Neo-Pagan Group Wins Tax Exemption

ALBANY, N.Y. (CN) - New York's high court told two municipalities Tuesday that real estate owned by a theater group and a neo-pagan sect should be exempt from property taxes.

In both cases, the use of the property "was reasonably incidental to" the purpose of the nonprofit organization that owned it, the Court of Appeals said.

The ruling upheld Appellate Division decisions in complaints brought against local assessors by Merry-Go-Round Playhouse Inc. in Auburn; and Maetreum of Cybele , Magna Mater Inc. in Palenville.

Merry-Go-Round began as Auburn Children's Theater in 1958. Today it operates a year-round youth theater that tours the state during the academic year and a professional summer stock theater that stages large-scale musicals in Auburn, a city in the Finger Lakes about 30 miles southwest of Syracuse.

To recruit summer talent, the theater group formerly leased apartments to house actors and staff. As operations grew and leasing became a headache, the group purchased two apartment buildings in the city in 2011 with a total of 30 units.

Only theater actors and staff live in the units and Merry-Go-Round receives no income from the properties.

When the theater group applied to the city as a nonprofit seeking an exemption from property taxes on the buildings, it was turned down. An appeal to a city review board was denied.

The group turned to Cayuga County Supreme Court, which ruled that it failed to meet the parameters of real property tax law of being a tax-exempt entity and using the buildings for a purpose related to its primary function.

That decision was reversed in early 2013 at the Appellate Division. The city then took the case to the Court of Appeals.

Chief Judge Jonathan Lippman, writing for the unanimous court, found on Tuesday that "the primary use of the apartment buildings is in furtherance of Merry-Go-Round's primary purpose" of promoting arts and education.

He also said the theater group "is organized exclusively for an exempt purpose," unaffected by the "commercial patina" of admission charged for its performances.

Lippman likened the case to others in which hospitals and colleges that provided housing to staff and faculty members were held to be entitled to tax exemptions because the property helped them fulfill their missions.

The theater group, he wrote, "established that the housing is used to attract talent that would otherwise look to other theaters for employment, that the living arrangement fosters a sense of community, and that the staff spends a significant portion of its off-hours in furtherance of theater-related pursuits."

Lippman noted that while the court had not previously addressed tax-exempt housing for an arts organization, "the statute does not elevate one exempt purpose over another."

Rather, "the use of the property to provide staff housing is reasonably incidental to petitioner's primary purpose of encouraging appreciation of the arts through theater."

In the Palenville case, the court similarly found that property used by the neo-pagan sect was in furtherance of its exempt purpose.

Maetreum of Cybele, Magna Mater is a nonprofit religious corporation that owns 3 acres in rural Greene County, about an hour south of Albany near Catskill. The property includes a former inn with 12 bedrooms, a caretaker's cottage, several outbuildings and an outdoor temple.

According to court records, Maetreum is the corporate entity for the Cybeline Revival, a faith founded in 1999 by Cathryn Platine but with ancient origins.

Platine writes on the sect's website that its full name translates as "Home of the Great Mother Cybele" and that the group observes "the principles of what we call Wholistic Feminism, our mission of charitable outreach." She says the group has traced Cybele back as far as 10,000 B.C. to an area in modern Turkey.

The sect received tax-exempt status from the Internal Revenue Service in 2005, but the town of Catskill rejected its requests for property tax exemptions in 2009, 2010 and 2011.

After its administrative appeals were rejected, the group filed three petitions for relief with the Greene County Supreme Court. After a nonjury trial, the petitions were dismissed because "the religious and charitable uses of the subject property were incidental to petitioner's primary, non-exempt use of providing affordable cooperative housing," according to an unsigned memorandum from the Court of Appeals.

The Appellate Division reversed the decision last fall, finding that testimony at trial - where the sect called four witnesses and the town offered none - showed that the group used the property "primarily for its religious and charitable purposes" and so was entitled to the property tax exemptions.

The Court of Appeals agreed, finding that the sect "adequately established its entitlement to the [real property tax law] exemption, as the proof at the trial established that the petitioner 'exclusively' utilized the property in furtherance of its religious and charitable purposes."

All seven judges of the court concurred on the memorandum.

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