A divided panel of the Commonwealth Court concluded that real estate used by a railroad as a transloading facility was not exempt from local real estate tax. CSX Transportation, Inc., v. Delaware County Board of Assessment Appeals, No. 1276 C.D. 2014 (Pa. Commw. Nov. 19, 2014). The appeal may not be correctly decided.
Pennsylvania’s Constitution in Article VIII, § 4 subjects property used or useful by a public utility in furnishing public utility service to the state’s Public Utility Realty Transfer Tax Act (PURTA) in lieu of local real estate taxes. A savings clause states that any law that subjected the real property of public utilities to local taxation at the time of adoption of the section remains in effect. The panel reviewed extensively the case law before adoption of the amendment, which established that only rights-of-way or railroads were exempt from local taxation. However, the exemption of rights-of-way appears to have developed under case law not statutory law. Indeed, the limitation on the exemption to rights-of-way appears also to be a construction of case law. Citing no authority, the majority evidently decided that the exception for a law subjecting public utility real estate to taxation includes case law, not just statutory law. That may not be correct.
The constitutional savings clause – that applicable law remain in effect – sounds more like statutory law than case law; one does not typically refer to case law being in effect. The transloading facility was used to facilitate the movement of automobiles to automobile carriers that were loaded onto railroad cars and transported; it was not used for storage. Nonetheless, the majority of the panel found that the transloading facility was akin to a warehouse, which under pre-1968 case law was not part of a right-of-way and was not exempt. For essentially the same reasons, the court concluded that the transloading facility was not subject to taxation under PURTA. A dissenting judge disagreed with the warehouse characterization. In his view the transloading facility was a depot and was therefore part of the property that was used and useful for PURTA purposes.