Written by Adam Silko – Research Assistant
Cite: H.R. 806, 200th Gen. Assem., Reg. Sess. (July 2016).
On July 20, 2016, Pennsylvania Governor Tom Wolf signed House Bill 806 into law as Act 89. Act 89 is an amendment to the Pennsylvania Farmland and Forest Land Assessment Act of 1974, commonly referred to as Clean and Green. Clean and Green is a preferential tax assessment program aimed at reducing property taxes on rural landowners by taxing enrolled land at its use value rather than its fair market value. Prior to Act 89, however, in counties where a countywide reassessment of property values had not occurred in several years, a property’s fair market value could be lower than the use values provided by county assessors. In those counties, landowners received a tax increase instead of a tax break for enrolling land. Act 89 was enacted to correct this problem. Act 89 also enacts changes to what type of land is included in determining a tract’s acreage, how county assessors may assess forest reserve land, and when county assessors may adjust a property’s use value.
Act 89 adds subsection (c.4) to Section 4.2 of the statute, which provides that county assessors may not establish a use value “greater than the assessment value that would apply to the land if the land were not enrolled in preferential assessment.” This new provision guarantees that a landowner will receive a tax break when he enrolls land in Clean and Green because the use value applied by the county assessor may not exceed the property’s fair market value. This provision is seemingly a response to the Commonwealth Court’s decision in Herzogv. McKean Cty. Bd. of Assessment Appeals, 2015 WL 5123303, at *6 (Pa. Commw. Ct. Jan. 27, 2015). In Herzog, the Court upheld the validity of use values for the landowner’s forest reserve land which exceeded the property’s fair market value. While acknowledging that the outcome did not provide the landowner with the tax benefit that the statute was created to provide, the Court stated that adjusting the statutory scheme to ensure that landowners always received a tax break was a task for the General Assembly. With the passage of Act 89, the landowner’s use values which exceeded the property’s fair market value would be deemed invalid.
Act 89 also addresses how county assessors apply use values to forest reserve land. By adding subsection (b.1) to Section 4.2, county assessors are now authorized to apply a use value for forest reserve land that “equals the average of all subcategories of forest reserve use values established by the department.” Nevertheless, if a landowner provides the county assessor with a statement defining the predominant “forest classification type” on the land, the assessor must apply the use value for that forest type.
Additionally, Act 89 adds subsections (c.1), (c.2) and (c.3) to Section 4.2, (c) which deals with the county assessor’s authority in establishing use values. Prior to this Act, county assessors were able to make yearly increases to enrolled lands’ use values, as long as the increase was applied uniformly to all landowners. This included instances where an amendment was passed that changed how land was to be valued. The Courts have held that county assessors could reassess a landowner’s land pursuant to an amendment as long as the reassessment was applied uniformly to all affected landowners. Sher v. Berks Cty. Bd. of Assessment Appeals, 940 A.2d 629, 635 (Pa. Commw. Ct. 2008). Act 89 essentially eliminates the county assessor’s authority to make annual adjustments to Clean and Green values without annually conducting countywide reassessments of real property values. With these provisions, an enrolled land’s use value may not be adjusted until a countywide reassessment of real property value occurs or unless there is a reclassification of land to a different land use category, even when an amendment is passed that would alter how a property is valued. In the year of a countywide reassessment, assessors are required to apply new use values to all land currently enrolled and to all applications filed in the year of the reassessment. These values must be applied until the next countywide reassessment.
Lastly, Act 89 adds subsection (a.2) to Section 3, which provides that land which is “burdened by a public or private road, right-of-way or easement shall be included in determining whether the condition for minimum contiguous area” of ten acres required under the provisions of Section 3 has been met. This provision overturns part of the Commonwealth Court’s decision in Way v. Berks Cty. Bd. of Assessment Appeals, where the Court held that the county assessor justly denied the landowner’s application for not meeting the ten-acre minimum requirement because land upon a public road cannot be used in calculating whether a landowner meets the qualifications for preferential assessment. Way v. Berks Cty. Bd. of Assessment Appeals, 990 A.2d 1191, 1194 (Pa. Commw. Ct. 2010). With this provision in place, the portion of the landowner’s land that fell upon the public road would have been counted in the tract’s acreage calculation and the application would have been accepted by the county assessor.