Property-tax change bites two schools
By Matt Russell
A change in how a former church building is taxed could pinch the finances of two Rochester charter schools.
Already facing tight budgets, Studio Academy and Adam Abdulle Academy could be forced to split $71,190 in property taxes this year at the former First Baptist building at 415 16th St. S.W., a building that previously had not been taxed.
The 46,000-square-foot building was exempt from taxes when First Baptist used it as a church. The church, now called Autumn Ridge, moved to a new building in 2005, however, and leased its former building to the two schools.
Once that change happened, the tax exemption no longer applied; state law allows the exemption only as long as the church does business there, according to Mark Krupski, Olmsted County’s director of property records and licensing.
Another factor in the change is that First Baptist charged the schools market-rate rent, so the building is considered a commercial property, he said.
Property taxes will start being assessed this year, Krupski said. It’s unlikely the county will seek back taxes from the past two years the schools have occupied the building, he added.
Autumn Ridge was notified about the property tax issue six to eight weeks ago, Krupski said. Autumn Ridge hadn’t notified the county about the change in use of its former building, he said. The issue came to his office’s attention from a series of contacts initiated by church members, attorneys and real estate agents.
On May 14, the Studio Academy board held an emergency meeting at which it unanimously approved a 15-year lease for the former church building, which it previously hoped to purchase. On Thursday, Studio Academy Director Eric Holsen said he heard the building might be sold, leading to a sense of urgency to enter into a lease as soon as possible.
Holsen added that the arts-focused school is required in its lease with Autumn Ridge to pay property taxes, something he had tried to negotiate out of the contract.
Adam Abdulle director Farhan Hussein said he thought his school, focused on teaching East African students, also would be required in its lease to pay property taxes, but he wasn’t certain.
Holsen and Farhan said they plan to challenge the county’s property tax decision, arguing that they are non-profit organizations renting from a non-profit organization.