S.F. Archdiocese to take $14.4 million tax battle to court

San Francisco, Calif., Dec 2, 2009 / 20:00 pm

Nearly two years after Archbishop George Niederauer of San Francisco initiated a corporate restructuring of the archdiocese, and a year after the city of San Francisco attempted to levy a $14.4 million property transfer tax on the archdiocese, the dispute will be moving to a civil court.

On November 30, the San Francisco Transfer Tax Appeals Board ruled orally in favor of San Francisco Assessor-Recorder Phil Ting who initiated the process to levy this tax on the archdiocese.

Noting that “more than 19 months have gone by since we first presented a straightforward transaction for recordation by City Recorder Phil Ting’s office and were met with inexcusable delays, and at times, arrogance,” a statement released by the archdiocese said, “We are glad that having exhausted the required administrative process we can finally proceed to a formal, neutral civil court forum.”

The story began in December 2007 when San Francisco Archbishop George Niederauer initiated a corporate restructuring of the archdiocese. According to the San Francisco Chronicle, the restructuring took land from the “Roman Catholic Welfare Corporation” and  the “Roman Catholic Archbishop of San Francisco” and transferred them to a new corporation called “the Archdiocese of San Francisco Parish and School Juridic Persons Real Property Support Corp.”

Conflict arose in December 2008, seven months after the archdiocese finished the restructuring, and one month after California voters approved Proposition 8 which added a defense of traditional marriage to the California constitution. 

At the time, San Francisco Assessor-Recorder Phil Ting claimed that the archdiocese owed the city $14.4 million in  property transfer taxes.

The taxes are typically collected when properties are sold or transferred to a separate and distinct legal entity.

According to the Chronicle, the archdiocese says that the taxes cannot be levied on the transfers because they were part of an internal reorganization within the archdiocese intending to create "simple ownership models" for schools, parishes and the archdiocese as a whole.

Ting's position is that the three archdiocesan corporations are legally separate entities because they have different boards of directors. 

"The city has applied the law in an uneven fashion (e.g. We are aware of non-Archdiocesan, non-Catholic charities which have transferred property to other charities and no transfer tax has been levied)," wrote Jack Hammel, legal counsel for the archdiocese, in an e-mail to the assessor's office last January, reports the Chronicle.

The transfer tax would be the second largest in San Francisco history. One of the high-value, well known properties is the Mission Dolores, a church and mission founded in 1776, long before California was a state or the city council of San Francisco had the authority to levy transfer taxes.