        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In re: Alan J. Kivitz, Vicki Sommer,    :
Gary Raymond and Donna Raymond,         :
t/d/b/a Vidoro Properties,              :
                           Appellants   :   No. 1715 C.D. 2017
                                        :   Argued: October 16, 2018
            v.                          :
                                        :
Board of Assessment Appeals of          :
Blair County                            :

BEFORE:     HONORABLE ROBERT SIMPSON, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE SIMPSON                        FILED: November 9, 2018

            In this tax assessment appeal with unusual procedures, Alan J. Kivitz,
Vicki Sommer Kivitz, Gary Raymond and Donna Raymond, t/d/b/a Vidoro
Properties (collectively, Taxpayers) seek review of an October 2017 order of the
Court of Common Pleas of Blair County (trial court) regarding their real estate tax
assessment appeal of four parcels located in a highway shopping area in Blair
County (County). The trial court determined the assessed market values of the
properties. Taxpayers only appeal with respect to the parcel known as the Summit
Property, and specifically with respect to the square footage of a building located
on it. Asserting the County failed to present sufficient evidence supporting its
mid-appeal reassessment of the building, which occurred during the trial court
proceeding, Taxpayers seek a remand for a determination of the fair market value
of that parcel based on the square footage of the building as calculated by their
expert. Upon review, we vacate and remand.
                                  I. Background
            Taxpayers own Vidoro Properties, a business which owns four
contiguous parcels of land with mixed commercial use improvements including a
large building (Summit Property) housing a health and fitness center.         The
building, located in a highway shopping area, also includes an office leased to
HealthSouth. The other parcels include an indoor pool and two one-acre parking
lots.   The parcels are located in Allegheny Township (Township) in the
Hollidaysburg Area School District (School District).


            In 2016, the County’s Assessment Office undertook a county-wide
reassessment, its first since 1958. For the 2017 tax year, the County assessed the
market values of the four parcels as follows: (1) Summit Property (Tax Parcel #2-
14.1.22) - $5,377,900; (2) Swimming Pool Property (Tax Parcel #2-14.1.21) -
$1,676,200; (3) Summit Parking Area- 1.00 Acre (Tax Parcel #2-14.1.12) -
$131,700; and (4) Summit Parking Area- 1.05 Acre (Tax Parcel #2-14.1.15) -
$110,600.


            Taxpayers appealed to the Board and challenged all four assessments.
In October 2016, the Board issued a “no change” disposition on each assessment.
Reproduced Record (R.R.) at 7a.


            Taxpayers appealed to the trial court. They alleged the County’s
assessments were improper and invalid because they were based on an erroneous
interpretation of fair market value. Taxpayers further alleged the assessments




                                        2
lacked uniformity, were discriminatory and substantially higher than assessments
of comparable properties in the taxing district.


             In support of their position, Taxpayers obtained an appraisal from
John K. Cowan (Taxpayers’ Appraiser), a certified general appraiser.            He
appraised the Summit Property. Taxpayers’ Appraiser was the only expert witness
appearing in this appeal.


             At the April 2017 de novo hearing, Taxpayers’ Appraiser testified that
he valued the Summit Property at $2,500,000. Tr. Ct. Hr’g, Notes of Testimony
(N.T.), 4/21/17, at 48; R.R. at 66a. Although Taxpayers used the property for a
health and fitness club, Appraiser testified its highest and best use would be
something other than a health club. Id. Taxpayers’ Appraiser did not believe the
cost approach would be appropriate for valuation. N.T. at 48-49; R.R. at 66a-67a.


             Taxpayers’ Appraiser further testified that the income approach would
not make sense because although the property leases space to several businesses,
overall the Summit Property loses approximately $20,000 per year. N.T. at 25-26;
R.R. at 43a-44a.    Logically, an investor would not buy a building that loses
$20,000 per year. In short, the Summit Property is not sellable as an income
property. N.T. at 26, 49; R.R. at 44a, 67a.


