A city's department of environmental protection attempted to collect water and sewer charges from a church. The church's request for an exemption was denied because the church property contained apartments for three staff members (the pastor, church business administrator, and a full-time teacher at a church-operated school).
The pastor wrote the city, claiming that "we are a religious organization, providing this community with a vital service. Our only income are gifts that come from the members of this community. We cannot pay these charges, moreover, we are entitled to exemption." The city disagreed, and assessed $12,000 in back charges against the church and imposed a "tax lien" on the church's property. The church appealed. It asked a court to grant its exemption from the water and sewer charges, reverse the city's assessments and penalties against it, and remove the tax lien.
A city ordinance contained the following exemption: "The real estate owned by any religious corporation … actually dedicated and used exclusively as a place of public worship [is] hereby exempt from the payment of any sum of money, whatsoever to said city, for the use of water taken by same from said city." A similar exemption applies to sewer charges.
The court's ruling
The appeals court ruled that the exemption of religious corporations from water and sewer charges "should be interpreted as applying to all property used in furtherance of the corporation's purpose," and in this case "that would include the housing provided its pastor, teacher and administrator staff promoting the primary purpose of the institution."
The court added that even if the staff members who were provided housing were not promoting the purposes of the church, the city should have granted a "partial exemption" for all of the church's property less the three apartments. The city's denial of any exemption was "legally wrong, arbitrary and capricious."
What this means for churches
Many cities exempt churches from water and sewer fees. This case demonstrates that such an exemption will not necessarily be lost because of uses of church property that "promote the primary purpose" of the church.
Bathelite Community Church v. Department of Environmental Protection, 797 N.Y.S.2d 707 (N.Y. Sup. Ct. 2004).