In Beaufort, questions raised over proposed fee for churches, schools, nonprofit groups

emoody@beaufortgazette.comJune 1, 2013 

A public-service fee that would be charged to nonprofit groups, churches, schools and other organizations that do not pay property taxes in the city of Beaufort is raising concerns for some of their leaders.

"Tax-exempt" should mean precisely that, according to Beaufort Memorial Hospital president and CEO Rick Toomey.

"We do not believe institutions that support the community through charitable actions should be taxed," Toomey said.

The fee was broached in March as a way to increase the city's revenue. On May 15, city manager Scott Dadson included it in his budget recommendations for 2014. The public-safety fee, also referred to as a "fee in lieu of taxes," would offset the cost of police and fire protection, Dadson said.

He proposes that organizations be charged 0.1 percent of the appraised value of non-taxable property and says that could generate about $300,000 annually for the city.

City Council would need to hold a public hearing and vote twice on any new fees before they could go into effect. It must also approve the annual budget.

City attorney Bill Harvey said he believes the fees would be legal, though he concedes he has not done extensive research on the topic.

"Municipalities can levy fees, assuming they are done uniformly," he said.

There are 533 tax-exempt properties in the city, worth a combined $334,681,520, according to city finance director Kathy Todd. All but 44 of those -- which are federal or state owned -- already pay stormwater fees, she said, amounting to more than $135,000.

The U.S. government owns the largest chunk -- property worth $61.6 million. The city itself owns property worth $40.4 million, and Beaufort County holds $30.3 million worth. Beaufort County School District owns $28.7 million that would otherwise be subject to property taxes. The remainder is divided among churches, utilities, cemeteries, the Technical College of the Lowcountry, the University of South Carolina Beaufort, and nonprofit groups, among others.

The school district pays stormwater fees, so chief operational services officer Phyllis White believes it is possible it could also be forced to pay a public-safety fee. That fee likely could be paid without raising school taxes, she added.

"It was surprising that they chose to consider this route," she said. "I could see entities like the hospital and the school district, but the churches, that's a little tough. They're supported by people's donations. Of course, we're supported by tax dollars, though."

Of all of those tax-exempt organizations, Beaufort Housing Authority is the only that already pays a fee in lieu of taxes -- between $25,000 and $28,000 annually, Todd said.

The federal Payments in Lieu of Taxes program is designed to help offset property tax losses to municipalities with land owned by the U.S. government, according to information Todd provided. State and federal laws outline specifically what is applicable.

Toomey said the hospital, which owns $18.6 million worth of property according to the city, gives back enough already.

"Last year, we provided over $22 million of charity care," he said. "Almost 40 percent of our patient volume come from residents within the city. We feel that we help meet many of the needs of the city by providing critical health care services. Maybe the city should help offset our cost of care."

Other organizations want to know more about the fees, their legality and how they would be implemented before saying much. Trustees of Carteret Street United Methodist Church, for instance, are looking into the proposal and its effects, according to its pastor, the Rev. Susan Ulmer.

"I know it has been part of our heritage as Americans that churches aren't taxed," she said.

Lowcountry Habitat for Humanity executive director Brenda Dooley said that while she believes the nonprofit organization could handle the fees, it would detract from its mission.

"Any extra money we have to spend is obviously a concern for us," she said. "We're a small community and all of the nonprofits are trying to raise money from the same pots of money, and that can be a struggle.

"On the other hand, if those are things that the city needs to provide those services, then I suppose we'll have to pay."

Follow reporter Erin Moody at twitter.com/IPBG_Erin.

Related content:

New fees recommended for city of Beaufort drivers, nonprofit organizations

As a tighter budget looms, Beaufort considers penny-sales tax, April 26, 2013

City of Beaufort discusses fees, penny sales tax options, March 19, 2013

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