Francis Small Heritage Trust, Inc. v. Town of Limington

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2014 ME 102
Docket: Yor-13-511
Argued: May 15, 2014
Decided: August 7, 2014
Panel: SAUFLEY, C.J., and ALEXANDER, SILVER, MEAD, GORMAN, and JABAR, JJ.
FRANCIS SMALL HERITAGE TRUST, INC.
v.
TOWN OF LIMINGTON et al.
SILVER, J.
[¶1] The Town of Limington appeals from a judgment entered in the
Superior Court (York County, Fritzsche, J.) vacating a decision of the State Board
of Property Tax Review. The Town argues that (1) the Superior Court erred in
vacating the Board’s ruling that Francis Small Heritage Trust, Inc., is not entitled
to a tax exemption as a benevolent and charitable institution pursuant to 36 M.R.S.
§ 652(1)(A), (C) (2013), and (2) the Board did not err in concluding that the Town
correctly applied the “[a]lternative valuation method” of 36 M.R.S. § 1106-A(2)
(2013) to the Trust’s properties that are classified as open space land pursuant to
Maine’s Farm and Open Space Tax Law, 36 M.R.S. §§ 1101-1121 (2013).1 This
1
Various provisions of the Farm and Open Space Tax Law, including 36 M.R.S. § 1106-A (2013),
have been amended since the 2009 and 2010 tax years at issue in this case. See, e.g., P.L. 2011, ch. 240,
§§ 7-8 (effective Sept. 28, 2011) (codified as amended at 36 M.R.S. § 1109(1), (3) (2013)); P.L. 2011,
ch. 618, §§ 6-7 (effective Aug. 30, 2012) (codified at 36 M.R.S. § 1106-A(2)-(3)). Those amendments do
not affect this appeal.
2
opinion gives us the opportunity to review the real estate tax status of land fully
devoted to conservation and free public access. Because we conclude that the
Trust is entitled to a charitable exemption, we affirm the judgment.
I. BACKGROUND
[¶2] The following facts are drawn from the administrative record
developed before the Board. The Trust owns eleven contiguous parcels of land on
and near Sawyer Mountain in Limington. Three of the parcels have historically
been taxed pursuant to the Maine Tree Growth Tax Law, 36 M.R.S. §§ 571 to
584-A (2013).2 The remaining eight parcels are classified as open space land
pursuant to the Farm and Open Space Tax Law, 36 M.R.S. §§ 1101-1121. The
open space properties are protected by third-party, “forever-wild” conservation
easements, and some of the parcels are also further protected by easements held by
the Department of Inland Fisheries and Wildlife as part of the Land for Maine’s
Future program.
[¶3] The Trust’s purposes are “to conserve natural resources and to provide
free public access to those natural resources.” To that end, the Trust’s properties
are “used and operated as conserved wildlife habitat,” and are open to the public
365 days a year. Local schools use the properties for field trips and environmental
2
Various provisions of the Maine Tree Growth Tax Law have been amended since the 2009 and 2010
tax years at issue in this case. See, e.g., P.L. 2013, ch. 405, § A-23 (effective Oct. 9, 2013) (codified at
36 M.R.S. §§ 575-A, 577, 579, 581-F to 581-G (2013). Those amendments do not affect this appeal.
3
education. The Trust’s land is also open for hunting, fishing, hiking, cross-country
skiing, and snowmobiling. In addition, the Trust has engaged in other activities,
such as sponsoring a Limington Boy Scout Troop, participating in a project with
Maine Medical Center to research the risk of exposure to Lyme-disease-
transmitting deer ticks, and conducting a workshop on invasive plants. The Trust
also holds a conservation easement on a commercial farm in the town of
Parsonsfield. The Trust’s Articles of Incorporation set forth the purposes of the
Trust:
The corporation is organized exclusively for charitable, educational,
and scientific purposes within the meaning of Section 501(c)(3) of the
Internal Revenue Code and Title 13-B of the Maine Revised Statutes.
