Allegheny County Property Tax Appeals: Hints & Tips For 2021 Tax Appeals
This year, in 2021, thousands of Allegheny County property tax assessment appeals were filed by by both taxing entities and commercial and residential property owners. The taxing entities (mainly the school district's) filed property tax appeals against recent home buyers whose sale price was higher than their current property assessment. Many property owners also filed 2021 tax appeals challenging their assessment value based upon an outdated base year system (2012) and drastic changes in the marketplace in the form of a global pandemic and the effects of COVID-19.
This page should help property owners who in 2021 either filed their own property tax appeals in Allegheny County, OR had their property appealed by a taxing entity.
I. What is the current tax appeal process in Allegheny County after COVID-19?
Step 1 is always understanding the tax appeal process. To significantly increase chances in an Allegheny County assessment appeal, property owners must have some basic understanding of the two step tax appeal process and understand how COVID-19 has dramatically impacted this process.
- First, there is a BPAAR (Board of Property Assessments Appeals and Review) hearing administered by a hearing officer, who has professional real estate experience (i.e. appraisers, real estate agents, real estate lawyers, home inspectors, etc.). The BPAAR hearing (first level hearing) is typically held at the Allegheny County Office of Property Assessments, located on the 3rd Floor of the County Office Building. COVID-19 has now changed all BPAAR hearings to telephonic hearings. This change in administrative procedure has also changed the evidence submission rules. Any evidence being submitted prior to the hearing must be exchanged at least 5 days in advance. This provides a significant opportunity for property owners to thoroughly cross-examine the school district's evidence at the time of the hearing. At the first level BPAAR hearing, evidence is offered by both sides, and the hearing officer takes the matter under advisement before making a written recommendation to the actual Board of Property Assessment. The Board will then issue a written decision.
- The Board of Property Assessment typically takes about 60-90 days to render a decision, called a “Notice of Disposition.” Once the decision, or “Notice of Disposition” is sent, all interested parties then have 30 additional days from the mailing date to appeal this BPAAR decision to a second level BOV (Board of Viewers) hearing. This is a ‘de novo’ appeal, meaning fresh or new and the case starts over with new evidence (which may or may not be the same as submitted at the first hearing).
- The second level hearing, or the BOV (Board of Viewers) hearing is also being help telephonically for now because of COVID-19. This is a more formal hearing in the Court of Common Pleas of Allegheny County. The BOV has a civil docket number and is normally held on the 8th floor of the City County Building in front of an assigned Hearing Master. It is very important for property owners to understand that because these are de novo proceedings, no party is limited to the evidence they presented at the first level. In fact, school districts often have different and higher opinions of value at these second level proceedings. Property owners therefore need to be prepared to discuss information that they may be seeing at the first time at the actual hearing. If the parties are unable to resolve the tax appeal through negotiations, the matter is scheduled for an actual trial, where all applicable Allegheny County local rules of court apply. Once the BOV court renders a decision, all parties may appeal to the discretion of the presiding Judge, whose review is limited to the evidence and transcripts from the BOV hearing, and legal briefs are submitted by the parties.
- Finally, if the parties are still not satisfied, an appeal to the Commonwealth Court of Pennsylvania can be filed alleging that the lower court abused its discretion or made an error of law. Very few cases are appealed this far. Theoretically, the case could also be appealed to the Pennsylvania Supreme Court.
II. Understanding The Burden of Proof in a Tax Appeal Hearing.
- In order to change a property assessment value in Allegheny County, the filing party has the burden of proof. Specifically, the burden of proof is on the filing party to prove that market value of the subject property is not accurate, either too high or too low. To meet your burden of proof, a valuation method must be used to arrive at a market value. In Pennsylvania, there are 3 recognized valuation methods that may be used: 1) Comparable sales approach; 2) cost approach method; and 3) income valuation approach). Comparables sales approach is exactly what it sounds like. It means finding comparable sales of similar properties and using those sale prices (not assessments) as evidence to change an assessment. The cost approach is generated by looking at the construction costs of building. This typically only applies to new construction type properties. The income approach is generated by analyzing the net operating income of a property and then applying a capitalization rate to determine a fair market value of a property.
- A sale price on its own DOES NOT meet the burden of proof for a tax appeal filed by a taxing entity. Recent purchases prices of a subject property are persuasive, but are NOT conclusive. This means that school districts can not change an assessment of a property simply by handing in a copy of the deed as evidence. Sales price is NOT controlling in an assessment appeal, and the evidence must include comparable sales or other valuation method. If you have been appealed, and the school district attorney only presents a deed or county web page as evidence, the school district has not met their burden of proof. This should be the first line of defense for any property tax appeal filed against recent homebuyers. To meet the burden of proof also requires utilizing one of the 3 valuation methods described here.
