Pa. a hotbed for tax-exemption battles

H. Woods Bowman just had to see Longwood Gardens, but not so much to savor the luxuriant foliage at the 1,077-acre horticultural landmark.

He wanted to get a firsthand look at the famous Kennett Square grounds that were the subject of a landmark 1998 case in which the state Supreme Court found Longwood to be "a purely public charity." Thus, the justices determined, it was worthy of a property-tax exemption.

"It was kind of a busman's holiday," said Bowman, a professor at Chicago's DePaul University and an expert in exemption law.

The Longwood case was another milestone in what Bowman describes as a 400-year battle between governments that need money and entities that profess to contribute to the public good in other ways.

Though the conflict is a British import, Bowman said, for reasons that aren't quite clear, nowhere in the nation has it been more intense than in Pennsylvania.

Thus, to a tax-exemption connoisseur such as Bowman, visiting Pennsylvania - he has relatives in the Philadelphia area - is not unlike a connoisseur of Italian cuisine taking a trip to Rome.

And the exemption battles rage on in Pennsylvania.

An ongoing case that could have widespread impact on recession-ravaged town and school budgets here and elsewhere in the nation involves Dunwoody Village, a continuing-care facility in Newtown Township, Delaware County.

Dunwoody, a retirement community perched on West Chester Pike in Newtown Square, has argued that it is a "purely public charity" that provides services and eases government health-care costs. Dunwoody lost in county court and has appealed to Commonwealth Court.

The county decision was a huge win for the Marple Newtown School District and for Newtown: Dunwoody pays $506,000 annually to the schools, and $232,000 to the township. In addition to tax-exempt status, it was seeking $1.5 million in back taxes.

With senior centers such as Dunwoody proliferating around the nation, legal experts say the case has far broader significance.

"The senior citizen housing issue is one of the hot topics," Bowman said. He said it appeared to be the No. 1 source of exemption appeals.

The "public charity" concept is a leitmotif in state constitutions, Bowman said, but Pennsylvania has added a unique wrinkle.

In 1997, the legislature passed Act 55, which specifically governs exemptions. Bowman said Pennsylvania was the only state in which a legislature had so acted; others rely on case law.