A high-stakes court battle over a number used in Allegheny County property assessment appeals culminated Wednesday in an agreement that could result in big tax breaks for thousands of affected homeowners.
As part of Wednesday’s consent order, the county agreed to re-examine the way it coded some 2020 property sales data that will serve as the basis for calculating assessments during appeal hearings this year.
The decision came during a court hearing related to a lawsuit filed last year that charged Allegheny County had been either “grossly negligent” or “intentionally dishonest” in the way it coded the sales, resulting in increased tax revenues during appeals.
It’s an agreement that could bring some relief to new homebuyers in the county who are battling school districts and municipalities over the value of their properties and how much they will be taxed.
At issue is what is known as the common level ratio — a state calculation used in assessment appeals to account for widening disparities between assessed values and current sales prices since the last countywide reassessment took place a decade ago.
The ratio — which is calculated based on sales data submitted by the county — is used to determine the value at which a property will be taxed.
For 2022 appeals, the common level ratio that was to be used had been calculated at 81.1%. But lawyers and consultants for the plaintiffs who filed the lawsuit believe that number is inflated.
They think it likely will drop — by their calculation it should be set at about 64% — once the county re-examines the data and re-codes sales that previously had been determined to be invalid.
If true, that could make a big difference in the tax bills that Allegheny County homeowners who recently bought homes could be facing as a result of assessment appeals filed this year by school districts and municipalities.
If the current ratio stays in place, a house valued at $100,000 would be assessed and taxed at a value of $81,100.
But if the plaintiffs are right, it would be assessed and taxed at $64,000.
John Silvestri, the attorney who brought the lawsuit on behalf of nine property owners, said the consent order is an opportunity for his clients to “get the increases that were pushed on them reduced.”
Mike Suley, a consultant to the plaintiffs, estimated that the new common level ratio resulting from a re-examination of the sales data could range anywhere from the high 50s to the low 60s.
Taxpayers facing appeals filed by school districts or municipalities “are going to get a break.” he predicted.
“I’m elated,” he said. “This is a game-changer.”
If the common level ratio drops significantly, Mr. Suley foresees taxing bodies around the county withdrawing many of the appeals they filed this year because the revenue gains won’t be as substantial.
“If you’re a school district, you’re on pins and needles but we have the facts on our side,” he said.
In a statement released after the court session, county Solicitor Andrew Szefi said it has always been the goal of the office of property assessment “to update its practices and training to best serve Allegheny County’s residents, including updates to the protocols” used by the office “to keep up with changes.”
“Today’s court order reflects some of those changes. While its impact on the common level ratio remains to be seen, it is important that the protocols utilized by OPA, and agreed to in the order, reflect updated guidance from STEB and lead to an as accurate a figure as possible,” he said.
STEB refers to the state tax equalization board, which determines the common level ratio each year.
Mr. Szefi also stated that it wasn’t surprising that the common level ratio could be affected given the activity in the real estate market in the county and around the country.
“We have seen that decrease over the last couple of years and will likely see further decreases in the years ahead owing to the increase in property values here in Allegheny County,” he said.
Both sides are already anticipating the common level ratio for 2023 appeals will be set at 63.6% based on the sales data submitted by the county.
Mr. Silvestri told Common Pleas Court Judge Alan Hertzberg, who is presiding over the case, that the reason for the drop had to do with the way the county re-coded some of the sales. He said the same methodology would be used in re-examining 2020 sales.
While Mr. Szefi disputed in court some of Mr. Silvestri’s claims regarding the way the county coded 2020 sales, he acknowledged that the ratio could be different with a re-examination of the data.
As part of the consent order, the plaintiffs will have access to the sales that are being re-examined and any changes that are made. The plaintiffs also will have the opportunity to present sales to the county’s property assessment office for re-examination.
Any disputes will be resolved by Judge Hertzberg.
While the re-examination is taking place, the board of property assessment appeals and review will be “holding our determinations until we receive some guidance on what the new CLR might be,” solicitor David Montgomery said.
Mr. Montgomery also mentioned in court that the board could open up a new appeal window depending on what happens with the common level ratio. The deadline for filing appeals this year was March 31.
“That remains to be seen,” he said afterward. “I think that would depend on how significant the CLR change is.”
Mr. Szefi pointed out in his statement that the consent order only affects about 12,000 properties subject to property assessment appeals this year, with most of those appeals filed by school districts and municipalities. The rest were filed by property owners.
The county itself does not file assessment appeals, although it benefits from any increases awarded to the other taxing bodies through the appeals process.
In the lawsuit, the plaintiffs contended that the county had manipulated the sales data submitted to the state by targeting those transactions where the assessed value was closer to the sales price, while excluding those where there were larger disparities between the two.
That, in effect, kept the common level ratio higher than it should have been, they claimed.
As part of the lawsuit, Mr. Silvestri, a former assessment board solicitor, analyzed the 2020 sales information submitted to the state tax equalization board. He determined that of 34,563 sales reported, only 5,355 — or 15.49% — were coded as valid for the purpose of calculating the common level ratio.
Two of the plaintiffs who might benefit from the consent order are Maddie Gioffre and Shaquille Charles. The married couple own a home in Wilkinsburg that was the subject of an assessment appeal.
“I’m happy that the county has agreed to do something different and make a change. There was clearly something wrong,” Ms. Gioffre said.
The couple’s assessment for tax purposes was calculated using a common level ratio in the mid-80s. They are hoping the new calculation will be much lower, bringing down their property tax bill.
“It will really help, especially since we’re looking to expand our family and need to save where we can,” Mr. Charles noted.
Mark Belko: mbelko@post-gazette.com or 412-263-1262.
First Published: April 28, 2022, 1:15 a.m.
Updated: April 28, 2022, 9:56 a.m.
