Anthony Krupincza, who owns five rental units in North and West Philadelphia, usually pays his tenants' water bills. But now that some of his property tax bills will nearly triple because of the city's new assessments, he's telling new tenants they have to pay. And he's raising rents for tenants who move in or renew.

"I have to explain to them it's not like I'm making more money. It's not like the extra money is going in my pocket," he said. "The difference is to pay the tax bill. And if you really do the numbers, it doesn't fully pay for the tax bill."

It's too soon to say the extent to which rents across the city might rise as a result of the city's first property reassessment in three years, which increased Philadelphia's total property value by 31%. Tax bills based on the new values will be mailed in December and are due March 31.

But landlords in the business of operating rental properties aren't eligible for the city's tax relief programs that were adjusted to soften the impact of the reassessment. So they will most likely pass on at least some of the extra costs in taxes - in addition to the operating costs inflation has driven up - to new and returning tenants, who already have faced historically high rent growth.

That's why City Councilmember Kenyatta Johnson said his "Save Our Homes" tax relief plan included $15 million in rental assistance in the fiscal year 2023 budget "to support those individuals who will be significantly impacted in seeing an increase in their rents" because of increases in tax assessments. Black and Latino neighborhoods face the highest increases in their tax bills due to the new assessments.

"We wanted to make sure not only homeowners were protected but also renters as well," Johnson said.

The rent relief money will go to tenants and landlords in the city's Eviction Diversion Program, according to city officials. Rental property owners seeking to evict a tenant for nonpayment of rent must participate in the program before filing for an eviction in court.

After the city released its property reassessments in May, Kadeem Morris, a housing attorney for Community Legal Services, said the pass-through of costs to tenants is inevitable, and he's encouraging low-income renters to work with their landlords to appeal, in hopes of preserving affordability.

"Landlords aren't required to eat that cost," Morris said, "but healthy relationships go a long way."

Greg Wertman, president of Hapco Philadelphia, the city's largest association of rental property owners, said that as soon as news broke about the new property assessments, he heard from worried members. The association's membership mostly consists of small landlords who own a few rental units. Philadelphia relies on these rental property owners to provide housing for households with low and moderate incomes.

That subset of housing, Wertman said, "is where this is going to really hurt. Their tenants don't have any more money. They're at their wit's end right now trying to make ends meet. This is where the landlord now gets put in a bad position."

He said the city should offer property tax breaks to small landlords. Rental property owners who can't or don't want to pass increased costs onto low-income tenants may start renting to market-rate renters or sell their properties and leave the business, he said. Hapco Philadelphia once had more than 2,000 members but lost about 700 during the pandemic, Wertman said.

Property tax increases that cut into rental owners' bottom lines, he said, "certainly [are] not going to help incentivize investors to get into the low- to moderate-income rental units."

Tenants in market-rate housing and who can afford to pay more "are going to be hit with some pretty hefty increases, I'm sure," Wertman said.

He said that when he was a rental property owner, he explained rent increases to tenants with itemized lists of his taxes and costs.

"I think that's the best way to go," he said. "To share that with your tenants and not raise [rent] to the point where you're going to force them to leave."



Staff writer Max Marin contributed to this article.