Maine's Tree Growth law gives massive tax breaks to landowners big and small

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Jacqueline Robbins is convinced that the owner of a 52-acre waterfront parcel in the small coastal town of Milbridge has been getting a sweetheart deal at the expense of other residents.

The law

Maine's Tree Growth Tax Law gives a landowner with a least 10 acres of forestland up to a 95 percent reduction on their property taxes if they pledge to manage that land "primarily for the production of commercial forest products."

Each 10-year confidential management plan must be certified by a licensed forester as meeting the intent of the law and must be approved by a town assessor.

Currently, 11.2 million acres — about 60 percent of the state's forestland — are enrolled in Tree Growth.

Tree Growth fast facts

* Maine's Tree Growth Tax Law was created in 1972. By 1976, 10 million acres were enrolled, 74 percent in the Unorganized Territory. 

* According to the Maine Forest Service, 11.2 million acres are now enrolled in Tree Growth, totaling about 60 percent of the state's forestland. Most are in the UT; 3.6 million acres are in organized towns.

* More than 105 coastal towns have properties in the Tree Growth program, representing about 8 percent of total enrollment. 

* Tree Growth enrollment is a long-term commitment. Withdrawing early can result in steep penalties. 

* The Legislature has changed the law 86 times, several times to encourage enrollment or to lessen withdrawal penalties. There have been 100 bills proposing changes to Tree Growth.

* In 1989 the Legislature passed a law requiring Tree Growth landowners to have a forest-management plan certified by a licensed forester. The 10-year plans are approved by local assessors and kept by landowners. The plans are confidential; the Maine Forest Service does not inspect the plans unless asked by local officials. 

* Maine has about 850 licensed foresters. 

* The management plans are 10-year documents, but can project harvesting or growth schedules much further out. For example, a plan created in 2012 might call for a harvest in 2032, well beyond the 10-year anniversary of the original document.

* Municipalities with Tree Growth properties receive some reimbursement from the state. Reimbursement rates have varied. In some cases, the payouts have been reduced by state budget cuts.

* Towns with a significant amount of Tree Growth property receive more state revenue-sharing; also, because the properties are largely exempted from land valuation, a town can experience reduced education costs and county taxes.

— Sources: Maine Revenue Service and Maine Forest Service

That property owner has paid an average of $3,115 a year in property taxes since 2007. Had the property not been enrolled in the Maine Tree Growth Tax Law program, the taxes would be about $20,000 a year, said Robbins, a tax assessor who contracts with about 10 towns.

To get that substantial tax break, the landowner had to have an approved woodlot management plan that ensured commercial timber harvesting or other forest product activity. But Robbins says the plan more closely resembles a honey-do list — yard work at best: Clear out fallen limbs and brush. Remove the dead trees.

She used one word to describe the management plan and the tax break, which the rest of Milbridge landowners have to absorb: "bull****!"

Robbins feels similarly about other properties enrolled in Tree Growth, particularly along the coast, where shoreland zoning restrictions, deed covenants and topography can significantly limit timber-harvesting activity, which is the impetus for the tax-relief program. 

Robbins said she has reviewed properties and management plans for several parcels in Waldo County. Landowners there all seem to be using the program properly, she said.

Similarly, complaints about the Tree Growth program in Androscoggin, Franklin and Oxford counties have been muted.

But coastal, and some lakefront, communities are another story. 

"What coastal communities have seen is that it’s become a scam," said Terry Towne, an assessor in Lamoine, just up the coast from Ellsworth. "It’s really a welfare system for larger shorefront property owners. Everyone else in the community has to make up the difference."

If it's a scam, it could be a big one. Critics say the confidential management plans, uneven enforcement and the protectionist culture of the forest products industry and state oversight agencies have made it difficult to fully examine the problem.

Given the number of acres in the program (11.2 million), the value of coastal and lakefront properties in Maine and the potential 95 percent tax break, the costs to property taxpayers could be significant.

At the heart of it: Assessors and municipal officials say abuses in Tree Growth make other taxpayers pay more than they should.

The Maine Municipal Association argues that Tree Growth abuses don't mean lost tax revenue; towns still collect what they need to provide services. However, if some landowners are only paying a fraction of their taxes, everyone else pays more, says the MMA's Geoff Herman.

"It's a tax-equity issue, not a revenue issue," Herman said.

State officials downplay the issue. So does the forest products industry, which was deeply involved in drafting the 1972 law and, as witnessed during this legislative session, remains highly influential in facilitating or resisting changes to it.

Tom Doak, former head of the Maine Forest Service and now executive director of the Small Woodland Owners Association of Maine, said there may be abuses in the program. However, he said, the majority of landowners are doing the right thing. 