             Therefore, Taxpayers’ Appraiser relied on the comparable sales
approach (value per square foot, determined by comparable sales, multiplied by the
useable square feet). See N.T. at 50; R.R. at 68a. Appraiser measured the building



                                          3
on the Summit Property and determined it to be 57,590 square feet in size, which
was significantly less than the square footage the County used in its assessment.
N.T. at 51; R.R. at 69a. A major reason for the discrepancy was the condition of
the second floor, which was not a full floor; rather, it was a mezzanine. N.T. at 56;
R.R. at 74a. Taxpayers’ Appraiser did not include the area for the mezzanine
“because of the nature of the mezzanine.” Id. He explained, “A lot of it – it
overlooks these basketball courts and the racquetball courts and I did not plug the
mezzanine in as square footage. It’s observation deck and hallways.” Id.         This
“low utility” testimony was in conjunction with Appraiser’s unrebutted testimony
that the highest and best use for the building would be for something other than a
health club.     See N.T. at 48; R.R. at 66a.      Also, this testimony is the sole
description of the mezzanine in the record. Whether, and to what extent, the
square footage of the mezzanine should be used in calculating fair market value
based on the comparative sales approach is important to the resolution of the case.


               As to comparative sales, the first comparison involved a fitness center
that sold for $67.24 per square foot.       N.T. at 51; R.R. at 69a.     The second
comparison involved an abandoned National Guard armory that sold for $53.13 per
square foot. N.T. at 51-52; R.R. at 69a-70a. The third sales comparison involved a
former auto dealership that sold for $47.24 per square foot. N.T. at 52; R.R. at
70a.


               Making certain adjustments, Taxpayers’ Appraiser arrived at a figure
of $41 to $45 per square foot. Id. Accordingly, he valued the Summit Property




                                           4
building at $43 per square foot, multiplied by 57,590 square feet, which yielded a
total market value of approximately $2,500,000. N.T. at 52-53; R.R. at 70a-71a.


            With respect to the square footage in the building, the County based
its initial assessment on a measurement of 88,000 square feet. At the April 2017
hearing, counsel for the County explained that the assessor could not enter the
building for assessment purposes and mistakenly believed the building had a full
second floor.   See N.T. at 79-80; R.R. at 97a-98a.       The County indicated it
encountered similar “mezzanine issues” on prior occasions and that the County’s
chief assessor committed to sending someone out to do a re-measurement of the
building. N.T. at 80; R.R. at 97a-98a.


            On May 23, 2017, the trial court entered an order noting a hearing
scheduled for May 31, 2017. Tr. Ct. Order, 5/23/17; R.R. at 14a-15a. The court
directed all counsel to submit any legal memoranda prior to the May 31 hearing.
Id. The order further specified (with emphasis by underline added):

            Any of the parties shall also submit any new
            measurement of the buildings within the (Summit)
            complex. There was a major disparity between each
            party’s measurement and this was reviewed by the
            County of Blair. The Court would DIRECT that the
            County of Blair, based on any finding of square footage,
            also formulate a new assessment based on that finding.

Id. In a letter to the trial court dated May 25, 2017, counsel for the County stated
(with emphasis added):

                    As you will recall, at the tax assessment appeal
            trial for the Summit [P]roperty, there was a discrepancy
            between the square footage of the building as reported by

                                         5
            the Assessment Office and by [Taxpayers’ Appraiser]. In
            response to that discrepancy, the County’s chief assessor
            re-measured the building. The square footage of this
            structure, as measured by the chief assessor on April 28,
            2017, is 63,150SF. However, for the reassessment, the
            square footage was incorrectly designated as 88,000SF.
            Consequently, the assessment for this parcel incorrectly
            included a value for 24,850SF, which is being corrected
            by the chief assessor. This adjustment results in a change
            of assessment that reduces the assessed fair market value
            from $5,377,900 to $3,260,600.

