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Tax collector, Kanuga reach settlement on exemption

Kanuga Conference Center, which faced the possibility of paying more than $1 million in current and back taxes and penalties, reached a settlement with the Henderson County tax collector that will save the Christian retreat $707,000 while making most of its property taxable in the future.

Under a settlement approved Tuesday by the county’s Board of Equalization & Review, Kanuga Conferences Inc. will pay $355,982 in taxes on its real property and its furnishings and equipment — known as business personal property — for 2020, 2021 and 2022 but will avoid paying back taxes, interest and penalties for 2016 through 2019 as the tax collector had originally demanded.
After examining the revenue generated by the lodging and meeting facilities on the retrreat center campus for the previous five years, Tax Collector Darlene Burgess made a determination last year that its hospitality business violated the terms of nonprofits under state law, resulting in her order to revoke its nonprofit status for tax purposes.
During a daylong hearing in December, Burgess said her office monitored Kanuga’s web-based marketing and promotions to the general public and turned up many instances where it rented facilities for non-religious uses.
“Between 2016 and 2021, many events have been held at Kanuga Conferences that are inconsistent with the statutory provisions” granting a tax exemption for religious organizations, Burgess told the Board of E&R. “Kanuga uses the property to hold for-profit commercial events open to the general public and inconsistent with the religious-based mission for which the exemption was granted.”

Examples, she said, included non-religious conferences and meetings, weekend getaways and high-profile recreational events. On its website, Kanuga promoted its lodging for up to 440 guests, the renovated 61-room Kanuga Lake Inn, 39 historic cottages and six guest houses plus meeting space, dining halls, indoor and outdoor chapels and numerous recreational amenities, including the lake, climbing wall, tennis, shuffleboard and pickleball courts and miles of hiking and mountain bike trails.

Kanuga CEO Michael Sullivan and the retreat’s attorneys, Anderson Ellis and Brian Gulden, argued that the conference center always adhered to its religious and education mission even if the events it hosted were not strictly religious.
“People come to Kanuga for what it is — a camp and conference center associated with the Episcopal church,” Sullivan testified in December. “Most people that book a room at the Holiday Inn don’t want a lot of priests around nor loudspeaker prayers nor a cross in every room without a television.”
Under the agreement, just 10 percent of Kanuga’s real property will be exempt, including outdoor chapels, Camp Bob and the sanctuary, while going forward the rest of the land and buildings plus its business personal property will be taxable — based on values of $17.75 million and $1.98 million respectively.
Burgess urged the Board of E&R to accept the settlement.
“I believe that it reaches our overall goal of maintaining an equitable tax base,” she said. “I agree with everything that’s in the settlement and I would urge the board to accept it.”

Ellis told the tax board that while neither party concedes factual or legal arguments made by the other they agreed to the settlement to avoid further litigation.

Sullivan continued to maintain that even though some non-religious events took place, the retreat that serves the Episcopal Church never strayed from its faith-based work.
“What I would say is we will continue the same mission,” Sullivan said after the Board of E&R unanimously ratified the settlement. “It may change how we market but for me how we’ve marketed has been consistent with our mission. Sharing gospel is sharing gospel. There will still be crosses in every room. There will still be a cross on the lake. If you were there last week you would have seen us blessing every single building and every single department. It’s Holy week. We’re the same people who keep doing the same things we’ve always done. I am glad that this cloud is over though.”