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Exemption Quirks Mean Religious Schools, Certain Businesses Don’t Pay School Parcel Taxes

An Action Alameda News investigation reveals that tax exemptions mean that religious schools in Alameda, and businesses that lease property from the City of Alameda don’t pay Alameda Unified School District (AUSD) parcel taxes.

Typically, commercial leases are so-called “triple-net” or “NNN” leases, meaning that in addition to rent, tenants pay other expenses normally paid by the landlord or property owner, such as real estate, taxes, insurance, utilities and other expenses. In Alameda, the City of Alameda owns several parcels along Central Avenue between Park and Oak Streets that comprise the Alameda Theater and Cineplex complex, which houses the Cineplex, as well as Angela’s Bistro, a Burgermeister Restaurant and the Alameda Wine Company. Action Alameda News has identified four assessor parcel numbers (APN) that relate to the complex, numbers 71-203-17, 71-203-18-1, 71-203-19-1 and 71-203-20-1 and confirmed with Alameda County Tax Assessor records that those properties are tax exempt, and therefore there are no property taxes – nor school parcel taxes – to be passed on to the for-profit businesses leasing space from the City there.

Additionally, Action Alameda News has identified several parcels that are part of the St. Joseph’s Community – part of the Oakland Catholic Diocese – off of Encinal Avenue by Chestnut Street that, while exempt from property taxes, are levied with other fixed charges or special assessments, but not Alameda Unified School District parcel taxes. The community includes the St. Joseph’s Parish, St. Joseph Notre Dame High School and St. Joseph’s Elementary School.

St. Joseph Elementary School on Chestnut St..

Tax bills for parcel’s with the following APNs, show no AUSD parcel taxes. However, the Diocese apparently pays other special assessments on these parcels, such as the city sewer service and mosquito abatement assessments.

  • 71-267-2-5
  • 71-268-2-3
  • 71-244-23-1
  • 71-268-1-1

On July 13th, Action Alameda News asked Alameda City Councilmember Frank Matarrese about both City of Alameda parcels that let to businesses but don’t pay AUSD parcel taxes, and about St. Joseph’s Community parcels that are exempt from AUSD parcel taxes. He said that he wasn’t familiar with the issue but would research it. By press time, we had not heard any further from Mr. Matarrese. Matarrese confirmed that he is a parishioner at St. Philip Neri in Alameda, also part of the Oakland Diocese.

A worker at the Alameda County Tax Assessor’s office told Action Alameda News that the City-owned property, as government owned property, is simply exempt, and that nonprofit-owned property, like the St. Joseph’s parcels, are exempt from property taxes, but not from special assessments such as local school parcel taxes. Hence, those parcels are levied with the city sewer service charge and so on.

St. Joseph Notre Dame High School, 1011 Chestnut Street

AUSD Superintendent Kirsten Vital referred Action Alameda News to Robert Shemwell, Chief Business Officer for AUSD, who wrote, “The two properties that you requested information on are “tax-exempt parcels” in that their respective total assessed values are zero. In other words, they are not subject to ad valorem (1%) property taxes. The language of Parcels Taxes A&H specifically taxes only those properties which receive an ad valorem tax bill.”

Shemwell had not confirmed by press time, but he was apparently referring to this clause in Measure H:

(e) On July 1, 2008, and thereafter, the special tax shall be collected by the Alameda County Tax Collector in the same manner as ad valorem property taxes are fixed and collected under provisions of the California Revenue and Taxation Code. The special tax shall be subject to the same penalty and enforcement provisions as relate to ad valorem taxes. The special tax and penalty shall bear interest at the same rate as the rate for unpaid ad valorem taxes.

The California Revenue and Taxation Code and Article XIII of California’s Constitution provide an exemption from ad valorem property taxes for property used for churches and religious schools; by referencing the Code in the language of Measure H, AUSD has granted religious schools in Alameda an exemption from paying AUSD parcel taxes, even as those schools divert students from the public school system. Public schools in Alameda get more money for having more students – higher Average Daily Attendance (ADA) – in their classrooms.

Further, voters may not be aware that they are approving an exemption for religious schools when they vote in favor of AUSD parcel tax ballot measures with such language. Measure E, the proposed AUSD parcel tax that failed last month, includes the following language which would exempt religious schools from paying the tax:

“Parcel of Taxable Real Property,” regardless of use code classification, is defined as any unit of real property in the District that receives a separate tax bill for ad valorem property taxes from the County Treasurer-Tax Collector’s Office. All property that is otherwise exempt from or upon which no ad valorem property taxes are levied in any year shall also be exempt from the special tax in such year.

