N. Franklin eliminated local police force; what was role of property reassessment?
Celeste Van Kirk/Observer-Reporter
The rear of the former Bon-Ton store at Washington Crown Center mall
Celeste Van Kirk/Observer-Reporter
A shopper walks past an empty store at Washington Crown Center center on Tuesday.
Celeste Van Kirk/Observer-Reporter
A view inside Washington Crown Center mall on Tuesday
Celeste Van Kirk/Observer-Reporter
The former Macy’s store at Washington Crown Center Mall
When North Franklin Township officials disbanded the municipal police department in late December, one of 10 reasons they cited was “in the 2017 reassessment, the township lost approximately $100,000,000 of real estate assessed value.”
A comparison of Washington County’s 66 municipalities shows that North Franklin’s assessed values had the most marked decline from 2017 to 2018, aside from tiny Green Hills Borough, but a county official noted the township’s biggest single taxpayer, Washington Crown Center, has a history of periodically filing assessment appeals going back, in online listings, more than 20 years.
“We’re not saying all of North Franklin’s financial problems are related to the assessment,” said township Solicitor Gary Sweat in a phone interview.
Other reasons the supervisors cited for no longer being able to provide local police protection included the cost of litigation, arbitration awards, increased insurance rates, incomplete audits, an obscured financial picture and “decisions by previous boards going back decades.”
As 2018 came to a close, the township faced a deficit of $850,000.
But the assertion that the 2016 property reassessment was responsible is not something county officials are buying.
“That was a big hit they took out there,” said Commission Chairman Larry Maggi. “The mall was going to lose value whether we reassessed or not.”
The countywide reassessment was undertaken after the county lost a lengthy court case, and 2017 was the first year that property owners received tax bills using the new valuation of 100 percent of present value instead of the previous ratio of 25 percent of 1981 value. It spurred a raft of challenges, many handled through assessment board appeals, but some that went to Washington County Court.
A spreadsheet generated by the Washington County tax revenue office Chief Assessor Raffaele Casale lists all property values appealed that year in North Franklin, which experienced a nearly 18 percent decrease in assessed value from 2017 to 2018.
By far, the biggest decrease in assessed value in North Franklin Township was a collective $90,809,800 plummet at Washington Crown Center mall.
What a casual observer calls “the mall” is actually, for tax purposes, five parcels, and three of the largest parcels decreased in assessed value from 2017 to 2018.
The assessed value of the largest chunk of the mall, owned by Kohan Retail Investment Group, doing business as Washington Crown Center Realty Holding, LLC, as of August 2016, dropped by $82 million.
The May Department Stores Co., owner of the former Kaufmann’s and the now-vacant Macy’s department stores’ real estate, is listed as having two parcels that are taxed separately.
The market value of the May Department Stores Co. parcels dipped by just over $7 million and $1.3 million, respectively. Macy’s announced in January 2017 it was closing its Washington Crown Center store. This news was followed the same year by the closings of the Gander Mountain sporting goods store and Payless Shoe Source.
Two other smaller parcels listed by the tax revenue office under Washington Crown Center Associates have market values that remained the same, $159,900 and $37,100, respectively.
A spreadsheet of 28 property assessment appeals in North Franklin Township from 2017 shows 19 commercial properties and nine residential. Values of 24 declined. The two mall parcels previously noted stayed the same, and two owned by CNX Water Assets LLC increased by a total of $76,600.
One aspect the 28 tracts have in common is that all are marked “settled,” meaning that the owners and all taxing entities, whether school district, township or county, reached an agreement on the numbers.
That was the case in the vast number of property assessment appeals. Washington County has 118,823 parcels of land, and between 5,000 and 6,000 appeals were filed at all levels once property owners saw the new numbers.
Of these, 1,206 went to court. Those that were settled or had stipulations filed numbered 966.
When Washington County Judge Michael Lucas affixed his name Oct. 3, 2017, to a stipulation among the county board of assessment appeals, Trinity School District, North Franklin Township and Washington Crown Center Realty Holding LLC, it was six months before the closing of another of the mall’s anchors – Bon Ton Department Store – was announced.
The order shows that North Franklin Township, or its legal counsel, did not attend the proceeding before Judge Lucas.
“The position we took was we let the Trinity attorneys be the lead on assessment appeals. Typically, that’s the way it’s handled,” Sweat said. “Eighty cents of every tax dollar goes to the school district.”
Court records show the Weiss, Burkardt Kramer law firm of Pittsburgh handled the mall tax assessment appeal on Trinity’s behalf.
“There was no need for us to have two separate lines of litigation,” Sweat said. “Pick an appraiser and that appraiser will be our expert for both of us to keep the cost down.”
