Bill would limit taxing bodies’ ability to appeal assessments

It’s a bill that probably will get the wholehearted support of anyone who has bought a house only to be welcomed to the neighborhood by a property assessment appeal filed by the local school district or municipality.

House Bill 1213 now pending before the state Legislature would prevent Pennsylvania school districts, municipalities and counties from filing assessment appeals in such situations, as well as in others.

While the legislation may be greeted with applause by homeowners who have been subjected to such appeals, critics say it may actually endup working against them — and could have costly consequences for taxing bodies as well.

For instance, if U.S. Steel Tower, now on the market and assessed at $233.2 million, sold for $500 million, Pittsburgh and its school district would be powerless to challenge the assessment. They would lose out on extra tax revenue — money that might have to made up by other taxpayers,

As it stands, the bill would bar school districts, municipalities and counties from filing an assessment

appeal based on the sale of a property; a financing or refinancing of the property; or investments that involve safety elements or are required by fair housing or disability regulations or laws.

Taxing body appeals would be limited to specific times: countywide reassessments; when a parcel is subdivided; or when there has been a change in the “productiveuse” of the property.

In a memo in support of the bill, the prime sponsor, state Rep. Warren Kampf, R-Chester, said a significant number of school districts file what he called spot appeals to “increase the revenue they use to balancetheir budgets.”

“The practice literally has the effect in some cases of hammering a property owner with a huge tax increase after he has decided to buy the property and participate in our state economy. It strikes me as one of the most anti-competitive government practices in existencetoday,” he wrote.

In an interview, he maintained that “school districts are doing this to homeowners, not just one or two but many, many of them. That’s no way to operate a school district and that’s no way to operate a taxsystem.”

Among those backing the legislation is the Pennsylvania Chamber of Businessand Industry.

“Allowing taxing districts to pick and choose the properties they want to appeal is not a fair policy and it’s too conducive to abuse,” said Alex Halper, director of governmentaffairs.

But opponents say the bill will do more damage thangood.

Contrary to Mr. Kampf’s statement, Ira Weiss, solicitor for the Pittsburgh Public Schools, said that 95 percent of the appeals filed by the district involve underassessed industrial or commercial real estate or apartmentbuildings.

The process, he said, helps the district to ensure that assessments in hot commercial areas like Downtown, the Strip District, and the East End keep up with market value, particularly in a county where it has been four years since the last reassessment took effect.

Ratherthan helping residential property owners, House Bill 1213 would shift the tax burden onto their backs since the district won’t have the ability to correct inequities on larger commercial or industrial sales,Mr. Weiss said.

“It’s a bad bill,” he said. “Any time you do anything tointerrupt the normal process of assessment and appeals, you’re necessarily benefiting one segment of taxpayers at the expense of another. In this case, you’re harming residential taxpayers.”

While Allegheny County typically does not file appeals, county Executive Rich Fitzgerald said school districts and municipalities should have the same right to do so as property owners. Allthree taxing bodies benefit if one of them wins an appeal and the assessment is increased.

“I understand the spirit and I understand the intent [of the legislation]. In some ways you do want to protect homeowners and taxpayers. The irony is that if you allow property to be woefully under assessed, that means everybody else is paying a little more,” he said.

Mr. Weiss said the legislation could end up costing city schools “seven figures” annually. The Pennsylvania School Boards Association, which also opposes the bill, estimates it could cost districts statewide $2 billionover a decade.

Mike Suley, a former county assessment director and appeals board member who is no fan of the appeals filed by school districts, nonetheless believes they, municipalities, and counties should be able to do so without restriction.

He argued that House Bill 1213 is unconstitutional.

“You can’t have a taxing scheme that favors one party and punishes the other,” said Mr. Suley, who is now an assessment and real estate consultant.

If the Legislature were serious about making meaningful changes, it would mandate regular countywide reassessments to ensure that property values stayed up to date, he added.

“This proposal is a ruse because it pretends to fix the problem,” he said. “They’re not fixing anything.”

But Mr. Kampf is confident his bill is legal.

“The uniformity clause of the constitution is a limit on governments and its purpose is to say governments are not permitted to pick and choose who they tax and in what manner,” hesaid.

He believes there is a “pretty good chance some portion of” the legislation willpass the House.

A companion bill is working its way through theSenate. ASSESS, FROM A-1