In re Consol. Appeals of Chester-Upland Sch. Dist., 633 C.D. 2017
| Decision Date | 27 December 2018 |
| Docket Number | No. 740 C.D. 2017,No. 732 C.D. 2017,No. 633 C.D. 2017,633 C.D. 2017,732 C.D. 2017,740 C.D. 2017 |
| Citation | 200 A.3d 1052 |
| Parties | IN RE: CONSOLIDATED APPEALS OF CHESTER-UPLAND SCHOOL DISTRICT and Chichester School District from the Decisions of the Board of Assessment Appeals of Delaware County, Pennsylvania for Various Tax Years and Various Real Properties Appeal of: Chichester School District and Chester Upland School District In re: Consolidated Appeals of Chester-Upland School District from The Decisions of The Board of Assessment Appeals of Delaware County, Pennsylvania for Various Tax Years and Various Real Properties Appeal of: Chichester School District In re: Consolidated Appeals of Chester-Upland School District, et. al. from the Decisions of the Board of Assessment Appeals of Delaware County, Pennsylvania for Various Years and Various Real Estate Properties Appeal of: Chester-Upland School District |
| Court | Pennsylvania Commonwealth Court |
Pamela A. Lee, Media, for appellant Chester Upland School District.
Donald J. Weiss, Chadds Ford, for appellants Chester Upland School District and Chichester School District.
Stewart M. Weintraub, West Conshohocken, for appellee Clear Channel Outdoor.
BEFORE: HONORABLE P. KEVIN BROBSON, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION BY SENIOR JUDGE COLINS
Before this Court are the appeals of Chester-Upland School District and Chichester School District (collectively, Appellants) from an April 27, 2017 order of the Court of Common Pleas of Delaware County (Trial Court). In the order, the Trial Court ruled that Appellants may not consider the presence of an outdoor advertising sign on a property when determining its fair market value for the purposes of a real estate tax assessment. For the reasons set forth below, we vacate the Trial Court's order and remand for further proceedings.
This appeal requires that we interpret the exclusion from taxation for outdoor advertising signs and their support structures that is set forth in Section 8811(b)(4) of the Consolidated County Assessment Law (CCAL), 53 Pa. C.S. § 8811(b)(4).1 The CCAL governs the assessment of real estate taxes for counties of the Second Class A, including Delaware County, and counties of the Third through Eighth Class. 53 Pa. C.S. § 8801(b)(1). Section 8811 is divided into two subsections that define what property is to be assessed and taxed and what forms of property are to be omitted from an assessment. Subsection (a) of Section 8811 establishes that real estate is a subject of taxation, which includes "land, lots of ground, ground rents," and buildings situated on the real estate. 53 Pa. C.S. § 8811(a). Subsection (b), on the other hand, sets forth several "exceptions" from taxation for specific kinds of property, including signs and sign structures; machinery, tools, appliances and equipment in a mill, mine, manufactory or industrial establishment; silos and other structures related to the storage of animal feed and structures related to the storage of animal waste or composting; amusement park rides; wind turbine generators and related wind energy appliances and equipment; and high tunnels. 53 Pa. C.S. § 8811(b). The exclusion for signs and sign structures appears in paragraph (b)(4) of Section 8811, which provides that:
No sign or sign structure primarily used to support or display a sign shall be assessed as real property by a county for purposes of the taxation of real property by the county or a political subdivision located within the county or by a municipality located within the county authorized to assess real property for purposes of taxation, regardless of whether the sign or sign structure has become affixed to the real estate.
53 Pa. C.S. § 8811(b)(4). This exclusion has not previously been addressed in the appellate court decisions of this Commonwealth.
The underlying actions in the Trial Court consist of 26 appeals of real estate tax assessment determinations by the Delaware County Board of Assessment Appeals (Delaware County Board) and the City of Chester Board of Revision of Taxes and Appeals (City of Chester Board) concerning assessments for the 2015 and 2016 tax years for properties contained within either the Chester-Upland School District or the Chichester School District. Each of the 26 properties at issue in these appeals (subject properties) contains an outdoor advertising sign. Pursuant to a stipulation of the parties, the Trial Court consolidated the 26 appeals to consider the common threshold legal issue of "whether a taxing authority can use the presence of an outdoor advertising sign to increase the real property tax basis" of the property. (Trial Court Stipulation ¶¶ 1, 3, Reproduced Record (R.R.) 13a; Trial Court Orders dated April 4, 2016, January 17, 2017 and April 7, 2017, R.R. 24a-27a, 74a-81a.) Appellants argued before the Trial Court that the assessments of the 26 subject properties should be increased in order to account for revenue that the property owners realized through ground leases or grants of easements to outdoor advertising companies that erected and operated a billboard on the properties.
