Want to lower your Allegheny County property taxes? Make them an offer they can’t refuse!
Special guest Ron Myers a/k/a The Godfather of Tax Appeals, began started handling tax appeals in 1997 as a non-lawyer and brings a completely different approach to understanding and winning tax appeal cases.
Everyone wants to lower their property taxes, but exactly what you need to do is not as obvious as you would think.
In this episode, Noah and Bill (with guidance from the Godfather) offer clever hints and secret tips for property owners that have been used for years to lower property taxes, even in some cases, when they should not have been lowered.
Finally in this episode is a discussion that may sound boring, but might be one the greatest tricks to lower property taxes ever, a/k/a the common level ratio (CLR).
Few property owners may understand it, but once they do, they will have the key weapon to actually seeing property tax relief.
Don’t pay more than your fair share of property taxes. Listen to some of these secrets from the pros, and save money…and live happy!
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We want to hear from you, our listeners.
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You can email us your questions, comments, and suggestions for future episodes at iObject
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at pghfirm.com.
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Or DM us on Instagram and Facebook.
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Follow us at Flaherty Fardo on Instagram or Flaherty Fardo Rogel and Amick on Facebook.
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Please rise.
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Court is now in session.
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All rise.
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All rise.
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I strenuously object.
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All those seeking information about the law and legal matters affecting the people of
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Pittsburgh and the Commonwealth of Pennsylvania, half-baked opinions, and a dose of self-indulgence
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are invited to attend and participate.
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I want the truth!
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You can't handle the truth!
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I object, Your Honor.
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Your Honor, I object.
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You would!
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Listen, we don't know you.
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We don't know who you are.
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We don't know what you do.
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So please do not rely on anything we say as legal advice.
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I'm Noah Fardo, presiding, my wingman, Attorney Bill Rogel.
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And all we're trying to do is bring a little irreverence.
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That's just what this stuffy company needs!
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A little irreverence!
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Well let's start the insanity.
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Call the first witness.
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Good morning, Bill.
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Hello!
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Hello!
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How are you today?
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Oh, I'm doing great.
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How are you today, Noah?
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I'm fine.
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Just as long as you don't ever do that voice again.
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Never?
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Never.
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I too am well.
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Do you recognize it?
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I do.
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I do.
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Okay.
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We're two Seinfelds deep in our first 30 seconds here.
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Hi, how are you?
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Hi, how are you?
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I'm great.
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I too am well.
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I too am well.
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Excellent.
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Pretty good.
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Excellent.
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Well, I'm excited to be here today because we have the Godfather.
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We have the Godfather of tax appeals.
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And you know what?
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He wasn't easy to book.
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I don't know if he's going to have a handler or not, but he's going to talk about tax appeals
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and what we've talked about already.
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It's a broken system.
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These homeowners are getting appealed and we help them defend these appeals by being
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smart on how they defend the appeals.
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So what I want our guest today, Ron Myers, to talk about is a little bit more deep.
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We're going to talk about the common level ratio.
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And usually I won't stop in a podcast, but common level ratio may have killed it.
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What do you think?
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I would not say that people have been knocking down the doors as that were to hear us discuss
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math, but we're going to talk about the common level ratio with the Godfather.
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If that doesn't get you excited, I don't know what does.
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More importantly, I'll judge these things after the fact and not before I reserve the
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right to say I told you so or to be proven wrong.
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Well, look, we get to get up this morning and we get to say the words, Vordaer.
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Do you know what a Vordaer is, Bill?
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I pronounce that way.
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It's a thing that happens in my cousin Vinnie.
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Now, if Mr. Trotter wishes to Vordaer to witness, he's going to be more than satisfied.
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We're going to Vordaer the witness.
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Well, look, here's what I want to do.
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I'm bringing on a guest today, an old friend of mine, Ron Myers.
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I look at Ron as literally one of the smartest people I know.
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But what he did with tax appeals is he's not a lawyer, and yet he has saved property owners,
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according to his records, over a hundred million dollars in property taxes.
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This is a non-lawyer saving hundreds of millions of dollars.
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You may have to correct me later.
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That might be hundreds of millions reduced assessments, but he saved people tens of millions
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of dollars in actual property taxes.
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And he has a great and unique perspective on property tax appeals.
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You ready, counselor?
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I'm ready.
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Hey, let me welcome Ronny Myers.
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Ronny, are you with us?
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Good morning, gents.
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I am.
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Do you have a handler with you?
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Is there somebody who's going to cut us off if we ask an inappropriate question?
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There is no handler.
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It's me in the open road.
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All right, Ronny, I'm calling you the godfather of tax appeals.
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Do you like that title or not?
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I kind of strangely object to it, really.
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Well, okay.
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I don't think it's fitting, but at any rate.
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All right.
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I used to do tax appeals 20 years ago.
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And do you think you have anything to offer?
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I mean, should people be listening to you today?
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Is there any reason to listen to you?
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Sure.
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Yeah.
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I represented hundreds of property owners.
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I probably saved property owners over $100 million in property taxes.
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Okay.
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Bill, you may vore dire the witness.
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Mr. Myers, can you explain to me what exactly it is that has qualified you to represent
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property owners in property tax appeals in Allegheny County?
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That is a great question.
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I would like to answer it.
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Nothing.
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This is like Seinfeld.
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Does he get a point for that?
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This is a show about nothing.
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Yeah, it is.
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So here's the thing.
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And I don't know what the law states today.
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Again, I've been removed for 20 years, but there was a statute that said a property owner
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may allow, I guess it was, an authorized representative and or counsel to represent them in these
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property tax appeals.
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I took that to mean me.
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I'm an authorized representative.
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That's it.
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Did he ever challenge you on that?
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Yes.
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Yep.
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There was a lawsuit filed.
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They actually sued the county.
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We filed an amicus brief and I think there was an enjoinder.
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So we joined the lawsuit to fight it and we won.
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So this wasn't originally your lawsuit?
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No, no.
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Attorneys.
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There was a group of attorneys that sued the county, the par board over this.
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We just jumped in to help defend it.
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So one of the reasons...
