The proposed housing plan developed by the Crawford County Planning Office recently uncovered that nearly 80 percent of Meadville’s workforce lives outside the city limits.
This stark finding prompted followup research which revealed that Meadville’s inter-municipality commuter rate is relatively high when compared to peer cities such as Warren, Oil City and Bradford despite having a similar amount of buildable residential land.
Although many individuals and families enjoy calling Meadville home, such a finding might trigger one to talk with those in the real estate industry.
To begin a housing discussion, one should know that they’re not talking Meadville real estate without at least mentioning property taxes. Discussions with professional realtors facilitated by the Crawford County Planning Office revealed that many potential homebuyers are turned away from purchasing property in Meadville due to its relatively high property tax rate.
Although the city’s higher tax rate is a creature of its more expansive scope of public services paired with the fact that just over 44 percent of its ratable assessment base is exempt from property taxes, at 21.92 mills in 2018, Meadville fares poorly against neighboring Vernon Township at 2 mills and surrounding West Mead Township at 4.25 mills.
This tax differential is significant for most potential buyers. A property owner with a home valued around the county’s median price of $120,000 can expect to pay $14,179 extra in property taxes above what they would pay on a similar property in Vernon Township over a 25-year mortgage term. That extra $14,000 goes a long way toward affordability for most households, and this difference has been attributed to Meadville losing out on home sales and investment opportunities.
“The taxes in many Crawford County neighborhoods are prohibiting sales. We have buyers choosing to live in other counties rather than pay our taxes,” said David Schepner, a broker with Howard Hanna Bainbridge Kaufman Real Estate.
None of Meadville’s peer cities, including Warren, Oil City and Bradford, exhibit millage rate differentials with neighboring residential municipalities as extreme as what the city of Meadville has with Vernon and West Mead townships. Unfortunately, other sections of Crawford County, including the city of Titusville, have just over 54 percent of its ratable assessment base exempt from property taxes, and some boroughs experience similar problems.
Because taxes and affordability go hand-in-hand, a look naturally shifts to homeownership.
County focus groups with real estate professionals revealed some of the challenges lenders face when providing mortgage loans.
A growing concern is that neighborhood decline is increasingly destabilizing mortgage investments. Essentially, a new mortgage loan granted to a buyer may be a sound investment at the time of origination, but gradual neighborhood disinvestment then causes the home to lose substantial value.
When this occurs, the lender is left to face an increasing level of risk should they have to foreclose on the property and attempt to recuperate their loan cost at resale. Some local real estate professionals are concerned that relatively high taxes may exacerbate this issue.
Max Holt, a trustee with Marquette Savings Bank in Meadville, cautions, “The city of Meadville does a great job; the whole property tax issue is a very difficult one. However, if the status quo continues, neighborhood decline is inevitable.”
Homeownership data may already reflect such concerns as the city of Meadville’s owner-occupancy rate of 38.5 percent, which is unaffected by the college student population, sits well below that of its peer cities of Bradford, Warren and Oil City at 46 percent, 56.9 percent and 63 percent, respectively. However, some Pennsylvania communities have reversed the flight of homeownership by establishing creative public-private partnerships to stimulate owner-occupancy.
Indiana borough, a community facing similar conditions as communities across Crawford County, has developed an innovative program aimed at revitalizing residential neighborhoods through a series of public-private partnerships titled Inhabit Indiana.
To establish the program, the borough partnered with community-based organizations, local financial institutions, settlement firms, real estate companies, developers and employers.
Designed as a two-phased approach, targeting both homebuyers and homeowners, the program consists of a closing costs assistance component and a repair and renovations component. In order to obtain state and federal financial assistance, the borough is leveraging local employer contributions to the program.
“Inhabit Indiana is an excellent example of what can happen when municipalities, private companies and nonprofits come together to increase access to home-ownership,” said Indiana Borough Councilman Ben Ford, who is spearheading the initiative.
With similar partnership opportunities available in the area, specifically Meadville and Titusville, this type of program may be a long-term approach to revitalize communities.
That 'R' word
Of course, the conversation isn’t complete without at least mentioning another hot button issue: reassessment.
Crawford County last conducted its reassessment of property in 1969 and last updated the formula it uses to assess property in 1985.
The update at that time was to add a multiplier of 2.7 to the calculated replacement cost of a structure based off 1969 figures.
Discussions with real estate professionals were mixed on the issue of reassessment.
“I have no interest in seeing a countywide reassessment," said Craig Mullen of Northwest Bank. "The cost doesn’t make sense based on our current county budget.”
In December 2017, it was revealed the cost of conducting a reassessment to be around $2 million. Current estimates, based on more recent quotes, place the cost of conducting a reassessment closer to $4 million.
On the other side, conducting a reassessment is viewed as a matter of fairness and necessity.
“I’m hopeful that the proposed housing plan for Crawford County includes a county reassessment of property taxes; it’s long overdue," said Steve Cappellino of ERIEBANK. "I truly believe it would have a positive impact on not only the county but the homeowners in Meadville as well.”
Although the county has no formal plans to conduct a reassessment, a 2010 study sponsored by the Center for Rural Pennsylvania concluded that the efficiency of revenue collection for municipalities declines with the amount of time allowed to pass since the last reassessment.
Specifically, that 2010 study concluded that an increase in the number of years since the last countywide reassessment leads to a decrease in the amount of tax revenue generated per mill with an even greater negative impact on rural counties.