As Richard Stanley has taken the helm of his father’s boatbuilding business on Mount Desert Island, he also has consolidated Ralph W. Stanley Inc. inland in Manset. The consolidation makes good sense. The water lot his father, Ralph, owns in Southwest Harbor is too cramped for tractor-trailer loads, Stanley said. Also, the taxes are high, roughly $12,000 a year.
Still, though Stanley chuckles at the headaches of his father’s waterfront lot, as a boatbuilder he can’t resist the call of the shore.
“If I could afford to buy a piece of property on the water…that would be a better place for me,” he said. Ralph W. Stanley Inc. designs, builds and restores classic wooden boats.
But Stanley, like many boatbuilders located on coastal land, feels the pressure of escalating shorefront property values; it makes better economic sense for him to build a boat and ship it over land to the water. The economic pressure of high property taxes has grown more acute during the recession, as business has fallen off. As a rule, boatbuilders are reticent to divulge details of their bottom line, but Stanley said it had been a hard off-season.
“The phone was not ringing all winter long, other than people saying they don’t want work done on their boats,” he said.
The grim economic picture has left some boatbuilders and boatbuilding advocates wondering if tax relief might be needed to help Maine’s boatbuilding industry survive. In the last 35 years, the Maine Legislature has amended the constitution to provide property tax relief for land used for agriculture, tree growth, and fishing.
But the most recent amendment in 2005, designed to defend Maine’s working waterfront against overdevelopment, left out boatbuilders. That provision defined working waterfront only as businesses that support commercial fishing. That definition set a precedent, said Hugh Cowperthwaite, fisheries project director for Coastal Enterprises Incorporated.
“To the best of my knowledge, that definition is the only place in state stature where working waterfront is defined,” Cowperthwaite said.
A successful referendum campaign in 2005 changed the Maine constitution to give owners of residential or commercial land used for fishing activities an option for a tax break. Under the provision, landowners can ask to have working waterfront land valued for its current use, rather than for its potential future use as real estate. It was the second effort to pass such a statute. Boatbuilders were not included in the definition to keep the focus narrow for voters, said Susan Swanton, executive director of the Maine Marines Trade Association.
“The thinking was it really would have been too much to bite off all at once,” she said.
The working waterfront bill received overwhelming support from voters in the fall of 2005, passing 72 to 28 percent. Since then, 50 parcels have been granted tax relief under the working waterfront program, totaling about 60 acres. Waterfront landowners have been cautious to enroll because the tax relief offered comes with steep penalties if a parcel is taken out of the program. Jeff Kendall, certification chief for the state’s property tax division, said he doesn’t expect many landowners to take advantage of the program in the future.
“We’ll get 10 or less parcels enrolled from here,” Kendall said.
Although boatbuilding advocates are eager to broaden the state’s definition of working waterfront, they aren’t as focused on broadening access to the tax relief program. That’s in part because many boatbuilders lease their land and only own their buildings, said Kendall. Others already have moved inland.
But that’s not always true. The land under Dark Harbor Boatyard, on the shores of Islesboro, is owned by the boatyard’s owners, said John Gorham, Dark Harbor’s general manager. The boatyard sits on land that would be coveted by real estate developers, he said.
“If we didn’t have the owners we did, they’d be far better off to put up condos,” Gorham said.
Gorham said his boatyard faces many financial hurdles, including having to spend $300 annually per employee for transportation from the mainland to the island. He believes it’s time that boatbuilders were included in the legislative conversation about working waterfront and that the profession should be included in the tax relief program.
But Swanton would rather see Maine legislators abolish the sales tax for Maine-made boats. Maine boatbuilders are competing directly with boatbuilders from New Hampshire, where there is no sales tax, and Rhode Island, where there is no sales tax on boats. Sales tax in Maine is five percent, which Swanton argued is significant enough to scare away some customers. Abolishing the sales tax would put Maine boatbuilders on equal footing with competitors, she said.
“That would be the top of our Christmas list every year,” she said.
Any tax relief option wouldn’t be taken up by the legislature until at least 2011, said Swanton. Boatbuilding advocates looking for tax relief might want to keep watch on the coming legislative session to see how a new farm property bill fares. The bill would allow municipalities to give tax relief to owners of farm land in exchange for development easements.
But not every boatbuilder wants tax relief. When Kim Brown Alexander, a manager with the 100-year old boatyard J.O. Brown & Son Inc. on North Haven, heard the opinions of those who favored doing away with the sales tax or reducing property taxes, her reaction was blunt.
“Man, these people are selfish,” she laughed.
Brown Alexander believes the taxes her boatyard pays are not only justified, but necessary. Those taxes pay for services she enjoys in the community, she said, and if her business were given relief, the tax burden would become heavier for other islanders. She said business owners should consider what they want to accomplish before asking for tax relief.
“It depends, whether you’re totally out for yourself or looking out for your community,” Brown Alexander said.
Craig Idlebrook is a freelance writer who lives in Ellsworth.