January 29 — It’s been more than 60 years since Franklin County, PA has performed a reassessment of property values.
Recently, a number of municipal boroughs have discussed the issue and the Chambersburg Borough made an official request to the County Commissioners to perform a reassessment.
Attorney Clint Barkdoll pointed out, “This is the first time that I can ever remember we’ve ever had public municipalities, specifically Chambersburg, Waynesboro and Shippensburg formally weighing in to the county saying you need to do something, we’re getting to a crisis point.”
When it comes to the nuts and bolts of assessing property, without the county deciding on a county-wide reassessment, the only time a person would have their property reassessed would be if they take out a building permit to make some changes to the property.
Barkdoll noted, “So in other words, if you’re in a very valuable property that predates 1961, and there’s never been a building permit or improvement in those 60 plus years, you’re still sitting in that old assessed value from 1961, even though your property may be worth many multiples more than when it’s truly assessed at.”
Chambersburg Borough Manager Jeffrey Stonehill said, “My understanding is that there’s two terms that we should talk about when we talk about this subject. We talk about assessed valuation, and that’s the valuation that the county uses to determine the equitable distribution of the real estate tax burden. The other one is fair market value. Fair market value is what your property may actually be worth.”
Going a little deeper, there’s something called the State Tax Equalization Board.
Barkdoll explained, “They establish something known as a common level ratio for every county in Pennsylvania. Franklin County is currently at 11.63. That’s the fourth highest in the state. This assessed value and the common level ratio, that CLR is set by the state and it resets every July 1, and it can go up and down based on various data that that state board synthesizes year to year.”
Stonehill said, “What the concept of that statistic which is calculated by the state is supposed to do is it’s supposed to create a ratio between the assessed valuation and the fair market valuation and that’s the idea of having a multiplier that people can use to try to gain the relationship between those two values.”
Barkdoll said, “If you look at those published CLRS, there are a lot of counties, even places like Adams, nearby here, Philadelphia, their CLR is roughly one or exactly one in some cases, which would mean that their assessed value is reflective of the actual value of the property and Franklin County’s current common level ratio is 11.63, again, that’s the fourth highest in the state and the thinking would be the higher that number is the more skewed your assessed valuation is.”
Michele Jansen of NewsTalk 103.7FM noted, “I think people do get confused because you’ll see a number that’s much lower than your market value, which is what they say is the value that your taxes are based on. I have to admit, I really didn’t have a clear picture of this, but it seems to me when I look at how other counties have gotten into reassessments, it’s been lawsuits that have triggered the reassessment to actually happen. I guess I’m just curious as to why it always seems to have to go to that if people wait. I know it’s political. I know the elected officials don’t like having the idea because I think people think automatically, my taxes are gonna go up. Then there’s the infamous idea that one third will go up, one third will go down and one third will stay the same. How accurate is that kind of common thought, knowledge that people have?”
Stonehill said, “So it’s unfortunate that sometimes counties have taken the decision to do the required reassessment, which is required by state law, only after litigation has been entered into. That is a shame, but there are plenty of other counties that have decided to be proactive and do the reassessment before a taxpayer or a taxing authority has approached some sort of legal action. I can’t answer why some have been more proactive than others. But you’re right. It’s it’s probably ultimately a political decision by the leadership in those counties.”
With more than 60 years since a reassessment in Franklin County, it’s the longest period of time taken of any of the other 67 counties in Pennsylvania.
Stonehill said, “If you look at our neighboring counties, Adams and Cumberland and even Fulton, it’s obvious that it’s long overdue. Whether it’s going to be simple or complicated, whether it’s going to be inexpensive or expensive, I’m not exactly sure as we sit here today, but I do know it is a required step that all counties in Pennsylvania must do at some point.”
Jansen said, “Considering how out of whack it must be between some of those properties that are very valuable where there’s been no reassessment and new properties with the way they get assessed, I understand it can get to the point where that is so out of whack that the State Judiciary could step in at that point, almost from what I read, without even somebody triggering a lawsuit necessarily, to say you need to do a reassessment.”
Barkdoll said, “I do think there are scenarios that a court could force this.”
A Pennsylvania law, 53, PA CSA section 8823, explicitly limits the tax increase a municipal government is allowed to make after there’s been a county-wide reassessment.
