Appealing Fair Market Property Value In Pennsylvania

In In re Assid, 842 A.2d 995 (Pa. Cmwlth. 2004), Dr. and Mrs. Assid (Assids) owned a 339-acre tract of land in Armstrong County (county) which they leased on April 1, 1999, to Spring Church. The lease term was for an initial five years, with an option for four consecutive five-year renewals with a right of reversion to the taxpayers at the end of the lease. Pursuant to the lease, Spring Church constructed an 18-hole golf course and club house on approximately 100 acres of the property. The annual rent was $ 60,000 or 10% of the gross profits from all operations, whichever amount was greater. The Assids received a notice of appraisal from the Armstrong County Board of Assessment setting the fair market value of the property at $ 1,346,390. Taxpayer appealed. At trial the county's appraiser testified that he used the cost approach and did not consider the effect of the lease on the value of the property. The Assids' expert, on the other hand, valued the property as encumbered by the long-term lease. He used the income approach to value and capitalize the net operating income from the lease to arrive at a present market value. He then added that to the Assids' reversionary value in the property and arrived at a fair market vale of $ 555,900. The trial court rejected this value and accepted the county's valuation. This Court reversed because the trial court was required to "determine the fair market value of the Assids' property ... by considering the impact of the long-term commercial Lease, and it failed to do so." Assid, 842 at 1001.