Taxation—Church Property

The New Hampshire Supreme Court ruled that a church-operated campground did not qualify for exemption from property tax, except for a small chapel.

Church Law and Tax 2002-09-01

The New Hampshire Supreme Court ruled that a church-operated campground did not qualify for exemption from property tax, except for a small chapel

Taxation—church property

Key point. Church-owned campgrounds may be exempt from property taxation if they qualify for a “charitable” or “religious” exemption under state law. An exemption may apply only to those buildings or facilities that are used regularly and exclusively for charitable or religious purposes.

* The New Hampshire Supreme Court ruled that a church-operated campground did not qualify for exemption from property tax, except for a small chapel. A regional denominational organization (the “church”) owns and operates a campgrounds and conference center that contains lodging, dining, chapel, meeting, and recreational facilities. The lodging includes “condominium-type townhouse units with kitchens” and free standing cabins. There are campsite areas that accommodate up to 100 trailers or recreational vehicles, with water supply hook-ups and bathroom facilities for all sites, and electricity for one half of the sites. There is also a dining hall, where meals are prepared and served to guests. Recreational amenities including tennis courts, a golf course, a basketball court, a swimming beach, boating and fishing access and cross country skiing trails. The property also includes staff quarters, maintenance buildings, a preschool, administrative office space and tracts of undeveloped land. During the summer months the camp is host to weeklong “camp programs” for families and adults. These programs have Christian-based themes and are run by pastors. The programs include worship services, Bible study groups and recreation opportunities. Guests are informed that they are expected to participate in the services. Guest registration check-in forms require indication of church affiliation, and approximately sixty percent of guests are members of the regional church. During non-summer months, the camp is rented to church-approved groups. Renters include a variety of church groups (from other denominations) and non-religious groups.

The local tax assessor determined that the entire camp, except the chapel, was subject to property tax. The church appealed. A trial court noted that the church had based its claim of exemption on its charitable rather than religious purposes, and it ruled that the church was not entitled to an exemption for any of its campgrounds on this basis. The court noted that the state property tax law exempted “the buildings, lands and personal property of charitable organizations and societies organized, incorporated, or legally doing business in this state, owned, used and occupied by them directly for the purposes for which they are established, provided that none of the income or profits thereof is used for any other purpose than the purpose for which they are established.” The statute defines “charitable” to include any organization “established and administered for the purpose of performing … some service of public good or welfare advancing the spiritual, physical, intellectual, social or economic well-being of the general public or a substantial and indefinite segment of the general public that includes residents of the state of New Hampshire, with no pecuniary profit or benefit to its officers or members, or any restrictions which confine its benefits or services to such officers or members, or those of any related organization.” The trial court concluded that the church failed to demonstrate that its operation of the camp contributed to the general public benefit, and so it was not a charitable organization entitled to tax exemption. The church appealed.

The state supreme court agreed that the campground did not qualify for exemption from property tax (other than the chapel). It based this conclusion on the fact that the operation of the campground did not benefit “the general public or a substantial and indefinite segment of the general public” because of the following factors: (1) the church’s organizational documents state that the camp was to be used for members of the church; (2) the camp’s own rules specify that “our programs and facilities are primarily reserved for the members of our [church]”; (3) no advertisements for the camp are sent to those outside of the church’s membership; (4) while the camp is used by secular groups, this use is only “occasional and infrequent”; (5) people who stay at the camp, even those associated with “secular” groups, must agree with the basic beliefs of the church. The court concluded, “Where an organization makes efforts to limit its services, and targets its benefits only to its members, that organization is not obligated to serve an indefinite segment of the population … and is not eligible for a charitable tax exemption.”

The court also ruled that the camp did not qualify for exemption based on its religious nature, except for the chapel and “those portions of the administrative offices, maintenance center, barn and workshop that are reasonably related to the function of the chapel.” The court concluded that for property to qualify for exemption on the basis of religious use, “the land must be directly used for religious purposes,” and that the lodging and dining facilities and other camp facilities and property not exempt because they were “not specially adapted to religious uses or purposes nor was the property so used.”

Application. Property tax exemption laws vary considerably from one state to another. However, this case demonstrates the difficulty church organizations face in many states in defending the exemption of campgrounds from property tax. East Coast Conference of the Evangelical Covenant Church of America v. Town of Swanzey, 786 A.2d 88 (N.H. 2001).

Resource. For a summary of the property tax exemption laws of each state, see Table 12-3 in Richard Hammar’s 2002 Church & Clergy Tax Guide. The tax status of church-owned campgrounds is addressed directly on pages 474-476 of the text.

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