Julia Zenkevich, Author at PublicSource https://www.publicsource.org Stories for a better Pittsburgh. Mon, 24 Apr 2023 14:56:58 +0000 en-US hourly 1 https://www.publicsource.org/wp-content/uploads/2021/11/cropped-ps_initials_logo-1-32x32.png Julia Zenkevich, Author at PublicSource https://www.publicsource.org 32 32 196051183 From slots to mills, big property owners aim for smaller property tax bills https://www.publicsource.org/allegheny-county-property-assessment-appeals-unbalanced-us-steel-rivers-casino/ Mon, 24 Apr 2023 09:30:00 +0000 https://www.publicsource.org/?p=1292779 U.S. Steel's Clairton Coke Works consists of 32 separate property parcels in the City of Clairton, assessed by Allegheny County at $10.7 million. The steelmaker is appealing all of the assessments, causing concern for the finances of the city and the Clairton City School District. (Photo by Quinn Glabicki/PublicSource)

From the Rivers Casino Pittsburgh to U.S. Steel’s Clairton Coke Works, big commercial property owners are looking to take advantage of a unique tax appeal season to save money — at the expense of schools and municipalities. An archaic property assessment system, now reshaped by lawsuits and resulting court rulings, has created “assessment chaos,” which […]

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U.S. Steel's Clairton Coke Works consists of 32 separate property parcels in the City of Clairton, assessed by Allegheny County at $10.7 million. The steelmaker is appealing all of the assessments, causing concern for the finances of the city and the Clairton City School District. (Photo by Quinn Glabicki/PublicSource)
graphic of a one hundred dollar bill superimposed inside three houses of different heights with broken green pieces

Unbalanced
How property tax assessments create winners and losers

From the Rivers Casino Pittsburgh to U.S. Steel’s Clairton Coke Works, big commercial property owners are looking to take advantage of a unique tax appeal season to save money — at the expense of schools and municipalities.

An archaic property assessment system, now reshaped by lawsuits and resulting court rulings, has created “assessment chaos,” which is making it hard for governments to budget, said Ira Weiss, solicitor for the Pittsburgh Public Schools. “The bottom line is: It’s a mess.”

Allegheny County’s Board of Property Assessment, Appeals and Review [BPAAR] has received 11,660 appeals of 2023 tax assessments. That’s notably higher than the average of around 8,000 appeals per year filed from 2015 through 2021.

This year’s appeals are 1,000 lower than the number filed last year, but there’s a key difference. Last year, nearly 90% of appeals were filed by school districts hungry for more revenue as property values rose. Appeals of 2023 tax bills, by contrast, came in almost as heavily from property owners looking to lower taxes (44% of appeals) as they did from school districts (54%). Municipalities — the only other entities that can appeal — consistently account for around 2% of filings.

About Unbalanced: This year, PublicSource is exploring the effects of property taxes on people and communities a decade after Allegheny County’s last reassessment.

Driving the change in the mix is a judge’s decision in a taxpayer lawsuit that tilted the tax math in favor of property owners — but only if they appeal. And many sophisticated property owners are doing just that. 

U.S. Steel, for instance, is appealing the tax bills on 95 properties, virtually everything it owns in Allegheny County. The steelmaker has filed the most appeals of any property owner in the county, covering property assessed at around $58.5 million.

Clairton is home to 32 of the U.S. Steel parcels under appeal. The Mon Valley city relies on the steelmaker for almost one-third of its total tax base, according to Mayor Rich Lattanzi. 

To have all of that under appeal is “huge for us,” Lattanzi said. The revenue loss could “be catastrophic for the City of Clairton,” he said, adding that U.S. Steel has helped his government and he believes the company doesn’t want to hurt the home of its coke works.

U.S. Steel is appealing its assessments to “bring its property values back into proper alignment,” according to spokesperson Amanda Malkowski, and to correct the “improper calculation” that has affected the taxes of property owners for years. The steelmaker doesn’t intend to apply any savings it achieves until 2024, so it won’t upend the current operating budgets of schools and municipalities.

But after that? “We would hope to be assessed fairly moving forward,” Malkowski wrote.

