Custer v. Bedford County Board of Assessment & Revision of Taxes

OPINION BY

Judge PELLEGRINI.

Robert S. Custer (Custer) appeals an order of the Court of Common Pleas of Bedford County (trial court) affirming the Bedford County Board of Assessment and Revision of Taxes’ (Board) decision that his greenhouse was taxable realty pursuant to Section 201(a) of the Fourth to Eighth Class County Assessment Law (Fourth to Eighth Class Law).1

Custer owns approximately 97 acres in Cumberland Valley Township, Bedford County, where he operates a nursery business. In March 2001, Custer purchased a used greenhouse for $1,500, disassembled it, transported it by flatbed pickup truck to his property where he stored it until May 2004, then reassembled it. The greenhouse is an arch-shaped structure that is 30 feet by 96 feet in size, and is approximately 12 feet high at its highest point. The greenhouse is constructed by 24 vertical pipes on each side. These vertical pipes are inserted two feet into the ground and are connected at the top to arch-shaped pipes. Plastic covering is attached to the arching pipes and serves as a covering for the structure.

Because of the addition of the greenhouse to the property, the Board increased the assessed value of the buildings on Custer’s property for the 2004 tax year from $11,124 to $19,978, an increase of $8,854. Custer appealed to the Board contending that the greenhouse' should not be assessed because it was not real estate.2 *115After the Board denied his appeal, he appealed to the trial court, again contending that the greenhouse was not real estate, but if it was, it was excluded from taxation because it was used as part of an industrial establishment, i.e., the growing of plants and flowers.

*114The following subjects and property shall as hereinafter provided be valued and assessed *115and subject to taxation for all county, borough, town, township, school, (except in cities), poor and county institution district purposes, at the annual rate,

At the hearing before the trial court, Custer testified that to disassemble the greenhouse and move it to his property, the plastic was removed and then the pieces that held it together were unbolted. After transporting it to his property, he reassembled it without heavy equipment, using only clam shell diggers, shovels and wrenches. He testified that each of the posts/poles was placed two feet into the ground just past the frost line. Custer opined that it was never his intention for the greenhouse to be permanent, but only to serve as a “starter” greenhouse to be replaced in the future by a “better” greenhouse. He stated that if he were to move off the property or quit the nursery business, he would either sell the greenhouse or take it with him. Custer admitted, though, that he had no present intention of moving his business or relocating. As to the greenhouse’s purpose, he testified that it assisted him by creating the necessary environment for raising plants going through a “transformation” from seed to plant to shrubbery to make them sellable.3

(a) 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, manu-factory or industrial process, and all other real estate not exempt by law from taxation

Jacob Guyer, another Bedford County nursery owner, testified that he owned six similar greenhouses that were transported from his previous place of business in Princeton, New Jersey, to his current residence in Bedford County where he had them reassembled.4

The trial court affirmed the Board reasoning that the greenhouse was taxable realty because it was meant to be a permanent improvement as it was to be used until it was worn out or Custer was no longer occupying the property. It also found that the greenhouse did not fall within the “machinery, tools, appliances and other equipment” exclusion to Section 201(a) of the Fourth to Eighth Class Law.5 *116This appeal followed.6

In deciding whether the greenhouse is subject to real property taxes, we take guidance from In re Appeal of Sheetz, Inc., 657 A.2d 1011 (Pa.Cmwlth.), petition for allowance of appeal denied, 542 Pa. 653, 666 A.2d 1060 (1995), where we had to determine whether a gasoline pump canopy was a fixture, and, therefore, taxable as realty, or was personalty, and not subject to realty tax. We began by setting out the broad categories in a quote from our Supreme Court in Clayton v. Lienhard, 312 Pa. 433,167 A. 321 (1933):

Chattels used in connection with real estate are of three classes: First, those which are manifestly furniture, as distinguished from improvements and not peculiarly fitted to the property with which they are used; these always remain personalty ... Second, those which are so annexed to the property that they cannot be removed without material injury to the real estate or to themselves; these are realty, even in the face of an expressed intention that they should be considered personalty ... Third, those which, although physically connected with the real estate, are so affixed as to be removable without destroying or materially injuring the chattels themselves, or the property to which they are annexed; these become part of the realty or remain personalty, depending upon the intention of the parties at the time of the annexation; in this class fall such chattels as boilers and machinery affixed for the use of an owner or tenant but readily removable ...

