Appeals of Linehan and Levin From a Decision of the Board of Revision of Taxes ~ Appeal of: City of Philadelphia

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Appeal of Linehan : CASES CONSOLIDATED
From a Decision of the Board of : No. 1167 C.D. 2020
Revision of Taxes :
:
Appeal of: City of Philadelphia :
Appeal of Levin :
From a Decision of the Board : No. 1168 C.D. 2020
of Revision of Taxes :
:
Appeal of: City of Philadelphia :
In Re: Appeal of Linehan :
From a Decision of the Board of : No. 1313 C.D. 2020
Revision of Taxes :
:
Appeal of: City of Philadelphia :
In Re: Appeal of Levin :
From a Decision of the Board : No. 1314 C.D. 2020
of Revision of Taxes :
:
Appeal of: City of Philadelphia : Argued: June 23, 2022
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE LORI A. DUMAS, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE DUMAS FILED: November 9, 2022
The City of Philadelphia (City) appeals from two orders of the Court of
Common Pleas of Philadelphia County (trial court), which sustained appeals filed
by Alexandra and Timothy Levin (Levins) and Molly and Charles Linehan
(Linehans) (collectively, Taxpayers).1 Essentially, the City contends that Taxpayers
failed to rebut the prima facie validity of the City’s tax assessments of Taxpayers’
properties.
We do not reach the City’s contention. Upon review, the trial court’s
December 2, 2020 order constitutes a legal nullity. We therefore quash the appeals
at dockets 1313 and 1314 C.D. 2020, as they are not properly before this Court.
Further, the trial court’s September 30, 2020 order fails to comply with Section
518.2(a)-(b) of The General County Assessment Law (Assessment Law), Act of
May 22, 1933, P.L. 853, art. V, as amended, added by the Act of December 13, 1982,
P.L. 1160, 72 P.S. § 5020-518.2(a)-(b). We therefore vacate that order, appealed at
dockets 1167 and 1168 C.D. 2020, and remand for further proceedings consistent
with this memorandum opinion.
I. BACKGROUND2
In 2014, the Levins bought 411 West Moreland Avenue, and the
Linehans bought 415 West Moreland Avenue (collectively, Properties), both of
which were then vacant lots in Chestnut Hill, Philadelphia. The City’s Office of
Property Assessment (OPA) valued both vacant lots at $215,000. Taxpayers
contracted to have a single-family home built on each property.
Taxpayers received a ten-year tax exemption from the City on the
assessed values of their new homes. In 2018, OPA valued the taxable land and set
1
We granted the City’s application to consolidate these appeals. Cmwlth. Ct. Order,
8/19/21.
2
Because the record was slim, and because the facts are generally undisputed, some of the
facts herein were sourced from Taxpayers’ bench memoranda. Further, for ease of disposition, we
may refer to one rounded figure in discussing the valuations at issue and specify the exact
valuations for each property only when necessary.
2
the market value for each property.3 Taxpayers appealed to the City’s Board of
Revision of Taxes (Board), which decreased the market value and set a new market
value for each property.
Taxpayers appealed the Board’s decision to the trial court. Taxpayers
filed bench memoranda, which attached various exhibits. The trial court held a
hearing, at which the parties stipulated to the accuracy of the current total assessed
value of the Properties based on OPA records attached to Taxpayers’ bench
memoranda. Notes of Testimony (N.T.) Hr’g, 9/21/20, at 9.4 Taxpayers presented
the testimony of Joseph Benincasa, a real estate appraiser.5 The City did not present
witnesses or introduce evidence in rebuttal.
On September 30, 2020, the trial court sustained the appeals in favor of
Taxpayers and adverse to the City, further reducing the assessed market value of the
land. The trial court’s order specified only the market value of the land for 2018 to
2021. Order, 9/30/20.6 The City timely appealed from that order.
3
Specifically, for 411 W. Moreland Avenue, OPA valued the taxable land at $700,321,
and the market value at $2,414,900. For 415 W. Moreland Avenue, OPA valued the taxable land
at $725,000, and the market value at $2,500,000.
