Land Trusts Fend Off Governor’s Property Tax Assault (Again)

In what is becoming an annual exercise, Maine land trusts are once again fending off attempts by the Governor and his conservative allies in the Legislature to weaken the property tax laws as applied to land trusts in particular and nonprofit organizations in general.  Two separate bills, LD 727and LD 1521, are at issue.  Last year, similar bills were unanimously defeated in committee, but recently LD 727 received support from four Republican members of the Taxation Committee.  Meanwhile, the Committee voted 9 to 3 Ought Not To Pass on LD 1521 last Thursday.  Now both bills will go before the full Legislature.  For more information on what these bills would do, see MCHT’s analysis.

Now is the time once again to let your Representatives and Senators know that support for land conservation is bipartisan, and that the property tax laws do not need a legislative fix.  Click here to find your legislators and their contact information.  Hearing from even three or four constituents can make a big difference on these bills.  And the property tax issue is a great entree to speaking about the overall work of your local land trust.

Maine Trial Court Rules Against Land Trust in Conservation Easement Dispute

In an April 29 decision, Justice John O’Neil of the Maine Superior Court ruled that a nonprofit school was not a “commercial use” and therefore did not violate a conservation easement held by the Saco Valley Land Trust (SVLT).  The court further held that the easement’s reference to “local land use laws” referred to those laws as they may change over time, and not at the time the easement was executed.

Here’s the backstory:  SVLT accepted a donated conservation easement from Mary Merrill in 1998 on her 105-acre property in Saco.  The easement designated 96 acres as the “Protected Property” and the other 9 acres as the “Residence/Farm Area,” where an existing residence and some outbuildings were located.  The restrictions on the 96 acres are fairly typical of a conservation easement, with only minimal structures and surface alterations permitted.  In contrast, the Residence/Farm Area was largely unrestricted, with two key exceptions: (1) no “commercial uses” were allowed (except forestry or agriculture); and (2) any structures had to be “permitted by local land use laws and… in keeping architecturally with the other structures in the Residence/Farm Area.”

In 2015, the Ferry Beach Ecology School (FBES), a Maine nonprofit corporation and 501(c)(3) tax-exempt organization, worked out a deal to purchase the 105 acres from Thomas Merrill (Mary’s nephew, who inherited the property upon Mary’s death).  FBES sought to relocate its educational programs to a new campus on the property, and proposed to establish two 9,000-square-foot dormitories and a 7,000-square-foot dining hall for 120 students within the Residence/Farm Area.  SVLT’s approval of the project was a contingency of the purchase and sale agreement, as was the City’s land use approvals.  The City of Saco approved a contract zone application for the property in early 2016, but site plan review was placed on hold pending SVLT’s approval.

SVLT objected to the FBES proposal, claiming that the size and scope of the school’s activities rendered it a commercial use that was not consistent with Mary’s intentions as set forth in the easement and in her subsequent last will and testament.  SVLT also contended that the easement’s reference to structures “permitted by local land use laws” referred to the laws in effect as of 1998, when the easement was executed.  And because the 1998 zoning classification would not have allowed the school, the FBES proposal could not meet the “local land use laws” condition of the easement.

Thomas Merrill filed suit against SVLT, seeking a declaratory judgment that the school’s activities and structures did not constitute a “commercial use,” and that the easement’s reference to local laws referred to laws in existence moving forward to time, and not the laws in effect at the time of the easement’s conveyance.

On summary judgment, the Superior Court sided with Merrill on both points.  As for commercial use, the court followed past Maine Supreme Court decisions that cited the dictionary definition of the word “commercial” to mean “of or relating to commerce” and “having profit as a primary aim.”  Because FBES was organized as a nonprofit corporation with educational purposes, it did not have profit as a primary aim, even if it might substantially grow its programs at the new location.  The court also pointed out that the potential size and scope of the educational programs and structures was nevertheless consistent with the easement because only minimal restrictions were placed on the Residence/Farm Area.

On the reference issue, given the absence of case law from the Maine Supreme Court, the Superior Court judge adopted a general rule of deed construction that any reference to general laws refers to laws as they may change over time, unless there is a clear expression of contrary intent.  In contrast, references to specific statutory provisions refer to the law in place at the time of the reference, unless provided otherwise, such as by adding the words “as amended” after the reference.  Because the conservation easement used the former approach, its general reference to local land use laws was intended to mean those laws as they might evolve in the future.  As the court noted, to hold otherwise would mean that decades or even centuries in the future, the parties would have to interpret a proposed action’s consistency with the City’s 1998 land use laws.