County’s Revised Assessment Letter, 5/25/17; R.R. at 229a.


            In their May 2017 memorandum of law, Taxpayers asserted they
overcame the prima facie validity of the assessment because the County re-
measured the square footage of the building on the Summit Property and
admittedly reduced the parcel’s fair market value by more than $2,000,000. See
Appellants’ Mem., 5/31/17, at 5; R.R. at 192a. Taxpayers further asserted the
County failed to present any evidence in support of its new assessment.          Id.
Consequently, Taxpayers argued their Appraiser’s testimony and valuations are the
only evidence in the record and do not support the trial court’s final determination
of the fair market value of the Summit Property. Id.


            Thereafter, the trial court apparently rescheduled the May 31 hearing
to August 28, 2017. See Certified Record, Item #13 (Scheduling Notice to parties’
counsel from Deputy Court Administrator Mary Wilt, dated June 9, 2017). There
is no record of a further hearing being held or of a party objecting to admission of
the letter from counsel for the County regarding the re-measured reassessment.




                                         6
             Ultimately, in its October 2017 decision, the trial court accepted as
credible the County’s change in assessment of the Summit Property from
$5,377,900 to $3,260,600 based on a correction of square footage from 88,000
square feet to 63,150 square feet. Tr. Ct., Slip Op., 10/19/17, at 16; R.R. at 209a.


             Regarding the square footage to be used in determining fair market
value, the trial court’s explanation was as follows:

             The Court finds that the County’s correction concerning
             the square footage from 88,000 to 63,150 square feet
             convincing. [Taxpayers’] appraisal did not specify the
             amount of square footage that was leased on the subject
             property, and [Taxpayers] continue to maintain the
             square footage of 57,000 ([N.T. at 50; R.R. at 68a]). The
             Court finds that the proper square footage to be 63,150 in
             that the Court believes the measurement done by the
             County to be the more accurate process.

Id.


             In rejecting Taxpayers’ Appraiser’s sales comparison approach, the
trial court found that Taxpayers’ Appraiser’s comparisons were not convincing
because the properties used were not appropriate for comparison. Tr. Ct., Slip Op.,
at 17; R.R. at 210a. The trial court concluded (with emphasis added): “In turn, this
demonstrates that [Taxpayers] have failed to meet their burden in rebutting the
presumption that the property assessment in question is valid.” Id.




                                          7
               For these reasons, the trial court determined the fair market value of
the Summit Property to be $3,260,600. Taxpayers appeal.1


                                        II. Discussion
                                        A. Argument
               Taxpayers contend the trial court erred in determining they did not
overcome the presumption of validity of the County’s assessment where it changed
it during trial without presenting any evidence in support of the change. They
assert the County assessed the Summit Property at $5,377,900 based on 88,000
square feet of space in the building, but lowered it during the trial to $3,260,600
based on a revised measurement of 63,150 square feet.


               Taxpayers argue that the appraisal of fair market value is based on fair
market value per-square-foot multiplied by the actual square footage. Therefore,
they allege both the fair market value per-square-foot and the actual square footage
are at issue in the trial court’s de novo proceeding. Taxpayers acknowledge it is
possible that Appraiser did not convince the trial court that his appraised value per-
square-foot was credible and thus Taxpayers failed to meet their rebuttal burden.
However, Taxpayers assert, the same argument cannot be made for a determination
of the actual square footage.          To that end, Taxpayers’ Appraiser testified he
measured the square footage precisely at 57,590.




       1
         Our review of tax assessment appeals is limited to determining whether the trial court
committed an error of law, abused its discretion or violated constitutional rights. Jackson v. Bd.
of Assessment of Cumberland Cty., 950 A.2d 1081 (Pa. Cmwlth. 2008).



