Turn the prom into a lesson in budgeting

Pricey proms

Prom season is here and anxious parents are finding costs for this rite of spring can be staggering.

You know the response that you get when a discussion on prom costs takes place. “But I am only in high school once!” your child is likely to say. Hard to argue with that logic, even if many kids go to multiple proms.

So what do you do when faced with the high cost of prom dresses or tux rentals, and transportation, and flowers, and the tickets?

The average family will spend $1,139.00 this year on prom expenses, according to a survey by Visa, Inc. Over time, the prom has become an exercise in keeping up with the Kardashians in terms of fashion.

You can either shrug your shoulders, and fall in line and in debt, or you can turn this springtime social event into a learning experience.

Budgeting for the ball

Why not tell your prom king or queen it is time to learn how to make a budget? This can be a valuable and practical financial lesson, as for many of these prom-going teenagers, college is fast approaching.

Saving some money by approaching the prom with a smart financial approach can help when it comes to getting ready for college as soon as this fall.

The approach is simple. First, set a reasonable and firm budget for the expenses, dress or tux, shoes, hair, transportation, tickets, pictures, after-party plans, etc. It is important to have your child take ownership of a portion of the prom expenses. If they have a job, make it clear they are responsible for a percentage of the cost.

Having your child decide what is important in the budget is a good lesson in how to stretch a dollar with limited funds. It is a skill they can certainly use in college and in life.

You may also find that, by working with your child in this lesson in life and finances, they may find the prom is a nice event to enjoy, but there are bigger and better experiences ahead. This one night will not define their existence and, in the end, you may have not only less drama to endure, but will have taught a valuable lesson.

Play it safe, hire an attorney to do the job right

Who should represent you?

In recent weeks, there has been a battle raging between Allegheny County Council and the Allegheny County Bar Association over whether appraisers and real estate agents should be able to represent homeowners at their formal hearings for real estate tax assessment appeals. Homeowners can choose to represent themselves at the hearing or hire a representative. The representative can be a real estate agent, certified appraiser or attorney. Only licensed attorneys can represent people in court. However, because the formal hearing is not held in a court, real estate agents and appraisers have been allowed to represent homeowners in the past.

The Allegheny County Bar Association expressed concern over this. The Bar Association feels that while the formal hearings are not held in a court, the real estate agents and appraisers are acting like attorneys and violating the law by practicing law without a license. The Allegheny County Board of Property Assessment Appeals and Review, which holds the formal hearings, agreed with the Bar Association and made a rule that only licensed attorneys could represent homeowners at their formal hearings.

Affordable representation for homeowners

Allegheny County Council, which oversees the Allegheny County Board of Property Assessment Appeals and Review, struck down the rule allowing only licensed attorneys to represent homeowners at their formal real estate tax assessment hearings. Council members didn’t want homeowners to be faced with the choice of paying money they didn’t have to hire an expensive attorney or not having any help to fight their real estate tax assessment. They think that allowing non-attorneys to handle the formal hearings provides a less-expensive alternative for homeowners. The Allegheny County Bar Association was understandably upset by Allegheny County Council’s actions and it is unlikely that we’ve heard the last of this issue.

In the meantime, who should you hire if you have a real estate tax assessment appeal hearing upcoming? Are attorneys really more expensive than a real estate agent or appraiser? Are real estate agents and appraiser acting like attorneys when they represent homeowners at formal hearings?

While the issue is still being resolved, it is always safest to hire an attorney instead of a real estate agent or appraiser to represent you at the hearing. Even though your formal assessment hearing isn’t held in front of a judge or in a courtroom, it is very much like a court hearing, because you must be sworn in to testify, your testimony is recorded and you must present evidence in order to win. I think it is likely that this dispute will be resolved in the Bar Association’s favor. Also, if you would need help at the next level of appeal, the Board of Viewers, only an attorney can represent you there.

Quality is worth the price

The fees charged by both attorneys and non-attorneys differ from person to person and case to case. In my experience, attorneys are not significantly more expensive than non-attorneys. It is important to remember that the fees are not as important as the end result. If you save $100 by hiring a non-attorney (or a bad, inexperienced attorney for that matter) over an experienced attorney, but lose your case, you still have wasted the money you spent. Most people would prefer to pay the extra $100 to get a good result, especially when that good result could save you thousands of dollars in real estate taxes over the years.

There are still tens of thousands of Allegheny County homeowners that are waiting to have their formal real estate tax assessment appeal hearing. The outcome of the conflict between Allegheny County Council and the Allegheny County Bar Association will have a big impact on these homeowners. If you are one of these homeowners, be sure that you choose your representative wisely and only trust your case to someone that truly qualified to perform the job at hand.

Bankruptcy Clients Commit Fraud? Say It Isn’t So!!!

By Kenny Steinberg

It isn’t so. Really!  But don’t believe me.  Believe the government auditors who were looking for fraud and didn’t find anything to write home about.  Or write anyone about, for that matter.

You’ve heard it before:  “Oh, I know someone who filed for bankruptcy, and they kept everything, and they had a lot.”  The implication here is that the bankruptcy filer did not let the Court know about assets that they had, because if they did, the Court would take these assets away.

To investigate this, the United States Trustee’s Office, who oversees the bankruptcy system, took part in random audits to find the “ah ha!” moments that were expected.  “What house in the Caymans?  Oh, THAT house,” is what we expected that the US Trustee’s Office would be reporting, along with the inevitable jail sentence for the bankrupt for hiding assets.  But it didn’t happen.

In fact, the US Trustee has halted these random audits indefinitely due to budgetary constraints.  But that doesn’t mean that they found anything before the budget crisis hit.  In fact, though they found “material misstatements”  in 25% of the audited cases, this did not result in a surge of denied discharges (the goal of bankruptcy is to get a discharge).  It apparently did not result in a major increase in prosecutions either.

