Massachusetts’ Highest Court Recognizes Myriad Public Benefits of Conservation
Massachusetts’ highest court issued a resounding endorsement of land conservation organizations’ myriad contributions to the cultural, health, societal, economic and environmental public good—contributions that benefit all citizens of Massachusetts and, by implication, our entire country. The court took great care to craft clear, sensible criteria to assist taxing authorities to distinguish bona fide charities from the few attempting to abuse the charitable property tax exemption for solely private purposes.
Massachusetts' highest court, the Supreme Judicial Court (SJC), ruled Thursday that the New England Forestry Foundation’s (NEFF) preservation of forest land qualifies as a charitable purpose under state law and that NEFF’s conservation parcels can be exempt from local property taxes. As the SJC wrote, “[W]e are not alone in recognizing conservation organizations as serving a traditionally charitable purpose by lessening the burdens of government.” New England Forestry Foundation v. Hawley, SJC-11432 ( May 15, 2014).
Notably, the SJC found that conservation land could be exempt even if no public access is permitted: “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.” The SJC, however, did articulate a careful standard that if a charitable organization actively excludes the public, it faces a heightened burden to show that exclusion is necessary to achieve its public purpose. See the “tests” discussion below for those details.
The SJC cited the New Mexico Court of Appeals holding that a land conservation organization owning land in the Pecos River Canyon in its "natural and undisturbed" state provided a "substantial benefit to the public" through its "environmental preservation and beautification" of the region. Therefore the land qualified for a property tax exemption despite the absence of any evidence that the public used the land for recreation or scenic views. Pecos River Open Spaces, Inc. vs. County of San Miguel, N.M. Ct. App., No. 30,865, slip op. at 9-10 (Jan. 11, 2013).
The court also cited Turner v. Trust for Pub. Land, 445 So. 2d 1124, 1126 (Fla. Dist. Ct. App. 1984), which stated that "[t]here can be little question that conservation serves a public purpose" and concluded that the particular parcel served "greatest public good" when it was left entirely undeveloped - without trails, walkways, or educational facilities. Equally of note is that the holding in this case potentially applies to any charity owning land such as colleges, hospitals and religious organizations who hold lands, usually adjacent to their active campuses, but which do not have a use directly related to their charters.
The Massachusetts SJC joined these few highest courts ruling that “by holding land in its natural and pristine condition and thereby protecting wildlife habitats, filtering the air and water supply, and absorbing carbon emissions, combined with engaging in sustainable harvests to ensure the longevity of the forest, NEFF engages in charitable activities of a type that may benefit the general public.”
Hawley officials had reiterated the argument of several Appellate Tax Board rulings that public access is the only benefit of conservation land that qualified a property for tax exemption, and argued that the Forestry Foundation did too little to encourage public use of the forest to qualify as tax-free. The court disagreed and identified many other benefits that flow from conservation land and that qualify a property for tax exemption. The court also held that preferential tax laws (aka current use assessments) are a parallel recognition of public good, not a substitute for property tax exemption.
The court specifically ruled that neither public access nor promotion of public access is necessary to establish real public benefit. The court, however, did articulate a careful standard requiring a greater showing of public benefit where public access is actively prohibited.
The town of Hawley imposed taxes on 134-acres of forest land owned by the New England Forestry Foundation on the basis that the organization failed to provide adequate public access to the tract, and said merely keeping land in a natural state doesn't constitute a charitable purpose. NEFF provided year round public access to the parcel in addition to numerous other mission-consistent public benefits.
The state's tax board endorsed the town’s position, but the Massachusetts Supreme Judicial Court reversed the tax board's decision and articulated a much broader frame for assessing the charitable property tax exemption. The court further held that conservation charities aren't obligated to provide public access, as some fragile lands cannot support such activity.
Originally the Massachusetts Appellate Tax Board (ATB) ruled against NEFF on its appeal of the refusal of the Board of Assessors of the Town of Hawley to abate real estate taxes on NEFF’s forest land bordered on two sides by the Commonwealth of Massachusetts Dubuque State Forest. New England Forestry Foundation v. Board of Assessors and Town of Hawley, Docket No. F306063, Commonwealth of Massachusetts Appellate Tax Board Promulgated: January 28, 2013. See the Alliance’s January 2014 eNews for more.
