160-percent increases - and he's not happy about it.
Squilla to give personal AVI savings to an inaccurately assessed property owner
City Councilman Mark Squilla has a low tax bill, even by Philadelphia's famously low standards. But, if the current iteration of the Actual Value Initiative were implemented, Squilla would actually get a break on his already low taxes, even though all his neighbors would get stuck with 160 percent increases.
But the councilman, unlike Philadelphia's numerous tax cheats, isn't happy about saving a few hundred dollars on taxes. He views his bonus as the result of another possible flaw with AVI — the way tax abatements are reconciled with rising home values.
"I was aware that my taxes were going down because of the abatement," said Squilla in an email. "This a perfect reason to phase this process in over a period of years."
The reason for Squilla's windfall is the 10-year tax abatement he has for major renovations he did on his home — $96,197 worth, according to the councilman. The cost of that work is credited against his home's taxable value by the Department of Revenue, as part of the citywide incentive program designed to spur home sales and property improvements.
The problem — aside from the many issues raised by critics of the abatement program — is that once AVI goes into effect, almost doubling the assessed value of Squilla's house, the Department of Revenue will also double his abatement in parity with the value increase.
This might sound fine, and even somewhat logical, as it maintains the proportionality of the previous abatement relative to the value of the house. But the unintended consequence is that Squilla's skyrocketing home value, which had presumably been severely underassessed and inaccurate before, will artificially inflate an already-large tax abatement that was based on more recent, nominally accurate construction costs.
To recapitulate: The result is that Squilla will end up actually paying one third less than before, thanks to the larger abatement, even though his home and all his neighbors' were found to be grossly underassessed by the Office of Property Assessment, which determined the new AVI values.
"I believe land values are assessed too low and therefore abated properties are getting a bigger break because of this error in assessment," said Squilla, who raised many concerns about AVI last year and successfully lobbied to put off the program's implementation for one year. Squilla reiterated that he thought anomalies, like the situation with his own home, presented even more of a reason to slowly introduce AVI.
"A phase-in would give us a chance to fix this problem and then the underassessed land and properties can be corrected," he said, "The argument against a phase-in is that people have been overpaying and should get that break right now, but if you look at cases like my house you know that is not always the case."
Squilla did not seem hopeful that a phase-in was even on the table right now, with most of Council pushing instead for various relief measures designed to mitigate the pain. Squilla said that he will not pocket any savings he accrues through AVI's introduction.
"Whatever reduction that I receive will be used to help someone pay their taxes who was inaccurately assessed," pledged Squilla.
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