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Pennsylvania Property Tax Updates

UPDATED december 2019

Pennsylvania Appellate Court Issues Conflicting Back-to-Back Decisions Holding Government to a Lower Standard than Taxpayers

In two unreported decisions issued in October 2019, the Pennsylvania Commonwealth Court (Pennsylvania’s intermediate appellate court) held that taxing districts may use sale price as evidence of market value for the purpose of identifying properties on which to file increase assessment appeals, but that taxpayers cannot rely on sale price as evidence of properties that the government should have, but did not appeal, to demonstrate that a district’s selection scheme is not uniformly applied.  

In East Stroudsburg Area School District v. Dallan Acquisitions LLC, 529 CD 2018 (Pa. Commw. 2019), the school district used a consultant to analyze property sale prices to target assessment appeals against properties which would result in additional taxes of at least $10,000.  Taxpayer was one of only 46 properties who the school district cherry picked by the district.  At trial, the taxpayer adduced evidence that neither the district nor Keystone performed any calculations to ensure that the properties it selected met its threshold.  In support of its case, the taxpayer proffered expert testimony analyzing recent sale prices within the district to demonstrate that fully half of properties which would meet the purported threshold were not appealed. In fact, taxpayer’s evidence demonstrated that the district did not appeal a single residential property, despite 12 residences meeting the district’s threshold.  Thus, taxpayer argued, the district’s selection scheme targeted only commercial properties in violation of the Pennsylvania Supreme Court’s 2017 Valley Forge Towers decision.  The trial court ruled against the taxpayer, finding the school’s methodology to be constitutional, and the Commonwealth Court affirmed.  In rejecting the taxpayer’s evidence, the Commonwealth Court observed, “On cross-examination, [taxpayer’s expert] acknowledged he did not investigate the actual market value of any of the properties he identified; he merely used each property's sale price as ‘a stand-in’ for market value.”  Left unsaid was what kind of evidence the taxpayer could have possibly introduced – short of securing separate appraisals on the 30-40 properties – that would have demonstrated that the school did not uniformly implement its own policy.

Twelve days later, a different panel of the Commonwealth Court also ruled in favor of the government in Punxsutawney Area School District vs. Broadwing Timber, LLC, 1209 CD 2018 (Pa. Commw. 2019).  There, the school district appealed the assessment of a recently purchased property based on its recent sale price.  As summarized by the Commonwealth Court, “After comparing the sale price to the Property’s assessed value, [the district] believed the Property was underassessed.”  In its defense, taxpayer adduced evidence that the school district had only appealed the assessments of commercial properties and challenged the district’s selection scheme as violative of the Pennsylvania Supreme Court’s 2017 decision in Valley Forge.  The trial court ruled for the school district, and the Commonwealth Court affirmed.  In affirming the increase, the Commonwealth Court approved of the school district’s reliance on sale price as a substitute for a property that was under-assessed, characterizing its methodology as “financial analysis” and even “expertise.” 

While the two opinions rely on evidentiary burdens and credibility determinations, two unwritten rules emerge.  First, a sale price is a sufficient basis on which a district may pursue an assessment appeal, yet is insufficient for the property owner to use as evidence to defeat such appeal. Second, school districts in Pennsylvania are free to appeal only commercial properties as long as they take an official stance that they consider all property types, including residential, and do not intend to exclude residential.  

Ironically, the Punxsutawney panel included a summary of taxpayer’s argument in its opinion as follows: “Recognizing that there has been no direction that appeals only be filed for commercial properties, Broadwing maintains the de facto effect of the practice results in the District appealing only a sub-classification of properties.  If this practice is allowed to continue, Broadwing argues, Valley Forge would be rendered meaningless.”  Indeed, as 2019 draws to a close roughly eighteen months after the Pennsylvania Supreme Court issued Valley Forge, it would appear the Commonwealth Court has rendered that seminal decision meaningless.

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Siegel Jennings, Co., L.P.A.
American Property Tax Counsel (APTC)

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