Thursday, January 05, 2012

Anger, Angst, Assessments

As an aside most know I am a big fan of the Guardian's Data Blog, so we will start with a plug for their e-book just out: Facts are Sacred: The power of data


We will get back to that, but now yet again assessments. News is out with some of the latest numbers on commercial property assessments in the City of Pittsburgh.  Again, everyone is confused.  One quote today:
Mr. Kamin said the assessment on the historical Frick Building, where his offices are located, soared by 119.2 percent, from $17 million to $37.3 million.
"I think it's ridiculous," he said. "It's a landmark building but it didn't more than double overnight."
Nothing went up 'overnight'.  The previous assessment values were all based on a 2002 base year. Which really means the market sales that went into the valuations were from before that even. These are values for 2012.  So the benchmark is how much the nominal (not even inflation adjusted values) went up over a DECADE.  Not 'overnight', by any definition.  For commercial property owners they might want to consider it a benefit to get the assessment done soonest.  If it gets delayed it might have the impact of pushing up values even faster given what the commercial property pundits are saying about Pittsburgh's forecast for the next couple of years.

That is just one more example of how the county has ensuredthe  mass confusion, consternation, angst and almost paranoia which reigns as a result of the ongoing property reassessment process. People are being scared and most of it just isn't necessary. Allegheny County accepted the reassessment plan over two years ago.  It is not like the timing was any secret according to the county's own schedule.  The current legal case that has lead us to this point goes back to 2005.  Allegheny County's acceptance of Judge Wettick's order to complete an assessment by this date goes back a couple years now. The situation we are in today, and its timing has been carved into slate tablets for a long time now.

There are innumerable things that could have been done to educate and prepare folks for getting their assessment numbers.  Just a little up front effort might have prevented a lot of folks from being as literally scared as they are.  I have talked to innumerable people in the last week who believe firmly their taxes are skyrocketing and in some cases their future homeownership is in peril.  In virtually all of the cases I have talked about, the homeowners property taxes are most likely going down.  Yet they don't believe it; such is the public state of mind.   

So if I was the benevolent data dictator, one of the things I would have done in this process dump out to the public a lot of data on how the assessment was completed.  If you want to read how Sabre Systems did it back in 2001, start reading. That is not the CLT (the current contractor) methodology, but it is not a bad primer on the process and local Allegheny County issues with property assessments. Any reason there is not some educational material out there in short or long form?  Would have made a big difference. Here we have even smart attorney folks thinking the assessment changes were all 'overnight'.

Second I would dump out a lot of diagnostics of the results so folks appreciate the changes going on, let along   Individuals can of course look up individual assessment values, but not much more.  I would have dumped out lots of descriptives and dumped out the whole dataset of new and old values.  You might be amazed what people would be able to do with data if you set it free. 

Sooo.. in the spirit of being "Data Driven" a term becoming ubiquitous, but that we rarely really mean. I think we are collectively going backwards personally.  That has all been a long lead up for the data that thus far everyone, incluing the media, seems to be almost guessing at, or operating completely on anecdotal snippets of the big picture.   I have a very rudimentary python program (to download if you want to look at it) one can use to scrape the data a more complete data site from the county assessment site.   I am sure there are 9th graders in town who could write  a better program. Given the speed I can get from the county's servers.. and probably the sheer inefficiency of my code, it's awfully slow, but it works. Don't try running it during the day, it takes overnight.  To keep it workable, it pulls from a list of block and lot numbers of city residential properties which I will leave online for now.  If anyone wants to use  this program as a starting point for a better and more useful program, I'd love to see it.

Below you will find what it gives me.  The distribution of how the new numbers compare to the old can be summarized in the graphic below.  This is the distribution of the ratio of new values vs. old values in the City of Pittsburgh data thus released.   Thus far the news is that the aggregate values of residential property in the city is 46% higher than the old values.  It is still dependent on the commercial property values come in at in aggregate, but if taxes are adjusted to be revenue neutral based on the +46% value, then it works out that there are 56K properties that will see their taxes go down, under 1,000 will remain exactly the same and 40K with taxes that will go up.  Works out to ~60% seeing property tax decreases.  Of course predicated on taxing bodies following the law of course.  Still, never has good news been so badly received.

