The recent Georgia Supreme Court decision confirming the tax exempt status of the Nuçi’s Space property is but the latest chapter in a story that stretches back almost four decades. Interestingly, most of the judicial and legislative action over that period originated right here in Athens-Clarke County, a point to which I will return later.
Back in the early 1970s, tax officials up in Rabun County sought to tax the property of a private school that generated revenue through its ancillary dairy operations. Generally speaking, property owned by educational institutions is exempt from property taxes, but in its November, 1971 decision, Rabun Gap-Nacoochee School v. Thomas et al; and vice versa, the Georgia Supreme Court ruled that if the property was used to generate revenue, even if such revenue was used entirely for charitable purposes, the property was subject to taxation. Note, though, that collection of the tax by the county government was optional, not mandatory.
Fast forward to 2003, the year in which tax officials here in the Classic City discovered the Supreme Court’s decision from decades earlier. Upon reapplying for its previously held tax exemption after moving the location of its thrift store, Habitat for Humanity subsequently received a property tax bill on the new location. Property tax bills for the Salvation Army on its thrift store and Athens Christian School on a couple of houses that it rented to faculty members quickly followed (in the event, property tax was eventually collected on church parking lots, concession stands at Sanford Stadium and Stegemen Coliseum, and the UGA Bookstore according to their income producing activities). Needless to say, the property tax bills concerning the two thrift stores prompted appeals to the Board of Assessors and then the Board of Equalization. Both bodies denied the appeals, being perfectly justified in so doing under existing case law.
During the following year, 2004, the matter shifted from the judicial arena to the legislative one. Louise McBee, a longtime member of the Georgia House of Representatives from Athens, got the ball rolling by asking the House’s legislative counsel to draft legislation that would exempt the kind of property in question from property taxes. McBee retired from office before such a bill could be introduced into the House.
Upon succeeding McBee in the 2005-2006 legislative session, Jane Kidd introduced HB 370. This measure, which had five cosponsors (including local GOP pariah Bob Smith but notably absent local Democrat Keith Heard), “relating to property exempt from ad valorem taxation, so as to provide for an exemption for certain charitable institutions” and further “to provide for a referendum” on the matter. Kidd’s bill began the legislative and committee processes in the House in February, 2005 but never emerged from the Ways and Means Committee.
Undaunted, Kidd revisited the matter in the form of HB1388 in February, 2006. This time, the bill had two cosponsors (again including Bob Smith but not Keith Heard). The bill emerged from the legislative process on this second attempt and resulted in Referendum C, a constitutional amendment item on the general election ballot of November, 2006. The statewide measure passed by an electoral margin of 68.5% to 31.5%.
It is only at this point that Nuçi’s Space enters the discussion, as under the 2006 amendment to the Constitution of the State of Georgia its location would have been exempt form property taxes. The Nuçi Phillips Memorial Foundation, Inc., owner of the property, applied for the exemption at its first opportunity in 2007. However, the Athens-Clarke County Board of Tax Assessors claimed that, since the Foundation sold alcoholic beverages for consumption on the premises, rented out space for private functions, rented out rehearsal space, and sold musical supplies it forfeited any claim to an exemption from property taxes.
Needless to say, the Foundation claimed that the location was, in fact, exempt from property taxes and appealed the matter to the Athens-Clarke County Board of Tax Equalization, a citizen panel appointed to resolve such disputes. In the event, the Board of Tax Equalization ruled in favor of the Foundation.
The Board of Tax Assessors in turn appealed this ruling to the Superior Court of Athens-Clarke County. Both parties stipulated a non-jury trial and Chief Judge Lawton Stephens heard the case in October, 2008. In December of that year, Stephens issued his ruling in the case Athens-Clarke County Board of Tax Assessors v. Nuçi Philips Memorial Foundation, Inc. in favor of the latter, noting that:
By a preponderance of the evidence presented at the trial the Court finds that the Foundation has met the test for exemption as articulated by the Supreme Court of Georgia . . . The Foundation has proven by a preponderance of evidence that it is an institution devoted entirely to charitable pursuits, that the charitable pursuits of the Foundation are for the benefit of the public, and that the use of the property is exclusively devoted to those charitable pursuits.
