PORTLAND — The state’s highest court heard arguments Wednesday on whether Hebron Academy, a private, college-preparatory school in Hebron, should have to pay property taxes on its ice arena because it collects fees from outside use.

Lawyers representing the school and town appeared before the Maine Supreme Judicial Court in Portland to make their respective cases. The court’s decision could have far-reaching effects for all private educational institutions in Maine, at both the secondary school and college level, that allow facilities for non-school use and charge fees. Two groups representing private secondary schools and colleges filed “amicus curiae” (friend-of-the-court) briefs on behalf of those schools. Another group filed a similar brief on behalf of Maine nonprofit hospitals.

Attorney John Conway, who practices in Auburn and represents the school, said state law exempts “literary and scientific institutions” from paying property taxes. The income derived from fees to outside users is incidental and only defrays the school’s much higher overhead costs, he told the seven justices.

Attorney Bryan Dench, who also practices in Auburn and represents the town, said state law is very clear that only facilities at those institutions that are “owned and occupied or used solely for their own purposes” are exempt. Renting out the school’s Robinson Arena for thousands of dollars a year is not incidental, he said.

Dench said a firm hired by the town to help with its revaluation alerted the Board of Selectmen that nonprofit organizations that rent out facilities can be taxed on those facilities.

The town sent a property tax bill in 2009 to the school that included a $19,240 assessment for the arena, roughly doubling the school’s property taxes.

The school had already been paying property taxes on faculty and administrative residences and a building leased by the United States Postal Service. The school fought the new taxation and appealed a year later to the Oxford County Commission, which denied the school’s appeal.

The school sued and won at trial in Oxford County Superior Court. The town appealed that ruling and the school cross-appealed the Oxford County Commission’s decision on the 2009 taxes.

Those appeals were heard Wednesday.

Dench told the court that the groups paying to use the arena were not “literary and scientific institutions,” nor were they benevolent or charitable organizations, which also are tax-exempt.

The school took in about $36,000 in 2009 to help cover the roughly $210,000 it paid in operation expenses that year, he said.

“So, it was not inconsequential,” he said. “There was evidence of substantial use and occupancy of the rink by people who were not qualified to use it under the exemptions.”

Justice Donald Alexander and, later, Justice Joseph Jabar, said the high court’s decision may have consequences for a broad collection of private educational institutions across Maine.

Dench said the court should focus on the case at hand.

In reading the trial judge’s opinion, Maine Supreme Judicial Court Chief Justice Leigh Saufley said that judge concluded that “revenues in the aggregate are so small that they are incidental uses that do not affect the exemption.” She asked whether the high court had to examine each of the school’s 27 parcels for any revenues derived from its use.

Dench said that’s exactly what he’d asked the court to do, recognizing it would be a “big job.” He said state law doesn’t specify whether a school property’s rental is incidental.

Justice Jon Levy noted that while the statute might not include the term “incidental,” case law does.

“It seems to be a well-established principle in this state that we recognize there are incidental uses,” he said. “In this case, a persuasive argument was made (in the lower court) that, in fact, these uses truly are incidental in the most common usage of that term.”

Levy said the total fees charged by the school “is a very small amount of money” and is needed to help defray overhead costs.

“Why isn’t that the end of this case?” he asked.

Conway said that the town and school had co-existed peacefully for 205 years before the town decided the school’s tax status had changed suddenly. Hebron Academy didn’t change the way it used its facilities, he said.

“It appears it was simply a time a tax assessor who, ironically, was one of the people who rented the arena to play adult hockey, informed the town that the Robinson Arena had been rented out for outside purposes,” he said.

Besides adult hockey groups, those that rented the arena included high schools and youth hockey groups, Conway said.

While “there’s little question that Hebron Academy qualifies as a literary and scientific institution . . . the question, I think, presented to the court is whether the property owned by Hebron Academy is occupied and used solely for their purposes,” Saufley said.

She said that under case law, “incidental uses” of the school would be acceptable. But when the school rents to outside users, shouldn’t the Legislature change the law if it wants private institutions to be able to rent out their facilities to non-school groups or individuals and not expect to pay property taxes on those facilities? she asked.

Conway said the law was changed to say, “occupied or is used solely,” to give greater flexibility to institutions by expanding the law, not to further restrict them.

“Where do we draw the line” in determining whether the school is occupying one of its facilities even though it is renting it out much of the time? Justice Levy asked.

Conway said the line the courts have drawn is whether it’s the primary or incidental use.

Justice Alexander asked whether that meant the school had to be renting its facility half of the time before it lost its tax-exemption.

The court is expected to rule on the case sometime next year.

cwilliams@sunjournal.com

Most of officials involved in case hold connections with private schools

Maine Supreme Judicial Court Leigh Saufley prefaced oral arguments Wednesday in the case of Hebron Academy v. Town of Hebron with the following comment on disclosures on behalf of the court:

“Not surprisingly, all of us have had a personal connection with one or more of the educational institutions involved in this case, including the amici organizations.

Here are the primary connections:

* One of my children attended North Yarmouth Academy, both attended classes at the Maine College of Art and participated in camps at Colby and Bowdoin (colleges.)

* Justice (Donald) Alexander graduated from Bowdoin College.

* Justice (Jon) Levy’s children attended Bates (College) and Waynflete (School.) Justice Levy has attended classes at the Maine College of Art.

* Justice (Warren) Silver attended Hebron Academy, “quite a few years ago, I might add.” Justice Silver’s wife serves on a board that is affiliated with the Maine Hospital Association.

* Justice (Andrew) Mead’s wife works at Husson University.

* Justice (Ellen) Gorman’s . . . son attended Hebron Academy and the Maine College of Art and her niece attends Bates College.

* Justice (Joseph) Jabar and his children graduated from Colby College.

None of us lives in Hebron but all of us live in towns and cities in Maine and pay property taxes in those municipalities.

Speaking on behalf of each justice, we are individually confident of our ability to address this appeal in a fair and impartial manner. However, if any of these disclosures causes concerns after you’ve had an opportunity to consult with your clients, please notify the clerk’s office on or before Dec. 21 this year. I will make sure this list is in the file and available at the clerk’s office.”

Bryan Dench, attorney for the Town of Hebron disclosed that two of his children attended Hebron Academy; John Conway, attorney for Hebron Academy, said his children attend public schools.

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