Crystal Lake Private Park Assoc. v. Susquehanna County Board of Assessment Appeals (Majority Opinion)

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IN THE COMMONWEALTH COURT OF PENNSYLVANIA Crystal Lake Private Park Association, : : Appellant : : v. : : Susquehanna County Board of : Assessment Appeals : BEFORE: No. 1903 C.D. 2007 Argued: April 8, 2008 HONORABLE ROCHELLE S. FRIEDMAN, Judge HONORABLE RENÃ E COHN JUBELIRER, Judge HONORABLE JAMES R. KELLEY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE COHN JUBELIRER FILED: May 12, 2008 Crystal Lake Private Park Association (the Association) appeals from an order of the Court of Common Pleas of Susquehanna County (trial court), which denied its appeal of the Susquehanna County Board of Assessment Appeals (Board) decision upholding the 2006 property tax assessment for a parcel of land known as the Park Way. The issues before us on appeal are: (1) whether a parcel of land that is similar to a common or controlled facility in a planned community, but which is not in a planned community under the Uniform Planned Community Act (Act), 68 Pa. C.S. §§ 5101-5414,1 is exempt from separate assessment and 1 The Act exempts common or controlled facilities in planned communities from being separately assessed and taxed. Section 5105(b)(1) of the Act, 68 Pa. C.S. § 5105(b)(1). taxation; and (2) if not, whether such a parcel of land, which is burdened by numerous easements, is of a peculiar, elongated shape, and is accessible only by private road, has any fair market value. The Association is comprised of 36 individuals who own properties in Crystal Lake Private Park. Crystal Lake Private Park is located on the western side of Crystal Lake in Clifford Township, Susquehanna County and Greenfield Township, Lackawanna County. The parties agree that Crystal Lake Private Park is not a planned community under the Act. Crystal Lake Private Park is separated from Crystal Lake by an elongated, six acre parcel of land known as the Park Way. The Park Way, like Crystal Lake Private Park, is partially located in Clifford Township, Susquehanna County and Greenfield Township, Lackawanna County. The only land access to the Park Way is via Crystal Lake Boulevard, which is a private road that runs between the Park Way and Crystal Lake Private Park. The Park Way was conveyed to the Association by J.W. Johnson in 1930. All 36 individuals owning properties in Crystal Lake Private Park have easements giving them the right to: cross the Park Way to reach Crystal Lake; to use the Park Way for ordinary and common purposes; and to lay and maintain pipeline running under the Park Way. Several members of the Association own and maintain boathouses on the Park Way.2 The Park Way had not been assessed and taxed since it was conveyed to the Association in 1930. 2 Taxes on the boathouses located on the Park Way are assessed to their respective owners. 2 By notice dated April 6, 2006, the Susquehanna County Assessment Office set up the Park Way as a new tax parcel in Susquehanna County for the 2006 tax year and assigned the Park Way a total appraised market value of $62,400.00 and a total assessed value of $31,200.00. The Association appealed the assessment of the Park Way to the Board. The Board subsequently held hearings on the matter and, thereafter, issued a decision upholding the separate assessment of the Park Way. The Association appealed the Board s decision to the trial court. The trial court held a hearing and arguments on the tax assessment of the Park Way. Ellen O Malley, the Chief Tax Assessor of Susquehanna County, and Joan Burman, a field assessor for Susquehanna County, testified on behalf of the Board, and Paula Placko, the Secretary of the Association, and Ronald Koldjeski, a certified property appraiser, testified on behalf of the Association. After considering the testimony and evidence presented, the trial court issued an opinion and order denying the Association s appeal. In its opinion, the trial court concluded that because the Park Way is not part of an official planned community, the Association cannot claim the Park Way to be exempt from taxation as a common or controlled facility under the Act. (Trial Ct. Op. at 6.) The trial court also concluded that the Board had properly assessed the actual and fair market value of the Park Way. (Trial Ct. Op. at 9.) The Association s appeal to this Court followed.3 3 This Court s review of a tax assessment appeal is limited to determining whether the trial court abused its discretion, committed an error of law, or reached a decision not supported by substantial evidence. Masalehdan v. Allegheny County Board of Property Assessment, 931 A.2d 122, 126 n.2 (Pa. Cmwlth. 