PJI Sues City to Protect Church From Unconstitutional Property Tax

San Rafael, CA–Representing Valley Baptist Church, the Pacific Justice Institute (PJI) has sued the City of San Rafael on the grounds that the city’s Paramedic Services Special Tax is unconstitutional as applied to the church.



Voters in San Rafael enacted the Special Tax via referendum by a two-thirds vote in 2010. Under the City’s Municipal Code, the City may tax non-residential structures within city limits at a rate of up to 14 cents per square foot. The City currently taxes such structures at a rate of 12 cents per square foot.

In January, Valley Baptist approached PJI because the City had slapped the church with a bill for more than $13,000 in unpaid taxes allegedly owed pursuant to the Special Tax. After researching the issue, PJI discovered that under California law, all taxes on real property must be ad valorem taxes—in other words, they must be levied in proportion to the property’s value as determined by assessment or appraisal. Because the California Constitution exempts real property used for religious purposes from ad valorem taxation, Valley Baptist contends that it does not owe any money to the City under the Special Tax.



Valley Baptist paid the money under protest, but only because it had to as a condition of filing suit. The church is now seeking to recover the money as well as have the Special Tax declared unconstitutional.



“The Special Tax is a de facto property tax because it triggers a duty on the part of owners of non-residential structures to pay the tax,” said PJI President Brad Dacus. “The California Constitution exempts churches from paying such taxes, pure and simple. Valley Baptist did not owe a penny to the City of San Rafael, and it’s unfortunate that the church now has to go to court to win back money that it never should have had to pay to begin with.”



Federal, state, and local governments have long granted tax exemptions to churches and other religious non-profit organizations because of the significant and beneficial social services they provide to their communities. “This concept is being lost in our generation because, sadly, church membership has declined,” Dacus said. “People in government thus unfortunately assume that churches aren’t paying their ‘fair share’ without understanding why they’re tax-exempt to begin with.”



If your church or religious organization needs assistance in a tax-related matter, contact PJI at (916) 857-6900.

​Watch the response of PJI President, Brad Dacus: