West Deer seeks some tax payment from living facility

West Deer, the Deer Lakes School District and Allegheny County are likely to get only a fraction of the property taxes they otherwise would on a new senior independent-living facility in the township.

But because the $21 million development is being built by Concordia at Rebecca Residence — a tax-exempt nonprofit — the taxing bodies would likely get nothing if not for a pending agreement, according to township Solicitor Sam Happel. If approved, the school district, county and township will split $144,000 in 2018, the first year of so-called “payments in lieu of taxes.”

That's less than a fourth of the more than $600,000 that would be paid if the development was taxed at its full value.

The independent-living facility will join the skilled nursing and personal care facilities there.

West Deer has issued a building permit for the expansion, Highpointe at Rebecca, and earthwork has started.

The expansion is being built on two of three parcels Concordia now owns.

Of the three, two are tax exempt, and it has applied for tax exemption on the taxable property.

Happel said that while such independent living facilities are usually taxable, he said Concordia would have a “strong argument” for theirs to be exempt because it's part of their overall organization.

If the township challenged the development's tax status and lost, it would not get anything and incur legal costs, Happel said.

Paul Brand, executive vice president of Concordia Lutheran Ministries, the parent of Concordia at Rebecca Residence, said they proposed the payment agreement about a year ago. Concordia has such agreements on two other independent-living properties in the state, he said.

“The way the property tax laws and regulations are set up, we believe we should qualify for full exemption based on the tests that the state has laid out,” Brand said. “We realize there are still some services being provided. We want to be good neighbors and reach an agreement that would be a ‘win-win' for all the parties involved.”

Although believing Concordia meets the criteria for exemption, Brand said they understand the school district — the biggest player in property taxes — would most likely appeal.

“To avoid a potentially long and protracted legal battle over this, we feel it's in everyone's best interest to negotiate this agreement,” Brand said.

The application for tax exemption on the taxable property would be withdrawn once the agreement is approved, Brand said.

On Happel's advice, West Deer supervisors held off voting on the agreement at their monthly meeting this week.

The county's law department is reviewing the agreement, county spokeswoman Amie Downs said.

Deer Lakes spokesman Jim Cromie did not respond to a request for comment.

Brand said Concordia based its initial proposal on dollar amounts per unit in the development. The school district made a counterproposal, which he said Concordia accepted.

As proposed, Concordia would begin making a tax payment in March 2018, with set amounts due in March of each year through 2027. After that year, the total due would be adjusted based on the Social Security Administration's cost-of-living index.

The payments would rise from $144,000 in 2018 to just under $180,000 in 2027, which is an increase of about 25 percent.

By the numbers

Based on current tax rates, if the development was taxed at $21 million, it would pay a total of about $602,000 a year, with the majority going to the school district, followed by the county, with West Deer getting the least.

The payment under the agreement would be split among the three taxing bodies by percentages based on their property-tax millage rates for that year.

Based on 2016 rates, that gives about 77 percent to the school district, 16 percent to the county and 7 percent to the township.

If the percentages remain the same, in 2018 the school district would get about $110,000; the county, $24,000; and the township, $10,000.

If the property was taxed at a $21 million value, the school district would collect about $460,000; the county, $99,000; and the township, $42,000.

Brian C. Rittmeyer is a Tribune-Review staff writer. Reach him at 724-226-4701 or at brittmeyer@tribweb.com.