4
For example, for year 2019, the OPA record states that the total assessed market value of
the property located at 411 W. Moreland Ave. was $2,090,000. This total included a tax-exempt
improvement assessed at $1,483,900 and taxable land assessed at $606,100.
5
Mr. Benincasa testified that he compared the sales of five similar properties to the
Properties. N.T. Hr’g at 14, 16. Mr. Benincasa testified as to the amounts for which the properties
were sold, the square footage of the land, and the value per square foot. Based on the values of
the five properties, Mr. Benincasa testified that the land value for the Properties was $300,000, at
$12.18 per square foot. Id. at 20-21.
6
To be clear, this order did not designate the total value of either Property, nor did it
identify the value of the single-family home built thereon. In relevant part, the order stated:
It is further Ordered that the market value of the land at 411 W. Moreland Avenue
. . . is hereby set as follows: 2018: $300,000
2019: $325,000
(Footnote continued on next page…)
3
Meanwhile, the City also timely filed a motion for
reconsideration/clarification. The City’s motion stated that although the trial court’s
order set values for the land, it was “silent” as to “the other components of the
assessment.” City’s Mot. for Recons., 10/22/20, ¶ 4. On December 2, 2020, the trial
court granted in part the City’s motion for reconsideration, and the City timely
appealed from this order.7
II. ISSUES8
The City raises three issues, which we reordered for disposition. First,
the City asserts that the trial court erred by increasing the tax-exempt value of the
2020: $350,000
2021: $350,000
It is further Ordered that the market value of the land at 415 W. Moreland Avenue
. . . is hereby set as follows: 2018: $300,000
2019: $325,000
2020: $350,000
2021: $350,000
Order, 9/30/20.
7
In this order, the trial court clarified, for example, that for tax year 2018 for the 411 W.
Moreland Ave. property, the taxable land value was $300,000, and the exempt improvement value
was $1,790,000, for a total assessed value of $2,090,000. Trial Ct. Order, 12/2/20. We add that
the trial court’s order inadvertently swapped Taxpayers’ addresses, i.e., referred to 411 W.
Moreland Ave. as 415 W. Moreland Ave., and vice-versa.
We add that the trial court incorrectly held that the City waived its issues by, inter alia, not
filing a post-trial motion from the December 2, 2020 order. Trial Ct. Op., 6/7/21, at 4.
Pennsylvania Rule of Civil Procedure 227.1(g) explicitly precludes the filing of a post-trial motion
“in an appeal from the final adjudication or determination of a local agency.” Pa.R.Civ.P. 227.1(g).
Finally, we acknowledge that the City filed a separate notice of appeal at each docket number. See
generally Commonwealth v. Young, 265 A.3d 462, 477 (Pa. 2021).
8
“Our standard of review in a tax assessment appeal is whether the trial court rendered a
decision unsupported by the evidence, committed an error of law or abused its discretion.”
Residents of Buckingham Springs v. Bucks Cnty. Assessment Off., 60 A.3d 883, 887 (Pa. Cmwlth.
2013). We add that neither party complied with Pa.R.A.P. 2119(a), which requires that the
argument portion of their appellate brief be divided into as many sections as questions presented.
4
Properties without evidence establishing the actual cost of construction. City’s Br.
at 7. Second, the City claims that the trial court erred in altering the land component
of the total assessed value of the Properties. Id. Third, the City challenges the trial
court’s acceptance of a methodologically flawed report prepared by Taxpayers’
appraiser. Id.III. DISCUSSION
Before discussing the City’s issues, we address the timeliness of the
trial court’s December 2, 2020 order granting the City’s motion for reconsideration.
Pennsylvania Rule of Appellate Procedure 1701(b)(3) states that a trial court may
grant reconsideration if (1) the motion for reconsideration was timely filed; and (2)
the order granting reconsideration is filed within the applicable appeal period for the
underlying order. Pa.R.A.P. 1701(b)(3)(i)-(ii). An order granting reconsideration
after the applicable appeal period has expired is a legal nullity. Orfield v. Weindel,
52 A.3d 275, 277 (Pa. Super. 2012); Sewickley Valley Hosp. v. Dep’t of Pub.
Welfare, 550 A.2d 1351, 1353 (Pa. Cmwlth. 1988).