                                                8
             Taxpayers further assert the taxing authorities did not impeach
Appraiser’s testimony as to square footage. As such, the only evidence the trial
court heard on the dimensional component of the assessment came from Appraiser.
However, the trial court found the re-measurement of 63,150 square feet to be the
more accurate measurement based solely on the letter from the County regarding
its assessor’s re-measurement.      See Tr. Ct., Slip Op., at 16; R.R. at 209a.
Taxpayers assert the taxing authorities presented no evidence from which the trial
court could determine how the County calculated the reduction in the Summit
Property’s assessment. Therefore, Taxpayers contend, the County’s re-measured
reassessment cannot be sustained based merely on a presumption of validity.


             Taxpayers further assert the trial court credited their Appraiser’s
testimony regarding square footage to the extent it warranted a review of the issue.
That review resulted in the County’s confirmation of at least a partial mistake
which lowered its assessment of the Summit Property by more than two million
dollars. Thus, Taxpayers argue the County’s confirmation of its mistake must
result in the trial court’s discarding of any reliability in the assessment. Stated
differently, the trial court cannot rely on the presumed validity of the County’s re-
assessed value because Taxpayers’ Appraiser established the County’s
miscalculation of square footage.


             Therefore, Taxpayers argue the County’s revised assessment cannot
be considered a new assessment entitled to a presumption of validity that they must
overcome.    If a taxing authority could defeat an evidentiary challenge to its




                                         9
assessment during a trial by merely presenting a new assessment, it could defeat
any meritorious taxpayer challenge without presenting any evidence.


             Summarizing, Taxpayers assert the parties do not dispute the
inaccuracy of the initial assessment of the Summit Property, which was reduced by
more than two million dollars. Nevertheless, the trial court found the revised
assessment to be valid by presumption absent any evidence supporting it. As a
result, Taxpayers maintain the trial court erred in holding that the County’s re-
measured reassessment, which, by itself, constitutes evidence of the unreliability of
the original assessment, was entitled to a presumption of validity that Taxpayers
did not overcome.


             In response, the County contends it successfully established a prima
facie case, and Taxpayers failed to meet their burden of rebutting the presumption
that the assessment was valid. In particular, the County asserts the trial court
rejected Taxpayers’ Appraiser’s testimony regarding the fair market value of the
Summit Property as not credible. The trial court rejected not only Taxpayers’
Appraiser’s income and sales comparison evidence, but also his square footage
calculation for the Summit Property building. In particular, the trial court found
Taxpayers’ Appraiser’s sales comparison comprised of non-comparable properties,
riddled with inconsistencies and based on improperly supplied data. As such, the
County contends the trial court properly determined that Taxpayers failed to rebut
the presumption that the final assessment of the Summit Property at $3,260,600
was valid. See Tr. Ct., Slip Op., at 17; R.R. at 210a.




                                         10
             Further, the County argues its re-measurement of the building on the
Summit Property, to which the parties agreed, did not, by itself, invalidate its
assessment and there is nothing in the record showing any admission as to the
invalidity of its original assessment. At the hearing, the County’s counsel stated
that square footage discrepancies are not uncommon, and the County’s Assessment
Office will send someone out to re-measure the property and correct it. N.T. at 54;
R.R. at 72a. Further, the trial court and parties agreed to keep the record open for a
re-measurement of the square footage. N.T. at 54-55; R.R. at 72a-73a.             The
County’s chief assessor re-measured the premises and arrived at a figure of 63,150
square feet upon determining that the building did not have a complete second
floor. County’s Revised Assessment Letter; R.R. at 229a. The trial court accepted
the County’s re-measurement, which included the partial second floor or
mezzanine, as the more accurate process. Tr. Ct., Slip Op., at 16; R.R. at 209a. To
the contrary, Taxpayers’ Appraiser did not include this area in his square footage
calculation. N.T. at 56; R.R. at 74a.


