By Mary Spicer
A nonprofit religious organization that recently purchased a former school building is asking the property’s former owner to forgive a year’s worth of school property taxes.
The former Cussewago Elementary School, approximately six miles north of Saegertown, was purchased from PENNCREST School District by the Mennonite Messianic Mission of the Eastern Pennsylvania Mennonite Church in late March 2012. The $60,000 price tag included the building and the 7.159-acre Cussewago Township property on which it stands.
What the purchase could not legally include was the building’s tax-exempt status.
During PENNCREST School Board’s recent study session, a letter from the board of directors of the facility now known as Cussewago Mennonite School was included on the agenda. In the letter, the Cussewago Mennonite School Board asked for forgiveness of a recently-received school property tax bill totaling $25,000.
“This is a very complex issue,” PENNCREST School Board President Luigi DeFrancesco said after the letter was read aloud by school board secretary Dinah Minnis. Directing Ted Watts Sr., the district’s attorney, to look into the matter but not setting a deadline for delivery of his report to the board, “I can’t promise anything,” DeFrancesco told the nine representatives from the Mennonite school who attended the meeting but did not request an opportunity to speak.
“We have performed extensive and costly repairs and improvements to the building, including a new roof, a more efficient heating system, and a great deal of insulating. With those changes, we have found the building very comfortable and reasonably affordable to operate,” the letter explained.
“However, we are now facing an unexpected problem,” the letter continued. “We had understood that as a nonprofit organization we would not be required to pay real estate taxes. Now we have learned that in order to be exempt in 2013, we had to apply for this exemption before Sept. 1, 2012. This we failed to do, not realizing the necessity of seeking exemption, not having been notified thereof.
“As a result, in the spring of this year, we paid $10,000 in taxes on the Cussewago building,” the letter continued. “This fall, we are being charged an additional $25,000 in school taxes.”
According to the letter, 12 families use the building as a school or place of worship. Being property owners, most of them already pay public school taxes in addition to yearly expenses of approximately $4,500 to run the school.
“It is a point of faith with us to be law-abiding and productive citizens who pay our own bills,” the letter continued. “We do not accept welfare, food stamps, dairy subsidies or social security benefits. The children enrolled in our schools cost you nothing to educate, for we accept no government assistance for our schools, not even busing. At the same time, we pay our taxes willingly, recognizing that we receive many benefits from our government.”
Noting that they have already paid twice to educate their children, “Must we pay yet a third time?” the letter asked, referring to the public school property taxes each family pays and the $4,500 “tuition” also paid. “We are not generally a wealthy people, and this is a heavy burden.”
Having been informed that only the PENNCREST School Board has the authority to forgive the $25,000 school property tax, the letter ended by stating, “Though we recognize you have no legal obligation to do so, yet we would be most grateful if you would also consider the justice of the matter, and our burden.”
A failure to communicate
“Effectively, ownership by a nonprofit organization does not in itself ensure that that property will be exempt,” Joe Galbo III, Crawford County’s chief assessor, told the Tribune Tuesday. “There is a two-step process. The organization must substantiate that it meets the qualifications as an organization for real estate exemption. Then they have to substantiate that the specific property is being used to advance their mission in a way that satisfies the (Pennsylvania state) Legislature and the appellate courts.”
In other words, “If you are an exempt organization and you are purchasing property, it is not automatically exempt,” Galbo said.
In Crawford County, property tax bills from county and local governments, whose fiscal years end Dec. 31, are mailed in the spring. Property tax bills from school districts, whose fiscal years end June 30, are mailed in the early fall.
According to Galbo, real estate tax bills are based on who owns the building on Jan. 1. When private property changes hands, the amount payable by both parties is prorated, he explained, but because the seller in this case, PENNCREST, is a government entity, the property held on to its property tax exemption through the end of the 2012 calendar year.
The deadline for applying for an exemption for 2013 was Sept. 1, 2012.
Once the annual deadline passes, there’s only one option. “You can go to the entities and ask for exoneration — approach them and ask for forgiveness of the particular tax,” Galbo said. “It would be the elected officials of each taxing district who make the decision.”
Galbo stressed that notices are sent to the buyer after the real estate transfer describing the property as having “an active taxable status” and advising that an exemption must be applied for.
“If attorneys are working with buyers, it’s up to them to advise them to do it,” Galbo said, stressing that all exempt organizations should talk to their attorneys or other legal advisors about their organization’s specific needs and what needs to be done to apply for an exemption.
“Outside of government, there is no such thing as presumed exemption,” Galbo added. “The burden is on the entities applying for an exemption to demonstrate that they are exempt.”
Mary Spicer can be reached at 724-6370 or by email at firstname.lastname@example.org.