Opinion
No. 11–P–2141.
2012-11-27
AMB FUND III v. BOARD OF ASSESSORS OF BOSTON.
By the Court (GREEN, FECTEAU & MILKEY, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
AMB Fund III (taxpayer) appeals from a decision of the Appellate Tax Board (board) upholding the refusal of the board of assessors of Boston (assessors) to abate local real estate taxes assessed against the taxpayer's leasehold interest in the International Cargo Port (the property), which is owned by the Massachusetts Port Authority (Massport). On appeal, the taxpayer argues that the board erred in concluding that G.L.c. 91 App., § 1–17 (§ 17), which generally exempts from taxation the properties of Massport and the lessees thereof, subjected the property to taxation. As we determine that the board's decision is both reasonable and lawful, we affirm.
The property is located within the Commonwealth Flats, an area of South Boston consisting of former tidal lands which, pursuant to legislative enactment, underwent development for occupation during the Eighteenth and Nineteenth Centuries. From January 22, 2004, through the fiscal years here at issue,
the taxpayer has held a leasehold interest in the ground lease, sub-leasing and using the property in connection with business conducted for profit. The taxpayer sought board review, under formal procedure, of the assessors' denial of its applications to abate real estate taxes assessed to the taxpayer (see note 1, infra ), and asserted exemption from local real estate taxation. The board's decision, entered on April 16, 2010, found that for the purposes of § 17, the property was located within the Commonwealth Flats and leased for business purposes. Furthermore, the board construed “lands of the Authority” to include any properties located within this portion of the Commonwealth Flats, whether originally transferred to or thereafter acquired by Massport, and it ultimately ruled that the property was taxable by the assessors under the “first exception” to § 17. The taxpayer timely appealed.
At issue are assessments for fiscal years 2005 through 2009. With respect to fiscal year 2005, however, the assessors issued an omitted assessment to the taxpayer and by an agreement dated June 21, 2006, the assessors abated the omitted assessment in full.
Taxation of the Commonwealth Flats. The city's authority to tax the Commonwealth Flats was originally authorized in 1904 by St.1904, c. 385, § 1, which provided in relevant part: “The lands of the Commonwealth, situate in that part of the city of Boston called South Boston and known as the Commonwealth Flats, shall, if leased for business purposes, be taxed by the city of Boston to the lessees thereof....”
Upon codification of the statutes as the General Laws of 1921, the provision was added, in part, to G.L.c. 59, § 5, second.
The Legislature enacted St.1904, c. 385 “[t]o change the effect of [Corcoran v. Boston, 185 Mass. 325 (1904) ], and make certain that such parcels of the flats at South Boston as should be leased for business purposes would be taxable by the City of Boston.” Opinion of the Attorney General, Rep. A.G., Pub. Doc. No. 12, at 21–22 (Feb. 8, 1943).
See Opinion of the Attorney General, Rep. A.G ., Pub. Doc. No. 12, at 22 (Feb. 8, 1943). “Legislative history discloses the fact that ... it was the legislative intent that the Commonwealth flats at South Boston should, as an exception to the general rule applicable to Commonwealth property, be assessable when leased for business purposes....” Id. at 21.
Specifically, § 5, second, provides the following exemption from property taxation: “Second, Property of the commonwealth, except real estate of which the commonwealth is in possession under a mortgage for condition broken, lands in Boston known as the commonwealth flats, if leased for business purposes, ... buildings erected by lessees under section twenty-six of chapter seventy-five, ... [and] property taxable under chapter five hundred and seventy-five of the acts of nineteen hundred and twenty” (emphasis added). While the Legislature has since expanded the exceptions to the general tax exemption for property of the Commonwealth, as applied to the Commonwealth Flats, G.L.c. 59, § 5, second, remains unchanged.
As an extension of long-established tax principle, when the Legislature created Massport in 1956
pursuant to St.1956, c. 465, Massport-owned properties were to enjoy a general freedom from taxation, subject only to two enumerated exceptions, namely, when leased for business purposes, the city maintained taxing authority over (1) “lands of the Authority, except lands acquired by the commonwealth under the provisions of chapter seven hundred and five of the acts of nineteen hundred and fifty-one,
In 1956, the Legislature created Massport, a public instrumentality. St.1956, c. 465, § 2. Not until its fulfillment of statutory preconditions did Massport acquire title to certain properties on February 17, 1959, including some of the properties located within the Commonwealth Flats. See St.1956, c. 465, § 6; Boston v. U.N.A. Corp., 11 Mass.App.Ct. 298, 299 (1981), citing Massachusetts Port Authy. v. Treasurer & Receiver Gen., 352 Mass. 755, 757 (1967). Massport did not, however, acquire control and title to the property in question until 1988.
situate in that part of the city called South Boston and constituting a part of the Commonwealth Flats,” (the “first exception”), and (2) “lands acquired by the Authority which were subject to taxation on the assessment date next preceding the acquisition thereof” (the “second exception”). St.1956, c. 465, § 17. Section 17, as originally enacted, embodied the general tax exemption applicable to property of the Commonwealth, contemporaneously reflecting the settled practice that when leased for business purposes, lands within the Commonwealth Flats were indeed taxable.