The ATB cited its own previous ruling dismissing the idea that preserving property was a charitable purpose, which stated “simply keeping land open and allowing its natural habitat to flourish is not sufficiently charitable.” The Massachusetts Supreme Judicial Court rejected the ATB’s argument in all respects.
The SJC said, ”[h]owever, 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 [MA] 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. 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. Such benefits may extend beyond the parcel of land itself. Consequently, NEFF's activities are not of the sort that inure only to a limited group of people such as the organization's own members.”
The Hawley case represented an opportunity to establish the many benefits and public good that land trusts and their supporters provide. The Land Trust Alliance is pleased that the Massachusetts Supreme Judicial Court recognized the innumerable public benefits from conserved land in the culture, economy, health, climate, land, water, nature and community of everyone in the Commonwealth thereby lessening the burdens of government and making public tax dollars go further, especially as towns and cities continue to have budget deficits that affect their ability to provide all necessary services.
If all land trusts – and other charities- had been forced to begin to pay property taxes for the land they hold, there would have been significant adverse consequences to Massachusetts citizens as well as the lands we cherish, and the land trusts that protect these lands for the public good. In keeping conserved places, we nurture that which defines us and contributes in countless ways to a better life for all.
As an organization that focuses on potential effects of land conservation nationwide, the Alliance collaborated with the Massachusetts Land Trust Coalition to file a joint amicus brief and followed this case closely. The Massachusetts Audubon Society, The Nature Conservancy, The Trustees of Reservations, and many other Massachusetts conservation organizations worked in partnership with the New England Forestry Foundation and the Land Trust Alliance on this critical case that affects all charitable work in the Commonwealth.
NEFF applied for a full property tax exemption for the Hawley Forest under Massachusetts G. L. c. 59, § 5, Third (Clause Third). The town assessors denied tax exemption contending that the Legislature intended G. L. c. 61 , § 2 land use tax (current use tax/forestry) reduction to be the extent of the tax benefit afforded to private landowners holding undeveloped forest land, and that Clause Third does not apply to land conservation organizations such as NEFF because the Legislature, by special act passed in 1891, intended The Trustees of Reservations to be the only private, nonprofit entity permitted to hold conservation land completely free from property taxes.
The Court rejected both arguments saying that organizations may be eligible for both tax benefits, and the overlap does not indicate a legislative intent for one statute to somehow "preempt" the other or that the history of TTOR suggest exclusivity of tax benefits.
The SJC established the following “requirements” to determine Clause Third qualification. The requirements may be closely related and have facts relevant to each but must be each considered in turn to ascertain if the organization seeking the exemption meets its burden under the statutes express terms.
First, the organization seeking the exemption must qualify as a “charitable organization” within the meaning of Clause Third:
- The organization must prove that it is in fact so conducted that in actual operation it is a public charity and
- The dominant purpose of the charitable organization must be to perform work for the public good and not merely for its own members.
- But where the organization’s dominant purposes are further from the traditional charitable purposes articulated in Clause Third (“literary, benevolent, charitable or scientific institution or temperance”) it must show additional factors such as benefiting an indefinite number of people, benefiting the general public and lessening the burdens of government by fulfilling an express goal or duty of government.
Second, the organization must occupy the property in furtherance of its charitable purposes. Occupancy is something more than simple ownership and possession.
- Instead it is an active appropriation to the immediate uses of the charitable mission of the organization. The dominant use of the property in question must contribute directly to promote the charity and participate physically in advancing the charity’s mission.
- The use of the property must be more than incidentally charitable or merely an indirect result of a noncharitable use of the property. But the courts will defer to the organization’s decisions about how it will use the property and the specific activities on the property so long as the property is directly used to further the organization’s mission.
- The organization must demonstrate that it occupies the parcel less like a private landowner and more like an entity seeking to further the public good.
- This does not require public access where such use is not necessary for the organization to achieve its charitable purpose. But if an organization takes steps to expressly exclude the public it has a heightened burden to show by compelling evidence that such exclusion is necessary to achieve its charitable purposes.
