A. F. Butch v. Board of Assessment Appeals of Berks County, et al. (Majority Opinion)
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IN THE COMMONWEALTH COURT OF PENNSYLVANIA Anthony F. Butch, : Appellant : : v. : : Board of Assessment Appeals of Berks : County and Brandywine Heights Area : School District : BEFORE: No. 2287 C.D. 2007 Argued: June 9, 2008 HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE DORIS A. SMITH-RIBNER, Judge HONORABLE JOSEPH F. McCLOSKEY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE SMITH-RIBNER FILED: August 14, 2008 Anthony F. Butch appeals from the August 30, 2006 and November 9, 2007 orders of the Court of Common Pleas of Berks County, which held that the Berks County Board of Assessment Appeals (Board) properly changed the assessment of Butch's property for county/township and school district taxes in 2005 and determined the market value and assessed value of his property for tax years 2005 through 2008. The trial court rejected Butch's arguments that the assessment change constitutes an illegal spot reassessment, that it was prohibited under the doctrine of collateral estoppel and that it lacked uniformity. On August 31, 1995, Butch purchased a 1.15-acre unimproved lot in Longswamp Township (Township) within the Brandywine Heights Area School District (School District) for $34,000. In September 1995 he began construction of a residence on the lot after obtaining necessary permits from the Township. Butch acted as the general contractor and incurred expenses of $87,819 for construction of the residence, which was completed in April 1998 and has since been occupied by Butch. Because the Township did not notify the Berks County Assessment Office (Assessment Office) of the permits, the Assessment Office was unaware of the construction until sometime in 2005 when Butch listed his property for sale at $425,000. As of September 2006 the asking price was reduced to $359,900 for the property, which ultimately was removed from the market. The Assessment Office notified Butch by notices of August 23, 2005 of the change in his assessment for tax years 2002 through 2005 from $26,800, the assessed amount for the unimproved lot, to $377,700 based on "added dwelling." Reproduced Record (R.R.) at 7a - 10a. Butch appealed to the Board, and by notices dated October 25, 2005 the Assessment Office voided the changes for 2002 through 2004 pursuant to its policy of not reassessing property retroactively when it is unaware of improvements to a property through no fault of the owner. After a hearing, the Board issued a final notice on March 8, 2006 reassessing the property at $377,700, effective January 1 and July 1, 2005 for the County/Township and School District property taxes, respectively. Butch appealed to the trial court, and he argued that the reassessment constitutes a spot reassessment1 and was prohibited under the doctrine of collateral estoppel because the Assessment Office had voided the 2002 through 2004 assessments and that the assessment lacked uniformity and was erroneous. The School District intervened in the appeal. 1 Section 1.1 of the Act commonly known as the Second Class A and Third Class County Assessment Law, Act of June 26, 1931, P.L. 1379, as amended, added by Section 1 of the Act of December 13, 1982, P.L. 1165, 72 P.S. §5342.1, defines a "spot reassessment" as "[t]he reassessment of a property or properties that is not conducted as part of a countywide revised reassessment and which creates, sustains or increases disproportionality among properties' assessed values." Assessment boards are prohibited from engaging in a spot reassessment. Section 7.1, added by Section 2 of the Act of July 19, 1991, P.L. 91, 72 P.S. §5348.1. 2 The trial court bifurcated the case and conducted an August 28, 2006 de novo hearing only on the spot reassessment and collateral estoppel issues. By decision and order entered August 30, 2006 in Butch v. Berks County Board of Assessment Appeals, 83 Pa. D. & C.4th 517 (2006), the trial court determined that the reassessment did not constitute a spot reassessment and that the doctrine of collateral estoppel did not apply. It cited Section 6.1 of the Act commonly known as the Second Class A and Third Class County Assessment Law (Assessment Law), Act of June 26, 1931, P.L. 1379, as amended, added by Section 2 of the Act of July 19, 1991, P.L. 91, 72 P.S. §5347.1, which provides that "[t]he subordinate assessors may change the assessed valuation on real property when a parcel of land is divided and conveyed away in smaller parcels or when improvements are made to real property or existing improvements are removed from real property or are destroyed." It distinguished Radecke v. York County Board of Assessment Appeals, 798 A.2d 265 (Pa. Cmwlth. 