Property Tax Exemption For Maine Land Trusts

There is anecdotal evidence that Maine municipalities are increasingly denying or revoking property tax exemptions for all different kinds of nonprofit organizations, including land trusts.  The ongoing ordeal of Francis Small Heritage Trust (FSH) is a prime example.  A couple years ago FSHT was denied exemption for several parcels it owns in Limington.  FSHT then applied for an abatement and was again denied.  Eventually, it appealed to the Maine Board of Property Tax Review, which upheld the Town’s denial.  Currently, FSHT is appealing in Superior Court, and Maine Coast Heritage Trust has filed an amicus brief in support of FSHT.

Although Maine law is not completely settled on the issue, there are sound reasons for believing that land conservation is a charitable purpose in a property tax exemption context.  Land conservation is clearly a policy of the State, as Maine has enacted dozens of laws to protect the state’s open spaces and natural resources over the past few decades.  In addition, many municipalities have passed ordinances or comprehensive plans that make land conservation an official goal or policy.  Most courts in other states that have considered the issue have found land conservation to be charitable.  For a detailed legal analysis of the issue, see Karin Marchetti Ponte’s recent article.

Meanwhile, here are a couple key points for land trust staff and boards to consider:

• Make sure your Articles of Incorporation and Bylaws have narrowly focused mission statements.  One of the reasons cited by the Town and the Board of Property Tax Review in denying FSHT’s application was a lengthy purpose statement that included “protecting appropriate uses such as logging, farming and other compatible commercial activities.”  The BPTR ruled that this language meant that FSHT was not organized for exclusively charitable purposes.

• Be aware of your rights.  An assessor’s denial or revocation of exemption is not the final word on the matter.  Maine law provides several different ways to challenge this decision.  Assistance from an attorney who is experienced in tax exemption matters will be very useful in determining a sound course of action.  In the coming weeks, I plan to write a summary of the procedural options for land trusts that have been denied exemption; look for this summary to be posted on the Maine Land Trust Network website, www.mltn.org.
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Case Law: Board Officer Immune From Liability

Under contract with the Land Trust Alliance, I research and compile a comprehensive database of land conservation-related court opinions.  The current edition of Land Conservation Case Law Summaries includes 308 cases and is available to Alliance members at http://learningcenter.lta.org.  Occasionally, I discuss particularly important or interesting cases in this E-Bulletin.

A recent court decision out of Connecticut demonstrates the value of state volunteer immunity laws in protecting volunteers from tort liability exposure.  In Sweeney v. Friends of Hammonasset, Inc., 140 Conn. App. 40; 58 A.3d 293 (Conn. App. Ct. 2013), a man was injured after slipping on ice during a nighttime owling outing.  The man sued both a nonprofit corporation, Friends of Hammonasset, as well as its volunteer Board president.  The suit claimed that the president was negligent in her supervising, training and oversight duties.  The president invoked Connecticut’s volunteer immunity statute as a defense.  

The appellate court upheld the trial court in ruling for the president on summary judgment, finding that Connecticut’s volunteer immunity statute (which provides complete immunity) applied and was not preempted by the federal volunteer immunity statute (which provides immunity only for economic losses and not non-economic losses such as pain and suffering).  The court pointed to the federal statute’s section on preemption, which provides that any state law extending additional protection from liability relating to volunteers would not be preempted by the federal statute.  The court also broadly interpreted a director’s “policy or decision-making responsibilities” to include supervision, oversight, and training matters, the crux of plaintiff’s allegations against the president.

It is comforting to see an appellate court issue a broad interpretation of a state volunteer immunity statute.  Note that a typical commercial general liability (CGL) insurance policy would provide defense and liability coverage for both Friends and the president in this kind of litigation, as both the corporation and its officers, directors, and other volunteers are generally named insureds.  In contrast, a typical directors and officers (D&O) policy would not be of any use here because that sort of policy generally excludes bodily injury and property damage claims.

Maine, too, has a rather broad volunteer immunity statute, found at 14 M.R.S. § 158-A.  Immunity is extended to anyone who provides service to a charitable organization without compensation, whether a Board director or just an ordinary volunteer.  Moreover, receiving payment for expenses does not jeopardize one’s volunteer status.  “Charitable organization” is defined broadly to include all 501(c)(3) organizations, as well as many other kinds of nonprofits.  Immunity attaches to claims based on personal injury, death or property damage, including any monetary loss.  The immunity covers claims sounding in negligence (but not gross negligence or intentional or malicious acts) if arising from an act by the volunteer herself.  And the immunity covers all claims that do not involve the personal acts of the volunteer.  Finally, there is a limited waiver of the immunity for claims involving the volunteers’ operation of a motor vehicle, vessel, aircraft or other vehicle for which the operator or the owner of the vehicle, vessel or craft is required to possess an operator’s license or maintain insurance.

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CIRCULAR 230 DISCLOSURE: Any federal tax advice contained in this communication or attachment is not to be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending any transaction or matter addressed in this communication.