Tax-exempt status of UF Hillel restaurant is up in the air
Published: Friday, October 11, 2013 at 3:56 p.m.
Last Modified: Friday, October 11, 2013 at 5:44 p.m.
The Alachua County Property Appraiser's Office and University of Florida Hillel are awaiting a new decision from a special magistrate regarding a dispute over whether a portion of Hillel used for a restaurant should remain tax-exempt.
The property appraiser's office investigated Hillel's tax-exempt status after noticing advertisements for the restaurant, Sababa UF, through Groupon and WCJB TV-20.
"Initially, we were under the impression that they just served kosher food as part of the religious experience for the students that go there," said Val Bates, an attorney for the property appraiser's office.
But the television advertisement made no mention of kosher food and made Sababa seem like a sports bar, Bates said. So the property appraiser's office took another look at Hillel, which sits across West University Avenue from the O'Connell Center, and decided the space used for Sababa shouldn't receive the religious tax exemption the rest of the center gets.
Leasing out part of its facility for a commercial reason means Hillel should lose its religious exemption for that portion of its space, he said. In other words, it can't have it both ways — religious and commercial.
But Hillel disagrees with the property appraiser's assessment of the situation.
Byron Flagg, an attorney for Hillel, said Sababa helps Hillel accomplish its mission of providing a religious and cultural facility for Jewish students in the University of Florida community by serving kosher food.
"It's pretty important for people in the Jewish community who are trying to keep their faith and are trying to keep a kosher diet," he said.
Even though Sababa is a commercial entity, Hillel is charging a nominal rent on the space it uses, so it isn't really making money off the endeavor, Flagg said. It is primarily relying on Sababa to serve a cultural and religious purpose.
Sababa operates out of kitchen space within Hillel, and the area where people tend to eat the food they get from the restaurant is also used for unrelated events.
Flagg said the property appraiser's office has been "polite and respectful" throughout the process.
"Our point is, look, Sababa is helping to fulfill the religious mission of Hillel, period," Flagg said.
Both Hillel and the property appraiser's office are waiting for a new decision from the special magistrate regarding their disagreement.
A previous recommendation to the county Value Adjustment Board by special magistrate Yvonne Yegge stated the property appraiser's June denial notice to Hillel was invalid.
The notification, which informed Hillel that the property appraiser's office was denying a religious exemption for the Sababa portion of the center, didn't comply with certain statutory requirements, according to Yegge's August recommendation to the VAB.
Maintaining its former kosher food service was untenable for Hillel, so it began leasing space to Sababa, which is basically a one-woman operation, according to the VAB recommendation. Sababa was charged nominal rent, and there is little money to be made from the enterprise, according to the recommendation.
Hillel has an assessed value of $4,667,800, according to the VAB recommendation. There could be a taxable value of $206,400 if the Sababa portion isn't exempted, although the magistrate suggested all of Hillel be tax-exempt.
Terry Jewell, director of real property valuation for the property appraiser's office, said the taxable value for Sababa's section of Hillel was estimated at $206,400 at the time. The office has asked to see the actual square footage provided for Sababa in Hillel's lease so it can get an accurate figure.
The property appraiser's office has appealed the VAB magistrate's decision, so the issue will be re-evaluated, Bates said. Depending on the magistrate's new decision, either side could choose to file a lawsuit, but the property appraiser's office hasn't made any plans to do so.
For now, both the property appraiser's office and Hillel must wait until the magistrate takes another look at the dispute.
Contact Morgan Watkins at 338-3104 or email@example.com.