Tax Law

Judge Sets Out New Reassessment Plan in Allegheny County, PA

In a case being watched statewide, an Allegheny County, Pennsylvania judge issued a ruling this week setting forth a new reassessment schedule and an unusual assessment method for properties located in that county. The reassessment, which would divide the county into four parts and would phase in assessments over a four-year period, is a wholesale departure from the current assessment system and raises important constitutional questions regarding judicial power and assessment uniformity.
Previously, we reported on the Pennsylvania Supreme Court’s ruling in Clifton v. Allegheny County (April 2009), in which the Supreme Court held that Allegheny County’s base-year system of assessment, as implemented, is unconstitutional. Currently, Allegheny County has a system of assessment in which all property values are frozen at 2002 values. In its April 2009 decision, the Supreme Court declared this system of assessment, as implemented in Allegheny County, to be unconstitutional and ordered the county to reassess. Although the Supreme Court limited its ruling to only Allegheny County based on the facts specific to the county’s use of a base-year system, that decision has far-reaching implications for nearly all of Pennsylvania’s counties, given that the vast majority of the counties also use a base-year system and many counties have not reassessed in decades.
Following the April decision, Allegheny County asked the Supreme Court to stay the portion of its ruling requiring a countywide reassessment in Allegheny County, in order to give the legislature time to create a new assessment system for all Pennsylvania counties. In August, the Supreme Court refused a stay and sent the case back to Allegheny County Judge Stanton R. Wettick, Jr., directing that Allegheny County complete a countywide reassessment within a realistic timeframe. To implement the reassessment ruling, Judge Wettick scheduled a trial on October 19, 2009, requesting that the plaintiff-taxpayers and defendant-Allegheny County each bring proposals and evidence supporting a comprehensive plan for reassessment. At the hearing, the taxpayers proposed the use of a computer-aided trending analysis to obtain new 2010 assessments. This trending analysis would be used as a quick and inexpensive interim measure in order to improve (in the taxpayers’ opinion) the current assessments until such time as a comprehensive countywide reassessment, with visual inspection of each property, could be completed by the county. The county, however, opted not to present its own plan for a comprehensive reassessment, instead choosing to attack the plan presented by the taxpayers.
On November 10, Judge Wettick issued his opinion from the October hearing. In his opinion, Judge Wettick rejected the plan submitted by the taxpayers, stating that their proposed interim measure would only substitute, but not eliminate, the inequities that exist in the current system. Having rejected the taxpayers’ proposal, and because the county did not present any plan of its own, Judge Wettick then proceeded to create his own plan and timetable for reassessment.
Under Judge Wettick’s plan, the county would be divided into four assessment districts. Over a four-year period, the county would undertake a reassessment of one district per year. The assessments of the properties in the first district would take effect in 2011 and would include sales through June 30, 2009 or later, if feasible. The assessment of the remaining districts would take effect in 2012, 2013, 2014 successively and likewise include sales through June 30, 2010, June 30, 2011, and June 30, 2012, respectively.
An important feature of this plan is that the district reassessment would be applicable for school and municipal taxes only. County taxes, however, would remain at 2002 base-year assessments until 2014, when all four district’s reassessments would be complete. The county values in 2014 for the first, second, and third assessment districts would be based on a trending analysis. This plan will therefore result in the creation of two assessments for each property. The significance of having two assessments – one for school and municipal taxes, and one for county taxes – is primarily to avoid a uniformity challenge resulting from the use of different base years in the county. It is questionable, however, whether this plan is successful in avoiding such a uniformity challenge.
Judge Wettick’s creation of this reassessment plan raises a number of constitutional questions. First, Pennsylvania judges are not granted such broad legislative powers under Pennsylvania’s constitution and General County Assessment Law. The court in this case appears to be stepping into a quasi-legislative role. Furthermore, the General County Assessment Law states that it is the responsibility of the counties to develop property assessments. Therefore, although Judge Wettick states that he created an assessment plan because the county “is waiting for the court to develop an assessment plan,” it is questionable whether the creation of such a plan by a court is permitted.
Secondly, it seems Judge Wettick did not solve the constitutional uniformity issue because each district would have a different assessment year, and each assessment would be based on sales from different years, inherently resulting in some degree of non-uniformity in the county. Judge Wettick argues that his plan achieves uniformity “because all property owners within a school district or municipality will be paying taxes based on the same assessment.” Nevertheless, property owners throughout the county will be assessed based on comparable sales of different years depending on what district they are in. In City of Lancaster v. County of Lancaster (November 1991), the Commonwealth Court stated that a partial revaluation of property creates multiple standards of valuation that result in an uneven allocation of the tax burden. By creating an assessment plan through which property owners throughout the county are assessed based on sales from different years, Judge Wettick has created multiple standards of valuation. Furthermore, for the same reason that Judge Wettick dismisses the trending analysis proposed by the taxpayers, a trending analysis of these disparate base-year valuations to a 2014 base year will not be able to equalize the standards of valuation.
Finally, even if the plan is deemed to provide sufficient uniformity, the Pennsylvania Supreme Court in Clifton declared Allegheny County’s 2002 base year unconstitutional as it has been implemented since 2006. Judge Wettick’s plan does nothing to resolve the lack of uniformity in the county from now until 2014.
The judge noted that this reassessment plan is to be implemented unless the county informs the court that it can complete a comprehensive countywide reassessment for use in 2012. To that end, the judge has scheduled a conference on December 2, 2009 at which the county may respond and present its own plan. Unless the county develops its own comprehensive reassessment plan by the time of the conference, a further appeal to the Pennsylvania Supreme Court is likely. Such an appeal also could affect the timeline and implementation of Judge Wettick’s proposed plan. We will continue to report an any developments in Pennsylvania assessment law.

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This article is republished with permission of Pepper Hamilton, LLP. Further duplication without the permission of Pepper Hamilton, LLP is prohibited. All rights reserved.