The Lincoln County Board of Commissioners has unanimously approved an abatement of property taxes for “dorm parent” apartments at Lincoln Academy, saying Newcastle may not tax the housing because it contributes to the school’s tax-exempt purpose.
The Monday, Feb. 10 decision overturns an October 2019 decision by the Newcastle Board of Selectmen to reject the school’s abatement request. The total valuation of the eight apartments is $726,900.
The county commissioners determined that the apartments contribute to the town academy’s primary purpose as a literary or scientific institution and should therefore be tax-exempt, according to their written decision.
“The County Commissioners unanimously find that the primary purpose of the dorm parent apartments is to allow the school to provide its essential services and supervision for the students, and the primary purpose is not for employee housing,” the decision states.
Newcastle Town Administrator Jon Duke said the selectmen have 21 days to appeal the decision and will likely review their options at their next meeting, Feb. 24.
The decision states that LA “presented evidence that the primary reason for the dorm parent apartments is to allow the Academy to operate a residential secondary school program.”
It goes on to say that the school’s residential program could not exist without the “supervision, guidance and support” of dorm parents. The commissioners’ decision states that “it is clear” that housing is not the primary purpose for the dorm parent apartments.
Maine law states that: “The real estate and personal property owned and occupied or used solely for their own purposes by literary and scientific institutions are exempt from taxation. If any building or part of a building is used primarily for employee housing, that building, or that part of the building used for employee housing, is not exempt from taxation.”
The commissioners’ decision states that the Legislature’s concern, in passing the law, “was that academic institutions would purchase taxable property to use as housing for their employees, negatively affecting the tax base.”
Both sides presented arguments to the commissioners on Jan. 28. LA was represented by attorney Kevin Decker, Head of School Jeffrey Burroughs, and Chief Financial Officer Wendy Corlett. Newcastle was represented by town attorney Peter Drum and James Murphy, the town’s assessors’ agent.
The selectmen had based their decision to deny the school’s abatement request on a recommendation from Murphy, who said the matter has not been interpreted and decided above the local level and should be left to the state.
In June 2015, Murphy assessed the apartments at $726,900 and taxed the school $13,120.55. Murphy determined that the apartments in the new Kiah Bayley Hall, which opened in February 2015, and existing apartments in Hall House were taxable, even though the majority of the campus is tax-exempt.
Lincoln Academy’s head of school at the time, David Sturdevant, filed an abatement request on behalf of the school Dec. 21, 2015, which the selectmen granted Feb. 15, 2016.
Ben Frey, now chair of the board of selectmen, said last year that the town had only intended to abate the taxes on the apartments for one year, 2016, and had not ruled them exempt.
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