And:
All funds collected by the Foundation directly support the programs, services, and mission of the Foundation.
And:
The Court finds that Nuçi Phillips Memorial Foundation, Inc. continues to operate as a purely public charity and has not deviated from the original purpose and vision of its founder Linda Phillips to honor the memory of her late son.
Not content with that outcome, the Board of Tax Assessors pursued matter up the judicial ladder. In November, 2009 a three-judge panel of the Court of Appeals of Georgia reversed the Superior Court’s decision in Athens-Clarke County Board of Tax Assessors vs. Nuçi Phillips Memorial Foundation, Inc., noting that:
In support of its argument, the board points to undisputed record evidence demonstrating that the foundation rented space to individuals hosting birthday parties and wedding receptions. The foundation also rented rehearsal space. Based upon this undisputed evidence, the foundation cannot demonstrate that its property was “exclusively devoted to conduct that benefits the public by furthering the charitable pursuits of its owner.” (Emphasis supplied.) . . . An organization does not dispense purely public charity when a person obtains its services by paying a fee.
The Court based its opinion on the contention that even if the revenue generated by Nuçi’s Space went toward fulfilling its charitable purpose, the mere act of generating such revenue disqualified it from a property tax exemption, citing the requirements of O.C.G.A. 48-5-41(d)(2).
Unsurprisingly, the Foundation differed with the logic used in the appellate ruling and took the matter to the Georgia Supreme Court. Earlier this month, the high court overturned the appellate court, saying in the case of Nuçi Phillips Memorial Foundation v. Athens-Clarke County Board of Tax Assessors that:
The Foundation is not disqualified from the tax exemption under the restrictions in OCGA § 48-5-41(c) and (d) (1). The institution issues no stock, makes no profit, does not distribute any dividends or any income to members, accumulates no retained earnings, and has a Board of Directors whose members serve without compensation. Although the organization periodically rents out part of its building to third parties, the primary purpose of the building is not to raise income but to provide services for those seeking mental health assistance. Any income raised is incidental to the primary use of the property, and the purpose of raising the income is to help fund the organization’s charitable services, including the payment for direct professional therapy for those who cannot afford it.
So there you have it. Where we may go from here has yet to be determined. The Board of Tax Assessors, and by that I mean the Unified Government of Athens-Clarke County because the mayor and commission can bring this process to a halt at any time of their choosing, continue to debate the wisdom of further beating this dead horse.
So, other than as an academic exercise into the history and specifics of the Nuçi’s Space case, why does this matter? It matters because this expensive and drawn out process demonstrates the lengths to which government – and in fairness, I do not mean just the folks down at City Hall – will go to generate revenue. Since Athens-Clarke County officials discovered the case from Rabun County, this entire matter, be it in the state legislature or in the courts, has hinged on nothing but the fact that the Unified Government has consistently sought more revenue, going a mere one for four in the appeals and judicial proceedings assiocited with its quest.
I have maintained for years, in print, in person, and in the blogosphere that government, be it local, state, or national, suffers not from a revenue problem; it instead suffers from a spending problem.
The Unified Government of Athens-Clarke County will be desperate for revenue going forward, revenue to offset its spending problem. The Feds have already shot their stimulus bolt, failing miserably (and predictably), so don’t look to Washington for more financial largess. Similarly, the folks under the Gold Dome are not in a position to bail local governments out anymore, as evidenced by the discontinuance of Homeowner Tax Relief Grant back in 2009.
Instead, it will be up to the folks down at City Hall to fund their own spending. They will do so through increased property tax assessments (remember the claim that every piece of property in the county is reevaluated every year), millage rate increases, never-ending LOST, never-ending SPLOST, increased water fees, increased sewer fees, increased trash pickup fees, increased landfill fees, imposition of the stormwater utility fee, a proposed increase in the hotel/motel tax, a proposed plastic shopping bag tax, a proposed trash hauler fee, a proposed septic tank inspection fee, a hoped-for tax on Internet sales, a hoped-for expansion of the existing sales tax to more items, etcetera, etcetera. That – and that alone – is what the Nuçi’s Space brouhaha is all about.
