A new fee could be coming to Allegheny County

A new fee could be coming to Allegheny County

This week Allegheny County Council will consider an ordinance that could add a $15 fee to mortgage and deed recordings to fund demolition of blighted property. 

Act 152 of 2016 permits counties to enact a fee of up to $15 and hold the revenue in a restricted fund.  The legislation amended a 1982 statute and presumably redefined “county” to permit Philadelphia and Allegheny County to consider the fee. Under the Act for a property to be considered blighted it must meet at least three of the nine criteria in Act 135 of 2008

Based on a $15 fee, an average of 140,000 deeds and mortgages recorded in recent years and a demolition cost of $10,000 to $12,000 around $2 million would be raised and 167 to 200 blighted properties demolished each year according to the proposed ordinance.

Though nominal, adding the demolition fee would increase the current charge of $166.75 to record a deed or mortgage.  After being set at $150 in 2013 two increases in an existing surcharge that affected all counties raised the charge. The demolition fee is not directly related to covering the cost of recording documents.

Some other points to consider if the fee is enacted:

It won’t be the sole source of demolition funding. Allegheny County, like many others, receives money from the federal Community Development Block Grant program, some spent on demolitions (according to the county’s Economic Development Department, typically the money goes from the county to municipalities and councils of governments who bid the work to contractors). 

While the ordinance states health, public welfare and economic development would be enhanced with the fee, on net—above what is currently spent—how would that be quantified?  Could it be quantified beyond number of structures demolished?

The county would likely account for the fee in a manner similar to other funds, but that does not end the paperwork.  Act 152 requires counties to file reports with the Department of Community and Economic Development (DCED)

Initial reports provide details on how the fee revenue will be spent, how many properties the county estimates it can demolish and any other information the county deems relevant. Annual reports show fee revenues, expenditures and the number of properties demolished.

As of April 6, there are initial reports from 19 counties, including Westmoreland, Beaver and Butler counties.  34 annual reports have been filed by 17 counties (depending on the date of fee enactment, some counties have filed two or three annual reports).   

In total, $5.1 million in fee revenue has been raised, $1.5 million has been spent and 79 properties have been demolished. Besides the gap between what is raised and what has been spent in this time period, several demolitions have far exceeded the price range estimated in the proposed ordinance.  The most demolitions carried out in one year was 11 (Delaware and Lawrence counties from January to December 2019).  

Act 152 contains a sunset provision and is set to expire in January 2027.  That should be honored.  However, it is possible a future General Assembly could decide to extend that date. If Allegheny County enacts the fee, it should embrace the spirit of the sunset review in its home rule charter and commit to end the demolition fee on that date.  That way the county could evaluate the effectiveness of the fee before deciding on the next step.