City council decides to cut land value tax

City Council on Monday informally agreed to eliminate its sometimes-controversial “land value” property tax, starting next year, because the tax never proved to be effective and because it caused confusion.

With that near consensus – Dave Butterbaugh was the main holdout – council gave an OK to the county to send notices next month that will indicate to city residents that they’ll be paying property taxes in the old, standard way, based on total assessed value of land and buildings.

Since 2002, city residents have been paying their city property taxes based at least partly on assessments skewed towards the assessed value of land – and away from the assessed value of buildings.

Since 2011, they’ve been paying their city property taxes based entirely on the value of the land – and not at all on the value of the buildings on that land.

Altoona is the only municipality in the country that taxes property based solely on the value of land.

The city went for land value tax on the urging of the Center for the Study of Economics in Philadelphia, a land value tax advocacy organization, whose president, Josh Vincent, made a presentation to council early this century.

Ideally, land value tax discourages landowners from merely holding vacant land, because it imposes a tax penalty for doing so, even as it encourages development, because it removes the tax penalty for doing so.

But it was always difficult to determine how much the practice has helped.

One of the reasons it may not have helped much was that city property taxes account for only about one-fourth of the total tax bills for city residents – with Altoona Area School District and Blair County tax accounting for the rest, said Finance Director Omar Strohm.

The high millage on land that resulted from the practice – the millage is 394, because land accounts for only one-seventh of the total assessed value in the city – scared off potential business development by those who didn’t look more deeply into the situation, said Mayor Matt Pacifico.

It also discouraged the purchase of vacant lots that have resulted from demolition of blight, because neighbors who might otherwise buy those lots for side yard beautification hesitated, because of the high taxes they’d owe, said Councilman Matt Cacciotti.

Butterbaugh argued for scaling back land value halfway to the traditional norm.

That would avoid punishing downtown property owners whose buildings are large, compared to their land, he said.

But a majority of council accepted the recommendation of City Manager Marla Marcinko, which matched the recommendation of the city’s Act 47 coordinator team, to return to the old way.

Council is not likely to take official action to change the tax until the end of this year, when it passes the budget and sets the slate of taxes for the next year, officials said.

Mirror Staff Writer William Kibler is at 949-7038.