School districts contend with ‘nitroglycerin’

The genesis of the property owner appeals is a lawsuit alleging that Allegheny County engineered years of unfair property taxation for thousands of properties. It led Common Pleas Judge Alan Hertzberg to change the common level ratio [CLR], a factor used in calculating the assessments of properties that are subjects of appeals.

The effect of the new ratio on assessed values will depend on an involved property’s market value and whether it has any tax exemptions, but could in many cases bring a reduction of around 20%. That reduction would carry into future years until another appeal or a reassessment occur. The reduction is only available to owners who file appeals and prove that the market value of their property warrants the reduction. The deadline for filing appeals was March 31.

Whereas appeals under the prior ratio often brought increased revenue to districts, now they could instead “knock 30% off of the value” used to determine the tax bill, according to Weiss. For school districts, he said, an appeal is now “like picking up a container of nitroglycerin and not knowing if it is going to blow up.”

The fact that 44% of appeals were filed by property owners represents “a dramatic shift in the breakdown from last year,” said Michael Suley, former manager of the county’s Office of Property Assessments and a consultant to the plaintiffs in the lawsuit. “The pendulum is swinging the other way.”

Why didn’t even more owners appeal in a county with some 580,000 properties? “What that tells me,” Suley said, “is that the property owners still don’t know how to do the math” to determine whether they can save money via appeal.

Most of the appeals involve residential properties, but the most consequential may be those related to commercial parcels. Countywide, owners of 877 commercial properties are appealing their 2023 tax bills.

Rivers Casino in Pittsburgh is the highest-assessed taxable property in Allegheny County. Its owner is appealing that assessment, with the potential of a seven-figure reduction in the property taxes paid on the property. (Photo by Katie Blackley/90.5 WESA)
Rivers Casino in Pittsburgh is the highest-assessed taxable property in Allegheny County. Its owner is appealing that assessment, with the potential of a seven-figure reduction in the property taxes paid on the property. (Photo by Bill O’Driscoll/90.5 WESA)

One of those properties, the Rivers Casino, carries the highest assessment of any taxable property in Allegheny County, at $240,905,100. According to Pittsburgh’s property tax calculator, that likely means around $5.5 million annually in revenue for the city, county and Pittsburgh Public Schools. 

A Rivers Casino spokesperson declined to comment.

A significant recalculation of the casino’s tax bill alone could shave $1 million or more from public coffers. And that’s one property.

“The impact is going to be significant,” said Weiss. It could cut into the budget of not only Pittsburgh Public Schools, but of other districts with large commercial properties, including Montour and Upper St. Clair, which his firm also represents. Schools could theoretically make up lost revenue by raising tax rates, known as millage, but those increases are limited by state law. “You can’t tax your way out of this problem.”

In Clairton, ‘shoestring’ budgets and big steel

Mon Valley communities like Clairton are already feeling the economic pressures of a declining tax base and the rising costs of municipal services. Clairton City School District receives about 3% of its total budget from U.S. Steel, and lower corporate contributions could mean potential budget shortfalls, said Larry Nicolette, the district’s business manager. That’s made it difficult to build up funds or include any slack in their budgets. 

The district “started at less than zero and we’re building up,” he said. “We’re trying to provide a world-class education, but we’re on a shoestring budget as well.”

The City of Clairton was under Act 47 — the state program for municipalities experiencing “severe financial difficulties” — for over 25 years starting in the late 1980s. The city exited the program in 2015 after combining jobs, using the lowest responsible bidders for contract work and implementing other cost-cutting measures, said Lattanzi, the mayor. But things are still tight.

Going back into Act 47 is “always a concern,” he said. “It’s always in the back of your mind.”

Clairton Mayor Rich Lattanzi sits behind his desk, surrounded by three terms’ worth of memories. He is a former U.S. Steel safety coordinator. Like many former steelworkers, he notes that the air in Clairton is far better than it used to be. “Those hills back there used to be black,” he said outside of a polling location during the primary election in May 2021, gesturing beyond the emissions rising up from the Coke Works and across the river, where green trees line the hilltops.
Clairton Mayor Rich Lattanzi sits behind his desk. He is a former U.S. Steel safety coordinator, now facing the possibility that the steelmaker’s property tax appeals could frustrate his efforts to balance the city’s budget. (Photo by Quinn Glabicki/PublicSource)

“We’re probably at the end of the rope as far as our savings,” he said.

