Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals and the School District of the City of Erie , 177 A.3d 406 ( 2018 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Bay Harbor Marina Limited :
Partnership, :
Appellant :
:
v. :
:
Erie County Board of Assessment :
Appeals, and The School District : No. 1377 C.D. 2016
of the City of Erie, and City of Erie :
Marina Holdings Limited, and Bay :
Harbor Marina Limited Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, and The School District :
of the City of Erie, and City of Erie :
: No. 1387 C.D. 2016
Appeal of: Marina Holdings Limited :
Marina Holdings Limited and Bay :
Harbor Marina Limited Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, The School District of the :
City of Erie and the City of Erie :
:
Appeal of: The School District of the : No. 1388 C.D. 2016
City of Erie :
Marina Holdings Limited and :
Bay Harbor Marina Limited :
Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, The School District of the :
City of Erie and the City of Erie :
:
Appeal of: The School District of the : No. 1389 C.D. 2016
City of Erie :
Bay Harbor Marina Limited Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, The School District of the :
City of Erie and the City of Erie :
:
Appeal of: The School District of the : No. 1390 C.D. 2016
City of Erie :
Bay Harbor Marina Limited :
Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals and The School District of :
The City of Erie and the City of :
Erie :
:
Appeal of: The School District of the : No. 1391 C.D. 2016
City of Erie : Argued: April 6, 2017
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
OPINION BY
JUDGE COVEY FILED: January 10, 2018
Bay Harbor Marina Limited Partnership (Bay Harbor) and Marina
Holdings Limited (Marina Holdings) (collectively, Lessees) appeal from the Erie
County Common Pleas Court’s (trial court) July 13, 2016 order that denied Lessees’
summary judgment motions and granted the Erie County Board of Assessment
Appeals (Board), the City of Erie (City) School District (District), and the City’s
summary judgment motions. The District cross-appeals from the trial court’s July 13,
2016 order and appeals from the trial court’s July 18, 2016 order that denied the
District’s motion to assign burdens of proof to Bay Harbor and Marina Holdings.
There are six issues for this Court’s review: (1) whether Lessees of the Erie-Western
Pennsylvania Port Authority (Authority), a Commonwealth agency, have standing to
seek tax immunity and exemption; (2) whether the Authority is or should be a party
to the tax appeal; (3) whether the Authority’s marina properties are immune and/or
exempt from taxation; (4) whether the trial court should have examined each parcel
and individual part thereof to determine if their public access areas were exempt from
taxation; (5) whether the District’s cross-appeals are properly before this Court; and,
(6) whether the trial court’s July 18, 2016 order is an appealable order.
The Authority is a third class port authority organized under the Third
Class City Port Authority Act (Act).1 It leased two parcels of its property – Bay
Harbor West and Bay Harbor East (collectively, Parcels) – to Marina Holdings and
Bay Harbor, respectively. The trial court described the Parcels as follows:
Both Bay Harbor West and Bay Harbor East operate as
private gated marinas for pleasure and recreational craft.
Bay Harbor West consists of approximately 8.8 acres,
including water lots. There are approximately 229 slips
available for lease. Two buildings are located on the Bay
Harbor West property, one of which houses bath/restroom
facilities and a commercial restaurant. Bay Harbor leases a
1
Act of December 6, 1972, P.L. 1392, 55 P.S. §§ 571-585.
2
portion of the Bay Harbor West property and first building
to Litz Enterprises, LLC, t/d/b/a Jr’s on the Bay (‘Sloppy
Duck’). Rent ranges from $44,820.00 to $48,708[.00] for
2016. Bay Harbor also leases a portion of the second
building to a commercial mechanic business, which pays
$2,200[.00] per quarter. The remainder of the second
building is utilized as an office for both Bay Harbor entities.
Bay Harbor East consists of approximately 12 acres. There
are three docks and 236 slips located on the property. There
is also a parking lot and bathhouse and vending area for
tenants.
Boat slips in Bay Harbor West and Bay Harbor East are
leased to private tenants on an annual basis. Once a slip is
assigned to a tenant, that tenant may renew his/her
membership year-to-year. Tenants are selected on a first-
come, first-serve basis and members of the public may
become members if dockage is available.
Both marina areas are fenced and locked. Access requires a
key device. The leases with the [] Authority provide for []
Authority approval of the fence at Bay Harbor East and
installation of a fence at Bay Harbor West. Parking is
located within the fenced areas of both marinas. Public
parking is located outside of the fence on the southern
portion of Bay Harbor West. Marina member amenities,
including bathhouse facilities, picnic shelters, fish cleaning
station and port-a-potties are not available to the general
public. Furthermore, various postings on both properties
exclude entry by the general public.
Use of both marinas is limited to members and their
family/friends, except for limited public access areas.
Public access at Bay Harbor West includes a walkway
along the eastern edge of the property allowing the public to
walk to the water. Another form of public access at Bay
Harbor West is a boat launch that provides public access to
the bay. Public transient boaters who use the boat launch
may not moor their boats in the marina area, although they
may use slips for a fee. Bay Harbor has a courtesy dock
allowing members and the general public to briefly dock
their boats and move their trucks/trailers to the launch to
remove their boats.
3
Public access to Bay Harbor East consists of a public access
walkway [] maintained by Bay Harbor along the eastern and
northern perimeter of Bay Harbor East. There is no public
boat launch. For a fee, transient boats may use one of six
open slips.
Trial Ct. Op. at 3-4 (footnotes omitted).
The Authority does not use or occupy the Parcels, is not involved in the
daily operations, decision-making, policy administration, rule enforcement or
membership criteria/approval of the entities using the Parcels. Each of Lessees’
leases provides, in relevant part:
4. Taxes, Utilities and Assessments.
(a) The [l]eased [p]remises are not subject to any taxes or
assessments as they have been acquired and have been used
and will continue to be used to further and effectuate the
Lessor’s authorized purposes. Nonetheless, in the event of
a change in law, an agreement between [the Authority] and
Lessee pursuant to which a payment in lieu of taxes is to be
made with respect to the [l]eased [P]remises (which
payment agreement shall be approved in writing by the
Lessee in advance), or a determination by a court or
governmental body with jurisdiction that any tax or
assessment may be chargeable against the [l]eased
[p]remises, the following subparagraphs shall control the
determination of liability for any taxes or assessments.
(b) The Lessee shall pay all taxes (including but not
limited to real estate taxes) and assessments, if any,
upon or against the [l]eased [p]remises by any
governmental entity by reason of the occupancy of the
[l]eased [p]remises by the Lessee regardless of whether or
not Lessee occupies the [l]eased [p]remises during the
entire period of such assessment. Lessee shall also pay all
water and sewer rental charges commencing with the
commencement date of the Lease term (such items for the
current Year to be prorated as of such commencement date),
all utility and telephone charges, and all expenses necessary
for the maintenance of the [l]eased [p]remises during the
term of the lease and any and all renewals thereof.
4
(c) The Lessee shall have the right in good faith to
contest or review by legal proceedings or in such other
manner as it deems suitable, which proceedings, if
instituted, shall be conducted promptly at Lessee’s
expense and free of expense to the Lessor, any taxes or
assessments imposed upon or growing due and payable
by reason of said [l]eased [p]remises or any part thereof.
The Lessee shall pay the amount that shall be finally
assessed or imposed against such premises or be
adjudicated to be due and payable as any such disputed or
contested tax or assessment. The Lessor will join in any
contest or protest provided for in this paragraph at the
request of the Lessee but at the Lessee’s sole cost and
expense and as a condition of such joinder the Lessor
may require reasonable indemnity against costs or other
damage by reason of such joinder.
Reproduced Record (R.R.) at 131a-132a, 220a-221a (emphasis added).
