Friday, December 15, 2006
Assessing the Chief Assessor
Back in March 2005, the County’s Chief Assessor told the County Council’s Special Committee on Property Tax Assessments that the recently developed reassessment values to be used in 2006 abided by the standards of the International Association of Assessing Officers. According to news reports the following day the Chief Assessor went on to say, “that means the percentage of inaccurate of assessments is likely to be in the single digits.”
The issue at the time was whether the new “2006” numbers better reflected market values than the old 2002 numbers still being used for property taxes in Allegheny County. Many on Council and the Chief Executive were opposed to the new assessment values because of the relatively large increase in market values captured by the latest reassessment.
As we pointed out on numerous occasions at the time, the new reassessment numbers much more accurately reflected market values than the 2002 figures. The newer assessments corrected some of the serious 2002 assessment problems in all price ranges studied except for the homes in the under $50,000 group.
The problem was that the Chief Executive and most of County Council simply did not want to send out the new assessments because of the large increases many homeowners would receive. There was no trust that the limit on windfalls would be honored by municipalities and school districts. Of course, that is a poor excuse for not proceeding with the better numbers. If school districts abused the windfall, then legal action would have followed. That is the position the Executive should have taken.
But, in actuality, many high end homeowners would have seen substantial increases in assessments even after the windfall adjustment was made. Why? Because in the 2002 assessment their properties were far below market value and the new assessment had brought them more in line with reality. Some of those assessments rose by 30 or 40 percent, which means that, notwithstanding the adjustment for windfall, the owner would face a significant rise in taxes. Therein lay the real opposition to going forward with the more accurate figures.
Fast forward to December 2006. Asked to testify in the lawsuit case brought against the County’s base year assessment system, the Chief Assessor now says that the overall assessment met international standards but some neighborhoods were inaccurately assessed. Her evaluation found that these problems could indicate problems within the entire reassessment.
But most revealing was her comment that, “The response to me was that no further analysis would be done, and the move toward the base year was begun.” The supreme irony is that Judge Wettick, who is hearing the case, had ruled in an earlier case regarding the new assessments that the County should go back and fix the problems and adopt the new numbers. Obviously, the County chose to ignore that admonition and decided to adopt the base year system as a way to avoid having to come to grips with the reality of the changing market values during the low interest rate environment of the 2002 to 2005 period which drove sales and rising prices.
Perhaps the Judge can finally get his earlier ruling put in force by throwing out the problem- ridden base year plan the County adopted. As we have noted, the base year plan is unconstitutional in that it does not treat all property owners uniformly, i.e., some would be taxed on 2002 sales prices while others will be taxed on future construction costs. Secondly, using the 2002 numbers lock in the substantial errors that caused such uproar when they were adopted. The numbers contained showed serious underassessments for high end homes and overassessements for the very low value homes. On average the errors “met” International Standards, but there were significant issues across neighborhoods within the County.
The new assessments with appropriate remedial steps could have gone a long way to creating a much better and fairer set of assessments.
The issue at the time was whether the new “2006” numbers better reflected market values than the old 2002 numbers still being used for property taxes in Allegheny County. Many on Council and the Chief Executive were opposed to the new assessment values because of the relatively large increase in market values captured by the latest reassessment.
As we pointed out on numerous occasions at the time, the new reassessment numbers much more accurately reflected market values than the 2002 figures. The newer assessments corrected some of the serious 2002 assessment problems in all price ranges studied except for the homes in the under $50,000 group.
The problem was that the Chief Executive and most of County Council simply did not want to send out the new assessments because of the large increases many homeowners would receive. There was no trust that the limit on windfalls would be honored by municipalities and school districts. Of course, that is a poor excuse for not proceeding with the better numbers. If school districts abused the windfall, then legal action would have followed. That is the position the Executive should have taken.
But, in actuality, many high end homeowners would have seen substantial increases in assessments even after the windfall adjustment was made. Why? Because in the 2002 assessment their properties were far below market value and the new assessment had brought them more in line with reality. Some of those assessments rose by 30 or 40 percent, which means that, notwithstanding the adjustment for windfall, the owner would face a significant rise in taxes. Therein lay the real opposition to going forward with the more accurate figures.
Fast forward to December 2006. Asked to testify in the lawsuit case brought against the County’s base year assessment system, the Chief Assessor now says that the overall assessment met international standards but some neighborhoods were inaccurately assessed. Her evaluation found that these problems could indicate problems within the entire reassessment.
But most revealing was her comment that, “The response to me was that no further analysis would be done, and the move toward the base year was begun.” The supreme irony is that Judge Wettick, who is hearing the case, had ruled in an earlier case regarding the new assessments that the County should go back and fix the problems and adopt the new numbers. Obviously, the County chose to ignore that admonition and decided to adopt the base year system as a way to avoid having to come to grips with the reality of the changing market values during the low interest rate environment of the 2002 to 2005 period which drove sales and rising prices.
Perhaps the Judge can finally get his earlier ruling put in force by throwing out the problem- ridden base year plan the County adopted. As we have noted, the base year plan is unconstitutional in that it does not treat all property owners uniformly, i.e., some would be taxed on 2002 sales prices while others will be taxed on future construction costs. Secondly, using the 2002 numbers lock in the substantial errors that caused such uproar when they were adopted. The numbers contained showed serious underassessments for high end homes and overassessements for the very low value homes. On average the errors “met” International Standards, but there were significant issues across neighborhoods within the County.
The new assessments with appropriate remedial steps could have gone a long way to creating a much better and fairer set of assessments.
