Friends of Pa. Leadership Charter Sch. v. Chester Cnty. Bd. of Assessment Appeals

• Decision Date: 24 September 2014
• Docket Number: No. 66 MAP 2013,66 MAP 2013
• Citation: 101 A.3d 66,627 Pa. 446
• Court: Pennsylvania Supreme Court
• Parties: FRIENDS OF PENNSYLVANIA LEADERSHIP CHARTER SCHOOL, Appellant v. CHESTER COUNTY BOARD OF ASSESSMENT APPEALS, Appellee. West Chester Area School District, Intervenor.

627 Pa. 446
101 A.3d 66

FRIENDS OF PENNSYLVANIA LEADERSHIP CHARTER SCHOOL, Appellant
v.
CHESTER COUNTY BOARD OF ASSESSMENT APPEALS, Appellee.

West Chester Area School District, Intervenor.

No. 66 MAP 2013

Supreme Court of Pennsylvania.

Argued March 12, 2014.
Decided Sept. 24, 2014.

101 A.3d 67

Anthony T. Verwey, Esq., Unruh, Turner, Burke & Frees, P.C., Blue Bell, for West Chester Area School District.

Andrew G. Lehr, Esq., for Friends of Pennsylvania Leadership Charter School.

Sigmund Joseph Fleck, Esq., Philadelphia, Colleen Anne Preston, Esq., Buckley, Brion, McGuire, Morris & Sommer, L.L.P., for Chester County Board of Assessment Appeals.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, STEVENS, JJ.

OPINION

Justice BAER.

627 Pa. 449

Friends of Pennsylvania Leadership Charter School (Appellant) appeals from the order of the Commonwealth Court which held that the retroactive real estate tax exemption provided in Section 1722–A(e)(3) of the Public School Code, 24 P.S. 17–1722–A(e)(3), was unconstitutional. We affirm the Commonwealth Court, albeit employing different reasoning, concluding that retroactive application of the real estate tax exemption of Section 1722–A(e)(3) is unconstitutional under the Pennsylvania Constitution because it violates the separation of powers doctrine.

Appellant is a Pennsylvania domestic nonprofit corporation affiliated with the Pennsylvania Leadership Charter School (PALCS), a public cyber charter school,¹ which, according to its articles of incorporation, operates exclusively for the support and benefit of PALCS and its affiliated organizations. Appellant owns property in West Chester, Pennsylvania (Property), which is located within Chester County (County) and the West Chester Area School District (School District), and which it leases to PALCS for use as a public cyber charter school.

On August 6, 2007, Appellant appealed the tax assessment for the Property to the Chester County Board of Assessment Appeals (Board) and sought a real estate tax exemption from its 2008 taxes by asserting that it qualified as a purely public charity and was therefore exempt from all local real estate

627 Pa. 450

taxes pursuant to Article VIII, Section 2(a)(v) of the Pennsylvania Constitution and the Institutions of Purely Public Charity Act, 10 P.S. § 371 et seq. See

101 A.3d 68

In re: Appeal of Friends of Pennsylvania Leadership Charter School, Chester County Docket No. 2007–12078. The Board denied the exemption.

In March 2009, the trial court affirmed, finding that Appellant was not a purely public charity and therefore was not exempt from local real estate taxes. The Commonwealth Court affirmed in an unpublished memorandum. In re: Appeal of Friends of Pennsylvania Leadership Charter School v. County of Chester Board of Assessment Appeals, 987 A.2d 231 (Table) (Pa.Cmwlth., January 7, 2010, 808 CD 2009) ; for text see In re: Appeal of Friends of Pennsylvania Leadership Charter School, 808 C.D.2009, 2010 WL 9519256 (Friends I ). No further appeals were taken; thus, the Commonwealth Court's judgment in Friends I became final. Faced with this final judgment against it, Appellant paid real estate taxes to the County and the School District for the years 2008 and 2009. Appellant additionally paid County real estate taxes for 2010, and was billed for 2010 real estate taxes by the School District.