“The cost of everything is up,” Lattanzi said. “If we lose any additional revenue through taxes, we may have to do a tax increase for the City of Clairton.”

Lattanzi noted that U.S. Steel works with the city to build playgrounds and hang banners touting veterans, plus donates funding that has helped his administration to buy and renovate a community center, purchase a dump truck, build a baseball field concession stand and prepare land for redevelopment. Nicolette added that the company’s craftspeople have helped paint and lay carpet in the school.

“With U.S. Steel,” said Lattanzi, “it’s very important to have a relationship.”

In Munhall, paving and parks at stake

Further up the Monongahela River, U.S. Steel and affiliates filed 12 appeals on properties in Munhall. The borough’s current financial outlook is stable, according to borough manager Seth Abrams, but “I wouldn’t say we’re flourishing.”

U.S. Steel makes up about 3% of Munhall’s total property tax revenue, according to Abrams, much of which comes from one property in The Waterfront. 

Abrams said the borough is looking for places to potentially cut costs in the future.

“Overall, we are concerned about the appeals in combination with the CLR that the courts have handed down,” he said. “We did budget for a potential loss of some revenue and did proactively have a small millage increase.”

Borough Manager Seth Abrams works in East Pittsburgh's municipal office. (Photo by Jay Manning/PublicSource)
Munhall Borough Manager Seth Abrams. (Photo by Jay Manning/PublicSource)

Abrams emphasized that Munhall has no concrete plans to trim services, but officials have begun to take note of services and investments that could be on the chopping block, like paving projects or a park rehabilitation.

He regretted, too, the practice of many school districts and some municipalities of appealing the assessments of new homebuyers, using the sale price as evidence to wring assessment increases from BPAAR. “We need the funds to maintain the services,” he said, “but to dump it on the people who are moving into town is not the welcome we want to give them.”

Potential fix not politically popular

Generally, property taxes are supposed to be based largely on the value of the property.

Allegheny County’s system — in which most tax bills are static while schools and municipalities appeal the assessments of recently sold properties — is rooted in the county’s decade-ago decision not to regularly reassess properties.

Other than Pennsylvania, “There’s no other state out there that allows counties to go 10 years without a reassessment,” said Dominick Gambino, owner of Diversified Municipal Services, a company that consults for schools, municipalities and counties regarding assessments. He managed Allegheny County’s Office of Property Assessments from 2001 through 2003, leading a reassessment of all properties.

The common level ratio is intended to achieve rough equality between years-old assessments — like the decade-old values that still determine the tax bills of most Allegheny County properties — and newer assessments based on recent sales. 

Gambino, though, said the ratio “does not achieve equity, and it’s kind of like a Rube Goldberg machine. They took something very simple and made it so complicated that people can’t even understand it.”

The only fair system, he said, involves routine reassessment of every property.

Weiss said the county’s decision not to reassess has left the property tax system “in a shambles. … It is my hope that whoever is elected immediately addresses this problem.”

Reassessments, though, have been politically fraught, as they tend to boost at least as many tax bills as they reduce.

At an April 19 town hall debate sponsored by PublicSource and NEXTpittsburgh, all of the candidates for county executive were asked whether they would reassess all properties.

One, state Rep. Sara Innamorato, pledged to “create a system that people have buy-in to, so it needs to be transparent. It needs to be regular. It needs to be without bias.”

No other candidate, though, expressed any intention to conduct a blanket reassessment.

“Let’s acknowledge that we have a horribly unfair system of taxation here in Allegheny County,” said city Controller Michael Lamb. “… I can’t support a reassessment until we can protect homeowners from these massive increases that are likely to happen to them.”

Julia Zenkevich is a general assignment reporter for 90.5 WESA. 

Rich Lord is the managing editor of PublicSource and can be reached at rich@publicsource.org.

This story was fact-checked by Dakota Castro-Jarrett.

This package was produced in a partnership between WESA and PublicSource.

