Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

APPEAL JOHNSTOWN ASSOCIATES FROM FINAL ASSESSMENT BOARD ASSESSMENT APPEALS CAMBRIA COUNTY (07/02/81)

decided: July 2, 1981.

IN RE APPEAL OF JOHNSTOWN ASSOCIATES FROM THE FINAL ASSESSMENT OF THE BOARD OF ASSESSMENT APPEALS OF CAMBRIA COUNTY, PENNSYLVANIA. APPEAL OF JOHNSTOWN ASSOCIATES


No. 80-1-138, Appeal of Petitioner, Johntown Associates, from the Order of Commonwealth Court of Pennsylvania at No. 1263 C.D. 1979 affirming the Order of the Court of Common Pleas of Cambria County, No. 5163 of 1978.

COUNSEL

Philip Baskin, Alan C. Jacobson, Baskin & Sears, James J. Flaherty, Pittsburgh, for appellant.

John W. Taylor, Sol. for Cambria County, Ebensburg, for appellee.

O'Brien, C. J., and Roberts, Nix, Larsen, Flaherty, Kauffman and Wilkinson, JJ. Nix, J., concurs in the result. O'Brien, and Roberts, JJ., would dismiss the appeal as improvidently granted.

Author: Flaherty

[ 494 Pa. Page 436]

OPINION OF THE COURT

This is an appeal from an Order of the Commonwealth Court*fn1 which affirmed an Order of the Court of Common Pleas of Cambria County dismissing the appeal of Johnstown Associates from a 1977 real estate tax assessment of the Cambria County Board of Assessment Appeals.

In 1973, the appellant, Johnstown Associates (hereinafter taxpayer), constructed a 165 unit low-income apartment building in the City of Johnstown. The project was subsidized through the Department of Housing and Urban Development (HUD), under a Section 236 program (12 U.S.C. ยง 1715z-1), to the extent of all but one percent of the interest payable on the property's mortgage. Rents for the apartments are fixed by HUD below rents prevailing for comparable non-subsidized units. Rental profit increases, if any, cannot be retained by the taxpayer; nor can the property be sold during the 16 1/2 year period following construction. The building in question is the only federally-subsidized housing project in Cambria County.

The Board of Assessment determined the fair market value of taxpayer's property to be $1,807,910, and, pursuant to its normal practice of assessing all property at 35% of market value, assessed the property at $632,770. Entered

[ 494 Pa. Page 437]

    into evidence in the Court of Common Pleas was an assessment record which appeared to list the $1,807,910 figure as the sum of land value plus building replacement cost less depreciation. Replacement cost less depreciation cannot be used as a factor in computing the market value of a building for tax purposes. Appeal of Pennsylvania Northern Lights Shoppers City, 419 Pa. 31, 213 A.2d 268 (1965). However, Cambria County's chief assessor testified that the appraisal was in fact based on the capitalization of income approach to value.*fn2 The property's net income of $161,127 was capitalized by the assessor at a rate of 8.84%, which consisted of 4.4% for taxes, 2.5% for depreciation, .9% for interest, and 1% for equity investment. By this method, a value of $1,823,000 was indicated; thus, the capitalization method of appraisal yielded a value that exceeded, by $15,090, the fair market value listed on the assessment record. The Court of Common Pleas affirmed the assessment, thereby adopting the lower initial valuation of $1,807,910.

The taxpayer claims that the effect of the assessment is to require that too high a proportion of the property's gross income, i. e., 24.9%, be applied to the payment of real estate taxes. In support of this position, evidence was introduced indicating that the combined national and regional average percentages of gross income allocated to real estate tax payments on non-subsidized apartment buildings is approximately 11%. In short, the taxpayer argues that a subsidized apartment project's value should be set at a level which will result in real estate taxes being owed which bear the same relation to gross income as the taxes on non-subsidized apartment buildings bear to their incomes, i. e., 11%. If the 11% ratio were to be applied in the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.