LDS church tax exemption affects Nauvoo, school district

Posted: Jul. 13, 2013 12:56 pm Updated: Aug. 3, 2013 9:15 pm

Herald-Whig Staff Writer

NAUVOO, Ill. -- Checks to Nauvoo property owners from the Church of Jesus Christ of Latter-day Saints will provide a partial refund on higher taxes paid this year after a change in the church's tax status on its holdings in Nauvoo.

Some church properties -- the temple, meeting house and temple president's home -- had been exempt from property taxes. But the church since the 1960s has paid taxes on its other properties in the Nauvoo area even though churches are exempt from paying property tax on religious properties.

Earlier this year, the church petitioned the state and county to apply the exemption, which was granted.

"The church has recognized that an exemption for these properties would be appropriate," said Eric Hawkins, a church spokesman in Salt Lake City. "It has taken time to work through the administrative processes associated with this change."

While tax exemptions for church properties are commonplace, the impact is greater in Nauvoo.

"There's a huge number of things going on here because of the historic significance and history of the LDS church," said Chuck Gilbert, chairman of the Finance Committee of the Nauvoo City Council. "In the case of Nauvoo, this is a fairly substantial number of properties in relationship to the total EAV (equalized assessed value) of the community, a little less than 20 percent. This took out $4.6 million in EAV."

The exemption also affected the Nauvoo-Colusa School District, which received about $132,000, or roughly 4 percent of its $3.2 million budget, from taxes on the properties, Superintendent Kent Young said.

Aware of the impact, the church offered to make an annual payment in lieu of taxes, or PILOT, to help offset the loss of tax revenue to the city and the School District.

"They had this thing all worked out to be nice and smooth, then the state threw them a curve," Gilbert said. "The state not only approved the exemption but approved it retroactively to 2012 taxes paid in 2013, after extensions had all been made."

That meant officials set the levy based on one EAV, then the taxes were extended against another EAV "which was significantly smaller," Gilbert said.

So instead of sending a PILOT to the city, the church this year is sending payments to property owners to offset the tax hike. Future PILOT payments will be made to the city.

Young said the possibility of the exemption had been talked about since at least 2002, but the approval came so quickly that officials "were a little bit shocked at first" because they assumed they would have a year to put plans in place.

"I thought this was going to be pretty damaging for the District, but once I talked to the main church out in Salt Lake City, they said they'd work out a payment for the School District," Young said. Without the PILOT, "the School District would be out that money. It's a great thing for us to get worked out."

Plans call for a five-year agreement between the church and the School District, Young said.

A similar agreement with the city will help its financial picture, but "I always hate to lose EAV which means a smaller base against which ongoing expenditures have to be based," Gilbert said. "The church has a significant impact on the community because of the large numbers of visitors that come in. Whether you're talking about the water department, sewer or fire, we may be 1,200 residents, but the fact is we're doing infrastructure for eight or 10 times that amount depending on what's going on."

Hawkins said the church has had "positive and productive interactions" with city and School District officials on the tax-related issues.

"We are grateful for their assistance," he said. "The church recognizes that it benefits from services and infrastructure provided by the city and School District and is pleased to provide this voluntary PILOT program to offset the cost of those resources."

The program, Hawkins said, will continue for five years, then may be continued, renegoiated or end.