CRANBERRY TWP — With hospitality businesses ravaged by the COVID-19 pandemic and associated state mitigation orders, many are looking to cut costs. For hotels and retail businesses in particular, one of those cost-cutting methods is to appeal tax assessments in order to pay less in taxes on frequently multimillion-dollar properties. The results of that tactic could impact funding of public services from road maintenance and police to school districts and parks.

This three-part series will look at how businesses try to minimize the tax bills on their properties; what that could cost the coffers of the county government, school districts and municipalities; and what impact such tax appeals have on these entities' budgets. This first article looks at the potential impacts in the southwestern tier of Butler County.

With 13 property assessments under appeal, according to data from the county, Cranberry Township houses the most appealed properties of any municipality. The assessed values on these properties totals nearly $11.7 million, which, according to the current common level ratio, makes the fair market value of the 13 properties more than $135.7 million.

Seneca Valley School District also hosts the highest assessed value under appeal of any county school district, at $11.7 million.

Mars Area School District, with two appeals, ranks fifth in the county's eight school districts in appealed assessed values at roughly $374,000.

Of the 12 properties in Seneca Valley and Mars Area with fair market values in excess of $1 million, six are hotels, four are big-box chain retail stores, one is a mall and one is a church. The remaining properties belong to individual property owners.

Appeals

Every year, some property owners in Butler County file an appeal of the assessed value of their property, which is considered the fair market value of the property in 1969. But that number jumped with appeals filed over the assessments made in 2020.

Thomas May, an attorney with Dillon McCandless King Coulter and Graham who represents Butler Area School District in the appeals within its tax base, said the number of appeals filed about 2020 assessments was higher than usual. However, he said he cannot pinpoint an exact cause.

According to May, most appeals end with settlements after both the taxing authority and the property owner each have appraisals done and negotiate based on those appraisals. Should the taxing authorities and owners reach a settlement, it must be approved by the school board and municipality. If they cannot reach a settlement, the parties go to a board of arbitration, but that's very few of the appeals, May said.

And while it hasn't happened yet, if either the property owner or taxing authority doesn't like the arbitration outcome, they can go to court, according to May.

The reason for a property owner to appeal is apparent: They want to pay less in taxes. For school districts and other taxing bodies, they may want to fight the appeals to protect their interests, May said, because their funding comes from taxes.

Highest-valued

Although the difference between an assessed value and a settlement for a typical homeowner could work out to a few dozen dollars for the taxing bodies, the difference balloons for commercial properties and, in particular, for hotels.

The largest property under appeal in Cranberry — and in Butler County — is the Pittsburgh Marriott North in Cranberry Woods, with a market value of more than $25 million. Using 2020 tax numbers, that property — alone — would generate in tax revenue nearly $29,000 to Cranberry Township, $276,000 to Seneca Valley and $60,000 to the county.

But the Marriott is not alone; in fact, it is indicative of many tax bills of expensive properties being appealed in southwest Butler County. Among the hotels appealing their assessed values are the Hilton Garden Inn in Cranberry Woods at a fair market value of $11.34 million; the Courtyard Marriott Cranberry Woods with a fair market value of $9.99 million; the Cranberry Hyatt, $9.35 million; the Residence Inn, $8.84 million; and the Best Western Plus, $8.69 million.

In total, the six hotels appealing their assessed values would — if taxed on the assessed value and based on 2020 tax rates — pay $83,500 to Cranberry, $806,120 to Seneca Valley and $174,000 to Butler County.

Data from the county show two hotels have thus far provided appraised values. The Cranberry Hyatt argues it should be appraised at roughly $589,000, or 27% lower than the county's assessment; the Best Western Inn provided an appraisal 41% lower than the county's, at $438,500.

If those figures were to be accepted as the settlement, the businesses would pay more than $88,000 less in property taxes to the three government entities: roughly $7,000 less to the township, $14,500 less to the county and $67,000 less to the school district.

Others

Three of the five highest-assessed properties in the southwestern tier either belong to or are occupied by big-box retail or similar entities.

The Cranberry Walmart, at an assessed fair market value of $17.62 million, is the second-highest valued property in Butler County being appealed. If it were to pay taxes on that amount, it would owe $20,000 to Cranberry, $42,000 to the county and nearly $194,000 to Seneca Valley.

Rounding out the retail segment of assessment appeals in Cranberry are the Target, at a fair market value of $11.34 million; the Cranberry Mall, $11.1 million; the Home Depot, $10.74 million; and Lowes, $10.61 million. Together, these properties would pay nearly $70,000 to Cranberry, $146,000 to the county and $675,000 to Seneca.

Impact

Although there are individually high-valued properties under appeal, Cranberry manager Dan Santoro said the township is more concerned about how many properties are being appealed.

“We are concerned, I would say,” he said. “We are in the process of trying to get an understanding of that impact of the cumulative effect of all of them. When you talk about the assessed value of 15 properties in the township that have significant assessed value, that can have a significant impact not only in year one but also a longer impact as well.”

It's one of many considerations the township had to plan around when creating its 2021 budget. The same, too, goes for Seneca Valley, where business manager Lynn Burtner said the district had to take into account the pending appeals when developing the budget.

Even though the impact may be immense, Santoro said it's not all doom and gloom.

“I don't expect any significant impact from an operational standpoint,” he said. “We're prepared to weather the storm, but the question is to what extent this will have an impact on us.”

This article includes reporting from former Eagle Staff Writer Eric Jankiewicz.