Doug Denico, the state's chief forester, said heartburn over the law is based more on hearsay than evidence. 

"We try to work on facts," Denico said. "There are a ton of anecdotes about Tree Growth, but we're not seeing a lot of the complaints here. That's what sort of mystifies us."

Robbins was livid when told of Denico's statement. Her response again began with the "b" word. 

"They've had complaints for a long, long time," she said. "They just don't want to deal with it. They don't want to upset the influential people in Augusta."

She added, "It's another example of the rich and powerful finding loopholes and getting away with it." 

Overstated problem?

Denico and Donald Mansius, head of the Maine Forest Service, handed over a spreadsheet showing 40 complaints about Tree Growth since 2007.

The document includes the Milbridge property. Robbins and a team of assessors identified the parcel as a potential misuse of Tree Growth during a recent review of properties enrolled in the program. 

Denico said the list reinforces two points: First, complaints are rare. Second, he said, "If there's a problem, we'll investigate."

Mansius said that there may indeed be problems on the coast that the Forest Service doesn't know about. He said the Forest Service has been proactive in reaching out to coastal assessors and foresters to reinforce the goals of the program.

However, he added, it's up to town officials — which by law are the ones responsible for policing the program and the only ones who can see the confidential plans — to come forward if they want the state's help. 

With a few exceptions, Mansius said, that hasn't happened.

He referenced a 2009 legislative report in which the MMA presented several questionable Tree Growth properties. One example cited was a 10-acre parcel in Georgetown owned by State Treasurer Bruce Poliquin.

"The MMA gave us eight or nine potential abuses," Mansius said. "We told the communities, 'Bring 'em on. We'll look into it.' Nothing ever came."

Mansius and Denico declined to speculate about why more coastal towns aren't making formal complaints.

That's not the case with SWOAM.  Earlier this year Doak told the Legislature's Taxation Committee that Tree Growth abuses were probably more perception than reality.

"The issue keeps coming back here because I think some people don't like the answers they're getting," said Doak, testifying on a bill sponsored by Senate President Kevin Raye, R-Perry, that would have directed the Forest Service to study questionable Tree Growth properties.

The comment was a reference to the MMA and about a half-dozen assessors who testified that Tree Growth was being used by some coastal landowners as a tax shelter. 

Some of those same assessors now say that by focusing on the number of official complaints received, SWOAM and the Forest Service can characterize the problem properties as outliers instead of addressing loopholes in the law that could be widely exploited. 

Said Towne, the Lamoine assessor, "The law is broke. It’s not working. It’s dysfunctional. They know it, but they don't want to deal with it."

Best-laid plans

The MMA and assessors say Tree Growth abuses are far more common than the state would like to admit. The suspicion stems from several forest management plans inspected by vigilant assessors like Towne.

Lesley Cosmano, a selectman in Stockton Springs, said the management plans she has seen contain ambiguous language that allows landowners to get away with not conducting any forestry activity.

"They say things like, 'The landowner could be, might be, will consider,'" she said. "The language is open-ended; it's not enforceable." 

The process of certifying a forest management plan effectively puts assessors on the front lines of Tree Growth enforcement. The state's Forest Service doesn't see the documents unless towns request technical advice or raise questions about whether a landowner is following his or her plan.

"People forget that local assessors can effectively veto a Tree Growth plan," said Lloyd Irland, an associate at the Yale Center for Environmental Law and Policy and a former state economist. 

Herman, with the MMA, says it's not that simple. He said assessors aren't licensed foresters; they may be uncomfortable challenging harvesting schedules or other provisions. 

Towne, the Lamoine assessor, said there's another reason some of his colleagues might choose deference over skepticism: small-town politics.

"When you take a stand and try to follow the law, you become the designated ***hole," Towne said. ". . . It’s an uncomfortable feeling. These are your neighbors, people you see every day. You want to be able to get along with them."

Lamoine hasn't taken that approach. The assessing board has actively challenged questionable Tree Growth use.

A few years ago, the town contends it discovered a landowner in Tree Growth using the program as a tax shelter for a gravel pit. The town yanked the property out of Tree Growth, a move that twice landed the two parties in front of the state Board of Property Tax Review.

The case has since moved to Superior Court. 

Even when assessors find a problem, their protests aren't always heard, said Kerry Leichtman, an assessor in Rockport. He said he recently reviewed a management plan for a 50-acre property in which the forester, who was paid to create the plan for the landowner, acknowledged that harvesting might be difficult, if not impossible, because of the topography. 