The nature of the activities to be conducted and the purposes to be
promoted or carried out by the corporation are as follows:
(a) The receipt and administration of property and funds for the
promotion of conservation and preservation of the natural resources
primarily in, but not limited to, the Towns of Cornish, Limerick and
Limington, County of York, state of Maine for the benefit of the
general public, including land and water resources, plant and animal
life, and areas of scenic, agricultural, ecological or educational
significance therein;
(b) In conformity with the purposes set forth in this paragraph, the
corporation shall accept by gift, devise or bequest, but may also obtain
by purchase, lease, or otherwise, property and interests therein,
including, but not limited to, developmental rights therein, and other
property, real, personal or mixed, of historic, scenic, agricultural and
natural significance. Other specific purposes of the corporation shall
be to maintain open space and preserves for wildlife and plant life,
protect appropriate uses such as logging, farming and other
compatible commercial activities within specified areas and adjacent
4
areas, engage in and promote scientific study and education regarding
natural resources, to demonstrate and teach the necessity of preserving
our natural heritage by conservation and preservation so that future
generations may enjoy it, and to protect and promote the utilization of
properties for hunting, fishing, hiking, cross country skiing and other
compatible uses.
(Emphasis added.)
[¶4] For tax purposes, the assessed value of open space land is governed by
36 M.R.S. § 1106-A, which provides that, if the assessor cannot determine the
market price of the property, the assessor may employ an “[a]lternative valuation
method.” Id. § 1106-A(1), (2). Pursuant to the alternative valuation method,
“[t]he assessor may reduce the ordinary assessed valuation of the land, without
regard to conservation easement restrictions,” by up to 95% if the land meets
certain statutory criteria.3 Id. § 1106-A(2). Section 1106-A(2) further provides,
3
The statute provides in relevant part:
The assessor may reduce the ordinary assessed valuation of the land, without regard to
conservation easement restrictions and as reduced by the certified ratio, by the
cumulative percentage reduction for which the land is eligible according to the following
categories.
A. All open space land is eligible for a reduction of 20%.
B. Permanently protected open space land is eligible for the reduction set in
paragraph A and an additional 30%.
C. Forever wild open space land is eligible for the reduction set in paragraphs A
and B and an additional 20%.
D. Public access open space land is eligible for the applicable reduction set in
paragraph A, B or C and an additional 25%.
5
however, that “[n]otwithstanding this section, the value of forested open space land
may not be reduced to less than the value it would have under [the Maine Tree
Growth Tax Law], and the open space land valuation may not exceed just value as
required under [36 M.R.S. § 701-A (2013)].”
[¶5] In assessing the Trust’s open space properties, the Town utilized the
alternative valuation method. Because the Town’s valuation of the properties, as
reduced pursuant to section 1106-A(2)(A)-(D), fell below the value of the
properties pursuant to the Maine Tree Growth Tax Law, the Town instead used the
tree growth value. The Town did not have data regarding the mixture of trees for
one of the Trust’s open space parcels because it had never been enrolled in the tree
growth program, so the Town instead used the full value of that parcel as reduced
pursuant to section 1106-A(2)(A)-(D).
[¶6] The Trust requested tax abatement on its eleven properties for the 2009
and 2010 tax years, contending that the properties should be granted tax-exempt
status, and that, if the properties are not exempt, the Town overvalued the eight
open space lots by misapplying the alternative valuation method set forth in
36 M.R.S. § 1106-A(2). The Town denied the Trust’s petitions, and the Trust
appealed to the Board.
36 M.R.S. § 1106-A(2)(A)-(D) (2013). Subsection (3) of the statute defines “[p]ermanently protected
open space,” “[f]orever wild open space,” and “[p]ublic access open space.” 36 M.R.S.
§ 1106-A(3)(A)-(C). The Town does not dispute that the Trust’s open space properties meet all of these
criteria and are eligible for a 95% reduction in assessed value.
6
[¶7] The Board consolidated the Trust’s appeals and held evidentiary
hearings on July 19 and 20, 2011, and September 9, 2011. The Board received the
testimony of several witnesses, including Richard Jarrett, the treasurer of the Trust
and a member of its board of directors. Jarrett testified that the “compatible
commercial activities” provision of the Trust’s Articles of Incorporation permitted
the Trust to engage in forestry. The Trust, Jarrett testified, plans to use its tree
growth parcels for an educational program on sustainable tree harvesting, with any
revenue flowing back into the Trust to be used in accordance with its purposes.
