Northampton County's Quiet War on the Church

Covenant United Methodist Church

By all outward appearances, Northampton County government is church-friendly. Before every meeting, all Council members and the Executive rise in prayer. A former and current member of Council are clergymen. Despite occasional grumbling from an atheist here and there, a plaque with the Ten Commandments defiantly adorns historic Courtroom One. But behind the scenes, little known to even elected officials, a quiet war has recently been declared against the Church. This is the story of that conflict.

It's an old story, really. Since the days of Henry II and St. Thomas Becket, government officials have always wanted more money than churches are willing to give. In Northampton County, the Revenue Appeals Board has assumed Henry II's crown. Starting ironically on St. Patrick's Day, 34 churches have been summoned to justify their tax exemptions. This is part of a process that this Board decided on itself, without a formal resolution or ordinance from County Council.

The Revenue Appeals Board

What is the Revenue Appeals Board? It's a five-person board, appointed by the Executive and confirmed by Council, who are paid to hear assessment appeals filed by property owners and taxing bodies. They can lower or raise a property assessment, and can declare a property exempt, taking it off the tax rolls.

It is supposed to be a quasi judicial body, but it has played favorites. Late last year, worried that multimillionaire developer Mark Mulligan might back out of purchasing the Wolf Building from the County, the Board entertained and granted a late appeal to reduce the assessment, in complete violation of county law. The person who strongly advocated for this illegal reduction, Richard McAteer, happens to be a member of the Revenue Appeals Board. He also chairs the Easton Redevelopment Authority. Wearing his Revenue Appeals Board hat, he voted by proxy to break a 2-2 tie in favor of a reduced development.

Charles Gordon, the Solicitor who represents this Board, was asked how he could allow a member of a quasi judicial body to vote on a matter in which he heard none of the evidence. "Nobody asked me," he answered.

No Reassessment since 1995 

Northampton County has a $8.834 billion assessed value tax base. This is where the property taxes imposed by all municipalities and school districts are derived. There's been no appreciable increase in recent years, thanks to the Great Recession, a stalled real estate market and an increase in assessment appeals in recent years.

These appeals stem from the inequities that result from a lack of reassessment. Politically unpopular and costly, there has been no county-wide reassessment since 1995. They are often perceived as tax hikes in disguise, especially to those who end up paying higher taxes. State law, however, requires that the process must be revenue neutral. Some property owners would also see their taxes go down.

Because there's no political will for reassessment, County officials began turning their eyes on nonprofits as a revenue source, much as Henry II looked on the church. And for good reason. Nine percent of the County tax base, or $770 million, is listed as exempt. That's 4,060 parcels.

The ArtsQuest Exemption

In 2012, when ArtsQuest sought an exemption for two South Side Bethlehem parcels, Council member Lamont McClure and Controller Steve Barron fought against it. McClure threatened to withhold hotel tax revenue already pledged to the Jeff Parks nonprofit, while Barron complained about "the funnel of cash going down there."

Council member Peg Ferraro disagreed, calling the ArtsQuest improvements a "blessing" and "asset to all of us." Echoing Ferraro, Council member Ken Kraft called ArtsQuest founder Jeff Parks a "visionary" under attack by "jealous people" in what seemed to him like a "witch hunt".

A Back Door Reassessment of Nonprofits? 

What was unknown at the time of the ArtsQuest debate is that the Revenue Appeals Board had already ordered assessors to review all 4,060 exempt parcels. By reviewing all parcels, the Board could avoid a claim of spot assessment, i.e. a property owner being singled out. It's unclear whether the county board has any independent authority to review an assessment without a request by the property owner or a taxing body. In a recent Warren County case, a county court ruled that a county revenue appeals board has no authority, on its own initiative, to change the exempt status of a nonprofit. But that's precisely what has happened in Northampton County. Reviews were completed early this year, and the Board started exemption hearings on St. Patrick's Day. Because the Board has targeted all nonprofits, numerous small churches scattered throughout the County are being put through the ringer.

War on the Church

In many cases, the Board has learned that parsonages and convents are listed as exempt properties, and the churches responsible have quickly agreed to start paying taxes. Even in the case of Roseto's Independent Presbyterian Church, where the Pastor lives in just 292 sq ft, taxes were imposed. But other decisions are even more questionable.

One of these small churches is Covenant United Methodist Church, located in Klecknersville. Built in the '60s, the Church was surrounded by acres of grassland. Some was converted into a baseball field, and a farmer approached the Church for permission to till the remaining land. The Church, which would otherwise have to spend money cutting the grass, agreed.  After a few years, the farmer asked the church if he could make a donation every year. If he plants soybean or corn, that donation could be $400. If it's grass, like this year, it's around $250.

