Key point. Churches are exempt from property or ad valorem taxes in every state, but this exemption does not necessarily apply to special assessments that require landowners to pay for improvements that directly benefit them.

A Minnesota appeals court ruled that a city's imposition of a special assessment on abutting landowners to cover the costs of street resurfacing could be applied to churches. In 2016, a city imposed a special assessment of $31,191.30 against a church related to a street resurfacing project. The church was informed that it was required to pay off the amount in five annual principal installments beginning in 2017. The church challenged the assessment, claiming that it violated a provision in the state constitution exempting from taxation "public burying grounds, public school houses, public hospitals, academies, colleges, universities, all seminaries of learning, all churches, church property, houses of worship, institutions of purely public charity, and public property used exclusively for any public purpose … except as provided in this section." The constitution goes on to provide that "the legislature may authorize municipal corporations to levy and collect assessments for local improvements upon property benefited thereby without regard to cash valuation."

A state appeals court ruled that the exemption of church property from taxation did not bar cities from requiring churches to share in the costs of public improvements, such as street resurfacing, that directly benefited them: