No takers yet for Scranton's tax-exempt property review

Jeff Horvath, The Times-Tribune, Scranton, Pa.
·3 min read
1

Jun. 26—Scranton's first attempt at landing a firm to verify the tax-exempt status of nonprofit- and government-owned properties fell short when a recent request for proposals drew no responses.

City officials will try again and plan to reissue the RFP this summer.

"We will rebid, but first we will develop a strategy ... widening our reach to increase the number of potential vendors," Business Administrator Eileen Cipriani said in an email.

Officials remain committed to the proposed review of nontaxable properties, which would be a first for Scranton, where nearly 6% of 27,000-plus parcels are off the tax rolls. The review would assess the appropriateness of property tax exemptions and whether properties warrant that designation.

Scranton asked vendors in the initial RFP to detail how they would approach the project and resolve issues of questionable tax exemptions, including potential challenges, litigation and appeals. The effort could deliver more city tax revenue if properties that don't merit exemptions are ultimately made taxable.

About 1,622 tax-exempt parcels account for nearly 37%, or about $220 million, of Scranton's $598 million total assessed property value. The city raised taxes 2% this year partly to address a trend of declining valuation.

"We're anxious to get this going," Mayor Paige Gebhardt Cognetti said of the tax-exempt property review. "We certainly hope that we'll be able to find a good partner to work with."

She described the review as a "niche process" that amounts to a large undertaking for a city of Scranton's size, which may explain why the initial RFP didn't garner any responses. Officials plan to cast a wider net to secure a vendor.

A 1985 state Supreme Court decision in Hospital Utilization Project v. Commonwealth established the five criteria an organization must meet to qualify as a tax-exempt charity under the state constitution.

They must advance a charitable purpose, donate or render gratuitously a substantial portion of their services, benefit a substantial and indefinite class of people who are legitimate subjects of charity, relieve the government of some of its burden and operate completely free from a private profit motive.

State lawmakers later passed, in 1997, the Purely Public Charities Act, commonly known as Act 55, which incorporated those criteria but defined what constitutes each.

City officials anticipate the firm awarded the contract to apply the five-prong "HUP test," named after the state Supreme Court case, in assessing whether Scranton property owned by nonprofits should be tax exempt.

"It's very important that we are showing the taxpayers that do pay every year at every level, residential and commercial, that their tax dollars are being used in the right way," Cognetti said. "It's only fair to them that everyone's paying their fair share. If people are part of an organization that should no longer be tax exempt that's not right, that's not fair and we want to be able to fix that."

Contact the writer:

jhorvath@timesshamrock.com; 570-348-9141;

@jhorvathTT on Twitter.