At an April 22 hearing, the Revenue Appeals Board decided to tax this land. It determined that four acres are being farmed, though it conducted no survey. It valued the land at $29,600, or $7,400 per acre, even though it is landlocked and can only be accessed via remaining church property. This is much higher than the $4,191 per acre average paid by Northampton County for farmland preservation.

This translates to $910 in taxes, well above what the farmer is donating. Trustee Alfred Miles doubts that the land will continue to be farmed if this ruling stands.

Miles is also irked that the Board just divided four acres off the property when everything is contained on one Deed. "They did a subdivision we didn't request," he remarked. He's still scratching his head over how a church can be assessed taxes on a property from which it derives no profit and that encourages our threatened farmland.

Ironically, Northampton County has preserved over 13,000 acres of farmland with a half mill open space tax increase dedicated for that purpose.

One hand giveth, and the other taketh away.

Things could be worse. At the nearby Salem United Church of Christ, located in Moore Township, the Revenue Appeals Board imposed a $39,100 valuation on four acres being farmed. That's $9,775 per acre.

Has the Tax Basis Increased? 

In two months of hearings, the Revenue Appeals Board has added $1,469,700 in taxable assessments. Most of the increase is undisputed. This quiet war has increased the County's taxable assessments by 0.016%.

ArtsQuest is on deck.

Ott Pulls a Nixon

When Lehigh County Commissioners decided to ignore Executive Don Cunninham's advice and delay re-assessment for a year, the "reform team" decided to show him who's boss. Not only did they charge forward, but Scott Ott issued a press release bragging about it. Just like President Obama, he wanted to make sure everyone paid their fair share.

That would look good in his Executive race.

But just as Cunningham warned, this reassessment fell hard on those who can least afford it. According to a Morning Call account, "[S]ome of the people who were calling or visiting the Lehigh County assessment office Tuesday were neither angry nor defiant. They were crying. Elderly people on fixed incomes. Young parents on single incomes. The county's first reassessment in 21 years had left them stunned by tax increases that would cost them hundreds of additional dollars a year."

So did Ott fix their problem?

Nah, he just deleted his press release, just like Nixon would do.

Northampton County's Shrinking Tax Base

In 2012, $85.9 million in real estate tax revenue was budgeted. But last night, when Northampton County Council adopted its no-tax hike budget, they had to revise their real estate tax revenue projection downwards, from $85.37 million to $84.97 million.

It's going the wrong way.

According to President John Cusick, that's a first for him. "Some of you might want to think about reassessment," he suggested.

Lehigh County Reassessment Hits Boroughs Hardest

Lehigh County's boroughs are feeling the biggest tax pinch as a result of Lehigh County's reassessment. That's according to a seminar for local title agents, conducted yesterday. The chart below reveals that Slatington (4,232 pop.) is feeling the biggest pinch, followed by Coopersburg (2,386 pop.) and Catasauqua (6,436 pop).

There have been 19,300 appeals.



Correction, 4/5/11, 8:50 AM: There are 13,644 requests for “informal reviews”. As they are scheduled, 20-30% are saying they no longer need to have the meeting.

What to Do With Your New Lehigh County Assessment

I know what you'd like to do, but reader Bill has the best suggestion. His taxes are going up $400 next year, and he wishes his home was worth as much as assessment officials claim. Here's his advice:

Take your letter and on it will be the county web site at

http://www.lehighcounty.org/Departments/Assessment/ReassessmentHome/tabid/1313/Default.aspx

Enter your ID number and you can see exactly what will happen with your taxes and you can also request a review, but you need to do it before March 16th.

Updated 8:15 AM: The web address that Bill provides is off. The correct link is here. Enter your "control ID" and you will see your taxes. Michael Molovinsky provides some analysis.

How Will Lehigh County Reassessment Affect You?

Information supplied by Lehigh County Director of Administration Tom Muller

Realtor Denies Lehigh Reassessment Will Favor Higher-Priced Homes

The Morning Call's latest report about Lehigh County's reassessment predicts that assessments will go up in Coplay, Heidelberg Township, Lynn Township, Alburtis, Catasauqua, Coopersburg, Emmaus and Macungie. Executive Don Cunningham had warned Commissioners that smaller communities with little industrial or commercial tax base would bear the brunt of this storm. His prediction seems to be coming true.

But pro-reassessment advocate Ray Geiger, a South Whitehall Realtor who wrote an op-ed on the topic, is taking the Morning Call (and Cunningham) to task in this email.

Your quote yesterday (and the headline was similar): “The changing landscape favors higher-priced properties over lower-priced ones”.

What is your data source for the above statement?

To the best of my knowledge, the County has only released the chart you offered which shows a geographic/municipal breakdown. Where is a chart that illustrates the trend among higher-priced properties versus lower-priced properties? Just because the smaller Boroughs illustrate increases, does NOT mean that higher-priced properties are favored overall.

