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Lowe's appeals, gets break on assessment

| Thursday, Aug. 4, 2011

Losing $2.3 million on a property assessment might alarm some public officials, but not in Frazer Township or Deer Lakes School District.

They've come to expect assessment appeals and reductions on properties at the Pittsburgh Mills mall.

The latest was for the Lowe's Home Improvement, which will be paying taxes on a $12 million assessment instead of $14.3 million.

Asked how many properties at the mall, which opened in 2005, have filed appeals, Township Manager Lori Ziencik replied, "I'd have to say just about every building out there. We've had Lowe's, we've had Sam's Club and Wal-Mart. They are always going to ask for lower."

The new Lowe's assessment is not a total loss for the township and the school district. Lowe's initially was granted a reduction to $9.5 million, but a school district appeal of that decision led to a negotiated settlement of $12 million.

"The biggest concern with all of these assessment appeals is: 'Is it OK with the Tax Increment Financing deal.' " she said. "Time after time, the attorneys say that it is insignificant."

Tax Incremental Financing (TIF) is an agreement under which a developer channels a percentage of taxes owed on a property into a fund over a period of years. The fund is used to repay up-front financing of infrastructure improvements and public facilities necessary to develop the property.

"There was more money going into the TIF initially than was anticipated so they were ahead of the game from the start," Ziencik said.

She said the Mills Company, the mall's original developer, typically built its main mall building first and constructed the outlying buildings such as Lowe's, Best Buy and Wal-Mart later.

However, at the Pittsburgh Mills, those buildings went up more quickly and began producing tax revenue sooner.

Regarding the taxes and the money going into the TIF, she said, "It's fluctuating up and down. But if you do the math on it, it is averaging about the same."

Ziencik said the township has not really felt an adverse financial impact from the assessment appeals, noting that some appeals succeed but some don't.

Under the TIF used to develop the Pittsburgh Mills, the township agreed to accept 25 percent of the taxes it is owed on the mall properties for 12 years. The school district agreed to accept 20 percent of its taxes for the same period. The rest goes into the TIF, which is administered by Allegheny County.

Ziencik said Lowe's was paying $22,202 in township taxes at a 1.55 mill tax rate. Now it will pay $18,600 — a $3,602 reduction. Using those figures as a guide, the property was paying three times as much or $66,600 into the TIF but will now pay $55,800, a $10,800 reduction.

Richard Trulick, Deer Lakes' business manager, said the $2.3 million reduction on the Lowe's property will mean a loss of $60,375 in school district taxes. But due to the TIF, the money the district actually will lose is 20 percent of that, or $12,075.

"You never like to see those reductions but if they are appropriate, they are going to happen," Trulick said. "You deal with that."

As for the actual revenue lost to Deer Lakes from the mall assessment appeals, he said, "With the TIF, that kind of softens it. It's not that high once you factor out the TIF."

Noting that the district has a budget of more than $30 million, Trulick said the $12,000 the district will lose on the Lowe's reassessment is "a small piece of a large puzzle."

On the average, Trulick said the collective mall properties have provided $1.1 million to $1.2 million per year in tax revenue for the past four years.

According to figures supplied by Ziencik, the township has received an average of about $94,000 per year during the same period from the mall development.

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