On December 17, 2012, Lessees applied to the Board seeking tax
immunity and/or exempt status for the Parcels. In a February 21, 2013 letter, the
Authority’s Chairman Jeffrey Johnson (Johnson) notified the Erie County Bureau of
Assessment’s Director of Assessment Scott Maas (Maas):
The [Authority] does not support the immunity or
exemption from real estate taxes for Authority property
unless it fulfills the core mission of the Authority. The
Authority has leased properties to . . . Bay Harbor Marina,
which are purely private, for-profit and commercial entities.
These types of entities operate yacht clubs, marinas and
recreational boat sales, and in no way further the core
mission of the Authority. As the record owner of the
[Parcels], the Authority opposes the grant of immunity or
exemption from ad valorem property taxes for these
[Parcels] and believes they are a proper subject of taxation.
We are, therefore, revoking the Authority’s joinder in the
Petitions seeking immunity or exemption from taxes that
are now before the [Board].
We would kindly request that you make the Board aware of
our position on this matter in that there is a hearing
scheduled before the Board . . . .
5
R.R. at 222a. The Board held a hearing on Lessees’ application and, on March 28,
2013, declared that the Parcels remained taxable. See R.R. at 19a-20a. Lessees
timely appealed to the trial court.2 The City and the District intervened. On April 22,
2014, the Authority passed a resolution stating:
BE IT RESOLVED THAT THE [AUTHORITY] DOES NOT
SUPPORT THE EXEMPTION FROM REAL ESTATE TAXES FOR
AUTHORITY PROPERTY UNLESS IT FULFILLS THE CORE
MISSION OF THE AUTHORITY, THE AUTHORITY HAS
LEASED THE PROPERTY TO BAY HARBOR MARINA, WHICH
IS PURELY PRIVATE, FOR PROFIT AND COMMERCIAL
ENTITY. THIS ENTITY OPERATES A MARINA AND HAS
PAID TAXES ON THE LEASED PROPERTY SINCE THE
INITIATION OF THE LEASE. AS THE RECORD OWNER OF
THE SUBJECT PARCELS, THE AUTHORITY SUPPORTS THE
CONTINUED PAYMENT OF PROPERTY TAXES FOR THESE
PARCELS AND BELIEVES THEY ARE PROPER SUBJECTS OF
TAXATION.
R.R. at 223a.
On October 31, 2014, the District filed a summary judgment motion
(District’s Motion), in which the City and the Board joined. On March 2, 2015, the
trial court heard argument on the District’s Motion. During argument, the trial court
informed the parties that because there were no material facts at issue, it would
decide the case on summary judgment motions, and offered Lessees an opportunity to
file their own summary judgment motions. The trial court also notified the parties
that it would remove the Authority from the caption since the Authority was not a
party.
On March 27, 2015, the District and the City moved to amend the
caption to add the District and the City as intervenors. On March 31, 2015, the trial
2
The matter was severed into two separate actions, but the cases were handled on a
consolidated basis. See Alma vs. Monroe Cty. Bd. of Assessment Appeals, 83 A.3d 1121 (Pa.
Cmwlth. 2014) (the taking of one appeal from multiple judgments is discouraged).
6
court issued an order granting the motion to amend the caption, declared that the
Authority was not a party to the action, and removed the Authority from the caption.
On April 27, 2015, Lessees filed their summary judgment motion and a motion to
join the Authority as a party. On June 10, 2015, the District filed a motion to assign
all burdens of proof to Lessees (Burdens Motion).
On October 12, 2015, the trial court heard argument on the summary
judgment motions and the joinder motion. On July 13, 2016, the trial court granted
the District’s Motion and denied Lessees’ summary judgment motion. Although the
trial court declared that Lessees had standing to pursue an exemption,3 relative to
immunity, the trial court explained:
Under the [Act], an authority has the power to lease real
estate. 55 P.S. § 573. The [Authority] is also entitled to
immunity from taxation based upon Section [12 of the Act],
which states, inter alia, that ‘the authority shall not be
required to pay any taxes or assessments upon property
acquired or used by it for such purposes[.]’ 55 P.S. § 582.
There is no provision under the [Act] regarding standing
and immunity claims for purposes of appeal. Additionally,
[Section] 8844 of the Consolidated County Assessment
Law [(CCAL)4], which permits [Lessees] to file an
exemption appeal, does not specifically authorize an
immunity challenge.
Th[e trial c]ourt agrees with [Lessees] that there is a paucity
of legal authority on the issue of standing in an immunity
claim. The absence of relevant case law, however, does not
lead to the conclusion that cases involving standing in
exemption claims are applicable by analogy or default.
Rather, th[e trial c]ourt concludes that the lack of legal
authority on the specific issue of standing in the context of
an immunity claim is due to the fact that immunity is
normally not raised by a lessee of a property owner or
3
The District acknowledges in its brief to this Court: “Admittedly, the [t]rial [c]ourt granted
standing to seek an exemption under what the [trial c]ourt determined to be applicable case law and
this is not challenged on appeal.” District’s Br. at 15.
4
53 Pa.C.S. §§ 8801-8868.
7
others claiming derivative standing. Accordingly, for
purposes of this appeal, th[e trial c]ourt finds that [Lessees]
have no standing to raise immunity from taxation.
Trial Ct. Op. at 10 (footnote omitted). The trial court further considered whether the
Parcels are used for a public purpose and concluded that Lessees were not so entitled
to immunity.
The trial court’s opinion also included the following footnote:
In tax exemption cases, the burden of proof is normally on
the taxpayer. City of Phila[.] v. Cumberland C[ty.] Bd. [o]f
Assessment Appeals, 81 A.3d 24, 25 n.1 (Pa. 2013). (‘[I]f
an entity is immune, the taxing authority bears the burden
of establishing why taxation is permissible; if the entity is
exempt[,] the entity bears the burden of establishing why it
should not be subject to taxation.’) However, Norwegian
T[ownship v. Schuylkill County Board of Assessment
Appeals, 74 A.3d 1124 (Pa. Cmwlth. 2013),] held that
property owned by a municipality is presumed to be exempt
from taxation; accordingly, the burden of proof is on a
taxing authority to claim otherwise. Norwegian Twp[.]
Trial Ct. Op. at 11 n.6. On July 18, 2016, the trial court entered a post-judgment
order denying the Burdens Motion.
On August 11, 2016, Bay Harbor timely appealed from the trial court’s
July 13, 2016 order to this Court.5 On August 11, 2016, Marina Holdings also
appealed from the trial court’s July 13, 2016 order to this Court.6 On August 16,
2016, the District filed a cross-appeal to Marina Holdings’ appeal,7 and filed a cross-
appeal to Bay Harbor’s appeal,8 contending that the trial court erred in its July 13,
2016 opinion and order by ruling that the taxing authorities had the burden of proving
exemption and immunity. On August 16, 2016, the District appealed from the trial
5
Bay Harbor’s appeal is docketed at 1377 C.D. 2016.
6
Marina Holdings’ appeal is docketed at 1387 C.D. 2016.
7
The District’s cross-appeal of Marina Holdings’ appeal is docketed at 1389 C.D. 2016.
8
The District’s cross-appeal of Bay Harbor’s appeal is docketed at 1391 C.D. 2016.
8
court’s July 18, 2016 order denying the District’s Burdens Motion.9 On September 6,
2016, this Court ordered the parties to address in their briefs, the appealability of the
trial court’s July 18, 2016 order. On November 2, 2016, this Court consolidated
Lessees’ appeals, the District’s cross-appeals, and the District’s appeals from the trial
court’s July 18, 2016 order. 10
Lessees first argue that the trial court erred when it held that Lessees did
not have standing to pursue their tax immunity claim.
