Valley Forge Towers Apartments N, LP v. Upper Merion Area School District
163 A.3d 962
| Pa. | 2017Background
- Montgomery County’s last countywide real-property assessment was in 1996; assessment ratios varied widely within Upper Merion Area School District, with ~80% of single-family homes below the county CLR while many commercial properties were closer to CLR.
- The School District hired Keystone Realty Advisors and selectively appealed only commercial property (including apartment) assessments to increase tax revenue and avoid political backlash from resident homeowners.
- Appellants (owners of apartment complexes) were targeted by those appeals; their administrative appeals were denied and appealed to common pleas; while those appeals were pending, Appellants filed a separate equity complaint alleging a Uniformity Clause violation arising from the School District’s selective-appeal policy.
- The School District demurred, arguing it has a statutory right to appeal and selective appeals do not violate uniformity; common pleas sustained objections and dismissed the complaint; the Commonwealth Court affirmed.
- The Pennsylvania Supreme Court granted review to decide whether the Uniformity Clause forbids a taxing authority from systematically appealing only one property-type sub-class (commercial/apartments) while ignoring under-assessed single-family homes.
- The Supreme Court held that treating real property sub-classifications disparately through a systematic appeal program based on property type or owner residency can violate the Uniformity Clause and reversed, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether taxing authority may selectively appeal only commercial properties without violating Pennsylvania’s Uniformity Clause | School Dist.’s targeted appeals create systematic disparate treatment of a property sub-class (commercial/apartments), harming uniformity and political accountability | Section 8855 grants taxing districts a statutory right to appeal and choosing higher‑value targets for revenue is rational and permissible; appealing all properties is impractical | A taxing authority may not implement a program of systematically appealing based on property type or owner residency; such disparate, systematic treatment can violate the Uniformity Clause and plaintiffs may bring as‑applied challenges in equity |
| Whether plaintiffs had to exhaust statutory remedies before suing in equity | Statutory appeals cannot adequately remedy or prevent a district‑wide selective‑appeal policy; equitable relief is appropriate to address systemic uniformity harms | Plaintiffs should exhaust administrative remedies; common pleas/Com. Ct. jurisdictional holdings support dismissal | Exhaustion exception applies: common pleas could properly exercise equity jurisdiction because administrative process cannot adequately address a taxing district’s systematic selective‑appeal program |
| Proper interpretive scope of Downingtown and related precedent (can government create sub‑classifications of real property?) | Downingtown preserves taxpayer right to compare to comparable properties and does not permit governmental sub‑classification to justify systematic disparate treatment | Some Commonwealth Court decisions read Downingtown to allow meaningful sub‑classifications and rational‑basis scrutiny for taxing decisions | Downingtown and Clifton require treating all real property as a single class for uniformity; government cannot systematically discriminate among property sub‑classes even if economically rational |
| Standard of review for as‑applied selective‑appeal challenges | Uniformity Clause prohibits intentional/systematic disparate enforcement; not limited to wrongful motive and requires stricter scrutiny than mere rational‑basis when subclassifying property | Apply rational‑basis review; economic/administrative considerations suffice to justify selection | The Court rejected a pure rational‑basis shield for taxing authorities here: systematic disparate enforcement by property type violates Uniformity Clause and is subject to constitutional limitation |
Key Cases Cited
- Downingtown Area Sch. Dist. v. Chester Cnty. Bd. of Assessment Appeals, 913 A.2d 194 (Pa. 2006) (reiterates taxpayers’ right to challenge disproportionate assessment ratios and that Equal Protection principles set a floor for Uniformity Clause analysis)
- Clifton v. Allegheny Cnty., 969 A.2d 1197 (Pa. 2009) (explains that all real estate is a single class entitled to uniform treatment; as‑applied challenges may be heard in equity)
- Beattie v. Allegheny Cnty., 907 A.2d 519 (Pa. 2006) (addresses administrative exhaustion doctrine and when equitable relief is available)
- Weissenberger v. Chester Cnty. Bd. of Assessment Appeals, 62 A.3d 501 (Pa. Cmwlth. 2013) (Commonwealth Court decision holding selective appeals may be permissible; relied upon and critiqued by Supreme Court)
- Springfield Sch. Dist. v. Montgomery Cnty. Bd. of Assessment Appeals, 101 A.3d 835 (Pa. Cmwlth. 2014) (Commonwealth Court holding that Uniformity Clause does not require equalization across all sub‑classifications; discussed and limited by Supreme Court)
- Kowenhoven v. Allegheny Cnty., 901 A.2d 1003 (Pa. 2006) (outlines factors for when equity jurisdiction is appropriate to resolve systemic assessment issues)