No. 80-3-794, Appeal from the Order of the Commonwealth Court, at No. 1730 C.D. 1979 and No. 1821 C.D. 1979, dated August 21, 1980, reversing Orders of the Court of Common Pleas of Philadelphia at No. 1156 March Term, 1976, No. 861 March Term, 1977 and No. 2860 February Term, 1978, dated July 18, 1979.
Judith N. Dean, Alan J. Davis, Philadelphia, for appellants.
Henry T. Reath, David A. Scholl, Christopher F. Stouffer, Francis J. Moran, Philadelphia, for appellee.
Wallace J. Knox, Erie, for County of Erie, etc. amicus curiae.
Roberts, Nix, Larsen, Flaherty and Kauffman, JJ. Larsen, J., files a dissenting opinion. O'Brien, C. J., and Wilkinson, J., did not participate in the consideration or decision of this case.
This is a dispute between a taxpayer and the Board of Revision of Taxes of Philadelphia over the assessment of real property. At issue is whether the Court of Common Pleas of Philadelphia applied a proper method of calculating the taxing district's "common level" ratio of assessments to fair market values. Unlike the Commonwealth Court, we are of the view that the court of common pleas committed neither error of law nor abuse of discretion. Hence we reverse.
The concept of common-level ratio was fully set forth in Deitch Co. v. Allegheny County Board of Property Assessment, 417 Pa. 213, 209 A.2d 397 (1965). There, based on the uniformity-of-taxation requirement of our Constitution, art. VIII, § 1, and "the principle that a taxpayer should pay no
more or no less than his proportionate share of the cost of government," 417 Pa. at 220, 209 A.2d at 401, this Court held that an owner of property is entitled to have his assessment reduced to conform with the common-level of assessments in the taxing district. Id. See Siegal v. City of Newark, 38 N.J. 57, 183 A.2d 21 (1962); Comment, "The Road to Uniformity in Real Estate Taxation: Valuation and Appeal," 124 U.Pa.L.Rev. 1418 (1976); Note, "Inequality in Property Tax Assessments: New Cures for an Old Ill," 75 Harv.L.Rev. 1374 (1962). In explaining the term "common level," Deitch stated:
"Where the evidence shows that the assessors have applied a fixed ratio of assessed to market value throughout the taxing district, then that ratio would constitute the common level. However, where the evidence indicates that no such ratio has been applied, and that ratios vary widely in the district, the average of such ratios may be considered the 'common level'. Siegal v. City of Newark, supra, at 64, 183 A.2d at 24. Furthermore, it may be that the evidence will show some percentage about which the bulk of individual assessments tend to cluster, in which event such percentage might be acceptable as the common level. Ibid."
417 Pa. at 220-21, 209 A.2d at 401 (footnote omitted) (emphasis in original).
This "common level" requirement does not permit a taxing district to apply one assessment-to-fair-market-value ratio to one use-type of property such as residential and a different ratio to another use-type such as commercial or industrial. Rather, "all properties are comparable in constructing the appropriate ratio of assessed value to market value. This is because the uniformity requirement of the Constitution of Pennsylvania has been construed to require that all real estate is a class which is entitled to uniform treatment." 417 Pa. at 223, 209 A.2d at 402 (citing cases). Accord, F. W. Woolworth Co. Tax Assessment Case, 426 Pa. 583, 235 A.2d 793 (1967); McKnight Shopping Center, Inc. v. Allegheny County Board of Property Assessment, 417 Pa. 234, 209 A.2d 389 (1965).
Practical considerations of course prohibit the construction of a common-level ratio by way of an evaluation of the assessment and fair market value of each and every parcel of realty in the taxing district. Thus Deitch permits the construction of the common-level ratio by "any relevant evidence." 417 Pa. at 223, 209 A.2d at 403. Specifically recognized as a means of constructing the common-level ratio are sales data.
"It would be . . . satisfactory to produce evidence regarding the ratios of assessed values to market values as the latter are reflected in actual sales of any other real estate in the taxing district for a reasonable period prior to the assessment date. Thus, for example, the taxpayer's expert witness or witnesses could select a number of recent representative sales and offer testimony with respect to such sales as proof of the ratio in the taxing district."
Both parties have chosen to utilize sales data to construct their proposed ratios. However, the parties have chosen different methods to analyze the data. The present disagreement is over which method ...