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HomeMy WebLinkAbout2003-4921 Civil SHENANDOAH MOBILE COMP ANY, and SHENANDOAH PERSONAL COMMUNICATIONS COMP ANY, Plaintiffs v. CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Defendant SPECTRASITE COMMUNICATIONS, Plaintiff v. CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Defendant v. CUMBERLAND COUNTY, SOUTH MIDDLETON TOWNSHIP, and SOUTH MIDDLETON SCHOOL DISTRICT, Interested Parties SPECTRASITE COMMUNICATIONS, Plaintiff v. * * * * * * * * IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION-LAW NO. 03-4921 CIVIL TERM IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION-LAW NO. 04-920 CIVIL TERM IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Defendant v. CUMBERLAND COUNTY, UPPER FRANKFORD TOWNSHIP, and BIG SPRING SCHOOL DISTRICT, Interested Parties SPECTRASITE COMMUNICATIONS, Plaintiff v. CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Defendant v. CUMBERLAND COUNTY, SOUTHAMPDEN TOWNSHIP, and SHIPPENSBURG AREA SCHOOL DISTRICT, Interested Parties SBA TOWERS, INC., Plaintiff v. CUMBERLAND COUNTY * * * * * * * * CIVIL ACTION-LAW NO. 04-921 CIVIL TERM IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION-LAW NO. 04-922 CIVIL TERM IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA BOARD OF ASSESSMENT APPEALS, Defendant v. CIVIL ACTION-LAW CUMBERLAND COUNTY, SOUTH NEWTON TOWNSHIP, : and BIG SPRING SCHOOL DISTRICT, Interested Parties NO. 04-949 CIVIL TERM * * * * SBA TOWERS, INC., Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA v. CUMBERLAND COUNTY BOARD OF ASSESSMENT APPEALS, Defendant v. CIVIL ACTION-LAW CUMBERLAND COUNTY, EAST PENNSBORO TOWNSHIP, and EAST PENNSBORO SCHOOL DISTRICT, Interested Parties NO. 04-950 CIVIL TERM IN RE: OPINION PURSUANT TO P A. R.A.P. 1925 OLER, 1., December 16,2004. In these six cases, Plaintiffs appealed Defendant's real estate tax assessments of Plaintiffs' telecommunication tower facilities. 1 At issue on the appeals was the correctness of Defendant's underlying classification of Plaintiffs' telecommunication towers as realty as opposed to personalty for real estate tax purposes? A two-day hearing was conducted on this issue on June 24, 2004, and June 28, 2004.3 On September 15, 2004, this court issued an order, accompanied by an opinion, classifying Plaintiffs' telecommunication towers as realty and upholding the Defendant's assessments of Plaintiffs' telecommunication tower facilities. 4 Plaintiffs have filed an appeal to the Pennsylvania Commonwealth Court from the September 15, 2004, order. 5 Plaintiffs have expressed the issues being pursued on appeal as follows: a. [T]he Court committed an error of law in ruling that telecommunication towers are classified as realty as opposed to personalty for real estate assessment purposes, pursuant to 72 P.S. 9 5020-201; b. the Court committed an error of law in ruling that the telecommunication towers "although their removal is not a practical 1 The following cases have been consolidated at Number 03-4921 Civil Term: Numbers 03-4921 Civil Term, 04-920 Civil Term, 04-921 Civil Term, 04-922 Civil Term, 04-949 Civil Term, and 04-950 Civil Term. See Order ofCt., Apr. 16,2004. 2 See Pet. of Appeal from Determination of Real Estate Tax Assessment, filed Sept. 18, 2003 (hereinafter Shenandoah's Pet. of Appeal); Pet. for Appeal, filed Mar. 4, 2004 (hereinafter Spectrasite/South Middleton Township Pet. for Appeal); Pet. for Appeal, filed Mar. 4, 2004 (hereinafter Spectrasite/Upper Frankford Township Pet. for Appeal); Pet. for Appeal, filed Mar. 4, 2004 (hereinafter Spectrasite/Southampton Township Pet. for Appeal); Pet. for Appeal, filed Mar. 5,2004 (hereinafter SBA Towers/South Newton Township Pet. for Appeal); Pet. for Appeal, filed Mar. 5, 2004 (hereinafter SBA Towers/East Pennsboro Township Pet. for Appeal). 3 Notes of Testimony 2, Hr'g., June 24,2004, and June 28,2004 (hereinafter NT. ~. 4 Shenandoah Mobile Co. v. Cumberland County Bd. of Assessment Appeals, Civ. No. 03-4921, (C.P. Cumberland County, Sept. 15,2004). 5 Concise Statement of Matters Complained of on Appeal, filed Oct. 25, 2004; Supplement to Concise Statement of Matters Complained of on Appeal, filed Nov. 8,2004. 