Appeal from the Order of the Board of Finance and Revenue, in the case of In Re: Gumberg Associates-Chapel Square, Docket No. RRT-8768, dated June 26, 1985.
Templeton Smith, Jr., with him, Richard DiSalle, Rose, Schmidt, Hasley & DiSalle ; Of Counsel: Stephen L. White, Vice President and Assistant General Counsel, for petitioner.
Ronald H. Skubecz, Deputy Attorney General, with him, Eugene J. Anastasio, Chief Deputy Attorney General, and LeRoy S. Zimmerman, Attorney General, for respondent.
Judges Craig and Smith, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge Craig.
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Gumberg Associates appeal a determination of the Pennsylvania Board of Finance and Revenue requiring Gumberg to pay realty transfer tax in the amount of $61,280.00.
The facts, as stipulated by the parties, are as follows. In December of 1981, Gumberg and the Urban Redevelopment Authority of Pittsburgh (URA) entered into a Contract for Disposition by Sale of Land for Private Redevelopment (contract), whereby Gumberg agreed to purchase property from URA and to construct a shopping mall on the property. The contract also provided that Gumberg could request URA to convey the property's title to the Allegheny County Industrial Development
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Authority (AID) if the conveyance were necessary for Gumberg to obtain construction financing. The contract provided that, if the conveyance to AID occurred, Gumberg would remain obligated to complete the construction as agreed with URA, and if Gumberg defaulted on that obligation, URA would have the same rights and remedies against AID that it would have with respect to a mortgagee with title. The contract was recorded in the Office of the Recorder of Deeds of Allegheny County.
Gumberg obtained $3,500,000 in construction financing from AID, and URA conveyed legal title to AID for $50,000. This conveyance was also recorded in the Office of the Recorder of Deeds of Allegheny County. The parties did not pay a realty transfer tax because URA conveyed the property to a nonprofit industrial development agency.*fn1 AID leased the property to Gumberg, with the lease providing that, upon repayment of the construction loan, title of the property would "automatically and ipso facto vest" in Gumberg.
After Gumberg completed the first phase of construction, Gumberg obtained permanent financing from a private source. Gumberg repaid the AID loan and, on September 15, 1983, AID conveyed title of the property to Gumberg for the nominal consideration of $1. Gumberg did not pay real estate transfer tax on that transaction.
The Commonwealth of Pennsylvania Department of Revenue informed Gumberg that realty transfer tax was
[ 116 Pa. Commw. Page 38]
due in the amount of $61,280 upon the property conveyed from AID to Gumberg, ...