Appealed From No. 94-02590. Common Pleas Court of the County of Chester. Judge SHENKIN.
Before: Honorable James Gardner Colins, President Judge, Honorable Joseph T. Doyle, Judge, Honorable Bernard L. McGINLEY, Judge, Honorable Doris A. Smith, Judge, Honorable Dan Pellegrini, Judge, Honorable James R. Kelley, Judge, Honorable Bonnie Brigance Leadbetter, Judge. Opinion BY President Judge Colins. Judge Pellegrini concurs in the result only. Dissenting Opinion By: Judge McGINLEY. (Judge Smith joins in this Dissent).
The opinion of the court was delivered by: Colins
OPINION BY PRESIDENT JUDGE COLINS
Proximately located just beyond the urban sprawl of Philadelphia, Pennsylvania, and Wilmington, Delaware, Longwood Gardens is undisputedly one of the world's great public gardens. In the instant matter, the Unionville-Chadds Ford School District (School District) appeals from the July 11, 1995 order of The Honorable Robert J. Shenkin, Judge of the Court of Common Pleas of Chester County, affirming determinations of the Chester County Board of Assessment Appeals that four parcels owned by Longwood Gardens (Longwood Gardens or Longwood) are exempt from real estate taxation.
The issues on appeal are whether Longwood Gardens is a "purely public charity" and whether it qualifies for real estate tax exemption under the applicable sections of The General County Assessment Law (Law), Act of May 22, 1933, P.L. 853, as amended, 72 P.S. §§ 5020-1 - 5020-602.
Longwood Gardens, a 1050-acre public garden located in Chester County was purchased in 1906 by Pierre Samuel du Pont. The property, originally acquired in about 1700 in a grant from William Penn, was the site of an arboretum created by members of the Peirce family. Working with a botanist, the Peirce family acquired and planted a collection of non-indigenous plants presented in a park-like setting. Recognizing the historic and horticultural value of the arboretum, and wanting to preserve the property and prevent the harvest of its timber, du Pont purchased the property in 1906, gradually developing the gardens and adding a conservatory, water garden, fountains, and open air theater. Du Pont opened the gardens to the public in the 1920s and established a trust (Trust) to maintain the gardens in about 1946. In 1970, the trust transferred the gardens to Longwood Gardens, Inc., the non-profit operating foundation that currently owns the property. Longwood Gardens in its entirety and the Peirce family home are listed on the National Register of Historic Places maintained by the U.S. Department of Interior.
In addition to the public gardens, Longwood Gardens includes walking trails and watershed areas, and educational and research facilities, including classrooms, a library, demonstration gardens, and plant collections. Longwood Gardens currently educates over forty students, providing tuition, housing, and living expenses. *fn1 Educational activities also include an ornithology program to study and preserve wild bird habitats and a fee-based program *fn2 of continuing education. Longwood participates in joint education programs with the Philadelphia school system and Kennett Consolidated School District.
Research activities include plant collection, hybridization, propagation, and evaluation (e.g., for commercial, medical, and aesthetic value). Longwood Gardens currently dedicates five full-time staff members to research in addition to some part-time staff assignments and students; it shares the results of its research with public and private enterprises. It participates in a longstanding cooperative venture with the U.S. Department of Agriculture and regularly exchanges information and plants with the National Arboretum and colleges and universities nationwide. Longwood functions as part of an extension service involving the nation's land grant colleges and universities working with the general public.
Longwood Gardens' 1994 operating expenses exceeded revenue by approximately $8 million, not including approximately $5 million in capital expenses for physical restoration and improvements. The Trust annually subsidizes--from interest and/or principal--approximately 40 percent of operating expenses not covered by operating revenues. Longwood charges for admission to the public gardens; full price admission is $10 for adults, with discounted admission of $4 for ages 15 to 20, $1 for ages 6 to 15, and under age 6 for free. Adult admission is reduced to $6 every Tuesday, and reduced or free admission is regularly available to persons sponsored by federally tax-exempt organizations and government organizations. Visitor passes priced at $35 each entitle the holder to unlimited admissions. To cover its costs, Longwood would have to charge each visitor $22 for admission (a minimum subsidy of $12 per visitor).
