Court Opinion

ID: 7801993
Source: CourtListenerOpinion
Date Created: 2022-08-19 13:12:15.621325+00
Date Added: 2024-06-11T16:29:22.518573
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In Re: Appeal of the Coatesville Area       :
School District From the Decision of the    :
Chester County Board of Assessment          : No. 1130 C.D. 2018
Appeals for the Property Located at         :
50 South First Avenue, City of Coatesville, :
Chester County, Pennsylvania Property       :
Tax Parcel No. 16-05-0229.0000              :
                                            :
Appeal of: Coatesville Area School District :

In Re: Appeal of the Coatesville Area         :
School District from the Decision of The      :
Chester County Board of Assessment            : No. 1161 C.D. 2018
Appeals for Property Located at 50 S. First   : ARGUED: September 20, 2021
Avenue, Coatesville, Chester County           :
Pennsylvania                                  :
                                              :
Tax Parcel No. 16-05-00229.0000               :
                                              :
Appeal of: Huston Properties, Inc.            :

BEFORE:     HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE ELLEN CEISLER, Judge
            HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION BY
SENIOR JUDGE LEADBETTER                                  FILED: August 19, 2022

            Now before the Court for disposition on the merits are the cross-appeals
of the Coatesville Area School District and Huston Properties, Inc., from the order
of the Court of Common Pleas of Chester County setting the assessment of the
subject parcel of real property (Property), at $267,250 for the tax years 2014 and
2015, representing a 72% partial exemption from its previous assessment of
$954,450. We affirm in part and reverse in part, concluding that Huston Properties
is entitled to a 100% exemption from the assessment on the Property.

Procedural History
                In August 2013, Huston Properties applied for an exemption from real
estate taxes, claiming entitlement as an institution of purely public charity. After a
hearing, the Chester County Board of Assessment Appeals (Board) granted a partial
exemption of 72%. The District and the City of Coatesville appealed to the trial
court, challenging the Property’s partial exemption. After a hearing on the merits,
the trial court issued two orders affirming the Board, each of which were appealed
to this Court by the District and the City and cross-appealed by Huston Properties.
                In an unpublished decision, In re: Appeal of City of Coatesville (Pa.
Cmwlth., Nos. 511, 530, 607, and 608 C.D. 2016, filed February 16, 2017), we
vacated the decision of the trial court and remanded for findings of fact and
conclusions of law with respect to whether Huston Properties satisfied the
requirements to qualify as a purely public charity set forth in Hospital Utilization
Project v. Commonwealth, 487 A.2d 1306 (Pa. 1985) (HUP), referred to as the HUP
test, and the Institutions of Purely Public Charity Act1 (Act 55), as well as the
Consolidated County Assessment Law, 53 Pa.C.S. §§ 8801-8868.
                On remand, the trial court issued a decision in June 2018, which
addressed the elements of the HUP test and Section 5 of Act 55, 10 P.S. § 375.
However, the trial court’s opinion did not address the requirements for a charitable
exemption under the Consolidated County Assessment Law. The District again
appealed the decision of the trial court with regard to the order disposing of its appeal

    1
        Act of November 26, 1997, P.L. 508, 10 P.S. §§ 371-385.

                                                2
but not an essentially identical order entered in the City’s appeal; the City did not
further appeal. Huston Properties cross-appealed. The matter returns to us for
decision after a prior order dismissing the appeal was vacated by the Supreme Court
of Pennsylvania.2

Factual History
               The facts may be summarized as follows. The Property, Parcel No. 16-
06-0229.0000, consists of 3.88 acres at 50 South First Avenue, Coatesville, Chester
County, on which sits the Huston Building. The Building is approximately 120 years
old (the original portion of the Building was built in 1902 and 1903 and a second
wing was added in 1916).             The Building originally served as the corporate
headquarters of the Lukens Steel Company, which was the first producer of boiler
plate in the United States. The Property was conveyed from the Bethlehem Steel
Corporation to Huston Properties in 2000 with the deed restriction that the Property
“be used as a site of an office building and otherwise only for purposes consistent
with the preservation and conservation of said tract of land as a historic structure.”
(Deed, Reproduced Record “R.R.” at 174a.) The Property is entered in the National
Register of Historic Places and is located in a historic overlay district created by the
City of Coatesville to protect historic resources.3 Huston Properties has maintained

    2
       This Court granted Huston’s motion to quash based upon grounds of res judicata and
collateral estoppel and dismissed the matter because only one of two orders on the dual appeals by
the City and School District was appealed. See In re Coatesville Area Sch. Dist., 216 A.3d 539
(Pa. Cmwlth. 2019). However, our Supreme Court vacated our order and remanded for a decision
on the merits. See In re Coatesville Area Sch. Dist., 244 A.3d 373 (Pa. 2021).

