By: Ian Haley

In February 2012, Governor Tom Corbett of Pennsylvania signed Act 13 into law. Act 13 amended the states previous Oil and Gas Act, 58 P.a.C.S. §§ 601.101 – 601.605, and provided significant changes regarding natural gas drilling operations. Portions of the Act essentially allowed the state government to supersede local governmental control and mandate local ordinance changes to accommodate the natural gas industry. Under Act 13, local governments lose their ability to zone and restrict oil and gas drilling and must instead defer to statewide policies on zoning regulations.

The intent of Act 13 is to permit optimal development of the Commonwealth’s oil and gas resources, to protect the safety of personnel and facilities in covered industries, to protect the safety and property rights of persons residing in areas hosting oil and gas operations, and to protect natural resources, environmental rights and values secured by the Constitution of Pennsylvania. See 58 Pa.C.S. § 3202 (Declaration of purpose of chapter).

However, in March 2012, the constitutionality of Act 13 was challenged on several grounds. As expected, the case climbed the judicial ladder and December 19, 2013, the Pennsylvania Supreme Court issued a decision finding several provisions of Act 13 unconstitutional. See Robinson Township v. Pennsylvania’s Pub. Util. Comm’n, No. 63 MAP 2012 (Pa. Dec. 19, 2013).

The Courts decision relied heavily on the 1971 Environmental Rights Amendment to the Pennsylvania Constitution. In part, the amendment provides,

“[t]he people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.”

PA Const. art. I, § 27.

The Supreme Court’s decision found portions of section 3215 of Act 13 unconstitutional as well as found sections 3304 and 3303 in violation of the Environmental Rights Amendment.

Section 3215 allows the Department of Environmental Protection to grant waivers for setback requirements from water sources even over the objection of the municipality. Section 3304 required municipalities that had land use ordinances to conform those ordinances to a set of uniform standards set out in the statute. Section 3303 declared that all local regulation of oil and gas activities was preempted. All, as mentioned, were found to be in violation of Pennsylvania’s Constitution.  

Act 13 also included an important provision regarding impact fees on drilled wells. The constitutionality of this provision was not at issue.

In the end, this historic decision is a win for local governments and municipalities but also acts as a major strike against the oil and gas industry. Local governments are able to retain their power to regulate and zone oil and gas production like they do other activities.

A copy of the decision can be found through the Pittsburgh Post-Gazette’s web-page or by clicking here.

By: Ian Haley

You cannot talk about the “Shale Boom” without talking about Pennsylvania. Coal and steel were once the lifeblood of the Keystone State but today’s industry is being re-born thanks to the natural gas reserves in the Marcellus Shale. The Appalachian range that stretches from the Southwest corner of the state to the Northeastern corner has provided a substantial large deposit of natural gas reserves for Pennsylvania.

In February 2012, Pennsylvania passed Act 13, providing a complete overhaul of the states natural gas drilling law. See P.a.C.S. §§ 3201 – 3274. Act 13 amended the states old Oil and Gas Act, 58 P.a.C.S. §§ 601.101 – 601.605, and provided significant changes regarding natural gas drilling operations. The amendment provided for enhanced environmental protections for the development of unconventional natural gas resources by authorizing the imposition, collection and distribution of an impact fee on the development of unconventional natural gas resources and to provide for municipal ordinances and zoning standards related to oil and gas development.

This enactment of Act 13 immediately created a flurry of debate. Most significant was the Acts limitations on local zone ordinances. A number of municipalities and counties challenged the Act and argued it violated local governments due process rights by restricting local governments abilities to zone and regulate drilling. In fact, on July 26, 2012, the Pennsylvania Supreme Court ruled zoning portion of Act 13 unconstitutional.

Outside of the constitutionality of Act 13, much debate has surrounded the states choice to impose an impact fee rather than severance tax on the gas industry. First, it is important to understand how Act 13’s impact fee works. An impact fee is essentially a flat rate fee and the law gives each county the power to impose a $40,000 - $60,000 flat fee on a well in its first year of operation, with the fee declining over the next 15 years.  The fee is based on the price of natural gas and the year in which a well is drilled. Therefore the revenue from impact fees is based on the number of wells drilled each year and the price of natural gas. In contrast, a severance tax is structured like any other tax. Instead of a flat rate fee, the tax is a percentage and based on the amount of production.