Following the final judgment in Friends I, the General Assembly amended the Public School Code effective January 15, 2011, to provide for prospective and retroactive real estate tax exemptions for charter schools and certain affiliated entities as follows:

(e)(1) Notwithstanding the provisions of section 204 of the act of May 22, 1933 (P.L. 853, No. 155), known as The General County Assessment Law, all school property, real and personal, owned by any charter school, cyber charter school or an associated nonprofit foundation, or owned by a nonprofit corporation or nonprofit foundation and leased to a charter school, cyber charter school or associated nonprofit foundation at or below fair market value, that is occupied and used by any charter school or cyber charter school for public school, recreation or any other purposes provided for

627 Pa. 451

by this act, shall be made exempt from every kind of State, county, city, borough, township or other real estate tax....

* * *

(3) This subsection shall apply retroactively to all charter schools, cyber charter schools and associated nonprofit foundations that filed an appeal from an assessment, as provided in Article V of The General County Assessment Law, prior to the effective date of this subsection.

24 P.S. § 17–1722–A(e) (footnotes omitted).

In March 2011, Appellant filed an application for prospective real estate tax exemption for the Property pursuant to Section 1722–A(e)(1), asserting that it was an associated nonprofit foundation that leased the Property to PALCS for use as a cyber charter school, which the Board granted on May 5, 2011, commencing with the 2011 tax year.

On June 16, 2011, Appellant filed a request for a refund of real estate taxes paid to the County for tax years 2008 through 2010, seeking retroactive relief, asserting that its unsuccessful assessment appeal in 2007 qualified as “an appeal from an assessment.” See 24 P.S. § 17–1722–A(e)(3). The Board denied the refund request on July 27, 2011. On August 22, 2011, Appellant also sought a refund for real estate taxes paid to the School District for 2008–09, and the withdrawal of the School District's tax bill for 2010. The Board denied this refund request on September 7, 2011.

Appellant appealed the Board's denial of its refund request for County real estate taxes to the trial court, but apparently did not appeal the Board's denial of its refund request for real estate taxes paid to the School District. Nevertheless, Appellant

101 A.3d 69

attempted to argue in its appeal to the trial court that it was entitled to a refund from both entities for real estate taxes paid in 2008 and thereafter and the withdrawal of any unpaid tax bills. It based its claimed exemption on its status as an associated nonprofit foundation that filed an assessment appeal prior to the effective date of Section 1722–A(e)(3), premised on its unsuccessful 2007 appeal that resulted in the final judgment of Friends I.

627 Pa. 452

The Board and the School District filed an answer and, after the pleadings were closed, moved for judgment on the pleadings, arguing that Appellant was not entitled to a refund under a statutory analysis of Section 1722–A(e)(3), and that the retroactive tax exemption contemplated by Section 1722–A(e)(3) was unconstitutional because it violated the separation of powers doctrine² and the Uniformity Clause³ of the Pennsylvania Constitution.⁴

The trial court first observed that Appellant's claim for tax exemption requested only a refund of County real estate taxes from 2008–2010, not school taxes paid during these years, and that the appeal further did not encompass a determination of its obligation to pay school taxes in 2010 or County taxes in 2011. To the extent it perceived that Appellant was attempting to expand the scope of its appeal, the trial court held it would only review those issues included in the verified claim

627 Pa. 453

for a real estate tax refund and ruled upon by the Board in the July 27, 2011 denial.

Addressing whether Appellant qualified for the retroactive exemption provided in Section 1722–A(e)(3), the trial court resolved the appeal on the statutory language. Specifically, the trial court observed that Section 1722–A(e)(1) and (3) expressly differentiates between “nonprofit corporations” and “associated nonprofit foundations,” and provides for retroactive tax relief in (e)(3) only to “associated nonprofit foundations.” According to the trial court, although Appellant premised its argument on an assertion that it was an “associated nonprofit foundation,” which would entitle it to retroactive relief, it had demonstrated in its pleadings only that it was a nonprofit corporation; it did not plead, or support by exhibits, that it was

101 A.3d 70

an associated nonprofit foundation. The court then held that Appellant's failure to substantiate its assertion that it fell within the nomenclature of Section 1722–A(e)(3) (that it was an “an associated nonprofit foundation”) doomed its request for retroactive relief, and it was not, therefore, entitled to a refund of taxes collected on behalf of the County in 2008, 2009, and 2010. The trial court also dismissed without prejudice other issues relating to school taxes paid by Appellant during those years, reasoning that those issues were not properly before the trial...