             In short, the County emphasizes that the trial court found its
reassessment of the Summit Property more credible and convincing than
Taxpayers’ Appraiser’s unacceptable appraisal of that parcel. Consequently, the
County maintains, the trial court did not rebut the validity of its assessment
regardless of the re-measurement of the square footage, which the trial court
accepted.


             Moreover, even assuming the County’s re-measurement of the square
footage, by itself, rebutted the initial validity of the assessment, the County argues



                                         11
the trial court could still find the reassessment, reduced by the square footage re-
measurement, adequate to determine the fair market value of the Summit Property.
See Green v. Schuylkill Cty. Bd. of Assessment Appeals, 730 A.2d 1017 (Pa.
Cmwlth. 1999) (trial court may determine weight to be given evidence and accept
only part of an expert’s testimony).      Thus, the County asserts the trial court
properly accepted the County’s reduced assessment based on the re-measurement
of the partial second floor or mezzanine area.


                                      B. Analysis
             This appeal involves a 2016 countywide reassessment.               At the
hearing, the parties recognized that generally, the chief assessor must testify as to
the current certified assessed value in order for the presumption of validity to
apply. See N.T. at 5; R.R. at 23a; BET Lehigh Real Estate, LLC, v. Schuylkill
Cty. Bd. of Assessment Appeals, 67 A.3d 845 (Pa. Cmwlth. 2013).                  Here,
however, the parties stipulated to the original assessments, which were read into
the record. N.T. at 6; R.R. at 24a.


             Further, after reviewing the Taxpayers’ evidence, the trial court
rejected Taxpayers’ Appraiser’s valuation. Tr. Ct., Slip Op., at 16-17; R.R. at
209a-210a. In particular, the court rejected Appraiser’s sales comparison on the
ground that the properties were not comparable in either quality or type. Id.


             Nonetheless, the trial court permitted the parties to re-measure the
square footage of the building on the Summit Property. See N.T. at 54-55; R.R. at
72a-73a. Taxpayers did not object to leaving the record open for the court to



                                          12
receive findings on the re-measurement. Id. However, Taxpayers argued that if
the parties disagreed to the re-measurement, the trial court must make the decision.
N.T. at 55; R.R. at 73a.


             The trial court treated the County’s re-measurement as a new
assessment and determined the proper square footage to be 63,150. Tr. Ct., Slip
Op., at 16; R.R. at 209a. To that end, the trial court stated in its opinion: “[T]his
demonstrates [Taxpayers] have failed to meet their burden in rebutting the
presumption that the property assessment in question is valid.” Id. at 17; R.R. at
210a (emphasis added).


             In cases where an appeal is pending before a trial court and it has
jurisdiction to grant a final order disposing of the matter, subsequent tax
assessments are automatically appealed, have a separate status, and continue to
exist notwithstanding the dismissal of the original assessment appeal.                     525
Lancaster Ave Apts, LP v. Berks County Bd. of Assessment Appeals, 111 A.3d
1231 (Pa. Cmwlth 2015); see Section 8854(a)(5) of the Consolidated County
Assessment Law.2 “[T]he automatic appeal provision of Section 8854(a)(5) is

      2
         Section 8854(a)(5) of the Consolidated County Assessment Law, 53 Pa. C.S.
§8854(a)(5), provides:

        (5) If a taxpayer or taxing district has filed an appeal from an assessment, so
      long as the appeal is pending before the board or before a court on appeal from
      the determination of the board, as provided by statute, the appeal will also be
      taken as an appeal by the appellant on the subject property for any valuation for
      any assessment subsequent to the filing of an appeal with the board and prior to
      the determination of the appeal by the board or the court. This provision shall be
      applicable to all pending appeals as well as future appeals.




                                             13
intended to eliminate duplicative, precautionary tax appeals and not to act as a trap
by which taxpayers can be deprived of their opportunity to be heard.”            525
Lancaster Ave Apts, 111 A.3d at 1236-37 (quoting Appeal of P-Ville Assocs., 87
A.3d 898, 903 (Pa. Cmwlth 2014)).


