Nullspace

Heennnrrryyyy GGeeoooorrrgggeeee!!!!!

2012-02-01T00:53:00.000-05:00

OK.. I can't resist this one. It's just floating up there.

EPR has this story on County Councilman Matt Drozd upset over the valuations of 4 vacant properties he owns in the city. Their inconsistent valuation is evidence that the whole assessment is kaput. He really seems to say that his new property valuations are evidence that the reassessment of all 580 thousand properties in the county must be wrong.

So let's see. Indeed Mr. Drozd owns 4 vacant properties on Perrysville Ave. Technically one is owned by him, and 3 others by DROZD DEVELOPMENT & CONSTRUCTION CORP. Here they are in the current assessment records.

http://www2.county.allegheny.pa.us/RealEstate/GeneralInfo.aspx?ParcelID=0023B00203000000

http://www2.county.allegheny.pa.us/RealEstate/GeneralInfo.aspx?ParcelID=0023B00204000000

http://www2.county.allegheny.pa.us/RealEstate/GeneralInfo.aspx?ParcelID=0023B00205000000

http://www2.county.allegheny.pa.us/RealEstate/GeneralInfo.aspx?ParcelID=0023B00206000000

The source of anger it seems is that all 4 properties were indeed assessed similarly at ($2000, $2100, $2,200 and $2,000) respectively. Yet the new assessments: $6200, $1000, $8000 and $8800. Egads. what is up with that? We'll come back to the $1,000 valued parcel in a minute, but the other prices all may make a lot more sense than you think.

First off, despite what is quoted in the article, they are not identical.. at least not in the parcel record which is consistent with the maps/shapes of these parcels.. The Sq. foot of each are: 2080, 2618, 2925 and 2800 . So for the three of them, the assessment per square foot is much more consistent with the new valuations than with the old. An error?

Then.... Are these recent purchases? No, it seems. One bought in 1980. Another couple bought in 1994. So they have remained vacant land in the city for literally decades. What were they bought for? $450, $2,275, $2,275 and $4,323. So he paid very different prices on them, maybe it makes sense they have slightly different values now?

Funny thing right when you think about it. When he bought decades ago there was a land tax in the city of Pittsburgh so he likely had to pay the split tax which really hit vacant land harder than other properties. He did well when the reassessment came in and got rid of the split tax in the city at the time.

So the property listed as $1000? It is the only property listed as having no utilities and no off street parking. I don't see how 2 of them have off street parking as it is... All seem to have some hillside issues. Maybe if the good Councilman corrects the parking data on the property cards as they have shown for the last decade on those two properties he might get a big tax break administratively... no need to go to a formal appeal even.

I'd ask for a commission on that advice for the savings he will get.. but it just can be much. The county tax bill on each property now comes to about $9.38 per year. With the 2% for paying early, and he does pay early each year it comes down to $9.19. Works out to 76 cents per month. So 45 cents postage on the letter back to the county represents almost 5% of his entire tax bill. I guess since he works for the county part-time, he might just drop it off and save the postage.

But this is the entire point of Henry George's land tax. Property in the city undeveloped is not supposed to happen. So sitting on 4 city parcels for decades with taxes so low that there is no incentive to either develop or sell to someone who is willing to develop is exactly what you don't want to happen for a city parcel. Now with the new values jumping several hundred percent he might have to pay $25 in tax annually to the county. Granted a bit more to the city and school district, but still.

and since everything gets tied together in Pittsburgh. The nano-tempest over what percentage of Pittsburgh property owners who will see their taxes will go down with the reassessment?? Well, I excluded properties with previous values under $3K precisely to exclude the many parcels like these that just are not the point when you see the news interviewing long time residents worried they wont be able to pay their new tax bills. These 4 parcels showed up as 4 datapoints in the other calculation.. not mine... so implicitly weighted the same as 4 life long residents elsewhere in city. Does that make sense?

In the end though.. what looks to me like a prime example of the new assessments doing a lot better than previous values is turned on it's head. In this case the old values sure seem to have been done a bit superficially and clearly didn't reflect what was different about the parcels. Now that has been corrected, it is deemed to be evidence of gross error???

Grapeshot

2012-01-31T17:31:00.001-05:00

For those who have been asking... the county's own calculations of the changes in taxable assessment values in total by municipality are as follows:

Clairton +42.1% (I believe this just the part assessed thus far)
Duquesne +31.9% (I believe this just the part assessed thus far)
McKeesport +27.8%
Dravosburg +85.9%
Versailles +43.1%
White Oak +23.5%
South Versailles +69.3%
East McKeesport +26.8%
Wall +23.0%
Wilmerding +15.4%
North Versailles +22.2%
Eliz Boro +12.8%
Eliz Township +29.3%
Forward +54.3%
Pitcairn -5.2%
Monroeville +26.1%
Penn Hills +12.1%
Plum +23.7%
Oakmont +34.8%
Verona +14.1%
Glassport +13.0%
Liberty +19.8%
Port Vue +19.3%
Lincoln +63.7%
Wilkinsburg +25.6% (ha.. I predicted +24.67%)
Braddock +34.4%
Chalfant +12.3%
Churchill +39.4%
East Pittsburgh +27.7%
Edgewood+51.4%
Forrest Hills +36.5%
North Braddock +15.0%
Rankin +75.3%
Swissvale +42.9%
Turtle Creek +8.1%
Braddock Hills +51.9%
Wilkins +29.8%

Rocks and shoals

2012-01-31T11:44:00.002-05:00

It's January and 55 degrees outside in Pittsburgh; the unemployment rate is down and... I guess it isn't true that there are no assessment headlines, but the ones I see are calm, sensible and rational stories*. Makes you wonder why could not have started out that way. Still a banner day all around.

So no poking the bear I say. That and you should never be fooled by the calm weather; the big rocks are always right under the surface and we are still far to close to shore to think this is all over with.

Plenty of other topics. For all the new bemused readers, and the poor PR folks now being assigned to check in every day, I will update my unemployment graphic and add a new twist. The unemployment story is kind of curious in that in ink I only see a story from the PG. The monthly labor force dump is de rigueur all around, yet no story in Trib or PBT or elsewhere as yet. Kind of curious. PG did also note the factoid we pointed out last week that the total employment count for the region is highest since April of 2001. I would say the highest other than just for April of 2001, but I parse. So with the December data just out this is what I get for the history of how regional unemployment looks to me.

What are the red numbers I added this time? I have generally failed in my quest to create a neologism that sticks; I am nowhere near smart enough to ever discover an equation, we will leave that to the physicists; but it is a far lower bar to create a metric. We obsess a bit to much on the monthly level of unemployment. Its the trend and the long term that really matters. So what I have done is create a measure of how many percenage points the region has been above or below the national unemployment rate cumulatively for distinct periods.   So for the prolonged periods where the regional and national rates diverge, there is a cumulative number of "unemployment percentage points-months" that can be added up. I have noted what I have gotten for each of the significant periods for Pittsburgh on the chart.   A name? It could be the Briem Unemployment Metric? Umm...... maybe not.

* and for those who read between the lines.. Note that the PG story makes a step toward clarity by pointing out that the lower percentage  expecting their property tax to go down  applies to a universe much bigger than just residential properties. Note where in that it references "residential and commerical owners" which is a point that was just skipped in the previous reporting. Still not quite right in that a lot of the virtually zero valued parcels I excluded in my higher number are parcels that have no owners really. Some are owned by the city itself, or just don't have owners period. Dead parcels with long gone owners that exist in a legal netherworld or otherwise are not relevant to the question at hand. I am quite sure that if you are talking a universe of Pittsburgh residential owners.. which would be the universe most analagous to those showing up at these meetings or lets say voters in the city.. you are talking a percentage a lot closer to my 65% number previously.  If that is all too much minutia or too complicated in summary: a parcel is not a parcel.   There are some folks out there with toolsheds separately deeded. or Probably should not treat them the same as a person. Citizens United not withstanding. Counting something valued at $1000, and which has a total annual tax of well under $100 as equivalent to most homes is confusing the issue.

Yeah,    12 step program is failing.

Bonds in being

2012-01-30T21:50:00.000-05:00

So I know that there are not a half dozen people outside the fifth floor who care... but for the muni finance wonks this is is actually curious reading the breaking news that Pittsburgh has (finally) agreed to a bond issuance that will be approved tomorrow.   It looks like most, but not all of the paper found buyers by the end of the day today.

Beyond it being $125 million or so which is not a small number, why is it of interest? According the the Preliminary Official Statement on this offering, part of it is to refinance some old bonds. Specifically these 2002 Series A bonds. Thing is that these bonds are callable on March 1, 2012, with a minimum of a 30 day notice to the registered holders of those bonds.   30 days left of March 1st is... tomorrow? You are talking seriously down to the wire in all of this.

Curious discrepancy in numbers.   Dow Jones says this was for $114 million. POS said $125 million. Trib breaking news says it is 80+57 which I add up to be $137 million.   I'm quite sure the number for the debt is a hard number at the end of the day, just curious reporting to see the different numbers floating around.

Like I said.. not quite the stuff for a general audience, but beyond any headines on this, there must be a very serious inside game of poker going on between the city, ICA and everyone else involved in the timing of this. Given how much ink we spill over some incredibly minutia things, you think this all would get a little more coverage or public debate.

a thud-less Monday morning?

2012-01-30T11:01:00.000-05:00

So roughly a quarter of Allegheny County had new assessment numbers that arrived in the mail Friday and Saturday. I am personally hoping that the lack of headlines and/or other rhetoric constitutes..... I dunno.... progress? Could it be?

One big important point based on questions I am getting.   Realize that virtually every number that has been talked about thus far, by me, in the media, and all others, have been about the assessment data out there for ONLY the City of Pittsburgh and the borough otherwise known as Mount Oliver.

So everything you have read about the notional tax issues and revenue neutrality all pertain only to those two municipalities.   Every municipality will have different aggregate tax changes requiring a unique resetting of tax rates, as will every school district. So for all other municipalities even to begin figuring out what the change to your tax bill is you will need to compare your assessment change to the changes in both taxing bodies. Whatever the number was for Pittsburgh, and/or Mount Oliver, will have nothing to do with your situation if you are not a resident of those two places. I sense a lot of folks thing the numbers being reported for Pittsburgh apply more generally.

I got into this a bit more a year ago in this post: So you want to calculate your new property tax bill?

and as far as I can tell, there is nothing in the public record yet as to what any of those aggregate changes are. I did calculate it to be a roughly +25% value for Wilkinsburg, but that again just applies for residents there.

More to follow.

Redistricting evermore

2012-01-29T01:05:00.001-05:00

Yes, the big news is all about the confusion over what is happening with state level redistricting of late.. lest we forget and for the political cartophiles out there the PG has an Next Page feature on some redistricting ideas.. I would have started putting up my own proposed redistricting maps up by now if I hadn't become preoccupied of late.

I go back to my post from October, and if there is any tech person out there who wants to implement to open source redistricting software it referenced (from publicmapping.org) on a server, I will offer my services to do whatever is needed to populate the data in the system for local projects. Nobody took me up on that offer.

The result would be a way the public could create their own maps that could be used to provide inputs into the ongoing redistricting processes.. which as per the PG piece includes at least Allegheny County Council, Pittsburgh city council, the Pittsburgh School District and of course lots of smaller municipalities and school districts. There really is no reason we don't have the capacity to do something like this in Pittsburgh is there? Tech savvy, data, and certainly interest in local politics all in abundance. Makes you wonder why nobody is doing this here?

Even in October I thought it too late for anything to happen with the state redistricting, but who knows now? If they miss the cycle, who knows when they will get back in gear. But the local council and school district redistrincting processes are all pretty far away from conclusion, so there is time for most of those I think.

No, this is not a post about assessments

2012-01-28T22:19:00.001-05:00

When a challenge isn't

2012-01-28T11:00:00.013-05:00

Well, this is curious semantics. A news article just out says: Many city homeowners may find property tax payments reduced. In it one of the first lines is:

"This estimate was released today by RealSTATS, which challenged University of Pittsburgh economist Chrisotpher Briem who earlier this month the new assessments would reduce property taxes for two out of three homeowners."

The article has data saying 54% of homeowners will likely see tax bills go down as a result of new assessment numbers. I had said here that it is likely 65%.    Strange semantics to say there is any 'challenge' going on. Seems to me they are agreeing with me more than anything else. I don't get it. But like I said, nobody asked me on this.

Anyway, just to avoid any confusion. I have put the full distribution of values I scraped from the county assessment web site online and explained in that previous post. I put my full dataset online as well exactly where the distribution comes from for those who want to look at it. Feel free to go and use it to do your own calculations. Remember, the old article being references was done at a time when the county was not releasing the assessment data even to the media even though it was central to the entire public debate at the time. The real issue here is that it is about open data, transparency and what the public should not be guessing about. There need not be any confusion or debating numbers here. In itself, figuring if your taxes go up or down need not be proverbial rocket science.

Note I used data directly from the assessment which is the basis for tax bills. I think the Realstats data is great, but I ~~dont think they have access to the actual assessment data yet do they?~~ (see update below) If they do I really want to know how they got it since to my knowledge the county has not released it yet. I also can not tell from the article if the realstats estimate of the tax rate change is being based entirely on residental values, or if it includes the reported commercial value increases as well. The higher increase in commerical values would create a bigger drop in the revenue neutral rate and thus a bigger percentage of homeowners that will face tax bills.

But I don't quite see the 'challenge' part anywhere. This news item says there is an estimate that 54% of homeowners will see a price drop. I came up with 65%.   We can argue over the 10% there, but the point is that there is not additional analysis saying that a majority of homeowners will see a price drop in the new assessment. Something that I suspect a majority of people still find suprising given the political rhetoric. I kind of see it as the opposite of any 'challenge'. I don't get it??

In fact, they really agree with the big point I made earlier. Per the article summarizing the realstats data "The areas in which taxes are going up are Lawrenceville, Stanton Heights, Morningside, South Side, Bloomfield, Highland Park and East Liberty".   I think that comes awfully close to what I said and was quoted in the PG:

The neighborhoods where assessment increases are most concentrated include the South Side Flats, Lawrenceville, the Mexican War streets and portions of Highland Park and East Liberty. Many city and county officials have pointed to those neighborhoods as redevelopment success stories where new residents are moving in and real estate prices are rising, Mr. Briem wrote.

What am I missing? I wish everyone who 'challenged' me would so agree with me? I can only speculate a bit on where the difference is from 55%, but as I said.. I based my ratio on the actual assessment data and not on an analysis of recent sales data which I suspect is what Relastats has since that is what they distribute regularly. Also as I explained, I took out parcels that were likely not habitable parcels which are a big chunk of all the parcels coded as 'residential' in the assessment data for the county.

You know what would be fun? The county distributes an actual dataset that the PG could then use to come up with a number themselves and then not get caught up in this. Why argue over a number that clearly can be calculated without too much speculation needed. Of course, it is unknown to me if the PG has yet to be able to acquire the actual data which I know they have been trying to get since December to little avail.

Update: So I've seen the Realstats report though it still isn't on their web site yet. From what I can tell he has somehow acquired the actual property assessment data, which is a big mystery since everyone I know including public officials who needed it did not have it. Though they may have it now. I think, and this is speculation a bit that Realstats is talking about a different set of issues. I was looking at City of Pittsburgh residents which at the time was clearly the only thing any of us could have been talking about since the county had only released the residential values. I think the count of residential properties in the city of Pittsburgh and Mount Oliver is close 119,100. There are another 30K or so commercial, or government parcels as well. So in the Realstats report I see he references 128 thousand parcels which I am pretty sure is talking about a lot more pacels than matters if you are talking about Pittsburgh residents and residential owners. I bet it is including commercial properties or a lot of properties that are clearly vacant in some form. So the numbers they are compiling are just not comparable to what I did and thus there are some difference between them.

Again, my data, explanation of how it was acquired, distribution of results, presumptions and explantion are all ONLINE HERE. Everyone can go poke a it and make their own conclusions. It might be good if Realstats put their complete dataset online as I have done for comparison.

If there is any difference in the final results it is because the county was not putting any of this data out at the time.. Right when everyone was getting their assessments and jumping to a lot of conclusions without much clarification from anyone out there. So it would have been nice if Realstats had put out this analysis of the actual assessment data when it really mattered, but it's great they are in large agreement now that folks have started to calm down. I would hope that with the actual assessment data we might reach a more definitive answer. It just isn't comparable to say "my numbers" are different from what comes out later. It isn't quite how this all works.

Best and Highest Value Use

2012-01-28T07:42:00.003-05:00

So this is interesting and no, this isn’t really about assessments. I mean, it is about assessments, but there are so many bigger issues rolled into this new legal development.

In the new litigant a week merry-go-round in Judge Wettick’s courtroom (it really must be getting crowded), the latest is the (collective) property owner of one R.J. Casey Industrial Park who has a slew of issues.

One of many points is a contention that it is against Pennsylvania’s uniformity clause to assess commercial property differently than residential property which is indeed how it is done here and most everywhere else. Problem with that is that commercial properties across the state have been assessed different than residential properties for decades. So I will let the attorneys fight over that one, it is just one of the issues.

Then they seem to point out the dearth of information on the assessment. Here are points 16 and 17 in their filing:

16. Regarding commercial properties, the Property Record Cards available for purchase on the Third Floor of the County Office Building, do not contain any information on the New Assessments.

17. Accordingly, unlike residential property owners, commercial property owners evaluating their New Assessments have no access to any information that the County used to determine the New Assessments.

Lots of capitals in that, but to be sure I feel their pain. Though I do get a chuckle of someone really digging up (and dusting off) a property record card and expecting to find much relating to the latest machinations written down in ink. Are those things still written in cursive? For the record, the online information is just a small part of what what went into determining new residential values. I see no reduced form from any of the many regressions that were used. 'Comps' are at most part of the equation and many overinterpret their role in the assessment I am pretty sure. There is a funny story back from when the original 2001 Sabre numbers came out which didn't really used comps the same way CLT did. The county web site did not list any 'comps' for a property, but people so expected to see them that eventually the web site was altered to show a few comparable properties that were picked ex post... though the properties listed really had no specific input into setting a particular property value becuase of the way the Sabre Systems algorithms worked. (that is a very short version of a very very long story.. but I digress).

To be fair I should go back to point 15 in the filing which is clearer and shows they did start out digitial:

15. Regarding Commercial Properties, the county provides no information online regarding the comparable sales used to determine New Assessments or even the gross square footage of an improvement on a commercial property. The County does provide this information online for residential properties.

Well, some information at least. Otherwise ditto.

Nonetheless, the motivation in the end must be to get a lower assessment and a lower tax bill. First off realize that for commercial property across the nation the standard for property assessment is not market valuation that it commonly is for residential values but “Highest and Best Use of the real property”. For a lot of properties that distinction may not be such a big deal, but for some in certain unique locations it could be a big deal.

So here the property owner is upset having seen their assessment for 6 properties jump from $2.7 million to $11.3 million. A scary 340% increase in nominal value. Even with our notional revenue neutrality it works out to a potential tax increase of 280%, so more than enough to be upset. So.. is the increased assessment some gross error on the part of the assessors, or is something else going on? Could it be the highest and best use for the property has changed?

Again, like the Mt. Washington parking space, we may have found the most exceptional case out there. Is there anything unique about this property?

So where is this property? All of the properties at issue in the filing are located in the otherwise depopulated Chateau neighborhood (why we still call it a neighborhood is another issue since literally no more than 10 people live there.. likely a lot less.. unless you count folks sleeping under the slots machines I guess). The properties in question are all along the riverfront a half mile or so from the edge of a property recently redeveloped and otherwise known as 777 Casino Dr. Nice new bike trail cuts through the properties in question and there are some nice marinas there it looks like.

So lets ponder the 'old' assessment values which everyone likes to refer to as 2011 values which they really are not. They are, again, base year assessments based on what circumtance were in 2002, if not prior. Yes, the 2002 base year assessment really means that the ‘old’ values were based on what the market would bear for a property in 2002. Back then the idea of a casino was not yet really formed, and even if it was there was no thought the casino would be placed over on the North Shore there where the Rivers Casino wound up. Remember Don Barden really came in with a somewhat unexpected bid and was clearly not expected to beat out the Penguins backed project slated for the Lower Hill District, nor the Station Square locations that everyone was focusing on. The location on the North Shore and the big empty plot of land on the North Shore there was fallow and without anyone really expecting much to be made of it anytime soon. I am pretty sure that was a big drag on all nearby real estate. Even the North Shore Connector was so far from completion, and opposition so loud, that it would not have been reasonable for it to have had any impact on real estate values at the time. Now it is on the verge of opening. Could it not have some positive impact on land values anywhere near it.