The Pennsylvania Public Utility Commission (PUC) is responsible for collecting the revenue generated from the impact fees and dispersing the funds. Generally speaking, sixty percent of the funds generated remain at the local level, going directly back to the counties and communities that are affected. The remaining funds are given to state run agencies responsible for maintaining and regulating the states drilling. Act 13 also allows for local governments to use the funds for roads, bridges, schools, environmental projects, and other area affected by the influx of the gas industry.

According to a Pennsylvania 2013 Governor Report, in 2011 Act 13’s impact fees generated approximately $204 million for local counties and municipalities. Due to declining natural gas prices, 2012 saw a slight decrease in revenue, with the fees bringing in approximately $202 million.

However, studies suggest more revenue can be generated through a severance tax. In fact, most energy producing states impose severance taxes rather than impact fees. Pennsylvania neighboring states of Ohio and West Virginia both employ severance taxes. North Dakota, another state experiencing a boom in shale oil production, also employs a severance tax.

The problem with Pennsylvania’s impact fee is that as gas production increases, the revenue generated from the fees remains relatively flat. The volume of natural gas production since 2008 has grown significantly. Historical statistics show that production rose from 1.3 trillion cubic feet in 2011 to over 2 trillion cubic feet in 2012. This dramatic increase in production has had no significant impact on what the impact fees brought in from 2011-2012, as they remained the same.

Using a conservative outlook, the PA Budget and Policy Center has estimated that a 4% severance tax could generate an additional $206 million dollars in 2013-2014 in place of the existing impact fee. A further outlook goes on to suggest that in 2019-2020, the 4% severance tax would generate an additional $326 million dollars. Using a more moderate future outlook, the 4% tax is expected to generate an additional $261 million and $867 million in 2013-14 and 2019-20 respectively. The difference between the conservative and moderate outlooks is simply the projected new wells drilled and increase in gas prices where the moderate approach simply predicts are larger growth. A more detailed analysis can be found on the PA Budget and Policy Center’s Briefing.

Now, Pennsylvania has defended its choice of an impact fee over severance tax mainly on the grounds that the gas industry is new and the state already imposes a large number of other taxes. Thus, it does not want to discourage the growth of the industry by imposing more taxes on production. However, despite having the low impact fee, Pennsylvania saw a decrease in the amount of new wells drilled in 2012.

Although Pennsylvania believes it can encourage more growth in its energy industry through the imposition of impact fees rather than severance taxation, it is clear that this choice could ultimately cost the state potential revenue. Yes, the industry is still relatively new and impact fees make Pennsylvania more competitive and attractive. However, if Pennsylvania were to switch to a severance tax, it is unlikely gas companies would venture elsewhere as the demand for Marcellus Shale in Pennsylvania is too great. Furthermore, statistics have shown that Pennsylvania is lagging behind other states in terms of revenue generated.  The potential revenue that can be generated through the use of a severance tax is too great to be ignored and Pennsylvania should reconsider the use severance tax on the ever expanding gas industry.  

By: Ian Haley

Today’s energy industry is driven by a multitude of factors. Most importantly, the world has recognized the scarcity of fossil fuels and the importance of focusing development on energy sources that are more sustainable, renewable, and efficient. However, three of the world’s largest energy companies, Exxon Mobil Corporation, BP, and Statoil, predict that oil and gas will continue to remain the most demanded energy sources well into the future. In fact, the three energy tycoons all similarly suggest that oil and gas will fuel the world’s economic growth as far into the future as 2040.

            Each year, Platts, an energy research company, reports the 250 Top Energy Company Rankings. This system ranks the world’s largest energy companies based on individual companies’ assets, revenue, profits, and return on investment capital. According to the 2012    ranks, Exxon Mobil, BP, and Statoil all were among the world’s top 10 leaders in energy. Exxon Mobil retained the top spot in the Platt rankings, a spot it has held since 2007. BP ranked 4th on Platt’s 2012 rankings, moving all the way up from the 118th spot it held in 2011. Finally, Statoil was ranked 6th in the global energy company rankings, up five spots from its 2011 ranking of 11th.

            According to Exxon Mobil’s “2012 The Outlook for Energy: A View to 2040”, the world’s energy demand is expected to increase 35% by 2040 even in the wake of increased energy use efficiency. This large increase projection is directly correlated to the anticipated world population growth from 7 billion today to nearly 9 billion by 2040.

