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Glaxo real estate reassessment may cost school districts millions

| Jun 20, 2011 | Commercial Real Estate |

Real estate throughout the country doesn’t have the value it once did. School districts, dependent on property taxes to fund education, are struggling to hold onto tax monies under old assessment values. In Montgomery County, Pennsylvania, two school districts are in a nail-biting commercial property tax dispute with one large taxpayer – GlaxoSmithKline.

The Upper Merion and Spring-Ford School Districts are worried that the big pharmaceutical company’s appeal to have its property-tax burden reduced will cost them millions. A retroactive reassessment from the time the company filed a lawsuit in 2007 could mean that, instead of the company paying real estate taxes, the districts might owe Glaxo a refund.

The districts have already anticipated big income losses for the next school year, when Glaxo’s property tax payments are expected to be downsized $2 to $3.5 million along with the company’s land assessment. Both districts have made sacrifices, including staff cuts.

To counteract Glaxo’s probable settlement, taxes are being raised in the districts next year. Taxes for Spring-Ford will go up more than 3 percent, while Merion School District tax rates will jump more than 9 percent.

The revenue-embattled school districts are trying to come to terms with just how much GlaxoSmithKline may have been overtaxed. The schools say the pharmaceutical firm is owed about $6 million, but Glaxo feels it is due more than $10 million. Should the two sides continue to disagree, the matter will be heard in court this fall.

The Upper Merion and Spring-Ford School Districts are not the only casualties under new, lower tax assessments. Other Philadelphia-area districts are losing tax money. West Chester gave up over $300,000 in revenue when three mall properties were reassessed. Commercial property reassessments in Montgomery County cost North Penn School District $1.4 million.

Source: Philly.com, “Glaxo tax disputes could cost school districts millions,” Dan Hardy, 15 June 2011

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