Billboards have long been excluded from property taxes in Pennsylvania, but that has not stopped two Delaware County school districts from taking a novel approach to try to increase tax revenue from nearly two dozen signs along I-95 and Route 322.
Instead of taxing the billboards and the structures that support them, the Chester Upland and Chichester School Districts decided that they could increase the assessment of the land the signs were on, because the revenue from the signs made the land worth more.
Last month, a judge in Delaware County Court upheld a decision by the Board of Assessment and Appeals that the presence of billboards could not be used to increase the assessment. But the case still illustrates both the vagaries of taxation and school districts' hunger for new revenue amid strained budgets.
Alan C. Kessler, a Duane Morris attorney who represented Outfront Media Inc., one of the billboard companies, on Friday called the decision by Judge Charles B. Burr II significant because "the school district in this case is trying to circumvent clear legislative statutory language."
Donald J. Weiss, the school districts' attorney, agreed that the school districts cannot tax the pole and the sign, because that is exactly what the statute prohibits. But Weiss came up with what even an opponent described as a creative argument.
The statue says that "no sign or sign structure shall be assessed as real property. It doesn't say the ground on which the sign sits shall not be taxed," Weiss said. Courts are not supposed to add words to a statute in their interpretations.
"If I own a piece of ground and I'm renting it to a billboard company for $2,000 a month, why shouldn't I have to pay tax on the ground as if I can rent it for $2,000 a month?" Weiss asked rhetorically. Income is one of three factors that can go into the valuation of a property under Pennsylvania case law. The others are replacement cost and comparable sales.
A school district victory in an appeal to Commonwealth Court — which Chester Upland has decided to do — would mean about $175,000 a year for Chichester and about $150,000 a year for Chester Upland, Weiss estimated. "School districts – particularly Chester Upland – we need the money," Weiss said.
Along with billboards, which cost from $250,000 to as much as $750,000 for a digital version, according to Weiss, silos used for animal feeds, amusement park rides, and wind turbines are also excluded.
Cellphone towers, however, are taxed. Weiss had an answer for the difference in treatment: "The billboard companies had better lobbyists."
The legislative record from 2006, when the billboards exclusion was made explicit in state law after Luzerne County attempted to tax them against a murky, long-standing practice not to, provides background. It says cellphone towers were taxed because they are permanent structures, whereas billboards "can be taken apart, moved from location to location," a Pennsylvania House member said.
A different member warned, perhaps more to the point, that failing to exempt billboards "is passing a tax increase to your constituents in your district who may have billboards located on their property for the last 20 years."