Second time's the charm: Scranton receives proposal for tax-exempt property review
Oct. 2—Scranton finally received a proposal for an ambitious project to verify the tax-exempt status of nonprofit and government-owned properties.
It came on the city's second try, with Scranton reissuing a request for proposals in late August after an initial RFP drew no takers. The Pennsylvania law firm Rudolph Clarke LLC submitted the lone proposal the second time around, City Controller John Murray confirmed.
The verification project would be a first for the city, which proposed the effort in the interest of fairness. Officials want to make sure tax-exempt properties warrant that designation.
Information the city released earlier this year shows roughly 1,622 tax-exempt properties account for nearly 37%, or about $220 million, of Scranton's $598 million total assessed property value. Nearly 6% of Scranton's 27,000-plus parcels are off the tax rolls.
Scranton's RFP asked vendors to detail how they'd approach the review project and resolve issues of questionable tax exemptions, including potential challenges, litigation and appeals. It also tasked would-be vendors with reviewing whether agreements exist where for-profit entities may be operating on tax-exempt properties.
Rudolph Clarke's proposal is under review.
A landmark 1985 state Supreme Court decision in Hospital Utilization Project v. Commonwealth established the criteria an organization must meet to qualify as a tax-exempt charity. It's the basis of the five-prong "HUP test" used in assessing whether certain tax-exempt properties should be tax exempt.
To qualify as a purely public charity warranting a property tax exemption, an organization must: advance a charitable purpose; donate or render gratuitously a substantial portion of its 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 passed, in 1997, the Purely Public Charities Act, commonly known as Act 55, which incorporated those criteria but defined what constitutes each.
Assuming Scranton selects Rudolph Clarke for the project, the firm would apply the HUP test, Act 55 and other relevant case law in the course of its nontaxable property review, partner Alex Glassman said.
"We review these types of properties all the time and are more than capable if the city of Scranton is interested in appointing us," Glassman said.
When such a project might start remains to be seen.
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