Town waives property taxes for Children’s Literacy Foundation’s new headquarters

May 20, 2023 | By Lisa Scagliotti

The Children's Literacy Foundation's new offices on Vermont Rt. 100 in Waterbury Center will be exempt from property taxes under a recent decision by the Waterbury Board of Civil Authority. Photo by Lisa Scagliotti

Getting settled into its new headquarters in Waterbury Center, the Children’s Literacy Foundation was recently buoyed by the news that town officials have agreed to exempt the nonprofit’s new facility from having to make property tax payments.

That was the decision of the town’s Board of Civil Authority which voted 10-2 to approve the organization’s request now that it will be located on property it owns in a building it has built. 

Founded in 1998, the Children's Literacy Foundation – often referred to as CLiF for short – until just a few weeks ago was located in a garage owned by its founder Duncan McDougall at his home on Loomis Hill. 

The nonprofit serves communities across Vermont and New Hampshire providing children, particularly those in rural locations from low-income households, with new, free books. Its programs with schools and libraries connect children and families with authors, writers, and storytelling to nurture a love of reading and writing. 

In 2022, the nonprofit purchased a 1.3-acre parcel at 3579 Waterbury-Stowe Road (Vermont Route 100) across from the Waterbury Center Community Church. The property was the site of the former Flatow House, formerly the CC Auction House which was destroyed in an arson fire in October 2017. 

CLiF broke ground last fall on a 3,000-square-foot headquarters where it has moved in over the past several weeks. The facility has space for the half-dozen staff and volunteers to work along with storage space for hundreds of books, and meeting space where it can hold its book-related events and programs. 

As it got closer to its spring move, McDougal requested that the town exempt the organization from paying property taxes under a state statute that allows for exemptions for properties used for “public, pious or charitable uses.” 

In February, the town’s three-member Board of Listers took up the request but turned it down. 

The statute does not define “public use” but the Vermont Supreme Court has established that properties qualify for public use exemptions if they satisfy three criteria: 

• The property must be dedicated unconditionally to public use

• The primary use must directly benefit an indefinite class of persons who are part of the public, and must also confer a benefit on society as a result of the benefit conferred on the persons directly served and,

• The property must be owned and operated on a not-for-profit basis.

After the denial, CLiF filed an appeal which went to the Board of Civil Authority. That body is the largest elected board consisting of the town’s justices of the peace, the members of the Select Board and the town clerk. One of the board’s duties in addition to overseeing elections and maintaining the town’s voter checklist is to hear appeals on tax matters from the Board of Listers. 

On April 17, the Board of Civil Authority convened a hearing on CLiF’s appeal. 

Town Appraiser Dan Sweet addressed the board, summing up the thinking behind the denial that the Board of Listers issued in the case. He said that while CLiF clearly is a nonprofit entity, the three-member Board of Listers did not agree that the property meets the test as being “dedicated unconditionally to public use.” 

McDougall attended and was asked to give a summary of the organization’s rationale for its request. He addressed the two main criteria being discussed, saying that the organization’s entire mission serves the public and that the building and property would support that work. 

McDougall described how the organization has grown over time from initially serving about 500 children per year to reaching 52,000 per year today. While it receives grant funding, CLiF is not government funded and 75% of its contributions are from individual private donors, he said. 

Board of Civil Authority members asked a number of questions during the public part of the hearing.  

Sweet noted that there are approximately 45 tax-exempt properties in Waterbury including churches, the primary school, state property, town-owned buildings and land, as well as facilities owned by the Edward Farrar Utility District. The Ice Center and American Legion are also exempt. Also, under an agreement made with the town in 2021, the nonprofit Hunger Mountain Children’s Center preschool and child care is exempt from paying the school portion of its property taxes. 

The board entered a deliberative session that was closed to the public. The meeting recessed due to another meeting scheduled for the same space at that time. The board reconvened on April 18 to complete its discussions. 

In a letter to CLiF, Board of Civil Authority Chair Liz Schlegel said that the board considered prior Vermont cases for public use tax exemptions and it determined that CLiF “clearly meets the criteria” in the tests the Supreme Court has established. 

The board also considered “CLiF’s mission and the activities it will conduct at the building.” It referred to a 2002 court case, Institute of Professional Practice v. Town of Berlin in which “a nonprofit organization’s administrative facility supporting their work was deemed exempt though no services were delivered to the public directly at or from that building.” 

The decision means that CLiF will not be on the property tax rolls going forward. Town Clerk Karen Petrovic said that the property – land and the new building combined – were assessed at a value of $517,200 in February. That would have meant a tax bill for 2022 of $8,769 for school taxes and $2,758 for municipal taxes for a total of $11,528.

Laura Rice is CLiF’s new executive director having succeeded McDougall who recently retired. She expressed gratitude to the municipality for adding CLiF to the list of tax-exempt properties. 

“As a nonprofit [that] relies exclusively on community support to fulfill our mission to reach thousands of under-resourced children each year, the Children’s Literacy Foundation is so grateful for the town’s decision to grant us an exemption,” Rice said in an email to Waterbury Roundabout. “CLiF worked very hard to stay in Waterbury when we were selecting our new site, and we are committed to being good neighbors to the many businesses and residents with whom we are honored to share this community.”

The tax matter request was the second successful request CLiF made of town officials as it pursued its headquarters project. It looked to the town to revise its ordinance regarding the threshold for commercial development projects to be subject to state land-use review under Act 250. The town previously had an ordinance where projects on sites larger than 1 acre would qualify for state review. Town officials agree to update that regulation in 2021 so that the new minimum project site size is 10 acres to trigger Act 250 review.