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Pennsylvania Property Tax Updates

UPDATED September 2019

Pennsylvania Appellate Court Hears Argument in a Series of Taxpayer Constitutional Challenges to School District's Schemes to Select Taxpayers for Appeals Based on Economic Thresholds

In a series of arguments heard or scheduled to be heard in the summer and fall of 2019, the Pennsylvania Commonwealth Court will repeatedly address the issue of whether school districts’ schemes for selecting which taxpayers to appeal meet constitutional uniformity. 

The cases follow the Pennsylvania Supreme Court’s decision in July 2017 in Valley Forge Towers Apts. LP v. Upper Merion Area School District, 163 A.3d 962 (Pa. 2017).  In Valley Forge, taxpayers alleged that the school district filed increase appeals only against commercial property owners and not against residential owners. The Pennsylvania Supreme Court held in Valley Forge that all real estate is one class, that taxing districts cannot divide property into sub-classes, and that all real estate must be taxed uniformly which is a requirement of Pennsylvania’s Constitution.  Taxpayers read Valley Forge broadly based on its language, reasoning and policy.  Taxing districts read Valley Forge extremely narrowly, essentially limiting its reach to the facts of that case and taking the position that so long as the school district establishes a facially neutral policy in which it “considers” appealing residential properties even if it did not, in fact, appeal any residential properties, its policy is constitutional.

Following the Supreme Court’s decision in Valley Forge there have been a series of taxpayer challenges to school selection schemes for increase assessment appeals where the schools’ schemes are based on some form of economic threshold.  In Pennsylvania, there is an appeal as of right to the Pennsylvania Commonwealth Court; there have been at least five (5) post-Valley Forge cases filed to the Commonwealth Court challenging school’s selection schemes including:

  • The School District of Philadelphia v. Philadelphia Board of Revision of Taxes, 1493 CD 17 (Pa. Commw. Ct, August 22, 2019). Here, the City of Philadelphia School District used consultant New Jersey-based Keystone Realty Consultants to create scheme whereby the School purported to select properties for appeal where the additional taxes that could be created were at least $7,500. The trial court dismissed approximately 140 school-initiated appeals because the trial court found this policy to be unconstitutional. The Commonwealth Court heard argument on the school district’s appeal; on August 22, 2019 the Commonwealth Court issued its decision refusing to affirm or reverse the trial court and, instead, remanded back to the trial court to make an evidentiary record on the school’s selection scheme.
  • Martel v. Allegheny County Board of Assessment Appeals, 568 CD18 (Pa. Commw. Ct. August 14, 2019(reported, amended opinion). Here, City of Pittsburgh School District filed on sale price.  Taxpayer filed a challenge, citing the Allegheny County local rule and Valley Forge.  The trial court ruled against the taxpayer; the taxpayer appealed.  The Commonwealth Court ruled against the taxpayer in early summer 2019, then rescinded and reissued its decision August 14, 2019 in which it ruled that the taxpayer had failed to exhaust its administrative remedy.  The taxpayer has filed a petition to the Pennsylvania Supreme Court seeking to have the Court take the case on appeal.  Taxpayer awaits the decision of the Pennsylvania Supreme Court as to whether to take the appeal.
  • East Stroudsburg Area School District v. Dallan Acquisitions LLC, 529 CD 2018 (Pa. Commw. Ct.)(aka “Marshall’s Crossing”). Here, the Stroudsburg Area School District used consultant Keystone Realty Consultants as well.  The School took the position at trial that it had a policy of appealing properties where the additional taxes that could be created were at least $10,000.  However, the taxpayer adduced evidence that neither the school nor Keystone performed any calculations to ensure that the properties it selected met this threshold, and that the school did not appeal any residential properties even though taxpayer produced expert testimony that at least 12 houses met the criteria.  The trial court found the school’s methodology to be constitutional and taxpayers appealed.  This case was argued before the Commonwealth Court on September 9, 2019 and the parties await a decision.  Siegel Jennings, Co., L.P.A. is co-counsel for taxpayers on this appeal.
  • Kennett Consol School District v. Chester Co. Board of Assessment, 253 CD 2019 (Pa. Commw. Ct.)(aka “Autozone”). Here, the school district admitted in discovery that it did not have a policy of its own, but rather, delegated its authority to set a threshold to a third party appraiser functioning as its consultant; the appraiser-consultant set a threshold of properties that are under-assessed by at least $1 Million and recommended 13 appeals. Based on this advice, the school filed increase appeals on 12 properties, none of which were residential. The school then engaged the same consultant-appraiser to prepare the appraisals.  The school appraisal on the subject property concluded that the property was under-assessed by $800,000 (thus, by its own evidence, the appeal did not meet its own threshold).  Taxpayer filed a motion to quash the appeal on the basis that the school’s appeal policy was unconstitutional.  The trial court denied the taxpayer’s motion and set the assessment based on the school district’s appraisal.  Taxpayer appealed to the Commonwealth Court.  This case, being handled by Siegel Jennings, Co., L.P.A. is scheduled for argument on November 12, 2019 before the Commonwealth Court.
  • Bethlehem Area School District v. Northampton County Board of Revenue, 357 CD 2019 (Pa. Commonwealth Court)(aka “Lehigh Crossing”). Here, the school district consulted with Keystone Realty Consultants and set a policy of selecting properties that would yield at least $10,000 of additional taxes.  Minutes from school board meetings indicated that part of the reasoning for setting this threshold was to recoup tax dollars that had been lost by virtue of appeals filed by commercial property owners which the school believed shifted the tax burden to residential owners.  Since 2012, the school’s scheme yielded no appeals on residential properties.  The trial court granted the taxpayer’s motion for summary judgment, finding the school’s selection scheme to be unconstitutional, notwithstanding the fact that the policy was facially neutral. The school district appealed to the Commonwealth Court.  The case is tentatively scheduled for argument on December 9, 2019.
  • CF PA Owner LLC. v. North Allegheny School District, (632 CD 2019(Pa. Commw. Ct.)(aka “Sherbrook Apartments”). Here, the school district filed based on a recent sale price.  Taxpayer filed a separate action asking the court to declare a selection scheme based on sale price alone to be unconstitutional.  Following briefing and argument, the trial court ruled against the taxpayer in a one-sentence decision without any reasoning.  Taxpayer appealed to the Commonwealth Court where the case remains pending; argument has not yet been scheduled.  Siegel Jennings Co., L.P.A. represents the taxpayer.

To discuss the specifics of these pending appeals and how they might affect the assessment on your property, please contact Siegel Jennings at:

Sharon F. DiPaolo, Esquire
Siegel Jennings, Co., L.P.A.
American Property Tax Counsel (APTC)
This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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