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Friends of Pennsylvania Leadership Charter School v. Chester County Board of Assessment Appeals

January 16, 2013

FRIENDS OF PENNSYLVANIA LEADERSHIP CHARTER SCHOOL, APPELLANT
v.
CHESTER COUNTY BOARD OF ASSESSMENT APPEALS



The opinion of the court was delivered by: Renee Cohn Jubelirer, Judge

Argued: December 12, 2012

BEFORE: HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE PATRICIA A. MCCULLOUGH, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION BY JUDGE COHN JUBELIRER

Friends of Pennsylvania Leadership Charter School (Friends) appeals from the Order of the Court of Common Pleas of Chester County (trial court) that granted the Motion for Judgment on the Pleadings (Motion) filed by Chester County Board of Assessment Appeals (Board) and the West Chester Area School District (WCASD) in Friends' appeal from the Board's denial of its claim for a refund of real estate taxes paid to Chester County (County). The trial court concluded that Friends was not eligible for the retroactive exemption from real estate taxes set forth in Section 1722-A(e)(3) of The Public School Code of 1949*fn1 (School Code) and, therefore, was not entitled to a refund of the real estate taxes collected on behalf of the County for 2008, 2009, and 2010. The trial court also dismissed, without prejudice, other issues relating to school taxes paid by Friends for the same years reasoning that those matters were not properly before the trial court. Although the trial court based its decision to grant the Motion on the plain language of Section 1722-A(e)(3) of the School Code, the trial court went on to indicate that, had it reached the constitutional question raised by the Board and WCASD, it would have found that the retroactive application of Section 1722-A(e)(3) violated Article I, Section 11 of the Pennsylvania Constitution (providing for a remedy by the due course of law).*fn2 On appeal, Friends argues that the trial court erred in: limiting its determination only to the refund of taxes paid to the County; concluding that Friends did not qualify for the retroactive tax exemption because it did not plead that it was an associated nonprofit foundation; and finding the retroactive application of Section 1722-A(e)(3) to be unconstitutional. For the following reasons, we affirm the trial court's Order.

Friends is a Pennsylvania domestic nonprofit corporation that is affiliated with the Pennsylvania Leadership Charter School (PALCS), a public cyber charter school. Both Friends and PALCS are recognized as nonprofit corporations under Section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3). (Petition for Appeal From the Decision of the Board (Petition for Appeal)

¶¶ 1, 3, R.R. at 5a-6a.) Under its Articles of Incorporation, Friends "operate[s] exclusively for the support and benefit of PALCS and its affiliated or controlled organizations." (Petition for Appeal ¶ 1, R.R. at 5a-6a.) Friends owns property at 1332 Enterprise Drive, West Chester, Pennsylvania 19380 (Property), which is located within the County and the WCASD. (Petition for Appeal ¶ 1, R.R. at 5a-6a.) Friends leases the Property to PALCS for use as a public cyber charter school. On August 6, 2007, Friends appealed the tax assessment of the Property and sought an exemption from real estate taxes as an institution of purely public charity, which the Board denied. (Petition for Appeal ¶ 5, R.R. at 6a.) The trial court and this Court affirmed the Board's denial. In Re: Appeal of Friends of Pennsylvania Leadership Charter School (Pa. Cmwlth., No. 808 C.D. 2009, filed January 7, 2010) (Friends I).

Effective January 15, 2011, the General Assembly amended Section 1722-A of the School Code to provide a tax exemption for certain entities, including nonprofit corporations and associated nonprofit foundations that leased property to charter and cyber charter schools. Section 1722-A(e) of the School Code provides, in relevant part:

(1) Notwithstanding the provisions of [S]section 204 of the act of May 22, 1933 (P.L. 853, No. 155), known as The General County Assessment Law [(County Tax Law)], all school property, real and personal, owned by any charter school, cyber charter school or an associated nonprofit foundation, or owned by a nonprofit corporation or nonprofit foundation and leased to a charter school, cyber charter school or associated nonprofit foundation at or below fair market value, that is occupied and used by any charter school or cyber charter school for public school, recreation or any other purposes provided for by this act, shall be made exempt from every kind of State, county, city, borough, township or other real estate tax . . . .

(3) This subsection shall apply retroactively to all charter schools, cyber charter schools and associated nonprofit foundations that filed an appeal from an assessment, as provided in Article V of [ the County Tax Law], prior to the effective date of this subsection.

24 P.S. § 17-1722-A(e).

On March 28, 2011, Friends applied for a real estate exemption for the Property, which the Board granted commencing with the 2011 school tax year.*fn3

(Petition for Appeal

¶¶ 7-8, R.R. at 7a.) Friends filed a verified claim for a real estate tax refund pursuant to Section 5566b of the Local Tax Collection Law*fn4 (Local Tax Law) with the County Treasurer, asserting that it was entitled to a refund of the County taxes it paid in tax years 2008, 2009, and 2010 based on the retroactive exemption provisions of Section 1722-A(e)(3) of the School Code. (Petition for Appeal ¶¶ 9, 11, R.R. at 7a.) By letter dated July 27, 2011, the Board denied Friends' verified claim. (Petition for Appeal ¶ 10, R.R. at 7a.)

Friends filed an appeal to the trial court asserting that, pursuant to Section 1722-A(e)(3), "Nonprofit Foundations such as Friends" were exempt from the real estate taxes it paid to the County and to WCASD in 2008, 2009, and 2010 and, thus, Friends was entitled to a refund of those taxes. (Petition for Appeal ΒΆΒΆ 15-19, 21-24, 26-28, 30, R.R. at 8a-10a.) Friends also sought the withdrawal of the 2011 real estate taxes the County billed Friends and the 2010 real estate taxes WCASD billed Friends. ...


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