It was only a $173 tax bill. But it led to a landmark ruling in May that could have nationwide consequences for the future of American conservation.
The property-tax bill, issued by the town of Hawley, Massachusetts, to the New England Forestry Foundation, examined key questions about the laws behind land trusts and nature conservancies—the most popular forms of nature philanthropy today. What exactly does it mean to conserve land? What must a charity do with the property to benefit the public? What organizations—and what types of land—deserve favorable tax treatment?
Wrangling over woods
Not quite 350 people live in Hawley, a sleepy Massachusetts town about 13 miles south of the Vermont border. The town has no gas station, but it does have the 134-acre Stetson-Phelps Memorial Forest.
The New England Forestry Foundation (NEFF) bought the land in 1999. For a decade, NEFF paid its small property-tax bill—reduced 90 percent under a program to preserve forestland. In 2009, at the conclusion of a ten-year forest-management plan on the property, NEFF applied to the town for a charitable tax exemption to reduce the tax bill to zero.
But Hawley officials denied the exemption, so NEFF appealed to the courts, prompting a multi-part legal battle: New England Forestry Foundation Inc. v. Board of Assessors of Hawley.
In Massachusetts, the charitable property-tax exemption has two requirements: that a charitable organization own the property, and that it “occupy” the property according to its mission. For example, a charitable organization that runs a museum wouldn’t have to pay property taxes on its galleries, since they help fulfill its mission, but it would have to pay up for its gift shop. Similarly, a university that builds a casino on campus wouldn’t qualify for a property-tax exemption for that land.
The fundamental question in the case: Does preserving land count as “occupying” it for charitable purposes? Is conservation action? Hawley officials had no doubt that NEFF owned the land, but was the nonprofit using it accordingly?
Similar disputes have popped up across the country, threatening the charitable status of land conservation. In New Mexico, an appellate court in 2013 upheld a charitable exemption for conservation in a case that pitted San Miguel County against Pecos River Open Spaces. Maine’s highest court heard oral arguments in another case, Francis Small Heritage Trust Inc. v. Town of Limington, in May, and a decision is expected later this year. Losing charitable property-tax exemptions “could significantly reduce capacity” of conservation groups, says Bob Wilber, director of land protection for Mass Audubon.
Does private preservation benefit the public?
Founded in 1944, the New England Forestry Foundation supports sustainable forestry by owning 23,000 acres, including 7,500 in Massachusetts. It also educates other landowners on keeping lands healthy, and monitors more than a million acres of conservation easements.
But the Hawley town tax assessors, and later the state’s appellate tax board, found that NEFF’s limited activity at the community forest didn’t count as occupying the property. The appellate board said the group should do more to make the woods available to the public if it wanted a charitable tax exemption. For example, the nonprofit could post signs welcoming people to the forest.
Public availability is key to justifying charitable tax breaks. Without requirements for it, groups of neighbors could form a nonprofit to preserve land in their neighborhood and then limit access to themselves, without paying property taxes. Though the Forestry Foundation posted a small sign that read “We invite respectful public visits” at the woods, officials in Hawley complained they didn’t do enough to encourage public use.
On May 15, the Massachusetts Supreme Judicial Court ruled unanimously that the foundation should not have to pay the tax bill. NEFF allowed hiking and hunting in the woods, and made the land available to a snowmobile club. And private conservation produces other public benefits, the court ruled. “By holding land in its natural 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,” wrote Justice Francis Spina.
Spina further argued that the lack of “affirmative steps to exclude the public from the land, such as through physical barriers, ‘no trespassing’ signs, or actively patrolling the land” separate conservancy lands from truly private lands that pay taxes and thus have a right to exclude other users. Leslie Ratley-Beach of the Land Trust Alliance says this decision will influence others, because it is one of only a few state high-court opinions on the subject, and because it went so far in enumerating the benefits of conservation and defining legitimate charitable conservation.
Land trusts—the private nonprofits that protect land directly by owning it—have grown rapidly in recent decades. As of the last count in 2010, there were 1,723 different land trusts scattered across the country, most of them all-volunteer and wholly local in their focus. They now have more than 5 million dues-paying members, and thousands of other donors who offer land or substantial funds to purchase it. They draw on the love of a particular local patch and the generosity of donors rather than state regulation or ownership to do their work. They currently take care of 47 million acres in the U.S.
With this latest ruling, their quiet growth is likely to continue.
Zachary Janowski is an investigative reporter for the Yankee Institute for Public Policy and a visiting member of the Hartford Courant editorial board.