Argued: June 19, 2013
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge
PATRICIA A. McCULLOUGH, Judge
The Board of Assessment Appeals of Schuylkill County (Board) appeals the August 28, 2012 order of the Court of Common Pleas of Schuylkill County (trial court) reversing the decision of the Board and determining that the property owned by Norwegian Township (Township) bearing Tax Parcel No. 20-06-0027 (Property) is exempt from real estate taxes. We affirm.
On August 6, 2007, Community Banks, N.A. (Community Banks) transferred the Property to the Township for $1.00. (Reproduced Record (R.R.) at 31a.) On March 1, 2012, Schuylkill County sent a notice to the Township notifying the Township of municipal/county and school district tax liability for the Property. (Id.) The Township appealed to the Board, which held a hearing on May 8, 2012. (R.R. at 52a.) By order dated May 9, 2012, the Board affirmed its tax assessment of the Property based on fair market value. (Id.) On June 8, 2012, the Township appealed the tax assessment of the Board to the trial court challenging the Property's tax-exempt status.
On July 12, 2012, the trial court held a hearing on the Township's tax assessment appeal. The parties stipulated to and the Board admitted the tax record card reflecting the Property's assessed fair market value of $49, 010.00. (Notes of Testimony (N.T.) at 3-4; R.R. at 31a.)
Leo John Grace (Grace), a supervisor and clerk for the Township, testified that Community Banks transferred the Property to the Township in 2007. Grace testified that the Township applied for grant money in 2007, and has been unsuccessfully applying ever since, to build a playground on the Property, but no funds were or are available. (N.T. at 5-6.) Grace stated that "since there is no grant money available . . . we've been cleaning it and cutting trees, and we're going to put some park benches in there, people from [the Township] can actually go sit until [grant] money does become available." (N.T. at 6.) Grace added that the Township has also removed debris from the Property. (N.T. at 6-7.)
Grace further testified that there is complete access to the Property "for about . . . three quarters of it, of the [P]roperty, and we plan on doing the rest." (N.T. at 7.) Grace stated that the Property is included in the Township's maintenance program to cut the grass and clean up after storms "maybe three times a month, same as [the Township does] with the [other] playgrounds." (Id.) Lastly, Grace asserted that the Township has applied for grants "several times through Amtek Engineering" and has spent thousands of dollars to make the Property open for public use. (N.T. at 17.) At the conclusion of the hearing, the trial court kept the record open for the Township to submit photographs of the Property. (N.T. at 21-22.)
By opinion and order dated August 28, 2012, the trial court held that the Property was exempt from real estate taxes. The trial court noted that, while the burden for establishing tax exemption is usually on the taxpayer under the general rule that all real estate is taxable, the taxing authority has the burden of proof when establishing tax liability for government-owned property. Relying on Granville Township v. Board of Assessment Appeals of Mifflin County, 900 A.2d 1012 (Pa. Cmwlth. 2006), the trial court stated that property acquired by a township is presumed to be immune from taxation unless there is evidence presented that the property is being used for a non-governmental purpose. The trial court also stated that, under Senior Citizen Health Care Council v. Board of Tax Assessment Appeals of Erie County, 678 A.2d 430 (Pa. Cmwlth. 1996), if a township has made a good-faith effort to develop a property it owns for its intended use, then the property is tax-exempt. (Trial court op. at 1-3.)
The trial court determined that the Property was tax-exempt under Article VIII, section 2 of the Pennsylvania Constitution and section 8812 of the Consolidated County Assessment Law (Law),  which authorize the exemption of public property used for public purposes from taxation. (Trial court op. at 2-3, 5-6.) The trial court concluded as follows:
If the Township is currently using the property for public purposes then the property is tax exempt. Also if the Township has made a good faith effort to commence developing the property for its intended use then the property would be tax exempt. See Senior Citizen Health Care Council. The testimony of Mr. Grace shows that the township purchased the property to be used as a park and/or playground. The Township's efforts to create the park and/or playground have been slow because the Township has not been able to secure grant funding to help them pay for the development of the park and/or playground.
Without the grant funding, the land has not been able to be fully developed as a park and/or playground. However, the land is still an area for residents to use for recreational activities. With benches being added to the land it will be more apparent to Township [sic] residents that the property is available to members of the public. As testified to by Mr. Grace the location of the land makes it a good area for residents to use, to walk their dogs or for any other recreational activities.
