TAXING SITUATION
Judges orders Delco to reassess all 200,000 properties after challenge
A townhouse on Traymore Lane in Rose Valley is at the heart of a battle that will lead to a reassessment of all properties in Delaware County.
MEDIA COURTHOUSE >> Delaware County Common Pleas Court Judge Charles B. Burr has ordered the first complete reassessment of all property valuations in the county since 2000 to address an apparent lack of uniformity in violation of the Pennsylvania Constitution.
“We believe the reassessment is long overdue and this is the proper way to deal with the lack of uniformity within the county,” said Philadelphia attorney John J. Murphy III, who represented two sets of homeowners in an underlying assessment challenge. “It was the right decision by the county.”
No representatives for the county provided comment on Tuesday.
The reassessment, which will become effective January 2021, is the ultimate result of a pair of assessment appeals filed by James and Lenore Kaufman of Rose Valley, and Peter and Ellen Bodenheimer of Haverford.
According to a post-trial brief, the Kaufmans purchased a twostory, three-bedroom townhouse in December 2013 for $721,000, which the county initially valued at $702,860, a 97 percent valuation on the purchase price. They appealed and the Delaware County Board of Assessment Appeals lowered the assessment to $488,838.
The Bodenheimers purchased a condominium in August 2014 for $731,082, which was initially assessed at $649,050, or 88 percent of the sales price, according to the brief. They also appealed and the assessment was reduced to $541,000, but the brief indicates that was still too high based on the county’s 67.8 percent “common-level ratio” representing the ratio of assessed value to current market value.
Both couples filed challenges to the county’s methodology for assessing home values based on 1998 as a “tax-base year,” instituted in 2000. Those petitions were consolidated and tried before Burr.
“The primary argument was that there was a widespread lack of uniformity in the assessments used in Delaware County, which primarily affected new homebuyers,” said Murphy. “The belief was that there was a pervasive lack of uniformity in property tax assessments, not only in (the petitioners’) communities but throughout the county.”
The Pennsylvania Constitution includes a “uniformity clause,” which provides that “all taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax.” In essence, Murphy said, the county violated that clause with wildly differing assessments on older and newer construction.
The brief notes that the state allows counties to adopt either an annual valuation method or a “base method” of property valuation in levying taxes. Delaware County has opted for the base method, which uses a given property’s base-year assessment as the basis for taxation in subsequent years.
But this system ignores fluctuations in the market and it can be difficult, if not impossible, to accurately value properties that did not exist at the time of the base year, Murphy said.
“Part of the argument we made … is that if you’re using a 1998 base year, how do you value new developments that did not exist in the base year?” he said. “Single detached homes built in the 1800s are not comparable sales. It’s rather obvious when you look at the sales the county used in valuing the (petitioners’) properties.”
Delaware County uses an Integrated Assessment System developed by Tyler Technologies to generate home valuation based on an analysis of comparable sales, according to the brief. The system employs a concept called “distance points” to identify comparable sales, in which lower points are assigned to more similar sales. Two row homes on the same street could have zero distance points, for instance.
The distance points assigned to five comparable sales for the Bodenheimer property allegedly ranged between 932 and 1,040 points. Tyler employee Paul Miller testified that he would expect to see distance points of this magnitude “for two entirely dissimilar properties such as a mud hut and a skyscraper,” according to the brief. The Kaufman property also generated distance points for five comparable sales ranging between 642 and 772 points.
Murphy also offered testimony from Richard Almy, former executive director of the International Association of Assessing Officers, who studied more than 7,300 sales and assessments in Delaware County between 2004 and 2013.
The brief notes there are various tools used to calculate uniformity, including the “coefficient of dispersion,” which expresses the percentage of deviation for valuations compared to the overall market. The COD essentially measures the likelihood that two properties assessed at the same value would both sell for that value. At zero percent, the two properties are of exactly equal and fair valuation.
The IAAO has set standards indicating the COD for single-family residential properties should be 10 percent or lower for newer, more homogenous areas and 15 percent or lower for older, more differentiated areas. But Almy found the COD for residential properties in the county was substantially higher than IAAO limits in every year he studied and become increasingly less uniform over time, according to the brief. The COD was 22.7 percent in 2004, for instance, but rose to 37.3 percent by 2008. The brief indicates COD for 2008 residential sales jumped to 52.2 percent in 2012 and 56.8 percent in 2013.
Almy also found that lower-valued properties in the county were assessed at a higher ratio of market value than high-valued properties, according to the brief, and that newer housing units constructed between 2004 and 2013 were assessed approximately 10 percent higher than older residences and 8 percent higher than all properties combined.
“The statistical evidence of systemic and pervasive inequities in the assessment of properties in Delaware County is overwhelm-
ing and uncontradicted,” the brief says. “While these statistics speak for themselves, they do not speak to the hardship and unfairness the current tax scheme imposes upon individual property owners in the county.”
With more than 200,000 residential and commercial properties in the county, retooling the assessments is expected to take some time. The county will need to notify taxpayers of new assessments in 2020 so they can review and appeal if they think they’re not accurate, said Murphy, who expects the process will begin later this year.
Murphy said a reassessment by law must be revenue neutral, so collectively taxpayers are not expected to pay more or less as a result, though some individual properties will pay more or less after a new basis is established.
“If a county reassesses and the overall assessments go up 50 percent, the county is expected to then decrease the millage rate by a corresponding 50 percent,” he said. “So while we expect the total assessments will go up because they’re based on current values rather than 1998 values, then we would expect the millage rates would decrease.”