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My small firm and another small firm, there was a group of real estate appraisers.
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And again, their thought process was, hey, we know how to value real estate.
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Why would an attorney have to value real estate?
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I think they were right.
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So listen, Bill, one of the reasons why I wanted to have Ronnie on today was because
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there's a lot of property owners who want to try these tax appeals by themselves or
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hire a representative that's not a lawyer.
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So there's a lot of non-lawyers getting in at the first level.
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And I thought it would be interesting to hear how a non-lawyer did do this.
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I mean, Ronnie, tell us how you got started.
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What year did you get started in tax appeals?
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Did I kill your board dire?
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You did, but you're good.
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Well, do we need more on that?
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Well, yeah.
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So in traditional tendering of an expert rules, an expert can prove himself qualified by training
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or by experience.
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So while there may be nothing that qualifies you, Mr. Myers, by virtue of your training,
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it sounds that you probably have become qualified by experience, even if the very first time
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you did one, you weren't.
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Absolutely.
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So in terms of education, I have an accounting degree from the University of Pittsburgh.
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And I did at the time, I was a licensed real estate agent.
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And again, I did that just to have some certification to prove my standing just in case as a backup.
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But I always felt straight up a property owner can hire whomever they want to represent them.
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They can hire a circus clown.
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It's their decision.
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So I always had an agreement written to say, I am the authorized representative.
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And if anyone ever asked me in an appeal hearing, I would present that and say, here, this owner
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would like me to be here as their representative.
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I'm authorized.
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Open and shut for me.
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Now, as a non-attorney, were you able to represent property owners at the second level at BOV
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appeals or only in front of the Board of Property Assessment, Appeals and Review?
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Only in the par board.
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Yep.
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So we would hire an attorney to hold our hand at the next level.
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Which now, all of these cases are going two levels.
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What happens if somebody hires a non-lawyer at the first level and it gets appealed to
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the board of viewers, which everything is getting appealed to the board of viewers now?
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You got a lawyer up.
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You hired a lawyer in every single case.
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Yes.
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How did you get involved in tax appeals, Ronnie?
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I mean, what brought you to the business and when?
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So it was 1998.
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I was finishing up my undergrad degree at Pitt and I was working for a small company.
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They owned a lot of owned and operated parking facilities, garages, parking lots, but they
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also had a lot of just commercial property, a lot of residential units and we could never
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quite figure out our tax bills.
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Taxes would start rolling in, the block, the lock system was just, it was a mess.
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Sometimes you would have an eight unit apartment building and it might have six block and lots
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tied to it.
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At any rate, we went to the county assessment office and just asking for help and there
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was one property in particular that didn't make sense to us.
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We owned a vacant plot of land near the Birmingham Bridge and next to it was the same size vacant
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plot of land, yet it had a billboard.
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It was an income generating property and their tax bill was like 500 bucks a year and ours
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was 5,000 or something like that.
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It was starkly different and it didn't make sense.
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So we just, through our inquiries, we were told to file an appeal and once we did that
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and lowered our taxes, a light bulb went off.
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Like hey, A, we have to do this for all of our properties and B, people started asking
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us to help them with theirs.
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So we just started filing appeals, simple as that.
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So you had a company back then, I mean that's how we met Ronnie, 20 some years ago.
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Pay less tax.
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You started a company.
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Whose idea was it to call it pay less tax?
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It was actually the founder, Alan Gawker.
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He came up with the idea to start a company.
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I did most of the legwork.
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We did a lot of research together and the research was primarily based on the uniformity
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of assessment.
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We just kind of focused on a neighborhood and just looked for the inequities.
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And again, in a hearing to me that I really, really hung my hat on the inequity, the uniformity
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of assessment, not the sale price or just fair market value.
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We would prove in a case that if my assessment is higher than someone else's, we need to
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be lowered.
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I don't care what things are selling for next to me.
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It doesn't matter.
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It's a tax issue.
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Now was this before or after the O2 reassessment?
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Before.
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So we started in 98 and that kind of, that whole reval just fell in our laps.
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And that was one of the greatest things that ever happened to us, to be honest with you.
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That was just the great reshuffling of mayhem.
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I remember you telling me a story running about calling people, just calling them on
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the phone.
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Didn't you use to cold call businesses up and down Fifth Avenue in Pittsburgh trying
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to lower their property taxes?
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We probably did 150 appeals on Fifth Avenue alone in that area from downtown all the way
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out to the Birmingham Bridge.
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And that was a very interesting part of the market because each block got either increased
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or decreased in value depending on which direction you were going.
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And you can't broad stroke any kind of value.
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You can't just say, oh, everything down there is worth 150 bucks a foot because you might
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start at $150 a foot.
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And as you get eight blocks down, it's $8 a foot.
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And so it was really unfair to the county to try to attempt to value 600,000 properties
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with a broad stroke on January 1st.
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Here's value for everything.
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You can't do it.
246
00:13:12,960 --> 00:13:13,960
It's an impossibility.
247
00:13:13,960 --> 00:13:17,160
It's a flawed system just on the face of it.
248
00:13:17,160 --> 00:13:20,280
Well, it's created a lot of jobs for everyone too.
249
00:13:20,280 --> 00:13:24,480
Well, there's a lot of commercial properties in that stretch, right?
250
00:13:24,480 --> 00:13:29,040
I mean, what were you doing for valuation methods?
251
00:13:29,040 --> 00:13:33,360
Were you just showing the other assessments of other businesses?
252
00:13:33,360 --> 00:13:37,440
Were you attempting to assess the profitability of these businesses?
253
00:13:37,440 --> 00:13:38,440
All of it, yes.
254
00:13:38,440 --> 00:13:45,960
So we started back then, the way we did our research to solicit our customers was just
255
00:13:45,960 --> 00:13:47,480
uniformity.
256
00:13:47,480 --> 00:13:49,840
So we just gathered that data from the county.
257
00:13:49,840 --> 00:13:51,520
We gathered their maps.
258
00:13:51,520 --> 00:13:56,840
And back then, if they print off literally boxes of papers for us to pour through, and
259
00:13:56,840 --> 00:13:59,600
we color coded it.
