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Tuesday, March 3, 2026
Explainer: What’s Actually Happening with Nonprofit Property Tax Exemptions in Portland?
Over the past several weeks, a number of Portland nonprofits have received notices from the City Assessor’s Office indicating that their municipal property tax exemption has been revoked.
Understandably, this has created anxiety, frustration, and confusion.
I’ve fielded calls from nonprofit leaders who feel blindsided and politically targeted. Some have said to me, “The last time something like this happened was during the LePage years. We expect this from the right, not from the left. What gives?” I even received calls from state legislators who didn’t realize that municipal property tax exemptions are governed by state law.
This tells me there’s a real gap in public understanding about what’s happening here.
So, why are some nonprofits in Portland being told they no longer qualify for property tax exemption? The public deserves a clear explanation of what is happening, and what is not.
Federal nonprofit status is not the same as property tax exemption
Many people assume that if an organization is a 501(c)(3), it is automatically exempt from property taxes. That’s not how the law works.
Federal nonprofit status governs income tax. Municipal property tax exemption is governed by Maine state law, specifically Title 36 of the Maine Revised Statutes.
They are separate systems with different standards.
Property tax exemption in Maine is narrow and “use-based”
Under Maine law, all property is taxable unless it falls within a specific statutory exemption. Courts in Maine have consistently held that exemptions must be interpreted narrowly. Taxation is the rule. Exemption is the exception.
It is also important to understand that the statute contains different categories of exemption, each with its own standards. Not all nonprofits fall under the same subsection of the law.
Many community organizations, including arts and cultural nonprofits, rely on the “charitable and benevolent institution” category. Under that provision, the law requires that:
- The property be owned by a charitable or benevolent institution;
- The institution be organized and conducted exclusively for charitable purposes; and
- The property be occupied or used solely for those charitable purposes.
That third requirement: “occupied or used solely” is where most questions arise.
The standard is not whether the organization is valuable or does good work in the community. The standard is how the property is used.
Examples that typically qualify:
- A museum open to the public for educational purposes.
- A food pantry distributing goods to people.
- A shelter providing housing as part of its charitable mission.
- A nonprofit operating free or low-cost educational programming.
Examples that can raise statutory concerns:
- Regularly renting space for weddings or private corporate events.
- Alcohol sales
- Leasing portions of a building at market rates to unrelated tenants.
- Operating substantial revenue-generating activities not directly tied to the charitable mission.
- Using significant portions of a property for non-charitable administrative or commercial activity.
Other institutions, such as houses of religious worship or certain hospital facilities, may qualify under different statutory subsections with distinct legal standards.
This does not mean that revenue-generating activities are unethical. Many nonprofits rely on creative fundraising to survive. But under Maine law, exemption depends on statutory use standards, not institutional goodwill.
If someone believes those standards are too narrow, that is ultimately a question for the Maine Legislature, not something a councilor or municipal assessor can change.
Who makes these decisions, and why Council cannot reverse them
In Maine, assessors occupy a unique legal position. Although they are appointed by municipalities, assessors exercise independent professional judgment, are supervised by the State Tax Assessor, are not subject to direction by the municipality in carrying out assessment duties.
This structure exists to prevent political interference in tax administration. And it means the City Council and City Manager are not authorized to direct or reverse individual exemption determinations. Even when controversy arises, the legal structure is intentionally insulated.
If there is disagreement with a determination, the proper avenue is the appeal process, not political intervention.
Why this is happening now
These exemption revocations we are hearing about in the paper arose in the context of Portland’s 2025 property tax revaluation, which requires a comprehensive review of properties on the tax roll.
Under state law, parcels owned by tax-exempt non-profits are supposed to be reviewed annually. In practice, a full annual review of every exempt parcel is administratively demanding and not always possible. From what I have been told, this recent review was likely the most thorough review of tax-exempt properties conducted in many years. (As in, no one seems to remember the last time it was done.)
When regular maintenance doesn’t happen consistently, later corrections feel abrupt. That dynamic can create the appearance of a sudden shift in political ideology or a revenue grab, when, in reality, it reflects a system catching up.
What has occurred so far
According to information provided by City staff:
- Since March 2025, the tax-exempt status for 48 parcels has been revoked.
- 41 revocations took immediate effect.
- 7 are deferred to April 1, 2026.
Those revocations add approximately $46.3 million in assessed value back to the tax roll.
Using the FY2026 mill rate of $11.98 per $1,000, that equates to approximately $555,000 in anticipated annual revenue.
Additionally, the Assessor has statutory authority to issue supplemental assessments going back up to three years in certain cases. Approximately 39 supplemental assessments totaling about $189,512.57 are being issued or processed.
It’s important to be clear that these revocations do not automatically imply bad faith by nonprofits. It may reflect evolving uses of real property, administrative capacity constraints, or reporting gaps over time.
The larger issue is consistency and fairness in application of the law.
What organizations can do next
Organizations have several options:
- Request an in-person meeting with the Assessor’s Office
- Submit a written request for reconsideration
- File an abatement and appeal to the Board of Assessment Review
- Appeal further to Superior Court
- In certain cases, seek a declaratory judgment
If an organization believes it can modify its use to comply with the statute, it may also simply reapply for exemption.
What this is not
This is not a City Council vote targeting nonprofits.
This is not a judgment about the cultural value of institutions like the Maine Irish Heritage Center, Maine Public, Mayo Street Arts, or others.
This is not the same thing as the proposed PILOT (Payment in Lieu of Taxes) program that the Finance Committee has been working on for two years.
The broader context
Portland has a significant amount of tax-exempt property—estimated at $4 billion. When exemptions are granted appropriately, they reflect legitimate public benefit and help relieve the burden of government. But, when exemptions drift beyond statutory standards, the funding needed to deliver core municipal services shifts to homeowners and businesses.
Portland’s nonprofit sector plays an outsized role in civic life, in part because our private-sector base is relatively thin and public investment has fluctuated over decades. Many nonprofits provide services that are valuable and loved by many, but that does not eliminate the need for statutory compliance. Allowing exemption standards to drift for years without review undermines public trust, erodes our tax base, and ultimately creates sharper corrections down the road.
What comes next?
When you elected me to serve in City Hall, I made it clear that I would fight for tax fairness. That means making sure our laws are applied consistently, transparently, and without political interference.
It is evident to me that the Assessor’s Office has undertaken a more comprehensive review of exemptions than has occurred in many years. The fact that this feels sudden to many organizations suggests that past oversight may not have been as regular or as visible as it should have been. Going forward, our responsibility is to ensure that review is consistent and predictable.
I believe the best work of the Council right now is to insist on:
- Clear, proactive communication about process and timelines;
- Better public education about the difference between federal nonprofit status and municipal property tax exemption;
- An honest discussion about our capacity to conduct regular reviews;
- Respect for the established appeal process.
Portland values the services nonprofits provide. We love our cultural institutions. We must also insist that tax law be applied consistently and fairly.
If you would like to understand your organization’s specific situation, I encourage direct engagement with the Assessor’s Office and use of the established appeal pathways.
The standards are written in state law. A fair process exists. This is a complex issue, but it is not a mysterious one.

ksykes@portlandmaine.gov 207-558-5764
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