In March, Luzerne County had to refund nearly $7,000 in county real estate taxes for both 2011 and 2012 to a Hazleton entity that obtained a $1.3 million assessment reduction on the former Traders Bank Building downtown.
More refunds were necessary in April.
The owner of the Residence Inn Marriott in Hazle Township was refunded a combined $48,930 in county taxes from 2011 through 2014 due to a $2.3 million assessment reduction. The Greater Wilkes-Barre Industrial Fund also received an assessment reduction of $1.9 million for a commercial property located in Plains Township and Wilkes-Barre.
County Council Chairwoman Linda McClosky Houck said the continued emergence of big-ticket assessment reductions has prompted her to schedule a discussion on the status of commercial appeals and the court-level process used to determine how much values are knocked down.
Court officials control the procedure for processing court-level assessment challenges that contest county assessment appeals board rulings, and they added additional steps after the 2009 countywide reassessment to prevent county judges from getting bogged down with the influx.
Initially, many of these cases were resolved through mediation, in which a court employee presided over negotiations. Court officials were not aware of any cases that advanced to the next step of trial before a special master.
Now, most of the cases are privately negotiated by attorneys without getting to formal mediation, officials said. A county judge must sign off on the settlement, but there’s typically no public proceeding in which both sides argue their opposing views, court and county officials said.
McClosky Houck questions whether it’s time to return to the pre-reassessment process of sending these cases straight to a courtroom, because the reassessment rush has passed and most of the lingering cases involve large commercial and industrial properties.
“I think it’s really important these large commercial cases are heard by a judge of the county. I want to be sure these cases are receiving every consideration from both the taxpayers’ perspective and the perspective of the taxing bodies,” McClosky Houck said.
The discussion is scheduled during Tuesday’s work session, which follows a 6 p.m. voting meeting in the council meeting room at the courthouse in Wilkes-Barre.
While the council and administration may not have power over establishing court protocol, they could provide a recommendation to court officials, McClosky Houck said.
County Court Administrator Michael Shucosky said court officials have been reviewing the procedure for court-level assessment challenges and other processes as part of an update of all rules of civil procedure.
McClosky Houck also said she wants an update on which court-level assessment challenges are pending, saying these cases are a potential outstanding liability that could impact the budget. Refunds due to assessment reductions are retroactive to the time an appeal was filed.
Reductions granted to larger commercial entities — many dating back to the reassessment — counter the county’s struggle to boost revenue to get back out of the red and balance the budget without a tax hike. The county spent more than $1.25 million on refunds for commercial cases resolved since 2014.
According to county records, larger, non-residential properties received a combined $16.9 million in court-level assessment reductions last year. Another $12.7 million in reductions have been granted this year to date, records show.
The total from both years equates to a loss of $170,000 in county revenue annually based on the current tax rate.
County Assistant Solicitor David Schwager said he supports the current process and aggressively represents the county’s interests in negotiations.
Schwager said some larger commercial settlements have taken years to settle in part because he is a tough negotiator. He said the refunds have fallen below budgeted amounts with the exception of 2014, when the county mistakenly zeroed out the line item for refunds.
“If I were giving away the store, I wouldn’t have such a difficult time settling these cases,” he said.
Schwager also stressed solicitors from the school district and municipality where a property is located must sign off on settlements. Schwager signs off on the county’s behalf, based on his more than 25 years of expertise as a real estate attorney and consultation with the assessment office. The county also has obtained outside appraisal opinions in a few cases, he said.
He questions the logic of returning to the traditional court-level structure, saying settlement discussions always were an option to avoid the time and expense of judicial court proceedings.
“I think the system has been working,” Schwager said.
The $1.3 million reduction for the former Traders Bank property on East Broad Street in Hazleton lowered the assessment from $1.78 million to $450,000.
Owned by DHD II LLC, the seven-story property’s refund applied only to 2011 and 2012 because the property was approved for Keystone Opportunity Zone, or KOZ, tax exemption from 2013 through 2022 as part of a project to make the site the new international headquarters for DeAngelo Brothers Inc.
The reduction on the Residence Inn Marriott, owned by Montoursville-based J&J Inn Partners, lowered the hotel’s assessment from $7.56 million to $5.25 million.
The Greater Wilkes-Barre Industrial Fund’s reduction was for the Trion Industries property on Laird Street. The total assessment for the two properties involved was lowered from $5.4 million to $3.5 million.