Judge dismisses lawsuit filed over Philadelphia's property tax assessment system

By Jon Campisi | Oct 12, 2011

A lawsuit that sought to declare Philadelphia’s system for assessing property value in the city illegal and unconstitutional has been dismissed by a city judge.

Philadelphia Common Pleas Court Judge Idee C. Fox last week issued the order to dismiss the lawsuit, which was first filed by attorney Kenneth L. Metzner on Jan. 28 of this year on behalf of 18 plaintiffs challenging the city’s real estate tax assessment procedures.

The lead plaintiff in the case was Brett Mandel, a strong critic of the system who once ran for city controller.

The lawsuit sought declaratory judgment, reform of the current city tax assessment and citywide reassessment systems, court ordered notification of all currently over-assessed properties in the city, restrictions on future tax increases, implementation of procedures to strike tax liens imposed pursuant to past over-assessments, and a prohibition on new tax liens on over-assessed properties.

Ten of the 18 plaintiffs in the suit claimed their properties are assessed at a higher percentage of the property’s market value than the average rate in the city.

The city had filed preliminary objections after the suit was filed contending that the plaintiffs had a lack of standing to sue, a failure to plead with sufficient specificity, and claims for unavailable forms of relief.

On Oct. 6, Common Pleas Court Judge Idee C. Fox dismissed the suit in its entirety, essentially ruling that the plaintiffs had no standing to sue.

The suit claimed that the city’s system for assessing and taxing properties violates the Uniformity Clause of the Pennsylvania Constitution, the General County Assessment Law, the First Class County Assessment Law, and the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution.

It also claimed that the moratorium on re-assessments that was announced by Mayor Nutter in January 2010 and imposed by the city was illegal and unenforceable, that the 9.9 percent property tax increases enacted by the city for tax years 2011 and 2012 are illegal and unenforceable, and that the city’s policy of setting market value of certain properties at 35 percent of their actual value is illegal and unenforceable.

The suit sought to compel the city to reassess, as “expeditiously as possible,” all properties located in the city at their fair market value, to protect taxpayers from “unmanageable increases in their property tax bills,” order the city to return to taxpayers any revenue the city collected as a result of the 9.9 percent property tax increase, and prohibit the city from proceeding with any sheriff’s sales or auctions of properties premised on unpaid taxes of properties in the city. The suit also sought attorney’s fees.

The suit had also sought judicial intervention in establishing and maintaining a “legitimate property assessment system” for the city.

“Judicial intervention is necessitated by the City’s long-standing failure to address or correct the known inequities of its property assessment system and practices, which has resulted in an arbitrary and discriminatory scheme of property taxation that is unconstitutional and otherwise illegal,” the lawsuit had maintained.

The suit claimed that for years, elected officials and policy-makers have “publicly decried the city’s faulty system for assessing the value of real property prior to its taxation.” Still, the suit claimed, “they knowingly permitted the dysfunctional and illegal system to become worse.”

“The city’s decision-makers have failed and refused to take the steps necessary to implement assessment practices that are fair, accurate, transparent or, most importantly, legal,” the suit had contended.

The suit claimed that the city collects about $1 billion per year in property taxes on about 579,000 taxable properties. About 60 percent of that goes to the school district, while the other 40 percent goes to city coffers.

The suit claimed that since at least 2004, the year the Board of Revision of Taxes began working on the Full Value/Actual Value Initiative, the city had taken “numerous steps to delay, and prevent implementation of, said initiative.”

The suit claimed that the city’s politicians feared property assessment reform.

In May of last year, Philadelphia voters approved a charter change abolishing the 156-year old Board of Revision of Taxes. The referendum came on the heels of a Philadelphia Inquirer investigation that singled out widespread problems at the agency.

Many who opposed the BRT argued that the agency, which both set property values and heard appeals, had a conflicting mission.

The BRT still hears appeals, but the mayoral administration has since delegated its assessment duties to a newly formed Office of Property Assessment.

In her ruling, Judge Fox said the plaintiffs in this particular case had to be aggrieved in order for the suit to move forward. And to be aggrieved, she said, the plaintiffs had to have suffered some “discernible adverse effect.” Some of the claims in the suit failed to show this, she ruled.

For example, on the claim of so-called “spot” assessing, she wrote, “Nowhere do plaintiffs actually claim that the city’s alleged spot reassessment caused an increase in their property tax rates. Nor do they identify, precisely when such a reassessment occurred, or the difference between the prior rate of assessment and the current rate of assessment. Without averments of these facts, the plaintiffs have not pled that they suffered any adverse effect or that such effect was a consequence of the spot reassessment.”

The suit’s Annual Assessment claim failed for a similar reason, the judge wrote. While the General County Assessment Law requires that assessors value each parcel of property within the districts to which they are assigned, the plaintiffs' claim suffers because they aver this in a general fashion, and don’t show specifics with regard to how the individual plaintiffs have allegedly been aggrieved by the city’s failure to properly assess properties, she wrote.

“Plaintiffs do not claim that the city’s failure to assess annually has had any particular effect on their particular property assessments,” the ruling stated. “It is thus merely a generalized grievance and not a ‘discernible adverse affect.’”

The case number was 110103848.

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