Source: https://casetext.com/case/pa-state-sys-of-higher-educ-v-ind-area-sch-dist-2
Timestamp: 2018-12-18 15:43:28
Document Index: 313307777

Matched Legal Cases: ['§5453', '§5453', '§ 8801', '§20', '§ 20', '§ 20', '§ 20', '§20', '§8521', '§1711', '§20']

Pa. State Sys. of Higher Educ. v. Ind. Area Sch. Dist, No. 184 M.D. 2011 | Casetext
Pa. State Sys. of Higher Educ. v. Ind. Area Sch. Dist.
No. 184 M.D. 2011 (Pa. Cmmw. Ct. Apr. 5, 2012)
Pa. State Sys. of Higher Educ.
Ind. Area Sch. Dist.
COMMONWEALTH COURT OF PENNSYLVANIAApr 5, 2012
Ind. Univ. of Pa. v. Ind. Cnty. Bd. of Assessment Appeals
…Appellant filed for declaratory relief in this Court&apos;s original jurisdiction and requested this Court to…
Bradley v. W. Chester Univ. of the Pa. State Sys. of Higher Educ.
…Bd. of Assessment Appeals , 2015 WL 5671153, at *1, *8 (Pa. Commw. Ct. 2015) (unpublished decision)…
No. 184 M.D. 2011
The Pennsylvania State System of Higher Education; and Indiana University of Pennsylvania, Petitioners v. Indiana Area School District; County of Indiana; and Indiana County Board of Assessment Appeals, Respondents
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
This case was assigned to the opinion writer before Judge Pellegrini succeeded Judge Leadbetter as President Judge.
On September 30, 2011, Petitioners filed a "Second Application for Summary Relief" in which they ask this Court to grant their Petition for Review in the Nature of Declaratory Judgment as a matter of law. On November 2, 2011, Respondents filed a "Joint Application for Summary Relief" which requests that this Court dismiss the Petition for Review as a matter of law. Both Petitions are before this Court.
In a declaratory judgment action, just as in civil actions generally, summary judgment may be granted only in those cases in which the record clearly shows that there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Hydropress Environmental Services, Inc. v. Township of Upper Mount Bethel, County of Northampton, 575 Pa. 479, 836 A.2d 912 (2003); Public Utility Commission Bar Association v. Thornburgh, 434 A.2d 1327 (Pa. Cmwlth. 1981).
Respondents further contend that they have statutory authority to determine taxable classifications, prepare a list of all properties exempted from taxation and hear all appeals challenging taxable classifications under Sections 601 and 701(c) of the Fourth to Eighth Class County Assessment Law, 72 P.S. §5453.601, and §5453.701(c).
Act of May 21, 1943, P.L. 571, as amended. Section 6(1)(ii) of the Act of October 27, 2010, P.L. 895, repealed The Fourth to Eighth Class County Assessment Law, effective January 1, 2011. The Fourth to Eighth County Assessment Law was replaced by the Consolidated County Assessment Law, 53 Pa.C.S. §§ 8801-8868, effective January 1, 2011. Because this matter arose prior to January 1, 2011, it is governed by the repealed Fourth to Eighth Class County Assessment Law.
Petitioners stress that "tax immunity" and "tax exemption" are distinct legal concepts and that only a tax "immunity" analysis is applicable to this controversy. They claim that whether a property is "used for a public purpose" is only relevant in a tax "exemption" analysis. They assert that Respondents have misread SEPTA because property that is "immune" from taxation is shielded from taxation "regardless of its use."
Under an "exemption" analysis a property is exempt when the legislature acts affirmatively to remove property otherwise subject to taxation, while immunity exists because no specific power to tax this class of property has ever been delegated by the legislature to the particular taxing body. Bucks County Community College v. Bucks County Board of Assessment Appeals, 608 A.2d 622, 623 n. 2 (Pa. Cmwlth. 1992). Because the legislature has not specifically delegated the power to tax a Commonwealth agency or instrumentality to Respondents, an "immunity," as opposed to an "exemption," analysis is appropriate. That is, the Property is entitled to immunity, unless PASSHE has acted outside the scope of its government authority in acquiring and holding the property.
