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Tonawanda church known for its souvlaki regains tax exemption

A storefront church in the City of Tonawanda has regained its religious property tax exemption after city officials revoked it earlier this year, arguing the building was primarily being used to make souvlakis, not for worship.

Holy Protection Orthodox Church, whose small congregation runs a popular souvlaki stand at Canal Fest, won back its tax-free status, attorneys for both sides confirmed Thursday.

The church’s exemption had been removed in February by City Assessor Judy M. Tafelski due to what she called a “public outcry” about the building’s use. Since becoming assessor last November, Tafelski said several shop owners and residents complained to her there is no activity at the Main Street church building, except during the week of Canal Fest.

[Related: Tiny church fights Tonawanda City Hall for tax exemption]

Holy Protection appealed the assessor's decision to State Supreme Court in a case that raised fundamental questions about what constitutes a church and qualifies it as tax-exempt.

Holy Protection, which is affiliated with the Holy Orthodox Church in North America, Metropolis of Boston Diocese, holds services “almost every Sunday” at 10 a.m., according to court filings. Sometimes those services are liturgies with a priest, but more often they’re reader services led by a lay church member.

Church leaders have said their congregation is small and attendance at services is limited, but that they are still entitled to their exemption of about $5,000 in city property taxes under the Constitution. The souvlaki stand is lucrative for the church, netting $73,327 in 2015, according to the church’s financial report contained in court documents.

The city approached the church about resolving the court case after reviewing the cost to taxpayers of defending itself, said the city's attorney, Steve Bengart.

"They did a cost-benefit analysis, frankly, of what it would cost to fight this, versus reinstating the exemption," he said. "And based on that, they acquiesced."

Both sides agreed this week to a "stipulated order" that reinstates the exemption and refunds school taxes the church paid in October while the case was pending, said Richard A. Clack, who represents Holy Protection Orthodox Church. The order must still be reviewed and signed by State Supreme Court Judge James H. Dillon.

"The object was to get the exemption back and we got it back," Clack said. "We paid the taxes that were due in October under protest and they're coming back as well."

Metropolitan Makarios Katre, a church leader in Toronto, did not immediately respond to a request for comment. Tafelski declined to comment on the case's outcome and referred all questions to Bengart.


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