As this case shows, land trusts and landowners cannot rely on a blanket prohibition of commercial uses to prevent all high-impact uses of a protected property.  By the logic of this decision, a nonprofit hospital could also be placed within the Residence/Farm Area.  Moreover, easement drafters should take note of any references to general laws or specific statutes, and make sure the intent is consistent with the rule of construction expressed in this decision.

One remaining loose thread, which prevented a full dismissal in Merrill’s favor, is that FBES still must obtain final site plan approvals from the City, although that appears to be a likely next step.  In addition, Merrill brought conflict-of-interest claims against SVLT because two of its Board directors own nearby property and allegedly should have recused themselves from SVLT’s internal decision making process.  But this decision doesn’t address that issue.  Finally, SVLT could still seek to defeat the project on the architectural consistency issue, also not addressed in this decision.  It’s not clear at this point whether SVLT will appeal the decision to the Maine Supreme Court.  In any event, such appeal would likely have to wait until the remaining zoning approvals are resolved by the City.

The court’s decision is not currently online.  Please email me if you’d like a copy.

‍

Maine Supreme Court Decides Conservation Easement Standing Case

In January, the Maine Supreme Court issued an important opinion (Estate of Robbins v. Chebeague and Cumberland Land Trust) that sharply circumscribes who has standing to enforce conservation easements in Maine.  In my view this case reaches the right policy outcome, and a judicious resolution of this particular dispute.  Although the specific issue that was decided by the court concerns a relatively rare situation, the broader and far more significant implication of the opinion is to confirm that Maine’s conservation easement enabling act does not confer standing on neighbors or the public at large.

Here are the key background facts: In 1997, Marion Payson donated a conservation easement on 100 acres of coastal land in the Town of Cumberland to the Chebeague & Cumberland Land Trust (CCLT).  The easement allowed for 10 building lots, each on separate dividable parcels.  In June 2014, the Payson heirs agreed to sell the bulk of the protected property to a developer, and the family retained only a 2-acre parcel.  Between the execution of the purchase and sale contract and the closing, the developer (unbeknownst to the Payson family) worked out a deal to sell the Town a 25-acre portion of the protected property for $3 million.  The Town proceeded with plans to develop a beachfront park, including the paving of an existing unpaved access road and the establishment of a parking area, portable toilets, and a pier.  The Town had been seeking public beach and shore access for many years, and this property was one of the few remaining undeveloped parcels available.  Meanwhile, CCLT determined that the paved road, parking area and recreational structures would not violate the conservation easement.  Cumberland voters narrowly approved the beach park purchase in November 2014.  The Payson family (acting through the Estate of Merrill Robbins, the record owner of the 2 acres) objected to the sale to the Town and filed suit against CCLT and the Town in December, claiming that the park improvements would violate the conservation easement.  The Town and CCLT filed motions to dismiss, contending that the Estate had no standing because it owned only the 2-acre parcel, which was separate from the 25-acre parcel to be developed into the beach park.  Maine’s conservation easement act confers standing on “an owner of an interest in the real property burdened by the easement.” 33 M.R.S. § 478(1)(C).  At issue on the motions to dismiss was whether any one landowner can bring an action to enforce the conservation easement as it pertains to another landowner under the same easement (i.e., a broad standing application).  Or does a landowner have standing only with respect to her specific portion of the protected property (i.e., a narrow standing application)?  The trial court held in favor of the narrow application and dismissed all claims against the Town and CCLT (opinion available here by typing “Woodworth” in plaintiff line), and the Estate appealed.

The Maine Attorney General filed an amicus brief in support of the landowners on appeal.  The AG took no position on the merits of the landowners’ argument about the correct interpretation of the conservation easement, but rather argued for the broader standing interpretation, finding no ambiguity in the enabling statute.  Meanwhile, the Maine Farmland Trust filed an amicus brief in favor of a narrow application of the standing provision, focusing on the policy implications.

The Maine Supreme Judicial Court affirmed the trial court in a 3-2 decision, holding that a landowner of one geographic portion of a conservation easement protected property does not have standing to enforce that easement as it pertains to a separate area of the protected property owned by another person.  The court found that the phrase “owner of an interest in the real property burdened by the easement” was ambiguous, insofar as it could reasonably be interpreted to mean either the broad or the narrow standing application.  The court went on to conclude that the underlying policy and legislative intent of the Maine conservation easement enabling statute supports the narrow reading.  In particular, the court cited a comment to the Uniform Conservation Easement Act (UCEA), upon which Maine’s enabling statute is based.  This comment suggests that the principal purpose of granting standing to the landowner is to allow that landowner to hold the easement holder accountable with respect to any affirmative obligations owed by the holder to that landowner, and not generally to all landowners under the easement.

