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Macy's Inc. v. Board of Property Assessment

IN THE COMMONWEALTH COURT OF PENNSYLVANIA


January 22, 2013

MACY'S INC.
v.
BOARD OF PROPERTY ASSESSMENT, APPEALS, REVIEW OF ALLEGHENY COUNTY LOT AND BLOCK 130-J-110 BOROUGH OF HOMESTEAD APPEAL OF: STEEL VALLEY SCHOOL DISTRICT

The opinion of the court was delivered by: Dan Pellegrini, President Judge

Argued: November 13, 2012

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BERNARD L. McGINLEY, Judge (P.) HONORABLE ANNE E. COVEY, Judge

OPINION BY PRESIDENT JUDGE PELLEGRINI

Steel Valley School District (District) appeals from an order of the Court of Common Pleas of Allegheny County (trial court) adopting the recommendation of the Special Board of Viewers (Board of Viewers)*fn1 fixing the assessed value of real property owned by Macy's Inc. (Macy's) located in the District as $6,330,000 for 2009; $7,450,000 for 2010; and $8,500,000 for 2011. For the reasons that follow, we affirm in part and vacate and remand in part.

The subject property is a 2.08-acre site improved with a two-story retail building located in the Waterfront Town Center in the Borough of Homestead, Allegheny County, Pennsylvania. On March 31, 2009, Macy's appealed the property's assessment for tax year 2009 to the Board of Property Assessment, Appeals and Review of Allegheny County (Board). Following the Board's denial of Macy's petition, Macy's appealed to the trial court. On July 28, 2011, the Board of Viewers of Allegheny County, acting as Board of Viewers for the trial court, held an evidentiary hearing on the property's assessments for the 2009, 2010 and 2011 tax years.*fn2

At the hearing, the Board of Viewers took judicial notice of Allegheny County's (County) assessed value of $10,723,600 for tax years 2009, 2010 and 2011; and heard testimony from both parties regarding the fair market value of the property. Gary E. Heiland (Heiland), a commercial real estate appraiser testifying for Macy's, opined that the property's fair market value was $3,240,000 as of March 31, 2009, and $3,240,000 as of January 1, 2010. Heiland did not offer testimony as to the property's fair market value for 2011. The District's expert witness, Gary R. Bodnar (Bodnar), a certified general real estate appraiser, opined that the property's fair market value for 2009 through 2011 was $8,750,000. Following the hearing, the Board of Viewers declared the assessed value of the property as $6,330,000 for 2009; $7,450,000 for 2010; and $8,500,000 for 2011. The District then filed objections to the Board of Viewers' recommendation with the trial court challenging its determination for the years 2009 and 2011. The trial court overruled the District's objections and adopted the Board of Viewers' recommendation. This appeal by the District followed.*fn3

On appeal, the District first contends that the trial court erred in adopting the Board of Viewers' recommendation of fair market value for 2009 because Macy's expert testified of the value of the property on March 31, 2009, not January 1, 2009, the effective date of the assessment, and, thus, did not successfully rebut the assessment record.*fn4 The District based its position on Section 10 of the Second Class County Assessment Law, Act of June 21, 1939, P.L. 626, as amended,72 P.S. §5452.10, which provides, in relevant part:

(c) In any appeal of an assessment the board[*fn5 ] shall make the following determinations:

(1) The current fair market value for the tax year in question.

72 P.S. §5452.10(c)(1). The District contends that section provides that the Board must determine the fair market value of a property as of January 1, regardless of what date the assessment appeal is filed, because in a Second Class County, a "tax year" commences on January 1 and ends on December 31. Under the District's interpretation, any appraisal not based on a property's value as of January 1, 2009, is a nullity, and, therefore, Heiland's valuation of the property as of March 31, 2009, is irrelevant and has no probative value as to fair market value. According to the District, then, the only relevant evidence before the Board of Viewers was the opinion of the District's expert valuing the property at $8,750,000, and the County assessment of $10,723,600 for 2009 and, therefore, the Board of Viewers erred in recommending a fair market value of $6,330,000 for that year.

Macy's contends that Section 10 of the Second Class County Assessment Law does not apply because it does not specify the date which the Board shall use to determine market value, only the tax year. Because the Second Class County Assessment Law does not apply, it argues that Section 511 of the General County Assessment Law then applies.*fn6 That section provides, in relevant part:

(b) In any appeal of an assessment.the board for the assessment and revision of taxes, shall make the following determinations:

(1) The market value as of the date such appeal was filed.

72 P.S. §5020-511(b)(1). Because that section requires a determination of "market value as of the date such appeal was filed," and it filed its appeal on March 31, 2009, Macy's argues that its appraisal properly determined the market value for the 2009 tax year.

