The borough is headed to Superior Court over a decision by its own Board of Equalization to exempt a local Episcopal church property from borough tax.
The dispute surrounds a parcel at 1 Mile Haines Highway purchased in 2000 by St. Michael & All Angels’ Episcopal Church. After the purchase, the church converted a small existing structure on the property into a chapel, and maintains the land, church representatives have said, as a place for members to walk, pray, and meditate.
According to state statute, municipalities may exempt from property tax land “used exclusively for nonprofit religious, charitable, cemetery, hospital or educational purposes.” The borough has granted that exemption to the 1-Mile parcel since it was purchased. But this year, the borough’s contracted assessor, Martins Onskulis, reversed course and removed the exemption. Onskulis has valued the property and building at $241,700.
At issue is what exactly constitutes the “exclusive use” required by statute for the exemption.
Both sides agree that there are hypothetically clear violations of this exclusive use clause: for instance, if the church had some kind of for-profit, non-religious activity on the grounds. But that’s not what’s happening, and Onskulis doesn’t dispute congregation members’ assertion that the only official activities on the grounds have been religious services.
Instead, Onskulis has said the religious activities have not been recent, or regular enough to qualify the property for an exemption. If regular services begin again, he said last month, the tax exemption would return.
In an email to attorney and congregation member Linn Asper in April, Onskulis wrote that “while the statute does not explicitly define (exclusive use), the concept implies an element of temporality and frequency, meaning the property should be used consistently and regularly over time for religious purposes.”
Onskulis, at an equalization hearing this spring, cited a Fairbanks tax case decided in Superior Court earlier this year as the basis for that reading of statute. But in some ways, it seems to be uncharted waters: Onskulis said he brought the case to a meeting of all the state’s assessors, and his fellow assessors said they had not dealt with a comparable case.
The church is currently being represented by retired Haines District Court judge Linn Asper. Asper told Onskulis this spring the church had held 72 services at the property since 2000, but none in the last six years. The church holds its regular services at the Chilkat Center.
Asper disagrees with how Onskulis is interpreting the law. In Asper’s view, the frequency of the services shouldn’t be relevant.
In an April email, he wrote to Onskulis that “the church concedes there has not been a religious service on the property for some time… however, the term ‘current’ is not in the controlling statute.”
“If the borough can dictate what type of service, how often, where it happens, they’re seeking to control the church,” Asper said this week. “I think that’s a really bad precedent.”
There are a couple of layers of appeals in the case. The first was the Board of Equalization hearing, in which the church appealed Onskulis’ original decision to remove the exemption. In that hearing, the board — an assembly-appointed body that hears property tax appeals — unanimously sided with the church, voting to exempt the property from tax.
“It’s not our place to say what someone’s religious experience is,” said board member Brenda Josephson.
“We’ve seen a lot of flim-flam outfits come into Haines and someone lives in a house out the road and calls themselves a church and says their property isn’t taxable — I’ve seen that several times,” said board member Jim Stanford. “That isn’t the case here. This is an established Episcopalian church that bought this property to use for religious purposes and I don’t want to be the one to say they aren’t using it.”
Now, the borough’s appeal to Superior Court seeks to overturn it’s own board’s decision, removing the tax exemption once more.
The borough filed the appeal on June 10.
In a court document filed Wednesday, Asper asked the court to dismiss the appeal, including on the grounds that the borough “has not alleged abuse of discretion or other actions of the Board that violate the requirements of the Alaska Administrative Procedure Act.”
The court has not yet scheduled a first hearing in the case.
As church members await a final decision, they’re putting work into the property to prepare for more regular use, including a newly-built bridge over a stream and a remodeling of the chapel. The work follows what Asper describes as a difficult stretch for the church since the start of the COVID-19 pandemic, Asper said.
“It gives us hope for the future,” said member Joan Degen of the recent work. Degen was at the property Wednesday mowing the grass.
“We’re a smaller congregation, lots of older members, many on limited incomes. I hope (the appeal) goes our way so we don’t have to downsize.”