Friday, April 24, 2009

Fayette Base Year Assessment Constitutional Per Allegheny Ruling?

Hopefully, some citizen-minded Pennsylvania property tax assessment expert will come Fayette's way before the reassessment planned to be implemented June 1, 2009, is implemented.

Where oh where are the Pennsylvania state legislators who promised their first, or second, top priority (pre-election) would be to "eliminate property taxes" even if they revised their pre-election statements to the more narrow "eliminate school property taxes?"

Where are these elected public servants now they are getting hefty state taxpayer-funded salaries, pensions, perks, free cars, daily stipends, travel subsidization, etc. including staffs to rival that of U.S. Congress-critters?

Nowhere to be heard on the promised "eliminate school property taxes" issue. Now the tone has changed to we're trying to do something positive to cut costs of property taxation for school-funding at the local level. Yes we are, we're really trying our best.

their best is to keep in place this obscene system of unfair property taxation.

On the one hand, state legislators pass such gimmicks as years-long tax-forgiveness for some, Keystone Opportunity Zones, and its offshoots and extensions and expansions, while on the other hand name-call the unfortunate who may have to use a payment plan to pay any back taxes owed. At worst, the same state legislators tout the tax-forgiveness for some as economic development while in their own districts some unfortunate may lose home or business property to a tax sale for inability to pay the bill!

why there isn't an uprising in Fayette has been frustrating for the past 10 years since the first round of Keystone Opportunity Zones were approved for certain sections of the county.

Now a reassessment will be conducted, and in this distressed area it's more likely more existing houses will have lost market value in the nationwide financial and housing crisis climate.

Meanwhile any costs associated with building a new place have risen out of all proportion. Only the very wealthy will be able to build or update if the crisis climate continues unabated.

Even 84 Lumber Company has sought state help from the federal government stimulus money if one can believe that because of a decline in that industry!

The little home-owner or business-owner who just wants to get by faces a neighbor or neighboring business that doesn't have to pay its fair share or any share of taxes for 10 or for 7 years with knowledge everything can come tumbling down just around the corner.

this situation has even been acknowledged as unfair, not uniform according to the state Constitution, and unconstitutional by state Representative Tim Mahoney nearly 2 years back come August, yet the legislator turns around and says OK to a new round of tax-forgiveness for those accepted into the program locally.

Maybe the board of Fayette Commissioners hasn't formalized the KOZ expansion/extension as requested by its promoters, yet, but who knows, as things have been going in this county maybe all a majority has to do is sign a form.

Along comes the reassessment and some homeowners will possibily have to pay not only more because of new building or upkeep while some located in KOZs won't have to pay a dime.

In addition, there's a year-2000 county bond-issue that's being used for the reassessment costs, dubbed a bargain at nearly 3 quarters of a million dollars, and local property tax-payers will foot the bill for that bond while KOZers won't be tapped for who knows how long with the extensions and expansions.

Maybe the expert on tax assessment Supreme Court rulings will come into Fayette and stop the insanity, on more than one front, but we're not holding our breath.

Net the Truth Online

Fayette commissioners take steps toward reassessment
By Amy Revak, Herald-Standard
04/24/2009
Updated 04/24/2009 12:15:43 AM EDT
...Hercik said the county assessment office plans to mail new notices on June 1 with the new values scheduled to go into effect for the 2010 tax year. Once notices are mailed, property owners will have 30 days to file an appeal if they disagree with their new assessed value.

The appeals will be handled at the satellite office and an independent appeals board will hear all appeals.

Hercik said when the first countywide reassessment in more than 45 years was undertaken in 2003, there were 10,000 appeals. He said his office doesn't "really have a clue" how many will be appealed this time around, but the assessment office is preparing for the appeal process.

When the first reassessment was held, county officials vowed not to allow time and inequities to creep into the system by doing regular updates.

The assessment office staff has undertaken the proactive step of updating the property valuations for all 85,000 tax records in the county for the 2010 tax year.

"In 2001, when the comprehensive revaluation program was announced, the county took the position that it would not allow the assessment system to fall victim to time as had occurred previously," Hercik said. "The county determined it would update the program every five or six years to stay current with market trends and values."

County assessment office staff has revisited every property in the county over the past few years and updated information for the county database. Hercik said some new photographs were taken, but not in cases where the physical condition of the property stayed the same.

"This time around out, county assessors performed the review functions," Hercik said. "We feel this greatly benefits the project as my staff knows their municipalities better then anyone. This update is being done 'in house' with minimal outside contracts and at a fraction of the original 2003 cost."

Hercik previously said the 2003 reassessment cost $3.3 million and was done by an outside firm. The current reassessment, being done in-house over three years, will cost "under $750,000."

