Value of Downtown Pittsburgh's skyscrapers cut in half, along with taxes they pay
PITTSBURGH (KDKA) -- The giant office towers Downtown aren't worth what they once were and that spells trouble for the city of Pittsburgh and its public schools.
In assessment appeal after assessment appeal, some Downtown skyscrapers' values are being cut in half, along with the taxes they need to pay to the city, county and school district.
The skyscrapers Downtown are getting massive assessment reductions and the school district for one says that spells disaster for its finances to the tune of tens of millions of dollars in refunds and lost revenue.
When it opened its doors four years ago, the PNC Tower was assessed at $147 million, but under appeal, it's been reduced to $72 million, a reduction of more than $74 million.
PPG Place, once assessed at $179 million, has been reduced to $142 million -- a decrease of $36.8 million.
And the city's tallest skyscraper, the U.S. Steel Tower, had been assessed at $233 million but is now $141 million -- a decrease of more than $91 million.
"Right now Downtown real estate is not what it was worth two or three years ago and that's why you're seeing the massive reductions," said attorney Robert Peirce.
During the pandemic, Downtown's office towers emptied out and they still haven't returned to their former bustle. The work-at-home economy has decreased demand for office space and the value of those buildings has plummeted.
As a result, the owners of more than 50 Downtown buildings have appealed their assessments and are winning huge reductions -- meaning they'll be paying far less in taxes and are owed money for paying too much in the past two years.
Sheehan: "So the city's going be cutting a lot of checks right now."
Peirce: "The reality is the city, the county, the municipalities, school districts are going to have to return millions of dollars to the property owners whether they be commercial or residential."
Because the courts recently approved a new formula for determining values, the appeals board is working through some 30,000 assessment appeals, both commercial and residential. But the largest reductions are Downtown, which represents about 25% of the city's real estate tax base.
"These refunds in the aggregate will be tens of millions of dollars. The tax base going forward will be diminished. The school district is going to have some very difficult decisions going forward," said Pittsburgh Public Schools Solicitor Ira Weiss.
Weiss is appealing these reductions to avoid layoffs and school closures but says he only expects to be partially successful.
"The general takeaway is that even if we are successful, there are going to be refunds of large amounts of money and there are going to be diminished tax bases moving forward," Weiss said.
Meanwhile, the assessment values keep dropping.
The Union Trust Building went from $54 million to $44 million, a reduction of $10 million. And Gateway Three was assessed at $62 million and has been reduced to $35 million -- a reduction of $27 million.
In a statement, the Gainey administration says it's monitoring this situation and has anticipated a drop in revenue. It's considering joining the school district in these appeals.
