City wins appeal over tax lawsuit by church

A San Rafael church cannot claim a religious exemption to the city’s paramedic tax, a state appeals court ruled.

The ruling against Valley Baptist Church reverses an earlier decision in Marin County Superior Court. The church’s lawyers are already planning an appeal to the California Supreme Court.

If the church prevails, and San Rafael is forced to grant exemptions to all religious institutions, the revenue loss could be $140,000 to $150,000 a year, according to Nadine Atieh Hade, the city finance director.

San Rafael voters approved the first tax for paramedic services in 1979. The initial tax was for residential properties, but voters expanded it to nonresidential properties in 1988.

The tax now stands at $95 per residential property and 13.2 cents per square foot of nonresidential property in city limits and the unincorporated pockets. Marinwood’s rates are $85 and 11 cents.

“In 2015-2016, the city examined its tax rolls and determined that nonresidential properties that were designated as ‘subject to exemption’ by the assessor had been inadvertently omitted from the paramedic tax assessment, even though residential properties similarly designated were being charged,” the appellate ruling says.

“City officials rectified this oversight prospectively and sought to collect a portion of the paramedic tax that had gone unpaid.”

Valley Baptist Church on North San Pedro Road was one of the properties to receive a bill. The city sought $13,644 in back taxes over three years.

“The church will be appealing the appellate court’s ruling — the city can count on that.”

— Ray Hacke, attorney for Valley Baptist Church

The church paid the money but sued for a refund in Marin County Superior Court. The church claimed it was constitutionally exempt from the property tax because it is a religious organization. The city argued that the paramedic tax was a special tax to which the religious exemption does not apply.

The case went to trial before Judge Stephen Freccero. He ruled in the church’s favor. The city appealed to the 1st District Court of Appeal in San Francisco.

In a decision issued on Feb. 26, a three-judge panel unanimously reversed the Marin verdict, saying the religious exemption did not cover special taxes like the paramedic tax.

Ray Hacke, a lawyer representing the San Rafael church, said the appeals court “effectively altered the plain meaning” of the state Constitution's

section on property tax exemptions.

“Make no mistake: The city of San Rafael's paramedic services special tax is a property tax, as mere ownership of real property triggers its imposition,” said Hacke, an attorney with the Pacific Justice Institute. “The

church will be appealing the appellate court's ruling — the city can count on that.”

Michael Colantuono, the lawyer representing San Rafael, said, “The city is pleased with the outcome of this case. It enables the city to continue to collect a revenue

measure that its voters approved by large margins in several elections to fund vital emergency medical services to all who might need them in the city — residents, businesses and their customers, and other visitors.”

The ruling is online at bit.ly/3cqtlPo.