Fight over Hebron Academy taxes goes to Maine high court

Russ Dillingham/Sun Journal

Hebron Academy Head of School John King looks out on to the ice at Robinson Arena on the campus. The arena is the subject of a tax issue that has threatened the public use of school facilities across the state.

HEBRON — The Maine Supreme Judicial Court on Wednesday will hear arguments on whether Hebron Academy should pay property taxes on Robinson Arena and other facilities the school rents to outside groups.

Russ Dillingham/Sun Journal

Hebron Academy Head of School John King walks away from Robinson Arena on the campus. The arena is the subject of a property tax issue that has threatened the public use of school facilities across the state.

Submitted photo

Hebron Selectman Daniel J. Eichorn

Russ Dillingham/Sun Journal

Hebron Academy Head of School John King talks on the phone outside Robinson Arena on the campus. The arena is the subject of a tax issue that has threatened the public use of school facilities across the state.

Russ Dillingham/Sun Journal

Hebron Academy Head of School John King, 2012

Russ Dillingham/Sun Journal

Hebron Academy Head of School John King walks out of Robinson Arena on the campus. The arena is the subject of a tax issue that has threatened the public use of school facilities across the state.

The results of that decision could be expensive for this private college-preparatory school, and could result in the school being closed to outside use.

In 2009, the town of Hebron began taxing Hebron Academy for Robinson Arena, a hockey rink that had been an outdoor arena for decades before it was capped in 1993. The tax bill for the arena came to $19,240.

Hebron Selectman Daniel Eichorn said the town was in the process of a revaluation when the assessor, John E. O'Donnell & Associates of New Gloucester, pointed out that nonprofit organizations that rent out facilities can be taxed on those facilities.

“Essentially, we are obligated to tax properties that are, under the rules of the state of Maine, subject to taxation,” Eichorn said. “We don't get to pick and choose which properties we tax and which properties we don't.”

The school balked at the bill and requested an abatement, going before the Oxford County Commission in October 2010. Commissioners determined Hebron Academy's request was not filed in time and denied the request. The school filed a lawsuit about six weeks later.

In a November 2011 hearing, town attorney Bryan Dench argued that the school didn't qualify as a “literary and scientific institution,” a distinction necessary for tax-exemption.

Active Retired Justice Robert W. Clifford, who presided over the trial, ruled in the school's favor that the arena should remain tax-exempt but rejected the school's claim to the 2009 taxes it paid. He said the town was relieved of property taxes on the arena from 2010 forward. Clifford also ruled that the school did qualify as a “literary and scientific institution.”

The town appealed the court's decision, and Maine's highest court is set to hear the case on Dec. 12.

The stakes are higher this time. During the discovery process, the town found that the school rents out several facilities, including the Lepage Center for the Arts, where the Oxford County Chamber of Commerce holds its annual awards dinner, and school dormitories, which are used for summer sports camps.

According to court documents, the school has been rented out for Norway Savings Bank functions and for weddings, offering food service and alcohol sales to patrons.

If the high court rules in favor of the town, any building that has been rented out in the past three years would be taxed for the year or years in which it was used, Eichorn said.

On the other side, the school is asking the court to overturn Clifford's decision on the 2009 taxes and have those refunded to the school. Since the decision, the town has been levying property taxes on the arena. Hebron Academy Head of School John King said the school paid taxes on the building in 2010 and 2011.

King said that if the high court upholds Clifford's decision, the town will owe Hebron Academy about $40,000 in taxes paid those two years. If the court awards the school the money it paid in 2009, that increases to nearly $60,000.

Maine law grants tax-exempt status to institutions such as schools, colleges, churches, veterans' groups and "benevolent and charitable institutions, including nonprofit nursing homes and hospitals. Hebron Academy is mostly exempt from property taxes as a “literary and scientific institution.”

Not all of the school's property is tax-exempt, though. Hebron Academy pays taxes on faculty housing and a building that houses the Hebron post office, part of which is rented to the U.S. Postal Service. According to Maine law, schools can be exempted from property tax only for property “owned and occupied or used solely for their own purposes,” meaning property essential for the running of the school.

The town contends that the school's renting the properties out, especially to private entities like sports camps and banks, violates the requirements the school must meet to be tax-exempt.

The school has argued that rented properties are part of the school, and that any rental use and subsequent income is “incidental and intermittent” and doesn't detract from those properties' primary use in serving the school's educational mission.

