A Superior Court judge Nov. 18 issued an opinion that would throw out an attempted multimillion-dollar "delinquent" tax bill imposed on the Archdiocese of San Francisco by the San Francisco assessor-recorder after a more than three-year legal fight.
Judge Richard A. Kramer issued a 43-page "Tentative Statement of Decision" in favor of the archdiocese. A case management conference is scheduled for Jan. 9.
The archdiocese fought the attempt by Phil Ting, head of the Office of the Assessor-Recorder, to impose transfer taxes on more than 200 parish and school properties involved in an internal reorganization by the archdiocese.
The archdiocese maintained that the effort came despite the fact that the city's "documentary transfer tax" ordinance, as it is called, applies only to property "sold" in San Francisco and specifically exempts internal reorganizations of this kind.
The church also countered that state and federal law have long recognized that intra-church reorganizations such as this are not transfers and are not subject to such taxes.
According to Catholic San Francisco, the archdiocesan newspaper, Ting's effort to collect the tax had been supported by the city's Transfer Tax Review Board, consisting of three city employees, which concluded the archdiocese was not exempt from a transfer tax. In April 2010, the archdiocese filed suit against the city.
In his ruling, Kramer ordered the board to set aside its finding and to issue another rejecting the determination by Ting that transfer taxes are due on the property transfers.
Kramer agreed with the archdiocese's central arguments: The transfers were not property that was sold, and the transfers were a change in the form of ownership that did not make them subject to transfer tax.
The assessor-recorder's office acknowledged that it had never before levied such a tax, that no other county has ever done so and that it has never taxed similar transactions even by for-profit companies, the archdiocese said in a statement after the ruling.
The archdiocese also noted that the proposed tax had the illegal effect of charging the archdiocese a fee to exercise its constitutional right to organize according to its religious needs. In view of his other findings, Kramer found that it was not necessary to address the constitutional argument.
"The Archdiocese of San Francisco is delighted that the Superior Court has vindicated the position the archdiocese has taken all along," said George Wesolek, director of communications for the archdiocese.
"The land and buildings involved are all used to serve the nearly half-million families and children in the archdiocese's parishes and schools and countless others," he said, noting that the tax would have had "had a crippling effect" on the parishes and schools.
"It would have chilled the missions of this and all churches, religions and nonprofit organizations in the city, and would have sent ripples through the for-profit community as well," Wesolek said. "Fortunately, the court saw through this attempt."
Wesolek continued, "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 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."
In his ruling, Kramer stated that each party may submit proposed revisions to the "Tentative Statement of Decision." He added that they may not reargue the substance of the matters decided, but rather shall be limited to such things as the accuracy of citations to the administrative record.