When did the controversy start and how did it get to the Supreme Judicial Court?
In 2009 the Town of Hawley, Massachusetts denied property tax exemption to NEFF for our 134 acres Stetson Phelps Community Forest. This was the first town that refused to accept NEFF's charitable status and deny our property tax exemption, but we were well aware of the controversy around the exempt status of conservation land arising from previous Appellate Tax Board decisions. We appealed the Town's decision, but the Town reaffirmed their position. Then NEFF appealed their denial to the state Appellate Tax Board (ATB) and on April 26, 2011 the ATB ruled in favor of the Town, but deferred its full written decision. That written decision was filed on January 28, 2013, detailing their decision for the Town.
Upon receiving the ATB decision and after consultation with our conservation colleagues in other Massachusetts conservation organizations such as Massachusetts Audubon Society, The Trustees of Reservations, and The Nature Conservancy's Massachusetts Chapter, NEFF decided to appeal the decision directly to the State Supreme Judicial Court (SJC). Oral arguments were heard by the SJC on January 6, 2014 and we anticipate a decision this spring or summer.
Is conservation really a charitable purpose?
NEFF is a charitable organization chartered in Massachusetts and recognized by the IRS as a nonprofit organization eligible to receive tax deductible donations—a status and role we have had since our founding in 1944. Massachusetts General Law Chapter 58, section 5 declares that real estate is exempt from taxation when it is"... owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized...." NEFF's mission is to conserve forestland and demonstrate sustainable forestry practices. To accomplish this mission NEFF buys and accepts donations of land and easements, prepares and maintains management plans for all of our properties, conducts timber harvests in accordance with those plans, offers educational walks and events before and after every harvest, and working through our Heart of New England campaign, educates landowners, foresters, and the public about sustainable forestry practices. All our properties are community forests open to the public for many activities dawn to dusk.
NEFF often partners with the Commonwealth of Massachusetts on conservation. For example, our Hawley property is bounded on two sides by a State forest. Our protection and management of properties provides a similar level of protection and public access as state ownership, and the state often relies on private charitable organizations to fill in these kinds of gaps in state-owned conservation land, saving the taxpayers money. And the burdens of government relieved by our work are not limited to providing public recreation. Conservation lands protect sensitive habitats; support songbirds, trout, bear, otter, and other wildlife; reduce floods downstream by storing and gradually releasing water; sustain stream flows during droughts; extract climate-altering excess carbon dioxide from the atmosphere; provide a sustainable source of wood products to the region; help us supply more of our energy needs from local sources such as biomass heating; sustain pollinators that enable successful crops; attract billions of dollars of tourism business to the state during leaf peeping season; and provide the beauty and backdrop of our cities and towns.
Even though all of NEFF's properties are open for public access and enjoyment, the test of access is not and should not be the only litmus test for NEFF or other conservation organizations. Massachusetts law clearly states the test should be whether a conservation organization is fulfilling its stated mission on any particular property in question. Our Hawley property and all our properties are clearly used or "occupied" in accordance with NEFF's mission.
There can be legitimate conservation interests of the public and charitable organizations that require limits on public access. Fragile ecosystems, habitat for endangered species, drinking water supplies, seasonal breeding habitat for shorebirds, forestlands undergoing harvest, and farmland all call for some access restrictions at times. In addition, some land-locked parcels are owned and protected by conservation organization in service of a valid conservation goal, but access may be temporarily or permanently unavailable because of other private ownerships that block access to a public way. But even without public access, almost all of those properties provide public benefits such as clean water, clean air, wildlife habitat, aesthetic beauty, or a timber supply for future generations.
Since NEFF's focus is on forestland suitable for timber production, fewer of our properties require limitations on public access compared with sister organizations that may specialize in protecting rare wildlife habitat. That is why we generally are able to keep our community forests open to the public. While NEFF wants to win this case to resolve and secure its own tax exempt status issues, we also want to support our sister conservation organizations who hold these special habitats in trust as a core part of their work. We believe the assessors should leave the judgment of access limits to the conservationists who are charged with maintaining these assets.
How big a deal is the tax bill in Hawley?
The actual tax bill in the Hawley situation is modest, $172.00, and this property's the assessed value is among our lowest. However, multiplied across 60 NEFF ownerships in Massachusetts each year – especially those in eastern Massachusetts, it would mount to a considerable burden that would hinder our plans to protect even more land. NEFF, as a forest owner with larger parcels, does have the opportunity to lessen its tax burden by filing under special conservation arrangements under Chapter 61. This would lower our tax payments, but still create a substantial financial burden. The greater concern is with the many other conservation organizations and land trusts in Massachusetts that can't file under Chapter 61 and have properties valued much higher than working forest land. For example, over the last several decades hundreds of parcels have been protected on Cape Cod, most have less than 5 acres, the minimum acreage allowed for the reduced taxation programs. If the ATB prevails the tax burden on these conservation organizations would be unbearable. Many local land trusts would not be able to continue to conserve these properties and they certainly wouldn't be in a position to save the next slice of green space under the development gun.
What does NEFF do with the revenues it earns from timber harvests?
Since we first acquired the Hawley land in 2000 we have earned $35,712 in gross timber revenues from that property and plowed our earnings right back into our programs and long term mission - to protect New England's forests and encourage sustainable forest management, so that the landscape will feel like New England for all future generations. To accomplish this goal we have committed along with other organizations to protect 30 million acres from development by 2060. Since 2000, across the New England region NEFF has reinvested our timber income from this property and our 141 other properties, along with private donations and state and federal government grants to purchase and protect 5,733 additional acres of land outright and 1,137,278 acres via conservation easements, where NEFF holds a restriction on development but the land remains owned by private landowners. NEFF now owns 26,000 acres of land and oversees almost 1.2 million acres of conservation easements, perhaps more than any other non- profit in the nation. In fact, one out of every eight acres of conserved forest land in New England has been conserved by NEFF. This land protection portfolio is a down payment on NEFF's Heart of New England campaign which seeks to fulfill the Wildlands and Woodlands vision of protecting 70% of New England in a forested condition by 2060. The granting of tax exempt status is something we take seriously. It is our job to use those tax savings, private and public donations, and our timber revenue toward our conservation goals to secure yet more public benefits from the protection of New England's forests.
I'd like to read the briefs in full from NEFF and the other parties. Where can I find the briefs or watch the oral arguments?
Briefs can be found here.
Oral arguments can be found here.
I love your approach. How can I support NEFF's efforts to protect New England's forests?
NEFF relies on private donations to support our conservation work. You can donate or otherwise support our work here.