Opinion ID: 2355272
Heading Depth: 2
Heading Rank: 1

Heading: Feeneys Nursery, Inc., Appellee

Text: In August, 1972, pursuant to Act 515, Robert Clayton and Marion Clayton, predecessors in title to appellee, Feeneys Nursery, covenanted with Bucks County to maintain the 76.39 acre subject tract as farmland. As a result of the covenant, the property owners benefited by the preferential tax assessment provided for by the Act. In November, 1979, the appellee sold and conveyed a 5.4 acre parcel carved out of the original 76.39 acre tract. At or about the time of the sale, Bucks County Board of Assessment Appeals, appellant, determined that the conveyance breached the Act 515 covenant and assessed rollback taxes [3] back to 1972 when the covenants were originally executed. [4] The rollback tax assessment was paid out of a sum escrowed for that purpose at the closing. The appellee then filed an appeal to recover the back taxes paid. The trial court found that a change in ownership brought about by a conveyance of a portion of the tract does not breach the covenant, so long as the land is maintained in the physical use for which it was covenanted. [5] The Commonwealth Court agreed with the trial court's conclusion and affirmed. [6] The appellant Board argues that under Act 515 there are two essential requirements to qualify for preferential tax treatment: (1) the land must be in common ownership; and (2) the land must meet the requisite minimum acreage provided by the statute. Appellant contends that when the land in question was subdivided and a portion not meeting the minimum acreage requirements was conveyed, both of the statutory essentials were violated. The appellee, on the other hand, argues that since the physical use of the land did not change at the time of or after the sale, no breach occurred and the tract still qualifies for preferential tax treatment. The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly. Every statute shall be construed, if possible, to give effect to all its provisions. Statutory Construction Act of 1972, Dec. 6, No. 290, § 3, 1 Pa.C.S.A. § 1921. [T]he General Assembly intends to favor the public interest as against any private interest. Id., 1 Pa.C.S.A. § 1922. The obvious intent of the legislature in enacting Act 515 was to preserve farms, forests, water supplies and open spaces in the Commonwealth. To encourage this end counties are authorized to extend a tax benefit in the form of a lower assessment to owners of such lands who covenant to preserve the land in an undeveloped state for at least a period of 10 years. The Act is specific as to the land that qualifies for the special tax treatment. Farm land must be at least twenty acres in area; it must be in common ownership; and it must be used for growing crops or raising livestock. A tract of land which meets these basic requirements is eligible, under Act 515, for the preferential tax assessment that becomes lawful upon the execution of a covenant. It is a rule of statutory construction that a statute which exempts persons or property from taxation must be strictly construed. See: Lehigh Valley Co-op Farmers v. Commonwealth of Pennsylvania, 498 Pa. 521, 447 A.2d 948 (1982). Statutes providing exemptions from taxation are strictly construed against the taxpayer. See: West Allegheny Hospital v. Board of Property Assessment, Appeals and Review of Allegheny County, 63 Pa.Cmwlth. 555, 439 A.2d 1293 (1981). Although literally, Act 515 is not a statute exempting persons or property from taxation, it is an Act which sanctions an arrangement for the preferential reduction of taxes. In a sense, the Act does exempt a portion of the real estate taxes on those qualified lands that are covenanted for designated statutory uses. Absent the statute, the assessment would be higher and the taxes due correspondingly greater. Accordingly, we are constrained to strictly construe Act 515 against the taxpayer. The land in question here was made subject to a covenant to preserve it as farmland pursuant to Act 515. At the time of the covenant, the tract consisted of 76.39 acres and was in common ownership. The common ownership was subsequently transferred by the original covenantors to the appellee. The Act contemplates that the entire tract covenanted will remain continually eligible for special tax consideration by preserving the integrity of each of the essential qualifications during the term of the covenant. All of the statutory requirements which make the land eligible in the first instance must continue until the expiration of the covenant. A change in any of the requirements during the term of the covenant constitutes a breach in the sense that the property which is the subject of the covenant is no longer qualified under the Act. One of the essential requirements is that the tract must be in common ownership. During the period of the covenant it must remain in common ownership, otherwise a landowner could obtain preferential tax treatment for a qualified tract which exceeds the acreage requirement and then, with impunity, subdivide the land into parcels smaller in area than is required by the Act. This is plainly contrary to the intent of the Act. The only exception provided by Act 515 is where part or all of the land is: [A]cquired by lease, purchase or eminent domain, and use of rights of way or underground storage rights in such land by a public utility or other body entitled to exercise the power of eminant domain. . . . 16 P.S. § 11946 We conclude that when the appellee sold and conveyed 5.4 acres out of the 76.39 acre tract, the covenant was breached and the owner became subject to pay the rollback taxes and interest as provided by Act 515. [7] The order of the Commonwealth Court is reversed.