"I'm reading this, saying, 'I have a problem giving this landowner a tax break,'" said Leichtman, who then notified the forester. "The forester wrote back and basically said it was out of my purview."

The pressure to ratify seemingly unrealistic management plans is a common complaint. When the plans are later challenged, some communities say they receive little guidance from the state. 

The island community of North Haven is facing this problem. In addition to having to comply with shoreland zoning laws that restrict tree cutting, four properties enrolled in Tree Growth have deed restrictions that significantly limit the property owners' ability to produce timber products.

And then, town officials point out, there's yet another factor that would stop most landowners on the island from any serious harvesting: the cost of the 12.5-mile boat ride across West Penobscot Bay required to move the timber to port in Rockland.

"To think that people are going to harvest timber on an island and pay big money to ship it across the water . . . doesn't pass the straight-face test," assessor Robbins said. 

Christie Hallowell, chairwoman of North Haven's Board of Assessors, thought the situation important enough to include in the 2011 Town Report.

"As the recent news concerning the Maine State Treasurer suggests, it is clear North Haven is not the only place dealing with potential misuse of Tree Growth classification," Hallowell wrote.

The report shows that the four Tree Growth parcels total 384 acres. Tree Growth reduces the land value from $3.9 million to $113,500, a tax reduction of $32,203 a year. 

North Haven's 2011 recreation budget was $32,345. 

The North Haven Tree Growth properties are included on the list compiled by the Forest Service. In each case, the state concluded that the property owners' management plans conformed to the law. However, the state questioned whether the landowners' objectives were consistent with the intent of Tree Growth. 

Nonetheless, the North Haven assessing board in October recertified one of the Tree Growth plans for another 10 years. Tammy Brown, North Haven's assistant to the assessing board, said the board did so reluctantly.

Why do it at all?

"The board felt it couldn't get clear advice from the Forest Service," Brown said, adding that the board was wary of being sued by the landowner. 

"I think the board felt that legal action by the landowner was a very real possibility," she said. 

Legal action by wealthy landowners has deterred other towns from taking a hard line on potential Tree Growth abuses.

Geoffrey Birdsall, chairman of the Georgetown Board of Selectmen, indicated during a board meeting last month that he was concerned that questioning Treasurer Poliquin's use of Tree Growth for his 10 acres could get the the town involved in a court dispute that it could neither win nor afford.  

Since 2004, Poliquin has paid property taxes of $30 or less per year on his 10 acres of coastal property, which is valued at $943,000, saving him thousands of dollars a year. The treasurer has refused to release his management plan to eliminate speculation that he has been misusing the law. Georgetown officials have declined to review the plan, despite the fact that his property was cited as a potential violation during a 2009 legislative study reviewing enforcement problems with the 40-year-old tax law.

Poliquin, who is seeking the Republican nomination for the U.S. Senate, has since applied to transfer his property out of Tree Growth into the Open Space program. If approved, Poliquin will avoid Tree Growth's punitive withdrawal penalties while still receiving a significant tax reduction.

The Legislature approved changes to the Tree Growth program to allow the no-penalty transfers. The intent was to help landowners hold onto their property without succumbing to development pressure. 

But critics like Towne say it's just another Tree Growth loophole. He says scofflaws can effectively get the maximum tax benefit in Tree Growth; if they're discovered, they can parachute to another tax-abatement program. 

The Board of Selectmen in the coastal town of Surry recently made the same argument when  a landowner transferred out of Tree Growth prior to selling the land. The board wrote that Tree Growth was a worthwhile but "loosely regulated program that invites almost anyone with 10 or more acres to reap the tax break." 

Secret plans

The 108-acre property that MMA's Geoff Herman owns in Mount Vernon includes an eight-acre plantation of red pine. At some point, Herman would like to convert the plantation to farmland.

Doing so would require a commercial harvest, according to his recently recertified 10-year forest-management plan.

The document is confidential under the Tree Growth law. Herman shared it with the Sun Journal to make two points: to show what a quality management plan looks like and that the information contained therein need not be exempt from Maine's Freedom of Access Act (FOAA).

Recent scrutiny of Tree Growth has prompted some to question why a law that grants tax breaks to the public should shield those plans from the public.

David Field, with the University of Maine Forest Management Division, said the plans were made confidential originally because large timber companies didn't want to reveal harvest schedules and prices — essentially business plans — to competitors.

However, New York and Vermont don't shield forest management plans from public records laws. Ginger Anderson, a spokeswoman for the Vermont Forest Service, noted that among the management plans filed and open to public scrutiny in her state are ones held by major landowners, including Plum Creek.

