703 A.2d 85

HOWARD AND MICHELLE ACKERMAN, ET AL., Appellants vs. CARBON COUNTY AND CARBON COUNTY BOARD OF ASSESSMENT, Respondents.

No. 94-2505.Commonwealth Court of Pennsylvania.Argued October 9, 1996.
Decided October 30, 1997.

OPINION OF THE COURT

MICHEAL V. FRANCIOSA, Senior Judge.

Appellants[1] are a group of Carbon County property owners who are appealing real estate assessments on their individual properties. In addition to their individual appeals from the Board Assessment, the appellants are seeking a declaration that Carbon County’s current method of determining real property assessments violates the uniformity of taxation requirement found in Article VIII, Section 1 of the Pennsylvania Constitution.

A hearing on the “uniformity” issue was held on August 3, 1995. At that time, the Board of Assessment met its initial burden of proof by introducing the assessment rolls for the properties in question; by testimony of the Chef Assessor which established that the valuation of the subject properties were continuous both from the period of time of the appeal through the time of the hearing; and, by documenting the common level ratio published by the State Tax Equalization board for Carbom County for the relevant period of the time in which the appeal is filed and also the year in which the appeal is filed and also the year in which the appeal heard. Because the assessment must be considred prima facie valid where the assessment record is admitted into in the evidence, the taxpayer has the burden to rebut the assesment’s validity. Fosko v. board of Assess. Aoo., Luzerne Co., 646 A.2d 1275, 166 Pa. Commw. 393 (1994).

In this case, the evidence produced by the appellants to satisfy their burden shows the following: The last county-wide reassessment was done in 1969. Thus, it has been twenty-seven years since the last county-wide reassessment. Moreover, Carbon County uses the cost to value. A factor which tends to complicate the use of the cost approach is the County’s need to utilize 1969 construction cost to value properties built since that time. There id another problem with depreciation procedures. Properties that were in existence in 1969 got a depreciation credit of 35%. Thereafter, all properties has never been euqalized. In addition, significant changes in market values of properties have occurred since 1969. Route 80 was constructed types of properties to the tax rolls.

Three witness were offered by appellants on the subject of uniformity. The testimony of Scott Dotterer shows a disparity in sales assessment ratios on the Borough of Jim Thorpe. He made an analysis of actual sale prices to assessment ratios for seven were assessed at 2.6% of the sales price as compared to the 9.6% assessmetn for his oem property. When he did an analysis on 1996 sales, Dotterer found he was paying real estate taxes at a rate almost three times greater that the owners of similarly valued properties.

The difficulty encountered in arriving at assessments of newly contructed properties is demonstrated by evidence regarding the Towamensing Trails Community. Such evidence discloses that the use of 1969 cost data to assess newer properties produced the following results:

There were 65 transactions in the Towamensing Trails Community from October 1, 1993 to September 30, 1994; in 53 of them the property was over assesed and in 12m the properties were under assessed;[2]
in total, 79% of the sales at Towamensing

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Trials showed an assesment more that 15% greater that the common level ratio; as a whole, Penn Forest Township had a 1994 common level ratio of approxomately 5% in the Borough of Jim Thorpe;[3]
this means that Penn Forest Township taxpayers were assessed at rates almost double those applied to property owners in th Borough of Jim Thorpe.

It is asserted by the County that appellants have not met the burden of proof required to establish a lack of uniformity in assessments. In support of its argument, the County cites the case of Albarano v. Board of Assessment and Revision, 90 Pa. Commw. Ct. 89, 494 A.2d 47 (1985). We believe the Countyu’s reliance o Albarano, supra is misplaced. In that case, the Commonwealth Court found the evidence insufficient because the taxpayers offered evidence of assessments of comparable properies, but failed to present proof of market value. Here, the taxpayers presented credible evidence consisting of analyses of actual sales prices to assessment ratios for seven properties in the Borough of Jim Thorpe and sixty-five transactions in Towamensing Trails Community.