    3
     The historic overlay district has not been recognized by the Pennsylvania Historical and
Museum Commission.

                                                3
the Property consistent with the deed restrictions requiring its use as an office
building and the purposes of conserving and protecting it as a historic structure.
             Huston Properties is a wholly-owned subsidiary of the Stewart Huston
Charitable Trust (Trust). Huston Properties is organized as a non-profit corporation
registered in Pennsylvania and as a holding company under Section 501(c)(2) of the
United States Internal Revenue Code, 26 U.S.C. § 501(c)(2). Huston was organized
and operates “exclusively to hold property, collect income therefrom, and turn the
entire income, less expenses, over to the . . . Trust . . . . ” (Articles of Incorporation
at Ex. A, R.R. at 184a.) The Trust is a testamentary charitable trust created by the
will of Stewart Huston (Last Will and Testament of Stewart Huston, R.R. at 698a-
746a), organized under Section 501(c)(3) of the Internal Revenue Code, 26 U.S.C.
§ 501(c)(3). The Trust is the sole member of Huston Properties. If Huston Properties
were to be liquidated, the funds would revert to the Trust. (Articles of Incorporation
at Ex. A, R.R. at 184a.)
             Huston Properties maintains and preserves the Property as a historic
structure—the trial court found that this was Huston Properties’ function for
purposes of applicable legal standards (the HUP test and Act 55). Huston Properties’
expenses on the Property have consistently exceeded its income, with rents from
tenants not covering operating expenses. The Property is let to multiple tenants
comprising for-profit and non-profit entities, with some of the non-profits paying
only nominal rent.         Between 2008 and 2014,4 Huston Properties rented
approximately 89% of the usable space in the building to non-profits. Other
entities—the Trust and the Lukens Band, the oldest community band in the United

    4
      The hearing in this matter was conducted in November 2015. (See Notes of Testimony
“N.T.,” R.R. at 15a-142a.)

                                            4
States—are allowed to use space at the Property rent-free. The Greystone Society,
a non-profit, occupying 1,800 square feet in the building, houses a museum and
conducts educational activities for the Lukens National Historic District.
               Although Huston Properties provides no direct services to the City, the
trial court found that Huston Properties’ service to the community is to maintain the
historic structure on the Property. (Trial Ct. Op. at 3.5) Huston Properties has
expended significant funds in preserving and maintaining the Property; because its
expenses have historically exceeded its income, it has required ongoing subsidies
from the Trust. For the tax years 2008-2014, Huston Properties’ expenses exceeded
its revenue by an average of approximately $39,000 per year, with the balance
subsidized by the Trust. The trial court found that Huston Properties cannot generate
sufficient revenue to pay all operational expenses and that Huston Properties is not
engaged in a commercial venture in competition with others. (Id. at 6.) All revenues
received are used for the maintenance and preservation of the Property, which the
trial court termed a “historic resource.” (Id. at 8 and 10.) The trial court found that
the preservation and maintenance of the Property would not be within the resources
of the general public. (Id. at 4.) The trial court found that Huston Properties leases
portions of the Property to various non-profits for nominal rent, thereby “donating
and rendering gratuitously a substantial portion of its services.” (Id. at 9.)

Issues
               On appeal, the District asserts that the trial court erred in concluding
that Huston Properties satisfied the HUP test and the requirements set forth in

    5
      The trial court made findings of fact, which are numbered separately and correspond to
elements of the HUP test and Act 55. Thus, our citations are to the trial court opinion’s pagination
and not to numerical findings of fact.

                                                 5
Section 5 of Act 55, 10 P.S. § 375; that the property was precluded from a charitable
tax exemption under Section 8812(b)(1)-(2) of the Consolidated County Assessment
Law, 53 P.S. § 8812(b)(1)-(2); and that the record did not support the trial court’s
conclusion that Huston Properties was entitled to a 72% partial exemption on the
Property. (Dist. Br. at 4-5.)
            Of the issues raised in Huston Properties’ cross-appeal, one remains in
dispute: whether it was entitled to a full (100%) charitable exemption.

Purely Public Charity: Pennsylvania Constitution, Article VIII, Section 2(a)(v)
and Section 5 of Act 55

                 To qualify for a charitable exemption from local taxes, an entity must
prove that it is a purely public charity within the meaning of the term in article VIII,
section 2(a)(v)6 of the Pennsylvania Constitution. In HUP, our Supreme Court
established a five-prong test, holding that an entity qualifies as an institution of
purely public charity for constitutional purposes if it meets the following
requirements:
                 (a) Advances a charitable purpose;

                 (b) Donates or renders gratuitously a substantial portion of
                 its services;
    6
        Article VIII, section 2(a)(v) of the Pennsylvania Constitution provides as follows:

                 The General Assembly may by law exempt from taxation:

                 ....