Cole Layer Trumble of Ohio did the previous reassessment.

Hercik said he and his staff has revisited the neighborhood delineations previously set by CLT, and made adjustments in land values as well as locations of comparable sales to more accurately reflect the conditions of different areas of the county. Also, new building cost and depreciation tables have been established.

The previous assessments were based on a 2001 base year, but 2008 will be the new base year.

"There had been a steady increase in market values from 2001 to 2007, however, 2008 and now 2009, may show a decline," Hercik said. "We plan to take all of this into consideration as we set new values across the county."

Hercik said an appraisal traditionally looks at sales that have occurred. In the update process, assessors are utilizing sales from 2006 through 2008.

"The assessment office can't forecast what the economy will do in 2009, but future updates will take current and future real estate markets into consideration. A revaluation is not a tool to simply increase taxes for the local taxing bodies, but it is a means to equalize the tax base," Hercik said. "In a revaluation year, local taxing bodies are required by law to adjust their millage rates so that they don't collect anymore in tax dollar after the revaluation than they did before the revaluation."

Hercik said individual tax shares may increase or decrease as a result of the reassessment, but the total amount collected by the various taxing bodies cannot change. In 2003, taxpayers saw the school millage rates drop from the 50- or 60-mill levels to the current 10- to 13-mill levels, and the same process will occur when new values are set this time.

Once the new notices are mailed, they will include a telephone number for taxpayers with questions to call...

http://www.heraldstandard.com/site/news.cfm?newsid=20303770&BRD=2280&PAG=461&dept_id=468520&rfi=6


Base year vs market sale price May 7, 2008 Testimony copy Daniel A. Miscaviage

http://www.senatorbrowne.com/finance/2008/050708/Miscavage.pdf


Judge rules Allegheny's base-year system unconstitutional
Buzz up!By Mike Wereschagin, TRIBUNE-REVIEW
Thursday, June 7, 2007

http://www.pittsburghlive.com/x/pittsburghtrib/s_511304.html


June 9, 2007
Judge Holds Unconstitutional Pennsylvania's Property Tax Assessment System

http://taxprof.typepad.com/taxprof_blog/2007/06/judge_holds_unc.html


Westmoreland anxiously awaits assessment ruling
Buzz up!By Rich Cholodofsky, TRIBUNE-REVIEW NEWS SERVICE
Tuesday, January 13, 2009

Westmoreland County officials readily concede the property assessment system is out of whack.

County commissioners have long acknowledged that adjustments need to be made in a system that overtaxes some property owners, while undertaxing others.

But the cost of a countywide reassessment starts around $10 million.

And the likely political fallout from such a move has led to Westmoreland officials making no decision to improve its system.

That could change this year, depending on what happens in the Pennsylvania Supreme Court, which is considering a case that could end with every county in the state finding that its property assessment system defies the constitution.

It's a scenario that would cost taxpayers in each county millions of dollars to revamp the property tax system.

The base-year system allows for counties to assign properties a value that reflects construction costs in one particular year. In Westmoreland County that year is 1972.

"We understand the tremendous cost and upheaval a reassessment can be," said Westmoreland Commission Chairman Tom Balya. "We hope the Supreme Court issues something that gives counties some relief."

"There's never a great time to do it. It's a very challenging thing to accomplish, because I don't believe the public is aware that we're not in it trying to raise taxes," Balya said.

The appellate court is being asked to review a decision by Allegheny County Judge R. Stanton Wettick, who ruled that county's system of using a base year to determine property assessments -- and subsequent taxes -- is unconstitutional.

That system, which is used in the state's 67 counties, allows properties to be assessed using values from the last year of a reassessment.

Westmoreland County uses 1972 as its base year. According to the State Tax Equalization Board, Westmoreland has the fifth-oldest base year for assessments in Pennsylvania.

The base-year system means that in 1972, the property assessments reflected 100 percent of a parcel's value. By 1982, the state calculated that Westmoreland County's assessments represented just 47 percent of market value.

This year, a property's assessed value will equal just 20.4 percent of it market value, meaning a home worth about $100,000 will have a property assessment of $20,000.

Those percentages are calculated by a state agency and are unique to each county.

John Wilt, a member of the county's Board of Tax Assessments and Appeals, concedes that the system is skewed.

"As time went on, market values tend to change. I cannot say the assessments are current today," Wilt said.

That's the problem.

One solution would be a countywide reassessment of its 193,000 parcels. But county leaders have opposed that effort as too costly. It is estimated that a reassessment could cost at least $10 million.

A reassessment would result in about one-third of the county's properties decreasing in value, while one-third would increase, Wilt said. The remaining third would not change substantially.