So now, 10 years later.. it is not to say there is any vast demand for land over there and I am unclear was nearby development the casino has wrought… but would it really be reasonable to think there has not been any impact on nearby property. In this case the 5 properties in question are add up to either 5 or 10 acres (I am confused because the itemized parcel 22-J-67 is listed as being owned by the URA?? even though there is no mention of the URA in the filing??) of land all effectively riverfront parcels though I am not sure if they own all the way to the river itself.

Someday when we ever really see data out of all this I will work up a map of the value per acre along all of Pittsburgh’s rivers before and after the reassessment. It might be interesting to see how the price gradient moving away from the river has changed over time. It would be an interesting factoid at least to see if any of the vast efforts to redevelop our riverfronts have had any meaningful impact capitalized into real estate values of real estate close to the riverfront. Just imagine the counterfactual if they did not and what that would mean?

So there is a bit of Henry Georgism in the highest and best use construct. It is certainly true that the parcels might not currently be ‘worth’ the new higher assessments placed on them.. but if assessments stay low, and taxes stay low, there will that much less incentive to ever fully develop those properties to the “highest value” use. There is only so much riverfront property near the Casino (and the stadia and the science center) to be had. I think that is the core reason commercial properties are assessed differently to begin with.

I'm thinking there is a future casino-annex hotel latent in the geography there. Best and highest value use?

North Side Story II

2012-01-27T19:49:00.000-05:00

Just noting the news today about some new commercial developments on the North Side. Last week I poked at the serious counterfactural North Side (Development) Story that is now mostly forgotten except by those focused on preservation history.

Just a gratuitous extra aerial view of the North Side circa 1954, also from the North Side Study of 1954.

Green Lantern Lands in Lawrenceville

2012-01-27T08:53:00.001-05:00

So here is an advertisement I noticed when reading something on PopCityMedia. It causes all sorts of short circuits in my real estate obsessed mind these days.

So 5309 Duncan St. in Lawrenceville. Way up in Upper Lawrenceville. Asking price a smidge under $245K. Let's go look up the assessment valuations for the property. Old assessment = $38K. Great gobs of gentrification Batman! Ok, lots changing in Lawrenceville and the ad implies a lot of investment in this property so no surprise the 'old' assessment is not quite matching. But the 'new' assessment value? All of $64K? So I know asking price is always optimistic, but we will have to track what this property actually sells for and how it compares to assessment values. Don't get me wrong, I don't get the price myself. That energy efficiency the ad talks about better include a Green Lantern power lantern since I doubt there is space to drop a geothermal pipe in the backyard... if indeed there is a back yard.

Stranger still when you look at the recent owner history. Fannie Mae REO disposal for $1,658 late 2010, and resold for $26K in early 2011.

To Flight Pittsburgh, To Flight

2012-01-26T18:44:00.001-05:00

So news yesterday includes a mention that Alcoa will expand production destined for the aerospace industry.

Is it a new gig for Pittsburgh? Not even close. Pittsburgh and specifically the Steel Building was for a long time the headquarters of the Rockwell Corporation. Rockwell was a major player in aerospace having built the Apollo command module and parts of the Saturn V rocket before that. It would move out as its Southern California operations eclipsed all that it was doing here, but still it was a Pittsburgh firm for a long time. Some may recall the mockup of the Space Shuttle, also built by Rockwell, that was in the Steel building's lobby until they left town. What is odd is I can find no image on the Internet of the Steel building's lobby with the shuttle mockup in it.

More than that of course. Just before the US would enter World War II, the Defense Plant Corporation would contract with the Curtiss Wright Corporation to build from scratch and operate a plant in Beaver County fo the production of state of the art propellers. The plant would employ nearly 4,000 workers at its peak, only to shut down completely as the war ended. Think about those job numbers a bit when you read almost any business news today about job creation or destruction here or there. 4,000 manufacturing jobs would be nearly 5% of the total manufacuting job count in the entire region today and that was just one, relatively small by Pittsburgh standards, plant now mostly forgotten in the long Pittsburgh story.

February is coming up and with it Black History Month. I always find some new nugget in this old article Early Black Flyers of Western Pennsylvania, Western Pennsylvania History. Vol. 69, No. 2. April 1986. Among other stories it covers is the story of one Charles Wesley Peters of the Hill District who in 1906 built a glider and flew it himself off of Herron Hill. Can you imagine?

and I learn something new every day about Pittsburgh. Checking a fact for some of the above I came across a recent newsletter for the Pittsburgh Space Command. Cool.

There is large, and there is large

2012-01-25T22:57:00.001-05:00

EPR describes the imminent bond Pittsburgh is about to float for $80 million as the "largest bond floated in city history".

Either memories are really really short, or I think someone misunderstood what large is. alternatively large, or getting smaller, or maybe even this not so small bond. I mean, even this.

Just semantics I am sure.

on those nomination petitions

2012-01-25T17:11:00.007-05:00

Attention politicos major and minor, sundry election lawyers and all hangers on! It appears the Pennsylvania Supreme Court has rejected the redistricting plan that had been approved. I don't see the final opinion which will spell out what their issue is that will have to be addressed by the Pennsylvania Legislarive Redistricting Commission.

but what is even more practical to the political apparachiki is that their order today appears to shift some of the dates crucial to the spring election cycle. (so attention Mitch Daniels!.. Isn't it strange that people are talking about Mitch Daniels parachuting into the Pennsylvania primary which by the time it comes around could be an All-Pennsylvania affair with Gingrich, Santorum and Paul... politics is strange)

update: I guess the biggest question is whether there is time for both the PLRC to revise the maps and then if it is necessary for this to all be litigated back to the Supreme Court. The ruling says the current (old) maps are in effect until there is a new plan. As per the schedule below, petition season is upon us and it will make a huge difference if the old maps are used one last cycle. What happens say with the now vacant District 22 which Wagner just resigned from and which is being moved across the state in redistricting? Will people be running for that seat here or in Allentown? Law gets complicated as to whether a special election needs to be scheduled for that seat now in its extant location. The only reason there was not going to be a special election was because the district was being moved. I think as of the moment there will literally have to be a special election scheduled here in Allegheny County for that seat, but I will defer to any attorneys to have other thoughts. Then just when will new maps come? You can make maps fast, but agreeing to maps is another thing. A complicating factor is the Supreme Court released its ruling on this, but I don't think they have yet followed up with an opinion detailing what specifically they found objectionable in the current plan, thus it would be hard to begin redrawing any maps until the opinion is posted. Convoluting things more.. PoliticsPA reports that three of the justices are off to Puerto Rico on a pre-sceduled event which may impact the timing of getting an opinion posted.

But the revised dates per the court:

Thursday, January 26 (was Jan 24th) First day to circulate nomination petitions

Thursday, February 16 (was Feb 14th) Last day to file nomination petitions

Thursday, February 23 (was Feb 21) Last day to file objections to set aside nomination petitions

Monday, February 27 (was Feb 24) Last day that court may fix for hearings on objections to nomination petitions

Friday, March 2 (was Feb 29th) Last day for court to finally determine objections to nomination petitions

Friday, March 2 (was Feb 29th) Last day for withdrawal by candidates who filed nomination

At least pick a prime number

2012-01-25T07:55:00.002-05:00

So a news item out of Harrisburg included a bill passed in the state house that would lead toward the Pennsylvania General Assembly shrinking from 203 members to 153 members. It's a long way to go before it gets enacted, but it might be a starting point.

but 153? Is there some aversion to round numbers in base 10 math? Master triangle math the motivation? Why 153?

It might be interesting for reform of the Pennylvania legislature to go just a bit further than just reducing the number by 50 or so. Would it be too much to try and impose a little more order on the whole system? Don't answer that. Our neighbors to the west in Ohio actually have a much more rational legislative structure. 99 members make up their house of representaives while there are 33 senators. The big difference is that the 3 to 1 ratio in Ohio is how the districts are spatially defined. Each senate district is made up of exactly the 3 general assembly districts which are coterminus in perfect tessellation. Just saying that if the proposed number of general assembly districts for Pennsylvania was150 and not 153 then it could work out the same with the 50 Pennsylvania senate districts. A tweak in the proposed law on how the general assembly districts are drawn could create a structure much like Ohio's. Think how much clearer that would be? Who would want that?

Not to say all that goes on in Ohio makes sense to me. This current proposal to transfer Ohio's control of the wholesale liquor market to a nonprofit with a monetized bond payment is all too convoluted to figure out. Which is why I am waiting for someone to come up with a corollary to try in Pennsylvania.

Slim Pickens redux

2012-01-24T20:55:00.000-05:00

For those perusing here while watching the State of the Union address, it is always a cottage industry for the media pundits to comment on the missing cabinet secretary in the audience. A topic far afield from the normal fare here, but as a baby wonk I started as a defense analyst many years ago. Thus the fodder for what was one of the most non-sequitur posts here a few years ago that may be worth posting again:

Slim Pickens Revenge (or What I would blog about if I were Tom Clancy)

Seriously, people worried about this stuff a lot. I didn't make a word of that up myself.

Nabobs alert

2012-01-24T14:35:00.002-05:00

OK... listen up. Nabobs especially. Latest job counts are out and for December we again have a peak in terms of the highest December job count for the Pittsburgh region ever.

Only May and June of 2001 showed a higher job count than the 1,164,000 raw number just out. So the middle of construction season then when I think there were a few big construction projects pushing up the numbers (and before USAirways employment imploded of course). Seasonally adjusted the first part of 2001 had some slightly higher numbers.

So we will call it the post-USAirways peak.

and yes.. just a side story to that number may be the warm weather permitting more construction than is typical to continue through the season.

Homework

2012-01-24T08:34:00.002-05:00

It's like the county is giving me programming homework.

OK. All 'new' assessment values for City of Pittsburgh commerical parcels are in a comma delimited file online here. Just two fields, Block and lot number (one field) and the 2012 assessment. Scraped with this program if you are interested.

So the top 10 new commercial valuations in the city that I come up with are....

500 Grant St. $242 million
Rivers Casino $242 million
1 PPG Place $238 million
600 Grant St. (aka Steel Tower) $233 Million
301 Grant St. $167 million
1001 Liberty $149 million
500 Ross St. $102 million
210 6th St. $98 million
401 Liberty $93 million
625 Liberty $92 million

So yes, I am sure they will all appeal and some may be overassessed. But it begs some questions on others. Look at the Steel Building (or Steel Tower or 600 Grant St. or whatever its moniker is these days). $233 million dollar assessment, but it is reported to have sold for $250 million last year all while it paid no real estate transfer tax on the deal. In past years the City of School District might have appealed against the assessment, but I suspect the political climate precludes that happening this year. This is speculation, but that steel building sale may be setting the market in the valuations.

Likewise the casino valuation will be appealed (again?), but realize that since it's base year assessment value set all sort of things have happened. The law changed allowing them to engage in the much more profitable table games was enacted and in a sense that would impact what the property is worth. For an establishment reportedly set up with $800 million in investment, you think it might be worth a third of that in the assessment valuation?

I have an idea.. they would need to change some laws for this to happen, but for anyone really balking at their assessment valuation then the fallback could be to use replacement cost.

City: $125 million bond POS hits street

2012-01-23T17:03:00.000-05:00

So the city has made nice with the ICA?? For the local public finance wonks out there: the City of Pittsburgh has hit the street with a preliminary official statement for a $125 million bond offering that they need to get out there by Thursday I think it is if they want to call the bonds part of his new bond is intended to defease.

Note on page A-10, a plague of some sort hit the city in 2009.

and only a bit non-sequitur... actually quite apropos.. but if you noticed the story today about how hillside problems are hitting the city's budget and likely the expenditures from this new bond offering. Is the City of Pittsburgh's Hillside Committee still functioning? I refer you to a report from not all that long ago from my friend Steve Farber:

An Ecological and Physical Investigation of Pittsburgh Hillsides - ECONOMICS REPORT to the City of Pittsburgh Hillsides Committee

Economics of Hillside Slope Development

Final Report

November 30, 2004

Flaring Contango

2012-01-23T08:25:00.000-05:00

My inner energy futures trader is mesmerized by what is happening in the natural gas markets of late. If you do not wake up at night wondering if natural gas will flip from contango to backwardation then I will make it simple.. the price of natural gas is plummeting faster than anyone predicted.

A little over 3 years ago, right around when a lot of folks were signing a lot of their Marcellus Shale leases, the benchmark price for natural gas peaked at over $14 per million British thermal units. The benchmark is for the gas at the Henry Hub pricing point. As of Friday that price had dropped to around $2.34. So for now a decline of 80+% from it's recent peak, but nobody seems to know where the trend ends. Some describe it as a 10 year low in natural gas prices, but that is in nominal prices. Adjusted for inflation I wonder what prices would be described as? I only know what I read, and it seems to me that industry folks, or at least the traders, are beginning to contemplate a near term future where there isn't enough storage capacity to hold the gas being produced. Then what?

Remember the glow of steel mills along the rivers? There may be a new glow forming across the Pennsylvania countryside.

But it means more than the potential artificial twilight that may be on the horizon. Most landowners signed leases with upfront hand money as a bonus to entice signing development rights to one of the drillers out there, but also with guarantees of royalities against future production usually around 12.5% as per state law setting the minimum royalty payments, though many may have negotiated higher shares.

But not all minimums are a minimum. Some may remember that the drillers won a court case against landowners that the royalty payment was only due on the price NET of a cost to get gas to market. How much that isI do not know, but if there are any folks out there in receipt of royalities it would be of interest (at least to me). The only number in the record I see is from this old blog post which says Range Resources is deducting 72 cents or 80 cents, mer MMBtu, for dry and wet gas respectively.

So just for sake of argument, assume the selling price for gas is the benchmark price. Yes, some may be getting more, but hold the thought and lets assume a dry gas example for moment. If you net out 80 cents from the peak and current prices it works out to $13.28 back in 2008 and $1.62 on Friday, it then works out to a royalty decline of over 88%.
Seems to me there are some latent stories out there of individual landowners seeing their royalty checks dropping precipitously? Though I have no idea what the time lag is between production and check which may have a lot to do with it. The biggest drops in gas prices have been very recent, and certainly to recent to have been reflected in checks yet.

The bigger question is just where the stability returns to the market. Are current price levels enough. Some industry folks say clearly yes and tht profit can be made even as low as $2.50, likely because of the other 'wet' products in the gas here. But we are not even at that level right now.

Player Piano Redux

2012-01-22T20:11:00.000-05:00

Let's see if we can crowdsource a post. h/t to several who caught it out there, but does anyone have the video for a Cisco commercial that ran during of of the games today with a tagline of "factories that fix themselves"? Just the sort of thing that might grate in a region once full of factories; factories full of workers. If the video is out there, I'll embed here if possible.

North Side Story

2012-01-20T21:09:00.002-05:00

So I probably could post something on reassessments daily, but why go through the torture? So I will at least pace myself. This is related to real estate and I guess really is about reassessments in the end. Just playing with a new wand scanner and some images from the North Side Study of 1954.

Today what I think will become a bigger story is the rising property value in at least some neighborhoods. Not the least of which will be the Mexican War Streets and environs. In the big picture it has not been that long since much of that real estate was written off and slated for vast reconstruction which much of the North Side could not escape.

How much reconstruction? Basically from the ground up. In the 1950's the plan was to take the neighborhood of the Mexican War Streets and environs from something that looked like this (click on images for better resolution versions)

and make it into something that looked like this:

You just have to wonder if those towers some sure wanted to build would have themselves been demolished over the last decade like so many of the other big housing projects built around then. A counterfactual history we were spared.

I really need to digitize the rest of my office some day.

Words Numbers Matter

2012-01-19T12:47:00.002-05:00

So which should be the opening line of this article: Appeals of largest-percentage reassessments to be heard first

Version 1: "About 8,000 Pittsburgh and Mount Oliver property owners have appealed their new assessments."

Version 2: "About 6.7% of Pittsburgh and Mount Oliver property owners have appealed their new assessments."

and which version was used? Actually the 6.7% is the percentage if the 8,000 appeals were just the residential appeals of which the city of Pittsburgh has 120 thousand or so parcels.. If it is 8,000 appeals of the the 150 thousand or so residential or commerical properties you are talking 5%.

Actually I am wondering.. is that scale of appeals higher or lower than what happened back in 2000 - 2001?

So go back to to the angst, anger, fear and loathing reported all around. All of 5-7% filed an appeal. Likely a chunk of them will not show up if past patterns follow and again looking at past practice I bet you would find plenty of folks see no, or minimal, adjustments in the appeal process.

So for everyone telling me the appeals will change all the numbers... how exactly? and by how much. Realize that if someone gets a lowered valuation, it will push down the revenue neutral point an iota, but at the same time will push another parcel into a lower valuation. So the impact on the distribution is unclear. Some point out the likely self-selction in that higher valued homes will be appealing more than lower valued homes. Granted, but see the numbers above on what total impact is possible and also I really got the impression from the news accounts that everyone was trying to appeal, not only those with nominal value increases above the revenue neutral point, but those below as well. .. So it may balance out more than one might presume.

Zen and the art of riding the 54C

2012-01-19T01:37:00.001-05:00

Since I can't avoid the topic I will just repost an old transit map I have below. A longer transit post isn't in me honestly. Since the Port Authority cut so many suburban routes a few years ago, they lost any hope of maintaining even passive support by the median voter and thus lost the battle for political support for any other path than the one we are clearly on.

Still, it is all just sad. As a disclaimer in one of the first posts here I pointed out that my 2nd spoken word was in fact 'bus'.. likely trying to hail a 54C. Now where are we? In the fall campaign I did try to introduce a simple question that still needs to be answered. Will there be public transit in Allegheny County eight years from now? Still needs to be answered.. strike that, it still needs to be asked.

So the map. Part of the news on the announced route cuts is that they include virtually all 'express' routes. So the map below isn't from all that long ago. Note the Port Authority used to have more 'express' routes than they will routes in total once this round of cuts is over with.

And if you have read this far then you probably want to go check out one of the more amazing side streets of the long tail intertubes: http://www.pittsburghtransit.info/

First image above from hopetunnel.org and found via pittburghtransit.info... or the other way around.

Waterblogged

2012-01-18T00:27:00.005-05:00

So does someone have a 12 step program for blogging about property assessments. Probably a really niche market. But I don’t have a problem. Still, there is time to look at our rosetta stone, otherwise known as the Pittsburgh Water and Sewer Authority.

And the readership drains away………

Seriously, our rosetta stone. Take the news today that the city and county are merging accounting systems. It was not too long ago that the city was fighting that with an argument that the city should merge its accounting system with… yes, the PWSA. The other news is that the PWSA, after 13 months is kind of, sort of, possibly, considering whether it will plan to look for a new leader. Makes you wonder who would have been running the city’s accounting system if it had followed the PWSA plan. It is not like the PWSA was very clear what software it was going to use itself. There could have been all sorts of fun news stories I bet.

More of course. Other news today is a report looking at the impact of “Swaptions” on the finances of a broard range of public entities in Philadelphia. Plenty of those issues here as well, but none worse than… yes, the PWSA’s. I'm not convinced that situation is settled completely even yet.

Assessments (who said that) are in the news of late in Judge Wettick’s courtroom. Not long ago though it was the same Judge Wettick who ruled that the PWSA’s line insurance program was illegal. Prompting it’s service provider, one Utility Line Security, LLC, to declare bankruptcy and hint at seeking $3 million in compensation from.. the PWSA again. What is up with that bankruptcy eh? Nobody noticing any longer, but lots this week actually. In summary, more liquid(ation). If I understand the filings looks like the PWSA is paying the rump ULS not $3mil, but $350K which may just go toward paying contractors awaiting fees. (I still bet that $$ came from cash generated via the Bond to Nowhere) I am guessing that is all needed to clear those contractor's liens that were beginning to gum up the system. Well... that was fun.

Why does ULS own this vacant parcel in Garfield anyway? Curious. I'm tempted to go try to buy one of those Dell computers to get the hard drives. Too much hassle.

