Bay Harbor Marina Ltd. P'ship v. Erie Cnty. Bd. of Assessment Appeals

• Decision Date: 10 January 2018
• Docket Number: No. 1388 C.D. 2016,No. 1389 C.D. 2016,No. 1390 C.D. 2016,No. 1387 C.D. 2016,No. 1391 C.D. 2016,No. 1377 C.D. 2016,1377 C.D. 2016,1387 C.D. 2016,1388 C.D. 2016,1389 C.D. 2016,1390 C.D. 2016,1391 C.D. 2016
• Citation: 177 A.3d 406
• Parties: BAY HARBOR MARINA LIMITED PARTNERSHIP, Appellant v. ERIE COUNTY BOARD OF ASSESSMENT APPEALS, and The School District of the City of Erie, and City of Erie Marina Holdings Limited, and Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals, and The School District of the City of Erie, and City of Erie Appeal of: Marina Holdings Limited Marina Holdings Limited and Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals, The School District of the City of Erie and the City of Erie Appeal of: The School District of the City of Erie Marina Holdings Limited and Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals, The School District of the City of Erie and the City of Erie Appeal of: The School District of the City of Erie Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals, The School District of the City of Erie and the City of Erie Appeal of: The School District of the City of Erie Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals and The School District of The City of Erie and the City of Erie Appeal of: The School District of the City of Erie
• Court: Pennsylvania Commonwealth Court

177 A.3d 406

BAY HARBOR MARINA LIMITED PARTNERSHIP, Appellant

v.ERIE COUNTY BOARD OF ASSESSMENT APPEALS, and The School District of the City of Erie, and City of Erie

Marina Holdings Limited, and Bay Harbor Marina Limited Partnership

v.Erie County Board of Assessment Appeals, and The School District of the City of Erie, and City of Erie

Appeal of: Marina Holdings Limited

Marina Holdings Limited and Bay Harbor Marina Limited Partnership

v.Erie County Board of Assessment Appeals, The School District of the City of Erie and the City of Erie

Appeal of: The School District of the City of Erie

Marina Holdings Limited and Bay Harbor Marina Limited Partnership

v.Erie County Board of Assessment Appeals, The School District of the City of Erie and the City of Erie

Appeal of: The School District of the City of Erie

Bay Harbor Marina Limited Partnership

v.Erie County Board of Assessment Appeals, The School District of the City of Erie and the City of Erie

Appeal of: The School District of the City of Erie

Bay Harbor Marina Limited Partnership

v.Erie County Board of Assessment Appeals and The School District of The City of Erie and the City of Erie

Appeal of: The School District of the City of Erie

No. 1377 C.D. 2016

No. 1387 C.D. 2016

No. 1388 C.D. 2016

No. 1389 C.D. 2016

No. 1390 C.D. 2016

No. 1391 C.D. 2016

Commonwealth Court of Pennsylvania.

Argued: April 6, 2017

Filed: January 10, 2018

Gary Eiben, Erie, for appellant.

Gregory A. Karle, Erie, for appellee City of Erie.

Raymond A. Pagliari, Erie, for appellee The School District of the City of Erie.

Dan W. Susi, Erie, for appellee Erie County Board of Assessment Appeals.

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge

OPINION BY JUDGE COVEY

Bay Harbor Marina Limited Partnership (Bay Harbor) and Marina Holdings Limited (Marina Holdings) (collectively, Lessees) appeal from the Erie County Common Pleas Court's (trial court) July 13, 2016 order that denied Lessees' summary judgment motions and granted the Erie County Board of Assessment Appeals (Board), the City of Erie (City) School District (District), and the City's summary judgment motions. The District cross-appeals from the trial court's July 13, 2016 order and appeals from the trial court's July 18, 2016 order that denied the District's motion to assign burdens of proof to Bay Harbor and Marina Holdings. There are six issues for this Court's review: (1) whether Lessees of the Erie–Western Pennsylvania Port Authority (Authority), a Commonwealth agency, have standing to seek tax immunity and exemption; (2) whether the Authority is or should be a party to the tax appeal; (3) whether the Authority's marina properties are immune and/or exempt from taxation; (4) whether the trial court should have examined each parcel and individual part thereof to determine if their public access areas were exempt from taxation; (5) whether the District's cross-appeals are properly before this Court; and, (6) whether the trial court's July 18, 2016 order is an appealable order.

The Authority is a third class port authority organized under the Third Class City Port Authority Act (Act).¹ It leased two parcels of its property—Bay Harbor West and Bay Harbor East (collectively, Parcels)—to Marina Holdings and Bay Harbor, respectively. The trial court described the Parcels as follows:

Both Bay Harbor West and Bay Harbor East operate as private gated marinas for pleasure and recreational craft. Bay Harbor West consists of approximately 8.8 acres, including water lots. There are approximately 229 slips available for lease. Two buildings are located on the Bay Harbor West property, one of which houses bath/restroom facilities and a commercial restaurant. Bay Harbor leases a portion of the Bay Harbor West property and first building to Litz Enterprises, LLC, t/d/b/a Jr's on the Bay (‘Sloppy Duck’). Rent ranges from $44,820.00 to $48,708[.00] for 2016. Bay Harbor also leases a portion of the second building to a commercial mechanic business, which pays $2,200[.00] per quarter. The remainder of the second building is utilized as an office for both Bay Harbor entities.