Standing is a requirement that parties have sufficient
interest in a matter to ensure that there is a legitimate
controversy before the court. In determining whether a
party has standing, a court is concerned only with the
question of who is entitled to make a legal challenge and
not the merits of that challenge.
In re T.J., 739 A.2d 478, 481 (Pa. 1999). Consequently, we consider Lessees’
interests.
Initially, we note that Section 3(a) of the Act states, in relevant part, that
“[t]he [port] authority shall exercise the public powers of the Commonwealth as an
agency thereof.” 55 P.S. § 573(a). “As a general matter, property owned by the
Commonwealth and its agencies is immune from taxation by a local subdivision in
9
The District appealed from the trial court’s July 18, 2016 order relative to Bay Harbor
docketed at 1390 C.D. 2016, and relative to Marina Holdings docketed at 1388 C.D. 2016.
10
This Court has explained:
Our scope of review of a trial court’s order granting or denying
summary judgment is plenary, and our standard of review is clear:
the trial court’s order will be reversed only where it is established that
the court committed an error of law or abused its discretion.
Summary judgment is proper only where there is no genuine issue as
to any material fact and it is clear that the moving party is entitled to a
judgment as a matter of law.
Kincel v. Dept of Transp., 867 A.2d 758, 761 n.7 (Pa. Cmwlth. 2005) (citation omitted).
9
the absence of express statutory authority.” Se. Pa. Transp. Auth. (SEPTA) v. Bd. of
Revision of Taxes, 833 A.2d 710, 713 (Pa. 2003) (emphasis added).
Section 12 of the Act, entitled: “Exemption from taxes and assessments”
provides, in pertinent part:
The effectuation of the authorized purposes of any
authority created under this [A]ct, shall and will be in all
respects for the benefit of the people of the Commonwealth,
for the increase of their commerce and prosperity, and for
the improvement of their health and living conditions; and
since the authority will be performing essential government
functions in effectuating such purposes, the authority shall
not be required to pay any taxes or assessments upon
any property acquired or used by it for such purposes[.]
55 P.S. § 582 (emphasis added). Although the title of Section 12 of the Act
specifically references “[e]xemption,” in Lehigh-Northampton Airport Authority v.
Lehigh County Board of Assessment Appeals, 889 A.2d 1168 (Pa. 2005), our
Supreme Court interpreted almost identical language in Section 5620 of the
Municipality Authorities Act (MAA)11 as affording tax immunity. See also Del. Cty.
Solid Waste Auth. v. Berks Cty. Bd. of Assessment Appeals, 626 A.2d 528 (Pa. 1993).
In contrast, with respect to exemption, Section 8812(a) of the CCAL
provides, in relevant part:
The following property shall be exempt from all county,
city, borough, town, township, road, poor, county institution
district and school real estate taxes:
....
(8) All other public property used for public purposes with
the ground annexed and necessary for the occupancy and
use of the property, but this shall not be construed to
include property otherwise taxable which is owned or held
by an agency of the [f]ederal [g]overnment. This chapter or
11
53 Pa.C.S. §§ 5601-5623.
10
any other law shall not be construed to exempt from
taxation any privilege, act or transaction conducted upon
public property by persons or entities which would be
taxable if conducted upon nonpublic property regardless of
the purpose for which the activity occurs, even if conducted
as agent for or lessee of any public authority.
53 Pa.C.S. § 8812(a).
Section 8844(c)(1) of the CCAL permits “[a]ny person aggrieved by any
assessment, whether or not the value thereof shall have been changed since the
preceding annual assessment, or any taxing district having an interest in the
assessment, [to] appeal to the [B]oard for relief.” 53 Pa.C.S. § 8844(c)(1). Appeals
from the Board to the trial court are governed by Section 8854(a)(1) of the CCAL
which provides:
Following an appeal to the [B]oard, any appellant, property
owner or affected taxing district may appeal the [B]oard’s
decision to the court of common pleas in the county in
which the property is located in accordance with [Section
5571(b) of the Judicial Code,] 42 Pa.C.S. § 5571(b)
(relating to appeals generally) and local rules of court.
53 Pa.C.S. § 8854(a)(1). The aforementioned language does not specify whether a
Commonwealth agency lessee is a “person aggrieved by an[] assessment[.]” 53
Pa.C.S. § 8844(c)(1). However, our Supreme Court
has held that ‘where a person is not adversely affected in
any way by the matter challenged, he is not aggrieved and
thus has no standing to obtain a judicial resolution of that
challenge.’ Hosp. & Healthsystem Ass’n of P[a.] v. Dep[’t]
of Pub[.] Welfare, . . . 888 A.2d 601, 607 ([Pa.] 2005)
(citing William Penn Parking Garage, Inc., v. City of
Pittsburgh, . . . 346 A.2d 269, 280 ([Pa.] 1975)). Moreover,
in order to be aggrieved, a party must show that it has a
substantial, direct and immediate interest in the claim
sought to be litigated. Id.; William Penn, 346 A.2d at 280–
83. We have defined these requirements as follows: a
‘substantial’ interest is an interest in the outcome of the
litigation which surpasses the common interest of all
11
citizens in procuring obedience to the law; a ‘direct’ interest
requires a showing that the matter complained of caused
harm to the party’s interest; an ‘immediate’ interest
involves the nature of the causal connection between the
action complained of and the injury to the party
challenging it, and is shown where the interest the party
seeks to protect is within the zone of interests sought to
be protected by the statute or constitutional guarantee
in question. Hosp. & Healthsystem Ass’n, 888 A.2d at 607;
S[.] Whitehall T[wp.] Police Serv[.] v. S[.] Whitehall T[wp.],
. . . 555 A.2d 793, 795 ([Pa.] 1989).
Pa. Med. Soc’y v. Dep’t of Pub. Welfare, 39 A.3d 267, 278 (Pa. 2012) (emphasis
added).
In In re Board of Property Assessment, 797 A.2d 414 (Pa. Cmwlth.
2002), this Court considered whether Pittsburgh International Airport private, for-
profit food vendor sublessees had standing under the General County Assessment
Law (GCAL)12 to appeal from an assessment finding that their parcels were not tax
exempt. The Court examined the language of Section 518.1(a) of the GCAL which
states “[a]ny owner of real estate or taxable property in this Commonwealth, who
may feel aggrieved by the last or any future assessment or valuation of his real estate
or taxable property, may appeal . . .” therefrom. 72 P.S. § 5020-518.1(a).13 The
Court explained that in earlier cases it had “determined that the term ‘owner’ includes
not only the registered owner of the real estate, but also an equitable owner or owner
of a taxable interest in the property.” In re Bd., 797 A.2d at 417. It further stated:
Each of the sublessees in this matter has entered into a
seven-year sublease that obligates it to pay all taxes
assessed or levied against the premises. Under the terms of
each sublease, upon expiration or termination of the lease
term, improvements made by the sublessee become the
property of the County as record owner of the terminal and
12
Act of May 22, 1933, P.L. 853, as amended, 72 P.S. §§ 5020-1 – 5020-602.
13
Added by Section 2 of the Act of December 28, 1955, P.L. 917.
12
remain in place unless the County requests their removal, in
which case the sublessee is obligated to remove them. . . .
[T]he facts . . . support a conclusion that the parties to the
lease agreements intended that the sublessee is the owner of
the parcel for tax purposes because the seven-year
commercial sublease indicates that the title to the
improvements, as well as the leasehold itself, remain in the
lessee during the term. [E]ach of the sublessees of public
property in this case, is the ‘owner’ of a non-freehold,
possessory interest in the taxable property for a term of
years, something less than legal or equitable ownership, but
ownership nonetheless for the purposes of Section 518.1 [of
the GCAL].