The County Administration on January 25th released the following---the existing PRD (price related differential) under the existing assessments is 1.09 and following the reassessment the PRD will be 1.00. I suggest you bone up on statistics and learn that statistic CLEARLY means that lower-priced properties are favored in the reassessment---NOT the FALSEHOOD that your headline screams to agitate the pubic

From this statistical FACT, one may more accurately conjecture, the declines in lower priced properties in the City of Allentown and throughout the County far outweigh the increases in the Boroughs--suggesting that the increases in the Boroughs are due to other factors---i.e. maybe, just maybe they’ve been “underassessed” since 1991?

Do you know anyone that EVER appeals an “underassessment”—and if County officials let things slide for twenty years---why not just keep quiet about an “underassessment”?

When the County releases the entire database—we will know the whole story—but the Administration continues to inflame rather than inform—and the Morning Call is a useful puppet.

He adds tht Cunningham's veto has resulted in "a shorter window for taxpayers to make informal appeals. If not for the veto the notices were expected to go out around February 4th, now they are going out February 23rd, and the deadline on informal appeals is March 16th—reducing the window by two weeks or so---thereby potentially risking more FORMAL appeals that cost more to the County to administer, and potentially clog up the already overburdened court system."

Wouldn't that be a reason to delay reassessment for a year, as Cunningham asked?

Assessment Appeals Favor the "Haves" Over "Have Nots"

Allegheny County, which is already undergoing property reassessment, offers an instructive example of what is about to happen in Lehigh County. It's bad news for a homeowner struggling to make a monthly payment.

According to the Pittsburgh Post Gazette, property owners who appeal their new assessments will have to prove they're incorrect. The best way to do this is with a certified appraisal, but that costs money. Even for an 89-year-old widow whose home doubled in value.

While the whole point of reassessment is to insure tax fairness, that goal is defeated when fairness can only be guaranteed to those with the means to pay for it.

Cunningham Strikes Out on Reassessment. Or Did He?

Lehigh County Executive Don Cunningham said he felt like he was at the plate in the bottom of the ninth with two outs and eight runs behind. Like most who find themselves in that situation, Cunningham struck out in his attempt to dissuade Commissioners from overriding his veto of an Ordinance that starts the reassessment process. They voted against him, 8-1. Tom Creighton was the sole Commissioner who was willing to delay reassessment another year.

Cunningham certainly struck out with Commissioners and the Lehigh Valley Association of Realtors, but with Allentown homeowners, he may have hit a home run. That ball has not landed.

Before Commissioners voted, they gave the Exec his swings. Ironically, it is Cunnigham who started the reassessment process himself. But in January, when he received the actual data, he put on the brakes for two reasons.

First, Cunningham noted, as we all know, that the real estate market is sluggish, especially with higher priced homes. Prices there have dropped in recent years. So for those people, reassessment is probably a good thing because values will be reduced. But for people with lower priced homes, like those in Allentown and the boroughs, it's probably a bad time to reassess, especially since there is no way to incrementally increase assessments for people who have a hardship. "You will get your bill, and you will have to pay it," he explained.

Second,  Cunningham is concerned about the impact of reassessment on nine different school districts and twenty-five municipalities in the County. Some of those school districts, like Northern Lehigh and Northwestern, have little in the way of commercial and industrial property. That will ultimately mean higher taxes for residential owners. "The individual's tax bill is all that matters to him," Cunningham observed, and it will be an unpleasant surprise for some.

Cunningham pleaded with Commissioners to wait just one year.

The Lehigh Valley Association of Realtors, appraiser Ray Geiger (read his op-ed) and two tea party members urged Commissioners to override Cunningham. But another group of people are in no rush. They're members of a special interest group called homeowners.

Rosemarie Dorward, who lives on 16th Street in Allentown, complained that ordinary people who have lived and worked in Allentown their entire lives "are being penalized. We don't get any tax breaks. ... Do we want more homes for sale in Allentown? You can't get people to buy now because of the school district." She urged Commissioners to listen to Cunningham and wait. "We don't need to tackle this right now. We have other major problems in this City and this economy."

Jeff Boore, who lives on 21st Street in the Queen City, asked, "Do you think we have more money? I have to tell you that personally, I'm at the limit. Where do you think this money's gonna' come from? You drive the value of my home up? That's a question. Does anybody have an answer?"

After an uncomfortable silence, Commissioner Vic Mazziotti agreed there's a lot of confusion about reassessment. He told Boore there will be no additional revenue to the County. While values may go up, "the tax rate will go down proportionately to generate the same amount of revenue. On the average home, the taxes will actually go down, and the reason for that is that there's been a shift in value to commercial and industrial property." Mazziotti added that reassessment is "strictly for fairness."

