Morrisville residents would most likely see their property taxes raised as the result of a county reassessment, simply going by the idea that the newer communities are generally over-assessed and the older communities are generally under-assessed, even though your individual millage may vary.
I particularly like the point made below where the less than thriving Doylestown of the 1980s had a failing business base and higher taxes. The residents built up the town, including...wait for it...building new schools!... I bolded this section to make it easier to read. And to think of the opportunity we passed up as a community.
Broken: Bucks County's property tax system is decades old
Bucks County’s system for setting property taxes is creaking with age.Even so, county officials — elected and appointed, Democrat and Republican – have no plans to change it.
Often homeowners who paid the same price for their houses have drastically different tax bills, sometimes thousands of dollars different.
A review by The Intelligencer of nearly 13,000 home sales between May 1, 2006 and Sept. 30, 2007 shows the disparity is widespread.
Take, for example, two Doylestown homes that sold for about $430,000:
Taxes for a newly constructed home on Woodbridge Drive are $6,701. A few streets away, an Oakland Avenue home that dates back to the late 1800s has a tax bill of $1,638.
For residents who live on these streets, that translates to a difference of more than $5,000 a year.
In New Hope, the owner of a West Bridge Street home that sold for $700,000 last year paid $3,891 in taxes. That’s half the $8,087 bill paid by the owner of a New Street home that sold for less — $684,000.The problem typically isn’t as pronounced in lower-priced properties, but it still exists.
In Bensalem Township, the owner of a Williams Street home paid $1,065 in taxes, which is nearly one-third the $2,929 tax bill paid by the owner of a Virginia Avenue home.
The sale prices? Almost identical at $122,500 and $122,100. The percentage of assessment-to-sale value? For one, it’s 5.2 percent and 14.4 for the other while state guidelines suggest it should be somewhere in the middle at 9.1.
It is not hard to find examples like this in virtually every municipality in the county.
While Bucks officials point out that, countywide, the margin of error in its assessments is within acceptable standards, that is likely little consolation to individual homeowners who are paying hundreds or thousands more in taxes for a home worth just as much as one up the road.
The analysis of these sales also suggests that newer homes are more often over assessed and older homes are more likely under assessed.
For example, Bedminster, Buckingham, Hilltown, Richland, Warrington, and Warwick, all communities that have had a significant amount of new construction, showed many more over-assessed than under-assessed homes. Those over-assessed homeowners are paying, on average, $530 to $1,255 more in property taxes.
In contrast, the older communities of Bristol, Doylestown Borough, Falls, Morrisville, New Hope and Yardley had many more under-assessed homes, translating to average tax savings to those residents of $611 to $1,819.
Old vs. new
Part of the problem is the age of each home. Across the state, taxes are based on property assessments, which are increasingly inaccurate the more time that passes between reassessments.
In Bucks, the last countywide property reassessment was in 1972. Over the years many complicating factors have put things out of whack.
For people who live in older homes in places where sale prices have skyrocketed, the skewed system is good news. Homeowners end up paying taxes based on old, outdated, and very likely low assessments. They save money — sometimes thousands.
But those who live in newly constructed homes often have higher assessments and bear much more of the tax burden than their neighbors.
The situation has spawned a number of lawsuits, here and elsewhere. The outcomes could decide the issue once and for all and force substantial change in Pennsylvania.
As homeowners who live on the older Oakland Avenue and newer Woodbridge Drive — although not in the two homes mentioned above — the Hevners and the Slebodnicks have perfect seats for the old vs. new debate.
Bob Hevner and his wife bought their Oakland Avenue home in 1984 when the borough held few signs of today’s quaint downtown that draws people from New York and Philadelphia in search of shopping and fine dining.
Back then, they said, half the stores were closed on Main Street. In the two decades since then, the taxes and commerce from residents like the Hevners built a thriving borough.
“We paid to build the schools,” Bob Hevner said, standing in his living room on a chilly winter evening. “We paid to create the fire department. We paid to make all the improvements that make Doylestown what it is today.”
They bought their home for less than $80,000, according to county tax records, but larger homes on their block now sell for many times that figure. Although he concedes their home has appreciated, it wouldn’t fill a fourth of the square footage in the large, new homes that have cropped up in Central Bucks.
“Doylestown is not a wealthy community,” said the retired chemical engineer.
Carl and Elsie Slebodnick live a few blocks away on Woodbridge Drive in the new Lantern Hill development in the borough. They don’t think they should have to subsidize residents whose assessments reflect sale prices of the early 1970s.
In 2003, the retirees downsized, selling their four-bedroom Buckingham home that sat on an acre, and purchased the three-bedroom Lantern Hill townhouse that required less up keep. Homeowners’ association fees cover things like snow removal and landscaping.
Carl Slebodnick successfully petitioned for a reassessment of a home in 1991, so he is savvy about taxes, but nothing could soften the blow of tax bills for their newly constructed townhome, which sold for about $360,000 four years ago but would likely go for more today. Their tax bill on a $49,120 assessment is $6,707, which is more than double the tax bill paid across town by the Hevners, county records show.
“We did expect them to be higher, but we didn’t expect them to be as high as they were,” he said.