2 impossibility" are firmly affixed to the ground, given that the manner in how the towers are affixed to the ground is designed for removability; c. the Court committed an error of law in ruling that the telecommunication towers are essential to the use of the rest of the facility; d. the Court committed an error of law in ruling that the intention of the parties at the time of annexation was for the telecommunication towers to become part of the realty; and e. the Court committed an error of law in ruling that telecommunication towers are classified as realty for the purposes of real estate assessment purposes, given that telecommunication towers are classified as personalty for purposes of sales and use tax, and where the determination of the classification of the towers for the respective taxes is made by applying the same legal test to the same towers using the same legal analysis. 6 f. In this case of first impression, the Court erroneously refused to consider Appellants' evidence and arguments regarding other states' classification of telecommunications towers, under substantially similar legal standards to those employed by the Commonwealth of Pennsylvania, as personalty rather than realty, while at the same time permitting appellees and amicus curiae in support of appellees' position to submit countervailing evidence and arguments on that issue? The basic rationale for the court's order classifying Plaintiffs' telecommunication towers as real property for purposes of Pennsylvania's real estate property tax was expressed in the court's opinion which accompanied the order, dated September 15, 2004. The present opinion, written pursuant to Pennsylvania Rule of Appellate Procedure 1925(a), is intended (a) to elaborate briefly upon the purported import of the position of the Pennsylvania Department of Revenue on sales and use taxes in relation to telecommunication towers and (b) to address the evidentiary issue raised in Plaintiffs' statement of matters complained of on appeal. 6 Concise Statement of Matters Complained of on Appeal, filed Oct. 25,2004. 7 Supplement to Concise Statement of Matters Complained of on Appeal, filed Nov. 8,2004. 3 STATEMENT OF FACTS Plaintiffs are Shenandoah Mobile Company, Shenandoah Personal Communications Company, Spectrasite Communications, and SBA Towers, Inc.8 Shenandoah, Spectrasite, and SBA Towers are all telecommunication tower companies which own towers throughout Pennsylvania.9 Spectrasite and SBA Towers are also part of an industry group, along with Crown Communications and American Tower Company, which is cooperating in the coordination of real estate tax assessment appeals.lO Defendant is the Cumberland County Board of Assessment Appeals.11 The Interested Parties of record are Cumberland County, South Middleton Township, Upper Frankford Township, Southampton Township, East Pennsboro Township, South Newton Township, South Middleton School District, Big Spring School District, Shippensburg Area School District, and East Pennsboro School District. 12 During the hearing, Plaintiffs called Brian Kostel, a senior tax accountant for a company called Crown Castle USA, who presented himself as knowledgeable in the area of Pennsylvania sales and use taxes in connection with telecommunication towers. 13 Through Mr. Kostel, Plaintiffs introduced copies of four letters to taxpayers or their representatives from the Pennsylvania Department of Revenue (none of which was binding upon any of Plaintiffs in the present caseI4), regarding sales and use taxation. 15 Plaintiffs' Exhibit 7 was a 1997 letter addressing the question of "[w]hether the taxpayer's construction of a communications tower, as well as the installation and repair of antennas and transmission lines located on said tower, are subject to Pennsylvania 8 NT. 1-2. 9 Stipulations of Fact ~2, Pis.' Ex. 13, Hr'g., June 24,2004, and June 28, 2004 (hereinafter Stipulations of Fact ~~. 10 Stipulations of Fact ~3. 11 NT. 1-2. 12 NT. 1-2. 13 NT. 230-32. 14 NT. 236-37. 15 NT. 232; Pis.' Ex. 7-10. 