Guest Post by Tavo T. True-Alcala
The Islamic Center of Nashville (ICN) recently filed a federal complaint and request for declaratory judgment against the State of Tennessee, the Metropolitan Trustee of Nashville, and the Tennessee State Board of Equalization after it was denied a request for retroactive property tax relief.
Since 1995, ICN has operated a religious school, the Nashville International Academy (NIA), an independently operating but related entity. To finance a new educational building, while still adhering to the Islamic tenet against interest-bearing loans, ICN entered into an Ijara agreement through which an entity related to Devon Bank held the property’s title until payments on the finance agreement were complete. The agreement lasted from August 2008 until October 2013, during which time ICN and NIA exclusively operated on the property, with no oversight by Devon Bank or its related entities. During this time no taxes were paid by the Bank or its related entities on the property, nor did it take any depreciation on the property for tax purposes.
In February 2014 ICN applied for a property tax exemption for the building, to be applied retroactively, seeking continuity of exempt status as provided by Tenn. Code Ann. 67-5-212(b)(3)(B). The tax exempt status was denied for the period prior to October 2013, when the Ijara payments were ongoing, but granted from that time onward. ICN appealed the decision before an Administrative Law Judge (ALJ) in January 2015, and after receiving an unfavorable ruling, appealed again to the Tennessee Assessment Appeals Committee, which also found that ICN was not entitled to the exemption prior to October 2013 due to the transfer of property in the Ijara agreement. Despite the adverse rulings, the ALJ and Appeals Committee expressed some degree of sympathy with ICN and discomfort that the law did not accommodate the religious need for Ijara agreements.
ICN contends that its refusal to pay interest is the sole reason it lost its tax exempt status, which it claims has done it harm by restricting its ability to develop property and develop other educational services. ICN’s complaint, available here, alleges violations of the Religious Freedom and Restoration Act (RFRA), its Tennessee counterpart, RLUIPA, state law, and the First Amendment of the United States Constitution.
With regard to RLUIPA, ICN claims that the defendants favor non-Islamic religions and non-religious organizations, substantially burdening ICN, without a valid compelling governmental interest as justification. Furthermore, the denial penalizes ICN’s adherence to sincerely held religious tenets, thus violating its right to religious expression and religious exercise as required by RLUIPA. ICN also contends that the laws of Tennessee, as applied to ICN, violate the Establishment clause’s purpose of “insur[ing] that no religion be sponsored or favored, none commanded, and none inhibited.” ICN is seeking a Declaratory Judgment that its actions are in accordance with the law as a religious institution by practicing the tenets of its religious faith.