The opinion of the court was delivered by: Senior Judge Kelley
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JAMES R. KELLEY, Senior Judge.
Chartiers Valley Industrial & Commercial Development Authority, Maurice A. Nernberg and Nancy N. Nernberg (hereinafter collectively referred to as "Owners")*fn1 appeal from the January 15, 2008 order of the Court of Common Pleas (trial court) ordering that the assessed value of their commercial property for years 2005-2007 is $306,300. We affirm.*fn2
Owners own a seven story office building located in downtown Pittsburgh (First Ward) at 301 Smithfield Street. Maurice Nernberg uses the first 4 floors of the building to conduct his law practice. The upper 3 floors are vacant. For the year 2005, the building was assigned an assessed value of $451,500 based upon an established predetermined ratio of 100%. Owners appealed the assessment and a hearing was held after which the Board of Property Assessment Appeals and Review (Board) reduced the building's assessed value to $306,300. Owners appealed the Board's reduction in assessment to the trial court.
The trial court conducted a de novo hearing on Owners' appeal on October 30, 2007, which covered the years 2005-2007. Owners and the taxing bodies agreed that the fair market value of the building as of 2002 is $306,300; therefore, under Allegheny County's method of assessment, the assessed value for the base year 2002 was also $306,300. Reproduced Record (R.R.) at 52a. Mr. Nernberg specifically informed the trial court that Owners were not attempting to take the property's current fair market value and reduce it. Id. Instead, Mr. Nernberg informed the trial court that the base year value had to be reduced to the common level ratio (CLR). Id. at 53a.
Before the trial court, Owners contended that the value of the building should be reduced further because in 2005-2007 other properties within Allegheny County were assessed at less than 100% of fair market value. In support, Owners submitted into evidence: (1) 15 property sales of other properties in 2004 in which the ratio of the total assessed values to the total sales prices is 60.13%; (2) 15 property sales of other properties in 2005 in which the ratio of the total assessed values to the total sales prices is 64.64%; and (3) 15 property sales of other properties in 2006 in which the ratio of the total assessed values to the total sales prices is 59.05%. Owners argued that the 2002 base year value of the building should be reduced so that the ratio of the total assessed value to actual value of the property, using 2002 assessed values, does not exceed 60.13% in 2004, 64.64% in 2005 and 59.05% for 2006.*fn3
The trial court determined that none of the 45 property sales for the years 2004-2006 involved properties located in downtown Pittsburgh which is comprised of the First and Second Wards. Most of the 45 properties are single-family residential properties and Mr. Nernberg testified that a person in his office selected the properties. Mr. Nernberg did not explain why these properties were selected.
The taxing bodies presented an expert witness who described what she believed to be all arms-length sales of commercial properties in the First and Second Wards of Pittsburgh for 2004, 2005, 2006 and 2007 (ending June 2007). In the foregoing years, the total sales prices of these properties exceeded their total assessed values.
The trial court determined that since Owners stipulated that the fair market value of their building for the 2002 base year is its assessed value, Owners' property is valued in the same fashion as all other properties are intended to be valued. The trial court pointed out that because Owners have stipulated that the assessed value of their property does not exceed the actual fair market value for 2002, the theory that their property's assessed value exceeds the fair market value using the base year value is not helpful to Owners. While a taxpayer may also seek a reduction in the assessed value by showing that the actual value of the property as reduced by the CLR is less than the 2002 base year value, the trial court pointed out that Owners have not elected to challenge the assessed value on these grounds.
The trial court also rejected Owners' contention that they were entitled to a reduction based on Downingtown Area School District v. Chester County Board of Assessment Appeals, 590 Pa. 459, 913 A.2d 914 (2006), which is based on the Uniformity Clause of the Pennsylvania Constitution.*fn4 Therein, the Supreme Court held a taxpayer has a right to claim his assessment violates the Uniformity Clause even where the difference between the predetermined ratio and the CLR is less than 15%. The Supreme Court also permitted uniformity challenges based on "meaningful sub-classifications." In short, the Supreme Court held that assessments could also be challenged based on the lack of uniformity in the assessment of properties having like characteristics and qualities.
With respect to Owners' appeal, the trial court noted that the only sub-classification into which Owners' property might fall would involve office buildings; however, the taxing bodies introduced credible evidence showing that downtown office buildings are not under assessed. Consequently, Owners cannot contend that their office building is over assessed in comparison to other office buildings.
In addition, the trial court pointed out that Owners did not rely on sales of similar kinds of businesses or properties but instead relied upon sales of mostly residential properties for the years 2004-2006. This evidence cannot support a claim that office buildings are a separate sub-classification that is over assessed. Finally, the trial court stated that this case was not controlled by Downingtown as the present matter does not involve a challenge based on either the CLR for Allegheny County or a lack of uniformity of properties having like characteristics and qualities. Accordingly, the trial court found that the assessed value of Owners' property for years 2005-2007 is $306,300. This appeal followed.*fn5
Owners raise the following issues for our review: (1) Whether downtown office buildings are a permissible sub-classification of real estate under the assessment law so that they may be assessed differently than other properties; and (2) Whether it is constitutionally permissible to assess ...