An Act To Impose a Municipal Services Fee on Tax-exempt Property
Maine Legislature, Session 121, LD 1080
Committee: Taxation
Sponsors: PELLON, DUDLEY, CARPENTER, JACOBSEN, LANDRY, SHERMAN, STONE, SULLIV AN, WHEELER
Amends: 36 MRSA §652, 36 MRSA §652-A

Legislative Document 
No. 1080 
H.P.798 
House of Representatives, March 4, 2003 
An Act To Impose a Municipal Services Fee on Tax-exempt 
Property 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative PELLON of Machias. 
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/J7·711oc~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representative DUDLEY of Portland, Senator CARPENTER of York and 
Representatives: JACOBSEN of Waterboro, LANDRY of Sanford, McGOWAN of Pittsfield, 
McLAUGHLIN of Cape Elizabeth, SHERMAN of Hodgdon, STONE of Berwick, 
SULLIV AN of Biddeford, WHEELER of Kittery. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §652, sub-§I, 1[L, as enacted by PL 1977, c· 
487, is repealed. 
Sec. 2. 36 MRSA §652-A is enacted to read: 
§652-A. 
Direct benefit service charges 
Notwithstanding the provisions of sections 651 and 652, and 
pursuant to the provisions and limitations in this section, 
a 
municipality may 
impose 
a 
charge for direct benefit services 
provided to an otherwise tax-exempt property of 
a 
public or 
private institution or organization, as described in sections 651 
and 
and referred to in this section as 
the 
"tax-exempt 
entity," for direct benefit services provided to the tax-exempt 
entity by 
the 
municipality. 
For 
purposes 
of 
this 
section, 
"tax-exempt entity" includes any identifiable subunit of that 
entity. 
1. 
Discretionary imposition. 
The 
imposition 
of 
direct 
benefit service charges under this section is not mandatory, but 
is at the discretion of the municipality in which the tax-exempt 
property 
is 
located. 
The 
municipal 
legislative 
body 
shall 
determine the scope of any charge system imposed: these charges 
may not exceed limitations outlined in this section, but they may 
be 
narrower 
in scope 
than this 
section specifically allows, 
reaching only some, but not all direct benefit services provided 
by 
the 
municipality. 
They 
may 
exempt 
classes 
of 
property 
nominally subject to charges as provided by this section. If C\ 
municipality levies service charges 
on 
any classification 
u( 
property as defined in this section, that municipality shall levy 
those 
service 
charges 
on 
all 
tax-exempt 
entities 
1n 
that 
classification. 
Z. 
Chargeable services. 
The only direct benefit services 
of a municipality for which a system of charges may be imposed 
pursuant to this section are: 
A. 
Fire protection services, which may include a medical 
crisis unit and E-9-l-l system; 
B. 
Police protection services, which may include a medical 
crisis unit and E-9-1-1 system; 
C. 
Water and sewer services which may include fresh water 
treatment, wastewater cleanup, pollution control and hydrant 
services; 
D. 
Trash collection, storage and disposal services; and 
Page l-LR1216(1) 
" 
E. 
Public works 
department services. 
which may 
include 
municipal sidewalk and road construction and maintenance. 
traffic control and snow plowing and removal. 
A municipality may include charges for a medical crisis unit or 
E 9 1 1 system as part of either fire protection services or 
police protection services. but not both. 
3. 
Calculation of charges. 
A municipality 
imposing 
a 
system of charges for direct benefit services shall calculate on 
an 
annual basis the actual costs of providing the 
service. 
including 
capital 
costs. 
and 
may 
impose 
on 
any 
individual 
tax-exempt entity only its proportional share of these costs 
according to the following formula: 
A. 
The total annual costs of the municipality for direct 
benefit services is divided by 
the total value 
of all 
taxable and tax exempt property in the municipality. 
This 
results in the direct benefit service charge rate; and 
B. 
