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decided: May 24, 1985.


Appeal from the Order of the Court of Common Pleas of Philadelphia County in the case of Pier 30 Associates v. The School District of Philadelphia, No. 2093 August Term, 1978.


Daniel B. Pierson V, with him, Anastasius Efstratiades, Pierson, Cameron & Morris, P.C., for appellant.

Eugene F. Brazil, General Counsel, for appellee.

Judges Craig and Colins and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 89 Pa. Commw. Page 506]

Pier 30 Associates appeals an order of Judge Gelfand of the Court of Common Pleas of Philadelphia County which upheld the Philadelphia School District's denial of Pier 30's appeal from the imposition of local use and occupancy tax on tennis courts constructed and operated by Pier 30 on property owned by the city, leased by the Philadelphia Port Corporation (a municipal agency), and sublet to Pier 30 Associates.

The public status of the property title is not in dispute. The only question before us is whether Pier 30's use of the property is for a "public purpose," thereby

[ 89 Pa. Commw. Page 507]

    exempting it from taxation under the General County Assessment Law,*fn1 which provides in part:

Section 5020-204. Exemptions from taxation.

(a) The following property shall be exempt from all county, city, borough, town, township, road, poor and school tax, to wit:

(7) all other property used for public purposes, with the ground thereto annexed and necessary for the occupancy and enjoyment of the same, but this shall not be construed to include property otherwise taxable which is owned or held by an agency of the Government of the United States nor shall this act or any other act be construed to exempt from taxation any privilege, act or transaction conducted upon public property by persons or entities which would be taxable if conducted upon nonpublic property regardless of the purpose or purposes for which such activity occurs, even if conducted as agent or lessee of any public authority. . . . (Emphasis added.)

The taxpayer has the burden of establishing exemption from taxation. Lehigh Valley Cooperative Farmers v. Bureau of Security Employment, Department of Labor and Industry, 498 Pa. 521, 447 A.2d 948 (1982). Statutory provisions exempting property from taxation are strictly construed. Matter of Tax Assessment of Real Estate of Greater Erie Economic Development Corp., 61 Pa. Commonwealth Ct. 144, 433 A.2d 568 (1981). Entitlement to tax exemption is a mixed question of law and fact, and absent any abuse of discretion or lack of supporting evidence, we will

[ 89 Pa. Commw. Page 508]

    not disturb the decision of the trial court. Appeal of Planned Parenthood Association of Bucks County, 55 Pa. Commonwealth Ct. 195, 423 A.2d 760 (1980).

The record*fn2 establishes that the tennis courts are open to the public, are used for the recreation of the public, and are located on public property. Pier 30 argues that those facts alone establish a public purpose entitling them to tax exemption, and relies on Martin v. City of Philadelphia, 420 Pa. 14, 215 A.2d 894 (1966), where the Supreme Court held that leasing a municipal stadium to privately owned major league sports franchises was a public purpose rather than a private enterprise. However, Martin did not

[ 89 Pa. Commw. Page 509]

    arise as a claim of exemption from local taxation, as here, but as a taxpayer challenge to a city ordinance authorizing a loan of $25,000,000 for construction of the stadium. See also Bernstein v. City of Pittsburgh, 366 Pa. 200, 77 A.2d 452 (1951) (City of Pittsburgh authorized to use public funds for construction of open-air auditorium in city park and lease it during summer months to private corporation for presentation of light opera). The mere fact that the tennis courts provide recreational facilities to the public is not sufficient to establish a public purpose which would exempt them from the school district's use and occupancy tax. Ample judicial authority supports Judge Gelfand's holding that the lessee must also establish that its use of public property furthers the function of a governmental agency.

In Public Parking Authority v. Board of Property Assessment, Appeals and Review, 377 Pa. 274, 105 A.2d 165 (1954), the Supreme Court upheld the real property tax exemption of those portions of a public parking garage leased from the Pittsburgh Parking Authority and operated by a private company as parking facilities ; however, other portions of the garage property which were leased for various commercial and retail uses*fn3 were not exempt from the tax.

But it thus appears that, unlike the leases of the garages and parking lots to effectuate the purpose of providing an "efficient operation of off-street parking facilities," these commercial rentals are authorized merely for the purpose of assisting in "defraying the expenses of the authority." The operation of the stores in the garage . . . does not constitute a use incidental

[ 89 Pa. Commw. Page 510]

    to the public purpose of providing "off-street parking facilities" for which purpose alone the privilege of tax exemption was granted by the Parking Authority Law.

Id. at 283, 105 A.2d at 169.

Similarly, in May Department Stores v. City of Pittsburgh, 31 Pa. Commonwealth Ct. 398, 376 A.2d 309 (1977), we held that a public parking garage, leased from the Parking Authority of Pittsburgh and operated by a private concern, was used for a public purpose and therefore exempt from the business privilege tax under section 5020-204(7). We noted that an activity may be tax exempt even if it is proprietary and operated for profit. Cf. Reading Municipal Authority v. Schuylkill Valley School District, 4 Pa. Commonwealth Ct. 300, 286 A.2d 5 (1972) (aircraft hangers at airport leased by municipal authority to private party who in turn leased space to individual owners of aircraft, were not used for a public purpose and therefore were not exempt from local taxation).

Pier 30 relies on City of New Castle v. Lawrence County, 353 Pa. 175, 44 A.2d 589 (1945), where the Supreme Court exempted from local taxation a privately run restaurant and amusement concessions located on a public golf course owned and operated by the city. However, as the court in City of New Castle recognized,

[t]hese buildings are part of the park equipment available for the entertainment and refreshment of the public visiting the park, and promote and facilitate the enjoyment of the park for park purposes. The Department of Parks and Public Property of the City of New Castle has control over the portions of the park in which these licensees or lessees operate. (Emphasis added.)

[ 89 Pa. Commw. Page 511]

    is for a public purpose, it is not conclusive. As noted, the key to exemption is evidence establishing that the lessee's use of the public property is furthering the purpose of the governmental agency from which the lessee rents the property. In the absence of such evidence, as here, we must conclude that the property is not serving a public purpose and is not tax exempt.

Accordingly, we affirm Judge Gelfand's sound decision.


Now, May 24, 1985, the order of the Court of Common Pleas of Philadelphia County, Civil Trial Division, at August Term, 1978, No. 2093, dated September 16, 1979, is affirmed.



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