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NORMAN LEVENTHAL v. CITY PHILADELPHIA (05/24/88)

decided: May 24, 1988.

NORMAN LEVENTHAL, ALAN LEVENTHAL AND EDWIN SIDMAN, T/A PHILADELPHIA HSR LIMITED PARTNERSHIP
v.
THE CITY OF PHILADELPHIA, THE DEPARTMENT OF REVENUE OF THE CITY OF PHILADELPHIA, AND THE PENNSYLVANIA CONVENTION CENTER AUTHORITY



Appeal from the Order of the Court of Common Pleas of Philadelphia County, Trial Division, Civil Section, Dated December 14, 1987, at No. 1849 June Term, 1987.

COUNSEL

Henry W. Sawyer, III, Philadelphia, for petitioner.

Barbara W. Mather, Richard J. Gold, First Deputy City Solicitor, Seymour Kurland, Philadelphia, for respondent.

Nix, C.j., and Larsen, Flaherty, McDermott, Zappala and Papadakos, JJ.

Author: Papadakos

[ 518 Pa. Page 236]

OPINION OF THE COURT

This opinion follows pursuant to our per curiam Order of January 22, 1988, affirming the order of a specially-appointed three-judge panel of the Court of Common Pleas of Philadelphia County which upheld the constitutionality of the Convention Center Authority Act of 1986*fn1 and the Hotel Room Rental Tax*fn2 under both the Pennsylvania and the United States Constitutions. By order dated January 19, 1988, we granted the joint Petition for Extraordinary Jurisdiction*fn3 of Norman Leventhal, Alan Leventhal and Edwin Sidman, t/a Philadelphia HSR Limited Partnership, Appellant/Plaintiff in this action, and the City of Philadelphia, the Department of Revenue of the City of Philadelphia, and the Pennsylvania Convention Center Authority, Appellee/Defendants herein.

[ 518 Pa. Page 237]

We assumed plenary jurisdiction in this matter to decide the narrow issue of whether the Convention Center Authority Act and the Hotel Room Rental Tax are constitutional as applied to Appellant under the Pennsylvania and the United States Constitutions. The challenge here is directed only to that portion of the tax which is dedicated to the Convention Center, and not to the past and continuing support for the Convention and Visitors Bureau.*fn4 Resolution of the issue before us depends on whether our holding in Allegheny Page 237} County v. Monzo, 509 Pa. 26, 500 A.2d 1096 (1985), is applicable to the facts presented in this case.

On June 27, 1986, the General Assembly enacted the Convention Center Authority Act (Act), 53 Pa.S. § 16201, et seq., which, among other things, created the Authority, 53 Pa.S. § 16204, and authorized cities of the first class to impose a hotel room rental tax, in part, for the use of the Authority for convention center purposes. 53 Pa.S. § 16223(b). In the event that construction of the main convention area is not commenced by December 31, 1988, all revenues collected under the tax can only be used for tourist promotion agency purposes, and not for convention center purposes. 53 Pa.S. § 16223(d)(5). Prior to the enactment of this Act, Philadelphia was imposing a three percent (3%) tax on hotel room rentals to support the Philadelphia Convention and Visitors Bureau.

Pursuant to the Act, Philadelphia's City Council enacted a Hotel Room Rental Tax (Tax). Phila.Code § 19-2401, et seq. Philadelphia is the only city of the first class in Pennsylvania. The Tax imposes an excise tax on the consideration that each operator of a hotel in the City of Philadelphia receives from each transaction of renting a room or rooms to accommodate transients. Phila.Code § 19-2402. The Tax only applies to hotels in the City of Philadelphia. Id. Among other things, the Tax requires that each operator of a hotel: 1) collect the tax from its patrons and pay the tax over to the City; 2) transmit to the Department of Revenue (Department) on or before the twenty-fifth (25th) day of each month, a return for the month preceding the month in which the return is made, reporting the amount of consideration received from each transaction during the month for which the return is made, the amount of tax due from that operator for that month, and such other information as the Department may require; and 3) maintain records, including, but not limited to, the number of transactions in each hotel reflected on an hourly, daily, or weekly basis, the rate(s) charged for each occupancy, the consideration received from each transaction during the month for

[ 518 Pa. Page 238]

    which each return is made, as well as any other information as the Department may require. Phila.Code § 19-2405. If an operator of a hotel fails to collect the tax, or pay the tax over to the City when due, that operator will be liable to the City for payment of the tax. Phila.Code § 19-2405(2).

The Tax authorizes the Department to collect the tax from each hotel operator and deposit a portion of the revenues in a special fund for the use of the Authority for convention center purposes, which include: 1) projected annual debt service or lease payments of the Authority; 2) costs associated with financing, constructing, improving, maintaining, furnishing, fixturing and equipping the convention center; 3) costs associated with the development of the convention center, including, but not limited to, design, engineering and feasibility costs; 4) costs associated with the operation and management of the convention center; 5) costs ...


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