The 
direct benefit 
service 
charge 
calculated 
under 
paragraph 
A 
is 
multiplied 
by 
the 
assessed 
value 
of 
individual tax exempt property. 
The result is the prorated 
charge for direct benefit services. 
4. 
Tax-exempt 
entity 
subject 
to 
service 
charges; 
exemption. 
Charges for direct benefit services may be imposed 
only on that tax exempt entity that derives at least 50~ of its 
annual revenue from charges such as. but not limited to. service 
fees, rents, rates or tuitions imposed on a client group served 
by that tax-exempt entity, regardless of the source of those 
charges. 
A tax-exempt entity otherwise subject to charges under 
this section is exempt if that tax-exempt entity expends 50°'0 or 
more of its annual revenues to provide temporary housing, food, 
clothing or other services to individuals and families at or 
below the federal poverty level, as defined in Title 22, section 
3762. 
A tax-exempt entity claiming exemption from municipal charges for 
direct benefit services must apply annually for exempt status on 
appropriate forms provided by the municipality for that purpose. 
The burden of proving a right to exemption initially and in any 
succeeding 
year 
lies 
with 
the 
tax-exempt 
entit}' 
seeking 
exemption. 
The tax-exempt entity shall provide tax. annual audit 
and business records necessary to prove the tax-exempt entity's 
exempt status. The granting of an exemption in any given year 
does not preclude the municipality from verifying or denying the 
exempt status of an entity in succeeding years. 
S. 
Upper limit of charges. 
Annual municipal charges for 
direct benefit services imposed pursuant to this section may not 
exceed 2% of the gross annual revenues of the charged tax exempt 
entity. 
The tax-exempt entity subject to the service charges 
shall file with the municipality an audit of or other financial 
data or records showing the revenues of the tax-exempt entity for 
the year immediately prior to the year for which the service 
charges 
are 
levied. 
The 
municipal officers 
shall 
abate 
any 
service charges that are in excess of 2% of the gross revenues 
shown. 
6. 
Expenditure of revenue, billing and payment schedule. 
Municipalities imposing charges on otherwise tax-exempt entities 
for direct benefit services provided shall expend the accrued 
revenues only to fund those municipal services for which the 
tax-exempt entities are being charged. Bills for the payment of 
direct benefit service charges must be sent at the same time and 
in the same manner as property tax bills. A municipality may in 
its implementing ordinance establish a payment schedule that is 
annual, semiannual, quarterly or monthly. 
7. 
Appeals 
process. 
Appeals 
of 
valuation 
or 
the 
calculation of the direct benefit service charge are allowed and 
must be conducted in the same manner provided for appeals by 
taxable entities in subchapter 8. 
8. 
Collection of unpaid charges. 
Collection of 
unpaid 
municipal charges for direct benefit services must be conducted 
in the same manner as provided in subchapter 9 for the collection 
of unpaid property taxes, and municipalities and their officials 
or agents have the same rights and authority conferred by that 
subchapter. 
9. 
Implementing ordinances. 
A municipality that imposes 
charges for direct benefit services pursuant to this section may 
adopt any ordinances necessary to implement the charges and other 
purposes of this section. 
SUMMARY 
This bill allows a municipality to charge an entity that is 
exempt from property tax for "direct benefit services" provided 
in that municipality, such as: fire and police protection; water 
and sewer services; trash collection and disposal; 
and public 
works 
department 
services, 
including 
sidewalk 
and 
road 
construction and maintenance. 
Only 
a 
tax-exempt entity that 
derives at least 50'1-0 of its annual revenue from charges such as 
service fees, rents, rates or tuitions imposed on a client group 
served by that tax-exempt entity, regardless of the source of 
those charges, may be charged for direct benefit services. 
A 
tax-exempt entity otherwise subject to charges is exempt if that 
tax-exempt entity expends 50% or more of its annual revenues to 
provide temporary housing, 
ff)od, clothing or other services to 
individuals and families at or below the federal poverty level.