In re Bd., 797 A.2d at 418 (footnotes omitted).14
In addition, this Court must examine the factors established in
Pennsylvania Medical Society to determine whether Lessees are aggrieved. First,
Lessees do have a substantial interest in the litigation’s outcome because of their
interests in tax relief from taxes imposed on the Parcels, where their leases require
payment thereof, exceed the common interest of all citizens. Further, Lessees have
direct interests because the Board’s decision triggers their lease obligations.
Whether Lessees have an immediate interest is less clear. Here, if the
Parcels are not immune under Section 12 of the Act, Lessees are subject to tax
liability. Therefore, we must consider the “zone of interests sought to be protected
by” Section 12 of the Act. Pa. Med. Soc’y, 39 A.3d at 278. The District argues that
since Section 12 of the Act applies only to the Authority, the “zone of interests sought
14
The In re Board Court, stated: “Of equal importance to our conclusion on this point is that
the interests of the County, as record owner of the airport terminal, are not adverse to those of the
tax-paying sublessees.” In re Bd., 797 A.2d at 418 n.11. In the instant action, because the
Authority has taken the position that the Parcels are taxable, “the interests of the [Authority], as
record owner of the [Parcels], are . . . adverse to those of the tax-paying [Lessees].” Id. (emphasis
added). We note that “[i]t is well settled that tax immunity is distinct from tax exemption.” SEPTA,
833 A.2d at 713. Although this Court has considered lessees’ standing in the context of tax
exemption, it has not done so with respect to tax immunity. Notwithstanding, the nature of Lessees’
interests are similar to those in In re Board.
13
to be protected” pertains only to the Authority. Id. However, Section 12 of the Act is
not so narrow, but rather focuses on the “[t]he effectuation of the authorized
purposes[15] of any authority created . . . ” thereunder. 55 P.S. § 582 (emphasis
added).16 Therefore, as lessees of Authority property which is purportedly used to
further the Authority’s authorized purposes, Lessees would be included within
Section 12 of the Act’s “zone of interests.” Pa. Med. Soc., 39 A.3d at 278.
Accordingly, this Court concludes that Lessees had standing to challenge the denial
of tax immunity, and the trial court erred when it held otherwise.
15
The Authority’s purpose is described in Section 3(a) of the Act: “Each authority shall be
for the purpose of planning, acquiring, holding, constructing, improving, maintaining and operating,
owning, leasing, either as lessor or lessee, port facilities and equipment.” 55 P.S. § 573(a)
(emphasis added). Section 2 of the Act defines “port facility” to include
all real and personal property used in the operation of a port
terminal, including, but without being limited to, wharves, piers,
slips, ferries, docks, graving docks, drydocks, ship building and/or
repair yards, bulkheads, dock walls, basins, carfloats, float-bridges,
dredging equipment, radio receiving and sending stations, grain or
other storage elevators, warehouses, cold storage, tracks, yards, sheds,
switches, connections, overhead appliances, bunker coal, oil and fresh
water stations, railroads, motor trucks, floating elevators, airports,
barges, scows or harbor craft of any kind, markets and every kind of
terminal storage or supply depot, now in use or hereafter designed for
use, to facilitate transportation and for the handling, storage, loading
or unloading of freight at terminals, and equipment, materials and
supplies therefor.
55 P.S. § 572 (emphasis added). Section 2 of the Act also defines “port terminal” as “any marine .
. . terminal . . . used or to be used, in connection with the transportation or transfer of freight,
personnel and equipment.” 55 P.S. § 572 (emphasis added).
16
Consideration of this broader “zone of interests” is consistent with the concept that
immunity attaches to the Commonwealth property itself, rather than simply to the Commonwealth.
As our Supreme Court stated, “property owned by the Commonwealth and its agencies is immune
from taxation by a local subdivision in the absence of express statutory authority,” so long as the
agency action is within the agency’s authorized purposes and powers, and so long as the property is
used for a purpose that is within the agency’s operations. SEPTA, 833 A.2d at 713 (emphasis
added).
14
Our conclusion that Lessees have standing to assert their immunity
claims is not a declaration that the claims are meritorious. See In re T.J. “Whether
property is tax-exempt or immune from taxation is a question of law[.]” Norwegian
Twp., 74 A.3d at 1128 n.3. Thus, we consider Lessees’ immunity claim consistent
with our Supreme Court’s holding in SEPTA, that
a court must first look at the broader question of whether
the agency’s action is within its ‘authorized purposes and
powers.’ Delaware C[ty.]. However, the inquiry does not
end at that point. The court must also consider the scope of
the immunity, i.e., whether the property was acquired or
used for a purpose that is within the operation of the
agency. In making this determination, the court must keep
in mind that immunity is not limited to the absolute
minimum of property necessary for operations.
SEPTA, 833 A.2d at 716. This includes considering whether the Parcels are being
used as “port facilities” as defined by the Act. Lessees’ argument that Section 3(b)(5)
of the Act permits the Authority to “lease as lessor” Authority property is not alone
sufficient to conclude that the use of the Parcels is within the Authority’s purposes
and powers. See SEPTA.
Lessees rely on the subject lease language and deposition testimony to
establish that the Act authorizes operation of the recreational marinas. Specifically,
Lessees point to the testimony of the Authority’s Executive Director Raymond
Schreckengost (Schreckengost), who testified that the Authority’s mission is “[t]o
promote industrial, commercial and recreational opportunities on Presque Isle Bay
and adjacent waters.” R.R. at 261a. Lessees further rely on Schreckengost’s
descriptions of other Authority-operated recreational marina facilities, asserting that
the Authority “regularly elects to utilize public-private partnerships to further its
statutory purposes.” Lessees’ Br. at 44. According to Lessees, “[i]n every case, the
[Authority] is utilizing its statutory power to enter into leases as a lessor and is doing
15
so to implement its statutory purpose of developing and maintaining marine
facilities.” Lessees’ Br. at 45.
Notwithstanding Lessees’ claims, the Authority’s actions do not
“implement [its] statutory purpose of developing and maintaining marine facilities.”
Id. (emphasis added). This Court acknowledges the Authority’s statutory power to
enter into leases and to lease Authority property. However, Section 3(a) of the Act
provides that “[e]ach authority shall be for the purpose of planning, acquiring,
holding, constructing, improving, maintaining and operating, owning, leasing, either
as lessor or lessee, port facilities and equipment.” 55 P.S. § 573(a) (emphasis
added). Section 2 of the Act defines “port facilities” as “including all real and
personal property used in the operation of a port terminal[.]” 55 P.S. § 572 (bold
and italicized emphasis added). “‘Port terminal’ includes any marine . . . terminal .
. . used or to be used, in connection with the transportation or transfer of
freight, personnel and equipment.” Id. (emphasis added). Because the Authority’s
statutorily-mandated purpose does not expressly authorize the Authority’s operation
of a recreational marina, we conclude that the Parcels are not immune from taxation.
We next address whether the trial court erred by sua sponte removing
the Authority from the case caption because the Authority is an indispensable or
necessary party. The District,17 City18 and Lessees19 do not dispute that the Authority
is a party to the action. Lessees named the Authority as a party in its appeal to the
17
The District states in its brief to this Court that “[t]he [Authority] was a named party at
least until April 1, 2015, and remained a designated party even after September 5, 2014[,] when the
[trial court] granted severance by a September 5, 2014 order providing that [Lessees] will be [the
a]ppellants along with the [Authority].” District’s Br. at 20 (citation omitted).
18
The City argues in its brief to this Court that it “is not disputing that the Authority did
become a party commencing with the appeal to the [B]oard and throughout.” City’s Br. at 22.