Not surprisingly, Exxon Mobil suggests oil will remain the world’s top fuel. However, natural gas is expected to overtake coal as the world’s second leading fuel because of increased investment and technological advancements in the area of natural gas. Together, oil and gas are predicted to supply 60% of global demand by 2040. In addition, Exxon Mobil believes gas is the “energy of the future”, and expects global gas supplies to rise 65% by 2040.

The technological advancements that continue to push supplies of oil and gas are numerous. For example, Exxon Mobil points to the production of crude oil from deep water, oil sands, and tight oil resources as a major advancement. For gas, the company highlights the technological advancements allowing production from areas such as tight oil resources in North Dakota, deepwater developments in the Gulf of Mexico, and Canadian oil sands. Not until recently, these areas of production were unattainable because of technological limitations.

Even with the rise in demand, production, and use of crude oil, Exxon Mobil estimates that by 2040 more than half of the world’s total supply of those resources will have yet to be produced. Furthermore, it is estimated that there is enough natural gas left in the world to meet current demands for the next 200 or more years. Overall, the future vision appears to show a continued heavy reliance on conventional energy resources.

Turning to BP, the world’s 4th largest energy company predicts a similar future. According to the company’s annual “Energy Outlook 2030”, global energy demand for energy will see a steady increase of approximately 1.6% per year through 2030. Overall, we should expect a total demand increase of around 40% by 2030. Similar to Exxon Mobil, BP suggests that traditional fossil fuels will continue to dominate the market.

Unlike Exxon Mobil, BP forecasts that oil, while occupying the largest market share of energy, will see a demand increase of only .8% through 2030. In comparison, gas is expected to be the fastest growing fuel with demand increasing at an average of 2% per year through 2030. 

Interestingly, BP attributes the growing energy demand to developing parts of the world such as China, India, and the Middle East. Like Exxon Mobil, BP points to an increase in supply growth in North America and specifically points to the U.S. tight oil and Canadian oil sands supplies. It is estimated that North America will account for nearly 73% of the world’s gas production in 2030.

In their annual “Energy Perspectives: Long-term macro and market outlook”, Statoil’s predictions through 2040 are in accord with Exxon Mobil and BP. The company predicts that global energy demand will increase by as much as 40% by 2040 with traditional fossil fuels dominating an estimated 72.5% of total market demand in 2040. Similar to other predictions, oil is expected to have the slowest growth at an average rate of .5% per year. Statoil bases the slow decline in oil demand growth to be due to factors including environmental policies, increasing prices, and energy efficiency in the transport sector. Furthermore, gas once again is considered the “energy of the future” and demand is expected to grow 60% by 2040.

Overall, the three industry leaders are consistent in two major areas. First, traditional fossils fuels will continue to dominate the world’s energy demand well into the future due in large part to technological advancements and investments. Second, the recent surge in natural gas production is not a fluke, but rather an industry that is expected to climb in demand faster than any other. And finally, all three major companies show very little promise by way of renewable energy. In fact, according to Statoil predictions, renewable energy will account for less than 20% of total energy production in 2040.

Although the outlook presented by Exxon Mobil, BP, and Statoil sounds promising economically, the fact still remains that the world continues to burn through fossils fuels at an increasingly faster pace than yesterday and does so without much of an outlook for renewable energy.

As the world continues to rely on traditional fuels, individual countries have taken steps to promote the use of renewable energy. For example, the United States adopted The Energy Policy Act of 2005, which provided tax credits for residential property that used certain forms of renewable energy. See 26 U.S.C. § 25d. Other countries have taken more direct approaches to enforce alternative energy development. For example, the European Union has recently implemented the EU Emissions Trading Scheme which places strict standards on domestic and international aircraft emissions in an attempt to promote energy efficiency and renewability. See NBAA.org, European Union Emissions Trading Scheme (ETS), http://www.nbaa.org/ops/environment/eu-ets/.

However, the forecasts of Exxon Mobil, BP, and Statoil indicate that the individual attempts by countries to promote alternative energy have had little impact on future demand. Instead, a more international approach to alternative and renewable energy development needs to be used. Some international organizations such as the International Renewable Energy Agency (IRENA) have recently been established and it is up to the nations of these agencies to collectively come together and change the future of renewable energy demand.

