No tax break for S.C. religious network

S.C. won't exempt Inspiration Networks from property tax in hard-hit Lancaster Co.

06/18/2009 12:00 AM

01/08/2010 1:53 PM

South Carolina has denied the Inspiration Networks' request for a tax exemption on its campus in Indian Land – a move that over time could bring millions more in property taxes to economically distressed Lancaster County.

The state's decision follows Observer stories last month showing how the network became one of the world's fastest-growing religious broadcasters. With a budget that reached nearly $80 million last year, the network has raised much of its money by telling viewers that God brings financial favor to those who donate.

Those donations have helped network chief executive David Cerullo become the best-paid leader of any religious charity tracked by watchdog groups, with annual compensation exceeding $1.5 million.

In recent years, South Carolina offered the network incentives worth up to $26 million to land its City of Light campus – a deal which has been questioned by economic development experts.

The state Department of Revenue recently notified the broadcaster that it's not eligible for a property-tax break on its 92-acre campus.

This week, Inspiration protested the state's decision. A spokesman declined to comment Wednesday about why the network believes it's entitled to a tax exemption.

If the revenue department rejects Inspiration's arguments, the network can appeal to an administrative law court. It's unclear when a final decision will be reached, state officials say.

A department spokeswoman said she could not discuss the reasons for the denial, other than to say the broadcaster didn't fall under any of the allowed exemptions.

S.C. law lets religious and charitable organizations receive property tax exemptions “as long as the property is used exclusively for the organization's purpose and no profit is realized,” according to the department's Web site.

Registered as a non-profit, Inspiration is exempt from federal income taxes.

As of last June, the network had invested about $56.5 million in the Lancaster County property, according to grant paperwork filed with the state commerce department. The county has yet to put a tax value on the property, but if it's found to be worth $56 million, Inspiration would be required to pay about $830,000 in annual property taxes, said county assessor Norman Anderson.

“That's a lot of money to the county,” Anderson said. “That could be 20 or 30 teachers.”

With an unemployment rate of 19 percent, Lancaster County is hungry for jobs and tax revenue. About 14,000 textile jobs have disappeared from the county since the mid-1990s. Lancaster, the county seat, topped a recent Forbes magazine list of most economically vulnerable towns.

Last year, the county collected a total of $13.9 million in property tax revenue.

The City of Light campus, located five miles south of the Charlotte outerbelt, is in the fastest growing part of Lancaster County, near large housing and commercial developments.

Today, the campus is home to two recently completed buildings – a 118,000-square-foot headquarters and a building that houses a bookstore and prayer center.

Inspiration officials had also promised for-profit components – including condos and a media production facility – which state and local officials had hoped would boost tax coffers. But the network has yet to begin work on those pieces.

On Monday, county council members met with network representatives in closed session to discuss their development plans. “We were assured ... that everything they said they would do they were going to do,” said Rudy Carter, vice chair of the council.

Network officials have said they faced delays beyond their control but intend to honor their development promises.

Economic development experts interviewed by the Observer said S.C. officials made costly mistakes when they agreed to provide incentives to lure the network from its home in Charlotte. The organization moved its headquarters just 14 miles – a change that experts say is unlikely to boost the local economy.

In addition to its City of Light campus, the network this year purchased an adjacent 88-acre tract of undeveloped land, according to Anderson, the tax assessor. The network's request for tax exemption covers only the 92-acre campus.

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