In recent years, the taxing courts have filed tax assessment appeals due to price increases in sales of real estate in Allegheny County. Dubbed the “newcomer tax,” school districts search for newly acquired properties and appeal property assessed values to the Allegheny County Board of Property Assessment and Appeals (“BPAAR”). The districts argue that the recent sale price justifies an increase in the fair market value of the property and therefore property taxes. If BPAAR agrees, it is required by law to apply the common level ratio in effect for the tax year to determine the valuation.
In 2021, a group of ratepayers filed a lawsuit in the Allegheny County Court of Common Pleas challenging the accuracy of the common level ratio used in the 2022 appeals. In the lawsuit, the ratepayers argue that the ratio current 81.1 should be lowered to 63.53. Applying a ratio of 81.1 versus a ratio of 63.53 significantly affects a taxpayer’s valuation. For example, if a property has a current fair market value of $100,000 and is purchased for $150,000, a ratio of 81.1 would result in an appraisal of $121,650. If, however, a ratio of 63.53 were applied, the valuation would be $95,295. It is therefore clear that a reduced ratio is advantageous for taxpayers.
Much to the delight of ratepayers, following this trial, on September 1, 2022, the Court of Common Pleas issued an order setting the ratio for 2022 appeals at 63.53. On September 15, 2022, the Pittsburgh School District appealed the order to the Commonwealth Court. The district’s appeal functions as an override or suspension of the ordinance, which means it remains unclear what the correct ratio should be for 2022 appeals. No briefing or argument is scheduled yet, leaving Allegheny County ratepayers and appellants in legal limbo.
We talk about legal limbo for a number of reasons. First, the BPAAR has already ruled on thousands of appeals in 2022 using the ratio of 81.1. If the ratio is reduced to 63.53, it has not been determined whether these cases will be reopened. Second, BPAAR has yet to hear thousands of 2022 appeals. After a period of extensions, BPAAR resumed hearings on November 13, 2022, without acknowledging what ratio will be applied. Third, the appeal window for the 2022 appeals closed on March 31, 2022. If the ratio is lowered to 63.53, all taxpayers should have the opportunity and the right to introduce their own appeals for the tax year 2022. Currently, the county council has introduced a bill in committee that, if passed, will extend the appeal deadline to November 30.
For 2023, the published ratio for Allegheny County is 63.6 and is not in any litigation. More importantly, as 2022 looks to 2023, interest rates continue to rise and real estate values decline, many homeowners may want to challenge property assessments in 2023.