Kestrel’s tax status heading to court: Midcoast Regional Redevelopment Authority seeks clarification over aviation company’s claim to tax exemption

BRUNSWICK

The question over Kestrel Aviation’s tax status may be decided in court. It was revealed at Monday’s Town Council meeting that the Midcoast Regional Redevelopment Authority will seek a declaratory judgment in superior court over the aviation company’s claim to tax exemption.

MRRA Executive Director Steve Levesque said on Tuesday that the request for the judgment will be filed in the next week or so.

A declaratory judgment typically resolves legal uncertainties between litigants.

Under Maine state statute, airports and associated structures on a municipal corporation’s land are tax exempt. What is not exempt under the statute, however, is any structure within the airport not used for airport or aeronautical purposes.

Kestrel’s share of MRRA’s tax bill to Brunswick in 2013 was reportedly $114,000.

Kestrel Aviation was one of the first companies to locate to Brunswick Landing in 2011. It resides in 83,000 square feet of the former Brunswick Naval Air Station, taking up about half of Hanger Six.

However, Kestrel has had a difficult history.

According to a 2013 report in the Bangor Daily News, Kestrel, which employs about 40 in Brunswick, was beset by funding problems, and had been late with rent payments to MRRA, late with employee paychecks, and failed to pay its employees’ insurance premiums.

Last year, Gov. Paul LePage’s office attempted to intervene, introducing a bill that would have exempted Kestrel from property taxes, before withdrawing support.

Levesque said Kestrel looks to be solvent and is now current on its rent, and the company’s outlook is improving.

“They’re going through a capital restructuring period,” Levesque said. “It looks like they’re going to be in good shape.”

The declaratory judgment would have an impact beyond Kestrel, said Levesque, because MRRA is seeking to attract more aviation and aerospace industry.

According to Interim Town Manager John Eldridge, the Kestrel property has been assessed for taxes for the last two years. “We have a legal opinion that it was a taxable piece of property,” Eldridge said.

Kestrel had appealed its tax status to the local board of assessment review, said Eldridge, which denied a change in status.

Levesque said the declaratory will save time and money. “We believe the company

The law says ...

UNDER MAINE STATE statute, airports and associated structures on a municipal corporation’s land are tax exempt. What is not exempt under the statute, however, is any structure within the airport not used for airport or aeronautical purposes. qualifies for an exemption because it’s an aeronautical business,” Levesque said. “The town doesn’t believe that. It’s not being adversarial. We have an obligation to the existing tenants, to know whether it’s exempt or not.”

Neither Eldridge nor the Town Council seemed perturbed by the request for declarity judgment. “It’s just a difference of opinion,” Eldridge said on Tuesday.

“No one’s suing for damages, we’re just asking for someone to referee,” said Levesque.

Source:   http://www.timesrecord.com

Is Kestrel exempt from property taxes?

Last week the Forecaster covered what it described as a feud between local leaders on one side and the MRRA board, along with Senator Stan Gerzofsky, on the other side.  Like a car wreck, the article made for some high quality rubbernecking; it even went statewide as the Bangor Daily News picked up the article.

But the important question of the town’s right to tax businesses on the base should not be lost, especially on those who just enjoy watching the town’s democratic leaders savage one another.

MRRA, and indirectly Kestrel Aviation, are asking to be granted a tax exemption for an activity that has always been taxed.  The Governor’s office has submitted a bill, L.R. 492, to exempt the activities of Kestrel Aviation from property taxes.

The state tax code has long contained an exemption for airports and landing fields and structures at municipal airports, so long as they are used for airport purposes.  But, like all exemptions, this one is limited to particular circumstances.

The purpose of the exemption is so that services that are necessary to sustain the airport operations are not taxed.  It’s to help a public airport survive; the implication is that a public service is provided by the mere availability of a municipal airport.  The legal jargon used is that there must be a “public use.”  Typically, exempt property would be related to maintenance and operations.  The exemption is not intended to include anything that has any connection to airplanes.  Nor is it intended to include private, commercial, for-profit businesses (although the mere fact that a profit is made does not disqualify one for the exemption).

One way to look at this is to ask, can a public airport survive without it?  If it can’t, the use is tax exempt.

On the other hand if it is merely a business that benefits from proximity to an airport it is taxed.   In fact, an easy argument can be made that Kestrel, and similar commercial enterprises, are already receiving a free benefit from proximity to publicly funded airport.

Read more here:   http://benetpols.org

Brunswick officials feud with senator, state over base redevelopment