A Penn. School District Sues Charter School for Past Due Annual Sort-of-Tax Payments

Print Share on LinkedIn More

June 23, 2011; Source: phillyBurbs.com | As of 2009, charter schools in Pennsylvania have been deemed to be tax exempt nonprofits. When the legislature updated the state’s school codes, it made its position crystal clear about charter schools, or so it seemed:  “All school property real and personal, owned by any charter school, cyber charter school or an associated nonprofit foundation . . . shall be made exempt from every kind of state, county, city, borough, township or other tax, including payments in lieu of taxes established through agreement with the Commonwealth or any local taxing authority.” 

That’s pretty clear. Charter schools can’t even be hit up for PILOTs. For good measure, the legislature added, “any agreement entered into by a charter school . . . with the Commonwealth or a local taxing authority for payments in lieu of taxes prior to December 31, 2009, shall be null and void.”

That presumably would have applied to the annual payments that the School Lane Charter School had been making to the Bensalem School District pursuant to an agreement stuck in 1998. But with the legislature’s action, School Lane stopped its payments and did not deliver the $177,500 it was scheduled to pay in 2009 and the $184,000 that the contract would have required for 2010. 

Bensalem district lawyers are hauling School Lane into court to get the 2009 and 2010 payments and force the school to get back into the annual payment swing of things. According to the district, School Lane acquired a former elementary school — from the Bensalem district — for $1.2 million. Part of that contract mandated the annual payments to the district.

By suing School Lane, the Bensalem district is challenging the law itself. When it was passed, then governor Ed Rendell vetoed it, claiming that it would make not only the charter schools into tax exempt nonprofits, but also the groups that were renting space to charter schools, and he felt that was unconstitutional. 

The notoriously cantankerous Pennsylvania legislator overrode Rendell’s veto, but his veto rationale may be the substance of the Bensalem suit against School Lane. The district says that the charter school amendment in the public school code on tax exemption “is not applicable because of the underlying agreement of sale,” according to the district’s lawyer, essentially saying that the contract is protected from the school code by the contract clauses of the U.S. Constitution. 

Can the legislature retroactively change the terms of the Bensalem-School Lange contract? —Rick Cohen

  • Kevin

    Retroactive law is impermissible and the courts have consistently ruled as such. The threat of retroactive law does not allow for notice and creates uncertainty both socially and economically.

    Retroactive law has only been ruled as permissible when it clarifies a past position.

    The question is whether this retroactive clause actually affects Bensalem. The article doesn’t make clear the agreement. If the agreement is a lease or rent or sale agreement, Bensalem would seem to have standing as a particularized victim of the retroactive law. If the agreement was just a fee for School lane to operate, that could be construed as a fee or tax which would not grant the district standing in federal court. The legislature has the ability to change tax policy and to do so would not be retroactive.

    The bill appears to be unconstitutional. The question is really does the district have the standing to oppose it.

    BTW, the link doesn’t go anywhere. Please link your sources.