Timber Trails Community Ass'n v. County of Monroe

McGINLEY, Judge,

concurring and dissenting.

I agree with the majority’s conclusions that the common pleas court lacked jurisdiction over the appeals from the assessments of the golf course parcels and that the request for attorney’s fees should be denied. However, I respectfully dissent from the majority’s conclusion in regard to the assessment of the common areas. In Pinecrest the property owners had exclusive rights of easement to the common areas, including exclusive use of the facilities. Although the value of the common areas was not an issue on appeal, the court observed that a zero or nominal actual market value resulting from such exclusivity could change “if the property owners modified their easement rights to permit the title holder of the common area to extend privileges to non-property owners.” Pinecrest, 98 Pa.Commonwealth Ct. at 204, 510 A.2d at 1276 (emphasis added). The majority today correctly endorses this proposition. However, I believe that the majority misinterprets Pinecrest to mean that any state of affairs other than absolute exclusivity of use by property owners must translate into some taxable value.

In my view, Pinecrest means simply that, because of the possible variety of treatments of the use of common area facilities, each individual situation must be examined closely to determine its effect on value, keeping in mind that “fair market value” means the price that a willing but not obligated seller could obtain from a willing but not obligated purchaser, Appeal of Johnstown Assoc., and keeping in mind that the *41assessment applies to things as they are during the current taxing period, not as they speculatively might become, Rieck Ice Cream Co. Appeal. Facilities such as lakes, golf courses, swimming pools and the like obviously have substantial intrinsic value if unburdened. However, there is no dispute in the present case that the common areas here are burdened, and the issue is whether the degree of burden is such as to render the property of no value to a prospective purchaser.

The evidence of record indicates that some property owners outside the developments (fewer than twenty-five) have been dues-paying members since the inception of the development, some other persons are granted fee-waived memberships for special reasons, and members may bring guests to play golf on a limited basis. Based on its view of Pinecrest, the majority remands for a determination of value in which “all relevant factors” shall be considered.

I think the trial court already has performed this analysis and that the majority’s remand order disregards this fact. The court did not simply note that these parcels are common areas and determine that they must have zero value. Rather, the court analyzed the particular facts and concluded that the limited deviations from absolute exclusivity involved here do not create something of value to a prospective purchaser.

The trial court accurately summarized the discussion in Pinecrest of the tax treatment of common areas of developments such as these, with its emphasis on the need for case-by-case analysis of all factors affecting fair market value. The court noted that the evidence supported a finding that the method of valuation employed in the reassessment failed to consider or to make adjustments for easements or restrictive covenants that were appurtenant to the land being valued.1 *42The court noted further that the existence of such easements and covenants is among the Pinecrest factors to be considered in determining fair market value. Although the county authority failed to consider these crucial factors in its valuation, the court received both documentary evidence2 and testimony from Jeffrey M. Evans, the chief operating officer of both Lake Naomi and Timber Trails, which indicated the presence of restrictions. Thus, whereas the county authority had assessed something that never existed, namely, unburdened common land and facilities, the trial court was able to begin its analysis by acknowledging the existence of the restrictions.

The trial court turned next to the issue of exclusivity of use. It listed the exceptions to absolute exclusivity that had been developed on the record. The court determined that, for tax purposes, these limited exceptions were not sufficient to justify a conclusion that the common areas should be considered to be other than for the exclusive use of community members.

I agree with this conclusion. From the point of view of a purchaser, it makes no difference that the total number of members includes some few outside the developments — they might just as well be inside. More importantly, as Mr. Evans testified, their numbers cannot increase: “[Y]ou could not purchase a new property today that would be eligible for membership outside the property.” N.T. at 71; R.R. 97a. *43The facts that employees are granted fee-waived memberships as part of their compensation and that some people who perform volunteer service for the community at large are granted memberships as a token of appreciation would likely act as a disincentive to a prospective purchaser looking to use the facilities to make a profit. Although the assessment of the golf course is not involved in this appeal, the fact that members may bring guests to play there (with a charge to the member and with no guest permitted to play more than ten times per year) certainly does not equate with access to the course by the public. A member of the public cannot play on that course unless he or she becomes acquainted with a member of Lake Naomi or Timber Trails and receives an invitation. Also, the opportunity to bring guests enhances the value of the course for members, who otherwise would be restricted to playing golf there with their neighbors.

The trial court noted the testimony of the taxpayers’ expert that the common areas would have marketable value if the restrictions were withdrawn, but the court emphasized that the land must be valued as it currently is.3 I agree. Although the use of the facilities has been extended on a very limited basis to persons not owning property in the developments, the evidence shows that a prospective purchaser would not have the power to extend the use further by opening it to access by the public at large or to any significant portion of the public.4 The court concluded that, under the facts of this *44case, the value of the housing lots in the developments had been increased to reflect the full value of the amenities and common areas. The restrictions on those areas and facilities were such as to render them of no value in themselves to a prospective purchaser, and further taxation of the common areas would constitute double taxation. In my view, the trial court performed the analysis required under our endorsement of Pinecrest and performed it correctly. Therefore, I see no reason to remand.

. Automated Valuation Systems (AVS) performed the county-wide reassessment. The trial court cited the testimony of Barry C. Seager, the acting county assessor, including the following:

Q. So your statement was [AVS] only took into account the comparable sales to establish valuation?
A. That’s correct.
*42Q. Do you know whether they took into account easements or covenants which may affect these parcels, in particular the one we’re discussing, and the other four also?
A. Not that I’m aware of in these particular properties.
Q. Do your cards reflect that they took those things into account?
A. There was no adjustments [sic] for any of those.

Notes of Testimony of March 20, 1989 (N.T.), at 26; Reproduced Record (R.R.) 52a. The court noted that AVS’s failure to consider restrictions may have been due to the fact that the assessment cards did not indicate the existence of any covenants affecting the property, although the cards had a block specifically for that purpose.

. The taxpayers introduced into evidence the Articles of Incorporation of Lake Naomi Club, dated 1964 (Plaintiffs’ Ex. 1); the bylaws of the Lake Naomi Club, dated 1976 (Plaintiffs' Ex. 2); deed restrictions found in deeds for residential lots in the Lake Naomi subdivision (Plaintiffs’ Ex. 3) and the Timber Trails subdivision (Plaintiffs’ Ex. 4) and the recorded deeds for the common areas (Plaintiffs’ Ex. 5-8). N.T. 20-23; R.R. 46a-49a.

. The acting county assessor was recalled as a witness for the County and the Board. Following examination by counsel, the trial court questioned him as to the basis of the valuations and the effect of the restrictions. The assessor conceded that the sale of a public golf course would not be comparable to the attempted sale of the golf course involved here and that there were no sales of which he was aware of golf courses restricted in the manner this one is. Notes of Testimony of January 19, 1990, at 115-20; R.R. 141a-46a.

. The Appellants assert that “[tjhere is nothing that would prevent the sale of the golf course to a new owner who could take subject to this use and increase its use by allowing members of the public to use the golf course." Brief of Appellants at 16-17. That statement is simply inaccurate; if it were true then Appellants should prevail. The common areas currently are not open to members of the public generally, and to make them so would require an extensive modification of the existing deeds and covenants.