 Exxon Mobil, in its annual report, properly quoted, “[w]hen it comes to energy – the future is not predetermined.” I believe the collection of these long term forecasts show just how important it is that more effort be put into renewable energy sources.

by Ian Haley

            In 1974, Pennsylvania passed into effect Act 319 entitled, “The Pennsylvania Farmland and Forest Land Assessment Act”. More commonly known as the “Clean and Green Act”, this act provides a preferential tax assessment for land used for agricultural and forestry purposes. The purpose of the act is to encourage landowners to retain and protect their land for agricultural, recreational, and forest development by providing property tax relief. See 72 Pa. C.S. § 5490.1 et seq. However, a volatile economy and surge in energy development has forced Pennsylvania to adopt amendments to the Clean and Green Act focusing on encouraging and balancing environmental protection with energy development. Today, the PA Department of Agriculture estimates that more than 9.3 million acres are enrolled under Clean and Green.

            Typically, when a county adopts the Clean and Green Program, it assesses two values on each piece of parcel that qualifies. These values include Fair Market Value and Use Value. When a landowner enrolls in the Clean and Green Program, their property is assessed at its Use Value rather than its Fair Market Value. The Use Value of property is typically lower than Fair Market Value, ultimately saving the landowner in taxes significantly. Generally, to qualify for the program landowners must devote at least 10 contiguous acres of land strictly for one of the following:

1. Agricultural use – land in agricultural production or soil conservation
   
   
2. Agricultural reserve - recreational open space available to the public
   
   
3. Forest reserve – land capable of producing timber or other wood products
   
   

Once enrolled in Clean and Green, landowners are obligated to continue to devote the land to one of the prescribed uses that qualified them for the program and are not able to withdraw from the program unless the use of their land changes to one which would not qualify. The program and its benefits continue until the landowner

            In situations where the use of the land does change to a non-qualifying use, the landowner is subject to a “roll-back” tax penalty of 7 years with an annual interest rate of 6%. A non-conforming use on any portion of the parcel results in the entire parcel being penalized. This penalty is calculated from the difference between the preferential taxes paid and the taxes that would have been paid if the land had been assessed at Fair Market Value.

            Everyone benefits either directly or indirectly from the enactment of the Clean and Green Act. Property owners and landowners directly benefit from substantial property tax savings, while the general public indirectly benefits from the preservation of farmlands, woodlands, and the environment. But how does this relate to the recent surge of oil and gas production in Western Pennsylvania?

            With the recent explosion of the oil and gas industry in the region, landowners with large holdings of natural and mineral resources have had the opportunity to lease property for the exploration and extraction of these resources beneath their lands. This resulted in some landowners leasing away property registered under the Clean and Green program to oil and gas extraction companies. Clearly, land that is used for the extraction of oil and gas is not one of the limited uses qualified under the Clean and Green Act. Knowingly or unknowingly, landowners were “double-dipping”, as they received the benefit of a tax reduction from the Clean and Green Program while also receiving royalties and other financial benefits from leasing away their property to oil and gas companies. In contrast, for other Clean and Green landowners the threat of “roll-back” taxes served as a major deterrent to “double-dipping” and exposing themselves to liability for leasing their registered Clean and Green property away to the oil and gas companies. Landowners were caught in a holding pattern between the Acts savings and potential large royalties payments.

Pennsylvania had to find a way to balance environmental protection with energy development. To encourage energy development, on October 27, 2010, Act 88, an amendment to the Clean and Green Act was signed into law that clarified implications concerning oil and gas use on Clean and Green parcels. The amendment made it possible for landowners to lease property for the removal of oil, gas, coal bed methane, and other energy sources without having their entire parcel being subject to the “roll-back” tax penalty. Instead, “roll-back” taxes are only imposed on the portion of land devoted to the energy activities. Essentially, the portion of property where the well-site or other energy production is located is excluded from the tax incentive and subject to a normal tax rate. In contrast, instead of an entire property becoming ineligible for preferential tax assessment and subject to the “roll-back” penalty, the preferential tax treatment will only be revoked on the portion of land no longer capable of being used for agricultural, agricultural reserve, or forest reserve.

Act 88 of 2010 states in part,

2) Portions of land subject to preferential assessment maybe used for exploration for and removal of gas and oil, including the extraction of coal bed methane, and the development of appurtenant facilities, including new roads and  bridges, pipelines and other buildings or structures, related to those activities.

