Thursday, October 21, 2010
We have previously blogged about Massachusetts putting property back on the tax roles when churches close down parishes or schools and leave the property vacant. In this earlier post we predicted that we would see more of this kind of litigation, and indeed the trend apparently has migrated to the Midwest. A recent decision by the U.S. District Court in the Western District of Wisconsin (Asbury United Methodist Church v. City of La Crosse) has held the same thing. In this case, Asbury United Methodist Church in La Crosse owned property that had been used as a parsonage, but which was vacant at the time of property tax assessment (January 1, 2008). The church later converted the parsonage to a "hospitality house" to provide housing for people being treated at local hospitals that could not afford to stay at a motel. This conversion, however, did not begin until April, 2008. The court held that under Wisconsin law, property must be used for charitable purposes at the date of assessment in order to qualify for exemption. In this case, the property in question was vacant and not being used for charitable purposes at the relevant date.
The court also considered the church's claim that Wisconsin law permits exemption for vacant property if it is being "readied" for charitable use (for example, undergoing renovation as a predicate to a charitable use). The court noted, however, that the conversion of the parsonage did not get underway until April 2008, over three months after the relevant assessment date. Accordingly, the property was not being "readied" for a charitable use at the key time in question. The court also rejected free exercise and due process arguments presented by the Church.