County to Get Handle on Tax Exempt Properties

County to Get Handle on Tax Exempt Properties

All non-profit property is exempt from taxation, but not all tax-exempt property is exclusively non-profit. That’s one of the important layers that have to be peeled off by the public, as well as by policymakers, when they discuss the status of tax-exempt property and say that if tax-exempt property were taxable taxing bodies would reap a bounty of dollars.

As yesterday’s Blog pointed out, there is merit in reviewing whether or not a property is truly deserving of a tax-exemption under the Pennsylvania Constitution or statutory provisions. That’s what the County Controller wants to do, as that office has issued its inaugural Taxpayer Alert discussing tax-exempt property, a recent court case, and the makeup of exempt property in Allegheny County.

The alert points out that "the total appraised value of exempt properties in Allegheny County is nearly $17 billion. After the latest reassessment this total to rose to over $23 billion". That means the rate of change in exempt value is roughly 35% from 2012 to 2013. But is that rate of change bigger than the rate of change for taxable property? It was $58 billion in 2011 according to the Controller’s CAFR.

How about in proportional terms? Based on the 2011 numbers, the $16.5 billion in exempt value represented 28% of total taxable residential and commercial value in the County (the $58 billion mentioned above). If taxable value rises to around $86 billion upon certification, the projected rise in exempt value to $23 billion keeps the ratio at around the same level as currently.

Then we have to turn to the original point above: just because a parcel is exempt from taxation does not mean it is a hospital, university, church, or charity. This was the analysis we did about a decade ago when looking at the City of Pittsburgh’s exempt parcels. The Alert shows that, based on land use codes (which may or may not have shortcomings), about 36% of the County’s total tax-exempt value can be attributed to church, hospital/charity, or higher-ed. About the same share, 38%, is tied to County government, school districts, or municipal government. A big piece (21%) is identified as "other", which could mean non-profit but could also include a lot of property owned by public authorities (unless those are counted under the county or municipal total). It is doubtful that even a serious examination of exempt parcels is going to lead to taxes being imposed on the County Courthouse or the slew of municipal centers or school buildings, meaning that the tax "loss" attributed in the Alert to various taxing bodies is overstated.