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Friday, January 27, 2012

Two Views on Lehigh County Reassessment

The Express Times tells us that, in a unanimous vote on Wednesday night, Lehigh County Commissioners ignored Executive Don Cunningham's advice and decided to forge ahead with its first County-wide reassessment since 1991. Cunningham favored waiting a year.

Was it the right call?

Vice Chairman Scott Ott thinks so, and so does every single Commissioner, both Republican and Democrat. In a news release, Ott points out that there were over 700 assessment appeals in 2010. And although he does not say this, municipal bodies almost always end up on the short end of a property tax challenge. What Ott does say is that, since 2007, Lehigh County municipalities may have lost as much as $50 million in revenue, forcing them to raise taxes.

"The reality is that reassessment is already happening," claims Ott, "but only for the few who have the knowledge and resources to challenge their assessments, mostly businesses."

So far, the County has spent $305,000 for the reassessment process.

But Executive Don Cunningham, like John Stoffa in Northampton County, thinks the County should wait a year or so until the market settles down. In a telephone conversation late yesterday, he told me he will veto the Ordinance. "I'm greatly concerned about it and its impact on a lot of regular folks," he worries, noting that assessments could change dramatically for older homes.

"We have entire streets in Allentown valued at $50,000-60,000, that are now selling for $10-15,000. What value do we assign? $50,000? $15,000? This is a nightmare time to affix a value."

I have long advocated the need for reassessment. So did Executive John Stoffa. But in 2009, as a result of the slumping economy, he changed his mind. At that time, his Fiscal Affairs Director, Vic Mazziotti, stated that the real estate market is so volatile that it would be difficult to find comparable home prices. But Vic was always bothered by those incessant assessment appeals, which do favor those with the means to mount a challenge. As a recently elected Commissioner, he believes the best time to reassess is now.

Despite the unanimous vote that includes members of his own party, Cunningham wonders whether there are political motives behind this sudden urgency.

"They want to show they're in charge. But this is not the right issue on which to stake out that ground," he noted.

Ironically, despite their differing views, both Cunningham and Ott are concerned most about homeowners with limited means.

That's a good thing.


Anonymous said...

Retired ASD teacher here.


A county reassessment is long overdue. Allentown is WAY out of whack.

There are multi-family dwellings all over that city that are not assessed as such. Problem is, the county seems to be relying on aerial inspection data. How can that possibly identify such conversions?

Anonymous said...

Politics is part of the game. On the part of Stoffa and Cunningham, that is. Everyone knows that in county governemnt, re-assessments aer poliitcale poison. Both Stoffa and cunningham want to wait, meaning until the next Executive does it.

Nice try.

Anonymous said...

" his Fiscal Affairs Director, Vic Mazziotti, stated that the real estate market is so volatile that it would be difficult to find comparable home prices"

and now Vic changes his tune? hmm.......

Issac Touro said...


say anything to get elected. once elected ignore the people who put you there., just another arrogant self serving pol

Anonymous said...

Before moving forward wouldn't it be nice to know with some degree of certainty what a reassessment would reveal in revenue? Havent seen that yet.

Anonymous said...

The reassessment is not permitted to result in additional revenue. The millage rate will have to be adjusted to generate the same tax revenue as the preceding year.

Might as well do this now- in conjunction with the change to 100% predetermined ratio for the assessed values already approved by the county.

michael molovinsky said...

retired teacher, each property has an information page, on which the number of dwelling units are noted. i assure you that over the years, it is quite accurate. however, i'm afraid you will be disappointed by the new assessments, because income is not factored in. of course you wouldn't want to factor in the vacancy rate, which is enormous.

anon 6:50, reassessment is supposed to be revenue neutral, although i have my doubts.

i side with cunningham on this issue, the market is presently all over the place

Bernie O'Hare said...

"and now Vic changes his tune? hmm"

Not really. Vic explained the rationale for waiting, but in my own conversations with him, he supported reassessment bc of those incessant appeals. Much of what he had to say led to my own essay on that topic. He looks as though he has flip flopped, but has not.

Bernie O'Hare said...