Stonehill said, “The state law would not allow that to occur. There is a cap that’s placed on all the municipalities as well as the school districts in the year following the reassessment when that data becomes effective, and so nobody can rush out and jack up their tax rate or get a windfall from the reassessment process. You have to remember that taxes, as disagreeable as they are to everybody, nobody likes to pay taxes, obviously, but they are decided by the elected officials in each municipality. So whether it be the Borough Council, township board or school board, they are the ones deciding the tax rate and unfortunately, it is necessary to pay for services that there will be some kind of taxes.”
Municipalities can only raise taxes to a certain millage and that’s based on assessed property values.
Jansen pointed out, “So you can get to the top of your cap and if the assessed values of the properties are so low, that’s not really going to give you the funds that you need. So we have a lot of older properties here in the borough. We have a lot of the ones that maybe have fallen away from their true assessed value for taxes. So you’re kind of limited artificially because you haven’t had these properties assessed at the correct value for taxation.”
Stonehill said, “This is where it goes from the primary issue which is a fair distribution of the tax burden. We want taxpayers to pay their fair share, whatever their fair share actually is. So we want every property owner to pay no more than and no less than the taxes that they should be contributing to the system. So that’s the first issue and making sure that we have a fair and equitable real estate tax system is extremely important to give everybody who pays taxes in Franklin County confidence that when they write that tax check every year, that they know that that’s the amount that they should be paying. When you let your reassessment go so many years, there is a question about whether or not you are paying your fair share. And that’s the famous one third, one third, one third cliche that we hear, which we see in writing from many different experts, which is that some people are probably paying too little in taxes, but many people might be paying too much in taxes, and you just want everybody to pay whatever is their fair share of taxes, no more and no less. So that’s the first issue with the reassessment.”
The second issue is the cap on taxes for boroughs, townships and counties.
Stonehill said, “They put a cap on us, which is understandable, and it’s very common, but the cap for example, there’s a cap on school districts, but the cap on school districts is articulated in a percent. So they can only do so much of a tax increase for so many purposes at a certain percentage. The cap for boroughs, townships and the county itself is articulated not in a percent but in a mil.”
A mil is determined on the basis of the assessed valuation of real estate.
Stonehill said, “So the more out of whack your assessed value is, the more out of whack your cap is in terms of trying to fund things. So obviously you still want the taxes to be fair, but you also want to be able to fund essential municipal services like police, fire and EMS. In Chambersburg our council for a generation has only raised taxes, the regular real estate tax to pay for police, fire and ambulance. That’s where they believe that real estate tax should be going and I’m sure that that’s true in many other municipalities.”
One of the major departments that can take a hit if taxes aren’t fairly evaluated, is the police department.
Chambersburg Police Chief Ron Camacho said, “Our whole thing is looking forward, and being able to plan strategically and project where we want to be. This community is growing. This community is robust. The level of service we give the Borough of Chambersburg citizens is very, very high. I don’t want to take steps back. I don’t want to be in a situation where there’s police layoffs, we can’t use or can’t buy technology in order to keep up with this high level of service that we’re used to doing. I’m very proud of what we’ve done here. I’m very proud of our relationship with the citizens here. I’m very proud of what we do for those outside of Chambersburg and how we can help and how we do help. So when I look at this, I don’t want to be a chief of someplace that’s going to start taking steps back because this issue has not been dealt with. Maybe I was out of place to be so vocal about it, but I’m protective of the citizens of Chambersburg and I’m protective of my officers. We’ve reached a very high level. I don’t want to take steps back. I’ve been in organizations where that has happened. I’ve seen with my own eyes and experience what happens when you start laying off police officers and you can’t give that level of service. Then maybe you get those officers back in a couple of years and you go to that same level, but you have taken some steps back and it’s very, very hard to climb out of that hole.”
How close is Chambersburg to the cap and are there real fears that some services may be unable to be delivered?
Chief Camacho said, “Right now we’re at 25 of that millage. That is capped at 30. Every year you have costs that go up. We haven’t grown as a police department. We’re at 35 officers. We’ve grown one officer in the last 10, 15, maybe even 20 years. We’ve only grown by one officer, but yet this committee is vibrant. It continues to grow. I’m seeing those demands. I’m seeing the call volumes jump up. I say all the time, the only thing I get beat up on is traffic. I’ve come up with many strategies to try to deal with the traffic issue. Eventually, in a couple of years, we’re really going to have to look at whether we need more people. We need more officers to be able to respond to the requests of the citizens, which is hey, get on top of this traffic. So we’re being proactive here. We’re at 25 out of the 30. We should not be having this conversation when we’re at 30. We should not be having this conversation when my budget is so tight that I can’t do the things that I’m doing that are successful that lead to success and lend to the service that we give to the citizens of Chambersburg. If the services start going down, and Chambersburg starts getting equated with crime and being unsafe, what’s going to happen to those municipalities that surround us? Do they think that’s not going to affect them? It does. We have a really good thing here. I’m very, very proud of this community. I’m very, very proud of this department. All we’re saying is let’s get ahead of this problem before we get into some deep dark hole that we cannot climb out of.”
