En Banc Commonwealth Court Upholds School District Property Tax Appeals

On March 8, 2013, the Pennsylvania Commonwealth Court issued an Opinion expounding on a tax authority’s ability to appeal a property tax assessment within its jurisdiction.  In the case, Guntrum Wiesenberger d/b/a Black Hawk Apartments v. Chester County Board of Assessment and Downingtown Area School District, No. 157 C.D. 2012, the Downingtown Area School District appealed the assessment of the Black Hawk Apartment complex property for tax year 2004.  In filing the appeal, the School District relied on a report of a real estate appraisal firm that identified apartment complexes in the County that were potentially under-assessed.  The report recommended that the District appeal only the Black Hawk Apartments property even though other apartment properties were identified as potentially under-assessed by marginal amounts.  The Black Hawk Property was potentially under-valued by $3.8 million and three other properties were potentially under-valued by $5,440 to $79,600, comparatively small amounts.

The Chester County Board of Assessment increased the assessment of the property by approximately $2 million, resulting in an additional $50,000 in annual revenue to the School District.  While the increased assessment was not challenged on appeal by the property owner, the Chester County Court of Common Pleas found that by selectively applying its right to appeal, the School District violated the property owner’s entitlement to uniform treatment under the Uniformity Clause of the Pennsylvania Constitution and granted a motion for partial summary judgment.

The School District appealed to the Commonwealth Court, which overturned the Common Pleas Court’s Order, holding that there was a rational basis for the School District in taking the appeal given that the size of the under-assessment of the Property was much greater than other potentially under-assessed properties. Furthermore, the Court held that the School District’s participation in a process to systematically evaluate different classes of property on an annual basis did not offend uniformity or equal protection precepts.  The Court interpreted the statute, now 53 Pa.C.S § 8855, which provides the right of a taxing district “aggrieved by any assessment of property…to appeal therefrom…” as not limiting the school district’s right to appeal. By holding in favor of the School District, the Commonwealth Court relied on its decisions in Vees v. Carbon County Board of Assessment Appeals, 867 A.2d 742 (Pa. Cmwlth. 2005), and In Re Springfield School District, 879 A.2d 335 (Pa. Cmwlth. 2005), that a decision to appeal only one taxpayer’s property does not amount to deliberate purposeful discrimination in violation of the Uniformity Clause, and that evaluating properties for appeal based on financial considerations and economic thresholds or by classification of property did not as a matter of law demonstrate deliberate purposeful discrimination.  Put another way by the Court, the property owner’s under-assessment, which was not contested and through which it pays comparatively less of the cost of local government, does not enjoy constitutional protection from a school district’s appeal.

Scot R. Withers and Mark P. Thompson attorneys at Lamb McErlane represented the Downingtown Area School District.