IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In Re: Consolidated Appeals of :

Chester-Upland School District :

and Chichester School District :

from the Decisions of the :

Board of Assessment Appeals : No. 633 C.D. 2017

of Delaware County, Pennsylvania :

for Various Tax Years and :

Various Real Properties :

:

Appeal of: Chichester School District :

and Chester Upland School District :

In Re: Consolidated Appeals of :

Chester-Upland School District :

from The Decisions of The :

Board of Assessment Appeals : No. 732 C.D. 2017

of Delaware County, Pennsylvania :

for Various Tax Years and :

Various Real Properties :

:

Appeal of: Chichester School District :

In Re: Consolidated Appeals of :

Chester-Upland School District, et. al. :

from the Decisions of the Board of :

Assessment Appeals of Delaware : No. 740 C.D. 2017

County, Pennsylvania for Various : Argued: June 7, 2018

Years and Various Real Estate :

Properties :

:

Appeal of: Chester-Upland School :

District :

BEFORE: HONORABLE P. KEVIN BROBSON, Judge

HONORABLE MICHAEL H. WOJCIK, Judge

HONORABLE JAMES GARDNER COLINS, Senior Judge
2

OPINION BY

SENIOR JUDGE COLINS FILED: December 27, 2018

Before this Court are the appeals of Chester-Upland School District and 

Chichester School District (collectively, Appellants) from an April 27, 2017 order 

of the Court of Common Pleas of Delaware County (Trial Court). In the order, the 

Trial Court ruled that Appellants may not consider the presence of an outdoor 

advertising sign on a property when determining its fair market value for the 

purposes of a real estate tax assessment. For the reasons set forth below, we vacate

the Trial Court’s order and remand for further proceedings. 

This appeal requires that we interpret the exclusion from taxation for 

outdoor advertising signs and their support structures that is set forth in Section 

8811(b)(4) of the Consolidated County Assessment Law (CCAL), 53 Pa. C.S. § 

8811(b)(4).

1

 The CCAL governs the assessment of real estate taxes for counties of 

the Second Class A, including Delaware County, and counties of the Third through 

Eighth Class. 53 Pa. C.S. § 8801(b)(1). Section 8811 is divided into two subsections 

 

1 The interpretation of a statute is a question of law, and therefore our standard of review is de 

novo and our scope of review is plenary. Department of Transportation, Bureau of Driver 

Licensing v. Weaver, 912 A.2d 259, 261 (Pa. 2006). In matters involving the interpretation of a 

statute, we apply the Statutory Construction Act of 1972, 1 Pa. C.S. §§ 1501–1991, which provides 

that the “object of all interpretation and construction of statutes is to ascertain and effectuate the 

intention of the General Assembly.” 1 Pa. C.S. § 1921(a); see also Weaver, 912 A.2d at 264. In 

construing statutory language, “[w]ords and phrases shall be construed according to rules of 

grammar and according to their common and approved usage.” 1 Pa. C.S. § 1903(a). The clearest 

indication of legislative intent is generally the plain language of the statute. Doe v. Franklin 

County, 174 A.3d 593, 605 (Pa. 2017). “When the words of a statute are clear and free from all 

ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.” 1 Pa. 

C.S. § 1921(b); see also Weaver, 912 A.2d at 264. It is only when the text of a statutory provision 

is ambiguous that we will attempt to ascertain legislative intent. 1 Pa. C.S. § 1921(c); Chanceford 

Aviation Properties, L.L.P. v. Chanceford Township Board of Supervisors, 923 A.2d 1099, 1104 

(Pa. 2007).
3

that define what property is to be assessed and taxed and what forms of property are 

to be omitted from an assessment. Subsection (a) of Section 8811 establishes that 

real estate is a subject of taxation, which includes “land, lots of ground, ground 

rents,” and buildings situated on the real estate. 53 Pa. C.S. § 8811(a). Subsection 

(b), on the other hand, sets forth several “exceptions” from taxation for specific kinds 

of property, including signs and sign structures; machinery, tools, appliances and 

equipment in a mill, mine, manufactory or industrial establishment; silos and other 

structures related to the storage of animal feed and structures related to the storage 

of animal waste or composting; amusement park rides; wind turbine generators and 

related wind energy appliances and equipment; and high tunnels. 53 Pa. C.S. § 

8811(b). The exclusion for signs and sign structures appears in paragraph (b)(4) of 

Section 8811, which provides that:

No sign or sign structure primarily used to support or 

display a sign shall be assessed as real property by a 

county for purposes of the taxation of real property by the 

county or a political subdivision located within the county 

or by a municipality located within the county authorized 

to assess real property for purposes of taxation, regardless 

of whether the sign or sign structure has become affixed to 

the real estate.

