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Church of the Overcomer v. Delaware County Board of Assessment Appeals Premises: 1010 Sunset Street

March 17, 2011

CHURCH OF THE OVERCOMER
v.
DELAWARE COUNTY BOARD OF ASSESSMENT APPEALS PREMISES: 1010 SUNSET STREET, TRAINER BOROUGH
FOLIO NO. 46-00-00563-00 APPEAL OF: CHICHESTER SCHOOL DISTRICT



The opinion of the court was delivered by: Patricia A. McCULLOUGH, Judge

Argued: October 13, 2010

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE JOHNNY J. BUTLER, Judge

OPINION BY JUDGE McCULLOUGH

Chichester School District (District) appeals from the February 5, 2010, order of the Court of Common Pleas of Delaware County (trial court) overruling the decision of the Delaware County Board of Assessment Appeals (Board) and deeming property owned by the Church of the Overcomer (Church) at 1010 Sunset Street in the Borough of Trainer to be exempt from real estate taxation.

The Church was incorporated as a non-profit corporation with the Pennsylvania Department of State on August 7, 2000. The Church maintains a religious exemption from sales and use tax by the Commonwealth and has been granted federal tax exempt status by the Internal Revenue Service. On December 17, 2004, the Church acquired the property located at 1010 Sunset Street. The property has been subdivided into two tax parcels, each occupied by a building. One of these buildings is used for religious worship, and this parcel is exempt from real estate taxation. The other building is what the Church refers to as its "community center" and serves many different purposes. The first floor of the building consists of a large meeting room, a smaller room, and a kitchen. The second floor consists of four bedrooms; one has been converted to a library/classroom, another is used for storage, and the remaining two are reserved for use by visiting missionaries. The parcel containing the community center was not previously exempt.

However, in 2008, the Church filed an appeal of its 2009 real estate assessment with the Board seeking an exemption from real estate taxes for this parcel effective January 1, 2009. By order dated November 15, 2008, the Board denied the Church's appeal. The Church then filed a notice of tax assessment appeal with the trial court seeking an exemption as a duly recognized church under section 204(a)(1) of The General County Assessment Law (Assessment Law), Act of May 22, 1933, P.L. 853, as amended, 72 P.S. §5020-204(a)(1). The District filed a notice of intervention seeking to uphold the Board's exemption denial. At a hearing on December 21, 2009, the Church requested and was granted permission, over the District's objection, to amend its notice of appeal to seek an exemption as a purely public charity under section 204(a)(9) of the Assessment Law, 72 Pa. C.S. §5020- 204(a)(9).

Keith Collins, pastor and founder of the Church, was the only witness to testify at this hearing. Pastor Collins described the Church's philosophy as a commitment to helping people actualize their potential and overcome adversity, especially individuals who would not traditionally go to a church. Pastor Collins stated that, in addition to conducting religious services, the Church has implemented several programs to further its philosophy, including: a program to help children of incarcerated individuals; a program to help such individuals maintain family contact and prepare for release; a summer camp program; a food bank; an addictions ministry program; a youth ministry program; and a cyber school.

Pastor Collins noted that all of these programs are administered from the community center building and are open to the public, although events related to several of the programs actually take place in the church building. Pastor Collins explained that the community center programs are funded entirely by congregation donations and do not generate revenue or profit. On cross-examination, Pastor Collins acknowledged that some community center uses are related to worship, such as prayer meetings and Bible study, but he could not put a percentage on such uses. Nevertheless, Pastor Collins emphasized that the programs are open to anyone who desires to participate in them.

By order dated February 5, 2010, the trial court overruled the Board's decision and deemed the community center parcel exempt from taxation. The District appealed to this Court. The trial court thereafter issued an opinion indicating that the testimony of Pastor Collins established that the community center satisfied the necessary criteria to qualify for a tax exemption as a purely public charity. The trial court explained that: every use of the property advances a charitable program, all of which provide services to the community at large without charge; benefits are provided to a substantial and indefinite class of persons who are legitimate subjects of charity; the programs relieve the government of some of its burden; and the programs are conducted entirely free from private profit motive. Thus, the trial court concluded that the Church met the criteria for a purely public charity set forth by our Supreme Court in Hospital Utilization Project v. Commonwealth of Pennsylvania, 507 Pa. 1, 487 A.2d 1306 (1985) (hereafter HUP).

On appeal to this Court,*fn1 the District first argues that the trial court erred in failing to analyze the Church and its community center as a single entity for real estate tax exemption purposes. We disagree.

