Indiana, PA - Indiana County

IUP files appeal in property tax dispute

by on March 16, 2014 1:55 AM

Indiana University of Pennsylvania is appealing a county decision to levy property taxes against a part, but not all, of the university’s Robertshaw Building.

The appeal, filed in the Indiana County Court of Common Pleas, is the latest action in a four-year property tax dispute between Indiana County and Indiana Area School District and IUP over the Robertshaw property.

The multipurpose building houses university art studios, its maintenance and grounds department, the central warehouse, procurement offices, and, most importantly, the Indiana County Small Business Incubator, which IUP runs.

The incubator’s purpose is to improve the local economy by fostering business development. It does so by offering fledgling business access to business services and commercial space at below-market rates.

But the county and the school district contend that leasing space to businesses is a commercial activity and not in accordance with IUP’s reason for being. Therefore, the space that houses the incubator should be subjected to property taxes, they argue.

The university disagrees.

The building’s tax status hadn’t been an issue until 2010 when Martin Medvetz, the county’s former chief assessor, lifted its tax-exempt status. Medvetz took that step after a tax abatement program that had sheltered the property expired.

The university contended then, as its does now, that its properties cannot be subjected to local taxation because it is an arm of the state. Initially, IUP said it would appeal to the county tax appeals board, but it forwent a hearing before that entity and took the matter straight to Commonwealth Court.

In April 2012, a three-judge panel ruled that the portions of the Robertshaw Building leased to third parties in exchange for rental income could be taxed.

But the court said there was insufficient information on the record for it to determine whether that activity was occurring. Therefore, the proper course was to return the matter to the tax appeals board for its review, the court said.

That review didn’t take place until October 2013, and only after the county forced the matter by listing the property for a tax sale.

In the end, the appeals board found that the portion of the building housing the incubator should be taxed and the rest of it was exempt. Given current millage rates, the decision means the university would owe about $8,750 in property taxes to the county and the school district. The building is in White Township, which does not levy a property tax.

Nevertheless, IUP is continuing to argue that the building cannot be taxed.

In its appeal, it cites an October 2013 decision from the Pennsylvania Supreme Court, which ruled that a certain property that had been acquired by a public entity administering a private charitable estate left to Philadelphia is immune to taxation.

The case concerned the Stephen Girard Trust, the Board of Directors of City Trusts, which administers it, and the building it acquired in Lemoyne, Cumberland County. The building was being leased by the attorney general’s office, and the board was using the rental income — $512,130 per year -— to help fund the trust.

There is a long and complicated legal history behind the nature of the trust and its administration — it was the private estate of the late merchant and banker Stephen Girard, who died in 1831 and gave much of his estate to Philadelphia for municipal improvements and the establishment of what became Girard College, a school for children in need.

In this specific case, the court found that the building is, in fact, immune from local taxation.

In its appeal, IUP asserts, without explaining why, that the ruling definitively answers the question as to whether the Robertshaw Building can be taxed.

“IUP asserts that the … decision is controlling and requires that the Robertshaw property be declared immune from taxation from any local taxing authority,” the university wrote in the appeal.

Additionally, IUP pointed out in the appeal that the Monroe County assessment appeals board recently declared East Stroudsburg University of Pennsylvania’s business incubator to be immune to local taxation.

Sam Kusic is a staff writer for The Indiana Gazette.
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