53 Pa. C.S. § 8811(b)(4). This exclusion has not previously been addressed in the 

appellate court decisions of this Commonwealth.

The underlying actions in the Trial Court consist of 26 appeals of real 

estate tax assessment determinations by the Delaware County Board of Assessment 

Appeals (Delaware County Board) and the City of Chester Board of Revision of 

Taxes and Appeals (City of Chester Board) concerning assessments for the 2015 and 

2016 tax years for properties contained within either the Chester-Upland School 

District or the Chichester School District. Each of the 26 properties at issue in these 
4

appeals (subject properties) contains an outdoor advertising sign. Pursuant to a 

stipulation of the parties, the Trial Court consolidated the 26 appeals to consider the 

common threshold legal issue of “whether a taxing authority can use the presence of 

an outdoor advertising sign to increase the real property tax basis” of the property. 

(Trial Court Stipulation ¶¶1, 3, Reproduced Record (R.R.) 13a; Trial Court Orders 

dated April 4, 2016, January 17, 2017 and April 7, 2017, R.R. 24a-27a, 74a-81a.) 

Appellants argued before the Trial Court that the assessments of the 26 subject 

properties should be increased in order to account for revenue that the property 

owners realized through ground leases or grants of easements to outdoor advertising 

companies that erected and operated a billboard on the properties. 

In its April 27, 2017 order, the Trial Court ruled that 

a taxing authority may NOT use the presence or existence 

of an outdoor advertising sign thereon to increase a 

property’s real estate tax basis or assessment based upon a 

claim of increased fair market value determined by the 

cost, income, comparable sales and/or any other valuation 

approach.

(R.R. 120a.) In the order, the Trial Court also affirmed the decisions in the 22 

assessment appeals where Appellants’ requests to increase the assessment had been 

rejected by the Delaware County Board, and reversed the 2 Delaware County Board 

and 2 City of Chester Board decisions that had ruled in favor of Appellants and 

reassessed the properties. (R.R. 120a-124a.) In its later opinion in support of the 

order, the Trial Court concluded that the exclusion from taxation for signs and their 

support structures in Section 8811(b)(4) of the CCAL, 53 Pa. C.S. § 8811(b)(4), 

prevented the existence of an outdoor advertising sign on a property from being 

considered in any manner to raise that property’s real estate tax basis. The Trial 

Court stated that, contrary to Appellants’ arguments, the taxation of land, lots and 
5

ground rents pursuant to Section 8811(a) does not override the General Assembly’s 

clear exclusion for signs and sign structures set forth in Section 8811(b)(4). (July 

18, 2017 Trial Court Opinion at 25-26.) 

On May 10, 2017, the Trial Court issued an order amending its April 

27, 2017 order to include the statement specified in Section 702(b) of the Judicial 

Code, 42 Pa. C.S. § 702(b), to allow an interlocutory appeal by permission. (R.R. 

130a.) Appellants filed a joint notice of appeal of the Trial Court’s April 27, 2017 

order as amended by the May 10, 2017 order, and later filed separate petitions for 

permission to appeal the Trial Court orders. On July 6, 2017, this Court entered an 

order granting the petitions for permission to appeal, stating the question to be 

considered by the Court on appeal as “Whether a property’s fair market value for 

assessment purposes may include revenue generated from billboard leases, rents or 

easements?” On July 20, 2017, this Court entered an order consolidating the three 

appeals.