Here, the trial court’s December 2, 2020 order granting reconsideration
was filed after the time period for appealing the prior September 30, 2020 order had
expired. Therefore, the trial court’s December 2, 2020 order granting
reconsideration is a legal nullity, and we must vacate that order and quash the City’s
appeals at dockets 1313 and 1314 C.D. 2020. See Orfield, 52 A.3d at 277.9
A. The City’s Challenge to Values in a Void Order
In support of the City’s first issue, the City argues that because the
record contains no evidence establishing the actual cost of constructing Taxpayers’
homes, the trial court erred by changing the improvement values in its order granting
9
The City’s appeals at dockets 1167 and 1168 C.D. 2020 are properly before this Court.
5
the City’s motion for reconsideration. City’s Br. at 19-20. The improvement values
challenged by the City, however, exist only in the trial court’s December 2, 2020
order, which we deem a legal nullity. Thus, we may not address the City’s argument.
See id.10
B. The Validity of a Challenge to Only the Land Values11
In its second issue, the City contends that the trial court could not have
altered the land component of the assessment without evaluating the total assessed
10
If this Court could review the December 2, 2020 order, then we would agree that the trial
court erred, as we explain in further detail below.
11
As background, we briefly summarize the property tax assessment process. A county
may designate a “base year” for ascertaining the fair market value of all properties within the
county. See generally Downingtown Area Sch. Dist. v. Chester Cnty. Bd. of Assessment Appeals,
913 A.2d 194, 202 (Pa. 2006) (Downingtown). A county has significant discretion in determining
when it will assess property, i.e., its “base year.” For example, Philadelphia County normally
reassesses its properties annually, as compared to Bucks County, which last reassessed its
properties in 1972.
After a county has ascertained the market values, the county applies an “established
predetermined ratio” (EPR) to calculate the assessed values. Section 102 of the Assessment Law,
72 P.S. § 5020-102 (defining EPR as “the ratio of assessed value to market value established by
the board of county commissioners and uniformly applied in determining assessed value in any
year”). “To take a simple, but common, example, a county may set its base year EPR at 100% of
actual value, and thus, reassess all real estate in the county at its actual value for the base year.
Each year thereafter, until the next county-wide reassessment, a given property’s value may
change, but its assessment ordinarily remains static, fixed at its base year level.” Downingtown,
913 A.2d at 202-03; see 53 Pa.C.S. § 8842. For example, if 2021 is the base year, a property has
a total market value of $6, and a county has elected to impose a 100% EPR, then the total assessed
value is $6.
Any subsequent alterations in the value of the property are then valued “in terms of base
year dollars.” Downingtown, 913 A.2d at 203. “For example, if a home is replaced on a lot, the
parcel’s value may increase from (say) $100,000 to $200,000 in present-year dollars due to the
new construction. However, the board does not simply re-assess the property at $200,000; rather,
using tables, charts, and other accepted techniques, the board determines what the improved
property would have been worth in the base year-in this example, perhaps $180,000[.]” Id. To
take the above example, if the $6 property was improved in 2025 and was worth $12 in 2025
dollars, the Board would have to express the assessed improved value in 2021 dollars, i.e., base
year dollars.
6
values. City’s Br. at 20-22 (discussing N. Park Vill., Inc. v. Bd. of Prop.
Assessments, Appeals & Rev. of Allegheny Cnty., 184 A.2d 253 (Pa. 1962) (Park
Village), and Pittsburgh Miracle Mile Town & Country Shopping Ctr. v. Bd. of Prop.
Assessment, Appeals & Rev. of Allegheny Cnty., 209 A.2d 394 (Pa. 1965) (Miracle
Mile)). In the City’s view, these cases and their progeny stand for the proposition
that a party cannot challenge “only the land component in an assessment appeal.”