The SJC also discussed the attributes of a bona fide charitable organization to address the legitimate concerns of the town that private parties would seek to abuse the tax exempt status. Without formally establishing a test, the SJC wrote that factors to consider could include:
- Membership in regional, State or national coalitions of conservation organizations;
- Recognition by government entities or the scientific or academic community as a trusted community resource;
- Partnership with local municipalities in carrying out state laws (such as being selected by a town or city to exercise its right of first refusal);
- Ownership of multiple parcels in various locations of a similar ecological sort or of a variety consistent with the organization's stated mission;
- Expertise of staff members in land conservation and environmental initiatives;
- Success in receiving competitive grants from Federal or State agencies;
- Certifications or accreditations from government or other appropriate entities;
- Invitations from policy makers or State agencies to participate in regional or Statewide strategic planning initiatives; or
- Like indicia of the organization's status as a genuine land-conservation organization.
Similar Case before Maine Highest Court
The same day that the SJC handed down its decision in NEFF v. Hawley, the Maine Supreme Judicial Court held oral arguments in Francis Small Heritage Trust Inc. v. Town of Limington, Law Docket No. YOR-13-511. The main focus was on whether Maine’s Open Space Tax Law (similar to the current-use statutes in Massachusetts c. 61) supplanted property tax exemption.
Attorney Rob Levin reported that the Justices probed that issue and also seemed open to the notion that land conservation is charitable. The parties also addressed the question of preventing the potential for abuse. Maine land trust attorneys “are thrilled with the strong endorsement the NEFF v. Hawley opinion gives to the important public benefits that conservation provides. It’s a ringing endorsement of conservation from a state that has a proud and storied tradition in this field. Let’s hope that other states, like Maine, follow this solid opinion from the Massachusetts high court,” said Attorney Levin.
Rob Levin authored the MCHT and Alliance’s brief in the Hawley case and co-authored the Alliance’s brief in the Maine case in collaboration with Maine Coast Heritage Trust attorney Karin Marchetti Ponte. For the background on the Maine case see the Conservation Case Law Summaries in the Conservation Defense Clearinghouse collected by Attorney Rob Levin under contract with the Land Trust Alliance. See the decision here.
Francis Small Heritage Trust (FSHT) is a land trust that owns several contiguous parcels of land comprising the Sawyer Mountain Highlands Preserve in the Town of Limington. All of the parcels were open to the general public for a variety of recreational uses, and FSHT held occasional educational events on the parcels.
FSHT acquired the parcels at different times, and enrolled some of the parcels in the current use Tree Growth program, while enrolling others in the current use Open Space program, both of which reduced property taxes. After the Town dramatically increased the tax assessment in 2009, FSHT applied for outright exemption, then petitioned the Maine Board of Property Tax Review, and eventually appealed in court.
The Town argued that the Open Space property tax program was intended by the Legislature to pre-empt exemption for land conservation properties. Also at issue was whether land conservation in and of itself is a charitable use within the meaning of Maine’s property tax exemption statute. Finally, FSHT claimed federal civil rights violations based on evidence that the Town had denied the exemption application because FSHT had successfully brought a lawsuit against the Town relating to an abutter’s subdivision application.
The Superior Court (Justice Fritzsche) held for FSHT on the exemption issue, finding in very forceful language that land conservation is charitable. In its key paragraph, the Court wrote:
"It is time to directly declare that a legitimate land trust, such as this one, which meets the statutory and case law requirements, is a benevolent and charitable institution exempt from local property taxes. The direct and indirect value of open space preservation particularly when, in appropriate cases, it is coupled with access for a wide variety of recreational activity is within any modern definition of a charitable institution. In addition to the ecological and environmental benefit of land preservation there are numerous physical, psychological and, for some, even spiritual benefits to having access to undeveloped land."
The Maine Supreme Judicial Court opinion should be issued by this fall.
The briefs on NEFF v Hawley and in Francis Small Heritage Trust Inc. v. Town of Limington are in the collection on property tax exemption cases in The Learning Center.