Philadelphia is a city of homeowners. Theirs are affordable homes for the most part. This fact has shaped our unique civic culture since the days of William Penn. In 2013, affordability is one of the city’s competitive strengths in the Northeast region.
All this is in peril if we don’t get the Actual Value Initiative right.
The process of coming up with fair, true numbers for property values across the board was long overdue. Mayor Michael Nutter’s push for the AVI is laudable. All citizens should begin by accepting the general idea; there will be no going back to the old system, which was, in a word, bad.
Figuring out how to make the new system work will be long, hard and tedious. Public officials at both state and city levels must focus their energies on this cause.
The property-tax system has been frozen for decades. Suddenly to spring into a new system risks catastrophe. Smooth transitions are always better for a city’s economy and its people’s lives.
Policy-makers face the challenge of devising ways to make this transition work for many different groups of people for whom AVI creates sudden problems. Low-income people need relief. So do middle-class people; Philadelphia cannot afford to chase any more of them out of town. Battered neighborhoods deserve extra care but resurgent neighborhoods must be encouraged as well, if all are to prosper together.
One important long-term remedy must be to authorize different rates of taxation for commercial properties, since residential properties are collectively taking a $200 million hit. But that requires a state constitutional amendment.
Other answers are easier and lie closer to home. A land-value tax, like what other cities have, is one obvious way. There are others.
As for ordinary residents, whether homeowners or renters: Do your eyes tend to glaze over when you hear the phrase “municipal finance”? We are sorry to say you had better unglaze them fast. This will be the most-important story of your lives this spring.