"Older communities will have older values. A reassessment will find that their (values) will go down," Wilt said. Homes with current market values of more than $250,000 would get higher assessed values, he said.

The Supreme Court decision could force the hands of commissioners throughout Pennsylvania.

Westmoreland County officials have a $35 million budget surplus that could be used to pay for a reassessment. But they would prefer not to do so.

"In a perfect world, we'd like to see the Supreme Court rule that it's OK to have a base year but update how we get there. The last thing I want to see is a legislative fix that has a lot of holes in it. Hopefully, the courts will allow enough time to transition into something else," Commissioner Tom Ceraso said.

A reassessment is overdue for Westmoreland. But in counties that already went through the turmoil of reassessing, it likely would have to be redone to comply with any ruling that holds the base-year system as unconstitutional.

Fayette County reassessed its 83,000 parcels in 2003. That project, which was phased in over a number of years, is expected to be completed this year, costing taxpayers $474,000 next year.

Vince Zapatosky, chairman of Fayette County board of commissioners, said lawyers for the county already are preparing a response should the Supreme Court throw out the current assessment system.

"It's more than a kick in the teeth. It's a loss of teeth," Zapatosky said of the pending ruling.

http://www.pittsburghlive.com/x/blairsvilledispatch/obituaries/s_606900.html



After an exhaustive review of statistical evidence, the court held that a base year real estate tax system was unconstitutional because it violated the requirement of the Uniformity Clause of the Pennsylvania Constitution that

"[a]ll taxes shall be uniform, upon the same class of subjects." The court reached this conclusion for two reasons, one theoretical and one practical. First, it reasoned that a base year system was invalid on its face because it failed to account for differential rates of change that occur after the base year in the value of real estate in different areas of a county. Second, the empirical evidence confirmed that the anticipated disparities had in fact occurred.

The court ordered Allegheny County to perform a computer-assisted countywide reassessment by March 31, 2008, for use in 2009, and a second computer-assisted countywide reassessment by March 31, 2009, for use in 2010.

Recognizing the virtual certainty that Allegheny County would file a direct appeal to the Pennsylvania Supreme Court, the court permitted Allegheny County to continue using its 2002 base year system until the 2009 tax year (though it provided a delay mechanism if the Pennsylvania Supreme Court had not entered a final order in this case by October 31, 2008).

http://www.buchananingersoll.com/media/pnc/5/media.1795.pdf


Pennsylvania Supreme Court weighing property tax assessments
by The Associated Press Thursday September 11, 2008, 7:14 AM

PITTSBURGH -- The property tax assessment system used by every county in the state might not be perfect, but it complies with a constitutional requirement that taxes be fair and equal, a government lawyer told the Pennsylvania Supreme Court on Wednesday. Attorneys challenging the so-called "base-year" system on behalf of several property owners argued that it leads to unfair real estate valuations and, thus, unfair tax bills.
The base-year system pegs the tax to a property's value in a given past year, rather than on its current value. The longer a county goes without reassessment, the greater the tax disparity can be, they argued. "It would be like taxing somebody at their 2002 income when they're making less in 2008," attorney Ira Weiss said. "No one would put up with that, and no one should want to put up with paying taxes on property with 2002 values in 2008." The case before the Supreme Court comes from Allegheny County, but the base-year system is used by all of Pennsylvania's 67 counties to determine how valuable a property is. School districts and municipalities use the assessment values to calculate landowners' tax bills. In October 2005, Allegheny County Executive Dan Onorato and county council decided to set 2002 as the base year for assessments, because they said using 2006 property values could mean large tax increases for thousands of people who bought property since the last reassessment in 2002.

http://www.pennlive.com/midstate/index.ssf/2008/09/pennsylvania_supreme_court_wei.html


County property tax case goes to top court
Onorato appeals Judge Wettick's assessment decision
Saturday, September 06, 2008
By Karamagi Rujumba, Pittsburgh Post-Gazette
Sitting in its Pittsburgh session, the Pennsylvania Supreme Court will hear oral arguments next week in a case that is at the core of how Allegheny County -- and many others -- determines real estate property values.

In 2005, county Chief Executive Dan Onorato implemented a base-year property assessment plan, which sets assessments based on the value of property in 2002, including new construction. Common Pleas Judge R. Stanton Wettick Jr. threw out that system last year, declaring the state law that allows a base-year system is unconstitutional.

At a news conference yesterday, Mr. Onorato said the county will argue that Judge Wettick not only was wrong in his interpretation of Allegheny County's base-year plan but also overstepped his authority in finding unconstitutional a state law that is the basis for similar plans in counties across the state. The court will hear arguments on the case on Wednesday.

