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Tax Board Bans Recording Equipment In Hearing Involving Nonprofit

Grand Rapids debating whether Acton Institute is a charitable organization

The Acton Institute's renovated building on E. Fulton Street in Grand Rapids.

GRAND RAPIDS — Moments before the Grand Rapids Board of Review was to hear testimony on the denial of tax exemption status for the nonprofit Acton Institute for the Study of Religion and Liberty the Grand Rapids City Assessor announced a new rule.

"The Board of Review is prohibiting recording equipment inside the hearing," Assessor Scott Engerson told reporters gathered at the public hearing. Engerson said the Board of Review made the decision and he was simply passing on the information.

This particular hearing garnered unusual attention. Last week, the city of Grand Rapids notified the Acton Institute, a nonprofit educational and research think tank, that it did not qualify as a nonprofit charity, which could exempt it from property tax. The organization, which operates in a refurbished structure at 98 E. Fulton, faces a property tax bill of $91,000 on the renovated building and an adjacent parking lot.

Paula Jastifer of the City Assessor's office said the board made the decision to ban recording equipment at its "organizational" meeting, which was held the first week in March before the Board of Review began the process of examining current assessment complaints. She said minutes of the meeting would not be available until the end of the month. A review of the minutes from last year's "organizational" meeting is a one-page document with all of four notes. None of them mention media restrictions.

Patrick Wright, director of the Mackinac Center Legal Foundation, said while cameras and recording equipment are allowed in public meetings and court rooms in Michigan, case law involving Board of Review hearings gives no clear direction.

The Mackinac Center plans to file a complaint about the Board of Review's ban under the Open Meetings Act. 

In the meantime, Kris Mauren, the co-founder and executive director of the Acton Institute made his case to the Board to reconsider the city's decision. He said that while his organization understands the need for cities to raise tax revenue, society "believes in, and depends upon, robust civic institutions — nonprofits for the most part — that help to support the society and culture in ways that the city cannot do at any level of taxation."

He said he thinks Acton meets the definition of a tax-exempt charitable organization under the Michigan General Property Tax Act 206, section 211.n and 211.o. He also cited two examples of case law, which define "charity" more broadly than the city.

The first case involved a dispute between the Wexford Medical Group and the city of Cadillac. The other involved the Kalamazoo Aviation History Museum against the city of Kalamazoo. In both cases, Michigan's higher courts ruled those organizations meet the definition of charity under the statute.

Mauren said that in a discussion from Monday that the city attorney believes charity requires "clothing the naked, feeding the hungry and sheltering the homeless." Calls to Catherine Mish, the city attorney in Grand Rapids, were not returned. 

Acton is the only nonprofit complaint to surface in Grand Rapids this year.

The Board of Review had no questions for Mauren and said it will send Acton a notice of its decision at a future date. 

Denials of property tax exemptions for nonprofits seem to be a growing tactic of cash-strapped state and local government, said David Thompson, vice president of the National Council of Nonprofits. His organization has been tracking tax exemption denials as well as fees imposed by government on nonprofits.

"In recent years, local government has been turning to nonprofits as a new source of revenue," he said. "Nonprofits that were the jewels in the crown of a city just five years ago are now treated as scofflaws subject to the scorn of local politicians. The politicians blame the nonprofits rather than facing the budget challenges head on."

Thompson said that when government imposes taxes and fees on nonprofits, it robs organizations of things they've been commissioned to do. 

"What the local politicians see as 'found money' are in fact resources dedicated to the community that have been donated by individuals who feel the nonprofits — and not the government — are best qualified to solve local problems." he said. 

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See also:

Grand Rapids Says Nonprofit Acton Institute Not a Charitable Institution