Colin McNickle: Hurdles for Pittsburgh property tax relief
Pittsburgh would be given the exclusive and explicit authority to enact a property tax relief program for longtime owner-occupants whose property values have risen because of gentrification under a bill pending in the Pennsylvania General Assembly.
But should the measure be approved, myriad implementation questions, left to the city, remain unresolved, concludes an analysis of the legislation by the Allegheny Institute for Public Policy. And that old bugaboo of Allegheny County’s lack of regular reassessments looms large.
“(I)n a situation where there are no regular, periodic reassessments, the relief program envisioned in Pittsburgh will provide additional tax relief benefits to very few, if any, current homeowners,” say Eric Montarti, research director, and Jake Haulk, president-emeritus.
The latest legislation, which would amend Act 146 of 1988, was spawned by a 2016 recommendation from Pittsburgh’s Affordable Housing Task Force. It sought to blunt higher property tax bills in areas where redevelopment and new development led to escalating home values.
The amendment was deemed necessary after the courts struck down a 1990 Allegheny County ordinance that capped county property tax increases for longtime owner-occupants at 5%. That ordinance was problematic because it did not specify that an increase in value had to result from the refurbishment of other properties.
Concomitantly, existing municipal and school district ordinances were nullified by the decision, including in the City of Pittsburgh.
Should the proposal become law, it would be up to the city to determine if it will utilize it, where and how.
“Would the program be citywide or in specific wards?” ask Montarti and Haulk. “How much would the value of covered residences be required to rise to be eligible for relief? What criteria would the city use to determine what actually caused the value to increase?”
And, critically important: “How much would the program cost?”
But there’s a wrench in the gears of this proposed gentrification relief.
“While Pittsburgh can go it alone … the duty of reassessing property falls to Allegheny County and there is no reassessment in the works for the foreseeable future,” Montarti and Haulk remind, adding that under the current administration any reassessment likely would take a court order.
“Moreover, an eligible Pittsburgh homeowner … would not be able to take advantage of the program unless there is a reassessment that shows (a) property in a designated area rose the necessary amount to get relief,” they note.
And absent any countywide reassessment, the assessed value will be unchanged unless there is a sale for a much higher price than the assessed value and the school district appeals on that basis, which would not affect the current owner.
Furthermore, given that the City of Pittsburgh has forsworn appeals of real estate assessments, even a recent homebuyer is unlikely to see a city tax increase due to higher assessments.
“In short,” Montarti and Haulk reiterate, “property revaluations should be done on a regular cycle so that large gaps between market values and assessed values do not develop.”
Failure to do so creates enormous inequities between rapidly rising market values and depressed or falling values.
“And it makes designing relief program as envisioned in Act 146 extraordinarily problematic,” they say.