19
Lessees assert in their brief to this Court that “[u]pon the filing of the appeals, the owner
of the properties, the [Authority], was identified as an appellant by [Lessees].” Lessees’ Br. at 32.
“[T]he [Lessees] believe that the [Authority] has already been joined as a party.” Id.
16
trial court based on Section 4 of the leases, which stated in relevant part, “[t]he
Lessor will join in any contest or protest provided for in this paragraph at the request
of the Lessee . . . .” R.R. at 132a, 221a. Lessees further reason that they properly
named the Authority as a party consistent with the rationale behind Pennsylvania
Rule of Civil Procedure No. 2227 which states:
(a) Persons having only a joint interest in the subject matter
of an action must be joined on the same side as plaintiffs or
defendants.
(b) If a person who must be joined as a plaintiff refuses to
join, he or she shall, in a proper case, be made a defendant
or an involuntary plaintiff when the substantive law permits
such involuntary joinder.
Pa.R.C.P. No. 2227. Lessees also note that the Authority’s party status is consistent
with Section 8844(e)(1) of the CCAL, that provides:
When an appeal has been filed, the [B]oard shall notify
the appellant, property owner and each affected taxing
district of the time and place of the hearing. Each party
attending the hearing shall have the right to examine any
witness. The notice shall be mailed to the appellant at the
address designated in the appeal. Notices required by this
section shall be mailed no later than 20 days preceding the
appeal. Any appellant who fails to appear for the hearing at
the time fixed shall be conclusively presumed to have
abandoned the appeal unless the hearing date is rescheduled
by the mutual consent of the appellant and the [B]oard.
53 Pa.C.S. § 8844(e)(1) (emphasis added). This Court agrees that the Authority was
properly named as a party in this action, and retained that status throughout the trial
court’s proceedings. Accordingly, the trial court erred by sua sponte removing the
Authority’s name from the case caption.
Lessees next contend that the trial court erred by concluding that
Lessees, as Commonwealth agency lessees, were not entitled to tax exemption.
17
Lessees argue that the Authority-owned marina properties are entitled to tax
immunity and/or exemption even when leased to private operators.
Initially,
[t]he elementary premise underlying taxation is that the
power to tax is exclusively vested within the legislature.
‘Property is immune from taxation if the taxing body has
not been granted the authority to levy a tax.’ Delaware
C[ty. Solid Waste Auth. v. Berks Cty. Bd. of Assessment
Appeals,] 626 A.2d [528,] 530 [(Pa. 1993)]. As a general
matter, property owned by the Commonwealth and its
agencies is immune from taxation by a local subdivision in
the absence of express statutory authority. It cannot be
presumed that general statutory provisions giving local
subdivisions the power to tax local real estate, were meant
to include property owned by the Commonwealth, since to
allow such taxation would upset the orderly processes of
government. Thus, in order to tax property owned by the
Commonwealth, a local subdivision must establish that it
has the authority to tax such property.
On the other hand, tax ‘exemption’ carves out specified
property from taxation that the taxing body otherwise
has the authority to tax. Delaware C[ty.], 626 A.2d at
530. The exemptions are the result of Article VIII,
Section 2 of the Pennsylvania Constitution, which
provides that the General Assembly may by law exempt
from taxation certain classes of property, including ‘that
portion of public property which is actually and
regularly used for public purposes.’ Pa. Const. Art. VIII,
§ 2(a)(iii). Thus, unlike immunity situations, the property is
presumed to be subject to tax unless specifically excluded
and the taxpayer must establish that the property is exempt
from taxation.
Thus, the primary distinction between ‘immunity’ and
‘exemption’ is simply that ‘the ordinary presumption
against exemption does not apply where the property
involved is owned by the Commonwealth, since such
property has for reasons of public policy been
consistently recognized as free from taxation.’
[Commonwealth v.] Dauphin C[ty.], 6 A.2d [870,] 872-73
[(Pa. 1939)].
18
SEPTA, 833 A.2d at 713 (emphasis added; citations omitted); see also In re Appeal of
Riegelsville, 979 A.2d 399 (Pa. Cmwlth. 2009). In Lehigh-Northampton, the
Supreme Court further clarified its SEPTA analysis:
[A] precept evident from Delaware County and SEPTA is
that the standard for judging the scope of immunity may be
different from that applicable to questions of tax exemption.
Because exemptions are statutory in nature, the relevant
statute supplies the governing standard. Presently, . . . the
trial court focused upon the ‘public purpose’ test embodied
in the [GCAL] . . . . On the other hand, under Delaware
County and SEPTA, immunity is assumed unless the agency
acts outside of its authorized governmental purposes. This
aligns with Section 5620 [of the MAA], which affirms that
authorities need not pay taxes on property acquired or used
for ‘authorized purposes’ relating to the ‘perform[ance of]
essential governmental functions.’ 53 Pa.C.S. § 5620[.]
Lehigh-Northampton, 889 A.2d at 1179. Importantly, in Norwegian Township this
Court explained:
In SEPTA, our Supreme Court described two distinct
analyses; one used to determine whether a property is tax-
immune and the other used to determine whether a property
is tax-exempt. However, . . . the Supreme Court observed
that courts within the Commonwealth have used the terms
‘immunity’ and ‘exemption’ interchangeably. As we noted
in Granville [Township v. Board of Assessment Appeals of
Mifflin County, 900 A.2d 1012, 1015 (Pa. Cmwlth. 2006)],
the distinction between tax immunity and tax exemption is
unnecessary in the context of government-owned property.
Whether either term is used, government-owned
property is not taxable if it is being used for a public
purpose, and the taxing authority bears the burden to
prove its taxability. Stated otherwise, the taxing
authority must prove that the government-owned
property is not being used for a governmental purpose
in order for the property to be taxable.[20]
20
The District and the City strenuously argue that the trial court erred by placing the burden
of proof on the taxing authority rather than on Lessees. They contend that because the Authority
19
does not support Lessees’ immunity and exemption claims, the burden should be with Lessees. The
District asserts:
The [Authority] does not seek the exemption. It opposes it. Either
way, the effort to derive the benefits of Section [12 of the Act] suffer
from the fatal flaw [-] [Lessees are] not the part[ies] Section [12 of
the Act] intends to benefit. The burden of proof in exemption cases
rests with the proponent of the exemption. The burden of proof in
exemption cases normally rests on the taxpayer. Statutory provisions
that exempt property from taxation must be strictly construed.
District’s Br. at 70-71 (citations omitted). After our Supreme Court explained in SEPTA that the
presumption against exemption does not apply where Commonwealth property is involved, it again
addressed the issue in Lehigh-Northampton, stating:
In contrast to tax immunity, tax exemption does not implicate the
authority to tax, but excludes from taxation specified property that
would otherwise be taxable. This difference is significant because
exemptions are evaluated according to a principle of strict
construction in favor of taxation, see 1 Pa.C.S. § 1928(b)(5), whereas
doubts are resolved in favor of the taxpayer in assessing the reach of
the taxing statute in the first instance. See . . . Delaware C[ty.], . . .
626 A.2d at 531 (‘[W]e strictly construe statutes purporting to
permit taxation of Commonwealth property, and such a grant
may not be found by implication.’ (citing Appeal of Harrisburg Sch.
Dist., . . . 417 A.2d 848 ([Pa. Cmwlth.] 1980), and Mastrangelo v.
Buckley, . . . 250 A.2d 447 ([Pa.] 1969))). ‘Thus, the primary
distinction between ‘immunity’ and ‘exemption’ is simply that
‘the ordinary presumption against exception does not apply
where the property involved is owned by the Commonwealth,
since such property has for reasons of public policy been
consistently recognized as free from taxation.’ SEPTA, . . . 833
A.2d at 713 (quoting Commonwealth v. Dauphin C[ty.], . . . 6 A.2d at
872-73). In short, Commonwealth property is presumed immune,
and the local taxing body bears the burden to demonstrate
taxability.