Relying heavily on this Court's previous decisions in In re Order of St. Paul the First Hermit, 873 A.2d 31 (Pa. Cmwlth. 2005), appeal denied, 591 Pa. 707, 918 A.2d 749 (2007), and St. Aloysius R.C. Church v. Fayette County Board of Assessment Appeals, 849 A.2d 293 (Pa. Cmwlth. 2004), the District contends that a single property which contains a church and supporting facilities must be analyzed as a single entity. However, the District misconstrues our holding in both St. Paul and St. Aloysius. Moreover, these cases are factually distinguishable from the present matter.

In St. Paul, the Order of St. Paul the First Hermit (Order) was the owner of eleven parcels of property and sought an exemption for a single parcel which included the Shrine of Our Lady of Czestochowa (Shrine),*fn2 a visitor's center, and a retreat house. The Order sought tax exemptions for the visitor's center and retreat house in their entirety as places of regularly stated religious worship, or, alternatively, as institutions of purely public charity. The trial court held that only certain portions of each building were exempt, i.e., those portions that were essential to the primary religious undertaking of the Shrine,*fn3 and rejected the Order's purely public charity argument. This Court affirmed, noting that the Order had been seeking an exemption for the entire parcel as either a place of regularly stated religious worship or as an institution of purely public charity, that the property was primarily used for the former, and that the Order never sought individual tax exemptions for the visitor's center and retreat house as separate institutions of purely public charity operating independently of the Shrine itself.

In St. Aloysius, local taxing authorities, including the Fayette County Board of Assessment Appeals, concluded that the entire parish house of St. Aloysius Roman Catholic Church was taxable. The parish house consisted of two levels, with the lower level serving as a church office used for routine church business and the upper level serving as living quarters for the church's priest, support staff and visiting priests and missionaries. The trial court held that the lower level of the parish house was exempt because it was primarily used for public charity, but that the upper level was not exempt. This Court affirmed, noting that the church was not operating the parish house as an entity independent from the church itself. In both St. Paul and St. Aloysius, the determinative factor was the lack of any institution or entity acting independently of the underlying place of regularly stated religious worship.

In contrast to the facts in St. Paul and St. Aloysius, the evidence of record in this case reveals that the community center operated independently of the Church. More specifically, Pastor Collins testified that the community center operates at least seven different programs out of the facility, all of which serve different populations within the general public, and that participation is not limited to the Church's congregation. While Pastor Collins acknowledged that these programs are intended to further the Church's philosophy, he stressed that the headquarters of each of the programs is in the community center building and that the programs are open to the public. In addition, the property in question had been divided into two tax parcels, one containing the Church and the other containing the community center. The Church parcel was previously declared exempt and the Church was seeking a separate exemption for the parcel containing the community center. Thus, we conclude that the trial court did not err in declining to analyze the Church as a single entity for real estate tax exemption purposes.

Next, the District argues that the trial court abused its discretion in permitting the Church to amend its petition to seek an exemption as a purely public charity, rather than as a place of regularly stated religious worship, on the day of trial. We disagree.

The Pennsylvania Rules of Civil Procedure permit a party to amend a pleading at any time, either consensually or with leave of court. Pa. R.C.P. No. 1033. Specifically, Pa. R.C.P. No. 1033 provides as follows:

A party, either by filed consent of the adverse party or by leave of court, may at any time change the form of action, correct the name of a party or amend the pleading. The amended pleading may aver transactions or occurrences which have happened before or after the filing of the original pleading, even though they give rise to a new cause of action or defense. An amendment may be made to conform the pleading to the evidence offered or admitted.

While counsel for the District initially objected to this amendment, counsel acknowledged that the testimony regarding the basis for exemption would essentially be similar under either exemption and merely requested the opportunity to brief the issue, which the trial court granted. Moreover, the District did not present any witnesses before the trial court, but relied entirely on its cross-examination of Pastor Collins. Our review of the hearing transcript does not reveal any prejudice to the District as a result of the amendment. Thus, we conclude that the trial court did not abuse its discretion in permitting the Church to amend its petition.

Finally, the District argues that the trial court erred as a matter of law in concluding that the Church was entitled to a tax exemption as a place of purely public charity because that conclusion is not supported by substantial evidence of record. We are constrained to agree with the District in this regard.

Article VIII, section 2 of the Pennsylvania Constitution permits the General Assembly by law to exempt certain places from taxation. Specifically, Article VIII, section 2(a)(i) permits exemption for "[a]ctual places of regularly stated religious worship" and section 2(a)(v) permits exemption for "[i]nstitutions of purely public charity, but in the case of any real property tax exemptions only that portion of real property of such institution which is actually and regularly used for the purposes of the institution." In accordance with that authority, the General Assembly enacted section 204 of the Assessment ...


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