Jarrett also testified that heavily encumbered conservation land is more of a
financial liability than an asset, and that transfers of such property are generally for
nominal value and often accompanied by a donation of “stewardship” funds for the
maintenance of the property.
[¶8] By a written decision dated August 22, 2012, the Board denied the
Trust’s appeals. The Board concluded that the Trust was not entitled to a tax
exemption because “its activities are not restricted solely to benevolent and
charitable purposes.” In reaching this conclusion, the Board relied on several
facts: (1) the Trust’s Articles of Incorporation permitted the Trust to “engage” in
commercial activities such as farming and logging; (2) Jarrett, the Trust’s treasurer,
interpreted the commercial activities provision of the Articles to permit the Trust to
engage in forestry; (3) three of the Trust’s parcels were enrolled in the tree growth
7
program; and (4) the Trust “own[s]” a commercial farm in Parsonsfield. The
Board also reasoned that the Trust’s property could not be exempt because eight of
the Trust’s properties were classified as open space land and already enjoyed
substantial tax relief, relying in part on Cushing Nature & Preservation Center v.
Inhabitants of the Town of Cushing, No. Civ.A.CV99-059, 2001 WL 1729095, at
*6 (Me. Super. Ct. May 30, 2001), vacated on other grounds, 2001 ME 149,
785 A.2d 342.
[¶9] With respect to the valuation issue, the Board concluded that the plain
language of section 1106-A(2) supported the Town’s use of the tree growth value
where the 95% reduction resulted in a value less than the tree growth value. The
Board also rejected the Trust’s argument that the fair market value of the properties
was nominal due to restrictions on their use because the Board found Jarrett’s
“unsupported testimony not persuasive and therefore insufficient to overcome the
presumption that the assessors’ valuation is valid.”
[¶10] The Trust appealed the Board’s decision to the Superior Court
pursuant to M.R. Civ. P. 80C and 5 M.R.S. §§ 11001-11008 (2013). The Superior
Court vacated the Board’s decision, concluding that the Trust was entitled to a tax
exemption as a benevolent and charitable institution. The court reasoned that the
Trust’s Articles of Incorporation permitted only the “protection” of logging,
farming, and other compatible commercial activities, and did not actually authorize
8
the Trust to engage in them, and that any revenue derived by the Trust from such
commercial activities was purely incidental. The court further reasoned that
nothing in the Maine Tree Growth Tax Law or the Farm and Open Space Tax Law
precluded exemption of the Trust’s property as that of a benevolent and charitable
institution. The court did not reach the issue of the Town’s valuation of the Trust’s
open space properties. The Town timely appealed.4
II. DISCUSSION
A. Standard of Review
[¶11] Because the Superior Court acted in its appellate capacity, we review
the decision of the Board directly without deference to the Superior Court’s
intermediate review. See Humboldt Field Research Inst. v. Town of Steuben,
2011 ME 130, ¶¶ 3-4, 36 A.3d 873; Mar. Energy v. Fund Ins. Review Bd.,
2001 ME 45, ¶ 7, 767 A.2d 812. We review the Board’s decision for abuse of
discretion, errors of law, or findings not supported by the evidence. Mar. Energy,
2001 ME 45, ¶ 7, 767 A.2d 812.
B. Analysis
[¶12] As a general rule, all real estate in Maine is subject to taxation.
36 M.R.S. § 502 (2013); Hebron Acad., Inc. v. Town of Hebron, 2013 ME 15, ¶ 7,
4
Amici Maine Coast Heritage Trust and Land Trust Alliance, Inc., filed a brief in support of the
Trust.
9
60 A.3d 774. Legislatively established state policy encouraging charitable use of
land, however, establishes that an organization’s property is exempt from taxation
if (1) the organization claiming the exemption is “organized and conducted
exclusively for benevolent and charitable purposes,” and (2) the property is
“owned and occupied or used solely for [the organization’s] own purposes.”
36 M.R.S. § 652(1)(A), (C)(1). Because the Town does not argue that the Trust
does not own, occupy, and use the property in question solely for its own purposes,
we address only whether the Trust is “organized and conducted exclusively for
benevolent and charitable purposes.” Id.