And our water is purple…Cool! Dare I say, it’s not some Ravens aficionados in our midsts.. Look no father than the PWSA. That was a fun prank in high school I have to admit, but points for doing it at scale.

and I just can't connect it to water at all, but note the story about the city being forced to put money away toward its unfunded health insurance liability. I am sure it is all because it was mentioned here over 5 years ago.

Hey, I'm improving. Only one mention of Judge Wettick. I've been put on a quota.

The unbearable assessment of the Pittsburgh Hipster

2012-01-17T17:34:00.001-05:00

Some think I don't get the assessment angst. I do and it can all be explained by the Pittsburgh hipster.

Really.

So last month the Washington Post named Pittsburgh the new 'in' place and in some official list maintained I guess by those powerful AP word czars we must have displaced tragically hip Portland. Now some of us noticed this last month when it came out, but the media catches up and the PG had a fun story on Sunday on this neo-hipsterism that is somehow making Pittsburgh 'cool' in a way it may never have been (ever?). So if you didn't go read Watch Out Portland, Pittsburgh's looking hip and in particular read this remarkable quote:

As for Pittsburgh being attractive to young people, "well, why wouldn't it?" said Mr. Sussman, the ukulele instructor.

"It is cheap to live here. It's the only city I know of where you can have a part-time job at a coffee shop, still afford a mortgage payment and be able to go out once a week. ... How would that not be appealing to any young person who isn't ready to settle down?"

There you go, it really is an amazing quote and the whole assessment angst follows from it directly. Our new hipster denizens are observing as new what generations or more have lived here. Real estate here just does not appreciate. In Pittsburgh real estate is hipster-priced. Period. End of story. Forget what happens everywhere else on the planet, real estate can be had in Pittsburgh cheap. Like really cheap, cheaper than anywhere else. Forget what the tax might be set at, it just can't be correct that our homes have inched up in value. Not too long ago it was observed that the total real estate value in the city of Pittsburgh (a city with at least 300,000 residents) was lower than the valuation in Lower Merion, a borough in Eastern Pennsylvania with less than a quarter the population.

So here is a story. Absolutely true and I'll protect the innocent, but a friend was absolutely livid at his new assessment. Angrier than anything I've seen. I asked by how much of course and it as near exactly 50%. The argument about tax rates being reset was not the point it was explained to me. It was just how could they be so WRONG. It wasn't about what the tax bill would be, it was about getting it right. Hard to argue against the point.

So a week later emotions abated and we talked again. Turns out he dug up some paperwork. Just last year a 2nd mortgage was taken on the house and there had been an appraisal done. He had not looked at the details because the loan was approved so it was never an issue. Now by univeral agreement, almost all commercial appraisals these days are coming in at extremely conservative levels for legal reasons related to the foreclosure crisis most likely. It is a particular problem here in Pittsburgh where lots of folks are willing to pay prices for local property, but often cant get a loan at the amounts they want and can pay because the appraisals are coming in so low. Still, it turns out that the property in question here the appraisal last year was HIGHER than what the new assessment figure came in at this year. Go figure. "Maybe they got it right" was the new thought. I have wondered for some time how many long-time Pittsburghers would be surprised by what value say Zestimate gives for their property.

So yes, there are things going on in SOME neighborhoods and communities. Places that were once priced for armageddon are actually being invested in. Not all, but some. Arguably more than a few. Might seem like big percentage changes, but more a reversion to the mean. Seriously take Lawrenceville. There is a French gourmet bakery thriving in Lawrenceville. Think about that. The Financial Times came in and decreed the neighborhood a "Diamond in the Rust". These are remarkable things that would have seemed inconceivable even a decade ago, ridiculous two decades ago and delusional three decades ago. Certainly these of not signs of prices going down are they?

For some of us, memories persist way to long, for others maybe not long enough. Lawrenceville was from upper to lower a depressed place until not too long ago. Some just can't believe there are even 6 figure prices being paid for a lot of those properties. I can say that having been born in Lawrenceville that there is more than a little cognitive dissonance about it all.. and it all plays out in the assessment numbers. Not as much cognitive dissonance as my born-Yunzerness feels when watching snippets of that Portlandia movie, but close.

But they NEVER ever reset tax rates following a reassessment

2012-01-16T17:21:00.002-05:00

So one of the most common beliefs out there is that no tax rates will get set based on the new assessment values... that somehow all governments ignore the state's anti-windfall laws and just get more money in the end. Can we do a poll to see how universal that belief is? I think it would come close to what most consider a universal truth? Certainly is common wisdom. I mean everyone says it... when everyone says it the news accounts report that everyone is saying it and it gets said again. Fact by repetition is an oxymoron. Rarely has common wisdom been so much more common that wise.

So let's go back to the traumatic assessments Allegheny County implemented for the 2001 and 2002 tax years. Remember, there were TWO reassessments. First in 2001 and then in 2002 because we were going to do this annually. At the time the anti-windfall laws were looser than they were now. School districts were able to collect up to 105% their previous property tax revenue in an assessment year, while I believe municipalities were able to collect 110% more. So did they?

School districts first. Don't have to do any work because then County Controller, a fellow some may have heard of named Dan Onorato, did the work already. His report is right there for everyone to read:

Review of Allegheny County School Districts' Compliance with the Act 146 Real Estate Tax Revenue Limitation 105% Windfall Provision For the Fiscal Year ended June 30, 2002. Dated July 1, 2003. Produced by the Office of the Allegheny County Controller.

No need for an introduction if that is your title. I will say it is pretty clear and straightforward and certainly thorough; I would argue definitive on the subject. The conclusion. Of the county's 43 school districts: 9 collected LESS in property taxes following the reassessment, 23 collected between 100 and 105% of their pre-reassessment property tax revenues, so within the law at the time. 4 collected between 105 and 110% of the previous year, though 2 of those explicitly voted for a tax increase at the time. The real scofflaws, 7 of the 43 school districts collected between 110 and 125% of the previous year's property tax revenues. 5 of those 7 voted for a tax increase, but two didn't. The conclusion spelled out in that report is that 75% of all school districts complied with the anti-windfall laws. 25% did not, but note they clearly were not the largest districts in the county, so it is something less than 25% of the county's population impacted by that. Note that school districts are changing tax rates all the time and one might argue most of those tax increases would have happened independent of the assessment

OK. So how about municipalities? I bet Dan has a report out there equally definitive on the subject, but I am not seeing quickly. I still would like to check the numbers myself.

So I found an old web site that I think the state has forgotten about that has all local tax collection data in it for Pennsylvania municipalities. Seriously, the site may be forgotten about. It only partially works and note the disclaimer: "These pages require Microsoft IE or Netscape versions 4.0 or greater. Best if viewed at a screen resolution of 800x600 or higher" there at the bottom. I really think they mean IE 1.0 actually.

(yes, I will put the municipality by municipality data I collected here. Hold that thought)
What do I get from that data, which includes a value for the total assessed value of property by municipality. For 130 municipalities in Allegheny County I get a change in total property valuation jumping from $9.8 billion in 2000 and then it jumps to $55.8 billion in 2001. So a 465 percent increase. Did taxes go up by 465 percent?

I also pulled actual real estate tax collections for every municipality in Allegheny County for all of the years between 1998 and 2005, so that ought to cover the whole trend well before, during and after the 2001 and 2002 reassessments. The key question is did the trend in property tax collections jump up as a result? Did every, or any, municipality sneak in a back door tax increase? Remember the anti-windfall laws were different at the time and municipalities were only limited to not collecting any more than 10% above the prior years property tax collections. Even that is not allowed any longer, but did they even take the tax windfall they could have without legal challenge?

Let's just say I don't think I need a Granger causality test for this......

Below is what I get adding up that data the total property tax collections by 130 municipalities in Allegheny County by year. You can decide if there was a 10% windfall taken in either or both, and they could have taken it 2 years in a row, in 2001 and then in 2002. Is there any observed deviation at all from the longer term trend which looks to me to barely be capturing new construction.

You know just eyeballing that time series you have a hard time making the case that the assessment caused an unprecedented jump in how much in property taxes local municipalities collected.
To be specific, there was a total property tax increase of 4.4 percent between 2000 and 2001. A small bit higher than the average 3.4% increase across all of the years in that range. That range includes year prior to 2001 when the county assessment system was basically kaput, and the years after 2002 when it was effectively operating on the base year system set at 2002 levels. The average jump, even in the fixed base year assessment years likely is mostly coming from new construction which does exist and produce a minimal amount of new property tax revenue each year.

But look closely at the 1999 and 2000 years. No change at all. Not even what little you might expect from new construction which certainly happened. Maybe the county was behind in routine assessments because the whole mass assessment was going on. Maybe it just caught up with the full mass reassessment. If you assume the 2000 number was just a bit higher than it was, then the trend looks even flatter between 2000 and 2001, the first reassessment year. Did the assessment create any bump up in property taxes collected?

So no. Just to be clear this is not a 'study'. This is not a 'report'. I think this is just looking up a few numbers to see if they match the common wisdom that keeps being repeated and universally believed. Call it fact checking if you will. That or trying to keep the news from being an echo chamber.

Statisticum Collegium

2012-01-15T21:09:00.001-05:00

For those who keep asking for the data with new assessment numbers here you go. I will be honest and had hoped that this data would be made public from its source. To have it come from me risks a bit of confusion of multiple sources if and/or when this is distributed. I would expect it would have to become available at some point, but even that isn't absolutely assured.  I don't think many folks have ever seen a data set for the county's 2005/2006 reassessment that was completed, but never implemented.   So one purpose of this exercise was to capture the results of county's multi-million dollar reassessment for the pseudo-record just in case the data wound up being 'lost' along the way.

For this new data, my understanding is the media folks have been asking since December for this and as yet have been unable to obtain it even though it is central to all the assessment debates of late.   I guess we live in a 2nd best world and this data has become too central to the public debate to leave it in data-limbo. So for all that have been asking, below you will find a link to the data I have on new property assessments for residential parcels in the City of Pittsburgh and Mount Oliver as first released last month and subsequently retracted.  So this is not meant to be the definitive reference. I suspect I lost a few records along the way, but I believe it represents 99% of what it should be.

This is the data I have and is what I used to generate the distribution of assessment changes and the 65% factoid that has been repeated surprisingly often in the media. I will repost what that distribution looks like below as well.

The file is comma delimited text. The file has only 3 data fields: 1) An index for each parcel comprised of its block and lot number, a standard reference for properties, 2) the 2002 base year assessment for each parcel and 3) the 'new' 2012 assessment for the parcel. There is one record per parcel and this should all only reflect residential parcels in the City of Pittsburgh.

OK. That comma delimited file is accessible via this link. For further reference on the data itself you should refer back to this earlier post here.

I will add to the earlier explanations that when coming up with the 65% I took out properties that were valued at under $3,000 per the previous (2002 base year) assessments. An arbitrary dollar amount to a degree, but is the value below which appeared to me conservatively represented mostly vacant land, new construction yet to be assessed at its new market value, auxilliary parcels such as the occassionally separately deeded parking space, or parcels otherwise unused and not relevant to the question at hand of how much residents can expect to see their tax bills change as a result of this reassessment. That took out roughly 10% of the records in the data; each record representing a parcel located within the City of Pittsburgh. Honestly I suspect if you could identify and take out more of the vacant land and similar parcels, the % below the notional revenue neutral point would be even higher, but that will remain for future crunching by someone.

and I'll address some of the math associated with the homestead exemption in a later post.

So to be clear. It is a 2nd best world at this point and ideally those generating this data would have made it a bit easier to access and would have provided similar and better diagnostics than this. Realize that property assessment data is public record in Pennsylvania. Any comments, errors or other quibbles... please feel free to comment.

(Far far) Back to the Future

2012-01-14T03:00:00.007-05:00

There are just under 89 thousand local governments in the United States. Remember, I even have a picture for Pennsylvania* of just how convoluted local government can be. I worked it out and 66 thousand of those local governments collect at least some property taxes for at least part of their revenues. All of that property tax collected is based on assessment values set on individual properties just like here. If even the smallest fraction of all those other local governments had anywhere near the angst, anger and outright fear that we do in managing assessments then there would be no time for any other subject to ever be covered in the media anywhere. Somehow most of the municipalities, counties and school districts that assess property taxes muddle their way through this process with less pain.

But it is not that way here. One thing I hear that that comes up repeatedly in the discussions of assessments is a straightforward argument. Lots of folks are looking at an increased assessment value that they feel, likely correctly, that the increased value is the result of their investment and improvements. Why, they wonder, should they be penalized for choosing to invest in their properties, makng them better and along the way improving our communities? That is what their core issue is with an increased assessment value, almost regardless of whether it will cause their tax bill to go up or go down. Their point boils down to an argument that they should not be taxed on the incremental real estate value they create. You might argue you really want to encourage investment in real estate because it is the type of invesment that results positive benefits for a lot more than just the individual property.

You know.. I agree. (with a !) Not only that, but there was a fellow named Henry George who argued that very point. His argument was that if tax was inevitable it should only be placed on the value of the land and that there should be no tax on the structures we build on the land. The argument was that such a tax encouraged investment, density. discouraged speculators, and kept land from being unused. George's Land Tax concept inspired a movement. It was the least objectionable way to tax, he argued, if indeed some tax was inevitable.

Of course history is strange.  Most everyone in town** has already forgotten, but it turns out that the City of Pittsburgh actually implemented a George inspired land tax and was for the better part of a century the largest government in the United States that did so. Technically it was a tiered tax with not all, but most taxes placed on the value of land. Some, but a much smaller fraction of tax, was place on the value of built structures. The history of split tax rates locally is really why you see local assessment data broken out into the value of land vs. the value of buildings. In the assessment/appraisal models the breakout is always there, but in lots of jurisdictions they don't bother to even show you the two numbers, just what the total value is of a property. What was the impact of the split tax over the period from 1916 when it was put in place here, to 2002 when it went away, is a perpetual debate. At the core of that depate is whether the land tax had something to do with say the density of our Downtown and its ability to retain a concentration of large buildings that in a lot of other similar cities have diminished.

So I am not jumping on board all of a sudden. There really is little political will, or understanding to really go back to a complete land tax. Yet, there are some intermediate policies that are gaining traction. In Philadelphia there are folks who argue that a city abatement on residential investment has been responsible for population gain in the city for the first time in decades. One of those things that is virtually impossible to prove definitively given all that goes on in a city. Still, that abatement works out to be very similar to a land tax at the end of the day. While there is a limited abatement on similar investment in place for some City of Pittsburgh neighborhoods, it just isn't anywhere near the same thing. I have argued that we should follow Philly's example a bit more closely and implement a city-wide abatement on virtually all new residential invesment. It would make news. It would put the City on the map and might even be worth its own cost in sheer publicity value that could encourage investment. There just have to be a few investors out there who would be excited to pay taxes valued for a vacant lot on new apartment building, condo or home they invest in.

The strongest counterargument for doing something like that is that the city needs revenues and cutting out so much revenue will hurt the city's ability to function. Thing is, for the City of Pittsburgh there is no cutting out of revenues. Pittsburgh revenues from the property tax have been extremely flat going back many years. There are not a lot of reasons to expect property taxes to jump anytime soon. An abatement does not cut taxes, but abates future investment that has yet to happen. It is giving away future tax revenue that may never be coming, yet the payoff could be a spike in investment and a population reversion that is really what plague the City of Pittsburgh. Lots of good stories around the region, and in the city, but population trends are still down and you really need to encourage families to stay.. families who are the ones likely to be investing in real estate for the longer term.   Given the minimal amount of new residential investment compared to what there should have, Pittsburgh may be a poster child for a place that has the most to gain, but the least to lose from a comprehensive residential tax abatement.

History is even stranger. If you think there is something at all to my abatement argument or go farther and really think the land tax is some antidote to the assessment miama that we currently endure... then it gets really strange actually. The demise of the land tax in Pittsburgh is really tied to the political anger that erupted upon learning the original Sabre Systems assessment numbers in 2001. The higher rate on land, and the adjusted land valuations meant that the sticker shock that is bad this cycle was far far worse for a lot of properties in the city back in 2001. It was easiest, and certainly politically expediant, to quickly end the split tax in the city of Pittsburgh.  A century earlier it had been implemented after a public debate and analysis over years. It would go away in virtually hours without any analysis or debate. Folks had forgotten why it was there and the political costs of keeping it was far too much.

Still.. if you want more stability in your assessment values, want to incentivize investment and maybe at the end of the day get people to move into the City... could our problem be our solution.

and if that does not strike you as the way forward, there are other ideas. One local Georgist has a bit more creative solution to our assessment mess.
__________________________________________

* I do have a US version of that graphic, but it is too big a file to do all that much with.

** Apologies to ADB

Known, but undisclosed, knowns

2012-01-13T01:28:00.008-05:00

So it's been an interesting couple of days. Sincere thanks for all the notes of support and sympatico along the way. At the other extreme I don't think I could summarize the comments I've had, but they range the gamut from folks telling me I don't have a clue, literally made it all up, or otherwise am delusional. We will dig into it all more of course as we watch the neverending machinations. The first blog post here addressing assessments was over five years ago (and I forgot this oped is now over a decade old as of next week) so I figure they can't end now. Back then I figure I bored even the regular readers here bringing up such a boring topic as assessments. No longer I guess.

The arguments certainly are not any more completed than is the legal process. It looks like Judge Wettick has ordered an update on the assessment for next week already, so it all continues. It really could be a year of assessment posts. On that point, for those who think much actually changed it may not be as it appears. The news is that the county will not attempt to oppose the progress of the reassessment. So nobody is going to jail. The timing of key milestones have been pushed out by 7 days in most cases is all. Per a new filing last week the current schedule of new assessment numbers to arrive for municipalities other than Allegheny is as follows. The numbers in the header are for subregions of the county. If it isn't clear, it means a lot more numbers are coming in the mail real real soon. Probably will be a shock for those who may read just the headlines and be thinking this process all ended. I'll lay odds most will receive the new letters and think they are "null and void" per previous.

For sure we can and will be arguing accuracy in individual or collective assessment values forever. Can we all at least agree on the issue being data transparency, openness and why we don't even know what is known. So the very first question is will the new assessment numbers reappear on the county web site anytime soon? Has anyone asked that question? Not there as I write this is all I know. Will they release a full data set or will we all have to become a county of hackers to scrape it over and over again? Best practices there.

So I just thought it might be fun to point out a news story from almost a YEAR ago. See the Trib: After reassessment, many in county could see lower taxes, by Tim Puko, February 11, 2011. And in that is a quote NOT from me (I'm going to make you follow the link to read it) that goes:

The fastest-rising values are in Pittsburgh neighborhoods, meaning people in 87 of 130 suburbs deserve to pay a lower share of county taxes,

Go figure that and tell me how it matches the public sentiment as reported. Also tell me why anything I said was 'news' in any real sense. It was all well known before it all began and there really isn't any real debate that for the majority taxes will go down with the new assessment numbers. Seriously, read the full story please. Ponder it. Think about whether any of it makes sense given the last week. I know, there are all sorts of issues with getting 'accurate' assessment values. What amazes me is that in this whole debate the folks who are clearly going to be winners thought they were losing and those clearly losing thought they were winners. Makes for some odd politics.

Since nobody seems to have asked this on the record. But does anyone know how much cost to mail out the mass mailing to everyone in the City of Pittsburgh telling them to ignore the 2012 assessment numbers. Everyone got one, so you are talking over 100 thousand pieces of mail sent out really quickly, so there must have been some rush premia on that. Someone paid that bill? Speaking of money, one of Judge Wettick's ruling yesterday was that the county could not fire the assessor, and I presume the firm that has been working on this for the county since 2002. Think he was in a good position to negotiate a decent contract? I still think this last week might have been a bit more entertaining if Ed was still on the county payroll.

Speaking of money. Has anyone added up how much money the county spent on the the 2005 assessment it threw out completely. Does anyone have the 2005 assessment numbers just to look at? Did the county get anything for whatever that $ amount works out to be.

Maybe it would be good for a little perspective. Great collection of some seriously glum looks in this photo from the November 30, 1930 Pittsburgh Press. Can you see the one almost-happy looking guy there looking up:

Sound Collision

2012-01-12T07:21:00.004-05:00

So again, if you are a new reader here and are only looking for information on the accuracy, tax implications of just the sheer Zeitgeist of the new property assessment figures in Allegheny County, you may want to skip below and look at 3 previous posts here on the subject. Click here: (1), (2), or (3).

