Spot Assessments and Appeals by Local Bodies

In past articles, we have published notices of deadlines for property owners to appeal real estate assessments where they believe the assessments to be too high.  What if, due to changing market values or other causes, the assessment is too low?

Real estate assessments are set by the Board of Assessment Appeals for each county.  Pennsylvania law prohibits “spot assessment”, which is essentially the reassessment of a property that is not conducted as part of a county-wide reassessment.  The exceptions to the prohibition on spot assessment are where the property is reassessed pursuant to a county-wide reassessment, where a parcel of land is subdivided and conveyed away in small parcels, or where improvements are made to a property or existing improvements are removed or destroyed.  In short, absent a county-wide reassessment or changes to the property, the County Board of Assessment may not single out a property it believes is assessed too low and increase the assessment. 

Over the past several years, some of our clients have had their assessments appealed by a local school district.  Although a real estate tax assessment can be appealed by any of the local taxing bodies (school district, county or municipality), since the school district receives the lion’s share of real estate taxes, it is typically the taxing body that initiates an assessment appeal.  In view of the rule against spot reassessments, the question arises whether the School District can accomplish a spot reassessment where it is otherwise prohibited by law.

While the answer to this question was in doubt for some time, the Courts have answered it by saying that a taxing body has the same right to appeal an assessment that it believes to be too low as does a property owner with respect to an assessment that he or she believes to be too high. 

What about the rule against spot reassessments?  The courts have explained that only the county Board of Assessment is prohibited from performing spot reassessments.  That prohibition does not prevent a taxing body from selectively appealing real estate assessments.  In cases we have handled in Montgomery County, school districts have selected property (such as those which were recently sold, so that a current purchase price could be used as evidence of fair market value) and appealed the assessments to the Board of Assessment Appeals.  The Board of Assessment Appeals in turn, has typically refused to increase the assessment (to avoid a spot assessment situation), thereby triggering a right of appeal by the school district to the county Court of Common Pleas.

These appeals by taxing districts raise issues of fairness and uniformity since the Pennsylvania Constitution requires that taxes be applied uniformly on similar types of property, in this case real estate.  Can a school district selectively appeal certain types of assessments on certain types of property, for example commercial property, and effectively cause spot reassessments?  On the other hand, the taxing bodies would argue that they are only exercising the same right as the property owner would have to appeal an incorrect assessment.  Thus far, the courts have not prohibited taxing bodies from prevailing on this type of appeal and it remains to be seen whether a future taxpayer challenge will be successful.
Stu Cohen



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