                        (v) Institutions of purely public charity, but in the case of
                 any real property tax exemptions only that portion of real property
                 of such institution which is actually and regularly used for the
                 purposes of the institution.

Pa. Const. art. VIII, § 2(a)(v) (emphasis supplied).

                                                  6
             (c) Benefits a substantial and indefinite class of persons
             who are legitimate subjects of charity;

             (d) Relieves the government of some of its burden; and

             (e) Operates entirely free from private profit motive.

HUP, 487 A.2d at 1317. The seeker of the exemption must establish each of these
elements. Camp Hachshara Moshava of N.Y. v. Wayne Cnty. Bd. for the Assessment
and Revision of Taxes, 47 A.3d 1271, 1275 (Pa. Cmwlth. 2012). Whether an entity
qualifies as a “purely public charity” under the HUP test “is a mixed question of law
and fact . . . .” Fayette Res., Inc. v. Fayette Cnty. Bd. of Assessment Appeals, 107
A.3d 839, 845 (Pa. Cmwlth. 2014).
             Once an entity has satisfied the constitutional minimum of the HUP
test, it must then also show that it meets the statutory requirements of Section 5 of
Act 55. Id. Those requirements generally correspond to the requirements of the
HUP test and are set forth in the discussion below. The parties dispute whether
Huston Properties met the first four elements of the HUP test and corresponding
requirements of Section 5 of Act 55, 10 P.S. § 575. As these issues overlap, we
address them together.

      Advancement of a Charitable Purpose
             With regard to the first HUP prong, the term “charitable” includes:

             [E]very gift for a general public use, to be applied,
             consistent with existing laws, for the benefit of an
             indefinite number of persons, and designed to benefit them
             from an educational, religious, moral, physical or social
             standpoint. In its broadest meaning it is understood to
             refer to something done or given for the benefit of our
             fellows or the public.

                                          7
HUP, 487 A.2d at 1315 (extraneous punctuation omitted) [quoting Hill Sch. Tax
Exemption Case, 87 A.2d 259, 262 (Pa. 1952)].
               Section 5(b) of Act 55 provides that the criterion of “advanc[ing] a
charitable purpose” is satisfied if an institution is organized and operated “primarily
to fulfill any one or combination” of enumerated purposes, including
“[a]ccomplishment of a purpose . . . recognized as important and beneficial to the
public and which advances social, moral or physical objectives.”                       10 P.S. §
375(b)(6).
               The District contends that the actual purpose of Huston Properties is to
generate income for the Trust as an unrelated business entity. This assertion is
contrary to the trial court’s finding of fact on the point, which finding is supported
by ample evidence. The District’s argument is belied by the deed restrictions placed
upon the Property, that it be used only as an office building and for purposes
consistent with the preservation and conservation of the Property as a historic
structure, as well as by the fact that the Property has consistently been operated at a
loss, with subsidization of shortfalls by the Trust. The trial court, as fact finder in a
tax assessment appeal, has within its province all matters of credibility and
evidentiary weight. The Lutheran Home at Topton, Pa. v. Schuylkill Cnty. Bd. of
Assessment Appeals, 782 A.2d 1, 6 (Pa. Cmwlth. 2001).
               The District further contends that the preservation of the Property as a
historic resource does not constitute advancement of a charitable purpose under the
HUP test.7 However, as pointed out by Huston Properties, the preservation of

    7
      The cases cited on this issue by the District do not deal with the meaning of advancement of
a charitable purpose. It was stipulated by the appealing taxing authority that that prong of the HUP
test was met in Unionville-Chadds Ford School District v. Chester County Board of Assessment
(Footnote continued on next page…)

                                                 8
“historic and esthetic values” of the environment is a right enshrined by the
Environmental Rights Amendment (ERA) to the Pennsylvania Constitution. Pa.
Const. art. I, § 27. It is a matter of express public policy that such values include the
“architectural . . . and cultural heritage” of the Commonwealth. Section 102 of the
History Code, 37 Pa.C.S. § 102. We believe that a function consistent with the
purposes of the ERA as elaborated by the History Code is a purpose recognized as
important and beneficial to the public and advances educational, moral, and social
objectives. Given the policies embodied by the ERA and the History Code, that
preservation of historical and aesthetic values are not merely laudable goals but
rights enjoyed by the citizens of the Commonwealth, we agree that the trial court did
not err in concluding that preservation of a historic resource constitutes advancement
of a charitable purpose.
               Given the rights established by the ERA and Section 102 of the History
Code, we believe that the preservation and maintenance of a historic structure and
property qualifies as a charitable purpose and the fashion in which the building is
operated by Huston Properties is such a use.

