Court Opinion

ID: 9754756
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:12:28.848846+00
Date Added: 2024-06-11T07:27:57.240983
License: Public Domain

DISSENTING OPINION BY
JUDGE FRIEDMAN.
I respectfully dissent. The question presented here is whether the Court of Common Pleas of Chester County (trial *622court) failed to consider relevant evidence in determining that the “established predetermined ratio” 1 of 100% in this case does not violate the tax uniformity provision in Article VIII, Section 1 of the Pennsylvania Constitution.2 Relying on the rulings of the Pennsylvania Supreme Court, which is the ultimate interpreter of the Pennsylvania Constitution,3 I would conclude that the trial court erred in this regard.
I. Supreme Court Case Law
In the case of In re Brooks Building, 391 Pa. 94, 101, 137 A.2d 273, 276 (1958), our supreme court stated that a taxpayer satisfies his burden of proving a property tax uniformity violation by producing “evidence of the market value of his property and of similar properties of the same nature in the neighborhood and by proving the assessments of each of those properties and the ratio of assessed value to actual or market value.”4
Subsequently, in Deitch Company v. Board of Property Assessment, Appeals and Review of Allegheny County, 417 Pa. 213, 223, 209 A.2d 397, 402-03 (1965) (emphasis added, citation omitted), our supreme court stated:
In determining ... whether the constitutional requirement with respect to uniformity has been complied with in a taxing district, all properties are compa-rabie in constructing the appropriate ratio of assessed value to market value. This is because the uniformity requirement of the Constitution of Pennsylvania has been construed to require that all real estate is a class which is entitled to uniform treatment. In establishing such ratio in a particular district, the property owner, the taxing authority, and the courts may rely on any relevant evidence.
The evidence supplied by the taxpayer in Brooks illustrates one method by which a taxpayer can meet his burden of proving a lack of uniformity, but we do not consider it to be the only method. It would be equally satisfactory to produce evidence regarding the ratios of assessed values to market values as the latter are reflected in actual sales of any other real estate in the taxing district for a reasonable period prior to the assessment date.
Thus, the court in Deitch validated the Brooks “similar properties” method of proving a uniformity violation under Article VIII, Section 1 of the Pennsylvania Constitution. This is because the ratio of assessed value to market value for similar properties in a taxing district is relevant to the question of whether the ratio is uniform for all properties within the taxing district.5 Id.
*623Later, in Keebler Company v. Board of Revision of Taxes of Philadelphia, 496 Pa. 140, 143, 436 A.2d 583, 584 (1981), relying on Deitch, our supreme court explained that, because “[p]ractical considerations ... prohibit the construction of a common-level ratio by way of an evaluation of the assessment and fair market value of each and every parcel of realty in the taxing district,” the common-level ratio may be constructed by “any relevant evidence.”6
The property in this case is a shopping center in Chester County with a market value of 8.5 million dollars. Lionville Station S.C. Associates (Lionville), the property owners, presented evidence that seven similar properties, i.e., other shopping centers in Chester County, were assessed at thirty-four to sixty-nine percent of their fair market values. Lionville argued that such evidence shows that the established predetermined rate of 100% violates the uniformity requirement of the Pennsylvania Constitution. The trial court refused to consider Lionville’s evidence, stating that it was irrelevant. However, as indicated above, the Pennsylvania Supreme Court has specifically stated that such evidence is relevant. Deitch; Brooks.
Accordingly, I would vacate the trial court’s determination and remand this case for consideration of Lionville’s evidence.
II. Statutory Provisions
A. STEB Common Level Ratio
In 1982, after the court’s decision in Keebler, the General Assembly amended the State Tax Equalization Board law (STEB Law)7 to require the STEB to “establish, annually, prior to July 1, a common level ratio of assessed value to market value in each county for the prior calendar year.” Section 7 of the STEB Law, 72 P.S. § 4656.7(9). In arriving at this ratio, the STEB was required to use “statistically acceptable techniques, including sales ratio studies.” Section 16.1 of the STEB Law, 72 P.S. § 4656.16a(b).
The STEB’s regulations indicate that the STEB has adopted the “sales ratio studies” approach to establish a common level ratio for each county for a particular calendar year. 61 Pa.Code § 603.1. In using this approach, the STEB gathers property sales data from each county, eliminating property transfers where the selling price is not bona fide or where the ratio of assessment to selling price is extremely high or low. 61 Pa.Code § 603.31(a), (b), (c), (d). Periodically, the STEB will compare the selling prices with appraised market values, which tend to be much more conservative.8 61 Pa. Code § 603.31(e), (f).
Significantly, the STEB common level ratio is not based on a study of the ratio of *624assessed value to market value for all properties in a county. Rather, the STEB ratio is based only on the ratio for properties in a county that have been sold for a bona fide price during a particular calendar year. Moreover, the STEB ratio represents an average ratio for those properties; the STEB ratio does not represent the ratio at which all properties in a county are taxed in a particular calendar year.