Through St.1951, c. 705, the Legislature authorized the Port of Boston Authority to obtain from the Federal government the land known as Castle Island Terminal Facility in South Boston and further declared, notwithstanding the provisions of G.L.c. 59, § 5, that the conveyance be exempt from taxation even if leased for business purposes. St.1951, c. 705, §§ 1–2. The property at issue here was not a part of the Castle Island Terminal Facility.
Recognizing that originally, “the exemption was created largely in part to enable the Authority to put its projects on a sound financial footing,” see St.1977, c. 949, § 1, but, by 1977, Massport had as a result of the exemption “achieved its essential purpose” while adversely affecting Boston and Chelsea, the cities in which its operations were centered, the Legislature substantively amended § 17, levying upon Massport an excise tax for the privilege of further operating its projects in Boston and Chelsea. St.1977, c. 949, §§ 1, 8. By the 1977 amendments, the Legislature narrowed Massport's general exemption from taxation to include an annual excise tax on Massport operations in Boston and Chelsea, in addition to the statute's two original exceptions.
In 1978, the excise tax provisions were removed and language calling for annual payments in lieu of taxes (PILOT) to Boston and Chelsea was added. See St.1978, c. 332, § 3.
In amending § 17, however, the Legislature altered the text of the two original exceptions, omitting a comma to conclude the clause pertaining to the tax exempt status of the Castle Island Terminal Facility and adding a “d” to the end of the word “situate.” See St.1977, c. 949, § 2.
Following additional amendments in 1978, and as currently in effect, the statute reads, in relevant part:
“[T]he Authority, after the payment of any excise which may be levied ... shall at all times be free from taxation within the commonwealth, and no property of the Authority shall be taxed to a lessee thereof ... except lands acquired by the commonwealth under the provisions of chapter seven hundred and five of the acts of nineteen hundred and fifty-one situated in that part of the city called South Boston and constituting a part of the Commonwealth Flats, and lands acquired by the Authority which were subject to taxation on the assessment date next preceding the acquisition thereof, shall, if leased for business purposes, be taxed by the city ...”
(emphasis added). St.1978, c. 332, § 2.
Discussion. The taxpayer's central contention is that neither the first nor the second exception to the general exemption provided by § 17 applies to the property. The first exception does not apply, according to the taxpayer, because it connotes both a geographic (lands located within the Commonwealth Flats) and a temporal (lands transferred to Massport at its creation) limitation. The taxpayer contends that the second exception does not apply because the property was acquired after the creation of Massport and the property was not subject to taxation immediately prior to its acquisition. The board disagreed, concluding that the property is within the first exception, and thus does not enjoy the exemption otherwise created by § 17.
The issue is one of statutory construction. “We accord the board's decision great deference and will not disturb its decision ‘if [it] is based on both substantial evidence and a correct application of the law.’ “ AA Transp. Co. v. Commissioner of Rev., 454 Mass. 114, 118 (2009), quoting from Boston Professional Hockey Assn. v. Commissioner of Rev., 443 Mass. 276, 285 (2005). “Notwithstanding this deference, a question of statutory interpretation ‘is a question of law for us to resolve.’ “ AA Transp. Co., supra at 118–119, quoting from Bell Atl. Mobile of Mass. Corp., Ltd., v. Commissioner of Rev., 451 Mass. 280, 283 (2008), S. C., 456 Mass. 728 (2010). “[B]ecause the board is an agency charged with administering the tax law and has ‘expertise in tax matters,’ ... we give weight to its interpretation of tax statutes, ... and will affirm its statutory interpretation if [it] is reasonable.” MASSPCSCO v. Assessors of Woburn, 80 Mass.App.Ct. 398, 402 (2011), quoting from AA Transp. Co., supra at 119.
Furthermore, “[e]xemption from taxation is a matter of special favor or grace. It will be recognized only where the property falls clearly and unmistakably within the express words of a legislative command.” MASSPCSCO, supra at 401–402, quoting from Willowdale LLC v. Assessors of Topsfield, 78 Mass.App.Ct. 767, 769 (2011). Ultimately, the taxpayer bears the “heavy burden,” AA Transp. Co., supra at 121, of “demonstrat[ing] entitlement to the exemption claimed.” Global Cos., LLC v. Commissioner of Rev., 459 Mass. 492, 494 (2011). It is well settled that “[w]here the language of a statute is clear and unambiguous, it is conclusive as to legislative intent.” South St. Nominee Trust v. Assessors of Carlisle, 70 Mass.App.Ct. 853, 856 (2007), quoting from Commonwealth v. Mandell, 61 Mass.App.Ct. 526, 528 (2004). However, where a statute is “susceptible to multiple interpretations, each of which is not wholly unreasonable, but none of which perfectly harmonizes all of the statutory language,” South St. Nominee Trust, supra at 856–857, or where words of a statute may “be regarded as surplusage,” Ropes & Gray LLP v. Jalbert, 454 Mass. 407, 412 (2009), the statute is ambiguous. The taxpayer argues that the statute is ambiguous, requiring resort to legislative history for its construction, because the board's broad construction of the first exception renders the second exception superfluous. That is to say, if the first exception is construed to encompass all “lands of the Authority,” then the second exception, which is limited to after-acquired property subject to taxation immediately prior to its acquisition, adds nothing. However, the argument ignores the geographic constraints of the first exception, limiting its application to lands within the Commonwealth Flats. The board's construction preserves meaning for the second exception, since the second exception applies to land acquired by Massport, wherever located, if such land was subject to taxation before its acquisition.