Not to say there are not angry folks out there.  Just under 5% are looking at effective tax increases of 100% or more (which would happen if your nominal values increased by 292% or more).  A lot of folks for sure, and I am sure most of them will be filing appeals.  I bet a lot (not all, a lot though) of those very high ratios are new construction in some form and I bet those parcel owners are not too suprised in general.  Probably the maximum anger is found in parcels somewhere between those two lines I've marked.


Note I started my program before they released the commercial values..  So this is just the residential data for now.  I'll see what we can do for commercial, but for that the properties themselves are so different that you have to look at the data a bit differently.  The commerical valuations will also impact what the revenue neutral millage is as well. So this is all just a first cut. Stay posted. 

I say at this point the cat is out of the bag.  What started as litigation with just a small handful of plaintiffs could potentially be a much bigger deal if the county really tried to backtrack on assessments now.  Theoretically if they wanted to keep using the old values, 60 percent of folks in the city at least would have a vested interest to sue to use the new numbers.  Might be why the county went out of its way to suppress the strangely never mentioned 2005 assessments it completed (I presume at a cost of $millions to complete??), and that nobody has ever seen unless you had been very quick to check.  Lot of folks would likewise have seen property tax decreases if it had been implemented. 

17 Comments:

Anonymous BrianTH said...

Obviously the lack of transparency and deliberate sowing of confusion goes together with the political strategy of opposing the reassessment. And that political strategy was unfortunately dictated by human nature: the people above the Briemdoza line (wherever it ends up) are collectively going to feel more intense anger at the politicians than the people below the line will collectively feel gratitude toward the politicians, despite the fact that the latter outnumber the former.

Oh well. I'd like to think that once the ~60% figure out their taxes went down, there will at least be some additional support for more regular reassessments, but I'd have to bet on it taking more court orders.

Thursday, January 05, 2012 10:10:00 AM  
Anonymous DBR96A said...

I don't know much about this stuff, but won't the millage rates go down correspondingly?

Thursday, January 05, 2012 10:21:00 AM  
Anonymous MH said...

the people above the Briemdoza line (wherever it ends up) are collectively going to feel more intense anger...

Kahneman and Tversky go to Grant Street.

Also, the people who are getting their taxes raised are probably more likely to be wealthy. In other words, to vote and otherwise participate politically.

Thursday, January 05, 2012 11:04:00 AM  
Anonymous BrianTH said...

Yep, that too . . .

. . . although as an aside, I think a lot of people in higher-priced areas in the County are going to find out their appreciation wasn't really that extraordinary--the biggest gains were more in gentrifying areas than already-established areas.

There is also a mathematical point about weighted averages which is difficult to convey intuitively, but it basically means that if the already-highest-value properties in a jurisdiction appreciated the most, the effects on the taxes paid by those highest-value properties will be muted (when it comes to these matters, the already-higher-value properties are the dog, and the already-lower-value properties are the tail, and it is tough for the tail to wag the dog).

So many owners of relatively expensive properties in the County may face only relatively modest tax increases, or in fact modest tax cuts. The only general group which is obviously on the hook are property owners in lower-value areas as of 2002 which have been gentrifying since then--which is a non-trivial group of people, but doesn't include a lot of wealthier people in the County.

Thursday, January 05, 2012 11:29:00 AM  
Anonymous Jerry said...

I suspect the slowness of your program is less a function of your code than the speed of the response from AC's website. Requesting one parcel at a time is always going to be slow, but I'm sure they aren't in a hurry to make a better public API, echoing what BrianTH said above about transparency and confusion.

Thursday, January 05, 2012 2:01:00 PM  
Anonymous MH said...

Oh Boy.

Thursday, January 05, 2012 3:29:00 PM  
Anonymous MH said...

To go back to the idea of suing the county, it occurs to me that there are wandering class-action law firms that file a suit and then seek more clients. I was reminded because I just cashed a check I got because my credit card company did something funky with the exchange rates back when I bought Harry Potter from Amazon UK. I have no idea if that works for government bodies or for taxes, but 1/3 of whatever the amount is for the whole school district would be enough to attract more lawyers to file on very short odds of success.