Bay Harbor East consists of approximately 12 acres. There are three docks and 236 slips located on the property. There is also a parking lot and bathhouse and vending area for tenants.

Boat slips in Bay Harbor West and Bay Harbor East are leased to private tenants on an annual basis. Once a slip is assigned to a tenant, that tenant may renew his/her membership year-to-year. Tenants are selected on a first-come, first-serve basis and members of the public may become members if dockage is available.

Both marina areas are fenced and locked. Access requires a key device. The leases with the [ ] Authority provide for [ ] Authority approval of the fence at Bay Harbor East and installation of a fence at Bay Harbor West. Parking is located within the fenced areas of both marinas. Public parking is located outside of the fence on the southern portion of Bay Harbor West. Marina member amenities, including bathhouse facilities, picnic shelters, fish cleaning station and port-a-potties are not available to the general public. Furthermore, various postings on both properties exclude entry by the general public.

Use of both marinas is limited to members and their family/friends, except for limited public access areas. Public access at Bay Harbor West includes a walkway along the eastern edge of the property allowing the public to walk to the water. Another form of public access at Bay Harbor West is a boat launch that provides public access to the bay. Public transient boaters who use the boat launch may not moor their boats in the marina area, although they may use slips for a fee. Bay Harbor has a courtesy dock allowing members and the general public to briefly dock their boats and move their trucks/trailers to the launch to remove their boats.

Public access to Bay Harbor East consists of a public access walkway [ ] maintained by Bay Harbor along the eastern and northern perimeter of Bay Harbor East. There is no public boat launch. For a fee, transient boats may use one of six open slips.

Trial Ct. Op. at 3–4 (footnotes omitted).

The Authority does not use or occupy the Parcels, is not involved in the daily operations, decision-making, policy administration, rule enforcement or membership criteria/approval of the entities using the Parcels. Each of Lessees' leases provides, in relevant part:

4. Taxes, Utilities and Assessments.

(a) The [l]eased [p]remises are not subject to any taxes or assessments as they have been acquired and have been used and will continue to be used to further and effectuate the Lessor's authorized purposes. Nonetheless, in the event of a change in law, an agreement between [the Authority] and Lessee pursuant to which a payment in lieu of taxes is to be made with respect to the [l]eased [P]remises (which payment agreement shall be approved in writing by the Lessee in advance), or a determination by a court or governmental body with jurisdiction that any tax or assessment may be chargeable against the [l]eased [p]remises, the following subparagraphs shall control the determination of liability for any taxes or assessments.

(b) The Lessee shall pay all taxes (including but not limited to real estate taxes) and assessments, if any, upon or against the [l ]eased [p ]remises by any governmental entity by reason of the occupancy of the [l ]eased [p ]remises by the Lessee regardless of whether or not Lessee occupies the [l]eased [p]remises during the entire period of such assessment. Lessee shall also pay all water and sewer rental charges commencing with the commencement date of the Lease term (such items for the current Year to be prorated as of such commencement date), all utility and telephone charges, and all expenses necessary for the maintenance of the [l]eased [p]remises during the term of the lease and any and all renewals thereof.

(c) The Lessee shall have the right in good faith to contest or review by legal proceedings or in such other manner as it deems suitable, which proceedings, if instituted, shall be conducted promptly at Lessee's expense and free of expense to the Lessor, any taxes or assessments imposed upon or growing due and payable by reason of said [l ]eased [p ]remises or any part thereof. The Lessee shall pay the amount that shall be finally assessed or imposed against such premises or be adjudicated to be due and payable as any such disputed or contested tax or assessment. The Lessor will join in any contest or protest provided for in this paragraph at the request of the Lessee but at the Lessee's sole cost and expense and as a condition of such joinder the Lessor may require reasonable indemnity against costs or other damage by reason of such joinder.

Reproduced Record (R.R.) at 131a–132a, 220a–221a (emphasis added).

On December 17, 2012, Lessees applied to the Board seeking tax immunity and/or exempt status for the Parcels. In a February 21, 2013 letter, the Authority's Chairman Jeffrey Johnson (Johnson) notified the Erie County Bureau of Assessment's Director of Assessment Scott Maas (Maas):

The [Authority] does not support the immunity or exemption from real estate taxes for Authority property unless it fulfills the core mission of the Authority. The Authority has leased properties to ... Bay Harbor Marina, which are purely private, for-profit and commercial entities. These types of entities operate yacht clubs, marinas and recreational boat sales, and in no way further the core mission of the Authority. As the record owner of the [Parcels], the Authority opposes the grant of immunity or exemption from ad valorem property taxes for these [Parcels] and believes they are a proper subject of taxation.

We are, therefore, revoking the Authority's joinder in the Petitions seeking immunity or exemption from taxes that are now before the [Board].

We would kindly request that you make the Board aware of our position on this matter in

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