There are many places in Massachusetts that I shall never visit, but that I feel quite sure are, in some small way, benefiting humanity as a whole, and other species for that matter. Should this generalized benefit — a positive externality, I suppose economists would call it — earn the owners of such places an exemption from the local property tax? Yes, said the Supreme Judicial Court.
When a non-profit corporation applied for a tax exemption for its forest land in Hawley, Western Massachusetts, the local board of assessors said no, a decision the state’s Appellate Tax Board upheld. Why? Because, the boards claimed, mere forest management, in and of itself, does not benefit a sufficiently large number of people and is not, therefore, a charitable purpose. On May 15, the Supreme Judicial Court ruled that the boards were wrong.
The nonprofit corporation is the New England Forestry Foundation, Inc. (NEFF) and the forest for which it was seeking tax-exempt status is the 120-acre Stetson-Phelps Pine Ridge Farm. NEFF already had the benefit of reduced taxation under M.G.L. c. 61 but wanted tax-exempt status under a different statute, M.G.L. c. 59, S.5 (Clause Third). The value of the land: $96,000. The tax rate: $200. This may strike readers as a pretty good deal, but the Court noted that applying for reduced-tax status under Chapter 61 every ten years for all NEFF’s properties entailed “administrative costs.”
In contrast to the Hawley Board of Assessors and Appellate Tax Board, which had decided that NEFF’s forest did not sufficiently benefit the public to qualify for an exemption under Clause Third, the Supreme Judicial Court (citing the Massachusetts 2011 Climate Change Report) held that “large forested blocks of land [contribute] to ‘ecosystem resilience’ in the face of rising temperatures and more severe storms because forests naturally absorb carbon and other emissions.” The boards had thought the forest owners should have to do something with the land in order to qualify for the exemption, e.g. educate the public, invite people in to walk around and enjoy the scenery, etc. Not really, held the Court:
“[B]y 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 pubic.”
The holding in this case invites many more applications for tax-exempt status from forest owners, and prompts a few questions. For example, while most of us probably agree that woodland-owning non-profit corporations should not have to pay as much tax as for-profit corporations, should the non-profits not have to pay any property tax at all? And what about other activities that foster “ecosystem resilience,” such as the Vickerys’ back-yard vegetable patch?
Before redefining myself, wife, and children as not so much a “family” and more of a “bona fide non-profit land conservation organization,” and dashing down to Amherst Town Hall to claim our tax-free status (esto perpetua), I shall re-read footnote 10 of the SJC’s decision. To hold closed the metaphorical floodgates it sets out some “factors that may prove relevant” (nothing so stifling as a “precise formula”) for determining the bona fides of a land conservation organization. But I feel confident that after planting a few more apple and plum trees, plus a few quiet summer evenings devoted to libation-assisted imaginative lawyering, I shall meet the Court’s criteria and do my part to both restore climate equilibrium and further erode Amherst’s tax base.
Peter Vickery, Esq., 