Although the witness called by the appellants were not qualified as real estates apprisers, this does not, as the County contends, render their information inadmissable in condiering lack of uniformity. As our Supreme Court stated in McKnight Shopping Center, Inc. v. Board of Property Assessment, 417 Pa. 234, 209 A.2d 389 (1965):

“In considering whether or not a particular assessment is lacking in uniformity, however, a property owner, the taxing authority and the courts may rely on any relevant evidence . . . . It would be easily satisfactory to produce, if possible, evidence regarding the ratios of assessed values to market values as the latter are reflected in actual sales of any other real estate in taxing district for a reasonable period prior to the assessment date. Thus, for example, if competent evidence of an overall current ratio based on sales within the taxing district is available, it may be introduced.
Whatever the procedure, the taxing authority always has the right to rebut the owner’s evidence is always for court to determine. The taxing authority cannot, however, do nothing except at the risk of having the owner’s testimony accepted by the court. where that testimony is relevant and credible, it is rebutted, it must necessarily be accepted.” See McKnight, supra, 417 Pa. 234, at pages 241-242, 209 A.2d 389, at page 393.

Moreover, in determining uniformity, the meaning of “comparables” is different than when an expert witness is determining the market value of a specific property. Thus, in determining uniformity, the ratios of assessed values to market values of all properties are all properties are “comparables.” See McKnight, supra, 417 Pa. 234
at page 241, 209 A.2d 389, at pages 392-393, citing Delaware, Lackawanna and Western Railroad Company’s Tax Assessment (No. 1), 224 Pa 240, 73 A. 429 (1909).

The Pennsylvania Supreme Court has held that taxation is not a matter of exact science and that absolute equality or perfect uniformity is not necessary to satisfy the constitutional requirement of uniformity Columbia Gas Transmission Corporation v. Commonwealth, 468 Pa. 145, 360 A.2d 592 (1976). The test of uniformity is whether there exists a reasonable distinction and difference between classes of taxpayers sufficient to justify different tax treatment. F.J. Busse Company v. Pittsburgh, 443 Pa. 349, 279 A.2d 14 (1971). It is the burden of the taxpayer alleging a violation of the uniformity clause to show that there is deliberate discriminatory effect. Butler Area School District Appeal, 100 Pa. Commw. 452, 515 A.2d 326 (1986).

Appellants have not shown deliberate discrimination in this cases. However, the testimony

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and documentary evidence offered by Roger Downing does show that the assessment practices utilized over the past twenty-seven years have reached a point where they have a discriminatory effect. Mr.Downing was accepted by the Court as an expert on assessment statistics. Using STEB[4] data, he testified that 44% of Carbon County properties transferred in 1994 were under-assessed by more than 15%. The importance of this evidence is that it reveals how unreliable the predetermined common level ratio[5] has become in Carbon County was 8.6%. The exhibits offered by Mr. Downing illustrate that the predetermined ratio could not be applied to 73 of the properties. Other evidence presented by Mr. Downing referred to the Coefficient of Dispersion (COD). The COD is a statistical tool, expressed as the average percentage deviation between the ratios of property’s assessed to market values and the County’s common level ratio. Under standards established by the International association of Assessing Officers (IAAO), the COD for residential properties should not exceed 15%. Carbon County’s COD is 40%.

Our Supreme Court’s decision in City of Lancaster v. Lancaster County, 143 Pa Commw. Ct. 476, 599 A.2d 289 (1991), noted that COD is an indicator of whether the constitutional requirement of uniformity was satisfied and as a factor in determining whether a county-wide reassessment was necessary. While City of Lancaster, supra, dealt with reassessments rather than a county-wide reassessment, the type of evidence presented by Mr. Downing in the case at hand was reviewed by our Supreme Court and accepted as admissible and relevant evidence. In fact, the Supreme Court reversed the lower court by holding, in part that the Common Pleas “finding regarding the acceptable Cod” was not supported by substantial competent evidence. See, City of Lancaster, supra, 143 Pa. Commw. at page 492, 599 A.2d at page 297. Here, it is beyond dispute that Carbon County’s COD of 40% is well in excess of the standard and, therefore, clearly unacceptable.[6]

The IAAO standard is that reassessments should be done cycles of no longer than four to six years. However, the applicable statutes do not fix a definite period to adjust assessments. In each case, the constitutional requirements is the reasonable attainment of a rough equality in tax treatment of similarly situated property owners. Allied Stores of Ohio v. Bowers, 358 U.S. 522, 526-527, 79 S.Ct. 437, 440-441, 3 L.Ed.2d 480 (1959). But, where discrepancies have continued for more than ten years adjustments to the assessment of property is necessary to remove the resulting inequalities. Allegheny Pitt v. Webster County, 488 U.S. 336, 109 S. Ct. 633, 102 L.Ed.2 688 (1989).

