Pennsylvania Court Provides Commercial Property Owners With Defense to Tax Assessment Appeals

by Pepper Hamilton LLP

Pepper Hamilton LLP

Executive Summary

  • The Uniformity Clause of the Pennsylvania Constitution requires all real property in a taxing district to be classified as a single class — real estate — for tax purposes, and taxing authorities may not create sub-classifications based on property type (i.e., commercial, apartment or single-family home).

  • Pennsylvania taxpayers, especially commercial property owners, who are currently subject to assessment appeals may have a challenge to appeals based on the Uniformity Clause of the Pennsylvania Constitution.


On July 5, the Pennsylvania Supreme Court issued a unanimous decision confirming that all real estate in a taxing district is a single class (i.e., not subject to sub-classifications based on property type, such as commercial, apartment or single-family home) for real estate tax purposes. Valley Forge Towers Apartments N, LP v. Upper Merion Area Sch. Dist. & Keystone Realty Advisors, LLC, No. 49 MAP 2016 (Pa. July 5, 2017).

As alleged in the complaint, the Upper Merion Area School District hired Keystone Realty Advisors to advise it as to which property tax assessments should be the target of appeals. Under Keystone’s direction, the School District focused its efforts solely on commercial properties, including apartment complexes. This strategy targeted generally higher-value properties that could result in greater tax revenue increases. Apartment complex owners challenged the School District’s right to engage in selective appeals on the basis that the focus on only commercial property violated the Uniformity Clause of the Pennsylvania Constitution.

Initially, the apartment complex owners were unsuccessful, and the Court of Common Pleas and the Commonwealth Court held that the sub-classifications did not violate the Uniformity Clause.

The Pennsylvania Supreme Court, however, agreed with the apartment complex owners. The Supreme Court stated that “all property in a taxing district is a single class, and, as a consequence, the Uniformity Clause does not permit the government . . . to treat different property sub-classifications in a disparate manner.”

As a result, a taxing authority may not systematically appeal the assessments of properties based on a sub-classification by property type. The Supreme Court specifically rejected the use of a rational-basis classification of sub-categories based on property type because there is only one class — real estate. The Supreme Court was careful to state, however, that nothing in its opinion should be interpreted as suggesting that a monetary threshold would violate the Uniformity Clause if it was implemented without regard to property type. The court noted that those classifications were not at issue in this case.

What Does This Mean for Commercial Property Owners?

Taxpayers with commercial property in Pennsylvania who are subject to assessment challenges by a taxing authority should consider including a uniformity challenge as a defense to current or future assessment appeals. Because of the potential efficiency and political advantages for taxing authorities to focus on appeals based on property classifications, many taxing authorities may have engaged in similar practices. This may be an issue for commercial property owners, even if they do not realize that the violation exists. A uniformity challenge would not directly impact the value of the assessment, but rather the constitutional proprietary of the challenge to the assessment itself.


Written by:

Pepper Hamilton LLP

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