Appeals (Appeal of Longwood Gardens), 714 A.2d 397, 399, n.2 (Pa. 1998). In re: Salem
Crossroads Historical Restoration Society, 526 A.2d 1257 (Pa. Cmwlth. 1987), dealt with the
fourth prong of the HUP test: “[s]pecifically, we do not think that the Society’s goals can be viewed
as ‘relieving the government of some of its burden.’” Id. at 1259.

     At all events, the District argues that there is “no comparison between Longwood Gardens
and Huston Properties” (Dist. Br. at 21), given the former’s world-renowned public gardens,
walking trails and watershed areas, education and research programs, financial and non-financial
contributions to the community, and hundreds of annual events open to guests for the price of
admission. Nowhere in Appeal of Longwood Gardens is it suggested that only organizations with
the scale and scope of Longwood Gardens may qualify as purely public charities.

                                                 9
      Gratuitous Service
                The second prong of the HUP test requires an institution to establish
that it “[d]onates or renders gratuitously a substantial portion of its services.” HUP,
487 A.2d at 1317. The District argues that Huston Properties does not meet the
second prong of the HUP test because “the record is void of any evidence or
testimony indicating that the public or non-profit tenants cannot afford to pay their
rents or that Huston Properties engages in any purported charitable activities.” (Dist.
Br. at 28.) The District cites Fellowship International Mission v. Lehigh County
Board of Assessment Appeals, 690 A.2d 1271, 1274 (Pa. Cmwlth. 1997), for the
proposition that the second prong of the HUP test requires a showing of “a bona fide
effort to service those persons unable to afford the usual fee. In other words, it must
be shown that it provides services to someone who cannot afford to pay.” From this,
the District reasons that Huston was required to show that its tenants are unable to
pay rent. While this argument would seem to relate more to the third prong of HUP
(whether the beneficiaries of the service are legitimate subjects of charity) rather
than whether the service is rendered gratuitously, it lacks merit in either case.
                The trial court found that the charitable function of Huston Properties
is the preservation and maintenance of a historic structure, not the subsidizing of
tenants’ rent.     To the extent that Huston Properties has had income, it has
consistently been exceeded by the costs of preservation and maintenance, which are
subsidized by the Trust, so clearly this service to the community is rendered
gratuitously.
                Section 5(d)(1) of Act 55 requires that an institution must donate or
render gratuitously a substantial portion of its services, which requirement may be
met by provision of, inter alia, “goods and services.” 10 P.S. § 375(d)(1). Section

                                           10
5(d)(1) sets forth several measures for this criterion. The District argues that Section
5(d) contemplates “some tangible and quantifiable ‘goods and services’ be provided
so that a calculation can be made as to whether a substantial portion of those goods
and services have been donated or gratuitously rendered.” [Dist. Br. at 37 (emphasis
supplied).] The District disputes that the “existence and maintenance of a historic[]
property provides some incalculable benefit to the citizenry at large.” (Id.) The law
does not impose a requirement that a service be “tangible” in order for it to qualify
under Act 55. Section 3 of Act 55 only defines the phrase “goods and services” in
terms of function and value. We have already found that the preservation of the
Property advances a charitable purpose that is covered by Section 5(b) of Act 55 and
further conclude that preservation and maintenance of a historic structure constitutes
“services” for purposes of Act 55.8

        Legitimate Subjects of Charity
              The third prong of the HUP test requires that a public charity benefit a
substantial and indefinite class of persons who are legitimate subjects of charity.
Mars Area Sch. Dist. v. United Presbyterian Women’s Ass’n of N. Am., 693 A.2d
1002, 1007 (Pa. Cmwlth. 1997). Section 5(e) of Act 55 provides that the institution
in question must “benefit a substantial and indefinite class of persons who are
legitimate subjects of charity.” 10 P.S. § 375(e)(1). With respect to Section 5(e) of
Act 55, “[l]egitimate subjects of charity” are defined as “[t]hose individuals who are
unable to provide themselves with what the institution provides for them” and

    8
      The District does not argue that the value of the preservation and maintenance services
provided by Huston Properties relative to income or expenses would be insufficient under Section
5(d)(1) of Act 55 nor would such an argument have merit, since all of Huston’s income is
consumed in providing this service.