If the cap is reached, what would it look like?
Chief Camacho said, “It could be that we don’t hire, maybe it’s not as bad as layoffs. But when I have an opening and we’re a young department, there are at least eight retirements within the next five years. So let’s say that we don’t have the money, we can’t raise taxes anymore for police services. So this is the budget you have. So now we’re not replacing officers that have retired. We’re not allowed to purchase vehicles that we might need. We’re very heavy on technology, which has been incredibly successful for us. Many different things that are there, but yet the call volume is still going up because Chambersburg is growing. So now I have three guys on the street answering 20,000 calls a year instead of the six or seven that I should. So that’s what it looks like not being able to give those good services, not being able to solve the crime that we need, not being able to prevent, not being able to engage with the community, which has been so successful and it’s really helped us gain the support of the community. It just hits on many different levels, and it scares the hell out of me. So we’re being proactive in looking at this. We understand that reassessment will take probably a year or two to complete and by that time we should be good to go and ready to start looking at the future of the department.”
Could this whole thing wind up in litigation?
Stonehill said, “I can’t tell you that I have any personal knowledge of that at this point. I’m not directly involved in the coordination between the municipalities, it’s the elected officials. So I don’t know what will happen. I stand by to try to help my Borough Council and navigate the fact issue. And I’ll leave that decision up to those folks.”
Could other school districts or townships join in the coalition to send a letter to the commissioners?
Stonehill said, “A letter has been transmitted from the borough of Chambersburg, a letter has been transmitted from Waynesboro Borough Council to the county commissioners. I understand that there has been communication from Shippensburg Borough Council, and I know that Allen (Coffman, Chambersburg Borough Council President) has had discussions with Greencastle and he’s looking forward to having face to face discussions with Mont Alto Borough and Mercersburg Borough. I don’t know in the end how large the coalition may or may not get, but I know that Alan is busy trying to communicate with his peers across the county and have discussions about the pros and cons of trying to get this reassessment done.”
What’s the opposing position? Should it never happen?
Stonehill said, “I don’t think that it’s practical. I mean, as you look at the counties across Pennsylvania, everybody has done it. Everybody who hasn’t done it will do it. It’s a requirement of county law. So I think it’s really just about how you do it, when you do it and how you undertake the process. I do admit I’m not an expert on the process. My understanding from talking to people across the state is that very often it requires hiring an expert firm who specializes in real estate and reassessment. They come in and they do some kind of scientific study. That study takes time and has a lot to do with types of property and the uses on that property. The current valuation method doesn’t have a category for warehouses and distribution centers because in 1962, they really didn’t exist in our world. Well, now they’re all over Franklin County. So that’s a category of use, which maybe isn’t properly reflected in valuation. So these are the kinds of things that you have to bring in real estate experts to examine and come up with a logical, rational system, which should be completely transparent. There should be town hall meetings and discussions. Then once the new valuations are released, I know the law requires a period of time where people can then appeal or challenge their valuations which are proper. Even regularly, taxpayers have the right to challenge their assessed valuation. But when there’s a reassessment, obviously, there’s going to be a very large number of appeals that happen in a very short period of time. That’s part of the cost of the reassessment process is the county and the county’s experts on real estate are going to have to somewhat defend the valuations that they come up with, but that’s good and that’s healthy and that gets you to a tax rolls, which we know will then be fair and correct at least at that period of time, snapshot in time. I’m sure our tax rolls were quite accurate in 1962 as well, but you have to start from somewhere and that’s why you have to regularly update the reassessment.”
When it comes to appealing a reassessment, there is a three member panel that will hear the appeals — it’s not the county commissioners.
If a property owner doesn’t like the panel’s decisions, he or she can appeal it further into the court.
Jansen added, “I think there’s a psychological side to this whole thing and there’s an education side to this thing and I believe that’s what you guys are definitely trying to address here. I mean psychologically people associate this with increased taxes, they just do and and that’s some of the messages that they’ll hear and they’ll be fearful, especially people who’ve been in their homes for a long time, who haven’t had a reason to get reassessed. That’s understandable. At the same time, that’s why you’re saying, let’s start this process, because we want people to understand, we want people to have the time. Maybe you’ve been in a house for a long time. You have to then think well, I’ve kind of gotten a break over these years and I want to start preparing for that and give people time for this idea that they will probably have some higher taxes, but we don’t know for sure until it’s done.”
