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For the past two weeks, AxisPhilly has been exploring the question of whether the city has undervalued its own land, especially under the Actual Value Initiative.
In one previous report, we found that vacant lots around the city were valued at much less than they’d already sold for. In another report this week, we found that the tax burden on land in the Graduate Hospital area had decreased under the city’s revaluation, even as home prices skyrocketed.
Critics say that by putting too little value on land, the city is making it easy for owners to sit on vacant lots – which are often a blight to the neighborhood.
One such owner would be Kenny Gamble, Philadelphia soul legend, philanthropist, developer, recently turned columnist, and founder of Universal Companies, a nonprofit that’s developed dozens of properties in South Philadelphia, where Gamble grew up. Universal has put many vacant lots to productive use and created what has been widely praised as responsible and affordable housing for the neighborhood.
But Gamble also owns around 20 vacant properties himself, with another half-dozen under the name of a company, Salaam Enterprises, that is registered to his wife, Faatimah Gamble. Many of these properties, most located in the city’s Graduate Hospital and Point Breeze neighborhoods, have been vacant for decades.
These neighborhoods have seen significant development in recent years, and an accompanying rise in real estate prices. Under the city’s old valuation system, property taxes were low enough that sitting on the lots was a relatively cheap proposition.
Now, under the city’s new assessments, it’s an even cheaper one.
The most dramatic example perhaps is the roughly quarter-block-sized hole at the corner of Broad and Christian Streets, a large block of land comprised of six adjacent vacant parcels, which Gamble bought in 1991. Previously assessed at $842,000, the land has been re-assessed at less than half that price, $396,000 for next year’s tax cycle. That means the actual tax he pays on the property will drop 80% to just under $5,000 – saving Gamble more than twenty thousand dollars in taxes on land that’s been vacant the 22 years he’s owned it.
But it’s hardly an isolated case. In a review of 10 vacant lots that Gamble owns in the gentrifying Graduate Hospital area, all 10 would see their taxes go down under the city’s 2014 valuations.
A few examples:
- Three vacant lots Gamble purchased in 1991 and 1992 on the 1500 block of Christian Street, where houses have sold recently for upward of half a million dollars. Back in the early 1990s, Gamble paid about $80,000 total for all three – and paid a yearly tax bill on them of about $2,600. Under the new citywide reassessment, Gamble will owe even less. It will now cost about $1,000 less (or about $500 per property) to continue sitting on them – even while owners of neighboring houses are paying much more.
- Right around the corner, on Montrose Street, where Gamble owns three more lots. He bought them in 1994 and 1995 for a total of $27,000, and was paying about $1,800 per year in taxes on them. But next year, his tax will go down to just over $800 total, less than half what he was paying before. A quick glance at our AVI Map shows that on this block, the only properties that didn’t see their taxes go up were the ones that didn’t have houses on them.
- Four, minimally fenced-off vacant lots on South Street – about a quarter of the 1400 block, on either side of the Jamaican Jerk Hut. Gamble and Salaam Enterprises bought them in 1998. Since at least 2007, sitting on those lots has cost Gamble about $1,500 annually. Next year, each will cost him only $1,000.
The neighborhood might be getting more expensive. But now, after two decades of letting these lots sit vacant, the cost of sitting on them just got cheaper.
* Mr. Gamble did not respond to a request for comment for this story.