S.C. high court rules against some church tax exemptions

By The Associated Press

01.15.03

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COLUMBIA, S.C. — Churches have to pay their share of public projects, the state's high court ruled on Jan 13.

Only owner-occupied homes and the Statehouse are exempt from assessment under the Municipal Improvement Act, the court said in a 4-1 ruling on a case involving a Charleston church.

The decision was the first time the state Supreme Court had ruled on the 1973 law as it applied to churches and nonprofit groups, lawyers said. The court said the city of Charleston could assess St. Matthew's Lutheran Church for a share of a $12 million improvement project.

"Curb appeal, even to a church, is important," said Frances Cantwell, a lawyer for the city.

St. Matthew's sued the city, saying state law excluded churches and other tax-exempt groups from paying assessments. The church appealed to the South Carolina Supreme Court after losing in Circuit Court.

The 1,200-member church can afford the $60,000, 10-year assessment because it planned for the cost, said church lawyer Kerry Koon. But, he said, "There are a lot of churches in a worse financial situations than St. Matthew's. No churches can afford an unexpected increase in their budgets."

The court cited cases from 1916 and 1931 in its ruling that municipalities can assess churches for street improvements. Associate Justice E.C. Burnett III dissented, saying lawmakers never intended the Municipal Improvement Act to apply to churches.

Several municipalities, including Charleston, Columbia and Greenville, currently charge churches storm-water fees to help pay for drainage improvement and flood prevention.

Koon said he hoped lawmakers would correct the law this session. The Rev. Richard Campbell, St. Matthew's pastor, said he could not comment because he had not discussed the ruling with church officials or lawyers.

Sharon Brennan, Charleston's economic development director, said a majority of property owners in the improvement district petitioned the city for the project and agreed to assessments. The city created the district in 1999.

Most assessments are based on values used for property taxes. Because St. Matthew's pays no property taxes, its assessment will be based only on front footage and is "generally less" than for properties that aren't tax-exempt, the Jan. 13 ruling said.