Opinion
21-P-883 21-P-884
02-02-2023
UNQUITY HOUSE CORPORATION v. BOARD OF ASSESSORS OF MILTON (and a companion case[1]).
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The taxpayers, Unquity House Corporation and Winter Valley Residences, Inc., appeal from decisions of the Appellate Tax Board (board) finding that the taxpayers were not entitled to real estate tax exemptions for fiscal year 2019 under G. L. c. 59, § 5, Third (Clause Third), for property owned and occupied for charitable purposes. We affirm.
Discussion.
The taxpayers assert that, contrary to the board's determination, they are entitled to claim the Clause Third exemption because they operate as traditional public charities and their occupancy of the properties advances the public good, lessens the burden on government, and benefits a sufficiently large and fluid segment of the population.
1. Standard of review.
A decision of the board "will not be modified or reversed if the decision 'is based on both substantial evidence and a correct application of the law.'" New Cingular Wireless PCS LLC v. Commissioner of Revenue, 98 Mass.App.Ct. 346, 353 (2020), quoting Genentech, Inc. v. Commissioner of Revenue, 476 Mass. 258, 261 (2017). The taxpayer carries the burden of demonstrating entitlement to an exemption. See Global Cos., LLC v. Commissioner of Revenue, 459 Mass. 492, 494 (2011); Jewish Geriatric Servs., Inc. v. Assessors of Longmeadow, 61 Mass.App.Ct. 73, 77 (2004) . Given the board's responsibility for administering the tax law and its expertise, "[w]here the board's construction of a tax statute is reasonable, we will defer to its interpretation." Oracle USA, Inc. v. Commissioner of Revenue, 487 Mass. 518, 522 (2021).
We accept the board's factual findings if they are supported by substantial evidence. West Beit Olam Cemetery Corp. v. Assessors of Wayland, 89 Mass.App.Ct. 677, 680 (2016). "Substantial evidence is 'such evidence as a reasonable mind might accept as adequate to support a conclusion.'" Id., quoting Boston Gas Co. v. Assessors of Boston, 458 Mass. 715, 721 (2011). Our application of the substantial evidence test "must take into account whatever in the record fairly detracts from its weight" (citation omitted). Cohen v. Board of Registration in Pharmacy, 350 Mass. 246, 253 (1966). "[W]e deem the evidence insufficient only where 'a contrary conclusion is not merely a possible but a necessary inference from the findings.'" Jewish Geriatric Servs., Inc., 61 Mass.App.Ct. at 76, quoting Erving Paper Mills Corp. v. Commissioner of Revenue, 49 Mass.App.Ct. 14, 17 (2000). See New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 465 (1981) ("A finding of the board must be set aside if the evidence points to no felt or appreciable probability of the conclusion or points to an overwhelming probability of the contrary" [quotation and citation omitted]).
2. Clause Third.
A taxpayer claiming exemption from property taxes under Clause Third must demonstrate that it qualifies as a charitable organization and that it occupies the property in furtherance of its charitable purpose. See New England Forestry Found., Inc. v. Assessors of Hawley, 468 Mass. 138, 150 (2014). For the purposes of Clause Third, the term "charity" is not limited to "almsgiving and assistance to the needy." New England Legal Found. v. Boston, 423 Mass. 602, 609 (1996). Charity is defined as a gift "for the benefit of an indefinite number of persons, either by bringing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government." New England Forestry Found., Inc., supra at 149-150, quoting Jackson v. Phillips, 14 Allen 539, 556 (1867).
Factors considered in determining whether an organization qualifies as a charity include, without limitation, "whether the organization provides low-cost or free services to those unable to pay, whether it charges fees for its services and how much those fees are, whether it offers its services to a large or 'fluid' group of beneficiaries and how large or fluid that group is, whether the organization provides its services to those from all segments of society and from all walks of life, and whether the organization limits its services to those who fulfil certain qualifications and how those limitations help advance the organization's charitable purposes" (citations omitted). New Habitat, Inc. v. Tax Collector of Cambridge, 451 Mass. 729, 732733 (2008). The less the organization performs traditional charitable functions, the more heavily the New Habitat factors weigh in the analysis. See New England Forestry Found., Inc., 468 Mass. at 150; New Habitat, Inc., supra at 733.
3. Review of board's decisions.
It is undisputed that the taxpayers are nonprofit corporations that rent apartments at below market rates to low income, elderly individuals, and in the case of Winter Valley, low income, elderly individuals with disabilities. The residents are all eligible for, and receive, rental subsidies from the United States Department of Housing and Urban Development (HUD). The taxpayers, however, also receive direct payments from HUD and from several municipal housing authorities. All residents are required to enter into a lease agreement and to provide a security deposit. Under the leases, the taxpayers are responsible for cleaning, maintenance, and trash removal, but are not required to perform any services not typically provided by a commercial landlord. The board concluded that the taxpayers' relationship with their residents was "essentially that of landlord to tenant."
