First Evangelical Christian Church v. Cnty. of Redwood
| Docket Number | 64-CV-15-330 |
| Decision Date | 14 June 2023 |
| Parties | First Evangelical Christian Church, Petitioner, v. County of Redwood, Respondent. |
| Court | Tax Court of Minnesota |
1
First Evangelical Christian Church, Petitioner,
v.
County of Redwood, Respondent.
No. 64-CV-15-330
Tax Court of Minnesota, Regular Division, Redwood County
June 14, 2023
This matter came on for trial before the Honorable Wendy S. Tien, Judge of the Minnesota Tax Court.
John E. Mack, New London Law, P.A., represents Petitioner First Evangelical Christian Church.
Mark J Manderscheid and Andrew M. Carlson, Taft Stettinius & Hollister LLP, and Jenna Peterson, Assistant County Attorney, represent respondent Redwood County.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER FOR JUDGMENT
On May 15, 2015, petitioner First Evangelical Christian Church ("FECC") filed a property tax petition alleging that three parcels of real estate, collectively the subject properties, were exempt from property tax. Trial took place on January 5 and 6, 2023, in Redwood County. This court finds that the subject properties are not exempt from tax under Minnesota Statutes section 272.02, subdivision 2.
The court, having heard and considered the evidence adduced at trial and the arguments of counsel, and upon all of the files, records, and proceedings herein, now makes the following:
FINDINGS OF FACT
1. Petitioner First Evangelical Christian Church ("FECC") has sufficient interest in the subject properties to maintain this petition; all statutory and jurisdictional requirements have been fulfilled; and the court has jurisdiction over the subject matter of the action and the parties thereto.
2. The subject properties are located at the following addresses in the City of Clements:
a. 19 Pine Street, Property ID 81-200-0900
b. 48 and 50 Pine Street, Property ID 81-200-1080
c. 111 Pine Street, Property ID 81-200-0420
3. FECC filed articles of incorporation with the Minnesota Secretary of State and received a certificate of incorporation on December 29, 2003.
4. As of the petition date, FECC owned the subject properties.
5. At all times from the date of its incorporation, Richard L. Clements was the chairman of FECC.
6. On or about May 29, 1987, Mr. Clements filed a certificate of assumed name with the SOS to do business under the assumed name D&D Motorcycle and Corvette Repair ("D&D"). D&D performed motorcycle repair services to the public and charged a fee for its services.
7. In 2006, D&D began doing business at 19 Pine Street, which displayed signage for "D&D Motor Cycle Repair" as of the petition date.
8. On December 18, 2014, FECC applied for property tax exemption with respect to each of the subject properties, and specifically (a) regarding 19 Pine Street because it constitutes the shop ministry, the "back door" to the ministry, and its storage is "obviously" necessary; (b) regarding 48/50 Pine Street because it is a house of worship
and church office, used for the church's worship services; and (c) regarding 111 Pine Street because it serves as storage for church property.
9. On April 27, 2015, the County denied the applications as follows: (a) regarding 19 Pine Street because it was taxable as commercial property; (b) regarding 48/50 Pine Street because FECC would not allow the Assessor to view the property and the County could not make a determination concerning the use of the property or its necessity for church purposes; and (c) regarding 111 Pine Street, because the necessity of the property for church purposes had not been proven.
CONCLUSIONS OF LAW
1. FECC has not met its burden to provide sufficient evidence of the sincerity of its religious belief to warrant a determination that it is a church for purposes of Minnesota Statutes section 272.02, subdivision 6.
2. FECC has not met its burden to provide sufficient evidence that it used 19 Pine Street in furtherance of church purposes as of January 2, 2015.
3. FECC has not met its burden to provide sufficient evidence that it used 48/50 Pine Street in furtherance of church purposes as of January 2, 2015.
4. FECC has not met its burden to provide sufficient evidence that it used 111 Pine Street in furtherance of church purposes as of January 2, 2015.
5. 19 Pine Street was not exempt as of January 2, 2015. 6. 48/50 Pine Street was not exempt as of January 2, 2015. 7. 111 Pine Street was not exempt as of January 2, 2015.
IT IS SO ORDERED. THIS IS A FINAL ORDER. ENTRY OF JUDGMENT IS STAYED FOR 30 DAYS. LET JUDGMENT BE ENTERED ACCORDINGLY.
MEMORANDUM
WENDY S. TIEN, JUDGE MINNESOTA TAX COURT.
