The taxpayers of our community are unjustly forced to pay more than their fair share of the cost of government when other property owners “game” the system and pay less than their fair share in real estate taxes. In Pennsylvania, our law provides for the “principle that a taxpayer should pay no more or no less than his proportionate share of the cost of government.[1]”
The Law Firm of DiOrio & Sereni, LLP successfully challenged on appeal a trial court’s decision that would have prohibited consideration of any potential income that a property owner receives from the placement of a billboard on property in arriving at a fair market value assessment.
In a matter of first impression (meaning that this issue had never been decided before by the appellate courts), the Commonwealth Court of Pennsylvania held in In re: Consolidated Appeals of Chester Upland School District[2] that a commercial property owner was wrong to assert that its property’s suitability for billboard use and the income it earns for billboard use should be ignored when determining the fair amount of real estate taxes this property owner should pay.
In Pennsylvania, a billboard and the structure that supports it cannot be considered as part of an assessment of property pursuant to statutory law. However, a court in a tax assessment appeal first determines the actual value of the property and then converts the actual value to the property’s assessment by applying the county’s common level ratio. When real estate is subject to a lease, the value of the lease to the property owner cannot be disregarded in valuing the property. Thus, when a property owner grants an easement or leases its property to an owner of a billboard, the property is considered to be income-producing property which cannot be disregarded in valuing the property.
The Commonwealth Court cautioned however that an appraiser must not indirectly value the billboard itself by considering the revenue generated from the number of advertisements that are placed on that billboard. This type of “value-in-use” which values the business activity conducted on a property is improper when valuing real estate tax assessments in Pennsylvania.
Therefore, the Commonwealth Court concluded that a property’s suitability to a billboard use and income earned by a property owner from the rental of the property to a billboard operator are not excluded from a fair market valuation under Pennsylvania law, thereby ensuring that our taxpayers do not pay this property owner’s fair share of the cost of our government.
The Law Firm of DiOrio & Sereni, LLP is a full-service law firm in Media, Delaware County, Pennsylvania. We strive to help people, businesses and institutions throughout Southeastern Pennsylvania solve legal problems – and even prevent legal problems before they occur. To learn more about the full range of our specific practice areas, please visit www.dioriosereni.com. or contact Pamela A. Lee, Esquire at 610-565-5700 or at [email protected]
[1] Deitch Company v Board of Property Assessment, 209 A.2d 397, 401 (Pa. 1965).
[2] 2018 WL 6797482 (Pa. Cmwlth. 2018)
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