Herman doesn't dispute Field's argument. However, he said, there's no reason smaller landowners like himself should be shielded from FOAA. Those who agree say lifting confidentiality for smaller Tree Growth landowners would discourage foresters from certifying plans like the one discovered in Milbridge.

Some believe that's a slippery slope. 

"I would say that the plans are transparent to the people who need to see them, the people with the expertise and those who will take corrective action," said Denico, with the Forest Service.

SWOAM takes the same position. The group has successfully lobbied lawmakers against making the plans public. 

Such efforts have emboldened skeptics like Towne, who suspects public inspection would reveal that many landowners shouldn't be in Tree Growth. 

"Why else would some of these small landowners be so concerned?" he asked. 

New laws, old politics

Field and Irland, with Yale, are staunch believers in the effectiveness of the Tree Growth law. Prior to its enactment in 1972, both say, forestland owners were exploited, overtaxed and in some cases, forced to sell their land.

Current-use programs like Tree Growth, both men argue, have buoyed the forest products industry and helped landowners keep their land while saving millions of acres from sprawl and overdevelopment.

Doak, with SWOAM, frequently calls Tree Growth the state's most successful conservation program. 

But even some Tree Growth defenders acknowledge it might be time to tighten the law. 

"It does seem to me that something needs to be done about this shoreland issue," said Field, a SWOAM board member.

Irland agreed, saying, "You can never devise a law that's 100 percent bulletproof from abuse. . . . But I like the idea of having the Forest Service put up some barbed wire to keep some abusers out."

Legislative records show the Tree Growth law has changed 86 times. But to assessors, none of those alterations have addressed the most significant problem: tax cheats.

Field said SWOAM is aware that scofflaws are threatening the Tree Growth legacy. 

"We talk about it all the time," he said. "But I think we're always reluctant to suggest changes. There's a fear that if the Legislature tinkers with it, it will blow up the whole program."

Denico, with the Forest Service, said he'd rather the agency focus on "changing behavior, rather than punishment." Mansius said that process is well under way. He said the agency has already had "come-to-Jesus" moments with licensed foresters to reinforce the fact that flimsy plans are not the intent of the law. 

"I think we've already seen some behavior changes," Mansius said. 

For assessors like Robbins, the changes aren't happening fast enough for coastal and waterfront towns.

"They move at a snail's pace," she said. "They pay more attention to the suits than us."

Robbins says nobody wants to scrap the program. However, she said, when it comes to Tree Growth properties on the coast, lawmakers and the Forest Service need their own come-to-Jesus moment.

"If you own land on the water, your primary purpose is not to harvest timber," she said. "It's a no-brainer."

Tree Growth: Written by paper companies 

The first Tree Growth bill was debated in 1971 on the floor of the Maine House of Representatives.

Pittsfield's state representative at the time, Republican Roosevelt Susi, was not a supporter. 

The bill proposed a current-use tax program in the Unorganized Territory, essentially giving landowners substantial property-tax breaks in exchange for sustainable timber harvesting.

Landowners, mostly large paper companies, drafted the bill. This did not please Susi, who didn't like the fact that major corporations had effectively written their own tax policy. 

"It's been said that there has been a lot of work done on this by the landowners," Susi said from the floor during that debate in 1971. "You can bet your boots there has been."

The bill passed the Legislature but was eventually vetoed by Democratic Gov. Kenneth Curtis. The Legislature in 1972 tried again, passing what's now known as the Tree Growth Tax Law.

Tree Growth is a current-use law. Today, all but five states have current-use forest programs, according to the Tax Foundation. 

Such tax programs essentially tax landowners on their current use, rather than the most profitable use. Taxing land this way effectively encourages property owners to manage their land for a specific purpose, rather than developing it for housing or commercial use or subdividing it for sale. 

The law has been changed 86 times. In many instances, the changes were to encourage enrollment or to lessen punitive penalties for getting out of the program.

The goal of increased enrollment made temporary allies of two traditional foes: environmental groups and the forest products industry.

For the forest products industry, Tree Growth gave landowners a tax incentive to continue timber production. For environmental groups, the program discouraged landowners from hacking up their property into subdivisions and selling the parcels to the highest bidder. 

Environmental organizations have touted Tree Growth as one of the state's most successful anti-sprawl programs.

Tom Doak, executive director of the Small Woodland Owners Association of Maine, calls Tree Growth the state's most successful conservation program. 

Tree Growth has not always been viewed kindly by municipalities. Lloyd Irland, an associate at the Yale Center for Environmental Law and Policy, said towns were never thrilled about implementing "bisected tax policy."

"Town assessors hate Tree Growth," Irland said. "They've been angry since day one." 