See 3A Singer & Singer, Statutes and Statutory Construction § 66:9, at 100 (7th ed. 2010) (“If the standard granting an exemption is capable of two interpretations, one granting an exemption and the other denying it, the construction which denies the exemption must be adopted”).
We are unpersuaded by the taxpayer's suggestion that the first exception should be construed to impose a temporal limitation, to apply only to lands within the Commonwealth Flats owned by Massport at the time of its creation. First, the language of the statute imposes no such temporal limitation by its express terms. Second, and perhaps more importantly, Massport held no property at the time of its creation; the land referenced in St.1951, c. 705, was not transferred to Massport until 1959. See St.1956, c. 465, § 6.
Indeed, “the city's taxing authority as to leasehold interests in the Commonwealth flats, for all practical purposes, is the same as stated in St.1904, c. 385, § 1,” which provides: “[t]he lands of the Commonwealth, situate in that part of the city of Boston called South Boston and known as the Commonwealth Flats, shall, if leased for business purposes, be taxed by the city of Boston to the lessees thereof.” U.N.A. Corp., 11 Mass.App.Ct. at 302 & n. 4. The imposition of a temporal limitation on this long-standing tax policy would be an alteration in the law and require a clearer indication of the Legislature's intent to effectuate such a change. Such indication is absent here. See Suffolk Constr. Co. v. Division of Capital Asset Mgmt., 449 Mass. 444, 461 (2007) (if the Legislature intended to change the existing law, “it would made that intention unmistakably clear”).
To the extent the taxpayer contends that ambiguity arises from the intended meaning of “a part of the Commonwealth Flats,” as the phrase appears in the first exception, the issue is foreclosed by Boston v. U.N.A. Corp., 11 Mass.App.Ct. 298, 300–301 (1981). Given the plain meaning of the statutory language of § 17, therefore, the relevant inquiry in U.N.A. Corp. turned on geography, not legislative intent. Where “a statute speaks with clarity to an issue[,] judicial inquiry into the statute's meaning, in all but the most extraordinary circumstance, is finished.” Beaupre v. Cliff Smith & Assocs., 50 Mass.App.Ct. 480, 491 (2000), quoting from Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475 (1992). Even if we were to conclude that the statute is ambiguous, we would conclude that the board's interpretation is, for the reasons we have explained, at least reasonable. See AA Transport Co. 454 Mass. at 119 (“[I]f the board's interpretation of a tax statute is reasonable, ... the board's interpretation will be adopted”). Accordingly, we conclude that the board did not err in interpreting § 17 as subjecting the property to local real property taxation.
We find the taxpayer's remaining arguments unavailing. First, the fact that G.L.c. 59, § 5, second, utilizes forward-looking language in its discussion of the tax status of certain lands, flats, and structures in Provincetown Harbor in no way reflects that the Legislature intended to temporally-limit the first exception, since, as the taxpayer itself recognizes, “a statute specifying the tax treatment of particular land controls over more general tax statutes such as G.L.c. 59, § 2B and G.L.c. 59, § 5, Clause Second.” See Cape Cod Shellfish & Seafood Co. v. Boston, 74 Mass.App.Ct. 1127 (2009) (crediting that “the Legislature can specify the tax treatment of particular land, and where it does, the specific statute [§ 17] controls over more general tax statutes”). See also Boston Fish Mkt. Corp. v. Boston, 224 Mass. 31, 34 (1916); Pereira v. New England LNG Co., 364 Mass. 109, 118–119 (1973).
Likewise, we reject the taxpayer's related claim premised on St.1967, c. 719, §§ 1, 4, 5, an amendment to St.1956, c. 465, § 17, authorizing Massport to acquire certain land in the “South Station Area” of the city from the Boston Redevelopment Authority.
Lastly, we give little weight to evidence of Massport's continued PILOT payments, which were not reduced during the fiscal years at issue, and Massport's treatment of the property as exempt under its own interpretation of § 17. “When a prior determination has been proved wrong, a taxpayer's reliance on the error will not prevent the commissioner from correcting a mistake of law and assessing a tax that is otherwise lawfully due.” Gillette Co. v. Commissioner of Rev., 425 Mass. 670, 678 (1997), citing Commissioner of Rev. v. Marr Scaffolding Co., 414 Mass. 489, 494–495 (1993).
Conclusion. The board's decision upholding the assessors' refusal to abate the local real property taxes for all fiscal years at issue is affirmed.
Decision of Appellate Tax Board affirmed.