For those interested, coverage of these matters over the years in the Banner-Herald, can be found here, here, here, here, here, here, here, here, and here.
19 comments:
"The Board of Tax Assessors, and by that I mean the Unified Government of Athens-Clarke County because the mayor and commission can bring this process to a halt at any time of their choosing"
Er, actually, no they cannot. The Board of Assessors operates independently of them after they have been appointed. In fact, it is my understanding that the Mayor and Commissioners did not even find out about the case from the County Attorney until it hit the newspapers, since he was working for the Board of Assessors and therefore operating under the realm of attorney-client privilege.
The law that Jane Kidd et al pushed, though, is, IMO, a bad one.
But the County Attorney is also the attorney for the mayor and commission, is he not? When I tried to talk to him years ago about the Board of Education's TBOR fiasco, he cited attorney-client privilege with the Commission as the reason to ignore my concerns (the Commission must approve the Board's levy because the Board cannot levy taxes in and of itself).
If the County Attorney represents differing parts of the Unified Government as independent entities and maintains separate attorney-client privilege with each of them, then this situation is even worst than I thought.
Upon reflection, perhaps I phrased my thoughts poorly. I meant that City Hall could bring this matter to a halt by directing the County Attorney not to pursue it any further, not by telling the Board of Tax Assessors what to do.
The County Attorney represents all parts of the Unified Govt. So, yes, he is the attorney for the M&C. He does not represent, to my knowledge, the BOE. They have their own Attorney. And, no, the M&C cannot direct him to stop working on the case, as in this specific instance he is working for the Tax Assessors and not for the M&C.
Yes, the Board of Education has its own attorney. If I recall correctly, he came from the same firm as did the County Attorney (not that such would signify anything, and I may be mistaken in any event).
The situation you describe for the County Attorney would seem problematic in its implementation (at the very least) to me.
No, the assessors and the attorney answer to our elected government. Imagine if they didn't? Not sure that'd be a democracy ...
Otherwise, very fine narrative re Nuci's victory over the ACC M & O. Personally, I feel that the storm water 'fee' is another example of how our local government has tried to get around the tax exempt shield.
Under well established federal law, the government cannot tax churches or other 'tax exempts.' (Um, what part of 'tax exempt' does ACC not understand?!)
I'd agree that the elephant in the room seems to be the government's insatiable desire for more tax revenue. This is why they went after Nuci's (tax exempt) and it's why they call the storm water tax a 'fee.' No matter how much you might like our elected folks, allowing them to bend the rules and call taxes fees -- just to evade federal law -- is both dishonorable and corrupt.
"No, the assessors and the attorney answer to our elected government."
This is not really true/ accurate -- or is at least a gross distortion of what happens. The members of the Board of Assessors are appointed by the Mayor and Commission. After appointment, they are independent and the M&C does not get to tell them what to do (think of the process as being like the Congress approving federal judges; after appointment the Congress doesn't get to tell them what to do). In fact, you wouldn't want the M&C to be able to tell the Tax Assessors what to do as every time they (M&C) needed more revenue they could simply tell the Assessors to inflate the value of houses. It's set up this way for a reason, and that's the reason, to prevent this.
Yes, the Attorney is appointed by the M&C to a two-year contract. However, he serves several masters -- M&C, Tax Assessors, Tax Commission -- and has separate attorney-client privilege with each. If he is working on a case for the Tax Assessors then he does not have to reveal that to the M&C.
The Stormwater fee is a fee, not a tax. Churches are exempt from paying taxes but not fees for service, otherwise they wouldn't have to pay for water and sewer. As it is they essentially get free fire protection. The reason for the stormwater utility is because it is requierd by the feds so that ACC can have its NPDES permit which allows them to provide you with clean drinking water. The money for providing the infrastructure has to be paid for one way or another. If it were not paid for using the stormwater fee and were paid for using property taxes then every property-tax paying person (but not every property owner [ie churches, UGA etc]) would have to pay. This way the those owning property tax exempt properties have to pay. Would you prefer that only those with taxable property paid and approximately 40% of the property in the county got a free ride?
