Schedule for Mini Casino Auctions Set as Off Limit Areas Grow

This past week the Gaming Control Board set the auction schedule for the new Category 4 mini casinos authorized by Act 42.  The auction’s initial round will occur on January 10th 2018 and will be open to the current Category 1 and 2 license holders.

There are ten Category 4 licenses that will be up for auction with a minimum bid of $7.5 million to operate slot machines (maximum of 750) and $2.5 million for table games (30 initially).  The process reads more like a sealed bid with envelopes containing the bid for the license and the location the casino would be situated contained in separate envelopes.  If the ten licenses are not auctioned off successfully on the 10th then the subsequent dates listed in the announcement will be utilized.  If the bidding moves past the initial round then the process would be opened to the two Category 3 license holders.

Now on to locations: as we pointed out in a blog when the law was close to passage, there were initial restrictions on Category 4 casinos setting up shop in certain counties. The Act allows municipalities to opt-out of hosting a Category 4 casino if a resolution of the governing body expresses that wish and it is communicated to the Control Board.  Here is the list as of Monday.  There are eight municipalities in Allegheny County that have decided they do not want to host one of the facilities.   Not on the list, but reported in the media, is Philadelphia, which voted to opt-out of hosting either a mini casino or video gaming terminals.  The city/county does host a stand alone Category 2 facility and will soon have the long elusive second one permitted in the 2004 law, and one member of the City Council stated “It’s better to focus on the casinos that we have.”

Deed Transfer Tax Boost Gets Preliminary Nod

What seemed dead in the dog days of summer, the proposal to raise the City of Pittsburgh’s portion of the deed/realty transfer tax from 2% to 3% (the state levies a 1% tax, as does the Pittsburgh Public Schools, see this blog for more details) could become reality.   Based on a news article the increase would be phased in over three years, with the rate rising 0.5 point in 2018 and staying there in 2019 before going to 1 point in 2020, bringing the total deed transfer tax paid in the City to 5% (3 points City, 1 point Pittsburgh Public Schools, 1 point state).

The proposed increase came out of the Affordable Housing Task Force, which raised several possibilities for funding the goal of affordable housing, though the Task Force did recommend putting whatever tax that would be slated for an increase on the ballot.

Revenue from the tax is projected to bring in $24 million in 2018 at the 2% rate.  The last increase in the tax came in 2004.

But wait, City Council also has another aspect of the plan.  While it raises the tax, Council would direct the Urban Redevelopment Authority to create or restructure a program providing grants for closing costs for first time City buyers.  If the grant program were to come to fruition, the proposal would stipulate three conditions:

a) Must not have previously purchased a residential property in the City of Pittsburgh;
b) The applicable residential property must be owner-occupied for at least three (3) years following the closing date; and
c) The property must be sold at or below the average sale price in Pittsburgh. Average sale price shall be based on the average single-family home sale price within the City of Pittsburgh over the previous three (3) years.

This does not do much to alter the impact of the deed transfer tax, or its hike, on other buyers or sellers outside of the terms of the grant proposal idea (the transfer tax is typically split between the buyer and seller, would disqualify non-first time buyers such as people who might be moving from one house in the City to another, and would not apply to non-residential transactions).

To see a list of realty transfer tax rates in Allegheny County, follow this link.

DCED Secretary Will Hold Hearing on Act 47 Status for Pittsburgh

Next week the Secretary of the Department of Community and Economic Development (DCED) will hold a public hearing to determine whether Pittsburgh should have its financially distressed status terminated.  Under the law–Act 47 of 1987, which was amended by Act 199 of 2014–regarding “termination of status” the Secretary will have 90 days following the public hearing to issue an “…administrative determination of whether the termination of status is appropriate and reasons for the determination”.

Act 199 amended the factors to be considered by the Secretary from what was in the original statute.  These are contained in section 255.1(c) of the statute and the rescission report by the coordinator addressed each in turn:

  1. Elimination of Operational Deficits
  2. Obligations to Finance Deficits Retired
  3. Significant Claims and Judgments Resolved
  4. Five Years of Projected Positive Operating Results

The determination of the Secretary can be appealed by any number of parties, including the governing body of the distressed municipality, creditors, or labor organizations.

