Opinion
No. 970 C.D. 2013
05-13-2014
Lydia O. Corey v. Washington County Board of Assessment Appeals and Canon-McMillan School District Appeal of: Canon-McMillan School District
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BERNARD L. McGINLEY, Judge (P.) HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY PRESIDENT JUDGE PELLEGRINI
The Canon-McMillan School District (School District) appeals from an order of the Court of Common Pleas of Washington County (trial court) setting the fair-market value of Lydia O. Corey (Taxpayer)'s property at a 1981 base-year value of $65,000.00 and an assessed value of $16,250.00 for tax year 2013. For the following reasons, we affirm.
Taxpayer owns residential property in Washington County, Pennsylvania, a fourth-class county subject to the Consolidated County Assessment Law (Law). The School District challenged the property's 2013 assessment, claiming that the fair-market value was higher than assessed. Agreeing with the School District, the Washington County Board of Assessment Appeals (Board) increased the property's market and assessed values. Taxpayer appealed to the trial court, claiming that the revised assessment was based upon an incorrect base-year value.
Section 8854(a)(1)-(2) provides, "Any appellant, property owner or affected taxing district may appeal the board's decision to the court of common pleas," challenging the property's market value or the applicable common-level ratio. 53 Pa. C.S. §8854(a)(1)-(2). Section 8854(a)(9)(i) further states, "Nothing in this subsection shall...[p]revent an appellant from appealing a base-year valuation without reference to ratio." 53 Pa. C.S. §8854(a)(9)(i). Taxpayer's notice of appeal states, among other grounds, that "the assessment is based on an improper method and/or formula." (Reproduced Record [R.R.] at 3a.)
Section 8802 defines "base year" as:
[t]he year upon which real property market values are based for the most recent countywide revision of assessment of real property or other prior year upon which the market value of all real property of the county is based for assessment purposes. Real property market values shall be equalized within the county and any changes by the board shall be expressed in terms of base-year values.53 Pa. C.S. §8802. Because Washington County's last countywide assessment was performed in 1980, all base-year values are expressed in 1981 dollars. The base-year value is multiplied by the established predetermined ratio—25 percent in Washington County—to determine the assessed value. (R.R. at 48a.)
At trial, the Board submitted its property record card, reflecting the increased market and assessed values. Bradley Boni, Chief Assessor for Washington County, testified that the revised values "should be" expressed in 1981 base-year dollars, but conceded that they were based on present value. (R.R. at 50a, 52a-53a.) James Connolly, Jr., a certified residential appraiser, testified to the property's fair-market value based upon an August 2012 analysis, which he stated was still valid, because property values in Washington County had not fluctuated. (R.R. at 94a-95a.)
At Taxpayer's request and without objection, the trial court took judicial notice of appraisals offered by Taxpayer and the School District in a prior appeal regarding the property's 2012 assessment, both of which appraised the property based upon 1981 values. The trial court found that Taxpayer appealed on a 1981-value basis, and because the Board's values were expressed in 2013 dollars, the only evidence of the property's 1981 base value were the prior appraisals, which Mr. Connolly testified remained in effect. Relying on the prior reports, the trial court again set the 1981 base-year value of the property at $65,000.00 and its assessed value at $16,250.00. This appeal followed.
In the prior appeal, Taxpayer challenged the base-year valuation of her property in the 2012 tax year. Ultimately, the trial court established the property's 1981 base-year fair-market and assessed values at $65,000.00 and $16,250.00, respectively. Based upon that valuation, Taxpayer moved for a directed verdict in her 2013 appeal, but the trial court denied the motion because the prior decision was not res judicata in the subsequent appeal.
On appeal, the School District contends that the trial court erred in taking judicial notice of the prior appraisal reports because they constitute incompetent hearsay. The School District argues that its failure to object to the reports at trial should be excused because "there was no need for the School District to object because the trial court had rejected Taxpayer's request that it take judicial notice of the appraisal report." (Br. for Appellant at 15.) However, a review of the record belies this argument. The trial transcript is replete with Taxpayer's unopposed requests that the trial court take judicial notice of the reports and the trial court's willingness to do so. (R.R. at 52a ("MR. SENTNER: Your Honor, I would ask the Court to take judicial notice that, during [the prior] trial, the School District introduced an appraisal of $68,000.00 by their appraiser. THE COURT: So noted."); R.R. at 57a ("THE COURT: For the record, I want everyone to know, I pulled our court file on this case from last year, because I said I will take judicial notice of the School Board's appraisal dated April 30, 2012, whereby Mr. Bodnar opined that this property, as of that date, was worth $68,000.00 based on the January 1, 1981 base-year."); R.R. at 45a-46a; R.R. at 75a.) Because the School District failed to make a timely objection, it waived any claim that the trial court should not have taken judicial notice of the 2012 appraisal. Pa. R.E. 103(a)(1)(A)-(B).
This Court's review in tax-assessment appeals is limited to determining whether the trial court abused its discretion, committed an error of law or reached a determination not supported by substantial evidence. Herzog v. McKean County Board of Assessment Appeals, 14 A.3d 193, 199 n.15 (Pa. Cmwlth. 2011).
