If you have an eye on development in Peters, Ross Township, North Fayette or Cranberry, it’s easy to see how quickly those communities are growing their tax bases with new residential development. And the growth of their commercial areas—additions to malls, construction of big box stores and corporate headquarters—also can quickly swell the amount of taxes the towns and schools collect.
It would take you mere moments to notice we have no such ability in “built-out” Mt. Lebanon, where few vacant parcels exist.
Because our tax base is basically “fixed,” it’s important to ensure that when existing properties are expanded, renovated or replaced by new construction, the new or improved property is assessed at fair market value. “An accurate assessment ensures that the community will remain a vibrant, desirable place,” says Municipal Planner Keith McGill. It also ensures that the tax system is fair and uniform, says Municipal Manager Steve Feller.
Take, for example, the parcel at 1121 Bower Hill Road. The former Tony G’s bar was assessed at $572,900 in 2004 but jumped to nearly $5 million in 2005 after an Eckerd (now a Rite Aid) was built on the spot. (That assessment dropped to $2.5 million this year, but in any event, it’s significantly more than the original assessment). A second Rite Aid, on Cooke Lane with an official address of 410 Castle Shannon Boulevard, is now assessed at $2.2 million but was valued at $1.3 million when it belonged to the Pennsylvania American Water Company in 2004.
The former Ground Round at 1600 Washington Road was valued at $909,700 back in 2007 but is now at $1.6 million as a retail center with several stores.
But the two biggest gains could come from the SpringHill Suites by Marriott, on Washington Road, when it is completed later this year, and The Fresh Market, 1551 Connor Road, which opened in July. Neither of these projects received and tax incentives or tax increment financing.
The Fresh Market, built on the spot of the former Roth Carpet store, currently is valued at $692,400 and listed as vacant land. The Allegheny County Office of Property Assessments is in the process of setting a value for the parcel, and it will go on the tax rolls January 1, 2014, unless the municipality or school district files for an interim assessment, says James W. Davis, the office’s assistant valuation manager.
Feller says filing for an interim assessment doesn’t net a windfall for either the school district or the municipality. It just allows the agencies to bill a little earlier for the tax, which would have been retroactively billed anyway once the county completes its process.
According to building permits filed with the Mt. Lebanon Inspection Office, The Fresh Market demolition and construction cost $9.4 million, but that doesn’t necessarily mean that’s where the assessment will end up. Davis says several factors go into setting a value. “In short, there are three approaches to value for tax purposes. Market (or sales), cost and income. All three need to be considered when valuing properties; however, the majority of commercial structures will be valued at the income approach.” The income is determined by using a Computer-Assisted Mass Appraisal System (CAMA), which calculates the estimate of present value based on the income that a property is expected to produce over its lifespan based on data from similar businesses.
“The cost approach is the second most common method, while market is mostly reserved for residential properties,” Davis says. “All properties are valued at 100 percent of the value, regardless of the method at which it was arrived.”
The process is triggered when the county receives Mt. Lebanon’s list of building permits and occupancy permits, the latter of which is given when a building is complete and deemed safe to be used. The list goes to the county once a month.
Staying current with property values is not an easy job. Last year, the county received more than 12,000 building permits to review. Of course, those figures include residential permits, which also can lead to increases in assessments, but as you can see, one large pharmacy, a new market and a 108-room hotel have the potential to add way more to the coffers more quickly than a couple of decks and a family room addition.