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.