An Act To Exempt Housing Owned by Nonprofit Organizations for People with Disabilities from the Municipal Service Fee Laws
Sec. 1. 36 MRSA §652, sub-§1, ¶C, as amended by PL 2005, c. 563, §16, is further amended to read:
(1) Any corporation claiming exemption under paragraph A must be organized and conducted exclusively for benevolent and charitable purposes;
(2) A director, trustee, officer or employee of an organization claiming exemption is not entitled to receive directly or indirectly any pecuniary profit from the operation of that organization, excepting reasonable compensation for services in effecting its purposes or as a proper beneficiary of its strictly benevolent or charitable purposes;
(3) All profits derived from the operation of an organization claiming exemption and the proceeds from the sale of its property are devoted exclusively to the purposes for which it is organized;
(4) The institution, organization or corporation claiming exemption under this subsection shall file with the tax assessors upon their request a report for its preceding fiscal year in such detail as the tax assessors may reasonably require;
(5) An exemption is not allowed under this subsection in favor of an agricultural fair association holding pari-mutuel racing meets unless it has qualified the next preceding year as a recipient of a stipend from the Stipend Fund provided in Title 7, section 86;
(6) An exemption allowed under paragraph A or B for real or personal property owned and occupied or used to provide federally subsidized residential rental housing is limited as follows: Federally subsidized residential rental housing placed in service prior to September 1, 1993 by other than a nonprofit housing corporation that is acquired on or after September 1, 1993 by a nonprofit housing corporation and the operation of which is not an unrelated trade or business to that nonprofit housing corporation is eligible for an exemption limited to 50% of the municipal assessed value of that property.
An exemption granted under this subparagraph must be revoked for any year in which the owner of the property is no longer a nonprofit housing corporation or the operation of the residential rental housing is an unrelated trade or business to that nonprofit housing corporation.
(a) For the purposes of this subparagraph, the following terms have the following meanings.
(i) "Federally subsidized residential rental housing" means residential rental housing that is subsidized through project-based rental assistance, operating assistance or interest rate subsidies paid or provided by or on behalf of an agency or department of the Federal Government.
(ii) "Nonprofit housing corporation" means a nonprofit corporation organized in the State that is exempt from tax under Section 501(c)(3) of the Code and has among its corporate purposes the provision of services to people of low income or the construction, rehabilitation, ownership or operation of housing.
(iii) "Residential rental housing" means one or more buildings, together with any facilities functionally related and subordinate to the building or buildings, located on one parcel of land and held in common ownership prior to the conversion to nonprofit status and containing 9 or more similarly constructed residential units offered for rental to the general public for use on other than a transient basis, each of which contains separate and complete facilities for living, sleeping, eating, cooking and sanitation.
(iv) "Unrelated trade or business" means any trade or business whose conduct is not substantially related to the exercise or performance by a nonprofit corporation of the purposes or functions constituting the basis for exemption under Section 501(c)(3) of the Code.
(b) Eligibility of the following property for exemption is not affected by the provisions of this subparagraph:
(i) Property used as a nonprofit nursing home, residential care facility licensed by the Department of Health and Human Services pursuant to Title 22, chapter 1663 or a community living arrangement as defined in Title 30-A, section 4357-A or , any property owned by a nonprofit organization licensed or funded by the Department of Health and Human Services to provide services to or for the benefit of persons with mental illness or mental retardation or any property owned by a nonprofit organization that provides residential rental housing to persons with physical or mental disabilities;
(ii) Property used for student housing;
(iii) Property used for parsonages;
(iv) Property that was owned and occupied or used to provide residential rental housing that qualified for exemption under paragraph A or B prior to September 1, 1993; or
(v) Property exempt from taxation under other provisions of law; and
(7) In addition to the requirements of subparagraphs (1) to (4), an exemption is not allowed under paragraph A or B for real or personal property owned and occupied or used to provide residential rental housing that is transferred or placed in service on or after September 1, 1993, unless the property is owned by a nonprofit housing corporation and the operation of the residential rental housing is not an unrelated trade or business to the nonprofit housing corporation.
For the purposes of this subparagraph, the following terms have the following meanings.
(a) "Nonprofit housing corporation" means a nonprofit corporation organized in the State that is exempt from tax under Section 501(c)(3) of the Code and has among its corporate purposes the provision of services to people of low income or the construction, rehabilitation, ownership or operation of housing.
(b) "Residential rental housing" means one or more buildings, together with any facilities functionally related and subordinate to the building or buildings, containing one or more similarly constructed residential units offered for rental to the general public for use on other than a transient basis, each of which contains separate and complete facilities for living, sleeping, eating, cooking and sanitation.
(c) "Unrelated trade or business" means any trade or business whose conduct is not substantially related to the exercise or performance by a nonprofit organization of the purposes constituting the basis for exemption under Section 501(c)(3) of the Code.
Sec. 2. 36 MRSA §652, sub-§1, ¶L, as enacted by PL 1977, c. 487, is amended to read:
(1) The owners of certain institutional and organizational real property, which is otherwise exempt from state or municipal taxation, may be subject to service charges when these charges are calculated according to the actual cost of providing municipal services to that real property and to the persons who use that property. These services shall include, without limitation:
(a) Fire protection;
(b) Police protection;
(c) Road maintenance and construction, traffic control, snow and ice removal;
(d) Water and sewer service;
(e) Sanitation services; and
(f) Any services other than education and welfare.
(2) The establishment of service charges is not mandatory, but rather is at the discretion of the municipality in which the exempt property is located. The municipal legislative body shall determine those institutions and organizations on which service charges are to be levied by charging for services on any or all of the following classifications of tax exempt real property:
(a) Residential properties currently totally exempt from property taxation, yet used to provide rental income. This classification shall does not include student housing or , parsonages or property owned by a nonprofit organization that provides residential rental housing to persons with physical or mental disabilities.
If a municipality levies service charges in any of the classifications of this subparagraph, that municipality shall levy these service charges to all institutions and organizations owning property in that classification.
(3) With respect to the determination of service charges, appeals shall must be made in accordance with an appeals process to be provided for by municipal ordinance.
(4) The collection of unpaid service charges shall must be carried out in the same manner as provided in Title 38, section 1208.
(5) Municipalities shall use the revenues accrued from service charges to fund, as much as possible, the costs of those services.
(6) The total service charges levied by a municipality on any institution and organization under this section shall may not exceed 2% of the gross annual revenues of the organization. To qualify for this limitation the institution or organization shall file with the municipality an audit of the revenues of the organization for the year immediately prior to the year which that the service charge is levied. The municipal officers shall abate the service charge amount that is in excess of 2% of the gross annual revenues.
(7) Municipalities shall adopt any necessary ordinances to carry out the provisions of this paragraph regarding service charges.
summary
This bill clarifies that property that is owned by a nonprofit organization that provides residential rental housing to persons with physical or mental disabilities is exempt from municipal property tax. This bill also exempts such property from the ability of municipalities to levy charges on certain tax exempt property for the provision of services such as fire and police protection and water and sewer service.