Stafford, Texas, a Houston suburb of fewer than 20,000 people, has 51 churches. On Sunday mornings, the town swells with commuting church members, clogging roadways and public spaces with congestion that civic leaders can't afford to solve. The tax-exempt houses of worship occupy so much of the city's seven square miles that tax revenue can barely cover police, fire, and schools, never mind new development. The predicament has pushed government officials to explore legal pathways to block church growth.
In Pittsburgh, the local government has taken a different tack, approaching religious congregations and other nonprofits to ask for voluntary donations. Some give but most do not, keeping these "payments in lieu of taxes" well beneath the potential public revenue businesses could generate on the same land.
Such fiscal realities have soured relationships between municipalities and churches nationwide. The Becket Fund, a nonprofit legal group that defends religious freedom, is flooded weekly with new reports of churches and local politicians butting heads over land use issues. Anthony Picarello, the Becket Fund's vice president and general counsel, says cities frequently complain of traffic or environmental concerns but often their true beef against churches stems from the loss of tax revenue.
Pastor Jeff Vanderstelt of Soma Church in Tacoma, Wash., believes he may have a solution-one that doesn't involve bitter public lawsuits or backroom negotiations. For the past two years, Vanderstelt has paid every dime of property tax on his church's building as if it were a business. That's because it is.
When the opportunity arose in 2005 for Soma to purchase the building in which it meets, Vanderstelt avoided typical church fundraising efforts. He took no special facilities offering and refused to sock his congregation with a massive mortgage. Instead, he established a for-profit LLC independent of the church and acquired financing from friendly investors at 8 percent interest.
Consequently, Soma does not own its urban campus but leases it from Vanderstelt's company at a highly discounted rate. And the church is not the only tenant. Telecommunications juggernaut AT&T and a private recording studio lease space in the building's basement, and other businesses periodically rent the facility for various events, generating enough income to completely cover the mortgage and tax burden. Last year, Vanderstelt's company operated in the black, donating its extra earnings to the church to provide salary raises for the staff.
The benefits of Vanderstelt's innovative approach extend far beyond finances. Because Soma's building is owned by a business rather than a church, schools and other public entities are not wary of using the facility for official events or programs. Soma also opens its space regularly for art or music festivals, providing further benefits to the city beyond tax revenue.
That open house philosophy has helped integrate Soma church members into the broader community and has elevated Vanderstelt among the city's respected business and civic leaders. Predictably, Soma faced no public resistance in acquiring a second building earlier this spring to accommodate its rapid growth. The new facility, purchased with the formation of a second LLC, will lease space to a café and culinary arts school to cover its costs. The city of Tacoma views such expansion as a boon to its finances and purposes.
The prospect of such friendly relations served as Vanderstelt's primary motivation in creating his unique model. "We knew that every time a new building gets turned over to a church or a property turns into a church, the city loses money," he said. "We asked ourselves, 'What would it look like to have the city see our presence as a contribution rather than something that takes away from the city's tax base?'"
The idea was born in Vanderstelt's mind due to past experiences at several megachurches, where he witnessed the kind of adversarial relationship that politicians and church leaders often share. During a three-year stint as youth pastor at Willow Creek, a church of 20,000 people in South Barrington, Ill., Vanderstelt questioned the wisdom behind a $90 million building project that exhausted resources and harmed relations with the very community the church aimed to serve.
"We had to hire a whole PR department to deal with all the problems the building caused," he recalled. "The city was saying, 'We have to pay for the traffic problems that you've created, but you're not paying to the tax base to take care of it.' It created a pretty bad image of the church in the community."
Comparable public image problems exist throughout the country. The Religious Land Use and Institutionalized Persons Act (RLUIPA), federal legislation Bill Clinton signed into law in 2000, gives churches ample legal leverage to sue cities that attempt to block them from purchasing huge chunks of land for buildings and parking lots.
RLUIPA has proved an important statute in defending the free exercise of religion from undue permit burdens born of anti-religious bias. Prior to its passing, municipalities often gave preferential treatment to large retail stores like Costco or Home Depot over tax-exempt megachurches.
But even pastors who have benefited significantly from RLUIPA protection in court admit that the law has pushed cities to automatically view large churches as pushy neighbors and unstoppable drains on public resources. Picarello said the Becket Fund counsels churches to exhaust every good-faith remedy to land-use disputes before considering a lawsuit. "Litigation is an unpleasant proposition," he said. "A lot of ministers have a combination of scriptural and common-sense concerns about suing."
Nevertheless, as the number of megachurches grows, so too does the number of lawsuits. Vanderstelt hopes that his model can help alleviate some of that strain. Several church planters in California have contacted him intent on replicating the idea, and he has begun publicizing it within the church-planting network to which he belongs.
Picarello generally views such conciliatory measures as preferable to litigation but warns that churches offering voluntary tax payments or operating as businesses could create expectations among local government officials that other churches are unable to fulfill. He contends that the philosophical basis for tax exemption, namely that churches provide valuable social services in lieu of taxes, requires a robust defense against politicians who increasingly doubt its merit. Churches paying taxes, Picarello says, might unwittingly legitimize those doubts.
Some municipalities have already made attempts at rolling back tax exemption, but such efforts have little chance of success, according to Evelyn Brody, a professor at Chicago-Kent College of Law and author of Property-Tax Exemption for Charities: Mapping the Battlefield. Brody says that although property-tax exemption is not constitutionally protected, it is so entrenched in societal precedent that "towns are going to have a hard time challenging it in the courts."
No matter whether churches remain exempt, Vanderstelt believes the onus lies on them to prove they are not drains on society: "When I think about how we live the gospel in our city, one of the primary things that drives that philosophy is that we should be willing to bear more pain on our shoulders than we create."
He contends that a less centralized approach that avoids massive building projects goes a long way toward accomplishing that noble aim-and carries spiritual benefits, too. "The church is now defined by its existence in a community all week long rather than its gathering in a building once a week," he said. "It finds its greater identity in its mission in the city. The weekly gathering becomes an equipping and a sending versus the end point."