Well, if I remember the law correctly (keep in mind this was a long time ago I looked this up) when you rented land to the "public", it fell under a special tax group. If you designate it as religious, it falls under a different group, but has some restrictions as to the use, and I believe you can't "rent" it the same way. I also believe there was a "private" renting thing, where you could restrict the renting easily, but you had to pay more taxes. So, they decided to do the public thing, as a conscious decision on their part, so there would be less restrictions as to their renting of it, but they would get the tax benefit of being public instead of private.
In other words, the church made a decision to maximize profit and that land became governed by the laws of all other public renting, such as not being able to deny people use. In other words, it was a greedy decision meant to bring in revenue, and they got burned by it.