Philadelphia for Philadelphians!: The Don’t Tax Me Out Campaign

by Candace Saunders
Defenestrator.org

This past October 25th, amid umbrellas and honking horns, the voices of a small but impassioned group of demonstrators filled the western plaza of City Hall. Philadelphians on their way to lunch might not have paused to acknowledge the rousing chanted refrain, but they could scarcely avoid hearing it: “Don’t tax us out! Don’t tax us out! Don’t tax us out!” The picket line strode in a circle around a small PA system and a collection of placards stating the group’s demands. The picketers, mostly older black women but otherwise varied in age and race, held signs bearing slogans like “IMPLEMENT TAX FORGIVENESS” and “STOP 10 YEAR TAX ABATEMENT”. A few folks stood at the gateway to City Hall chatting with curious passersby, collecting petition signatures and handing out flyers. Between speakers, the protesters stood with their signs shielding them from the chilly rain. It seemed it would take more than a little stormy weather to keep the members of the Don’t Tax Me Out Campaign from educating fellow Philadelphia residents about the shady plans hatching just above them in looming City Hall.

Don’t Tax Me Out, a campaign of the Community Preservation Network and its member groups, including Brewerytown’s African American Business and Residents Association (AABRA), Concerned Citizens of Point Breeze, INCITE’s Anti-Displacement Solidarity Committee, the Community Leadership Institute, and the Haddington Residents Association, came together to challenge City Hall’s newest money-making scheme—a city-wide property tax increase that would further elevate already soaring property taxes in Philadelphia, especially in rapidly appreciating neighborhoods. Throughout the spring and summer, the campaign organized community meetings in neighborhoods throughout Philadelphia. I was fortunate enough to attend the June 28, 2007, meeting hosted by the Haddington Residents Association at the Salvation Army community center at 55th and Market streets in West Philadelphia. At all of these meetings, community organizers and concerned residents gathered together to share information about the economic war that developers and speculators, with City Hall’s blessing, are waging against low-income communities in Philadelphia.

The City’s plan to get back on budget will place an even heavier tax burden on poor and working class Philadelphians despite widespread foreclosure thanks to property taxes already overwhelming for many low- and fixed-income home owners. Properties, the scheme urges, should be taxed at full market value instead of the lower “assessed value” now used to determine real estate taxes.

Though all of this is purportedly to simplify the system and to collect funds desperately needed to improve and maintain city schools and other social services, one has to wonder who these changes will really benefit. If taxes are so high that low-income folks can no longer afford to pay them, and if there is no community protection plan in place to prevent endemic foreclosure, many will indeed be taxed right out of the city. This disturbing trend has started in many neighborhoods throughout Philadelphia. But it can be stopped, and Don’t Tax Me Out is on the job.

How are property taxes determined in the first place?

There’s nothing like a little algebra to add some spice to an issue. Property taxes are set by City Council, are regulated by the Pennsylvania Constitution, and are currently calculated based on a uniform rate of about 8.2% applied to the “assessed value” (or 32% of the market value) of a property.

Property taxes are determined using the following formula:

Market Value (MV) x Pre-Determined Assessment Ratio (PDR) = Assessed Value
Assessed Value (AV) x Tax Rate (TR) = Property Taxes

For example:
$50,000 (MV) x .32 (PDR) = $16,000
$16,000 (AV) x .08264 (TR) = $1,322.24

Therefore, the owner of a house with a listed market value of $50,000 can expect to pay $1,322.24 in real estate taxes this year. The market value on the books does not always reflect the actual market value of a property, and is often much lower, especially in or near gentrifying areas. The predetermined ratio and tax rate may fluctuate on an annual basis.

How will taxes be determined under a Full Market Value system?

In 2004 state law charged Philadelphia’s Board of Revision of Taxes (BRT) with the task of assessing the real market value of all 569,000 commercial and residential properties in Philadelphia. According to its website, “The BRT does not set tax rates or determine any property owner’s taxes. That job belongs to the Mayor and the City Council. But the Full Value Project simplifies the property tax system, by making it more uniform, fairer, and easier to understand. As a result, property taxes will be based on what properties are actually worth.”

Proponents argue that full market reassessment is good for home-owners because their assets will increase in value. But with many already barely balancing fragile budgets, or finding themselves buried under taller and taller stacks of unpaid bills, an upsurge in property taxes could mean losing their homes. There were 646 foreclosures in Philly in all of 2006, but by June, 2007, there had already been 949.