Stonehill said, “I think that’s an important point. I think there’s an assumption that people make that if I’ve owned my property for many, many years, and I’m going to go through this reassessment process, then I am going to be the one who ends up paying more in taxes at the end. I would just caution people not to rush to that. Conclusion. The reassessment process, if it’s done correctly, if the county engages with a firm that understands how to do this and has experience in Pennsylvania, what their goal will be is a fair assessment, not a higher assessment, but the right assessment for your property. In the end that might not mean a tax increase, even if your assessment goes from a very low 1962 number to a current year, that doesn’t mean you’re necessarily going to pay more in taxes. I would not jump to that conclusion. I would wait and let the process play itself out. What we have here in Franklin County because it’s changed so much since 1962, we have a lot of properties, which weren’t even in existence in 1962. It’s quite likely that many of them are either paying too much or too little and the goal of the process is that everybody wants to pay their fair share. I am proud that most taxpayers and like I said nobody likes to pay taxes, but most taxpayers are willing to contribute taxes to essential municipal services like the police department, as long as they know that they’re paying what is fair for them to pay. Most people don’t want to pay too little and they don’t want to pay too much. They just want to pay the right amount for them. The goal of a good reassessment process is to figure out with every piece of real estate in the county, what their fair share should be.”
The ratio of 11.63, if the reassessment is done correctly, should drop to one.
Stonehill noted, “So the fair market value, what your property is worth and the percentage of taxes you pay should have a one to one relationship. Everybody sort of has an idea what their property is worth. If it’s not exactly what they thought it was worth, they have this appeal process that you’re absolutely allowed to challenge whatever the expert says, your home or business is worth. And that’s part of this process. They actually have to make as part of this a system to make it easy and accessible for everybody to question whether or not their assessments are right or not. That’s terrific. That’s part of the process.”
Part of the reason the discussion needs to happen now is because planning for municipal departments often happens years in advance.
Chief Camacho said, “While somebody might say, you still have this cap room. I don’t want to wait until the last minute. We shouldn’t be waiting till we’re at 29. Why do that? We wouldn’t do that. That’s not smart thinking. We need to be forward looking, proactive, having these discussions, and having this education put out there. I’ve even gone and taught my officers. I don’t want my officers, they’re on the street, they’re interacting with a citizen and then they start getting beat up. My taxes are going to go up because of you. So they’ve been educated in order to kind of allay the fears. One thing I would say about that is, we’re talking 1962 and many iterations of different county commissioners that have gone through there, change is difficult and you have to manage change in order for you to be effective and I think that’s what we’re doing here. We’re talking, educating, we’re not bullies, we’re not pushing anybody over. We’re just having this conversation and just being honest, and truthful and saying, this is what this will look like. Yes in two years we’ll be maxed out and then in three, maybe some of these some of the services are getting cut. I can definitely tell you that in five years, this department would look very, very different and the level of service would look very, very different if this is not addressed.”
What percentage of the overall budget in the Borough of Chambersburg is coming from property taxes?
Stonehill said, “In the General Fund, which is our general governmental fund where both police, fire and EMS have their expenses, the number one revenue source beyond doubt is the real estate tax. It’s unfortunate because none of us love the real estate tax, but the state of Pennsylvania only gives municipalities like Chambersburg the real estate tax as its only tool to adjust on an annual basis to try to close budget gaps. In other states, there are other laws about different types of taxes. Pennsylvania does not have that variety of tax revenue. We’re very limited on the local level to the real estate tax. We don’t get any share of the sales tax whatsoever here in our local municipalities. Chambersburg has done a terrific job of development. You look at the Norland Avenue section of the borough, lots of great sales tax revenue has been generated by that development. It all goes to the state of Pennsylvania, none of it goes to the local municipality. We don’t get liquor taxes. We have the earned income tax, which has not changed its rate since 1965. We have the local services tax, which hasn’t changed since 2004. The one tax that we can adjust on an annual basis is the real estate tax. And because that’s the only tool in our toolbox, we want to make sure that it’s fair and it’s accurate for all the taxpayers in the borough.”
Does the borough have any debt service from municipal bonds? If so, how does that play into this reassessment discussion?
