Parcels Move from Exempt to Taxable…Maybe

Six years after County Council enacted an ordinance saying they wanted properties receiving a tax-exemption as an institution of purely public charity to be reviewed periodically and seven months after County Council held a hearing involving the region’s largest non-profit health provider, about 20 owners of parcels that were deemed exempt have indicated that those parcels should indeed be taxable.

Recall that, as we noted in a Brief at the end of 2012, the County Chief Assessment Officer was given the job of conducting a review of properties that qualified as tax-exempt under the state’s Institutions of Purely Public Charity Act once every three years to determine if the exemption was justified. Lo and behold three years after the ordinance was passed no review was done. Same deal four years later, five years later, etc. County Council chose to conduct a hearing regarding the status of UPMC, and soon after the County Executive told the Assessment Office to get moving and carry out the dictates of the 2007 ordinance.

Inquiries on 2,800 parcels were sent out. The value of the 20 properties comes to $8.7 million: at the County millage rate of 4.78 mills, the County would collect $41,000 in real estate taxes. Twelve of the parcels are located in the City of Pittsburgh, meaning the City and the Pittsburgh Public Schools would collect money from those properties. The remaining eight are spread throughout other municipalities and school districts. It should be noted that several of the parcels that appeared in the article now indicate that something is in error and they should not be on the list.

When the Controller’s office looked at this issue last June in a Taxpayer Alert they estimated that the County had around $23 billion in exempt property post-reassessment. That means the value of the 20 properties moving to the taxable side represents about 0.03% of the total exempt value. Realizing that much of that total is owned by various levels of government which would not be scrutinized under the ordinance, the percentage of these properties as part of what is left over would rise, but without seeing how much of the total is accounted for by state, Federal, and authority ownership it is not clear by how much.

A New Approach for City School Property

Late last week the Pittsburgh Board of Education approved a new set of guidelines on how to dispose of surplus property. With declining enrollment and some buildings not fit for rehabilitation, the District will now have a clear way of proceeding with the sale of property.

Key in this set of guidelines is the fact that charter schools will not be discriminated against buying District-owned property that is for sale. As the solicitor for the District noted the policy "removes the apparent bias against charter schools" who felt that they were not getting a fair shot at buying property. For instance, the URA-which is marketing some closed school buildings-had a note on its website that "the district prefers not to ‘encourage’ competing schools." That language is supposed to be removed as a result of the guidelines.

That does nothing to guarantee that the District won’t continue to stifle actual charter school competition by denying charters (two were turned down last month) but it might give parents who want choice some hope. Consider that the Center of Education Reform’s latest "Survey of America’s Charter Schools" found that 65% of all charter schools have a waiting list, which is up from 58% in 2008. On average, 239 children are waiting to enter a charter school.

If Pittsburgh Public Schools are confident in their product, then they should welcome all competition, especially those willing to take some property off of the District’s hands.

House Plays Politics with Court Order

The Pennsylvania House of Representatives passed a moratorium on court-ordered property reassessments until the matter can be studied further. This moratorium would not apply to counties going through voluntary reassessments and it would be optional for those counties going through court-ordered reassessments. Interestingly enough this legislation seems to primarily benefit Allegheny County and its Chief Executive who just lost a State Supreme Court Ruling regarding his property reassessment scheme. While this piece of legislation is unlikely to make it through the Senate, it serves as an illustration of politics trumping good governance.

The moratorium would expire on June 30, 2011 or until the study is complete, whichever comes first. Interestingly enough this date delays any decisions from being made until after the Gubernatorial election in 2010, for which Allegheny County’s Chief Executive is considering a run. Of course he once used anger over property assessments to propel himself into the County Executive’s seat and will do anything he can to make sure this same anger doesn’t derail his aspirations for the Governor’s chair.

But the Supreme Court ruled that a base-year assessment system is unconstitutional as used in Allegheny County which locks in inequities as properties in growing neighborhoods, over time, become under assessed while those in declining neighborhoods become over assessed. While the Court suggested the General Assembly take up the issue of base year assessments, this recent legislation from the House is not what they had in mind. Obviously members of the House are also afraid of voter outrage as the roll call shows only one vote against and 196 in favor. Instead of tackling the issue head-on, they have decided to play politics. The property owners of Pennsylvania deserve better.