On occasion, it has been argued by taxpayers or their counsel during the course of an assessment appeal brought by a school district that the district’s appeal constitutes “spot assessment” where the district has selects properties to be appealed by reference to those which have recently sold. The argument goes that because a school district may choose only those properties which have sold recently for an amount in excess of their present assessed value for appeal, the school district’s appeal process operates in a non-uniform manner by punishing property owners who have purchased their property recently while generally leaving alone the values of properties which have not sold in recent years. School districts have argued in response that the practice of selecting appealed properties by reference to recent sales was fully consistent with the statutory and case law framework for real estate assessment. Moreover, school districts have argued, the evidence provided by a recent sale of a property is the best available evidence of fair market value available in an assessment proceeding. A recent Commonwealth Court case, Vees v. Carbon County Board of Assessment Appeals, 867 A.2d 742 (Pa. Cmwlth, 2005) has settled this matter by holding explicitly that a school district’s practice of appealing properties on the basis of recent sales is lawful and not a violation of applicable law.
In Vees, the Commonwealth Court heard en banc the appeal of husband and wife taxpayers who had purchased 85 acres of unimproved land located within Palmerton Area School District. The County had performed a countywide reassessment the year prior to the purchase of the land by Mr. and Mrs. Vees, and a fair market value of $92,250.00 was assigned to the property by the County. In contrast, the sales price one year later was $170,000.00.
The School District appealed the property’s value to the local Board of Assessment and argued that the fair market value should be set at the purchase price. In response, the Board increased the fair market value to a figure just short of the purchase price, $161,900. The taxpayers appealed the assessment to the local Court of Common Pleas and argued that the school district’s appeal of their assessed value was excessive and that the value increase was discriminatory and violative of due process and equal protection. Before the Court, the School District presented an appraisal and testimony indicating that the property was worth $180,000.00, while the taxpayers testified on their own behalf and confirmed the property’s purchase price of $170,000.00 without presenting any competing appraisal. The trial Court affirmed the Board of Assessment’s determination that the property was worth $161,900.00 and set the property’s assessed value at $80,950 (after applying the County’s common level ratio of 50%).
The taxpayers then appealed to the Commonwealth Court, continuing to argue that the School District’s decision to appeal their property’s fair market value constituted a violation of the Uniformity Clause set forth in the Pennsylvania Constitution and the Equal Protection Clause of the United States Constitution. Specifically, the taxpayers argued that the school district’s selective appeal of their property constituted an unlawful “spot assessment.” The Commonwealth Court noted that the taxpayers did not attempt to challenge the constitutionality of the actual statute which gives school districts the right to file assessment appeals, nor did the taxpayers present any substantive evidence concerning comparable properties under appeal or not under appeal by the School District. Thus, the taxpayers relied on a very narrow argument that the School District’s decision to appeal their property as a result of the recent sale was unconstitutional.
The Commonwealth Court rejected their argument and held that the School District’s decision to appeal the taxpayers’ property based on the recent sale was a proper use of the authority granted under Pennsylvania statute for municipal governing bodies, including school districts, to appeal the taxable value of properties. The Court held that the “spot assessment” argument and the line of cases discussing spot assessments were inapplicable to the school district’s appeal because the school district isn’t vested with the power to “assess,” but only with the power to appeal, which power is granted equally to private landowners and governmental entities. The Commonwealth Court noted that in order to prevail on their argument that the school district’s appeal violates the uniformity clause, the taxpayers must show that there was deliberate, purposeful discrimination in the application of the tax. The Court found that no such discrimination occurred in the school district’s practice of appealing assessments where purchase prices in recent sales exceeded assessed value by $15,000.00, and no discrimination occurred in the district’s appeal of the taxpayers’ property. Rather, the Court held that “school districts which feel aggrieved by any property assessment have the right to appeal, in the same manner, subject to the same procedure and effect, as if the appeal was pursued by an individual property owner” and that if the effect of a school district’s appeal is that some properties are increased in value, it does not violate the principle of uniformity.
The Commonwealth Court restated and followed its holding in Vees a few months later in Appeal of Springfield School District, 2005 Pa. Commw. LEXIS 344 (July 11, 2005). In Springfield, the school district and municipality appealed from a decision of the Court of Common Pleas which refused to increase assessed values of two commercial properties. One of the taxpayers argued that the school district’s method of determining which properties to appeal was discriminatory and violative of uniformity. Relying on its holding in Vees, the Court held that the issue was resolved, and reiterated that “[t]he law places no restrictions on the “methodology” employed by a school district or by an individual property owner in determining whether to appeal.”
Thus, the Commonwealth Court has definitively answered the question in favor of school districts who wish to take assessment appeals of properties based on recent sales. If you would like additional information concerning these decisions or have questions concerning applying them to your individual circumstances, please contact one of our school law attorneys.