260
00:13:59,600 --> 00:14:03,680
It sounds archaic and kind of childish, but that's what we did.
261
00:14:03,680 --> 00:14:07,680
We literally just color coded things.
262
00:14:07,680 --> 00:14:14,760
And then, Bill, we got into the income approach to value and obviously sales.
263
00:14:14,760 --> 00:14:19,480
But on the commercial side of things, to me, income dominates, right?
264
00:14:19,480 --> 00:14:27,800
If you could prove this building can generate X, and this one cannot, obviously the one
265
00:14:27,800 --> 00:14:31,000
that's making money is worth more, right?
266
00:14:31,000 --> 00:14:33,200
So we just started gathering data.
267
00:14:33,200 --> 00:14:38,240
And then over the years, you just become more and more in tune, especially when you're working
268
00:14:38,240 --> 00:14:40,480
in a small geography.
269
00:14:40,480 --> 00:14:46,600
Touch base, let's follow up on that, Ronnie, on the commercial properties.
270
00:14:46,600 --> 00:14:51,440
And we talked at a separate time about the different ways you can value property.
271
00:14:51,440 --> 00:14:52,640
You look at fair market value.
272
00:14:52,640 --> 00:14:54,760
You can look at comparable sales.
273
00:14:54,760 --> 00:14:58,580
And you can look at comparable sales with commercial properties, but finding comparable
274
00:14:58,580 --> 00:15:03,960
hotels in the same vicinity or car washes in the same vicinity is difficult.
275
00:15:03,960 --> 00:15:07,360
So the income approach, let's say I own a commercial property.
276
00:15:07,360 --> 00:15:11,800
I bring in $10,000 a month.
277
00:15:11,800 --> 00:15:13,020
How do you break down?
278
00:15:13,020 --> 00:15:14,020
What would you look at?
279
00:15:14,020 --> 00:15:17,840
If you're paying to somebody who has a commercial property and their income has dropped because
280
00:15:17,840 --> 00:15:21,320
of the pandemic or otherwise, they're missing tenants.
281
00:15:21,320 --> 00:15:24,240
I think that's what a lot of the commercial appeals are now.
282
00:15:24,240 --> 00:15:30,440
How do you run through, how do you tell them how to value their commercial property based
283
00:15:30,440 --> 00:15:32,320
on rent?
284
00:15:32,320 --> 00:15:38,380
So basically you have your income and then you have all your related expenses, right?
285
00:15:38,380 --> 00:15:41,660
And then you have a net income at the end of the day.
286
00:15:41,660 --> 00:15:46,560
And now you're really taxing my memory.
287
00:15:46,560 --> 00:15:51,520
But at the time, I remember as a general rule of thumb, it was like something like seven
288
00:15:51,520 --> 00:15:56,920
times the net was a good indicator of what you could sell that property for.
289
00:15:56,920 --> 00:15:59,920
So to give you an idea of fair market value.
290
00:15:59,920 --> 00:16:08,440
But you could really dive into it deeper than that and start applying a cap rate.
291
00:16:08,440 --> 00:16:15,760
So you get your net income and the cap rate is made up of what interest would be in the
292
00:16:15,760 --> 00:16:16,760
market, right?
293
00:16:16,760 --> 00:16:26,580
What would the current commercial mortgage rates, but it also be loaded for taxes and
294
00:16:26,580 --> 00:16:28,000
other types of expenses.
295
00:16:28,000 --> 00:16:34,020
So you could apply a loaded cap rates and it would spit out a value.
296
00:16:34,020 --> 00:16:37,800
And if that didn't work, then you would visit them a second time, only this time with Luca
297
00:16:37,800 --> 00:16:38,800
Brazi.
298
00:16:38,800 --> 00:16:43,840
He's not on the list, but Luca Brazi wants to see.
299
00:16:43,840 --> 00:16:45,560
Is this necessary?
300
00:16:45,560 --> 00:16:50,120
So the cap rate, what I always did to Ronnie on commercial appeals is you put as many expenses
301
00:16:50,120 --> 00:16:54,040
as you can, you own a commercial property, put as many expenses as you can, you get your
302
00:16:54,040 --> 00:16:55,080
net revenue.
303
00:16:55,080 --> 00:16:59,120
Now we're going to multiply times this cap capitalization rate and the higher the cap
304
00:16:59,120 --> 00:17:02,560
rate, the lower you end up with a number.
305
00:17:02,560 --> 00:17:07,780
So what you try to do is you raise the cap rate and the cap rates always higher for lower
306
00:17:07,780 --> 00:17:08,780
valued areas.
307
00:17:08,780 --> 00:17:09,780
Would you agree?
308
00:17:09,780 --> 00:17:10,780
Is that fair?
309
00:17:10,780 --> 00:17:11,780
Oh, absolutely.
310
00:17:11,780 --> 00:17:12,780
Absolutely.
311
00:17:12,780 --> 00:17:18,000
And it's another variable to play with to affect value.
312
00:17:18,000 --> 00:17:19,000
Yeah.
313
00:17:19,000 --> 00:17:22,560
And I always felt like a lot of the hearing officers or at least some of them, I mean,
314
00:17:22,560 --> 00:17:24,560
they were in the dark on this too, right?
315
00:17:24,560 --> 00:17:26,700
They're not really going to break down these expenses.
316
00:17:26,700 --> 00:17:28,040
They don't know what the cap rate is.
317
00:17:28,040 --> 00:17:33,520
So there's so much subjectivity to it that, I mean, it's a great system.
318
00:17:33,520 --> 00:17:37,920
The appeals is set up where you almost always have a case.
319
00:17:37,920 --> 00:17:38,920
Yes.
320
00:17:38,920 --> 00:17:39,920
Very few cases.
321
00:17:39,920 --> 00:17:46,040
And you talked about uniformity, Bill, let's go back to uniformity for a second.
322
00:17:46,040 --> 00:17:52,560
Because legally the law is the assessments, whatever they're taxing you at has to be uniform
323
00:17:52,560 --> 00:17:53,560
or fair.
