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Are Conservation Lands Idle?

February 20, 2013 | Land Trust Alliance | Washington, D.C.

Taxing authorities concerned about lost revenue may fight real estate tax exemption of property owned by land trusts, but a New Mexico court found that conservation is a “charitable use” and conservation property is tax exempt. A similar case in Massachusetts is still in progress.

Prove It!

The Pittsburgh Post-Gazette reports that Allegheny County (Pennsylvania) Executive Rich Fitzgerald recently announced plans to send letters to of all 9,000 properties currently identified as non-government, tax-exempt to demand proof that those properties meet the current five-part test for property tax exemption. Ironically, county legislation passed in 2007 required a systematic review of such exemptions every three years. This systematic review is only one more avenue being pursued by the county and Pittsburgh to collect revenues from nonprofit organizations. This is an on-going effort in Pennsylvania: a "voluntary" payment agreement with colleges and universities (2009) and a payments-in-lieu-of-taxes (PILOT) agreement with a coalition of nonprofits (in place from at least 2010 through 2012).

New Mexico Court Opinion

In a case of first impression, the New Mexico Appeals Court held that a 60-acre conservation property owned by Pecos River Open Spaces subject to an open space conservation easement granted to the Santa Fe Conservation Trust prohibiting all construction is a “charitable use” exempt from property taxes under Article VIII, Section 3 of the New Mexico Constitution. The County taxing authority (Board) argued that conservation was not a charitable use because “land that is idle, unimproved and not in actual use” has “… no direct and immediate charitable use, and for which the claimed environmental benefit - even if construed to be a charitable purpose - is, at best, remote and consequential.” See below for a similar case with a contrary holding at the Board of Tax Appeal.  This case is the first published opinion on property tax exemption for conservation properties since the 1990’s.  See Adirondack Land Trust v. Town of Putnam Assessor, 203 A.D.2d 861 (N.Y. App. Div. 1994), for the last such case.  For a similar case that considered the term “use,” see Turner v. Trust for Public Land, 445 So. 2d 1124 (Ct. App. Fla. 1984).  

The recited facts do not explicitly address public recreational access but the apparent lack of recreational use is important because a handful of trial-level, unpublished opinions identify recreational access as a key factor in determining whether there is any public benefit from conservation of a property.  The Court found New Mexico’s “strong public policy encouraging conservation” and the County’s “goal of conservation within its borders” showed that “conservation of land in its natural and undeveloped state generally benefits the public in the context of environmental preservation and beautification of the the State of New Mexico.” Pecos River Open Spaces, Inc. v. County of San Miguel, No. 30,865, slip op., 2013-NMCA-___ (N.M. Ct. App. 2013). Period for appeal still open. State of New Mexico.” Pecos River Open Spaces, Inc. v. County of San Miguel, No. 30,865, slip op., 2013-NMCA-___ (N.M. Ct. App. 2013). The period for appeal still open.

Massachusetts Decision that Conservation Land Depends on Extensive Public Access

The Massachusetts Appellate Tax Board (ATB) ruled against the New England Forestry Foundation (NEFF) on its appeal of the refusal of the Board of Assessors of the Town of Hawley to abate real estate taxes on a 120 acre parcel of forest land bordered on two sides by the Commonwealth of Massachusetts Department of Conservation and Recreation’s Dubuque State Forest located in Hawley and owned by NEFF with a Conservation Restriction. A statute dating back to the 19th century allows personal property of a charitable organization and real estate owned and occupied by the organization for the purposes for which it was organized to be exempt from property taxes. The ATB has repeatedly found that an organization’s charitable exemption status is not dispositive in determining whether its property qualifies for the property tax exemption. The burden of establishing entitlement to the exemption is on the organization. Over the last ten years, the ATB consistently denied exemption either because the organization failed to “provide services to a large or fluid group of beneficiaries or failed to maintain goals and methods that are close to traditional charitable purposes and methods.”

NEFF provided evidence of educational promotion of sustainable forest practices, public access to the property for those wanting to learn more about sustainable forestry, and public access for those wishing to utilize and enjoy the large forested track for cross country skiing, snowmobiling, bird watching, walking and other recreation. The ATB found that NEFF’s education endeavors were insufficient in scope to be considered educational and further that the scope of tree harvesting by NEFF was not a dominant purpose of the non-profit and did not fit traditional charitable activity.

Massachusetts land trusts have maintained that public access, though a laudable goal, is not always in the best interests of the subject properties. Farmers with permanent agricultural restrictions may not want the public to have general access to their lands, and certain protected lands may host endangered or threatened species or provide habitat for such species. Also Massachusetts land trusts argued that the ATB failed to fully comprehend the varied and valuable benefits of protecting land, farmland, forestry land, water resources, etc. The case is expected to be appealed to either the Appeals Court or the Supreme Judicial Court.  

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