             Because the trial court ordered re-measurement of the building, the
presumption of validity of the original assessment of the property was rebutted. To
the extent the original assessment retained a separate status and continued
existence, and to the extent that no party offered any evidence to support the
original assessment, Taxpayers’ appeal should have been sustained as to the
original assessment of the Summit Property. Nevertheless, consistent with the
automatic appeal provision, the trial court had the ability to address the re-
measured reassessment.


             Regarding the re-measured reassessment, the trial court was asked to
decide how much square footage from the mezzanine level should be used to
calculate fair market value of the Summit Property building under the comparative
sales approach. The County maintains the re-measured area of 63,150 square feet
should be used, but Taxpayers assert that their Appraiser’s measurement of 57,590
square feet is the only value supported by the evidence in the record.


             In the absence of objection to the procedures by which the re-
measured reassessment was added to the trial court record, there is no reason why
that value should not be accorded presumed validity. However, it is unclear on
what basis the trial court ultimately chose the County’s re-measured area.



                                         14
             First, the trial court found the County’s re-measurement “to be the
more accurate process,” Tr. Ct., Slip Op. at 16; R.R. at 209a, after apparently
comparing the two processes.       But, the trial court did not reference certain
testimony of Taxpayers’ Appraiser regarding the building’s highest and best use,
and why given that use he purposefully did not include the low utility mezzanine
area in his square footage calculations. See N.T. at 56; R.R. at 74a. Also, there is
no information in the record about the County’s process for re-measurement, so
comparison of the processes is problematic.         Certainly, there is not enough
information in the record for this Court to evaluate whether the trial court’s
determination of more accurate process is supported by substantial evidence.


             Second, the trial court also stated that Taxpayers failed to meet their
burden in rebutting the presumption that the re-measured reassessment was valid.
But this presumes the trial court found Taxpayers’ Appraiser’s prior testimony
about the highest and best use and the appropriate square footage not credible or
not relevant. See Deitch Co. v. Bd. of Property Assessment, Appeals and Review
of Allegheny Cty., 209 A.2d 397, 402 (Pa. 1965) (“If the taxpayer fails to respond
with credible, relevant evidence, then the taxing body prevails.”). The trial court,
however, did not express such determinations about those parts of the Appraiser’s
testimony. To the contrary, the trial court significantly relied on the square footage
testimony of Taxpayers’ Appraiser when it required a re-measurement. Under
these circumstances, we believe more explanation is needed. In particular, further
explanation is needed as to how Taxpayers’ Appraiser’s highest and best use
testimony, and related low utility testimony regarding the mezzanine area, was




                                         15
addressed by the County’s re-measurement, and why that testimony was
insufficient to rebut the County’s re-measured square footage.


             Accordingly, we remand to the trial court to further explain its ruling
on this issue. On remand, we leave to the thoughtful consideration of the trial
court whether or not to accept additional evidence.


                                  III. Conclusion
             For the above reasons, the order of the trial court is vacated in regards
to the original assessment of the Summit Property, and the order of the trial court is
also vacated to the extent it determined the re-assessed market value of the Summit
Property to be $3,260,600.      This matter is remanded for further proceedings
consistent with this opinion.




                                       ROBERT SIMPSON, Judge




                                         16
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In re: Alan J. Kivitz, Vicki Sommer,     :
Gary Raymond and Donna Raymond,          :
t/d/b/a Vidoro Properties,               :
                           Appellants    :   No. 1715 C.D. 2017
                                         :
            v.                           :
                                         :
Board of Assessment Appeals of           :
Blair County                             :


                                   ORDER

            AND NOW, this 9th day of November, 2018, the order of the Court of
Common Pleas of Blair County is VACATED, and this matter is REMANDED
for further proceedings consistent with the foregoing opinion.    Jurisdiction is
relinquished.




                                        ROBERT SIMPSON, Judge
