Like it or not, Allegheny County has embarked on its first property tax reassessment effort in 40 years.
As you read this, officials are working the streets to determine the fair market value of your building or property. Beginning in January 2001, you will have to pay a tax based on 100 percent of that determined value.
But what if it's wrong? What if the determined value proves inaccurate or overpriced, in your estimation? Then fight back now.
So says Alan Papernick, a principal at Pittsburgh law firm Papernick & Gefsky and one of the region's leading real estate attorneys. He predicts that valuations of many local commercial properties, at least, will fall far short of a fair and accurate assessment, which means the onus falls on owners and large tenants to turn that around.
"There's only one way the assessment is going to be accurate," Papernick says. "It's like pin the tail on the donkey. And once that assessment is set, it's very difficult to have it reduced unless there's a significant change in your property."
Not that Papernick is against the new assessment initiative; he's not.
"This undertaking is a good one," he says. "No one ever understood how to come up with a percentage of value" to determine how to tax property owners. "The fact that they're converting to 100 percent of value will be helpful."
But there's one caveat to his enthusiasm for the new system: "There's no piece of real estate that's the same."
And therein lies the problem, as far as he's concerned. At this moment, property assessors from SABRE Systems, the consulting firm hired by the county to conduct the reassessments, are going from commercial property to commercial property using what Papernick calls exterior inspection methods to determine fair market value. They also are talking with property owners when possible to gather other pertinent information, such as recent property purchase agreements, rental income and expenses.
Owners in the city of Pittsburgh will be receiving their reassessments within days, if they haven't already. Those in the South Hills will begin receiving them in early September, and by late September, those in the eastern suburbs and the Mon Valley should begin receiving theirs. By late October, the western suburbs, along with northwestern sections of the county, will receive theirs.
The final reassessment values go into effect in January 2001.
So what can you do to make sure your assessment is fair and accurate? Papernick suggests several options:
1. Protect your vital property information. Perhaps the biggest problem in the assessment process is that the assessors very easily could take any information they gather out of context, Papernick says.
For instance, you might buy a property for a price that's higher than the fair market value, for whatever reason. But you wouldn't want the assessor to take the number itself and work it into the assessment. The same goes for expenses. You might have few expenses this year on your building, but maybe that's because you're saving up for a new roof or other work in the following year.
Other considerations include the history of the building, the history of its management and even subsidies from rentals. So your best bet, he says, is to simply decline to release any additional information, which you're not obligated to release anyhow.
"It's not as if you're hiding something," Papernick says. "It's about presenting it in the light that's most favorable to the taxpayer."
2. Challenge the initial valuations. As you receive your assessments, you will have the opportunity to challenge them at informal hearings with SABRE officials. But you only have until December to do so.
3. File a formal appeal. Once SABRE Systems turns over its assessments to the county, the property assessments will be considered final -- unless you or your attorney file an appeal with the county. However, you only have until Feb. 28, 2001 to file. While you may have a shot at overturning the assessment on appeal, the drawback is this: The appeals process could take months, if not a year. All the while, you will still be required to pay the assigned tax at the time it's due. If you win the appeal, you'll be reimbursed for the extra taxes paid.
Papernick is quick to point out that this advice doesn't just apply to building and property owners. Large tenants in those properties have a lot at stake as well when it comes to larger property tax assessments. For that reason, he recommends that tenants leasing large amounts of floor space in a building should consider the appeals process also, when necessary. Whatever you do, act quickly, he says.
"Since countywide reassessment occurs so rarely, the tax implications of inaccurate property values are significant," he says. "Inaccurate assessments have the potential to result in tax hikes that will remain in place indefinitely." How to reach: Papernick & Gefsky, (412) 765-2212
Daniel Bates (email@example.com) is editor of SBN magazine.