Assessment of property cannot be based on speculation and assumption with respect to future or possible use. In ENF Family Partnership v. Erie County Bd. of Assessment Appeals(2004), the property owner held the only parcels zoned for agricultural use in an area that was zoned residential and commercial. The three parcels were reassessed in line with their status as agricultural property pursuant to a countywide reassessment.
The school district filed appeals on the parcels and, at the hearing, presented two appraisals that concluded that the highest and best use of the property was commercial. Each of the appraisals assumed that the zoning on the three parcels could be changed to commercial, thus dramatically increasing the fair market value. Based on these appraisals, the Appeals Board increased the parcels’ assessed values. The trial court affirmed.
The property owner challenged the increases to the assessed values based on the hypothetical highest and best use of the parcels as found in the appraisals. The Commonwealth Court found in favor of the property owner.
The Court held that “factors based upon pure speculation, such as what a property would be worth in an altered condition, are irrelevant and may not be considered.” There was no evidence presented at the board level or the trial court level that the property owner had applied for a change in zoning. The Court noted that the mere possibility or assumption that the three parcels might be rezoned at some time in the future was nothing more than speculation and should not have been considered by the Appeals Board in rendering its decision.
This decision has profound implications for taxing jurisdictions seeking to increase assessed values of properties, especially those properties situated in areas experiencing a growth in commercial development. Only those factors in existence at the time of the assessment or factors that have a high probability of occurring at the time of the assessment are relevant to a determination of assessed value.
A taxing jurisdiction cannot base an argument for an increase in an assessed value merely on the fact that a property could or should be utilized in a certain capacity and that the property owner may, in fact, utilize the property in that manner at some uncertain point in the future.
 204 Pa. Commonw. LEXIS 826 (Pa.Commw.Ct., 2004)