324
00:17:53,560 --> 00:17:56,200
Is that how you interpret it?
325
00:17:56,200 --> 00:18:02,680
Well, I mean, those are the literal words in the state constitution about taxation,
326
00:18:02,680 --> 00:18:04,520
that it has to be uniform.
327
00:18:04,520 --> 00:18:11,360
But if you look at a sale price and because the inconsistency here is, and Ronnie, help
328
00:18:11,360 --> 00:18:12,360
me with this.
329
00:18:12,360 --> 00:18:18,200
The inconsistency is everything needs to be uniform, but at the same time, we're determining
330
00:18:18,200 --> 00:18:20,640
fair market value.
331
00:18:20,640 --> 00:18:27,240
And if something sells, if you have a sale price, isn't that the fair market value, Ronnie?
332
00:18:27,240 --> 00:18:29,320
No, not a single sale.
333
00:18:29,320 --> 00:18:30,880
Fair market value.
334
00:18:30,880 --> 00:18:35,400
Inherently in the term, you have to have a market and one transaction doesn't make a
335
00:18:35,400 --> 00:18:36,720
market.
336
00:18:36,720 --> 00:18:42,240
You need multiple transactions just to get to the market.
337
00:18:42,240 --> 00:18:46,740
And then you have, and then it has to be fair in addition to that.
338
00:18:46,740 --> 00:18:48,420
And then you can have your value.
339
00:18:48,420 --> 00:18:54,280
People overpay or underpay sale prices all the time.
340
00:18:54,280 --> 00:18:55,760
And that's the goal when you get appealed.
341
00:18:55,760 --> 00:18:57,480
You need to prove you overpaid.
342
00:18:57,480 --> 00:18:58,480
Here's why.
343
00:18:58,480 --> 00:18:59,480
Correct.
344
00:18:59,480 --> 00:19:00,480
Yep.
345
00:19:00,480 --> 00:19:06,200
And I would say, you know, again, there's a lot of subjectivity.
346
00:19:06,200 --> 00:19:09,200
It depends on the hearing officer.
347
00:19:09,200 --> 00:19:14,240
Some of them will only listen to a sale price and are very, very focused on fair market
348
00:19:14,240 --> 00:19:15,240
value.
349
00:19:15,240 --> 00:19:24,400
You're going to, I always brought uniformity of assessment as a very strong argument.
350
00:19:24,400 --> 00:19:26,240
And do you mean comparing assessments?
351
00:19:26,240 --> 00:19:27,240
Absolutely.
352
00:19:27,240 --> 00:19:28,240
Absolutely.
353
00:19:28,240 --> 00:19:30,640
I can't be taxed more than my neighbor.
354
00:19:30,640 --> 00:19:31,640
It's unfair.
355
00:19:31,640 --> 00:19:33,000
It's against the law.
356
00:19:33,000 --> 00:19:40,200
So listen, I don't know how this was in the stone age back before the last reassessment.
357
00:19:40,200 --> 00:19:45,680
I feel like at this point, especially at the first level, the hearing officers simply don't
358
00:19:45,680 --> 00:19:47,920
want to hear a uniformity challenge.
359
00:19:47,920 --> 00:19:53,600
And personally, I tend to only make them when they're really, really strong.
360
00:19:53,600 --> 00:19:58,200
If we went in there in every case and argued a uniformity challenge, which you could, because
361
00:19:58,200 --> 00:20:03,500
the system is so fundamentally non-uniform, you can always find some similar properties
362
00:20:03,500 --> 00:20:07,960
that are not being taxed at the same dollar value that you are.
363
00:20:07,960 --> 00:20:14,240
But to me, uniformity challenges now are strongest in plans with very similar homes or town homes
364
00:20:14,240 --> 00:20:21,120
or condominiums, places where I've got 30 houses right here that are identical, right?
365
00:20:21,120 --> 00:20:23,960
Same square footage, basically the same layout.
366
00:20:23,960 --> 00:20:27,040
And here are all of their assessments.
367
00:20:27,040 --> 00:20:32,680
And here is my client's assessment, and it's 20% higher than theirs or 40% higher than
368
00:20:32,680 --> 00:20:33,840
theirs.
369
00:20:33,840 --> 00:20:38,160
If it's that strong, I think a uniformity challenge still works and definitely is worth
370
00:20:38,160 --> 00:20:39,960
making.
371
00:20:39,960 --> 00:20:45,000
But lack of uniformity is so baked into the system now that it's tricky.
372
00:20:45,000 --> 00:20:48,040
You can make it that argument literally every time.
373
00:20:48,040 --> 00:20:51,720
I'm not convinced you should.
374
00:20:51,720 --> 00:20:58,520
I actually love it as an argument because it's so clear and black and white versus fair
375
00:20:58,520 --> 00:21:00,800
market value.
376
00:21:00,800 --> 00:21:03,480
It is super subjective.
377
00:21:03,480 --> 00:21:08,200
And again, a lot of these property owners, they're getting appealed by a municipality
378
00:21:08,200 --> 00:21:10,480
or a school district.
379
00:21:10,480 --> 00:21:13,600
In today's day and age, it's really a school district, right?
380
00:21:13,600 --> 00:21:17,200
A lot of the municipalities aren't doing the appeals just because, right?
381
00:21:17,200 --> 00:21:18,840
There's no reason for them not to.
382
00:21:18,840 --> 00:21:21,600
They just decide it as a policy not to.
383
00:21:21,600 --> 00:21:24,200
And they let the school catch all the flak.
384
00:21:24,200 --> 00:21:25,200
Yes.
385
00:21:25,200 --> 00:21:28,720
And so that school district is in there appealing on one sale.
386
00:21:28,720 --> 00:21:30,560
Again, there's no market.
387
00:21:30,560 --> 00:21:37,040
And you as the property owner, the only guy on the block getting raised potentially.
388
00:21:37,040 --> 00:21:42,600
And again, I would argue to the end of the earth, why are you singling me out?
389
00:21:42,600 --> 00:21:50,720
I'm getting a different assessment, a different tax than anybody else on my street.