In any event, it’s not clear that AUSD is appropriately levying the existing taxes. The 2009-2010 property tax bill for APN 71-244-23-1, which comprises 1012 Chestnut Street and 1014 Chestnut Street, and comprises facilities for San Jose Notre Dame High School, shows that ad valorem property taxes were levied. However, the bill shows no assessment for the AUSD school taxes under Measures A and H. (The tax bills are reproduced below.) Action Alameda News has asked Mr. Shemwell to comment on the status for this parcel. Action Alameda News estimates that the exemptions are costing the school district from $15,000 to $20,000 per year, for the St. Joseph’s parcels alone.

APN 71-244-23-1, 1012 and 1014 Chestnut Street

1012 Chestnut Street

Saint Josephs Church and School Parcels Tax Bills

Financial reports for the Roman Catholic Diocese of Oakland show that for the year 2009, the Diocese realized over $15 million in revenue, and at the end of the year held over $200 million in assets.

10 comments to Exemption Quirks Mean Religious Schools, Certain Businesses Don’t Pay School Parcel Taxes

  • Thanks for this valuable information. So far as I’ve seen, this is the only Alameda online news site that ever does any rigorous investigative journalism. That tradition of American journalism is also woefully absent from our newspapers, which sometimes read as though they’re simply picking up press releases from organizations otherwise discredited in this town.

  • Barb

    I would assume that all state, federal, and other governmental owned parcels, (or assessment districts such as the Hospital) are exempt from school parcel taxes.

  • Government-owned parcels are exempt. Where it raises questions are places like the Alameda Theater complex, where the government leases the space to for-profit businesses that speak in favor of the school parcel taxes but don’t have to pay them like their neighboring business around the corner.

  • David Young

    I find it interesting that this “rigorous” investigative reporting noted that Alameda Public Schools make money for each “head” that attends… yet failed to mention that, in fact, the private schools save them money and educate those students for no cost to the tax payer. (The cost to educate a student in private schools is less per student than that of the cost per student in the public schools on average in the United States.) Yet, this was not investigated or reported in this article. This would seem to be an example of biased sentationalism, not investigative reporting!

  • Barb

    Tuition at my daughter’s private school was upwards of $9000 per year ten years ago, and she got a great education. Plus I had to commit as a single working mother to two days volunteer work in the classroom per month. AUSD gets much less per student now. What concerns me is the 480 plus legal (how many illegal?) out of district students that my tax dollars pay for yet, they pay nothing.

    AUSD has too much plant and too few students. It needs to focus on the basics, fire the adminstrators who want their jobs simplified to “maintain the status quo”. Even though it supposedly provides a good education, many, many parents believe as I did, that their children’s future is worth more than AUSD is capable of providing. By the time parents detect the shortcomings of AUSD, their children are so entrenched in the public school system that admission into an excellent private secondary school is lost to them.

    It is good investigative work by Action Alameda, that one does not see anywhere else, to show that the businesses who “support” the parcel tax, may not have to pay it. I asked repeatedly for proponents to say up front if they were in the 12% of households that actually had children in AUSD. Very few supporters actually would. Most of the news blogs, are reduced to parsing words and providing a forum for articulating unsupported opinions without reference to any facts. It is nice to see new facts now and then, even though we get this for free and can’t really complain if the authors don’t cover everything everyone wants covered. If there are any facts to support that the cost to educate the Alameda children enrolled in private schools is less than the cost to educate them in public schools I would like to see those studies or surveys. Don’t forget to add in all the transportation costs to take children to and from private schools in Oakland, Berkeley and across the bay. Or the lost earnings of the parents who choose to forego AUSD, and are required to participate in their children’s classroom education as well as transport their children to private schools.

  • The District is always arguing that they need more students in seats at AUSD schools to generate ADA revenue, and they justify the 400+ out-of-district students that attend AUSD schools, many of whom AUSD actively solicits, on the basis of the ADA revenue they bring in. AUSD claims the per-student ADA revenue exceeds the cost. For a district that follows that line of reasoning – whether or not one agrees with it – it’s interesting that they should carve out an exemption for religious schools.

    The point of the article was not to debate whether or not private schools cost less money than public schools, but to examine an apparent contradiction in AUSD’s policies and to highlight sources of revenue that AUSD eschews.

  • nomoretaxes

    I am very surprised that city owned properties are exempt from school parcel taxes. Thank you for the information.

  • Most significant is that those 400+ out of district students, while they bring in ADA funding, their parents pay no Alameda parcel taxes. So, in sum, they cost the district money. The only reason AUSD brings those students in is to attempt to offset declining enrollment and keep smaller schools open, and avoid laying off teachers. And we’ve discussed much of this before on this site, shouldn’t need to do so every time, because a newcomer shows up. Or someone who wishes to skew the discussion.

  • Barb

    Like I said, maintain the status quo, which is the easiest of all things to do. Bureacratically speaking of course.

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