Throughout Allegheny County, waves of mall owners, hoteliers, office park operators and big-box retailers are stampeding to slash taxes by challenging their property assessments.
But as property owners keep winning big breaks, they’re also creating big headaches.
The more the owners succeed, the more they’re choking off critical revenue for suburban school districts, all of which heavily rely on property taxes to fund everything from books to programming to teacher salaries to new gyms.
The numbers are stark.
Over the past two years, aggressive tax appeals have obliterated more than $105 million of commercial property value in communities that make up the West Allegheny School District.
In the Montour School District covering Robinson and surrounding communities, property values have plunged by more than
$89 million thanks to assessment challenges.
The value of land and buildings in the Gateway School District, which encompasses Monroeville and Pitcairn, has tumbled by nearly $69 million.
And in the Moon Area School District, a landowner is pushing to lower the value of a single property by $30 million. Success would force the district to shell out more than $700,000 in tax refunds.
While Pittsburgh has generated headlines for months about an unceasing stream of successful property tax appeals that have devastated the Downtown tax base and thrown Pittsburgh Public Schools into panic, a silent crisis — one no less dire — has been brewing outside city limits.
From one end of Allegheny County to the other, property tax challenges are ramping up intense pressure on many of the 42 suburban school districts.
More than half are facing multimillion-dollar declines in property value because of the flurry of appeals from commercial property owners, according to a TribLive analysis.
School district leaders say they’re facing painful choices to cut programs, raise taxes or deplete rainy day funds, as costs rise due to inflation and increasing staff salaries.
While commercial property owners celebrate, some districts are grappling with an increasingly grim outlook.
Edward Hirshberg, an attorney at Ryan Law in Pittsburgh who has represented commercial clients and schools, sees tough times ahead.
“Every single school district is facing some hard decisions,” Hirshberg said.
Lost value
Through the end of March, Allegheny County lost $1.4 billion in commercial, residential and agricultural property value after appeals of assessments in 2022 and 2023, according to data compiled by TribLive from the
Western Pennsylvania Regional Data Center. Commercial properties represented about 11% of appeals in 2022 and 2023.
The majority of the losses are in Pittsburgh, which is the county’s largest municipality by size and population and boasts a concentration of skyscrapers whose values are nosediving.
But the worth of commercial real estate in the suburbs also is tanking.
Municipalities outside of Pittsburgh have lost nearly $570 million in property value because of 2022 and 2023 appeals.
Some of the biggest drops have happened in Robinson, Findlay, Monroeville and Sewickley, each of which has seen tens of millions of dollars in property values vanish. More drops are likely on the way.
Five properties have each experienced declines in assessed value of more than $10 million:
• An Amazon fulfillment center in Findlay, $21 million.
• Monroeville’s Miracle Mile strip mall, nearly $17 million.
• The Industrial Scientific office building in Robinson, $14 million.
• Heritage Valley Hospital in Sewickley, more than
$12 million.
• A senior living community in Whitehall, more than $11 million.
Bleak situation
Chartiers Valley School District — which includes Bridgeville, Collier, Heidelberg and Scott — has been hard hit.
Patricia Connolly, the district’s finance director, said Chartiers Valley has seen its taxable property value plunge by 20% through appeals for the 2022 and 2023 tax years.
As a result, she said, the district likely will have to dole out significant refunds to property owners.
Connolly said the district’s rainy day fund is below the state recommended level, making it difficult to dip into reserves to pay refunds and cover lost revenue. The state recommends that school district rainy day funds be above 8% of their total budget. Chartiers Valley’s rainy day fund is at about 6.5%.
Chartiers Valley already has raised property taxes each of the past six years, she said, and can’t hike them any faster because of state law that limits tax increases.
That has made it challenging to cover rising teacher pay and other bills increased by inflation, Connolly said.
Without major changes to state or federal funding sources, she warned, the district’s budget situation is bleak.
One-two punch
Hirshberg pointed to two main reasons property owners are flooding the county’s Board of Property Assessment Appeals and Review with challenges.
The first is the change in something called the county’s common level ratio, an esoteric formula used during appeals to value properties for tax purposes.
In 2021, Allegheny County was using a common level ratio of 87.5%. A property that won an appeal would have its assessment changed to about 87% of its new fair market value, the price at which it might change hands on the open market.
So, for example, an owner who proves to the appeals board a property’s fair market value should be lowered to $100,000 would see its assessed value set at $87,500 for tax purposes.
A lower value means less taxes. And the common level ratio keeps sliding.
After a successful lawsuit brought by homeowners, Allegheny County Common Pleas Judge Alan Hertzberg ruled in 2022 that the ratio had to be reduced to 63.5% for 2022 and 2023 taxing years.
That has encouraged scores of property owners, particularly those with large and expensive commercial property, to seek appeals, Hirshberg said.
“If you drop that on a $10 million property, just changing the common level ratio and nothing else, it decreases your real estate value by a few million dollars,” Hirshberg said.
For the 2024 taxing year, the ratio will drop again, to 54.5%.
That will further erode schools’ revenue stream, said Ira Weiss, the solicitor for Pittsburgh Public Schools and some suburban districts.