In the past five years, the school has earned an average of $137,000 per year from facility rentals and services. That's about 1 percent of the school's $14 million annual budget. In court briefs, attorney John Conway, who represents Hebron Academy, said the actual profit from those rentals is much lower.

Robinson Arena costs more than $370,000 a year to run, according to court documents, including general and administrative expenses. The school makes about $36,000 in income from renting it out.

According to King, paying taxes on those properties could raise tuition and maybe even force the school to stop allowing outside groups to use the rink and other facilities. He said expenses related to keeping the rink open would cancel out the money made from rentals. “Paying the people, and so forth, certainly added up to more than we would make,” King said.

Dench said that argument doesn't hold water.

“If that were true, then why do it?” Dench said. He pointed out that the school made $686,234 from facility rentals between June 30, 2006, and Feb. 18, 2011. “I would not describe rental income of $686,234 … as incidental,”  he said.

Dench argues that the school's tax-exemption lets it compete unfairly with businesses that rent facilities and pay taxes on those properties. In briefs submitted to the court, he points out that Hebron Academy employs a person to manage facility rentals.

“We don't run it as a competitive venture,” King said. “We run it essentially to cover whatever we can of the costs. We don't particularly pay attention to what other facilities are available.”

King argues that renting the ice rink and other properties is a service to the community, as well as a source of income. “It was something good to do for the area, and a little bit of an offset to the expenses that went to operating that facility.”

He added, "The town hasn't really taken into consideration, we don't think, the amount that we do for the town.”

Hebron Academy students volunteer at the local elementary school and Hebron Academy groundskeepers help maintain the town's fields on their off time, King said. “The kinds of people who teach at a place like this are really community-oriented people.”

He added that Hebron Academy has students from local towns, including 28 from Oxford County, which decreases the burden on those schools.

He said losing the rink would be a loss to residents of Hebron and beyond. “You couldn't make it available to youth hockey groups or youth sports groups or other things without running a risk of losing the tax-exemption,” he said.

Eichorn said King is overstating the school's benefit to the town.

“To be perfectly frank, it's not 1980 anymore," Eichorn said. "There was a time when the academy was far more involved with the town. Town programs would use their ball field." He said there was a time when losing access to the campus would have been difficult for the town, but not anymore.

He said that in his 10 years living in Hebron, he hasn't seen much contact between the school and the town.

“At this stage, other than the open skating during a few months in the winter, I don't know of any other circumstance in which the residents of the town of Hebron in general are welcome on the Hebron Academy campus,” Eichorn said.

He said the school might be able to allow free skating without being subject to property tax if it asked for, but didn't require, donations rather than charging admission to use the ice.

Even the name recognition Hebron holds as the host of the school has been overshadowed, he said. “If you go outside of the state of Maine, people are more likely to have heard of the town because of the Redneck Olympics.”

Oral arguments on the case are scheduled for 11:30 a.m. Wednesday at the Cumberland County Courthouse in Portland.

treaves@sunjournal.com

What do you think of this story?

Login to post comments

In order to make comments, you must create a subscription.

In order to comment on SunJournal.com, you must hold a valid subscription allowing access to this website. You must use your real name and include the town in which you live in your SunJournal.com profile. To subscribe or link your existing subscription click here.

Login or create an account here.

Our policy prohibits comments that are:

  • Defamatory, abusive, obscene, racist, or otherwise hateful
  • Excessively foul and/or vulgar
  • Inappropriately sexual
  • Baseless personal attacks or otherwise threatening
  • Contain illegal material, or material that infringes on the rights of others
  • Commercial postings attempting to sell a product/item
If you violate this policy, your comment will be removed and your account may be banned from posting comments.

Advertisement

Comments

Jane Ryerson's picture

hebron taxation of hebron academy

Since Hebron Academy is a private institution and anyone going there pays tuition and or room and board, then to rent out this facility for income disqualifies those buildings from being tax exempt. Due to hefty endowments left to private institutions, these schools can well afford the property taxes that would be billed on rentable facilities. If the school wants to avoid these property taxes, then they should abide by the rules of the game and stop renting out facilities. Otherwise play fair and pay the taxes. We have a private school in Bethel that was originally left to the townspeople of Bethel through William Bingham. Trustees came in and created a private entity and thus townspeople are not allowed to use any of this schools facilities and local students have to pay for a school to go to if they want originally meant to be tuition free for Bethel residents. If a school wants to make it a business of renting it's facilites then they should pay the consequences.

