The Haines Borough has dropped its controversial effort to tax the 1 Mile Haines Highway Episcopal Church property.
The assembly voted unanimously Tuesday to end a borough appeal in Superior Court seeking to overturn a Board of Equalization decision from May. In that decision, the citizen board ruled the church property be exempt from property tax under a religious-use exemption. That had reversed an initial decision by the borough assessor that the property be taxed.
The exemption, which is written in state statute, exempts properties used exclusively for non-profit religious purposes. The debate regarding the Episcopal Church property centered around that “exclusive use” element, with borough staff and its contract assessor arguing that after six years without a church service at the property, it was no longer being used for religious purposes. Church members, meanwhile, argued both that the property was open to members for meditation and private prayer, and that there was no stipulation in state law regarding frequency of religious use to qualify for the exemption.
Borough manager Alekka Fullerton filed the appeal to Superior Court in early June without assembly input. On Tuesday, assembly members criticized that decision, including Cheryl Stickler, who cast the appeal as a First Amendment infringement.
The borough’s exemption decision did not dictate the church’s use of the property, only that some uses would incur taxation. But Stickler seemed to argue that taxation functionally acted as government intervention in worship.
“The First Amendment… to me prohibits a government body from going in and saying, this is how frequently you worship, this is how your property looks, this is how you have to prove to us you’re using this as a church property,” Stickler said.
“There’s fair and then there’s right,” she said after. “In my opinion, it is not right to levy taxes on our churches no matter what denomination, what faith. We, as Americans, get the right to freely exercise how we believe and what we believe.”
Fullerton and assessor Martins Onskulis, however, stood by their argument that the church property, according to “the letter of the law,” as Fullerton put it, had to be taxed.
“This is about treating taxpayers equally and following the letter of the law with respect to mandatory tax exemptions,” Fullerton said.
“We’re setting some sort of precedent,” Onskulis argued. “What if a church buys 100 properties in Haines. Are we going to exempt half the borough because it’s now owned by a church?”
Onskulis, as evidence that the church was not being singled out unfairly, said other vacant church lots in the borough were made taxable this year. That type of process, as well municipalities appealing board of equalization decisions, are something assessors in the state “see every year,” he said.
Other assembly members disagreed with Onskulis and Fullerton, but on different grounds than Stickler.
“I personally do see possible cases where it would be appropriate to tax church-owned property not used for religious purposes, but I don’t think that’s what we’re looking at here tonight,” assembly member Eben Sargent said. “We don’t have explicit standards for what current use means. I think in this case, the church has asserted they are using it, and the [Board of Equalization] agreed with them.”
“In the absence of a clear explicit standard, I think we should rely on [the Board of Equalization] and church’s own description of their use,” Sargent said later.
Assembly member Craig Loomis opposed the appeal as a waste of money, given the legal fees and minimal possible return.
“I think we would probably lose this lawsuit anyway,” Loomis said. “Representing the taxpayers, as a taxpayer, I think this is a waste of money.”
The assembly voted unanimously to have borough staff withdraw the pending appeal from Superior Court.
The whole issue will likely be moot going forward, at least for the Episcopal Church property, given that the church has begun holding services there in recent weeks.
As for other church properties around town, there looks to still be some grey area. Because the exemption is written into state statute, the borough cannot change the wording of the law, borough attorney Max Holmquist said. The assembly may still be able to set policy regarding interpretation or application of the exemption law, and at one point during Tuesday’s meeting Fullerton asked if they intended to do so.
But assembly members opted to keep their decision limited to the specific question of the Episcopal Church, and questions about requirements surrounding frequency of use remain unanswered.