In addition to Tree Growth, Maine has several current-use programs, including Open Space, Farm Land and Working Waterfront. Tree Growth offers the richest tax benefit — up to a 95-percent discount on property taxes.

— Steve Mistler

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 's picture

open space

Those categories are as follows:

• Ordinary Open Space - 20% reduction

• Permanently Protected - 30% reduction

• Forever Wild - 20% reduction

• Public Access - 25% reduction

In other words, if the property met all of the above requirements, the owner would see a cumulative reduction of up to 95% on the classified land.

So a GRID scale WIND developer buys huge tracts of land. They open this land to hikers, snowmobilers, et. al. They declare it forever wild and permanently protected. This will offset tax valuations on the already excelerated depreciation of turbine parts.

No tax gain .

 's picture

After reading the below

After reading the below exerpt, I wonder when landowners will be paid carbon credit $$$ for nurturing the forests that keep us alive?

Carbon Sequestration:
Heat from Earth is trapped in the atmosphere due to high levels of carbon dioxide (CO2) and other heat-trapping gases that prohibit it from releasing heat into space -- creating a phenomenon known as the "greenhouse effect." Trees remove (sequester) CO2 from the atmosphere during photosynthesis to form carbohydrates that are used in plant structure/function and return oxygen back to the atmosphere as a byproduct. About half of the greenhouse effect is caused by CO2. Trees therefore act as a carbon sink by removing the carbon and storing it as cellulose in their trunk, branches, leaves and roots while releasing oxygen back into the air.
Trees also reduce the greenhouse effect by shading our homes and office buildings. This reduces air conditioning needs up to 30%, thereby reducing the amount of fossil fuels burned to produce electricity. This combination of CO2 removal from the atmosphere, carbon storage in wood, and the cooling effect makes trees a very efficient tool in fighting the greenhouse effect. (11)
One tree that shades your home will also save fossil fuel, cutting CO2 buildup as much as 15 forest trees. (16)
In one urban park (212 ha), tree cover was found to remove daily 48 lbs particulates, 9 lbs nitrogen dioxide, 6 lbs sulfur dioxide, and 1/2 lbs carbon monoxide. ($136 per day value based upon pollution control technology)

Planting trees remains one of the cheapest, most effective means of drawing excess CO2 from the atmosphere. (15)
A single mature tree can absorb carbon dioxide at a rate of 48 lbs./year and release enough oxygen back into the atmosphere to support 2 human beings. (10)
Each person in the U.S. generates approximately 2.3 tons of CO2 each year. A healthy tree stores about 13 pounds of carbon annually -- or 2.6 tons per acre each year. An acre of trees absorbs enough CO2 over one year to equal the amount produced by driving a car 26,000 miles. An estimate of carbon emitted per vehicle mile is between 0.88 lb. CO2/mi. – 1.06 lb. CO2/mi. (Nowak, 1993). Thus, a car driven 26,000 miles will emit between 22,880 lbs CO2 and 27,647 lbs. CO2. Thus, one acre of tree cover in can compensate for automobile fuel use equivalent to driving a car between 7,200 and 8,700 miles. (8)
If every American family planted just one tree, the amount of CO2 in the atmosphere would be reduced by one billion lbs annually. This is almost 5% of the amount that human activity pumps into the atmosphere each year. (17)
The U.S. Forest Service estimates that all the forests in the United States combined sequestered a net of approximately 309 million tons of carbon per year from 1952 to 1992, offsetting approximately 25% of U.S. human-caused emissions of carbon during that period.
Over a 50-year lifetime, a tree generates $31,250 worth of oxygen, provides $62,000 worth of air pollution control, recycles $37,500 worth of water, and controls $31,250 worth of soil erosion. (2)

RONALD RIML's picture

This doesn't pass the 'Smell Test'

This doesn't pass the 'Smell Test'

The property owner's 'Tree Growth' plan is not kept on file at the Town Office with the Assessor after he has examined it. The Assessor must rely on the reputation of the state registered forester who has created the pan for the owner that the plan is carried out. There's no way the Town can verify the plan is being carried out until the property is up for sale. Our Town Assessor tells me that's the law due to the confidentiality of 'Business Plans' - Supposedly the penalties for violating 'Tree Growth' tax breaks are so onerous that property owners and foresters 'Police' themselves. Ya - right...

I've asked my State Representative to look into this, and have provided him the necessary materials from the state to examine. These 'Plans' which allow for significant tax breaks for select property owners should be public record so that it may be verified that the plans are - in fact- being implemented. I suspect in a number of cases the true plan is tax avoidance.


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