Maine's Working Waterfront Tax Law
What is the purpose of the law:
The Current Use Valuation of Certain Working Waterfront Land law was enacted to encourage the preservation of Maine’s working waterfront and to prevent the conversion of this land to more intensive uses as the result of economic pressures caused by high property taxes. The program is intended to support commercial fishing activities. The law requires an assessor to calculate the value of working waterfront property based on its use as working waterfront land, rather than the market value of the property at its highest and best use.
What is working waterfront land?
"Working waterfront land" means a parcel, or portion of a parcel, of land abutting tidal waters or located in the intertidal zone (between the high and low water mark), that is used primarily (more than 50%) to “provide access to or support the conduct of commercial fishing activities.” 36 M.R.S. § 1132(11).
What is a commercial fishing activity?
Commercial fishing activity includes commercial aquaculture production (the commercial production of cultured fish, shellfish, seaweed or other marine plants for human and animal consumption) and commercial fishing (the harvesting and/or processing of wild marine organisms with the intent of disposing of them for profit or trade). Commercial fishing activity does not include retail sales to the general public of marine organisms or their byproducts.
What is meant by providing access?
“Providing access” means allowing persons directly engaged in commercial fishing activities access to the water or the intertidal zone over waterfront land.
How does a landowner take advantage of this program?
A landowner may elect to apply for taxation under this law by filing an application with the local assessor. Applications must be filed on or before April 1 of the year in which the owner wishes to first subject land to taxation under this program. The application must contain a description of the parcel, together with a map identifying the location and boundaries of the working waterfront land, a description of the manner in which the land is used for commercial fishing activities and other information the assessor may require to aid in the determination of what portion of the land qualifies for classification as working waterfront land. The application must be signed and consented to by each person with an ownership interest in the land.
Must the entire waterfront parcel be used as working waterfront land?
No. An entire parcel may be included in the working waterfront program, with a portion of that parcel that is used primarily for commercial fishing activity subject to the reduced valuation. The remaining portion of the parcel, however, must not be used for purposes inconsistent with commercial fishing activity and must be smaller than a minimum lot size as provided under state law or local zoning requirements. A portion of a parcel that is not used primarily for commercial fishing activity will be assessed as other similar property in the municipality.
Who determines whether the parcel qualifies for the program or not?
The local assessor is responsible for reviewing the applications and determining whether the land meets the requirements for classification as working waterfront. The assessor is also required to notify the owner in writing by June 1 as to whether the application for classification (filed by April 1) has been accepted or denied. If the application is denied, the assessor must state the reasons for the denial and provide the owner an opportunity to amend the application to conform to the requirements for classification. The assessor is required to keep the application on file in the municipal office of the town in which the working waterfront land is located.
If the assessor denies my application or if I do not agree with the value the assessor has placed on the property, can I appeal?
Yes. The appeal process for denial of an application or a tax assessment of a parcel for which classification has been applied is the same appeal process available for Tree Growth, Farmland and Open Space. Appeal of the assessor's determination is made to the State Board of Property Tax Review.
How will the assessor determine the value of my property?
There are several methods available to the assessor, but the ultimate goal remains the same; to value property in a manner which recognizes the sale price that the parcel would command in the marketplace if it were required to remain in its current use. The first valuation method is to consider the sales prices of other properties that must continue to be used as working waterfront. Such properties are those which have deeded restrictions requiring a continued use as working waterfront or are located in an area zoned for commercial or working waterfront purposes. The second valuation method is to use a value comparative to that of non-waterfront land currently being used for similar commercial purposes. The third valuation method estimates the value of certain unrelated factors which may enhance the valuation of most waterfront properties. Such factors include, but are not limited to, views from the property, possible use as residential housing and non-waterfront related commercial uses. Under this methodology, the assessor would exclude the estimated value associated with non-working waterfront related factors to arrive at a proper value as working waterfront.
When the assessor has insufficient knowledge or information to be able to employ one or more of the above methods, the Legislature has provided for an alternative valuation process that employs a set percentage reduction from the highest and best use value of the land.
A. Working waterfront land used predominantly (more than 90%) as working waterfront land is eligible for a reduction of 20% from estimated market value;
B. Working waterfront land used primarily (more than 50%) as working waterfront land is eligible for a reduction of 10% from estimated market value;
C. Working waterfront land that is permanently protected from a change in use through deeded restrictions is eligible for a reduction of 50% (if used predominantly as working waterfront) or 40% (if primarily used as working waterfront).
Whichever method is used, the local assessor is ultimately required to determine the current use value and must also adjust that value to reflect the same assessment ratio as all other property in the municipality.
How long must I keep my land in working waterfront classification? What happens if I decide to use my property for purposes other than working waterfront?
Working waterfront current use classification is a voluntary program whereby a landowner may elect to enroll and qualify their property for the benefit of reducing their property taxes. Once enrolled, the property remains classified as working waterfront until the property is removed from the program or reclassified under the Open Space Tax Law. The parcel may be removed at any time, with the appropriate penalty assessed, by the assessor upon request by the property owner or when the assessor determines the parcel no longer qualifies for classification as working waterfront. The property owner must notify the tax assessor of any change in use. Failure to report a change in use will result in the assessment of an additional 25% removal penalty.
How much is the penalty for withdrawal or disqualification?
The penalty for removal from working waterfront classification for land enrolled for 10 years or less is 30% of the difference between the 100% working waterfront valuation and the fair market value of the property on the date of withdrawal. The penalty drops 1 percentage point for each year the property is in the program beyond 10 years to a floor of 20% for land classified for 20 years or more. The penalty is assessed and collected as a supplemental assessment.
What do I do if I buy a parcel that is classified as working waterfront?
If working waterfront property is transferred, the new owner must, within one year of the date of transfer, file a new application and a sworn statement that the transferred parcel continues to meet the requirements of working waterfront. Otherwise, the property will no longer qualify for the program and a withdrawal penalty will be assessed.
How do I know if working waterfront is for me?
Prior to enrollment in any current use classification, landowners should educate themselves about the program and talk to their local assessor to determine what tax benefits they may expect. The owners should also consider whether their personal goals for the parcel are compatible with the terms of the working waterfront program.