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INSIGHT: Automatic Carryforward of Prior Residential Appeals Is Not Evidence of Uniform Assessments in Pennsylvania

Aug. 11, 2020, 8:01 AM

A panel of the Commonwealth Court of Pennsylvania issued a recent decision favorable to commercial taxpayers facing selective reverse assessment appeals by school districts. The case is Colonial School District v. Metroplex West Associates, L.P., 530 C.D. 2019 (May 28, 2020).

In Metroplex, the Commonwealth Court reversed a decision by the Montgomery County Court of Common Pleas (trial court) denying a petition by Metroplex West Associates, LP (taxpayer) to dismiss the Colonial School District’s (school district) appeal of its assessed value as unconstitutional. The taxpayer’s petition asserted that the school district’s appeal violated the uniformity clause because the school district targeted only commercial properties. The school district asserted that there were a number of court appeals for prior tax years pending on residential properties in 2013 when the school district appealed the assessment on taxpayer’s property. In support, the school district relied on the automatic carryforward provision of the consolidated county assessment law. The trial court agreed.

The Commonwealth Court reversed, holding, inter alia, that the trial court’s finding that the school district had taken numerous residential appeals during the time period in question must be set aside as not supported by substantial evidence. The Commonwealth Court found that the fact that 10 residential property appeals were pending in court at the time of the school district’s appeal on taxpayer’s property did not evidence that the school district has actually reviewed residential properties and filed appeals on residential properties in or after tax year 2013.

The Commonwealth Court remanded to the trial court for further proceedings on taxpayer’s motion to dismiss. The Commonwealth Court did not address the trial court’s finding that the school district did not violate the uniformity clause because it based reverse appeals on “economic reasons,” such as the property being undervalued by more than $500,000.

Metroplex could be compared to Punxsutawney Area Sch. Dist. v. Broadwing Timber LLC. There, the Commonwealth Court held that a formal written policy for taking reverse appeals is not required under the Pennsylvania Supreme Court’s decision in Valley Forge Towers Apartments N, LP v. Upper Merion Area Sch. Dist.. In Punxsutawney, the Commonwealth Court stated “[a]ll Valley Forge requires is that the ‘other selection criteria’ used by a taxing authority, whether a monetary threshold or other methodology, be ‘implemented without regard to the type of property in question or the residency status of its owner.’”

Subsequently, in Kennett Consol. Sch. Dist. v. Chester Cty. Bd. of Assessment Appeals, the Commonwealth Court held that the school district’s appeal policy of appealing properties under-assessed by $1 million did not violate the Uniformity Clause. In Metroplex, the school district relied on a recorded mortgage as the basis for its reverse appeal of the taxpayer’s property. The school district argued that taxpayer’s property had a higher fair market value than shown in its assessment. However, there was no credible testimony before the trial court that the taxpayer was refinancing its property. The Commonwealth Court found that the record did not support the trial court’s finding that the 2013 mortgage exceeded the fair market value of taxpayer’s property.

In any event, the Metroplex ruling undercuts a common argument by localities in relying on the automatic carryforward of residential appeals when defending against claims of uniformity clause violations following Valley Forge.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Joe Bright concentrates in state and local taxation, regularly assisting business and individual taxpayers regarding corporate, financial institution, sales and use, income, real estate, transfer, and all other state and local taxes. A former chief counsel of the Pennsylvania Department of Revenue, he has since represented hundreds of taxpayers—including businesses, individuals, and nonprofit entities—in state and local tax planning, administrative, legislative, and litigation matters.
Bob Careless concentrates his practice in the area of land use and zoning law, primarily in the city of Philadelphia and in the suburbs of Southeastern Pennsylvania.

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