- The primary issue for current appeals (property owner or taxing entity) is the fair market value of the property, either in the current year 2021 (and then applying a ratio) or as of the base year January 1, 2012. This can get complicated, but the appellant (whoever files the appeal) can actually choose at the hearing which argument they are making for the appeal (i.e. either a base year approach (2012), or a fair market value approach (2021).
- The base year valuation method focuses on what the property was worth in January 2012 by looking at sales and/or construction information at or around that time. The current fair market value method focuses instead on more recent sales, and requires that this opinion be depreciated backwards to reflect a 2012 value. The State Tax Equalization Board sets annual ratios that are then applied to the fair market value determination to arrive at a base year (2012) value. Obviously, the longer the time period from the base year, the more gross the discrepancies in assessments between comparable properties.
- In both base year approaches and/or current market approaches, the best evidence is most often the comparable sales approach, which is to provide proof of similar properties, similarly located, which have sold for a value that supports a lower assessed value for your property. If you are defending a school district appeal, you should also focus on evidence that shows why the purchase price is actually higher than the current fair market value. These reasons can include why you think you overpaid for a property, any other items that were included in the listed purchase price (seller assist, furniture, etc.) and/or any significant issues with the property that you were NOT aware of at the time of closing.
- All property owners should have a minimum of 3 comparable sales as evidence, but we recommend doing a much more comprehensive neighborhood analysis if possible. All same street sales should be analyzed. All same nieghborhood code should be analyzed. The School districts's evidence which must now be submitted in advance should be reviewed carefully for inconsistencies or disparities including location proximity to the subject. The school district will often use evidence not because it is actually comparable, but rather it fits with the assessment they are trying to set.
- You should print out all of the county webpages for any comparable sales you intend to offer. (County comparables can be found on the Court-Ordered Allegheny Real Estate Website). Be certain to at least print the home page, building information page, and image for any comparable sales offered as evidence. Property owners are required by local rules to have at least 3 copies of any evidence you intend to offer or, in theory, the evidence can be denied. Appraisals can help, but are not always necessary, and in some cases are discouraged.
- Remember that Pennsylvania law requires that one of three recognized valuation methods be used in order to change a property assessment. They are a) the comparable sales approach; b) the income approach; and/or c) the cost approach. If the school district does not use one of these methods and instead tries to rely on the deed only, a motion should be made to dismiss the appeal. Read more about defending school district tax appeals.
III. Hints, Tips & Secrets (actually good ones) for Allegheny County Property Tax Appeals
- Maybe take multiple bites at the apple. A property owner can in theory appeal their property assessment every single year, as long as no appeal is pending. If you have not appealed your assessment in several years, it is probably worth examining an appeal. We advise many of our clients who are borderline with their assessments to actually appeal their property assessment multiple times over a few year stretch. Sometimes we will have clients file tax appeals multiple years in a row. If it's close - definitely file an appeal. Any property owner who files an appeal to the first level can withdraw at any time up to the time of the hearing. Once the appeal is appealed to the BOV (the second level hearing) then consent is needed from the taxing entity before the appeal can be withdrawn. However, the risk of increase is typically lower when a property owner files their own appeal. It is true that any time a property tax appeal is filed, the property assessment could be sustained, decreased or increased. The reality is that it is very seldom that an owner files an appeal and has their property assessment raised. Theoretically it can happen, but in practice seldom does. Likewise, if a school district files the appeal, the assessment is seldom lowered, but in theory can happen. Most of these cases (not all) eventually settle at a conciliation at the Board of Viewers, and a property owners may achieve the lowest assessments by taking small bites and filing appeals over a multiple year stretch. At the very least, all property owners should be analyzing annually whether they should file a new tax appeal to lower their property assessment.
- Save the evidence from the BPAAR. Understand the difference between the BPAAR and the BOV. As stated, Property owners may freely withdraw appeals filed at the BPAAR before a hearing (the first level hearings), but are NOT allowed to withdraw BOV appeals (second level appeals) without the taxing entities consent. This is an important consideration before deciding to appeal any first level decision. The best outcomes typically use the entire appeals process to gain property tax reductions. Saving property taxes through attrition, so to speak. One of the most important ways to increase chances for success on appeal to the BOV is to preserve the evidence offered by the school district at the first hearing and to scrutinize the differences as opposed to a property owner's own evidence.