Even if the Township [sic] efforts to build a playground or park have been delayed because of a lack of funding there is no evidence to suggest that the land in question has been used for a non-public purpose. Under these circumstances, taxation of the property is neither compelled nor intended by the Pennsylvania Constitution or the County Assessment Law. The land is available to the public for recreational activities and we believe that the land has been used by the Township to benefit the public. We also believe that the township has made a good faith effort [to] develop the land to be used as a park and/or playground.
(Trial court op. at 5-6.) (emphasis added.)
On appeal,  the Board argues that the trial court erred in determining that the Board bears the burden of proving that the Township is not using the Property for a public purpose and therefore the Property is taxable. The Board asserts that the trial court erred in concluding that the Property is tax-exempt because: (1) the Township is not actively and currently using the Property for public purposes; (2) the Township merely "intends" to use the Property as a public park and/or playground and has not begun construction or expended significant sums of money towards this development; (3) the Township does not have the necessary funds to develop the Property for public purposes; and (4) the Township has failed to install improvements to the Property or notify its residents that the Property is available for public use as a park and/or playground.
Burden of Proof
Initially, we must determine whether the trial court erred in placing the burden of proof on the Board to show that the Property is not used for a public purpose, and, thus, subject to taxation. Usually, the taxpayer bears the burden of establishing a tax exemption under the rule that all property is subject to real estate taxes. In re Borough of Reiglesville from Bucks County Board of Assessment and Revision of Taxes, 979 A.2d 399, 403 (Pa. Cmwlth. 2009). Generally, the taxing authority's admission of the tax assessment record into evidence establishes a prima facie case for taxability, and it is the taxpayer's burden to overcome the validity of the tax assessment with competent, relevant evidence. Gitney v. Berks County Board of Assessment Appeals, 635 A.2d 737, 741 (Pa. Cmwlth. 1993). However, "[t]he burden of proof of liability for taxes is on the taxing authority where the real estate in question is owned by a governmental body." Granville, 900 A.2d at 1016; see also In re Borough of Reiglesville, 979 A.2d at 403.
The general rule that government-owned property is presumed tax-immune has a long historical basis in our case law. As our Supreme Court held in Directors of the Poor of Schuylkill County v. School Directors of North Manheim Township, 42 Pa. 21 (1862):
If we require the townships, counties, towns, cities, and state, and the road, school, and poor authorities, to tax each other, we shall furnish fees enough for several hundred officers engaged in transferring from one public body to another the taxes which it has collected for its public purposes . . . Surely it is not too much to say this is absurd. The public is never subject to tax laws, and no portion of it can be without express statute. No exemption law is needed for any public property, held as such.
Id. at 25.
In Granville, the court, in considering Directors of the Poor of Schuylkill County and the history of the taxability of government-owned property, stated, "[t]he concept of the tax immunity of public property has survived constitutional and statutory revisions; what has changed is how it is applied and under what terms." Granville, 900 A.2d at 1016.
Relying on Guilford Water Authority v. Adams County Board of Assessment, 570 A.2d 102 (Pa. Cmwlth. 1990), the Board argues that the trial court erred by placing the burden on the Board to prove the Township's tax liability for the Property. However, the Board's reliance on Guilford is misplaced. Guilford involved an appeal by Guilford Water Authority, a municipal authority, from a decision denying its claim for a real estate tax exemption. We held that Guilford Water Authority, the taxpayer, had the burden to prove tax-exempt status. Id. at 103 n.2. In doing so, we relied upon Appeal of Pittsburgh Institute of Aeronautics, 435 Pa. 618, 258 A.2d 850 (1969), which is distinguishable from the present case.
In Appeal of Pittsburgh Institute of Aeronautics, the Pittsburgh Institute of Aeronautics (PIA), a non-profit corporation, claimed to be exempt from taxes as a purely public charity. In that case, our Supreme Court noted that a taxpayer claiming a tax exemption bears the burden to prove tax-exempt status. Id. at 622, 258 A.2d at 852. However, property owned by non-profit corporations, such as PIA, is not entitled to the same presumption of tax immunity or tax exemption as is government-owned property, such as that owned by the municipal authority in Guilford. In deciding Guilford, we failed to consider this important distinction and misstated the appropriate burden of proof for government-owned property.
The Board's further reliance on Hospital Utilization Project v. Commonwealth, 507 Pa. 1, 487 A.2d 1306 (1985), to demonstrate that the burden of proof for tax exemption lies with the taxpayer is also misplaced for similar reasons. In Hospital Utilization Project, the taxpayer, like the taxpayer in Appeal of Pittsburgh Institute of Aeronautics, contended that it had tax-exempt status because it was a public charity. Similar to cases involving non-profit corporations, the burden is on the taxpayer seeking exemption as a public charity to prove its entitlement to tax-exempt status. Hospital Utilization Project, 507 Pa. at 13, 487 A.2d at 1312. However, as previously observed, such is not the case with government-owned property, and the court's conclusion of the burden of proof in Hospital Utilization Project is inapplicable to the present case. Further, the exemption at issue in Hospital Utilization Project was for sales and use tax, which is not at issue here.