2007). 3 On appeal, the Association first argues that the trial court erred in determining that the Park Way is not exempt from being separately assessed and taxed. Specifically, the Association contends that the Park Way is very similar to a common or controlled facility in a planned community and that, therefore, the Park Way should be given the same tax treatment as a common or controlled facility in a planned community. The Association argues that if the Park Way is not given the same tax treatment as a common or controlled facility in a planned community, the Park Way will be double taxed. Under Section 5103 of the Act, a planned community is defined, in relevant part, as: [r]eal estate with respect to which a person, by virtue of ownership of an interest in any portion of the real estate, is or may become obligated by covenant, easement or agreement imposed on the owner s interest to pay any amount for real property taxes, insurance, maintenance, repair, improvement, management, administration or regulation of any part of the real estate other than the portion or interest owned solely by the person. 68 Pa. C.S. § 5103. A planned community may be created . . . only by recording a declaration executed in the same manner as a deed by all persons whose interests in the real estate will be conveyed to unit owners . . . . Section 5201 of the Act, 68 Pa. C.S § 5201.4 4 The tax treatment of planned communities is discussed in Section 5105(b) of the Act, which provides that [i]f there is a unit owner other than a declarant, each unit must be separately taxed and assessed[,] [and] [t]he value of a unit shall include the value of that unit s appurtenant interest in the common facilities . . . . 68 Pa. C.S. § 5105(b). Further, Section 5105(b)(1) of the (Continued ¦) 4 Here, the Association concedes that no declaration has been filed and that Crystal Lake Private Park is not a planned community under the Act. (Association s Br. at 11.) Despite making these concessions, the Association contends that because the Park Way is very similar in nature to a common or controlled facility in a planned community, the Park Way should be afforded the same tax treatment.5 However, the Association fails to cite to any authority which would warrant giving the Park Way the same tax treatment as a common or controlled facility in a planned community. To the contrary, our prior case law requires common areas that are not part of planned communities to be assessed and taxed separately from the adjoining residential development. See, e.g., County of Monroe v. Pinecrest Dev. Corp., 510 A.2d 1274, 1276 (Pa. Cmwlth. 1986) (concluding that a common area adjoining a residential development must be separately assessed and taxed). Moreover, the mere fact that the Park Way is separately assessed and taxed will not automatically result in double taxation. There are protections built into the tax assessment system to prevent double taxation from occurring. See Timber Trails Cmty. Ass n v. County of Monroe, 614 A.2d 342, 345 (Pa. Cmwlth. 1992) Act provides that [n]o separate tax shall be imposed against common facilities or controlled facilities. 68 Pa. C.S. § 5105(b)(1). 5 The Association does not contend that Crystal Lake Private Park is a planned community to which the Act would generally apply. See Section 5102(a) of the Act, 68 Pa. C.S. § 5102(a) (discussing the general applicability of the Act to planned communities created after its effective date). Nor does the Association contend that Crystal Lake Private Park is a planned community to which the Act would retroactively apply. See Section 5102(b) of the Act, 68 Pa. C.S. § 5102(b) (discussing the retroactive applicability of the Act to planned communities created prior to its effective date.) 5 (discussing valuation procedures that will prevent double taxation of common areas and properties with appurtenant easements in the common areas) (citing County of Monroe v. Pinecrest Dev. Corp., 510 A.2d at 1276-77)). As long as all relevant factors regarding valuation, such as the easement interests in the Park Way, are taken into consideration when determining the fair market values of the Park Way and the individual properties in Crystal Lake Private Park, there should be no double taxation. Therefore, we conclude that the trial court properly determined that the Park Way is not exempt from being separately assessed and taxed. The Association next argues that the trial court erred in determining that the fair market value assigned to the