Lincoln Phila. Realty Associates v. BD. OF REVISION OF TAXES OF CITY AND …
| Decision Date | 04 October 2000 |
| Citation | 563 Pa. 189,758 A.2d 1178 |
| Parties | LINCOLN PHILADELPHIA REALTY ASSOCIATES I, Appellee, v. The BOARD OF REVISION OF TAXES OF the CITY AND COUNTY OF PHILADELPHIA and the City of Philadelphia and the School District of Philadelphia, Appellants. Lincoln Philadelphia Realty Associates II, Appellee, v. The Board of Revision of Taxes of the City and County of Philadelphia and the City of Philadelphia and the School District of Philadelphia, Appellants. Nine Penn Center Associates, Appellee, v. The Board of Revision of Taxes of the City and County of Philadelphia and the City of Philadelphia and the School District of Philadelphia, Appellants. (Three Cases). Philadelphia Airport Business Center Limited Partnership, Appellee, v. The Board of Revision of Taxes of the City and County of Philadelphia and the City of Philadelphia and the School District of Philadelphia, Appellants. (Two Cases). Nine Penn Center Associates, Lincoln Philadelphia Realty Associates I, Lincoln Philadelphia Realty Associates II and Philadelphia Airport Business Center Limited Partnership, Appellees, v. The Board of Revision of Taxes of the City and County of Philadelphia and the City of Philadelphia and the School District of Philadelphia, Appellants. |
| Court | Pennsylvania Supreme Court |
Mark A. Aronchick, Joseph A. Dworetzky, Michael Lieberman, Dara B. Less, Stephanie L. Franklin-Suber, Richard Feder, Philadelphia, for City of Philadelphia, the School Dist. of Philadelphia and the Bd. of Revision of Taxes.
Thomas A. Leonard, Michael P. Weinstein, Philadelphia, for Nine Penn Center.
Bruce Alan Herald, Exton, for Airport Business Center.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO and SAYLOR, JJ.
This appeal concerns exemptions from local real estate taxation granted to Appellees, certain Philadelphia taxpayers, by Appellant, the Board of Revision of Taxes of the City and County of Philadelphia (the "Board").
The history of this matter is complex, but highly relevant. In 1977, with the enactment of the Local Economic Revitalization Tax Assistance Act, 72 P.S. §§ 4722-4727 ("LERTA"),1 the General Assembly authorized local taxing authorities to exempt from local real property taxation, by ordinance or resolution, the assessed valuation of improvements and new construction in deteriorated areas of economically depressed communities. See 72 P.S. § 4725(a). Pursuant to LERTA, the local taxing authority has discretion to grant exemptions, see 72 P.S. § 4725(a); and, if it decides to do so, to determine the amount of such exemptions, within specified limits, see 72 P.S. § 4726(a), (b); the duration thereof, to a maximum of ten years, see 72 P.S. § 4726(b)(1); and the boundaries of eligible areas, see 72 P.S. § 4725(a). See generally Northwood Nursing Care and Convalescent Home, Inc. v. City of Phila., Bd. of Revision of Taxes, 98 Pa.Cmwlth. 401, 405, 511 A.2d 281, 283 (1986) (), appeal denied, 515 Pa. 626, 531 A.2d 433 (1987), appeal dismissed, 484 U.S. 1037, 108 S.Ct. 767, 98 L.Ed.2d 854 (1988); BERT M. GOODMAN, ASSESSMENT LAW & PROCEDURE IN PENNSYLVANIA 497-504 (1999) (hereinafter GOODMAN, ASSESSMENT LAW).
Where a local taxing authority has chosen to grant exemptions pursuant to LERTA, the statute specifies the following procedure for obtaining such an exemption:
(a) Any person desiring tax exemption... shall notify each local taxing authority granting such exemption in writing on a form provided by it submitted at the time he secures the building permit, or if no building permit or other notification of new construction or improvement is required, at the time he commences construction. A copy of the exemption request shall be forwarded to the board of assessment and revision of taxes.... The assessment agency shall, after completion of the new construction or improvement, assess separately the new construction or improvement and calculate the amounts of the assessment eligible for tax exemption in accordance with the limits established by the local taxing authorities and notify the taxpayer and the local taxing authorities of the reassessment and amounts of the assessment eligible for exemption. Appeals from the reassessment and the amounts eligible for the exemption may be taken by the taxpayer or the local taxing authority as provided by law.
