Understanding the Property Assessment Appeal Process
Understanding the Property Assessment Appeal Process
By John M. Coles, Esquire

John M. Coles is a partner in the Harrisburg law firm of Rhoads & Sinon LLP, and currently serves as chair of the firm’s Real Estate Practice Group. He has experience in a wide range of commercial real estate transactions, including property sales and acquisitions, zoning and land development issues, tax assessment appeal litigation, commercial leasing, planned communities, condominiums, and the financing of all types of commercial transactions. He can be reached at jcoles@rhoads-sinon.com or 717-231-6640.

As we move through the summer months we approach the season for filing annual real estate tax assessment appeals in Pennsylvania. As commercial real estate professionals, this is a good opportunity to review the basic process and procedure for these appeals. Particularly given the current economic and market conditions, now may be a good time to consider appealing a real estate tax assessment.

In general, there are two opportunities for property owners to appeal the assessed value of their properties. First, if the property owner makes improvements to the property, including the construction of a new building or the renovation or modification of an existing structure, the county assessment office will generally issue a Notice of Change of Assessment setting forth the new assessed value for the tax parcel in question. The county tax assessment offices often use building permit records and approved and recorded land development plans to keep track of new construction in their jurisdictions. Upon the issuance of a Notice of Change of Assessment, property owners typically have forty days to appeal the new assessment to the county Board of Assessment Appeals.

In the absence of new construction, property owners have the opportunity to appeal the assessed value of any tax parcel on an annual basis, pursuant to procedures established by state statute and by local county rule. The appeal deadlines for filing these annual appeals are typically in mid to late summer and vary from county to county. For example, the annual appeal filing deadline in Dauphin County is usually August 1. In Cumberland County it’s usually September 1 (although with Cumberland County’s ongoing countywide reassessment, different dates may apply this year depending upon when taxpayers receive their new assessment notices.) As a result, when contemplating an appeal, it’s very important to determine the appropriate filing date. If a property owner misses a filing date for one year, the appeal typically will be treated as an appeal for the succeeding year, so missing a deadline even by one day can delay receiving the benefits of an appeal for a full calendar year.

The process of filing an appeal is usually fairly simple, with most counties requiring only the completion and submission of an appeal form and a modest filing fee (generally around $100.00). Anyone interested in filing an appeal should check with an attorney or local county officials to ensure proper compliance with local procedures.

Once the appeal application has been submitted, a hearing is typically scheduled before the county Board of Assessment Appeals. These boards are most often comprised of three members, who are usually either the county commissioners (in many smaller counties) or separate appointees  (in many of the larger counties). The hearing before the Board typically lasts about thirty minutes, and it is helpful to have legal representation at the hearing to present the sworn testimony of the applicable witnesses.

An appraiser tends to provide the majority of the testimony at the hearing. Most county boards require that original appraisal reports be submitted as part of any commercial property tax appeals and that the appraiser be present at the appeal hearing to present the findings from the report. As a matter of law, the existing assessment on the property set by the county assessment office is deemed to be correct unless proven otherwise by the taxpayer. Because the taxpayer has the burden of proof, it is critical that the appraiser present a qualified persuasive report and testimony.
 
At the appeal hearing, representatives from the county assessment office are usually in attendance to provide their testimony as to how they arrived at the assessed value of the property. In addition to the county assessment office and the taxpayer, the school district and municipality in which the property are located also receive notice of the appeal hearing and have the opportunity to be present and to question the taxpayer and any witnesses. School districts and municipalities have a vested interest in the outcome of the appeal hearing, as any change in the assessed value of the property will impact those taxing jurisdictions’ tax bases, and therefore the tax revenue available to them. As a result, especially in large commercial appeals, it is not unusual for the school district and the municipality to be present and to take an active role at the hearing.
 
Following the hearing, the board will usually issue a decision order within several weeks. If the taxpayer is dissatisfied with this decision, the taxpayer has a statutory right to appeal the decision to the county Court of Common Pleas. Unless the case is settled, a hearing will be scheduled before a judge and a trial will then take place. Following the trial, the judge will issue a decision, and that decision is appealable through the appellate courts and ultimately to the Pennsylvania Supreme Court.

In addition to the procedural aspects of tax assessment appeal hearings, it is also important for real estate professionals to be aware of the substantive aspects of the hearings. The county Board of Assessment Appeals will typically be familiar with the valuation methods utilized in a commercial appraisal report, including the sales comparison, cost, and income approaches. The more familiar an appealing taxpayer is with these appraisal methodologies, the more involved the taxpayer can be in the appeal hearing. If the case proceeds beyond the county board level and into the Court of Common Pleas, the school district and municipality typically will retain an appraiser as well, presenting the opportunity for a “battle of the experts” at the trial court level.
 
In addition to the appraisal methodologies, the county assessment statutes introduce a role for the common level ratio in the hearing process. While many real estate professionals may be familiar with the common level ratio and its application to realty transfer tax provisions, county assessment laws provide that once the ratio reaches certain thresholds, that ratio must be applied to the fair market value of the property (as determined by the Board of Assessment Appeals) so that the board may establish the assessed value for the property. Therefore it is important to monitor the common level ratio and to consult with an attorney or an appraiser to understand how the ratio may impact any pending or future tax assessment appeals. Particularly in counties that have not had countywide reassessments for some time, the application of the ratio, if required by statute, may result in an assessed value that is markedly lower than the actual fair market value of the property.

For all of these reasons, if a commercial property owner is contemplating a real estate tax assessment appeal, the property owner should consult an attorney, financial advisors and an appraiser to evaluate the implications of filing an appeal. It is also worth noting that while we usually associate assessment appeals with a lowering of a property’s assessed value, once a taxpayer files an appeal the Board of Assessment Appeals has a statutory obligation to find the fair market value of the property, and there is no legal reason why that finding could not result in an increase of the property’s assessed value if the evidence leads the board to that conclusion. In fact, the taxing jurisdictions (i.e., the school district and municipality), have the same right as the taxpayer to appeal any decision of the Board of Assessment Appeals to the Court of Common Pleas.

Particularly in light of the current economic climate, it is more important than ever that commercial property owners understand the tax assessment appeal procedure and consider how and when they may want to avail themselves of the appeal process. The amount of real estate taxes payable with respect to a property can be a critical factor in price and rent calculations for sale or lease transactions and, with some basic background information, property owners can carefully consider if and when to file an appeal.