As much as I would really love to look at something other than property assessments today, it just wouldn't seem right. There are several new angles on this today. Both Trib and PG explain that Downtown property owners are a bit miffed at the new assessment values and that they might hurt their rental business. Remember, I've pointed out in the past the incredible story that Downtown Pittsburgh is not only far from dead, but about as about as identically packed with jobs as it was 10, 20 and 50 years ago. About as densely packed with jobs as 4/10ths of a square mile can likely support here given challenging transportation, parking and transit issues Downtown Pittsburgh has (all of which clearly have costs that seem not to have deterred investment Downtown of late). There was an announcement last week of an entirely new PNC skyscraper, on top of the bigger one that was just built. Also, the North Shore Connector is about to open and can only help push down parking prices which will benefit Downtown occupancy. And if you really want to get into it... there are a lot of Downtown investment properties that had their values drop incredibly in the new assessment numbers which, according to the logic cited in the news articles from the Downtown landlords, can only increase the probability of more investment and occupancy in the future. The Granite Building in particular dropped in value by a rather incredible 80% in the new numbers and some of the high end condos that were priced rather incredibly for Pittsburgh were brought down to, still high, but less astronomical numbers. That should increase their marketability now and in the future should it not?    So yes, I get it that Downtown property owners who may indeed be looking at some marginal tax increases (again you have to look beyond the nominal assessment increase to figure by how much) want any tax increase not to happen, but given all the other costs and issues Downtown, you are really incredibly hard pressed to make the case that the new assessment numbers will somehow flip everything on its head. Just isn't going to happen, of if it does it will not be because of the assessment. I'll skip the rational expectations argument that Downtown landlords might have read the news over the last 5 years and seen that a property reassessment was coming, yet that seems to be a particularly good period for the city in these things. Though maybe the uber rational Yinzer-owner really thought assessments would never ever happen ever again.

And by the way I would love to show some data on what is happening with Downtown assessment values to see if what is being reported is true for all the properties owners down there. That is impossible of course because Allegheny County took all the new assessment data off of its website and has otherwise made it all unavailable... even to all the media organizations who have tried to get it I am told. So we really do not know if the stories being reported are more than anecdotal stories from the self-selected owners that are upset with their own property assessments.. and just can't make any broader statements for Downtown and the City's commercial properties in total . They might all be correct, but we just don't know. Policy by anecdote is not considered a best practice anywhere on the planet.

Then the news of the day is that there is a meeting this afternoon that may, just may, lead to a few headlines. How big a deal is the question at hand? We can calculate a $$ value.

So taking just the city of Pittsburgh and Pittsburgh School System property tax millages (10.8 and 13.92 respectively) you can get a $$ for how much the total distribution is at stake in the decision this afternoon.   What I come up with via the analysis of the posts this week is that if the new assessment goes through, there is a total of $20 million in increased payments for one set of home owners in the city. Also at stake is $33 million in lowered payments for another set of residential owners. So it is a $53 million dollar question in a sense.

County-wide it will add up to more than that of course. Those numbers are just for the City of Pittsburgh and there will be some similar calculations in the suburbs. It is also a shift in taxes that recurs annually. So if we are fighting over the permanent fixture of a past-year base year then one might want to calculate the NPV of that tax shift for winners and losers each and every year into the future.   You can see why some are fighting this to its scorched earth conclusion.

We could do a thought experiment and calculate how much the lack of a reassessment since 2002 has cost the citizens of Allegheny County.   As an assumption that is clearly false, but lets say the values of properties changed consistently in a straight line from old values to new values over a a decade.   That $53 million in 2012 adds up to $265 million dollars in counter-factual tax shift that didn't happen because there was no reassessment implemented over all those years. And if whatever happens today leads to another 10 year delay in getting a new assessment completed what then?  Let's say that $53 shift grows to $100 million over the next decade. Added up it is another $750 million on a very fictional table. Real money at the end of the day though.

It is not over of course, no matter what happens in court today. Given the uncharted territory we are all in it is a bit silly to speculate to far on the potentialities until decisions are made. Keep in mind that these tax impact calculations will get far more complicated for most suburban residents compared to what is going on within the City of Pittsburgh. Most suburban residents have, in addition to the county itself, typically pay property taxes to a municipality and a school district and those geographies are not coterminus. So there is another whole dimension to this question of how the tax bill is changing for a specific parcel. You will need to figure out the tax neutrality for two distinct taxing bodies and then add. Given the confusion in the city thus far, the unknown tax calculation could be ever more painful if there continues to be no data to help coming from the assessors on how tax rates should change.

At some point we will get to the next question which unfortunately is far too rhetorical: what do we do if and when this reassessment is completed. Will it be another decade before we do it again? Remember that with the implementation of the 2001 reassessment it was all to be updated continuously with new values issues annually. That is why there was a 2002 reassessment and there would have been a 2003 reassessment as well until Jim Roddey decided for the political expediency of pushing it off 3 years into the future. The myth was that it would become a triennial reassessment, but of course that was fiction and once turned off no politician would ever be able to survive restarting assessments. It was a brief moment Allegheny County could have moved into the 21st century, but was not to be, and likely will not be again.

For me, the saddest part of this is how we so confuse ourselves. There are innumerable people in town who work toward a goal of improving the economic development of the city and region. Real estate prices really capitalize almost all the good and bad of what happens in a place. So we can argue over the accuracy of individual property values in this assessment, but there is much less error in the cumulative value the reassessment is placing on local properties. So buried in all the noise is a nugget of a bigger truth that property values in a lot of parts of the city are going up. We think Lawrenceville is hot, certainly the Financial Times does, but it really was not that long ago when Lawrencevile was as written off as a lot of other neighborhoods remain today. South Side Flats appreciating far beyond what anyone can conceive. I can tell you personally what the South Side Flats was like 30 years ago and it was not pretty and yes you could buy blocks of row houses for less than what subcompact cars cost today. Far less actually at one point not that long ago; yet those $200K and larger transaction prices for those same homes are very real. Most of the world actually likes and wants their property to appreciate. We have taken a fundamentally positive things and turned it on its head. We do that a lot.

So there is something uniquely Pittsburgh in all of this: A persistence of memory that keeps us from seeing the changes all around us. Time to stop being afraid of the future.

2pm. Might make the OK Coral look tame. Though the only weapons will be pen and pencil.

Maybe next week we will find something else to talk about? Or not.

Like the square root of negative one

2012-01-11T08:17:00.005-05:00

(Note Wednesday January 11: If this is your first time here and are only interested in Allegheny County property assessments, before you look at the maps, you probably want to look at this earlier post where I go through explicitly the tax neutrality calculation. Otherwise, welcome.)

So again, assuming that tax rates are reset as they must by law and that the revenue neutral rate is calculated based on the 58% increase in real estate values that has been reported in the news. I have shown my calculation that it means 65% of parcels will see a tax decrease in the city of Pittsburgh and that fewer than 25% will see a tax increase of 10% or more.

But numbers are boring. So here is what I am calculating for a map all of the residential parcels in the city of Pittsburgh that will see a tax increase of 10% or more. Each dot is a single parcel and only those with an estimated tax bill increasing under the new assessment by 10% or more are shown. Is the equivalent of a nominal assessment increase of 74% or more.

(note January 13: As some have noted, there are some points not plotting on the maps. I'm refining the maps and will be reposting and adding more. Maybe some neighborhood by neighborhood comparisons soon. It does not affect any of the distribution tabulations, i.e. the calculation of 65% looking at a tax decrease, etc.)

Tax bills increasing by 10% or more with new assessment numbers.

Lots to be taken from that map. Does anyone really disagree with dramatic price appreciation over a full decade in the places with the most concentrated potential assessment increases. South Side Flats, Lawrenceville, the edges of Highland Park and East Liberty, Mexican War streets. Kind of writes the story of redevelopment in the city of Pittsburgh we almost universally shout out as a positive story, except now when it comes to taxation. Funny that.

The alternative version of that map, one showing each parcel that can expect a tax decrease by 10% or more. That is the equivalent of a nominal increase in assessed value of 42% or less.

Tax bills decreasing by 10% or more with new assessment numbers.

So those maps surprised me even and I checked a couple times, spot checked and rechecked and it sure checks out for me. Remember a green dot is a nominal assessment increase of 74% or greater for the first map, and everything including what may seem dramatic increases up to 42% are the red dots in the 2nd map. I've talked to innumerable homeowners in the city at this point, virtually all livid or scared. Yet in 90+% of the cases I have talked one on one about, when I learn their assessment increases it is for jumps well below 58%, most well under and likely to get a tax cut out of this, yet they just can't believe that.

Of course, it would be good if the county did this on their own so there would be no doubt. One thing going on is that the micro regions where taxes might increase are more concentrated than they appear and the density of those dots stack upon each other quite a bit, whereas the properties that will likely see a decrease are virtually everywhere, including within the areas where some properties will see increases.

Also for those still staring at the maps. The dots are probably too big in a sense and there are an awful lot of parcels in the city to squeeze in there. Earlier I showed that the ratio of parcels with taxes likely to go up vs those going down was 1:2. Realize here I am ignoring for the moments everything in the middle, with tax changes plus or minus 10 percent. The ratio of properties at the extremes here, greater than 10% change is more lopsided. So the number on the negative really outweigh the number on the positive extreme which mostly reflects just how low valued so many city parcels remain even after appreciation in some select neighborhoods. Put another way.. takes 10 $40K homes with 10% tax decreases to offset the revenue change from one $400K home (yes they exist in the city) with a 10% increase.

If you are still incredulous. Here is a factoid. With the base year 2002 assessments. 86% of all residential parcels in the city of Pittsburgh were valued under $100K. So if you are disagreeing because you are taking a personal sample of say 10 properties and they are all valued at over $100K, the probability that you have a random draw of residential parcels in the city of Pittsburgh is way too small to even be measured in nano-mills so you just can't extrapolate to anything city-wide.

You know.. I think I'm going to run those maps through a Fourier filter of some kind. I'm not sure anyone has studied gentrification that way.. well, Im sure someone has.

Allegheny County Möbius

2012-01-10T21:22:00.002-05:00

It is interesting watching the reporting of it all. If you want to skip the interpretation you can read the judge's order in its entirety. It seems to me that the Judge is now in rare company as one of a very small number of people who has ever bothered to read Allegheny County's Home Rule charter. It is true that the original intent of the County Manager position, from even before the position was created, was that it would be more of the professional manager role that many local governments have. Sort of a person that would keep that job through transitions even when parties change. Has not worked out that way thus far and this episode is clearly going to be seminal in defining that persons actual role. Not that one in 10 could name present or past county managers.

and I do note the ACE's response which is that no judge gets to run the county's assessment process when he is the elected official. There is this little bit of history where Judge Nicholas Papadakos of the Court of Common Pleas in Allegheny County actually went much further than Judge Wettick has even hinted at and actually took over the county's property assessment system himself for several years in the 1980's. The judge then ran the county department outright and you didn't get the county commissioners threatenting Seppuku. In fact, I think they kind of liked it.

Why do we have a county manager in the first place. I'll say it again. The referendum that passed the home rule charter and created the position of Allegheny Chief Executive was passed in an election by the very slimmest of margins (hey who wrote that?). 50.3 to 49.7 from the news accounts. That margin was only possible because of the anti-county government sentiment generated by how bad things ran after Larry Dunn came to power in 1995. Remember he fired the property assessors, cut taxes but didn't cut spending, thus the county ran out of money, county bond ratings fell, there were even headline stories about weeds overrunning the county parks because there was nobody to cut the grass. He all but forced Judge Wettick into the course of rulings on property assessments that lead to this moment. No Larry Dunn -> no Home Rule Charter > no new assessments and the last couple of years would have been a dream. Strange comparing how Larry Dunn's political demise began by freezing property assessments leads directly to our current assessment miasma and the different results it is having on the public. You think that 16 years might have given us an opportunity to do this better.

But there has been a flurry of orders from the court today. There is an entirely separate order he seems to think is necessary to make sure people actually show up. Is that normal? What happens if the County Manager quits by Thursday? Why do all these people need to be around if everything is going to be delayed a year? Again, I personally expect them all to quit by then just to make this all the more fun.

Another filing today: The judge's response to a motion requesting he consider reconsidering past reconsiderations on all of this. Denied, of course, but interesting Aramaic scribble there on the very top.

There is another

2012-01-10T18:42:00.003-05:00

Dear Judge Wettick,

Just in case you are looking for an über Solomonic path forward from this ever more convoluted state...

There was a complete reassessment completed of all Allegheny County properties completed in 2005, and those numbers were already professionally judged to be accurate. Done. Complete. County-wide. Evaluated and tested and ready to go. Allegheny County paid for that reassessment as well. Makes you wonder how much money has been spent to not complete a reassessment.

Note that the County's Chief Assessor back then, arguably the last professional assessor the county has had one might argue, explained the changes in values quite clearly:

The major increases, she said, reflect a strong housing market marked by low interest rates, new construction and a high number of sales.

So why now, after yet another 6 years from when that was written is this all being warped into something so inconceivably emotional? If there were big changes in market values just 3 years after the 2002 base year numbers,... then why would the expection be there would not be even greater changes after a subsequent 6 years.

Air Drops.... pour tout les

2012-01-10T07:40:00.006-05:00

While we are waiting for the big parachute to land on ~~Điện Biên Phủ~~ the county courthouse. This current headline is a bit more than irksome: US Airways balks at airport expansion. Yes it is a current headline and yes, I left out a word for effect. You will see what I mean.

While we are on the topic. Current news is about a report that says Pittsburgh will lose 300 jobs as a result of Southwest's dropping a PIT-PHL flight. I suspect that job loss is on the high side. How many flights and/or individual routes are there out of Pittsburgh? Total jobs in air transportation (NAICS 481) in Allegheny County currently is at all of 2,491 as of December. We still have quite a sizable number of flights and routes so each 'airline-route' (to make up a metric) can't be worth anywhere near 300 jobs on average even if you take a healthy multiplier and divide. I guess I have to go read the report to see if they are trying to quanitfy the economic impact of the higher air fare costs which are likely to result. If that is true it sure would be ironic since rarely did anyone locally try to measure the job loss resulting from high air fares across the board (not just on any one flight) a decade ago.

By the way..the 4th quarter's job count in Allegheny County for jobs in the air transportation industry (NAICS 481) of 2,491 was up 11 jobs from December 2009 which made it the very first December year over year jobs increase in the local air transportation industry in a long time. I bet 10 to 15 years or more, but I am not sure how far back I can go consistenly on that. +11 jobs is all, but hey better than yet another decline.

Looking back those 10 years, since everyone is looking for Rick Santorum quotes. This is not in any way good or bad for the campaign, just historical commentary in congress on how great our airport is in general and specifically looking at the loss of our flight to London-Gatwick (people forget that one) . Strange reading it now. Yes, yes, Ken, we know as scheduled the Paris flight restarts in March. Allons-y!

Pipeline waves on the Mon

2012-01-09T14:58:00.001-05:00

While we are paddling out to ride the big wave this is too fun to pass up. Despite rumors to the contrary, Mike is still around and catches the evolution of the Parking Chair from practicality to cultural icon and now to subject of serious academic research. Not a joke.

I am waiting for someone to be really angry at the assessment their parking chair rights, which as we all know vary a lot by neighborhood.. making them very very hard to assess consistently. Note I am serious more than you think. If someone has rights to a parking chair, then said rights must have some nonzero economic value. I would have too much fun as a lawyer.

I'm still mad that the Pittsburgh Parking Chair Wikipedia page I created went away in that it was absorbed into a far more generic Parking Chair page. Can I sue the Wiki-gnomes for a taking?

Assessments today: Where did the water go?

2012-01-09T07:39:00.001-05:00

So I don't read any assessment news today. That tide sure is receding awfully far and fast though. Again if you are here for the first time after reading Brian O's column on Sunday (seems to be a lot of you) then you may want to start with my previous post.

In the eternal hope to find the signal in the noise, here are some pictures of all that should really matter if we cared about a fair and accurate assessments. These take a selection of most recorded sales transactions in 2010 and compares the sales price actually recorded to the current 2002 base year assessment values in use, and then does the same comparison of 2010 actual sales data to the recently, and briefly, released assessment values that are out in the twilight zone somewhere. and no, I do not have an explanation for why anything like this has not been produced more officially by anyone.

I'll skip a longer explanation, let's just summarize by saying that in the ideal world we never quite reach the sales price and assessed value would be identical. That would put all of these points on the red line I have drawn as a reference there in each graph.

This is clearly all a preliminary look at what could be incomplete data. But given the complete paucity of actual diagnostic data released by the city or county on any of this, we really ought to have some modicum of data to debate with.

So here is what I get first. Which looks like it does a better job?

At first look, the answer seems pretty clear. Certainly everyone over $200K or so in value looks to be valued spot on. Of course it still is the case that most city parcels are valued at the low end of the range there. Probably should zoom in there and look again:

So again, seems pretty close for everything above $100K or so in value. Still can't tell what is going on at the lower end of the range. So again zooming in:

So you would want to see a lot better at the lowest end of the range, but the use of the 2002 base year values at this point sure looks like white noise to me. Still could improve some on the lowest valued properties, but honestly those are always going to be the most difficult. There are a number of things going on in that range. You can see where I cut off the data below $5K. I would discriminate differently if I were doing this more formally. Still a lot of the low valued transaction values are not really arms-length market value transactions (i.e. transfers within a family for example) which may account for more points than you want to seein the top left there. Things like folks flipping properties coming out of foreclosure or post-REO sales all likely are showing up there along with other transactions thay may not represent market valuations. Not to say there are not going to be some debatable valuations at the low end, but it may not be as bad as that last graph might imply.

A people numerous and angry

2012-01-08T02:52:00.003-05:00

If you are coming here after reading Brian O's column today, the analysis there referenced comes from my post last week: Anger, Angst, Assessment

But there is an update that is probably a bit more inconceivable to most. That first cut was looking at the pattern of value changes in residential properties between the 2002 base year numbers in use in Allegheny County and the 2012 numbers that are currently in some legal twilight zone. The city-wide average for residential properties was somewhere close to a 46% increase in the two sets of values.

By the way, not ever mentioned anywhere.. but over the decade there has been a tad bit of inflation that is impacting the nominal values of everything. If the nominal value of your home actually didn't appreciate over that time, it means its real value dropped by a third give or take. In inflation adjusted dollars everyone's property taxes have been dropping over the last decade because of the lack of reassessments and generally fixed millage rates (exceptions where millages have gone up, but most have not in the county).

Turns out that commercial properties came in with a 71% increase in value. That is over 10 years, so we are really talking about works out to a tad over 5% increase per annum... a rate which a lot of people in the world would still be angry with if it was that low. Itself not all that much above the rate of inflation for that matter. Stranger still it is so low when you begin to look at all the positive media coverage of local commercial real estate has had of late. Hold that thought for now.

So if you work it out, the overall value of assessments in the city of Pittsburgh work out to a 58% increase give or take. So assuming the required resetting of tax rates to levels that keep city revenues the same as before the assessment... 58% is the benchmark to look at when determining whether or not your actual tax bill will be going up.

So for the city of Pittsburgh the distribution of changes in assessed values look like the graph below. I have annotated the aggregate changes in residential, commerical properties and the overall average. It works out quite remarkably that it is not 60% that will see their taxes go down if the millage is properly reset, but 65%. So for everyone who will see their property tax bill go up, almost 2 homeowners will see their property tax bill go down. To overparse a bit, but it is about 3/4 of all owners who are looking at a property tax bill going down, or by increases of 10% increase or less.

Here is something to ponder... the scale of changes resulting this assessment are likely an order of magnitude LESS than the changes that resulted from the 2001 reassessment. I can't prove that because I don't have the data, but anyone want to argue the point? Why are we dealing with it this time an order of magnitude worse is a real question worth asking?

and points for anyone who gets the reference used for the blog post title.

Move over Yinzcam - Siri gets translated into Yunzer-speak

2012-01-07T15:03:00.000-05:00

We interrupt this assessment channel.. but this is way too funny and I suspect we all could use a joke. It is such a flat world; I learned of this in an email from Mongolia and I do not joke. My colleague Phil is destined for Hollywood with this video. I wish this really existed.. it doesn't does it? I really am not sure.

