PA 07-127—sHB 6776

Environment Committee

Finance, Revenue and Bonding Committee

AN ACT PRESERVING MARITIME HERITAGE LAND

SUMMARY: This act provides a property tax break for certain licensed commercial lobstermen by treating portions of waterfront property they own and use for lobstering as “490 program” land. Under the 490 program, farm, open space, and forest land is assessed at its current use value for property tax purposes.

The act defines “maritime heritage land” as the portion of waterfront real property that a licensed commercial lobster fisherman owns and uses for commercial lobstering. It excludes buildings the lobsterman does not use exclusively for commercial lobstering. The lobsterman must have earned at least 50% of his or her adjusted gross income in the prior tax year, as determined for federal income tax purposes, from commercial lobster fishing. The lobsterman must provide satisfactory proof to the municipal assessor where the property is located.

By law, a conveyance tax is imposed on land in the 490 program when (1) its use classification changes or (2) it is sold or transferred within 10 years of its classification (with certain exceptions). The act extends the same conveyance tax penalty, as well as other 490 program provisions, to property classified as maritime heritage land.

The act also adds a municipal option for an additional 50% commercial property tax break for land classified as maritime heritage land.

It makes conforming and technical changes.

EFFECTIVE DATE: July 1, 2007

MARITIME HERITAGE LAND

490 Program and Maritime Heritage Land

By law, assessors must determine the value of 490 land based solely on how it is being used (i. e. , current use value) without regard to its potential resale or fair market value (i. e. , the highest and best use one can make of such property). The act adds maritime heritage land to the program and uses a classification process similar to that for farmland. Under the law, the classification processes for open space and forest land have additional requirements (see BACKGROUND).

Applying for Maritime Heritage Land Classification

Under the act, a landowner may apply to the tax assessor for classification of his or her land as maritime heritage land on any grand list of a municipality by filing a written notice no less than 30 days before and no later than 30 days after the assessment date. But in a year in which a revaluation of all real property becomes effective, the application may be filed no later than 90 days after the assessment date.

The application must be on a form the Office of Policy and Management (OPM) secretary prescribes. It must describe (1) the land, (2) its use in general terms, (3) the potential tax liability if a conveyance tax is assessed, and (4) any other information the assessor may require to help him or her determine whether the land qualifies for the maritime heritage land classification.

If the assessor determines an applicant's land is maritime heritage land, he or she must so classify it and include it on the grand list. The assessor must annually file a certificate with the town clerk stating the date of initial classification as maritime heritage land and the conveyance tax obligation under the program, as under the law for 490 program land.

If a landowner fails to apply for the classification within the act's prescribed deadline or as it requires, he or she is considered to have waived the right to such classification.

As under current law for 490 land, any person aggrieved by an assessor's denial of land classification as maritime heritage land has the same rights and remedies for appeal and relief as the law provides for other taxpayers claiming to be aggrieved by the actions of assessors or boards of assessment appeals.

CONFORMING CHANGES

The act adds maritime heritage land to the following provisions of the 490 program.

Classification, Sale Notification, and OPM Report

The law specifies that the classification of land as open space, farm, or forest land under the 490 program attaches to the owner and not the land. Under the law, the classification ends if (1) the land use is changed to something other than that described in the owner's application or (2) the land is sold or transferred. In the case of a change in use, the classification terminates on the earlier of the date the use changes or the assessor becomes aware of this change.

By law, the town clerk must notify the assessor of the sale of any land in the program when the sale is filed in the land records. Upon receiving the notice, the assessor must notify the new owner of the tax benefits of participating in the program. The law requires the filing of a revised program application with the assessor whenever ownership of land in the program changes.

Conveyance Tax

By law, a conveyance tax is imposed on program land that changes use or is sold or transferred within 10 years of its classification. The tax is 10% if the land is sold in the first year following its classification, and decreases by 1% per year. The law also imposes the tax based on sales or transfers within 10 years if a person other than the owner caused the land to be classified as open space or farm or forest land. By law, the tax penalty is based on the property's fair market value as determined in conjunction with the most recent revaluation. The conveyance tax does not apply in several circumstances under the law, for example, upon a land owner's death, where no consideration was received for the land.

BACKGROUND

490 Program

The 490 Program is the popular name for PA 63-490, the public act that created it.

Farm Land. The law requires assessors to determine the value of farm land under 490 based solely on its current use value without regard to its potential fair market value. A farmer must apply for such an assessment and the land must be farm land, as defined by law, which the assessor must determine.

Open Space Land. By law, a property qualifies for the open space classification if it is located in an area a municipality's planning commission designated as open space in its plan of conservation and development.

Forest Land. Under the law, to qualify for classification, eligible forest land must consist of (1) one tract of 25 or more contiguous acres or (2) at least two tracts totaling at least 25 acres, in which no single tract is less than 10 acres. Additionally, land contiguous to a forest land tract owned by the same person can be classified as forest land, if it meets the law's standards.

OLR Tracking: KM: DC: PF: RO