[¶13] Whether a purpose is benevolent and charitable within the meaning of
section 652(1) is a question of law that we review de novo. Cushing Nature &
Pres. Ctr. v. Town of Cushing, 2001 ME 149, ¶ 10, 785 A.2d 342. Because
“[t]axation is the rule and exemption the exception,” Green Acre Baha’i Inst. v.
Town of Eliot, 150 Me. 350, 353, 110 A.2d 581 (Me. 1954), the burden is on the
party seeking the exemption to prove that it falls “unmistakably within the spirit
and intent of the act creating the exemption,” Hebron Acad., 2013 ME 15, ¶ 7,
60 A.3d 774 (quotation marks omitted). In cases where the charitable exemption is
claimed,
there must be a careful examination to determine whether in fact the
institution is organized and conducting its operation for purely
benevolent and charitable purposes in good faith, whether there is any
10
profit motive revealed or concealed, whether there is any pretense to
avoid taxation, and whether any production of revenue is purely
incidental to a dominant purpose which is benevolent and charitable.
When these questions are answered favorably to the petitioner for
exemption, the property may not be taxed.
Christian Fellowship & Renewal Ctr. v. Town of Limington, 2006 ME 44, ¶ 17,
896 A.2d 287 (quoting Green Acre, 150 Me. at 354, 110 A.2d 581).
[¶14] We have construed the word “benevolent” as synonymous with the
word “charitable.” Id. ¶ 13. An activity or purpose is “charitable” if it is
for the benefit of an indefinite number of persons, either by bringing
their minds or hearts under the influence of education or religion, by
relieving their bodies from disease, suffering, or constraint, by
assisting them to establish themselves in life, or by erecting or
maintaining public buildings or works or otherwise lessening the
burdens of government.
Id. ¶ 14 (quoting Episcopal Camp Found., Inc. v. Town of Hope, 666 A.2d 108,
110 (Me. 1995)). Part of the rationale for granting exemption for charitable
institutions is that
[a]ny institution which by its charitable activities relieves the
government of part of [its] burden is conferring a pecuniary benefit
upon the body politic, and in receiving exemption from taxation it is
merely being given a “quid pro quo” for its services in providing
something which otherwise the government would have to provide.
Episcopal Camp, 666 A.2d at 110 (alterations in original) (quotation marks
omitted). This “quid pro quo” factor, although not controlling, is one courts should
consider in determining whether the charitable exemption applies. Christian
11
Fellowship, 2006 ME 44, ¶¶ 24, 35, 896 A.2d 287. Providing opportunities for
even “casual and limited group recreational and relaxation activities” can
constitute a quid pro quo because it “provid[es] something that government would
otherwise provide, through the government system of parks, public lands, and
recreational facilities.” Id. ¶ 37 (quotation marks omitted).
[¶15] We have not directly addressed whether land conservation constitutes
a charitable purpose within the meaning of section 652(1). See Cushing,
2001 ME 149, ¶ 15, 785 A.2d 342 (declining to reach the issue of “whether land
conservation or preservation, standing alone, could constitute a charitable use”).
We have, however, considered whether wildlife refuges qualify for exemption. In
Holbrook Island Sanctuary v. Inhabitants of the Town of Brooksville, 161 Me. 476,
477, 484, 214 A.2d 660 (Me. 1965), the plaintiff organization sought exemption of
property it operated as a wildlife sanctuary or game preserve. Public access to the
plaintiff’s property was strictly limited:
The corporation employed a full-time Warden . . . with an additional
helper during the summer months and the hunting season. All persons
wishing to enter the sanctuary were and are asked to register at the
office and to apply to the Warden for permission to enter the
sanctuary. Persons and organizations engaged in nature study were
permitted in the Sanctuary accompanied by the Warden for the
purpose of nature study, observation and photography. The public
was directed not to enter the sanctuary for any other purpose. The
Warden and his assistant were instructed to prohibit hunting in the
area.