In their appeals, Appellants acknowledge that a billboard and the 

structure that supports it are not to be considered as part of an assessment of property 

pursuant to Section 8811(b)(4). Nevertheless, Appellants argue that the sign-andsign-structure exclusion does not preclude assessment of the land on which a 

billboard sits and the consideration of income derived from a lease of that land for 

the purpose of erecting and operating a billboard. Rather, Appellants assert that 

Section 8811(b)(4) clearly and unambiguously only exempts the signs and sign 

structures and does not exempt the land underneath the signs. Appellants argue that 

the Trial Court’s order denying any use of the “presence” of billboards on the subject 

properties in arriving at an assessment negates any consideration of the revenues that 

a property owner could realize through a ground lease or grant of an easement to an 
6

outdoor advertising operator. Thus, according to Appellants, the Trial Court’s order 

not only denies the existence of the physical billboard, but also denies any 

consideration of the effect of a billboard lease on the fair market value of the 

property. Appellants contend that the order accordingly conflicts with precedent 

concerning assessments under the CCAL, which requires consideration of all of a 

property’s potential uses and the property’s ability to generate income, including 

revenues derived from long-term leases on the land. 

Under the CCAL, the starting point for determining the valuation of 

real property for tax assessment purposes is that the property must be assessed at its 

“actual value.” Harley-Davidson Motor Co. v. Springettsbury Township, 124 A.3d 

270, 279 (Pa. 2015); see also 53 Pa. C.S. § 8842. The actual value is a parcel’s fair 

market value, which has been defined as “the price which a purchaser, willing but 

not obliged to buy, would pay an owner, willing but not obliged to sell, taking into 

consideration all uses to which the property is adapted and might in reason be 

applied.” Harley-Davidson, 124 A.3d at 279 (quoting F & M Schaeffer Brewing Co. 

v. Lehigh County Board of Appeals, 610 A.2d 1, 3 (Pa. 1992) (plurality)); see also

Tech One Associates v. Board of Property Assessments, Appeals and Review of 

Allegheny County, 53 A.3d 685, 700 (Pa. 2012). The actual or fair market value is 

determined by competent witnesses as to what the property is worth on the market 

at a fair sale. Harley-Davidson, 124 A.3d at 279; Allegheny Energy Supply Co., LLC 

v. County of Greene, Board of Assessment Appeals, 869 A.2d 31, 33-34 (Pa. Cmwlth. 

2005) (en banc). The CCAL sets forth three approaches that must be consulted in 

arriving at a valuation: (i) the cost approach, based on reproduction or replacement 

cost of a property less depreciation and obsolescence; (ii) the comparable sales 

approach, relying on sales of properties with similar characteristics; and (iii) the 
7

income approach, which divides a subject property’s annual net rental income by an 

investment rate of return. 53 Pa. C.S. § 8842(b); Harley-Davidson, 124 A.3d at 279; 

Aetna Life Insurance Co. v. Montgomery County Board of Assessment Appeals, 111 

A.3d 267, 278 (Pa. Cmwlth. 2015). A trial court has discretion to decide which 

method of valuation is most appropriate and applicable to a given property. Aetna 

Life Insurance, 111 A.3d at 278; Allegheny Energy Supply, 869 A.2d at 34.

When determining fair market value, the property tax assessment “must 

include all relevant factors having a bearing on that value.” Harley-Davidson, 124 

A.3d at 283 (emphasis in original). The assessment must include “the entire

property and not merely its constituent elements.” Tech One Associates, 53 A.3d at 

700 (quoting North Park Village, Inc. v. Board of Property Assessments, Appeals 

and Review of Allegheny County, 184 A.2d 253, 255 (Pa. 1962)) (emphasis in 

original). In addition, the property must be valued based on its current condition 

even where an appraiser asserts that the highest and best use of the property is 

different from the current use and would require alteration to the property, such as 

subdivision of the land. Harley-Davidson, 124 A.3d at 280-81; Craftmaster 

Manufacturing, Inc. v. Bradford County Board of Assessment Appeals, 903 A.2d 

620, 631-33 (Pa. Cmwlth. 2006). As our Supreme Court has explained, the “ways 

in which a property hypothetically could be used by potential buyers are properly 

considered by an expert in evaluating what a willing buyer would pay for a property; 

however, the subject property should not be valued as though it were already in that 

hypothetical condition.” Harley-Davidson, 124 A.3d at 280. 

