Philadelphia Commercial Real Estate Property Tax Hike Struck Down by Judge

Late Thursday night, Senior Common Pleas Court Judge Gene Cohen ordered the city of Philadelphia and School District to repay nearly $50 million in tax revenue after determining that they were unconstitutionally targeted during the assessor’s revaluation of properties. This comes after a month’s long fight that looks set to continue after the city commented that they would appeal the ruling.

“There is ample evidence of such political pressure”

Judge Cohen in his ruling, citing that the City Council members were placing pressure on Finance Director Rob Dubow to revalue specifically commercial properties

This precedent-setting lawsuit will return 2018 taxes to the owners of over 700 commercial property owners, many being some of the largest office complexes and income-producing assets in the city.

Judge Cohen ruled that the reassessment was unconstitutional because he felt that commercial properties were unfairly targeted while residential properties were left alone for the most part. The revaluation resulted in more than $118 million in new tax revenue for the city of Philadelphia and the School District. Much like Texas where equal and uniform is present as an argument, Cohen also pointed to this statute that was violated.

Judge Cohen in his ruling effectively nullifies the 2018 tax assessments covering the Philadelphia commercial real estate properties in the suit, and he ordered that the city refund the difference between the 17′ and 18′ taxes. In addition to the property taxes, there also is a use and occupancy tax that will be heading back to property owners. According to the Philadelphia Inquirer in an email from City spokesperson Mike Dunn, Mr. Dunn said the city is “very likely to appeal” the ruling.

“The facts are, the property assessments were not accurate resulting in less revenues for our schools”

City Councilman Allan Domb who Judge Cohen referred to as being one of the members placing pressure on the Finance Director

The 2018 assessment is the only year covered under this ruling and the market values for 2019 and 2020 will remain. Peter Kelsen who represented over 300 of the operators said of the ruling, “I believe what this decision will do is make it clear to the city and give guidance to taxpayers … whether they’re residential or commercial, that constitutional requirements have to be followed to the letter of the law in order to have a legal and fair tax assessment process.”

We will continue to monitor the appeal process which will be sure to be a lengthy battle between property owners and the city of Philadelphia. This will help shape the future of the Philadelphia property tax system.