Lehigh-Northampton, 889 A.2d at 1175-76 (emphasis added; citations omitted). In Granville, this
Court held 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 (emphasis
added). There is no ambiguity here. Both the Pennsylvania Supreme Court and this Court have
spoken clearly that Commonwealth-owned property is presumed immune and exempt from
taxation and the burden is on the taxing authority to demonstrate otherwise. Certainly, the
presumption may be overcome. Although the Authority, as owner, may disagree that Lessees are
20
Norwegian Township, 74 A.3d at 1131 (emphasis added; citations omitted).
What, then, is the established law as to the taxability of
property or part of property which would admittedly be
exempt from taxation if used by the owner for a public
purpose but which is leased to other tenants? The
controlling test is, not merely whether the property or part
of it has been rented out, but whether the use of the part
so leased is for a public or a private purpose. It is the
use of the property, and not the use of the proceeds from
the property, which determines whether tax exemption
may constitutionally be granted.
Appeal of Mun. Auth. of Borough of W. View, 113 A.2d 307, 309 (Pa. 1955)
(emphasis added); see also Basehore v. Hampden Indus. Dev. Auth., 248 A.2d 212
(Pa. 1968). More recently, this Court explained: “[T]he key to exemption is evidence
establishing that the lessee’s use of the public property is furthering the purpose of
the governmental agency from which the lessee rents the property. In the absence of
such evidence . . . the property is not serving a public purpose and is not tax exempt.”
Pier 30 Assocs. v. Sch. Dist. of Phila., 493 A.2d 126, 129-30 (Pa. Cmwlth. 1985).
Citing to Borough of West View and to Pittsburgh Public Parking
Authority v. Board of Property Assessment, 105 A.2d 165 (Pa. 1954), this Court in
Wesleyville Borough v. Erie County Board of Assessment Appeals, 676 A.2d 298 (Pa.
Cmwlth. 1996), further explained:
Our Supreme Court has . . . stated that the fact that property
of a public body is leased to another entity, even a private
party deriving profit therefrom, will not defeat the tax
exemption if the property is being used for the
specifically[-]authorized public purpose for which it was
acquired. The controlling test for tax exemption is not
whether the property or part of it has been leased out,
but whether the use of the property so leased is for a
entitled to tax exemption, the Authority’s position does not change the burden as long as the
Authority owns the Parcels.
21
public purpose. This [C]ourt has also stated that the
crucial point is not whether the public body is benefitted
by the use of the leased property but whether the use is, in
fact, public.
Where the primary and principal use to which property is
put is public, the mere fact that income is incidentally
derived from the use of the property does not affect its
character as property devoted to a public use. On the other
hand, property that is owned by a tax-exempt entity is
taxable if the property is used for commercial purposes
or is rented to a lessee for a purely business enterprise
and not a public use.
Id. at 302 (citations omitted; bold and italicized emphasis added); see also Upper
Dauphin Nat’l Bank v. Dauphin Cty. Bd. of Assessment Appeals, 561 A.2d 378 (Pa.
Cmwlth. 1989); see also Indiana Univ. of Pa. v. Indiana Cty. Bd. of Assessment
Appeals (Pa. Cmwlth. No. 1923 C.D. 2014, filed September 17, 2015), slip op. at 16
(“The general rule is when a governmental entity leases property for a private or
commercial purpose, that lease does not count as a ‘public purpose’, and that
property will not be exempt from taxation.”21 (Emphasis added)).22
In light of the foregoing, the Court examines Lessees’ use of the Parcels
to determine whether the trial court properly concluded their “use is [not], in fact,
public.” Wesleyville, 676 A.2d at 302. The trial court explained the factors upon
which it based its conclusion that Lessees’ use was not for a public purpose:
21
This Court’s unreported memorandum opinions may be cited “for [their] persuasive value,
but not as binding precedent.” Section 414(a) of the Commonwealth Court’s Internal Operating
Procedures, 210 Pa. Code § 69.414(a).
22
This Court acknowledges that in 2002, in In re Board, this Court stated that “when public
property is used by a private entity, the key to maintaining the tax exemption is evidence
establishing that the lessee’s use of the public property is furthering the purpose of the
governmental agency from which the lessee rents the property.” Id. at 419 (emphasis added). The
analysis used therein seems more akin to an immunity analysis. Thus, the Court concludes that the
In re Board Court’s analysis does not reflect the current state of the law given the distinction
between tax immunity and exemption recognized by our Supreme Court in 2003 in SEPTA, and in
its 2005 Lehigh-Northampton decision.
22
Here, the [Authority], in exchange for rental income, leases
the subject properties to commercial entities not affiliated
with the [Authority]. As reflected by the evidence, these
properties are utilized as private, for-profit marinas and
inure to the sole benefit of [Lessees] and its subtenants.
The public has either limited or restricted access to the
marinas. The record is devoid of any evidence that the
marinas are used for a public purpose. Furthermore, the
[Authority] has no control over the marinas, particularly in
the operations, decision making, or administration of the
marinas. The [Authority] is also not involved in
membership approval and rental fees with the subtenants.
Trial Ct. Op. at 13.
In support of their contention, the trial court erred and the Parcels are
indeed being used for a public purpose, Lessees posit:
The [Parcels] are by definition owned by a public agency
and therefore constitute public property. As for their use, it
is equally apparent that the [Parcels] are used for public
purposes. The leases mandate the use of the property for
marinas. Hundreds of members of the public are able to
utilize the docks for dockage every year. Uncountable
others have access to the public access areas enabling both
foot traffic and boats to be launched from the ramp at Bay
Harbor West.
Although the exemption section of the [Act] is the source of
the immunity of the [Authority], its statements of the
benefits of the [Authority’s] purposes is of relevance in
demonstrating the public purposes to which the properties
are being applied. [Section 12 of the Act] states that the
purposes of the Authority are ‘for [ . . .] the benefit of the
people of this Commonwealth, for the increase of their
commerce and prosperity, and for the improvement of their
health and living conditions: [ . . . ,] 55 P.S. [§] 582. The
marinas serve these purposes. They facilitate commerce
and generate economic benefit to the Bayfront and
surrounding areas. In terms of health and living conditions,
the marinas provide recreation opportunities to the public
which would not otherwise exist.
Lessees’ Br. at 53-54 (citation omitted).
23
Importantly, Lessees omit critical terms from their quotation of Section
12 of the Act which omission serves to obfuscate the provision’s true meaning.
Specifically, Section 12 of the Act states:
The effectuation of the authorized purposes of any
authority created under this [A]ct, shall and will be in all
respects for the benefit of the people of the Commonwealth,
for the increase of their commerce and prosperity, and for
the improvement of their health and living conditions; and
since the authority will be performing essential government
functions in effectuating such purposes, the authority shall
not be required to pay any taxes . . . .
55 P.S. § 582 (emphasis added). Thus, contrary to Lessees’ assertions, the
recreational marinas would only serve the Act’s purposes and thereby “benefit . . . the
people of the Commonwealth” if those recreational marinas fall within the
authorized purposes of the Act. Id. Further, despite Lessees’ contentions that the
recreational marinas “facilitate commerce and generate economic benefit to the
Bayfront and surrounding areas[, and] . . . provide recreation opportunities to the
public which would not otherwise exist[,]” Lessees’ Br. at 54, “the crucial point [in
tax exemption] is not whether the public body is benefitted by the use of the leased
property but whether the use is, in fact, public.” Wesleyville, 676 A.2d at 302.