The post From slots to mills, big property owners aim for smaller property tax bills appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

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To reassess or not to reassess? Property tax mess awaits next Allegheny County exec https://www.publicsource.org/allegheny-county-executive-property-assessment-weinstein-lamb-innamorato/ Mon, 13 Mar 2023 08:30:00 +0000 https://www.publicsource.org/?p=1291208 A portion of an Allegheny County property tax bill overlaid with two houses on a beige background

A lawsuit showed that Allegheny County used flawed data to calculate tax bills for many, leaving a delicate situation for the next county executive. Candidates are staking out a range of positions, from a full reassessment of all property to a reformed appeal process.

The post To reassess or not to reassess? Property tax mess awaits next Allegheny County exec appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

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A portion of an Allegheny County property tax bill overlaid with two houses on a beige background

The thorny issue of property tax assessments has challenged Allegheny County Executive Rich Fitzgerald at both ends of his 12 years in office, culminating in a 2022 lawsuit that exposed the county for using flawed math to calculate many tax bills.

A new county executive will decide what’s next for an assessment system with damaged credibility. Fitzgerald is term-limited from running for re-election and will leave office in January. 

At least eight people are currently running to be the next executive. The winner will have to decide whether or not to do a countywide reassessment, as Fitzgerald vowed not to, and restore public confidence in the fairness of the assessment process after a lawsuit and numerous news reports showed it to be anything but.

Candidates’ plans for the system vary, but all recognize the need for change. Some, like state Rep. Sara Innamorato, said they would like to reassess across the board, a move that could level the playing field but risks raising tax bills on some residents. County Treasurer John Weinstein, on the other hand, favored a more technocratic approach, improving the current appeal system instead of mass reassessment. 

“Clearly people are going to be very, very suspect of things coming out of the assessment office, as they should, because none of this is being handled properly,” said Weinstein, who has been treasurer since the late 1990s. 

How did we get here?

Most Allegheny County property tax bills are based on the last countywide reassessment of property values, which took place in 2012. But tens of thousands of assessments have been subject to appeals, which can be filed by homeowners, school districts or municipalities who believe the assessment does not reflect current market value.

A calculation known as the Common Level Ratio [CLR] is used to roughly equalize appealed assessments and assessments set by the county over 10 years ago.

“We need an assessment system that is completely insulated from the political process”

john weinstein

The average home price in the county has more than doubled since the last full reassessment of properties, but the CLR didn’t change as steeply as property prices did. As a result, some new homeowners are paying much higher property taxes than the long-time homeowners in the same neighborhood, or even next door.

A group of property owners across the county who had been paying the so-called “newcomer tax” filed a lawsuit in 2021. The suit alleged that the county submitted skewed data to the State Tax Equalization Board, which calculates the CLR. The resulting calculation was artificially high and allowed the county, school districts and municipalities to boost their revenues without increasing tax rates, by appealing the assessments of recently sold properties.

A judge ruled that the county “failed to administer the property tax assessment appeal system in a just and impartial manner.” County officials were ordered to send new data to the state board, but the lawsuit is still ongoing. Pittsburgh Public Schools have appealed the new CLR.

To reassess or not to reassess?

Most candidates did not rule out a countywide reassessment, placing the field almost entirely at odds with Fitzgerald’s policy. 

For Innamorato, reassessing each property anew is a matter of justice. “By us not taking action and coming up with some sort of regular, consistent system, we’re exacerbating inequality,” she said. 

Olivia Bennett, who has heard expert testimony as a county council member during the lawsuit, said the system was “so botched” and “starting from square one would have to be a reassessment.”

Dave Fawcett and Republican Joe Rockey cautioned that the assessment system should be carefully reformed before it is used to reassess the whole county. 

Democratic candidates for Allegheny County executive debate at a forum hosted by Democratic and grassroots groups on Wednesday night, Feb. 15, 2023, at the Hampton Community Center. Seated from left are Dave Fawcett, Erin McClelland, Liv Bennett, Sara Innamorato and Michael Lamb. John Weinstein did not join until later in the event. (Photo by Stephanie Strasburg/PublicSource)
Democratic candidates for Allegheny County executive debate at a forum hosted by Democratic and grassroots groups on Wednesday night, Feb. 15, 2023, at the Hampton Community Center. Seated from left are Dave Fawcett, Erin McClelland, Liv Bennett, Sara Innamorato and Michael Lamb. John Weinstein did not join until later in the event. (Photo by Stephanie Strasburg/PublicSource)

“I think there has to be a different approach,” Fawcett said. “And yeah, it could be a countywide reassessment, but not the way we’re doing it now. … If we’re using more objective, more scientific, more data analysis, then we’re using a system with some credibility, and yeah I would be in favor of a uniform, logical, understandable reassessment.”

