PRLA Restaurant & Lodging Matters Spring 2020

26 •  PENNSYLVANIA RESTAURANT & LODGING matters  •  Spring 2020 THE ONGOING COVID-19 health crisis will likely have a deep impact on many different aspects of the commercial real estate industry and larger economy. As readers of this magazine are well aware, the hospitality sector suffered the hardest and most immediate hit and is also particularly vulnerable to a lasting slowdown and any potential aftershocks which could continue for years in some markets. Pennsylvania property owners who have been financially impacted by the pandemic need to act soon to evaluate and potentially request relief on their property taxes. With respect to the impact of the COVID-19 pandemic, owners in Pennsylvania have an advantage over most other states because the date on which the market value for an appeal is based—known as the “effective date of value”—is earlier than in other states. In Pennsylvania, the effective date of value is: • For Allegheny County, PA— March 31, 2020 • For Philadelphia County, PA—the first Monday in October (October 5, 2020) • For all other 65 PA Counties—Between August 1, 2020, and September 1, 2020, (we recommend filing before August) By comparison, in nearly every other state, the effective date of value is either January 1, 2020 (at which point, the impact of the pandemic was largely unknown in the market), or January 1, 2021 (at which point assessors will likely argue that the effect of the pandemic is already behind us). Assessors in other states are already pushing back against requests for property assessment reductions based on arguments of what was known on those dates. Thus, Pennsylvania property owners are uniquely positioned to use information about the effect of the pandemic to seek a reduction in property taxes. For 65 of Pennsylvania’s 67 counties, the operative question in seeking to reduce your property taxes will be: “What would someone pay for my property on August 1, 2020, based on what information was known in the market?” Reducing your property taxes will require appealing your assessment; winning that appeal will require evidence of your property’s market value. Therefore, appraisals used to support assessment appeals filed in Pennsylvania this year should incorporate the impacts of the COVID-19 crisis. Procedurally, the assessment appeal process in Pennsylvania begins with the filing with the Board of Assessment Appeals in the county in which a property is located. The Board (or in some areas the county commissioners) will conduct a hearing on the appeal in September or October, at which time the valuation evidence must be presented. Generally, for commercial properties—and especially this year—sufficient evidence to reduce your property assessment and taxes will require a written appraisal report prepared by a Pennsylvania Certified General Real Estate Appraiser who is competent in valuation of hotels and who is attuned to the unique impact of the COVID-19 pandemic on that sector. After the hearing, the Board will render a decision either changing or sustaining the property’s assessment, and both the taxpayer and taxing districts then have a right to appeal the Board’s decision to that county’s court of common pleas. Why You Should Reevaluate Your Property Taxes in Light of the Coronavirus Pandemic By Sharon F. DiPaolo, Esq. and Brendan B. Kelly, Esq.