12
Id. at 480-81. The plaintiff blocked off existing access roads on the property, with
the intention of permitting the roads to become overgrown and return to their
natural state. Id. at 480. We concluded that the organization at issue was not
“charitable,” because it was “nothing in substance more than a game preserve,” the
purpose of which was “plainly to benefit wild animals”; provided “no benefit to the
community or to the public”; and was contrary to public policy favoring
state-regulated game management areas. Id. at 484-88; see also Silverman v. Town
of Alton, 451 A.2d 103, 106 (Me. 1982) (holding that a wildlife refuge was not “in
and of itself . . . a scientific institution or organization” pursuant to 36 M.R.S.
§ 652(1)(B) (2013), and that the “incidental scientific objective to benefit the
University of Maine by permitting use of the premises” was insufficient to bring
the property within the exemption).
[¶16] The Town suggests that our holdings in Holbrook and Silverman
control this case. Amici Maine Coast Heritage Trust and Land Trust Alliance, Inc.,
in turn, urge us to overrule or limit Holbrook, citing scholarly criticism of that
decision. See Kirk G. Siegel, Comment, Weighing the Costs and Benefits of
Property Tax Exemption: Nonprofit Organization Land Conservation,
49 Me. L. Rev. 399, 416 (1997) (“[Holbrook’s] holding, that a benefit to wild
animals did not equate to a benefit to the community and was therefore not
13
charitable, might be assessed differently by a court with a modern awareness of the
public benefits of ecosystem preservation.”).
[¶17] We conclude that both Holbrook and Silverman are distinguishable.
Our holding in Holbrook was based on the absence of any benefit to the public of a
game preserve operated in a manner that heavily restricted public access and was
contrary to public policy. See Holbrook, 161 Me. at 480-81, 484-88, 214 A.2d
660. As we discuss further below, neither rationale applies here. Silverman is also
inapposite, as it did not apply the exemption for benevolent and charitable
organizations, but rather the exemption for scientific institutions. 451 A.2d at
105-06.
[¶18] Appellate courts in several other jurisdictions have concluded that
land conservation is a charitable purpose, at least when coupled with public access,
or where conservation of the land otherwise confers a public benefit. See, e.g.,
Santa Catalina Island Conservancy v. Cnty. of L.A., 178 Cal. Rptr. 708, 716
(Ct. App. 1981) (concluding that “nonprofit organizations formed and conducted
for the purpose of preserving natural environments and recreational opportunities
for the benefit of the public come within the term ‘charitable’ as defined by the
decisions of our Supreme Court by lessening the burdens of government”); Turner
v. Trust for Pub. Land, 445 So. 2d 1124, 1124, 1126 (Fla. Dist. Ct. App. 1984)
(holding that a nonprofit corporation’s conservation of land in its natural state
14
entitled it to tax exemption pursuant to a Florida statute defining a charitable
purpose as “a function or service which is of such a community service that its
discontinuance could legally result in the allocation of public funds for the
continuance of the function or service” (quotation marks omitted)); Pecos River
Open Spaces, Inc. v. Cnty. of San Miguel, No. 30,865, 2013 WL 309847, at *5, *7
(N.M. Ct. App. Jan. 11, 2013) (holding that, “owing to the substantial public
benefit derived from conservation of the Property, conservation in this case
constitutes a charitable purpose that qualifies the Property for a tax exemption”
pursuant to the New Mexico Constitution); Mohonk Trust v. Bd. of Assessors,
392 N.E.2d 876, 878-80 (N.Y. 1979) (concluding that a trust whose purpose was
“preservation of wilderness areas for the benefit of the public” was entitled to
exemption pursuant to statute exempting property used exclusively for “religious,
charitable, hospital, educational, moral or mental improvement of men, women or
children or cemetery purposes” (quotation marks omitted)); Little Miami, Inc. v.
Kinney, 428 N.E.2d 859, 860 (Ohio 1981) (per curiam) (holding that an
organization’s restoration of an island to its natural state and continued efforts to
preserve the island were in furtherance of charitable purposes and rendered the
property exempt); see also Trustees of Vt. Wild Land Found. v. Town of Pittsford,
407 A.2d 174, 175-77 (Vt. 1979) (holding that land preserved in an undeveloped
state was not exempt as a “public, pious or charitable use[]” where public access to
15
the land was strictly limited (quotation marks omitted)). Several of these holdings
were based in part on legislative recognition of a public policy in favor of
conservation. See Santa Catalina, 178 Cal. Rptr. at 716; Turner, 445 So. 2d at
1126; Pecos River, 2013 WL 309847, at *3-5.