We agree with appellant’s contention that “the evidence leads to an inescapable conclusion that Carbon County’s 26, year hiatus in doing a county-wide reassessment has created intolerable and illegal assessment disparities among properties of comparable value.” In addition to the staleness of 1969 cost data, the county’s scheme magnifies the impact of transitional delay because it uses the cost approach alone without consideration of market value. With the passage of time, therefore, the method of assessment utilized by Carbon County does not provide for some perception of the general change in area property values.[7]

A very similar situation occurred in Chester County. There, assessment had not

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been revised on a county-wide basis for about 20 years. It was apparent to the Court that older properties in the County were undervalued in terms of fair market value. Because the valuations placed on the various properties throughout the County Court had become so disparate over a period of 20 years, the Chester County Court of Common Pleas ordered a reassessment Behe, et al. v. Chester County Board of Assessment Appeals,
41 Ches.Co.Rep. 90 (1993).[8]

In our opinion, the time has come for a revaluation of all property within Carbon County to bring its system up to date and to clear up the inequities where the owners of older properties are having their tax burden subsidized by people who have built since 1969. As noted by our Commonwealth Court in City of Lancaster, supra,
“where . . . there has not been an assessment of the entire County since 1960[9] , there can be no uniformity of assessment.”City of Lancaster, supra, 143 Pa. Commw. 476, 599 A.2d 289, at page 300.

Whether or not such a re-valuation requires a county-wide assessment cannot be determined by us at this time. Under our Order of Court dated June 21, 1995, we agreed to postpone a decision on the question of whether or not a county-wide reassessment is the only remedy until after the uniformity issue was decided. Having found a lack of uniformity, we enter the following:

ORDER OF COURT
AND NOW, this 9th day of September, 1996, having concluded in the foregoing Opinion that Carbon County’s assessment of properties has become defective because of a lack of uniformity, it is ordered, adjudged and decreed that a hearing shall be held at 10:00 a.m. on October 22, 1996. At such hearing, the Court will determine what remedy is necessary to cure any defect or defects.

SUPPLEMENTAL OPINION

In this case, Taxpayers took an appeal to the Common Pleas Court after being denied relief by the Carbon County Board of Assessment Appeals. The individual assessment, involving approximately 600 property owners, were consolidated when the proceeding attached for a hearing before this Court. In these proceedings, Taxpayers raised a constitutional question by alleging that the current method used in Carbon County to taxation requirement set forth in Pa. Const. Art. 8, § 1. Under a stipulation of counsel, approved by the Court would decide whether or not the present system violated the uniformity of taxation requirement, and if the Court found such a violation, no reassessment would be ordered until the county-wide reassessment.

On September 9, 1996, we filed an Opinion declaring that the current assessment system used in Carbon County had become defective because of a lack of uniformity. However, pursuant to the aforementioned stipulation, the Order of Court which accompanied our Opinion did not provide for an additional hearing to assist the Court in determining whether or not there was an alternative to county-wide reassessment.

On September 24, 1996, Carbon County filed a notice of appeal to the Commonwealth Court of Pennsylvania. Since the appeal was taken before this lower court had conducted a heating on the appropriate remedy, it was dismissed as being premature.[1]

The remedy hearing was held on December 30, 1996. During the brief proceeding, the Chief County Assessor testified that: (1) a county wide assessment would cost somewhere between $2,000,000 to $3,000,000; and (2) it would be a three year project — one year to gather the necessary information, a

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second year to implement a new system, and a third year to handle appeals form the new system, and a third year to handle appeals from the new assessment of individual properties.

