Tuesday, February 19, 2013

Philadelphia's 10 biggest commercial taxpayers would get lower bills under new real estate assessment

Philadelphia's 10 biggest commercial taxpayers, including Center City office towers, Franklin Mills Mall, and the shipyard in South Philadelphia, could pay a total of $17.5 million, or 45 percent, less in property tax next year under Mayor Nutter's tax reform.

The reform is designed to base taxes on the properties' actual value rather than on outdated figures used for years by the city.
Commercial properties, particularly in Center City, have long been assessed based on values closer to real market values than most residential properties, which, experts said, meant that commercial-property owners paid more than their fair share of real estate taxes.
"It's been a great week for the office-building owners. They've been getting the shaft for about 20 years, so it's about time," Reaves C. "Trip" Lukens III, a private real estate appraiser in Philadelphia, said Monday.

In the aggregate, commercial and industrial properties could see their property tax bills drop by at least $56 million, or 26 percent, according to an Inquirer analysis, depending on where City Council sets the tax rate and whether it adopts a homestead exemption for residential properties, which would shift some taxes back to commercial parcels.
The estimates here are based on a 1.25 percent rate.

Lukens, of Lukens & Wolf L.L.C., said it appeared to him that some commercial properties remained overvalued.
"Two Penn Center is a good example," Lukens said.

That property was valued at $66 million in a transaction last fall, but the city's Office of Property Assessment valued the building at 1500 John F. Kennedy Blvd. at almost $81 million, 23 percent more.

Even so, under Nutter's tax reform, the property-tax bill there is slated to drop an estimated $241,598, or 19 percent, to about $1 million from $1.25 million.

In its attempt to value commercial properties accurately, the Office of Property Assessment asked property owners for income and expense data, but real estate experts said city officials got very little detail because it was not required.
"I think very few owners gave them that information," said Joseph C. Bright, a tax lawyer at Cozen O'Connor. Any property owners who appeal the new assessments will have to provide the information, he said.

The biggest tax decrease for a single parcel is expected to go to the investors group that owns Franklin Mills Mall. The tax on the property listed at 4301 Byberry Rd. could be $2.25 million next year, down $3.38 million or 60 percent, from this year's estimated bill of $5.63 million. A spokesman for Franklin Mills did not respond to a call seeking comment.
Not all big commercial-property owners would get breaks.

Tenet Healthcare Corp., a for-profit hospital owner based in Texas whose holdings include Hahnemann University Hospital in Center City and St. Christopher's Hospital for Children in North Philadelphia, could see the biggest increase on a single parcel.
Tenet's property at 225-51 N. 15th St., part of the Hahnemann complex, is slated for an estimated $1.7 million increase. That 247 percent increase is partially offset by reductions on other parcels, giving Tenet an overall increase of $1.1 million, or 41 percent.
A spokeswoman for the company declined to comment.

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