SALT Blog - SALT Blawg

On February 28, 2023, the Pennsylvania Supreme Court issued its evenly divided opinions in GM Berkshire Hills LLC v. Berks County Board of Assessment Appeals, 16 MAP 2022 (“Berkshire”).  In Berkshire, the Wilson School District (“WSD” or “school district”) adopted a policy of appealing recently sold properties that were potentially underassessed by at least $150,000. The Pennsylvania Supreme Court granted cert, agreeing to review two issues:

• whether the school district’s selective real estate tax assessment appeals violate the uniformity clause when the school district chooses only recently sold properties for appeal, leaving most properties in the school district at outdated base-year values; and
• whether the school district’s selective real estate tax assessment appeals violate the uniformity clause when the school district chooses only recently sold properties that would generate a minimum amount of additional tax revenue for appeal, leaving most properties in the district at outdated base-year values.

The court declined to address an additional issue raised by the property owner regarding whether the school district’s policy violated the Equal Protection Clause of the U.S. Constitution. 

The Pennsylvania Supreme Court issued three opinions in Berkshire.  The first was authored by Justice Mundy and joined by Justices Wecht and Brobson.  Therein, the Justices agreed with the Commonwealth Court and held that “assessment appeals tending to enhance uniformity do not otherwise violate the Uniformity Clause so long as they are undertaken based on neutral factors such as those used by the School District in this matter.” 

Meanwhile, Justice Donohue authored an opinion, joined by Justices Todd and Dougherty, that would have reversed the Commonwealth Court.  Justice Donohue’s opinion reasoned that the, “property assessment scheme employed by the School District creates a subclassification of property in violation of the Uniformity Clause.” 

Justice Dougherty, joined by Justice Donohue, authored a second opinion in support of reversal on slightly different grounds – disagreeing with the characterization of the methodology for choosing properties for reassessment as “neutral” because such methodology employs the common level ratio (“CLR”).  Justice Dougherty’s opinion reasons: “WSD’s multiplication of the presumed fair-market value of any property by the CLR, in conjunction with WSD’s additional computational parameters such as setting a monetary sum-certain for recoupment of appeal costs to only newly purchased real property for determining which assessments to appeal, permits individual taxation to be determined by a method that, in my view, is not uniform or neutral.” 

Justice Dougherty’s opinion also calls upon the legislature to fix the issue that he believes they can and should address: “to the extent the propriety of a school district’s selection method of property assessment appeals under the Uniformity Clause continues to be an issue in future cases, I write to suggest a legislative remedy for what is, in my view, the underlying problem in many — if not most — matters challenging individual property reassessments, i.e., stagnant, artificially low overall property values in a taxing district resulting from infrequent, sometimes decades old, countywide property assessments.”

Apart from the Uniformity Clause violations, in the underlying case, Berkshire asserted that the school district’s policies violated the Equal Protection Clause of the U.S. Constitution.  Although the Pennsylvania Supreme Court did not grant cert on that issue, if it chooses, it has an opportunity to seek review from the U.S. Supreme Court.  Additionally, there are several cases in the pipeline challenging various monetary thresholds used by school districts throughout the Commonwealth to target properties for appeal.  With an evenly divided court and a justice still to be appointed to the Pennsylvania Supreme Court, there is likely more to come on this issue.   

Jennifer Karpchuk is co-chair of the State and Local Tax (SALT) Controversy and Planning practice at Chamberlain Hrdlicka. She can be reached at jennifer.karpchuk@chamberlainlaw.com.