February 1, 2023
Michael I. Werner
Real Estate
Mark Belkow Pittsburgh Post-Gazette, January 26, 2023: ‘A big number’: Allegheny County Council action could trigger thousands of assessment appeals — retroactively
Allegheny County Council’s decision to give property owners a second chance to challenge their 2022 assessments could open the floodgates for thousands of new appeals, according to some experts.
Michael I. Werner, an attorney with the Strassburger McKenna Gutnick & Gefsky law firm who handles assessment matters, estimated Wednesday that the legislation, if signed by Executive Rich Fitzgerald, could trigger up to 20,000 appeals.
“It’s a big number,” he said.
Mr. Werner said he has already talked to hundreds of property owners over the past few months who are interested in filing such appeals because of a possible change in the number used to compute taxable value.
In the bill approved Tuesday, council gave taxpayers until March 31 to file appeals for 2022. That’s the same deadline for filing 2023 appeals.
The action was triggered by an appeal pending in Pennsylvania Commonwealth Court over what figure will be used to compute the taxable value of properties in hearings before the county’s board of property assessment appeals and review.
In September, county Common Pleas Judge Alan Hertzberg set the number, known as the common level ratio, at 63.53% — a significant dip from the 81.1% that had been in use in 2022 appeal hearings. The Pittsburgh Public Schools appealed the ruling to Commonwealth Court, where arguments are scheduled for April.
If Judge Hertzberg’s ruling is upheld, it could make a huge difference in the amount of taxes a property owner would pay. At the 81.1% ratio, a house valued at $200,000 on appeal would be taxed at $162,200. But at the 63.53% ratio, it would be taxed at $127,060.
Jason Yarbrough, a partner in the Meyer, Unkovic & Scott law firm who handles assessment issues, said one thing that may hold back the number of appeals is uncertainty over whether Commonwealth Court will actually lower the common level ratio to 63.53%
It may not benefit many property owners to appeal if the ratio remains at the 81.1% ratio for 2022.
Nonetheless, “There probably will be a fair amount of people [appealing] despite the uncertainty. It could lead to massive tax savings for them, even if it is for one year,” Mr. Yarbrough said.
But while the second chance appeals could benefit property owners if the common level ratio is lowered, it could have the opposite effect for the city school district and other taxing bodies that count on the tax revenue to help balance their budgets.
“It’s clearly alarming and concerning,” said Ira Weiss, Pittsburgh Public Schools solicitor. “You have a situation here where school districts are limited in their ability to raise millage under Act 1. You have a seemingly volatile tax appeal situation where no one can reliably predict where it is going to land and you have school districts and municipalities who annually have to create a budget.”
He added, “It does not bode well for the taxing bodies.” Mr. Weiss said he would not be surprised if there are as many as 20,000
appeals stemming from the county council legislation.
“It’s like Carl Sagan and the billions and billions of stars,” he said. “I expect there is going to be an unbelievable amount of appeals. It will be interesting to see how the [assessment] board handles all of these.”
David Montgomery, assessment board solicitor, could not be reached for comment.
In light of Judge Hertzberg’s ruling and the controversy over the common level ratio, Mr. Weiss said the school district is re-evaluating the approach it has taken in past years in filing appeals to increase the assessments of undervalued properties.
At higher common level ratios, such an approach makes sense. But if the ratio is lowered to 63.53% for 2022 — it already is set at 63.6% for 2023 — it may not behoove taxing bodies to do so because the revenue return would not be nearly as great.
One possibility, Mr. Weiss acknowledged, could be the filing of fewer appeals by the school district, although he added no decisions had been made.
Mike Suley, a former county assessment director and board member, saidthat in years without a countywide reassessments, there are typically about 10,000 appeals filed, mostly by taxing bodies.
He estimated that 100,000 county property owners could benefit if the common level ratio is lowered to 63.53% for 2022.
“There are tens of thousands of people in Allegheny County paying much more than they should be paying and they don’t even know it,” he said. Mr. Suley, who served as a consultant to the property owners who sued to lower the common level ratio, said there is an easy way for taxpayers to determine if they would benefit from an appeal.
If their current assessment is higher than 63.53% of their property’s current market value, they should appeal, he said.
Mr. Suley said he knows of one Brentwood property owner who is in line for $4,000 in tax refunds if the common level ratio is lowered to 63.53%. And that’s even though the property has increased in value by 10%.
“I’m just saying, you can be a winner if you do the math,” he said.
Still to be determined is whether Mr. Fitzgerald will sign the council bill or veto it. In October, he told council that he would support legislation to give taxpayers a second chance to appeal their 2022 assessment.
Amie Downs, Mr. Fitzgerald’s spokeswoman, did not return an email Wednesday seeking comment.
If Mr. Fitzgerald does veto the bill, Patrick Catena, county council president, said he has the votes to override it.
At the same time, Mr. Yarbrough cautioned that it’s still uncertain what Commonwealth Court will do.
It could uphold Judge Hertzberg’s order, reverse it, or send it back to him for more work, he said. And if the ruling goes against the school district, it could appeal to the state Supreme Court.
“The worst thing you can have in the assessment arena is uncertainty, and that’s what we have now,” Mr. Weiss said.
Because of the appeal pending before Commonwealth Court, the assessment board has been withholding final determinations on more than 8,000 cases dating back to last year.