4 sales tax?" Plaintiff s Exhibit 8 was a 2003 letter addressing the question of "[ w ]hether the Taxpayer's erection and installation of a communications tower, where the owner of the tower provides the component parts of the tower, and the Taxpayer's sale and installation of property on the tower where the Taxpayer supplies the property are subject to Pennsylvania sales tax?" Plaintiffs Exhibit 9 was a 2003 letter "respond[ing] to [a] June 17, 2003, letter requesting an opinion as to the taxability of the lease of space on telecommunications towers." Plaintiffs Exhibit 10 was a 2004 letter addressing the issue of whether "the leasing of space on telecommunication towers [is] subject to sales and use tax." Although in certain of these letters the Department took the position that the applicability of sales and use taxes to the construction of a telecommunication tower and to the rental of space on such a tower was dependent upon whether the tower was bolted in place or embedded, it is quite clear from the most recent of the letters that the Department does not equate the real property/tangible personal property test for applicability of sales and use taxes with the test applied to a determination of the applicability of property taxes. This is demonstrated in the following excerpt from the letter: The resolution of this issue [of the applicability of sales and use taxes to rental of space on telecommunication towers] depends on whether the telecommunication towers constitute real estate or tangible personal property. The Department of Revenue has historically held that items attached by bolts remain tangible personal property after installation. The goal of the Department is to fashion understandable rules of taxation. The rule that if the telecommunication tower is bolted to a foundation [it] is tangible personal property and if the telecommunication tower is embedded in the ground it is a part of the real estate is a very easy rule for taxpayers to follow and for the Department to administer. Citing several local property tax cases in your letter [on behalf of the taxpayer], you contend that the Department is ignoring "the intention of the parties" test in making the determination whether the telecommunication towers are personalty or realty. The intention of 5 the parties is not a factor in making this determination in the sales tax statute, regulations, or case law, nor should it be. 16 As was noted in the opinion which accompanied the order appealed from in this case, the intention of the parties is the most important factor to be considered in a determination of whether an item is personalty or realty for purposes of Pennsylvania's property tax on realty. It is also clear from the correspondence that any subjection to sales or use tax of leases of space on telecommunication towers to cellular telecommunications services has now been precluded by the legislature as of June 30, 2004.17 Also during the hearing, Plaintiffs proposed to present the telephonic testimony from Texas of Ted Clark, national director of property tax services in the communications industry for Ernst & Young. 18 Mr. Clark had, apparently, prepared a "50-state survey" concerning the tax treatment of telecommunication towers throughout the country.19 The relevance of his proposed testimony was supported by Plaintiffs' counsel as follows: . . . Mr. [Clark] is the National Director of Property Tax Services for Ernst & Young, and his exclusive job is primarily representing telecommunication companies, and he is familiar with how all 50 states are treating telecommunication towers for real estate purposes. . . . [T]his would be just as an aid to the Court to understand how other jurisdictions are treating these in light of the fact that there is no appellate case law in Pennsylvania. So we are offering this testimony because it's certainly relevant as to how telecommunication towers are taxed, whether as real estate or as personal property. And then the Court could determine what weight to be given to it, and it's being offered as precedential. That is h f. 20 t e extent 0 It. 16 Taxpayer's Ex. 10 (emphasis added). 17 Taxpayer's Ex. 10. 18 NT. 245-46. 19 NT. 246. 20 NT. 241-42. 