An Act To Exempt Housing Owned by Nonprofit Organizations for People with Disabilities from the Municipal Service Fee Laws
Maine Legislature, Session 123, LD 1648
Committee: Taxation
Sponsors: WAGNER, BLANCHARD, CONOVER, CRA VEN, KNIGHT, MILLER, PIOITI, THERIAULT, WATSON
Amends: 36 MRSA §6

Legislative Document 
No. 1648 
H.P.1157 
House of Representatives, March 22, 2007 
An Act To Exempt Housing Owned by Nonprofit Organizations for 
People with Disabilities from the Municipal Service Fee Laws 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative WAGNER of Lewiston. 
'77/~ 'frI. 7lIt1£~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: BLANCHARD of Old Town, CONOVER of Oakland, 
CRA VEN of Lewiston, KNIGHT of Livermore Falls, MILLER of Somerville, PIOITI of 
Unity, THERIAULT of Madawaska, WATSON of Bath. 
Printed nn rel:yded paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §6S2, sub-§l, ~C, as amended by PL 2005, c. 563, § 16, is 
further amended to read: 
C. 
Further conditions to the right of exemption under paragraphs A and B are that: 
(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 ofthat 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 
1 
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 ef, 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 
meanmgs. 
(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 §6S2, sub-§l, ~, as enacted by PL 1977, c. 487, is amended 
to read: 
L. 
Service charges. 
(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 sfla.I.l 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) San itation 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 sfla.I.l does not include 
student housing eF~ 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. 
I 
(3) With respect to the detennination 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 
II 
organization shall file with the municipality an audit of the revenues of the 
organization for the year immediately prior to the year wJHeft 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. 
p;;.;~ 4 - 123LR2274(01)-1