Downingtown v. Chester County Bd.

Decision Date27 December 2006
Citation913 A.2d 194
PartiesDOWNINGTOWN AREA SCHOOL DISTRICT v. CHESTER COUNTY BOARD OF ASSESSMENT APPEALS and Lionville Station S.C. Associates Appeal of Lionville Station S.C. Associates.
CourtPennsylvania Supreme Court

John Keenan Fiorillo, Esq., Unruh, Turner, Burke & Frees, P.C., for Lionville Station S.C. Associates.

Jeffrey R. Sommer, Esq., Buckley, Brion, McGuire, Morris & Sommer L.L.P., West Chester, for Chester County Board of Assessment Appeals.

Scot Russel Withers, Esq., Lamb McErlane, P.C., James E. McErlane, Esq. Lamb McErlane, P.C., West Chester, for Downingtown Area School District.

Gerald J. Pappert, Esq., PA Office of Attorney General, for Attorney General of the Commonwealth of PA.



Justice SAYLOR.1

This matter concerns the issue of whether the prevailing statutory scheme for tax equalization obviates the common law procedure for asserting a challenge under the Uniformity Clause of the Pennsylvania Constitution. This is an issue of first impression in this Court.

The subject property is a "neighborhood" (strip) shopping center located within Appellee Downingtown Area School District in Chester County. In 1996-97, the County assessed the subject property at approximately $5,800,000 as part of a countywide reassessment in which all real estate was assessed at 100% of its fair market value, effective January 1, 1998.2 In March 1999, Lionville Station S.C. Associates ("Appellant") purchased the property for approximately $10,400,000. The School District appealed the $5,800,000 assessment, and the County's Board of Assessment Appeals increased the assessment for tax year 2000 to $6,500,000, or $77.86 per square foot. The School District again appealed, seeking to have the assessment further increased to $8,500,000, or $101.81 per square foot.

At the ensuing de novo hearing, the parties stipulated that, for tax year 2000: the subject property's fair market value was $8,500,000; the common level ratio ("CLR") for the County, as determined by the State Tax Equalization Board ("STEB"), was 85.2% of fair market value; and the established predetermined ratio ("EPR") for assessing taxable real estate in the County was 100% of fair market value. The County's chief assessor testified that the average assessment for shopping centers similar to the subject property was $64.29 per square foot, and that the $77.86-per-square-foot figure for the subject property was arrived at in an effort to achieve uniformity with such other commercial properties, adjusting for age, location, construction, and demographic factors. Appellant also presented the expert testimony of commercial real estate appraiser Scott Eiffes, who had performed an analysis comparing the subject property with seven other shopping centers in the County which he deemed comparable. In his analysis, Eiffes determined that the assessments for the comparables ranged from $47.87 to $89.62 per square foot, and that the ratio of the assessed value to actual value for the comparables was in the range of 34% to 69%. Accordingly, Appellant opposed the School District's requested relief, arguing that an increased assessment would result in a violation of the constitutional requirement of tax uniformity. See PA. CONST. art. VIII, § 1 ("All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.").

The trial court rejected Appellant's argument, however, indicating as an initial matter that all of Appellant's evidence concerning the comparable properties was irrelevant because the pertinent class of properties consisted of all real estate in the taxing district. The court also stated that the existence of the CLR, as calculated by the STEB, superseded prior methods of determining tax uniformity. The trial court nonetheless declined to apply the CLR and instead granted the School District's requested relief by assessing the subject property at the EPR of 100% of fair market value, or $8,500,000. See Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, No. 00-01233, Order (CCP Chester Dec. 28, 2001). In its subsequent opinion, the court did not explain why it had decided not to apply the CLR, but merely repeated its assertion that Appellant's proof regarding the comparables was irrelevant. See Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, No. 00-01233, slip op. at 3 (CCP Chester March 26, 2002).

