Delco challenges tax-exempt properties, says school districts are shortchanged millions

Delaware County Courthouse (Google Maps)

Delaware County Courthouse (Google Maps)

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At the behest of Delaware County Council, the county Board of Assessment is reviewing all tax-exempt properties, to identify for-profit entities currently receiving tax abatements. The county has specifically challenged the exemption status of Springfield Country Club, the Ridley Marina, a piece of the Ridley Township Community Center, and even its own Solid Waste Authority.

The Board of Assessment heard the challenges in late October and ruled in favor of all four on Nov. 15. The county Solid Waste Authority did not object to the challenge involving a portion of its property in Marple Township, but the other parties did go on record as having an issue with the county’s position.

Each of the properties of concern are owned by municipalities but are said to have for-profit businesses operating on the premises.

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The County Council maintains that local school districts are being shortchanged “hundreds of thousands of dollars” and possibly more due to what it characterizes as improper assessments over the years.

“The real question is: Why in the past haven’t the school districts, who really have the most to gain by putting properties back on the rolls, gone and explored the taxability of these properties or whether they’re getting the appropriate amount under a PILOT, etc? And that’s questions you’d have to direct to them,” Delaware County Council member Christine Reuther said.

(PILOT is shorthand for payment in lieu of taxes, or compensation offered despite tax-exempt status.)

Reuther said the county should not have been put in the position of correcting this course.

“There’s really nothing under the assessment law that allows us to go back — and our attempt is not to go back. Our intent is to follow the law and look at these things prospectively, and make sure that properties that should be subject to tax are paying their fair share, and that the school districts will get the benefit of it going forward,” she said.

Complaints from community members led to the initial challenges, and as a new member of the Delaware County Solid Waste Authority, Reuther said, she took it upon herself to let the county solicitor know about a questionable assessment of a portion of the authority’s Marple Transport Station being leased to a landscaper.

Solicitors for the county and the Solid Waste Authority had a phone conversation, prior to the October hearing, in which the authority agreed that the parcel of land was no longer exempt. Reuther hopes the process for other challenges can be as painless.

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“Over the next two years, there’s going to be a review of all of the exempt properties in the county, and if they’re taxable, or partly taxable, we’ll put them back on the rolls,” Reuther said.

According to the Pennsylvania Constitution, tax exemptions for properties can be granted on such grounds as being a place of religious worship, among others. “Institutions of purely public charity” also fall under that umbrella, but only the portion of the physical property “which is actually and regularly used for the purposes of the institution.”

And for public properties, there is another limitation: only the portion of the property that is used continuously for public purposes. In lay terms, that means public properties used for for-profit interests are not exempt. A 2003 state Supreme Court ruling in SEPTA v. Board of Revision of Taxes affirmed the limitation.

Reuther argued that’s exactly what Springfield Township is doing with the Springfield Country Club. It’s not out of the ordinary for municipalities to operate tax exempt golf courses and country clubs, she said.

In fact, the Springfield Country Club has been making an annual payment in lieu of taxes approved by a previous iteration of the County Council. But, Reuther said, there are several for-profit businesses on the property, including a Marriott Courtyard hotel, a restaurant, and a spa that are ineligible for tax exemption. She said PILOTS aren’t intended for this use.

“The amounts that were provided for were nominal — and they purport to be for 50 years, which no public entity can enter into a 50-year agreement,” she said.

No publicly available meeting minutes mention those issues.

If the country club had paid the taxes due on those portions of the property, the county says, the Springfield School District would have gotten nearly $200,000 in additional funding for this academic year.

In an interview with WHYY News, Jim Byrne, the Springfield Township solicitor, said the township was caught off guard by the October assessment hearing. He said he had only heard about the details of the challenge through a press release from the Springfield Democratic Committee that came after the county’s announcement.

“I believe it’s all just a political response to a fouled-up reassessment process,” Byrne said. “I think that the reassessment process was a total mess. I think that the county realizes that it was a total mess. I think they know that there are commercial properties that are grossly undervalued through this process, and that they are trying to shift the blame.”

Byrne categorized the investigation as a witch hunt and questioned why two Republican strongholds, Springfield and Ridley, were chosen out of all Delaware County municipalities. Though saying the county has “no evidence” of wrongdoing, Byrne conceded that there were for-profit entities operating on country club property.

“It’s in accordance with the zoning for that parcel. And there is no public entity that’s privately gaining anything here. The amenities are being offered to the public as a whole. Any income that comes to the township goes back to the township. The entities have been run up there for many, many years,” Byrne said.

Springfield Township is expected to appeal the assessor’s office ruling in favor of the county.

The Ridley Marina and Ridley Community Center exemption challenges are also expected to garner some pushback.

Though it was purchased by Ridley Township in 2002, the county is arguing that the Ridley Marina is a for-profit business enjoying “a tax abatement usually only available to nonprofit businesses.” The arrangement also was approved by a previous iteration of the County Council.

Reuther said a restaurant is operating on the marina’s grounds. According to the county’s estimate, the Ridley School District would have received millions of dollars in additional tax revenue this year. The county is also making an argument to the assessor that several for-profit entities operate on the grounds of the Ridley Community Center.

WHYY reached out to Ridley Township for comment but did not receive a response.

In a separate debate elsewhere in Delaware County, public land and taxation have become a hot-button issue in Radnor. The Philadelphia Inquirer reports that a Radnor Township commissioner is trying to end a tax arrangement involving a $1 lease on publicly owned land that was once part of the Ardrossan estate. Some of the properties covered by the tax break are owned by wealthy landowners. One is owned by Delaware County Council Chair Brian Zidek.

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