Two Grand County-based nonprofits that applied in February for property tax exemptions were recently denied their requests after officials made findings that the nonprofits did not provide a sufficient gift to the community, per Utah law, to qualify them for exemptions — exemptions that would have slightly raised property taxes on everyone else in the county.
While state law calls for a variety of factors to contribute to the ultimate decision on whether a property owner may be exempt from paying local property taxes, the recent conclusions boiled down to two key points, having satisfied most of the other tests: Is the property providing a community benefit, and is it providing a community gift?
Although the difference between “gift” and “benefit” might not be immediately obvious, the Utah Supreme Court does define the two terms differently in this context, and it was up to the Grand County Board of Equalization to decide whether applicants for property tax exemptions met both criteria.
On this occasion, the Board of Equalization consisted of the same seven people who sit on the Grand County Council, who, as the county council, later voted to approve the board’s decision. Grand County Attorney Christina Sloan provided legal guidance to the board during their hearings with the two nonprofits.
Friends of Arches and Canyonlands National Parks was the first nonprofit to request an exemption, and Community Rebuilds was the second. Each organization performs a variety of functions in Moab, but at question were the benefits provided by the specific properties for which they were seeking tax exemptions.
Friends of Arches sought a property tax exemption on a nine-bedroom house wherein Arches or Canyonlands employees can stay, an alternative offered to the employees to keep them from having to do apartment-hunting around town when in-park housing fills up.
While each property supports a nonprofit mission — in neither case do the owning organizations make financial gain from the properties — the bar for qualifying for an exemption is higher than merely turning no profit.
According to a 1911 ruling by the Utah Supreme Court, cited by Grand County Christina Sloan in a document about the board’s decisions on the exemptions, a property may be exempt from taxation if “the state […] is presumed to receive benefits from the property equivalent at least to the public revenue that would otherwise be derived from it.”
In answering the question of whether Friends of Arches satisfied this requirement, Jaylyn Hawks, a member of the equalization board and the county council, said that the nonprofit did not provide such a benefit.
Is it a gift to the national parks? Definitely. Is it a gift to the occupants — the successful, lucky occupants that get to live there? Definitely. Is it a gift to the community? I’m going to have to say no and, in fact, it could be construed to be a burden.Jaylyn Hawks, Grand County Council
Hawks continued by saying that the total dollar amount that Friends of Canyonlands would pay in property tax, spread evenly across other property tax payers, was not a “significant burden,” but pointed out that the list of existing property tax exemptions in Grand County is already hundreds long — now up to 378, she said — and that adding another to the list would be a “huge burden.”
In addition to the “community benefit” requirement that council members ultimately found Friends of Arches did not satisfy, the property must also provide a “community gift,” which Sloan described as a “nonreciprocal contribution to the community” that alleviates a burden that would ordinarily fall onto the state or county to handle, such as public education, public safety, care for the impoverished or housing for those who are unable to provide it for themselves.
This final distinction — who is receiving the housing and whether they could provide it for themselves — proved to be key to the board’s decision on the tax exemptions sought by Community Rebuilds.
Precedent in Utah is that housing does not constitute a burden on the state if the housing is for able-bodied, working-age adults, according to case law cited by Sloan. However, the equalization board collectively found that, although Community Rebuilds provides a community benefit, the service that the property provides — the focus for the county in this case was the housing the properties provide for interns and volunteers — is not one that courts have held to be a public burden.
“Here, the recipients of the charity (meaning, the use of the properties) is restricted to interns of Community Rebuilds, the Southeast Utah Health Department, and the Youth Garden Project, none of which are offered housing based on need,” read the conclusions approved by the county council.
The decisions on the tax exemptions were not unanimous. Not present for the proceedings was Rory Paxman, and abstaining from the vote on the Community Rebuilds matter was Gabriel Woytek, who works for Youth Garden Project, a close partner of the nonprofit.
Evan Clapper and Mary McGann had both argued for Community Rebuilds providing a community gift to Grand County, and McGann made that argument as well for Friends of Arches. Ultimately, votes by Jaylyn Hawks, Greg Halliday and Curtis Wells led to both nonprofits being denied property tax exemptions.