N.C. Court of Appeals Sides With Avery County: Grandfather Mountain’s Not Exempt From Property Taxes

Published Thursday, August 28, 2014 at 2:17 pm

By Jesse Wood

Aug. 28, 2014. N.C. Court of Appeals recently concluded that the N.C. Property Tax Commission “erred” in granting the Grandfather Mountain Stewardship Foundation tax-exempt status in 2013.

The ruling came down on Aug. 19, and now the foundation has 30 days from the ruling to appeal to the N.C. Supreme Court.

“Grandfather Mountain is certainly disappointed in the ruling of the N.C. Court of Appeals,” the foundation said in a statement on Thursday. “We believe the court may have interpreted too narrowly the phrase ‘wholly and exclusively used for scientific and educational purposes,’ which was the basis of the court’s decision.”

Grandfather Mountain Stewardship Foundation Director of Education Jesse Pope leads participants on a Wildflower Walk.  This year, the hike will take place Saturday, May 18 at 9 am during Grandfather Mountain's Naturalist Weekend.  Photo by Kristen Pickeral

Grandfather Mountain Stewardship Foundation Director of Education Jesse Pope leads participants on a wildflower walk during a prior Naturalist Weekend at Grandfather. Photo by Kristen Pickeral

In 2008, the N.C. Division of Parks & Recreation reached an agreement to acquire 2,456 acres of Grandfather Mountain backcountry to become Grandfather Mountain State Park. The acquisition was arranged with assistance from The Conservation Fund and The Nature Conservancy, which holds conservation easements on some 4,000 acres of the mountain.

Months later, the Grandfather Mountain Stewardship Foundation incorporated as a nonprofit “to operate exclusively for charitable, religious, education and scientific purposes.”

In 2011, Grandfather Mountain Stewardship Foundation filed for an exemption with the Avery County Tax Office. That request was denied by Avery County Tax Administrator Phillip Barrier and upheld by the Avery County Board of Equalization and Review, which handles appeals from property owners.

Grandfather Mountain Stewardship Foundation paid local property taxes in 2011 and 2012, while the N.C. Property Tax Commission took two years to hear the matter. The commission eventually sided with Grandfather Mountain Stewardship Foundation in 2013.

So in 2013 Grandfather Mountain Stewardship Foundation didn’t pay local property taxes. Barrier noted that $58,000 is the average the foundation annually pays in taxes. (Depending on how this case concludes, Barrier said either Avery County would have to return tax payments it received in 2011 and 2012 or Grandfather Mountain would have to pay 2013 property taxes.)

Avery County then filed with the N.C. Court of Appeals, which, as noted before, recently overturned the N.C. Property Tax Commission’s ruling.

Below is testimony from former Grandfather Mountain Stewardship Foundation President Penn Dameron transcribed in the recent opinion below:

Q․ On June 4, 2009, Grandfather Mountain, Inc., conveyed a conservation easement to the State of North Carolina limiting property owner to using the property for conservation and education activities. It is true that there are commercial and retail activities that take place on the site. Is that correct?

A. That’s correct.

Q. So it not entirely accurate to say that it’s limited for conservation and education activities. Is that correct?

A․ It does—as we’ve already noted, it would permit us to continue activities that were already taking place on the mountain above and beyond conservation and education.

In the case opinion, judges noted that Dameron said that the foundation recognized $1.1 million in profit in 2010 from retail sales.

However, the court opinion also did state: “The record supports that the attraction of Grandfather Mountain offers educational and scientific presentations about birds, reptiles, animals, and native flora and fauna; and that revenue from the operations on the property is used to further educational and scientific uses on the property.”

The ruling also noted that Grandfather Mountain allows other nonprofits such as the Avery County Habitat for Humanity and Humane Society and local boy scouts and girl scouts to use the facilities.

Barrier said that the county pondered on whether to continue fighting this case because of the rising legal bills, which Barrier said are “up there.” Finance Director Tim Greene said “outside counsel” fees for this case are currently $164,531.

Barrier said that “it felt like if we don’t go to battle” than attractions like Tweetsie Railroad and Linville Caverns could file for exemptions as well.

The foundation said that while its board hasn’t decided how to proceed, it continues to “evaluate all of its options” – one of which would be to appeal to the N.C. Supreme Court within a few weeks.

Just like Barrier was concerned with a precedent this ruling may set for its tax collection operations, the foundation noted its concern for how a ruling may affect other nonprofits in North Carolina.

“Other 501(c)(3) nonprofit organizations recognized by the State of North Carolina should be very concerned about the outcome of this case, as it has the possibility of setting a far-reaching precedent that harms educational and scientific organizations,” the foundation noted in a statement.

In addition the foundation said, “We want to emphasize to the public that this case has no bearing on Grandfather Mountain’s nonprofit status; it focuses solely on whether property taxes may be assessed to a registered nonprofit.”

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