Allegheny County allowing some assessment appeals to be negotiated

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Forget a hearing. For some Allegheny County property owners challenging their reassessments, it's become more like let's make a deal.

Since late October, the Allegheny County Board of Property Assessment Appeals and Review has been allowing property owners and taxing bodies, mainly school districts, to negotiate settlements of reassessment appeals outside of a formal hearing. The agreed-to value then is submitted to a hearing officer as a stipulation supported by both sides.

David Montgomery, the assessment board's solicitor, said the new procedure, implemented Oct. 26, was set up at the request of school districts, which saw it as an expeditious way to resolve some of the remaining 15,000 to 20,000 appeals filed over reassessment-related values.

Many of the settlements involve commercial properties where disputes in value could amount to hundreds of thousands of dollars or more.

The new practice comes as the county is facing a Dec. 17 deadline to resolve challenges to new values for residential real estate. Many school districts had settlements ready to go and wanted a way to finalize them at the county level, Mr. Montgomery said.

The county's administrative code requires the appeals board to "hear and decide" all assessment appeals. Mr. Montgomery said the new procedure complies with the code because the settlement is presented to a hearing officer for approval at a formal hearing, although the "evidence, generally speaking, is limited to the stipulation."

Mr. Montgomery said allowing school districts and property owners to cut their own deals is no different than what happens when decisions rendered by the assessment board are appealed to the board of viewers in Common Pleas Court. At that level, the parties typically are urged to negotiate a settlement, he said.

But others found fault with the new practice.

"I think they should have an appeal hearing," said Charles Martoni, president of county council. "I thought that was the whole design -- for someone to listen to it and make a decision on it."

Phil Marcus, a real estate broker who represents property owners in appeals, also criticized the procedure.

"I don't think that's fair because at the appeals board level, the decisions should be made on valid comparable sales. I think negotiating, what would be the basis for that? The good looks of the property owner? It's subjective enough as it is. It's almost like the wild west down there," he said.

But Jonathan Kamin, a Downtown attorney who has been involved in multiple settlements, defended the procedure.

"My point of view is that if a property owner and the taxing jurisdiction can agree on what a property value is worth, why waste anybody else's time and clog up the court system?" he asked.

Mr. Kamin said the settlements aren't easy deals to make.

"Negotiating with the taxing jurisdictions is a challenging task. They're advocates for their values. It's not as if it's done in a vacuum," he said. "The school district has no interest in leaving money on the table and we have no interest in giving money away."

"I think it's a perfectly legitimate way to resolve cases," added Ira Weiss, solicitor for the Pittsburgh Public Schools. "The fact all the parties agree and sign off on it makes it a very transparent process."

County Executive Rich Fitzgerald, who has fought the court-ordered reassessment, said he had no problem with the settlements. He said the assessment board still signs off on the negotiated value. "They have the final oversight and approval if they think there's something not right with it," he said.

Mr. Montgomery acknowledged that the Dec. 17 deadline was a factor in allowing settlements. By that date, the county must provide a "final and revised roll" of property values that other taxing bodies will use as the basis for their 2013 property taxes.

He believes that most of the settlements so far have involved commercial properties where the stakes are high in terms of the money and tax revenue involved.

Districts "are not making deals with people who are coming in just asking for some compromise. By and large, school districts are stipulating with people who have been able to demonstrate some basis for their position," Mr. Montgomery said.

The new procedures were put in place after many of nearly 108,000 appeals resulting from the reassessment already had been decided. None of the property owners who completed their appeals before Oct. 26 had the option of negotiating a settlement outside of a hearing.

Robert Strauss, a professor of economics and public policy at Carnegie Mellon University, said that raises questions about uniformity.

"I think it's going to compound the public's lack of confidence in government because it's a separate process for big folks," he said.

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