                                              11
“[s]ubstantial and indefinite class of persons” is defined in pertinent part as
“[p]ersons not predetermined in number.” 10 P.S. § 375(e)(2).
             The District asserts that the trial court erred in finding that these
standards were met because of (1) a lack of evidence that Huston’s tenants are
legitimate subjects of charity, and (2) “[t]here was no evidence at trial indicating that
the Property was open to the community.” (Dist. Br. at 28.) The District argues that
for a property to qualify under this prong of the HUP test, it must be open to the
public.   The District also distinguishes the Property from an institution like
Longwood Gardens, “a unique resource that virtually no individual could afford to
maintain on his or her own . . . comparable to a public library, museum, or art
gallery.” [Dist. Br. at 26 (quoting Appeal of Longwood Gardens, 714 A.2d at 400).]
             On the contrary, our Supreme Court has not made public entry into a
building a litmus test, but rather requires that the benefit be available to the public at
large. Further, Huston’s preservation and maintenance activities are a resource to
the general public that, like Longwood Gardens, would not be within the means of a
private individual. The trial court found that the maintenance and preservation of
the Property would not be within the resources of the general public. (Trial Ct. Op.
at 10.) As stated by our Supreme Court, “an essential feature of public charity ‘is
that it is not confined to privileged individuals[] but is open to the indefinite public.
It is this indefinite or unrestricted quality that gives it its public character.’” Appeal
of Longwood Gardens, 714 A.2d at 401 [quoting Donohugh’s Appeal, 86 Pa. 306,
313 (1878) (emphasis supplied)]; compare Sacred Heart Healthcare Sys. v.
Commonwealth, 673 A.2d 1021 (Pa. Cmwlth. 1996) (provision of management
services to only a small group of affiliated corporations and not to the general public
or any segment thereof is not a charitable purpose).

                                           12
             We agree with the trial court that the beneficiaries of Huston Properties’
activities of preservation and conservation include the public at large, which enjoys
a historic resource it would otherwise lack. The Property is accessible to members
of the general public through a museum operated on site and a community band, and
its historic and architectural features can be viewed and appreciated. We believe
this adequately establishes that the Property is an accessible benefit to the general
public for purposes of the HUP test and Section 5(e) of Act 55.

      Relief of a Government Burden

             To satisfy the fourth prong of the HUP test, an institution must relieve
the government of some burden. Section 5(f) of Act 55 provides in relevant part as
follows:

             (f) Government service.--The institution must relieve the
             government of some of its burden. This criterion is
             satisfied if the institution meets any one of the following:

                    (1) Provides a service to the public that the
             government would otherwise be obliged to fund or to
             provide directly or indirectly or to assure that a similar
             institution exists to provide the service.

                   (2) Provides services in furtherance of its charitable
             purpose which are either the responsibility of the
             government by law or which historically have been
             assumed or offered or funded by the government.

             ....

                    (4) Provides a service to the public which directly
             or indirectly reduces dependence on government programs
             or relieves or lessens the burden borne by government for
             the advancement of social, moral, educational or physical
             objectives.

                                         13
10 P.S. § 375(f)(1)(2) and (4).
               The District contends that “[t]here is no precedent for the argument that
the government has the burden to maintain or preserve a privately owned
commercial office building, even if the building is designated as historically
significant.” (Dist. Br. at 24.) We disagree that the charitable endeavor must relieve
the government of some mandatory obligation. In Appeal of Longwood Gardens,
our Supreme Court stated as follows regarding the nature of the relief of a
government burden prong:

               Whenever the government provides services and facilities
               to its citizens, it bears certain burdens. Such burdens exist
               regardless of whether the governmental endeavor is
               obligatory or discretionary in origin. If services and
               facilities provided by government experience reduced
               demands due to the existence of independent institutions
               that meet the same needs, then it can fairly be said that the
               government’s burden has been eased.

Appeal of Longwood Gardens, 714 A.2d at 400 (emphasis supplied).
               Nonetheless, we agree with Huston Properties and the trial court that
the preservation and maintenance of historic structures is a burden that the
Commonwealth has taken on and, indeed, a duty of government.                   The ERA
establishes that the people of the Commonwealth have a right to the “preservation
of the natural, scenic, historic and esthetic values of the environment” and imposes
on the Commonwealth a duty to conserve and maintain them. Pa. Const. art. I, § 27.
Further, Section 102 of the History Code includes a specific statement of legislative
policy that historical preservation is a duty vested in the Pennsylvania Historical and
Museum Commission. 37 Pa.C.S. § 102.9 More concretely, the state government

    9
     The legislative statement provides, in pertinent part:
(Footnote continued on next page…)

                                                14
has assumed some of the burden for funding historic preservation. Section 104 of
the History Code provides that

               [t]he money collected by the [Historical and Museum]
               [C]ommission from all fees, sales and other activities shall
               be paid into the State Treasury through the Department of
               Revenue and credited to the Historical Preservation Fund.
               Collections shall include the proceeds from the sale of

               It is hereby determined and declared as a matter of legislative
               finding and policy that:

               (1) [The ERA] makes the Commonwealth trustee for the
               preservation of the historic values of the environment.

