Reassessment problems may affect public housing
'We have no money to pay the taxes or the ability to generate any further revenue. It is a crisis situation,' attorney Raymond N. Baum told the county Board of Property Assessment Appeals and Review.
Baum and Larry Swanson, deputy director of ACTION-Housing Inc., said high tax bills could threaten some projects with default and discourage lenders from making loans in the future.
Allegheny County has approximately 25,000 affordable housing units owned by for-profit and nonprofit developers.
Baum and Swanson are members of the Allegheny County Community Assistance Advisory Council, which was appointed by County Executive Jim Roddey to study the effect of countywide reassessment on low-income people.
Margaret Philbin, a spokesman for Roddey, referred a call for comment yesterday to the council.
Affordable housing is made available to the elderly, poor and disabled at below-market rents, with the federal government providing a rent subsidy. The federal government also provides tax credits to lenders who make the loans, allowing them to pass on some savings to the developers.
ACTION-Housing is a nonprofit group that owns or manages 23 affordable housing units throughout the county. Swanson said the group is appealing assessments on five of them, including Greenfield Terrace, a 202-unit residence for low-income senior citizens that opened in 1997 off Lydia Street in Greenfield.
The assessment was increased from about $526,000 to nearly $1.1 million, which would increase property taxes from about $17,700 to more than $56,000, he said.
Swanson said appeals may have been filed for as many as 100 developments countywide. Appeals board Chairman Kevin McKeegan said the board would need exact figures. The matter will be discussed by the board April 30, he said.
Baum said some project owners are being pressed by lenders to increase escrow payments to cover the higher property taxes.
'We need to get these (appeal) hearings moved up as quick as we can,' he said.
Charities like ACTION-Housing get federal aid from the U.S. Department of Housing and Urban Development to construct housing units, and in return agree to keep rents at below-market levels for 30 years.
Under federal rules, projects are not allowed to turn any annual profit and cannot be sold, said Swanson.
Swanson said if property tax bills cannot be reduced, the only option may be to apply for tax exemptions. Nonprofits like ACTION-Housing are entitled to complete exemptions, Baum and Swanson said.
ACTION-Housing doesn't want to do that 'unless we absolutely have to,' Swanson said, because the group wants to pay at least a share of local taxes as a sign of commitment to the community.
For-profit developers of affordable housing borrow construction money from banks, which in turn get federal tax credits for 10 years, he said.
Again, the developers agree to set rents at below-market levels and cannot earn any annual profits. Developers make their money in up-front development fees, said Baum. Should property taxes go unpaid, the Internal Revenue Service can declare a project in default and revoke the tax credits.
Richard Nemoytin, spokesman for the Pittsburgh office of HUD, was not able to comment when contacted yesterday.
Brian Nearing can be reached at email@example.com or (412) 391-0927.