Longwood Gardens employs approximately 170 full-time and 107 part-time (seasonal) workers (hourly wage) in addition to its 135 volunteers and 30 to 40 students. Management includes a director/chief operating officer, who oversees three department heads and reports to a board of trustees. The director is responsible for budget and policy development, leadership, and daily operational activities. Each manager receives a salary and use of a car; managers pay market-rate rents for the use of homes owned by Longwood Gardens on its grounds.
Longwood Gardens contributes to the surrounding community. It donated over $2 million and 1.8 acres of real property to the East Marlborough Township for highway improvements. It donates fire protection to the surrounding community through the use of its fire-fighting equipment and the services of its employees acting as volunteer members of the fire company; it donates landscaping expertise and materials to community projects; it donates the use of its facilities to community charities at cost; and it participates in community events. In 1994, Longwood Gardens hosted over 450 events as part of its performing arts program, *fn3 which events are open to the public at no additional cost over the regular admission price.
PENNSYLVANIA TAX EXEMPTION LAW
The Pennsylvania Constitution provides that the General Assembly may exempt from taxation institutions of purely public charity and that portion of the institution's real property that is actually and regularly used for its charitable purposes. Pa. Const. art. VIII, § 2(a)(v). Under that authority, the General Assembly passed Section 204(a) of the Law, exempting, in pertinent part, the property of
(3) All ... institutions of learning, benevolence, or charity, ... 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 increase of grounds and buildings thereof, and for no other purpose...;
(6) All public parks when owned and held by trustees for the benefit of the public, and used for amusements, recreation, sports and other public purposes without profit;
72 P.S. § 5020-204(a)(3) and (6). To qualify for exemption, Longwood Gardens must be an institution of purely public charity, and it must fit within a statutory exemption.
The Pennsylvania Supreme Court in Hospital Utilization Project v. Commonwealth, 507 Pa. 1, 487 A.2d 1306 (1985), articulated a five-part test for determining whether an institution qualifies as a purely public charity. In order to so qualify, the institution must 1) advance a charitable purpose, 2) donate gratuitously a substantial portion of its services, 3) benefit a substantial and indefinite class of persons who are legitimate subjects of charity, 4) relieve the government of some of its burden, and 5) operate entirely free from private profit motive. Id. at 22, 487 A.2d at 1317. An entity claiming to be a purely public charity has the burden of proving that its operation satisfies all five criteria for tax exemption purposes. Couriers-Susquehanna v. Dauphin County, 165 Pa. Commw. 192, 645 A.2d 290 (Pa. Commw. 1994).
On appeal, the School District argues that the trial court erred in its determination that Longwood Gardens is a purely public charity; except for the stipulation that Longwood advances a charitable purpose, the School District argues that Longwood does not meet the last four Hospital Utilization Project (HUP) criteria. Second, the School District argues that the trial court erred in concluding that Longwood Gardens is exempt as a "public park" under Section 204(a)(6) of the Law, 72 P.S. § 5020-204(a)(6), because, it contends, the public park exemption does not apply to privately owned property that has not been dedicated to public use.
In an appeal of a local agency decision where the trial court takes de novo evidence, our review is limited to determining whether constitutional rights were violated or whether the trial court manifestly abused its discretion or committed an error of law. City of Washington v. Board of Assessment, 666 A.2d 352, 358 (Pa. Commw. 1995), petition for allowance of appeal granted, Pa. , 681 A.2d 1344 (1996). Whether an institution is one of purely public charity is a mixed question of law and fact on which the trial court's decision is binding absent an abuse of discretion or lack of supporting evidence. Id.
Advances a Charitable Purpose
Although the School District apparently stipulated that Longwood Gardens advances a charitable purpose, *fn4 Judge Shenkin made his own inquiry and concluded that Longwood's primary charitable purpose is as an arboretum, in addition to its advancing horticultural and floricultural education and research. On appeal, the School District contends ...