Tax Appeals Mount for Borough

The Borough owes $2 million in tax appeals to taxpayers who feel their properties were assessed too highly.

The number of appeals has mounted over the past few years as the values of many properties in the Borough have dropped. Currently, the Borough is fighting about 200 tax appeals, which, if it loses, could add to the $2 million it already owes.

Tax appeals become prevalent when the market value of real estate drops below its assessed value, as determined by municipalities. If a house is assessed at $1 million and its value drops, without an appeal, the homeowner will continue to pay taxes based on the $1 million assessed value.

But residential appeals haven't been the Borough's biggest source of pain. Commercial property owners can use vacancies to justify tax appeals. 

"Commercial properties in some cases have decreased in value more than residential properties have," Borough Attorney Brian Giblin said.

And though the Borough only accounts for about a quarter of any property tax bill, the Borough foots the entire bill of a successful tax appeal. So when a homeowner wins a $10,000 appeal, the Borough must pay the entire figure, though it only received $2,500 when it first collected the tax bill.

But a turnaround could be coming. Vacancy rates have gone down and the ratio between market value and assessed value is starting to even out again. Though there's usually a two- to three-year lag before municipal coffers start to see the benefit of any uptick in the economy, these are still good signs, Giblin said.

Councilman Alan Brundage said all the Borough can do is continue to contest the appeals and show the rates are just. At the same time, he said, the governing body has to be business-friendly.

"We don't want to make it sound like it's an us against them with the businesses," he said.