Should tax-exempt groups pay city fee?

A plan to charge churches and other nonprofit organizations a fee to move into or expand in certain areas of Greenwood has gotten some pushback from city officials.

The plan to charge a fee would apply only to churches and other nonprofit organizations within the city’s tax-increment financing (TIF) districts. Organizations and churches already located in those areas would not have to pay the fee unless they expanded, moved or bought new property, according to the proposal.

In a first vote, the fee was approved by the city council 6-2. But in a second vote, the proposal stalled with a 4-4 vote. Now, the city council is set to consider the fee again Sept. 9. In order to be approved, the fee must get a majority of votes.

Supporters of the fee say it is necessary so that the city can collect the tax dollars needed to pay back the debt on projects such as Freedom Springs Aquatic Park and the new Interstate 65 interchange and to be able to set aside money for future infrastructure work and to attract new companies to the city. If nonprofit organizations are located in the city’s TIF districts, the city loses out on tax money on the land, money that could have been collected and set aside for those projects, city officials said.

“It’s very important for us to continue to see businesses come into the city whether it’s commercial, or retail — that’s what we want — but nonprofit and tax-exempt decrease the value of an area,” Greenwood Mayor Mark Myers said.

“We don’t want to discourage nonprofit or tax-exempt, but if they’re going to come into (TIF) areas we expect them to make payment in lieu of taxes.”

But some council members raised concerns about the nonprofits that would have to pay the fee.

Council member Thom Hord voted against the proposal because tax exemption for nonprofit organizations was established specifically to help those types of entities, Hord said.

Hord has served on church staffs, and he runs The Refuge, a nonprofit that helps feed the hungry and also serves as an after-school program for kids. He has seen how tax exemption helps nonprofit organizations, he said.

“In my opinion, it’s not the right way to collect,” Hord said.

Under the proposal, a nonprofit organization in a TIF district would be required to pay a fee that would be equal to how much they would pay in property taxes, which would be calculated using the assessed value of the property and the total tax rate. The money would then go to the redevelopment commission, which manages money in the city’s TIF districts, according to the proposal.

The city’s TIF districts are centered around the municipal airport, downtown, Fry Road, east of Interstate 65 and the east side of the city.

If a church or organization is already in a TIF district, it would not have to pay the fee. But if that group bought new land, expanded or built a new facility, it would have to pay the tax on the value of that newly built property, according to the city’s proposal.

The city already has been making that push. In February, Goodwill agreed to pay taxes as one of several conditions it and the city agreed on in order to build a warehouse near Emerson Avenue and County Line Road.

At the Aug. 3, city council meeting the council gave an initial approval to the fee. Hord and Bruce Armstrong voted no. On Aug. 17, a second, tie vote failed to move the fee forward, with Hord, Armstrong, Ron Bates and Mike Campbell voting against the tax.

Hord said the details of what makes a nonprofit or tax exempt organization subject to the fees are too vague.

According to the proposed ordinance, a church or nonprofit located in a TIF district prior to the change is grandfathered in and won’t have to pay the fees. But if that organization decides to expand the facility or buy a different property, the new property or addition would be charged the fee. And if an organization that has been located in Greenwood moves into a new facility or office located in a TIF district, then it also will have to pay the fee.

Campbell said he initially voted for the tax but changed his vote because the wording makes it hard to draw a distinction between what requires an organization to pay a fee and what does not.

“The problem I have is some churches, if they’re in TIFs and grandfathered in but want to expand, those churches will have to pay the fee. I have a problem with churches paying that,” Campbell said.

The intent of the proposal is to protect the value of TIF districts and the city’s investment in those areas, the corporation counsel Krista Taggart said.

The city isn’t trying to discourage nonprofit and tax-exempt organizations, Taggart said. Nonprofit organizations provide valuable services and jobs. The fee is meant to direct nonprofit and tax-exempt groups to build or expand in areas outside TIF districts, unless they’re willing to pay the fee, Taggart said.

Corey Elliot is a reporter at the Daily Journal. He can be reached at or 317-736-2719.