However, while a property must be valued based on the current 

condition of the land, the property may not be valued based solely on its current use. 

Instead, in Schaeffer Brewing, the Supreme Court held that property must be valued 
8

according to its objective fair market value in the marketplace or “value-inexchange” rather than its unique, subjective value to a particular owner, or “valuein-use.” 610 A.2d at 3-4. Thus, in that decision, the Court determined that the 

valuation of a property containing a large commercial brewery calculated using a 

replacement cost valuation approach was improper because the valuation was based 

on a “hypothetical model production plant” using only the facility’s barrel-per-year 

output “without any pretense of replicating the same physical characteristics of the 

actual real estate being assessed.” Id. at 5. Though only a plurality decision,2this 

Court has followed Schaeffer Brewing in cases such as Hershey Entertainment and 

Resorts Co. v. Dauphin County Board of Assessment Appeals, 874 A.2d 702 (Pa. 

Cmwlth. 2005), where we held that Dauphin County improperly valued Hershey 

Park and Zoo America based on the value-in-use to the operator of these parks where 

the valuation was derived from the revenue earned from sales of tickets, food and 

souvenirs; this Court noted that the county’s approach was “impermissibly based 

upon the productivity of” the business enterprises which would lead to the value of 

the real estate fluctuating from year to year based on attendance and concession sales 

at the park. Id. at 707-10 (emphasis in original); cf. In re Appeal of V.V.P. 

Partnership, 647 A.2d 990, 992-93 (Pa. Cmwlth. 1994) (valuation of a racquet sport 

facility using the income method based on actual receipts and expenses of facility 

was not an improper value-in-use because severe limitations on the property’s 

viability as an investment property, including zoning and site factors, meant that the 

current use was the only conceivable one).

 

2

In Harley-Davidson, the Supreme Court noted that Schaeffer Brewing is a non-precedential 

plurality decision and that a majority of the Court had not endorsed the holding that a property’s 

value-in-use is not to be considered in assessing a property. 124 A.3d at 279 & n.6.
9

Additionally, when real estate is subject to a long-term lease, the 

portions of the property subject to a leasehold interest cannot be disregarded in 

valuing the property. Tech One Associates, 53 A.3d at 698 n.25, 703. Rather, the 

“economic reality” of the lease must be considered in establishing the market value 

of the property. Id. at 703; In re Appeal of Marple Springfield Center, Inc., 607 A.2d 

708, 710 (Pa. 1992). Accordingly, in Tech One Associates, our Supreme Court held 

that an appraisal expert appropriately determined that the rent paid under a longterm lease by the property owner to a shopping center operator could be included in 

the valuation of the property, in addition to and separate from the valuation of the 

buildings built by the lessee. Tech One Associates, 53 A.3d at 701-03. The Court 

held that “when the property generates income [through the lease], the capitalization 

of income approach[3]is an appropriate method to use to ascertain its value, and, in 

applying that method, the contract rent received under the lease is the relevant 

income stream which is to be capitalized, even if it is below prevailing market rental 

rates.” Id. at 703; see also Marple Springfield Center, 607 A.2d at 710.

In light of the above principles, we conclude that the Trial Court 

erroneously interpreted the sign-and-sign-structure exclusion of Section 8811(b)(4) 

to foreclose any consideration of any potential income that a property owner may 

receive from the placement of a billboard on the property in arriving at a fair market 

value assessment. Section 8811(b)(4) unambiguously states that a taxing authority 

must not treat the value of a sign or its support structure as part of the real property 

subject to taxation in the assessment of the property. As our Supreme Court has 

 

3

“Broadly defined, an ‘income capitalization approach’ to valuation is ‘[a] set of procedures 

through which an appraiser derives a value indication for an income-producing property by 

converting its anticipated benefits (cash flows and reversion) into property value.’” Tech One 

Associates, 53 A.3d at 698 n.9 (quoting The Dictionary of Real Estate Appraisal 143 (4th ed. 