"i side with cunningham on this issue, the market is presently all over the place"

This should be a screaming headline somewhere. I'm going to have to take my pills early today.

Anonymous said...

I think the point Anon was trying to make is until the market stabelizes how can you get fair assesments from one month to another. the variability would be just too much.


Anonymous said...

It's not a question of not reassessing, but it just sounds like when. My neighbors on the right just got foreclosed on and the people across the street are moving out piece by piece in the middle of the night.

I live in a New Jersey-heavy part of Northampton County, but all I see is foreclosure and bank sales and plummeting home prices and houses that don;t sell. It sure makes sense to me to wait a year or two.

Anonymous said...

9:19 -

So you think it will get better in a year or two? Maybe, maybe not. No one has that answer.

By doing nothing things only get worse. The administration's presentation admits that the reassessed values (while perhaps not perfect) would be fairer than what we have now.

Things will only get worse by waiting. This is what happens when you don't reassess for 21 years.

Perhaps there should be a mandate to do this on a regular basis, to help take the politics out of it.

Anonymous said...

Seamus, kissing the Cunningham posterior as well as the Callahan. At least you are a consistent public tit sucker.

Anonymous said...

The bottom line is in a reassessment some will have their taxes go down and others up.Cant wait to see how The Mazz will handle the outcry of those who will get the increase.

Anonymous said...

When are people going to learn to never listen to realtors? Whatever they tell you to do, do the opposite.


The nearly beaten to death "It's always a good time to buy" phrase

Anonymous said...

You are correct. I was concerned about the volatility of the real estate market. About two years ago I discussed my concern with the Lehigh Assessment Office staff responsible for the reassessment. They told me that they could develop valid values under the circumstances. While I respected their professionalism, I was not so sure.
Based upon the ratios used to measure the results of their efforts, they were right! The three key ratios - Common Level Ratio, Coefficient of Dispersion and Price-Related Differential - are all currently in the “unacceptable” range by a significant margin. The reassessment moves these ratios solidly into the “acceptable” range, returning fairness to the process. The Assessment staff did an excellent job!
Implementing the reassessment will reduce the average Lehigh County residential tax bill by $32 per year, over 5% of their annual county tax bill. Also, commercial and industrial appeals have resulted in millions of dollars of reduced tax proceeds to Lehigh County municipalities, school districts and the county. The taxing bodies made up these losses by raising tax rates and shifting the tax burden to those taxpayers who did not appeals their values. New values, based upon more current information, will provide support for the revised values and bring equity back to the appeals process.
Mr. Cunningham claims that this is all political. And he is correct. His actions are purely political. The vote of the County Commissioners was 8 to 0. The charge was lead by a Democrat. This is the right thing to do and now is the right time to do it. I am proud of my colleagues on the board – Democrats and Republicans - for having the courage to move ahead on this matter. The only one behaving in a crass political manner is Don Cunningham. Does that surprise anyone?
Vic Mazziotti

Anonymous said...

Good Job Vic. Also check out a couple of the hack jobs that Cunningham has parked big contributors in. He freeze needed human service vacancies but puts an old labor leader in the Dept.???

Anonymous said...

Even as someone in an older home who probably will be slightly negatively impacted by the reassessment, I'm actually OK with doing this at the county level, and I understand that this is what the County Commissioners have to consider. I'm not a conspiracy nut - I suspect that everyone involved at the county level is telling the truth, and the true effect to the county will be revenue neutral.

However, my worry is what the municipalities will do with these revised numbers. I see some serious games being played by them to hide increasing taxes. Suddenly, it will become fashionable to blame every finaicial issue at the municipal level on the reassessments. If taxes go up, it will be blamed on the reassessment. If the community is cutting programs, it will be blamed on the reassessment. If it rains on a parade day, it will probably be blamed on the reassessment too!

I'm thinking we're about to open a can of worms here - not at the county level, but at the municipal level. I hope I'm wrong, but watching other stories such as Allentown's money grab from surrounding municipalities for the arena doesn't exactly fill me with confidence!

Anonymous said...

I'm trying to figire out what's more beautful...Cunningham trying to stall, and get out from under what will be an unpopular assesment, or the dumb-ass commissioners sgreaming "no, wait WE'LL own it'

Anonymous said...