72 P.S. § 4727(a). In the case of Philadelphia County, the authorization of appeals "as provided by law" implicates the First Class County Assessment Law, 72 P.S. §§ 5341.1-5341.21. The Assessment Law directs the Board to give printed or written notice, at least ten days prior to the first Monday in October of each year, to registered owners whose real property has sustained an increase or decrease in assessment, valuation, and ratio, see 72 P.S. § 5341.10(a); stipulates that "[a]ppeals from real estate assessments shall be filed on or before the first Monday of October," 72 P.S. § 5341.14(a); and instructs the Board to complete its hearings and dispose of all appeals "as promptly as possible," 72 P.S. § 5341.14(e).
In 1978, the Philadelphia City Council adopted Councilmanic Ordinance 1130 authorizing the Board to grant real estate tax exemptions on improvements to deteriorated industrial, commercial, and other business properties in all wards of the City. See Philadelphia Code § 19-1303(3) (hereinafter "Phila. Code"). The language of Section 19-1303(3) followed, in large part, that of its enabling act, LERTA. The property eligible for exemption was "limited to that improvement for which an exemption has been requested..., and for which a separate assessment has been made by the [Board]," id. at § 19-1303(3)(D)(1)(b), and the amount to be exempted from taxation was "limited to that portion of the additional assessment attributable to the actual cost of improvements," id. at § 19-1303(3)(D)(1)(a). At the time of the events here at issue, Section 19-1303(3) provided for a five-year exemption. See id. at § 19-1303(3)(D)(2)(a). Significantly, however, while Section 19-1303 stated, consistent with LERTA, that the Board was not to assess the improvement and calculate the amounts of assessment eligible for exemption until "after it has determined that the improvement is completed," id. at § 19-1303(3)(D)(3)(d), it also provided that the five-year exemption was to "commence in the tax year immediately following the year in which the building permit is issued," id. at § 19-1303(3)(D)(2)(a). Echoing LERTA, Section 19-1303(3) also stated that "[a]ppeals from the reassessment and the amount eligible for the exemption may be taken by the City or by the taxpayer as provided by law." Id. at § 19-1303(D)(3)(f).
Each of the taxpayer-appellees (collectively, ")—Lincoln Philadelphia Realty Associates I ("Lincoln Realty I") and Lincoln Philadelphia Realty Associates II ("Lincoln Realty II"), developers of residential rental units at 4000 and 4040 Presidential Boulevard, respectively; Nine Penn Center Associates ("Nine Penn Center"), developer of the Mellon Bank Center at 1735 Market Street; and Philadelphia Airport Business Center Limited Partnership ("Airport Business Center"), developer of properties on Island Avenue and Bartram Avenue—applied to the Board to exempt improvements to the named properties. The Board granted Taxpayers' requests, notifying each taxpayer by letter that its exemption would commence with the year following the year in which the building permit was granted, and specifying in each letter the actual years for which the exemption would apply.2 The exemption periods for each taxpayer were as follows: Lincoln Realty I, 1987-1991; Lincoln Realty II, 1989-1993; Nine Penn Center, 1989-1993; and Airport Business Center properties, 1987-1991. Taxpayers accepted the exemptions without comment, and enjoyed the benefit of substantial tax abatements as construction proceeded.3
In 1992, however, the Commonwealth Court issued its decision in the case of MacDonald, Illig, Jones & Britton v. Erie County Bd. of Assessment Appeals, 145 Pa.Cmwlth. 521, 604 A.2d 306,appeal denied, 533 Pa. 603, 617 A.2d 1276 (1992). Erie County, like the City and County of Philadelphia, had adopted an ordinance implementing LERTA, and that ordinance, like Phila. Code § 19-1303(3), provided that a real estate tax exemption was to commence "in the tax year immediately following the year in which the building permit is issued." Id. at 524, 604 A.2d at 308. The building in question was an office building known as 100 State Street, construction of which began in 1988. MacDonald, Illig, a law firm and the owner of two condominium units in the building, applied for a LERTA tax exemption for its portion of the building and was informed that its application was tentatively approved.
On November 1, 1989, the Board mailed to MacDonald, Illig assessment change notices setting forth the Board's calculation of the amount and duration of the LERTA exemption for the interior of the firm's units and for its portion of the "shell/common area" of the building. In accordance with the ordinance, the exemption for the latter was to begin in 1989, the applicable building permit having been issued in 1988.4 MacDonald, Illig appealed the exemption to the county Board of Assessment Appeals, arguing that LERTA mandated that real estate tax exemptions commence in the year after the completion of the construction or improvement. The Board denied relief, MacDonald, Illig appealed to the Court of Common Pleas, and both MacDonald, Illig and the Board filed motions for summary judgment. The trial court granted summary judgment in favor of MacDonald, Illig, and the Board appealed to the Commonwealth Court.
Perceiving ambiguity in the pertinent provision of LERTA, the Commonwealth Court sought to determine the...
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