City of Philadelphia v. OLS Hotel Partners, L.P.

Citations: 781 A.2d 268; 2001 Pa. Commw. LEXIS 542

Court: Commonwealth Court of Pennsylvania; July 26, 2001; Pennsylvania; State Appellate Court

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The City of Philadelphia, OLS Hotel Partners, L.P. (operating as The Four Seasons Hotel Philadelphia), and Central Parking Systems of Pennsylvania, Inc. are appealing a December 23, 1999 decision from the Court of Common Pleas, which partially affirmed and partially reversed a June 29, 1999 ruling from the Tax Review Board regarding their liability for the City's parking tax. OLS Hotel provides valet parking for guests, facilitated by a December 21, 1983 easement agreement allowing parking for up to 90 vehicles in a garage at 18th and Cherry Streets. OLS Hotel agreed in a September 23, 1996 contract to pay the garage owner $33,000 monthly and an additional $8.00 for each use exceeding 60,000 annually. Valets parked guests' vehicles in the garage, and OLS Hotel charged registered guests $24 on weekdays and $18 on weekends, while transient guests paid based on parking duration. Standard Parking managed the garage until August 31, 1997, after which Central Parking took over. The City notified OLS Hotel on May 7, 1997, of its responsibility to collect the parking tax, which OLS Hotel confirmed in a July 17, 1997 inquiry to the City's Revenue Department. The Revenue Department ruled on November 10, 1997, that OLS Hotel must collect the tax. OLS Hotel subsequently paid $14,166.60 in parking tax for November 1997 but later sought a refund, which the City denied on April 20, 1998.

On January 20, 1998, Standard Parking submitted an amended parking tax return for March to August 1997, reporting receipts from OLS Hotel and including the corresponding parking tax. Subsequently, on April 2, 1998, Standard Parking filed a petition with the City for a $38,728.80 refund for parking taxes covering December 1996 to August 1997, based on payments from OLS Hotel. This refund request was denied by the City on April 20, 1998. Similarly, Central Parking filed a refund petition on April 17, 1998, for $17,212.80 covering September to December 1997, which was also denied on April 30, 1998. Both parking companies, along with OLS Hotel, sought review by the Board to protect against potential liability for taxes on overlapping receipts. During oral arguments, the City adjusted its position to seek taxes from OLS Hotel based only on the difference between valet receipts and the amounts paid to Standard and Central Parking. 

In a June 29, 1999 decision, the Board denied the refund requests from Standard and Central Parking but ruled that OLS Hotel was not liable for the parking tax, as it was not classified as an 'operator' under The Philadelphia Code. Consequently, the Board granted OLS Hotel's refund request. The City then appealed this decision, while Standard and Central Parking continued to appeal the denial of their refunds. On December 23, 1999, the trial court upheld the Board's decisions regarding Standard and Central Parking but reversed the Board's decision concerning OLS Hotel, asserting that OLS Hotel charged guests for parking services subject to the tax. 

The trial court's ruling prompted appeals from the City, OLS Hotel, and Central Parking. The City contended that the trial court failed to decide OLS Hotel's liability for the parking tax as the operator of a valet service. OLS Hotel countered that it was not the operator of the parking facility and argued that Standard and Central Parking should bear the tax responsibility. Central Parking further claimed that OLS Hotel operated a distinct parking area and that the easement fee paid to Central Parking should not be taxed, entitling it to a refund for the erroneously taxed amount.

Section 19-1202(1)(b) of the Philadelphia Code imposes a 15% tax on fees for parking or storing motor vehicles in city-operated facilities. A 'parking facility' is defined as any area accommodating more than three vehicles for a fee, while an 'operator' is the individual or entity managing the facility. In this case, the ninety parking spaces in question qualify as a 'parking facility.' However, OLS Hotel is not the 'operator' of these spaces; Central Parking operates the garage and collects $33,000 monthly from OLS Hotel for parking services. OLS Hotel is the 'person' parking vehicles in the facility, making its $33,000 monthly payment and additional fees for excess usage subject to the parking tax. Hotel guests, who hand their keys to a valet, do not engage in the taxable transaction as they do not directly park or store their vehicles; this responsibility lies with OLS Hotel as the paying party. The court reversed the trial court’s ruling regarding OLS Hotel while affirming other aspects of the case. The review scope is limited to potential constitutional violations, legal errors, or whether findings are supported by substantial evidence.

Amicus Curiae Urban Growth Property Trust and Interparking, Inc. (Amicus) asserts that OLS Hotel is the sole entity responsible for the parking tax on valet services it charges guests, as it utilizes its easement rights to operate a parking facility within the garage. Amicus argues that the payments made for the easement to use the parking garage should not be subjected to the parking tax. Additionally, Amicus claims the operator of the parking garage bears no obligation to remit any parking tax related to OLS Hotel's valet service. Central Parking disputes its classification as the 'operator' of the ninety spaces, suggesting that both it and OLS Hotel function as operators. This stance contradicts Central Parking’s management agreement with the garage owner. According to the arrangement, OLS Hotel’s payments are akin to those of a typical user who pays a monthly flat fee and receives a key card, with Central Parking labeling these as easement fees. However, the agreement specifies that the fees pertain to the parking of passenger vehicles. The situation implies that if the ninety spaces are occupied, valet service would necessitate alternative parking solutions. The City's argument would require the court to find that both the hotel and its guests are occupying the same parking space simultaneously.