Id. at 21.12
The Board assesses property “at the actual value thereof,” i.e., current
market or base year market value. Section 13 of the Act of June 27, 1939, P.L. 1199,
as amended, 72 P.S. § 5341.13.13 “Actual value means market value,” which is
defined as the “price which a purchaser, willing but not obliged to buy, would pay
an owner, willing but not obliged to sell, taking into consideration all uses to which
the property is adapted and might in reason be applied.” Valley Forge Golf Club,
Inc. v. Bd. for the Assessment & Revision of Taxes of Montgomery Cnty., 285 A.2d
213, 215-16 (Pa. Cmwlth. 1971) (Valley Forge) (citation omitted); accord Harley-
Davidson Motor Co. v. Springettsbury Twp., 124 A.3d 270, 279 (Pa. 2015)
(Springettsbury).
12
Taxpayers counter that these cases predated the creation of the property tax exemption
at issue. Taxpayers’ Br. at 5. Regardless, Taxpayers maintain that if OPA alters only the taxable
land value, they are entitled to challenge it. Id.13
Because the City is a county and city of the first class, see Section 1 of the Act of June
25, 1895, P.L. 275, as amended, 53 P.S. § 101, the Assessment Law governs the City’s property
assessment. That statute does not define “assessment.” Our Courts have consistently defined
“assessment” in the context of our tax statutes as a “valuation of property for the purpose of
taxation.” City of Meadville v. Odd Fellows Home of W. Pa., 193 A. 662, 664 (Pa. Super. 1937);
accord Broad & Sansom Realty Co. v. Fidelity Bldg. Corp., 141 A. 34, 35 (Pa. 1928) (stating,
“Assessed, as used in our taxing statute and as here used, means a certain sum of money, fixed
under a given rate on property valuation, due and payable as taxes.”); Appeal of Hart, 199 A. 225,
227 (Pa. Super. 1938) (explaining that the term “assessment” “more accurately [refers to] a certain
sum of money fixed under a given rate on property valuation”).
7
After a property is assessed, a taxing authority may exempt from
taxation “the assessment attributable to the actual cost of construction” of the new
residence. Sections 301 and 302 of the Improvement of Deteriorating Real Property
or Areas Tax Exemption Act (IDRPA), Act of July 9, 1971, P.L. 206, No. 34, as
amended, added by the Act of August 5, 1977, P.L. 167, 72 P.S. §§ 4711-301 to -
302. For example, the City exempts real estate taxes “limited to that portion of the
assessment valuation attributable to the cost of construction of the new eligible
dwelling unit.” Phila. Code § 19-1303.4(4)(a); see Section 303(b) of the IDRPA, 72
P.S. § 4711-303(b).14 The Board “shall assess separately the dwelling unit and the
land upon which the new residential construction stands.” Phila. Code § 19-
1303.4(6)(d).
A party aggrieved by an assessment may appeal to the Board, which
“shall” determine the “current market value for the tax year in question” as well as
the “common level ratio.” Section 14(b)(1)-(2) of the Act of June 27, 1939, P.L.
1199, as amended, 72 P.S. § 5341.14(b)(1)-(2).15 In turn, a party, including a
14
The IDRPA permits the City “to exempt improvements to certain deteriorated residential
property and areas . . . .” Section 102 of the IDRPA, as amended, 72 P.S. § 4711-102. To the
extent that the statute and ordinance refers to “assessment” or “assessment valuation,” in this
context, the City explained that “the exemption value, by statute, is actually supposed to be set at
the actual cost of construction, and there is no evidence in the record as to the actual cost of
construction.” N.T. Hr’g at 51; cf. Citadel Dev. Corp. v. Bd. of Assessment Appeals of Erie Cnty.,
828 A.2d 1057, 1062 (Pa. 2003) (explaining that if the actual cost of construction is less than the
legislative ceiling at issue, then the entire amount is exempt); MacDonald, Illig, Jones & Britton
v. Erie Cnty. Bd. of Assessment Appeals, 604 A.2d 306, 310 (Pa. Cmwlth. 1992) (construing statute
analogous to IDRPA, in which the “actual costs” of new construction can only be assessed after
construction is complete).
