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Our Commonwealth Court recently considered the question of whether an arguably makeshift greenhouse should properly be considered “real estate” for the purpose of assessment and taxation under the Fourth to Eighth Class County Assessment Law. That law provides in pertinent part: “All real estate, to wit: Houses, house trailers and mobile homes permanently attached to land or connected with water, gas, electric or sewage facilities, buildings, lands, lots of ground and ground rents, trailer parks and parking lots, mills and manufactories of all kinds, all office type construction of whatever kind, that portion of a steel, lead, aluminum or like melting and continuous casting structures which enclose, provide shelter or protection from the elements for the various machinery, tools, appliances, equipment, materials or products involved in the mill, mine or manufactory or industrial process, and all other real estate not exempt by law from taxation.” Robert Custer, the owner of approximately 100 acres of land in Bedford County, was the unfortunate recipient of a significant reassessment for the 2004 tax year. The local Board of Assessment increased the value of the buildings on Custer’s property from $11,124 to $19,978 on account of a greenhouse having been erected. Custer purchased the used greenhouse in 2001 for $1,500, dissembled it and then stored it until 2004. Custer eventually reassembled the simple structure in 2004 using only clam-shell diggers, shovels and wrenches; it was affixed to the ground with vertical pipes inserted only 2 feet into the earth beneath. It was never his intention to make this particular greenhouse permanent – it was merely a starter greenhouse. In the case that he was to transfer this property or get out of the nursery business altogether, he would either dissemble the greenhouse and take it with him or sell it. In challenging the county’s assessment, Custer offered equal protection and uniformity clause arguments (both waived on appeal to the trial court) and contended that his greenhouse was merely personalty and hence not subject to real estate taxes. Finally, even assuming that the greenhouse should properly be considered realty, it would nevertheless enjoy the industrial establishment exclusion. The Pennsylvania Supreme Court 1933 Clayton v. Lienhard decision illuminates the three basic categories of chattels used in connection with real estate: those that are obviously furniture, those that are so annexed their removal would cause material injury and those that are connected and can be removed without material injury. When considering whether something is a fixture, the manner of attachment, that item’s importance to the permanent use of a building or improvement and the intention of the parties are key factors to consider. The Custer court easily concluded that the greenhouse was realty because of what it perceived to be Custer’s intention of keeping the greenhouse in place as long as his property was being used as a nursery. The degree of attachment necessary to evidence permanence is not high at all – ease of portability is not dispositive of whether a chattel is a fixture where the item is affixed in at least some manner. However, as the dissent pointed out, Custer’s actual intention does not appear to be the same as the majority noted. In reply to the question of whether he intended for the greenhouse to be made permanent, he testified: “No. We kind of looked at this greenhouse as a starter greenhouse.” As for the fallback argument, the subject property must constitute machinery, tools, appliances or other equipment, and the property must be contained in a mill, mine, manufactory or industrial establishment to achieve the exclusion. The operation of the greenhouse was not part of an industrial establishment but rather an agricultural one and hence the exclusion did not apply. The Commonwealth Court was also recently called upon to scrutinize the validity of another assessment, specifically the reassessment of a parcel of land containing a cellular tower. The In re Appeal of Young opinion did not concern itself with whether a cellular tower is realty for purposes of the tax law – these towers clearly are improvements (held as such in 2005 in Shenandoah). Rather the decision considered the manner in which a county attempted to benefit from the Shenandoah decision by applying it retroactively to a specific parcel. A spot reassessment is the reassessment of a property or properties which is not conducted as part of a countywide revised assessment and which creates, sustains or increases disproportionality. In Young, the landowners argued that the Lawrence County Assessment Office’s actions constituted an unlawful spot reassessment because the land at issue was reassessed several years prior and subsequent to the cellular tower improvement having been made; there had been no additional countywide reassessments. The board went so far as to set aside that portion of the land upon which the tower was situated and assign it a new tax identification number. The board contended that its authority to reassess was derived from the assessment law, which does permit assessments when improvements are made to real property. Nonetheless the board’s reassessment several years prior had already taken into account that portion of the land containing the subject improvement. As such, the office waived its right to reassess several years later to take advantage of a favorable law. The fact that cellular towers were not treated as “improvements” until 2005 does not mean that the improvements did not occur until 2005 – this was clearly an unlawful spot assessment. It is indisputable that Custer and Shenandoah will be relied upon by authorities to tax greenhouses and cellular towers, respectively. These types of items, which enhance the utility of real property are improvements and are therefore subject to taxation, notwithstanding ease of portability or an owner’s intent to experiment with a particular business on his/her property (unless the endeavor is excluded). However, authorities must be prudent about their approach to revenue generation as the Pennsylvania assessment law affords little room for error. If the assessment is not an initial one, great scrutiny will certainly be applied, especially in light of Young. HARPER J.DIMMERMAN represents clients in real estate matters and is the principal of his firm and president of DST Land Transfer Inc., a title insurance company licensed in Pennsylvania and New Jersey. He may be reached at [email protected] or 215-545-0600. He is co-chairman of the PhiladelphiaBar Association’s solo and small firm committeeand an executive committee member of the law practice management committee and YLD.

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