In determining what remedies this Court may invoke, the decision of the commonwealth Court in City of Lancaster v. County of Lancaster, 143 Pa. Commw. 476, 599 A.2d 289 (1991) supplies two answers to that question. First, while we sympathize with county’s assertion that a total reassessment is a costly undertaking, cost is not relevant factor. When a taxing scheme is constitutionally infirm, the necessary reform cannot be ignored. See, City of Lancaster, supra, 599 A.2d at page 301. Second, any plan to update an assessment program must be implemented by a complete county-wide reassessment. In that regard, we agree with the observation made by President Judge Wood in the case of Behe, et al. v, Chester County, etc., 41 Ches.Co.Rep. 90 (1993). As stated by President Judge Wood:

“The Defendants, in their brief, cite Croasdale v. Dauphin County Board of Assessment Appeals, 89 Pa. Commw. 409, 492 A.2d 793 (1985) . . .[H]owever, I read that case as simply standing for the proposition that piecemeal assessments won’t do. You have to do the whole county at once. I have no argument with that proposition. That is what City of Lancaster says as well.” 41 Ches.Co.Rep. at page 95.

At the hearing held on December 30, 1996, we granted the county’s request to incorporate into the record its brief lodged on November 12, 1996. In it, the county challenges the court’s authority to go forward with ordering any reassessment in this case. Here, the Taxpayers followed the mandated statutory procedure. The fact that the recent decision reached in Harrisburg et al. v. Dauphin County Board of Assessment Appeals et al., 677 A.2d 350 (Pa.Commw. 1996) would have permitted them to bypass the statutory remedy is of no consequence. Assuming an action in equity would have been less burdensome, the Taxpayers did, nonetheless, assume the task of appealing. Moreover, the consolidation of their individual appeals from the Board of Assessment did provide a procedure whereby the larger question of uniformity was expeditiously and efficiently resolved. Furthermore, our earlier opinion refers to several cases where the uniformity issue was raised in appeals taken pursuant to the statutory remedy for persons aggrieved by assessments. See, Albarano v. Board of Asses., 90 Pa. Commw. 89, 494 A.2d 389 (1965); Delaware, Lackawanna and Western Railroad Company’s Tax Assessment (No. 1), 224 Pa. 240, 73 A. 429 (1909); and Butler Area School District Appeal,
100 Pa. Commw. Ct. 452, 515 A.2d 326(1986).

Finally, we disagree with the county’s suggestion that these 600 taxpayers can be granted relief under the provisions of 72 P. S. § 5453.602(a)(ii). We remain firmly convinced that a reassessment limited to the areas covered in this particular appeal would be invalid. If we select these properties and approve an assessment methodology different from properties in the same class located elsewhere in the county, such a partial valuation runs afoul of the holdings in City of Lancaster an Croasdale, supra.

ORDER OF COURT
AND NOW, this 10th day of January, 1997, Carbon County and Carbon County Board of Assessment are ordered to conduct a reassessment of all propertied in Carbon County.

To that end, we further direct that Carbon County shall complete such county-wide reassessment within two (2) years form the date of the Order.

[1] Over six hundred Carbon County property owners have joined in these consolidated assessment appeals.
[2] “Under” and “over” refer to the whether the sale price/assessment ratio was higher or lower than the Carbon County common level ratio of 8.6%.
[3] See appellants’ “Exhibit #4”.
[4] STEB is the abbreviation for the State Tax Equalization Board.
[5] Common level ratio is the ratio of assessed value to current market value; and, the predetermined common level ratio is calculated annually by STEB.
[6] Although not on point with the issues in this case, in City of Harrisburg v. Dauphin County Board of Assessment Appeals, 677 A.2d 350 (Pa.Commw. 1996), the Court used COD evidence to support its finding of “a lack of uniformity”.
[7] Our review of the cases discloses that Carbon County is out-of-step with most of the other counties when it comes to assessment procedures. The over-whelming practice is to utilize the current market value or a base year market value.
[8] The case was appealed to the Commonwealth Court; however, we were unable to find a decision on the part of the Commonwealth Court concerning the ruling reached on appeal.
[9] The lawsuit in the City of Lancaster case was filed in 1987. Thus, the Court was dealing with approximately the same twenty-seven year hiatus as in this case at bar.

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