In early August, the Maine Supreme Judicial Court issued a landmark pro-conservation decision in Francis Small Heritage Trust, Inc. v. Town of Limington, 2014 ME 102 (Me. 2014). The opinion puts to rest several arguments that municipalities have raised over the years in denying property tax exemption applications. I was pleased to play a role in this process by co-authoring with Karin Marchetti Ponte a joint Land Trust Alliance – Maine Coast Heritage Trust amici brief in support of FSHT. Here are the major findings and issues discussed by the Law Court:
Land Conservation Is a Charitable Purpose – Francis Small Heritage Trust leaves no doubt that land conservation is indeed a charitable purpose within the meaning of 36 M.R.S. § 652(1)(a) and that the typical land trust preserve is eligible for property tax exemption. The Court quoted extensively from three Maine statutes (the Natural Resources Protection Act, the Land For Maine’s Future enabling act, and the Growth Management Act) in declaring that “the Legislature has enunciated a strong public policy in favor of the protection and conservation of the natural resources and scenic beauty of Maine.” Because FSHT assists the state in achieving these conservation goals, its land conservation activities are charitable. This analysis follows the traditional “lessen the burdens of government” prong for demonstrating that an activity is charitable.
The Court also cited to a growing body of case law from other states finding that conservation is charitable for property tax purposes. The most recent of these is a seminal May 2014 decision by the Massachusetts Supreme Judicial Court in New England Forestry Foundation v. Board of Assessors of the Town of Hawley, 9 N.E.3d 310 (Mass. 2014), which dealt with many of the same issues as the FSHT case. These cases have emphasized that land conservation benefits the general public in a number of ways.
Public Access is Not Essential For Exemption, But It Helps — Significantly, the Law Court distinguished the typical Maine land trust preserve, where public access is permitted and encouraged, from the facts of a troublesome older case, Holbrook Island Sanctuary v. Inhabitants of the Town of Brooksville, 161 Me. 476 (Me. 1965), involving a wildlife sanctuary where public access was heavily restricted and discouraged. Thus, although the Law Court doesn’t go so far as to say that public access is a prerequisite for exemption, a land trust seeking exemption where public access is prohibited or significantly restricted will have a heavier burden in demonstrating public benefit. This outcome tracks the analysis of the Massachusetts high court’s opinion in New England Forestry Foundation.
Incidental Commercial Activities and Accompanying Purpose Provisions in Articles Won’t Defeat Exemption – The Law Court also dispensed with the Town’s contention that a section of FSHT’s Articles of Incorporation reflected a non-charitable purpose. The key disputed phrase was that FSHT’ purposes included “protect[ing] appropriate uses such as logging, farming and other compatible commercial activities.” Because there was no evidence that FSHT engaged in any purely commercial activities, the Law Court did not find this language disqualifying. In a key footnote, the court noted that even if an organization engages in incidental commercial activities, language in the Articles that authorizes these activities will not defeat an otherwise legitimate exemption request. This holding should be very helpful in preventing municipalities from denying exemptions based on minor drafting ambiguities.
Open Space Tax Program Does Not Supplant Property Tax Exemption – Finally, the Law Court ruled that the Open Space Tax Program, whereby landowners can apply for reduced taxation of open space parcels, does not supplant property tax exemption for Maine land trusts. The two legislative schemes can coexist, and land trusts can elect to apply for Open Space, exemption, or neither. The Law Court’s resolution of this issue resolves a niggling issue from a 1991 trial court decision (Cushing Nature Preserve), where the lower court ruled that Open Space did preclude and supplant exemption.
Clarity for Land Trusts and Towns – As a result of the comprehensive decision in Francis Small Heritage Trust, both land trusts and towns have much-needed clarity. Hopefully, the conflict points will be greatly reduced. At the same time, land trusts and all nonprofits must recognize that towns are increasingly pressed for revenues, and there will be ongoing attempts to limit the scope of the charitable exemption through the legislative process. Along these lines, some land trusts might continue their policies of paying property taxes in full, or applying for Open Space, even though exemption is now clearly an option.
For more analysis, see Maine Coast Heritage Trust’s summary and the Land Trust Alliance’s summary.
Earlier this Spring, a small nonprofit parks organization won a significant court case in Friends of Congress Square Park v. City of Portland, 2014 ME 63 (Me. 2014). The Law Court ruled that the group had the right to bring a citizens’ initiative to protect 60 different park properties throughout the City of Portland. The initiative was then placed on the June ballot, and was narrowly passed by Portland voters, 51.5% to 48.5%.
The list of protected properties includes Congress Square Park, which the City Council had been trying to sell for development into a hotel event center. In the wake of the election, an ad hoc committee is working on plans for improving and redesigning the park. And following up on the Law Court’s decision, the trial court recently awarded the Friends its attorneys’ fees after the City conceded liability for violating their members’ civil rights by denying the initiative petition. See the September 2013 and January 2014 E-Bulletins for more background on the controversy and the issues. Along with litigation co-counsel Sarah McDaniel, I was honored to represent Friends of Congress Square Park in this matter.
The plight of Congress Square Park highlights the lack of protection for municipal parks throughout Maine. Unlike certain other states, Maine has no statutory protections for municipal parks. Although the occasional town park or forest is protected through deed restrictions, conservation easements, or town ordinances, the vast majority of town parks or forests could be sold just like any other town-owned land. Through the citizens’ initiative process, the Friends sought to establish a heightened standard for the City to sell all or a portion of its parks. Portland had already taken certain steps in this direction in 1999 by enacting the Land Bank. The citizens’ initiative expands and strengthens the Land Bank by adding dozens of properties to it and establishing a higher supermajority for selling a park or converting it to non-park uses.
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