[¶19] Most recently, in New England Forestry Foundation, Inc. v. Board of
Assessors of Hawley, 9 N.E.3d 310, 312-13 (Mass. 2014), the Supreme Judicial
Court of Massachusetts held that a nonprofit land conservation organization was
entitled to a tax exemption as a charitable organization. The organization’s stated
purpose was, in part, to “create, foster, and support conservation, habitat, water
resource, open space preservation, recreational, and other activities by promoting,
supporting, and practicing forest management policies and techniques to increase
the production of timber in an ecologically and economically prudent manner.” Id.
at 313 (quotation marks omitted). The property at issue was a 120-acre parcel
abutting a state forest that the organization maintained in an undeveloped state
using sustainable forestry practices and opened for public recreation. Id. at 313-14,
321, 325-26. The Massachusetts court concluded that the organization’s purposes
were charitable because the environmental benefits of holding land in its natural
state “inure[d] to an indefinite number of people,” and because the organization
“lessen[ed] the burdens of government” by “assist[ing] the State in achieving its
conservation policy goals.” Id. at 320-23.
16
[¶20] There can be little doubt 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. For example, 38 M.R.S. § 480-A (2013) states:
The Legislature finds and declares that the State’s rivers and
streams, great ponds, fragile mountain areas, freshwater wetlands,
significant wildlife habitat, coastal wetlands and coastal sand dunes
systems are resources of state significance. These resources have
great scenic beauty and unique characteristics, unsurpassed
recreational, cultural, historical and environmental value of present
and future benefit to the citizens of the State and that uses are causing
the rapid degradation and, in some cases, the destruction of these
critical resources, producing significant adverse economic and
environmental impacts and threatening the health, safety and general
welfare of the citizens of the State.
....
The Legislature further finds and declares that the cumulative
effect of frequent minor alterations and occasional major alterations of
these resources poses a substantial threat to the environment and
economy of the State and its quality of life.
See also 5 M.R.S. § 6200 (2013) (finding that “the continued availability of public
access to [outdoor] recreation opportunities and the protection of the scenic and
natural environment are essential for preserving the State’s high quality of life”
and that the “public interest in the future quality and availability for all Maine
people of lands for recreation and conservation is best served by significant
additions of lands to the public domain”); 30-A M.R.S. § 4312(3)(F) (2013)
(identifying the protection of “critical natural resources, including without
17
limitation, wetlands, wildlife and fisheries habitat, sand dunes, shorelands, scenic
vistas and unique natural areas” as a state goal). In creating the Land for Maine’s
Future program, the Legislature declared that
the future social and economic well-being of the citizens of this State
depends upon maintaining the quality and availability of natural areas
for recreation, hunting and fishing, conservation, wildlife habitat, vital
ecologic functions and scenic beauty and that the State, as the public’s
trustee, has a responsibility and a duty to pursue an aggressive and
coordinated policy to assure that this Maine heritage is passed on to
future generations.
5 M.R.S. § 6200 (emphasis added). The Legislature also recognized the important
role played by conservation organizations in achieving these goals. See id.
(finding that “Maine’s private, nonprofit organizations . . . have made significant
contributions to the protection of the State’s natural areas and . . . should be
encouraged to further expand and coordinate their efforts”).
[¶21] Against this legal backdrop, we consider whether the Trust is
organized and conducted for benevolent and charitable purposes pursuant to Maine
law. The Trust’s purpose is to conserve natural resources for the benefit of the
public. The Trust has opened its properties to the public year-round, free of
charge, and permits school field trips, hunting, fishing, hiking, cross-country
skiing, and snowmobiling. As the Superior Court determined, the Trust essentially
operates its properties in the manner of a state park in the Sawyer Mountain region.
In doing so, the Trust assists the state in achieving its conservation goals, see, e.g.,
18
5 M.R.S. § 6200; 30-A M.R.S. § 4312(3)(F); 38 M.R.S. § 480-A, and “provid[es]
something that government would otherwise provide, through the government
system of parks, public lands, and recreational facilities,” Christian Fellowship,
2006 ME 44, ¶ 37, 896 A.2d 287 (quotation marks omitted). We therefore hold
that, under the circumstances of this case, the Trust is organized and conducted for
benevolent and charitable purposes within the meaning of section 652(1)(C)(1).