While the value for the development’s 117 condos and townhouses has gone up, it’s not enough to make up for 35 years of appreciation on old homes, he said.
“In spite of (our homes’) appreciation,” he said, “other homes have appreciated too. We’re still way out of whack with where we should be.”
Assessment vs. market value
But how skewed are assessments in Bucks County and how widespread is the inequity?
The Intelligencer attempted to answer these questions by analyzing a 16-month snapshot of sales data.
The figures do not show how tax bills stack up on homes that have not sold during this window and some homes listed may have been reassessed, due to home improvements, since the county started providing the data last year.
By using a state-set percentage called the “common level ratio” as a benchmark, the 12,447 home sales can be used to compare tax rates. The figure represents the difference between a home’s market value and its assessed value. It is used to set the tax assessment for new construction.
The 2007 figure won’t be finalized until June, but the 2006 figure is 9.1, meaning your assessment should represent 9.1 percent of your home’s market value.
If all homes in the county appreciated at the same rate, the assessment would never have to change. Even as prices went up, everybody’s assessment would keep the same ratio to their market value.
But because, as expected in any real estate market, different parts of the county have appreciated at different rates, not everybody’s assessment is equitable.
In fact, it’s not uncommon for a home to be assessed at a rate as low as 5 percent of market value.
Yet new construction seems to be bearing the bulk of the tax burden — with assessments as high as 15 percent of market value.
Chadds Ford Attorney Donald Weiss, who used to represent Bucks homeowners in assessment appeals, says part of the reason might be that the extraordinary number of new homes that have been built in Bucks County distorts the formula used to set their assessments.
Thousands of new homes have been added to the tax rolls each year for nearly 20 years and their assessments, set by a formula designed to find an average, are then used to help set the next year’s average.
A true average would look at all the homes in the county and what their market value is each year compared to their assessment, but the only way to do that is with a reassessment.
“You don’t have to be a mathematician to see how unfair it is,” he said. “I think this is what the people have to be seeing. Some people are over-assessed compared with their neighbor.”
The county uses other averages and formulas to show that, overall, county assessments are within or close to industry-accepted ranges.
Within those countywide averages, however, are variations between individual properties that can be striking.
That’s because the difference between a home assessed at 9 percent of market value and 8 percent may not appear significant, but it can have a dramatic impact on a tax bill.
Richard Almy, a Phoenix-based consultant who has studied property values in Allegheny County, said even small differences in ratios translate to thousands of dollars in inequitable taxes.
When assessments are close to 100 percent of market value, those small differences are less noticeable. But when, over the course of years, assessments drop to only a small percentage of real value, the impact is magnified.
“Less than 100 percent of market value is a graveyard of assessors’ mistakes,” he said, quoting a common turn of phrase for people in his line of work. “If you’re down around 9.1, one percentage point difference translates into a fairly huge difference in what you pay in taxes.”
Meeting the standards
Over the years and even until now, the county commissioners in Bucks have defended the current assessment system. While they may not go as far as to say it is fair or even good, they claim most alternatives would be worse. Reassessing, they have said, will be too expensive, or it will force people out of their homes. They have argued that the problem really is the property tax, and the county should just wait until the state gets rid of that.
Still, the present commissioners and their lawyer attempt to justify assessments by pointing to measurements calculated by the state — “coefficient of dispersion” and “price-related differential” — to make the case that now is not the time for a costly and time-consuming reassessment.
In fact, county solicitor Guy Matthews says Bucks is among the best-scoring counties on the PRD scale.
“Bucks County is in a very favorable position on that,” he said.
Asked how such a disparity between new construction and old can exist, Matthews said over-assessed homeowners might appeal to the Assessment Board of Appeals to get their taxes lowered, but the owners of under-assessed properties are unlikely to appeal.
“Where property is under-assessed,” he said, “we can’t do anything about it because that would be illegal spot assessment.”
Illegal spot reassessment is exactly what some have criticized the county for doing a dozen years ago.
Richard Brosius, the county’s chief appraiser, said in a deposition given as part of a pending lawsuit against the county, that his office reassessed about 18,000 mostly townhomes and condos in a five-year period during the early 1990s because they were over assessed.
These changes can then impact the state-set average, as the re-assessed homes, with their lower assessments, are sold.
Tax experts who hear Bucks hasn’t reassessed in 35 years have a hard time believing that assessments — and therefore taxes — could possibly be fair.
Tom Connelly, formerly of the State Tax Equalization Board, said the reality that new home owners in a county like Bucks are paying a higher tax rate than older home owners “creates class war.”
The only solution is a countywide reassessment, he said.
“One of the unique features of Bucks County is they don’t have a major city so their values are for the most part evenly distributed,” he said. “It would appear that in the southern part of county they are not getting the appreciation of real estate values. As compared to more recently developed areas where there is still appreciation.”
Montgomery County, whose reassessment is only a decade old, is an example of why states are increasingly switching to annual reassessment.
The county implemented new assessments in 1998 at a cost of about $8 million, according to the head of the assessor’s office Thomas Brauner. Before that, the last time they had reassessed was 1978.
