Court will adjudicate dispute over the tax consequenences of church property used in the furtherance of the spiritual work of the parish but is also used to generate secular income

Attorneys for an Episcopal parish in New Hampshire will appear before the state’s Supreme Court in September to appeal a lower court ruling holding the congregation must pay property taxes on parking spaces it leases to local students. On 14 September 2016 the court will hear arguments in the case of The Bishop of the Protestant Episcopal Diocese in New Hampshire, A Corporation Sole d/b/a St. George’s Episcopal Church v. the Town of Durham, 15-0671, on the question of the tax treatment of dual use church properties.

In 2014 the tax assessor of Durham, New Hampshire submitted bills to St George’s Episcopal Church and the Community Church of Durham for taxes owed on the church’s parking lots. Since 1996 the two churches had leased parking spaces to students at the nearby University of New Hampshire, who were permitted to park in the lot at all times except for Sundays from 7:30 a.m. to 1 p.m., and on days where the church had schedule weddings, funerals and other parish events. The Durham assessor valued the parking lots at $90,000 and in January 2014 billed the churches $2737.

St George’s appealed the assessment, the Strafford Superior Court held the dual use of the property did not permit the church to claim a tax exemption, and upheld the assessment. Judge Steven Houran wrote: “The spaces are not being ‘used and occupied directly’ for religious purposes;” adding: “The church rents the spaces to college students, who occupy and use the spaces for their own private and secular purpose and not for the statutory exempted religious purposes of the church.”

In 2012 the state’s supreme court ruled municipalities could assess taxes on property owned by nonprofits if the land is not being used for by that organization for exempt purposes.