Johnson County synagogue will have property taxes abated

IOWA CITY – A synagogue does not have to pay property taxes accrued over the past several months, a split Johnson County Board of Supervisors decided Thursday in a decision that touched on the tax-exempt status of religious institutions.

The supervisors voted 3-2 to approve the request from the Agudas Achim Congregation to abate an estimated $28,650 in taxes for the property at 401 Oakdale Blvd. in Coralville, where the congregation is moving after nearly 100 years in Iowa City.

The abatement covers the period from when the congregation took possession of the property on Dec. 21, 2011, through June 30, the end of this fiscal year.

Religious institutions typically are exempt from property taxes. But an application for such a request is due with the county by Feb. 1, and that exemption then applies to the following fiscal year starting July 1.

Because Agudas Achim didn't purchase the land until December, it didn't have a chance to meet that deadline and the full tax period was already levied and taxed for, county Treasurer Tom Kriz said.

Further complicating matters, taxes in Iowa are collected about a year in arrears, or at the end of a period. So the taxes in the time frame in question are payable this September and March 2013, Kriz said.

Tom Gelman, treasurer of the Agudas Achim board of trustees and an attorney, said the congregation filed for the exemption in a timely fashion, in late December. But Iowa law means tax-exempt entities are exposed to a five-to-17-month window when buying property.

In 2007, the Iowa Legislature amended state law to give county supervisors the power to abate taxes for property that would have been exempt but was acquired after the Feb. 1 deadline.

Gelman and fellow Agudas Achim board member Carrie Norton told the supervisors the congregation was not seeking special treatment but instead believed all recognized houses of worship should receive an abatement in these situations.

This is believed to be the first time the matter arose in Johnson County since the law changed, but Gelman said it won't be the last.

“So what we're really looking for is a policy, for that policy to be thoughtfully approached … and applied in a consistent way,” he said.

Sally Stutsman, Terrence Neuzil and Pat Harney voted for the abatement, saying religious institutions should not have to pay property taxes.

“I'm of the opinion that the (tax) amounts are moot,” Neuzil said.

Board Chairman Rod Sullivan and Janelle Rettig were opposed. Responding to Gelman's request for consistency, Sullivan said he has never supported a tax abatement.

Rettig noted that the budgets for the county, city of Coralville and the Iowa City school district, which would have collected the approximately $28,0000 in taxes on the property, are already set and will take effect July 1.

“This will be a budget cut for them,” she said.

Gelman said the congregation negotiated with the seller payment of taxes for the bill up until the closing date on the property, as is common, but the seller would not pay for the rest of the year.

The new synagogue should be ready by late fall, Gelman said.