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REICHARD-COULSTON v. REVENUE APPEALS BOARD NORTHAMPTON COUNTY (11/17/86)

decided: November 17, 1986.

REICHARD-COULSTON, INC., APPELLANT
v.
REVENUE APPEALS BOARD NORTHAMPTON COUNTY, APPELLEE



Appeal from the Order of the Court of Common Pleas of Northampton County in the case of Reichard-Coulston, Inc. v. Revenue Appeals Board, Northampton County, No. 1983-C-8320.

COUNSEL

Seth I. Davenport, with him, John E. Garippa, for appellant.

Leo DeVito, Jr., with him, John J. Bartos, for appellee.

Judges Craig and Barry, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Barry. Dissenting Opinion by Senior Judge Kalish.

Author: Barry

[ 102 Pa. Commw. Page 228]

This appeal results from an order of the Northampton County Court of Common Pleas (trial court) which established the assessment value of certain property belonging to the appellant, Reichard-Coulston, Inc. The taxing authority, Revenue Appeals Board of Northampton County, is the respondent in the present appeal.

The involved property consists of approximately 20.5 acres on which is erected a heavy manufacturing facility owned and operated by the appellant. The facility consists

[ 102 Pa. Commw. Page 229]

    of sixteen buildings, many of which were built in the late nineteenth and early twentieth centuries, though improvements and additions have also recently been made. The undertaking at the facility is the manufacture of iron oxide pigments for the paint industry.

After the taxing authority had established its 1984 assessment on appellant's property, the latter sought de novo review in the trial court. At trial, the parties stipulated that the Common Level Ratio (CLR) for the county*fn1 was 22.4%, and the testimony presented thereafter thus addressed only the market value of the property. Experts of both parties testified to such values using the "Market Data Approach" and the "Cost Approach."

Noting that it was "not bound to accept the valuation testimony of the experts," the trial court concluded that the cost approach was the most appropriate for the involved property. The trial court then performed the following calculation:

Using the Cost Approach, we conclude that the market value of the land in the 1984 tax year was $1,163,840.00. This figure is reached by taking a reproduction cost new of $3,012,800.00 and subtracting a depreciation rate of 70%, to arrive at $903,840.00. The value of the land itself of $260,000.00 is then added, arriving at the final value of $1,163,840.00.

Trial Court op. at 5. The trial court in turn applied the CLR of 22.4% to the market value, establishing the assessment value at $260,700.16. Appellant then initiated the present appeal.

[ 102 Pa. Commw. Page 230]

Our own scope of review is limited to determining whether the trial court abused its discretion, committed an error of law, or whether its decision is supported by the evidence. Appeal of Duquesne Club, 92 Pa. Commonwealth Ct. 15, 17 n.1, 498 A.2d 459, 460 n.1 (1985). Appellant maintains, as its only argument, that the trial court committed an error of law in relying on the cost approach in determining the market value of the property. We disagree and hence affirm.

The challenged method of property valuation entails (1) estimating the value of the land "assumed vacant and available for its highest and best use;"*fn2 (2) estimating the reproduction cost or "cost new" of the facility;*fn3 (3) subtracting from the latter amount the facility's depreciation;*fn4 and (4), finally, adding to this depreciated balance the value of the land ((1), above).*fn5 This method is in contrast to the market approach, under which comparative sales are considered in order to establish a value corresponding to "the price at which a purchaser, willing but not obligated to buy, would pay an owner, willing but not obligated to sell, taking into consideration all uses to which the property is adopted and ...


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