We agree with the trial court that consideration of evidence of the property's market value as of the March 31, 2009 filing date of the appeal was proper. Section 10 of the Second Class County Assessment Law only requires the Board to determine the current fair market value of a property for the tax year in question, while Section 511 of the General County Assessment Law provides the date on which the property is to be valued for that tax year in question where an appeal is to be taken.*fn7 Because March 31, 2009, was the correct date, Macy's expert's opinion of fair market value for 2009 constituted substantial evidence which rebutted the presumed validity of the assessment records for 2009 and upon which the trial court could determine fair market value for that year. Accordingly, we find no error of law or abuse of discretion in the trial court's adoption of the Board of Viewers' recommendation of fair market value for 2009.*fn8

The District also challenges the trial court's determination of fair market value of $8,500,000 for 2011 because the only evidence introduced before the Board of Viewers was the County's assessment of $10,723,600 and the District's expert testimony opining a fair market value of $8,750,000. The District alleges that the trial court abused its discretion in failing to set forth its rationale for adopting the Board of Viewers' recommendation where that recommendation departed from the evidence presented.

In tax assessment cases, the duty of the trial court is to determine the property's current market value on the basis of competent, credible and relevant evidence. Gilmour Properties v. Board of Assessment Appeals of Somerset County, 873 A.2d 64, 66 n.3 (Pa. Cmwlth. 2007). The function of the trial judge in a tax assessment case is not to independently value the property but to weigh the conflicting testimony and values expressed by the competing experts and arrive at a valuation based on the credibility of their opinions. Id. However, in a single-expert case, a trial court is not required to accept the uncontradicted opinion of that expert. Green v. Schuylkill County Bd. of Assessment Appeals, 565 Pa. 185, 205-206, 772 A.2d 419, 432 (2001) ("To preclude the trial court in a single-expert case from determining that the appropriate valuation lies somewhere between the official valuation and the inevitably lesser valuation offered by the taxpayer's expert is to attribute to the expert's valuation a definitiveness that it does not automatically possess, and to limit unnecessarily the trial court's ability to perform its legislatively designated role as factfinder.")

However, our Supreme Court in Green stated that in such cases, the trial court must clearly state its reasons for departing from the expert's valuation:

[i]n making a determination in a tax assessment appeal, the trial court must state the basis and reasons for its decision. . This requirement is as significant to a single-expert case as to a case with competing experts.indeed, it may be more so. Where the trial court is presented with conflicting testimony by equally credible experts.it is appropriate for the court to conclude that the fair market value of the subject property is somewhere between the values presented by the parties. . Where, however, a single expert testifies as to fair market value, and the trial court's valuation departs from that figure, there is no basis for assuming that the trial court's valuation is, ipso facto, appropriate. Accordingly, the trial court's reasoning must be stated on the record so that the reviewing court may determine if the trial court's departure from the expert's valuation is warranted.

565 Pa. at 208, 772 A.2d at 433.

Here, the Board of Viewers provided no explanation as to why it reduced the value to an amount below the value opined by the District's expert. The trial court, in adopting the Board of Viewers' recommendation, provided only the following rationale:

[T]he [Board of Viewers] reduced the assessed value of [the District's] expert by only $250,000, a reduction of less than three percent of the fair market value. Thus, this case does not present a fact situation in which Green was applied to support a substantial reduction in value.

(March 8, 2012 Trial Court Opinion at 3-4, n. 4). However, Green requires an explanation of why the deviation was made from the evidence and does not excuse an explanation just because the deviation is minor in the context of that appeal.

Accordingly, the trial court's order is affirmed in part and vacated and remanded in part. The trial court's determination of the property's value for tax year 2009 is affirmed. The trial court's determination of the property's value for tax year 2011 is vacated and remanded with the instruction to give reasons why it did not follow the only evidence on the record that the fair market value of the property for tax year 2011 was $8,750,000.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

No. 2373 C.D. 2011 :

Macy's Inc. : v. Board of Property Assessment, : Appeals, Review of : Allegheny County Lot and Block 130-J-110 : Borough of Homestead : Appeal of: Steel Valley School : District :

ORDER

AND NOW, this 22nd day of January, 2013, the order of the Court of Common Pleas of Allegheny County (trial court), dated December 15, 2011, at No. BV09-001488, is affirmed in part and vacated and remanded in part. The trial court's determination of the property's value for tax year 2009 is affirmed. The trial court's determination of the property's value for tax year 2011 is vacated and remanded with the instruction to give reasons within sixty (60) days of the date of this Order as to why it did not follow the only evidence on the record that the fair market value of the property for tax year 2011 was $8,750,000.

Jurisdiction relinquished.

DAN PELLEGRINI, President Judge


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