               (2) The conservation of Pennsylvania's historic . . . heritage and the
               preservation . . . objects of historic interest, and the identification,
               restoration and preservation of architecturally and historically
               significant sites and structures are duties vested primarily in the
               Pennsylvania Historical and Museum Commission.

               (3) The irreplaceable historical, architectural, archaeological and
               cultural heritage of this Commonwealth should be preserved and
               protected for the benefit of all the people, including future
               generations.

               (4) The preservation and protection of historic resources in this
               Commonwealth promotes the public health, prosperity and general
               welfare.

               (5) The rapid social and economic development of our
               contemporary society threatens to destroy the remaining vestiges of
               our historic heritage.

               (6) It is in the public interest for the Commonwealth, its citizens and
               its political subdivisions to engage in comprehensive programs of
               historic preservation for the enjoyment, education and inspiration of
               all the people, including future generations.

37 Pa.C.S. § 102 (relating to declaration of policy).

                                                 15
            historic properties. The money in the fund may be used
            by the [C]ommission and is hereby appropriated to it in
            exercising its powers and performing its duties as set forth
            in this title.

37 Pa.C.S. § 104(h). Section 502 of the History Code provides that the Pennsylvania
Historical and Museum Commission

            ha[s] the power and duty to:

            (5) Undertake the activities necessary to qualify the
            Commonwealth for participation in programs and sources
            of Federal assistance for purposes of historic preservation.
            ....

            (8) Provide technical and financial assistance to public
            officials, private individuals and organizations engaged in
            historic preservation activities.

            ....

            (11) Solicit, receive and utilize funds from any public or
            private source for purposes of historic preservation.

            (12) Acquire easements in properties of historic,
            architectural and archaeological significance by gift,
            purchase, devise or any other lawful transfer when
            acquisition is necessary for the preservation thereof.

            (13) Rent or lease historic resources and associated
            properties for purposes of historic preservation.

            (14) Contract with other states, public officials in this
            Commonwealth or private individuals and organizations
            for purposes of historic preservation.

                                        16
37 Pa.C.S. § 502(5), (8), and (11)-(14).10 The Historical and Museum Commission
administers a grant program, which funds “nonprofit organizations and local
governments for small construction projects for publicly accessible historic
resources.”11      The Department of Community and Economic Development
administers a tax credit program for taxpayers engaging in historic preservation.12
                In the recent case of Ceramic Art & Culture Institute v. Berks County
Board of Assessment Appeals, 227 A.3d 46, 59 (Pa. Cmwlth. 2020), this Court
rejected a taxing authority’s “narrow understanding” of the government burden
factor, stating that it is enough for an organization to relieve a more general assumed
government burden of fostering the arts, without respect to a particularized
obligation to teach ceramics. In light of the values set forth in the ERA, as expanded
upon by the History Code, and in light of the funding for historical preservation
provided by state government, historic preservation is indeed a burden that the
government has assumed. Thus, we conclude that the trial court did not err in finding
that Huston Properties relieves the government of some of its burden.

                The District also argues that the trial court erred in finding that Huston
Properties’ activities relieved the government of a burden as required by Section 5(f)
because of the reasons set forth supra with respect to the fourth prong of the HUP
test and because Huston Properties “provided no evidence . . . that the government

    10
       See also Section 2802-A of art. XXVIII-A of The Administrative Code of 1929, Act of
April 9, 1929, P.L. 177, as amended, added by Section 2 of the Act of June 28, 1951, P.L. 204, 71
P.S. § 717 (relating to Historical Preservation Fund).

    11
         https://www.phmc.pa.gov/Preservation/Grants-Funding/Pages/Construction-Projects.aspx
(last visited on August 18, 2022).

    12
       See https://dced.pa.gov/programs/historic-preservation-tax-credit-hptc/ (last visited on
August 18, 2022).

                                               17
has traditionally assumed responsibility for the preservation of historically
significant, privately-operated, commercial office buildings.” (Dist. Br. at 34.)
               This argument is unavailing for the reasons stated above regarding the
HUP test.       The burden that a charity relieves need not be a statutorily or
constitutionally mandated government responsibility. See Ceramic Art & Culture
Inst., 227 A.3d 46; Pocono Cmty. Theater v. Monroe Cnty. Bd. of Assessment
Appeals, 142 A.3d 110, 116 (Pa. Cmwlth. 2016). It need only be within the “scope
of burdens that are routinely shouldered by government.” Appeal of Longwood
Gardens, 714 A.2d at 401. In the instant case, the trial court concluded as follows:

               Governments have no mandatory obligation to maintain
               historic structures or keep land open. Nevertheless most
               governments choose to do so and public support for such
               efforts is clear. Therefore, by preserving and maintaining
               this historic structure, Huston [Properties] relieves the
               City of Coatesville, the County of Chester, and the
               Commonwealth of Pennsylvania from some of the burden
               that would otherwise fall on one or more of these entities.