MARK GRAVEL's picture

Shut the front doors and

Shut the front doors and close the campus to the public.

ROGER COUTURIER's picture

Greed and ignorance

I can't believe Selectman Eichorn actually made the statements he was quoted in the article. “To be perfectly frank, it's not 1980 anymore," Eichorn said. "There was a time when the academy was far more involved with the town. Town programs would use their ball field." He said there was a time when losing access to the campus would have been difficult for the town, but not anymore.

He said that in his 10 years living in Hebron, he hasn't seen much contact between the school and the town.

“At this stage, other than the open skating during a few months in the winter, I don't know of any other circumstance in which the residents of the town of Hebron in general are welcome on the Hebron Academy campus,” Eichorn said.

These statements can't really come out of the mouth of an educated person. This sounds like the sentiments of an individual who might be a transplant from out of state who has come to Maine for a better life style but is out to set us all straight as to how things should really be. Hebron Academy was here long before you arrived in the picture. It has had significant impact on our communities as well as its youth. Shame on you Mr. Eichorn!

FRANK EARLEY's picture

Greed, nothing but pure greed.........

Greed, it's the only explanation I have for the actions of the Selectmen of Hebron. Having an establishment in town, being used by the community, and charging rent to use the facilities. I am just assuming that this has been going on for a while.
I have never run an ice arena, but from all the "Hupla" over the building of the new ice facility in Auburn, I'm assuming it is a great benefit to the towns youth. I am also going out on a limb here, and guessing that the "Ice Arena", requires some cost to operate. Personnel must be needed to operate and maintain the equipment. Lets not forget the "Zamboni" operator, a job I've always wanted to try. Then there's the cost of insurance. The liability coverage on a facility of that nature, must be enormous.
Now taking all that into consideration, charging rent to help offset the cost, as apposed to allowing the use for free, or worst of all not allowing the public use at all, are the three possibilities here. The fact that this has even gotten to this point, should be an embarrassment to the Board of Selectman for the town of Hebron. I would be willing to bet, that the Law in question to allow the taxing of rental property, was never meant for this type of situation in the first place. It just caught someones eye, at a time when some people consider money over anything else. It looks lucrative. It's also sad, when you look at what could be lost as apposed to what might be gained. Not only in Hebron, but across the state. If the town of Hebron were to win this case in court. A precedent will be in place which may result in the exclusion of most private facilities to be rented by outside groups. Just think of what that would mean to the many towns that use private facilities.
I feel the best position for Hebron Academy, would be, pending the decision of the Court, close all the facilities to any outside use. This may give the Selectmen a taste of what they and many others stand to lose in the pursuit of a little money, Greed..........

Catherine Pressey's picture

Little money Greed!

Not living in Hebron, but not so far away, in Mechanic Falls, it would seem to me that the cost of building and maintaining the building would leave the school in a neg. place. I would gladly see a few dollars saved by the school to provide a safe place well maintained by the school. And I can not see how someone could make a comment that the Red Neck Olimp. put the town on the map far more than the school. I as a tax payer in above town, would love our town to have the school here, you can not even begin to make a comparison of the Red Neck Olimp. with the honorable school. I envey the tax payers of Hebron, to have something great to be proud of. HONORABLE SCHOOL IN MY OPINION, TAKES A SCORE OF A, SAD STATE OF AFFAIRS. SAD INDEED!

Catherine Pressey's picture

Little money Greed!

Not living in Hebron, but not so far away, in Mechanic Falls, it would seem to me that the cost of building and maintaining the building would leave the school in a neg. place. I would gladly see a few dollars saved by the school to provide a safe place well maintained by the school. And I can not see how someone could make a comment that the Red Neck Olimp. put the town on the map far more than the school. I as a tax payer in above town, would love our town to have the school here, you can not even begin to make a comparison of the Red Neck Olimp. with the honorable school. I envey the tax payers of Hebron, to have something great to be proud of. HONORABLE SCHOOL IN MY OPINION, TAKES A SCORE OF A, SAD STATE OF AFFAIRS. SAD INDEED!

Advertisement

Stay informed — Get the news delivered for free in your inbox.

I'm interested in ...