Land Bank Policies Up for Consideration This Week

Pittsburgh City Council will hold a post-agenda session and a committee hearing this week to deliberate on the policies and procedures manual (manual) for the Pittsburgh Land Bank.  The mission of the Land Bank, as outlined in the manual, is to “…return unproductive real property to beneficial reuse…” under the terms of the state Land Bank law (Act 153 of 2012) and the ordinance passed by the City of Pittsburgh.

The manual, which is currently in draft form, notes that in the “organizational context” (section 1.03) the Land Bank is one of several entities and agencies involved in the overall mission and will enter into a three party cooperation agreement with the City and the Urban Redevelopment Authority to spell out the “…ongoing interaction” between the parties.

The manual spells out how the Land Bank is to acquire property and the factors it is to consider (section 4.01) and how to dispose of its holdings (section 5.01).  The Land Bank is to be funded by a combination of levies it places on the real property it may come to hold or by grants or loans from other levels of government (section 13.03).  It can also receive a portion of the property taxes it holds if the taxing bodies agree.

City Circles Back on LOOP Idea

At Pittsburgh City Council’s proceedings this week a resolution was introduced to explore the possibility of creating a long time owner occupant protection program (LOOP) that would permit a tax exclusion/exemption to long time home owners.  The resolution under consideration would direct the City Treasurer and Finance Director to work with members of the General Assembly to explore a LOOP program, even though it seems all the pieces are in place.

We touched on this concept last year when the LOOP was included in the final report of the Affordable Housing Task Force.  By virtue of a Constitutional amendment in 1984, counties of the first (Philadelphia) and second (Allegheny) class are permitted to make special provisions “…applicable to taxpayers who are longtime owner-occupants as shall be defined by the General Assembly of residences in areas where real
property values have risen markedly as a consequence of the refurbishing or renovating of other deteriorating residences or the construction of new residences.”  In other words, in areas that are gentrifying.

The state law that carries out the amendment was passed in 1988, and that statute allows the municipalities and school districts in a second class county to enact programs within their own taxing jurisdiction (Philadelphia is a combined city-county and the city levies taxes for the school district, whereas Allegheny County has separate municipalities and school districts with their own taxing power).  Pittsburgh even has language in its code of ordinances that outlines a LOOP program, but as we found out last year some murkiness surrounding how the City, or possibly Allegheny County, designed the program led to litigation, though no one involved could cite the court case.  In Pittsburgh’s code it notes that if a home’s value increases due to improvements to the principal residence the exemption would not count; the program is supposed to provide relief from increases in value due to refurbishment and new construction of other properties in the designated area.

It is worth noting that the LOOP idea and its approval for inclusion in the Pennsylvania Constitution preceded the creation of the homestead exclusion as well as the senior citizen tax relief that is used in Allegheny County and the City of Pittsburgh by way of the additional sales tax (RAD) of 1%.

The only other place where a LOOP program is available is Philadelphia: they do have it, but homeowners cannot take the LOOP and the homestead exemption.  In addition to the criteria Philly establishes to qualify for the LOOP, there has to be a tripling of assessed value in order for the LOOP to be an effective relief program.



Changes to Public School Code Now Law

Updating a blog from October that covered proposed legislation to amend the state’s Public School Code in regards to teacher layoffs, which is contained in Section 1124: Causes for Suspension.  The Section currently allows for ” board of school directors [to] suspend the necessary number of professional employes” if there is a decrease in enrollment, curtailment of programs, consolidation of schools or creation of a new school district.

Now the law, which takes effect immediately, will add a fifth reason for suspension, economic reasons.  There are a list of conditions that apply, which are laid out in the statute (see this document, beginning on page 16). In addition to these conditions, a study of the effectiveness of the changes allowing economic reasons for layoffs will have to be completed following the 2012-22 school year.  Time will only tell how many school districts go through the process of, one, laying off teachers, and two, citing the economic reason language as opposed to one of the existing conditions as the reason for the suspensions.

There are other changes that will take place due to the Act, which are described in the fiscal note on the legislation.

City Sees a Drop in Premium Pay

A news article this morning noted that the amount of money the City of Pittsburgh is paying for overtime in the Fire Bureau (in the Public Safety Department) is decreasing from where it stood a few years ago.  In terms of dollars budgeted for “premium pay”–which is one of six subcategories of expenditure under Personnel-Salaries and Wages in the bureau–the 2013 actual expenditure was $17.8 million (about 31 cents per $1 dollar of total salaries and wages.  This year the budget for premium pay is $15.2 million and for 2018 the budgeted expenditure is slated at $14.9 million.