"We think [Judge Wettick] is wrong," Mr. Onorato said, adding that he will keep fighting for his base-year plan because he made a campaign promise to deal with "the reassessment problem" when he sought the chief executive's office in 2003.

The long-awaited assessment case -- Clifton et al, and Pierce et al v. Allegheny County -- hinges on a law that was created by the state Legislature and approved by then Gov. Dick Thornburgh in 1982, giving counties the authority to use a base year when setting property values.

In Allegheny County, the issue of assessments has been a lightning rod for many years, with property owners complaining of constant and excessive reassessments of their properties. Mr. Onorato said he sought to stabilize what amounted to a continuous "back-door property tax increase on homeowners" every time the county did a reassessment because values increase but school districts and municipalities never rolled back tax rates.

Furthermore, he argued, about 20 counties in Pennsylvania use a base-year market value system to establish property tax rates, causing chaos if Judge Wettick's ruling is upheld.

"The first thing I will do [if the Supreme Court upholds Judge Wettick's decision] is go to Harrisburg and ask them for a new law," he said. "Allegheny County is not going to do a reassessment any time soon."...

...A group of homeowners challenged Mr. Onorato's base-year plan in Common Pleas Court, arguing that he had essentially implemented an assessment freeze, unfairly penalizing property owners with decreasing or stagnant assessment values while giving tax breaks to property owners with rising values.

More than a year after their initial challenge, Judge Wettick agreed with the homeowners and threw out Mr. Onorato's plan, ordering the county to complete a computer-assisted reassessment by March of this year and another reassessment by March of 2009.

So far, the county has done neither assessment because the case is still under appeal. And because Judge Wettick found a state law unconstitutional, the case went straight to the state Supreme Court, where it has been since last year, pending oral arguments.

At its core, the homeowners' case is based on the premise that the base-year plan violates the uniformity clause of the Pennsylvania Constitution and the equal protection clause of the 14th Amendment of the United States Constitution.

"It's a question of uniformity," said Ira Weiss, an attorney representing a group of homeowners in Franklin Park, Mt. Lebanon and Squirrel Hill. Another group of homeowners is represented by attorney Don Driscoll. Judge Wettick combined both cases, and both legal teams will essentially operate as one.

"The Pennsylvania Constitution requires that all taxes in the state should be structured uniformly. That is why we don't have a graduated tax," said Mr. Weiss. "What Allegheny County did [in implementing the base year] is so far from acceptable, let alone uniform. It is unconstitutional."

The inequities in property valuations that were created by the base-year plan, Mr. Weiss said, are far-reaching enough that "I'm very confident the court will affirm Judge Wettick."

And that could set the precedent for challenges of the other base-year plans across the state, said Mr. Weiss. "I think ours is a bellwether case. If [the challenge] stands, there is a chance all those other similar systems out there will fall."

But in his brief before the court, Allegheny County Solicitor Mike Wojcik argued that the state statutes that created the base-year plan "do not clearly, palpably, and plainly violate the Constitution."

"We have a strong argument to make because I think Judge Wettick exceeded his bounds. He wants the [base-year plan] to be a lot closer to perfection in uniformity [regarding how taxes are collected,] but I don't think the Pennsylvania Constitution requires that," Mr. Wojcik said...


http://www.post-gazette.com/pg/08250/909908-85.stm


Pennsylvania’s ‘Base Year’ Assessment System Challenged
The base year assessment system that all 67
counties in PA use to tie a property’s tax to its value
in a given past year is being challenged in the
Pennsylvania Supreme Court. The attorney’s
representing several property owners contend that
this system leads to unfair real estate valuations
and therefore unfair tax bills.
Attorneys for the government say the system may
not be perfect but it complies with a constitutional
requirement that taxes be fair and equitable.
In October 2005 Allegheny County officials decided
to set 2002 as the base year for assessments
because they felt using 2006 property values would
result in tax increases for thousand who had
purchased property since the last reassessment in
2002.
But people’s attorney Ira Weiss contends, “It would
be like taxing somebody at their 2002 income when
they’re making less in 2008.”
If the Supreme Court rules in the people’s favor
counties would have to do annual reassessments
unless the state legislature were to set another
standard.

http://www.ennestax.com/admin/doc/WEBTaxFaxs_regular_Sept_08.pdf



Downingtown decision

http://kassablaw.com.p2.hostingprod.com/files/Interim_Real_Estate_Tax_Assessment.pdf


Related

The Burden of Property Tax Exemptions
By Donald A. Krueckeberg
December 2004

http://www.njpp.org/rpt_freenj.html

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