County and municipal governments operate on a calendar year. Sweat said North Franklin lacked information before its Dec. 31, 2016, budget-setting deadline for the coming year that would have revealed its declining revenue, and blamed the county for not providing it.
“It creates a dilemma when formulating a budget,” Sweat said. “The millage we set counted on a tax bill applied against a $102 million assessment at the mall.
“We relied on Trinity to get an appraiser for shopping malls,” Sweat said of Crown Center’s appeal. “Those cases are won and lost on appraisals.”
Complicating the matter was a 2014 tax appeal for the 2015 tax of mall parcels that was still outstanding under the prior formula for setting assessments. It was settled in late August 2017.
When 2018 drew to a close, Trinity School District, which also includes Amwell, Canton and South Strabane townships, experienced a net decrease in assessed property value of 5.92 percent.
“Trinity had six months to look at this and to evaluate the appeals that were coming in. You knew what you were up against based on the appeals that had been filed.
“The supervisors kept the millage where it had been prior to the change. These numbers did not become clear until after the dust settled.
“I think a lot had to do with townships not getting good direction,” Sweat said.
The Washington County Tax Revenue Office sent letters to all municipalities estimating millage for 2017. It calculated down to nine places to the right of a decimal point, which is a billionth of a dollar.
“The purpose of this is to assist and not control or replace the good judgment of municipal officials,” the letter stated. “To the extent that your millages may be rounded off to a shorter (number) of decimal places, or that you wish to increase your revenues within statutory tolerance, our department will be unable to assist in that regard; please seek legal counsel from your solicitor.”
As to what North Franklin viewed as a shortcoming, Maggi said, “I’m not sure that’s totally accurate. We haven’t heard that complaint from other municipalities. Some municipalities took that into consideration when they were setting their budgets that there were going to be some appeals. There was going to be some loss there.
“In fairness, they may have contacted the tax assessment office rather than us, but if they didn’t get satisfaction from the tax assessment office, they would have come to us.”
Municipalities experiencing growth in their tax base may have had to adjust in an opposite fashion to keep the year following the reassessment revenue neutral.
Peters Township was among those that saw an increase in its tax base.
In a December 2016 Observer-Reporter news story about municipal budgets in light of the reassessment, Peters Township Manager Paul Lauer said, “The Washington County Assessment Office provided a figure, and they actually performed that calculation. They confirmed what we already knew. (Then-chief assessor Brad Boni’s) calculation was very accurate, and it was very helpful.”
When a property’s assessment is lowered, any taxes paid under the previous assessment must be refunded to the owner.
Sweat said on mall properties, the refund was about $50,000.
Civil Knox, general manager and marketing director of the mall, responded to an email inquiry that its occupancy rate will be 88 percent as of mid-month when several new tenants open.
She called the disbanding of the local police department “a definite concern for us, however we are continuing to provide our customers with a safe environment for shopping and visiting our center with our current security staff and the assistance needed with the state police, which has been excellent.”
Dr. Michael Lucas, Trinity superintendent, also responded, “We had a wonderful partnership with North Franklin police for years. They would respond to calls in minutes, and the support was phenomenal.
“We are fortunate to have our own police department at Trinity Area. Our school board has done an outstanding job to make sure our students and staff are safe. The disbandment has not affected school security at Trinity Area.”
The Washington and McGuffey school districts filed suit in 2008 against the county commissioners, demanding the reassessment. The court battle ensued, and, faced with the possibility they could be jailed for contempt, the commissioners in 2013 hired Tyler Technologies of Moraine, Ohio, to reassess property, at a cost of more than $6.9 million.
Associated costs brought the total to the neighborhood of $8 million.
“This is a complaint we as commissioners had when we were forced into this,” Maggi said.
“McGuffey did not fare well and Washington did not fare well. We were contesting it and we were fighting it. It wasn’t good for anybody.
“We spent $8 million and it still hasn’t solved anything. It’s just a different set of problems.”
The City of Washington felt an overall decrease of 4.24 percent in property values. The decline was not as marked in East Washington Borough, the other municipality in Washington School District. The borough’s tax base declined 1.46 percent.
Four municipalities within the McGuffey School District – Morris, Claysville, East Finley and South Franklin – also experienced declines in assessed value. Green Hills Borough, population 28 and home to Lone Pine Country Club, which went from a 36-hole course to 18, had a percentage assessed value plunge of nearly 42 percent.
But three other communities within the district, West Finley, Buffalo and Donegal, were among the top 11 who saw increases. Rounding out the nine McGuffey municipalities was Blaine Township, which experienced an increase of 0.1 percent.
While North Franklin and Morris had double-digit decreases, no municipality in Washington County registered a double-digit increase.