(3) Roll-back taxes shall be imposed upon those portions of land actually devoted to activities set forth in paragraph (2),excluding land devoted to subsurface transmission or gathering lines, which shall not be subject to roll-back tax . . . 

            This amendment provided a great benefit to Clean and Green landowners and successfully removed the deterrent effect Clean and Green had on energy development in the region. In most cases, landowners can still reap the preferential tax benefit of using their land for agricultural, agricultural reserve, and forest reserve while also capitalizing on the opportunities that oil and gas has brought to Western Pennsylvania. Within a short period of time, the economic and social benefits of the oil and gas industry have grown tenfold and it is important to allow this community to take advantage of its potential and continued growth.

Pennsylvania has made major strides in its attempt to balance environmental protection with energy development. With amendments to the Clean and Green Act, property owners benefit as well as the general public by helping promote oil and gas production while preserving the use of agricultural, open space, and forest development.

By: Leigh Lyons

A fairly recent case decided by the Supreme Court of Pennsylvania lays
out the rule to follow when questioning whether an oil and gas lease has
produced “in paying quantities.”  In the recent case of T.W. Phillips Gas and Oil Co. and PC Exploration, Inc., v. Ann Jedlicka, 42 A.3d 261, the Supreme Court held that, “where production on a well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase ‘in paying quantities’ must be construed with reference to an operator’s good faith judgment.” 
           
In T.W. Phillips v. Jedlicka, Appellant Ms. Jedlicka is the owner of a parcel of land consisting of approximately 70 acres located in North Mahoning Township. 
The original oil and gas lease contained an habendum clause which
provided, “to have and to hold the above-described premises for the sole and
only purpose of drilling and operating for oil and gas with the exclusive right
to operate for same for the term of two years, and as long thereafter as oil or gas is produced in paying quantities, or operations for oil or gas are being conducted thereon, including the right to drill other wells.”  The habendum
containing the above language can commonly be seen in oil and gas leases, and
has caused some concern for landowners when wells are not producing high
royalties and they wish to terminate the lease.  The term “in paying quantities” was not defined in the above lease.
        
T.W. Phillips drilled four gas wells on the Jedlicka property.  One well was abandoned back in 1955, and another was temporarily abandoned back in 1953. 
All four wells were fractured and eventually assigned to PC Exploration, Inc. in 2004.  PC Exploration drilled four additional wells upon their assignment of the lease and Ms. Jedlicka had received royalties and free gas throughout the life of her
lease. PC Exploration then made plans to drill four more wells on the Jedlicka property and Ms. Jedlicka objected to the construction claiming that T.W. Phillips failed to maintain production “in paying quantities” under the habendum clause, and as a result, the lease had lapsed and been terminated.  
             
Appellees, T.W. Phillips, argued that the lease remained valid since the
wells on the property have produced gas in paying quantities and continued to
pay a profit over operating expenses, and additionally, that they have operated
the wells in good faith to make a profit.  The Indiana County Court of Common Pleas determined that T.W. Phillips had produced gas on their leasehold in paying quantities, and therefore the lease remained in effect.  The Trial Court relied on the Supreme Court’s 1899 decision in Young v. Forest Oil,, 45 A. 122, where the Court held that, “consideration should be given to a lessee’s good faith judgment when determining whether oil was produced in paying quantities.”  The Superior Court then affirmed the Trial Court’s decision and reiterated that although the decision in Young was more than a century old, it still remained good law. The Superior Court held that the Appellant, Ms. Jedlicka, failed to carry her burden that the Appellee’s acted in bad faith.  
             
The Supreme Court reviewed both decisions and again reiterated important
aspects of oil and gas leases.  The Supreme Court noted that “a lease is in the nature of a contract and is controlled by principles of contract law.”  Further, as the Supreme Court earlier recognized in Brown v. Haight, “the traditional oil and gas ‘lease’ is far from the simplest of property concepts.  In the case law oil and gas ‘leases’ have been described as anything from licenses to grants in fee,” 255 A.2d 508.  Generally though, the title conveyed in an oil and gas lease is inchoate, and is initially for the
purpose of exploration and development, Calhoon v. Neely, 50 A. 967.  If development is unsuccessful during the agreed upon primary term, then no estate will vest in the lessee; however, if oil or gas is produced during that primary term, then a fee simple determinable is created in the lessee, and their right to extract oil becomes
vested.  The interest held by the grantor/lessee is termed a “possibility of reverter.”  
             