The case of Reading Municipal Airport Authority v. Schuylkill Valley
School District, 286 A.2d 5 (Pa. Cmwlth. 1972), is instructive here. Therein, the
Reading Municipal Airport Authority (Reading Authority), an authority created to
manage Reading’s airport, purchased two buildings containing a total of 16 T-
hangars. The Reading Authority leased the buildings to a private corporation that
leased the 16 T-hangars to aircraft owners. The Reading Authority claimed tax
exemption for the buildings. Both the board of assessment and the county common
pleas court concluded that the Reading Authority was not entitled to an exemption.
On appeal, this Court affirmed, concluding:
24
Where, . . . as here, buildings arranged for T-hangars are
provided to a private business entity with no restriction as to
use or charges for use and available for rental by that
private business organization to persons of its unfettered
choosing, we believe that there is not a public use. . . .
[T]he property primarily serves [the lessee] and not the
general public using the airport.
Reading Mun. Airport Auth., 286 A.2d at 9-10.
Similarly, we find no public purpose in a gated, for-profit, membership-
restricted recreational marina that leases boat slips. Nor do we find the existence of
the Parcels’ public access walking area and public boat launch persuasive in
determining whether the recreational marinas are used for a public purpose,
especially where Section 306.10 of the City’s Zoning Ordinance mandates such
public access for all proposed Bayfront development.23 Although we acknowledge
23
Section 306.10 of the Zoning Ordinance for the city of Erie (No. 80-2005) states:
A free public access way* must be regarded as an essential
component of all developments in all Waterfront Districts. Every
proposed site development that has access to the Bayfront water's
edge shall show on the plans a proposed free public access way,
abutting and parallel to the water’s edge. The free public access way
shall be of sufficient width to comfortably handle the expected
amount of pedestrians, but shall not be less than twelve (12) feet in
width. The construction of the free public access way shall be of such
material as to be aesthetically pleasing and in harmony with the site
development, and shall not consist of gravel, stone, grass or other
unapproved material. When the free public access way is abutting the
water’s edge, and an apparent danger exists, a safety barrier shall be
installed. It shall be the responsibility of the developer and/or
property owner to construct and maintain the public access way. In
addition, said developer or property owner shall assume all liability.
The public access way shall be made accessible to the handicapped.
The free public access way shall have north/south access to a [City]
Public Right-of-Way at maximum intervals of seven hundred sixty
(760) feet. The issuance of a building permit shall be contingent upon
the developer providing a performance bond in an amount equal to
one hundred ten (110%) percent of the cost of the proposed free
public access way.
25
that the Authority “is benefitted by the use of the leased property . . . the use is [not],
in fact, public.”24 Wesleyville, 676 A.2d at 302.
Lessees also argue that the trial court applied an erroneous standard of
proof when it stated, “[t]he record is devoid of any evidence that the marinas are used
for a public purpose.” Trial Ct. Op. at 13. Specifically, Lessees contend that:
The burden is on the taxing bodies to establish that the
public purpose exemption does not apply. This requires
proof that the properties are not used for a public purpose.
The so-called determination that the record is ‘devoid’ of
any evidence that they are used for a public purpose would
apply if the burden were on the marina operators. It is not.
Lessees’ Br. at 52-53.
At page 11 of its opinion, the trial court explicitly acknowledged that the
taxing authorities have the burden to prove that the properties are subject to taxation.
Further, immediately prior to the trial court’s challenged statement about the absence
of public purpose evidence, the trial court noted: “As reflected by the evidence,
*‘Free Public Access way’ - A constructed passage located within a
Waterfront District designed for use by the general public for such
activities as walking, jogging, fishing, etc., and made available for the
public's use during daylight hours, and as mandated by City Council.
24
Our conclusion is also consistent with the policy behind the public property exemption:
The policy underlying the public property exemption is that by taxing
government-owned property, the government would in effect be
taxing itself. ‘[T]he exemption of the property of a municipality is
founded on the fact that the municipality is a governmental agency of
the State, vested by the State with a part of its sovereignty, and
employed in aiding the State in matters of government and the
execution of its laws. . . .’ Y.M.C.A. of Germantown v. Phila[.], . . .
187 A. 204, 210 ([Pa.] 1936).
Granville, 900 A.2d at 1015. In the instant matter, there is no concern of the government taxing
itself. Lessees are to pay the taxes on the properties they use in the operation of their private
businesses.
26
these properties are utilized as private, for-profit marinas and inure to the sole
benefit of [Lessees] and its subtenants. The public has either limited or
restricted access to the marinas.” Trial Ct. Op. at 13 (emphasis added).
Accordingly, it is clear that the trial court did not improperly apply the burden, but
rather, found that the Authority met its burden by proving that the marinas are
“utilized as private, for-profit marinas and inure to the sole benefit of [Lessees] and
[their] subtenants.” Id. Accordingly, we discern no error in the trial court’s
conclusion that the public purpose exemption did not apply to the Parcels given
Lessees’ use.
Lessees next contend that the trial court should have examined each
Parcel and individual part thereof to determine if the public access areas were exempt
from taxation. Citing to Lehigh-Northampton, Lessees focus on the Supreme Court’s
statement that “[a]ny parcel -- or part thereof -- which is ultimately adjudged to be
outside of the scope of the Authority’s tax immunity will then be subject to local real
estate taxes for the tax years in question only if it was deemed non-exempt in the
bifurcated trial which has already occurred[.]” Id. at 1179-80 (emphasis added).
Lessees assert that in light of this Court’s holding in Norwegian Township and
Granville that “the distinction between tax immunity and tax exemption is
unnecessary in the context of government-owned property[,]” the same analysis
should be applied to tax exemption claims involving government-owned property.
Norwegian Twp., 74 A.3d at 1131.
In response, the District argues that the Parcels’ public access areas
should not be exempt because
the public access areas and/or the Bay Harbor West boat
launch occupy a small area located within the lease
premises. [Lessees] acquired their leasehold interest subject
to these areas which are not sufficient to declare any portion
of the subject properties tax exempt.
27
That the public access areas, boat launch, restaurant and
repair shop may be a convenience or incidental benefit to
the public, does not rise to the level of or constitute public
use and do not give rise to an exemption
District’s Br. at 46 (citation omitted). Although the District argues that the particular
areas are not used for a public purpose, the District fails to provide support for its
position.
The City, also opposing the separate evaluation and consideration of the
Parcels’ public access areas, contends that the Lehigh-Northampton decision is
inapposite because the Court did not hold that the lower court erred in its approach to
parcel review, but simply remanded the case to the trial court to apply the SEPTA
factors to evaluate the immunity claim. The City further maintains, in reliance upon
In re Koppel Steel Corp. v. Board of Assessment Appeals, 849 A.2d 303 (Pa. Cmwlth.
2004), that the trial court properly viewed the marinas as contiguous parcels.
In In re Koppel, this Court held that the trial court incorrectly rejected an
appraiser’s valuation of appellant’s 11 parcels where the appraiser valued the
property as one integrated economic unit. In reversing the trial court, this Court held
that “although a statute may require the assessment of separate tracts of land,
contiguous tracts that are under single ownership and used for a common purpose
may be joined into one large tract for assessment purposes.” In re Koppel, 849 A.2d
at 306.
The instant action is distinguishable from In re Koppel. Here, the
question is whether leased Commonwealth property is subject to tax exemption, not
the assessed value thereof. Importantly, Section 8812(a)(8) of the CCAL exempts
from taxation “[a]ll other public property used for public purposes . . . .” 53 Pa.C.S.
§ 8812(a)(8) (emphasis added). We can discern no reason that the Lehigh-
Northampton Court’s procedure should not be applied to land, a portion of which is
used for a public purpose. Thus, we reverse the trial court’s holding that the entirety
28
of the Parcels are subject to taxation, and remand this matter for the trial court to
determine whether portions of the Parcels are exempt.
