111 A.3d 267
Pa. Commw. Ct.2015Background
- Aetna appealed Montgomery County real estate tax assessments for 980 Jolly Road (a 155,614 SF, single-owner, owner-occupied corporate office) for tax years 2009–2014 after the Board of Assessment Appeals denied relief.
- Both sides presented expert appraisals (Aetna’s Patcella and School District’s Abissi). Both agreed the sales-comparison approach and single-tenant highest-and-best-use were most appropriate.
- Abissi relied on a mix of comparables, including tenant-occupied sales ("Tenant Comparables") and three private/transactional sales (1031 exchange, sale-leaseback, option-to-purchase) ("Transactional Comparables"). Patcella used a different set of comparables and opined a larger decline in value.
- The trial court credited Abissi as credible and rejected Patcella for inconsistencies, errors, and subjective adjustments; it adopted Abissi’s reconciled sales- and income-based values for each tax year and entered assessments accordingly.
- Aetna appealed, arguing (1) the Tenant Comparables were not comparable and inflated value, (2) the Transactional Comparables were not public/market-exposed and thus incompetent, and (3) Abissi’s market-stabilization opinion lacked support.
Issues
| Issue | Aetna's Argument | School District/Trial Court's Argument | Held |
|---|---|---|---|
| Competency of tenant-occupied comparables | Tenant-occupied sales are not comparable to an owner-occupied, vacated-upon-sale property and inflated value | Tenant comparables share essential physical/use features; occupancy difference goes to weight, not admissibility | Tenant comparables are competent; differences affect weight, not admissibility; trial court properly credited Abissi |
| Competency of private/transactional comparables (1031, sale-leaseback, option) | Private/transactional sales were not publicly exposed and therefore not true comparables | Private transactions can be bona fide arm’s-length sales; admissible if confirmed as arm’s-length | Transactional comparables are competent if bona fide/arm’s-length; trial court found they were and so accepted them |
| Market stabilization opinion | Abissi lacked sufficient/new comparables and ignored market realities; Patcella showed ongoing decline | Abissi used vacancy, absorption, new construction, rent trends and proximate sales; court found this a sufficient foundation | Abissi’s market-stabilization testimony was competent; credibility/weight were for the trial court to resolve |
| Credibility and weight of experts | Patcella’s methodology and data were superior; trial court erred in rejecting him | Trial court is exclusive factfinder; Patcella had errors/inconsistencies; Abissi’s methodology and verifications were credible | Trial court’s credibility determinations are binding if supported by substantial evidence; court affirmed trial court’s choice to credit Abissi |
Key Cases Cited
- Jackson v. Board of Assessment Appeals of Cumberland County, 950 A.2d 1081 (Pa. Cmwlth.) (three valuation approaches and deference to trial court on method)
- Parkview Court Associates v. Delaware County Board of Assessment Appeals, 959 A.2d 515 (Pa. Cmwlth.) (trial court is ultimate factfinder in assessment appeals)
- Gilmour Properties v. Board of Assessment Appeals of Somerset County, 873 A.2d 64 (Pa. Cmwlth.) (court weighs competing expert testimony)
- RAS Development Corp. v. Fayette County Board of Assessment Appeals, 704 A.2d 1130 (Pa. Cmwlth.) (credibility and weight are exclusively for the trial court)
- Herzog v. McKean County Board of Assessment Appeals, 14 A.3d 193 (Pa. Cmwlth.) (appellate review limited where substantial evidence supports findings)
- McKnight Shopping Center v. Board of Property Assessment, Appeals & Review, 209 A.2d 389 (Pa.) (properties need not be identical to be comparable; differences affect weight)
- In re Appeal of Property of Cynwyd Investments, 679 A.2d 304 (Pa. Cmwlth.) (consideration of leases or occupancy can be reflected in weight; failure to adjust goes to weight)
- Parkside Townhomes Ass'n v. Board of Assessment Appeals of York County, 711 A.2d 607 (Pa. Cmwlth.) (expert’s decision not to adjust for certain factors goes to weight)
- Buhl Foundation v. Board of Property Assessment, Appeals and Review of Allegheny County, 180 A.2d 900 (Pa.) (market value determined by competent expert testimony)