Nevertheless, because our supreme court has approved the use of sales data to establish a common level ratio, the STEB ratio is relevant evidence for determining whether a county’s established predetermined ratio is constitutional. However, the Pennsylvania Supreme Court has made clear that such is not the only relevant evidence. Keebler; Deitch; Brooks.
B. Fifteen Percent Rule
By statute, any person aggrieved by an established predetermined ratio may appeal to the board of assessment appeals. Section 8(c) of the Assessments Law, Act of June 26, 1931, P.L. 1379, as amended, 72 P.S. § 5349(c). In such an appeal, the board initially must determine the market value of the property and the STEB common level ratio. Section 8(d.l) of the Assessments Law, 72 P.S. § 5349(d.l). Then, if the established predetermined ratio does not vary by more than fifteen percent from the STEB common level ratio, the board must apply the established predetermined ratio to the market value; otherwise, the board must apply the STEB common level ratio to the market value.9 Section 8(d.2) of the Assessments Law, 72 P.S. § 5349(d.2).
It appears to me that, in establishing the fifteen percent rule, the legislature was attempting to create a bright-line test for property tax uniformity. The fifteen percent rule certainly suggests that, if an established predetermined ratio does not vary by more than fifteen percent from the STEB common level ratio, there is property tax uniformity within a county. To the extent that the legislature has made the fifteen percent rule the exclusive method for determining property tax uniformity, the legislature has usurped the judiciary’s function of interpreting the Pennsylvania Constitution. See Pottstown School District v. Hill School, 786 A.2d 312 (Pa.Cmwlth.2001) (stating that interpretation of the Pennsylvania Constitution is the province of the courts). Indeed, the Pennsylvania Supreme Court has never held that the exclusive method for determining property tax uniformity is to: (1) calculate an average assessment ratio from county sales data and (2) determine whether the established predetermined ratio varies by more than fifteen percent from that average assessment ratio.
Moreover, I believe that the fifteen percent rule for property tax uniformity actually defeats uniformity. “[T]he constitutional mandate requiring uniformity is met where the taxing authority assesses all property at the same percentage of its actual value; application of such a uniform ratio assures each taxpayer will be held responsible for its pro rata share of the burden of local government.” In re Appeal of Armco, Inc., 100 Pa.Cmwlth. 452, 515 A.2d 326, 329 (1986), appeal denied, *625516 Pa. 643, 533 A.2d 714 (1987) (emphasis added). Where an established predetermined ratio can vary by fifteen percent above or below the STEB’s common level ratio, the ratio could vary by as much as thirty percent within a county. This is not uniformity.
III. Hromisin
My position in this matter is not inconsistent with the holding in Hromisin v. Board of Assessment Appeals of Luzerne County, 719 A.2d 815 (Pa.Cmwlth.1998), appeal denied, 558 Pa. 634, 737 A.2d 1227 (1999). In Hromisin, this court held that taxpayers may obtain no relief where the evidence presented by the taxpayers’ own expert establishes that the ratio of assessed value to market value for their property is less than the STEB common level ratio for the county for the prior calendar year. Here, the ratio of assessed value ($8.5 million) to market value ($8.5 million) is 100%, and the STEB ratio is 85.2%.10 Because the 100% ratio is not less than the STEB ratio, the holding in Hromisin does not apply here.
Nor is my position contrary to the dicta in Hromisin regarding the “similar properties” evidence presented by the taxpayers’ expert witness. First, Hromisin quotes from Appeal of F.W. Woolworth Company, 426 Pa. 583, 235 A.2d 793 (1967), stating that the “preferred way of determining a common level ratio” is to study the ratio for the entire taxing district. Hromisin, 719 A.2d at 819 (emphasis added). Thus, “similar properties” evidence is flawed to the extent that it does not consider all properties in a taxing district. Id. However, Hromisin does not state that “similar properties” evidence is irrelevant.11
Second, Hromisin seems to suggest that “similar properties” evidence is unnecessary because the Assessments Law “provides an essentially complete mechanism of assuring uniformity within each county.” Hromisin, 719 A.2d at 819. However, Hromisin does not state that the Assessments Law provides the exclusive mechanism for determining whether there is property tax uniformity within a county.
Third, Hromisin states that there is a “serious question” as to whether the approach commonly used to mount a uniformity challenge, i.e., to offer an expert to compute a common level ratio based upon tax records within the county, is any longer permissible. Id. However, Hromisin does not explore this “serious question” any further and does not conclusively resolve the matter.
Finally, with respect to the fifteen percent rule, Hromisin never addressed whether the rule was constitutionally valid. Hromisin did state that “perfect uniformity is not possible since property values fluctuate continuously....” Id. at 818. However, the question remains as to whether an assessment ratio fifteen percent above or below the STEB ratio satisfies constitutional uniformity.
President Judge COLINS joins this dissent.