The Court next addresses whether the District’s cross-appeals of the trial
court’s July 13, 2016 order are properly before this Court, where the District was not
aggrieved by it. Although the District prevailed before the trial court, the District’s
cross-appeals challenge the trial court’s conclusion in its footnote 6 pertaining to the
applicable burden of proof.
Our Supreme Court has explained:
Pennsylvania Rule of Appellate Procedure 501 permits any
‘aggrieved party’ to file an appeal. Pennsylvania case law
also recognizes that a party adversely affected by earlier
rulings in a case is not required to file a protective cross-
appeal if that same party ultimately wins a judgment in its
favor; the winner is not an ‘aggrieved party.’ See Hosp[.]
& Healthsystem Ass’n, . . . (holding that [the Department of
Public Welfare] was not an aggrieved party, as the
prevailing party, and it did not need to file a cross-appeal).
Our holding is further supported by the Note to
Pennsylvania Rule of Appellate Procedure 511 which states,
‘[a]n appellee should not be required to file a cross[-]appeal
because the Court below ruled against it on an issue, as long
as the judgment granted Appellee the relief it sought.’
Pa.R.A.P. 511, Note.
Basile v. H & R Block, Inc., 973 A.2d 417, 421-22 (Pa. 2009) (emphasis added;
footnote omitted). Similarly, in Lebanon Valley Farmers Bank v. Commonwealth, 83
A.3d 107 (Pa. 2013), the Supreme Court stated:
‘Pennsylvania case law also recognizes that a party
adversely affected by earlier rulings in a case is not
required to file a protective cross-appeal if that same party
ultimately wins a judgment in its favor; the winner is not an
‘aggrieved party.’’ Basile . . . , 973 A.2d [at] 421 . . .
(citation omitted) (emphasis in original). Moreover, several
Justices of this Court have gone a step further and suggested
such appeals should not be permitted. See id., at 424
(Saylor, J., concurring) (footnote omitted) (asserting
29
‘[protective] cross-appeals generally should not be
permitted’ given that ‘the collective burden of screening
and addressing such cross-appeals may outweigh the
benefits from the opportunity for an appellate court to
advance the resolution of the litigation in individual cases’);
id., at 426-27 (Baer, J., concurring) (writing ‘separately to
second Justice Saylor’s inclinations to deem protective
cross-appeals impermissible’ because ‘refusing to hear
[them] will streamline cases on appeal and prevent
prevailing parties from deluging the courts with
unnecessary protective cross-appeals[,]’ and noting such
practice would ‘eliminate[ ] the question of whether a non-
aggrieved party filing a protective cross-appeal must raise
every potential appealable issue for fear of waiver’).
Lebanon Valley, 83 A.3d at 112; but see Meyer, Darragh, Buckler, Bebenek & Eck,
PLLC v. Law Firm of Malone Middleman, P.C., 137 A.3d 1247 (Pa. 2016).
Based on the above-quoted Supreme Court precedent, this Court agrees
that the District was not aggrieved by the trial court’s ruling on the burden of proof
issue, and was not required to file a cross-appeal to prevent its waiver. Given our
disposition of this appeal, the issue was preserved because it was necessary thereto,
and the Court has addressed it herein in footnote 20. Accordingly, the District’s
cross-appeals (Docket Nos. 1389 and 1391 C.D. 2016) are quashed.
Finally, the Court addresses the question of whether the trial court’s July
18, 2016 order, issued after the trial court’s July 13, 2016 order granted the District’s
Motion and denied Lessees’ summary judgment motion, and which denied the
District’s Burdens Motion, is an appealable order. The District provides two
rationales to support its appeals from the trial court’s July 18, 2016 orders. First, it
contends that the July 18, 2016 order was an appealable collateral order. Second, it
asserts that the July 13, 2016 opinion and order and the July 18, 2016 order should be
treated as a single appealable order.
30
“It is fundamental law in this Commonwealth that an appeal will lie only
from final orders, unless otherwise expressly permitted by statute.” T.C.R. Realty,
Inc. v. Cox, 372 A.2d 721, 724 (Pa. 1977).
Pennsylvania Rule of Appellate Procedure 313 states:
(a) General rule. An appeal may be taken as of right from
a collateral order of an administrative agency or lower
court.
(b) Definition. A collateral order is an order separable
from and collateral to the main cause of action where the
right involved is too important to be denied review and the
question presented is such that if review is postponed
until final judgment in the case, the claim will be
irreparably lost.
Pa.R.A.P. 313 (text emphasis added). Based on the above-quoted collateral order
definition alone, since the trial court’s July 18, 2016 order was issued after final
judgment was entered on July 13, 2016, the July 18, 2016 order was not a collateral
order. Further, our Supreme Court has held that an order postdating the grant of
summary judgment has no effect. See Sidkoff, Pincus, Greenberg & Green, P.C. v.
Pa. Nat’l Mut. Cas. Ins. Co., 555 A.2d 1284 (Pa. 1989). Additionally, the District
does not provide any legal authority to support its position that the July 13 and July
18, 2016 orders should be treated as one. Accordingly, the Court holds that the July
18, 2016 order was not an appealable order, and dismisses the District’s appeals
pertaining to the same (Docket Nos. 1388 and 1390 C.D. 2016).25
25
Notwithstanding, the Court notes that the substance of the District’s appeals have been
addressed herein at footnote 21.
31
For all of the above reasons, the trial court’s order is affirmed in part,
reversed in part, and remanded for further proceedings consistent with this opinion.
___________________________
ANNE E. COVEY, Judge
32
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Bay Harbor Marina Limited :
Partnership, :
Appellant :
:
v. :
:
Erie County Board of Assessment :
Appeals, and The School District : No. 1377 C.D. 2016
of the City of Erie, and City of Erie :
Marina Holdings Limited, and Bay :
Harbor Marina Limited Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, and The School District :
of the City of Erie, and City of Erie :
: No. 1387 C.D. 2016
Appeal of: Marina Holdings Limited :
Marina Holdings Limited and Bay :
Harbor Marina Limited Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, The School District of the :
City of Erie and the City of Erie :
:
Appeal of: The School District of the : No. 1388 C.D. 2016
City of Erie :
Marina Holdings Limited and :
Bay Harbor Marina Limited :
Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, The School District of the :
City of Erie and the City of Erie :
:
Appeal of: The School District of the : No. 1389 C.D. 2016
City of Erie :
Bay Harbor Marina Limited Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals, The School District of the :
City of Erie and the City of Erie :
:
Appeal of: The School District of the : No. 1390 C.D. 2016
City of Erie :
Bay Harbor Marina Limited :
Partnership :
:
v. :
:
Erie County Board of Assessment :
Appeals and The School District of :
The City of Erie and the City of :
Erie :
:
Appeal of: The School District of the : No. 1391 C.D. 2016
City of Erie :
ORDER
AND NOW, this 10th day of January, 2018, the Erie County Common
Pleas Court’s (trial court) July 13, 2016 order is reversed in part and the matter is
remanded to the trial court for further proceedings to determine whether the public
access portions of the subject parcels are immune and/or exempt from taxation.
Further, the trial court is directed to return the Erie-Western Pennsylvania Port
Authority’s name to the caption. The trial court’s order is affirmed in all other
respects.
Moreover, the School District of the City of Erie’s (District) appeals
docketed at Nos. 1388 and 1390 C.D. 2016 are dismissed, and the District’s cross-
appeals docketed at 1389 and 1391 C.D. 2016 are quashed.
Jurisdiction is relinquished.
___________________________
ANNE E. COVEY, Judge