[¶22] The Board reached the opposite conclusion in part because the Trust’s
Articles of Incorporation permit it to “engage” in “appropriate uses such as
logging, farming and other compatible commercial activities.” It also found that
the Trust “owned” a commercial farm in Parsonsfield. We are not persuaded by
this analysis. The Trust’s Articles of Incorporation state, amongst a list of
purposes, that “[o]ther specific purposes of the corporation shall be to . . . protect
appropriate uses such as logging, farming and other compatible commercial
activities within specified areas and adjacent areas.”5 (Emphasis added.)
Moreover, there was no evidence that the Trust owns a commercial farm; rather,
the testimony indicated that the Trust holds a conservation easement on a farm
5
The Trust’s treasurer did testify that the “compatible commercial activities” language in the Trust’s
Articles of Incorporation permitted the Trust to engage in forestry. Even if we assume that the Articles of
Incorporation do permit the Trust to engage in forestry and that such use would be nonexempt in the
circumstances of this case, we have made clear that incidental, nonexempt use of property will not render
the property ineligible for exemption. See Hebron Acad., Inc. v. Town of Hebron, 2013 ME 15, ¶¶ 20-26,
60 A.3d 774. A logical corollary to that holding is that an organization’s incorporating documents may
authorize the organization to engage in such incidental use without destroying the exemption. See id.
19
property in Parsonsfield, protecting the property from further development. The
treasurer of the Trust testified that the Trust plans to harvest its tree growth parcels,
but only as part of an educational program on sustainable tree harvesting, with any
revenue flowing back into the Trust to be used in accordance with its purposes. An
educational program on sustainable forestry is consistent with the Trust’s
charitable purposes. See 36 M.R.S. §§ 563-564, 572 (2013) (declaring
encouragement of operation of forest land on a “sustained yield basis” as the public
policy of Maine).
[¶23] The Board also based its conclusion that the Trust is not entitled to
exemption on the reasoning that the Legislature has already provided tax relief for
open space land pursuant to the Farm and Open Space Tax Law, 36 M.R.S.
§§ 1101-1121, citing the reasoning of Cushing, 2001 WL 1729095, at *6.
Likewise, the Town argues that the Legislature, in enacting the Farm and Open
Space Tax Law, intended it to be the exclusive method of taxing open space land.
[¶24] This reasoning does not withstand scrutiny. The charitable exemption
now codified in section 652(1) is well established in Maine law, tracing its origins
back to the 1800s. See Hebron Acad., 2013 ME 15, ¶¶ 14-15, 60 A.3d 774.
Nothing in the language or legislative history of the Farm and Open Space Tax
Law, originally enacted in 1971, see P.L. 1971, ch. 548 (effective Sept. 23, 1971),
indicates any intent to preempt or otherwise displace this longstanding exemption
20
in the context of land conservation. Although the Farm and Open Space Tax Law
provides that “[t]he assessor shall determine” whether the land is open space land,
and that, if so, “that land must be classified as open space land and subject to
taxation under this subchapter,” 36 M.R.S. § 1109(3) (emphasis added), that
provision only comes into effect upon the landowner’s “election to apply” for
taxation pursuant to the statute, id. § 1103 (emphasis added). The Legislature, in
other words, specifically made the application of the Farm and Open Space Tax
Law voluntary on the part of the taxpayer. That the statute’s valuation
methodology recognizes and adjusts for the restricted nature of open space land,
see id. § 1106-A, does not demonstrate legislative intent to tax such land when it is
owned and used by a charitable institution.
[¶25] The Farm and Open Space Tax Law and the charitable exemption are
distinct in their scope and purpose. The Farm and Open Space Tax Law describes
its purpose as follows:
It is declared that it is in the public interest to encourage the
preservation of farmland and open space land in order to maintain a
readily available source of food and farm products close to the
metropolitan areas of the State to conserve the State’s natural
resources and to provide for the welfare and happiness of the
inhabitants of the State, that it is in the public interest to prevent the
forced conversion of farmland and open space land to more intensive
uses as the result of economic pressures caused by the assessment
thereof for purposes of property taxation at values incompatible with
their preservation as such farmland and open space land, and that the
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necessity in the public interest of the enactment of this subchapter is a
matter of legislative determination.