We you say 'set-up-that-way' this implies that our elected leaders have a say? It doesn't matter how you slice it, in a democracy we elect folks to run the levers of government. They certainly can change the process if they want; voters can see through the mirage and they see a government that spends too much! The manager certainly DOES hire and fire the attorney. In very many GA counties, for instance, elected leaders have variously canned assessors or even dissolved whole offices; it's not that you don't know what you are talking about, it's that you are a craven liar!
If you'll look up the definition of a tax, you'll see the sw fee fits. For instance, no other surrounding country uses that mechanism to fund the mandate; and ACC is not unique in that it is non-exempt from that mandate.
The 'fee' WAS sold as a way to address the fact that so much land is 'tax exempt' in ACC. Even a simpleton would recognize that as 'motive' in a court-of-law. This fee is doomed, if you ask me. The fact that one SC Judge allowed it is very thin backing.
"We you say 'set-up-that-way' this implies that our elected leaders have a say? It doesn't matter how you slice it, in a democracy we elect folks to run the levers of government."
Yes, but it is not the local folks who set up the system. There's a little thing called the State Assembly and the State Constitution that separate the elected officials and the Assessors for the very reason stated above -- that if the elected officials had direct control over the assessors then they could direct them to inflate the value of properties, perhaps selectively, whenever they felt they needed more revenue.
Now, the M&C can remove the Assessors for cause, but not just because they don't like a decision they make. Of course, they are free to not reappoint them when their term expires, but that is a different issue. And, again, the M&C do not have the power to tell the Assessors what values houses should be nor how to run their office on a day-to-day basis nor whether or not to pursue legislation like in the Nuci's case. The regulations that set forth the procedures for how assessing the value of property are goverened by the State Dept of Revenue.
"The manager certainly DOES hire and fire the attorney."
Er, no he doesn't. The Attorney meets every two years with the M&C who decide whether or not to renew his contract. The Clerk of Commission and the Auditor do likewise.
"If you'll look up the definition of a tax, you'll see the sw fee fits. For instance, no other surrounding country uses that mechanism to fund the mandate; and ACC is not unique in that it is non-exempt from that mandate."
To my knowledge the surrounding counties are not big enough populationwise to be required to have a stormwater utility for NPDES purposes. But, for those in other parts of Georgia that are required to have such a utility, they have a choice of how to fund it -- with a fee or with property taxes. As I stated above, it could have been funded by property taxes here in ACC but then many institutions (UGA, churches etc) who contribute to the problem would not have paid anything to address it. Had they chosen to fund it out of property taxes (and remember, it's a federal mandate) then you would no doubt be pissing and moaning about that.
"it's not that you don't know what you are talking about, it's that you are a craven liar!"
Big words from someone who has no clue.
"We you say 'set-up-that-way' this implies that our elected leaders have a say? It doesn't matter how you slice it, in a democracy we elect folks to run the levers of government."
Yes, but it is not the local folks who set up the system. There's a little thing called the State Assembly and the State Constitution that separate the elected officials and the Assessors for the very reason stated above -- that if the elected officials had direct control over the assessors then they could direct them to inflate the value of properties, perhaps selectively, whenever they felt they needed more revenue.
Now, the M&C can remove the Assessors for cause, but not just because they don't like a decision they make. Of course, they are free to not reappoint them when their term expires, but that is a different issue. And, again, the M&C do not have the power to tell the Assessors what values houses should be nor how to run their office on a day-to-day basis nor whether or not to pursue legislation like in the Nuci's case. The regulations that set forth the procedures for how assessing the value of property are goverened by the State Dept of Revenue.
"The manager certainly DOES hire and fire the attorney."
Er, no he doesn't. The Attorney meets every two years with the M&C who decide whether or not to renew his contract. The Clerk of Commission and the Auditor do likewise.
"If you'll look up the definition of a tax, you'll see the sw fee fits. For instance, no other surrounding country uses that mechanism to fund the mandate; and ACC is not unique in that it is non-exempt from that mandate."
