In a decision issued last week, the Supreme Judicial Court (SJC) ruled that New England Forestry Foundation, Inc. (NEFF) is a qualifying charitable organization whose forest land is exempt from property taxes under M.G.L. c. 59, § 5, clause third.  In so ruling, the SJC reversed a contrary decision of the state Appellate Tax Board (ATB).forest

NEFF owns a 120-acre parcel of forested land in the Town of Hawley, in the northwestern corner of Massachusetts.  NEFF bought this land, known as Hawley forest, in 1999.  NEFF hired a licensed forester to develop a forest management plan, which involved conducting a “tree inventory” and selectively harvesting mature and poor-quality trees.

NEFF applied for tax-exempt status under the state’s property tax statute on the ground that  NEFF is a charitable organization that “occupies” Hawley forest for a charitable purpose.  The Hawley tax assessor denied NEFF’s application, and the ATB upheld the assessor’s decision. 

The SJC took NEFF’s appeal on direct appellate review and reversed.  The SJC observed that to be exempt from paying property tax an organization must satisfy a two-pronged test.  

First, the organization must show that it is a charity whose dominant purpose is to perform work for the public good.  On this prong, the SJC noted that “properly preserved and managed” conservation land benefits the public, even if the public doesn’t actually visit and walk the land in large numbers.  The SJC also cited the environmental benefits of forests and the fact that, by engaging in conservation and environmental protection, NEFF is “lessening the burdens of government.” 

Second, the organization must show that it “occupies” the land in furtherance of its charitable purposes.  On this prong, the ATB had concluded that NEFF did not “occupy” the Hawley forest because it did not sufficiently promote and facilitate public access to the land.  The SJC disagreed, stating that courts should defer to an organization’s judgment on how to use its land to best promote its charitable purposes.  The court added that in some cases – such as where a fragile habitat or ecosystem is involved – public access could thwart the very conservation objectives the organization is trying to achieve.  The SJC concluded that as long as NEFF does not affirmatively exclude the public from the Hawley forest (which it does not), it satisfies the “occupancy” prong of the test.

Thus, NEFF’s Hawley forest is tax-exempt, and the law in this area is clarified:  for a bona fide charitable organization, public access to, and use of, conservation land is not required in order to “occupy” that land for charitable purposes.