“The number one thing is to get the backlog of appeals behind us, to understand the implications of that, and for us as a county to get everybody back on an equal footing, which is where they were coming out of 2012,” Rockey said.

Weinstein was the only candidate to come near echoing Fitzgerald in saying no to reassessment. He said by revamping the assessment appeal system, the county can achieve fairness without resetting the entire system.

More cautious approaches

Weinstein proposed ditching the county’s part-time appeals board and replacing it with a full-time, professional board to cut down on backlogs and boost credibility in the process. 

“We need an assessment system that is completely insulated from the political process,” Weinstein said. 

He also called for greater transparency in the process, with property record cards produced by assessors posted online and an independent review of the data the county sends to the state’s equalization board. 

Michael Lamb said it’s too early to decide on a course of action, pending decisions on who is owed a refund as a result of litigation.

Making the assessment system more fair has the potential to bring higher tax bills to some, which makes the whole idea politically tricky

Though he didn’t detail a plan, Lamb said he would be sure to protect longtime homeowners from “massive” tax increases. 

Innamorato said she favors a Philadelphia program, that offers property tax relief to longtime homeowners. That program caps assessment increases and “freezes” assessments for homeowners whose income is below a certain threshold and who have lived in the home for 10 years. 

Charlie Wolfson is PublicSource’s local government reporter and a Report for America corps member. He can be reached at charlie@publicsource.org or on Twitter @chwolfson

Julia Zenkevich is a general assignment reporter for 90.5 WESA.

This story was fact-checked by Terryaun Bell.

This package was produced in a partnership between WESA and PublicSource.

The post To reassess or not to reassess? Property tax mess awaits next Allegheny County exec appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

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Tables turn on Allegheny County assessments, as new math favors owners over tax collectors, schools https://www.publicsource.org/allegheny-county-property-tax-assessment-appeals-pittsburgh-public-schools/ Thu, 23 Feb 2023 10:30:00 +0000 https://www.publicsource.org/?p=1290761 Two houses, one high and one low, and some U.S. currency. (Illustration by Natasha Vicens/PublicSource)

Things are looking up for potentially thousands of homeowners across Allegheny County, after a lawsuit last year changed how some properties are assessed. Property owners have until March 31 to appeal and potentially lower their tax bills by hundreds or thousands of dollars per year. If many of them do appeal, school districts and municipalities could be facing a major shock to their finances.

The post Tables turn on Allegheny County assessments, as new math favors owners over tax collectors, schools appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

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Two houses, one high and one low, and some U.S. currency. (Illustration by Natasha Vicens/PublicSource)

When Aaron DeLeo bought his house in Verona in October 2020, he thought he’d lucked into a great deal.

graphic of a one hundred dollar bill superimposed inside three houses of different heights with broken green pieces

Unbalanced
How property tax assessments create winners and losers

DeLeo had been looking for months and hadn’t found anything suitable. But the owner of the house in Verona was in a hurry and accepted DeLeo’s offer at the asking price, even though many other homebuyers at the time found themselves in bidding wars. 

The house had everything DeLeo wanted. Close to work, with a fenced-in backyard and an extra garage, it featured cherry kitchen cabinets, hardwood floors and a gazebo in the backyard.

For a decade, DeLeo had been trying to put himself in a position to buy a house. He worked in a science lab and made an extra $100 a pop leading local trivia games at night. He even sold some of his oldest and most valuable Magic: The Gathering game cards to pay the down payment. 

His monthly payment would be just under $1,000, and he thought he could handle it. He didn’t factor in Allegheny County’s property assessment system.

Soon after moving in, DeLeo started receiving letters from lawyers offering to help him appeal his tax bill. He didn’t know what they were talking about until he received another letter saying that the Penn Hills School District believed his house should be valued for tax purposes at $126,000 — a 64% increase – if he didn’t challenge the new valuation. 

DeLeo expected his monthly payment to go up, maybe by $100 a month or so. Instead it jumped by $400 a month, a 44% increase. 

