Every year in St. Louis County, on the fourth Monday in August, more than one thousand properties are placed on the auction block. County revenue officials and eager bidders converge on council chambers to divvy up land on which owners have not paid property taxes for three years.
The tax-delinquent citizenry are warned in advance that their real estate will go to the highest bidder if they haven't paid at least one year's worth of back taxes. The deadline is auction day.
"We have a flurry of activity right before the tax sale: people coming in and paying the oldest year due, just to get their property out of the sale," says Richard Robison, manager of revenue services.
One prominent plot that escaped auction this year was the $3.8 million, 55-acre Spanish Lake spread belonging to Applied Scholastics International, the Church of Scientology-associated nonprofit tutoring program that is trying to gain a foothold in St. Louis public schools. [For more on Applied Scholastics, see "L Is for L. Ron" in the October 26 issue of the Riverfront Times.]
Since purchasing the property in 2001 for $2.9 million, Applied Scholastics has paid just one year's worth of property taxes. Now, the organization owes St. Louis County nearly $350,000 and has until next August to make good on at least some of that debt.
The organization has been fighting to obtain a tax break for more than a year, saying its educational mission led the federal government to grant it a charitable status back in 1972.
But the county's not convinced. First, the St. Louis County Board of Equalization turned Applied Scholastics down, saying its tutoring programs operate like a business by charging fees for so-called moral-improvement classes. And now the county council sees no reason to overturn the board's decision.
"Most of what we heard was about their programs in Belize and other countries. And that was really a concern of mine," says St. Louis County Councilman Kurt Odenwald. "I want to know what they're doing in the county. Are their teachers certified? Do people get degrees? Are county residents taking their classes?"
Applied Scholastics spokeswoman Mary Adams suggests that the latest scrutiny of her group amounts to a witch hunt.
"Somebody is trying to insinuate we're something other than what we are," Adams says. "The real question is why the county is trying to tax an organization recognized for 30 years as a charitable, educational and tax-exempt organization by the IRS."
Counters Odenwald: "We really have to make sure we're exempting for an educational purpose."
Adds Rita Casey, supervisor of the Board of Equalization: "Otherwise, I could say I'm teaching kids in my basement and get an exemption."
Odenwald asked Applied Scholastics in September to furnish the council with more detailed information about the organization's effectiveness and its county-centered educational efforts.
"If we find out it really isn't a school, and what's being used is just for the internal religion [of Scientology], that would affect our underlying decision," he says. Odenwald expects the council's revenue committee to forward its recommendation to the full body for passage within the next few weeks.
Municipal land-use and tax lawyers say the conflict amounts to differing interpretations of a broad state law.
According to that statute, property-tax exemptions are reserved for parcels "actually and regularly used exclusively for religious worship, for schools and colleges, or for purposes purely charitable and not held for private or corporate profit."
Between 250 and 300 charitable groups apply every year for exemptions, and only about half are granted, county officials say.
"If you're the county, you don't go: 'Bang, that's it, you're 501(c)(3) and federally tax-exempt, so you can have the tax status locally, too'," says Jerome Pratter, a St. Louis attorney who has fought the county over this issue before.
Case law has left the burden on anyone seeking tax breaks to prove that their organization provides direct benefits to society, Pratter adds.
"I wouldn't bet a dollar on either side in this case," he concludes. "But so far everybody is doing what they're supposed to, which is dig for the facts. And my guess is the loser will end up in court, because there's a substantial amount of money involved."
It would not be the first time a Scientology-associated group and St. Louis County have sparred in the halls of justice.
In 2003 the Church of Scientology, which has local headquarters in University City, filed a lawsuit against the Board of Equalization for declaring the church taxable. That case is still pending.
A 1977 Missouri Supreme Court ruling denying the Church any property-tax exemptions was the basis for the board's and council's actions, Councilman Odenwald says. The high court held that Scientologists were not religious because they didn't worship the Supreme Being. But Odenwald recognizes that other states, such as Florida, have in recent years cut the Church a tax break. "Might the court apply a different standard today? It might."
The county, meanwhile, has shown little inclination to aggressively pursue the back taxes owed by Applied Scholastics.
"We'll send out a delinquent notice just before the tax sale," explains Nancy Key, coordinator for the county's collector of revenue. "But we're not like a collection agency that keeps calling and calling."