PITTSBURGH – A senior residential development has reiterated claims that the East Allegheny School District has violated the Pennsylvania Constitution’s Uniformity Clause and the U.S. Constitution’s Equal Protection Clause by selectively filing increase appeals against the assessments of properties recently purchased by new buyers, while leaving unchanged the assessments of properties not recently sold – and opposed their preliminary objections refuting that claim.
CPF Living Communities II – Pleasant, LLC first filed suit in the Allegheny County Court of Common Pleas on Oct. 6 versus East Allegheny School District. Both parties are of North Versailles.
The plaintiff is the owner and taxpayer for the property located at 120 Mosside Boulevard, in North Versailles and within the School District’s borders.
“The property is 119,868 square feet improved with 127 senior housing units. On or about July 16, 2019, taxpayers recorded their purchase of the subject property. On or about March 30, 2020, School District filed to the Allegheny County Board of Property Assessments Appeals and Review an appeal of the assessment of Taxpayers’ Property. Following a hearing, the BPAAR issued its disposition issuing a no-change in the assessment of the subject property. School District appealed the Board’s disposition to the Allegheny County Court of Common Pleas at BV 20-001318, which is currently pending,” the suit stated.
“Under Allegheny County Local Rules of Court, taxpayers in assessment appeals are not permitted to take discovery from School Districts or other taxing bodies; therefore, School District has not been required to state on record why it appealed taxpayers’ assessment. Upon information and belief, School District has no formal policy to govern its selection of properties for tax assessment appeals. Upon information and belief, School District has a pattern of filing assessment appeals against recently-purchased properties. Upon information and belief, School District initiated this appeal directly because it became aware of taxpayers’ purchase of the property. Upon information and belief, School District selectively files assessment appeals against recently-purchased properties while not appealing the assessments of properties that have not recently sold.”
The suit added that the subject property is currently assessed at a fair market value of $11,970,750, or $94,257 per unit – but that at the Board hearing, the School District sought to increase the fair market value of the property to $20,000,000 or $160,000 per unit.
“School District’s scheme of selectively targeting recently-purchased properties creates fundamental unfairness by taxing substantially similar properties at drastically different effective rates based solely on when a taxpayer purchased. School District’s scheme unconstitutionally creates a subclass of recently-purchased properties. The Pennsylvania Constitution’s Uniformity Clause requires that ‘all taxes shall be uniform upon the same class of subjects.’ The Uniformity Clause prohibits School District from treating recently-purchased properties disparately from properties have not recently sold,” the suit said.
“In this case, the School District effectively stands in the shoes of the assessor. Allegheny County has not implemented a countywide reassessment since 2012, after it was ordered to do so upon a finding that the County’s systematic application of its base year assessment method resulted in unconstitutional disparities. The government can reassess a property only when the property has been subdivided, has undergone a physical change, or within the context of a county-wide reassessment. School District is systematically and selectively causing spot assessments of recently-purchased properties. By treating taxpayers and other owners of recently-purchased properties disparately from other taxpayers, the School District is violating both the Pennsylvania Constitution and the United States Constitution.”
The School District filed preliminary objections on Nov. 16, which claimed that the plaintiff senior development failed to state its claims under the state and federal laws it accused the defendant of violating.
“Plaintiff’s complaint fails to set forth a claim for which the law provides recovery because the alleged methodology of Tax Assessment Appeals by the District did not violate the Uniformity Clause of the Pennsylvania Constitution. Plaintiff’s complaint fails to set forth a viable Section 1983 claim against the District for a violation of Equal Protection Rights under the 14th Amendment of the United States Constitution. The Equal Protection Clause under the 14th Amendment requires that no state deny any person within its jurisdiction the equal protection of the laws. However, the Equal Protection Clause does not forbid classifications. It simply keeps governmental decision makers from treating differently persons who are in relevant respects alike. As the alleged methodology of taking appeals by the District does not create spot assessment or a protectable subclass under the Uniformity Clause of the Pennsylvania Constitution, there is also no violation of the plaintiff’s 14th Amendment rights as a matter of law,” according to the objections, in part.