“The value of my house is more than when the last person lived here. I get that part of it. So, yes, I think the taxes should go up partially,” he said. “But not that outrageous amount.”

DeLeo received a new letter in the mail last year from a lawyer letting him know that after a lawsuit ruling, he would be in a good position to lower his tax bill by well over $1,000 per year.

Things are looking up now for DeLeo and potentially thousands of other homeowners like him across the county, after a lawsuit last year changed how some properties are assessed. DeLeo and people like him have until March 31 to appeal and potentially lower their tax bills by hundreds or thousands of dollars per year. If many of them do appeal, school districts and municipalities could be facing a major shock to their finances.

A generational change in property taxes

A judge ruled last year that the county had skewed a calculation known as the Common Level Ratio [CLR], meant to roughly equalize assessments determined through appeals and those the county assigned a decade ago.

As a result, a home that sold for $100,000 — if it became the subject of a property tax appeal — would likely have been valued at around $81,000 in 2022 for taxing purposes. But after the judge’s ruling, it would be valued around $64,000 this year. For a house in Penn Hills, that would mean a savings of more than $700 per year.

A for sale sign in front of a Verona home on Monday, Feb. 13, 2023. (Photo by Stephanie Strasburg/PublicSource)

“It’s like a generational drop” in the ratio used in assessment appeals, said Jason Yarbrough, a Pittsburgh lawyer who has worked on real estate appeals for more than a decade. “I don’t think there’s ever been as significant of a drop year-over-year than what we are seeing in 2023 as we try to catch up to years of adjustments that should have been made.”

DeLeo is one of many new homeowners across Allegheny County who had been paying what is sometimes referred to as the “newcomer tax” in recent years. 

The average home price in the county has increased by more than half since the last time the county conducted a full reassessment of properties in 2012. The ratio applied in appeals did not keep pace. So it had become increasingly lucrative for school districts to appeal the assessments of newly sold homes in order to tax them at higher values. Between 2015 and 2021, school districts across the county tripled the number of assessment appeals they were filing on homes in an attempt to collect more tax revenue.

The lawsuit has reversed that calculus. Tax experts say that many people who bought their homes in the past couple of years will have an opportunity to appeal their assessments and reduce their taxes. 

“Most people in the real estate world are predicting there will be many fewer school district or municipal-initiated appeals in 2023 and many more property-owner appeals,” said Michael Werner, a lawyer who has been working on appeals for two decades.

In a more typical year, most property assessment appeals would target properties sold in the previous year. But Werner thinks that homeowners who have bought in the last several years — and saw their assessments increase through appeals — might be in a position to appeal this year. It will be more difficult for people who purchased homes five years ago, when prices and resulting assessments were lower, he said.

Wayde Fargotstein (left), chair of the Property Assessment Appeals & Review Board, and lawyer David Montgomery discuss county property assessments at a board meeting on Thursday, February 16th, 2023 in the County Office Building in downtown Pittsburgh. The board annually decides thousands of property assessment appeals, and this year faces a unique scenario due to the change in the Common Level Ratio. (Photo by Amaya Lobato-Rivas/PublicSource)
Wayde Fargotstein (left), chair of the Property Assessment Appeals & Review Board, and lawyer David Montgomery discuss county property assessments at a board meeting on Thursday, February 16th, 2023 in the County Office Building in downtown Pittsburgh. The board annually decides thousands of property assessment appeals, and this year faces a unique scenario due to the change in the Common Level Ratio. (Photo by Amaya Lobato-Rivas/PublicSource)

The new math will be especially beneficial for commercial property owners, which have more ways of appealing their property values than relying on a recent sales price, Yarbrough said. For example, commercial properties may be able to use a loss of revenue since the pandemic to argue that their properties are not worth as much now. Some of his larger corporate clients could save hundreds of thousands of dollars per year with an appeal. 

But both commercial and residential owners have one thing in common, he said: I think some people believe that this will happen automatically,” he said. “It won't, and it will require them to take some kind of an affirmative step and filing an appeal if they think that their number is wrong.

Who is most likely to win a property tax cut?

People who bought houses in the last two or three years could have an easier time winning an appeal, according to Werner. That’s because it will be easier to show that their house now is worth a similar amount to what they paid for it. And then they could get their tax bill reduced by applying the new, lower CLR.