A divided Commonwealth Court affirmed in a published decision. See Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 819 A.2d 615 (Pa.Cmwlth.2003) (en banc). Initially, the majority noted that, under a 1982 amendment to the Second Class A and Third Class County Assessments Law of 1931,3 the Board of Assessment Appeals was required to utilize the EPR unless the CLR varied from it by more than fifteen percent.4 It also indicated that the traditional method of mounting a uniformity challenge — offering an expert to compute a CLR based upon county records — may no longer be permissible in light of the 1982 legislative change. See id. at 619 (quoting Hromisin v. Board of Assessment Appeals of Luzerne County, 719 A.2d 815, 819 (Pa. Cmwlth.1998)). Nevertheless, like the trial court, the majority declined to apply the CLR, instead indicating that it was undisputed that the County's EPR from its 1996-97 countywide reassessment was set at 100%, and that the CLR for tax year 2000 was 85.2%. Because the CLR varied from the EPR by less than fifteen percent of the EPR, the majority concluded that the trial court's decision to assess the subject property at 100% of its fair market value was consistent with statutory requirements, thus rendering Appellant's uniformity challenge meritless. See id. at 620.5

Judge Friedman filed a dissenting opinion in which President Judge Colins joined. Relying on a line of decisions by this Court, Judge Friedman stated that proof tending to establish the average assessment-to-value ratio of properties within the taxing district is relevant to a uniformity challenge, and that this Court has specifically endorsed an approach in which the taxpayer proffers evidence regarding the assessment-to-value ratio of properties similar to the one at issue. See id. at 622-23 (Friedman, J., dissenting) (quoting In re Brooks Bldg., 391 Pa. 94, 101, 137 A.2d 273, 276 (1958), Deitch Co. v. Board of Prop. Assessment, Appeals & Review of Allegheny County, 417 Pa. 213, 223, 209 A.2d 397, 402-03 (1965), and Keebler Co. v. Board of Revision of Taxes of Phila., 496 Pa. 140, 143, 436 A.2d 583, 584 (1981)). Judge Friedman therefore concluded that the trial court had erred in refusing to consider Appellant's evidence that the comparable properties had all been assessed at between 34% and 69% of their fair market value. She also opined that, to the extent the General Assembly has made the fifteen-percent rule of Section 8(d.2) of the Assessments Law (see supra note 4) the exclusive test for tax uniformity, it has usurped the judicial function of interpreting the Pennsylvania Constitution. She indicated, moreover, that the fifteen-percent rule "actually defeats uniformity" by allowing assessment-to-value variances of up to 30 percent (fifteen percent above and below the EPR), whereas courts have interpreted Article VIII, Section 1 as embodying a requirement that taxing authorities assess all property at the same percentage of value. See id. at 624.

This Court granted discretionary review, limited to two issues, the first being whether the Commonwealth Court and trial court erred in concluding that Section 8(d.2) of the Assessments Law supersedes the methods of determining uniformity established by this Court. The second issue — which is only relevant if we conclude that the EPR should not have been applied to the subject property — pertains to whether the trial court and Commonwealth Court erred in disregarding Appellant's uncontradicted valuation testimony. See Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 577 Pa. 420, 846 A.2d 74 (2004) (per curiam).

In tax assessment appeals, this Court considers whether the trial court abused its discretion, committed an error of law, or reached a decision not supported by substantial evidence. See Beattie v. Allegheny County, ___ Pa. ___, ___, 907 A.2d 519, 524, (2006); Wilson Area Sch. Dist. v. Easton Hosp., 561 Pa. 1, 5 n. 5, 747 A.2d 877, 879 n. 5 (2000).6 Presently, Appellant claims that the Commonwealth Court erred by concluding, based upon Section 8(d.2) of the Assessments Law, that the traditional method of mounting a uniformity challenge is no longer valid where the CLR varies from the EPR by no more than fifteen percent. Appellant urges that, despite the formula contained in that provision, the resulting assessment must still meet the constitutional requirement of uniformity. The School District counters that the 1982 amendments to the Assessments Law provide a statutory means of assuring constitutional uniformity within a taxing district, and relieve the taxpayer of the onerous task of compiling voluminous data and presenting expert testimony in order to raise a claim of non-uniformity. See Brief for Appellee (School District) at 13-14. The Board of Assessment Appeals, by contrast, maintains that, for the sake of uniformity and clarity, the STEB-calculated CLR should be applied to the subject property's fair market value in all assessment appeals, notwithstanding the statutory directive that this only be done where there is a fifteen-percent differential between the CLR and the EPR. See Brief for Appellee (Board of Assessment Appeals) at 17.

As early as 1930, this Court recognized that a taxpayer is entitled to relief under the Uniformity Clause where his property is...

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