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Sleight of Hand

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It's early in the year, but I feel confident in predicting that the biggest political train wreck in Philadelphia in 2012 will be the AVI, the city's plan to reassess all properties to more closely reflect market value.

AVI stands for the Actual Value Initiative and it is due to be rolled out sometime in the fall.  It will replace the old fashioned method of assessing real estate, a function done for years by the Board of Revision of Taxes.

Mayor Nutter stripped the BRT of the power to assess and handed it to city government.

AVI will be a mind blower for property owners even if it all goes well.

Under the current system, the city determines the market value of a home and multiplies that by 32 percent to come up with the assessed value.  It then applies a 9.8 percent tax on that assessed value.

In short, we have become used to low assessment numbers in Philadelphia -- numbers that often bear little relationship to the real value of a home, even before the 32 percent is applied. 

Now, imagine this fall when you get a letter from the city telling you that your home, which previously had been assessed at, say, $100,000 will henceforth be assessed at $400,000.  That's called sticker shock.

The $400,000 is supposed to reflect the market value of your home. i.e., the price it would fetch it you put out a "For Sale" sign tomorrow.

Re-assessing every home in the city -- along with all commercial properties -- is a gigantic undertaking, even with the use of computer programs and statistical analysis based on actual real estate sales.

But, wait, it gets trickier.

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