(Trial Ct. Op. at 5-6.) We agree. The Commonwealth has enacted funding of
historic preservation into law through the History Code and funds said programs
with the public fisc. Huston Properties’ services relieve the government of some of
the burden it has assumed.

Consolidated County Assessment Law

               The District next argues that the trial court erred13 in granting Huston
Properties a partial exemption because Section 8812(b)(1) and (2) of the

    13
       As noted, the trial court did not make findings of fact or conclusions of law with respect to
issues surrounding the Consolidated County Assessment Law as we had directed when we
(Footnote continued on next page…)

                                                18
Consolidated County Assessment Law precludes exemption of the Property from
real estate taxes where Huston Properties (1) realizes income from the Property and
(2) does not demonstrate significant occupancy and continuing use of the Property.14
(Dist. Br. at 38.)
               Section 8812(b) of the Consolidated County Assessment Law provides
for exceptions to Subsection (a), which state in pertinent part as follows:

               (b) Exceptions.--

                     (1) Except as otherwise provided . . . , all property,
               real or personal, other than that which is actually and
               regularly used and occupied for the purposes specified in

remanded the matter. However, neither party has raised this as an issue and we believe the matter
may be decided on its merits based upon the record before us.

    14
       Huston Properties contends that the District failed to preserve any issue relating to Section
8812(a) because it did not raise such issues in its statement under Rule 1925(b) of the Pennsylvania
Rules of Appellate Procedure, Pa.R.A.P. 1925(b). The District’s statement of errors complained
of on appeal states:

               The [t]rial court erred as the Property owned by [Huston Properties]
               does not fall within the exemption provided at 53 Pa.C.S. § 8812
               because [Huston Properties] failed to establish that it is a purely
               public charity and that the premises were not the source “from which
               any income or revenue is derived” [] by the Lessor [Huston
               Properties], that any rent paid is purely nominal, and that the Lessees
               were the recipients of the Lessor’s charity.[] See [] Appeal of
               Archdiocese of Philadelphia, 617 A.2d 821 (Pa. Cmwlth. 1992).

(Dist. Concise Statement of Errors Complained of on Appeal ¶ 4, Suppl. R.R. at 1122a.)

     The District responds in its reply brief that its statement was sufficient to preserve the issue
under Pa.R.A.P. 1925(b)(4)(v), in that “all issues raised in the Statement will be deemed to include
every subsidiary issue contained herein which was raised in the trial court.” As the District’s
arguments are focused on the exceptions under Section 8812(b)(1)-(2) rather than Huston
Properties’ eligibility for an exemption under Section 8812(a), we deem the issue raised with
sufficient specificity.

                                                19
             this section, and all property from which any income or
             revenue is derived, other than from recipients of the
             bounty of the institution or charity, shall be subject to
             taxation, except where exempted by law for State
             purposes.

                    (2) Except as otherwise provided . . . , all property,
             real and personal, actually and regularly used and
             occupied for the purposes specified in this section shall be
             subject to taxation unless the person or persons,
             associations or corporation so using and occupying the
             property shall be seized of the legal or equitable title in the
             realty and possessor of the personal property absolutely.

53 Pa.C.S. § 8812(b)(1)-(2) (emphasis supplied).
             With respect to Section 8812(b)(1), we believe that our decision in
Borough of Homestead v. St. Mary Magdalen Church, 798 A.2d 823 (Pa. Cmwlth.
2002), is controlling. In Borough of Homestead, we addressed whether a building
should be exempt from real estate taxation where a purely public charity (the Diocese
of Pittsburgh) converted a school building into an office building in which it
maintained an office and leased the rest of the space to for-profit and non-profit
entities in furtherance of the overall objective of helping the unemployed and
generating new business for the local economy. The for-profit entities occupied 16%
of the space while non-profits occupied 79% of the space, and the Diocese allowed
various local groups and government units to utilize the space at no cost. The
building never generated a profit and operated at a deficit while subsidized by the
charity.
             In determining whether the tenants in Borough of Homestead were the
recipients of the owner’s charity, we considered the Diocese’s responsibilities for
maintenance of the building and the Diocese’s never having derived net income or
surplus revenue but requiring that the operation be subsidized for substantial losses.