Park Way by the Board was proper. Specifically, the Association contends that the trial court erred in relying on the testimony of the Board s witnesses instead of the testimony of the Association s expert, which establishes that the Park Way has a fair market value of zero because it is burdened by numerous easements, is of a peculiar, elongated shape, and is accessible only by private road. In a tax assessment appeal, [t]he proceedings in the trial court are de novo. Deitch Co. v. Board of Property Assessment, 417 Pa. 213, 221, 209 A.2d 397, 402 (1965). The trial court, as the finder of fact, must determine the fair market value of the property in question and the applicable common level ratio. Section 704(b) of the Fourth to Eighth Class County Assessment Law (Law), Act of May 21, 1943, P.L. 571, as amended, 72 P.S. § 5453.704(b). The trial court must then apply the applicable common level ratio to the fair market value of the property in 6 question to arrive at the assessed value. Section 704(c) of the Law, 72 P.S. § 5453.704(c). When determining fair market value, the trial court is to weigh the conflicting expert testimony and determine a value based upon credibility determinations. Willow Valley Manor, Inc. v. Lancaster County Board of Assessment Appeals, 810 A.2d 720, 723 (Pa. Cmwlth. 2002). Fair market or actual market value is 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." RAS Dev. Corp. v. Fayette County Board of Assessment Appeals, 704 A.2d 1130, 1134 (Pa. Cmwlth. 1997) (quoting In re Appeal of Johnstown Assocs., 494 Pa. 433, 438, 431 A.2d 932, 935 (1981)). Three methods, including cost, comparable sales, and income, must be considered in determining fair market value. Section 602(a) of the Law, 72 P.S. § 5453.602(a). However, the trial court has the discretion to decide which of the methods of valuation is the most appropriate and applicable to the given property. Willow Valley Manor, 810 A.2d at 723. Here, while the trial court received and considered evidence regarding the Association s tax assessment appeal, the trial court did not make any of the necessary findings regarding the Park Way, including a finding as to its fair market value.6 Because the trial court failed to make its own independent findings, we 6 The trial court did acknowledge, in its opinion, that its review in a tax assessment appeal is de novo and that its duty is to determine the fair market or actual market value by weighing the conflicting expert testimony and making credibility determinations. (Trial Ct. Op. at 7.) However, the trial court did not actually conduct a de novo review and make its own (Continued ¦) 7 must vacate the trial court s order and remand this matter so that the necessary findings can be made. See Matter of Harrisburg Park Apartments, Inc., 489 A.2d 996, 997-98 (Pa. Cmwlth. 1985) (vacating the lower court s order and remanding the matter for findings as to the fair market value of the property, the applicable common level ratio, and the assessed value of the property). We note that the easement interests in the Park Way, in addition to all other relevant factors, including but not limited to actual use exclusivity, location, size, etc., should be considered by the trial court in determining the fair market value of the Park Way. See Timber Trails Cmty. Ass n, 614 A.2d at 346 (Pa. Cmwlth. 1992) (holding that to determine the [fair market or] actual market value of common areas for tax assessment purposes, all relevant factors including evidence of the actual use exclusivity must be considered beyond the property owners easement rights under the deed ). Accordingly, the order of the trial court is vacated, and this matter is remanded for further proceedings consistent with this opinion. _________________________________ RENÃ E COHN JUBELIRER, Judge factual findings as to the fair market value of the Park Way. Instead, the trial court appears to have conducted an appellate-type of review to see if the Board s valuation of the Park Way was supported by the record evidence. (Trial Ct. Op. at 6-9.) 8 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Crystal Lake Private Park Association, : : Appellant : : v. : : Susquehanna County Board of : Assessment Appeals : No. 1903 C.D. 2007 ORDER NOW, May 12, 2008, the order of the Court of Common Pleas of Susquehanna County in the above-captioned matter is hereby vacated, and this matter is remanded for further proceedings consistent with this opinion. Jurisdiction relinquished. _________________________________ RENÃ E COHN JUBELIRER, Judge

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