Tomorrow's Assessment News Today

2012-01-07T06:19:00.002-05:00

Just trying to stay ahead of the bow wave in all of this, and speculating a bit on what seems obvious that we are moving away from, not closer to, any assessment resolution in Allegheny County. It sure seems to me that the probability of timely property tax collection this year is getting lower. Since city of Pittsburgh valuations are out there, it is all the other parts of the county that are really lost in space for the moment.

What does it matter? An awful lot of course. By my count there are 176 local governments, including municipalities of various charters, school districts, public authorities and special district governments and the county itself, that rely in some form on own-source property tax revenues. There are more local governments than that in the county, but some do not get any revenue from a property tax. "Own-source" just meaning from taxes levied by the governments themselves, and not passed on to them as intergovernmental aide from another government, whether or not the original source was a property tax.

Most local governments don't have big cash surpluses sitting around, so lack of, or delayed, property taxes could be a big problem. How big and for whom is it a bigger problem may become the bigger issues pretty soon.

Anyway. To answer I tried to make one big chart, but 176 individual governmental units makes it unwieldy to graph here. But if you want a table of all 176 local governments with property tax revenue in Allegheny County, ranked by the percentage of total local taxes that come from a property tax I have put it in an excel file online here.

For a summary that is almost as telling, here is how the reliance on property taxes breaks down by type of government in Allegheny County. This shows the average proportion of local taxes that come from property taxes for all local governments in Allegheny County, broken down by type of government. I would just speculate that in general, the higher the percentage in this, the higher stress over delayed property tax assessments.

Which all just tells me this is all a real problem.

One thing to keep in mind. Taxes are not the only source of revenues for local governments. Some local governments, especially public authorities for example, get revenues as transfers from other levels of government. Others also generate revenues from fees which I did not include in any of this. Note also the graphic is the average of the proportion. So each government is weighted the same for this. Thus it is not being impacted by the relative sizes of all the different local governments we have here.

Ni!

2012-01-06T13:09:00.004-05:00

Judge says Ni!

and for those who didn't catch this sidebar that may be a far bigger story than even what is the headline today.. From Jim Parsons(WTAE) tweet this afternoon, it would seem the county didn't bother to extend a contract with the folks doing the assessment last year. That could, I emphasize could, be a far bigger topic next week than even whether some form of a contempt order comes down. If the remainder of the county's assessment isn't completed, which it most certainly isn't yet... then who is going to be completing it?

Just asking the question is all.

Whatever that answer is... boroughs, townships, cities, school districts and anyone else caught in the cross fire probably should plan for ever more extended timeframe for all of this. Look it up: Tax Anticipation Bond. Though it is a bit unclear to me if you could insure a bond at a decent rate given the scale of uncertainty anywhere at the moment.

Steerage lost

2012-01-06T07:35:00.006-05:00

I said recently that it would soon be All Assessment All the Time for much of the 2012. It was no joke. Think I could get away with writing on something else today? Guess not. i do say with admiration and sincerity that I have added to my personal bucket list playing poker with Rich F. In far more consequential circumstances we used to call this brinksmanship.

Some quick hits:

PG talks about possible contempt of court outcomes in the latest developments. Truth is I am quite sure the county (the county itself, or its apparachiki in their official capacities) has most certanly been past the point of possible contempt citations many times in the past in all of this. The problem is, as I am sure Judge has pondered, what exactly does that mean? Does the Judge really want to be in the situation of holding a County Executive in contempt. Then what? Put his top functionaries in jail or fine them? Seems pretty unfair to do it to the underlings, but just impractical to do much to the top dog. Fine the county $ per day for noncompliance? Well then, who is going to collect from the county if they prove to be continuingly uber belligerent? Would county sheriff go around serving the county executive or otherwise enforce the judge's rulings. All becomes painfully more complex than even it is now and I suspect Judge Wettick has considered all that in detail. Likely would get other common pleas court judges involved in related rulings that could themselves be inconsistent in the end. Not good.

Here is the biggest thing. So if it is true that commerical values went up by 71% in the city of Pittsburgh, then to follow up on my post yesterday on the distribution of changes in assessment values, and the winners and losers that result, here some back of the envelope calculations. Roughly I think 60% of city property tax revenue is from residential and 40% from commercial property. If you don't believe commercial is that much of total revenues then remember this graphic which shows a huge, almost entirely commercial, Downtown impact all by itself. So if residential values went up on average 46% and commercial went up by 71%, it means the overall average is more like 56%. The article says it is 57.89% (there are some significant digits for you). Now go back to the distribution I put up there yesterday. If millage is adjusted based on that calculation even roughly, then it is more lopsided and OVER 2/3rds of all city residents would see their property taxes go down resulting from the new assessment, yet people are universally livid.    At the same time barely any public anger over the county's recent 20% property tax rate increase. I am missing something.

Further it means it is now far less than 5 percent who would expect to see taxes go up by 100 percent or more. More like 3.5 percent now.   I really need to see if I can calculate a total estimated savings in $$ from all the homes that lose out if there really is going to be no assesment. Must be some dollar amount to all of that,

For school districts or other municipalities worried about a month delay in getting their property tax revenues through the door... realize that short term municipal paper is yielding close to 1% or less (at an annual rate) interest these days. What does that work out to for a month or so? So all I have to say is: Tax Anticipation Bond. Done all the time in lots of places quite routinely for precisely the same reason as may be needed here (without the soap opera of course). What is routinely dealt with as a matter of routine elsewhere is some inconceivable trauma for us. Can be said for more than assessments of course as well.

and yes.. there will always be assessment mysteries. The Casino which supposedly had well over $400 million in construction costs, something like an $800 million total cost, is still appealing it's $199 million dollar assessment.. an assessment which I think was set before they got their approval for table games which would impact an income based assessment.

The old RET and older Alcoa building is upset over an assessment increase from 10 to 30 million. This is for an entire skyscraper. Scrap aluminum is pretty expensive these days. Might be 3-4 million in aluminum value alone in there, let alone the value of the XPlorion. That cost a million to install I bet at one point. Whether it counts in the cost of the building these days would not even be a rhetorical question.

On this notion that canceling (I am struggling with the correct verb to describe what actually happened yesterday) a new property assessment will help property values in the county.. what will be the impact of the years of uncertainty and confusion this is going to have on property values in the future? High taxes are one thing, but not really knowing what taxes will be is another thing altogether. Sometimes the devil you know...

Crystal ball.   Barring some quick resolution. If no reassessment I suspect there will be strong patterns in the new ('old new'?, or 'new, now old'?) assessment numbers that correlate with race in some way which will prompt some sort of filing in Federal court on this and I suspect the Federal bench in town are collectively Wettick supporters. Just a guess.

and just from the archives. October 19, 2009: "We're here because of the Supreme Court's mandate to me," Indeed ..........Ditto

On that which is deterministically random

2012-01-05T19:01:00.001-05:00

Desperately seeking the right metaphor...

Alice?

Flatland?

Ecomium?

Teumessian fox vs Laelaps?

They all fail me. I really don't know. This is all in the realm of the theological more than anything else at this point. Someone will determine the border between private judgment and the law.

Anger, Angst, Assessments

2012-01-05T04:18:00.002-05:00

As an aside most know I am a big fan of the Guardian's Data Blog, so we will start with a plug for their e-book just out: Facts are Sacred: The power of data

We will get back to that, but now yet again assessments. News is out with some of the latest numbers on commercial property assessments in the City of Pittsburgh. Again, everyone is confused. One quote today:

Mr. Kamin said the assessment on the historical Frick Building, where his offices are located, soared by 119.2 percent, from $17 million to $37.3 million.
"I think it's ridiculous," he said. "It's a landmark building but it didn't more than double overnight."

Nothing went up 'overnight'. The previous assessment values were all based on a 2002 base year. Which really means the market sales that went into the valuations were from before that even. These are values for 2012. So the benchmark is how much the nominal (not even inflation adjusted values) went up over a DECADE. Not 'overnight', by any definition. For commercial property owners they might want to consider it a benefit to get the assessment done soonest. If it gets delayed it might have the impact of pushing up values even faster given what the commercial property pundits are saying about Pittsburgh's forecast for the next couple of years.

That is just one more example of how the county has ensuredthe mass confusion, consternation, angst and almost paranoia which reigns as a result of the ongoing property reassessment process. People are being scared and most of it just isn't necessary. Allegheny County accepted the reassessment plan over two years ago. It is not like the timing was any secret according to the county's own schedule. The current legal case that has lead us to this point goes back to 2005. Allegheny County's acceptance of Judge Wettick's order to complete an assessment by this date goes back a couple years now. The situation we are in today, and its timing has been carved into slate tablets for a long time now.

There are innumerable things that could have been done to educate and prepare folks for getting their assessment numbers. Just a little up front effort might have prevented a lot of folks from being as literally scared as they are. I have talked to innumerable people in the last week who believe firmly their taxes are skyrocketing and in some cases their future homeownership is in peril.  In virtually all of the cases I have talked about, the homeowners property taxes are most likely going down. Yet they don't believe it; such is the public state of mind.

So if I was the benevolent data dictator, one of the things I would have done in this process dump out to the public a lot of data on how the assessment was completed. If you want to read how Sabre Systems did it back in 2001, start reading. That is not the CLT (the current contractor) methodology, but it is not a bad primer on the process and local Allegheny County issues with property assessments. Any reason there is not some educational material out there in short or long form? Would have made a big difference. Here we have even smart attorney folks thinking the assessment changes were all 'overnight'.

Second I would dump out a lot of diagnostics of the results so folks appreciate the changes going on, let along   Individuals can of course look up individual assessment values, but not much more. I would have dumped out lots of descriptives and dumped out the whole dataset of new and old values. You might be amazed what people would be able to do with data if you set it free.

Sooo.. in the spirit of being "Data Driven" a term becoming ubiquitous, but that we rarely really mean. I think we are collectively going backwards personally.  That has all been a long lead up for the data that thus far everyone, incluing the media, seems to be almost guessing at, or operating completely on anecdotal snippets of the big picture.   I have a very rudimentary python program (to download if you want to look at it) one can use to scrape the data a more complete data site from the county assessment site.   I am sure there are 9th graders in town who could write a better program. Given the speed I can get from the county's servers.. and probably the sheer inefficiency of my code, it's awfully slow, but it works. Don't try running it during the day, it takes overnight. To keep it workable, it pulls from a list of block and lot numbers of city residential properties which I will leave online for now. If anyone wants to use  this program as a starting point for a better and more useful program, I'd love to see it.

Below you will find what it gives me. The distribution of how the new numbers compare to the old can be summarized in the graphic below. This is the distribution of the ratio of new values vs. old values in the City of Pittsburgh data thus released.   Thus far the news is that the aggregate values of residential property in the city is 46% higher than the old values. It is still dependent on the commercial property values come in at in aggregate, but if taxes are adjusted to be revenue neutral based on the +46% value, then it works out that there are 56K properties that will see their taxes go down, under 1,000 will remain exactly the same and 40K with taxes that will go up. Works out to ~60% seeing property tax decreases.  Of course predicated on taxing bodies following the law of course. Still, never has good news been so badly received.

Not to say there are not angry folks out there. Just under 5% are looking at effective tax increases of 100% or more (which would happen if your nominal values increased by 292% or more). A lot of folks for sure, and I am sure most of them will be filing appeals. I bet a lot (not all, a lot though) of those very high ratios are new construction in some form and I bet those parcel owners are not too suprised in general. Probably the maximum anger is found in parcels somewhere between those two lines I've marked.

Note I started my program before they released the commercial values.. So this is just the residential data for now. I'll see what we can do for commercial, but for that the properties themselves are so different that you have to look at the data a bit differently. The commerical valuations will also impact what the revenue neutral millage is as well. So this is all just a first cut. Stay posted.

I say at this point the cat is out of the bag. What started as litigation with just a small handful of plaintiffs could potentially be a much bigger deal if the county really tried to backtrack on assessments now. Theoretically if they wanted to keep using the old values, 60 percent of folks in the city at least would have a vested interest to sue to use the new numbers. Might be why the county went out of its way to suppress the strangely never mentioned 2005 assessments it completed (I presume at a cost of $millions to complete??), and that nobody has ever seen unless you had been very quick to check. Lot of folks would likewise have seen property tax decreases if it had been implemented.

Kids, can you spell e-l-a-s-t-i-c-i-t-y for $500?

2012-01-04T02:54:00.002-05:00

We interrupt your assessment channel... just because I am burned out by it and my web-scraping program is awfully slow (more later).

But I mean it.. about the kids and about the $500

So thanks to the Cleveland Plain Dealer for pointing out an economics contest for kids sponsored by the Cleveland Federal Reserve. Here is how they can earn $$:

Pick a show or episode and investigate the scenes to find the basic economic concepts within. Then write an essay, poem, play, or short story explaining how the show or episode demonstrates some of those concepts.

You can pick a comedy or drama, documentary or sports show, reality show or soap opera. But whatever you choose, the show or episode must explore basic economic principles, and it must be a show that you wouldn't be embarrassed to watch with your grandma. And for those of you who don't embarrass easily, that means no programs rated TV-MA, programs rated for mature audiences.

Top Prize = $500. and 11th and 12th graders in Western Pennylvania are eligible! Since yes, Pittsburgh is in the Cleveland Federal Reserve's district.

and no.. I do not provide ghost writing services.. nor do I probably watch whatever tv shows kids in high school watch these days. Do kids in high school watch tv these days?

I trade you anecdotes

2012-01-03T00:54:00.000-05:00

So with the news obsessing on the one property they found where a parking space on Mount Washington seems to be overassessed. It is now international news even, but do check out the first comment in that link via London's Daily Mail.

Was it really an incorrect value though? Probably, since that seems to be slightly more than a parking space in Manhattan a few years ago, but how incorrect? It still is the neighborhood (or part of a neighborhood) with the most valuable real estate in the region. Reasonable to think it has a pretty high value per square foot of land. Is prime Mt. Washington real estate approaching Manhattan prices yet? Is a better view than most in Manhattan is it not? Can we at least agree the space is worth more than the $5,000 it is currently assessed at? Would be worth more than that in a lot less pricey a neighborhood than that, wouldn't it?

Remember in the first reassessment 2001, there was initially a dog house that wound up being assessed a bit improperly? I will bet the assessment just completed will eventually be measured to be more accurate than the first Sabre Systems assessment even. I bet when we really get a look at this all, the condo parking space that was overassesed was an anomaly.. certainly an outlier.. maybe even the single most extreme outlier in the entire assessment when it comes to the % increase in assessed value. Would be the very definition of anecdote if that was true, n'est-ce pas?

A bigger issue.... I personally believe we have a lot of properties in the county that have economic values which are literally negative or zero at best. The property assessment system does not really deal with that situation very well so it never gets recorded that way. I was always pretty sure that the models being run produce negative values when first run. They likely get adjusted to at least zero or more likely some minimal land value before being finalized. I think I have proof of that. They did miss at least one property in the adjustment. While I am quite sure that number will be corrected, I do wonder what would happen if it remained the offical assessed value. Would the owner have to send an invoice TO the county in order to get a check sent to them? Probably wouldn't work.

I do wonder what is up Downtown real estate speaking of anecdotes. I have no idea what the market for penthouse condos is in Pittsburgh these days, or what it ever was for that matter. There is at least one case where either the owner is really happy at their lowered assessment, or really mad that the condo they paid $2+mil for a few years ago is now worth well under $1mil. A moment of Yunzer cognitive dissonance for me to believe we have 7 figure condo prices anywhere for that matter. That and the poor Granite building seems to have most of the value in each of its units written off almost entirely. Not questioning whether that is a fair valuation, but still.

Presidential race starting in January?! Blame Pennsylvania

2012-01-02T00:16:00.000-05:00

It is bewildering that the year just began, yet the Iowa Caucus process is just hours away. I also know caucuses are not primaries as we know them here in Pennsylvania. Still, the fact that the presidential campaign is officially beginning is amazing. It is also amazing to folks around the world who do these things very differently. National elections leading to the election of potentates can be announced with barely weeks notice. The American Primary system is in lots of ways an example of American exceptionalism. Few places have year-long election campaigns, actually now more than a full year for us with the new date for the Iowa Caucuses.

It turns out that Pennsylvania, and our Western PA neighbor Crawford County is to blame for this whole primary system juggernaut now upon us. If you read this before you can skip it, but below has been my primary season post in the past with the summary of how Pennsylvania history now impacts the nation, if not the world. Just consider, a century ago, the whole primary idea was still considered an experiment. Maybe democracy is a perpetual experiment.

For more you can read Western Pennsylvania History: The Origin of the Direct Primary: The Crawford County System. Volume 60, Number 2 (April 1977) , 145--158

*********

Which then makes you wonder why do we have primaries at all? Plenty of modern democracies do not hold primaries.. Not even all states in the US have primaries. The caucus system is still in use in Iowa as we will all re-learn a year from now. Can you imagine a caucus system in place here? It turns out that the direct primary system got its start just outside of Pittsburgh. Crawford County, Pennsylvania created the direct primary in 1842. The local Democratic Party had a chaotic and ultimately failed county convention that year whereupon no slate of candidates was nominated. In the machinations that followed, they ultimately dealt with the situation by allowing all Democrats to cast equal votes for who would represent the party in elections that fall. Seems like a normal enough idea now, but it had never been tried that way before. The idea was so well liked that it transformed from a provisional measure to the permanent method of selecting party nominees. While the idea spread throughout the state and nation, it was not an overnight change. Pennsylvania would not have a comprehensive law requiring primaries until 1913.

"Before you know it, they'll want to get rid of Iron City Beer at tailgate parties..."

2012-01-01T10:15:00.000-05:00

As the county administration transitions, I thought this old headline might be fun. Oh the things we used to fight over:

Lids flip over idea of domed stadium

All my lawyers

2011-12-31T08:34:00.000-05:00

Judge Wettick must be feeling a bit like Susan Lucci at this point. In the news is his: Ruling of the day as covered in more detail in the PG. Certain amount of entertainment in it.

Shades of the Ed Schoenenberger story from his brief tenure as the county's chief assessment officer. I really had begun to wonder if he really existed, so off-grid he has been, but it turns out Ed is still out there (though he still has a far less public online presence and schedule than everyone's friend BK). I mean really out there. South Dakota no less.

I wonder... Has anyone ever gone and audited Ed's contract? $80K a year to rarely even be in town and he himself all but says his job was to not get stuff done. yet there is some surprise over the current machinations? Our own denial is our biggest enemy. Poor guy was not even effective at being a whistleblower, but there has to be some story there worthy of follow up. Paul vO's story there was not followed up by anyone to the best of my knowledge.

Rumor has it there is a new controller just elected who might have some purview over how county funds have been expended.

More Pittsburgh real estate trends

2011-12-30T12:58:00.003-05:00

Lest we forget some of the bigger stories in all of this. The other day I played with the housing data for the trends across metro areas since 1991. I have renormalized the data to show changes over just the last 5 years. Just fun with numbers, but this is what you get:

So we can quibble over what the Pittsburgh time series means in itself, but clearly some awful awful times in a lot of, if not most, other real estate markets over what is now a half of a decade. So we are not merely talking about a bad month, quarter or even year. Some markets out there are stabilizing, but not all are and most opining I see projects more pain elsewhere at least in the near term.

Anecdotal I know it is.. but if this is not a sign of something weird in local real estate markets I don't know what is. It is almost done, but there is not one, but THREE new townhomes being squeezed onto this triangle plot of land (below) in Lawrenceville that I thought for sure was undevelopable.It really is kind of remarkable. Henry George would be cheering.

(ED NOTE: I've taken down the google street view embed that was here becasue it was interacting strangely with the blog. You can still get to the view I was referenencing here)

I honestly had imagined a drill of some kind going in on that site. A bit too small I know. Just so Wiz does not feel forgotten: Look at those parcels. Lawrenceville was one of the first parts of the city where the Landmen started to buy up leasing rights for Marcellus shale production within the city of Pittsburgh. By all acounts they have given up for now on city development, but why they started with the densist part of the city is just a bit confusing.

Groundhog Day Redux

2011-12-30T00:21:00.001-05:00

Written a decade ago, net a month, this week:

Trib: Groundhog Day in the Assessment Office. Nuff said.