6 Counsel for Defendant responded with the following objection, which the court found persuasive in part: . . . I have no objection to the Taxpayers including in their memorandum as they did, case law from throughout the country. I would have no objection to them citing statutes from throughout the country. I don't know-either this witness is going to testify as to the law, which is not something that the witness should be permitted to do, we can argue about the law. If not, is this witness just going to testify that they got a bill or they didn't get a bill from state A? Well, whether they got or didn't get a bill from state A, doesn't mean that's what the law was because maybe the law wasn't being implemented correctly in their favor or in our favor. I don't think how they got and why they got the bills is relevant. Therefore, you're left with legal positions, which I think should be left to lawyers and briefs?1 Counsel for several of the municipal taxpayers joined in this position, adding that "other states taxation schemes and their interpretations of their own rules and regulations are not at issue here today and should not be a part of the evidence.,,22 The court responded to the positions of the parties as follows: THE COURT: ... I'm impressed with [the] argument that what other states do really depends on how their statutes read, and I think we would be [here] for quite a while if he was going to go through each of the fifty states and talk about the statute and how it's applied. If you want to have him testify as to Pennsylvania's practice, I'll permit that. PLAINTIFFS' COUNSEL: Well, Your Honor, what he was going to do is to testify as to Pennsylvania's practice. He wasn't going to testify as to the law in all other states. He was going to testify through as to how Pennsylvania's practice may differ from the other states. THE COURT: Well, it really doesn't matter whether it differs [from] or is the same as the other states, but I would permit him to testify as to the practice in Pennsylvania. PLAINTIFFS' COUNSEL: Okay.23 21 NT. 242-43. 22 NT. 243. 7 The witness was, accordingly, permitted to testify with respect to his knowledge of Pennsylvania practice. However, he was not permitted to testify with reference to his 50- state survey. 24 Finally, the court has not been able to find in the record any support for Plaintiffs' suggestion, in their supplemental statement of matters complained of on appeal, of disparate treatment of the parties by the court with respect to this issue, and certainly none was intended.25 DISCUSSION Classification of Plaintiffs' telecommunication towers as realty for purposes of Pennsylvania's real estate property tax. The court's basic rationale in classifying the telecommunication towers of Plaintiffs in the present case as real rather than personal property for purposes of Pennsylvania's real estate property tax was set forth in the opinion which accompanied this court's order dated September 15, 2004. In this regard, it may be reiterated that the intention of the parties is the most important criterion on the issue;26 the mere fact that property may be bolted in place, that it may be capable of being removed and transferred to another location, and that on occasion such an event may occur does not preclude the item's being considered realty for purposes of Pennsylvania's real property tax. See In re Sheetz, Inc. 657 A.2d 1011 (Pa. Commw. Ct. 1995) (canopy at self-service gasoline station). With specific reference to the import of Plaintiffs' evidence of the position of the Pennsylvania Department of Revenue on the subject of the application of sales and use 23 NT. 243-44. 24 NT. 246-48. 25 The indication in Plaintiffs' supplemental statement of matters complained of on appeal that the court granted some right to one side in this case which it did not grant to the other with respect to presentation of evidence or argument on the issue of the practice of other states relating to taxation of telecommunication towers is somewhat mysterious. The court does not control the contents of briefs, and in any event briefs are not part of the evidentiary record in Cumberland County. See Cumulus Broadcasting, Inc. v. Bond, 52 Cumberland LJ 108 (2003). Nor has the court been able to find an instance during the hearing when it permitted Defendant, the amicus curiae or any of the interested municipal parties to present evidence of a type which it refused to permit Plaintiffs to present. 26 In re Sheetz, Inc., 657 A.2d 1011 (Pa. Commw. Ct. 1995)(canopy at self-service gasoline station). 