The ratio between sale and market value is down to 50.7, but it’s unclear how many properties stray from that number. Brauner has declined to answer questions about whether it’s time to reassess, as has Bucks’ Brosius.
A Band-Aid
Commissioners Charley Martin and Jim Cawley have consistently rejected doing a reassessment because they say the state’s system of taxing individuals based on the property they own is simply unfair.
They don’t want to put a Band-Aid on the problem.
Martin, a Republican, has gone so far as to say that people moving into pricey homes built in the county essentially deserve to pay higher taxes because they’re the ones putting a strain on infrastructure.
“If the new people coming in to the county are paying a little more that’s fine with me,” he said at an August public meeting.
However, a group of retirees who have lived in Bucks for years and then bought new homes in age-restricted communities are convinced the inequitable tax system means they pay disproportionately high bills too. They even sued the county to prove it.
Like the incumbent commissioners, Democrats who ran for commissioner last year did not support reassessment.
“We didn’t because it wouldn’t be fair to people living in homes who are just making ends meet and then would not be able to make ends meet,” said incoming Commissioner Diane Marseglia. “Coming up with a reassessment would not be equitable.”
Marseglia said she wouldn’t be able to afford her Middletown home if there was a countywide reassessment. She would like to see the county convene a nonpartisan committee of residents to study the issue for six months.
Across the state, elected officials have been reluctant to order reassessments. They view raising taxes — especially on seniors — as tantamount to political suicide.
But a reassessment doesn’t automatically mean higher taxes. As assessments go up, millage rates must come down. In a reassessment year, the revenue local taxing bodies receive from property taxes must remain essentially neutral. Individual properties owners might end up paying more in taxes because their assessments are artificially low now, but others should see their taxes fall as they no longer have to subsidize those under-assessed properties.
12 comments:
A fair and simple means of updating assessments without squeezing homeowners out of their homes would be to implement a reassessment upon sale system. New homeowners enter into their new home with eyes wide open, and longer tenured homeowners would not be forced to abandon their homes as a result of the real estate market's vagaries. This would not require some expensive roll-out or massive effort, merely a re-assessment when the house is sold. A pre-assessment could be made when the house hits the market. I'm sure their is some reason why people might disagree with this, but for homeowners of new homes to be whining about unequal assessments after they bought their houses with their current assessment is unfair. They enetered into the agreement knowing full-well how much their assessment was. Somebody call the Whaaaambulance!!!
True, but some people are young and therefore did not have the opportunity buy their house when they truly cost $75,000. This means that our young families are paying an unfair share of the taxes.
Yeah? And my kids didn't get the opportunity to buy cigarettes at $.60 a pack.
That's a crazy argument.
But wage inflation follows inflation. I don't have figures on the disparity between the two over the past several years, particularly as it relates to housing, but there is still some parity that goes on, else the economy would collapse. Yes, I know, look around. However, it would seem that the most vocal groups calling for a reassessment are not the young families, but the seniors who bought expensive new homes in controlled communities. They knew the assessment amount when they made the move, and now after the fact they cry foul. Meanwhile, how many Morrisville homeowners will lose their homes should a reassessment result in increased taxes? especially with the older housing stock and high millage. This is like the people who want the RR crossings quieted. They bought a house near the tracks, the train noise comes with the turf. Or take the people along the river. They buy a house in the floodplain. They enjoy riparian rights and the beauty and benefits of living where they do. Along comes a flood, and suddenly, everyone else has to pay for their failure to carry sufficient insurance. Meanwhile, the river is plastered with Private Property signs, limiting the public access along its entire length. How's that for hypocrisy?
"..call the Whaaambulance!!!"
Alright,who's the Bungiephile?
Has anyone noticed that we are one of only two states with such a backwards reassessment process? Not that I am surprised, but this is likely due to the fact that we are dead-wrong with how things are done. This reassessment process is as inequitable as education funding!
Can you still buy your cigarettes at $.60 a pack? Nope, you now have to pay the same price as others smoking an equivalent cigarette!
Unless of course you are from NJ, where there is a higher tax on tobacco. This, combined with our forward thinking borough council, has led to the proliferation of such high class establishments as Smokin' Joes and the other tobacco stores that dot our community. I don't suppose that using the power of zoning or other such restrictions to curtail what other communitieas freely label as nuisance businesses has occurred to them. Meanwhile, they will endlessly debate every legitimate and worthwhile project that comes to town.
Why doesn't New Hope have tobacco stores, nail salons, fireworks stores and cell phone stores eevrywhere? What about Washington's Crossing? Nope. Upper Balck Eddy? Nope. It seems that Morrisville is the only bridge accessible town in Bucks that has generated this phenomenon. Why? If these other towns can prevent nuisance businesses, why can't we? The answer is sitting in Borough Hall once a month or so.
Why doesn't someone suggest building a nursing home? We are gonna need it soon with all the "seniors" in our town. Since they seem to be in the majority! So we've been told!
See that big building adjacent to the canal where it crosses Pennsylvania Avennue? What do you think it is?
An old farts home! Won't it be overflowing soon with all the residents of Morrisville becoming of age soon?
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