15
A taxpayer may challenge a property’s total assessed value by introducing evidence of
the ratio of assessment value to current market value of “similar properties of the same nature in
the neighborhood,” i.e., the “common level ratio” (CLR). See Downingtown, 913 A.2d at 199-
200; Section 102 of the Assessment Law, 72 P.S. § 5020-102. The State Tax Equalization Board
(STEB) calculates a CLR for each county based on the prior year’s “arm’s-length transactions” of
(Footnote continued on next page…)
8
municipality, may appeal the Board’s assessment to the Court of Common Pleas.
Sections 518.1 and 520 of the Assessment Law, 72 P.S. §§ 5020-518.1, 5020-520;16
accord Phila. Code § 19-1303.4(6)(d). Like the Board, the court “shall make the
following determinations:” the market value and the CLR. 72 P.S. § 5020-
518.2(a)(1)-(2).
For example, in Springettsbury, the trial court was required to
determine the market value of the property and was then “required by law to apply
a [CLR] for each year to arrive at the assessed value for the property . . . .”
Springettsbury, 124 A.3d at 287 n.9. The Springettsbury trial court, however, did
not perform that calculation, and this Court remanded to have the trial court comply
with the statute. Id.
As in Springettsbury, the instant trial court’s order determined the
market value of the land only, which prompted the City to file a motion for
reconsideration to have the trial court enumerate the other values required by statute.
See City’s Mot. for Reconsid. ¶ 4. Unfortunately, as we held above, the trial court
untimely granted the motion for reconsideration. Therefore, somewhat similar to
Springettsbury, the only valid, appealable order before us lacks the values required
by statute, specifically the assessed total values of the Properties and the CLR. See
72 P.S. § 5020-518.2(a)-(b); cf. Springettsbury, 124 A.3d at 287 n.9.
all properties sold within that county. Using our illustration of a property with a 2021 total
assessed market value of $6 as an example, the STEB would calculate the 2021 CLR as 1.0, and
“[t]hereafter, under normal economic conditions, the STEB-calculated CLR tends to diminish each
year, reflecting ongoing inflation and real estate appreciation.” Downingtown, 913 A.2d at 203
(citations omitted). Very simply, the STEB-calculated CLR provides broad guidance to ensure
that the Board and trial court do not inaccurately assess the value of the property at issue. See
generally 72 P.S. §§ 5020-518.2(b), 5341.14(c). But because the STEB-calculated CLR is based
on all county sales, the taxpayer may nonetheless challenge the assessment of the property at issue
by introducing the CLR of similar properties. See Downingtown, 913 A.2d at 205.
16
Section 518.1 was added by the Act of December 28, 1955, P.L. 917.
9
When necessary, as here, the trial court’s order stating the assessed total
market value must also include the assessed land and improvement values,
particularly if only one value is contested or when a tax exemption applies. See
Miracle Mile, 209 A.2d at 395; Park Village, 184 A.2d at 255. For example, in
Miracle Mile, our Supreme Court noted that the parties’ “stipulation as to the fair
market value of land or improvements is merely an evidentiary expedient and does
not alter the court’s obligation on review to pass upon and to determine the
correctness of the property assessment as a whole.” Miracle Mile, 209 A.2d at 395.
In other words, notwithstanding any stipulation, the trial court’s order should include
the values necessary to calculate the “total assessment of the property as a unit.” Id.
Similarly, in Park Village, our Supreme Court observed that the “reasonableness of
the total assessment . . . is controlling,” i.e., the reviewing authority considers the
“total assessment of both land and improvements as a unit . . . .” Park Village, 184
A.2d at 255.
