BAR HARBOR — The Criterion Theatre is a registered nonprofit and owns its own building. Yet the organization paid almost $23,000 in taxes last year, according to its 2018 financial report.
The historic building and the land it sits on are designated commercial property, listed in the tax assessor’s database with a combined value of $930,600.
According to Criterion board president Richard Cleary, the organization pays property tax according to Maine law due to how the building is used. “The building includes two commercial spaces for which we receive rent,” he said.
Bar Harbor tax assessor Steve Weed explained, “generally speaking, being owned by a nonprofit doesn’t necessarily mean the property is exempt. It also has to be used and occupied exclusively by the nonprofit.”
Which properties are taxable and which are tax exempt is determined by state statute. When a nonprofit organization acquires a property, the organization must apply to the town for property tax exemption, Weed said. Applicants most specify how the property meets the state’s tax exemption requirements.
According to Weed, the main criteria for tax exemption is that properties are used by the nonprofit organizations “solely for their own purposes” to further their mission.
The statute further states, “If any building or part of a building is used primarily for employee housing, that building … is not exempt from taxation.”
The nonprofit College of the Atlantic purchased a group of townhouses on Eden Street last spring to alleviate the housing crunch for off-campus students. That is taxable property now owned by the college, said Rob Levin, director of communications. The six townhouses are rented to students through a rental agent who also serves as the property manager.
“They’re not dorms, they’re just apartments,” Levin explained. Buildings on campus, including dorms, are tax exempt, since they further the college’s educational mission. However, since the townhouses are located and managed off campus, Levin said, “they’re not a part of our educational operations. So there was no reason to make that a nontaxable status.”
Levin said the college uses the townhouses as “summer rentals” when college is not in session.
Mount Desert Island Hospital, a nonprofit healthcare facility, pays taxes on two of its downtown properties and the residential cottages at Birch Bay Retirement Community in Hulls Cove, according to Public Affairs Officer Oka Hutchins.
The cottages at Birch Bay Retirement Village are for independent living, and residents pay a monthly fee to live there, according to the website. Therefore they are taxed as residential property. The assisted living portion of the facility is tax exempt, because it fits into the nonprofit facility’s mission to provide medical services.
The two downtown buildings, 1 Stanwood Place and 294 Main Street, are both vacant and “not being used for an exempt purpose,” Hutchins explained. The Stanwood Place property was acquired by the hospital at auction last summer and is currently available for lease through Lynam Real Estate.
Bar Harbor’s largest nonprofit, Jackson Lab, owns an apartment complex on Paluga Lane that is taxed as residential property. According to town records, the 12-unit property was purchased by the lab in 2014, and is assessed at $878,200 for tax purposes.