Owners of property in areas that have had more real estate transactions in recent years and have seen a lot of appeals will tend to benefit the most.

You have to look at Lawrenceville. You have to look at Squirrel Hill. You look at probably Point Breeze, Highland Park, Morningside,” said Michael Lamb, the City of Pittsburgh’s controller. “The Strip District would be probably the biggest one: People who bought homes or condos in the Strip during the pandemic paid top price.”

The more expensive the home, the more savings potential. For example, the owner of a home that sold for $700,000 in Pittsburgh and saw its assessment hiked to that level through an appeal could save about $6,000 per year in taxes by appealing and applying the new CLR.

Lamb warns that people need to carefully look at their own situation before deciding to appeal. 

Allegheny County Controller Corey O’Connor demonstrates the Property Tax Estimate Worksheet that his office has made available to the public. (Photo by Rich Lord/PublicSource)
Allegheny County Controller Corey O’Connor demonstrates the Property Tax Estimate Worksheet that his office has made available to the public. (Photo by Rich Lord/PublicSource)

“This could backfire on you,” he said. “You can go in and come out of there with a bigger valuation.

County Controller Corey O’Connor’s office held meetings last year about changes to property tax assessments. O’Connor said the most well-attended meetings were in the North Hills. His office has created a calculator to help residents decide whether or not to appeal.

Longtime homeowners could benefit, too, if they live in an area where prices have remained flat or have been falling through time. But if they purchased their home five years ago or more, they may have to get an appraisal or research sales of similar houses during the appeals process to prove how valuable their home is now.

The biggest losers? Governments, especially schools

School districts and other taxing bodies, which have relied on property appeals to increase tax revenue in recent years, could lose out on millions of dollars in the coming years. They may have to pay refunds to people like DeLeo, and they won't reap new revenue because the appeals they file won't be as lucrative under the new ratio.

The sticker shock that homeowners like DeLeo have been hit with in recent years will instead fall on municipalities and school districts. Ira Weiss, whose law firm represents a half-dozen school districts in the county including Pittsburgh Public Schools, said this has “put every school district and every municipality in Allegheny County on knife's edge.”

More Unbalanced stories

“They're going to have to wrestle with the fact that they're going to lose real estate tax revenue” when they set their budgets in 2023, he said.

Appeals filed by owners of commercial and industrial properties alone could reduce tax collections across the county by tens of millions of dollars, Weiss said.

We have told clients that they have to be very conservative in their budgeting for next year,”  he said. 

Many school districts will have to raise their tax rates to make up the difference, he said.

“I'm not saying they're all going to do it,” he said. “But if they don't do it, many local governments — that is, municipalities and school districts — will have to cut programs.”

Lamb, the city controller, said he’s not sure how many individuals will end up appealing, so it’s difficult to say how big of a hit Pittsburgh’s finances will take. But he said he expects most longtime residents will not appeal and some newer homeowners will. 

I don't know that we have a sense of the full impact of it, but it could be a pretty major hit to what is our biggest revenue source,” he said. 

The city's $686 million budget relies on $159 million from the property tax.

The county’s current property value assessment system has led to stark inequality. Owners of similar homes in the same neighborhood and even on the same block can be charged radically different tax bills, largely depending on when they bought their houses, or in some cases, when they did serious renovation work. Neighborhoods like Lawrenceville have become centers of inequality, where some homes are still valued at 2012 prices and others are taxed at much higher rates.

The current system also has led to inequalities between municipalities and neighborhoods. Areas with depressed home values should have seen their tax bills go down, as richer areas take up a larger share of their tax bills, according to Lamb. But this hasn’t happened. 

“Generally what you see is that you've got very wealthy communities that are assessed at a fraction of their value, and you have poorer communities that are assessed at most of their value,” said Lamb. “So it's unfair.

The lawsuit that changed everything isn’t over

The lawsuit that brought property owners the new ratio and the opportunity to lower some tax bills continues. The Pittsburgh Public Schools have appealed the finding that compelled the new CLR. The plaintiffs, meanwhile, have filed motions alleging that the county's newly hired chief assessment officer fails to meet a requirement in the county code that demands 10 years of property valuation experience.

