25 Pa. Commw. 173 | Pa. Commw. Ct. | 1976
Opinion by
The Board of Tax Revision of the City of Philadelphia (Board) determined that the appellee, Overmont Corporation (Overmont), was liable for real estate taxes for the years 1973 and 1974 on approximately 1.13 acres of land it owned in the City of Philadelphia. The Court of Common Pleas of Philadelphia County, after consolidating Overmont’s appeals from those assessments, reversed the Board’s determinations by an order dated December 24, 1974. The Board’s exceptions to the lower court’s order were dismissed on April 2, 1975, and the Board appealed to this Court.
The question presented by the Board’s appeal is, we believe, one of first impression. We are asked to decide whether, as a matter of law, vacant land previously owned by one charitable institution loses its exemption from real estate taxes when it is transferred to a second nonprofit charitable corporation which intends to erect a building on the land to be used for charitable purposes. The period for which real éstate taxes were assessed is the period during which the building was under construction.
The land in question here had previously been owned by Philadelphia College of Osteopathic Medicine (PCOM) which had been granted a charitable exemption from real estate taxes on the entire tract of which this land was a part. PCOM desired to build a residence facility for senior citizens on the land, which would qualify for 100 percent financing from
By a deed dated September 8, 1972, PCOM transferred the land to Overmont for a consideration of $246,000. Shortly thereafter, construction of the senior citizens’ apartments began. Construction was completed on May 31, 1974, at which time Overmont took possession from the contractor. The Board claims that during the period of construction Overmont was not entitled to an exemption as a charitable institution, notwithstanding the earlier exemption granted to PCOM on the same land. We agree with the Board and reverse the order of the court below.
Effect of Transfer
The applicable law is The General County Assessment Law (Act),
“ (a) The following property shall be exempt from all county, city, borough, town, township, road, poor and school tax, to wit:
“(3) All hospitals, universities, colleges, seminaries, academies, associations and institutions of learning, benevolence, or charity, including fire and rescue stations, with the grounds thereto annexed and necessary for the occupancy and enjoyment of the same, founded, endowed, and maintained by public or private charity: Provided, That the entire revenue de
“ (9) All real property owned by one or more institutions of purely public charity, used and occupied partly by such owner or owners and partly by other institutions of purely public charity, and necessary for the occupancy and enjoyment of such institutions so using it. ”
Section 204 implements the power granted in Article VIII, Section 2(a) (v) of the Pennsylvania Constitution :
“(a) 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.” (Emphasis added.)
It is clear from the constitutional grant, Section 204, and the case law that whether an exemption for charitable purposes is proper depends on whether the land is actually used for the purposes of the institution seeking the exemption. University of Pittsburgh Tax Exemption Case, 407 Pa. 416, 180 A.2d 760 (1962); Board of Revision of Taxes of Philadelphia v. United Fund of the Philadelphia Area, 11 Pa. Commonwealth Ct. 201, 314 A.2d 530 (1973).
Once PCOM transferred the land at issue here, it could no longer be said that the land was being used for PCOM’s purposes. Therefore, the land in Overmont’s hands held the same nonexempt status it would have held regardless of the transferor’s identity. It
Period of Construction
In Dougherty v. City of Philadelphia, 112 Pa. Superior Ct. 570, 172 A. 177 (1934), a parochial school which constructed a building partially on land it previously owned and partially on land purchased from a transferor who did not qualify for a charitable exemption was held not entitled to an exemption during the period of construction for the land it purchased. In the case at bar, as we have stated, PCOM’s charitable exemption ended with its use. The Superior Court stated in Dougherty that “ownership and use must be present to justify an exemption and . . . the construction of a building intended for a use that would be within the terms of the exempting statute was not yet such use.” 112 Pa. Superior Ct. at 575, 172 A. at 179. Applying this rule, we find that Overmont’s building and land during the period of construction were not yet a use qualifying for a charitable exemption. Overmont, however, relies on that portion of Dougherty which states: “Where real estate has acquired a definite character disclosing a devotion to and a use and occupation for a purpose entitling the owner to exemption, such character is not changed by the doing of things ordinarily essential to its use for the charitable purpose.” 112 Pa. Superior Ct. at 577, 172 A. at 180. This rule, as applied in Dougherty, related only to that land already exempt and in the possession of the original holder of the exemption and is thus not applicable to the land in question here.
We are likewise nnpersnaded by the fact that Overmont at all times intended the facility then under construction to be used for charitable purposes. This alone does not entitle Overmont to a charitable exemption during the period of construction. Mullen v. Commissioners of Erie County, 85 Pa. 288 (1877).
The fact that Overmont received an exemption as a charitable institution when the building was completed is consistent with the cases cited above. The property was admittedly exempt from taxation at all times except during the period of construction. There is nothing anomalous in this result, however, since where
Order reversed.
Act of May 22, 1933, P.L. 853, as amended, 72 P.S. §5020-101 et seq.
Apparently in response to the Mullen case, the legislature passed the Act of June 4, 1879 (No. 304), which exempted from taxation buildings under construction intended for charitable use. That Act was specifically repealed by the Act of May 22, 1933, P.L. 853, Section 601(35), 72 P.S. §5020-601, thus returning the law at this time to the rule as enunciated in Mullen, supra.