2002), which held that an assessment change must come at the time of improvements and not at some arbitrary future time. Unlike in Radecke, the Assessment Office had no notice of the improvements until 2005.2 The trial court held another de novo hearing on November 7, 2007 on the uniformity and property valuation issues. The Board's expert witness, Thomas J. Bellairs, a state-certified appraiser, testified that the market or sales approach is more appropriate in determining the valuation of a single-family residence than the cost approach and that the income approach did not apply. He opined that the fair market value of Butch's property was $300,000 based on the recent sale prices of 2 By order dated October 11, 2006, the Court quashed Butch's appeal from the trial court's August 30, 2006 order as an appeal from an interlocutory order. See Trial Court's Docket Summary, pp. 1 - 2; Supplemental Reproduced Record at 1b - 2b. 3 five comparable properties within the School District. Butch testified that his property value was $121,000 to $122,000, relying on $34,000 paid to purchase the unimproved lot and the construction cost of $87,819. The trial court indicated that although tax equalization generally is achieved through the State Tax Equalization Board's calculation of the "common level ratio,"3 a taxpayer may prove lack of uniformity through assessment-to-value ratios of similar properties. See Downingtown Area School District v. Chester County Board of Assessment Appeals, 590 Pa. 459, 913 A.2d 194 (2006). The trial court concluded that Butch failed to survey an ample number of properties to show that he was paying more than his fair share of taxes, and it accepted Bellairs' opinion of fair market value and rejected Butch's testimony as disingenuous and lacking in merit. Applying the fair market value of $300,000 to the common level ratio for tax years 2005, 2006, 2007 and 2008, the trial court assessed valuation at $258,900 for 2005, $240,000 for 2006, $225,000 for 2007 and $204,300 for 2008.4 Butch argues that the Assessment Office engaged in an illegal spot reassessment when it reassessed the property based on the substantially appreciated value more than seven years after completion of the residence construction. While acknowledging that Section 6.1 of the Assessment Law allows changes in assessed valuation based on improvements to the property, he maintains that the change 3 A "common level ratio" is "[t]he ratio of assessed value to current market value used generally in the county as last determined by the State Tax Equalization Board pursuant to the act of June 27, 1947 (P.L. 1046, No. 447), referred as the State Tax Equalization Board Law, [72 P.S. §§4656.1 - 4656.17]." Section 1.1 of the Assessment Law. 4 In a tax assessment appeal, this Court's review 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. Sher v. Berks County Board of Assessment Appeals, 940 A.2d 629 (Pa. Cmwlth. 2008). 4 should be made at the time of improvements, not at some other arbitrary time; that the Board relied on the property's listed sales price rather than its fair market value to increase the assessment;5 and that the court should have given considerable weight to Butch's testimony regarding his construction costs. As for uniformity, Butch submits that the average assessment-to-value ratio of comparables used by Bellairs was substantially lower than the ratio for Butch's property and that the trial court erroneously required him to provide a survey of more than five properties to show non-uniformity. Butch has abandoned his collateral estoppel argument. The Court agrees with the trial court's disposition of the issues in its thorough and well-written opinions filed August 30, 2006 and November 9, 2007. The Court therefore adopts the trial court's reasoning and affirms its orders on the basis of opinions issued by Judge Scott E. Lash in Butch v. Berks County Board of Assessment Appeals, 83 Pa. D. & C.4th 517 (2006), and Butch v. Berks County Board of Assessment Appeals (No. 06-2702, filed November 9, 2007). DORIS A. SMITH-RIBNER, Judge 5 In Allegheny Pittsburgh Coal Co. v. County Commission of Webster County, 488 U.S. 336 (1989), cited by Butch, the Supreme Court held that the assessments of recently purchased real properties based on their sale prices, while making only minor modifications in assessments of lands that had not been recently sold, violated the equal protection clause of the Fourteenth Amendment. That holding, however, has no application under the facts presented here. Butch also claims that the value of the land was improperly reassessed from $26,800 to $66,200, citing McCrady v. Board of Property Assessment, Appeals, Review & Registry of Allegheny County, 827 A.2d 522 (Pa. Cmwlth. 2003), which involved the issue of whether the assessment board was permitted to revise the prior assessment of the land under the trailer moved onto the property. The Court held that the board had no authority to reassess the real property beyond the addition of the trailer. Nothing in this record, however, supports the contention that the Board increased the assessed value of the land to $66,200. 5 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Anthony F. Butch, : Appellant : : v. : : Board of Assessment Appeals of Berks : County and Brandywine Heights Area : School District : No. 2287 C.D. 2007 ORDER AND NOW, this 14th day of August, 2008, the Court affirms the orders of the Court of Common Pleas of Berks County on the basis of the opinions issued by Judge Scott E. Lash in Butch v. Berks County Board of Assessment Appeals, 83 Pa. D. & C.4th 517 (2006), and Butch v. Berks County Board of Assessment Appeals (No. 06-2702, filed November 9, 2007). DORIS A. SMITH-RIBNER, Judge
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