In the instant case, the Appellant, Ms. Jedlicka, was arguing that the oil and gas did not produce “in paying quantities” during the primary term.  The Supreme Court found that, “the phrase ‘found or produced in paying quantities’ means paying quantities to the lessee or operator.”  Further, “so long as the lessee is acting in good faith on business judgment, he is not bound to take any other party’s, but may stand on his own.  No court has any power to impose a different judgment on him, however
erroneous it may deem his to be.  Its right to interfere does not arise until it has been shown clearly that he is not acting in good faith on his business judgment, but fraudulently, with intent to obtain a dishonest advantage over the other party to the
contract. The Supreme Court wrote that, 
“if a well consistently pays a profit, however small, over
  operating expenses, it will be deemed to have produced in paying
quantities.  Where, however, production on a well has been marginal or sporadic, such that, over some period, the well’s profits do not exceed its operating expenses, a determination of whether the well had produced in paying quantities requires consideration of the operator’s good faith judgment in maintaining operation of the well. In assessing whether an operator has exercised his judgment in good faith in this regard, a court must consider the reasonableness of the time period during which the operator has continued his operation of the well in an effort to reestablish the well’s profitability.”
            
In reiterating the holding in the century old Young, the Supreme Court in T.W. Phillips
had molded together century old law and gave an unambiguous standard for courts
to follow when assessing whether oil and gas has been produced “in paying
quantities” giving much credence to the lessee’s business judgment. 
 


 

By Leigh Lyons, Esquire

As a part of the new child custody law, a statute regarding relocation in Pennsylvania (23 Pa.C.S. § 5337) was enacted and put into effect on January 24, 2011.  Over a year has passed since the initial statute has been put into effect, and practitioners are finding certain pitfalls in the language throughout the statute, and more specifically, what is left out of the statute completely.
             
The new relocation statute, unlike the former statute, defines relocation, which gives practitioners a bit more guidance as to what actually constitutes as a relocation by a party. It also lays out nine factors that the court must consider when deciding
if a relocation is in the best interest of the child, and of course, the tenth factor being just that, any other best interest factor of the child. The statute also gives guidance as to the time and method of service that starts the entire process, but this is where the statute begins to falter.
             
It’s clear that in the law, nothing is so black and white as to fit nicely into any given statute, especially in family law matters. The idea is that if the parties already have a standing custody order, the party wishing to relocate would only need to begin the relocation process by filing a Petition to Relocate (following the required statutory guidelines, of course,) but what if the party who wishes to relocate does not have primary custody?  Does the party then need to file a Custody Complaint to start the process over, or are they required to file a Modification of the already existing custody order, or is the Petition to Relocate enough by itself? This question may very well vary from county to county, and the statute does not provide any insight as to this
question.
             
Once a Petition to Relocate is filed, and the non-relocating party follows the statutory guidelines and filed his/her Counter-Affidavit opposing the relocation, the statute states that the “court shall hold an expedited full hearing on the proposed relocation…”  I’m sure you know my next question: What is considered an expedited  hearing? The statute does not give any type of timeline as to what expedited means, and if we look to the common dictionary definition of the word, we find that to expedite means to: 1.“speed up the progress of; hasten; 2. accomplish promptly, as a piece of  business; dispatch.”  So that helps…a little.  Whereas each county may have different standard timelines for hearings being scheduled, you would be led to believe that the word “expedited” means that it would be faster than normal; however, I have heard of one recent expedited relocation hearing that was set to a date that was over four months away from the time of requesting said expedited hearing. It seems that the word may not be as forceful in the statute as one would think.

The statute does thrive by detailing that negative inferences may be drawn by a party for failing to provide notice to the non-relocating party, and also laying out ten specific factors that the court must consider when scrutinizing whether a relocation may be in the child’s best interest or not, but it seems as though practitioners are coming across more and more flaws with the statute as time goes on.

***If you are considering relocating, even if just to another county within
Pennsylvania, contact Neighborhood Attorneys for your free consultation at
724-705-7082

By: Leigh Lyons, Esquire

The much anticipated 2013 Allegheny County Property Assessments have now been released for the entire county, and many homeowners and commercial property owners have been surprised that their assessment may have increased by fifty percent (50%) or more. Below you will find a breakdown of some of the communities that have had the highest average property assessment increases, as well as what you can do to appeal your own property assessment.

