Are portable classrooms that a Maine school district leases instead of owning subject to municipal property tax, and if not, does the town get reimbursed for the lost revenue?

Plain-English summary

George Mayo, Director of the Property Tax Division at the Maine Bureau of Taxation, asked the AG's office whether portable classrooms leased (rather than owned) by Maine school administrative units were subject to local property tax. Deputy AG Crombie J. D. Garrett issued a short memo answering no.

The statute that drove the answer was 20-A M.R.S.A. § 4001(3)(C), which exempts property leased by school administrative units. Portable classrooms are a common example. School districts often lease them under year-to-year contracts to handle enrollment surges, building renovations, or temporary capacity needs. The text of § 4001(3)(C) does not distinguish between owned and leased property for exemption purposes when the leased property is in use by the school administrative unit.

The follow-on question was whether the school's tax exemption forced the state to reimburse the host municipality for the lost property tax revenue. Garrett said no. The 1979 Maine Constitutional amendment imposed a reimbursement obligation on the state for property-tax exemptions enacted after the amendment took effect. § 4001(3)(C), as Garrett read the legislative history, predates the 1979 amendment. Because the exemption is older than the constitutional reimbursement rule, the rule does not reach back to require state-funded backstops for revenue forgone under § 4001(3)(C).

Garrett noted that he had communicated the same conclusion to the Assistant AG representing the Department of Education, so both the assessor side and the education side of state government were working from the same answer.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why are leased portable classrooms tax-exempt at all?

Because 20-A M.R.S.A. § 4001(3)(C) extends Maine's school-property tax exemption to property leased by the school administrative unit, not just property the school owns outright. The memo applies that statute to portable classrooms leased by a school unit and concludes they are exempt.

Does the lessor (the company that owns the portable classroom) get the exemption, or the school?

The exemption attaches to the property based on its use by the school administrative unit. As a practical matter, the property comes off the local tax rolls while it is leased to and used by the school for educational purposes.

Why doesn't the state have to reimburse the town?

Maine's 1979 constitutional amendment requires state reimbursement when the Legislature enacts a new property-tax exemption on local taxing authority. Garrett's memo concluded that § 4001(3)(C) predates that amendment, so the reimbursement obligation does not reach it. The exemption was on the books before the constitution required the state to backstop local losses.

What if a school leases the portable classroom only for part of the year?

The 1988 memo does not address fractional-use situations. The Property Tax Division would have to apply the statute to particular facts. Where a school administrative unit uses the property for the educational year, the exemption applies; gaps in possession or use raise factual questions the memo did not resolve.

Who else got copies of this memo?

Assistant Attorney General Peter H. Stewart and State Tax Assessor Steven Murray. The memo functioned as a working-level legal advice piece for the Property Tax Division and DOE-side legal staff.

Background and statutory framework

Maine school administrative units (SAUs) hold their core real and personal property tax-exempt under 20-A M.R.S.A. § 4001 and related provisions. § 4001(3)(C) extends that exemption to property the SAU leases for educational use. Maine's 1979 constitutional amendment, in turn, made the state financially responsible for reimbursing municipalities for property-tax revenue lost to new exemptions; existing exemptions are grandfathered. The 1988 memo applies that grandfathering rule and concludes that no reimbursement flows for the leased-property exemption.

Citations

• 20-A M.R.S.A. § 4001(3)(C)

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1988/ag_19881122.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Department of Attorney General

MEMORANDUM

To: George Mayo, Director, Property Tax Division, Bureau of Taxation
From: Crombie J. D. Garrett, Deputy Attorney General
Date: November 22, 1988
Subject: Taxable Status of Portable Classrooms

It is the conclusion of this Department that, by virtue of 20-A M.R.S.A. § 4001(3)(C), property leased by school administrative units, such as portable classrooms, is exempt from property taxation. I have related this conclusion to the assistant attorney general representing the Department of Education. It is also my opinion that there is no need for reimbursement of any municipality for lost revenues, because the statute creating this exemption antedates the 1979 amendment to the Maine Constitution providing for such reimbursement.

CJDG/vv
cc: Peter H. Stewart, AAG
Steven Murray, State Tax Assessor