DEATH & TAXES CATHOLIC CEMETERY OPERATED BY FOR-PROFIT FIRM MUST PAY SCHOOL TAXES, JUDGE RULES
The Marple Newtown School District has reportedly reached a tentative settlement agreement in a tax dispute with the Archdiocese of Philadelphia and subsidiaries of StoneMor Partners LP, the for-profit corporation currently operating Ss. Peter and Paul Cemetery.
Property valuation and related tax exemption issues were scheduled for trial before Delaware County Court of Common Pleas Judge Spiros Angelos this week, but one witness said he had been contacted by attorneys in the case Wednesday and told his testimony would not be needed because a settlement had been reached.
The exact details of the proposed settlement were not immediately available. Marple Newtown Solicitor Mark Sereni and archdiocese spokesman Ken Gavin both declined comment, and attorneys for StoneMor did not respond to calls seeking comment. One person familiar with the case indicated the proposed settlement requires school board approval.
Trevose-based StoneMor, the nation’s second-largest provider of funeral and cemetery products and services in the death-care industry, took over management of 13 archdiocesan cemeteries in May 2014 under a 60-year lease agreement designed to help defray the archdiocese’s unfunded liabilities.
Ss. Peter and Paul is currently a taxable property assessed at more than $1.7 million. Three corporate entities – StoneMor Operating LLC, StoneMor Pennsylvania LLC and StoneMor Pennsylvania Subsidiary LLC – are the sole occupants of Ss. Peter and Paul, but the archdiocese retained ownership of the property under the $53 million lease through a holding company, Philadelphia Catholic Cemeteries LLC.
Marple Newtown filed an appeal for the cemetery’s 2015 real estate assessment with the county Board of Assessment Appeals in August 2014, according to a pretrial statement filed with the court in July.
At that time, the property assessment implied a fair market value of more than $2.5 million, according to the district. Marple Newtown says its appraiser places the actual value at $9.9 million for the 2015 tax year, $9.4 million for 2016 and $9 million for 2017.
The board rejected the appeal and indicated the assessment would remain at $1.7 million, according to the July filing. The district appealed the board’s decision to the Common Pleas Court.
The holding company also filed an appeal with the board of assessment the following year seeking a tax exemption, which was also denied. The two cases were consolidated in April 2016.
The archdiocese and StoneMor, an intervener in the case, maintained that the property at 1600 S. Sproul Road is tax exempt because it is “an actual burial ground that is owned by and continues to be used by a non-profit entity that derives no private or corporate profit therefrom,” according to their pretrial filing. StoneMor and PCC also argued that the property is a “sacred burial ground regularly utilized for religious worship and related purposes.”
But Marple Newtown disagreed that the cemetery falls under provisions of the Consolidated County Assessment Law dealing with real estate tax exemption, which only applies to “churches, meetinghouse(s) or other actual places of regularly stated religious worship.”
The district pointed to prior court holdings that “regularly stated” worship means that which is “fixed, established, occurring at a regular time, as stated hours of business.” Marple Newtown argued that was not the case at the cemetery, which only experiences irregular services at the behest of families, not the property owner.
Determining whether a subject property is an “actual place” of worship likewise requires worship to be the “primary purpose” of the property, according to the district’s pretrial filing.
Marple Newtown claims the property’s primary purpose is a for-profit cemetery that sells burial rights, goods and services. Any religious worship, such as graveside services, is incidental to those for-profit endeavors, according to the district.
The statutes additionally exempt “actual places of burial … if used or held by a person deriving no private or corporate profit from the enterprise and no substantial part of whose activity consists of selling personal property in connection therewith,” according to the district.
As the three for-profit StoneMor companies are the sole “users” of the property and the archdiocese derived a $53 million profit in essentially selling StoneMor exclusive rights to that use through the lease, the district argued tax exemption should be denied on that basis as well.
Philadelphia Catholic Cemeteries has also filed appeals with the Montgomery County Board of Assessment for Holy Sepulcher Cemetery in Cheltenham and Calvary Cemetery in Lower Merion, according to electronic court records. StoneMor has also joined those appeals as an intervener.