The Ghost of Bob Jones: Maine Invokes "Public Policy" To Deny Property Tax Exemption

   

Waldo County Courthouse, Belfast Maine 1961

 

In Belfast last month, the Waldo County [Maine] Superior Court issued a split decision in Peach Ridge Sanctuary v. Town of Brooks.  The Court held that the Town of Brooks could not deny property tax exemption to an admittedly charitable organization because the Town disapproved of the organization's animal rescue philosophy and the manner that it legally operated its animal rescue center.  On the other hand, the Court held that the Town could deny tax exemption with respect to Peach Ridge Sanctuary's unused vacant land devoted to conservation.  The latter holding, surprisingly, relied on the "public policy" exception we all know about, but don't think will ever be applied again.  Without ever mentioning Bob Jones University, the Court considered whether a 501(c)(3)'s land held for conservation was entitled to property tax exemption: 

PRS's charitable activities of rescuing and sheltering abused or neglected animals occurs on the [first set of] lots it owns. The structures used for housing animals and staff housing are located on these lots, as are the fenced in pastures for livestock. Though not all these lots are developed, all are used to walk dogs or are necessary as buffers from other human activity. Any other use of this property in the years in question for wood harvesting or recreation by PRS staff was de minimis and did not interfere with PRS' major purpose.  PRS lessens the burden on state and local government by accepting and caring for abused and neglected animals that are rescued by government officials. There are few facilities in Maine licensed to take the types of livestock that are housed by PRS and there are no other facilities that have the space and resources to take the large number of animals that are housed by PRS. Due to the nature of the animals housed by PRS, and the trauma that many have experienced, a certain amount of land is needed as a buffer from other activities. 

The other lots owned by PRS, Map 7, Lot 85 and Map 7, Lot 50, were used during the years in question almost exclusively for land conservation and/ or as a private game preserve with no  meaningful public access allowed. The property is not held in trust and is not held with a conservation easement.    

Brooks sought to deny property tax exemption for the first lots because it thought the organization's methods could be achieved with less land, and apparently far less impact on the City budget:

The Town now argues that PRS's use of the property is not unmistakably charitable because of the way that PRS chooses to conduct its animal rescue operations.  Essentially, the Town concedes that animal rescue is a charitable use but argues that the way that PRS operates and the philosophy that PRS espouses make its actual operations not unmistakably charitable. The Town takes issue with PRS's policy of housing rescued animals for the rest of their natural lives and not making efforts to adopt out animals to suitable homes. The apparent significance of this argument is that animals could be rescued on a smaller property if PRS followed a different philosophy or operated differently.

PRS is a true believer organization, and once it rescues an abused or neglected animal, it seeks to provide the poor creature with peaceful sanctuary for the rest of the animal's life.  It lets the rescued animals room over a large piece of property.  The Town thought that the organization would not need so much land (and therefore would not cost the town so much lost tax revenue) if it rehabilitated animals and then sought to have them adopted.  Here is what the Court said about the Town's disapproval of these tree hugging animal lovers:

It is [not] the role of the taxing authority or a court to question the philosophical basis for the way the charitable entity conducts its operations or to determine if the operations could be conducted in a more efficient manner. Though one may reasonably disagree with the philosophy espoused by PRS, the record is clear that those involved in the organization have a good faith belief in that philosophy and that PRS's activities are conducted in a way that PRS believes is in the best interest of the animals. The fact that an organization may hold beliefs that are not held by the majority of the population does not mean that the organization's activities are not charitable and benevolent.

I swear this judge must have read Bob Jones, because Justice Powell said the same thing using many more words:

Even more troubling to me is the element of conformity that appears to inform the Court's analysis. The Court asserts that an exempt organization must "demonstrably serve and be in harmony with the public interest," must have a purpose that comports with "the common community conscience," and must not act in a manner "affirmatively at odds with [the] declared position of the whole Government." Taken together, these passages suggest that the primary function of a tax-exempt organization is to act on behalf of the Government in carrying out governmentally approved policies. In my opinion, such a view of §501(c)(3) ignores the important role played by tax exemptions in encouraging diverse, indeed often sharply conflicting, activities and viewpoints. As JUSTICE BRENNAN has observed, private, nonprofit groups receive tax exemptions because "each group contributes to the diversity of association, viewpoint, and enterprise essential to a vigorous, pluralistic society." Far from representing an effort to reinforce any perceived "common community conscience," the provision of tax exemptions to nonprofit groups is one indispensable means of limiting the influence of governmental orthodoxy on important areas of community life. 

Alas, the Court's holding that PRS's conservation land violated state public policy, suggests that maybe the Court didn't cite Bob Jones because the Court hasn't heard of it.  Here's is how the Court justified denial of property tax exemption for the second lot, used for conservation:

Land conservation may be a permissible charitable purpose, so long as it furthers the conservation policy of the State of Maine. As PRS correctly notes, "the Legislature has enunciated a strong public policy in favor of the protection and conservation of the natural resources and scenic beauty of Maine." Francis Small Heritage Trust, 2014 ME 102, [ 21, 98 A.3d 1012. This public policy is not simply an incidental by-product of a public policy in favor of ensuring access to recreational activities, as the Legislature has specified the preservation of wildlife habitat as a specific and distinct goal from recreational opportunities associated with that habitat. See 30-A M.R.S. § 4312(3)(F) (identifying the protection of "critical natural resources, including without limitation, wetlands, wildlife and fisheries habitat, sand dunes, shorelands, scenic vistas and unique natural areas" as a state goal). The Legislature recognizes conservation organizations as an important part of achieving this goal. See 5 M.R.S. § 6200. However, as Holbrook shows, this does not mean that private organizations may claim that they are providing a public benefit by pursuing any project that they label as conservation efforts. To claim a property tax exemption, PRS must show that they are furthering the state's conservation goals.

. . .   

An organization that operates a closed wildlife preserve, the purpose of which is only to benefit wild animals without any benefit to the public, is contrary to the public policy favoring state-regulated game areas . . . Importantly, the regional game biologist of the Fish and Game Department inspected the wildlife sanctuary under scrutiny and concluded that the way the organization was maintaining the preserve was not consistent with the state's preferred way of managing wildlife populations. Accordingly, the game 7 preserve was deemed to be no benefit to public, as it was contrary to the state's conservation policy. 

Another curiosity, by the way, is that the Court distinguished this case from conservation easements because the land was not forever dedicated to conservation.  Without such a dedication, the Court ruled, the charity was no different than an ordinary owner of vacant land.  We wouldn't give that owner property tax exemption!  Well, first, PRS is required to devote its assets, forever and ever, to charitable use; its whole existence must be charitable, in perpetuity.  Anyway, why would a charity grant a conservation easement in land it already holds for charity?  I guess a downtown hospital might grant an easement to another organization that wants to plant an urban garden on the hospital's property.  But either way, the property is held in charitable trust forever.  Second, if PRS decided to sell the land to a for-profit business -- a possibility the Court thought sufficient to deny property tax exemption for the preserved land in the absence of forever dedication -- the property tax exemption would lapse.  Property tax exemption is presumably a year to year determination.  The land's appreciation would still be owned by the charity or its charitable successors because PRS may only sell for FMV, and the proceeds go to the Charity.  It must be real cold up there in Maine.

 

darryll jones