decided: December 15, 1988.
IN RE: BLUE KNOB RECREATION, INC., ASSESSMENT APPEAL. BLUE KNOB RECREATION, INC., APPELLANT
Appeal from the Orders of the Court of Common Pleas of Bedford County, in the case of In Re: Blue Knob Recreation, Inc. Assessment Appeal, dated April 14, 1988 and April 25, 1988.
Paul S. Foreman, Foreman, Swartzkopf & Dickey, for appellant.
Thomas S. Ling, for appellee, Bedford County Tax Assessment Board.
President Judge Crumlish, Jr., Judge Colins, and Senior Judge Blatt, sitting as a panel of three. Opinion by President Judge Crumlish, Jr. Judge MacPhail did not participate in the decision in this case.
[ 122 Pa. Commw. Page 157]
Blue Knob Recreation, Inc. (Blue Knob), appeals Bedford County Common Pleas Court orders affirming the Bedford County Board of Assessment and Revision of Taxes and denying its motion for post-trial relief and/or reconsideration. We affirm.
In 1974, Blue Knob executed a lease agreement to operate a ski resort on Commonwealth land.*fn1 The premises consisted of various buildings, some of which
[ 122 Pa. Commw. Page 158]
Blue Knob had the option to demolish. Blue Knob agreed to pay an additional yearly rental fee for those existing structures which it continued to use as part of the ski facility. During the 1977-1978 ski season, Blue Knob constructed a new lodge. Although constructed at Blue Knob's expense, the record does not disclose whether it paid an additional rental fee to the Commonwealth.
In 1986, Bedford County assessed a tax on the new lodge*fn2 pursuant to Section 201 of The Fourth to Eighth Class County Assessment Law (Act),*fn3 which subjects to taxation for county purposes "[a]ll real estate" including "buildings, lands, lots of ground and ground rents . . . ." Blue Knob's appeal of this assessment to the Board was denied, whereupon it appealed to the common pleas court. Section 704(a) of the Act, 72 P.S. § 5453.704(a). The trial court upheld the assessment.
In Pennsylvania, the general rule concerning a lessee's tax liability is whether "there are indicia that the title to the improvements, as well as the leasehold itself, remains in the lessee during the term." Venango Federal Savings and Loan Association v. County of Venango, 73 Pa. Commonwealth Ct. 313, 315, 457 A.2d 1340, 1341 (1983).
The trial court reviewed Section 6, paragraphs 8 and 10 of the lease and concluded that ownership interest in the ski lodge remained with Blue Knob. Our reading of those paragraphs, which specifically address ownership
[ 122 Pa. Commw. Page 159]
of permanent improvements, compels the same conclusion.
Paragraph 8 indicates ownership of permanent improvements made by Blue Knob will pass to the Commonwealth "at the end of the thirty-fifth term of this agreement . . . ." Moreover, if the lease terminates prior to the end of the thirty-fifth term, Blue Knob retains a possessory interest in the permanent improvements that have not fully depreciated. Paragraph 10 further establishes that, where the lease ends before the thirty-fifth term, those facilities in which Blue Knob has a possessory interest will be sold to the Commonwealth at fair market value. As it is the intention of the parties which governs to whom leased property belongs, City of Philadelphia v. Straub, 106 F.2d 172 (3rd Cir. 1939), we believe the clearly expressed intent of these paragraphs confirms that the parties intended title of those structures which Blue Knob erected to vest in Blue Knob.
Blue Knob argues that since Section 6, paragraph 9 of the lease prohibits the removal of any improvements on the premises,*fn4 it negates the indicia of ownership. Venango.
While Venango is instructive, we decline to hold that Section 6, paragraph 9 of the lease negates Blue Knob's ownership under the standards articulated in
[ 122 Pa. Commw. Page 160]
that case.*fn5 Venango did not condition title entirely on the lessee's ability to remove the structure. Rather, it considered removal as a factor indicating indicia of ownership.*fn6 In Venango, the deed, conveying a term of thirty-three years in land, contained a habendum clause which stated that "any improvements thereon will automatically revert to and revest in" the grantor at the end of the term. Id. at 314, 457 A.2d at 1340-41. This Court affirmed the trial court and, on this language, concluded title to any improvements in that leasehold had not yet vested in anyone succeeding the grantee. The situation here is substantially similar and compels the same result regardless of the constraints placed on Blue Knob's ability to remove the building.
Thus, the common pleas court orders are affirmed.
The Bedford County Common Pleas Court orders, dated April 14, 1988, and April 25, 1988, are affirmed.
Judge MacPhail did not participate in the decision in this case.