Sheetz, 657 A.2d at 1012-1013.

Custer contends that the greenhouse is clearly personalty under both the first and/or third classifications. Regarding the first classification, Custer asserts that the greenhouse is more furniture than an improvement because its purpose was not to enhance the value, beauty or utility of Custer’s property or to adapt the property for a new or further purpose. Rather, he argues that the greenhouse was equipment that was necessary, useful and desirable for the purpose of raising plants for his nursery business. “Improvement” has been defined as a “permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs.” Groner v. Monroe County Board of Assessment Appeals, 569 Pa. 394, 400, 803 A.2d 1270, 1273 (2002) (quoting Spahr-Alder Group v. Zoning Board of Adjustment of Pittsburgh, 135 Pa.Cmwlth. 561, 581 A.2d 1002, 1004 (1990)). While the greenhouse may not have been valuable from a monetary perspective ($1,500) or enhanced the beauty of the property from an aesthetic perspective, the greenhouse enhanced the utility of Custer’s property by allowing Custer to grow more plants for his nursery business, making it an improvement, not furniture.

Regarding the third classification, Custer contends that because the greenhouse can be removed without harm to it or the property on which it was located, and it was his intention that the greenhouse was to be removed once a new greenhouse was bought or the nursery business failed, it cannot be considered real property. The test to determine whether a chattel becomes part of the realty was set forth in Sheetz as follows:

*117A fixture is an article in the nature of personal property which has been so annexed to the realty that it is regarded as part and parcel of the land. Black’s Law DiCtionaey 575 (5th ed.1979). The considerations to be made in determining whether or not a chattel becomes a fixture include (1) the manner in which it is physically attached or installed, (2) the extent to which it is essential to the permanent use of the building or other improvement, and (3) the intention of the parties who attached or installed it.

Sheetz, 657 A.2d at 1013 (quoting Gore v. Bethlehem Area School District, 113 Pa.Cmwlth. 394, 537 A.2d 913, 915 (1988)).

Applying this test to the greenhouse, beginning with the first consideration, the manner of attachment, Custer asserts that because the greenhouse can be removed without any damage to it or the property, it must be personalty. However, in categorizing the canopy in Sheetz as realty rather than personalty, we observed that the degree of attachment necessary to evidence permanence is not high. Sheetz, 657 A.2d at 1014, n. 7. Further, we stated that:

The permanence required is not equated with perpetuity. Just because they have been and can be moved does not mean the intention was not to make them permanent. It is sufficient if the item is intended to remain where affixed until worn out, until the purpose to which the realty is devoted is accomplished or until the item is superseded by another item more suitable for the purpose.

Id. at 1014.

We went on to observe that “[m]odern construction methods and types of structures allow material that stays for years on a piece of property to be moved with little damage to the property. Acoustic ceiling panels ‘affixed’ by gravity and removable with no damage to the property are nonetheless taxable as real estate as are door handles and kitchen faucets when attached to a structure.” Id. at 1013-1014. In the case of the greenhouse, each of the posts/ poles are placed two feet into the ground, which possesses the requisite degree of “attachment.”7

The third consideration in Sheetz is the intention of the parties who attached or installed the chattel. As with the canopies in Sheetz, there is nothing in the record in the present case suggesting that the greenhouse is an item that was intended to be removed as long as the property was being used as a nursery to grow and cultivate plants. The greenhouse creates the necessary environment for raising plants and will be affixed to the property until it is worn out, the nursery business fails or Custer and his wife no longer occupy the property. Under the Sheetz test then, the greenhouse is realty and taxable as real estate.