390
00:21:50,720 --> 00:21:52,320
I feel discriminated against.
391
00:21:52,320 --> 00:21:55,600
And in fact, the law doesn't allow for that.
392
00:21:55,600 --> 00:21:57,040
That's why he's called the godfather.
393
00:21:57,040 --> 00:22:02,120
See, that's why they call him the godfather.
394
00:22:02,120 --> 00:22:08,000
Well, my question is, aren't you like a kid in an elementary school class who's asking
395
00:22:08,000 --> 00:22:10,360
the teacher for homework or something at this point, right?
396
00:22:10,360 --> 00:22:14,400
You're your neighbor and you're in there telling the school and the hearing officers that they
397
00:22:14,400 --> 00:22:16,000
need to raise my taxes too.
398
00:22:16,000 --> 00:22:17,960
I'm not going to be real happy with you.
399
00:22:17,960 --> 00:22:18,960
Yeah.
400
00:22:18,960 --> 00:22:23,760
No, I'm just saying you got to lower mine or keep it the same.
401
00:22:23,760 --> 00:22:28,980
And by the way, apply the common level ratio and I'm going to get a 20% tax break because
402
00:22:28,980 --> 00:22:29,980
you appealed me.
403
00:22:29,980 --> 00:22:31,960
How do you like them apples?
404
00:22:31,960 --> 00:22:34,080
Well, let's get back to that for a second.
405
00:22:34,080 --> 00:22:38,160
But I'm reading the Post Gazette yesterday morning and there's a section on selling real
406
00:22:38,160 --> 00:22:40,160
estate and it says buying here.
407
00:22:40,160 --> 00:22:44,480
Edgeworth history in a ballroom priced at $1.3 million.
408
00:22:44,480 --> 00:22:47,000
And so this house in Edgeworth is going to sell for $1.3 million.
409
00:22:47,000 --> 00:22:50,320
And then you read the article and at the bottom of the article, it says its current assessment
410
00:22:50,320 --> 00:22:52,960
is $437,000.
411
00:22:52,960 --> 00:22:56,540
So what's going to happen is somebody is going to pay $1.3 million.
412
00:22:56,540 --> 00:22:59,120
School districts can argue that's fair market value.
413
00:22:59,120 --> 00:23:02,320
And now that person is going to pay three times as much as the rest of the houses that
414
00:23:02,320 --> 00:23:03,320
haven't sold.
415
00:23:03,320 --> 00:23:06,840
I mean, that's pretty bad.
416
00:23:06,840 --> 00:23:08,880
Let's move on.
417
00:23:08,880 --> 00:23:15,960
The common level ratio, the exciting common level ratio.
418
00:23:15,960 --> 00:23:19,560
Do either of you want to take a shot at what the common level ratio is?
419
00:23:19,560 --> 00:23:24,040
Because understanding the common level ratio, if you really get deep here, Bill, and I think
420
00:23:24,040 --> 00:23:30,280
I need to prove this one to you, means basically if the common level ratio drops like it did
421
00:23:30,280 --> 00:23:35,780
this year, every property owner in the entire county should be able to appeal and receive
422
00:23:35,780 --> 00:23:36,780
a reduction.
423
00:23:36,780 --> 00:23:40,420
Ronnie, would you agree?
424
00:23:40,420 --> 00:23:41,580
Without a doubt.
425
00:23:41,580 --> 00:23:44,440
So explain this to Bill because he's not buying this yet.
426
00:23:44,440 --> 00:23:46,880
He, yeah, explain it to him.
427
00:23:46,880 --> 00:23:50,840
Walk him through it because seriously, there should have been 500 plus thousand appeals
428
00:23:50,840 --> 00:23:56,200
this year since the ratio dropped 7% and everybody could have reduced their property taxes 7%
429
00:23:56,200 --> 00:23:57,200
in my opinion.
430
00:23:57,200 --> 00:23:58,200
Potentially.
431
00:23:58,200 --> 00:24:00,720
I mean, you used to do this, right?
432
00:24:00,720 --> 00:24:03,680
Hey, guys, I want to interrupt for a second.
433
00:24:03,680 --> 00:24:06,320
It's Mike, the podcast producer here.
434
00:24:06,320 --> 00:24:11,400
Can we take a moment and define the common level ratio for those of us who don't know?
435
00:24:11,400 --> 00:24:14,240
Can we start with a really good definition of common level ratio?
436
00:24:14,240 --> 00:24:16,960
Do you want the layman's version?
437
00:24:16,960 --> 00:24:18,200
Yes, please.
438
00:24:18,200 --> 00:24:21,440
If there are some, I mean, it depends on what you think, who you think the audience is going
439
00:24:21,440 --> 00:24:23,880
to be here, but I'm interested.
440
00:24:23,880 --> 00:24:26,960
I'm listening, but I don't know what it is to me personally.
441
00:24:26,960 --> 00:24:27,960
Okay.
442
00:24:27,960 --> 00:24:34,120
So there's a state tax equalization board, STEB, and what they try to do is make sure
443
00:24:34,120 --> 00:24:38,080
that property taxes across the Commonwealth are fair.
444
00:24:38,080 --> 00:24:44,600
So the county is required every year to tell the state or provide the state with all the
445
00:24:44,600 --> 00:24:46,840
sales that happen within the county.
446
00:24:46,840 --> 00:24:50,500
So you could watch for trends in real estate.
447
00:24:50,500 --> 00:24:56,720
And obviously in the past, whatever, five years, real estate has gone up in value almost
448
00:24:56,720 --> 00:25:01,320
at unprecedented level, right?
449
00:25:01,320 --> 00:25:05,520
So what happens as real estate values are going up?
450
00:25:05,520 --> 00:25:10,360
The ratio, the level at which you're assessed, it is going down.
451
00:25:10,360 --> 00:25:12,160
It's not keeping up.
452
00:25:12,160 --> 00:25:13,160
Does that make sense?
453
00:25:13,160 --> 00:25:14,960
Am I explaining that well?