The "Immunity" Analysis - Government Use Test
"Immunity" also extends to property owned by "agencies or instrumentalities" of the Commonwealth. Id. In the case of property owned by a State agency or instrumentality, Pennsylvania appellate courts have ruled that "immunity" is not unqualified, and does not apply if a property is not acquired or used for an authorized governmental purpose. Delaware County Solid Waste Authority v. Berks County Board of Assessment Appeals, 534 Pa. 81, 87, 626 A.2d 528, 531 (1993) ("Property owned by a Commonwealth agency is ...not given blanket immunity. If an agency acts outside its authorized governmental purposes, then its immunity is not automatic."). This is commonly known as the government use test. It begins with the presumption that property owned by a Commonwealth agency or instrumentality is immune from real estate taxation. The burden is on the taxing authority to establish the lack of immunity by showing that the Commonwealth agency or instrumentality acted outside the scope of its authority in acquiring and holding the property. Id. See also Appeal of West View Borough Municipal Authority, 381 Pa. 416, 113 A.2d 307 (1955). Property which is not acquired or used for authorized governmental purposes will not enjoy governmental immunity. Delaware County.
To the contrary, to qualify for tax "exemption" it must be established that the property is being used for a "public purpose." Article 8, Section 2 of the Pennsylvania Constitution.
In the case of property owned outright by the State, as opposed to a state agency or instrumentality, application of the "government use test" would be redundant because as this Court pointed out, the "government always acts as the government." East Stroudsburg University Foundation v. Office of Open Records, 995 A.2d 496, 504 (Pa. Cmwlth. 2010). Or, as the Supreme Court explained in Pennsylvania State Employees' Retirement System v. Dauphin County, 335 Pa. 177, 183, 6 A.2d 870, 873 (1939), "[e]ven if owned outright by the State, the revenues therefrom could only be devoted to public purposes under the Constitution." See also SEPTA in which the Supreme Court again recognized that property owned by the Commonwealth "has for reasons of public policy been consistently recognized as free from taxation." SEPTA, 574 Pa. at 714, 833 A.2d at 713.
For example, the Pennsylvania State Capitol Complex in Harrisburg, Pennsylvania.
Petitioners assert that PASSHE is equivalent to the sovereign Commonwealth for purposes of an immunity analysis. Petitioners contend that since PASSHE is equivalent to the sovereign Commonwealth , not merely an agency or an instrumentality, the Property is entitled to blanket immunity regardless of "the purpose for which it is used." This Court agrees that the "purpose for which the property is used" is not relevant because that is the test applied in an "exemption" analysis.
However, this does not necessarily mean that Petitioners prevail for they still must prove that: (1) PASSHE is the sovereign Commonwealth entitled to blanket immunity; and if not , (2) that it is a Commonwealth agency or instrumentality which has acted within the scope of its governmental authority in acquiring and holding the Property.
PASSHE is not the equivalent to the Sovereign Commonwealth
For Purposes of Tax Immunity Analysis -
It is an "Agency or Instrumentality" of the Commonwealth
PASSHE is Pennsylvania's public university system. It is composed of 14 universities in Pennsylvania, including IUP, which are publicly owned and governed. PASSHE, has been statutorily designated as "a body corporate and politic constituting a public corporation and government instrumentality." The legislature has given it the right to have "perpetual existence as a corporation" and to adopt and use a "corporate seal." Section 20-2003-(A)(b) of the Public School Code, 24 P.S. §20-2003-A(b).
PASSHE should not be confused with The Pennsylvania State University or Pennsylvania's Commonwealth System of Higher Education . The Commonwealth System of Higher Education is the organizing body of Pennsylvania's "state-related" schools, which allows the independent control of the universities while supplying them with the public funds needed for operations at each institution. Universities in the Commonwealth System of Higher Education are considered public universities, but are under independent control rather than that of the state.
Sections 20-2002-A, 20-2003-A, and 20-2004-A, of the Public School Code of 1949 (Public School Code), Act of March 10, 1949, P.L. 30, were added by the Act of November 12, 1982, P.L. 660, as amended, 24 P.S. § 20-2002-A, 24 P.S. § 20-2003-A, 24 P.S. § 20-2004-A.
PASSHE is "part of the Commonwealth's system of higher education." Section 20-2004-(A)(a) of the Public School Code, 24 P.S. §20-2004-A(a). It serves and carries out a particular function for the Commonwealth, as opposed to being the Commonwealth. Therefore, for tax immunity purposes, PASSHE is not the equivalent to the sovereign Commonwealth. Property owned by PASSHE is not owned outright by the Commonwealth, and it is not entitled to absolute, unqualified real estate tax immunity.
Petitioners argue that PASSHE is the Commonwealth because it enjoys sovereign immunity under 42 Pa.C.S. §8521; Poliskiewicz v. E. Stroudsburg Univ., 536 A.2d 472 (Pa. Cmwlth. 1988). However, an entity's status as an agency or instrumentality of the Commonwealth varies, depending on the issue for which the determination is being made. Pennsylvania State University v. Derry Township School District, 557 Pa. 91, 731 A.2d 1272 (1999). Therefore, PASSHE's entitlement to sovereign immunity for purposes of tort liability is not necessarily determinative of its status in a tax immunity matter.
Whether PASSHE's Use of the Property is
Within its Authorized Governmental Purpose
In SEPTA our Supreme Court confirmed that the proper inquiry for purposes of determining whether an instrumentality or agency is entitled to tax immunity is twofold: whether the agency or instrumentality has acted within its authorized (1) powers, and (2) purpose. SEPTA clarified that when applying the government use test in an immunity analysis the court must look at the agency or instrumentality's authorized powers and purpose. It is not enough to simply look to whether the agency or instrumentality was given authority to hold or lease property. The court must also determine if holding or leasing the property is within the agency's or instrumentality's governmental purpose.
Petitioners suggest that SEPTA was wrongly decided and blurred the distinction between immunity versus exemption. They contend that "use" of the property is only germane in an "exemption" analysis and that the Supreme Court, in holding that the "use" of the property was relevant in its "immunity" analysis effectively eliminates the distinction between immunity and exemption. This Court must disagree. As explained, the law applied by the Supreme Court in SEPTA was entirely consistent with prior case law. The Supreme Court accurately pointed out that the "use" of the property in an "exemption" analysis is relevant to determine if the property is being used for a "public purpose." In an "immunity" analysis, "use" of the property is necessary to determine if the agency or instrumentality is being used within the agency's "governmental powers and purposes." The only time "use" is not relevant is when it is the Commonwealth itself which owns the property. In such a case, there is tax immunity. As discussed, that is not the case here.
The Supreme Court affirmed and found that SEPTA's property was presumed to be immune because it was organized under 74 Pa.C.S. §1711(a) which provides that metropolitan transportation authorities shall exercise the public powers of the Commonwealth as an agency and instrumentality thereof. In applying the government use test, the Supreme Court next found that while SEPTA was "authorized" to lease real estate in order to "raise revenue" and "reduce its expenses," the lease of property to third parties did not further its "purpose" which was to "operate a transportation system in Southeastern Pennsylvania." SEPTA, 574 Pa. at 710, 833 A.2d at 717. The Supreme Court ultimately concluded that SEPTA property leased to commercial tenants was not immune from taxation because leasing property was not an activity connected to SEPTA's purpose. That is, it was not sufficiently related to the governmental purpose of operating a regional transportation system.
Contrary to Petitioners' argument, the Supreme Court did not determine that SEPTA is the Commonwealth. It determined that SEPTA was part of the sovereignty of the Commonwealth as opposed to a "local" agency.
acquire, purchase, hold, lease as lessee and use any property , real, personal or mixed, tangible or intangible, or any interest therein, lease as lessor any property, real, personal or mixed, tangible or intangible necessary or desirable for carrying out the purpose of the system, and to sell, transfer and dispose of any property acquired by gift, grant, devise or bequest, whether the property is real, personal or mixed, tangible or intangible, or any interest therein; to take , demand, receive and possess all moneys , real property and goods which shall be appropriated , given or granted to for the use of the system and to apply the same according to the will of the
donors; to sell, transfer and dispose of real property acquired by and titled to the system upon the approval by the General Assembly as provided in Section 2018-A. (Emphasis added).
PASSHE's enabling legislation states that its purpose is "to provide high quality education for the Commonwealth at the lowest possible cost to its students." The "primary mission" of PASSHE is "the provision of instruction for undergraduate and graduate students to and beyond the master's degree in the liberal arts and sciences and in applied fields, including the teaching profession." Id.
Section 20-2003-A of the Public School Code, 24 P.S. §20-2003-(A). --------
Respondents request this Court to deny the Petition for Review so the Board can hold an evidentiary hearing on whether PASSHE is leasing portions of the Property to third party commercial entities and receiving rental income. This Court agrees that this is the proper course. It is unclear whether PASSHE leases a portion of the Property to the Incubator in exchange for rental income , and whether other portions are rented to other entities. On this record, this Court does not have sufficient information to determine what is taxable and what is not.
To the extent that the Property houses classrooms, laboratories, libraries, study halls, auditoriums, workshops, etc., which are used by the university, its faculty, employees and students, for teaching and educational purposes, then it shall not be subject to real estate taxes. However, those portions of the Property which are leased to any third party in exchange for rental income , are subject to taxation, and do not enjoy tax immunity because they are not used for PASSHE's governmental purpose which is the provision of education.