Accessing the Maine Coast

How can taxes be used to generate funding for access?

Taxes can be used as a means of raising funds that the public can invest in the acquisition of public access through voluntary conveyance/acquisition tools or through eminent domain. A land gains tax, real estate transfer tax, impact fees, or tax increment financing are examples of these strategies, some of which are already used for access and working waterfront purposes, others are potential new tools that would currently require legislative action to enable their use for these purposes.

How can tax incentives be used for access?

Reductions in a landowner’s taxes can be used as an incentive for allowing public access, or to discourage uses that inhibit access. Tax incentives may include income tax deductions, reduced property taxes, reduced estate taxes, avoidance of capital gains taxes, and gained investment interest. They might also include a current use taxation structure for open space, or for working waterfronts that provide access for commercial fishing activities.

How can current use taxation be used for working waterfronts and waterfront access?

Many states have restricted tax assessments on certain kinds of property, like farmland, by restricting the basis of property valuation to its current use, rather than its “just” value (full market value), or “highest and best use” value, (developed to its fullest potential). Known as current use taxation in Maine, this is a use-value assessment affecting the valuation of a property that is dedicated for a particular use. Current use provisions allow for a reduction in just value, and thus taxes on that value, for select uses that are deemed to have public benefit. Reducing this just value results in a reduction in property taxes that may make it affordable for owners to retain the property in its current use, potentially reducing development pressure on the property.

The Maine legislature initially enacted current use taxation to provide an incentive for property owners to keep their property as open space, farmland, or forestry. Maine’s Open Space tax law is designed to prevent the forced conversion of open space to more intensive developed uses as a result of economic pressure. Parcels enrolled as Open Space are assessed at current use with additional reductions possible for those parcels allowing public access.

In 2005, 72% of Maine voters endorsed working waterfront current use taxation, and in 2007, the legislature passed an enabling act to provide for such a program for waterfront land that is used for, or that supports commercial fishing activities. Owners of working waterfront property may apply to have their properties valued according to their current use as working waterfront. In exchange, the landowner must maintain the property for working waterfront uses only, or risk a financial penalty. The reduced valuation and associated tax reduction apply only to the land, not to any structures or equipment on the property. This program was updated in 2025 to increase the incentives available to working waterfront property owners.

For more information see Maine Revenue Service.

What impediments to working waterfront preservation exist in state and federal tax law?

The obvious tax-related impediments to protection of working waterfront are those which increase the costs of sustaining commercial water-dependent uses on the waterfront: ever-increasing personal and business income taxes, and property taxes that rise with population pressure. Specifically, property taxes across the country are typically levied based on market value, which can pose a threat to less immediately profitable marine industries located on high-demand waterfront property. Logically, then, tax-based efforts to improve working waterfront preservation will aim to reduce the income and property tax burdens for water-dependent enterprises. More subtly, though, some of these tax tools, if not implemented and coordinated well with other tax tools, may reduce their overall effectiveness. For example, an overlay of current use taxation, a working waterfront covenant, a water dependent use zone, and tax increment financing on a single parcel or area of waterfront property, may lead one tactic to reduce, or even eliminate, the benefits of the other.

What are new tax tools or new ways to apply existing tax tools for access and working waterfronts?

A number of tax-related programs exist that might be applied to securing access and preserving working waterfronts in Maine, but these would require new legislative or other action to implement.

How could a new Working Waterfront Conservancy help address access needs?

Based on the land trust model

Inspired by the successes of the Working Waterfront Access Protection Program, traditional land trusts and initiatives like the Maine Farmland Trust, working waterfront advocates have proposed the formation of a private, nonprofit Working Waterfront Conservancy. This conservancy would exist as a state-recognized, not-for-profit corporation, exempt from taxes under Section 501(c)(3) of the Internal Revenue Code (IRC). This status is granted to charitable organizations that provide specified public benefits. Like a traditional land trust, a Working Waterfront Conservancy could purchase lands outright for holding, purchase the development rights to properties for holding, or accept donations of either land or restrictive easements.

Working waterfronts likely don’t currently qualify as charitable deductions

A traditional land conservancy is able to claim tax-exempt status and to certify donations of land or covenants for charitable deductions to the extent that the organization’s supervision of these lands provides a significant public benefit recognized by the federal tax code. The key tool in this framework is the conservation easement, which imposes limitations or restrictions on real property to the benefit of the holder. In order to qualify for charitable deduction purposes, the gift must be “exclusively for conservation purposes,” which the existing IRC articulates to include public recreation or education; protection of fish, wildlife or plants; conservation of property with demonstrable historic value; or preservation of open space, farmland or forest, so long as it is for the scenic enjoyment of the public and consistent with a clearly delineated government program. (Note that working waterfronts are absent from this existing statute). Of the 49 states with legislation enabling conservation easements, 27 also have state-level programs designed to purchase agricultural conservation easements on qualifying farmland. These programs, known in the agricultural context as PACE (Purchase of Agricultural Conservation Easement) Programs, operate in the same fashion as Purchase of Development Rights and also exist at independent and local levels in 18 states.

Steps toward qualifying

As noted, preservation of land as a working waterfront is not currently a recognized public benefit under either Section 501(c)(3) or Section 170(h) of the Code. But it could be argued, for example, that commercial aquaculture is analogous to commercial agriculture, and/or that working waterfronts have significant historic, cultural and even scenic value. In the end, though, because the statute specifically mentions preservation of agriculture and forestry, but omits any mention of aquaculture or fisheries, a judicial interpretation of the statute as it stands now would likely not allow these or other working waterfront uses to qualify for tax exemption or for charitable tax deduction. Therefore, in order for working waterfronts to qualify as charitable deductions, it appears that it may be necessary to amend the Internal Revenue Code.

As a point for further research, it should be determined whether nonprofit working waterfront organizations constitute qualifying charities for the purposes of this deduction. Working waterfront stakeholders could begin by researching past IRS rulings on this issue and, if necessary and feasible, seek an on-point ruling from the IRS. This finding would inform further action such as pursuing Internal Revenue Code amendment.

As with the initiative to appropriate direct federal funding for investment in working waterfront preservation, amendment to the IRC would likely require a long-term strategy to inform stakeholders, legislators and the voting public.

where can I find more information?

Working Waterfront Preservation: Opportunities Posed by Tax Policy – Executive Summary (PDF 36 KB) and Strategy Table (PDF 56 KB)
By Kristen Grant, Amanda LaBelle, and Catherine Schmitt, Maine Sea Grant, December 2010

Working Waterfront Tax Strategies (PDF 216 KB)
By Steven R. Gerlach, Esq., Bernstein Shur, Councelors at Law, September, 2010.