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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
IN THE MATTER OF: APPEAL OF THE CHURCH OF YAHSHUA THE CHRIST AT
WILMINGTON from the decision of the Pender County Board of Equalization and Review
concerning property tax exemption for tax year 2000
Filed: 2 September 2003
1. Taxation_property_religious use exemption_building required
A property with no buildings did not qualify for the N.C.G.S. § 105-278.3 tax exemption
for property used for religious purposes. The statute is not ambiguous; land is exempted only to
the extent necessary for the convenient use of building. However, the building and
accompanying land need only be used for religious purposes, which may encompass activities
other than worship.
2. Taxation_property_religious use exemption_building required_constitutionality_not
A church's beliefs prohibiting worship in a building did not raise the issue of whether it
was constitutional to refuse a property tax exemption for buildings used for religious purposes
because the church as not barred by its beliefs from using buildings for non-worship religious
Appeal by the Church of Yahshua the Christ at Wilmington from final decision entered 10
December 2001 by the North Carolina Property Tax Commission. Heard in the Court of Appeals
14 May 2003.
The Church of Yahshua the Christ at Wilmington, pro se, appellant.
Robert H. Corbett, for Pender County, appellee.
This appeal arises under N.C. Gen. Stat. § 105-278.3(a) (2001), which exempts from property
tax "[b]uildings, the land they actually occupy, and additional adjacent land reasonably necessary for
the convenient use of any such building" to the extent the property is used "for religious purposes
. . . ." Appellant, The Church of Yahshua The Christ at Wilmington ("the Church"), challenges a
decision of the North Carolina Property Tax Commission. The church contends that real property
owned by the Church should be exempt from taxation under § 105-278.3 even if the land has no
buildings on it. The Church argues alternatively that if the tax exemption provided in § 105-278.3requires that there be buildings on the land, then the statute is unconstitutional as applied to the
Church because the Church's religious tenets prohibit members worshiping in buildings.
We hold that the tax exemption set out in § 105-278.3 applies only to buildings and the land
necessary for their convenient use. Because the Church admits that no buildings exist on its land,
the Commission correctly determined that the property at issue was not entitled to tax exemption
under § 105-278.3. We do not reach the constitutional question as set forth by the Church because
the Church does not contend that its members are barred from using buildings for "religious
purposes" as opposed to worship.
The Church owns approximately 50 acres of land located in Pender County, North Carolina.
For tax year 2000, the Church filed a request with the Pender County tax assessor for exemption of
this land from property taxes. The tax assessor denied the request and the Pender County Board of
Equalization and Review affirmed the decision. The Church appealed to the North Carolina Property
Tax Commission. Following an evidentiary hearing, the Commission affirmed the decision of the
Board. The Church appeals the Commission's final decision.
The Commission found that the Church is a religious body and that it owns the approximately
50 acres of land at issue. According to the Commission, there is "no formal building of worship"
on the land, but the Church has plans to construct buildings "such as an outdoor pavilion, tractor
shed, workshop, storage buildings and homes for active ministers." The Commission found that the
land is used for camping and recreational outings as well as observing nature, but further found that
the Church had failed to demonstrate that regular instruction or courses of study occur on the land.
Based on these findings, the Commission concluded that the Church failed to meet its burden
of proving its entitlement to an exemption under N.C. Gen. Stat. § 105-278.4 (2001) (exemption for
property used for educational purposes), § 105-278.5 (2001) (exemption for property owned by a
religious educational assembly), § 105-278.6 (2001) (exemption for property used for charitable
purposes), and § 105-278.3 (exemption of property used for religious purposes). Since the Church
has assigned error solely to the conclusion of law that it failed to meet its burden of proof withrespect to N.C. Gen. Stat. § 105-278.3, we review only whether the Commission erred in its decision
under that statute. In re Appeal of the Master's Mission, 152 N.C. App. 640, 645, 568 S.E.2d 208,
211 (2002) (charitable and religious exemptions not reviewed where taxpayer solely assigned error
as to the educational exemption).
With respect to N.C. Gen. Stat. § 105-278.3, the Commission noted that the Church
"contends that the subject property should be exempt because the property is used as a natural retreat
for outdoor altar services that requires extended buffers to create such an environment." The
Commission rejected this argument because the Church "failed to show that the subject land qualifies
for the exemption when there were no buildings of worship situated on the property that are used for
a religious purpose."
Standard of review
This Court reviews decisions of the North Carolina Property Tax Commission pursuant to
N.C. Gen. Stat. § 105-345.2 (2001). "Questions of law receive de novo review, while issues such
as sufficiency of the evidence to support the Commission's decision are reviewed under the whole-
record test." In re Appeal of The Greens of Pine Glen Ltd. P'ship, 356 N.C. 642, 647, 576 S.E.2d
316, 319 (2003). Under de novo review, the Court "considers the matter anew and freely substitutes
its own judgment for that of the Commission." Id.
