Massachusetts Court Clarifies Forest Property Tax Exemption


The New England Forest Foundation (NEFF) is a 501(c)(3) nonprofit organization that provides for the conservation and ecologically sound management of privately owned forestlands. NEFF owns over 23,000 acres of land in five states and holds conservation easements on much more. In Massachusetts, NEFF owns 7,500 acres in 39 different municipalities.

Massachusetts state laws allow for landowners to receive lower property tax assessment for land held as forest, agriculture or recreational land. This allows for land to be valued according to how it is used instead of its potential value for development. The purpose is to incentivize landowners to keep land as open space. Specifically, landowners can have their forest land assessed at a lower value, but will not receive a full exemption from local property taxes, under “Classification and Taxation for Forest Land and Forest Products” (General Law c. 61).

NEFF owns a parcel of forest land in the town of Hawley, which is located in the northwestern part of Massachusetts in between two state forests. Originally, the parcel received the forest land assessment, but in 2009 NEFF applied for full tax exemption under the Clause Third property tax exemption. Clause Third provides that property a charitable organization owns is exempt from property taxes if the land is occupied by the organization to further its mission. The Hawley Board of Assessors (Board) denied the application, stating that NEFF did not occupy the land in Hawley for a charitable purpose.

The Supreme Court of Massachusetts, however, did not agree with the Board. The Court stated that to qualify under Clause Third the applicant must meet a two-pronged test:

1. The organization seeking exemption qualifies as a charitable organization and 2. The organization occupies the property in furtherance of its charitable purpose.

The Court found that the Hawley parcel meets these requirements and the Board was wrong not to grant the property tax exemption.

1. Is NEFF a charitable organization? NEFF is registered as a 501(c)(3) organization, but according to the court, that is not enough. NEFF must show that its dominant purpose is to do work for the public good, not just its own members. The Board challenged the fact that NEFF is acting like a charitable organization in this case because it did not promote the parcel for public use or conduct educational programs on the property; it only owned and managed the property in its natural state.

The Court stated that NEFF’s work is traditionally charitable because it lessens the burden on the government. The Massachusetts government is responsible for safeguarding the State’s natural resources and manages land to promote air, water and land quality. Therefore, when NEFF hired an independent forester to create a management plan that enhanced the health of the forest, provided for wildlife habitat, and increased water quality, it assumed a responsibility of the government and provided a public good. The Court also noted that many conservation organizations like NEFF are essential partners in State land conservation efforts and their missions specifically align with governmental goals.

Historically, land managed in its natural state would not have been considered a charitable purpose, unless it provided for public access, educational opportunities, or facilitated scenic views. But, science has advanced to show how land in its natural state provides us with clean air, absorbs carbon, filters water, and provides for wildlife habitat. All of which are tangible benefits to the public that do not require public access. It also helped that the property is adjacent to two State owned parcels, so it extended a natural corridor and enhanced state forest land functions.

2. Did NEFF occupy the Hawley parcel in furtherance of its charitable purpose? The Court states that occupancy is more than just ownership or possession of the property. NEFF must show that it owns the property in a way that promotes its charitable mission and furthers the public good. The Board argued that NEFF lacks sufficient public engagement to provide a public benefit and is acting like a private landowner instead of a charitable organization providing a public good.

The Court found that NEFF was occupying the property for the public good. The Clause Third does not require NEFF to allow public access to the property, and even if it did, NEFF did not exclude public access to the parcel. The Court went further and stated that if NEFF did want to exclude the public, it still may be eligible for a full property tax exemption. A charitable organization may exclude the public if it is required to protect a fragile ecosystem, protect the public if the land is being logged or burned, or in other cases where public access would thwart the conservation objectives of the organization.

It also requires that the occupancy be in furtherance of NEFF’s mission. Fortunately, NEFF’s mission has a wide scope that includes promoting recreation, education, and maintaining healthy forests. If NEFF only claimed that their charitable mission was to promote recreation and education, then it would have had to show more public access and engagement. However, because its mission also includes conservation of forest land through sustainable management that promotes environmental quality, the management plan was sufficient to show that NEFF occupied the forest to further its mission.

The Court noted that in this case it helped that the parcel was adjacent to State forests because it showed NEFF was not occupying the land to create a buffer zone around private land. In some cases private landowners conserve land around their property to increase property values value for their own benefit, but here it was clear that was not the case. It also helped that the management plan was created by an outside forestry consulting firm instead of a forester on staff because it showed that the management plan was created to further conservation goals and not only to receive a tax reduction under the forest land property value assessment.

This court case is a very important analysis of forest property taxes, which will have a far reaching effect on land conservation across the country. First, it indicates the difference between the property tax reduction under State current use laws for individual property owners and a full property tax exemption for charitable organizations. These are two distinct statutory schemes, where one incentivizes open space conservation and the other incentivizes organizations to work for the public good. Second, it provides substantial support for land conservation organizations and validates their work as charitable. It clarifies that conservation and proper land management is a charitable purpose because it ensures the public has clean air and water, habitat for wildlife, and a wide range of ecosystem services. Finally, the decision clarifies that public access is not required to show public benefit. This will help land conservation organizations protect fragile and important areas, but has the potential to restrict public access to those that use these lands for recreational or educational purposes.

Read The Full Decision Here.