2002)).
10

explained with respect to the machinery exclusion of Section 8811(b)(1), the purpose 

of the exclusions is to move into a separate class of non-taxable property what would 

have been classified as taxable real estate under Section 8811(a) absent the 

exclusion. Jones and Laughlin Tax Assessment Case, 175 A.2d 856, 861 (Pa. 1961). 

However, there is no justification in the text of Section 8811 for the Trial Court’s 

holding that a valuation of the real property cannot consider the effect of a lease of 

the property to a billboard operator or the property’s suitability for a billboard use 

due to its location, zoning designation or other characteristic when arriving at the 

fair market value of the property. Rather, as applicable caselaw instructs, the 

valuation must consider “all [of the] relevant factors having a bearing on” a 

property’s fair market value, including the “ways in which a property hypothetically 

could be used by potential buyers.” Harley-Davidson, 124 A.3d at 280, 283 

(emphasis in original). In addition, pursuant to Tech One Associates, the appraiser 

must consider the “economic reality” of a long-term lease on a property that provides 

revenue to the property owner where appropriate. 53 A.3d at 703. Section 

8811(b)(4), like the other exclusions of that subsection, plainly requires by its text 

only that the physical billboard sign and the structure that supports the signs be 

excluded from the valuation, but this provision does not have any effect on a taxing 

authority’s valuation of the land and other non-excluded or non-exempt taxable real 

estate situated on that land. Nor does the Section 8811(b)(4) exclusion alter the 

traditional methods of valuation set forth in the CCAL or the foundational principles 

of valuation set forth in our caselaw. 
11

Taxpayers4argue that the Trial Court’s interpretation of Section 

8811(b)(4) was proper because factoring in the amount of rent paid by billboard 

operators to property owners pursuant to leases or easements into a property’s fair 

market value would value the property to the specific property owner based on its 

current use, in violation of the “value-in-use” concept described in Schaeffer 

Brewing and decisions of this Court. Taxpayers argue that Appellants’ proposed 

method of valuation that would account for revenue earned by the property owner 

from leases or easements for billboards would be an improper “value-in-use” 

valuation that would reflect the value of the business activity conducted on the 

subject properties, which is entirely derived from the excluded non-taxable sign and 

sign structure.

In addition, Taxpayers argue that Appellants’ proposed methods of 

valuation would indirectly value the billboards themselves in violation of the Section 

8811(b)(4) exclusion. Taxpayers find support for this argument in our Supreme 

Court’s decision in Schaeffer Brewing where the Court explained that:

The machinery and equipment exclusion clearly evidences 

a legislative intent and public policy to promote a 

favorable business climate in Pennsylvania by providing 

tax relief for Pennsylvania industries. In view of this 

public policy consideration, it is not sufficient only to 

exclude machinery and equipment from direct inclusion in 

the assessable real estate valuation. To give the exclusion 

proper effect, the assessed value of industrial real estate 

must not, in any way, reflect consideration of the value of 

the machinery and equipment. Otherwise, a subtle–but no 

 

4 A group of appellees, including property owners and lessees of the subject properties and holders 

of easement interests in the properties with responsibility for payment of the real estate taxes, filed 

a joint brief. Several other appellees joined in the joint brief. In addition, appellee Beit Jala, Inc., 

the owner of one of the subject properties, filed a separate brief in support of the Trial Court’s 

order. For ease of reference, appellees are collectively referred to as “Taxpayers” in this opinion.
12

less real–assessment of machinery and equipment will 

result.

610 A.2d at 6-7 (citation omitted). Taxpayers argue that, as in Schaeffer Brewing, 

the amount of rent paid here by billboard operators to the property owners pursuant 

to leases or easements necessarily “reflect consideration” of the billboards and that 

taxing the rent that is paid by the operators will operate as “a subtle–but no less real–

assessment” on the billboards themselves, which is contrary to Section 8811(b)(4). 