- Use your neighbors cases to strengthen your own case. This is a little time consuming but can really help if you are having a difficult dispute with a taxing entity or school district. Research settlements of your neighbors cases before any settlement at your BOV case. Find older homes on your street that sold within the last 5 years or so and then research which of these cases was also appealed in the past by the taxing entities. Conduct a percentage analysis of both your neighbors settlements as well as your neighbors assessment compared to their purchase price. This information can be found on the Allegheny County civil docket access. School attorneys may become very defensive if you raise evidence as to how they settled other cases, but in our opinion, this absolutely should be relevant. If two homes sold on the same street at the same time, (let's say both homes sold for $300K +/-, and sold 12-24 months apart), one would think that if both cases were appealed by the school districts, that they should both settle or be assessed for close to the same percentage of their purchase prices. The problem is that there are still gross discrepancies between assessments and percentages new homeowners are taxed at even when they are neighbors. Though this should by no means by the ONLY evidence you bring to an assessment appeal proceeding (because a valuation method should always be used), showing the assessments of properties around the subject property can sometimes be used in making a common sense uniformity argument.
- The School districts can be out-researched. The school districts handle thousands of appeals and can get sloppy in their research - not always, but it does happen. The fact is you can increase your chance of a successful resolution the old fashioned way - simply out working and out researching the taxing entities. Make sure you know the entire market of the property you are appealing better than the attorneys opposing you. This means knowing the evidence that both helps and hurts your case. As stated above, this means also having comparable sales both from 2012 and from the current base year. Distance and neighborhood code are typically the most important factor (of course, not always), but the closer your comparable sales are in location, typically the better. We often recommend bringing a map as evidence and calculating the distance, especially at the Board of Viewers. Being thoroughly prepared is key to anything obviously, but it is also very true in these assessment appeal hearings.
- Subscribe to a Research Service. Comparable sales can be found online at the Allegheny County website, zillow.com, realtor.com or by contacting local real estate agents or appraisers and asking for a comparable sales analysis. But if you really want too out prepare the school district you need to be able to search all of the Allegheny County data in a searchable format. The West Penn Multi List allows this function.
- Be nice, it can save you thousands of dollars of property taxes. Seems obvious, but hearing officers are tired of frustrated property owners or perhaps expect many people to be angry. Typically, preparation and kindness will work better than anger toward the individuals involved. Likewise, there is no benefit of being hostile with the attorneys from the taxing entities as the case will most likely be appealed to the second level and these are the same attorneys you will probably be negotiating with in the future.
- Don’t hire non-lawyers because they are not allowed at the BOV. If you hire representation for your tax appeal hearing, make sure the representative is a lawyer and that the legal fee covers the entire length of the representation, regardless of appeals to the BPAAR or BOV. Non-lawyers are allowed to represent property owners at the first level only (BPAAR) but are not allowed to represent property owners at the second level (BOV). We have had many clients who paid and lost at the first level and then were told that the company they hired could not assist them on appeal. The appeals process is often necessary to obtain the largest reductions and only licensed attorneys are allowed to offer representation at the BOV.
- Understand your fee. Many cases are appealed to the BOV. If you are paying an attorney on a contingency fee, make sure you understand if the fee includes future year(s). Many attorneys will charge contingency fees for 3 years regardless if the appeal is resolved in the first year. Our fee ONLY includes the years under appeal. If the appeal ends in year 1, our contingency is calculated off of the first year only. Likewise, if the appeal lasts two years (as many cases do) then our fee is for the first and second year only. Just make sure you understand the contingency fee arrangements before hiring outside counsel.
- Simple, professional and persistent leads to the best results. Efficient, organized presentations are appreciated by the hearing officers and may tend to lead to better results. Be smart about proving market value both in the 2012 base year and/or a current market value analysis. Focus on the overall data. Be sure to cross examine the school districts evidence for any and all discrepancies. It is important to have photos and estimates as necessary, and use the entire appeals process. Spreadsheets focusing on a comprehensive valuation method is key to success.
- Use the Pandemic. COVID-19 is touching every facet of our lives and property taxes are no different. There are countless ways to use the pandemic as a basis to show changing market values. Every commercial property in Allegheny County should be analyzing whether they should appeal property assessment in 2021.
If you would like a free consultation concerning a property tax appeal or other real estate issue, please email attorneys Noah Fardo or Nicole Hauptman Amick directly below.