It is important to note that the BRT’s Full Value Project and the City’s plans to tax properties at full market value are not one in the same. However, the Full Value Project is the first step towards full value taxation and is in itself quite alarming.

Consider the following example. A house in gentrifying West Philadelphia (a.k.a. University City) near UPenn currently listed on tax roles with a market value of only $80,000 could be reappraised at over $200,000. Even using the current assessed value system, taxes would more than double, from $2115.28 to $5288.96. Remember, this is still using only 32% of the market value. Full value taxation would apply the tax rate to 100% of the market value.

As reported in the South Philly Review in August 2007, “Bahiya Carbal-Johnson, of the Community Leadership Institute… and the Community Preservation Network, demonstrated what this could mean for the owner of a property for sale at 334 N. Gross St... In ’08, with a market price of $69,900, taxes for the property would be $1,840. If full-market valuation comes to pass, the taxes would jump to $5,776.” More than tripled! Does that sound “fairer” to you?

Though possible that the actual tax rate (the current 8.2%) would be lowered under full value taxation, there is no doubt that overall taxes would rise dramatically. After all, the plan was designed to pull in more money. For low- and fixed-income folks, especially seniors, the new and trendy commercial district a few blocks away could mean a shocking spike in taxes that destroys a true community generations in the making. .

Renters Beware!

The full market valuation will affect renters as well. The higher the taxes landlords pay, the more they will raise rents. With the extra money, the landlord might actually start fixing the place up, even completely renovating units or selling out to real estate developers. In this manner, a building previously occupied by mostly lower-income tenants can be quickly overtaken by an influx of wealthy university students or yuppies in only a few short lease cycles. It’s happened all over the city—the draw of proximity to Center City and college campuses has sent ripples through all of Philadelphia, and rents are rising steadily outward, with a few hotspots here and there.

In the 2005 documentary “All for the Taking: 21st Century Urban Renewal” on the Neighborhood Transformation Initiative, eminent domain abuse, and gentrification in Philadelphia, AABRA’s Al Alston says, “We believe that the rents are going to increase dramatically, the property values are going to increase dramatically, and the property taxes are going to increase dramatically. And it’s an easy step to go from lots of black folks in a blighted community to no black folks because we’ve been priced out.”

The rising property values and rents are related to a steady process of gentrification, a reversal of the 1960s-80s “white flight” phenomenon that left city budgets high and dry. With today’s gentrification, opportunistic real estate speculators and developers are capitalizing on sheriff’s sales and buying out large numbers of residential and commercial properties, renovating or leveling their way into neighborhoods, and then selling them off whole hog to the new city slickers. It’s a lucrative business, sure, but it’s also institutionalized racism and a violation of basic human rights.

Free Dough for the Upper Crust

Philadelphia currently grants a 10-year tax abatement for new development. This means that developers and purchasers of new homes are free from paying property taxes for up to ten years. Let’s just go ahead and call it what it is—city-sanctioned tax evasion! When a developer or individual sells a new home, the remainder of the 10 tax-free years passes to the buyer.

Until recently, there were no regulations requiring that a certain number of affordable/low-income housing units are built for every “luxury” or market rate unit built. But on December 14, 2007, City Council voted 12-5 in favor of Councilman Darrel Clarke’s bill requiring that developers include affordable housing in every new major residential project. According to the Philadelphia Inquirer, “Under the legislation, the housing must target families making up to $90,000 a year, or 125 percent of the area's median income. Clarke's revised bill sets aside half of all units for sale or rent to families earning up to 80 percent of the median income. Developers unable to build such units must make payments to the city Housing Trust Fund. Half of that fund targets families making 30 percent or less of the median income.” Not surprisingly, the bill will not go into effect until the City passes companion legislation offering incentive$ to builders. This is evidence of City Hall sloppily working to appease housing justice activists through privatization of low-income housing. Let’s not forget that the City has adopted the Clinton era HOPE VI low-density low-income housing policy wherein public housing projects are thinned out, leaving more and more poor folks without affordable housing. The “mixed-income” housing complexes will still leave many low-income people out in the cold. And one can only wonder what incentives will be dangled in front of developers already enjoying the 10-year tax abatement. No matter what they are, it seems unavoidable that the benefits of mixed-income development will be dampened by the costs to tax payers.