The court likened the Payson heirs’ attempt to enforce the easement to a private attorney general action.  And because Maine’s enabling statute was amended in 2007 to allow for only limited standing by the Maine Attorney General, the court concluded that the Maine Legislature did not intend to allow for expanded standing by members of the public acting as private attorneys general.  Moreover, the court observed that from a policy perspective, a broad standing application is not needed because the Attorney General has standing under Maine’s statute in the event that a holder fails to enforce a clear violation.  Moreover, the court noted that a broad standing rule would expose the easement holder to “expensive and complicated enforcement lawsuits” that often would not serve the public interest, such as in the instant case where the plaintiffs’ apparent motivation was to limit public access.

The dissent took a different approach, finding that the key phrase, “an owner of an interest in the real property burdened by the easement,” was not ambiguous.  The dissent reasoned that because the word “the” is a definite article, its plain meaning “must refer to all of the real property” burdened by the easement, not just that portion owned by a particular landowner.  The fact that this was a split 3-2 decision reflected that the statutory construction issue was far from a no-brainer.  Some of my legal colleagues and land trust professionals, committed conservationists all, think the dissent had the better legal argument here.

Nevertheless, I’m quite pleased with this opinion from a policy perspective.  The circumstances present in this case, where the owner of a portion of an easement-protected property seeks to enforce the easement with respect to a portion owned by another landowner, are relatively unusual.  The true impact of this opinion is in resolving the broader and much more common question of whether neighbors or the general public have standing under Maine’s conservation easement enabling statute.  All of the reasons cited by the Maine Supreme Court in denying standing to these particular plaintiffs are even more applicable and persuasive with respect to a typical neighbor or citizen with no ownership interest in the protected property.  Until now, the only decision on neighbor or citizen standing in Maine came from a one-page trial court order rejecting such standing.  Cluff  Miller v. Gallop, No. RE-03-022 (York Cty. Super. Ct. July 2, 2003).  But the Estate of Robbins opinion effectively confirms that neighbors, as well as the general public at large, do not have any such standing to enforce conservation easements in Maine.

Foreclosing neighbor or citizen standing is the right policy outcome because nine times out of ten, these suits further the private interests of the plaintiffs rather than the public interests of land protection, just as the Maine Supreme Court pointed out.  And for the very occasional instance where a neighbor or citizen seeks to step in because the easement holder has been genuinely remiss in its enforcement responsibilities, that person can petition the Maine Attorney General to exercise its enforcement powers under Maine’s enabling act.  Although the Maine Attorney General’s office does not have the resources to take on numerous enforcement actions, surely it has the ability to step in for the once-in-a-blue-moon situation where a land trust (or more, likely, a government holder) is asleep at the wheel.

On the narrower question of whether the owner of a portion of a protected property should have standing to enforce the easement vis a vis another portion of the property, I think the equity issues are more debatable, but still militate in favor of denying standing.  Looking prospectively, attorneys representing landowners should be alert to this issue whenever the easement will allow division of the protected property or when the property already has multiple parcels with different landowners.  In these cases, the easement can be drafted so as to override the narrow standing under the statute, although of course this will be a double-edged sword, subjecting every parcel owner to the whims of every other parcel’s owner.  On the one occasion over the past couple years where I have seen the issue arise during the drafting of an easement, both landowners declined to assume any standing authority over each other, and trusted that the holder would responsibly enforce the easement.

Meanwhile, it’s unclear to what extent this opinion will or should have applicability outside of Maine.  Although the specific language at issue, “an owner of an interest in the real property burdened by the easement,” comes directly from the UCEA and is found in dozens of state enabling statutes, Maine’s enabling statute diverges from the UCEA in two respects.  First, Maine’s statute expressly grants the Maine Attorney General limited standing to initiate and intervene in conservation easement suits.  Only a handful of other states have similar AG standing provisions.  Second, Maine’s statute omits a provision of the UCEA that grants standing to “a person authorized by other law.”  In fact, the trial court rejected standing on a “special interest” theory precisely because of this omission.  The omitted language arguably allows the owner of a portion of an easement-protected property such standing on a “special interest” or “intended beneficiary” common law theory.  In the only case that is directly on point, a Connecticut trial court judge in McEvoy v. Palumbo, 52 Conn. L. Rptr. 745 (Conn. Super. Ct. Nov. 16, 2011) also applied the narrow standing approach.