Average Increases

Property assessments in Allegheny County increased an average of 35.4%.  This figure includes all 130 municipalities throughout the county. Residential properties increased an average of 27.7%, while commercial properties increased a whopping 54.4%.

The 2013 reassessment was conducted because the Pennsylvania Supreme Court ordered Allegheny County to reassess the values of properties after a group of homeowners instituted a lawsuit against the county.  The homeowners contended that homes of higher value were being under-assessed, while homes of lower value were being prejudiced by being over-assessed. Before the court ordered 2013 reassessment, the last reassessment in Allegheny County was conducted in 2002.  
 
Comparing the new assessed values of properties has left many scratching their heads as some communities with lower-value properties increased by a greater percentage than those with higher-value properties.  Three municipalities in Allegheny County with some of the highest average increases in assessments were West Elizabeth (66.8%), Green Tree (52.6%), and Dormont (52%). Other notable municipalities include Upper St. Clair’s average increase of 21.8% and Bridgeville’s average increase of 42%.  
 
How to Interpret Your Assessment

The average increase in assessments in your municipality and your school district is significant because if your specific assessment increased by more than the average in your municipality or school district, then you are likely to have an increase in your taxes for those taxing authorities starting in 2013.  Conversely, if your increase is less than the average in your municipality or school district, then you may likely see a decrease in your taxes in 2013. The same applies for the average increase in Allegheny as a whole; although, in general, county real estate taxes tend to be significantly lower than municipal and school district taxes. The reason that the averages are so important is because pursuant to state anti-windfall laws the taxing authorities have to adjust their millage rates downward after a reassessment so that their overall tax collection remains revenue neutral. 
 
For example, if you own property in Upper St. Clair, and your property’s assessment increased by 13%, then you are likely to see a decrease in your real estate taxes because the average increase in assessments in Upper St. Clair was 21.8% (which applies to both township and school district real estate taxes) and in Allegheny County it was 35%. Therefore, even if you are upset or shocked by the increase in the assessed value of your property, it may not be in your best interest to file a formal appeal if your increase is less than than the average increases in your municipality, school district and in Allegheny County. 
 
What You Can Do About Your Assessment

There are two types of appeals that you may file.

Informal Appeal: a one-on-one meeting between a property owner and a representative of the Office of Property Assessments to review information on a property’s characteristics and 2013 court-ordered reassessment value. Representatives from municipalities and school districts are not present at informal reviews. Property owners may  provide corrections to property characteristics and bring pictures and written documentation supporting a change in the 2013 court-ordered reassessment value.

* Informal reviews will be conducted on the third floor of the County Office Building located at 542 Forbes Avenue in Downtown Pittsburgh and at remote sites throughout the county. Reviewers will only discuss information regarding your property characteristics and 2013 court-ordered reassessment value. They will not discuss taxes. You will be notified, in writing, of the results several weeks after the review.

Formal Appeal: A quasi-judicial hearing before the Board of Property Assessment Appeals & Review. The hearing provides property owners and/or the three taxing bodies (municipality, school district and county) an opportunity to challenge a property’s assessed value. Property owners, other interested parties, and the three taxing bodies may present evidence at the formal appeal hearing.

* You may obtain the 2013 Court-Ordered Reassessment Value Formal Appeal Form by downloading it on the Allegheny County Assessments page at http://www.alleghenycounty.us/opa/2013NewAppealForm.pdf by calling 412-350-4600. This form is also available onthe third floor of the County Office Building located at 542 Forbes Avenue in Downtown Pittsburgh. The deadline for filing a formal appeal of your new 2013 court-ordered reassessment value is April 2, 2012.

 You will be notified of the time, date and location of your formal appeal hearing. Representatives from your municipality and school district may or may not be present at your formal appeal hearing. 
 
If all of the above seems a bit overwhelming, whether you are just too busy to do everything yourself or you just don’t completely understand all of the language, you can always look into retaining an attorney to help you along your journey to, hopefully, get your 2013 assessment reduced, thereby lowering your future real estate taxes.  
 
If you have any questions or would like to schedule a consultation with Neighborhood Attorneys, LLC please call 724-884-0864 or visit us at our website: http://www.neighborhoodattys.com.