Pennsylvania school districts have a legal right to target underassessed real estate in order to collect higher property tax revenues for public education.
A precedential court ruling upheld the practice of selecting certain properties for appeals when sales tax data indicates they are underassessed by more than $150,000.
In GM Berkshire Hills LLC and GM Oberlin Berkshire Hills LLC v. Berks County Board of Assessment and Wilson School District, GM Berkshire argued that the Wilson School District’s use of sales prices to determine which assessments to challenge violated the U.S. Constitution’s equal protection clause and the Pennsylvania Constitution’s uniformity clause.
The Berkshire properties, which consist of 47 residential buildings, claimed that basing appeals on recent sales data discriminates against new property owners because longtime owners of similar properties may not be selected for an appeal by the school district.
The Wilson District’s appeal raised the Berkshire properties’ combined tax assessment for 2018 and 2019 tax years from $10.45 million to $37.16 million.
The Pennsylvania Commonwealth Court sided with the school district saying the district’s method of selecting which properties to appeal is reasonable and does not conflict with laws barring appeals from being selected based on a property’s classification. Justices ruled that the district’s use of a $150,000 threshold was practical for its fiscal purposes.
"Using recent sales prices as part of the selection of properties for appeals is a quantitative method of reasonably ascertaining a property owner's fair share of the tax burden, because such figures represent the kind of evidence of market value that a school district must show when it appeals an assessment," Judge Christine Fizzano Cannon wrote for the three-judge panel.
Another case on this issue before the Pennsylvania Supreme Court may be resolved in the next six months. In our opinion, from a valuation perspective, the process of allowing school districts to target properties for reassessment creates inequities between taxpayers, as opposed to improving uniformity.