On occassion I have the crazy idea of writing up the history of property assessments in Allegheny County. It really is an interesting story with an unquenchable motif that can only be described as how not to do things right. Then in the next moment I always say to myself, why write something that at most a dozen people will ever care to read? So no history from me, but if you want to read one seminal piece check out what was called the Jaffurs' report of 1976.

I guess we may have made some progress. That report observed that a large part of the property data then in use included WPA line drawings of properties. The county was still working on incorporating the newfangled technology known as the Polaroid.

But their conclusions included this passage which might arguable be rewritten today verbatim (see the very last page in the scanned file):

In considering long range improvements to the Allegheny County assessment process a vital element is the development of a credible system wherein the property owner has access to information on how the assessor and/or the mechanical system arrived at the valuation.

That just about covers that... but egads. "mechanical system."?? I did once have a class on analog computing, but even that was in the context of electrical analog systems. I have not seen a mechanical analog computer since I saw the vestiges of the fire control system built into the USS New Jersey. No joke. Scary contraption.

"and all the folks agree that this is terrible"

2011-12-29T13:19:00.000-05:00

We have not even begun and this is already out of hand. Please will someone stand up and explain that your assessment increase has little to do with your expected tax increase. No, not me.... like how many read here? I mean maybe one pol, or our good friends in the media not waiting until the 10 paragraph to kind of get around to trying to explain that the rates might change somewhere in the process. They will change, and they will change a lot. I do believe from what I know of the distribution of real estate values in the city at least that the majority of properties will see property taxes go down as a result. It's just the way the math works out.

Some people are now upset even thought hey clearly are in a range of having their taxes go down. So here is a verbatim pull from a story today:

Donna Query said she, too, will appeal the new assessment, which increased the value of her home along Chess Street in Mt. Washington by nearly 30 percent, from about $37,000 to $48,000."I don't know how they come up with these numbers," she said

So that assessment went up by 30%. By all accounts city values went up on average much more than that. This person is looking at a big tax cut even if the city and school district merely come close to complying with the law. I would think the immediate question for her would be what she thought of the expected tax cut she should be getting. Probably why I am not a journalist.

I hate to pick on just that one article, they are all much the same expecially in omnimedia world. Irate taxpayer makes good copy I do realize, but hopefully not at the expense of the truth. And who in the world thinks any municipality or school district could get away with a back door tax increase out of this. The lawsuits would kill them if nothing else and eat up any potential revenue gain. .

OK.. still you worry, are upset or just plain confused. A primer on how this all works, direct from the Commonwealth of Pennsylvania and their Real Estate Assessment Process in Pennsylvania document. It has a good starting point on property taxes, assesments, anti-windfall statutes and assessment appeals.

Prior to 2004, the assessment laws31 contained provisions limiting the amount of real estate tax revenues that could be levied by a political subdivision32 in the year following a countywide reassessment or a change in the predetermined ratio. These provisions are commonly referred to as the “anti-windfall” provisions.
The laws required a political subdivision33 to reduce its millage rate so that the total amount of taxes levied on the properties in the year following a reassessment increased by no more than a specified percentage from the previous year.34

In 2004 and 2005, three bills were signed into law35 which changed the implementation of the anti-windfall procedures by political subdivisions. The assessment laws now require political subdivisions to follow a “two-step” process when increasing real property taxes by a percentage allowed by law following a countywide reassessment. The first step requires a political subdivision to establish a revenue-neutral millage rate.36 The second step is optional. By a separate vote, a political subdivision may institute a final tax rate that limits the total amount of taxes levied to no more than the maximum percentage increase permitted by the assessment laws.
In 2006, the Taxpayer Relief Act (Special Session Act 1)37 was enacted. Act 1 contains a new anti-windfall provision which applies school districts. Section 327 directs that after a countywide reassessment,38 a school district which, after July 1, 2006, for the first time levies its real estate taxes on that revised assessment or valuation must reduce its millage rate so that the total amount of taxes levied on the properties subsequent to the reassessment increases “less than or equal to the index for the preceding year.” Section 327 does not require the “two-step” process that exists in the current assessment laws.

(Emphasis added)

This is all going to be painful.

Tortoise or Hare? Pittsburgh Real Estate

2011-12-29T02:26:00.002-05:00

I really do suspect one could blog/comment/opine daily on assessments in Allegheny County from now until... some undefined date long in the future, but who wants to endure that? So to connect a bit the assessment crescendo just beginning with the bigger picture, and for a good end of the year post... just what is going on with Pittsburgh real estate?

Some benchmarking of data from the Federal Housing Finance Agency is below. I should add a note that this is their Purchase Only index of housing prices among the 25 largest MSAs in the nation. This is an index normalized to the beginning of 1991, so the graph is showing relative changes, not actual dollar values in any sense.

Pittsburgh is in fact the current median in that dataset which they label as the 25 largest MSAs, but includes some Metropolitan Divisions as well. Nonetheless, if you bought real estate in Pittsburgh in 1990 it would on average have been a better investment than in half of the other regions. I suspect some here will just refuse to believe that.

It is all unctuous bafflegab I tell you. Über unctuous maybe.. or is it Über bafflegab?

and for the curious, the region tracing out the north face of the Eiger is Miami.

Property Assessment Dawn: Termination Shock and beyond

2011-12-28T18:31:00.003-05:00

Assessments have entered the heliosphere and the future is upon us. By multiple accounts, new property assessments were mailed out to City of Pittsburgh residents. Most have actually arrived by now. The folks in Mt. Oliver are along for the ride.

Folks will be chomping on this for days/weeks or longer, but clearly there is an immense amount of confusion over what it means. Realize that since Allegheny County did this last time, state law has made it much more difficult, not quite impossible, to have an asessment result in higher revenue collection by any level of government that uses property taxes. In other words, tax rates will be adjusted for all municipalities, school districts, and for the county itself. The only question is by how much.

By all accounts, property values in Allegheny County, and likely for the City of Pittsburgh, went up cumulatively by 50%. So whether your taxes go up depends solely on whether your property went up in value by more than 50% or less than 50%. The 50% is not the final number, just what the pols have thrown out there thus far. There is some more specific # that will be calculated, but I bet it is pretty close to 50%, at least for residential properties in the city of Pittsburgh.

So I have a hypothesis: In the city of Pittsburgh MORE residential properties will see their property taxes go DOWN than will see their property taxes go up.

Discuss.

That statement of course depends on a new tax rate being set close to what is notional revenue neutral rate would be. It is not saying half the properties in the city will be going down, but that more than half will see increases than by less than the city-wide average appreciation.

For the statisticians out there, or those who remember that statistics class way back when, it is all a question of skew. Lots of low value properties in the city likely saw less than average appreciation.. but the higher valued properties that likely saw appreciation I am just betting add up to some much bigger cumulative increased values.  Got that? If I am right it works out that in sheer number of parcels, more will see tax decreases than will see tax increases. Put another way, the slower appreciating values are on average lower valued to begin with and so you need more of them to balance the higher valued properties that I am guessing appreciated by greater %'s.

If I am right.. it will be kind of interesting how the politics of this plays out. All the public rhetoric seems to be telling the average property owner that they should expect taxes to go up. What if that is the other way around?  That more properties will see taxes to down? It is not saying there will not be some very angry people since there is going to be a distribution out there.. and a lot of people will be seeing assessment increases well in excess of the city average. I am betting those folks are likely to make themselves heard pretty clearly, while the majority that will save money will either be confused on this point, or just not know their taxes are going down until well into the future.

"A vast industrial miracle is coming to Pittsburgh"

2011-12-28T02:32:00.002-05:00

I know the PG has a series all week on coal, but check out the Pittsburgh Press Page 1 above the fold headline in 1947 which leads with "The biggest story in the History of Coal".

I am not quite sure that all worked out.

And that was just the beginning. Seems like much of the whole issue was devoted to the story of how coal and technology was going to save Pittsburgh. One of the secondary stories still on the front page there starts literally with this line "A vast industrial miracle is coming to Pittsburgh".

Miracles are good. In Pittsburgh all the better. Beatification may have been a bit premature.

Another story with the headline "Way is paved for many new plants in area" in that issue leads with this sentence: "Many industries never dreamed of in Pittsburgh can spring up here as a result of turning western Pennsylvania soft coal into gas and liquid fuels". Quite a statement since we tend to dream up a lot here.

Somewhere out there is some media coverage that mentions in passing that the promised commerical plant would not be built.
and on an inside page is a article "How the coal cracking process will work". Amazing what goes around, comes around.

In other words.. We already said NO

2011-12-27T20:30:00.004-05:00

I have enough attorney friends to have given me the ability to translate some legal documents and make them understandable to the public. This from the Pennsylvania Supreme Court today says in the vernacular: Stanton Wettick is our friend. That would be a much clearer statement than the verbose order they issued which in its entirety says:

and now, this 27th day of December 2011, the Emergency application for Extraordinary Relief is DENIED (emphasis in original)

as a result the Trib headline says: Allegheny County drops reassessment notices into the mailbox

Now while that headline may in fact be the literal truth, I still wonder just a bit whether any franked piece of mail made it to the US Postal Service by the close of business today. We will find out Wednesday I suppose.

Most Stable Region of Pittsburgh

2011-12-27T02:23:00.003-05:00

So in the spirit of the end of year retrospectives we will be having all week this came to mind. In October I pointed out that for the Pittsburgh region, it was the highest employment count for an October ever. Same for November. Following from that, I was thinking a bit about some analysis by the folks at the parent of the business times which showed Pittsburgh among a small set of regions that are at their decade high employment peaks.

That analysis might be misread a bit. It is not that Pittsburgh is among the top employment gainers over the decade. We are one of a few regions currently hitting their decade high peaks. Lots of regions have had more growth over the decade, but many have dropped a lot from those peaks in recent years. In lots of ways it is a reflection of the relative stability here, not a lot of job growth.

So I made a graphic of the employment change for the 50 largest MSAs (currently, by employment) over the last decade. So with November 2001 as a baseline, below is what those trends looks like; Pittsburgh is in red. It works out, and I calculated this explicitly that Pittsburgh is in a sense the single most stable employment time series among all 50 regions. Stable as defined by the difference in this time series between the peak and trough over the decade. The difference between the peak and trough for Pittsburgh works out to 6.67 across the decade, which works out to the lowest range for any of the 50 regions.

Mile High Punditry

2011-12-26T22:12:00.001-05:00

So with the maximum likelihood analysis pointing toward a playoff game against Denver, it is hard not to remember our good friend Bill Johnson who once parachuted in from Denver to cover the last playoff game we had against Denver in 2006.

Bill looks to have survived the demise of the Rocky Mountain News for whom he came here for back then, but moved on to the Denver Post. Of note he appears to have only recently resigned from the Denver Post as well.

Bill was actually not a sports beat guy, but more of an all around pundit out in Denver. Does this mean we need to send Brian O. off to Denver if this game happens? If we are the Paris of Appalachia, certainly Denver must be the...??... Zurich of the Denver Basin?

and since his previous employer has dropped off the DNS master index, I can't reproduce a link.. but to be fair, Mr. Johnson had a follow up column after he got back that was pretty positive on his ever more notorious experience here.

Random mashup

2011-12-26T08:44:00.001-05:00

Random hits while things have been slow:

Analysis from Willow looks at aggregate real estate valuation across regional markets and Pittsburgh is one of a rare few regions where the value of real estate went up last year. I realize everyone writes this off as just some "we didn't boom, so we didn't bust" meme, but that is last years explanation and this has all gone beyond reversion to the mean for Pittsburgh.

PG is doing a series on coal, reflecting I suspect a realization that all things are not shale. King Coal stories would legitimately go back a century or two for Pittsburgh. But more recently there was a point when all things energy, and especially coal, here were written off as old news. Thus they had been relegated to obscure indicators.

Speaking of real estate value going up... ASSESSMENT TIME IS HERE*. Stories will be fodder for everyone for months if not the year. There will be neverending news cycles that start with: 1) Gosh, where did values go up? 2) Gee where did values go down? 3) How much will my taxes be going up? 4) The confusion of the appeals process? 5)The scale of appeals the county needs to deal with? 6) How did this all happen? 7) What is going on with assessments in other Pennsylvania counties? 8) What are those bums in Harrisburg doing about assessments? 9) Will my municipality/school district be resetting rates and when? and 10) The epilogue: when will we be doing this whole assessment thing again?

To not repeat on the most immediate of questions I had a post last year: So you want to calculate your new property tax bill?

and h/t to Jim Russell for this neat little snippet. Pittsburgh needs make welcome to the Bhutanese. I like to think I know my geography, but I had to look that one up. I am not so good on landlocked nations. I'd give some historical stats on the local Bhutanese population, but that isn't quite possible. It looks like a Cleveburgh story though and the Cleveland Plain Dealer was on the story earlier this month. Who knew?

* Can we really be so sure of this? Could there be anything else that holds this up with Judge Wettick promised that the city values will go into the mail tomorrow. I'm sure all those letters are stuffed and franked and just waiting for the post office to open Tuesday morning to go out. I'd honestly be more surprised at this point if they actually do go out. Who knows what could go wrong in the mailing of 150K letters give or take. Maybe the franking machine breaks and the repair person is on a long weekend holiday.

Santa-tracking - thanks to a Pittsburgher

2011-12-24T17:16:00.001-05:00

With the obligatory news coverage of NORAD's Santa tracker upon us, I will just repeat last year's Christmas Eve post and point out that the Santa tracker owes its start to diasporan and Westminster grad Colonel Harry Shoup. He gets the credit always, as in the ABC post just out, but his local connection is mostly lost to the ages. Since he strarted it somewhat accidentially, NORADs service to the world has run almost smoothly every year, except for when the Google folks almost caused a diplomatic incident recently.
I will divulge the Secret Santa path for deliveries in the United States:

Which shows Santa is not really constrained by time or fuel efficiency. What is really shows is just how much my programming skills have atrophied at this point. If I ever in my career teach a class in computer science (unlikely) I think I will assign the traveling Santa problem to find the shortest noncrossing path that will hit every county in the country, which is all that map really does. That algorithms book is still on the shelf though.

Pigskin mythos

2011-12-23T14:43:00.001-05:00

Obligatory history for December 23, 1972 below.

And all those cheering fans: masses of unemployed steelworkers cheering as their jobs were being "downsized" in America's great deindustrialization? NOT. It would be a decade before the Cliff Stoudt economy arrived in Pittsburgh. For 1972 average manufacturing employment was 286K in the Pittsburgh region. In fact, from this moment through moment the Steelers won Superbowl XIV (January 20, 1980), the count of jobs in Manufacturing in Pittsburgh would go up. Just a bit, but still up. The average level of manufacturing employment in the region for 1979 was 288K.

Not the mythos you care about? On the far more important debate a to whether the whole thing was 'legal' or not at the time... I personally always defer to the physicists. Only they can can calculate how the oblate spheroid bounces.

On a side note, and who knows what this means in long tail philosophy, but if you do search for "Cliff Stoudt" I seem to have quite the Google rank.

Cleveburgh Watch: A Tale of Two Banks

2011-12-23T09:42:00.001-05:00

So to admit upfront, this is all parasitic on some neat reporting from Bloomberg out on the Analytic Journalism frontier. They have acquired and made available to the public (which means they want us to use it right?) data as they describe "Once secret " from the Federal Reserve on its lending to major banks during during the peak of the financial crisis. I suspect the Fed would describe this all as merely 'confidential' data.

As they describe it in detail the data:

The data reflect lending from the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, the Term Auction Facility, the Term Securities Lending Facility, the discount window and single-tranche open market operations, or ST OMO.

Got that? I have pulled the files for PNC and National City which now are one of course. Some may recall there was a certain bit of angst up the Turnpike that for some reason National City was denied TARP funding that might have kept it around a bit longer. The PNC takeover followed immediately on the heels of the government's denial of TARP dollars. Some thought it a bit less than fair since along the way PNC used some of the same money to implement the takeover.

Well.. if there is any doubt over the flawed logic of a straight one on one comparison of the financial situation of the two banks at the time, here is what the Bloomberg data has for Fed lending to the two institutions as a percentage of their market capitalizations day by day.

Yes at one point near the end, Fed lending to National City well exceeded its market capitalization. PNC's lending looked to be in itinerant blocks of a billlion. I am speculating completely when I wonder if that was $ pushed by the Fed as it wanted to shore up confidence in the system.. not really money desperately needed by PNC at the time.

Some things take time

2011-12-22T09:27:00.004-05:00

Let's declare it a no-rant zone until the new year. So just with escalating buzz on the North Shore Connector (relatively) soon to open I thought this would be interesting. The excerpt below is from "Transit: Report #3 of the Pittsburgh Plan" dated 1923. You might need to expand it to read it, but if you do you will really see how long the vision of a subway to the North Shore has been out there. That and for everyone who got mad at the cost of doing it under the river vs. with a new or extant bridge (not that the Coast Guard was going to make that anywhere near as easy as anyone wanted to believe mind you), you will see that even that debate goes back almost a century.

Personally I suspect that no matter the history and circuitous path to get tot his point, the spur line over to the North Shore may wind up being one of the most used parts of the Port Authority system. We will see.

Taxing Billboards and Authority Angst

2011-12-21T07:56:00.002-05:00

What goes around, comes around in so many ways here.

Headline Today: Billboard tax pushed by city councilman.

The (Pittsburgh) Gazette Times: Signboard Ordinance is Framed. October 28, 1911

Speaking of ancient history. Who knew the Stadium(less) Authority was not only not planning its own demise, but actually expanding its portfolio by subsidizing "T" rides on the North Shore connector. Funny thing tough. I presume the obvious that the Stadium Authority has some vested interest to do this because it will increase the value of parking lots it still owns on the North Side. So getting people to use that parking will take away from Downtown parking, the biggest supplier of which is yet another public authority, the Pittsburgh Parking Authority. So it's quasi-competition in the quasi free market of dueling public authorities in support of the Port Authority. Maybe we need just one big meta-authority to make sense of all the other authorities?

I do wonder what the PPA thinks of that deal since it can only hit their bottom line downward. That and does this really mean the Stadium Authority is planning to exist in perpetuity? Looks like it is working to self-justify a continuing stadium-less existence. Can we at least rename it to something a bit less anachonistic? It could be renamed the Authority formerly known as the Stadium Authority Authority. Remarkably, that would probably be less confusing to the public.

Creeping employment statistics

2011-12-20T10:48:00.002-05:00

For what it is worth: highest wage and salary employment in the Pittsburgh region for a November ever. 3rd highest employment count for any month of the year ever.

as an addendum, it might be worth noting that if you look at the same data and do the division, manufacturing employment is now 7.63% of the total nonfarm wage and salary employment in the Pittsburgh region; a new all time low.

Confusion greatest before the conclusion

2011-12-19T19:55:00.000-05:00

There is going to be fascinating to watch. There is a new litigant a week popping up in Judge Wettick's courtroom as he tries to prod the county to the event horizon otherwise known as property assessments.

Now it seems that the Allegheny County Board of Assessments, Appeal and Review wants to itself file motions in the case in its own right and standing. My scan of their filing is basically is that they object to several aspects of the roadmap the Judge has laid out for how this will all play out imminently.

Seems a bit late doesn't it? Nothing quite new in the case for them to be popping up and filing now sure seems to me to be timed to muck up the conclusion as much as possible. And what I would think some lawyers might take up in argument, but isn't the Board of Assessment, Appeals and Review itself an extension of Allegheny County itself? To file independently an artifice more than anything else? The county is proscribed in how much it can really object at this point since legally they accepted the Judge's perogative to order an assessment quite some time ago. Now if someone else objects...

My take is that this isn't over yet and the county has ever more strategem's to dig out and throw into the gears with the intention of preventing the actual implementation of new assessment values. You have to give them credit for creativity and perseverance to this point. That and with the incumbent moving on, would it be unsurprising to see a lot of the key actors in the play quitting their county jobs and moving on when DO leaves office. Just speculating, but I anticipate the unanticipated over the next week.

Next year is likely to see greater level of tragicomic machinations in the case. I kind of expected the County Executive elect to back off his campaign pledges to go to jail before sending out new and different property assessment values, but that sure seems to not be the case as of this week. The Venn diagram of the intentions of Judge Wettick and Rich Fitzgerald have no intersection as best I can tell. How does it go when the immovable object meets the irresistable force?