In contrast to Cunningham, Mazziotti argued that higher priced homes are actually under-assessed, while lower-priced homes are over-assessed.

Mazziotti's explanation brought Richard Sayre, who lives on N. 16th Street, to the podium. "It's he said, she said. What's the right way? ... We need answers. How can you pass something if you don't have all the answers of how it's going to affect everyone?"

In a brief discussion among Commissioners, cut short after Commissioner Percy Dougherty called for the vote, Tom Creighton was the sole Commissioner who thought the case had been made for waiting a year. Creighton noted that in each of Pennsylvania's 67 counties, assessment is done a little differently, In Blair County, Creighton observed, assessments are quite simple - $1 per square foot. That County has used that model for the last 50 years. "I feel we should delay in case the rules change," he concluded.

Dougherty, after pointing out that reassessment should be statewide and not county-by-county, inconsistently argued the County should nevertheless move ahead.

Scott Ott, noting the state is unlikely to make any changes any time soon, stated, "We can't pin our future on hopes."

In contrast to Mazziotti, who argued that reassessment is tax neutral, Commissioner David Jones delivered a brief sermon noting that the County must reassess to combat a "continuous decline in tax revenue."

After voting to over-ride Cunningham, Commissioners began making promises they would work with taxpayers who are adversely impacted, as they filed from the room.

"All your input is valuable," Chairman Brad Osborne told homeowners who left unhappy.

Since reassessment are universally unpopular, it is likely that Commissioners will be seeing many more unhappy homeowners in the months to come. But instead of blaming Cunningham, they'll be pointing angry fingers at Commissioners for moving ahead despite the recommendation of the County Executive.

I guess they showed him.

That's why I think Cunningham may have hit a home run last night, despite striking out.

LC Comm'rs Now Own Reassessment

Lehigh County Exec Don Cunningham today vetoed a unanimous decision by the Board of Commissioners to move ahead with reassessment. His message appears, in its entirety, in The Morning Call, and can be distilled to this single sentence. "I am vetoing this because it is the wrong thing to do at the wrong time and it will have grave and lasting consequences for our county and our property owners."

Earlier this week, when I stopped by the Lehigh County Voter Registration office, I bumped into Commissioner Vic Mazziotti, and told him his board now owns reassessment, and could suffer some political repercussions.

"So we own it," Vic replied. "I'd rather lose an election than do the wrong thing."

A little over a year ago, that's exactly what former Commissioner Dean Browning was saying.

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.

Lehigh Comm'rs Paving Way to Reassessment

The last two times I visited Lehigh County's Board of Commissioners, the skies darkened and water came cascading down from the heavens, turning Route 22 into a river. It's almost as though Someone was giving me a not too subtle message, but I paid no attention. Last night, I went again, and to my relief, there was no rain. This time it snowed, and I slid all the way home. But not before learning that Lehigh County is dead serious about reassessment, so get ready.

Last time Lehigh County did a reassessment, in 1991, we still had a Warsaw Pact. Executive Don Cunningham called for a reassessment in his budget message, but I thought that would not actually take place for several years. I thought wrong.

At last night's Commissioners' meeting, a trifecta of ills were introduced to pave the way toward reassessment. Commissioner Percy Dougherty explained that assessors will be trained to do the job in house, at a cost of about $500,000 to $1 million, instead of the exorbitant prices paid to do it with outside help, which can cost as much as $11 million.

One piece of legislation sets aside $226,000 so that the County can photograph all 130,000 properties. One program being purchased, at a bargain price of just $31,000 will detect changes in a property, like new garages, sheds and swimming pools.

I wonder if it will pick up Pawlowski's mancave.

No word yet on the cost of the black helicopters taking the pictures, but I think they're starting with the tea party.

In Northampton County, where reassessment is just as badly needed, there is no political will.

Stoffa's Argument for Reassessment

"Paying tax is the price you pay for living in this country. We have to keep it as fair as possible."

That was John Stoffa's brief, yet accurate, justification for reassessment Monday on Ron Angle's WGPA 1100 AM radio talk show. We've been demanding property tax reform for years, but no one wants it on a county level. Every caller opposed reassessment, encouraged by Ron. Every caller but me. I disguised myself as Jolly Joe Timmer, until Angle got wise and cut me off.

Are you a tenant or a homeowner?

Tenant.

Ah ha. Then what the hell do you know, you bleeding heart commie pinko piece of ....

Why are folks afraid of something intended to promote equal taxation? There has been no reassessment in twelve years. Stoffa knows his proposal is unpopular, but is determined. "I didn't take this job to be the most politically popular county executive ever. It's the right thing to do."

Rather than rejecting the idea outright, council could actually help Stoffa (and the rest of us) by making sure reassessment itself is done in the fairest way. The idea of using a computer program to do this job does not thrill me. But it does need to get done, and soon.