The Pennsylvania Constitution requires that, "All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax and shall be levied and collected under general laws," which is known as the uniformity clause. In 2017, the city of Philadelphia reassessed commercial and industrial properties for the 2018 tax year due to pressure from Philadelphia City Council. The city proclaimed that it had better information to assess the value of such commercial and industrial properties, and for that reason, the city's reassessing only those specific classes of property did not violate the uniformity clause. The city did not focus on residential properties as part of the reassessment because the city determined that the residential properties were already assessed at or near fair market value. In 2017, a group of commercial property owners sued the city asserting that the city's selective reassessment scheme violated the uniformity clause of the Pennsylvania Constitution. In Duffield v. City of Philadelphia, No. 1536 (Phil. Cty. Comm. Pl. 2017), the Philadelphia Court of Common Pleas found that the city violated the uniformity clause by reassessing commercial real estate and not residential properties. Judge David Cohen concluded that real estate in a single jurisdiction must be treated as a single class for uniform treatment, and taxing authorities are not permitted to treat one sub-classification of properties differently from another. The city appealed the decision and final disposition is still pending. However, Duffield is just the most recent case in a line of many that shape the ever-changing Pennsylvania tax assessment laws and procedures.

The Pennsylvania tax assessment process is unlike any other in the United States. Pennsylvania does not have a state agency to oversee the property valuation and assessment process, or to supervise and ensure uniformity in the assessment process from county to county. Instead, each county in Pennsylvania has a designated chief assessor responsible for supervising the assessment office that determines assessed values for local real estate taxation. Additionally, Pennsylvania is one of only six states that does not have statutorily mandated reassessments on a fixed cycle. For example, Beaver County's last reassessment occurred in 1982, compared with Allegheny County's last reassessment of 2012 effective for 2013 Beaver County Judge Dale Fouse has ordered Beaver County's assessment office to reassess Beaver County's roughly 96,000 parcels by 2023 due to the county's use of 1982 for its base year. The countywide reassessment year is significant in Pennsylvania because that year becomes what is known as the "base year" for each county under the Pennsylvania assessment and valuation system. A base year is defined as"the year upon which real property market values are based for the most recent countywide revision of assessment of real property or other prior year upon which the market value of all real property of the county is based. Real property market values shall be equalized within the county and any changes by the board of assessment appeals shall be expressed in terms of such base year values." Under a base-year system of valuation, a county performs a countywide reassessment of all real property in the base year, and then uses each property's base-year assessment as that property's basis for taxation in the base year, as well as its basis (i.e., assessed value) in subsequent years, see Downingtown Area School District v. Chester County Board of Assessment Appeals, 590 Pa. 459 (2006).

In tax appeals subsequent to the base year, an appellant can elect to challenge the property's assessed value using either the base year or current market-value methodology. If an appellant chooses to use the base-year methodology, then the appellant must provide evidence of the property's value in the base year and apply the county's established predetermined ratio to the base-year value. The established predetermined ratio in Allegheny County ordinance Section 5-210.02 "definitions" is defined as "the ratio of assessed value to market value established in Section 5-210.03 of this administrative code and uniformly applied in determining the assessed value in any year." The current predetermined ratio for Allegheny County is 100%. If an appellant chooses the base-year methodology, then the appellant must provide evidence of the market value of the property in Allegheny County back in 2013.

The second and more commonly used methodology for challenging the assessed value of a property is the current market-value methodology. After establishing the current market value of the property, the common level ratio should be applied to that value. The common level ratio is the ratio of assessed value to current market value as last determined by the Pennsylvania State Tax Equalization Board (STEB) STEB annually calculates the common level ratio for each county, to be applied to current market-value assessments. Prior to 2015, the Allegheny County Board of Property Assessment Appeals and Review did not always apply the common level ratio to current market values. However, in 2015, Judge R. Stanton Wettick ordered in the case of S&D Shah v. Allegheny County Board of Property Assessment Appeals and Review, GD 15-13517 (Al. Cty. Comm. Pl. 2015) "… that the Allegheny County Board of Property Assessment Appeals and Review apply the common level ratio to its findings of fair market value where the appellant elects a current market-value methodology. The board shall apply the common level ratio regardless of whether it is sought by any party. This order of the court also applies to proceedings before the board of viewers." As it stands today, the common level ratio in Allegheny County from July 1, 2019, to June 30, 2020, is 1.16.

The final distinction to consider when challenging the assessed value of a property is the type and use of that property. "Today in Pennsylvania, property taxation is primarily used to raise revenue for the maintenance of the counties' public school systems, and is administered through a number of statutory provisions," as in Pennsylvanians Against Gambling Expansion Fund v. Commonwealth, 583 Pa. 275 (2005). As such, school districts are more likely to challenge the assessed value of commercial and industrial properties than residential properties like the city of Philadelphia did in Duffield. However, a recent Pennsylvania Supreme Court decision found that the specific targeting of a certain class of properties to increase school district revenue is illegal and violates the uniformity clause. In Valley Forge Towers Apartments N v. Upper Merion Area School District, 640 Pa. 489 (2017), the Pennsylvania Supreme Court "granted review to consider whether the uniformity clause permits the school district, pursuant to its statutory right to appeal individual property assessments, to concentrate solely on commercial properties while foregoing appeals as to single-family residences which may have even lower assessment ratios." The Supreme Court found that the school district's preliminary objections should not have been sustained and reversed the Commonwealth Court's order and remanded the case for further proceedings. The Supreme Court's reasoning was that … as "every tax is a burden," see Del. L. & W. R., 224 Pa. at 243, 73 A. at 430, it is important that the public has confidence that property taxes are administered in a just and impartial manner, with each taxpayer contributing his or her fair share of the cost of government. This lends legitimacy to the property-tax system in the eyes of the public which, in turn, tends to suppress both the desire to evade taxes and the tendency to embark upon protracted litigation—which, itself, consumes large quantities of societal resources. Where there is a conflict between maximizing revenue and ensuring that the taxing system is implemented in a nondiscriminatory way, the uniformity clause requires that the latter goal be given primacy, (citing Downingtown Area School District v. Chester County Board of Assessment Appeals, 590 Pa. 459, 466 (2006)) (quoting Del. L. & W. R.'s Tax Assessment, 224 Pa. 240, 243, 73 A. 429, 430 (1909)).

The recent decisions in Duffield and Valley Forge further advance Pennsylvania's tax assessment system toward uniformity, but do not completely solve the problem throughout the state. Under current law, a taxpayer's recourse is to challenge an unfair, selective reassessment through costly litigation that oftentimes does not make economic sense. Unless the Pennsylvania legislature adopts a uniform schedule for periodic reassessments like 44 other states, uniformity can only be sought through litigation and judicial oversight.

Hal D. Coffey, a member at Clark Hill, practices real estate law. He regularly assists parties seeking to acquire, develop, maintain and sell commercial property. David M. DelGreco is an associate in the firm's real estate practice group. Joshua M. Farber is a member of the firm's real estate practice and real estate development practice group and general corporate/mergers and acquisitions practice group.