Retirement complex must pay taxes; schools relieved
By Anthony R. Wood June 23, 2011
INQUIRER STAFF WRITER
In a case that could have ramifications for school districts and towns throughout Pennsylvania and beyond, a judge has rejected arguments by a Delaware County retirement complex that it should be exempt from property taxes.
Without comment, Delaware County Court Judge George Pagano last Thursday ruled against a petition in which Dunwoody Village contended it was a "purely public charity" providing community services and easing the health-care burden for government.
Dunwoody, a "continuing care retirement community" (CCRC) in Newtown Township, has 30 days to appeal to Commonwealth Court. Donald Wieand, attorney for Dunwoody, was unavailable for comment.
For the Marple-Newtown School District, Pagano's decision came as a multi-million-dollar sigh of relief. Dunwoody pays $506,000 annually to the district, as well as $232,000 to the township. In addition to tax-exempt status, it was seeking $1.5 million in back taxes.
"This decision is a huge victory for our students and taxpayers," said Mark A. Sereni, the Marple-Newtown solicitor.
"If Dunwoody had won this case, it would have been the death knell for school districts across the state," said Denise Elliott, of the Lancaster law firm Kegel, Kelin, Almy & Grimm, which specializes in tax and education law.
Had the district been forced to pay back the money, "our students and taxpayers would have borne the brunt of badly slashed programs and significantly higher taxes," Sereni said.
In countering Dunwoody's argument, the school district and township said that "charity" would be a questionable distinction for a facility that catered to "well to do" residents, charged entrance fees as high as $408,300, and boasted "luxurious accommodations" including a beauty salon and a masseuse.
Tax polices concerning the growing CCRC industry vary around the nation, experts say.
New Jersey facilities typically receive exemptions for skilled-nursing and assisted-living components and pay taxes on the rest, according to the state Department of Community Affairs.
In Pennsylvania, requirements vary from county to county. The state has about 200 CCRCs, roughly half of those in the Philadelphia region. Most facilities pay taxes on at least part of their real estate.
But a 2007 state Supreme Court decision may have major impacts on CCRC tax cases, said Elliott. The court found in essence that CCRCs should be either entirely taxable or entirely exempt.
She said Dunwoody is the first case she knows of that has gone to trial since the high court decision.
"With what the school districts are going through now," said Elliott, "this is a hot-button issue."