36 M.R.S. § 1101. In contrast with the specific, conservationist purposes of the
Farm and Open Space Tax Law, the charitable exemption seeks to encourage all
activities that are “for the benefit of an indefinite number of persons” and “lessen[]
the burdens of government” by providing services in which the state has a genuine
interest. See Christian Fellowship, 2006 ME 44, ¶¶ 14, 23, 896 A.2d 287
(quotation marks omitted) (defining “charitable” and noting a legislative study
indicating that “the original purposes of the charitable exemption were to promote
not only providing services in lieu of government services, but also providing a
service in which the state has a genuine interest” (quotation marks omitted)); see
also New England Forestry Found., 9 N.E.3d at 316 (noting that Massachusetts’s
charitable exemption “does not seek to encourage charitable organizations to
pursue particular substantive policy goals or charitable activities,” but rather
exempts certain property from taxation “on the theory that property held for
philanthropic, charitable, religious, or other quasi public purposes in fact helps to
relieve the burdens of government”).
[¶26] Although some of the factors by which the Farm and Open Space Tax
Law defines open space land could be relevant in the application of the charitable
exemption, see 36 M.R.S. §§ 1102(6), 1109(3), open space land may be held by an
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individual or entity that does not qualify for a charitable exemption for any number
of reasons, see, e.g., id. § 652(1)(A) (requiring that an organization be
“incorporated by this State” in order to be entitled to exemption as a charitable
institution); Nature Conservancy of the Pine Tree State, Inc. v. Town of Bristol,
385 A.2d 39, 43 (Me. 1978) (“Land held in its natural state does not become tax
exempt by transfer to a charitable institution where the grantor retains the rights to
access, passage or custodianship, more particularly since these tend to be the only
private rights of ownership exercised while land is privately being held in its
natural state.”). That the two statutes might overlap in their application to a
particular taxpayer does not indicate legislative intent that one statute “preempt”
the other. See New England Forestry Found., 9 N.E.3d at 315-16 (holding that a
Massachusetts statute providing tax incentives for owners of undeveloped forest
land did not preempt the Massachusetts charitable exemption statute because the
statutes served distinct purposes and contained no language indicating that they
were mutually exclusive).
[¶27] The Town correctly notes that when two statutes are in conflict, “we
favor the application of a specific statutory provision over the application of a
more general provision.” Cent. Me. Power Co. v. Devereux Marine, Inc.,
2013 ME 37, ¶ 22, 68 A.3d 1262. We will not, however, read into the exemption
statute and the Farm and Open Space Tax Law a conflict where none exists. See
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Fernald v. Shaw’s Supermarkets, Inc., 2008 ME 81, ¶ 19, 946 A.2d 395; Yeadon
Fabric Domes, Inc. v. Me. Sports Complex, LLC, 2006 ME 85, ¶ 20, 901 A.2d 200.
C. Conclusion
[¶28] Under the circumstances of this case, the Trust is entitled to
exemption as a charitable and benevolent organization. Because we conclude that
the Trust’s property is exempt, we do not reach the issue of valuation.
The entry is:
Judgment of the Superior Court vacating the decision of
the State Board of Property Tax Review affirmed.
On the briefs:
Leah B. Rachin, Esq., Bergen & Parkinson, LLC, Kennebunk, for
appellant Town of Limington
David A. Lourie, Esq., Portland, for appellee The Francis Small
Heritage Trust, Inc.
Karin Marchetti-Ponte, Esq., Maine Coast Heritage Trust, Mount
Desert, and Robert H. Levin, Esq., Portland, for amici curiae Maine
Coast Heritage Trust and Land Trust Alliance, Inc.
At oral argument:
Leah B. Rachin, Esq., for appellant Town of Limington
David A. Lourie, Esq., for appellee The Francis Small Heritage Trust,
Inc.
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Karin Marchetti-Ponte, Esq., for amici curiae Maine Coast Heritage
Trust and Land Trust Alliance, Inc.
York County Superior Court docket number AP-12-41
FOR CLERK REFERENCE ONLY