Thursday, January 05, 2012 3:47:00 PM  
Anonymous MH said...

Can somebody explain to me how the county can make an argument under the Equal Protection Clause? The closest I can come to making sense of it would be that they are going to argue that by making things more equal within Allegheny county you've somehow denied equal protection to residents of other counties. However, that clearly isn't what they are upset about. Is there a way to make an argument that somehow one class of people in Allegheny County has a right to the same type of unfair treatment relative to another class of people in Allegheny County as similarly situated classes in other parts of the state?

Thursday, January 05, 2012 4:12:00 PM  
Anonymous Anonymous said...

It's been my experience that people have very selective memories.

My parents' assessment went up somewhat and my Dad asked me if he should appeal. I told him no, as his taxes would likely go down. My grandmother's went up substantially, but she also is looking at a likely reduction.

As for an EPC argument, I don't think there is one when you are looking at it Allegheny County versus the other 66, but probably one can be made if there were any differences in criteria (2011 assessment vs. 2022 assessment) utilized for the city property owners and the rest of Allegheny County.

Thursday, January 05, 2012 4:33:00 PM  
Anonymous MLN said...

It would be interesting to calculate the average assessed value for each bin on the histogram.

It would possibly show which type of properties are seeing the large tax hikes and potentially which demographic the County Executive is so afraid of crossing.

Thursday, January 05, 2012 4:34:00 PM  
Anonymous BrianTH said...

Of course there is no EPC argument--and if there was, it would likely imply there has to be a single nationwide assessment scheme, which exactly no federal courts are going to be willing to say.

But they have to say something to explain filing in federal court, since the state courts keep selfishly refusing to agree that more accurate assessments are bad for a county.

Thursday, January 05, 2012 5:44:00 PM  
Anonymous Alex B. said...

Politics, always politics. Now our brand new County Executive is going to risk jail time to show he's "one of the people."

The various elements in this "comedy" are completely disinterested in facts. The lawyers and "assessment consultants" need more confusion to generate higher fees.

The whole affair is shameful.

Thursday, January 05, 2012 6:07:00 PM  
Anonymous gambino said...

the last reassessment done in 2002 was done with the valuation models from CLT calibrated my my in-house modeler, a former stats prof at PSU. Multiple regression analysis and 5 adjusted comp sale prices with a seventh number, the weighted average of the 5 adjusted comps sales prices were used in valuing by the market approach. Sabre did not do the current 2002 base year values, they were in house with CLT CAMA

Sunday, January 08, 2012 4:33:00 PM  
Blogger C. Briem said...

I would say the last reassessment was actually the 2005 one.. but that is arguable.

The Sabre systems assessment used the EDA feedback algorithm which was designed by Professor Longini at CMU precisely for Allegheny County. Would have worked much better for us than any multiple regression model except that they threw out too much of the low valued data thinking they were not arms-length transactions.

Sunday, January 08, 2012 5:32:00 PM  
Blogger C. Briem said...

Oh.. you were commenting on my posting of the sabre systems methdology. I said in the post is not the relevant documetation for for CLT's product, but still it has a lot of good background in on the issues faced with assessing in Allegheny County.

Sunday, January 08, 2012 5:40:00 PM  
Anonymous Anonymous said...

i enjoyed your work very much. the problem in Allegheny County of course is a complete lack of leadership and the political pardox of Democrats fighting a reassessment when most of the reductions in tax will occur in Dem areas, see DR Fischbeck (CMU)study of the 2006 values and the resulting tax payments. The simple 5th grade math of 2 X 4 = 8 and 4 X 2 = 8 with the antiwindfall provision applied is either beyond their comprehension ofr they are purposely pushing politics over practice.....

Sunday, January 08, 2012 8:30:00 PM  
Anonymous gambino said...

The commercials will all appeal and more than likely get reduced, fairly or not, because the appeals process gets all starry eyed when the commercials bring in big guns. The increases were not from my original 2002 values but from reductions that may or may not have been appropriate

Monday, January 16, 2012 5:18:00 PM  

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