When the evidence is conflicting, the whole-record test requires the Court to review all the
evidence in the record, including evidence contradictory to that upon which the Commission relied,
to determine whether the decision has a rational basis in the evidence. In re Southview Presbyterian
Church, 62 N.C. App. 45, 47, 302 S.E.2d 298, 299, disc. review denied, 309 N.C. 820, 310 S.E.2d
354 (1983). We may not substitute our judgment for that of the Commission, but rather must decide
whether substantial evidence exists to support the decision. Id.
The Church first argues that since it uses its land for religious purposes, it should be entitled
to a property tax exemption under N.C. Gen. Stat. § 105-278.3 even in the absence of any buildings
on the land. We disagree. N.C. Gen. Stat. § 105-278.3(a) (emphasis added) provides:
(a) Buildings, the land they actually occupy, and additional
adjacent land reasonably necessary for the convenient use of any
such building shall be exempted from taxation if wholly owned by an
agency listed in subsection (c), below, and if:
(1) Wholly and exclusively used by its owner for
religious purposes as defined in subsection (d)(1),
below . . . .
The statute is unambiguous. The focus of the exemption is on "buildings." Land is exempted only
to the extent necessary for convenient use of the building.
The Church's construction of the statute would significantly expand the scope of the
exemption to cover not only buildings, but land used for religious purposes. It is for the General
Assembly to determine what property should be exempt from taxation and when the General
Assembly has intended to exempt land, as opposed to buildings, it has done so explicitly. See N.C.
Gen. Stat. § 105-278.4(b) ("Land (exclusive of improvements); and improvements other than
buildings, the land actually occupied by such improvements, and additional land reasonably
necessary for the convenient use of any such improvement shall be exempted from taxation" if
owned by an educational institution that also owns buildings exempted from taxation). The Church's
proposed construction of the statute is particularly unwarranted given the principle that statutes
exempting specific property from taxation based on the purpose for which the property is used
should be construed strictly against exemption and in favor of taxation. In re Appeal of Worley, 93
N.C. App. 191, 195, 377 S.E.2d 270, 273 (1989).
We hold that N.C. Gen. Stat. § 105-278.3 does not provide for a tax exemption in the absence of
buildings used by the owner "for religious purposes." The Commission erred, however, in requiring
a "building of worship" for property to qualify for the exemption under § 105-278.3. The building
and accompanying land need only be used "for religious purposes." N.C. Gen. Stat. § 105-
278.3(d)(1) defines "religious purpose" as "one that pertains to practicing, teaching, and setting forth
a religion." The statute notes that "[a]lthough worship is the most common religious purpose, the
term encompasses other activities that demonstrate and further the beliefs and objectives of a given
church or religious body." Id. The Commission should, therefore, have made findings of fact regarding whether there were
buildings being used for religious purposes on the property at issue. Under the whole record test,
we may review the record to determine whether the evidence is conflicting and whether remand is
therefore necessary. See In re Rogers, 297 N.C. 48, 60, 253 S.E.2d 912, 920 (1979) (even after
determining that an error justifying remand has occurred, an appellate court may "examine the record
to see if there would have been sufficient evidence to support necessary findings if they had been
properly made"). Here, the record reveals no dispute. When asked at the hearing whether there were
any buildings on the property, counsel for the Church replied, "No, sir, there are not . . . ."
Additionally, the Church stated in its reply brief filed with this Court: "The fact that no building used
for religious purposes existed on the subject property was known to the Commission before the
hearing on the merits." Because the property has no buildings at all, it does not qualify for tax
exemption under N.C. Gen. Stat. § 105-278.3.
The Church next argues that to the extent N.C. Gen. Stat. § 105-278.3 requires a building for
the tax exemption to apply, it is unconstitutional as applied to the Church because the Church's
religious beliefs prohibit worshiping as a group in a building. We need not address the constitutional
issue as posed by the Church because the Church does not suggest that its beliefs preclude using
buildings "for religious purposes" other than worship.
In fact, the record reveals that the Church advised the Commission that the Church's "long
term plans include the construction of some buildings, principally on the front third of the subject
property. These buildings will include an outdoor pavilion, tractor shed, workshop, storage
buildings, and homes for active ministers, elderly or infirm ministers, and caretakers." Because the
Church is not barred by its beliefs from constructing buildings to be used for non-worship related
religious purposes and therefore may, without violating its religious beliefs, still qualify for the tax
exemption under N.C. Gen. Stat. § 105-278.3, this case presents no constitutional issue.
Because of our disposition of this appeal, we do not address the Church's remaining
assignments of error.
Judges MARTIN and HUNTER concur.
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