The School District also contends that the trial court erred by permitting Taxpayer to proceed with a base-year valuation challenge because the School District initiated the appeal on a current market-value theory, and Taxpayer is bound by the basis of the initial appeal. The School District concedes that Section 8854(a)(9)(i) regarding appeals to courts of common pleas allows "an appellant" to appeal "a base-year valuation without reference to ratio" but contends that in this case, the School District is the appellant and has that exclusive right. 53 Pa. C.S. §8854(a)(9)(i). Although the School District initiated the appeal, Taxpayer was the party aggrieved by the Board's decision and was the appellant at the trial-court level. Based on the plain language of Section 8854(a)(9)(i), Taxpayer was permitted to pursue a base-year challenge. As the trial court noted, a contrary ruling would create a race to file with the Board. Moreover, it would leave a taxpayer without recourse because a taxing authority can "force the board to increase the assessment to the fair market value as of the year the appeal was taken...and merely apply the [established predetermined ratio] to that figure, rather than to a figure expressed in base-year dollars." Downingtown Area School District v. Chester County Board of Assessment Appeals, 913 A.2d 194, 204 (Pa. 2006).
Section 8842 of the Law provides that a county may "utilize the current market value or it may adopt a base-year market value" to arrive at a property's "actual value" for the purposes of an assessment. 53 Pa. C.S. §8842 (emphasis added). In this case, Washington County has adopted the base-year method, and its last county-wide assessment was performed in 1980 with all property values expressed in terms of 1981 base-year dollars. Our Supreme Court explained in Clifton v. Allegheny County, 969 A.2d 1197, 1203 (Pa. 2009):
Under a base year system of valuation, a county performs a countywide reassessment of all real property in the base year, and then uses each property's base year assessment as that property's basis for taxation in the base year, as well as its basis (i.e., assessed value) in subsequent years. Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 590 Pa. 459, 913 A.2d 194, 202-03 (2006). In the base year, a property's assessed value may be 100% of its actual value, and thus, assessments of all real estate in the county are based on actual, fair market value for the base year. Each year thereafter, however, a given property's market value may change, but its assessment ordinarily remains static, fixed at its base year level until the next countywide reassessment. Id. at 203-04. This is so because a county utilizing a base year method of valuation typically does not consider market fluctuations subsequent to the base year when assessing "current value," or factor in variables such as improvements to a property that may increase its assessed value. If a building is constructed on a lot that was vacant during the base year, the property's assessed value is determined by using either sales of comparable properties in the base year or base year construction schedules.
Even if Taxpayer was permitted to pursue a base-year challenge, the School District contends that she waived this basis by failing to assert it in her notice of appeal, which states that her assessment was "based on an improper method and/or formula," and the assessment was unjust, improper and illegal. (R.R. at 3a.) There is no dispute that Washington County was on a base-year assessment basis or that Taxpayer's notice of appeal clearly sets forth that she was challenging the market-value method in arriving at the assessment as improper. Because this allegation was sufficient to put the parties and Board on notice of Taxpayer's base-value challenge, and because the challenge fell squarely within the scope of the notice, Taxpayer properly preserved her claim.
Accordingly, we affirm the trial court's order setting the fair-market value of Taxpayer's property at a 1981 base-year value of $65,000.00 and an assessed value of $16,250.00.
/s/_________
DAN PELLEGRINI, President Judge ORDER
AND NOW, this 13th day of May, 2014, the order of the Court of Common Pleas of Washington County dated May 8, 2013, is affirmed.
/s/_________
DAN PELLEGRINI, President Judge
Section 8817 sets forth when an assessment of a parcel with a base-year value may be changed such as subdivision or substantial improvements. 53 Pa. C.S. §8817. "[B]ecause of the discrepancy between present-year dollars and base-year dollars, when a county board of assessment appeals alters the value associated with a particular piece of property, ... the board designates the new value in terms of base year dollars." Clifton, 969 A.2d at 1197 n.7 (internal citation omitted); 53 Pa. C.S. §8802 ("Real property market values shall be equalized within the county and any changes by the board shall be expressed in terms of base-year values.").
Our Supreme Court in Clifton gave the following example:
[I]f a home is replaced on a lot, the parcel's value may increase from (say) $100,000 to $200,000 in present-year dollars due to the new construction. However, the board does not simply re-assess the property at $200,000; rather, using tables, charts, and other accepted techniques, the board determines what the improved property would have been worth in the base year—in this example, perhaps $180,000; it is this latter figure of $180,000, multiplied by the base year [established predetermined ratio], which becomes the parcel's new assessed value for the present tax year. In this way, uniformity is maintained because, as explained above, other properties whose assessments have not been altered also remain assessed according to base year dollars.969 A.2d at 1197 n.7.
While the fair-market value of Taxpayer's property could be changed, the Board needed to convert the new value into 1981 dollars. It was not permitted to assess Taxpayer's property based upon current market value while using the base-year method for most of the county. See City of Lancaster v. County of Lancaster, 599 A.2d 289, 295-96 (Pa. Cmwlth. 1991) (holding that a county that uses base-year market values for most of the county may not use a formula based upon current market value as to a selected group of taxing districts only).
While the School District does not explain why it was permitted to seek a change in assessment under Section 8817, Taxpayer has not challenged the School District's ability to do so.