DocketNumber: Appeal, 1110 C.D. 1985
Judges: Barry, Craig, Kalish
Filed Date: 11/17/1986
Status: Precedential
Modified Date: 10/19/2024
Opinion by
This appeal results from an order of the Northampton County Court of Common Pleas (trial court) which established the assessment value of certain property belonging to the appellant, Reichard-Coulston, Inc. The taxing authority, Revenue Appeals Board of Northampton County, is the respondent in the present appeal.
The involved property consists of approximately 20.5 acres on which is erected a heavy manufacturing facility owned and operated by the appellant. The facility con
After the taxing authority had established its 1984 assessment on appellants property, the latter sought de novo review in the trial court. At trial, the parties stipulated that the Common Level Ratio (CLR) for the county
Noting that it was “not bound to accept the valuation testimony of the experts,” the trial court concluded that the cost approach was the most appropriate for the involved property. The trial court then performed the following calculation:
Using the Cost Approach, we conclude that the market value of the land in the 1984 tax year was $1,163,840.00. This figure is reached by taking a reproduction cost new of $3,012,800.00 and subtracting a depreciation rate of 70%, to arrive at $903,840.00. The value of the land itself of $260,000.00 is then added, arriving at the final value of $1,163,840.00.
Trial Court op. at 5. The trial court in turn applied the CLR of 22.4% to the market value, establishing the assessment value at $260,700.16. Appellant then initiated the present appeal.
The challenged method of property valuation entails (1) estimating the value of the land “assumed vacant and available for its highest and best use;”
We believe the Cost Approach to be a more accurate method of valuation in the instant case.
The comparable sales under the Market Approach ranged from $3.00 to $9.00 per square foot. In the Cost Approach, this particular property itself can be considered, and depreciation deducted by examining the unique features of the property.
Trial Court op. at 5. The court thereupon utilized (1) a land value figure; (2) a reproduction cost calculation; and (3) a depreciation percentage, all figures within the range of the expert testimony, to arrive at market value.
Appellant maintains that the foregoing utilization of the cost approach on the part of the trial court constituted error, given the long-standing judicial declaration that the “reproduction cost [approach] has no probative value for any purpose in fixing the fair market value of improved real estate for tax purposes.” City of Wilkes-Barre Indus. Development Auth. v. Board of Tax Assessment Appeals, 89 Pa. Commonwealth Ct. 182, 188, 492 A.2d 113, 116 (1985) (citing, inter alia, U.S. Steel Corp. v. Board of Assessment and Revision of Taxes, 422 Pa. 463, 223 A.2d 92 (1966)). Appellant further offers to us scholarly authority for the proposition that the cost approach is inappropriate for the valuation of “any property on which the improvements are not new,”
However reasonable appellants arguments, they are advanced in practical disregard of the legislatures re
Revision of assessments and valuations by board; assessment roll; exemption list.
(d) In arriving at actual value [for assessment purposes] the price at which any property may actually have been sold . . . shall be considered but shall not be controlling. Instead such selling price, estimated or actual, shall be subject to revision by increase or decrease to accomplish equalization with other similar property within the taxing district. In arriving at actual value, all three methods, namely cost (reproduction or replacement, as applicable, less depreciation and all forms of obsolescence), comparable sales and income approaches, must be considered in conjunction with one another.
72 PS. §5348(d) (Section 7(d) of the Act of June 26, 1931, P.L. 1379, as amended by Act of December 13, 1982, P.L. 1165) (emphasis added). We agree with the appellee that the above statute “evidences a legislative intent to have a revenue appeals board and trial court, as fact finder, consider all three approaches to valuing property.”
As apparent from our above recital of the trial court opinion, the testimony regarding the market approach was so conflicting that it was apparently thought untrustworthy. In contrast, the calculations included in the experts’ testimony under the cost approach resulted in assessment values thought by the trial court to be more consistent and credible.
Affirmed.
Order
Now, November 17, 1986, the Order of the Northampton Court of Common Pleas, No. 1983-C-8320, dated March 29, 1985, is hereby affirmed.
For discussion of the concept of the common level ratio, see Strawbridge & Clothier v. Board of Assessment Appeal, 89 Pa Commonwealth Ct. 198, 201-02, 492 A.2d 108, 109 (1985).
N.T., 1/22/85, at 21 (testimony of M. Lerario).
Id. (“[Such cost] is estimated based on physical inspection of the property and utilization of accepted cost manuals.”).
Id. (“Depreciation is then deducted. Depreciation is a deduction from cost new based on physical, functional and economic deterioration and absolescences [sic].”).
Id. at 21-22 (“To arrive at a depreciated cost new of the improvements, to that is added back the value of the land to arrive at an indication of value by the Cost Approach.”).
W. Kinnard & S. Messner, Industrial Real Estate 473 (2d ed. 1979).
Brief for Appellee at 11.
See Trial Court op. at 5:
All of [the cost approach figures utilized in our computation] are within the range of the expert testimony presented at trial. Petitioners [taxpayers] expert applied a depreciation rate of 93%, and Respondents expert applied depreciation rates ranging from 15 to 40%. Petitioners expert valued the land at $250,000.00; Respondents expert was of the opinion that the land was worth $269,000.00. Both experts concluded that the reproduction cost new of the subject property was over three million dollars.
Id.
Appellant has not advanced any argument, constitutional or otherwise, premised on the view that the legislature lacks the authority to promulgate a rule attributing to particular evidence probative value after the judiciary has held to the contrary. We know, in any case, of no support for such an argument—there is certainly no constitutional provision so declaring, nor is such attribution irrational, and thus “beyond the power of the legislature, even irrespective of constitutional restrictions.” Leahey v. Farrell, 362 Pa. 52, 55-56, 66 A.2d 577, 578-79 (1949).
It is true that in Rich Hill Coal Co. v. Bashore, 334 Pa. 449, 7 A.2d 302 (1939), the Supreme Court held unconstitutional a provision of the workmens compensation law which established the following as a rule of evidence:
When an employee sustains an injury in the course of his employment, declarations, remarks and utterances made by the injured employee within twelve hours after the injury was sustained shall be admissible as competent evidence.
Section 201.1(b) of the Act of September 29, 1938 [now repealed], amending The Pennsylvania Workmen's Compensation Act, Act of June 2, 1915, P.L. 736. This rule led to tremendous due process concerns over the hearsay implications inherent in the statute. In response, the Rich Hill Court declared that “[n]ot even an act of legislation can give probative value to a statement that has none. The legislature has no control over the laws of logic.” 334 Pa at 484, 7 A.2d at 319.
The foregoing declaration is, however, patently inapplicable to section 5348. We are unwilling to characterize the legislatures adjuration that the cost approach be utilized as irrational, simply because many or most scholars think the approach is inappropriate for certain properties because of depreciation calculation problems. This hardly rises to the evidentiary illogic dealt with in Rich Hill.