Downtown is being hit with another round of big property assessment cuts, delivering another blow to a city tax base already staggering over a half a billion dollars in reductions awarded in recent years.
Allegheny County Board of Property Assessment Appeals and Review members approved nearly $64.9 million in assessment decreases Thursday for the 2025 tax year.
The biggest by far went to the 31-story Fifth Avenue Place, the Highmark Health headquarters, which saw its taxable value slashed by $63.4 million overall.
In addition, the board approved a $1.4 million cut in the taxable value of Downtown’s Warner Centre, the former theater that is now an office and retail complex.
With the latest actions, assessment reductions in the Golden Triangle, which represents about a quarter of the city’s tax base, are already approaching $100 million for 2025 alone.
That could cost the three taxing bodies — the city, the Pittsburgh School District and the county — nearly $2.5 million in property tax revenue.
And that’s on top of the roughly $500 million in cuts won the past few years by the owners of some of Downtown’s most prominent real estate, including U.S. Steel Tower, PPG Place, the Tower at PNC Plaza, and BNY Mellon Center.
Mike Suley, assessment board chairman, said Thursday that there are more appeals involving big-ticket Downtown properties still to be decided this year.
”It’s death by a thousand cuts,” he said. ”This will continue until there’s a reassessment.”
The Fifth Avenue Place reduction involved two separate parcels owned by Highmark or its real estate arm. The taxable value of the first parcel plunged by $41 million, or 60.8%, from $67.4 million to $26.3 million. The assessment on the second fell by nearly 62% from $36.6 million to $14.2 million, a difference of nearly $22.4 million.
Highmark, through spokesman Aaron Billger, declined comment on the reductions, saying the health insurance and hospital giant had not been formally notified of the decisions by the appeals board.
Fifth Avenue Place is the second prominent Downtown building to get a big cut in its taxable value for 2025.
Last month, the assessment board sliced the taxable value of Penn Avenue Place, known to many Pittsburghers as the former Horne’s department store, by $18.3 million to $30.5 million.
According to county real estate records, that property, at 501 Penn Ave., is owned by HTA-Penn Ave LLC. It is leased exclusively to Highmark, which uses the building for office and meeting spaces.
Highmark will benefit from the reduction because it pays the real estate taxes on the building. Mr. Billger has said that to the best of this knowledge, the building owner led the appeal of the property.
Warner Centre’s assessment, meanwhile, declined from $4.9 million to $3.4 million, or 30%.
All of the reductions came after a hearing during which the property owner and the taxing bodies had the opportunity to present evidence to a hearing officer, whose recommendation is then reviewed by an assessment board member before it goes to the full board for approval.
The plummeting values in Downtown have been led mainly by two factors. One is stubbornly high office vacancies stemming from the pandemic and the hybrid work policies it spawned.
But the other big factor has been a sharp drop in the common level ratio (CLR), the number used in appeal hearings to calculate taxable value. It has fallen from 87.5% to 52.7%, making it easier for property owners to win assessment decreases.
In a lawsuit filed this week to force the county to reassess all of its properties, attorney Ira Weiss argued on behalf of a Churchill homeowner that the erosion of the commercial tax base in Downtown and throughout the county unfairly shifts tax liability over to residential real estate owners.
He maintained in the complaint that a “substantial number of commercial property owners have used the CLR to obtain unreasonably low assessments” through the appeals process.
In an interview Thursday, Mr. Weiss — who also is representing the Pittsburgh School District in its lawsuit to force a countywide reassessment — said he’s not shocked by the latest decreases in Downtown property values.
“It’s not sustainable. It’s getting worse. The patient is dying and they’re not doing anything to medicate it,” he said of the county. “This blindness the county has to the huge inequity this causes among taxpayers who can least afford it ... is very disturbing.”
The county has argued, in seeking to dismiss the district’s lawsuit to force a reassessment, that school board members simply can raise taxes to account for revenue shortfalls caused by assessment decreases.
It also has stated that the current assessment system is equitable in the sense that it treats all taxing bodies the same.
But like Mr. Weiss, Dominick Gambino, a former county assessment director who now is a consultant for school districts and municipalities, believes the solution rests with regular reassessments.
“If the county would be correcting the values routinely, there would be no common level ratio that can be easily manipulated, and the values would not only reflect current value and be more accurate and property taxation would be easy to understand by folks like my Aunt Rose,” he said. “But more importantly, the values would be equitable and uniform and not the regressive mess they are currently.”
Downtown was not the only place to see a big drop in taxable value of some properties in the latest round of approvals by the assessment board.
In Monroeville, the assessed value of the Miracle Mile shopping center property fell by $11.1 million, or 24.9%, from $44.5 million to $33.4 million. In Moon, the taxable value of the Harmony at Diamond Ridge senior living complex tumbled $22 million, or 53.5%, from $41.1 million to $19.1 million.
First Published: January 31, 2025, 12:57 a.m.
Updated: January 31, 2025, 8:50 p.m.