To: PROA Groups, Board Members, and Alternates

We just received word that the PA Supreme Court has ruled against

Millersville Borough in the Lease Tax case.

A brief history of the case follows for your information:

1. Millersville Borough (Lancaster County) enacted a local ordinance imposing a tax on residential lease transactions. Lynnebrook and Woodbrook Associates, landlords owning 178 rental units in MIllersville, sued the borough, maintaining that the tax was not allowed by the Tax Enabling Act. The court ruled against the landlords.

2. The case was then appealed to Commonwealth Court , which also ruled against the landlords.

3. With PROA's financial assistance, the case was then appealed to the PA Supreme Court. The Supreme Court has now reversed the lower court's ruling.

4. The effect of this decision is to declare Lease Taxes illegal in Pennsylvania. Millersville will have to refund over $120,000 collected under this ordinance over the past four years.

5. While this court case was pending, PROA also had a bill introduced into the PA legislature to ban such taxes. This bill passed and was signed into law by the governor. Unfortunately, this new law allowed lease tax ordinances that pre-existed it's enactment to be grandfathered. So while the new law prevented any additional municipalities from imposing lease taxes, MIllersville and a few other municipalities were allowed to continue collecting their pre-existing taxes on leases. With this Supreme Court decision, even those lease taxes which pre- existed the new law are now declared illegal.

We would like to thank Attorney Lee Sitvale and his law firm for continuing to appeal this case, and for the excellent argument before the court.