Daily Development for Thursday, July 19, 2007
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
Here’s one (edited, of course) from Harris Ominsky, dean of Pennsylvania law commentators
STATE AND LOCAL TAXATION; ASSESSMENTS; UNIFORMITY: Pennsylvania trial court finds property assessment system used in many parts of the state to be unconstitutional as a violation of the uniformity principle.
Clifton, Cranor, et al. v. Allegheny County, (Civil Div. C.P. Allegheny County, PA No. GD05-028638, decided June 6, 2007
Common Pleas Judge R. Stanton Wettick, Jr., here declared that the present Pennsylvania system for real estate tax assessments is unconstitutional and produces "arbitrary, unjust, and unreasonable discriminatory results." He ruled in favor of the complaining homeowners and ordered Allegheny County to conduct reassessments of all properties to bring them into line.
The case of, analyzed the long history of Pennsylvania's assessment law. That law permits real estate taxes to be levied on assessed values established by the use of a base-year market value for an indefinite number of years. If this decision holds up on appeal, it will affect real estate assessments throughout the state of Pennsylvania.
Allegheny County uses 2002 as its base year. This means that real estate taxes for 2007 were determined by using the 2002 fair market value of the taxpayers' properties. Under that system, market fluctuations over the five-year period were not reflected in the assessments.
The decision pointed out the obvious. Property values change at different rates. Also, properties in high-value neighborhoods appreciate at higher rates than property values in low-value neighborhoods. To cite an example of the impact of the 2002 year base, consider the Woodland Hills School District, which includes Edgewood and Braddock. Their taxes were calculated using 2002 fair-market values, even though between 2002 and 2005 property values in Edgewood increased by approximately 36% while property values in Braddock declined by 16%. On average this would make for a discrepancy of 52%!
This decision reverberates throughout the state because at least 34 of Pennsylvania's 67 counties have not conducted a comprehensive county-wide reassessment within the 20 year period from 1985 to 2005. For example, in 2005, a Philadelphia owner of property with a fair-market value of $100,000 in the most over assessed quartile paid property taxes of at least $3,310; and the owner having a fair-market value of $100,000 in the most under assessed quartile paid taxes of no more than $1,418. Wettick stated: "Using income tax terminology, one out of every four Philadelphia property owners was in a tax bracket of at least 3.31% and one out of every four property owners was in a tax bracket that did not exceed 1.42%."
The judge also highlighted what he called a high "Price-Related Differential" of 1.18 which means that owners of less expensive properties are more likely to be over assessed, and owners of more expensive properties are more likely to be under assessed. This created unacceptable inquality to the judge.
"Constitutions of almost every state, including Pennsylvania, have Uniformity Clauses. Pennsylvania has consistently required equality of taxation under the Uniformity Clause, and based on long-established case law, this equality "is met only when, to the extent reasonably practicable, the ratio of assessed value to actual value is the same to every property."
The judge noted that absolute equality is not the goal. As earlier cases have held, only "approximate equality" can reasonably be expected. The body of case law on these issues provides that there must be substantial uniformity, which means as nearly uniform as practicable under all of the circumstances. The law must attempt to set up a system so that the burden of real estate taxes is shared by all owners fairly.
The County argued that a base year system does not violate the Uniformity Clause because an owner has a safety valve of appealing a base-year evaluation by applying the established common level ratio to the property's current market value .The court rejected that argument because it would place the burden on the taxpayer to equalize ratios. Also, a possibility of appeal does not work to equalize assessments because taxpayers who are under assessed will not be likely to file appeals to increase their assessments.
Reporter’s Comment 1: Apparently, the main culprit is the Pennsylvania legislature. Pennsylvania and Delaware are the only states without requirements that assessments be based on current or relatively current actual values. The laws and regulations of 22 of the remaining 48 states provide for annual assessments. Nine of these 22 have specific requirements for periodic field reviews. The other 26 states provide for reassessments at intervals of more than one year. With few exceptions the period of time is between two and five years. Pennsylvania and Delaware also differ from other states because the other 48 states, unlike Pennsylvania and Delaware, have state agencies that exercise supervisory responsibility over the assessment programs of the different counties.
Reporter’s Comment 2: Frequent reassessment would facilitate uniformity. Unfortunately, it would place a substantial burden and expense on municipalities that try to conform to this standard, instead of sticking with the base-year system generally used throughout the Commonwealth.
Reporter’s Comment 3: A substantial part of the opinion is dedicated to a state-by-state analysis of assessment laws and constitutional amendments throughout the country that deal with uniformity and real estate taxes. This may be of only academic interest to Pennsylvania real estate practitioners, but it may prove to be a valuable guide if and when the Pennsylvania legislature ever gets around to honoring Judge Wettick's recommendations and attempts to bring tax uniformity into Pennsylvania.
Based on his analysis Wettick concluded that more than half of the states have enacted assessment legislation that does not require annual reassessments. Virtually every state other than Pennsylvania has set up a state agency with oversight responsibility as a necessary feature of an assessment scheme designed to produce assessment uniformity and equality. Pennsylvania has not done this, but Wettick's conclusion is that courts should not have the duty to provide for alternatives to annual reassessments or to the kind of agencies that must be set up to accomplish these objectives. He feels strongly that these things are a matter for the legislature.
Reporter’s Comment 4: Allegheny County will undoubtedly challenge the opinion and oppose the order to reassess all properties. The Pennsylvania legislature will probably ignore the recommendations for new legislation, at least for now.
Meanwhile, the impact of this decision on taxpayers must be carefully considered. Property owners in Philadelphia and elsewhere who think they are being unfairly assessed will undoubtedly be citing this Allegheny County case in attempts to achieve fairer assessments for themselves.
Reporter’s Comment 5: There's an old canard that "You can't fight City Hall." The Allegheny County case is support for the proposition that you can fight it - and maybe you can even win.
The Reporter for this item was Harris Ominsky, of the Philadephia bar.
Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters. The same is true of all
commentary provided by contributors to the DIRT
list. Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor
and are in no sense the publication of the ABA.
Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality
DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 to 15 messages per work day.
Daily Developments are posted every work day. To
subscribe, send the message
subscribe Dirt [your name]
To cancel your subscription, send the message
signoff DIRT to the address:
for information on other commands, send the message
Help to the listserv address.
DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters. Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.” But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list. If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.
To subscribe to BrokerDIRT, send the message
subscribe BrokerDIRT [your name]
To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:
DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law. Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, DIRT, and its sponsors.
DIRT has a WebPage at:
To be removed from this mailing list, please go to
or send an email message to the address firstname.lastname@example.org,
with the text SIGNOFF BROKERDIRT in the body of the message. Problems
or questions should be directed to email@example.com.