Should Valentine churches that house for-profit day cares be taxed?
Two Valentine churches opened their doors to help address a growing child care shortage. Now, the portions of those buildings used for day care could become subject to property taxes.
VALENTINE, Neb. — Two Valentine churches opened their doors to help address a growing child care shortage. Now, the portions of those buildings used for day care could become subject to property taxes.
The nonprofit Valentine Children and Families Coalition recently partnered with Saint John’s Episcopal Church to open a day care in the church’s basement. The coalition leases the space for $1 per year. Two years earlier, the coalition helped launch another child care program inside the Presbyterian Church. That church charges $300 per month for the space, covering utilities such as water, garbage, electricity and heat.
Church members said they spent two years planning for the Presbyterian day care, and for the past two years of operating it, no concerns about taxes were ever raised.
“If nothing else, we want to be grandfathered in because we were told that this would be okay,” said Caroline Leonard with the Presbyterian Church. “We were not in the market to have a daycare in our church, but we were approached by a non-profit to fill a need.”
Like many Nebraska communities, Valentine is facing a significant child care shortage. Jill Joseph-Austin, executive director of the Valentine Children and Families Coalition, told county commissioners the previous assessor indicated taxing the churches would not be an issue.
But newly appointed assessor Melissa Bancroft brought the question to the commission, arguing that when a tax-exempt nonprofit houses a for-profit business, the portion used for that business should be taxed.
“It’s not that I’m taxing the entire church. I’m taxing the portion that’s being used for a for-profit business,” Bancroft said.
Bancroft said failing to tax the space could set a precedent allowing other nonprofits to lease property to for-profit businesses without tax consequences.
“I think we have to make a standard,” Bancroft said.
County commissioners opted to delay a decision while they review tax codes and seek further guidance. Still, some signaled support for the churches’ efforts.
“I do think commissioners have the power to disagree with the assessor. I do realize though that it opens up a can of worms,” said County Commissioner Martin DeNaeyer. “But we are definitely supporting this and what they are trying to do.”