Even if the greenhouse is considered realty, Custer contends that it is still not taxable because it falls within the taxation exclusion within Section 201(a) of the Fourth to Eighth Class Law which states in relevant part: “Machinery, tools, appliances and other equipment contained in any mill, mine, manufactory or industrial establishment shall not be considered or included as a part of the real estate in determining the value of such mill, mine, manufactory or industrial establishment.” To fall within the exclusion, two requirements must be met: “(1) the property at issue must constitute machinery, tools, appliances, or other equipment; and (2) the property must be contained in a mill, mine, *118manufactory, or industrial establishment.” BFC Hardwoods, Inc. v. Board of Assessment and Appeals of Crawford County, 565 Pa. 65, 72, 771 A.2d 759, 763 (2001) (BFC Hardwoods) (citing Appeal of Borough of Aliquippa, 405 Pa. 421, 432, 175 A.2d 856, 862 (1961)).

Custer contends that the operation of the greenhouse pursuant to his nursery business is an activity that is part of the horticulture “industrial establishment” because the greenhouse brings about a physical change in plants that is better, than if they were exposed to the natural elements. While a variety of businesses have been construed to be “industrial, establishments,” 8 and within its confines from little seeds, mighty plants grow, “industrial” is not a term that has ever been applied to where plants are grown for consumption or for ornamentation. To put it simply, the greenhouse is not being used as part of an “industrial establishment,” but as part of an “agricultural establishment” which does not enjoy a similar exclusion.

Accordingly, because the greenhouse is “real estate” and not part of an “industrial process” or establishment as those terms are used in Section 201(a) of the Fourth to Eighth Class Law, the trial court’s order is affirmed.

ORDER

AND NOW, this 2nd day of November, 2006, the order of the Court of Common Pleas of Bedford County, dated December 20, 2005, is affirmed.

. Act of May 21, 1943, P.L. 571, as amended, 72 P.S. §§ 5453.201(a).

. Section 201(a) of the Fourth to Eighth Class Law, enumerates the types of property that are subject to real estate assessment and taxation. It provides that:

.Dawn Marie Custer, Custer’s wife, gave similar testimony regarding the construction of the greenhouse and also stated that if they decided to move, they would take it with them.

. Melissa Roy, Bedford County Chief Assessor, was also called to testify in the present matter; however, her testimony was only relevant to the uniformity argument raised by Custer, which was eventually dismissed by the trial court as explained in footnote number six below and, therefore, is not relevant to this appeal.

. Custer also raised the argument that the Board’s failure to assess similar greenhouses in Bedford County constituted a violation of the Equal Protection Clause of the U.S. Constitution, U.S. Const, amend XIV, § 1, the Uniformity Clause of the Pennsylvania Constitution, Pa. Const, art. VIII, § 1, and Section 201 of the Fourth to Eighth Class Law. The trial court did not consider this argument because Custer did not raise this issue in his petition for review of real estate tax assessment, and, therefore, it was deemed waived.

. Our standard of review in a tax assessment appeal is limited to a determination of whether the trial court abused its discretion or committed an error of law, and whether its decision is supported by substantial evidence. In re Appeal of Marple Springfield Center, Inc., 530 Pa. 122, 607 A.2d 708 (1992).

. The second consideration in Sheetz is the extent to which the chattel is essential to the permanent use of the building or other improvement. In this case, the question is whether the greenhouse is a building, so this consideration does not apply.

. See e.g., United Laundries, Inc. v. Board of Property Assessment, Appeals and Review, 359 Pa. 195, 58 A.2d 833 (1948) (commercial laundry); Messenger Publishing Co. v. Board of Property Assessment, Appeals and Review, 183 Pa.Super. 407, 132 A.2d 768 (1957) (newspaper plant); City of Pittsburgh v. WIIC-TV Corp., 14 Pa.Cmwlth. 18, 321 A.2d 387 (1974) (television station); BFC Hardwoods (drying lumber for commercial sale); Allegheny Energy Supply Company, LLC v. Greene County Board of Assessment Appeals, 837 A.2d 665 (Pa.Cmwlth.2003) (power plant’s smokestacks, cooling towers and water intake structure constituted industrial machinery used directly in the manufacturing process and, thus, were excluded from real estate tax assessment).