A county tax appeals board is being asked to determine whether Indiana University of Pennsylvania should have to pay property taxes on one of its buildings.
To that end, the tax assessment appeals board has scheduled a Feb. 25 hearing to take arguments on whether the Robertshaw Building should continue to be exempt from county and Indiana Area School District property taxes. The assessor's office and the school district are arguing that, to an extent, the building is subject to property taxes. More specifically, they argue, the section of the building housing the Indiana County Small Business Incubator is taxable.
That part is taxable, they contend, because for-profit enterprises rent space there and are engaged in commercial operations unrelated to the university's educational mission. The fact that a nonprofit organization owns the building is irrelevant, they say.
The university disagrees.
IUP officials declined comment, saying the matter has been referred to the Pennsylvania State System of Higher Education. State system spokesman Kenn Marshall said the state doesn't agree with the county's position, but declined to say more because it is a pending legal matter.
School district officials also declined comment, saying it would be inappropriate to do so in advance of the hearing.
The Robertshaw Building is a multipurpose building that, in addition to the incubator, houses the university's procurement and engineering and construction offices, its central warehouse, its maintenance shed and studios for the fine arts program.
Indiana County Chief Assessor Martin Medvetz said he concedes that parts of the building dedicated to those uses are tax-exempt. But the incubator, which is home to 13 businesses and one nonprofit organization, is another matter, he said.
The business incubator is an IUP program under the Eberly College of Business and Information Technology. It provides fledgling businesses with inexpensive office and industrial space and gives them access to a shared receptionist, conference room, fax machine and a copier. Incubator businesses also have access to student interns and the business expertise of professors and staff through the university's Management Services Group.
The incubator was established in 1986, a few years after IUP received the Robertshaw Building as a donation from its former owner, thermostat manufacturer Robertshaw Controls.
Since IUP took possession, the building has remained off the tax rolls. And incubator tenants had been benefiting from additional state tax breaks afforded to them through a state economic redevelopment program. Those breaks expired at the end of 2010.
When they did, Medvetz put the property on the tax rolls, he said, noting his obligation to ensure that the county and municipalities receive the tax revenue they are due.
This isn't an uncommon dispute, said Doug Hill, executive director of Assessors Association of Pennsylvania and the County Commissioners Association of Pennsylvania. Hill said counties often are sending tax bills to nonprofit institutions.
He said the more important consideration in these sorts of disputes isn't the ownership of a particular property, but the use. As an example, he said a church leasing its parking lot to a neighboring business during the week still has to pay taxes on the parking lot.
He also said the state constitution doesn't grant a tax exemption to nonprofit organizations on taxes, only institutions of purely public charity.
Hill said there are any number of ways the dispute could be settled, one of which would be through a judge's ruling. He also said the county and the university could reach an agreement in which the university promises to make payments to the county and the school district in lieu of taxes.