454
00:25:14,960 --> 00:25:18,520
Does someone want to jump in and fail me out?
455
00:25:18,520 --> 00:25:19,520
Yeah, yeah, yeah.
456
00:25:19,520 --> 00:25:21,640
Listen, I think you're on the right track.
457
00:25:21,640 --> 00:25:27,680
As I understand it, basically the county reports data and the STEB ratio does math with the
458
00:25:27,680 --> 00:25:30,520
data that there's no, no one's exercising discretion.
459
00:25:30,520 --> 00:25:32,440
No one's making decisions here.
460
00:25:32,440 --> 00:25:38,000
The county sends all of its sales data in and then there is a state board that looks
461
00:25:38,000 --> 00:25:44,040
at the data the county sends and decides, okay, basically property values have appreciated
462
00:25:44,040 --> 00:25:49,080
X percent since the base year in that specific county.
463
00:25:49,080 --> 00:25:54,720
And that's the hypothetical percentage figure that you're getting, right?
464
00:25:54,720 --> 00:25:55,720
Yes.
465
00:25:55,720 --> 00:25:56,720
Yep.
466
00:25:56,720 --> 00:26:00,320
So, and basically they're saying, here's all your sales, right?
467
00:26:00,320 --> 00:26:02,200
And that's 100 percent.
468
00:26:02,200 --> 00:26:04,560
And here's all your assessments.
469
00:26:04,560 --> 00:26:10,760
All your assessments are about 81 and a half percent of what sales, the actual sales are.
470
00:26:10,760 --> 00:26:14,720
Therefore, your assessment ratio is 81 and a half percent.
471
00:26:14,720 --> 00:26:15,720
And two things.
472
00:26:15,720 --> 00:26:16,720
Your common level ratio.
473
00:26:16,720 --> 00:26:17,720
Yep.
474
00:26:17,720 --> 00:26:21,200
First of all, that number is generated on a county-wide basis.
475
00:26:21,200 --> 00:26:26,240
It's not statewide, but it's also not neighborhood by neighborhood or municipality by municipality.
476
00:26:26,240 --> 00:26:31,980
So when we talk about what the common level ratio in Allegheny County is for a given year,
477
00:26:31,980 --> 00:26:38,560
that ratio reflects an average across the county, which as applied is going to under
478
00:26:38,560 --> 00:26:44,320
assess the properties that are in the areas that have been appreciating the most and over
479
00:26:44,320 --> 00:26:49,120
assess the properties that are in the areas that have been flat or declining.
480
00:26:49,120 --> 00:26:50,120
Exactly.
481
00:26:50,120 --> 00:26:51,120
Yep.
482
00:26:51,120 --> 00:26:53,520
It's flawed to begin with.
483
00:26:53,520 --> 00:26:54,520
It's really discriminatory.
484
00:26:54,520 --> 00:26:59,280
And, you know, even on a practical sense, what they would do is if you bought your house
485
00:26:59,280 --> 00:27:09,840
for $100,000 last year in 2021, and the common level ratio for Allegheny County was 87.5%,
486
00:27:09,840 --> 00:27:11,640
the hearing officers would say, well, you paid 100.
487
00:27:11,640 --> 00:27:13,760
It must have been assessed.
488
00:27:13,760 --> 00:27:14,960
It should be assessed at 100.
489
00:27:14,960 --> 00:27:20,680
But then they multiply it times the ratio and you'd end up with an assessment of 87,500.
490
00:27:20,680 --> 00:27:26,800
But now this year, the common level ratio went down to 81%.
491
00:27:26,800 --> 00:27:31,560
So when we have these cases that get appealed to the board of viewers, the second level,
492
00:27:31,560 --> 00:27:35,320
and we're looking at multiple years in the appeal, which is what usually happens where
493
00:27:35,320 --> 00:27:39,080
you're let's negotiate 2021, let's negotiate 2022.
494
00:27:39,080 --> 00:27:43,200
The school districts are even agreeing, well, 2021 should be 87,000.
495
00:27:43,200 --> 00:27:46,000
2022 should be $81,000.
496
00:27:46,000 --> 00:27:51,880
So these just by having their appeal in the pending and extending into another year, they
497
00:27:51,880 --> 00:27:53,120
got a tax reduction.
498
00:27:53,120 --> 00:27:58,080
And what I'm saying, and I think, Ronnie, you're agreeing is that those people who settled
499
00:27:58,080 --> 00:28:04,920
their case last year for $87,000 on $100,000 home, couldn't they appeal again, say my market
500
00:28:04,920 --> 00:28:07,840
value hasn't changed and the ratio is 81,000.
501
00:28:07,840 --> 00:28:12,360
So you should lower my assessment to 81,000.
502
00:28:12,360 --> 00:28:18,440
That was one of my tactics, by the way.
503
00:28:18,440 --> 00:28:22,900
And again, years and years ago, a lot of folks didn't even understand that.
504
00:28:22,900 --> 00:28:24,360
Nobody understands it.
505
00:28:24,360 --> 00:28:25,880
No, no.
506
00:28:25,880 --> 00:28:31,200
And to further exacerbate this problem, by the way, is there's a base year, right?
507
00:28:31,200 --> 00:28:32,200
2012.
508
00:28:32,200 --> 00:28:35,440
So the assessments are sitting at this base year valuation.
509
00:28:35,440 --> 00:28:42,720
So as property values have increased over the last decade, the county hasn't raised
510
00:28:42,720 --> 00:28:46,120
assessments to try to even keep up with it.
511
00:28:46,120 --> 00:28:52,080
So I read an article recently where there is a group that is suing right now to say
512
00:28:52,080 --> 00:28:58,720
the common level ratio is actually much, much lower than what you're even saying right now.
513
00:28:58,720 --> 00:29:04,960
And the reason is the county didn't provide all the sales data to the state.
514
00:29:04,960 --> 00:29:09,480
There were 17,000 sales and they only sent them 4,000.
515
00:29:09,480 --> 00:29:10,480
That's right.
516
00:29:10,480 --> 00:29:11,480
I remember seeing that too.
517
00:29:11,480 --> 00:29:12,480
Yes.
