Originally published on Forbes.com May 26th, 2014
The Massachusetts Supreme Judicial Court went with the consensus view on global warming in its decision in the case titled New England Forestry Foundation, Inc vs Board of Assessors of Hawley .
……the climate change adaptation advisory committee of the Executive Office of Energy and Environmental Affairs has identified the conservation of large forested blocks of land as an effective means of contributing to “ecosystem resilience” in the face of rising temperatures and more severe storms because forests naturally absorb carbon and other harmful emissions.
Property Tax Exemptions Can Be Hard
Getting a not-for-profit organization exemption from federal taxes, while somewhat challenging is really not that hard, Teapartygate and Lois Lerner to the contrary notwithstanding. Exemption from local property taxes can be much more difficult. Partly this may be because the effect of tax exemption is much more vivid in a town. The math is pretty simple divide the expenditure budget by the total assessed valuation and you have the tax rate. Lower the denominator of the fraction by exempting somebody’s property and there are only two possible effects – everybody else’s rate goes up or expenditures have to come down.
You really can’t blame the Assessors of Hawley Massachusetts with a population of 337 according to the last census and plenty of trees as google maps shows. The Town of Hawley has considerably less in the way of resources than the New England Forestry Foundation which was appealing a rejection of charitable exemption on 120 acres of forested land adjacent to a state park.
The Issue
The issue was whether NEFF was occupying the land for a “charitable purpose”. The question seems a little odd since the Forestry Foundation is recognized by the state and federal government as a charity and it is an actual forest (or part of one) that it owns. As cases from across, the country show, though, the standard for property tax exemption tends to be more narrow and more rigorous.
NEFF had been paying local property tax on the parcel since acquiring it in 1999. Thanks to forestry classification, the taxes were very low – less than $200. There is a bit of administrative expense, though, that NEFF hoped it could avoid by claiming a charitable exemption. The assessors turned NEFF down and the Appellate Tax Board sustained their determination.
Specifically, the board concluded that NEFF was not carrying out a charitable purpose within the meaning of the statute because forest management is not a traditional charitable purpose and because the benefits of NEFF’s activities in the Hawley forest do not inure to a sufficiently large and fluid class of persons due in part to NEFF’s insufficient efforts to promote the use of the land by the public. The board further concluded that NEFF did not occupy the Hawley forest in furtherance of its claimed charitable purposes because it offered “at best vague testimony” regarding what it termed “active management” of the land, and provided evidence of only one planned educational activity to take place in the Hawley forest. ….. the tax-reduction scheme for forest land under G.L. c. 61 demonstrates that the Legislature intended only to reduce the tax burden on forest land, not to eliminate it completely.
One Break Does Not Preclude Another
The Supreme Judicial Court sided with NEFF. It determined first off that the reduction in taxes for keeping land in forestry and a charitable exemption were not mutually exclusive.
….G.L. c. 61 does not contain any express or implied indication that the Legislature intended for c. 61 to preclude land conservation organizations from seeking or qualifying for a property tax exemption under Clause Third. Chapter 61 references expressly “nonprofit conservation organization.” G.L. c. 61, §§ 6, 8. Thus, the Legislature considered nonprofit land-conservation organizations when it enacted the statute. Yet the Legislature never stated that c. 61 should serve as the only source of a property tax benefit for nonprofit conservation organizations.
What Is Charity?
In order to qualify for the charitable exemption, NEFF has to both be a charitable organization and also “occupy” the land for its charitable purpose, which goes beyond more ownership.
In the context of the property tax exemption, we have long recognized that “charity” may constitute more than “mere alms giving.”
…a charity is “a gift, to be applied consistently with existing laws, 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 by otherwise lessening the burdens of government.”
Preserving Open Space Is Traditionally Charitable
NEFF’s purposes are traditionally charitable within the meaning of Clause Third and the definition of charity set forth in Jackson, supra.First, NEFF’s charitable programs and activities, both in Hawley and throughout New England, are of the sort that their benefit inures to an indefinite number of people. Historically, the “benefit” provided by land held as open space or in its natural state has been measured by the direct access of people to that land for such purposes as recreation, scenic views, or education.
And Then There Is That Nasty Global Warming – That Judges In Boston Believe In
However, as the science of conservation has advanced, it has become more apparent that properly preserved and managed conservation land can provide a tangible benefit to a community even if few people enter the land. For example, the climate change adaptation advisory committee of the Executive Office of Energy and Environmental Affairs has identified the conservation of large forested blocks of land as an effective means of contributing to “ecosystem resilience” in the face of rising temperatures and more severe storms because forests naturally absorb carbon and other harmful emissions.
Additionally, open space land naturally absorbs and helps dissipate stormwater runoff without the need for drainage systems that are required in paved and developed areas. 8 Furthermore, forest land helps to clean the air by filtering particulates naturally, and it regulates and purifies the fresh water supply by stabilizing soils that store water over time and filter contaminants.
Citizens Of Massachusetts Have A Right To Clean Air And Water – Who Knew?
I really should take a closer look at my state constitution.
Conservation and environmental protection are express obligations of the government in Massachusetts. Article 97 of the Amendments to the Massachusetts Constitution provides a right of the people to “clean air and water, freedom from excessive and unnecessary noise, and the natural, scenic, historic, and esthetic qualities of their environment” and identifies as a “public purpose” the government’s protection of people in their right to the conservation, development, and utilization of natural resources.
In Hawley, NEFF is acting in a manner that assists the State in achieving its conservation policy goals. The Hawley forest is abutted on two sides by the Kenneth Dubuque Memorial State Forest. By acquiring property that directly abuts the State Forest, NEFF has helped to extend a block of forested land preserved by the State. The preservation of increasingly large and contiguous forested blocks has been identified by the EEA as important to the preservation of species that require a certain amount of continuous area to thrive and to the biodiversity of forest lands more generally. Furthermore, NEFF is committed to managing its forest lands according to many of the same principles the Department of Conservation and Recreation has set forth for the management of its own forest lands.
We Still Should Probably Figure Out A Way To Help The Town
According to its Form 990 New England Forestry Foundation has net book value of over $31 Million and annual revenue over $2 Million. According to the FAQ of the NEFF website the tax bill in question was fairly trivial – $172, but the principle at stake was important enough to draw amicus briefs from the Massachusetts Land Trust Coalition, Massachusetts Association of Conservation Commissions, The Trustees of Reservations and the Nature Conservancy. There are hundreds of acres on Cape Cod, some quite small, that would not qualify for the low agriculture valuation that lowered NEFF’s bill in Hawley.
You might wonder why the Town of Hawley fought this case so hard. Apparently, the woods to people ratio in Hawley is high enough that exempting a lot of forest could be a real hardship. If you take a look at the vicinity of Hawley on google maps, you will note that there is no local shortage of trees. In the last census, the town had a population of 337. The town’s website indicates that it may not be done with the struggle
It became clear at the Tuesday, May 20 Selectboard meeting that there is a great deal of interest in placing limitations on some tax exemptions and finding ways to shore up the ongoing ability of low-population-density towns like Hawley to generate the revenue needed to finance their operations.
In some ways, this case reflects a problem with local property tax exemptions. Often the public benefit the exemption provides is broad and perhaps not much appreciated by the local taxpayers who have to pick up the slack. The Selectmen indicated that they might be seeking help from the legislature.
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