Church Denied Exemption for Spiritual Retreat Center because “Religious Activity” Requires Proselytizing
On Tuesday, the Michigan Court of Appeals upheld a Tax Tribunal decision denying religious and charitable property tax exemption to the Woodside Bible Church‘s Retreat Center. The property’s assessed value was $1.1 million and is located in a sparsely populated township (where its exemption probably has noticeable effect). During the tax years in issue, the Church rarely used the Center itself. Instead, it rented the Center to unaffiliated groups or individuals. Church advertising describes the Center as a place for marriage retreats, spiritual reflection and renewal but the Church does not hold stereotypical worship services at the Center. The Center is also available for weddings and other ceremonies.
A Michigan statute exempts from property tax “houses of public worship, including buildings or other facilities owned by a religious society and used predominantly for religious services or for teaching the religious truths and beliefs of the society.” Woodside asserted that it rents the property solely to Christian and nonprofit organizations that conform to its specific beliefs and that renters must “respect” the Church’s belief. During the tax years in issue, the Church rarely used the Center itself. The Court ruled that exemption is for property actually used for teaching or preaching and since neither occurred at the Center, exemption should be denied.
The Court’s rationale is similar to that articulated by the Wisconsin Supreme Court in the Catholic Charities Bureau, perhaps suggesting an emerging, if not troubling, state law trend to limit religious exemptions to proselytizing activities. In this case, though, the Michigan Court of Appeals had more statutory support than the Wisconsin Supreme Court in Catholic Charities Bureau. In Wisconsin, a state statute limited exemption to “religious activities,” which the Wisconsin Supremes interpreted to require preaching and teaching. Here, the statute contains the requirement explicitly. Still, Catholic Charities Bureau argues (the case is pending a decision on a cert petition before the U.S. Supreme Court) that a government may not make distinctions amongst religious activities to which it grants tax concessions.
The Michigan Court essentially found that since the Center was not used for stereotypical preaching or teaching, it was not “used predominantly for religious services or teaching.” It is interesting to note the Church’s argument that all of its activities, including the rental of the Center, were parts of its religious mission to “help people belong to and grow in Christ.” The Michigan Court thought that way too broad, noting that it would render the Church’s simple maintenance on any property a religious activity. I am not so sure that is a convincing way to look at things. It bothers me somehow, but I can’t articulate the reason. The Church’s claim may be too broad, but limiting religious exemption to explicit proselytizing seems too narrow and fraught with constitutional problems. Here is part of the Court’s opinion:
In 2016, petitioner purchased the subject property, a large residence located on the shores of Lake Huron in Forester Township. The property includes a large house that now has 12 bedrooms, a large dining room, and a great room, along with a pole barn and a garage. Petitioner’s hope for the property was to create “a place of retreat where people could have extended periods of time away from the busyness of life. In this place, marriages would be strengthened, leaders developed, and pastors encouraged.” Petitioner refers to the property as “The Lodge,” and markets it to other groups and organizations. It has created a brochure detailing the facilities available and highlighting its availability as a place of retreat and rest. Petitioner’s senior executive director of operations, Mike Fisk, asserted generally by affidavit that from “2017 through 2020, the ministry retreat center [The Lodge] was used as an extension of Woodside, with missions to strengthen marriages, develop leaders, and encourage and counsel pastors, consistently taught from a biblical and prayerful perspective.” Because of the COVID-19 pandemic and its attendant “lockdown” restrictions, from March 2020 through May 2021, the property sat unused.
In its decision, the Tax Tribunal noted that there was no dispute about petitioner’s status as a religious society, and identified the controlling issue as whether petitioner used the subject property predominantly for religious services or for teaching its religious beliefs or truths. Citing the itineraries petitioner provided as discovery responses, the tribunal concluded that the predominant use of the property was by organizations other than petitioner for “leadership development and marriage renewal with an emphasis on rest and recreation,” and that most of the activities were “recreational activities such as golf, crafting, games, and general free time,” with “little time devoted to teaching religious truths and beliefs.” The tribunal concluded that petitioner had not met its burden of establishing that it was entitled to an exemption, and denied petitioner’s motion for summary disposition. It further ruled that, under MCR 2.116(I)(2), respondent was entitled to summary disposition instead.
The evidence submitted with the motions showed that the property was predominately used by third parties, not petitioner, and appeared to be predominately used for recreational and other nonreligious purposes. And because there was evidence of neither petitioner’s, nor the third parties’, religious beliefs and truths, even if the third parties’ use of the property were primarily for teaching religious beliefs, there was no evidence that those third parties’ beliefs were also petitioners’ beliefs. The record evidence indicates only that petitioner predominately used the property as a rental venue for other Christian organizations, which itself constituted neither conducting religious services nor teaching religious beliefs.
. . .
The marketing brochure actually supported the tribunal’s conclusion that the property served as a primary place for recreation and retreat, because it reads much like flier from a secular hotel or vacation venue, speaking of only retreats, recreation, rest, and escaping “the busyness” of everyday life. And, contrary to the assertion that the property was intended to serve petitioner’s purposes of teaching its religious beliefs, the pamphlet made clear that organizations renting The Lodge were responsible for planning the itineraries for the events they held.
darryll k. jones