Nonprofits would owe millions under tax plan



Analysis by Dick Broom

 

BAR HARBOR — Gov. Paul LePage’s proposal to allow municipalities to tax property owned by nonprofit organizations could have a huge impact on some Mount Desert Island nonprofits.

The governor has said he wants to greatly reduce or eliminate Maine’s revenue sharing program whereby state funds are distributed to municipalities. To help them make up for that lost revenue, he proposes allowing cities and towns to levy taxes on the portion of property owned by nonprofits that is assessed at more than $500,000. The tax rate for those nonprofits would be half the rate paid by other property owners.

The Jackson Laboratory (JAX), with property in Bar Harbor assessed at $230.1 million, is by far the most property-rich nonprofit on MDI. Under the governor’s proposal – and based on the town’s current mill rate of $10.22 – JAX would owe nearly $1.2 million in annual property taxes. That is nine times the $132,000 that the town expects to receive this year in state revenue sharing funds.

Historically, JAX has voluntarily made an annual payment of lieu of taxes (PILOT) to help support fire, police and other municipal services. This year’s PILOT is $77,116.

College of the Atlantic, with property assessed at $29.2 million, is making a $7,000 PILOT to the town this year. Under the governor’s plan, COA’s tax bill could be as high as $146,443.

MDI Hospital’s holdings, including Birch Bay Village retirement community, have a total assessed value of $28 million. The hospital, which has been making no payments to the town in lieu of taxes, could have a tax bill of $140,525.

The property owned by the Bar Harbor Housing Authority has a total assessed value of $14.6 million. Its property taxes under the governor’s proposal would be $72,230. This year it is making a PILOT to the town of about $25,000.

MDI Biological Laboratory’s property, assessed at $11.1 million, could be taxed to the tune of $53,926. The Bio Lab this year is sending the town a $3,500 PILOT.

Maine Coast Heritage Trust has 17 pieces of property in Bar Harbor with a total assessed value of $10.4 million. The taxes on that could be $50,456.

The Maine Sea Coast Mission’s $5.4-million Colket Center on West Street could cost the nonprofit $24,881 in taxes.

Other Bar Harbor nonprofits that could start getting tax bills from the town are the Abbe Museum and Jesup Memorial Library. The Abbe could be taxed $10,803 for its $2.6 million property. The library’s two properties, assessed at nearly $1.8 million, could result in a tax bill of $6,551.

Ironically, the town budget each year includes an allocation to the Jesup. This year, the library is receiving $20,000 in taxpayer funds.

The YWCA’s property is assessed at about $1.4 million, which means its tax bill would be $5,028. Not only does the YWCA not get any money from the town, but this year it has voluntarily paid the town $2,520 in lieu of taxes.

The land under the YMCA on Park Street is owned by the town. The building has never been assessed by the town.

Under the governor’s proposal, cities and towns would have to collect property taxes from nonprofit organizations with property valued at more than $500,000, except for churches, public schools and government agencies. But municipalities could choose to give back all or some of the tax revenue they receive from nonprofits.

The actual tax on Bar Harbor nonprofits could be somewhat higher or lower than the amount calculated on the basis of current property assessments, according to Bar Harbor Assessor Justin VanDongen.

“We’re going to review the [nonprofits’] assessments this summer and make sure they are accurate, just in case the governor’s budget goes through the way he has it planned,” he said. “So, the nonprofits would have a chance to see them a year before they take effect and could come in and discuss them.”

Mount Desert

Mount Desert Assessor Kyle Avila said the town’s current assessments for property owned by nonprofits, as well as other properties in town, are pretty accurate and up to date.

“That’s what the tax would be based on” under the governor’s proposal, he said.

Camp Beech Cliff is the property-richest nonprofit in Mount Desert with just under $8 million in assessed value. Based on the town’s current mill rate of $6.78, the camp would owe $25,387 in taxes under the governor’s proposal.

That is about the same amount the town expects to receive from the state in municipal revenue sharing funds this year.

Maine Coast Heritage Trust owns 12 properties in Mount Desert with a total assessed value of $6.9 million. Its tax bill would be $21,635.

Two nonprofits own property of significant value in downtown Northeast Harbor. The Northeast Harbor Library, with an assessed value of nearly $3.2 million, would pay $9,087 in taxes. Neighborhood House, whose property is assessed at just over $1.2 million, would have a tax bill of $2,448.

Southwest Harbor

MDI Hospital owns property in Southwest Harbor with a total assessed value of $1.8 million. Based on the town’s current mill rate of $12.86, the hospital would owe $8,449 in property taxes under the governor’s plan.

The Southwest Harbor Public Library would owe $1,794 on its assessed property value of $779,000.

Harbor House Children’s Center has an assessed value of $525,300. Because under the governor’s plan it would only be taxed on the amount over $500,000, its tax bill would be $161.

The Harbor House building on Main Street is owned by the town, so it would still be exempt from property taxes under the governor’s proposal.

Southwest Harbor’s budget for the current fiscal year projects that the town’s revenue will include $54,000 in state revenue sharing funds.

Tremont

The MDI Housing Authority’s 22-unit Birchwood Apartments, which has an assessed value of $1.4 million, is the only nonprofit with property in Tremont that would be affected by the governor’s tax proposal, according to Assessor Debbi Nickerson. Based on the current mill rate of $8.75, the Housing Authority’s property tax bill would be $4,082.

Tremont expects to receive about $49,600 in state revenue sharing funds this year.

Representatives of nonprofit institutions across Maine have already testified in opposition to the tax plan during a hearing before the legislature’s Appropriations Committee.

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