Zoned Out

New York’s Court of Appeals is poised to weigh in on a question that has long vexed lawyers working at the intersection of nonprofit law and land use: Does a nonprofit’s compliance (or noncompliance) with local zoning laws affect its eligibility for a property tax exemption?

That’s the issue at the heart of First United Methodist Church in Flushing v. Assessor, Town of Callicoon, a sleeper case with big implications for religious organizations, nonprofit landholders, and local assessors alike.

The First United Methodist Church, based in Flushing, NY, owns a 70-acre rural property in Callicoon, NY, that it uses for religious retreats, prayer gatherings, a chapel, and a vegetable garden. It sought a property tax exemption for 2021 and 2022, arguing that the property served religious purposes and therefore met the statutory requirements for exemption under New York law.

The town of Callicoon disagreed. It denied the exemption, arguing that the property’s use violated local zoning laws, which permit agricultural and religious uses—but not for the property to function as a “church,” defined narrowly as a place where organized services are regularly conducted.

At trial, a lower court sided with the church, holding that the property wasn’t operating as a “church” within the zoning definition and that the exemption applied. The Appellate Division affirmed, setting the stage for review by New York’s highest court, which heard oral arguments on September 8, 2025.

At first glance, this may seem like a parochial property dispute. But the implications run deep.

If the court finds that zoning compliance is a prerequisite for a tax exemption, nonprofits—especially religious organizations and retreat centers in rural or mixed-use zones—may find themselves vulnerable to shifting or inconsistently enforced zoning interpretations. That could mean more litigation, more compliance costs, and more confusion about how tax and land use law intersect. It could also embolden localities looking to expand their tax base by second-guessing how nonprofits use their land.

On the other hand, a clear ruling decoupling exemption eligibility from zoning status could simplify administration and shield nonprofits from collateral zoning battles when their tax-exempt status is at stake.

As of this writing, the New York Court of Appeals has not yet issued an opinion. But the decision is expected to either reaffirm the lower courts or clarify the contours of the zoning/tax boundary more directly. 

Stay tuned. This case might not grab national headlines, but for nonprofit scholars as well as land use scholars, the opinion could be monumental.

CJR