Take a Hike (Back)
by Ron Davis
Was a property tax hike levied against a Pennsylvania shopping center based on an illegal local assessment? Pennsylvania’s top court thinks so and has therefore ruled that the local taxing authority in the county where the shopping center is located must reduce the assessment.
The shopping center, located in Berwick, sits on two parcels of land, which altogether had in 2004 received a property tax assessment of $649,250. The next year, however, local tax authorities concluded that the property value of the center had increased. So they bumped up the assessment to $1,067,794.
The center’s owner protested the increase, claiming that the tax hike was based on an illegal “spot assessment.” In fact, state law prohibits a change in a single property’s tax assessment unless it is levied as part of a countywide reassessment of all properties.
Local tax officials responded that although the reassessment of the center property was not part of a countywide undertaking, evidence showed that the booming local economy made such an increase necessary. Moreover, the officials added, they had reduced the assessment of the center in 1999 based on a high tenant vacancy there–and had never increased it after the center recovered from that problem.
A Pennsylvania court, based on a hearing of the facts in the case, determined that the fair market value of the shopping center property required a tax assessment of $790,525. That figure was nearly a 22-percent increase over the 2004 tax assessment. The center’s owner appealed that ruling.
The Pennsylvania Commonwealth Court reversed the lower court, explaining, “The primary inquiry is whether the tax officials had the power to reassess the shopping center property when the county did not conduct a countywide reassessment. Although testimony might support a conclusion that the general economy of the shopping center property increased, it does not support a finding either that real estate values increased because of the economy of the area. The tax officials have pointed to no other testimony that would support a finding that the requirements of law were present. Accordingly, we...direct that the tax board reinstate the shopping center’s tax assessment.” (Berwick Associates v. Columbia County Board of Assessment Appeals, 2007 WL 2176105 [Pa.Cmwlth.])
Decision: August 2007
Published: August 2007