In the old days, when the Mirror wrote a story about the city adopting its budget, the reporter could give readers an idea of how much property tax they'd pay the following year by using a hypothetical assessed value.
Assume $10,000, take the millage - currently 47 - convert to thousandths, multiply and presto, the bill would be $470.
Except it doesn't work that way anymore. It's all based on land value now, after an eight-year phase-in completed for 2011.
Mirror photo by Patrick Waksmunski
Dick Lockard looks over his tax bills near his home on East Caroline Avenue in Altoona. Lockard is questioning the calculation of his real estate taxes.
The change has led to confusion among property owners who pay attention to their tax bills.
Earlier this year, city resident Dick Lockard got a city bill for $509 - seemingly $209 more than it should have been, based on a Mirror example published in December.
Lockard wondered if he was getting ripped off, but the answer is no - he's just paying more under the new system.
City Council voted to adopt "land value tax" in 2002, on the urging of The Center for the Study of Economics in Philadelphia, whose president, Joshua Vincent, had made a presentation the year before.
Land value tax shifts the basis for property tax to assessed value of land and away from assessed value of buildings. It's designed to encourage development and discourage speculative hoarding of ground.
While 16 cities and two school districts in Pennsylvania use land value tax, Altoona this year became the first municipality in the country to go as far as to rely on land value alone.
Council introduced the practice with a 20-percent shift toward taxing on land alone, followed by successive annual shifts of 10 percent, until the transformation was complete.
Because collective assessed value of land in the city is one-seventh as much as assessed value of land and buildings combined, the city had to increase millage by a factor of seven to generate the same revenue.
That land millage is now 369 mills.
Applied to the $24.59 million assessed value of land in the city, it generated $9 million for 2011, theoretically.
Because the new millage is seven times higher than the millage under the old system, individual property owners pay less if their land value is less than one-seventh of their total assessed value - the amount that was the basis for taxation under the old system.
Conversely, owners pay more if their land value is more than one-seventh of their total assessed value.
After the change began, there were a flurry of questions, according to Controller A.C. Stickel.
Then there were few until this year, when the transformation was complete.
"That surprised me, because we'd been inching into it for eight years," Stickel said.
Some calls were from people who - believe it or not - thought they were paying too little, City Clerk Linda Rickens Schellhammer said. They worried the city would come after them later.
Some people called to complain, some to express puzzlement, some from curiosity, said Finance Director Omar Strohm.
The confusion came from an increase that seemed to come from nowhere, according to Mike Baldner, chief assessor for Blair County. There would have been more calls, but reductions in the house tax offset the increase in land tax for many, Baldner said.
Actually, it offset the increase for most, according to a report from the Center for the Study of Economics.
This year, 72 percent of residential parcels - not including vacant lots - got a cut, according to the study. The biggest group got a $10 decrease approximately, the report stated.
Most of the "screaming" came from those with vacant lots, according to Baldner. Their properties were in the crosshairs of the increase.
Vacant lot owners have filed several tax appeals in each of the last several years, according to Baldner.
Realtor Ace Evey of Exit Realty John Hill said he understands that city officials have "their backs against the wall" with financial troubles, but the increases have been "out of line," he said.
The change has probably created startling contrasts at the edge of the city, according to Baldner.
For vacant ground in the city that is assessed at $1,000, an owner would pay $369, he said. If the land were in Logan township, the owner would pay $12, he said.
The county Board of Assessment generally grants a 50 percent assessment reduction if conditions like lack of access prohibits building on a vacant lot, Baldner said, but not if the problem is just that it would be unprofitable to build.
One unsuccessful appellant was Phyllis Garhart, whose family owns four lots - two vacant, one with a storage building and the other a house property below Gospel Hill.
She couldn't get an appraisal on her lots, because there wasn't anything comparable nearby. Garhart wanted to build a garage next to her storage building, but the setbacks limited her to a tiny, impractical structure.
To circumvent them, she would have needed a variance from the Zoning Hearing Board, which can grant them only under strict conditions.
Recent planning code changes may change that, according to Planning Director Lee Slusser. Now, property owners can build with setbacks matching the average on their block, according to Slusser.
So Garhart may try again.
Looking at the numbers
The Center for the Study of Economics cites a variety of statistics to show the program is working.
"I don't think it has really lit up the downtown," conceded President Joshua Vincent.
Still, Altoona's median income rose 19 percent in the first decade of the century, compared to U.S. median income rising just 4.2 percent; just 10.8 percent of Altoona's housing units are vacant, compared to 12 percent nationally.
"By all accounts, Altoona ought to be like other post-industrial communities in Pennsylvania and the Rust Belt - yet it's not," states a Center for the Study of Economics newsletter.
It's actually "very hard to tell" whether the program has promoted development, especially with the bad economy since 2008, said Altoona City Manager Joe Weakland.
Evey thinks it hasn't helped.
"I don't see any evidence," he said.
One disadvantage of the program is that it eliminates the property tax growth that can accrue from building construction, Stickel said.
Buildings, unlike land, can proliferate, increasing the tax base, he said. But with land value tax, the city has sworn off taking advantage of it, he said.
Under the current outdated county assessment system, it can't even take advantage of market increases in land values, he said.
Current assessments of land value are based on frontage and location, with per-foot values decreasing the farther a property is from downtown, Baldner said.
The "downside" to land value taxation is the burden it places on commercial properties with lots of parking lot space, Vincent said.
J&P Auto Mart co-owner Dawn Scaramozzino has noticed a tax increase for her 1.2-acre property. Still, she isn't complaining.
"You have to pay to be in business," Scaramozzino said, citing city services like plowing, maintenance of streets and keeping the peace.
Land value tax would work better if the Altoona Area School District also adopted it, because it would increase the development incentive, according to Weakland.
Evaluation of the evidence for success is far from over.
Patrick Miller, executive director of the Greater Altoona Economic Development Corp., said he can't point to any particular example of land value tax influencing a development decision.
Miller recalls the city's adoption of the Local Economic Revitalization Tax Assistance tax abatement program in the 1980s to promote development in Pleasant Valley.
While development followed, at least one city official thought afterward it would have happened anyway, Miller said.
"Did it [land value tax] accelerate the process [on specific projects]?" Miller asked rhetorically. "I don't know. Maybe."
Mirror Staff Writer William Kibler is at 949-7038.