. The "established predetermined ratio” is the "ratio of assessed value to market value established by the board of county commissioners and uniformly applied in determining assessed value in any year.” Section 1.1 of the Act of June 26, 1931, P.L. 1379, added by section 1 of the Act of December 13, 1982, P.L. 1165, as amended, 72 P.S. § 5342.1.

. Article VIII, Section 1 of the Pennsylvania Constitution states, “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.” Pa. Const., art. VIII, § 1.

. See Pennsylvania AFL-CIO v. Commonwealth, 563 Pa. 108, 757 A.2d 917 (2000) (stating that the Pennsylvania Supreme Court is the ultimate interpreter of the Pennsylvania Constitution).

. The ratio of assessed value to market value is known as the common level ratio. Keebler Company v. Board of Revision of Taxes of Philadelphia, 496 Pa. 140, 436 A.2d 583 (1981).

. In other words, because similar properties are a sub-class of all properties, the ratio for similar properties is relevant.

. In Keebler, the parties chose to utilize sales data to construct their proposed common level ratios. Id.

. Act of June 27, 1947, P.L. 1046, as amended, 72 P.S. § 4656.1 — § 4656.17.

. Thus, a general equation for the STEB ratio would be the assessed value for only those properties sold within a county at a bona fide price in a calendar year (Assessed Value — BF Sold Properties) divided by the market value for only those properties sold within a county at a bona fide price in a calendar year (Market Value — BF Sold Properties):
Assessed Value — BF Sold Properties
Market Value — BF Sold Properties
In contrast, the equation for the common level ratio would be the assessed value of all properties, including those sold at non-bona fide prices and those unsold, within a county in a calendar year (Assessed Value All Properties) divided by the market value of all properties, including those sold at non-bona fide prices and those unsold, within a county in a calendar year (Market Value — All Properties):
Assessed Value — All Properties
Market Value — All Properties

. The board is a local administrative agency, and, as such, it has no power to determine whether the fifteen percent rule in section 8(d.2) of the Assessments Law violates the uniformity provision in Article VIII, Section 1 of the Pennsylvania Constitution. See Allegheny Ludlum Steel Corporation v. Pennsylvania Public Utility Commission, 67 Pa.Cmwlth. 400, 447 A.2d 675 (1982) (stating that an administrative agency cannot determine the constitutionality of its own enabling legislation), aff'd, 501 Pa. 71, 459 A.2d 1218 (1983). The board must comply with the statute.

. I note that the 85.2% STEB ratio for the calendar year 2000 means that property values in the county have appreciated an average of 14.8% since 1996, the year of the last county-wide assessment.

. If this court were to read Hromisin now to state that evidence which fails to consider all properties in a taxing district is irrelevant, then the STEB ratio would be irrelevant because it considers only those properties that have been sold for a bona fide price during a particular calendar year.