The borough administration is alleging a series of errors by the Board of Equalization in its hearing of a tax exemption for the Episcopal Church property at 1 Mile Haines Highway. 

The case is complicated, with now two layers of appeals: it started early this year, when borough contract assessor Martins Onskulis removed a longstanding religious tax exemption for the church property, saying that it had not been used for religious purposes frequently enough to comply with state requirements for the exemption. According to state statute, properties may be exempt from municipal property tax when they are “used exclusively for nonprofit religious purposes.” 

Church members disagree, and say the frequency of their services isn’t relevant. And even though the church hasn’t held services at the property in six years, members say the property had been open to church members for meditation and prayer. 

In a first round of appeal in May, the borough’s Board of Equalization, a citizen board that hears property tax appeals, sided with the church and reinstituted the exemption. Then, on June 10, the borough administration appealed to the state Superior Court, seeking to overturn the board’s decision in the first appeal. 

The borough’s decision to take the case to court has drawn criticism from some in the community, not least Board of Equalization members.

One, Jim Stanford, at a recent assembly meeting called the issue a constitutional question of church and state. 

“Are we really as a borough going to tell a church in Haines, Alaska, how and when and where they can worship?” Stanford said. “This is a question that has been battled for 200 years since the U.S. Constitution was founded.”

Now, it seems, that position is part of the borough’s grounds for appeal in court. 

In court documents filed earlier this month, borough attorney Max Holmquist listed eight alleged procedural errors made by the Board of Equalization during its hearing on the church’s exemption as grounds for overturning their decision.

One was that the board “improperly relied upon generalized constitutional assertions and non-statutory considerations, including references to the First Amendment and the absence of sewer service, rather than focusing upon the statutory requirements governing exemption eligibility,” seeming to point to Stanford’s freedom of religion argument. 

The range of alleged errors also includes assertions that the board did not properly place the burden of proof on the taxpayer, in this case the church; that the board’s decision was not supported by the available evidence or adequate findings of fact; and that the board based its decision at least in part on evidence outside the public record and so-called “ex parte communications.” 

That last alleged error has drawn the most public attention, and seems to suggest the borough administration knows of conversations between church members and board members on the issue prior to the hearing. 

Onskulis said he wouldn’t speak about the details of the case until he had confirmation from the borough attorney that he could do so while the appeal was ongoing. 

Amid the pushback, borough officials say the appeal is a necessary precedent on the exemption issue. 

“It’s really important to set a precedent for how we interpret this, because it could affect a lot of other properties that are mandatory exemptions, including SEARHC properties,” said Alekka  Fullerton at last week’s assembly meeting. 

Fullerton said that in the past the borough has determined that Southeast Alaska Regional Health Consortium’s exemption as a healthcare facility did not apply to the organization’s property in the borough used for holding supplies or housing a maintenance crew. 

Regardless, it seems the church dispute specifically will have less relevance going forward. Fullerton said that if the property was being “used as a church, there would be no question it would qualify for a mandatory exemption.” The church plans to hold services on the property as soon as this week. 

If the court sides with the borough administration, the church, along with a potential exemption, can next be reassessed in 2027, Onskulis said.