The Pennsylvania Supreme Court is currently reviewing matters concerning one of a district’s most basic financial vital lines, real estate tax, and you probably did not even know it.
On April 26, 2016, the Supreme Court granted a petition for allowance of appeal in the matter of Morgan Properties Abrams Run Owner LP, et al v. Upper Merion Area School District, et al. This is an action for declaratory judgment filed by several property owners that were the subjects of underlying school district initiated assessment appeals. Notably, several of the Appellants have settled the district initiated assessment appeals and withdrawn from this matter.
The issue, as presented by Petitioners, is:
[The School District] deliberately chose commercial properties, such as Petitioners’, for selective assessment appeals, but did not appeal assessments of any single-family-home properties, although the latter are significantly underassessed. The Uniformity Clause of the Pennsylvania Constitution prohibits disuniformity in taxation. Is a school district’s decision to appeal property assessment insulated from review because, inter alia, the school district has a statutory right to file appeals and can identify an economic reason for its appeals?
Essentially, they are seeking declaratory judgment that a district’s act filing appeals solely against commercial properties, and not against single-family homes, violates the PA Constitution’s Uniformity Clause. They also seek an injunction to stop the district from filing additional appeals solely against commercial properties.
The matter was defeated at the trial level via preliminary objections. The court dismissed the counts for declaratory judgment and injunction based on statutory law and caselaw that clearly establishes a district’s right to appeal real estate assessments. The court further held that there was no independent cause of action against a district for violation of uniformity because the district does not set the assessments of property, but merely taxes thereon.
The Commonwealth Court affirmed the trial court decision finding that a district’s “targeting” of high value properties for the purpose of increasing revenue meets the rational basis requirement under the equal protection clause.
The court further found that the use of consultants with contingency fee arrangements inherently establishes motivation for increased tax revenue and the selection of high value properties, thus again meeting the rational basis requirement.
Bottom Line for Schools
With a new Supreme Court panel, it is unclear how they will rule and why they chose this case to accept certiorari. Should a District be interested in voicing their opinion in this matter, amicus curiae – “friend of the Court” – briefs are due by September 7, 2016.
If you should have any questions, please contact your legal counsel or an attorney at KingSpry.
School Law Bullets are a publication of KingSpry’s Education Law Practice Group. It is meant to be informational and does not constitute legal advice. John E. Freund, III, is our editor.
