In a case that could have broad – and expensive – implications for conservation organizations statewide, the Supreme Judicial Court (SJC) must decide whether forest land owned by a nonprofit is entitled to a charitable exemption from property taxes.
New England Forestry Foundation, Inc. v. Board of Assessors of the Town of Hawley (SJC-11432) went before the SJC last week (see the webcast of the oral arguments). The case – taken by the SJC on direct review from the Appellate Tax Board – pits a small Berkshires town against one of the largest land preservation organizations in New England.
In 2009, the Town of Hawley (population 337 – yes, you read that right) sent the New England Forestry Foundation, Inc. (NEFF) a tax bill totaling $172 for 120 acres of forest land. The tax assessment was based on the property’s forestry classification, pursuant to M.G.L. c. 61, which affords owners of managed forest land significant tax reductions.
NEFF paid the bill, but then applied for a charitable exemption from local property taxes, pursuant to M.G.L. c. 59, § 5, Clause Third. This statute exempts from taxation “real estate owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized.”
NEFF uses its Hawley property for forest conservation and infrequent timbering activities, and permits the public to access marked trails on the property. In addition, NEFF asserts that it uses the property to educate its members and neighboring property owners on sustainable forestry practices. These activities, according to NEFF, constitute occupancy of the property for charitable purposes.
The Hawley Board of Assessors disagreed and denied NEFF’s application for a charitable exemption. The Appellate Tax Board (ATB) agreed with Hawley in a 2013 decision.
The ATB found that a lack of convenient public access to the NEFF property, and the limited nature of NEFF’s educational activities, were evidence that the NEFF property did not benefit the public at large or relieve the government of any burdens, and was therefore ineligible for a charitable exemption. According to the ATB, the “preservation of nature” – however laudable – is not on its own sufficiently charitable. The ATB also noted that M.G.L. c. 61 offers favorable tax treatment for forest land, suggesting that the legislature did not intend to completely exempt such land from taxation.
The ATB’s decision is consistent with several prior ATB cases holding that nonprofits must take affirmative measures to encourage public access to conservation land in order to qualify for a property tax exemption. In essence, the ATB opposes charitable exemptions for private nature reserves, or conservation land that is not sufficiently welcoming to the public.
NEFF, along with several high-profile conservation organizations submitting amicus briefs to the SJC, argue that the ATB’s public access requirement is too strict, and fails to recognize the public benefits associated with land left in its natural state. Conservation groups fear that if the SJC upholds the Hawley Board of Assessors, thousands of acres of conservation land statewide may be subject to property taxes. For property that is ineligible for forest land classification or other tax reduction programs, the tax bills could be significant – particularly in expensive zip codes.
We will be sure to analyze the SJC’s decision in this case later this year.