MacDonald, Illig, Jones & Britton v. Erie County Board of Assessment Appeals

PELLEGRINI, Judge,

dissenting.

I respectfully dissent. In enacting LERTA, the General Assembly authorized a taxing body to fashion its own program to meet the economic conditions of its community. *535Contrary to the intent of the General Assembly, the majority finds that Section 6 of LERTA, which by its plain language only imposes procedural duties on a Board of Assessment, precludes a taxing authority from determining when an exemption is to commence. Moreover, its holding that the exemption begins one year after the completion of the improvement is internally inconsistent with its holding that an exemption must commence strictly with Section 6’s purported mandates.

Section 6 of The Local Economic Revitalization Tax Assistance Act of December 1,1977, P.L. 237, as amended, 72 P.S. § 4727 (LERTA),1 is implemented through city, county and school district ordinances.

Section 6, entitled “Procedure for obtaining exemption”, provides (emphasis added):

Any person desiring tax exemption pursuant to ordinances or resolutions adopted pursuant to this act, shall notify each local taxing authority granting such exemption in writing on a form provided by it submitted at the time he secures the building permit or other notification of new construction or improvement is required, at the time he commences construction. A copy of the exemption request shall be forwarded to the board of assessment and revision of taxes or other appropriate assessment agency. The assessment agency shall, after completion of the new construction or improvement, assess separately the new construction or improvement and calculate the amounts of the assessment eligible for tax exemption in accordance with the limits established by the local taxing authorities and notify the taxpayer and *536the local taxing authorities of the reassessment and amounts of the assessment eligible for exemption.

From its plain language, Section 6 places no restrictions on a local taxing authority’s ability to set the date of onset of the tax exemption. Rather than placing any restriction on the local taxing authority, its purpose is to establish a procedure and authorization for a Board of Property Assessment to implement the exemption as enacted by the local taxing authority.

Section 6 only sets forth the procedure by which an exemption is obtained and how it is calculated. It requires the Board, once it has received from the local taxing authority the application for exemption that the building owner filed at the time he obtained the building permit, to:

• after completion, assess separately the new improvement;
• calculate the amount of the assessment eligible for exemption in accordance with the limits established by the local taxing authorities; and
• notify the taxpayer as well as the local taxing authorities of the amount of the exemption.

Nothing in this Section places any limitation on the local taxing authority’s discretion on how to fashion a program that it believes will serve its economic revitalization goals including setting the timing for the beginning of the exemption.

In Northwood Nursing Care and Convalescent Home, Inc. v. City of Philadelphia, Board of Revision of Taxes, 98 Pa.Commonwealth Ct. 401, 511 A.2d 281 (1986), petition for allowance of appeal denied, 515 Pa. 626, 531 A.2d 433 (1987), appeal dismissed, 484 U.S. 1037, 108 S.Ct. 767, 98 L.Ed.2d 854 (1988), addressing the Section 6 requirement that the application for exemption should be made at the time the building permit is secured, we held that it was within the local taxing authority’s power to define at the time the building permit is secured as being within sixty *537days of the date when the building permit is issued. We stated “the plain language of the Act clearly contemplates that whether the exemption will be available and how it is to be obtained is left to the determination of the local taxing authorities.” Id. 98 Pa.Commonwealth Ct. at 405, 511 A.2d at 283.

Limits on the local taxing authority’s LERTA program are imposed by Section 5(b) of LERTA, 72 P.S. § 4726(b) which provides:

Whether or not the assessment eligible for exemption is based upon actual cost or a maximum cost, the actual amount of taxes exempted shall be in accordance with the schedule of taxes exempted established by a local taxing authority subject to the following limitations:
(1) The length of the schedule of taxes exempted shall not exceed ten years.
(2) The schedule of taxes exempted shall stipulate the portion of new construction or improvements to be exempted each year.
(3) The exemption from taxes shall be limited to the additional assessment valuation attributable to the actual costs of new construction or improvements to deteriorated property or not in excess of the maximum cost per unit established by a municipal governing body.

As long as the exemption is for new construction, not for more than ten years, runs with the property and is uniform, this provision provides local taxing authorities with wide latitude to determine both the length of the exemption schedule and the portion to be exempted each year. 72 P.S. § 4726(b). The absence of any requirement in Section 5 as to when an exemption should commence, indicates that the General Assembly left that determination to the local taxing authority. If a local taxing authority wants to only exempt those improvements made in the year following the issuance of the building permit, nothing in Section 5 would preclude such a provision.

*538The argument that if it is within the local taxing authority’s discretion when an exemption begins is adopted, a building owner will not be able to receive the full value of the exemption because all of its improvements were not completed prior to the year following the issuance of the building permit is simply not maintainable. While that may be so, a local governing authority is not even required to enact a LERTA ordinance. How much encouragement the local authorities would like to provide and the scope and timing of the exemption given is totally within their discretion.

Finally, the. majority opinion is internally inconsistent, finding that Section 6 of LERTA mandates that the exemption must begin one year after the completion of the improvement. However, Section 6 provides that it will commence “after the completion of the new construction or improvement.” There is nothing in Section 6 that authorizes it to commence one year after. The one year after language is contained in the county ordinance that the majority finds not to be in accord with LERTA. Reading Section 6 the way the majority interprets it would mean that the exemption would begin in June of 1989, not January of 1990.

Because the LERTA statute does not require local taxing authorities to commence an exemption the year following completion of the improvement, the County has the discretion to determine the exemption would begin in the year following the issuance of the building permit. Accordingly, I would reverse.

. The LERTA statute implements Article VIII, Section 2(b)(iii) of the Constitution of Pennsylvania which reads:

(b) The General Assembly may, by law:
(iii) Establish standards and qualifications by which local taxing authorities may make uniform special tax provisions applicable to a taxpayer for a limited period of time to encourage improvement of deteriorating property or areas by an individual, association or corporation, or to encourage industrial development by a non-profit corporation;