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Nigro v. City of Philadelphia

August 25, 2010


The opinion of the court was delivered by: Norma L. Shapiro, J.


Before the court is a Motion to Remand by Plaintiff Russell M. Nigro. For the following reasons, the Motion is granted and the case is remanded to the Pennsylvania Court of Common Pleas for Philadelphia County.


The Center City District ("CCD") is a neighborhood improvement district ("NID") authorized by the Community and Economic Improvement Act, 53 P.S. § 18101 et seq. The Act grants municipalities, e.g., the City of Philadelphia, the authority to create one or more NIDs and to establish a managing authority to administer the NID. See 53 P.S. §§ 18104, 18105. The Pennsylvania legislature made the following findings supporting the creation of NIDs:

(1) Existing tax rates in many municipalities are at or near their statutory cap.

(2) The General Fund revenue derived from these taxes many times is not sufficient to provide adequate municipal services or additional services needed in specific geographic areas within the municipality, including, but not limited to, downtown commercial districts.

(3) As a result, municipalities should be encouraged to create, where feasible and desired, assessment-based neighborhood improvement districts which would include, but not be limited to, downtown commercial districts. . . .

53 P.S. § 18102. The Act delegates to a managing authority, upon approval by the governing body of the municipality, the power to assess property owners within the NID a special charge to support improvements and services. See 53 P.S. § 18107.*fn1

The CCD is governed by an authority with powers defined by the Community and Economic Improvement Act and the Municipality Authorities Act of 1945, 53 Pa. C.S. § 5601, et seq. The District was created by Philadelphia City Council through the enactment of Philadelphia, Pa., Ordinance 727 (Mar. 28, 1990). The CCD was incorporated under the laws of Pennsylvania and, in November 1990, City Council approved the CCD's first plan and budget. Philadelphia, Pa., Ordinance 1069 (Nov. 2, 1990) (approving the CCD plan, estimated costs and proposed method for charges). The CCD was created as "a body corporate and politic," and the City retains the right to approve any plan of the CCD. See Ordinance 727, § 5.

The stated goal of the CCD is "to create a safer, cleaner, well-managed Center City so that Philadelphia can successfully compete as an environment in which to live, do business, shop and visit." Ordinance 1069, § 6. The CCD, a privately-directed municipal authority, seeks to accomplish its goal by "provid[ing] security and cleaning services that will supplement basic services already provided by the City of Philadelphia," and by "support[ing] marketing and promotional initiatives designed to enhance the image of our expanding downtown." Id.

The CCD primarily funds its activities by levying assessments on property owners. The assessment is imposed upon all taxable properties within the District, including: fully taxable properties; the taxable portion of exempt properties; and the taxable portion of abated properties. Ordinance 1069, Ex. A, "Proposed Method of Assessment." An individual assessment is determined by: (1) the ratio of the assessed value of an individual property to the total taxable assessed value of all properties in the District, times; (2) the total annual amount of assessments billed. See Ordinance 1069; 53 Pa. C.S. § 5607(d)(27)(i)(A). On average, the CCD receives seventy-three percent (73%) of its income from mandatory assessments. Philadelphia, Pa., Ordinance 70998, Ex. A (Dec. 13, 2007). Prior to September 2005, "owner-occupants" of residential properties could opt out of the annual assessment through the Homeowners Contribution Fund. This option is no longer available.

The CCD also receives funds from other sources, including: voluntary payments from tax-exempt property owners; proceeds of bonds backed by District revenues; interest income; and charges for district operations, such as sidewalk and concourse cleaning, landscape maintenance, and graffiti removal services in adjacent residential and commercial areas. See Ordinance 1069, Ex. A; see also Ordinance 70998, Ex. A.

Claims to secure the payment of assessments are entered in the prothonotary's office as liens on property in the same manner as municipal claims. 53 Pa.C.S. § 5607(d)(27)(v). The City is authorized to enter into cooperative agreements with the CCD for the purpose of taking legal action to collect unpaid CCD assessments and charges. Ordinance 1069, § 4.

Plaintiff, in an action against the City and the CCD in the Court of Common Pleas of Philadelphia County, alleged that the assessment scheme is unlawful because it is not imposed uniformly on property owners, in violation of the uniformity clause of the Pennsylvania Constitution, the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution, and the CCD's enabling legislation.Plaintiff asserts that because Philadelphia condominium property owners immediately outside the CCD do not pay the assessments but receive similar services, and some property owners within the CCD do not pay the assessments but receive CCD services, the assessments are not imposed uniformly. Defendants removed based on federal question jurisdiction under 28 U.S.C. § 1331, and supplemental jurisdiction under 28 U.S.C. § 1367.

Plaintiff, moving to remand the action to the Court of Common Pleas (paper no. 10), argues this court is prohibited from exercising jurisdiction over the matter under the Tax Injunction Act, because the assessment is a tax within the meaning of the Act. CCD opposes remand (paper no. 13) on the ground that this assessment does not constitute a tax. The City of Philadelphia adopted the arguments and conclusions offered by the CCD, by letter dated April 26, 2010 (paper no. 14).At oral argument on June 8, 2010, the court ordered the parties to brief ...

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