Tammy Wolicki: Clarifying Hempfield’s property tax appeal process
The Hempfield Area School District is providing clarification regarding the district’s involvement in the property tax appeal process. There is much misinformation being shared in this regard.
Taxpayers, commercial businesses and taxing bodies, such as a school district, have a legal right to file a tax appeal. The district defends tax appeals filed by individuals and businesses on a regular basis. Revenue to the district is decreased when tax appeals filed against the district are successful. Alternatively, the district receives additional revenue when district-initiated appeals are successful. Revenue generated from a successful tax appeal is used to balance the district’s budget for expenses such as textbooks, transportation, supplies, technology and salaries.
Hempfield Area is filing appeals, not assessing or spot-assessing properties. The responsibility of assessing property rests with the Westmoreland County Tax Assessment Office, not school districts. The last county-wide assessment in Westmoreland County was completed in 1973.
The tax appeal process involves a review of recently sold property. Originally, the district had chosen to include only commercial properties in the tax appeal process. However, the Pennsylvania Supreme Court recently issued a decision in Valley Forge Towers Apartments v. Upper Merion Area School District that limits the rights of taxing bodies to file tax assessment appeals based on property type. The court found that the Pennsylvania Constitution prohibits taxing bodies from initiating tax assessment appeals exclusively based on the specific type of property. Therefore, residential properties must be considered as well as commercial in the tax appeal process .
Districts use a variety of methods when determining which properties to consider for the tax appeal process. Some districts use a minimum potential amount of revenue generated for the district, others a minimum value of the property, and yet others a differential based on a selected amount. Hempfield Area chose a differential of $100,000 for the 2018 tax year but changed the amount to a $250,000 differential for the 2019 tax year. There is no mandated method that school districts must use to determine on which properties to file a tax appeal. The determination is based upon the vote of the majority of the school board. The board vote on Sept. 17 to change the differential led to fewer properties being affected.
It is not the intention of the board of directors to change the differential annually. A differential is based on a comparison of the implied current fair market value and the purchase price. (Implied current fair market value is determined by multiplying the current assessment by the common level ratio factor, which is currently 6.13.) The district uses a differential of $250,000 to identify properties that are potentially under-assessed. For example, a home that has an implied current fair market value of $250,000 but sells for $500,000 would be considered for a tax appeal. A differential of $250,000 affects properties with a substantial difference in implied current fair market value and purchase price, hence has little impact on the vast majority of sales and property owners.
In 2017, the district filed four commercial and seven residential tax appeals for the 2018 tax year based on the $100,000 differential. In 2018, the district filed 14 commercial and two residential tax appeals for the 2019 tax year. The revenue generated from district-initiated tax appeals in no way offsets the revenue lost to successful taxpayer appeals.
The district selected the law firm Andrews & Price to file district-initiated appeals for properties thought to be under-assessed. The firm is compensated with 30 percent of the increased revenue generated in year one only. The school board votes to approve the final settlement of each successful district-initiated tax appeal.
The Westmoreland County website includes the millage rate for schools by city for 2018. The millage rate for the Hempfield Area is 83.46. When ranked by millage, only five of the 17 districts in Westmoreland County have a lower tax millage than Hempfield Area.
Tammy Wolicki is superintendent of the Hempfield Area School District.