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Maine Court Ruling Clarifies that Land Trusts are Eligible for Property Tax Exemption

We are very pleased to share with you the news that the Maine Supreme Judicial Court ruled yesterday that land conservation is a charitable purpose under the Maine Property Tax Exemption statute. The ruling settles a dispute between the Town of Limington and Francis Small Heritage Trust (FSHT) regarding the property tax exempt eligibility of FSHT’s preserves.

This is very good news for Maine’s land trust community. In finding FSHT’s preserves tax exempt eligible, the Maine Supreme Judicial Court has ruled that land conservation is a charitable and benevolent activity in Maine. This determination has been long awaited, and will be invaluable to land trusts that do seek exemption on their land holdings.

Read more in the block below.

Cheers!

Whit and Donna

LAND CONSERVATION IN MAINE RULED TAX EXEMPT

Maine Court Ruling Clarifies that Land Trusts are Eligible for Property Tax Exemption

A ruling has been made in the dispute between the Town of Limington and the Francis Small Heritage Trust (FSHT) regarding the eligibility of the Trust’s public preserve land for property tax exemption. The Maine Supreme Judicial Court has ruled that land conservation is a charitable and benevolent activity in Maine, and thus land trusts that use their preserves solely for their charitable purposes are eligible for tax exemption under the Property Tax Exemption statute (36 MRS Section 652 et seq.). This is a resounding victory for land conservation organizations in Maine.

Read the court’s opinion here (PDF).

The court also determined that as written, FSHT’s corporate purposes are charitable - including one disputed portion: “the protection of appropriate uses such as logging, farming and other compatible commercial activities.”

The Law Court also reversed the opinion of the State Board of Property Tax Review, which had decided that the Legislature intended the Farm and Open Space Tax Law to be the only avenue for property tax relief available to land trusts. Land trusts may qualify for exemption even if they also qualify for Open Space. This point is crucial to land trusts who have some preserves and headquarter properties that are built upon and are thus ineligible for Open Space.

This settles once and for all that land trusts who use their preserves solely for their charitable purposes are exempt from property taxation.

This is excellent news for land trusts in Maine, where their eligibility for property tax exemption has been uncertain due to a 1969 case, in which the Law Court decided that the purposes of the Holbrook Island Sanctuary were only beneficial to animals and not of benefit to humans. The Law Court distinguished the Holbrook case, noting that Holbrook did not make the Sanctuary available to the general public. The Law Court sided with the Superior Court, which held that “in addition to the ecological and environmental benefit of land preservation there are numerous physical, psychological and, for some, even spiritual benefits to having access to undeveloped land.”

Recently, in Massachusetts, their Supreme Court granted exemption to New England Forestry Foundation in a similar case, and held that the Massachusetts current use statute does not preempt exemption for otherwise eligible property owned by land trusts.

What does this mean for Maine land trusts?

This decision benefits Maine land trusts because there is no longer uncertainty about the tax exemption of qualifying land conservation preserves. Until this decision, there was inconsistent interpretation of Maine’s Property Tax Exemption statute and some land trusts received exemption from their towns while others did not. Now land trusts can expect tax exemption on qualifying preserves, where they are solely used for their charitable purposes.

What does this mean for Francis Small Heritage Trust?

FSHT is now clearly eligible for tax exemption. Other land trusts who are organized in Maine, solely for charitable purposes, may apply for Property Tax Exemption on or before April 1 of the tax year; and if they meet the other criteria for exemption - such as that the land must be used solely for charitable and benevolent purposes - they will qualify.

Can Land Trusts still apply for tax relief under the Open Space Tax Law?

Yes. The rules for Open Space are different than those for Property Tax Exemption, and legal advice should be sought to determine the best course for a particular preserve and land trust.

What was the timeline for events leading up to this decision?

FSHT Founded 1990
FSHT assembles Sawyer Mountain Highlands throughpurchase of 17 parcels of land over 15 years, some with LMF $ 1996-2011
The town revokes tax exemption on FSHT properties.FST decides to begin the appeal process. 2009
FSHT appeals to Board of Property Tax Review June, 2011
Bureau of Property Tax Review rules in favor of Town of Limington February 15, 2012
FSHT appeals to Superior Court March 6, 2012
Superior Court rules for FSHT May 30, 2013
Town appeals to Supreme Court November 20, 2013
Oral arguments at Supreme Court May 15, 2014
Supreme Court Decision August 7, 2014