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County's appeals cut property taxes by $8 million

| Friday, Sept. 5, 2008

Pittsburgh Public Schools Superintendent Mark Roosevelt never asked for a cut in his property taxes, but Allegheny County sought one for him -- along with 8,700 other property owners.

As in many of those cases, the county acted on Roosevelt's property assessment even when the homeowner did not.

The county won a $40,000 reduction for the superintendent -- even though he did not attend the appeal hearing, did not submit paperwork and says he did not talk with anyone about the case. Odder yet, a school board lawyer at the hearing advocated for keeping a higher assessment than the county wanted.

"Obviously, when I got this in the mail about my property, I knew it was something I had to steer clear of entirely," Roosevelt said this week. "I was a bystander, which is odd. It's kind of odd to be a property owner who has not asked for relief, and somebody is asking for relief for you."

But at the direction of county Chief Executive Dan Onorato, the county did that thousands of times in 2006. Many of the properties that were appealed are in Pittsburgh's affluent 14th and 7th wards, representing Squirrel Hill and Shadyside, and in suburban communities such as Mt. Lebanon, Moon and Franklin Park, which is part of the North Allegheny School District.

"Once we adopted the base year and realized school districts and municipalities were pursuing recent sales to increase taxes, we filed appeals on behalf of homeowners to keep the base year assessed value where it should be," said county spokesman Kevin Evanto. "What the school districts and municipalities that were appealing were attempting to do were back-door tax increases."

The county filed appeals to lower assessments in 2006 -- the year it established an assessment system that calculates property values using the base year of 2002 -- and since then has defended lower values when school districts and municipalities have appealed to raise them.

The base-year system, used by counties throughout Pennsylvania, will be tested Wednesday when a challenge to the system comes before the state Supreme Court.

In all, the county's appeals knocked $256.6 million in assessed value off the tax rolls, according to data from the Office of Property Assessments. That saved those taxpayers nearly $8 million a year in taxes.

Schools and cities, however, appealed many of the cases to the Board of Viewers, a division of Common Pleas Court, because the rulings cost schools more than $5 million a year and municipalities $1.7 million a year.

If the county had accurate assessments at market value, it might not have needed to enact a controversial 10 percent drink tax to generate money to help pay for public transit, said Martin Sheerer, solicitor for Fox Chapel Area schools. Real estate taxes remain the main source of revenue for most local governments, but the assessment problem has created imbalances in Allegheny County for more than a decade, he said.

"We have been in a mess here that never should have occurred," Sheerer said. "The base year does not work because it's not fair."

In practice, the county has advocated for the base year even when that has hurt its own budget. The appeals it won cost the county $1.2 million a year in lost revenue.

"It's about doing the right thing for as many people as we can," said Michael Wojcik, county solicitor. "It may be giving us revenue challenges but overall it's making Allegheny County a better place to live and a more competitive environment."

The county typically gets involved to defend the base-year assessment when a case makes its way to the Board of Viewers, the step after the county's Board of Property Assessment and Appeals.

Over the past two years, lawyers for schools and municipalities often argued against county attorneys -- even when the homeowners did not show up.

"These are all public dollars here," said Ira Weiss, a lawyer who represents seven homeowners whose challenge of the base-year system led the county to appeal the case to the Supreme Court. "You have public dollars chasing each other in these cases."

The problem with using a base year is that it preserves errors in the system, and it does not allow for areas where values increase faster than others, said Donald Driscoll, another lawyer who has teamed with Weiss.

"We're concerned about the use of a base year and the inadequacy of appeals to achieve uniformity," Driscoll said. "It locks in values that existed at some arbitrary point in the past."

The county's appeals hit some schools and municipalities harder than others. Pittsburgh Public Schools lost nearly $1 million a year in tax collections, and the city's take decreased by $740,000.

Among suburban communities, Mt. Lebanon lost the most because of the county's appeals. The school district had a $473,000 annual decrease and the municipality's revenue dropped by nearly $100,000. Other districts hit hard were North Allegheny, nearly $462,000 a year; Fox Chapel, nearly $298,000 a year; and Moon, nearly $289,000 a year.

"It's an unprecedented thing for the county as the assessing agency to be involved this way," said Weiss, whose firm represents Pittsburgh schools and several suburban districts. "It's symptomatic of a system that needs fixing."

In Roosevelt's case, his assessed value of $390,000 was lower than the $445,000 price he paid for the home in 2005. But when the county appealed the assessment, it sought to cut it to $257,200, the value assessors set in 2002.

The superintendent said he did not get involved in the case -- a point confirmed by Weiss, the district's lawyer. Still, the district ordered an appraisal for the property that came in at $375,000.

The hearing officer recommended setting the value at $350,000, and the assessment board agreed.

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