PARIS — A lawyer for the town of Hebron argued in Oxford County Superior Court on Tuesday that Hebron Academy does not qualify for tax-exempt status under Maine statute.
Hebron Academy filed a lawsuit against the town last December after the town began demanding property taxes for the Robinson Ice Arena, which the town alleges the school runs as a business. The school said the compensation it gets from renting out the ice and holding open skate times is far less than the building's operating budget.
The school is seeking to have the arena declared tax exempt and to be compensated for more than $19,000 in property taxes it paid to the town for 2009.
Justice Robert W. Clifford heard the case Tuesday in Oxford County Superior Court. Both parties have two weeks to submit supplemental briefs, after which Clifford will rule on the case.
Bryan Dench, representing the town, said Tuesday that the private high school is not a literary and scientific institution because employees are paid beyond “reasonable compensation for services.” He also said the school's attorney never proved the Robinson Arena was being used for literary or scientific purposes.
John W. Conway, who represents Hebron Academy, called Headmaster John J. King as witness. King testified to the school's curriculum and that employees are paid only compensation for work performed as part of their jobs. He said no one makes more money if they raise more funds for the school.
King described the school's liberal arts education and its emphasis on writing in the curriculum. He said students were required to take two science courses before graduation.
He said the school rents out Robinson Ice Arena to hockey teams and clubs, but said the $205 per hour the school charges is a fraction of the arena's $371,000 annual operating cost. He said the school only allows outside groups to rent it when it won't conflict with students' use.
King said that if renting out the ice meant the school would have to pay property taxes, the tax payments could amount to more than the school's revenue for the arena. If so, Hebron Academy might discontinue allowing outside groups to use the arena, he said.
According to King, the school takes in revenue from renting out buildings and fields and from catering events. It amounts to about $130,000 per year. He said the school's annual operating budget is $13 million.
Most of the Hebron campus is tax exempt, with the exception of the headmaster's house, 10 structures that house other faculty, and the school's business office building, half of which is rented to the U.S. Postal Service as a post office.
According to the statute, a literary and scientific institute is tax exempt, but living quarters for faculty are not.
King said the school had dutifully paid property taxes on faculty housing, and said he was surprised in 2009 when its property taxes doubled.
The town had begun taxing the arena and five other school parcels. The school contested the new taxes, but submitted its request for an abatement a few days too late in March 2010. King said there was a misunderstanding, and that the school was told it had until the end of March rather than 185 days from when tax bills were mailed.
The town denied the school's request for an abatement. The academy took the case to the Oxford County Commission, which denied the abatement because of the missed deadline.
The town removed the five parcels from the tax rolls on the 2010 tax bills, but kept taxing the arena.
In Dench's cross-examination of King, he asked the headmaster about compensation. In a recent budget year, King said, he was paid $185,000, plus travel and entertainment expenses he accrues in reaching out to alumni seeking donations for the school.
He asked King to discuss his benefits and his housing, which is provided by the school. King said a stipulation of the headmaster position is that he live on school grounds.
Dench later asked Clifford to make a judgment based on what he said was the school's lack of qualification as a literary and scientific institute, citing high employee pay as one reason.