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Tax Law

Real Estate Assessment Controversy Continues in Pennsylvania


Following the earlier decision by Pennsylvania’s Supreme Court declaring Allegheny County’s real estate assessment system to be unconstitutional and calling into question the assessment systems used by other counties throughout Pennsylvania, Pepper is providing this update about how this decision impacts anyone that owns or rents property in Pennsylvania.
 
What Is a Base Year System?
 
A base year is the year used as the beginning or reference year for establishing a property’s assessment. For example, Allegheny County’s 2002 base year establishes property assessments based on the property’s 2002 value. In contrast, for example, Berks County operates on a 1994 base year, the last year Berks County reassessed. As a result, the base year system of taxation freezes the property’s assessment until the completion of a countywide reassessment. It is this frozen-in-time assessment that determines the amount that a property owner pays in property taxes.
 
What Is Next in Allegheny County?
 
On April 29, 2009, the Pennsylvania Supreme Court decided that Allegheny County’s base year system of property taxation is unconstitutional. Accordingly, Allegheny County has to reassess. Judge Wettick will hold a hearing on June 3, 2009 to establish a timetable for Allegheny County to reassess all properties in the county. Reportedly, Allegheny County Executive Dan Onorato is considering “other options” to completing a countywide reassessment, such as:
 
  • lobbying state legislators to change assessment laws so that the same assessment laws apply with equal force to all counties
  • filing a federal lawsuit if the state legislators choose not to implement a statewide uniform assessment system, and, if all else fails
  • requesting the state to impose an arrest on reassessments.
 
The court ordered a reassessment of all properties in Allegheny County, meaning that the assessment of your Allegheny County properties will change. This will, in turn, cause your total real estate taxes to change.
 
What Is Happening in the Rest of Pennsylvania?
 
The Supreme Court did not expressly direct the other 66 counties in Pennsylvania to reassess, but many of the counties are analyzing their assessment procedures. The Supreme Court’s decision implies that counties that use a base year system of taxation would be wise to reassess if many years have passed since the last reassessment. Specifically, the Supreme Court cited several counties that had not reassessed in many years, such as Blair County (last reassessment in 1958), Butler County (1969), Lackawanna County (1973) and Forest County (1974).
 
If you pay real estate taxes on properties in any of Pennsylvania's counties outside of Allegheny County, you also may see changes in your assessments and real estate taxes because most counties have been approaching real estate assessment the same way that the court found to be unconstitutional in Pennsylvania. In response, many Pennsylvania counties are examining the Supreme Court decision and determining whether they also will reassess. When and if other counties reassess, your assessments and taxes also will change.
 
Pepper will update clients on developments on this issue. In the meantime, if you have any questions about the status of Pennsylvania’s real estate assessment system and how it relates to the specifics of your property, please contact Dusty Elias Kirk or Sharon F. DiPaolo.
 
The material in this publication is based on laws, court decisions, administrative rulings and congressional materials, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.
 
This article is republished with permission of Pepper Hamilton, LLP. Further duplication without the permission of Pepper Hamilton, LLP is prohibited. All rights reserved.