BRUNSWICK — The Midcoast Regional Redevelopment Authority is taking legal action in a bid to end a two-year tax dispute with the town.

At issue is the tax status of 93,000 square feet of MRRA-owned property at Hanger 6 at the Brunswick Executive Airport, leased to Kestrel Aircraft Co.

In a lawsuit filed late last month at Cumberland County Superior Court in Portland, MRRA asks for a declaratory judgment on the case.

The purpose of the suit is to clarify whether Kestrel’s operation at the municipal airport falls under the state’s definition of “aeronautical purposes,” entitling the company to an exemption from municipal taxation.

Attorneys from Brunswick and MRRA interpret the statute differently, creating the current impasse that has strained relations between the two sides.

“It’s just an honest disagreement that we need someone to clarify,” MRRA Executive Director Steve Levesque said. 

If a judge finds for MRRA, Brunswick could be forced to repay MRRA almost $238,000 in taxes the agency paid on behalf of the aircraft company in the past two years. The town could also be required to declare the hanger space as tax-exempt for the duration of Kestrel’s 20-year lease. 

Despite the financial stakes, both sides are eager for a judge’s ruling on whether the statute applies to Kestrel. 

“This is going to clear up the issue once and for all,” said Levesque, adding that a court judgement is preferable to bringing the case into a lengthy and expensive process before the state’s Board of Appeals.

Last August, MRRA and the town assessor, Cathleen M. Donovan, asked the Brunswick Board of Assessment Review to indefinitely postpone its proceedings on MRRA’s appeal of its tax status to avoid a decision that could take the case to the state level, Levesque noted.

Interim Town Manager John Eldridge said the town does not consider the suit adversarial, and agreed that a ruling may finally clear up the issue.

MRRA is arguing that state law exempts Kestrel from paying property taxes, because the space it leases at the municipal airport is used for “exclusively aeronautic purposes.”

The company uses the space it leases from MRRA to research, design and construct a new composite-material passenger aircraft. A prototype airplane is being tested, but the company has not yet started commercial production. 

The company’s business, as well as the fact that it also employs certified aircraft mechanics and provides repair and maintenance services to the general public, firmly puts it within the state’s definition of aeronautics, MRRA argues. 

Brunswick’s attorneys argue that Kestrel’s focus on research and development, not full-time aircraft construction or maintenance, means it should not be given a tax exemption.

In contrast, Tempus Jets, the aircraft maintenance and refurbishment company that began leasing space in Hanger 6 last September, is considered exempt because its work clearly falls under the state’s aeronautical definition, Assessor Cathleen Donovan said.

The town has until the end of the month to respond to the lawsuit. Levesque said he was optimistic that a decision could be reached in the case within a few months. 

Peter L. McGuire can be reached at 781-3661 or pmcguire@theforecaster.net. Follow him on Twitter @mcguiremidcoast.