Forbes blogger sees "ominous" rumblings in ruling. A trend afoot?
A tax court in Oregon ruled that a local parish’s rectory is not exempt from property taxes, and one observer at least wonders if the case may be the start of a trend.
The case stands out as the rectory is not on the same property as the parish church
The Oregon Tax Court in May approved the Clatsop County Assessor’s denial of an exemption for St. Mary Star of the Sea Catholic Church in Astoria, Oregon, whose rectory is about a mile and a half from the church.
During the trial, Father Todd Molinari, Vicar for Clergy of the Archdiocese of Portland, testified that Canon Law requires priests to reside in a rectory near the church they serve. Canon 533 obliges a pastor to "reside in a rectory near the church.” The canon is interpreted as requiring a rectory “within the territory of the church parish,” Father Molinari said.
According to an account by Peter J. Reilly, who blogs about tax law at Forbes, Father Molinari said:
He began by explaining that the Church operates under the concept of “sustenance,” which means the local parish has to provide for the basic necessities of its priest. The particular requirements within a given archdiocese are usually spelled out in the policies of that archdiocese. The rectory must be within a reasonable distance to the church facilities, and provide a place for the priest to sleep, cook his meals, do his laundry, and have an area for study. The rectory must also have space for an assistant priest in the event there is one, and for seminarians studying for the priesthood who would be given a temporary assignment at a rectory. The rectory must also have space for visiting priests. The rectory is to be used for the purposes of the priest’s ministry.
Father John Tran, pastor, also testified, saying he uses the rectory as his full-time personal residence and that he prepares homilies at the rectory. He testified that it takes him less than five minutes to get from the rectory to the parish by car.
But, according to Oregon law, as quoted in the court decision, the exemption for property owned by religious organization covers "houses of public worship and other additional buildings and property used solely for administrative, education, literary, benevolent, charitable, entertainment and recreational purposes by religious organizations, the lots on which they are situated, and the pews, slips and furniture therein. However, any part of any house of public worship or other additional buildings or property which is kept or used…for any purpose other than those stated in this section shall be assessed and taxed the same as other taxable property."
Reilly said that case law has evolved a two-prong test for tax exemptions for clergy residences. "The official living in the residence must be required to live there by either church doctrine or practical necessity and the proximity of the residence to the house of worship must be necessary to further religious objectives," he said.
"The Oregon Tax Court saw the proximity as not being necessary to further religious objectives," he said. The court decision noted:
Although Tran does write sermons and homilies at the rectory, those duties do not require close physical proximity to the church. Tran could prepare those messages anywhere in Astoria, including the church, where he has at least one office. The other uses of the rectory have no direct connection to the church; they certainly do not require a rectory in close proximity to the church. There was generalized testimony about the availability of guest bedrooms for visiting priests, deacons, and seminarians, but no specific testimony or other evidence that such officials have stayed at the subject property and, if so, how many and how often they were there. Assuming such church officials did in fact visit and stay overnight at the rectory, they could have slept in a residence anywhere in Astoria, regardless of its location with respect to the church…. Tran does meet with his parishioners, but those meetings are all scheduled to take place at the church.
The court also noted that there is "no specific statutory grant of exemption for Catholic rectories," and that each case must be examined individually—a comment that Reilly considered "ominous."
"It would seem that many church rectories … would flunk the test laid out by the Oregon Tax Court," Reilly wrote. "It will be interesting to see whether this becomes a trend."