                                           20
We concluded that the licensees received the bounty of the Diocese based on the
subsidy. Moreover, the intended beneficiary of the charity, the community, was
served because the Diocese utilized the licensees to fulfill the charity’s mission of
serving the community.
               Like the Diocese in Borough of Homestead, Huston Properties has
utilized the Property by leasing space to for-profit and non-profit entities for funds
that aid in, but are insufficient to cover, the costs related to maintaining and
conserving the Property. As in Borough of Homestead, the Property has operated at
a substantial loss that is subsidized by Huston Properties’ parent, the Trust. Huston
Properties provides heat, electricity, ventilation, air conditioning, basic janitorial
services, repairs, and exterior maintenance to all of its tenants.15 As the tenants in
this case benefit Huston Properties’ mission of preserving and maintaining the
Property, we conclude that the exception in Section 8812(b)(1) does not apply.
               Likewise, we find the exception provided in Section 8812(b)(2)
inapplicable, as the evidence of record indicates that Huston Properties maintains its
office in the Building. (N.T. at 49, R.R. at 63a.)

Percentage of Property Exempt from Taxation
               In addition to asserting that Huston Properties is not entitled to any
exemption, the District contends as its fifth issue that the trial court erred by not

    15
        The District cites Appeal of the Archdiocese of Philadelphia, for the proposition that receipt
of any income disqualifies Huston Properties from a tax exemption under Section 8812(b)(1). That
case is readily distinguishable, in that the leases contained a laundry list of benefits to the lessor
such that it was “difficult to envision a cost to [l]essor that is not either to be paid directly by
[l]essee or reimbursed as additional rent.” 617 A.2d at 824. Here, while Huston receives revenue
from the rentals, it does not actually derive income, since its revenue and expenses result in a net
deficit.

                                                 21
providing a basis for its conclusion that the Property was entitled to a 72%
exemption. Conversely, Huston Properties asserts that it is entitled to a 100%
exemption. We address these arguments together.
             In Alliance Home of Carlisle v. Board of Assessment Appeals, 919 A.2d
206 (Pa. 2007), a property generated income through leasing units to tenants. The
Supreme Court found that because the income-producing portion of the property
subsidized the charitable component, the entire property qualified as a purely public
charity exempt from real estate taxation. Likewise, this Court has found that where
space is leased to both for-profit entities and non-profits, to further the purpose of a
purely public charity, the entire property may be tax exempt. See Borough of
Homestead, 798 A.2d at 826. The rents Huston Properties receives are used to
support the charitable purpose of preserving and maintaining the Property by
offsetting some of the expense to maintain it, and the Property is operated at a deficit.
Because the proceeds of leases will be used to further the charitable purpose of
maintaining and preserving the Property, a 100% exemption is appropriate.
Accordingly, we need not address the method of computation of a 72% exemption.

Conclusion
             In light of the foregoing, we affirm in part and reverse in part. We
affirm that an exemption is in order but reverse with respect to the trial court’s
finding that a 72% exemption is appropriate, and direct that the Property be 100%
exempt from taxation.

                                         _____________________________________
                                         BONNIE BRIGANCE LEADBETTER,
                                         President Judge Emerita

                                           22
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In Re: Appeal of the Coatesville Area       :
School District From the Decision of the    :
Chester County Board of Assessment          :        No. 1130 C.D. 2018
Appeals for the Property Located at         :
50 South First Avenue, City of Coatesville, :
Chester County, Pennsylvania Property       :
Tax Parcel No. 16-05-0229.0000              :
                                            :
Appeal of: Coatesville Area School District :

In Re: Appeal of the Coatesville Area         :
School District from the Decision of The      :
Chester County Board of Assessment            :      No. 1161 C.D. 2018
Appeals for Property Located at 50 S. First   :
Avenue, Coatesville, Chester County           :
Pennsylvania                                  :
                                              :
Tax Parcel No. 16-05-00229.0000               :
                                              :
Appeal of: Huston Properties, Inc.            :

                                     ORDER
            AND NOW, this 19th day of August, 2022, the order of the Court of
Common Pleas of Chester County is AFFIRMED IN PART and REVERSED IN
PART. It is ORDERED that the assessment for the real property known as 50 South
First Avenue, Parcel No. 16-06-0229.0000, for the tax years 2014 and 2015 is $0.00.
Said assessment will remain in future tax years unless and until the same is changed
as otherwise provided for by law.

                                      _____________________________________
                                      BONNIE BRIGANCE LEADBETTER,
                                      President Judge Emerita