Borough officials are asking for assembly approval on Thursday to take a property tax conflict to the Alaska Supreme Court.
The conflict is over whether Camp Li-Wa should have a full religious purpose property tax exemption. The camp’s exemption was partially revoked by the borough assessor in 2018 after 32 years when it was determined that the camp derived some income from secular activities.
Wasilla-based Victory Ministries of Alaska, which operates the camp, maintains that religious and charitable organizations are allowed to make money from minimal secular activities and keep their tax exemptions under state law.
The borough maintains that by granting a property tax exemption to the camp, commercial businesses are having to compete with the commercial activities of institutions claiming a tax-exempt status.
Both Alaska law and borough code provide that “property used exclusively for nonprofit religious, charitable, cemetery, hospital, or educational purposes” is exempt from taxation. On income-earning property, it is exempt “only if that income is solely from use of the property by nonprofit religious, charitable, cemetery, hospital, or education groups. If used by nonprofit educational groups, the property is exempt only if used exclusively for classroom space.”
An element of the conflict that has delayed resolution is questions around who is the proper authority to handle Victory Ministries’ appeal.
A state judge has at least twice said it’s the Fairbanks North Star Borough’s responsibility to process the appeal. The borough wants the matter settled in state court.
According to a memorandum to the assembly by borough legal counsel, last year Victory Ministries agreed to a settlement. The nonprofit submitted new information to the borough assessor, which “issued more detailed findings of fact and conclusions of law” concerning its partial denial of the tax exemption.
Victory Ministries appealed again and also filed a motion asking the court to enforce a previous order. Superior Court Judge Michael McConahy has held that questions of fact and law should be heard before the agency in a position to offer remedy and sent the case back to the borough.
Either side may take the case to state court after the Board of Equalization, which hears property tax disputes, has made findings, the judge wrote.
The borough’s Board of Equalization specializes in valuation appeals and is not the proper venue for this type of tax exemption appeal, according to borough officials.
In the memo to the assembly, borough legal counsel wrote that a recent lower court order in the case is improper and misstates the law.
“Rather than rule on this issue, the court issued a nunc pro tunc order (an order that essentially rewrote its previous decision) and granted Victory’s appeal that it previously dismissed,” the memo reads.
“As a matter of law, courts cannot, on their own initiative, use a nunc pro tunc order to rewrite a final appealable order,” according to the memo.
Borough attorneys hold that the burden was on Victory Ministries to prove that it is entitled to the exemption, but the court incorrectly placed the burden on the borough assessor to show sufficient evidence to revoke the exemption.
Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough.