HARRISBURG - Property that has experienced environmental contamination – or “stigma” – can suffer devaluation, according to the state Supreme Court.
The court recently agreed with a trial court’s decision to accept a 5 percent devaluation to commercial properties’ value because of stigma, in Harley Davidson Motor Company v. Springettsbury Township.
The court’s decision is not a per se rule, according to attorney Sean O’Neill, who studied the case. Rather, it offers guidance to future contaminated property cases.
“That being said, even though the Supreme Court did not establish a rule as to devaluation for environmental stigma, the decision is useful precedent and can be cited to support arguments that the impact of environmental stigma on commercial/industrial property values is minimal,” O’Neill told the Pennsylvania Record.
In Harley-Davidson’s case, the percent of devaluation of the property was sought to determine the property tax valuation.
The property in question was contaminated between 1914 and 1964, when the United States Navy used it to operate a weapons manufacturing plant.
According to legal documents, the Navy, “in the course of their business, buried numerous containments – as well as unexploded military ordinance – in the subsurface strata.” Currently, Harley-Davidson uses the property to manufacture motorcycles.
In an analysis of the case written by O’Neill, he stressed that this case will provide “helpful authority” for people who want to sell contaminated property, and for people whose contaminated property has been appraised at full value for tax purposes.
“Appraisers consider environmental stigma in other contexts, such as estimating compensation in condemnation cases, or even just valuing a property to determine purchase price,” O’Neill told the Record.
“Appraisers are generally offering their opinion on the fair market value of a property, and so must consider the impact of environmental contamination or stigma on fair market value.”