From the PA tax manual

"In counties of the second A and third classes, each political subdivision is required to reduce its tax rate for the
first year after a countywide reappraisal or after the county changes its established predetermined ratio in order
that the total amount of taxes levied that year against real properties contained in the duplicate for the preceding
year does not exceed 110 percent of the total amount levied the preceding year"

This process could cause a problem for some municipalities that have not experienced a building boom. To get around this problem the county is not required to use a current year for the market basis. I would suggest using the year 2004.

Anonymous said...

Sorry, I erased the end of the preceding quote,

"The same restrictions apply to political subdivisions within counties of the fourth to eighth class. However, the
percentage is not to exceed 110 percent in the case of a school district or 105 percent for any other taxing

Anonymous said...

There is much misinformation here among these posts, and a small amount of fact.

The data released by Cunningham/Muller at the Commissioner's meeting on January 25th, clearly illustrates the regressivty of the existing assessments in Lehigh County.

Regressivty means, the curent 1991 values are such that the higher pricd properties are enjoying under-assessment and lower-priced properties are suffering over-assessment. This is positively identified by the 1.09 price-related differential statistic.

The output presented by Muller/Cunningham from the already conducted reassessment is in direct contradiction to their conclusion. It clearly illustates a return to uniformity by its resultant 1.00 PRD. (There are other statistical indicators as well--each confirming that the output of the reassessment--returns the County to fairness and uniformity).

If you are seeking a reason why the Administration would be acting conrary to their own data-- you might want to look at County Ordinance 2011-193 passed December 21, 2011, and signed by Cunningham on Janury 7, 2012---two days before he changed his tune about whether assessment is a good idea or not. The ordinance is posted on the County web site---I suggest you read it and think it through if you want to understand the "politics".

Anonymous said...

If Stoffa had wasted 300,000 dollars on an assessment gone awry Steve Barron would have called in the state attorney general on him...or maybe the epa.

Anonymous said...
This comment has been removed by a blog administrator.
Bernie O'Hare said...

Sorry, you'll have to sign your name before I can let that comment stand.

Anonymous said...

Reassessments are about uniformity--they are NOT about taxes. If you are aggrieved of your real property taxes the appropriate venues are the budget meetings of your county, municipality or school district. Most people are aggrieved of the real property tax because the heaviest burden by far is the school districts which rely on that source of funding as their primary source of revenue. If you are aggrieved of your school district real property tax and cannot get them to spend less money—then you may support a shift in funding to income or consumption (i.e. sales). That is a matter for Harrisburg.

Reassessments are about uniformity---so that each of us pays a fair share based on the value of the real estate that we own. Most states trigger automatic reassessment at either a set time interval or by a set level of non-uniformity measured by the coefficient of dispersion (COD)—the well-known statistical tool that measures uniformity.

Pennsylvania does not do so—but relies on what is known as a “base year system”--leaving it up to politicians---hence the long time lag between reassessment--which has led to numerous lawsuits and court-ordered reassessments across the Commonwealth. (Typically the only time reassessments get called for is by lame-duck County Executives). The longer the time between reassessments the more non-uniform they become, and the greater the bias toward regressivity. (i.e. an unfair burden on the lesser-priced properties).

Anonymous said...

Assessments become non-uniform because different property types (i.e. residential v non-residential) and/or different neighborhoods appreciate or depreciate at differing levels. Real estate experts will opine correctly that higher-price properties tend to appreciate at a higher rate than do lower-priced properties.

Assessments also become non-uniform because, over time, those who have successfully appealed are lowered while the bulk of the assessments stay the same. The “reverse appeals” initiated by many school districts such as Allentown and throughout Carbon and Schuylkill County, further exacerbate non-uniformity. (To the best of my knowledge, none of the school districts in Northampton have initiated “reverse appeals” to date, at least on any large scale -but the longer it goes between reassessments, the more likely they will—because they view it as tool in their arsenal to increase revenue).

