Church Camp Tax Exempt

532-acre camp used primarily for church purposes.

Appeal of Mount Shepherd Methodist Camp, 462 S.E.2d 229 (N.C. App. 1995)

Key point. Church campgrounds that are used primarily for religious purposes may be exempt from property tax, and this exemption may apply to undeveloped land that is part of the camp if it is integral to religious exercise.

A North Carolina court ruled that a 532—acre church camp was exempt from property taxation because it was used primarily for religious purposes.

A District of the United Methodist Church owns a 532—acre camp. Located on twenty—three acres of this land are a number of structures including cabins, bathhouses, recreational vehicle sites, camping areas, a petting zoo, ballfields, picnic shelters, parking lots, a chapel, and a lodge. There are approximately seven miles of trails passing throughout the property. One acre of the land is leased to the State of North Carolina. The timber on twenty—four acres of the land was recently cut and sold. The structures, property improvements and trails are used in the operation of the camp. The camp is open to different groups (adult and child) including the Methodist Church, public schools, scouts, and other churches. In some cases there is a small fee ($5.00 per person per night or $1.50 per person per day) charged for the use of the facilities. The activities conducted at the camp vary depending on the group but include religious worship, meditation, camping, hiking, swimming, fishing, pond studies, counseling, canoeing, pottery classes, baseball, softball, environmental studies, and picnicking.

A county tax board found that only 21 acres of the camp were exempt from property tax. The camp appealed. A tax commission found that all of the 532 acres were exempt as a religious camp except for (1) the one acre leased to the State of North Carolina, (2) the twenty—four acres used by the camp for the commercial production of timber, and (3) the northeast portion of the property which contains no structures and no trails except "a seldom used perimeter trail." The county appealed.

A state appeals court agreed with the commission's finding that most of the property was exempt. In response to the county's argument that the camp could not be exempt from property tax because it charges some campers a fee, sold some timber from a portion of the property, and allows the facilities to be used by non-church groups, the court observed:

There is substantial evidence in this record that the primary purpose of the camp was to serve the religious and spiritual needs of the members of the Methodist Church. The fact that others were permitted to use the camp and that some were charged a fee is not determinative. The fee was small and there is no evidence that there was any effort by the camp to make a profit. Furthermore, the sale of the timber on a portion of the larger tract is not a basis for converting the entire tract into a commercial venture. The commission correctly refused to exempt the twenty—four acres from which the timber was sold.

The court also rejected the county's argument that only the land where the structures are located (approximately twenty—three acres) is entitled to exemption. It observed: "Exempt property includes … not only buildings and the land the buildings occupy, but also any adjacent land reasonably necessary for the convenient use of any such building. The commission therefore did not err as a matter of law in concluding that the natural areas of the camp, where no improvements were located, were properly within the scope of [the exemption]." The court added:

[T]he property exempted by the commission, where there were no improvements, was an integral part of the camp and provided campers opportunities to further their religious practice. Worship, meditation and Bible studies are conducted throughout the camp. Environmental classes teaching Christian stewardship of the outdoors are taught in wilderness areas. Adults and supervised children are allowed to travel throughout the camp uninhibited to learn about the outdoors and undergo self—discovery. Furthermore, the undeveloped natural areas of the property serve as a buffer zone to screen the camp from surrounding development, contributing to the sanctity and serenity of the camp and thus qualifying its use for a "religious purpose."

This case will be useful to any church that owns undeveloped property that is used to support religious activities.

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