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decided: August 16, 1985.


Appeal from the Order of the Court of Common Pleas of Bucks County in the case of G.D.L. Plaza Corporation v. Council Rock School District, No. 81-7169-14-5.


John A. Vanluvanee, with him, Derek J. Reid and John N. Schaeffer, Eastburn and Gray, for appellant.

William M. Adshead, with him, Alfred J. Tagliaferri, Peck, Young & Van Sant, for appellee.

Judges Craig and MacPhail, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge MacPhail. Judge Barry did not Participate in the decision in this case. Dissenting Opinion by Senior Judge Kalish.

Author: Macphail

[ 91 Pa. Commw. Page 177]

The Council Rock School District (School District) appeals from the decision of the Court of Common Pleas of Bucks County which held that the G.D.L.

[ 91 Pa. Commw. Page 178]

Plaza Corporation (GDL) was a "purely public charity" entitled to a tax exemption. We reverse.

On May 5, 1980, the School District adopted a residential construction tax resolution.*fn1 The resolution authorized the School District to collect a residential construction tax on all new construction taking place within the district at the rate of $875.00 for each residential unit.*fn2 GDL is a non-profit corporation which had planned to build*fn3 a housing complex for elderly and handicapped persons. GDL was taxed in the amount $97,125. GDL paid the tax "under protest", and then brought an action in equity to recover the monies paid, asserting that the GDL project was an institution of "purely public charity" and qualified for an exemption.*fn4

After a hearing, the trial court sustained GDL's appeal and held that GDL was a purely public charity entitled to tax exemption status. The instant appeal followed.

[ 91 Pa. Commw. Page 179]

GDL is a non-profit corporation which built and now operates a housing complex for elderly and handicapped persons. The project was constructed in conformity with the provisions of Section 202 of the National Housing Act, 12 U.S.C. § 1701q. Seed money for the project, in the amount of $54,857.52, came from the G.D.L. Manor Corporation.*fn5 The project has one hundred and eleven (111) rental units contained in a single building, one hundred and ten (110) of which are rented by persons whose annual incomes average $18,000 . . . (for an individual) to $21,400 (for a couple).*fn6 Residents must be at least sixty-two (62) years of age and retired or handicapped or otherwise eligible to receive Social Security benefits. The residents receive rental supplements from the Department of Housing and Urban Development (HUD) in accordance with a rent schedule established by HUD.*fn7

GDL claims exemption pursuant to Article VIII, Section 2 of the Constitution of the Commonwealth of Pennsylvania*fn8 and Section 204(a)(3) of the General County Assessment Law (Law), Act of May 22, 1933,

[ 91 Pa. Commw. Page 180]

P.L. 853, as amended, 72 P.S. § 5020-204(a)(3), which provides in pertinent part:

(a) The following property shall be exempt from all county, 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 derived by the same be applied to the support and to increase the efficiency and facilities thereof, the repair and the necessary increases of grounds and buildings thereof, and for no other purpose.

Liability for taxation is the rule and statutory provisions which exempt property from taxation are subject to strict construction. See General Mennonite Appeal, 72 Pa. Commonwealth Ct. 96, 455 A.2d 1274 (1983). The taxpayer has the burden of bringing itself within the ambit of the exemption. In Re: Appeal of Doctor's Hospital, 51 Pa. Commonwealth Ct. 31, 414 A.2d 134 (1980). The fact that an organization is a non-profit corporation does not mandate that it should be exempt from taxation. Pittsburgh Institute of Aeronautics Tax Exemption Case, 435 Pa. 618, 258 A.2d 850 (1969).*fn9

[ 91 Pa. Commw. Page 181]

Case law has established a three-pronged test to be applied when a claim is made for tax exemption: "[T]o obtain the claimed exemption from taxation, [the taxpayer] must affirmatively show that the entire institution, (1) is one of "purely public charity"; (2) was founded by public or private charity; (3) is maintained by public or private charity." Woods School Tax Exemption Case, 406 Pa. 579, 584, 178 A.2d 600, 602 (1962). The question of whether the taxpayer is a "purely public charity" is a mixed question of law and fact. In Re: Appeal of Doctor's Hospital. Absent an abuse of discretion or a lack of supporting evidence, the decision of the trial judge considering the question of the entitlement to a tax exemption as a purely public charity will not be disturbed by this Court on appeal. Appeal of Bucks County Board of Assessment Appeals, 55 Pa. Commonwealth Ct. 195, 423 A.2d 760 (1980).

We are aided in our determination by the recent Supreme Court decision of Hospital Utilization Project v. Commonwealth of Pennsylvania, Pa. , 487 A.2d 1306 (1985), wherein the Court stated that in order for an entity to qualify as a purely public charity, it must possess the following characteristics:

(a) advances a charitable purpose;

(b) donates or renders gratuitously a substantial portion of its services;

(c) benefits a substantial and indefinite class of persons who are legitimate subjects of charity;

(d) relieves the government of some of its burden; and

(e) operates entirely free from private profit motive.

Id. at , 487 A.2d at 1317. It is the School District's position that GDL is not a "purely public charity" as that term has been defined under Pennsylvania law.

[ 91 Pa. Commw. Page 182]

The School District does not dispute that GDL advances a charitable purpose. A "charitable" purpose has been broadly defined to include:

[E]very gift for a general public use, to be applied, consistent with existing laws, for the benefit of an indefinite number of persons, and designed to benefit them from an educational, religious, moral, physical or social standpoint. In its broadest meaning it is understood 'to refer to something done or given for the benefit of our fellows or the public.' Taylor v. Hoag, 273 Pa. 194, 196, 116 A. 826 [, 826 (1922)].

