Mississippi law allows counties to exempt some fraternal and benevolent organizations from the property tax rolls, but no one is watching to see if they are living up to the requirements for the exemption.
The Bay-Waveland Yacht Club created a stir when it was learned a few weeks ago that it has had such an exemption for a couple of years. That exemption happened quietly, without any public notice or discussion, until one club member, who also is chairman of the Hancock County Alliance for Good Government, found out.
“It just shocked me,” said Lana Noonan of Waveland, a 40-year member of the club. “That’s not who the (Bay-Waveland) Yacht Club is. We don’t want that image in the community.”
She said the exemption saves the club about $20,000 a year, or about $3.58 a month from each of its 445 members.
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Property taxes pay for Bay St. Louis and Hancock County government services and also support the Bay-Waveland School District. So those entities can either cut or scale back services or raise revenue through higher taxes for other property owners.
Meanwhile, the Bay-Waveland Yacht Club, Noonan said, still would call the police if it is burglarized or the fire department if it catches fire.
And all the club had to do to qualify for the exemption, according to Tax Assessor Jimmie Ladner, was change its charter to make it a perpetual benevolent fraternal organization. It then filed a report with the Secretary of State’s Office reflecting the changes.
“A fraternal and benevolent organization for the common purpose, promotion and pleasure of doing good works related to boating, racing, athletics and related activities,” the report says in part.
That document also said the club is not a tax-exempt nonprofit under IRS rules and said it does not solicit donations. Ladner said he had no choice but no exempt the club from ad valorem taxes.
The Secretary of State’s Office said it was simply a repository for the information and does not have an oversight role on county exemptions.
“Once they do the necessary legal filings to meet the requirements of the law, the statute says the following properties shall be exempt from taxes. It doesn’t say the following properties may be exempt from taxes,” Ladner said. “I’m going to be completely candid, I asked for their charter and their bylaws. I’m the assessor. That’s what I require to show proof of what you are. Your charter and your bylaws.”
And, Ladner said that’s as far as his oversight goes.
“How they operate their day-to-day things, I don’t know that,” he said. “No more than I would know how the VFW operates or the American Legion operates or any other organization that falls under the same statutes.
“I understand the optics on it are terrible — that people may not like it. I don’t think you want public officials that pick and choose which laws they’re going to obey.”
He said there are 4,398 properties that are exempt, the vast majority of them belonging to a government entity.
The state statute also says that “any part rented or from which revenue is received shall be taxed.” And the club does rent out some of its facilities for weddings and such, according to its website.
This month, Noonan asked the Board of Supervisors to require Ladner to report all applications for exemptions each month. They refused.
Yacht Club Treasurer Chris Roth, a former commodore, said the original intent was to protect the club.
“We had been looking into over the years how we could assure the club properties could not be sold for the specific benefit of stockholders,” he said. That led it to amend its bylaws, he said, to say the only benefit to stockholders would be the par value of the stock, $100. The rest of the proceeds of the sale would go to a foundation “for the benefit of the sailing community.”
“Through research on the perpetuation issue we were made aware that based on our current activities, engaging with the local communities, we might be eligible to apply for the tax exemption” Roth said. “So we did further research and found that other organizations similar in nature to ours qualified for the exemption. So we presented to the tax assessor our petition requesting the tax exemption and it was granted to us.”
Noonan is skeptical.
“You can put anything on paper,” she said.
Roth said they also let high schools use their facilities for social events. The club also lets DMR store and launch boats, allows search and rescue teams to use their facilities, and sponsors safety classes for the public. Civic clubs can use the facilities for their functions, he said.
“We host national and international regattas that attract hundreds of out of town guests who support our local businesses,” he said. “We sponsor high school regattas and collegiate competitions. We support Coastal Cleanup and other conservation initiatives. We hosted the first Bridge Fest after Katrina.”
Roth said the club does charge for its sailing camps but it also offers scholarships to some campers.
“I don’t see it in the Jib Sheet (the yacht club’s newsletter for members) or any of the paper,” said Noonan.
And, on the Club’s website, there is no mention of scholarships in the application form. It also says the club cannot be rented by nonmembers, although members can host events for nonmembers. Again, all its packages come with a price tag.
Others exempt, too
Property tax exemptions for yacht clubs aren’t rare. In Harrison County, every yacht club except the Pass Christian club receives an exemption on at least some of their property.
Tax Assessor Tal Flurry backs up Ladner’s interpretation of the law
“They’re covered under 27-31-1 for different types of properties that can be exempt,” he said. “Things like this, the Elks Lodge, that are chartered in a certain way.”
And, he said, the organization only has to produce a copy of the charter with the Secretary of State’s Office to prove that they should be exempt.
Pass Christian, he said, is chartered as a for-profit business. Biloxi’s clubhouse is exempt but its marina, where it has slips for rent is on the tax rolls. Gulfport and Long Beach’s clubs are exempt, he said.“When all of this came up years ago, we obtained from them copies of their charters to show that they should be exempt,” Flurry said.
The state Department of Revenue says has oversight role in certain economic development exemptions but not those granted to perpetual or fraternal benevolent organizations, such as the Yacht Club.
“Most other ad valorem tax exemptions are administered outside the oversight of the Department of Revenue,” said Jeff Foreman, director of the DOR Exemptions and Public Utilities Bureau, wrote in an email to Ladner. “Under current Mississippi law, case laws and guidance from the Attorney General, the duty to determine eligibility for such an exemption lies solely with the county. The Department of Revenue plays no role in the approval of such exemptions and, as such,there is no requirement for any information regarding such exemptions to be filed with the department.”