## Facts

- Lock Haven University Foundation (Foundation) is a nonprofit corporation affiliated with Lock Haven University, organized to support the university and to receive and administer property for charitable and educational purposes; its earnings could not inure to private individuals.
- The Foundation owned Evergreen Commons, a student-housing complex adjacent to the university campus, which it built and operated.
- Evergreen Commons housed primarily university students; students paid rent intended to cover debt service, operating expenses, and reserves, with any eventual surplus to be applied to the Foundation’s charitable/educational purposes.
- In April 2005, Clinton County issued a revised assessment increasing Evergreen Commons’ assessed value and stating the reason as “no longer exempt improvements.”
- The Foundation appealed administratively to the county Board, seeking continued exemption for the improvements; the Board denied relief.
- The Foundation appealed to the Court of Common Pleas, which found the Foundation itself qualified as a purely public charity but held Evergreen Commons was not exempt property because of its use.
- The Foundation appealed to the Commonwealth Court.

## Issues

1. Whether Evergreen Commons qualified for real estate tax exemption as property of an institution of purely public charity based on the property’s actual use.
2. Whether operating student apartments funded by rent payments (covering costs and debt service, with possible later surplus for charitable purposes) constitutes a charitable use rather than a commercial, revenue-producing use.

## Decision

- The Commonwealth Court affirmed the order of the Court of Common Pleas and the Board’s denial of exemption.
- The court accepted that the Foundation qualified as a purely public charity but held Evergreen Commons did not qualify for exemption as a tax-exempt charitable use of property.
- The court treated Evergreen Commons as functionally comparable to rental housing offered to able-to-pay tenants, despite the absence of private profit distribution and the Foundation’s nonprofit status.

## Legal Principles

- Property-tax exemption for institutions of purely public charity depends on the actual use of the specific property; an owner’s charitable status does not automatically exempt all property it owns.
- A revenue-producing property is not exempt merely because net proceeds may later support charitable or educational programs; the property itself must be devoted to a charitable purpose.
- In evaluating charitable use, courts consider whether the activity operates without a profit motive in practice and whether it provides gratuitous or materially reduced-cost benefits to a charitable class, rather than serving paying customers in a standard market transaction.

## Conclusion

Even when a university-related nonprofit qualifies as a purely public charity, a student-housing complex operated through rent-paying tenants may remain taxable if its operation resembles ordinary commercial rental housing and the property’s use does not itself constitute a charitable activity.


Lock Haven Univ. Found. v. Clinton Cnty. Bd. of Assessment Appeals & Revision of Taxes, 920 A.2d 207 (Pa. Commw. Ct. 2007)