Beach Road property owners cut off from electricity and road access may receive a reduction in taxes for the current fiscal year.
The assembly at a meeting Tuesday asked interim manager Alekka Fullerton to draft an ordinance that would allow the borough to offer tax relief to disaster-impacted property owners by retroactively revising assessed property value.
On March 10, the borough mailed notices of value to all property owners. Assessed values are based on property condition as of Jan. 1 and, combined with mill rate, determine how much a person owes in property taxes for the upcoming fiscal year.
After receiving the notifications, several Beach Road residents asked for a moratorium on taxes while their properties remained cut off from the rest of town.
“How are you going to charge me taxes for a piece of property you won’t let me go to? We’re asking that from December 2 on, all taxes be prorated until services are returned,” Beach Road resident Todd Winkel said in an interview with the CVN in late March.
In response, borough officials looked into the issue.
“This was a lot more complicated than people first thought it was,” interim manager Alekka Fullerton said, breaking the issue into taxes for the current fiscal year (FY21) and taxes for the fiscal year that begins July 1 (FY22).
“FY22 taxes should not truly be at issue since the properties have been reassessed as of January 1, 2021. The property owners have been made whole since the value of the property was reduced,” Fullerton wrote in a memo to the assembly. On April 13, the assembly voted to reopen the neighborhood, a first step in restoring services to the area.
For the purpose of FY22 taxes, land value for homes in the Beach Road “green zone” was reduced by 35%. Land value for homes in the mandatory evacuation zone was reduced by 50%, and land value for properties destroyed by the Dec. 2 landslide was reduced by 95%. The value of structures on the properties was reevaluated on a case-by-case basis.
Property taxes for Beach Road homes in the current fiscal year is a separate issue, Fullerton said.
“In November, the Beach Road residents paid property tax for FY21 based on their January 1, 2020 assessment. The borough, like many other jurisdictions, currently does not allow a reassessment based on a tragedy which occurs during the tax year,” Fullerton said. Offering a reduction in property taxes for the current fiscal year would require changing code.
Lowering property taxes would require adjusting either the mill rate or the assessed value of the property. Fullerton said after some research, the borough determined a change to the mill rate would be a “very bad idea.”
“There are all kinds of protections in terms of taxpayer protections, constitutional protections, equal protection under the law. There’s all kinds of other issues involved with disparate property tax,” Fullerton said. She pointed out that completely exempting Beach Road property owners from property taxes doesn’t make sense since the tax covers borough services like the school.
The other option involves reassessing home values midyear. Under current state law, tax adjustments are allowed for properties affected by disasters.
“The municipality may by ordinance provide for assessment or reassessment and reduction of taxes for property destroyed, damaged, or otherwise reduced in value as a result of a disaster,” the statute reads.
Fullerton noted that passing such an ordinance would mark a change in borough policy, which could open the assembly to criticism.
“There are undoubtedly people who will say that this is unfair because they personally had a disaster, they personally had a house burn down and this was not done for them,” Fullerton said at Tuesday’s meeting.
Assembly member Paul Rogers said despite the concern, he thought the change had merit, making a distinction between individual tragedies like a structure burning down and a disaster impacting an entire neighborhood.
“We would have to clearly define what we mean by disaster. My desire would be for us to pursue the opportunity that the state has afforded us and to apply it to a large-scale disaster, something along the lines of what we experienced in December,” he said.
The assembly directed Fullerton to draft an ordinance for consideration at the next regular meeting on April 27.