Allegheny County schools, municipalities unsettled by pending appeals of reassessments
Some Allegheny County schools and municipalities are on unsteady financial ground two years since a court-ordered property reassessment triggered appeals on one out of every six parcels, thousands of which remain unsettled.
It could take years to resolve more than 13,000 outstanding appeals from the 2012 reassessment, which could slash millions of dollars from a $6.4 billion chunk of county real estate. That would be on top of a $3.8 billion appeal-driven reduction in the county's taxable value that school and municipal officials from Pittsburgh, Clairton and West Mifflin say will force them to increase tax rates to compensate for so many successful appeals, particularly among employers that own large commercial properties.
“The deck of cards was stacked against all the municipalities and the school districts because it was a blank deck,” said M. Janet Burkardt, a partner at Weiss Burkardt Kramer, Downtown, which represents Pittsburgh Public Schools. “Nor could we have ever predicted the overwhelming number of appeals.”
Pittsburgh schools have a $13.1 million budget deficit that officials blame, in part, on appeals that lowered city property values.
County officials, who opposed the reassessment, encouraged appeals. County Executive Rich Fitzgerald held town meetings to help residents fill out appeals.
Burkardt and attorney Sharon DiPaolo, who represents commercial property owners in assessment appeals, said the reassessment was flawed. Dallas-based Tyler Technologies, which was paid $9.3 million to conduct the reassessment, will assess Washington County properties by 2016 under a $7 million contract.
The company assessed some office buildings with vacancies as full and some subsidized housing at market rates, Burkhardt said. DiPaolo said Tyler used inflated rent prices for office space.
“Were mistakes made? Probably. Were there steps to correct them? Yes,” county Manager William McKain said.
Last week, the county released the 2014 assessments, giving schools and municipalities property values for budgets this year and next.
More adjustments likely are ahead as the Board of Property Assessment Appeals and Review and the Board of Viewers, the bodies that evaluate appeals, review 13,188 outstanding appeals.
The reassessment increased property values 27 percent, according to a 2013 county estimate. State law prohibits a tax windfall during a reassessment, so many taxing authorities lowered rates. In May, the county estimated that appeals could reduce the total increase of property values to about 20 percent.
“I'm sure that even the most seasoned people in the assessment business were confused,” said Eric Montarti, a senior policy analyst at the Castle Shannon-based Allegheny Institute.
The Pennsylvania Supreme Court ordered the county to reassess in 2009. That started in 2010 and concluded in early 2012. If property owners paid 2013 taxes, then won appeals, taxing bodies owed them refunds.
About one in six property owners appealed, generating 115,099 claims in 2012 and 17,629 in 2013.
“The property tax system, overall, is a lot more fair now than it was before the reassessment,” said attorney Noah Fardo, whose Shadyside firm handled more than 1,100 appeals.
Pittsburgh Public Schools is scheduled to set its millage rate on Wednesday. Officials say the school board might have to raise taxes for more than one year.
Commercial owners of Downtown properties won some of the biggest appeals, records show.
BNY Mellon reduced the assessed value of its properties nearly $71 million. The assessed value of the bank's 55-story tower on Grant Street dropped from $242.4 million to $214 million.
Joel Aaronson, a partner at the Downtown firm of Reed Smith and the attorney representing BNY Mellon, said the bank presented accurate appraisals during appeal hearings and did not play “hardball” with its assessment.
“No property owner, from the largest to the smallest, should have to pay more than their fair share,” Aaronson said.
U.S. Steel won a $12.3 million combined reduction for six Clairton properties. Clairton and the school district have appealed. In the meantime, the district set its tax rate at 7 mills for buildings and 75 mills for land — a half-mill decrease for each — to compensate for the appeal, said Charles Lanna, the district's business administrator.
U.S. Steel did not return calls seeking comment.
“It's troubling that there are school districts that are adversely affected by substantial reductions in commercial value,” said Don Driscoll, an attorney who represented homeowners who sued to force the reassessment. “On the other hand, if the reductions reflect actual market value, it is what it is.”
Driscoll said fair property values that are lower could persuade businesses not to relocate jobs and facilities.
Jobs could be at stake at Century III Mall in West Mifflin.
The mall owners appealed a $134.3 million assessment as outrageously high. In May, Las Vegas-based Moonbeam Capital Investments LLC bought the mall, the size of more than 20 football fields, for $10.5 million. The appeal is pending.
DiPaolo, a partner at Siegel Jennings Co. in Hampton who is representing Moonbeam, said commercial property owners must appeal unfair assessments to stay competitive. High taxes could dissuade potential tenants, DiPaolo said.
But the appeal could lower the total taxable value in West Mifflin and its school district. The school district built into its $46.7 million budget an allowance for a potential refund to Century III, said Dennis Cmar, the district's business manager, noting, “That's a huge unknown.”
Aaron Aupperlee is a Trib Total Media staff writer.