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John E. Hosa


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Importance of Fair and Uniform Implementation of Assessment Appeal Policies by School Districts

John E. Hosa, (412) 594-5659,

In the last few years, Downingtown Area School District in Chester County has found itself at the center of several important decisions in the realm of Pennsylvania tax assessment law.

The first and most significant of these was Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 131 A.3d 152 (Pa. 2006), known as Downingtown I, where the Supreme Court held that a taxpayer may prove non-uniformity by presenting evidence of the assessment-to-value ratio of several similar properties in the same neighborhood as the subject property.  The Court also appeared to invalidate a provision of the now-replaced Second Class A and Third Class County Assessments Law, which required appeals boards to apply the county’s established predetermined ratio – rather than the common level ratio published by the State Tax Equalization Board – to the property’s market value, and to apply the CLR only if it varied by the EPR by more than fifteen percent.  (Note, however, that both the General County Assessment Law and the Consolidated County Assessment Law still contain identical provisions.)

Next came Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 131 A.3d 152 (Pa. Cmwlth. 2015), known as Downingtown II.  In Downingtown II, the Commonwealth Court held that a trial court had properly rejected a taxpayer’s theory that its leasehold interest had a “negative value” since it was paying rent at above-market rates.  In so ruling, the Court distinguished Tech One Associates v. Board of Property Assessment, Appeals and Review of Allegheny County, 53 A.3d 685 (Pa. 2012), where the Supreme Court held that leased fee and leasehold interests must be considered in determining a property’s market value.

Last October, DASD was once again at the forefront of a tax assessment dispute before the Commonwealth Court in Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 303 A.3d 1104 (Pa. Cmwlth. 2023).  In what will likely become known as Downingtown III, the Court examined the constitutionality of the school district’s appeal policy – a highly controversial topic in recent years.

By way of background, DASD had adopted a policy to appeal any real property assessment that could potentially result in total annual additional tax revenue of $10,000 or more.  The policy did not impose a limit on the number of appeals that may be filed per year.  To effectuate its policy, DASD hired an appraisal company, Valbridge Property Advisors, to locate under-assessed properties that met the $10,000 threshold.  Contrary to its policy, DASD directed Valbridge to locate a maximum amount of fifteen properties.  Valbridge quickly located fifteen properties, which did not include the subject property owned by Marchwood Apartments Owners, LLC.  DASD appealed all fifteen of Valbridge’s properties; however, it added Marchwood’s property to the list, seemingly at random.

On appeal to the court of common pleas, Marchwood challenged the constitutionality of DASD’s appeal policy and the matter proceeded to trial.  At trial, the testimony overwhelmingly established that many properties met DASD’s monetary threshold but were not appealed, and that there was a lack of methodology in selecting the appeals.  For instance, Valbridge’s appraiser testified that he “did not have a hard and fast rule with respect to the methodology [he] used” to identify properties.  Several DASD employees testified that they did not know how Valbridge selected the properties for appeal.  An expert witness for Marchwood opined that there were multiple residential properties that met the school district’s threshold but were not appealed, and the Valbridge appraiser indicated that there “could be” more than 100 un-appealed assessments that met the threshold.  Finally, DASD had apparently rejected one commercial property for appeal because the owner was represented by a “very aggressive” attorney.

Nevertheless, the trial court ruled in favor of DASD, finding that its policy was a neutral monetary threshold and was permitted under Valley Forge Towers Apartments N, LP v. Upper Merion Area School District, 163 A.3d 962 (Pa. 2017) and its progeny.  On appeal, the Commonwealth Court recognized that Valley Forge seemed to suggest that neutral monetary thresholds in the context of appeal policies were not unconstitutional.  The Court, however, proceeded with caution; it did not declare neutral monetary thresholds to be automatically constitutional, and it clarified that this was not the holding of Valley Forge.  More importantly, while acknowledging that the appeal policy may be constitutional on its face, DASD had “implemented its policy in an arbitrary fashion” that was “unacceptable as a matter of sound public policy.”  Because DASD “did not even attempt to capture each and every assessment that would meet the monetary threshold,” its implementation of the policy “created a systematic and disparate treatment of taxpayers.”  The decision of the trial court was, therefore, reversed.

In the dissenting opinion, President Judge Reneé Cohn Jubelirer emphasized the principle that “absolute equality and perfect uniformity are not required to satisfy the constitutional uniformity requirement.”  Citing Valley Forge, Judge Jubelirer argued that DASD had discretion to choose what appeals it filed.  Because DASD’s policy was implemented without regard for property sub-classification, it comported with precedent and passed constitutional muster.  The majority’s rigid criteria for an appeal policy to be deemed constitutional did not comport with precedent, in her view.  This raises an important question: how imperfectly must an appeal policy be implemented for it to be deemed unconstitutional?  There may well be a case in the future where a school district’s implementation of its policy is flawed, but not as haphazard as DASD’s implementation in Downingtown III.

In conclusion, the obvious impact of Downingtown III is that a school district’s facially neutral appeal policy– i.e., one that is not based on property sub-classification, as denounced in Valley Forge – does not necessarily pass constitutional muster.  The implementation of the policy is equally important.  If the policy is not implemented in a fair and uniform manner, it is subject to a constitutional challenge.  In this case, DASD essentially cherry-picked sixteen appeals.  Although there were a number of other assessments that met the school district’s monetary threshold, DASD could not offer any legitimate reason for why they were not appealed.  School districts should ensure that their appeal policies are being followed strictly and that all assessments meeting the monetary threshold are appealed.  If school districts feel their policies are yielding too little or too many appeals, the monetary threshold can be modified.

Reprinted with permission from the June 3, 2024, issue of The Legal Intelligencer. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited.  All rights reserved.

June 04, 2024

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