Should Foreseeable Prospects for a Property Which Exist at the Time of Assessment Be Considered In Determining a Property's Fair Market Value ?
In Air Products and Chemicals, Inc. v. Board of Assessment Appeals of Lehigh County, 720 A.2d 790 (Pa. Cmwlth. 1998), taxpayer petitioned the Lehigh County Board of Assessment Appeals to reduce the $ 74 million fair market value assigned to its facilities.
The board denied the petition and taxpayer appealed to the trial court.
The taxpayer's expert valued the parcel (including the facilities and office space) as a single, indivisible tract and opined that its fair market value was between $ 50 and $ 57 million.
The board's appraiser, however, valued the property as two separate, independent parcels, dividing as one tract the taxpayer's administration buildings and the fitness center and the other tract containing the company's research and development facilities.
The Court held that the trial court correctly accepted the taxpayer's valuation.
The appellate courts of this Commonwealth have held that reasonably foreseeable prospects for a property which exist at the time of an assessment may be considered in determining a property's fair market value, e.g., its probable use, lease or sale.
However, consideration of factors based upon pure speculation, such as what the property would be worth in an altered condition are irrelevant to the issue of fair market value.
In other words, hypothetical ways in which the property could be used by potential buyers should be considered in determining what a willing buyer would pay for the property.
That is not to say, however, that the property should be valued as though it were already in that hypothetical condition.
For instance, a large farm may have greater potential value if the land were subdivided into one acre lots for single family homes, but while that potential must be considered, the property may not be taxed as though it were currently subdivided and developed.
Accordingly, even if the trial court had accepted the opinion of the County's expert that subdivision was the highest and best use, it would have been error to value the property as though it were, in fact, two separate parcels. Air Products, 720 A.2d at 793.