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August 09, 2016

School District of Philadelphia sees pot of money in undervalued property assessments

Education School Funding
School District of Philadelphia headquarters Thom Carroll/PhillyVoice

The School District of Philadelphia headquarters on North Broad Street.

The School District of Philadelphia is attempting to bolster its revenue in a new fashion – challenging undervalued property assessments and valuations throughout the city.

The district is launching a three-year pilot program that will appeal property assessments its consultants believe are undervalued by at least $1 million. District officials declined to estimate the potential revenues, but City Councilman Allan Domb suggested tens of millions of dollars are sitting out there. 

The district on Tuesday issued a Request for Proposal as it looks to a law firm or real estate appraiser willing to help investigate and litigate assessment appeals.

The program primarily will focus on properties likely to yield at least another $7,500 annually in tax revenue – a total that would require a property to be undervalued by $1 million. Last school year, the district received nearly $700 million from local property taxes, which represented 27 percent of its general fund revenue.

"It's really about equity," Chief Financial Officer Uri Monson said. "School districts in the state of Pennsylvania have the ability to challenge assessments and under-assessments. It's a tool that the district has not used before. We want to make sure our funding has been spread equitably across all taxpayers across the city."

The program is "purely an economic analysis" to identify the properties with the largest discrepancies, Monson said. It will not target specific neighborhoods or favor commercial or residential properties.

It is too early to estimate the amount of additional revenue that could be raised, Monson said. The district first needs to have an expert look at the data, hence the RFP. But at his previous job as Montgomery County's chief financial officer, Monson said he watched several school districts benefit from such assessment challenges.

Domb said undervalued commercials assessments leave the city and school district short of some $75 million annually. The district gets 55 percent of the city's property tax revenue. By Domb's estimation, that means another $41.25 million in tax revenue.

The city put out its own RFP to hire commercial appraisers to address undervalued assessments, Domb said. Several hundred thousand dollars were allocated toward addressing the issue in the budget City Council passed in June.

"I think the end results will be wonderful," said Domb, a real estate developer. "The school district and the city of Philadelphia are partners in this endeavor. ... I'm very pleased the school district is stepping forward. It's a great win for the school district, for the city and everyone."

All RFPs must be submitted to the district by 11 a.m. on Aug. 25.