Wednesday, December 28, 2011

Property Assessment Dawn: Termination Shock and beyond

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.  


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.


Anonymous MH said...

I hope you're right about the 50% increase. This line from the count web site doesn't seem to fit with that, but maybe STEB is just there for political cover, not actual accounting.

Every July, the State Tax Equalization Board (STEB) releases a sales ratio study comparing the County assessed values to current sales prices. The most recent STEB ratio, for the year 2010, was 85.8%. That means for 2010, on average County-wide, the assessed values were within 85.8% of the 2010 sales prices.

Wednesday, December 28, 2011 8:17:00 PM  
Anonymous MH said...

'count' should be 'county.

Wednesday, December 28, 2011 8:18:00 PM  
Blogger C. Briem said...

I think the overall increase in a range closer to 50% is consistent with the Realstats data out there, and other data I have seen. I honestly will have to think about why the STEB data works out differently, though I am pretty sure the STEB analysis is all based on data submitted by the counties. So it does become an interesting question.

THere is a wildcard yet in that the revenue neutrality will also have to take into account all the commerical property and whether the city's commercial property comes in will impact the new millage rates.

Wednesday, December 28, 2011 8:34:00 PM  
Blogger C. Briem said...

also note I really am talking about city-only metrics here since that is all that really matters for city residents. County taxes being such a small part of what impacts a city property owner. County overall might not have such a big increase.

Wednesday, December 28, 2011 8:39:00 PM  
Anonymous BrianTH said...

I've called these the "rich-get-richer" and "gentrification" scenarios--Chris is describing the effects of the rich-get-richer scenario (the near-median property owners get a tax cut), whereas the gentrification scenario (the lower the starting price, the higher the appreciation rate during the relative period) has the opposite effect.

I actually don't have a firm guess about where the City will end up, since both scenarios have happened--places like the South Side, Lawrenceville and parts of the North Side had gentrification appreciation, but if you compare a lot of the nicer East End neighborhoods to a lot of the lowest-priced neighborhoods, it looks more like rich-get-richer.

And I agree the commercial property side is a huge wildcard--they are obviously mostly on the rich side from the residential point of view, so did they appreciate faster than the residential properties? I have no idea.

Thursday, December 29, 2011 7:54:00 PM  

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