Can we at least agree on an order of magnitude?

2011-12-18T01:45:00.003-05:00

Well, in Ohio there is certainly more debate over the economic impact of shale gas development. No, that isn't right, there is debate here, but I can't say I've seen a headline this blunt in Pennsylvania.

See the Cleveland Plain Dealer over the weekend: Shale gas will not create 200,000 Ohio jobs by 2015, Ohio State University says of industry. Not only that, but here is what it says about the jobs created in Pennsylvania:

"We estimate that Pennsylvania gained about 20,000 direct, indirect and induced jobs in the natural gas industry between 2004-2010, which is a far cry fewer than the over 100,000 jobs reported in industry-funded studies (and the 200,000 expected in Ohio by 2015),"

Hmm... I guess if I had to start to judge which numbers are closer to reality, I would first look at what backgrounds the various authors have in regional economics and employment research.

Messages in the sky

2011-12-17T23:21:00.001-05:00

Just reading the Trib's story today: Pittsburgh International Airport eyes Ohio market with ad blitz

It just gets me pondering the airport's recent history. A decade ago USAirways' economic impact on the Pittsburgh region was arguably at apogee. It was at or near peak employment here, in number of flights and just sheer Schlitz. There was angst, but also potential, over the potential merger of USAirways with United, a deal that would be disallowed. The high level of angst probably lead to the brief groupthink that allowed even a moment of credulity to the Mystery buyer of USAirways that would be shown to be a hoax. Remember when one Emil Bernard was supposedly planning an $8bil offer to buy USAirways in the fall of 2001 despite having no known assets other than a house in NJ. I know leveraged buyouts were once all the rage, but that would have been a greater leverage ratio than even LTCM.

How long is a decade? Today the wikipedia entry for USAirways starts out with the description the company as a Tempe, AZ based firm. Like.. ouch. If you read through it in more detail you really have a hard time finding much of the Pittsburgh history that we all associate with the name "USAirways". There is but a brief wiki entry for Allegheny Airlines that barely fills in the gaps.

What's it mean? We have parsed that by some measures the October 2011 employment in the region was an all time high for an October ever. The all time all time employment high in the region by the same data was actually June of 2001, not coincidentially contemporaneous with that peak USAirways employment. So to consider the region's growth trend over the next decade, or lack of growth more honestly, you have to look at it in context to the freefall of what was at a point in time the region's largest private sector employer. We could parse the "largest" or "private sector" in that statement some other time, it was clearly a large local employer that would shed a lot of jobs quickly.

Beyond the direct impact of the USAirways jobs here, did it matter? It was a few years later in 2004 I tried to make the point that the economic research does not bear any clear connection between airline service and regional competitiveness. Economists study literally everything somewhere, but you will be hard pressed to find someone who finds causality between expanded air connectivity and future growth. It falls into that category of so often repeated things it takes on self-referential type of credibility. There is correlation between air service and growth, for sure, but can you really not say that causality the other way around? i.e that growth increases service and not vice versa. Which way it works makes a big difference for policy of course. For Pittsburgh you have have to ask if we are typical or counterexample since clearly recent employment growth and population gains have correlated pretty strongly with ever decreasing airline service, certainly less connectivity that there was a decade ago.

So rereading the that 2004 PG article got me thinking of what is up with former PG biz writer Dan F. who's local stuff was always insightful and who left for the WSJ's Atlanta office. Looks like he is now in New York City still working for the WSJ. I suspect for a biz/finance writer, I would think covering Wall Street for the Wall Street Journal is a big step up.

Searching for Godot

2011-12-16T03:58:00.003-05:00

So the PG is highlighting that it tops some metric Google is putting out of top 10 searches by region. Post-Gazette.com tops Google searches for Western Pa.

The Google list there is curious. So I get that a newspaper would top the list, font of information it ought to be. But at number 8, and not all that far behind is "Duquesne Light". Do people have such troubles paying their electric bill, or otherwise having problems with their service? I clearly am missing something.

But on a meta-news topic. You would think on this topic at least, the PG's online coverage would embed at least one link to the source of the story in the first place. Hypertext is a novel idea and all. So here is Googles Regional Zeitgeist 2011 for Pittsburgh fwiw.

You notice also this must be the only online-anything list about anything in Pittsburgh that does not have a single 'Steelers' entry there anywhere.

and if you look at other regions, the modal to entry is typically a large local newspaper or news organization, it isn't always so. Check out Washington, DC where the to entry by far is for the transit agency there WMATA. Weirder is that for DC the number 6 entry is for SEPTA, which comes up as Philly's transit agency. Has DC commuting extended that far? No Port Authority on our search list of course. The Yin to our Yang: In Philadelphia SEPTA is by long measure the top seach there and the Philadelphia Inquirer only comes in at number 8.

In Chicago, the CTA Bus tracker is coming in at number 2. The CTA bus tracker is pretty cool and has real time, REAL TIME as in where is the bus right now, bus tracking information. Not where the schedule says it ought to be. Would be useful here eh? I know we are lacking in programmers in town and all, but still.

Number one in Chicago is METRA which comes up as something called commuter rail. Not quite sure what that even means? I'll have to ask Wikipedia what this thing called Pittsburgh Commuter Rail is.

.

Anecdote vs. Data

2011-12-15T17:55:00.000-05:00

Let me make some introductions. Data meet news, news meet data.

I just caught this headline.. but the Patriot News had article over the weekend: Marcellus Shale industry brings 'tsunami of jobs' to Pa.. which really was more of an anecdotal story focused on a woman getting a job in the drilling industry here in Pennsylvania.

Yet below is what the state's own data days about women working in Pennsylvania in these industries. I've seen virtually no news that really looks into just how one sided this looks. Given the coverage like above, you might think it was a tsunami of jobs for women. Maybe someone wants to go the next step and work out similar gender breakdowns for new hiring in the same industries in say Texas and Oklahoma and see how Pennsylvania compares.

New Hires by Gender in Mining, Quarrying, Oil and Gas Extraction Industries

Pennsylvania, 1st Half of 2010

Source: LEHD, which is a collaboration of state labor agencies and BLS.

The Day, strike that, the half century after

2011-12-15T01:14:00.008-05:00

Pardon the moment of philosophy......

So I keep getting into a conversation that boils down to me disagreeing with some idea that today everything is as bad and as scary as it has ever been. Like the world is ending. Ususally starts with some discussion on the economy, but becomes much broader.

I honestly just don't get it. I really don't. Below was routine news content back in the days when all was so perfect. This wasn't in some beatnik version of the National Enquirer, but the Pittsburgh Press and written by he who would become it's editor the late John Troan, by all accounts an eminently sensible guy. There was also this little war in a far off place called Korea at the same moment in time. I can't even imagine how the work order off to the graphics department went?? "Please draw a landscape showing an atomic bomb over Brookline by noon". Think the editor came back on the initial drafts with a "get a few more mushroom clouds in there". All routine.

Go read it yourself if you wish. Every single paragraph is astonishing. Just in passing it points out "Those French bathing suits probably will go out of style" followed soon by "You can't encase yourself in a six foot suit of concrete and a foot thick steel helmet. That would kill you sooner than the atom bomb." Might be a bit of gallows humor in that, but I really don't think that was written tongue in cheek! How is an entire generation not completely neurotic if these were daily concerns?

Risk of depletion: the vacation from pension angst is over before it began

2011-12-14T06:57:00.002-05:00

Yunz thought I forgot. That or lost interest? Boiler has been building up steam is all. That and there seems to be quite a confluence of news in the nexus here: pensions, assessments, redistricting even migration. Damage Control teams being spread thin just trying to keep up. But let's poke in on pensions for a minute.

Let's recap: we all declared victory just a few months ago it seemed. We 'solved this for the city' was one quote.

So last week we learn that the city pension funding is down to 54%, Note that is 54% with the notional asset of pledged future parking revenues that is still hard to define and as council is learning even harder yet to extract from the Pittsburgh Parking Authority. Let's just agree that it is not cash on hand in any form, nor fungible in any extant market. I still want to know what the real cash horizon is for the pension fund. You think others would care as well.

What really ups my distemper over the whole notional asset is how if confused the public. Maybe the asset makes sense, maybe it doesn't. But read the news coverage and tell me if you walk away with any appreciation for how much in $$ is really there to pay pension bills? No real appreciation that a large part (soon to be the majority) of all pension assets are no more than a promise from the city to itself to pay money in the future to the pension account. It is a promise that I am pretty sure existed long before last December mind you.

So it is coincidence that Governing had a column last week on the public pension problems everywhere to a degree. Will pension plans run out of money? It talks of the "risk of depletion" for pension funds. "depletion" isn't quite a euphemism, but sure sounds a lot tamer than the what it would mean if it were to come true.

So what does it all mean here? Here is what we know as to the state of the city's collective pension fund. Forgive me for any errors in the decimal points, the city does not mail me the detailed pension accounting.

Total liability Jan 1, 2011 $1,012,027,241

Funding as of Jan 1, 2011 said to be 62% which gives me $627 mil

Funding as of Sept 30, 2011 said to be 54% so $549 mil

Value of notional asset said to be valued at $239 million which gives a net value of $307 mil

That in itself would give you 30% funding ratio. It has been worse. Still,, after all the extra $$ piled in and all the other machinations, in reality we are in my calculation below the 32% we were just about two years ago. No thanks to some big losses due to massive market timing bets. I really wonder if they have really gotten all the cash back into the market in a portfolio that make sense. Something tugging at me makes me wonder what is up with the investment. Anyone know more?

If this is how we define success, you have to wonder what failure looks like? The only thing different today than a year ago is that an IOU was passed from one part of city government to another. The truth is that IOU existed legally, morally, and in the accounting long before the latest accounting trick. So what really is any different?

It really is worse than that. Realize also that there was what by definition was a one time transfer of the cash that was sitting in the not so locked 'lock box' built up from past budget surpluses. So just before the end of the year.. or so everyone is agreeing to even if the banks were closed, was the transfer of $45 million I believe it was to the pension fund. When thinking about trends, you really have to think about that as the one-time opportunity it was. No such surplus will be there for a long time again. If you were to net that out the city would most likely have been at ~$262 mil or less, or just under 26% funding ratio.

I won't pile on and say another year has gone by and while the rate of increase in the calculated total liability has slowed a bit, it would still seem an obvious projection that the total liability is higher as well which would push that % lower. That or that parts of the system are less well funded than these cumulative averages would imply. But success.. keep saying it.. it all succeeded last year.

Financial Times hearts Pittsburgh

2011-12-13T02:28:00.002-05:00

Financial Times is all over Pittsburgh with an article and multimedia coverage of, for lack of a better term, the Pittsburgh Story. The text is in: 'Steel City' Discovers a Softer Side.

FT is behind a paywall, if that link does not work, use the Google News trick and plug the title into the search engine and you should be able to read it. It has an interesting play on past and present if you take the time to read it.

Note they also have a multimedia treatment you will get to if you scoll to the bottom of that article. Some picture, but also a new video segment. All quite positive. We really do have friends over the pond. Remember past articles: "No longer 'hell with the lid off'", or "A Pattern Emerges" or even "Obama's exemplar: from depressed steel town to diversified economy". and not to forget the full FT G-20 special, which may have been sponsored a bit if I recall correctly. Also the look at Lawrenceville: Diamond in the Rust.

But on the current article.. How much can I clip under fair use? I just find this middle section rather fascinating on a lot of levels:

“Folks from Cleveland have come to Pittsburgh. People from Lexington, Kentucky, have come,’’ Mr Ravenstahl says. “They ask the same question: how did you do it? Well, this didn’t happen overnight. This was strategic and this took time.”

and then in a following paragraph:

Enter Tom Murphy, the son of a steelworker who ran for mayor in 1993 and promised to create jobs and end city centre blight. Union pickets turned out to jeer “Mr Technology’’ for ignoring the empty mills.

I suspect LR and TM have met more in print than in person at this point.

Further fallout for us?

2011-12-12T16:37:00.001-05:00

If you are not paying attention to the niche news about what is happening within the Nuclear Regulatory Commission (NRC), you probably should be.

There is a bit of mixing different geographies in this, but here is data I pull when I extract data by occupation across all regions in the US with measurable employment in two of the most specialized occuptions out there: Nuclear Engineers and Nuclear Technicians. Added together and ranked by absolute employment counts the graph below is what I get. In sheer numbers these are not huge anywhere, but they are the core and proxies for the far larger establishments that rely on these workers. So you see why any hiccup in the nuclear industry will have impacts here as much as anywere.

Midatlantic UFC - Pennsylvania-New Jersey migration flows

2011-12-12T02:21:00.007-05:00

Just some more gratuitous wonking with the most recent IRS migration data. Playing off some media and online buzz (granted some of that is a bit of an echo chamber) coming from the apparent net migration from New Jersey to Pennsylvania, below are two maps showing what the spatial patterns are for the population migration between the two states.

The top map shows the county to county flows that have a net migration FROM a Pennsylvania county TO a New Jersey county.The bottom map shows the same for flows FROM New Jersey TO Pennsylvania. So these maps isolate the inter-state migration flows between just the two states and are separated into two maps for the flows that are net into NJ or net into PA respectively. Note the flows are weighted in the width of the line symbols to the size of the net migration flow and the two maps are scaled the same for comparison. So at least for the moment Killer Keystone is stomping on Golden Garden.

by request.. the full resolution PDF of image below is online here.

Net New Yunzers

2011-12-11T07:36:00.024-05:00

So if you think it is hard to define a Yunzer, what in the world is a Net Yunzer? Maybe a Yunzer working at Google? Also, maybe a Yunzer is the same as a Yinzer, but I still say it is spelled with a 'u'! Modernisms be damned.

Can I borrow content from myself? I suppose. Same as I had on the Pittsburgh Urban Blog, but here is a bit more parsing of the migration data you may have read about already.
Here is a comparison of two maps, each of which show only those metropolitan and micropolitan areas which are generating net migration into the Pittsburgh region. So these are depicting only regions which have more people moving into Pittsburgh than are destinations of people moving from Pittsburgh. Note it is a different set of maps showing regions that attract more people from Pittsburgh than are sending people here. Got that?

The top map is for the most recent period, migration between 2009 and 2010 generally. The bottom map shows the same data for 5 years prior: migration between 2004 and 2005. Both are made to the same scale. What a difference 5 years makes.

And a coincidence I just realized... 2004 would also be the year when Ariba bought out Freemarkets fwiw.

Investing like it's 1999

2011-12-10T11:55:00.001-05:00

The weekend includes an anniversary for what some thought was Pittsburgh's great windfall, Freemarkets 1999 IPO could come and for a brief golden moment was valued with a notional market capitalization of $8.42 billion dollars. The intraday high would place the value more like $9.7 billion. The firms last complete fiscal year reported $7.8 million in revenue and 234K in profit would nonetheless be worth more than a $billion more than the still combined hybrid of the entire USX corporation which I think had revenues that year of $30 billion. Probably a bigger order of magnitude disparity between the two in employee counts at the time.

For sure some would make a fortune, but they would have had to sell pretty quickly. When Ariba bought Freemarkets in 2004, the price paid would be the equivalent of $493 million, roughly 5% of it's peak market capitalization. Some early investors made out. In particular those folks at Goldman Sachs are not dumb. But if you bought stock on that IPO day or most any time soon thereafter I am not sure you could have avoided taking a bath. If one did what common investing wisdom says to do and bought and held= not good.

It is not a bad story in a sense. Lack of dot.com boom would mean less of the dot.com bust for Pittsburgh that soon followed in many regions. One of Freemarkets problems was that it came into this near the end of the dot.com frenzy. So the IPO pop was bigger and the period before the burst was shorter. This was all another era ago really. So long ago that even as big a deal it was, it seems to me that Freemarkets does not have its own Wikipedia page today. Even the Pittsburgh Chair once had a Wikipedia entry :-). Still I once said that the dot.com bust could be Pittsburgh's boom. You know.. it may have worked out.

So the irony to me in the whole Freemarkets story if you followed it at the time. Despite its name, and its "B2B" focus at the time..the B being business.. the real buzz for Freemarkets was when earlier in 1999 it conducted a reverse auction of sorts and facilitated the purchased of just under a million pound load of road salt of all things for the Commonwealth of Pennsylvania. That and some coal even (remember CoalHUB?!). Talk about old economy meeting new! Pennsylvania state government and Freemarkets were way ahead of the curve in getting the public sector thinking about e-commerce and the Freemarkets IPO was in many ways a direct result of that apparent success. So it was a public sector client spending public money that vaulted Freemarkets to initial fame and itinerant fortune.

Water under the bridge

2011-12-09T16:07:00.001-05:00

Since the PWSA is looking at a rate increase...

This would probably take a Public Finance 103 Class to ever sort out... maybe even an entire dissertation... but I would love to see someone try and go and forensically look at thie 2008 bond deal the PWSA put out there and see if anyone could figure out how much of the $300+ million floated from that ever made it into actual infrastructure investment... as in something actually resembling pipe. It really needs to be written up as a case study somehow. It's way way to convoluted to get into again here, but it was pretty clear long ago problems would be hard to avoid.

But I am all for investment in core infrastucture, so as long as this rate increase does not wind up in Malaysia, I'm good.

The Paris of Cleveburgh

2011-12-09T00:55:00.004-05:00

OK. the game is over and we are Cleveburgh again.

So this is interesting in lots of ways. The Cleveland Plain Dealer is just now reporting on developments at the Pittsburgh International Airport. See: Pittsburgh airport says regional strategy and shale can propel air traffic. So to begin, points for connecting shale to everything. How many folks from Bradford are going to be filling seats to Paris I am a bit dubious of, but still. With apologies to Brian O it gives another whole meaning to the Paris of Appalachia meme.

Why is the article really interesting? It's funny when folks talk about promoting Cleveburgh you also see the head on competition for air traffic going on between folks here and folks in Pittsburgh. Kind of anti-Cleveburgh thinking in all of that. But the amount of ink the Plain Dealer is spending on reporting on the Pittsburgh airport is a bit seminal fwiw.

and I really thought I was watching for local coverage of this pretty closely.. and it is possible I missed it. Note that the PD article is giving a number for the amount of subsidy Delta got for year 2 of their Pittsburgh to Paris flight. It says the 2nd year's subsidy was "less that (sic) $2 million", well down from the maximum $5 million for the first year of the flight. We knew the $5 million number some time ago. Did we really have to learn the (pseudo) $2 million number from the PD?? That would be fascinating.

I will stand corrected if someone can find a public record of the 2nd year number. I only note I did not see any data on this as of this July 2011 post.

and I'll add one other thing on the general airport strategy of building up a regional flight network. Don't you think that reads verbatim as the business plan for Allegheny Airlines at some point in the past. I was recently told there is an Allegheny Airlines Historical Society. Maybe we have that actual plan out there somewhere?

Browns Insider

2011-12-08T05:58:00.000-05:00

I find this rather odd if you watch it. From Cleveland is this video segement for their Browns Insider:

Nonflation Non-story

2011-12-07T10:24:00.000-05:00

There is a PG story on a McKeesport councilperson upset that some cash in the city budget there was deposited in an account with a ZERO PERCENT INTEREST RATE.

The caps are just my channeling of the anger the local councilperson seems to be exhibiting if this has been raised to an actual news story.

I really hate to say that this may rank as the non-story of the day. I presume that any cash on hand in McKeesport is really a short term holding based on the timing of revenue and expenditure, not some long term investment they are investing with a multi-year horizon. Anyone can look at the short term interest rates these days. The one month t-bill is actually showing up as ZERO percent.

The 3 month interest rate is .01.. Not as in 1% but 0.01%, and for those who don't realize it those are annual rates. So for the $14 mil in question, a 3 month CD of some sort would earn $1,400 annually. Over 3 months we are talking $467. Now let's talk about fees associated with all of this or maybe just the opportunity cost of the time spent debating this on their council.

Jersey Shore voting with their feet

2011-12-06T16:53:00.000-05:00

It's going to be a migration story week. Via the AP and the New Jersey Star Ledger is the story of the day. It says that more and more residents of New Jersey are fleeing.... to Pennsylvania?

I thought we were a tax hell or something like that? Everyone should be fleeing Pennsylvania I thought. I know I read that somewhere???

Note that the New Jersey folks are probably not heading into the state for the shale gas jobs. Will have to look a bit more closely at this data myself to see if there is anything to be said about migration of shale workers into the state.

