Brunswick redevelopment authority to seek court decision on tax exemption for Kestrel Aircraft hangar

Posted April 02, 2014, at 4:12 p.m.

BRUNSWICK, Maine — The Midcoast Regional Redevelopment Authority will ask a judge to decide whether the hangar currently leased by Kestrel Aircraft should be tax-exempt because it is used for aeronautical purposes.

At stake is approximately $240,000 in property taxes the redevelopment authority has paid to Brunswick during the past two years.

The town of Brunswick and the MRRA, the entity charged with redeveloping the former Brunswick Naval Air Station, have a “difference of opinion” about the tax status of the property leased by Kestrel, according to Steve Levesque, executive director of MRRA.

Levesque said he will file a request for declaratory judgment in Cumberland County Superior Court.

For the past two years, the redevelopment authority has paid approximately $120,000 per year in property taxes to Brunswick for the 83,262 square feet leased by Kestrel in Hangar 6, near the former Navy airstrip that has been converted to a commercial airport.

Other tenants in the 166,355-square-foot hangar include Tempus Jets, which rents 33,352 square feet, and Flight Level Aviation, which operates the airport in 20,777 square feet.

Tempus Jets arrived in Brunswick in the summer of 2013, so property taxes on that space have not yet been paid, according to John Eldridge, Brunswick’s acting town manager. The town has not contested the tax-exempt status of the space leased by Flight Level Aviation, the fixed-base operator of Brunswick Executive Airport.

MRRA officials maintain that state law provides a property-tax exemption for certain aeronautical uses. The town disagrees.

“That’s the question — whether Kestrel qualifies for that exemption or not,” Levesque said Wednesday. “We have an impasse — a difference of opinion. The declaratory judgment is basically seeking an opinion.”

In 2013, MRRA appealed the town’s decision on the tax status of the Kestrel space, but the Brunswick Board of Appeals upheld the town’s interpretation of the law determining the property and use is taxable.

If a court disagrees, the exemption could potentially affect other tenants using MRRA property for aeronautical purposes, John Eldridge, Brunswick’s acting town manager, said Wednesday by phone.

In a March 27 letter to the town, Levesque wrote that MRRA and town officials “have worked hard to develop an increasingly collaborative and cooperative relationship,” and that “maintaining and continuing to improve that relationship requires continuing diligent efforts … and the airing and resolution of disagreements in healthy ways.”

An alternative to the suit — taking the question to the State Board of Property Taxes — will avoid a potential 18-month delay and would prevent both parties from incurring additional legal expense, Levesque wrote.

State law currently exempts “airports and landing fields and the structures erected thereon or contained therein of public municipal corporations,” from property taxes. But structures or land at the airport not used for airport or aeronautical purposes would be subject to local property tax collection.

In January 2013, the Department of Economic and Community Development proposed legislation that aimed to clarify the tax exemption status for aviation companies at municipal airports across the state.

At the time, Gary Brown, then Brunswick’s town manager, told The Forecaster that the town council was committed to fighting that bill.

“If it were to pass, it would overturn centuries of established local control, hinder economic development and deny Brunswick desperately needed resources to backfill the loss of state funding for education and other critical needs of the town of Brunswick,” Brown said at the time.

Gov. Paul LePage’s administration later withdrew the proposed legislation, DECD spokesman Doug Ray said Wednesday. Asked about the tax-exempt question, Ray said the department does not comment on property tax law.

In his March 27 letter to Eldridge, Levesque wrote that the court filing “is not an act of anger or acrimony,” and that the MRRA board does not want to jeopardize the positive steps the two parties have taken toward each other in recent months.

Eldridge concurred with Levesque’s description of the issue as “a difference of opinion.”

“Any legal process by nature is adversarial, but we understand that the MRRA board felt a need to do this,” Eldridge said by phone Wednesday.

Should a court determine the property is tax-exempt, the 2012 and 2013 taxes would be returned to MRRA, Eldridge said.

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