Tax-Exempt Status Will Be in Jeopardy
By Jay Tokasz and Brian Meyer
The Buffalo News
September 16, 2007
http://www.buffalonews.com/home/story/163697.html
Catholic church buildings slated for closure could still end up costing parishioners hundreds of thousands of dollars in taxes if the properties aren't sold or converted for other tax-exempt uses.
City officials say church buildings will be added to the tax rolls within a year or so after they close.
The buildings have been exempt from property taxes for decades because of their religious purpose. But state law dictates that such properties get taxed when they're no longer being used by a church.
"I believe religious properties add significantly to the fabric of our communities," Mayor Byron W. Brown said. "But when they cease to operate as churches, it's appropriate that they go back on the tax rolls."
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| Taxing exampleSt. Adalbert 212 Stanislaus St. Assessed: $1.2 million Tax bill: $38,264 |
The potential tax bill could be staggering for nearby parishes that remain open. They will be responsible for paying the property taxes.
"Unfortunately, this is what happens when the Catholic Diocese makes decisions in a vacuum," said Joseph Golombek Jr., North Council member, who has been highly critical of the diocese's restructuring, known as "Journey in Faith and Grace." "They've closed four out of six churches in our neighborhood without looking at the long-term impact."
Sixteen Catholic churches in Buffalo – as well as several of their ancillary buildings — that closed recently or are scheduled to be shut down have an assessed value of $12.4 million, according to city assessment records.
Based on the city's nonhomestead tax rate of $32.76 per $1,000, those properties would be subject to a combined city tax bill of more than $400,000. That figure doesn't include Erie County taxes.
The diocese is still in the midst of a massive restructuring of its parishes, and more closings are anticipated in Buffalo and other parts of the eight-county diocese — pushing the potential tax liability even higher.
"Being realistic, we understand there may be some unused properties," said Steven D. Timmel, executive director of financial administration for the diocese.
But diocesan officials also expressed optimism that they would find appropriate reuses for the properties and thus avoid huge tax bills.
"That's where our energies have been right now," said Timmel. "We've got some time. Time is our ally here."
"The tax issue," he added, "may become a moot point."
A six-month window
The city will provide "about a six-month window" from the date of a building's closure until it is placed on the tax rolls, said Timmel.
If need be, the diocese will contest some of the assessed values of unused church properties — some of which have assessments of more than $1 million, despite being located in neighborhoods with depressed housing values.
"We need to come back to the fair market value of the properties," Timmel said.
Steven D. Roth, the diocese's associate director of buildings and properties, has discussed the tax situation with Martin F. Kennedy, the city's assessment and taxation commissioner.
The diocese has the right to appeal an assessment, Kennedy said.
Kennedy acknowledged that many of the properties probably had inflated values.
"As far as what the value would be once [a church] is empty, I'm not sure how to answer that question," he said.
The city will have to examine as many prior sales of churches as possible to determine an "honest opinion" of a property's value, Kennedy said.
"It's a difficult equation," he said. "Believe me, it's not going to be easy."
Nearly a third of all properties in Buffalo are tax-exempt, including churches, hospitals, schools and government buildings.
The addition of some church buildings to the tax rolls would be only a slight boost to the city, which expects to raise $146.3 million from property taxes this year.
But it could have a major impact on some Catholic parishes, which will be responsible for paying the tax bill. Many of the city parishes that will remain open are still struggling with dwindling congregations and growing costs.
Some pastors said their congregations would be hard-pressed to afford any taxes — on top of the considerable expenses of building upkeep.
Down the road, St. Columba & St. Brigid Parish faces a potential property tax liability of as much as $61,634.
"It would be a terrible burden on the St. Columba & St. Brigid community," said the Rev. Roy Herberger. "We don't have that kind of money to spare in the bank account."
St. Columba & St. Brigid, St. Mary of Sorrows and St. Ann parishes will soon merge and be located at the St. Columba & St. Brigid Church site on Eagle and Hickory streets.
Liabilities assumed
The merged community assumes all of the assets and liabilities of the three entities.
St. Mary of Sorrows, assessed at $516,400, offered its final Mass on Saturday, and St. Ann church is scheduled to close next year. The St. Ann property on Broadway and Emslie is currently valued at nearly $1.4 million. Catholic Charities, a nonprofit human services organization, leases space in the school owned by St. Mary of Sorrows — a deal that allows that building to maintain its tax-exempt status.
Herberger hopes Catholic Charities can expand into other parish-owned buildings at Genesee and Guilford streets.
As long as any income derived from such an arrangement doesn't exceed the cost of building maintenance, the property will maintain the tax exemption.
St. Ann Church has attracted some interest from potential buyers, but it could be a difficult sell.
The current pastor, the Rev. James Joyce, estimated repair expenses over the next five years could top $1 million. The church needs work on its roof, gutters and windows, as well as masonry repairs.
On the West Side, the Rev. Richard Jedrzejewski is trying to sell St. Elizabeth Church at 986 Grant St. to a Protestant congregation. The church would be subject to $8,885 in taxes, based on its current assessment.
Even if the sale goes through, Assumption Parish, where Jedrzejewski is pastor, still will be responsible for St. Francis Xavier, a large empty church on East Street with an assessed value of more than $1 million and a potential pending tax bill of $34,257.
"It would be something we couldn't afford, even if it was a couple thousand dollars," Jedrzejewski said.
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