A longer historical look at the ratio of premium pay to salaries in the Fire Bureau back to 2000 shows highpoints in 2006 of 0.37/1 (this followed separations and retirements in the Bureau due to a change in retiree health care in 2005) and in 2014 of 0.41/1; most other years in the prior to 2014 were in the .20-.29 range, and since then in the mid to high .30s.

As we noted in a 2014 Brief on the Port Authority and its overtime issues “The hefty use of overtime might make good business sense for very short periods when there is an expectation of an increase in revenue that would enable more hiring or when qualified applicants are not readily available”.  However, the additional complication of overtime in public sector work, specifically in the City of Pittsburgh, and even more specifically to the Fire Bureau, is that firefighters are the only collective bargaining unit that can count overtime into pensions, which leads to a practice of working as much as possible in  the final years when pensions are calculated, known as spiking.

The Mayor wanted to see an end to this practice, and it was called for by the Act 47 recovery team, but the 2015 contract between the two parties kept the overtime provision and minimum staffing levels.  Additionally, a 2013 lawsuit by fire captains and deputy chiefs affected premium pay totals, and at the same time the City’s overseers said the number of firefighters would likely have to rise from what had been budgeted.

Supreme Court Will Hear Sick Leave and Building Training Cases

“Did the Commonwealth Court err in holding that the State Emergency Management Services Code, the State Disease Prevention and Control Act Law, the Second Class City Code, and the Home Rule Charter and Options Law failed to satisfy the “expressly provided by statute” exception, and that the City of Pittsburgh therefore lacked the authority to pass the Paid Sick Days Act and the Safe and Secure Buildings Act?”

That is the question contained in the docket sheets (here and here) of the Supreme Court as the appeals of two City of Pittsburgh ordinances proceed through the court system in Pennsylvania.  We wrote about the Commonwealth Court’s majority opinion on the sick leave ordinance in May of this year.  The Court upheld decisions of the Allegheny County Court of Common Pleas on the sick leave and building ordinances–and yet the City, which has lost twice in the courts on these ordinances so far, said through a spokesman that “we welcome our day in court to defend the bills”.

The first defense was concluded in December of 2015–two years ago–when the Common Pleas Court ruled “there are limitations on the City’s authority to enact any ordinance determining any duty, responsibility, or requirement of a business or private employer.”    Then Commonwealth Court this May ruled against the City and “… brushed [the  claim aside by citing the language of the home rule law [at 2962]” regarding prohibited powers.  The City’s record in the courts in recent years has not been in its favor, with only the Commonwealth Court’s reversal of the Common Pleas Court decision on police residency, a reversal which was then reversed by the Supreme Court.

Where Category 4 Casinos Won’t Be Going

Last month we wrote about the proposal in what became Act 42 to create a new category of casinos in Pennsylvania–category 4 or “mini casinos.”  There were restrictions written into the law that prevents category 4 casinos from locating in certain counties (Carbon County can be added to the list regarding the language about sixth class counties that are contiguous to counties hosting a category 2 casino) and municipalities are able to pass a resolution against having a category 4 casino within their boundaries.

The Gaming Control Board is to receive the opt-out resolutions which are to be filed by December 31st of this year to be effective.  After that, category 4 casinos could be located in municipalities that have not, subject to the restrictions noted above.

As of 5 PM yesterday the Board had published the names of 136 municipalities that do not wish to have a category 4 casino.  That’s about 5% of the total number of municipalities statewide.  At least one of PA’s big cities has indicated that it would be fine with hosting a category 4 casino.


City Looks to go Longer on Fire Agreement

In early 2016 we wrote about the proposed service agreement for fire protection between the City of Pittsburgh and the Borough of Ingram, an agreement that eventually was approved as a five year deal between the two municipalities.  Ingram Borough agreed to pay the City $459k through an intergovernmental cooperation agreement.

The terms of that deal are up for amendment this week to a ten year deal with mutual five year renewal opportunities.  The Borough will pay $1.1 million over the life of the proposed deal.  The deal would expire in April of 2026.

The payment to the City is recorded as part of Intergovernmental Revenue, which is budgeted at $50 million in 2018.  About half of that comes from state pension aid ($23 million) and Pittsburgh also has service agreements with the neighboring municipality of Wilkinsburg.