The statistical threshold for the COD is cited by experts as 1.15 or sometimes stated 15. In the Muller/Cunningham presentation in Lehigh on January 25th—they revealed that the COD in Lehigh is currently 1.274 or 27.4. While 1.14 is considered the threshold, above 1.20 is considered very poor. The output of the reassessment according to Muller/Cunningham is 1.087 or 8.7—well below the 1.15 threshold and a sound indication that conducting the reassessment will restore uniformity to an acceptable level.

The Common-Level-Ratio which is more familiar to many people is NOT a measurement of uniformity, but rather is simply a statistic that measures the average relationship of assessment to sales prices. Currently in Lehigh County because it employs a 50% established ratio—the CLR is 0.357—to equalize it to the new 100% established ratio—one would double it to 0.714. The threshold is considered 15% in either direction. Again, the statistics released by Muller/Cunningham based on the reassessment—would change the CLR to a very good 0.933. Translated, that means “on average, the entire County”, under the new reassessment would be “undervalued” by 6.7%. That is not a bad thing for two reasons: (1) the standard tolerance is 15%; and (2) if the market softens up to another 6.7% during 2012—then the reassessment, on average, would still be at an appropriate level.

Anonymous said...

The Muller/Cunningham presentation on January 25th also revealed that there were 2,653 VALID (i.e not sheriff’s sales or bank sales or family sales) during 2011 that were inputted into the mass appraisal model that generated the reassessment numbers---any statistician will opine that this is more than enough to evaluate a universe of 123,538 parcels in Lehigh County. What they didn’t say is that it is likely they also inputted the 2009 and 2010 sales which is a perfectly legitimate use of additional data, provided consideration and adjustment is made for changing (in this case declining) market conditions. In any event, the measure of the success of the Lehigh reassessment is the 93.3 CLR, the 1.87 COD and the perfect 1.00 PRD.

As to costs, the $305,000 spent to date in Lehigh has been entirely for new aerial photography in 2010 and other hardware and software needs. They have done it to date, entirely in-house—and the staff deserves to be commended. Most counties have to hire outside firms to conduct reassessments, hence the cost is often in the millions; and again, the longer a county waits the more expensive it becomes for a variety of reasons—and the more likely a lawsuit will trigger expensive litigation and a possible court-ordered reassessment.

Until Cunningham’s threatened veto, Lehigh County has long enjoyed a history of good assessment practices, and successful reassessments—circa 1954, 1973, 1991 and now the pending one. The real property data base in Lehigh County is exceptional as compared to other counties across the state. Door-to-door assessments were conducted at considerable expense by an outside firm known as CLT in 1973 including measurements of each building. Since that time, they have well maintained the database through examining and re-examining properties triggered by building permits and razing permits. In 1991 the reassessment was conducted by in-house personnel. Today, the in-house personnel were aided by sophisticated aerial photography that provides oblique views too; and “change” software that automatically compared the new photography with the 1991 photography to ascertain “changes” that needed to be addressed and if necessary field inspections were made.

There is no doubt that there will be “tax” winners and “losers” as a result of the reassessment, but these are nothing more than due to the desirable purpose of making the burden uniform. We can all dislike and moan about taxes, but at least they should be fair.

Northampton County, not assessed since 1995 displays statistics that are similarly poor as Lehigh. Make no mistake though, there are MANY counties in the Commonwealth that are far worse than both Lehigh and Northampton---all that can be said about them is that they are “out of control” because having suffered so long---the costs are exhorbitant. Allegheny County had one done in 2002—did a poor job, and there has been on-going litigation out there ever since and right up to this moment. (Check the Pittsburgh newspapers to see that the Judge out there has threatened County officials with contempt of court).

Regular reassessment s should be encouraged by taxpayer’s and their officials and not held hostage by political motivations to get re-elected and an uninformed public.

(No, I am NOT an employee of the Assessment staff, Lehigh County or ANY county).

Anonymous said...

Finally, a real Lehigh County Commissioners Board and not a Cunningham rubber stamp. Cunningham and crew have had easy sailing for six years. I am glad the new group is being the elected officials they were elected to be.

Bravo folks, good job. The Don is a great BS artist and it is time some folks aren't afraid to challenge the status quo!


Anonymous said...

Next thing the new Board should do is clean up the patronage jobs.