Stonehill explained, “Chambersburg does have municipal debt. We floated a bond for example, to build the new police station on South Second Street and that has its own real estate tax levy separate from the tax that pays for the operation of the police department and the fire department. Those taxes are not capped. If the borough wanted to borrow X number of dollars to build something they could levy a dedicated tax for that bond, it would only be for that bond and that would not be subject to the 30 mil real estate tax. So that has not held up the council from being able to make capital investments and that’s one of the ways they were able to get a new police station, that in a very significant grant from the state of Pennsylvania. I think the Chief’s concern about the police department and then my concern about the fire department and the ambulance service are all related to the ability to have a fair tax system in Chambersburg Borough.”
Jansen said, “I think understanding what these taxes pay for is really important and I’m so glad that we’re talking about that and understanding all the different things that can be affected. The more of our population we can educate about this and all the important services there are I think that’s how we can really get people on board with this.”
What about the cost to the county?
Jansen said, “We were told a little while ago that the money coming from COVID, that ended up making them have an extra, they thought maybe we actually finally have the money to do the assessment. I don’t know where that’s happened. Perhaps we have to have some of the commissioners in here to talk about that. Then also the cost of saying wait I don’t agree with this and I want to challenge it. What are those costs?”
Barkdoll said, “On the appeal itself, there are no fees. There’s no filing fees to the county and technically someone does not need an attorney. A property owner can fill out that appeal form. They can go into that panel and represent themselves. Now the county does pay those people on that panel. They do get a nominal fee for hearing the appeals but the cost would be pretty minimal in that regard to the county.”
Some people have suggested a reassessment could cost the county up to $5 million.
Stonehill said, “I’m not entirely clear how the county would work that into their budget. But I believe that whatever that number is, and I don’t know if that number is accurate or not. That number, whatever the amount of the cost is, is really to pay for the consulting firm that has to come in, the Real Estate Assessment consulting firm that has to come in and look at all the thousands of properties and come up with a logical system and then also present new valuations and then also defend those when people file their appeal. So that’s why it’s an expensive process. I am sure that the county can release a request for proposals. I am sure there are multiple firms both in Pennsylvania and the region that do this work. I know that when we talked to Indiana County, they gave us the name of their firm that did it for the county out there. I’m sure it would be very simple to compare notes with the dozens of other Pennsylvania counties that have undertaken this work and get a much better sense on what it would cost and who might accomplish this work. This is not the kind of thing that can be done by existing talent that work in the county. It’s a specialty project. It’s a once and done, somebody has to do it and there are firms that do this work. I’m sure a variety of proposals can be obtained with different prices and that’s the kind of thing that perhaps the county officials can undertake in the near term to try to get ready for the process.”
Another argument has been that an army of people will be needed to walk all the properties.
Barkdoll said, “Franklin County has moved to a very sophisticated GIS mapping system, uniform parcel identifier system. So my understanding, this third party vendor that does this, they are doing this with existing data and technology. They’re not sending assessors out into the field to look at anyone’s property again.”
Stonehill agreed, “That’s my understanding as well. I’m not really an estimate field. But you are correct that the county has excellent data on all of the real estate properties. And by the way, it’s all free and available online. If you’d like to Google things, you can go and see all the properties. You could see all the information about all the properties in the county and you could see their current assessed valuations online. My understanding is the consulting firm that is retained by the county would start with the existing data to do their analysis of what things should be assessed at.”
Could there be some collateral revenue benefits to a reassessment?
Barkdoll said, “I’m specifically thinking of enhanced transfer taxes that would be coming in when there’s family transfers for below market value, they still have to pay a transfer tax based on assessment, and the borough gets a piece of that.”
Stonehill said, “I’m not entirely sure, but that certainly isn’t a motivating factor in this process. I mean, I think we’ve been really clear about the concern that there’s going to be the ability to taxes, right now, boroughs, townships, school districts, they all have both the right and the responsibility to raise taxes if necessary to pay for municipal services. This project doesn’t give them any additional rights. What it does is ensure the fair and equitable distribution of that burden so that everybody can be confident that whatever their tax burden is, that it’s the right size for their property. I think that’s so important. People are concerned, businesses are concerned and homeowners are concerned that their tax bills aren’t accurate and nobody wants to have inaccurate tax bills. That can’t be a good system for Franklin County.”
“I hear it all the time,” Barkdoll confirmed.
Jansen said, “I think we’ll invite the commissioners to come in and to add their side of this issue and we’re going to have to find out what are the trade offs and how best we should be handling this for all of us to get where we need to be.”