County Council considers property tax exemptions for nonprofits
Homeowners in Park City may see their property taxes increase this year as some non-profit organizations continue receiving sizable tax exemptions from the government.
Property used by Utah nonprofits for religious, charitable or education purposes qualifies for property tax exemptions under state law. Groups in Summit County that have benefited from the exemptions in the past have included the National Ability Center and Kimball Art Center.
Non-profit organizations defend the tax exemptions, claiming the value of their services outweighs the amount they would pay in property tax.
"What they do in return should be greater than what their taxes would be if they were to pay taxes," Summit County Assessor Barbara Kresser said. "It’s kind of a give-and-take situation."
To qualify for the tax break the property must be owned by a nonprofit, Kresser said.
The situation came to a head when a request for a property tax exemption from the United States Ski and Snowboard Association was denied by the county last fall. The group was seeking a property tax exemption for its Center of Excellence training facility at Quinn’s Junction.
Because the Center of Excellence is owned by a for-profit company, the training facility does not qualify for a tax exemption under state law, according to the Summit County Council.
The non-profit United States Ski and Snowboard Association, which leases the property from the for-profit firm, appealed the decision to the Utah State Tax Commission. Without the tax exempt status for its $22 million facility, USSA could owe a hefty tax bill to the county.
"I don’t think a for-profit lessor gets the benefit of a property tax exemption," Summit County Council Chairwoman Claudia McMullin said.
County councilpersons will wait for a decision on USSA’s appeal before deciding on requests for tax breaks from other groups.
"We’re waiting for the Tax Commission to tell us how they define education for example. We’re waiting for them to tell us, do you have to be a nonprofit that owns the property?" McMullin said in a telephone interview Tuesday.
She said scrutinizing the nonprofits is not about making money for the county.
"We’re not saying, ‘Let’s change the law on nonprofits,’" McMullin said. "We’re just saying, ‘What is the law? And let’s apply it.’"
In the case of the Kimball Art Center, space the center rents to a for-profit coffee shop may not qualify for the tax exemption.
"We would carve out that percentage so 100 percent of the building wouldn’t get the tax exemption," McMullin said.
The center is also rented out for birthday parties, receptions and the Sundance Film Festival, which could impact its property tax exemption.
"Overarchingly, in the Kimball situation, it depends how you define education," McMullin said.
State law narrowly defines what qualifies as religious, charitable and educational uses.
About 25 applications for property tax exemptions were submitted by local nonprofits in 2010, according to the Summit County Assessor’s Office.
It will be a few months before the groups know if they received the tax exemptions. State officials are expected to decide the USSA appeal this summer. Then county officials will move forward.
"Right now, it’s just in limbo. We just have everything waiting on that," Kresser said about the appeal.
According to McMullin, "Either we were right or we weren’t right."
"But I want to know so I can apply the law to the others, so I don’t get a bunch of reversals," McMullin said. "It’s not about the money. It’s do you really qualify and what have you done to prove it?"
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