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What new tax-related programs could be developed or used together for access?

A number of tax-related programs exist that could be applied to securing access and preserving working waterfronts, but these would require new legislative or other action to implement for this purpose. Potential tools are reviewed below, including the excise tax, fee-based mechanisms, the real estate transfer tax, zoning, income tax incentives, tax increment financing, property tax deferrals, as well as quasi-taxation models such as special assessments, impact fees, and exactions, and a proposal for a working waterfront conservancy. [Note: This website is for informational purposes only and does not propose to advocate for any specific legislative or political action.]


Excise Tax: An excise tax is a tax on manufacture, sale, or business license or charter that may be levied by federal, state, or local governments. Not to be confused with taxes on property, income or estates, excise taxes are most commonly applied to items like alcohol, tobacco, and gasoline. The Dingall-Johnson Act and the Pittman-Robertson Wildlife Restoration Act are examples of federally enacted excise taxes used for wildlife and fisheries restoration. See Federal Excise Tax Models case study. In this manner, funds for a working waterfront conservancy or coastal access land bank might be raised through related state or federal excise taxes.

Fee-based mechanisms: Fee-based mechanisms can be used to generate funds to cover the cost of tax-relief for land owners who protect coastal access or the working waterfront status of their lands. The 2010 Maine Voluntary Municipal Farm Support Program may serve as a useful model.

Real estate transfer tax: Though not currently available to generate funding for access in Maine, the real estate transfer tax could, with legislative action, serve as vehicle to secure funding to be used to purchase development rights, or full fee interest on the open market, both of which could be used to secure access. The real estate transfer tax is a sales tax on real property imposed by state or local government on the sale or transfer in ownership from one owner to another. The tax is usually based on the value of the land. The most common transfer tax is split evenly between buyer and seller, and the resulting revenues can be applied to a variety of uses. Both Massachusetts and Washington state have used real estate transfer taxes to fund land banks and to purchase waterfront lands (respectively). More on Land Banking.

In Maine, the state legislature established a real estate transfer tax (RETT) in 1975. The HOME Fund was authorized in 1982 to dedicate funds for affordable housing investment in the state, and may serve as a model. Beginning in 1984, the HOME Fund has been funded through allocations from the RETT. The statute designates the RETT funds to be allocated 45% to the state general fund, 45% to the HOME Fund, and 10% to Maine’s counties. Actual allocations to the HOME Fund tracked since 2000 indicate that the RETT percentage to that fund have varied from a high of 45% in the earlier years, to as little as 7% in 2009. Attempts to increase the Maine state transfer tax rate (one-half of one percent) have repeatedly failed. An alternative approach to applying this tool could be to pursue reallocation of existing RETT tax dollars to allot a percentage to coastal lands and/or working waterfront preservation. Maine currently has no enabling legislation for municipalities to levy this tax at the local level and several attempts to pass such legislation have failed. See Real Estate Transfer Taxes, and Land Banks case study.

Zoning and tax policy: The development of a city plan in which various geographic areas (zones) are restricted to certain uses and development, is a tool often used in conjunction with tax policy. The zones (such as water-dependent use zones) often incorporate a variety of tax incentives designed to reduce costs to maritime industries, increase costs for non-water-dependent uses, and encourage capital investment in working waterfront enterprises. Districts like those described can be defined at any level of government. Once those maritime districts are drawn, any number of tax tools, including federal and state income tax provisions, can be used to spur development in a certain business or industry, or geographical zone. More on zoning.

Income tax incentives: The primary purpose of the income tax is to raise revenues to fund government services, but federal and state authorities use income tax incentives, often in the form of exemptions, credits, or deductions, to promote a given public policy. For example, the federal government has supported historic rehabilitation, brownfields (industrial or commercial sites that are often contaminated) redevelopment, and alternative energy production and use by providing income tax incentives to both individuals and businesses, producers and purchasers. Maine’s Pine Tree Development Zones, an example of income tax incentives at the state level, allow certain qualified businesses in certain areas specified deductions on reported business income, as well as a reduced payroll tax. The income tax incentives described here represent a small fraction of the large number and variety of income tax credits and deductions that exist at both the state and federal levels. Similar income tax incentives could be enacted to provide credits, deductions, or even exemptions for investment in water-dependent industries.

Tax increment financing (TIF) is a method of capturing an anticipated increase in property value and using it to fund economic development projects. At the core of a TIF package is the premise that development will increase property values and property tax revenues to the city or town. With a TIF approach, the municipality reserves a fixed percentage of these future tax revenues for repayment of the public or private financing package that enabled the development in the first place. There are caps on the acreage and value of land allowed to be incorporated in a TIF district, and each district must be approved by the local legislative body and the state Department of Economic and Community Development. Hypothetically, a lone fishing dock in need of retrofitting could be declared a qualifying district, and the infrastructure improvements paid for by the increase in tax revenue. However, TIF relies on the developer’s capacity to pay the increased property taxes to cover development costs, but increased property taxes are precisely one of the identified problems facing traditional water-dependent uses. It would also be challenging to find a way to use a TIF approach where working waterfront taxation, covenants or zoning were already in effect, as any of these would likely impinge on any potential increase in valuation. For these reasons, TIF measures would seem likely to serve only limited purposes for working waterfront protection in limited circumstances.

Other property-related tax tools

    Property Tax Deferrals: Florida enacted an enabling statute in 2005 that would allow for property tax deferrals on working waterfront lands. Under the statute, the owner of qualified working waterfront, upon approved annual application, is not required to pay property taxes that year. This is not an abatement, but rather an interest-accruing deferral that legally takes the form of a lien on the property held by the state. Thus, while the owner of the property is relieved from paying a portion or the entirety of the tax, the unpaid tax remains a debt owed by the owner to the state and gathers interest until repaid.

    Property Tax Abatement: In contrast to property tax deferral, which merely postpones payment, and current use taxation, which reduces the assessed value of a property, property tax abatement operates by applying a credit or reimbursement to forgive all or part of a landowner’s property tax. In other words, a property tax abatement reduces or eliminates the tax itself without affecting the assessed value of a property. While property tax abatement can be an effective incentive in the same manner as a credit on income tax, municipalities tend to apply the abatement method selectively because of the resulting loss of revenue.

    Land Gains Tax (also known as Windfall tax): a land gains tax is assessed to discourage capital gains resulting from the rapid purchase and sale of property. By imposing these financial penalties, such a tax could discourage short-term speculation that would rapidly drive up waterfront land values without producing any new on-site development. Such a tax has been upheld by the Vermont Supreme Court, but, even fourteen years after that decision, Vermont remained the only state to have adopted a windfall tax—perhaps due to tax uniformity provisions in most other state constitutions.

Quasi-Taxation: Special Assessments, Impact Fees, and Exactions
Grounded in a municipality’s police power rather than its taxation power, special assessments, impact fees, and exactions are not tax tools per se, but are included here as possible monetary and non-monetary incentives for a desired form of land use and development. Properly applied, they can be used by a municipal government to help finance larger waterfront construction and improvement projects related to water-dependent uses, and to discourage (or derive public benefit from) other major development projects. More in Plan and Regulate for Access.

State and federal tax laws providing models for working waterfronts:

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

More on Working Waterfront Conservancy.