Marybeth Dodd, Fox Chapel Area School Board president, said the decrease in the ratio will impact her district for years. She said that while Fox Chapel Area School District can likely cover the nearly $35 million total decline in value for properties that make up its communities, many other districts don’t have the wherewithal.
‘Perfect storm’
The second factor encouraging assessment challenges is a decrease in the value of commercial properties caused by pandemic pressures.
Office vacancies are up because people began working from home. That change made office buildings less valuable. Online shopping soared as a desire for added convenience mixed with worries about covid-19 that kept people from patronizing stores in person. Brick-and-mortar retailers lost business, cutting into their value.
Barry Balaski, Moon Area’s superintendent, is closely tracking the deluge of property tax appeals.
He knows that Moon is filled with commercial properties under assault by owners and their lawyers eager to knock down their tax bills.
“It is a perfect storm for schools,” Balaski said.
Districts are especially vulnerable when appeals are successful because of their outsize reliance on property taxes for funding.
While Moon has allocated $4 million for appeal-related refunds, the scale of swooning property values is growing beyond the district’s control and making managing a budget difficult, Balaski said.
Taking action
Hirshberg called the situation “an absolute mess” driven by the lack of a countywide reassessment since 2012.
Pittsburgh Public Schools is trying to tidy things up.
After Weiss, its solicitor, beseeched the school board to take action, its members unanimously passed a resolution demanding that Allegheny County enact a countywide reassessment or face a lawsuit. The county didn’t budge, and the district sued this month.
A similar lawsuit triggered the last reassessment.
“All the school districts and municipalities are in the same boat here,” Weiss said after the board approved the resolution. “They are all suffering because of this system.”
Litigation is the typical path to reassessment in Southwestern Pennsylvania. Lawsuits are brought by school districts, property owners or others challenging a county’s common level ratio. Then a judge rules if the ratio is constitutional, and if it is not, the county is forced to complete a reassessment.
Beaver County completed a court-ordered reassessment last year for the first time in more than 40 years. That kind of stagnation is not unusual. Westmoreland and Butler counties haven’t reassessed in decades.
The push to reassess is growing beyond Pittsburgh. Joining the chorus are suburban school districts such as Moon Area, Fox Chapel Area, Gateway, Montour and Quaker Valley.
Robin Mungo, Gateway’s board president, supports a reassessment and said conversations about the necessity of one should be spreading to all school districts in Allegheny County.
“I like paying what I paid in 2012, but in order to keep the quality that we can produce, we need to do something,” Mungo said.
Democratic Allegheny County Councilwoman at-large Bethany Hallam believes it is long past time for a reassessment. She introduced a bill Wednesday that would move the county to regular reassessments, triggered anytime the common level ratio dips below 85%.
Hallam dismissed fears that taxes would surge, noting that windfall provisions would cap any increase in millage rates and limit any tax hikes.
“It is important for the financial stability of every municipality and school district,” Hallam said. “We need to do a reassessment immediately.”
Council President Pat
Catena, D-Carnegie, agreed.
“If we took our medicine in regular fashion, it wouldn’t be the sticker shock it looks like it is now,” Catena said.
To combat dwindling revenues, taxing bodies — mainly school districts — have pursued their own appeals, primarily of residential properties.
A key target: homes bought in the last several years.
Some schools and municipalities have enjoyed success. In Bethel Park, for instance, the school district won a $7.5 million increase for an apartment complex. And Harmar, which is part of the Allegheny Valley School District, triggered a
$3.5 million jump in the value of a large, vacant commercial lot near Route 28.
So far, though, property value declines have far outpaced gains.
Not one penny more
Mike Suley, a member of the Board of Property Assessment Appeals and Review, said the rate of the court-ordered drop in the common level ratio was shocking.
The current system benefits wealthy owners of commercial properties, Suley said, because they understand the ratio and have the resources to take cases to court.
When the common level ratio dropped, appeals exploded in Allegheny County — nearly 27,000 total for 2022 and 2023. That’s nearly double compared to the two-year span of 2018-19.
This year, the county is on track to grant nearly 12,000 appeals.
Most properties in Allegheny County still are paying taxes based on their value in 2012. The common level ratio is meant to factor in this discrepancy between assessments that are more than a decade old and properties that change value through appeals.
Why the county hasn’t already triggered a countywide reassessment is mostly political, according to Hirshberg, the Pittsburgh-based lawyer.
“It gets everyone in the county to think about their property taxes, and no one wants to do that,” he said.
Finger on the trigger
Allegheny County Executive Sara Innamorato acknowledged that the county’s assessment system has been long broken.
In an interview with TribLive, she said suburban property value declines show how the issue goes beyond the Downtown Pittsburgh boundaries.
“We have 130 municipalities. We have 43 school districts. This impacts all of them,” she said.
She said she understands the urgency pressuring Pittsburgh Public Schools. But she stressed the importance of a measured approach.
“They have budgets to pass and students to care for,” Innamorato said. “We just have to continue to be methodical and intentional. We can’t rush into anything because we want to get it as close to right as possible.”
Ryan Deto is a TribLive reporter covering politics, Pittsburgh and Allegheny County news. A native of California’s Bay Area, he joined the Trib in 2022 after spending more than six years covering Pittsburgh at the Pittsburgh City Paper, including serving as managing editor. He can be reached at rdeto@triblive.com.