Although the instant order omits the necessary values, we would be
remiss if we did not highlight the parties’ erroneous stipulation to the Properties’
total assessed values and the trial court’s acceptance thereof. Briefly, the Taxpayers’
tax exemption is limited to the actual cost of constructing the new home. See Section
303 of the IDRPA, 72 P.S. § 4711-303; accord Phila. Code § 19-1303.4(4)(a)
(same). In other words, if assessed land value + assessed improvement value = total
assessed value is “$2+$4=$6,” and if the actual cost of constructing the new home
at issue is $4, then the tax exemption is $4. See 72 P.S. § 4711-303(b); Phila. Code
§ 19-1303.4(4)(a).
The parties, however, erred by stipulating to the total assessed value as
a constant, i.e., a fixed value, because any alteration to the assessed land value
10
necessarily alters the assessed improvement value to maintain the constant. See In
re Armco, Inc., 515 A.2d 326, 330 (Pa. Cmwlth. 1986) (noting that in “any equation,
to maintain a constant result when one variable changes, another must change to
counterbalance it”). By way of illustration, in our prior example, if the parties
previously stipulated to a total assessed value of $6, but the trial court decreases the
assessed land value from $2 to $1, then the assessed improvement value must
necessarily increase from $4 to $5 in order to preserve the stipulated total assessed
value of $6, i.e., “$2+$4=$6” becomes “$1+$5=$6.”
The flaw in that illustration is the assumption that the assessed
improvement value can change. The assessed improvement value cannot change,
absent record evidence, because Taxpayers’ tax exemption is limited to the actual
cost of constructing their new homes. See 72 P.S. § 4711-303; accord Phila. Code
§ 19-1303.4(4)(a) (same). Plainly, the actual cost to construct Taxpayers’ homes
cannot be both $4 and $5. It follows that the parties’ stipulation to the total assessed
value is improper when, as here, a party elects to challenge one of the component
values, and therefore the stipulation is void. Cf. Klingler v. Workmen’s Comp.
Appeal Bd., 413 A.2d 432, 435 (Pa. Cmwlth. 1980) (holding that a stipulation to
waive interest was illegal and therefore void). For these reasons, similar to
Springettsbury, we vacate the September 30, 2020 order and remand to the trial court
for an order that complies with 72 P.S. § 5020-518.2(a)-(b). See Springettsbury, 124
A.3d at 287 n.9. Because of our disposition, we need not address the City’s
remaining issue.
IV. CONCLUSION
For these reasons, we quash the appeals at dockets 1313 and 1314 C.D.
2020, vacate the trial court’s September 30, 2020, and December 2, 2020 orders at
11
dockets July 2018-002796 and July 2018-002797, strike the parties’ September 21,
2020 stipulation, and remand to have the trial court issue an order that complies with
72 P.S. § 5020-518.2(a)-(b).
LORI A. DUMAS, Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Appeal of Linehan : CASES CONSOLIDATED
From a Decision of the Board of : No. 1167 C.D. 2020
Revision of Taxes :
:
Appeal of: City of Philadelphia :
Appeal of Levin :
From a Decision of the Board : No. 1168 C.D. 2020
of Revision of Taxes :
:
Appeal of: City of Philadelphia :
In Re: Appeal of Linehan :
From a Decision of the Board of : No. 1313 C.D. 2020
Revision of Taxes :
:
Appeal of: City of Philadelphia :
In Re: Appeal of Levin :
From a Decision of the Board : No. 1314 C.D. 2020
of Revision of Taxes :
:
Appeal of: City of Philadelphia :
ORDER
AND NOW, this 9th day of November, 2022, we quash the appeals at
dockets 1313 and 1314 C.D. 2020, vacate the trial court’s September 30, 2020, and
December 2, 2020 orders at dockets July 2018-002796 and July 2018-002797, strike
the parties’ September 21, 2020 stipulation, and remand to have the trial court issue
an order that complies with Section 518.2(a)-(b) of The General County Assessment
Law, Act of May 22, 1933, P.L. 853, art. V, as amended, added by the Act of
December 13, 1982, P.L. 1160, 72 P.S. § 5020-518.2(a)-(b).
Jurisdiction relinquished.
LORI A. DUMAS, Judge