To my knowledge the surrounding counties are not big enough populationwise to be required to have a stormwater utility for NPDES purposes. But, for those in other parts of Georgia that are required to have such a utility, they have a choice of how to fund it -- with a fee or with property taxes. As I stated above, it could have been funded by property taxes here in ACC but then many institutions (UGA, churches etc) who contribute to the problem would not have paid anything to address it. Had they chosen to fund it out of property taxes (and remember, it's a federal mandate) then you would no doubt be pissing and moaning about that.
"it's not that you don't know what you are talking about, it's that you are a craven liar!"
Big words from someone who has no clue.
Sorry for the double post -- damned infernal computer!
I hear ya!
Hey, getting more tax money is even easier than pressuring the assessors to up the valuations!
The M & O vote to raise the millage rates.
But my-oh-my, imagine how land values might zoom in a housing bubble; and then imagine how tax revenue would zoom? And not one elected leaders lifts a finger to bring about a stupendous increase in spending money ...
But then the assessors will LOWER valuations AFTER the bubble ...?
Noooooooo ....
Don't work that way!
:)
PS: The city attorney is not an independent agent; he/she answers to the elected government. You are SO craven!
Yes, the M&C set the millage rate. So what's your point?
The M&C does not determine the assessed value. It's the Assessor's office, as stated about 3 times already.
As I pointed out, the M&C hire the Attorney with a two-year contract. They can decide to not renew him at the end of that period, or they can fire him and have to buy him out of his contract before then. But the Attorney is neither hired nor fired by the Manager, and he works for several different parts of the govt and has attorney-client privileges with each.
But thanks for playing.
Doesn't it bother you that the people who complain the loudest and most bitterly about the local government are incredibly ignorant of the laws, structures, policies, etc. ?
"The Government" is not some monolithic creature with a single controlling entity and that's a VERY GOOD thing! However, it makes it difficult for the simple-minded to really understand how it all works. But, alas! That never keeps the simple-minded and ignorant from exercising their constitutional right to rant and rave and form their strong opinions based on misinformation.
It has ever been thus...
Oh, yes, it's REALLY confusing for me!
Hmmmm. I though Louise McBee or someone like that actually sponsored and passed a law in the Gen Assembly that EXEMPTED Nuci's space? So confusing.
I guess local government has its own rules, and state laws don't apply, here? That's why it's OH so confusing!!
"I guess local government has its own rules, and state laws don't apply, here? That's why it's OH so confusing!!"
Apparently you don't read much. You know, there's those 3 branches of govt, with the job of the legislative branch being to write laws and that of the judicial branch to interpret them. No one is saying that the local govt is exempt from following the law. What the Assessors are doing is seeeking clarity on it -- the fact that they have won some rounds and lost some on the way to the Supremes and that the Supremes were divided 4-3 and even one of the 4 didn't join in the opinion suggests that the law is far from clear.
But, again, thanks for playing.
Um, they lost. And will again ...
But, now, common sense is as prevalent in our government betters as it is in their apologists ...
Whatever you do, don't ask any elected officials if they support or oppose Berryman's folly!
That would be TOO much!
Berryman doesn't get to decide which cases to pursue. He can advise them on whether he thinks they have a good case and whether he thinks it's winnable but if "they" (in this case it's Assessor's office) decide to pursue it then he doesn't have the option of declining unless he wants to just quit his job. But, the next attorney would still have to do what his/her client directed so...nothing to be gained there.
BTW: the mayor gets to choose which attorney to recommend; that choice has to be ratified by a majority vote of the commission. The manager has absolutely nothing to do with hiring or firing the attorney. The attorney is not answerable to the manager in any way and the mayor and commission do not have any authority to stop the attorney from working on cases for other parts of the government. If they fired him for pursuing a case that they didn't like that was brought by the Assessors or any other legitimate government entity then they would be way overstepping their authority and any court in the land would hand them their heads.
Most of the commission would prefer that the Nuci's case had never been started and that it would end right now but, it ain't their call to make and they know it.
Sadly, that doesn't keep our local morons from suggesting that the commission has some personal vendetta against Nuci's or that they're just looking for more tax money. Are those helicopters black?
Bullshit, sir, you are a bald faced liar!
The attorney IS hired and fired by Heidi Davison and she most certainly could tell him to back down. The truth that you and you minions don't want to admit is that the mayor and the commission are behind this bid because the government needs the money!
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