Taxpayers raise valid concerns that must be accounted for in any 

valuation of property on which a billboard sits. We agree that an appraiser must not 

indirectly value an existing billboard on a property by, for example, considering the 

revenue generated from the number of advertisements that are placed on that 

billboard in a given year. However, in this appeal we are only called upon to address 

the question of whether the revenue that a property owner receives pursuant to a 

lease or easement for the purpose of erecting a billboard may be considered in a fair 

market value property assessment. Thus, we conclude only that a property’s 

suitability to a billboard use and income earned by the property owner from the rental 

of the property to a billboard operator are not excluded from a fair market valuation 

by Section 8811(b)(4) and that the property should be valued consistent with the 

general principles of valuation described above. Issues concerning the valuation of 

any of the individual subject properties are not presently before this Court. 

Finally, Taxpayers contend that Section 8811(b) must be interpreted in 

favor of property owners and against an extension of the property that is subject to 

assessment because exclusions from taxation are to be strictly construed against the 

taxing authority with doubts resolved in favor of the taxpayer. See, e.g., Crawford 
13

Central School District v. Commonwealth, 888 A.2d 616, 620 (Pa. 2005).5 However, 

the doctrine of strict construction of a statute in favor of a party applies only where 

there is reasonable doubt regarding the meaning of the provision. See Tech One 

Associates, 53 A.3d at 696; BFC Hardwoods, Inc. v. Board of Assessment Appeals

of Crawford County, 771 A.2d 759, 763 n.5 (Pa. 2001). Here, there is no doubt that 

the text of Section 8811(b)(4) applies only to exclude the valuation of an advertising 

sign or its sign structure and does not otherwise prohibit the valuation of land 

according to the CCAL and applicable caselaw. 

Accordingly, we conclude that the Trial Court’s April 27, 2017 order 

was in error. The Trial Court’s order is vacated, and we remand this matter to the 

Trial Court for further proceedings consistent with this opinion regarding the 

assessment appeals on the individual subject properties.6 

__________ ___________________________

JAMES GARDNER COLINS, Senior Judge

Judge Fizzano Cannon did not participate in the decision for this case.

 

5 Appellants argue that the “exceptions” from taxation listed in Section 8811(b) of the CCAL are 

in fact exemptions from taxation, which are required to be construed against the taxpayer. 1 Pa. 

C.S. § 1928(b)(5); Crawford Central, 888 A.2d at 620. However, our Supreme Court has expressly 

held that the prior version of the machinery and equipment provision, which now appears in 

Section 8811(b)(1), is in fact an exclusion from taxation and not an exemption. See BFC 

Hardwoods, Inc. v. Board of Assessment Appeals of Crawford County, 771 A.2d 759, 763 & n.5 

(Pa. 2001) (holding that machinery, tools appliances and equipment exception of the Fourth to 

Eighth Class County Assessment Law was in fact an exclusion and not an exemption and therefore 

this provision was required to be strictly construed against Commonwealth); see also Jones and 

Laughlin Tax Assessment Case, 175 A.2d at 862.

6 As we resolve this appeal in Appellants’ favor, we need not address their argument that the Trial 

Court’s order would violate the Uniformity Clause of the Pennsylvania Constitution and the Equal 

Protection Clause of the United States Constitution. 
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In Re: Consolidated Appeals of :

Chester-Upland School District :

and Chichester School District :

from the Decisions of the :

Board of Assessment Appeals : No. 633 C.D. 2017

of Delaware County, Pennsylvania :

for Various Tax Years and :

Various Real Properties :

:

Appeal of: Chichester School District :

and Chester Upland School District :

In Re: Consolidated Appeals of :

Chester-Upland School District :

from The Decisions of The :

Board of Assessment Appeals : No. 732 C.D. 2017

of Delaware County, Pennsylvania :

for Various Tax Years and :

Various Real Properties :

:

Appeal of: Chichester School District :

In Re: Consolidated Appeals of :

Chester-Upland School District, et. al. :

from the Decisions of the Board of :

Assessment Appeals of Delaware : No. 740 C.D. 2017

County, Pennsylvania for Various : 

Years and Various Real Estate :

Properties :

:

Appeal of: Chester-Upland School :

District :

ORDER
AND NOW, this 27th day of December, 2018, the order of the Court of 

Common Pleas of Delaware County is VACATED, and this matter is REMANDED 

for further proceedings consistent with this opinion.

Jurisdiction relinquished.

__________ ___________________________

JAMES GARDNER COLINS, Senior Judge