Religious Camp Is Tax Exempt

Disputed property used to house camp staff.

Hapletah v. Town of Fallsburg, 590 N.E.2d 1182 (N.Y. 1992)

Key point: A state law exempting from taxation all property "used exclusively for religious purposes" may exempt more than a chapel at a religious campgrounds. Caretaker and faculty residences and undeveloped land also may be exempt.

The New York Court of Appeals (the highest state court in New York) ruled that 64 bungalows, 6 house trailers, and a 10-acre wooded section of a 31-acre religious campground were exempt from property taxes as property "used exclusively for religious purposes."

A religious organization conducts a religious education program on a 31-acre parcel of land. The property is used primarily during the summer months when approximately 450 students from two years of age and older attend religious camps. The property consists of a main building containing a kitchen and dining room, recreational facilities, classrooms, chapels, a dormitory building, 64 bungalows, and 6 trailers. Ten acres of the 31-acre property are mostly wooded and are used primarily for hiking. The bungalows are used by clergy and teaching staff and their families. One of the trailers is used as a residence by a full-time caretaker.

A tax assessor determined that the 64 bungalows, 6 house trailers, and the 10-acre of wooded land were taxable since they were not used exclusively for religious purposes. The religious organization appealed. The court of appeals concluded that the properties in question were exempt from tax. The court began its opinion by quoting the state property tax exemption statute, which exempts "property owned by a corporation or association organized or conducted exclusively for religious … purposes and used exclusively for carrying out thereupon one or more [exempt] purposes."

The court noted that the term exclusively "has been broadly defined to connote `principal' or `primary' such that purposes and uses merely auxiliary of incidental to the main and exempt purpose and use will not defeat the exemption …. Put differently, the determination of whether the property is used exclusively for [exempt purposes] depends upon whether its primary use is in furtherance of the permitted purposes."

The court concluded that the bungalows, trailers, and 10-acre wooded section all met this test. It observed: "If [the organization] was unable to provide residential housing accommodations to its faculty, staff, students and their families, its primary purposes of providing rigorous religious and educational instruction … would be seriously undermined. Thus, these housing facilities are `necessary and reasonably incidental' to the primary purpose of the facility, and this is so notwithstanding the existence of limited housing facilities nearby."

For the same reasons the court concluded that the trailer provided to the full-time caretaker was exempt. Finally, the court concluded that the 10-acre wooded section was exempt since it too was "incidental to the primary religious purpose of the entire 31-acre parcel." The court acknowledged that tax exemptions "are to be strictly construed," but added that the interpretation of such exemptions "should not be so narrow and literal as to defeat their settled purpose … that of encouraging, fostering and protecting religious and educational institutions."

See also New Life Gospel Church v. Department of Community Affairs, 608 A.2d 397 (N.J. App. 1992).

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