Archdiocese wins case against San Francisco

A judge has made final his ruling in favor of the Archdiocese of San Francisco in a dispute with the county assessor, who had sought to impose millions of dollars in taxes on church properties.

On Jan. 9, San Francisco Superior Court Judge Richard Kramer made final a tentative ruling in favor of the archdiocese he issued on Nov. 18, 2011, ending a three-and-a-half-year legal battle.

“In a fight to preserve the freedom of religious organizations to restructure, the Archdiocese of San Francisco challenged an attempt by San Francisco Assessor-Recorder Phil Ting to impose a 20 million dollar transfer tax bill on an internal reorganization involving Archdiocesan parish and school properties,” the archdiocese said in a Jan. 10 press release. 

“As I have previously stated, ‘The family of Archdiocesan civil law corporations has simply been reorganized to better enshrine the centuries old principles of church law concerning the uniqueness of parishes and schools,’” said archdiocesan general counsel Jack Hammel in a prepared statement. “‘The courts in recent years have said that if you claim that your parishes and schools are unique under church law then show it in your corporate structures and related articles and by-laws. We have done that. Each corporation is a spoke in the Archdiocesan wheel and the ecclesiastical office of the Archbishop is the essential ‘hub’ of that wheel. Intra-church transfers within a wheel of this nature are not subject to transfer tax. It is as simple as that.’”

“This has been a very frustrating experience,” Hammel said. “From the outset, Mr. Ting and his chief assistant in the Recorder’s office, Craig Dziedzic, refused to recognize well-established law on this subject. This refusal and the repeated delaying tactics that we encountered over the past three and a half years, caused a considerable disruption to the charitable activities of the Archdiocese.”

The attempted levy was described by the assessor’s office as “the second largest transfer tax event in our city’s history,” and stemmed from the internal transfer within the archdiocese in 2008 of 232 pieces of church-owned property. Ting determined that the transfers were the equivalent of “sales” and therefore subject to property taxes.

The archdiocese appealed Ting’s ruling to the San Francisco Transfer Tax Appeals Board, which voted unanimously to uphold the assessor’s findings, prompting the archdiocese to file its lawsuit in Superior Court.

In an April 21, 2010 statement announcing the suit, the archdiocese characterized the appeals board as “all City Hall administrators,” and said established law was “overwhelmingly in favor of the Archdiocese.”

“The Archdiocese maintains that to impose transfer taxes, penalties and interest on a religious organization in connection with an internal restructuring involving no exchange or receipt of money from which to pay any tax is inequitable and threatens to confiscate substantial Church assets that are devoted to religious purposes,” said the 2010 archdiocesan statement announcing the lawsuit.

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.

In a June 12, 2009 story, Catholic San Francisco characterized the archdiocese’s attempt to overturn Ting’s decision as “a fight to preserve the freedom of religious organizations to restructure.” The newspaper said the archdiocese had made the same kind of property transfers in Marin and San Mateo counties and that neither county sought to impose transfer taxes.

In announcing Judge Kramer’s tentative Nov. 18 ruling, the archdiocese said the court had correctly held “that under the San Francisco Ordinance no tax could be imposed because the Archdiocese did not ‘sell’ this property and that the transaction was merely a change in corporate form. The Court further held that state law precludes the City from imposing such a tax.”

“Ironically, if Mr. Ting’s office had been successful, the tax would have drained, not filled, the City’s coffers; it would have cost the City an enormous sum to replace the services now being provided with this money, such as schooling for thousands of children,” said archdiocesan spokesman George Wesolek in the November statement. “The Assessor/Recorder apparently expected the Archdiocese to roll over in the face of this attack, but underestimated the resolve of the Church. It is unfortunate that the Assessor/Recorder’s miscalculation forced the Archdiocese to spend more than three years and hundreds of thousands of dollars in attorneys’ fees to defeat this illegal action, but the Archdiocese is hopeful that the Assessor/Recorder’s office will now be dissuaded from taking similar measures in the future.”



Posted Wednesday, January 11, 2012 6:42 AM By HGP
The secularists will not be dissuaded from any future action of this sort. This is one way they use to try to destroy the Catholic Church which speaks out with the truth. They got the Church to spend “hundreds of thousands of dollars in attorneys’ fees to defeat this illegal action” and they should be counter sued for the recovery of all monies and time spent. That will probably not happen. More parishioners money wasted.

Posted Wednesday, January 11, 2012 7:05 AM By JMJ
Mr. Ting should now be forced to reimburse the Church for the expenses that he caused out of his own pocket. +JMJ+

Posted Wednesday, January 11, 2012 8:47 AM By Bud 
In retrospect of course, it certainly looks to me that recorder, Phil Ting INITIALLY made errors deliberately but who was actually behind it? Wasn’t the city at least responsible for the diocese’s loss?

Posted Wednesday, January 11, 2012 9:25 AM By MD
I think this is something that not only Catholics should be upset about because of the deliberate attack on the Church by Mr. Ting, but non-Catholics alike because Mr. Ting wasted time and money of all the tax payers in this fraudulent tax bill which resulted in litigation. Praise God the tax was not withheld.

Posted Wednesday, January 11, 2012 12:06 PM By St. Christopher
The Archdiocese must now sue for costs and perhaps consider bringing a “constitutional tort” type action against Mr. Ting, if not other supervisors. This is aggressive and may not be successful, given immunity of elected officials, but some effort must be made to seek payment from, and give embarrassment to, the people that sought to bring the weight of the State down on the Church. Do not let up, as the City will not be humbled by this loss, at least not yet. These are pagans united against Christ, not much different than Roman emperors that put the first Christians into the areans against wild beasts. This issue is not even close and the City knew it. They did it to show off their liberality to their base and to try to imtimidate the Archdiocese. Not even close — keep your heel on the City’s throat, Archbishop, do not let up.

Posted Wednesday, January 11, 2012 1:18 PM By Tota Tua
it is exempt as is a transfer of property from individual ownership into a trust. this was done deliberately. Ting deserves to be recalled.

Posted Wednesday, January 11, 2012 4:15 PM By The other Mike
These Progressives will spend the City into oblivion if they think it will hurt the Church. This time it backfired on them. They really don’t care how much damage they do to everything around them as long as the Church is damaged or tarnished in some way.

Posted Tuesday, January 17, 2012 5:54 PM By JLS
The point of the US and state govts having terms of elected politicians is to avoid bloodshed. In recent times the public seems to be losing its recourse to unseat crooked politicians. This situation is one more little tick on the tick of time reminding us all that responsibility costs lots more than giving up one bag of chips and a six pack of beer and an hour of TV weekly.