ASSESSMENT APPEALS AT RISK

Legislation recently introduced in both the Pennsylvania Senate and the Pennsylvania House of Representatives, if passed, could significantly impair a school district’s ability to appeal the assessed value of a piece of real property, which could substantially affect a major source of tax revenue for school districts.  Senate Bill 586 (and its companion bill, House Bill 1213), currently being reviewed in the Senate and House Committees, would amend Section 8855 by adding an entirely new Section 8855.1, to the Consolidated County Assessment Law.  Although the Consolidated County Assessment Law generally applies to Counties of the Second Class A and Third through Eighth classes, which excludes Philadelphia and Allegheny Counties, proposed Sections 8855 (c) and 8855.1 (c) make the amendments applicable to all Counties in Pennsylvania.

The proposed legislation would only permit school districts to appeal the property’s value in three limited circumstances: 1) if the appeal results from an assessment created during a countywide reassessment and the appeal is filed in the taxable year following the effective year of the reassessment; 2) if a parcel is subdivided and those subdivided parcels are conveyed to new owners; and 3) there is a physical change in the property which changes or modifies its use.

If a school district is able to appeal based on these limited circumstances, Senate Bill 586 creates new standards with respect to the burden of proof and evidence to be presented by school districts at a hearing.  School districts must prove, by a preponderance of the evidence, that the requested value is not inconsistent with the Pennsylvania Constitutional mandate that all taxes be uniform.  Currently, in order to prove this, a school district (as well as a taxpayer) may submit assessed values of other properties without the need for an appraisal report.  However, in the proposed law, a school district could not submit an assessed value which was increased in violation of proposed Section 8855 (b).  Therefore, evidence of an assessment of a property which was increased due to a school district’s appeal based on a recent sale would not be permitted.  Further, an assessment or assessed value shall be deemed appropriate per Section 1 of Article VIII of the Constitution if it is less than the value determined by the Board of Property Assessment after an appeal hearing (presumably in compliance with these amendments) or less than “an amount reasonably consistent with the assessed value of similar properties located in the same neighborhood or local community.”  None of the language in the above-quoted passage is defined, permitting broad discretion to the factfinder.

Just as the legislature moves to restrict the ability of school districts to appeal undervalued properties, it also moves to expand the ability of taxpayers to restrict school district appeals.  Without providing any guidance regarding evidence to be presented, a taxpayer has the right to request the dismissal of a school district’s appeal at any stage of the process, and the ruling body “shall” dismiss the appeal, if the appeal is taken in violation of the proposed amendments (proposed §8855 (b)(3)).  Moreover, if a school district obtained an increase prior to the effective date of the proposed section but after the most recent countywide reassessment and said increase would have been obtained in violation of the proposed amendments, the taxpayer has the right to bring an appeal and have the assessed value changed back to the former assessed value.  No refund will be given to the taxpayer if the improper appeal was finalized prior to the effective date of the amendments (proposed § 8855 (b)(5)).

The end result, especially for those school districts in Allegheny County, is especially troubling.  Except for the stray appeal based on a use change or subdivision, school district appeals would be eliminated.  Ten years lapsed between the two most recent reassessments in Allegheny County, and there is no reassessment planned in the foreseeable future.  Additionally, as most school district appeals are based on recent sales, increases obtained by school districts from 2013 to the effective date of the proposed amendments would be subject to potential rollback.  While the school districts would not be required to issue refunds, these rollbacks would result in the loss of revenue.

Due to the significant financial impact these proposed legislative changes could have on school districts, the Education Law Team at Maiello, Brungo & Maiello, LLP, 412-242-4400, will monitor future developments and provide periodic updates.