Fee changes proposed for submerged lands

Posted Dec. 23, 2008, at 9:20 p.m.

AUGUSTA, Maine — After years of capped rental fees, lawmakers will consider a proposal this session that fundamentally changes the way the state charges for the use of submerged lands which are owned by the public, a move already stirring opposition.

“I have some real concerns about this,” said Sen. John Nutting, D-Leeds, co-chairman of the Legislature’s Agriculture, Forestry and Conservation Committee. “I think this will need a lot of work by the committee, once we get in, in January.”

Will Harris, director of the Bureau of Parks and Lands, said the proposal was the result of the Legislature’s request that the Department of Conservation come up with a new way to assess the fees the state collects for leasing use of the submerged lands for everything from docks to pipelines.

Under current law, there is a cap of $1,200 a year on the cost of each lease, but the cap ends in 2009. There are now 967 leases that run from a few commercial fishing operations to private leases and to large commercial leases such as Bath Iron Works and the Portland Pipe Line Corp. There are 200 leaseholders that are public facilities and are not charged fees.

“We had a working group that met on this,” Harris said, “but we did not reach a consensus.”

What the agency is proposing would replace the current law with a new formula that starts with charging 5 cents an acre for use of submerged lands, which are mostly on the coast. The formula then adjusts the rate based on the municipal valuation of the land adjacent to the submerged land. It would also phase in the higher rates over a decade.

“We worked to come up with a fairer way to do this, and provide the funding needed to operate the program,” Harris said.

According to the report released last month by the agency, the 274 current commercial leaseholders are paying $174,000 a year to the state. Without the cap, that would jump to $870,000 next year.

Currently the leases yield $312,000 for the program operations, which include oversight staff and grants to projects such as $46,500 for harbor ledge removal in Stonington. When the cap ends next year, revenue from the leases is projected to be $1,057,990; under the department proposal, it would be $570,412.

In written comments attached to the report to the Legislature, one of the largest leaseholders, Portland Pipe Line, acknowledged the $1,200 fee they are paying to use the lands owned by the public is not enough. They support some formula approach, noting that simply removing the cap would raise the company’s annual fee from $1,200 to about $150,000.

“This is a very substantial increase in cost for any organization, but it is especially challenging under the current economic conditions,” Chris Gillies of the company wrote.

Portland Pipe Line suggested a fairer approach was a flat per-acre fee, but said they did not “object” to the formula proposed by the department.

The Maine Marine Trades Association, which represents many boat yards, boat builders and marinas, called the complex formula developed by the department “convoluted” and urged a simpler approach.

They also objected to department staff characterization that all but 70 leaseholders would see a decrease because that position is based on what rates would be when the cap is removed.

“If you wrote a check for $1,200 in 2008 and in 2010 you have to write a check for $10,000 that’s an increase — no matter what you want to call it,” wrote Susan Swanton, executive director of the MMTA.

But Nutting is concerned that the public will not get properly compensated for the use of public lands under any of the current proposals.

“There are some real fairness issues here,” he said.

Nutting said he looks at the issue more broadly, noting that out-of-state yacht owners do not pay the same sort of fees to use Maine waters as other states charge. For example, he said, Maine is the only state on the East Coast that does not charge sales taxes on marina fees.

“Once again we are giving people that could pay to use our cleaned up coast more than they are, a break so the average Maine taxpayer pays more,” he said. “I just think that is the wrong emphasis.”

Nutting said that out-of-state visitors to Maine need to start paying more of the costs of keeping the state a good place to visit.

The bill will not be scheduled for a public hearing until after the committee meets and sets its schedule early in January.

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