(The Center Square) – The Philadelphia public school district must return $35 million to taxpayers after a court decided the city unconstitutionally targeted commercial properties for tax increases.
The School District of Philadelphia said the final appeal in a long-running lawsuit over a city tax strategy was denied at its July 14 school board meeting. Local governments will have to return $118 million in total to commercial property owners.
The school district said in an email to The Center Square that it already budgeted for the loss of the $35 million in its fiscal year 2022 fund balance. The district’s total revenue in 2021 was $3.9 billion.
The lawsuit claimed the city selectively reassessed only commercial properties while the state constitution states that reassessments must include all properties within the city.
The city of Philadelphia reassessed 41,730 nonresidential properties and levied $118 million in additional taxes on those properties in 2018. However, the city didn’t reassess 538,380 residential properties.
The court found the City Council pressured the city’s tax assessors to complete the commercial reevaluations to increase tax collections, according to court documents. Court documents cited to support that opinion included statements made by City Council members to the city’s chief assessment officer that they were eager to complete the commercial tax assessment to increase tax revenues.
At a 2016 City Council meeting, the city’s chief assessment officer was told the commercial reassessment would bring in $50 to $100 million per year. The chief assessment officer was told “whatever we can do to speed up the timing, we should try to help you do because it is extremely important.”
Court documents stated that a City Council member sent the city’s finance director an email stating that commercial values had to be adjusted “ASAP.”
The city had argued that the Office of Property Assessment “determined commercial properties were significantly under assessed as compared to market value while noncommercial properties were accurately assessed and there was, therefore, no need to conduct a reassessment of noncommercial properties in 2018.”
