Commonwealth court judge reverses decision in Duke Energy appeal
A Commonwealth Court judge has reversed the decision of a property assessment appeal in Fayette County filed by Duke Energy Fayette II LLC over what Duke characterizes as a spot assessment of property in German Township.
The decision was handed down Thursday by Judge Anne E. Covey.
The order stated, “While we sympathize with Fayette County’s financial predicament, the law must be followed. All taxpayers, individuals and corporations are entitled to certainty in the law. The General Assembly has spoken and we are constrained to uphold its mandates.
“The trial court’s order is reversed, and the matter is remanded to the trial court for immediate remand to the (reassessment) board to reinstate the property’s 2003 tax assessment.”
In 2001, the property was assessed at $1.8 million before improvements were made. In 2011, the revised assessment came to $35,181,260. A month after the new figure was released, Duke Energy appealed to the county Board of Assessment Appeals, which determined that no change would occur in the new assessment.
Attorneys for Duke Energy filed the appeal to Commonwealth Court last year against the board, the county and Albert Gallatin Area School District after Fayette County Judge Nancy D. Vernon determined there was no statute of limitations on a reassessment.
Vernon found that the county Tax Assessment Office was acting within the law when it re-assessed the 400-acre property in 2011, eight years after the company completed construction of a gas-fired electric generation facility.
According to court documents, the last county-wide property tax assessment was conducted in 2001, the same year Duke Energy acquired the property. The land was subdivided, and a 60-acre tract was designated for building the power plant.
At around the same time, Duke Energy applied for enrollment as a Keystone Opportunity Zone (KOZ) and, upon approval, was granted real estate tax abatement from 2001 through 2011, records state.
The power plant became operational in 2003, and the county was made aware of the improvements to the property. Because an appraisal of the property following the construction project would have cost the county between $25,000 and $50,000, it decided to wait until Duke Energy’s KOZ status was near its expiration. The stated reason was that it was more practical to wait until the property was eligible to be taxed, therefore offsetting the cost of the appraisal with the revenue generated by the assessment, according to court records.
Covey determined that although that action may have been “reasonable” as opposed to “arbitrary,” it was nonetheless unsupported by statute.
“Here, although an outside appraiser would have been necessary and costly, the costs of the appraisal at the proper time is not a factor which the board had the luxury of weighing,” wrote Covey. “Thus, the board was obligated by statute to conduct the assessment at the time of the improvements and not thereafter.”
Vernon stated in her ruling that the county’s method of re-assessing did not constitute a spot assessment, but Covey disagreed with that finding as well.
According to Covey, the Consolidated County Assessment Law states that “assessors may change the assessed valuation on real properly … when improvements are made to real property.”
“The law is well-settled that the assessment of improvements must take place when the improvements are made and not at some arbitrary time in the future, or a board of assessment will be guilty of spot reassessment,'” Covey wrote.