On May 13, 2015, FECC filed a Real Property Tax Petition for the Assessment year 2015, payable in 2016, asserting that three parcels of real estate (collectively the "subject properties") should be exempt from real property taxes.[1] The subject properties all are located in Clements, Minnesota and classified as follows:[2]
Table 1. Subject Properties
-
Property Location
Property ID Number
Legal Description
2015 Classification
1
19 Pine Street
81-200-0900
Lots 9, 10, and 11, Block 8, Original Clemens Plat
Commercial
2
48 and 50 Pine Street
81-200-1080
Lots 4 and 5, Block 9, Original Clemens Plat
Commercial
3
111 Pine Street
81-200-0420
Lots 9, 10, 11, and 12, Block 5, Original Clemens Plat
Commercial
After this court filed an Order to Show Cause why the petition should not be dismissed for lack of prosecution,[3] trial took place on January 5 and 6, 2023.[4] The parties filed post-trial briefs.[5]
FECC provided the testimony of Richard L. Clements, who describes himself as its president and pastor. Mr. Clements testified about the history and structure of FECC, an entity known as D&D Motorcycle and Corvette Repair, and the subject properties. The County provided the testimony of Kathy Hillmer, the County Assessor as of January 2, 2015, concerning her review and denial of FECC's applications for exemption, including the application currently at issue. Ms. Hillmer testified concerning the bases for her specific determination that the subject properties are not exempt.[6]
I. FECC, Richard Clements, and the Subject Properties
A. FECC
Before 1997, Mr. Clements and his mother had been members of Bethlehem Lutheran Church ("Bethlehem"), a church of the Lutheran Church - Missouri Synod (the "Synod"), which owned and held services at 211 3rd Street, in Clements, MN, also known as the "Church Proper."[7]
The Synod closed Bethlehem in 1997,[8] prompting a rift between the congregation and the Synod, and leading Mr. Clemens to seek to continue religious services under the name Peace Evangelical Lutheran Church.[9] Accordingly, on December 6, 1998, Mr. Clements posted a notice at the Church Proper, asking if the members of Peace Evangelical Lutheran Church should incorporate pursuant to "Minnesota Statutes, chapter 315," which concerns Religious Societies.[10] On December 21, 1998, five former members of the Bethlehem congregation met and voted to incorporate under the name "PEACE EVANGELICAL LUTHERAN CHURCH" ("Peace Evangelical").[11]
Peace Evangelical caused to be filed a Certificate of Formation with the Redwood County Recorder on May 17, 1999,[12] which describes its adoption of a Constitution and Bylaws, election of three persons as "Trustees," and selection of Richard L. Clements as "Chairman" and Patricia A. Ockwig as "Secretary."[13] Subsequently, the Synod deeded the Church Proper to Peace Evangelical on October 29, 1999, although the warranty deed was not recorded until March 16, 2000.[14] Both the Certificate of Formation and the warranty deed were prepared by an attorney.[15]
The record does not reflect that Peace Evangelical ever filed articles of incorporation or otherwise registered with the Minnesota Secretary of State ("SOS"), nor that it adopted a
constitution or bylaws.[16] On December 29, 2003, however, Mr. Clements, as incorporator, filed nonprofit Articles of Incorporation with the SOS for FECC, [17] and on December 29, 2003, was issued a Certificate of Incorporation under Minnesota Statutes, chapter 317A.[18] Mr. Clements testified that he viewed FECC as a "name change" from Peace Evangelical, rather than the formation of a new entity.[19]
FECC maintained a Constitution and Bylaws,[20] based on the former Bethlehem constitution and bylaws.[21] The adopted Constitution provided for membership criteria,[22] and stipulated that only members could vote.[23] Former members of FECC (such as expelled members) forfeited all rights.[24] The Bylaws established numerous duties and procedural formalities, calling for annual elections of trustees and elders.[25] They require the recording secretary "keep an exact record of all transactions and resolutions of the voters' assembly in both regular and special
meetings, submit minutes for approval at the next regular meeting, and enter such approved minutes in a book provided for this purpose."[26] The Bylaws also specify that "[t]he trustees shall be the legal representatives of the congregation [and] shall have charge of the property of the congregation and shall see to it that it is kept in good condition and repair."[27] "The treasurer shall keep an account of all monies received and ... shall keep accurate account of the receipts and disbursements and render a full report of his or her transactions . .."[28] Although the Bylaws make no provision for a "President" of the congregation,[29] Mr. Clements testified that he was "voted in" as "president of the Church" in 1998.[30] The record contains no evidence that an FECC congregation elected trustees or elders at any time, nor does the record evidence any meetings of FECC's officers.
Mr. Clements testified that the church "always" kept "a detailed listing of its financial accounts in the time period of 2014 through 2015."[31] The record contains no account of FECC's receipts...
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