The case started in the summer of 2021, when a group of residents and a property investment firm filed a lawsuit challenging the county’s assessment practices.

The plaintiffs had recently purchased properties in Wilkinsburg, McKeesport, Pittsburgh, Forest Hills and Franklin Park. Not long after, local school districts or municipalities had appealed their property values.

Maddie Gioffre (right) and Shaquille Charles stand in front of their Wilkinsburg home on April 5, 2022. The two purchased the home in early 2020 and were promptly subjected to an assessment appeal. They are the lead plaintiffs in a lawsuit challenging the way Allegheny County calculates property assessments after appeals. (Photo by Lindsay Dill/PublicSource)
Maddie Gioffre (right) and Shaquille Charles stand in front of their Wilkinsburg home on April 5, 2022. The two purchased the home in early 2020 and were promptly subjected to an assessment appeal. They are the lead plaintiffs in a lawsuit challenging the way Allegheny County calculates property assessments after appeals. (Photo by Lindsay Dill/PublicSource)

The lawsuit alleged that the county had submitted incorrect real estate data to the State Tax Equalization Board in a way that “artificially overstates, or inflates” the Common Level Ratio.

Plaintiffs claimed that sales records sent to the state board weren’t an accurate sample of arms-length transactions between buyers and sellers, but instead were chosen because the sale prices were close to the assessments, according to John Silvestri, a lawyer for the plaintiffs. Because the data was skewed toward properties with sale prices that were close to their assessments, the state board calculated a CLR that didn’t reflect rising property sale prices. That kept the CLR high and exposed new homeowners to much higher property taxes than neighbors who purchased their houses years ago.

At stake were millions of dollars’ worth of property taxes. With an increased CLR, the county, school districts and municipalities were able to increase revenues without increasing the tax rate by filing appeals against owners of recently sold properties.

Allegheny County Common Pleas Judge Alan Hertzberg ultimately ruled that the county “failed to administer the property tax assessment appeal system in a just and impartial manner” and ordered officials to send new data to the state.

Evidence showed “there could be no doubt that Allegheny County’s Office of Property Assessment had been ‘cooking the books,’” Hertzberg wrote in his opinion. He ordered a CLR of 63.53% instead of 81.1%.

A spokesperson for the county declined to comment, citing pending litigation.

Lawmakers push for reforms — but not mass reassessments

The litigation also spurred lawmaking efforts that continue, and that could further improve the landscape for property owners.

Last year county council President Pat Catena created a Special Committee on Assessment Practices to hear evidence from the lawsuit and gather information about county assessments in the past.

Allegheny County Council President Patrick Catena, in the Gold Room of the Allegheny County Courthouse. (Photo by Jakob Lazzaro/90.5 WESA)
Allegheny County Council President Patrick Catena, in the Gold Room of the Allegheny County Courthouse. (Photo by Jakob Lazzaro/90.5 WESA)

In January, council passed an ordinance to create a second-chance window for taxpayers to challenge recent property assessments. Those who want to appeal their 2022 property assessments now have until March 31 to do so.

If a court orders a change in the 2023 common level ratio, the ordinance would also give homeowners a second chance to appeal assessments from this year.

Two additional pieces of legislation were introduced but are still sitting in a county council committee.

If a court adjusts the CLR again, one proposed ordinance would direct the county Office of Property Assessments to identify affected properties and recalculate their assessed values. It would also direct the office to alert property owners, municipalities and school districts to any such change and require that the county issue refunds for taxes it collected based on appeals decided using any incorrect assessments.

Another ordinance would allow council to appoint a candidate to the post of chief assessment officer if that position is ever vacant for 90 days or more.

The litigation and legislation are altering a system that has frozen many property owners’ tax bills for a decade. But so far, the changes do not entail the kind of full reassessment of all properties that has proved contentious in decades past.

Oliver Morrison is a general assignment reporter at WESA and can be reached at omorrison@wesa.fm.

Julia Zenkevich is a general assignment reporter at WESA and can be reached at jzenkevich@wesa.fm.

This story was fact-checked by Sophia Levin.

This package was produced in a partnership between WESA and PublicSource.

The post Tables turn on Allegheny County assessments, as new math favors owners over tax collectors, schools appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

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