Indeed, a progeny of cases decided after Guilford have held that municipal authorities, including townships, are extensions of the Commonwealth, and, thus, property owned by these entities is presumptively non-taxable. Lehigh-Northampton Airport Authority v. Lehigh County Board of Assessment, 585 Pa. 657, 674-75, 889 A.2d 1168, 1179 (2005) ("[P]roperty owned by a Commonwealth governmental agency is presumed immune, and the taxing body bears the burden of proving any limitation of the scope of the agency's immunity relative to an individual parcel of property that it wishes to tax."); In re Borough of Reiglesville, 979 A.2d at 403 ("The burden of proof for establishing the tax liability of a government-owned property lies with the taxing authority."); Granville, 900 A.2d at 1016 ("[T]he burden of proof of liability for taxes is on the taxing authority where the real estate in question is owned by a governmental body."); Dauphin County General Authority v. Dauphin County Board of Assessments, 768 A.2d 895, 898 (Pa. Cmwlth. 2000) (Property owned by a municipal authority which is primarily and principally used "for a public purpose" is exempt from taxation). Thus, the Board's reliance on Guilford is misplaced.
The Board's reliance on In re Township of Middleton, 654 A.2d 195 (Pa. Cmwlth. 1995), is similarly misplaced. In that case, we held that the burden was on a township to prove that property it owned was tax-exempt. However, in doing so, we relied on Lehigh Valley Cooperative Farmers v. Bureau of Employment Security, Department of Labor and Industry, 498 Pa. 521, 447 A.2d 948 (1982), a case involving a cooperative agricultural association claiming tax exemption from paying unemployment compensation taxes. As in Guilford, in In re Township of Middleton, the court misplaced the burden of proof in a government-owned property context on the taxpayer by mistakenly borrowing a principle from a case that did not involve government-owned property.
Further, in In re Township of Middleton, this Court also declined to extend tax immunity to townships, as we determined that a municipality was neither the Commonwealth nor one of its agencies. However, this court in In re Township of Middleton failed to cite any authority for its conclusion, and subsequent cases from both this Court and our Supreme Court have held otherwise. See Lehigh-Northampton Airport Authority; In re Borough of Reiglesville; Granville; Dauphin County General Authority.
While the dissent chooses to ignore "which party has the burden of proof or what has been decided in other cases, " (Dissent slip op. at 1), a discussion of these issues is necessary to the outcome of this case. In this regard, we conclude that the present case is controlled by our decision in Granville, which cited the reasoning of our Supreme Court in Lehigh-Northampton Airport Authority. In Lehigh-Northampton Airport Authority, the Supreme Court affirmed "decades of precedent" in this Commonwealth holding that municipal authorities created under the Municipality Authorities Act are agencies of the Commonwealth. 585 Pa. at 672, 889 A.2d at 1177. The court further noted that property owned by the Commonwealth is presumed to be immune from taxation and that the taxing authority bears the burden of proving the property's taxability. Id. at 675, 889 A.2d at 1179. In Granville, we applied the reasoning of Lehigh-Northampton Airport Authority to property owned by a township and held that a township is a governmental body whose property is presumed to be immune or exempt from tax. We noted in Granville that decisions addressing the taxability of public property use the terms immunity and exemption almost interchangeably and that the failure to recognize that different principles may be at work in different cases has added to the confusion in these types of cases. Nevertheless, we reiterated that "the burden of proof of liability for taxes is on the taxing authority where the real estate in question is owned by a governmental body." Granville, 900 A.2d at 1016. Thus, the trial court properly relied on Granville to conclude that the Board bore the burden to prove that the Property is subject to taxation.
The basis for tax exemption of public property is found in Article VIII, section 2 of the Pennsylvania Constitution and in section 8812 of the Law. In relevant part, Article VIII, section 2 of the Pennsylvania Constitution states:
(a) The General Assembly may by law exempt from taxation:
(iii) That portion of public property which is actually and regularly used for public purposes.
Pa. Const. art. VIII, §2. Section 8812 of the Law states further:
General rule.--The following property shall be exempt from all county, city, borough, town, township, road, poor, county institution ...