After reassessment, many in county could see lower taxes

Home values are rising, but that doesn't mean Allegheny County property taxes will increase from this year's reassessment.

Owners of more than half of the county's nearly 600,000 properties could get county tax cuts once officials finish a court-ordered reassessment, according to sales data analyzed by the Tribune-Review and the real estate information company RealStats.

"I don't have much faith at all. I think that the point of the reassessment is to attempt to raise taxes in general," said Thaddeus Fields, 37, of Shaler, who could save hundreds on the taxes on the Kleber Road home he bought in July. "I would very much like my taxes to be reduced. If it happens, that would be great."

Property values have risen about 24 percent countywide since 2002, according to RealStats, a South Side-based company that compared nearly two years of sales data -- 26,535 market-rate sales -- with values from the 2002 reassessment schools and governments use to determine taxes. County officials are using the same sales figures to help revalue all properties for tax bills starting in 2012.

If property values rise from an assessment, state law says taxing bodies must lower millage rates accordingly. So the RealStats sales data suggest people will pay higher taxes only if their property values increase more than the county average of 24 percent. Owners of properties that declined in value or increased less than 24 percent should get county tax cuts.

Fields bought his home for $143,900, a 13 percent increase in value since the 2002 reassessment, according to RealStats. Homes in the county and his township have generally appreciated at twice that rate, meaning Fields is likely to save on taxes starting next year.

"If everyone's house went up, it doesn't mean everyone's taxes will go up," said Paul Fischbeck, a Carnegie Mellon University public policy professor. "Those who went up only a little bit will see a decrease in their tax bills."

Fischbeck studied the RealStats data and numbers the county published after an aborted 2005 reassessment. The numbers show largely the same trends: Property values have risen steadily, and most suburban homeowners deserve a tax cut. The fastest-rising values are in Pittsburgh neighborhoods, meaning people in 87 of 130 suburbs deserve to pay a lower share of county taxes, according to the data and Fischbeck's review.

It is difficult to predict just how much any property owner might save. Reassessment will include more than sales data, said Timothy H. Johnson, the county administrative services director overseeing the project.

Workers look at the outsides of homes and businesses to check conditions. They collect data on construction costs and business earnings for commercial properties, outline neighborhoods based on home styles and conditions, and use computer algorithms to process information.

Market values can swing widely and rapidly, but county officials must use one day for the reassessment. They'll use the value of properties on June 30, 2010, to reset tax bills in 2012.

This will be Allegheny County's first reassessment in 10 years. Like neighboring counties, Allegheny has used a "base-year" system, which utilizes old values to set taxes if values don't change much.

Counties stuck with the base-year system to avoid problems and political uproar. Westmoreland hasn't altered assessments since 1972, and Butler hasn't since 1969, making those two of the five oldest assessments in use statewide.

But Allegheny and Washington counties lost lawsuits forcing them to reassess, because they used the system for so long that values changed too much. Washington County hasn't reassessed since 1981. Owners in the two counties are paying unfairly high or low taxes because bills are calculated using inaccurate values, which is unconstitutional, judges determined.

Allegheny County is near the end of its property reviews, and will calculate its values this summer. Washington County extended its deadline in hopes the state Legislature will devise a new system, said commission Chairman Larry Maggi, a Democrat.

"I just think the process is flawed. At this time in history, with what's going on with the country, to spend $8 million to reassess is foolish," he said.

The shock of rising home values and clumsy results of past assessments can have huge political impact. Allegheny County Executive Dan Onorato in 2003 used the issue to win election.

"My concern is that someone who sees a 15 percent increase in their property value -- and should actually see a tax cut -- is going to be upset by a reassessment," Fischbeck said.

It can also hurt business, said Carnegie Mellon economist Robert P. Strauss, who clashed with Onorato over reassessments. Businesses want stability and a trustworthy system before they invest. But it worsens the problem to delay a reassessment when values fluctuate wildly, he said.

That doesn't matter to taxpayers who are skeptical because of failed assessments, said Rich Fitzgerald, County Council president and a candidate for county executive who is pushing for a moratorium on reassessments. The 2001-02 reassessments sparked 180,000 appeals, 75 percent of which owners won.

"I personally, as a tax collector, dread the thought of going through a reassessment mainly because everyone, all the taxpayers, will be up in arms over it," said Patricia DiCello, city treasurer in New Kensington. "Change scares people."

A big cause for fear is school taxes, which add up to about four to six times more than county property taxes. Even if county taxes decrease, school taxes depend on micro-trends within districts and are harder to predict.

Regional districts are the easiest to analyze. In Highlands School District, for example, values rose in three towns and dropped in one. In Brackenridge, Fawn and Harrison, sales outpaced the 2002 assessed values by 10 percent to 13 percent. But in Tarentum, they dropped 12.6 percent to an average sale price of $40,119, according to RealStats.

The numbers indicate that owners in all those towns likely will get county tax cuts, but school tax cuts could be limited to Tarentum. Its property owners own less-valuable properties and should pay lower school taxes after a reassessment. Owners with more-valuable properties in the other towns would pay more to make up the difference.

"It went from a real nice, tight-knit community to falling apart," said Rob Malinsky, 30, a lifelong Tarentum resident. There are two boarded-up homes across the street from where he lives and at least four foreclosures in his neighborhood, according to RealStats. "Everyone is moving out. It's too expensive to live here."

Still, there are many people, even in wealthier communities, likely deserving a tax cut.

Upper St. Clair values increased 29.1 percent, and taxes for most owners there likely will rise, according to RealStats. But Michael Cruny chose to buy his first home there in part because his Realtor told him about the changing tax landscape along the Allegheny County-Washington County border.

The 27-year-old lawyer grew up and works in Washington County, and he shopped in Peters, knowing homebuyers long flocked across the county line for lower taxes. But with Washington County nearing a reassessment, the bevy of new homes in Peters could be vulnerable to large tax increases.

Cruny found a 50-year-old ranch house in Upper St. Clair that will be affected the opposite way. In August, he paid $134,637 for the three-bedroom house on Long Drive. That sales price was about 15 percent higher than the value from the 2002 assessment, according to RealStats.

Because that didn't keep pace with rising values in Upper St. Clair or the rest of the county, his combined tax bill of about $3,800 could drop by about $400.

"I don't know exactly what I would do with it," said Cruny, who has about $40,000 in college debt. "But being on a tight budget, trying to pay back loans and with a mortgage and everything, it would definitely help out."