(R.R. 120a.) In the order, the Trial Court also affirmed the decisions in the 22 assessment appeals where Appellants' requests to increase the assessment had been rejected by the Delaware County Board, and reversed the 2 Delaware County Board and 2 City of Chester Board decisions that had ruled in favor of Appellants and reassessed the properties. (R.R. 120a-124a.) In its later opinion in support of the order, the Trial Court concluded that the exclusion from taxation for signs and their support structures in Section 8811(b)(4) of the CCAL, 53 Pa. C.S. § 8811(b)(4), prevented the existence of an outdoor advertising sign on a property from being considered in any manner to raise that property's real estate tax basis. The Trial Court stated that, contrary to Appellants' arguments, the taxation of land, lots and ground rents pursuant to Section 8811(a) does not override the General Assembly's clear exclusion for signs and sign structures set forth in Section 8811(b)(4). (July 18, 2017 Trial Court Opinion at 25-26.)
On May 10, 2017, the Trial Court issued an order amending its April 27, 2017 order to include the statement specified in Section 702(b) of the Judicial Code, 42 Pa. C.S. § 702(b), to allow an interlocutory appeal by permission. (R.R. 130a.) Appellants filed a joint notice of appeal of the Trial Court's April 27, 2017 order as amended by the May 10, 2017 order, and later filed separate petitions for permission to appeal the Trial Court orders. On July 6, 2017, this Court entered an order granting the petitions for permission to appeal, stating the question to be considered by the Court on appeal as "Whether a property's fair market value for assessment purposes may include revenue generated from billboard leases, rents or easements?" On July 20, 2017, this Court entered an order consolidating the three appeals.
In their appeals, Appellants acknowledge that a billboard and the structure that supports it are not to be considered as part of an assessment of property pursuant to Section 8811(b)(4). Nevertheless, Appellants argue that the sign-and-sign-structure exclusion does not preclude assessment of the land on which a billboard sits and the consideration of income derived from a lease of that land for the purpose of erecting and operating a billboard. Rather, Appellants assert that Section 8811(b)(4) clearly and unambiguously only exempts the signs and sign structures and does not exempt the land underneath the signs. Appellants argue that the Trial Court's order denying any use of the "presence" of billboards on the subject properties in arriving at an assessment negates any consideration of the revenues that a property owner could realize through a ground lease or grant of an easement to an outdoor advertising operator. Thus, according to Appellants, the Trial Court's order not only denies the existence of the physical billboard, but also denies any consideration of the effect of a billboard lease on the fair market value of the property. Appellants contend that the order accordingly conflicts with precedent concerning assessments under the CCAL, which requires consideration of all of a property's potential uses and the property's ability to generate income, including revenues derived from long-term leases on the land.
Under the CCAL, the starting point for determining the valuation of real property for tax assessment purposes is that the property must be assessed at its "actual value." Harley-Davidson Motor Co. v. Springettsbury Township , 633 Pa. 139, 124 A.3d 270, 279 (2015) ; see also 53 Pa. C.S. § 8842. The actual value is a parcel's fair market value, which has been defined as "the price which a purchaser, willing but not obliged to buy, would pay an owner, willing but not obliged to sell, taking into consideration all uses to which the property is adapted and might in reason be applied." Harley-Davidson , 124 A.3d at 279 (quoting F & M Schaeffer Brewing Co. v. Lehigh County Board of Appeals , 530 Pa. 451, 610 A.2d 1, 3 (1992) (plurality) ); see also Tech One Associates v. Board of Property Assessment, Appeals and Review of Allegheny County , 617 Pa. 439, 53 A.3d 685, 700 (2012). The actual or fair market value is determined by competent witnesses as to what the property is worth on the market at a fair sale. Harley-Davidson , 124 A.3d at 279 ; Allegheny Energy Supply Co., LLC v. County of Greene, Board of Assessment Appeals , 869 A.2d 31, 33-34 (Pa. Cmwlth. 2005) (en banc ). The CCAL sets forth three...
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