518
00:29:12,480 --> 00:29:17,920
The argument here is the county, because the common level ratio is based solely upon the
519
00:29:17,920 --> 00:29:20,960
data sent by the county, we've got an allegation out there.
520
00:29:20,960 --> 00:29:21,960
And I don't know if it's true.
521
00:29:21,960 --> 00:29:25,740
I'm not a party to this lawsuit, but there's an allegation that the county is essentially
522
00:29:25,740 --> 00:29:31,840
juicing the common level ratio by only sending a select part of the data that makes it look
523
00:29:31,840 --> 00:29:36,640
like the property values are appreciating less overall than they are.
524
00:29:36,640 --> 00:29:37,640
Than they actually are.
525
00:29:37,640 --> 00:29:38,640
Yeah.
526
00:29:38,640 --> 00:29:42,040
They're arguing that they believe the common level ratio right now is somewhere around
527
00:29:42,040 --> 00:29:43,680
61%.
528
00:29:43,680 --> 00:29:44,780
Can you imagine?
529
00:29:44,780 --> 00:29:51,840
So I, as an authorized representative or a homeowner or anyone else, could file an appeal.
530
00:29:51,840 --> 00:29:57,760
And if your home is valued at $100,000, you walk in, you get sustained, right?
531
00:29:57,760 --> 00:29:58,760
Meaning no change.
532
00:29:58,760 --> 00:30:03,440
I don't even bring an argument, just file the appeal and let them stamp you that you're
533
00:30:03,440 --> 00:30:06,000
$100,000 in value.
534
00:30:06,000 --> 00:30:09,520
And now you get the common level ratio of 81%.
535
00:30:09,520 --> 00:30:14,280
You just got a 20% tax break just for showing up.
536
00:30:14,280 --> 00:30:16,760
This is a theory practice distinction, right?
537
00:30:16,760 --> 00:30:22,560
I mean, if the whole county does this, then at that point, the school district starts
538
00:30:22,560 --> 00:30:27,040
showing up and waving around comparable sales to try to raise your current market value
539
00:30:27,040 --> 00:30:31,800
from your seven or eight year old sale.
540
00:30:31,800 --> 00:30:33,400
Just to stop this from happening.
541
00:30:33,400 --> 00:30:38,520
But if only a couple people do it, if the number of people filing appeals with no evidence
542
00:30:38,520 --> 00:30:43,200
is small enough, then yeah, you'll get the current market value set right where it's
543
00:30:43,200 --> 00:30:48,280
always been, except that you take the common level ratio off that current market value
544
00:30:48,280 --> 00:30:53,400
and that current market value or the assessed value ends up dropping rather significantly.
545
00:30:53,400 --> 00:30:58,080
A property owner can go into an appeal, right?
546
00:30:58,080 --> 00:31:03,960
And have their assessment raised to a point and still enjoy a tax break.
547
00:31:03,960 --> 00:31:09,800
And so in some instances, I would take the risk, you know, obviously with getting the
548
00:31:09,800 --> 00:31:16,600
approval from the property owner to say, hey, I can bring in some comps or some income approach
549
00:31:16,600 --> 00:31:20,040
to value to show that your properties may be actually worth a little more.
550
00:31:20,040 --> 00:31:25,600
But once we get this CLR, common level ratio applied, we're going to get this huge tax
551
00:31:25,600 --> 00:31:26,600
savings.
552
00:31:26,600 --> 00:31:27,600
Are you on board?
553
00:31:27,600 --> 00:31:28,600
He's like, yeah, whatever, man.
554
00:31:28,600 --> 00:31:30,960
If you can lower my taxes, go for it.
555
00:31:30,960 --> 00:31:33,040
So just manipulating numbers.
556
00:31:33,040 --> 00:31:39,000
And if the common level ratio is actually 61%, as some folks are arguing, this is going
557
00:31:39,000 --> 00:31:40,000
to be a boondoggle.
558
00:31:40,000 --> 00:31:41,000
Boondoggle.
559
00:31:41,000 --> 00:31:42,000
I like that.
560
00:31:42,000 --> 00:31:43,000
Movie reference for that or not?
561
00:31:43,000 --> 00:31:51,000
Yeah, I don't know if that's, that's certainly different than doppelganger, which is a word
562
00:31:51,000 --> 00:31:52,480
I like to use periodically.
563
00:31:52,480 --> 00:31:57,200
Ronnie, let's bring this home because we beat that to death.
564
00:31:57,200 --> 00:32:01,600
Well, you're going to lose, you say the words common level ratio and I think you lose eight
565
00:32:01,600 --> 00:32:03,600
out of 10 people.
566
00:32:03,600 --> 00:32:07,960
Were there 10 people to begin with?
567
00:32:07,960 --> 00:32:11,720
And well, there might be 12 over the next 18 months that actually listen.
568
00:32:11,720 --> 00:32:12,720
Okay.
569
00:32:12,720 --> 00:32:16,080
I would like to thank each of those people personally.
570
00:32:16,080 --> 00:32:19,680
Maybe write them a letter, but let's bring it is not a ratio.
571
00:32:19,680 --> 00:32:21,600
That's a literal count.
572
00:32:21,600 --> 00:32:22,600
Okay.
573
00:32:22,600 --> 00:32:24,960
Well, so let's bring this home.
574
00:32:24,960 --> 00:32:29,960
And for some reason, when I say home, I think in my bed where my children sleep, right?
575
00:32:29,960 --> 00:32:33,440
But that's my reference for the it's where his wife sleeps.
576
00:32:33,440 --> 00:32:36,720
Where his children play with their toys, where their children play with the toys.
577
00:32:36,720 --> 00:32:37,720
Okay.
578
00:32:37,720 --> 00:32:43,040
I'm home in my bedroom where my wife sleeps, where my children come and play with their
579
00:32:43,040 --> 00:32:44,040
toys.
580
00:32:44,040 --> 00:32:49,200
I tried using a Godfather line and a closing once and it fell so flat.
581
00:32:49,200 --> 00:32:50,840
I think it was the make him an offer.
