Utility is suing Sanford over tax

By BETH QUIMBY, Portland Press Herald Writer

Copyright © 2005 Blethen Maine Newspapers Inc.

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SANFORD — The Kennebunk, Kennebunkport and Wells Water District is suing Sanford to stop the town from charging it property taxes. The non-profit water district contends that its 80-year-old charter gives it tax-exempt status within the watershed, which would mean that Sanford has no right to collect the $6,500 it has assessed on the roughly 756 acres the district owns in town. Sanford officials, however, say they are simply trying to be fair to other taxpayers in town and will continue to demand the water district pay its tax bill.

The issue highlights the sometimes uneasy relationship between the town, which is served by the Sanford Water District, and the Kennebunk, Kennebunkport and Wells Water District, which provides drinking water to people living in seven coastal communities. The district's prime water source is Branch Brook and its headwaters, which surround much of the Sanford Regional Airport.

For years, Sanford did not charge the district any taxes. Last year, however, town officials decided to change that policy.

Town Manager Mark Green said the Town Council reasoned that Sanford is already home to many nonprofit agencies, and that because the town spends a lot of money trying to protect the Branch Brook watershed from contamination, it was time to ask the district to pay its property taxes.

The water district has bought up thousands of acres in the Branch Brook watershed, including the hundreds of acres of land around the airport, to protect it from development that would degrade water quality.

Norman Labbe, the district's superintendent, said when the district received a tax bill this year, it requested an abatement. Five months later, the town turned down the abatement request, maintaining that the district was granted an exemption from taxes only within the service district, not the entire watershed.

So the district went to court.

"We are tax-exempt and always have been," he said.

Sanford officials say they will not back down.

"Why shouldn't they pay their fair share?" asked Gordon Paul, Town Council chairman.

The town's decision to tax the water district was a matter of fairness to all of the taxpayers in town, he said.

However, Sanford does not plan to start assessing taxes on other nonprofit landholders in town, Paul said.

Labbe said if the court does not uphold the water district's position, it would have consequences for water districts across the state that own land outside of their service territory.

The district is persisting, said Labbe, because it is responsible for managing its ratepayers' money wisely, and it should not pay money it does not owe.

The district serves about 11,500 homes and businesses in Kennebunk, Kennebunkport and Wells, as well as parts of York, Biddeford, Arundel and Ogunquit. In the winter, the district produces about 2 million gallons a day for about 28,000 people. In the busy summer months, it pumps about 5 million to 7 million gallons a day for 75,000 to 100,000 people.

Airport Manager Evan McDougal said having the water district as a neighbor puts the airport in an awkward position.

"What people have to realize is that the entire south side of the airfield has been purchased by the water district, so there can be no development unless they say so," said McDougal. He said Sanford owns and operates the regional airport but most of the people who use the airport come from the coastal communities served by the water district.

"If it is truly a regional asset, you would assume that communities that benefit would contribute a little bit of revenue," he said.

Staff Writer Beth Quimby can be contacted at 324-4888 or at: bquimby@pressherald.com