A yearslong tax dispute between an organization that runs Christian youth camps and the Fairbanks North Star Borough has reached Alaska’s highest court.
After oral arguments Thursday, the state supreme court is tasked with considering whether to overturn a lower court ruling that sided with the borough’s assessor.
Victory Ministries says more of the buildings at its Camp Li-Wa location near Fairbanks should qualify for a property tax exemption outlined in Alaska statute. The exempt status is allowed for sites used for exclusively nonprofit religious, charitable or educational purposes, or exclusively as nonprofit cemeteries or hospitals.
Victory Ministries says the organization exists to “evangelize and disciple children and youth in Alaska for Jesus Christ through Christian camping.” The organization says its beliefs include that homosexuality is sinful and contrary to God’s design, according to the Camp Li-Wa website.
In oral arguments Thursday, Victory’s attorney Janella Kamai said the core question before the state’s top appellate court is “simple and narrow.”
“Was Camp Li-Wa used exclusively for charitable purposes during the 2021 tax year? And the answer, under Alaska’s controlling law and the undisputed facts, is simply yes,” she said.
Ehren Lohse, the attorney representing the borough, described the crux of the matter in a much different way.
“This is really a case about whether operating a retreat destination open to the general public – complete with meals and recreational activities like horseback riding, archery range, a shooting range – should be considered charitable under Alaska law, when the operation generates substantial revenue,” he said.
The borough’s assessor has repeatedly found that some buildings at Camp Li-Wa aren’t used exclusively for one or more of the tax-exempt purposes. Victory has been battling that finding in court since 2018, with separate cases filed for each tax year.
Last year, Fairbanks Superior Court Judge Kirk Schwalm ruled in favor of the borough. The ruling upheld the entirety of the borough assessor’s report about the buildings’ taxability as of 2021. That report determined that 21 of the camp’s buildings are taxable, while 22 are tax exempt. Victory then appealed to the Alaska Supreme Court, maintaining the exemption should apply to the whole operation.
The parties agree the seasonal youth camps aren’t at issue in the tax dispute. The disagreement instead relates to other offerings at the camp’s grounds, like paid horsemanship-riding lessons at an indoor arena. The grounds also have numerous spaces groups can rent for retreats and events.
Lohse says Victory has leased out the equestrian center for dog agility trials, and it’s rented other spaces to groups and individuals, like sports teams and members of the military.
“What stands out is that not every one of these groups – one, is a nonprofit; two, has their own charitable purpose; or three, is firmly connected to Victory’s purpose of promoting Christ, the gospel, through Christian camping,” he said.
Kamai said the working understanding of “charitable” in Alaska contains more wiggle room than the borough’s argument suggests.
“Contrary to the way the borough’s applying it, this court has actually applied a very broad definition of charity – more of a totality of circumstance[s] viewpoint. They look at the actual use of the property, the purpose behind the use,” she said.
Alaska Supreme Court justices posed numerous questions to both Kamai and Lohse. They asked how the attorneys are interpreting elements of relevant case law, and tried to dig into the specific way people who visited the camp’s grounds used the disputed buildings.
That line of inquiry didn’t always turn up clear answers, like in an exchange between Justice Dario Borghesan and Lohse about one of the buildings that Victory rented out for a pastors’ retreat.
“Does it come down to a question of fact – of what people were actually doing? I’m just not sure how, ultimately, this gets resolved,” Borghesan said.
“Yeah, I, I sympathize with you,” Lohse responded. “I think it could, and I think here there are not enough facts to show how the property was being used.”
Earlier in the hearing, Justice Aimee Oravec had grilled the borough assessor’s written decision for not containing clear findings of fact while determining that the properties weren't used for exclusively charitable purposes. But justices and Lohse also noted the responsibility of proving exempt status rests with the taxpayer. The superior court decision last year said Victory Ministries had not met that burden.