In a post from the Bankruptcy Law Network, Cathy Moran wrote that “The audit results so far support what debtor’s attorneys have said all along:  debtors are overwhelmingly honest on their schedules (the papers that they have to file with the Bankruptcy Court).”  This has certainly been our experience at Steidl and Steinberg.

But it is also important that the attorneys and staff at the law offices emphasize that honesty is not only the best policy, it is the only acceptable policy, and that is how we conduct our business.

That doesn’t mean that there cannot be any planning involved before bankruptcy papers are filed to help people keep their assets.  In fact, the Bankruptcy Code itself talks about what people can keep, and we’ll help you do that.  But it does mean that one must be honest with their attorney so that one can get the maximum benefit out of a difficult situation.

Fraud, no!  Plan, Yes!



More homes are selling

By Tom Rose

Here’s some good news regarding the economy.

According to the U.S. Commerce Department, sales of new homes rose in March to a seasonally-adjusted annual rate of 417,000. Now before you get carried away and think the housing market has fully recovered, most economists feel the pace of new home sales should be at 700,000 annually. That means the housing market isn’t totally back.

But the pace is ahead of last year’s sales of 352,000 and February 2013’s of 411,000, and economists agree the housing market is likely to remain a major contributor to economic growth this year.

Near-record low mortgage rates and an improving job market are driving more Americans to purchase houses. A rise in demand is helping to increase sales and prices of homes in most markets. The biggest housing gains were in the Northeast (20.6 percent) and the South (19.4 percent) while the West (20.9 percent) and Midwest (12.1 percent) sustained the most dclining sales.

Attorney wants new countywide revaluations

A report prepared by an assessment expert  is the basis for a proposal to Judge Wettick to recalculate the property assessment figures in poorer neighborhoods in Allegheny County. 
By Len Barcousky / Pittsburgh Post-Gazette

As many as two-thirds of Allegheny County homeowners could see their new assessments dip if the judge overseeing property revaluation agrees that the results from the controversial project were unfair to poorer communities.

An independent analysis of Allegheny County’s $11 million reassessment has found that numbers for Pittsburgh, Clairton and Duquesne school districts did not meet international property valuation standards.

Assessment expert Robert C. Denne reached that conclusion in a report he prepared for one of the lawyers who sued the county to force real estate revaluation.

Attorney Don Driscoll on Thursday asked Senior Common Pleas Judge R. Stanton Wettick Jr. to order the county to correct the problem by recalculating assessment numbers across the county.

Mr. Driscoll filed his motion on behalf of his original clients, two property owners who believed their homes in less-affluent communities had become relatively overvalued over time.

“We have preliminary indications that the results of the reassessment disfavor lower-value communities,” he said. The certified values scheduled to go into effect in 2013 failed to eliminate the “statistically significant regressivity” that would have residents in poorer communities continue to pay a disproportionate share of property taxes.

The problem should be corrected before the Dec. 17 deadline for the county to provide a “final and revised roll” of assessment numbers to municipal governments and school districts, Mr. Driscoll’s motion said.

Those new values are scheduled to replace 2002 base-year numbers in calculating 2013 property taxes.

Reducing assessments for such a large number of homeowners could cause an increase in tax bills for others.

Whether homeowners would pay more or less in property tax next year depends on how the assessment increase for their properties compares to the average increase for their community and school district.

That means adjusting assessments downward for some could change the impact for other owners who thought they would escape reassessment without paying a higher tax bill.

County Executive Rich Fitzgerald, a vocal opponent of reassessment, said he was skeptical that Mr. Driscoll’s proposal could repair a fundamentally flawed process.

“Poorer communities were supposed to be better off [following reassessment],” he said. “Instead things got worse. He doesn’t like the numbers he got, so now Mr. Driscoll is asking the court to give him lower numbers he likes.”

The best option for the county would be to continue to use 2002 numbers and correct problems through the appeals process, Mr. Fitzgerald said.

Among the statistics that Mr. Denne found to be out of compliance with International Association of Assessing Officers standards was the “price related differential.” It compares ratios of assessed values to adjusted sales prices. Mr. Denne’s analysis found the numbers to be too high in the Pittsburgh, Clairton and Duquesne school districts.

Problems with assessments, however, were not limited to those three communities. Mr. Denne wrote in his report that, “Despite the variability of the ratios [across the county], there is also a clear indication that the lower valued properties tend to be assessed at higher levels and the higher valued properties tend to be assessed at lower levels.”

As a result, Rankin — one of the poorest communities in the county — saw an average increase of 75 percent in values before appeals. Trendy Mt. Lebanon had an average increase of 30 percent while neighboring, middle-class Dormont had an average increase of 52 percent. The average across the county was 35 percent.

Those statistical problems can be reduced by throwing out “extreme outliers” among property sales — transactions that for a variety of reasons do not reflect the general market trends in a community or neighborhood — Mr. Driscoll said.

Allegheny County hired an outside consultant, the Cole Layer Trumble division of Tyler Technologies, to do the bulk of its reassessment work. The firm relied largely on mathematical models to do a “computer-assisted mass appraisal” of the county’s 550,000 taxable properties.

The new assessment numbers could be adjusted to reflect the results of Mr. Denne’s research quickly and cheaply, Mr. Driscoll predicted. “We think this can be done without a great deal of time, effort or expense,” he said.

Allegheny County Controller Chelsa Wagner’s office, which is conducting an audit of Cole Layer’s assessment work, said it recently received the final information it needed to finish the audit but it isn’t finished yet.

Len Barcousky: lbarcousky@post-gazette.com or 412-263-1159.