California Catholic Daily

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Published: June 9, 2009

Stacked deck?

Will San Francisco archdiocese get fair hearing on appeal of huge tax bill over internal property transfers?

A hearing has been scheduled for Tuesday, June 16, in an appeal by the Archdiocese of San Francisco of an attempt by the City and County of San Francisco to levy up to $15 million in property taxes against the archdiocese.

A three-member board made up of the city treasurer, the city controller and the head of the city’s real estate division will hear the archdiocese’s appeal. Two of the three appeals board members – Treasurer Jose Cisneros and Real Estate Division head Amy L. Brown – have been active supporters of same-sex marriage. Cisneros is a member of the board of directors of the homosexual-rights group Equality California, a major player in attempts to legalize same-sex marriage in California. Brown has provided instruction to city workers on how to perform same-sex marriages, and was a donor to the unsuccessful No on 8 campaign. During the campaign, supporters of same-sex marriage repeatedly called for the revocation of the Church’s tax-exempt status because of support by California’s bishops for the constitutional amendment protecting traditional marriage.

“With Cisneros and Brown as two of the three members of the review board, will the Church get a fair hearing?” asks Gibbons Cooney, writing under the heading “San Francisco Versus the Church” on the blog A Shepherd’s Voice. “I doubt it. Look for this to end up in court, where public attorneys -- paid in part by the tax dollars of Catholics -- will try to hamstring the Church.”

The controversy arose following the internal transfer within the archdiocese in 2008 of 232 pieces of property. San Francisco County Recorder Phil Ting determined that the transfers were the equivalent of “sales” and therefore subject to property taxes. The estimated tax levy proposed by Ting would be between $3 million and $15 million.

“San Francisco County Recorder, Phil Ting, has taken a step that is unprecedented in the history of the state of California,” archdiocesan spokesman Maurice Healy told California Catholic Daily in January, when news of the proposed tax levies surfaced. “He has determined that an internal reorganization of church property, without consideration, within the family of corporations of the Archdiocese of San Francisco, constitutes a ‘sale’ and is subject to a property transfer tax.”

In December 2007, Archbishop George Niederauer announced “certain corporate structure changes” in an article published in the archdiocesan weekly Catholic San Francisco. "The goal here in San Francisco has been to allow the day to day operations of our parishes and schools to continue in a cohesive, efficient manner while at the same time establishing simple ownership models that clearly distinguish the canonical assets of the parishes and schools from those of the Archdiocese in general," said the archbishop.

“The law is overwhelmingly in favor of the Archdiocese in holding that church property ‘transfers’ of this nature are exempt from transfer taxes,” said Healy in his January statement to California Catholic Daily. “The California legislature, courts, the State Board of Equalization and the Attorney General have repeatedly stated that religious corporations are merely permitted as a convenience to assist in the conduct of the temporalities of the church -- which is the real owner of church property. Counties throughout the state have recognized this fact in connection with similar corporate reorganizations in other dioceses.”

Ting told the San Francisco Chronicle in a January interview, "Because we knew the accusations (of unfair treatment) could be out there, we worked to look at every single document so we could totally and completely understand their argument. We looked at all the various exemptions that could have been applied, and we felt that none of them were applicable in this case. That meant it was our determination that this was a taxable event."

The “unfair treatment” allegation was raised in an email to the assessor’s office from archdiocesan attorney Jack Hammel, which said “the city has applied the law in an uneven fashion,” and noted that some non-Catholic charities “have transferred property to other charities and no transfer tax has been levied.”

Cooney, a longtime San Francisco pro-family advocate active in his parish, views the tax dispute from a wider perspective. “Since the mid 1990s, there has been a state of war between the government of the city of San Francisco and the Catholic Church,” he wrote. “The city and archdiocese had grown up together, in reasonable harmony, and this state of war was a new thing. What had changed? Simply this: by the mid 1990s, homosexual activists had taken power in the city. As the homosexual activists grow more powerful the war grows hotter. If you attempt to promote Church’s teaching on homosexuality in San Francisco you face an implacable enemy.”

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