Officials of this Twin Cities suburb of 34,000, with seven shopping malls and an unemployment rate of 1.9 percent, called the assessment a routine charge for the project to improve Josephine Road, which runs alongside church property. But Thomas Basich, the senior pastor and founder of the church, calls the assessment "government-sponsored terrorism."

Church leaders complain that the city is unfairly assessing a nonprofit religious organization for a public-works project that will benefit the entire town.

"It's not so much an amount but whether there should be a tax at all," Basich told Christianity Today. "An assessment is a tax. We have to draw a line somewhere, and the line is zero."

Special assessments on churches have occurred before, says Jordan Lorence, an attorney with the Northstar Legal Center, a conservative organization in Fairfax, Virginia, that defends religious freedom. But Lorence fears that revenue-hungry cities may be getting bolder: "Cities can use special assessments as a weapon against churches."

Attorney Lynn Basich, Thomas Basich's daughter, is representing Advent. She says the proposed assessment infringes on the church's right to free exercise of its religion. "Here you have a local government interfering with … the exercise of our religion," she said. "The power to tax is the power to destroy."

The total cost for the proposed Josephine Road reconstruction—including the street, sewer improvements, a new sidewalk, and landscaping—is $967,114. The state has provided $817,267. Advent Lutheran's proposed assessment is $158,000, while the city has ...