7/28/2019 2013 Reassessment Question for Centre County, Pennsylvania, Commissioners

1/3

1

This is a copy of a letter sent to Centre County, Pennsylvania,Commissioners requesting information about a county property reassessmentand the impact on State College Area School District home owners and the HighSchool Project Referendum scheduled for May 2014. The reply is posted on thetab directly below this article.http://www.statecollegewatchdog.com/commissioners-reply

May 29, 2013

Centre County CommissionersWillowbank Office Building420 Holmes StreetBellefonte, Pennsylvania 16823

Gentlemen:

Subject: Centre County Property Reassessment?

Residents of the State College Area School District (SCASD) will soon face aconfluence of property tax increases including a referendum in 2014 asking to increasedebt significantly.

As you are aware, Centre Countys last property assessment was in 1994 and 1974prior to that. County reassessment generally occurs every 20 to 25 years inPennsylvania that will be 2014 to 2019 for Centre County.

Due to appreciation of the value of real estate within the county, the common levelassessment ratio (CLR) now averages 28.8% of fair market value countywide. Someareas of the county have appreciated in value to a higher degree than others. Thecounty tax assessor acknowledges that these areas are predominantly in the StateCollege Area School District.

I also remind that SCASD property tax mills are five times higher than county tax millsthat is five times more impact on school district property owners.

The SCASD announced that it will use a referendum question to seek voter approval ofnew debt required to fund a high school project in May, 2014. The cost explained in

public documents ranges from $70 million (repairs only) to $152 million (new highschool, new location). The total attendant 30-year debt service is $117 million to $244million respectively. That is an added annual debt service of 1.4 to 3.4 (2013) mills, a 4to 10 percent tax increase calculated prior to a reassessment.

At the same time the school district is also confronting significant school employeepension (PSERS) contribution increases from 12 to 31 percent of payroll by 2019-20(contributions increasing from $4 million to about $10 million) and continuing to increase

http://www.statecollegewatchdog.com/commissioners-replyhttp://www.statecollegewatchdog.com/commissioners-replyhttp://www.statecollegewatchdog.com/commissioners-reply

7/28/2019 2013 Reassessment Question for Centre County, Pennsylvania, Commissioners

2/3

2

thereafter. (PSERS contributions are excepted from annual Act 1 index limits.) With 1mill presently worth $2 million of district revenue, the mill impact rises steadily from .3to about 4.5 mills by 2020 just for PSERS. SCASD voters are therefore confronting atypical annual school property tax increase of 1 mill plus an additional 1.4 to 3.4 mills fora high school and additional increases of 3 to 4.5 mills for pension obligation.

Section 327 of the 2006 Taxpayer Relief Act 1 includes an anti-windfall provision whichapplies to school districts and which is an exception to 53 Pa (page 372, 8823 J (a)(scope) (2). Section 327 of Act 1 directs: after a countywide reassessment a schooldistrict which, after July 1, 2006, for the first time levies its real estate taxes on thatrevised assessment or valuation must reduce its millage rate so that the total amount oftaxes levied on the properties subsequent to the reassessment increases less than orequal to the index for the preceding year. Consequently, the first year tax increasemust be limited to 1.7 percent if using, as an example only, the 2014 limit. That does notinfer that a tax increase on any property is limited to 1.7 percent. The higher the newassessed value, probably the higher the individual tax increase.

An anti-windfall limit of 5 percent is applied to county and municipal property taxrevenue but not to individual tax increases the first year after reassessment (53 Pa).Despite explanations of revenue neutrality after the 1994 reassessment, there was loudpublic outcry about individual tax increases of 20 percent within the SCASD in 1995.

It is unknown what percentage of taxpayers will see a tax increase with a countywidereassessment, but a general assessment theory seems to be that countywide 33% willincrease, 33% will decrease, and 33% will see very little change. (After a 2012reassessment in Lehigh County [last assessment in 1991] 57 percent of homeownersreceived a tax cut, 43 percent a tax increase, 0 percent no change, with some increasesas high as 75 percent.) It is reasonable to project that most of the 33 percent CentreCounty increase will apply within the SCASD.

Unfortunately, at this time it is unknown what the general impact will be withoutextensive research by the county assessor into this subject. Using data provided to meby the county assessment office on about 23,000 homes in the SCASD, my ownestimate using Zillows, Chase Home Value, and Trend_MLS, and randomly selectedproperties with a 1995 AV of about $71,000, in each SCASD municipality, is that theassessed value for the average SCASD home increased 68 percent from $71,000 to$119,000. That changes the mill calculus provided by the SCASD in their communityinformation publications and surveys. I understand the limits of Zillows (+/- 20 percent)et al but it is more 2013 data than the assessment office can provide at this time.

It also appears that the average home has increased in value by a higher percentagethan homes three to four times the average AV using 2013 values.

I do understand that after reassessment that tax mills must be reduced to comply withthe windfall provision limits. I understand that mill rates among the three taxing entitiesare different. After the 1994 reassessment SCASD mills were reduced from 172 to 21,

7/28/2019 2013 Reassessment Question for Centre County, Pennsylvania, Commissioners

3/3

3

(30.6 to 3.6 county, 37 to 4.4 Patton Township, 239.6 to 29 total) yet property taxes stillincreased significantly more than 20 percent on SCASD homes only ten years old.While the 2004 to 2006 53 PA and Act 1 laws have some different provisions than the1994 laws, I see little that places a limit on individual property tax increases.

Im not discouraging reassessment the present assessment ratio of 28.8 percent begsreassessment. Rather, I and others want to know the total impact of all this before wevote yes or no on the referendum. I calculate that the reassessment creates a minimumequivalent tax increase of 1.5 (2013) mills for homeowners in the SCASD after the firstyear using one SCASD mill = 2.65% tax increase. I encourage a more reliable estimateby the county.

As a county resident and property taxpayer, I ask (1) what year will the inevitablereassessment most likely be conducted and, if practical, (2) an estimate of the generalimpact on SCASD homeowners approximately how much will assessed valueincrease and on about how many properties and (3) a range of those increase amounts

as a consequence of reassessment? (4) How much will the so-called average SCASDhouse with a1995 assessed value of $71,000 increase? (5) What is a knowledgeableprojection of the mill conversion for the county, municipalities, and SCASD?

Finally, I recommend that the next reassessment use a predetermined assessment ratioof 100 percent rather than 50 percent (1994) to avoid some of the nitwittery involvedwith the arcane art of assessment.

Thank you for your attention to this matter.

A written reply by postal or email is requested within 30 days.

Signed/Address/Telephone/Email/