Hill School Tax Exemption Case, 370 Pa. 21, 25, 87 A.2d 259, 262 (1952), quoting Funk Estate, 353 Pa. 321, 323, 45 A.2d 67, 69 (1946). In Four Freedoms House of Philadelphia v. Philadelphia, 443 Pa. 215, 219, 279 A.2d 155, 157 (1971), the Supreme Court stated that "there can be no doubt that providing low-cost housing for elderly persons with limited incomes constitutes a public charity." (relying upon Presbyterian Homes Tax Exemption Case, 428 Pa. 145, 236 A.2d 776 (1968)).

GDL's beneficiaries -- the elderly and handicapped -- are legitimate objects of charity. See Presbyterian Homes; Vanguard School Tax Exemption Case, 430 Pa. 378, 243 A.2d 323 (1968). We are also satisfied GDL has demonstrated that it operates free from private profit motives: its officers and directors receive no salary; GDL has not profited from operating the project;*fn10 and all excess revenues are specifically designated to inure to the benefit of the GDL project.

The GDL project differs from the retirement home granted an exemption in Presbyterian Homes in that

[ 91 Pa. Commw. Page 183]

GDL provides no services to its tenants aside from transportation. In both Presbyterian Homes and Vanguard, the underlying reason for finding each entity to be a purely public charity was that the institution supplied essential care which its beneficiaries could not provide for themselves. See Metropolitan Pittsburgh Non-Profit Housing Corp. v. Board of Property Assessment, 480 Pa. 622, 391 A.2d 1059 (1978). We do not believe that by providing this limited service to its tenants that GDL is furnishing essential care to the residents. We also note that GDL does not provide for residents when they are unable to care for themselves, rather, GDL "helps" to place these residents in a nursing home. The rationale for the exemption for the non-profit housing for the elderly in Presbyterian Homes and Four Freedoms House is therefore inapplicable to the case at bar. The residents receive transportation to doctors' appointments, hospitals and the like, but this certainly falls short of fulfilling the requirement of "donating or rendering gratuitously a substantial portion of its services."

Hospital Utilization Project requires that the entity relieve the government of some of its burden. This requirement stems from Young Men's Christian Association of Germantown v. Philadelphia, 323 Pa. 401, 187 A. 204 (1936), wherein the Supreme Court explained that:

Taxes are not penalties but are contributions which all inhabitants are expected to make (and may be compelled to make) for the support of the manifold activities of government. Every inhabitant and every parcel of property receives governmental protection. Such protection costs money. When an inhabitant fails to contribute his share of the costs of this protection, some other inhabitant must contribute more than his

[ 91 Pa. Commw. Page 184]

    fair share of that cost. . . . Any institution which by its charitable activities relieves government of part of this burden is conferring a pecuniary benefit upon the body politic, and in receiving exemption from taxation it is merely being given a 'quid pro quo' for its services in providing something which otherwise the government would have to provide. . . . The measure of an institution's gratuitous aid to those requiring it is the measure by which the government is relieved of its responsibilities.

Id. at 413-14, 187 A. at 210. We do not believe that GDL has demonstrated that it relieves the government of any burdens: the government, through HUD, subsidizes the elderly and handicapped residents who live in the GDL project; GDL does not subsidize or in any other manner support its residents. On these facts, we cannot conclude that GDL is relieving the government of any of its burdens. Young Men's Christian Association.

All of the above factors, when considered together, do not support the finding of the trial court that GDL is a purely public charity entitled to exemption from taxation.*fn11 While the project does possess some charitable characteristics, we do not believe that the GDL housing project fully meets the strict requirements for a tax exemption.

Accordingly, we reverse the order of the Court of Common Pleas of Bucks County.*fn12

[ 91 Pa. Commw. Page 185]


The order of the Court of Common Pleas of Bucks County, dated February 28, 1984, at No. 81-7169-14-5, is reversed.

Judge Barry did not participate in the decision in this case.



Dissenting Opinion by Senior Judge Kalish:

I respectfully dissent. It seems to me that the majority opinion applies too narrow a standard in determining that this institution is not a "purely public charity." It is difficult at times to draw the line in determining what purposes are of social interest to the community, particularly since there are no fixed standards. However, because of the greater concern today for the aged, "public charity" should be given a more liberal interpretation. The thought expressed by the supreme court in the Presbyterian Homes Tax Exemption Case, 428 Pa. 145, 152, 236 A.2d 776, 780 (1968), quoting from Fifield Manor Pasadena v. County of Los Angeles, 188 Cal. App. 2d 1, 11, 10 Cal. Rptr. 242 (1961), should be given great weight in considering the totality of the circumstances which make up a purely public charity. "Man, especially the old, does not live by bread alone; that though he be able to pay for all material wants he nevertheless may be dependent upon his fellow man to protect him from the haunting fear of . . . illness or other physical disability overtaking him with no one near to help, fear of the loneliness arising from the absence of social contacts, fear of any of the tragedies of old age where there is no one standing by to help."

The majority indicates that G.D.L. has demonstrated that it has met all the indicia of a "purely public charity" except that the resident must be transported

[ 91 Pa. Commw. Page 186]

    elsewhere to obtain "essential care." But this factor of transportation should be considered with all the other factors, including the value of social contacts, and the nearness to others who can allay the fear of loneliness and who can aid in their transportation where necessary, as part of the "essential care" criteria. Considering the totality of the circumstances, G.D.L. has met the standard of a purely public charity.

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