“CPF Living has [also] failed to exhaust its administrative remedies established under 72 PS Section 5020 — 501, et. seq, regarding appeals of Real Estate Tax Assessments. CPF Living has acknowledged in the complaint that it does engage in the administrative process. Until there is a final decision on the appeal of the School District, CPF Living has not exhausted its administrative remedies.”
UPDATE
The plaintiff filed an opposition brief on Feb. 9, arguing both that the defendant failed to state a claim upon which relief could be granted, and that the statutory appeals process is inadequate to address constitutional claims raised by a taxpayer in a complaint for declaratory judgment.
“Defendant’s claims are misplaced, as both the Pennsylvania and U.S. Constitutions prohibit School District from treating recently-purchased properties disparately from properties that have not recently sold. The Pennsylvania Constitution’s Uniformity Clause requires that ‘all taxes shall be uniform upon the same class of subjects.’ As stated by the Supreme Court of Pennsylvania, ‘each taxpayer, no matter how great or small, has the right to demand that his property shall be assessed upon a uniform valuation of other properties belonging to the same class and within the territorial limits of the authority levying the tax.’ The Pennsylvania Commonwealth Court elaborated that ‘this is not an idle thought in the mind of the taxpayer, nor is it a mere speculative theory advocated by learned writers on the subject; but it is a fundamental principle written into the Constitutions and statutes of almost every state in this country.’ It also held that ‘it is axiomatic that when a taxing authority, such as a school district, exercises its discretion to appeal a real property assessment, it must do so within constitutional boundaries,” the brief stated.
“Where a state’s laws require uniformity in property taxation, including Pennsylvania, the United States Supreme Court has held that disparity between ‘assessments of properties not recently sold’ and ‘assessments based on a recent purchase price’ violated the Equal Protection Clause of the 14th Amendment to the United States Constitution. Here, the School District stands in the shoes of an assessor. While defendant asserts that owners of newly-purchased property do not represent a protected subclass, this is not settled law. Moreover, even where a selection scheme is constitutional, this does not mean that it has been applied uniformly. As such, taxpayer has properly averred a good faith constitutional claim that it seeks to bolster through discovery. For these reasons, defendant’s preliminary objection as per Pennsylvania Rule of Civil Procedure 1028(a)(4) should be stricken.”
Despite the defendant’s argument that as per Pennsylvania Rule of Civil Procedure 1028(a)(7), the taxpayer has not exhausted its statutory remedies, the plaintiff countered that the Supreme Court of Pennsylvania has expressly held that this argument is without merit in Valley Forge Towers Apts. v. Upper Merion School District, and Allegheny County courts have echoed this sentiment in BRL Orangeburg Properties, Inc., v. Allegheny County Bd. of Assessment Appeals and Review.
For a lone count of negligence, the plaintiff is seeking a declaration that the School District’s selective use of tax assessment appeals to charge owners of recently-purchased properties a disproportionate share of the property tax burden is in violation of the Uniformity Clause of the Pennsylvania Constitution; that taxpayers in Allegheny County Real Estate Tax Assessment Appeal matters are entitled to serve discovery upon taxing authorities, including but not limited to, interrogatories and requests for production of documents seeking information relative to a school district’s method or policy for selecting the properties it appeals; an injunction preventing the District from selectively pursuing appeals of recently-purchased properties, plus attorney’s fees and such other relief as the Court deems just and proper.
The plaintiff is represented by Sharon F. DiPaolo, Ryan J. Kammerer, Brendan B. Kelly and Christina N. Gongaware of Siegel Jennings, in Pittsburgh.
The defendant is represented by Daniel P. Beisler of Beisler Law, in North Huntingdon.
Allegheny County Court of Common Pleas case GD-23-011663
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com