OPINION
Appeal
from county board of assessment.
GREINER
P. J.
This
issue for determination is the taxability of that portion of
the basement of the Borough of Emporium's Municipal
Building which is leased to the Commonwealth of Pennsylvania
for the use of the Department of Forests and Waters as an
office for Park Region No. 1. No
cases have been cited on this precise point where the
contested tax assessed area is used by the Commonwealth. It
is, therefore, one of first impression.
There
are no facts in dispute, and, in effect, the matter is
presented to the court on a case stated. Emporium Borough,
the county seat of Cameron County, a county of the seventh
class, is the sole owner of its municipal building,
consisting of a basement and ground or first floor. The
entire first floor is occupied and used by the borough for
its governmental functions. A portion of the basement is
leased by the borough to the Commonwealth of Pennsylvania for
the use of the Department of Forests and Waters as office for
Park Region No. 1, at an annual rental of $ 3,600. There is
no question that the Commonwealth uses the leased premises
exclusively for its governmental functions. As in the case of
the first floor, the borough uses the remainder of the
basement exclusively for its governmental functions. The
leased premises were initially assessed for local real estate
tax purposes by the chief assessor of Cameron County in May
1966. Following a hearing on the borough's timely appeal
from such assessment, the Cameron County Board of Assessment
and Revision of Taxes on November 18, 1966, advised the
borough of a reduction from the initial assessment due to
correction in the area involved and modification of the use
classification. The borough, alleging that it was not legally
assessable for any local real estate taxes on the leased
portion of its municipal building, filed an appeal to the
court of common pleas.
Article
IX, sec. 1, of the Constitution of Pennsylvania provides in
part:
"
. . . the General Assembly may, by general laws, exempt from
taxation public property used for public purposes. . .
."
The
Fourth to Eighth Class County Assessment
Law of May 21, 1943, P. L. 571, sec. 101, 72 PS §
5453.101 et seq., provides for exemptions from taxation (72
PS § 5453.202), the pertinent sections of which are as
follows:
"
Section 202. . . . (a) The following property shall be exempt
from all county, borough . . . county institution district
and school . . . tax, to-wit: . . .
"
(7) All other public property used for public purposes with
the ground thereto annexed and necessary for the occupancy
and enjoyment of the same, . . .
"
(b) Except as otherwise provided in clause (11), subsection
(a) of this section, all property, real or personal, other
than that which is in actual use and occupation for the
purposes specified in this section, and all such property
from which any income or revenue is derived, . . . shall be
subject to taxation, except where exempted by law for state
purposes, and nothing herein contained shall exempt same
therefrom" . (Clause (11) subsection (a) relates to
free, public nonsectarian libraries).
Although
there is no authority on the specific issue before the court,
there is ample law relating to the fundamental legal
principles involved. The case of West View Borough Municipal
Authority Appeal, 381 Pa. 416 (1955), embodies much of it.
Commencing at page 419, Mr. Chief Justice Horace Stern
states:
"
To qualify, therefore, for tax exemption it must be
established that the property is being used for a public
purpose and, while a declaration by the legislature as to the
existence of a public purpose is entitled to prima facie
acceptance as to its correctness, it is not conclusive, it
being a judicial question for the ultimate determination of
the courts as to whether a proposed use is a public one
Dornan v. Philadelphia Housing Authority, 331 Pa.
209, 222, 200 A. 834, 841; McSorley v. Fitzgerald,
359 Pa. 264, 268, 59 A.2d 142, 144, 145.
"
What, then, is the established law as to the taxability of
property or part of property which would admittedly be exempt
from taxation if used by the owner for a public purpose but
which is leased to other tenants? The controlling test is,
not merely whether the property or part of it has been rented
out, but whether the use of the part so leased is for a
public or a private purpose. It is the use of the property,
and not the use of the proceeds from the property, which
determines whether tax exemption may constitutionally be
granted.
"
It is not necessary to cite more than a few of the many cases
that have been decided in accordance with the principles thus
stated.
"
In Pittsburgh School District v. Allegheny County,
347 Pa. 101, 31 A.2d 707, and in Freeport School District
v. County of Armstrong, 162 Pa.Super 237, 57 A.2d 692
it was held that a county might levy a real property tax upon
land owned by a school district not used for any school
purpose but leased to a private individual for a commercial
enterprise, and this even though the income from the property
was devoted to school purposes. In Kittanning Borough v.
Armstrong County, 347 Pa. 108, 31 A.2d 710, it was held
that buildings owned by a borough which were partly devoted
to public uses and partly leased out for commercial uses were
taxable as to the portions thus demised. In Pittsburgh v.
Allegheny County, 351 Pa. 345, 41 A.2d 639, it was held
that a county might levy a real property tax upon land
acquired by a city but rented out for commercial purposes. In
Philadelphia v. Barber, 160 Pa. 123, 28 A. 644, it
was held that a part of church property which was rented for
a school and thereby produced revenue was subject to
taxation. In Young Men's Christian Association of
Germantown v. Philadelphia, 323 Pa. 401, 187 A. 204, it
was held that, where a charitable institution
leased part of its building commercially to lodgers, such
part was not exempt from taxation. In Pittsburgh Public
Parking Authority v. Board of Property Assessments, Appeals
and Review, 377 Pa. 274, 105 A.2d 165, it was held that
a portion of the property of a Public Parking Authority which
was leased by the Authority for a commercial use thereby lost
its tax exemption. In West View Borough Municipal Authority
Tax Case, 175 Pa.Super 641, 107 A.2d 130, it was held that,
where a dwelling house on the property of a Municipal
Authority was leased to a tenant purely for revenue, the
house so leased was not exempt from taxation. But, on the
other hand, as contrasted with these decisions, it was held...