8 taxes to the construction of, and lease of space on, such towers, the court's earlier opinion may benefit from a brief amplication. First, it may be noted that, with respect to local property taxes, enabling legislation in Pennsylvania permits taxation of both real and personal property. Act of May 22, 1933, P.L. 853, 920l(a), as amended, 72 P.S. 95020-20l(a) (2004 Supp.); Act of June 17, 1913, P.L. 507, as amended, 72 P.S. 994821 et seq. (2004 Supp.). Telecommunication towers are not among the enumerated types of personal property which may be subjected to a property tax,27 and in that sense the subjection of such property to the real estate property tax does not create an inconsistency of the proportions suggested by the taxpayers. Second, it may be observed (1) that the test employed by the Department of Revenue in classifying some telecommunication towers as personalty for purposes of sales and use taxes is quite different from that which the courts are expected to employ for purposes of property taxes, (2) that the opinions of the Department which were entered into evidence, while certainly of interest, were not determinative of the issue which was before the court, either in terms of binding precedent or identity of context, and (3) that appellate caselaw does not support the proposition that the Department's subjection of a certain item to sales and use tax precludes its subjection to real property tax. See, e.g., In re Sheetz, Inc., 657 A.2d 1011 (Pa. Commw. Ct. 1995) (canopy at self-service gasoline station). Admission of evidence. The admission or exclusion of evidence is within the sound discretion of the trial court. Odato v. Fullen, 2004 P A Super 123, 848 A.2d 964 (2004). A court may take judicial notice of the laws of other states. See, e.g., Commonwealth v. Seip, 385 Pa. 545, 124 A.2d 110 (1956). It is within the province of a trial court to exclude evidence (a) which is not relevant,28 or (b) if its probative value is outweighed "by considerations of undue delay, waste of time, or needless presentation of cumulative evidence,,,29 or (c) is not consistent with the best evidence rule.30 27 See Act of June 17, 1913, P.L. 507, as amended, 72 P.S. ~~4821 et seq. (2004 Supp.). 28 Pa. RE. 402. 29 Pa. RE. 403. 9 In the present case, with respect to the proposed testimony of a non-attorney as to how Pennsylvania's practice varied from that of 49 other states in the area of taxation of telecommunication towers, the testimony would, in the court's view, (a) not have been relevant to the proper interpretation of Pennsylvania's statute relating to taxation of real property, (b) have caused unnecessary delay in light of the court's ability to take judicial notice of the statutory schemes of other states, and (c) not have represented the best source of information as to the tax legislation of other states. However interesting the practices of other states might have been in this area, such testimony did not offer the guidance which a judicial opinion from a sister jurisdiction interpreting a statute highly similar to Pennsylvania's could provide and would, in the court's view, have significantly extended the duration of the hearing to no useful purpose. For the reasons expressed in the court's opinion dated September 15, 2004, as amplified in the present opinion, the court entered the order from which the taxpayers have appealed to the Pennsylvania Commonwealth Court. BY THE COURT, 1. Wesley Oler, Jr., 1. Carl C. Risch, Esq. Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, P A 17013 Attorney for Shenandoah Mobile Company Mark A. Mateya, Esq. p.o. Box 127 Boiling Springs, P A 17007 Attorney for County Commissioners Association of Pennsylvania 30 See Pa. RE. 1002. 10 Robert L. Knupp, Esq. Knupp, Kodak & Imblum, P.C. 407 North Front Street Harrisburg, P A 17108 Attorney for Shenandoah Personal Communications Company Stephen Douglas Tiley, Esq. 5 South Hanover Street Carlisle, P A 17013 Attorney for Cumberland County Board of Assessment Appeals Philip Haring Spare, Esq. Snelbaker, Brenneman & Spare, P.C. 44 West Main Street Mechanicsburg, P A 17055 Attorney for Big Spring and South Middleton School Districts Sharon F. DiPaolo, Esq. Pepper Hamilton, LLP One Mellon Center, 50th Floor 500 Grant Street Pittsburgh, P A 15219 Attorney for Spectrasite Communications and SBA Towers, Inc. 11 12