Despite attempts to make development a bit more equitable, market rate housing remains significantly more profitable than affordable housing. It also falls in line with City Hall’s plans to draw a wealthier tax base to Philadelphia, hopefully turning one of the poorest cities in the Unites States into a quasi-Parisian, world-class megalopolis. We need fancy outdoor eateries, hip boutiques, and offices stacked high enough to scrape the sky. That may sound nice to some who are tired of nicknames like Filthadelphia, but are the true costs too high? Was the massive Convention Center expansion really worth the loss of the Asian Arts Initiative’s home in Chinatown?

We’ve heard them described as “up and coming” neighborhoods, but the fact is that neighborhoods like Brewerytown were already there before developers took an interest in them. Newcomers’ fear and loathing of their Black and Latino neighbors betray the racism underlying gentrification, though many would deny it. Even those who claim they are simply looking for an affordable place to live benefit from the predatory actions of developers. Gentrification is neoliberal capitalism on a smaller scale, though how small is the scale, really, when the same thing is happening in every major city in the US? Not very.

It’s true that people need places to live, and that many come to urban areas in search of employment, education, or a community that might not exist at home. Should newcomers simply be denied access to Philadelphia and all that makes it special? Of course not. But there are ways that the city could protect current residents from the ill effects of gentrification, and these solutions must be discussed and implemented as soon as possible. While wealth and development do bring new amenities and greater “curb appeal” to neighborhoods, longtime residents are often unable to enjoy these improvements. The Don’t Tax Me Out Campaign is here to debunk the popular yet foolhardy notion that development necessarily benefits low-income people—clearly it does not.

Philadelphia for Philadelphians!

Isn’t it interesting that City Hall grants a huge tax break to the folks it supposedly wants to pump for the money so desperately needed to revamp an ailing system of overextended social services? The 10-year tax abatement, coupled with the proposed full value assessment, is a de facto plan to push out the poor to make way for the rich. The lower income residents of this city are literally subsidizing schools, sanitation, and fire and police departments for wealthy newcomers. And if taxes are too high and aren’t getting paid, where does that leave these services?

In 2006, City Hall postponed full market valuation until 2008. Fortunately for homeowners and activists, the City announced in August 2007 that it would not start the tax hikes in 2008 as originally intended. However, the plan remains a real possibility, and without adequate resistance, it will happen. Clearly our elected officials have their priorities jumbled, or they wouldn’t be pushing for tax reform that will raze the field for a new, world-class Philadelphia without its most important element—the heart and soul of the city of brotherly love—PHILADELPHIANS!

Demands

The Don’t Tax Me Out! campaign understands that Philadelphia needs more in the way of tax dollars, but doesn’t think it should come at the cost of broken communities, homelessness, and displacement.

NO CITYWIDE TAX REASSESSMENT WITHOUT COMMUNITY PROTECTIONS:
There will be no citywide property tax increase until a comprehensive community protection plan is put in place to safeguard poor and working class residents from displacement and increased financial strain.

NO MORE BURDEN FOR THE POOR AND WORKING CLASS:
While we support a more just tax system where poor neighborhoods do not have to pay higher tax percentages then wealthier neighborhoods, we believe that no change in the system should further burden poor and working class people.

STOP TEN YEAR TAX ABATEMENT
End the ten year tax abatement program that has sold off neighborhoods to developers and those with money to invest, making our communities places where longtime residents can not afford to live.

IMPLEMENT TAX FORGIVENESS
Create and implement a tax forgiveness program for low & moderate income homeowners to be able to pay their taxes, stay in their communities, and invest in their neighborhoods.

BALANCED REINVESTMENT
A 50/50 plan of development will be implemented, where all market rate development that is built in the city of Philadelphia should be matched with the development of minimum income housing that is affordable to those with minimum wage incomes.

To Get Involved…

The Community Preservation Network is a growing movement of residents associations, community groups, and individuals committed to uniting all Philadelphia residents impacted by gentrification pressures to prevent the displacement of working and poor people. To get involved with the Don’t Tax Me Out Campaign, call 215-701-7085 and visit www.allforthetaking.org for related news, events, and updates.

Homepage:: http://defenestrator.org/dont_tax_me_out