582
00:32:50,840 --> 00:32:51,840
He can't refuse.
583
00:32:51,840 --> 00:32:52,840
It was horrible.
584
00:32:52,840 --> 00:32:53,840
It's horrible.
585
00:32:53,840 --> 00:32:58,680
Ronnie, let's, let's sort of summarize what we have here, right?
586
00:32:58,680 --> 00:33:01,520
Fair market value is not one sale.
587
00:33:01,520 --> 00:33:04,060
Don't be afraid to argue lack of uniformity.
588
00:33:04,060 --> 00:33:05,400
What else do you got?
589
00:33:05,400 --> 00:33:06,400
That's it.
590
00:33:06,400 --> 00:33:08,160
You know, never be afraid to appeal.
591
00:33:08,160 --> 00:33:10,040
You could appeal every year.
592
00:33:10,040 --> 00:33:13,360
And I don't think people realize that too.
593
00:33:13,360 --> 00:33:14,360
It's your choice, right?
594
00:33:14,360 --> 00:33:15,360
And you're right.
595
00:33:15,360 --> 00:33:19,000
I, again, it's a flawed system on the face of it.
596
00:33:19,000 --> 00:33:23,600
How many systems are you aware of that you're being taxed on where it's kind of just arbitrarily
597
00:33:23,600 --> 00:33:24,600
determined, right?
598
00:33:24,600 --> 00:33:28,800
Like when you walk into a store, you're going to pay sales tax on a candy bar and you know
599
00:33:28,800 --> 00:33:33,600
the candy bar costs a buck and the taxes 6% or whatever, right?
600
00:33:33,600 --> 00:33:35,880
Allegheny County, I guess it's seven.
601
00:33:35,880 --> 00:33:40,400
Um, property assessments are not like that.
602
00:33:40,400 --> 00:33:46,120
They move and they obviously they don't move enough or we wouldn't be having these conversations.
603
00:33:46,120 --> 00:33:49,400
The assessments aren't moving with the market.
604
00:33:49,400 --> 00:33:53,560
So hey, one, one other thing is somebody that knows what they're talking about and then
605
00:33:53,560 --> 00:33:54,560
appeal.
606
00:33:54,560 --> 00:33:58,440
And you know, one other thing is there was, um, some great advice for people buying houses
607
00:33:58,440 --> 00:34:00,280
that are going to get appealed.
608
00:34:00,280 --> 00:34:04,320
If you're buying in the first quarter of any calendar year, schedule your closing after
609
00:34:04,320 --> 00:34:08,960
March 31st, there was a closing I was having that was going to occur on February 1st assessment
610
00:34:08,960 --> 00:34:13,800
was going up, would have gone up another 9,000, $10,000 a year just by pushing the closing
611
00:34:13,800 --> 00:34:15,240
date past March 31st.
612
00:34:15,240 --> 00:34:17,280
They save $10,000.
613
00:34:17,280 --> 00:34:21,540
So you know, be smart when you're buying, there's things you can do when you're buying
614
00:34:21,540 --> 00:34:25,120
that can help in the defense of the eventual appeal.
615
00:34:25,120 --> 00:34:27,520
Bill, you got anything else for the Godfather?
616
00:34:27,520 --> 00:34:29,000
No, I don't.
617
00:34:29,000 --> 00:34:33,400
I mean, um, I think he's, uh, he has proven his bona fides here.
618
00:34:33,400 --> 00:34:38,920
I'm a little concerned about whether or not what, what Ron was doing for all these years
619
00:34:38,920 --> 00:34:43,440
was essentially the unlicensed practice of law, but it was authorized by statute.
620
00:34:43,440 --> 00:34:45,660
Hey, it doesn't make any difference to me.
621
00:34:45,660 --> 00:34:46,780
What a man does for a living.
622
00:34:46,780 --> 00:34:47,780
You understand?
623
00:34:47,780 --> 00:34:51,320
It doesn't make any difference to me what a man does for a living.
624
00:34:51,320 --> 00:34:56,680
It's just, you know, as long as your interests don't conflict with my interests.
625
00:34:56,680 --> 00:34:57,680
Thank you for coming on today.
626
00:34:57,680 --> 00:34:58,680
We appreciate it.
627
00:34:58,680 --> 00:34:59,680
Yeah.
628
00:34:59,680 --> 00:35:00,680
Thank you.
629
00:35:00,680 --> 00:35:01,680
Can we drop the Godfather then?
630
00:35:01,680 --> 00:35:03,680
Just call me Ron.
631
00:35:03,680 --> 00:35:07,760
Yes, Bill, can you do an outro for me?
632
00:35:07,760 --> 00:35:10,760
Snoop Ronnie Ron.
633
00:35:10,760 --> 00:35:17,120
All right.
634
00:35:17,120 --> 00:35:18,760
That's our episode for the day.
635
00:35:18,760 --> 00:35:22,400
Thanks again to, uh, the reluctant Godfather.
636
00:35:22,400 --> 00:35:24,560
Hopefully you learned something or had a few laughs at least.
637
00:35:24,560 --> 00:35:29,120
If so, please subscribe, rate and review us, tell your friends, or if we did a bad job,
638
00:35:29,120 --> 00:35:30,720
your enemies to check us out.
639
00:35:30,720 --> 00:35:32,920
It's the only way that this podcast can grow.
640
00:35:32,920 --> 00:35:38,880
If you have questions for our eventual mailing it in segment or other feedback for the podcasts,
641
00:35:38,880 --> 00:35:44,440
email the podcast directly at iobject at pghfirm.com.
642
00:35:44,440 --> 00:35:50,120
For more information on Allegheny County tax appeals, visit our website at pghfirm.com
643
00:35:50,120 --> 00:35:55,680
where we do go over most updated FAQs for tax appeals, give advice for property owners
644
00:35:55,680 --> 00:36:00,800
defending school district tax appeals, and discuss how to lower your property taxes for
645
00:36:00,800 --> 00:36:03,280
commercial appeals as well.
646
00:36:03,280 --> 00:36:26,000
Thank you again for listening and take care.