The parsing has only begun actually. Pittsburgh (city, region or pick your county) has always ranked near the top in a metric of what percentage of householders have lived in their current place of residence the longest. I will have to look at the data the folks are reporting on to see if that is still generally true or if we have budged out of the top spots.

and I have updated my regional migration report on the UCSUR publications page fwiw.

A Custard Too Varied

2011-12-05T22:32:00.000-05:00

So do we storm the ramparts to bring him back, or give him an award for sheer endurance? Pittsblog: Eight Years is Enough.

To connect the epicurean and the existential, I will point out that Mike's Pittsblog blogging tenure lasted longer than the entire cupcake craze in town. That has to count for something.

For the obligatory non-sequitur.. and ever more proof that truth is so much stranger than fiction. The author/creator of Eight is Enough, Tom Braden, has one of the strangest bios in modern American history. You just know that bio is only half written. If only I could find a connection to Cyril in there somewhere.

Still Mendoza Salary #s

2011-12-05T21:50:00.000-05:00

Average salary of Pittsburgh Pirates rises to 27th. $1.73 mil per player on average. AP: MLB Avg Salary Up 2.7 Pct To $3.1M

Appraising the 'Burgh

2011-12-05T15:46:00.001-05:00

So various news on the economy and real estate out there. The PG's Mark R. had a story yesterday on that place far far away: Las Vegas is Gound Zero for the America's Housing Collapse. There is a telling quote in there that says it all in a way: "Homes never should have been appraised at this value....". In the perfection of retrospection it is an obvious statement.

There has been a major change in housing policy and law. Specifically the Dodd-Frank reforms have required compliance with strengthened Regulation Z (Truth in Lending) requirements put out by the Federal Reserve. The results has been that that theregenerally must be a completely independent third party appraisal in real estate transactions. That often means an appraiser who is not as familiar with the hyper-local trends impacting real estate prices in a specific neighborhood. That and general reaction of appraisers in a lot of places has been to flip from the overly optimistic valuations that were the norm before, to generally conservative appraisals now. In lots of ways the new lower paradigm for appraised values has had a real impact on local real estate markets around the country.

So it all is clearly a good thing given the excesses that it all is intended to prevent from happening again. Too much system-wide risk unaccounted for in the way things used to work. But Pittsburgh may be impacted more than a lot of places by the change in appraisal norms. Given how low housing values have been here in the past, a straight up appraisal for a lot of our appreciating neighborhoods is really going to come in way too low compared to what current values are. That or say you are looking at a home newly rehabbed by Eve Picker yet have an appriaser using as a comparable valuation a nearby parcel without any investment in it in decades. The different values may be way too much to be encapsulated by a generic appraisal methodology even if those differences really reflect what are differences in market valuations. There is a sort of reversion to the mean going on.

Given that the appraisal is a key to getting a mortgage this all becomes a real issue in local real estate markets. How big a problem this is locally I can't quantify, but I'll bet this is becoming a big and bigger issue with folks trying to get legitimate mortgages for fair market value properties in certain neighborhoods.. say the South Side Flats or parts of Lawrenceville or other places. That may be the real latent real estate story for the region these days... i.e. what has the appraisal reform meant since it was fully implemented only earlier this year. Probably a bit more relevant to us at least than what happens in the distant land known as Las Vegas.

Hidden mandates not terribly hidden

2011-12-04T20:20:00.000-05:00

Just in passing I note the PG article parsing possible defense industry cutbacks on Allegheny County. The neuron it sparks is one of the ignored vestiges hidden in the City of Pittsburgh Code of Ordinances where in section 204 - Powers and Duty of the Mayor you can find this perpetually ignored mandate:

The mayor shall present an annual report on the tax monies paid per capita and the citizens of the City of Pittsburgh to the federal government that is allocated to military spending. The report shall include an analysis of the impact of the military budget on the City's economy in relation to jobs and social services. The mayor shall advertise this analysis in two prominent daily newspapers in the City

.
Yes, it was once complied with.

But the bigger point it always gets me wondering is whether it is possible for a bottoms up revision of Pittsburgh's Home Rule Charter and code? A Constitutional convention of a sort. It there were student lawyers out there needing a project like this, could one calculate what percentage of the verbiage in the entire city code are really effective these days?

A Tale of Two Recessions

2011-12-03T08:59:00.002-05:00

So I wind up often getting into an argument that boils down to me disagreeing with a common belief that the recent recession for Pittsburgh is a slighly milder, but still very similar experience to the recession of the early 1980's. Nationally it was actually two recessions officially (January to July 1980 followed by the longer period July 1981 to November 1982), though I think most would agree that the two recessions really were one big recession for the Pittsburgh region.

So as the national news parses the good unemployment numbers yesterday, the nabob version focuses on the drop in the labor force participation the numbers seem to show. It lead me to making the graph below. I took the labor force trends in Pittsburgh and made a comparable index from a period early in the two recessions. So from January 1982 and from January 2008 forward, the graph shows what happened to the national and Pittsburgh region labor forces over the subsequent 4 years. The graph shows the change from those baseline months. Lot's to parse from it, but just take a look:

The extreme differences for Pittsburgh in the two recession (1980s vs recently) go way beyond what that graph shows. That decline in labor force in Pittsburgh actually masks the decline in the male labor force a bit as women entered the workforce in record numbers to replace the men who were out of work. The drop in the labor force clearly correlate with the net migration that spiked from the region and the drop in population it caused. The folks who were leaving both the regional labor force and leaving the region period were predominantly younger workers who were the folks most capable of adapting and changing to new jobs in new industries. Those who stayed were far more likely to be older workers who had been displaced from the occupations they had had for decades and for many would never find new employment. Today we know that in recent years we have seen the first net migration into the Pittsburgh region in decades and changes in migration patterns almost entirely reflect changing migration patterns of young workers. It is folks in their 20's who dominate migration flows with rates of migration dropping as folks get into their 30's, 40's and older.. until there is a bit of a spike in early retirement years. So if net migration for the Pittsburgh region flipped from net negative to net positive just a few years ago, it has to reflect changes in the flow of younger workers into the region.

So, just as the incredibly high unemployment rates of Pittsburgh in the early 1980's persisted even though so many workers were leaving the region which would have taken a lot of potentially unemployed folks out of the regional labor force... masking how bad the employment situation really was; today the regional unemployment rates are being impacted by more workers, or those seeking work, flowing into the region and potentially making local labor force metrics look worse than they appear otherwise.

Manufactured Numbers

2011-12-02T08:25:00.002-05:00

So I really wonder if I surveyed folks in town and asked them what percentage of jobs were still in manufacturing I wonder what the modal answer would be?

The actual answer.. by one measure, is a speck under 7.7%. Within a very insignificant significant digit of the lowest percentage since.. well, I can't quite say ever in the same sense of ever ever. Pre-columbian paleoeconomic employment taxonomies are not quite my field. Lowest for an October though... Maybe ever is fair in that context though since I am pretty sure October was not a pre-Columbian concept. Not all because of the loss of existing manufacturing jobs of course. Remember October employment for the Pittsburgh region is at at all time high, so even stable employment counts in any one industry would be declining in percentage within the region.

The less flippant point is that there is a myth out there that the local manufacturing decline is all ancient history. As trend the last 5 years have not been kind; the last decade has not been kind. There was a bit of stability in the mid to latter 1990's, but what that was masking was continuing decline in most of the legacy manufacturing sectors in the region while there was a decent chunk of new manufacturing jobs being created at the Sony Plant in Westmoreland County. Take that one establishment out of the mix, and the trend has been mostly unabated.

How long has the trend been going on in some form? Pittsburgh, the region, employed the largest percentange of the US manufacturing workforce in 1909. So a bit more than a century ago.

Looking forward there are some announced hits coming that have not shown up in the data yet. You might have worried more when you saw the headlines that Heinz is soon to be closing 5 plants, but that actually does not matter in this context since Heinz actually does not have any manufacturing plants in the MSA any longer.

ditto

2011-12-01T15:19:00.003-05:00

Pittsburgh region's unemployment rate down another 4/10ths of a percent between September and October. The another is the important piece since it was a 4/10ths of a percent decline between August and September. Not a surprise here of course, but still it seems beyond what anyone can write off as less than good news. The trend is not done yet given what I see in the CPS data, but we will see. Gets to whether this is really news. It really isn't. Not much really changed over the last two months to justify 8/10ths of a percentage point drop. I actually just don't think some or even most of the increase in the unemployment rate earlier in the year really reflected what was happening, so the data might be just catching up.

Allegheny County's unemployment rate ought to be noted as well. Down a full half a percentage point to 6.3% for October. Can it go lower? Of course, but by an absolute measure close to 6% unemployment is actually just plain low.. not low compared to the nation. The average unemployment rate in the Pittsburgh region over the last 40 years, which includes some good and some very bad times of course, is a tad over 6.6%.

Let's update my graphic of the relative unemployment rate. Not quite the absolute record, but still rare territory for the region. Important because relative measures like this are often strong indicators of regional migration patterns. More data on that hopefully coming this month. So hang on.

Once there was a transit vision

2011-11-30T18:35:00.001-05:00

DNJ asks an interesting question in the PG today: Will our "T" ever grow up? The specific question is why does light rail only go to the South Hills? Because the trolley once went that way? Begs the bigger question since there was not long ago trolley service throughout the region. The South Hills' trolleys survived just a little bit longer.

So what is the answer? Why does the T only service the South Hills? Take this as the Chris Briem answer you are free to disagree with, but it all is pretty clear to me. There is a question that has to come first. Where was rapid transit supposed to go? See below for the vision of the 92-mile rapid transit system envisioned by the 1967 Allegheny County Rapid Transit Study. Even the East Busway as we know it was built with a foundation to hold Light Rail until even that limited vision was abandoned just a few months ago. Why was the vision curtailed? The short answer is the imbroglio called Skybus. Like so many things in this region we fight, we confuse, and the 2nd best solution devolves to no solution before all is said and done. By the time Skybus was officially declared kaput the energy for transit in the region was drained completely and the powers that be Downtown basically gave up on rapid transit. There would be handwaving along the way, but it has never been anything more than that for decades. What we see in the T is merely what inertia wrought from literally decades of effort for something grander. Even the obvious extension of rapid transit to Oakland in the form of the Spine Line would be twisted into the runners up prize now known as the North Shore connector. If there was not for a momentary vision of Riverboat gambling in the city (remember?), not coincidentially right at the site where the Rivers Casino sits today, I personally doubt the North Shore Connector would have made it much further than the Spine Line ever did. I do not joke on that; such is the logic of reactionary planning lacking any strategic vision. The region's motif is how we so convolute paths that when all is said and done, nobody can understand how we arrived where we did so disconnected it all becomes from where anything begins.

and to think I typed that all up in a five minute fit and did not once mention... no.. I can't do it. We will leave the unmentionable unmentioned.

Lies, damn lies, and context

2011-11-30T10:00:00.000-05:00

First off,though it has nothing to do with what I started writing except that it talkd about Bradford County and the international attention Pennsylvania shale gas development is getting. BBC looks at the whole Marcellus thing: How fracking affects a community in Pennsylvania

What really got me going was a far less read piece that also looked at some Marcellus impacts. A publication called Area Development has this: Natural Gas Boom Boosting Regional Economies. Iin passing they have a neat little factoid also about Bradford County. It says with clear implication that it is all Marcellus related

"In Bradford County, Pa., the 2009 unemployment rate of 10 percent has been halved because of Marcellus Shale gas development. "

Half? I was like.. really? I had to go check. So here is the unemployment rate in Bradford County back a few years:

So it is true that Bradford county had one month, one, where the local unemployment rate hit 9.9%. Problem is that the current unemployment rate is 6.4%, so half is quite a stretch. Skipping that the 9.9% was just one month and that the average unemployment rate in 2009 was 8.3% you really are getting further away from justifying that half claim. The kindest I could is that there was one month in April of 2011 that the county's unemployment rate was 5.1%. So really cherry picking two specific months I've highlighted there with the two recent extremes in the unemployment rate might get you to justifying that half comment. But it raises a bigger question then does it not? Bradford County, the heart of Marcellus, has seen its unemployment rate go up a lot this year? Further, what is the best baseline to really judge the impact on the local labor force up there? One month in 2009, or all of 2009, or some earlier year. The average unemployment rate for 2008 was 5.3%. So yes, the current unemployment rate in Bradford county is up from what was the end of the recession technically. How about 2007? 4.7%. So now go back and think about that half claim. Methinks it all may be a bit more complicated than that.

Daily Ranking extra - Mercer Quality of Living

2011-11-29T11:36:00.000-05:00

Mercer just updated its worldwide ranking of cities according to their metric of quality of living. Remember this was the ranking that last year we were the almost the top US city to make the list coming in behind only Honolulu (who says weather matters!). So we made their top 50 this year, albeit at a tie for 49th, but somehow dropped to the 8th US city on the list. Was it that bad a year?

See: 2011 Quality of Living worldwide city rankings – Mercer survey

Neverending Transit Trend

2011-11-29T09:42:00.001-05:00

So the news says there will be ever more cuts to public transit locally. I tried to get someone to ask the candidates for county executive during the election runup whether or not there would even be public transit in Allegheny County a decade from now. It was not intended to be a rhetorical question, but given the interest it had during the race it might as well have been.

One of those things I wish I had more time to do a bit more thoroughly, but looking through past Fact Book's of the American Public Transit Association I came up with the graph below of how the Port Authority of Allegheny County ranks among the top transit agencies in the nation by the number of passenger trips. I would bet that the 2009 rank there probably does not even capture recent cuts, let alone what is in the news today.

The missing years are just not reported in any annual fact book they have online, at least as far as my quick look found. Given time one could generate the missing rankings from the data directly. Maybe later.

Where Pennsylvania fears to tread

2011-11-28T18:56:00.001-05:00

Looking east to New Jersey in Bond Buyer today: A marriage made in New Jersey

Go Tigers!

Reconsidering Hell Again

2011-11-27T10:59:00.002-05:00

PBT mentions how the transportation plan for Pittsburgh's Hill District may be considering a new incline as that will connect the uppper parts of the Hill with the Strip District.

My inner civil engineer doubts a new incline will ever be built. Even in parts of the world with funicular's, they often are not replaced when needed. They just costs too much to build, let alone maintain. Go ask the Port Authority whether the inclines we have now make money or not. More typically, and more cost effective, in most circumstances will be built some form of aerial tram. So maybe that will wind up being the plan. It is not as if nobody has considered new aerial cable cars in Pittsburgh before. A recurring plan remarkably. From 2005: Gondola plan swings back into action.

(ed note: yeah, I see the Trib archives are not working.. At least they have not been for me of late. That and all archived links I have are not working either. What is up with that?)

Why would you build an incline or aerial cable car from the Strip District to the upper Hill? You can make the case and history tells you why. Just consider the quote all think is such a pejorative for Pittsburgh. James Parton's 19th century description of Pittsburgh as "Hell with the lid off". We've covered the misuse of that phrase many times here. Parton was not offering a critique, but was more in awe of the activity and industry he saw looking down upon Pittsburgh from the best view he could find. It was a commenter here who pointed out to me that the view Parton was looking down upon Pittsburgh from was not Mount Washington as I think myself and many others presumed. It was from Cliff Street in what is now the Hill District. There are more than a few blocks with some of the best views of the city right up in parts of the Hill District and improving access might actually make them attractive to new investment.

It all follows actually from the idea put forward that the Hill District needs better access to the rivers. It was an idea highlighted by Mindy Fullilove in her book Root Shock. Which brings up a bit of a non-sequitur, but Dr. Fullilove has a neat blog documenting her observations of 100 Main Streets in and near New York and beyond. See: Countdown to Main Street.

Proto Black Friday in the Burgh

2011-11-25T07:04:00.000-05:00

When did the commercialism begin? Not anytime recently. A full page ad from November 25, 1925:

Cleveburgh renamed

2011-11-23T10:33:00.001-05:00

A new book out on the megapolitan watch: Megapolitan America

I have not read it, at least not yet, but presume it follows from the authors' Planning article a few years ago with the same theme. In it, the Pittsburgh/Cleveland megapolitan region is named the "Steel Corridor". OK, I guess. I am sure others would prefer DNA-pike or something like that. That and Cincinnati/Columbus is the region called the Ohio Valley. Maybe we should just refer to ourselves as the Greater Upper Ohio Valley Agglomeration (or GUOVA? it almost works). I will stick with Cleveburgh as the megapolitan region that has the most operational reality to it today.

The Blame Game: Braddock

2011-11-22T21:44:00.001-05:00

National Journal online has a focus on the failure that is Braddock. See: The Left-Behinds, subtitled: How three decades of flawed economic thinking have helped to create record numbers of long-term unemployed and undermine America’s middle class.

The whole meme of the piece comes down to this quote:

Braddock’s plight came from the structural decline of a major manufacturing industry

.
So again, this rosy vision that all was working in Braddock before steel decided to pick up and move away or shut down.

NOOOOOOOOOOOOOOOO. It just isn't true. We've been through this before. The demographic and economic declines in Braddock, as with those in neighboring Duquesne, or Rankin, or Homestead all started long before the decline in local manufacturing employment or wages, nor did that decline accelerate in the last 3 decades that the National Journal article focuses on. Can't even say it is a confusion of causation vs. causality; look at most any time series on economic conditions in Braddock and there isn't even any spurious decline that started in the early 1980's. It's all weird revisionism. Paleo beer goggles of a happier past that really existed long long before anyone really remembers.

I wonder how many current residents of Braddock today are the "long term unemployed" that are vestiges of an industrial past? Those workers left Braddock long ago, and took with them their families most all before the bulk of the jobs went away. The article says Braddock is filled with "their children and grandchildren. These are the second and third generations of a lost tribe.". Really? Even the mayor is not the 2nd or 3rd generation of a local steelworker; few of the very few remaining working age residents are either.

Then there is this quote:

U.S. Steel’s Edgar Thomson Steel Works chugs on, as it has since 1875, but it’s a sprawling corrugated-metal relic of its former self. Its parking lot is almost empty at midday, and it employs several hundred workers rather than the more than 10,000 who labored here at its peak.

You know.. Edgar Thompson has been pretty busy even during the depth of the recession. In fact US Steel brought work to Edgar Thompson from other plants because I have to believe it was the best business choice for them to do that. They even got in trouble with the Canadian government for first choosing to shut down it's Hamilton, Ontario plant and not take work away from E.T.. Here is the big point though.. those several hundred workers at Edgar Thompson probably make as much steel as did thousands of their predecessors. That is called the increasing productivity which is pretty much a necessary condition for manufacturing competitiveness in the world. Yet, somehow that is bad? It has nothing to do with the current conditions of the residents of Braddock mind you, but still.

Now of course maybe I am being harsh and the story isn't really about Braddock more than the metaphor it shows for the apocryphal Rust Belt or maybe the Pittsburgh region collectively. Of course there is the post earlier today where I pointed out that employment in the Pittsburgh region is pretty much at an all time high as of last month. All time. Not mentioned anywhere.

All that being said. Make no mistake we have failed Braddock. We failed it decades ago. Continue to fail it, and there really seems to be no reason to think we will not continue to fail it for a long time to come. But as long as we believe the mythos of what went wrong, it is pretty much impossible to ever hope anything will ever get any better.

Ignore this

2011-11-22T10:49:00.003-05:00

Ignore this. No big deal. Not that there is a recession or anything. Well.. the recession has been over for some time technically I suppose, but it's not like job growth is getting anyone excited. Anyway for us:

Total nonfarm jobs in the Pittsburgh region for October 2011 come in at the highest level for an October ever.

Glide path or crash landing? Pennsylvania Manufacturing.

2011-11-22T08:07:00.000-05:00

Trib covers the Governor's new panel charged with doing something to improve on manufacturing trends in Pennsylvania.

One of those things that needs a little historical perspective to even begin thinking about. Here is Pennsylvania's manufacturing employment since 1969. Not exactly much change in trend which is remarkable in itself. Through significant booms and busts, not much deviation from trend.

For Pittsburgh it is not such a smooth glidepath. First there was the crash landing, and later in the 1990's I suspect the trend would look more like the state's if you took out the growth and decline of employment at the former Sony Plant in Westmoreland County which expanded a lot in late 1990's only to go away completely.