An Act Regarding the Exclusive Use of Tax Exempt Property
Maine Legislature, Session 128, LD 1121
Committee: Taxation
Sponsors: KINNEY, CUSHING, ORDWAY, PARRY, STETKIS, TIMBERLAKE
Amends: 36 MRSA §652

Legislative Document
No. 1121
H.P. 785
House of Representatives, March 21, 2017
An Act Regarding the Exclusive Use of Tax Exempt Property
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative KINNEY of Limington.  (BY REQUEST)
Cosponsored by Senator CUSHING of Penobscot and
Representatives: ORDWAY of Standish, PARRY of Arundel, STETKIS of Canaan, 
TIMBERLAKE of Turner.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §652, sub-§1, ¶C, as amended by PL 2007, c. 627, §20, 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 may not receive directly or indirectly any pecuniary profit from the 
operation of that organization, except as 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 must be devoted exclusively to the 
purposes for which it is organized;  
(4)  The institution, organization or corporation claiming exemption under this 
section must file with the assessors upon their request a report for its preceding 
fiscal year in such detail as the assessors may reasonably require; 
(5)  An exemption may not be allowed under this section 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; 
(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.; and 
(8)  The property of the institution, organization or corporation may not be 
incidentally used to provide goods, services or materials in exchange for any 
amount, type or form of remuneration.  For the purpose of this subsection, an 
incidental use is a use of the property that is not directly related and necessary to 
the purposes of the benevolent and charitable or literary and scientific institution, 
organization or corporation. 
SUMMARY 
This bill amends the exemption from property tax provided to benevolent and 
charitable incorporated institutions and to scientific and literary institutions to specify that 
the exemption does not apply to property that is used incidentally in the provision of 
goods, services or materials in exchange for any type of consideration.