Proposed bill would allow Pittsburgh to enact a LOOP

Proposed bill would allow Pittsburgh to enact a LOOP

Legislation that was introduced this week in the Senate would amend Act 146 of 1988 to allow the City of Pittsburgh to create a property tax relief program for longtime owner-occupants (LOOP).

We wrote about the LOOP program in a 2016 Policy Brief when it arose as part of the city’s task force on affordable housing.  A 1984 amendment to the Pennsylvania Constitution permitted first and second class counties (Philadelphia and Allegheny) to enact property tax relief provisions for people who had resided in their principal residence for at least 10 years and saw their value go up because of the refurbishment of other residences around them (i.e. gentrification).

So, what would the proposed legislation aim to do? First, it would amend Act 146 by defining “municipality” as either a county of the first class (Philadelphia), a county of the second class (Allegheny), or a city of the second class (Pittsburgh).

Philadelphia has a LOOP, and Allegheny County had one briefly in the 1990s until it was struck down by the courts.  The reason, according to a copy of the case, was that the ordinance did not specify that the increase in value had to be the result of refurbishment of other property.  Note that since that time there have been tax relief programs created in Allegheny County for the county, municipalities and/or school district taxes for senior citizens or homestead property.

Second, it would amend the language pertaining to school districts and municipalities in a county of the second class by adding authority for a city of the second class to adopt a LOOP program “regardless of whether a county of the second class has adopted a program.”

Third, it would specify that if there is an increase in value of the “principal residence” (the existing language is “real property”) from refurbishing or renovating of other “real property” (broader than the existing language is “residences”) then a program of uniform relief would be permitted.

If the law should pass it would then be up to the city to decide if it wants to utilize it (Philadelphia did not enact its program until 2014), where to utilize it, if city residents could take the homestead exemption and senior tax relief and qualify for the LOOP and if there would be some value change threshold to qualify (in Philadelphia, value has to triple).

Besides what could be negative consequences from enacting such a program, Pittsburgh, while being able to “go it alone” would still need the county to reassess in order to determine if an owner’s primary residence has risen in value.  Any guess when that might happen?