Board reduces assessed value of rental homes
The Fayette County Assessment Appeals Board voted unanimously Friday to reduce the assessed value of 30 income-restricted, single-family rental homes built in Uniontown last year to $75,000 each. Board members approved the reassessment, saying they considered testimony and information from a hearing into the developer’s appeal that was held in May and continued in June.
The $75,000 assessments are about 20 percent less than the homes’ original assessed values of $90,000 to $97,000, but more than the $36,000-a-home assessment requested by the developer, Uniontown Family Homes.
The assessed value means that the developer would pay about $1,040 in real estate taxes to the Uniontown Area School District, $990 to the city and $263 to the county for each home, chief assessor James Hercik estimated after the board voted.
Uniontown Family Homes is a partnership of the Community Action Agency of Fayette County and PIRHL Developers of Cleveland Ohio.
Using tax-credit financing from the Pennsylvania Housing Finance Agency (PHFA), a state grant obtained by the Uniontown Redevelopment Authority and other public and private funding sources, Uniontown Family Homes built 13 houses on scattered lots in the N. Gallatin Avenue, East End and Lafayette neighborhoods and 17 homes in a subdivision off of Bailey Avenue.
The homes have two to four bedrooms and most are two stories, but some are one-story.
They were originally assessed at their market values, but Uniontown Family Homes argued that the income approach should have been used in setting the assessed values because the PHFA financing makes the homes available only to low- and moderate-income residents and limits the rent they pay.
Rents range from about $300 to $735 based on the size of the home and the tenant’s income.
Those restrictions last for 15 years. If tenants stay in their homes for 15 years, they are given the chance to buy the homes for the balance of the construction debt.
The developer contended that the income from rent is not enough to pay real estate taxes that are based on market assessment values and the income-based approach is the proper way to assess houses with PHFA restrictions.
Board Chairman Lloyd Moser said state law and court precedents require using the income approach when assessing the value of residential property with income restrictions.
He said such properties are legally “shielded” from market value assessments.
“They’re guaranteed a reduction,” Moser said.
Board member Dee John said the homes are nice and cost about $150,000 to build.
Uniontown Councilman Gary Gearing asked what formula the board used to arrive at the $75,000 figure.
Hercik said the amount was the board’s opinion on the homes’ value.
He said state law treats residential property with long-term restrictions differently that other properties.
The developer, school district, city or county could appeal the board’s decision to Common Pleas Court within 30 days, Hercik said.
Gearing said a formula should have been used to determine the assessment value so it could be used in other cases and so the assessment could stand up in court if it is appealed.
The developer initially wanted each home assessed at $13,000, but later raised the requested amount to $36,000.
“We feel we gave them a break,” board member John Rogish said, adding that $75,000 is at least 20 percent less than the market value assessment.
Hercik said many other properties with PHFA restrictions in the city have been assessed using the income approach. He cited senior citizen apartment buildings The Heritage and Beeson Court as examples.
He has said that during the planning stages of the development, there was an understanding that the homes would be assessed using the income approach. However, the field assessor was not aware of it and used the market value approach. Hercik said he didn’t notice the error until after the assessment had been filed.