The board found that in 2016, Unquity House received $867,866 in rental income from residents and $1,158,297 in government subsidies. Although the board did not make a similar finding with respect to Winter Valley, it found Winter Valley participated in HUD's § 202 program, which is intended to expand the supply of affordable housing by providing capital advances to private, nonprofit entities.
The board correctly cited Charlesbank Homes v. Boston, 218 Mass. 14, 15 (1914), for the proposition that a charitable corporation whose "object is to provide wholesome and sanitary homes for . . . people of small means at moderate cost," without more, is not exempt from property tax. In M.I.T. Student House, Inc. v. Assessors of Boston, 350 Mass. 539, 541 (1966), however, the court observed that "to provide living quarters for needy persons is a charitable purpose." More recently, this court held that "providing living space and residential assistance to individuals who are unable to manage on their own" is a traditional charitable purpose. Mary Ann Morse Healthcare Corp. v. Assessors of Framingham, 74 Mass.App.Ct. 701, 706 (2009).
The board reasoned, and we agree, that the taxpayers' entitlement to the Clause Third exemption depended on the extent to which they carried their burden of showing that they provided services to the residents beyond those typically provided by landlords. In this regard, the board found that the taxpayers had failed to show the extent to which they were present to assist with the daily living or medical needs of the residents, or the extent to which they, as opposed to government agencies or other nonprofit organizations, provided additional services and assistance. Thus, the board concluded that the taxpayers "did not demonstrate that [they] regularly perform[ed] charitable services for the benefit of its residents." The board also emphasized that the residents received rental assistance not from the taxpayers, but rather from government programs.
Other organizations that provided services to the residents included the Boston Food Bank, which supplied provisions to the residents of Unquity House on a monthly basis (which Unquity House staff helped distribute); Hebrew Senior Life, which, through a grant study, provided a registered nurse and social worker to advocate for preventative medical services; and South Shore Elder Services, which evaluated residents' needs and helped obtain appropriate services upon request of the taxpayers' management staff.
The taxpayers contend that the board's findings are not supported by substantial evidence because the record shows that the taxpayers provided daily educational and social activities; transportation for grocery shopping, lunches, and medical appointments; fitness, health, and nutrition services; and monitoring of and emergency response to residents' medical needs. However, the board did not overlook these services. Rather, the board found that the taxpayers did not sufficiently "substantiate" the nature or extent of these services or activities to qualify for the exemption.
For example, the board found that the staff at Unquity House included a property manager, two maintenance workers, a resident care coordinator, two activity employees, and front desk personnel, and that the staff at Winter Valley consisted of a property manager, two caretakers who live on the property, a case manager, activity employees, and staff dedicated to the assisted living units. But the record is bereft on any description of the hours, duties, qualifications, or availability of the property managers, the care coordinator or case manager, or the activity employees. Although the taxpayers' sole witness, Sarah McLaren, the executive director of the nonprofit corporation that manages both Unquity House and Winter Valley, testified that all staff discussed the residents' well-being and generally kept an eye on them, the only specific example she gave of such caretaking was that live-in and on-call maintenance staff responded to emergency calls. Likewise, the board noted McLaren's testimony that the taxpayers provided daily educational, exercise, or social activities, food programs, and transportation, but found that taxpayers failed to provide "any details" about the nature or frequency of such programs or activities, the number of participants, whether they were provided by third parties, or whether fees were charged.
The taxpayers' failure to substantiate the services they provided to the residents distinguishes this case from the board's decision in Island Elderly Hous., Inc. v. Assessors of Tisbury, 20 Mass.App. Tax Bd. 232 (1997), in which the board found that the taxpayer provided substantial assistance and numerous services to its residents and that its employees were on the premises on a continuous basis to serve the residents' needs.
Reviewing the record as a whole, taking into account the evidence that tends to show that the taxpayers provided services to the residents beyond those provided by a typical landlord, we have no basis to upset the board's weighing of the evidence to reach its ultimate conclusion that the taxpayers failed to prove entitlement to the Clause Third exemption. The evidence favorable to the taxpayers does not point to an overwhelming probability, see New Boston Garden Corp., 383 Mass. at 466, or a necessary inference, see Jewish Geriatric Servs., Inc., 61 Mass.App.Ct. at 76, of the contrary. Accordingly, the board's factual findings are supported by substantial evidence.
The taxpayers also contest the board's finding that the record failed to show that the taxpayers "provided benefits to a sufficiently large or indefinite class of people." In this regard, the board noted McLaren's testimony that Unquity House's residents "come from everywhere" and represent a cross-section of society, and that Winter Valley's residents represent "a fluid cross-section of society." Nonetheless, the board was "unable to confirm" from this testimony that the taxpayers "provided benefits to a sufficiently large or indefinite class of people." We agree with the board that, even if the record supported the taxpayers' claim on this point, this factor alone would not be sufficient to overcome their failure to demonstrate that they performed traditional charitable functions. Discerning no clear error of law, we defer to the board's reasonable application of the requirements of Clause Third and its conclusion that the taxpayers failed to meet those requirements. See Oracle USA, Inc., 487 Mass. at 522.
Given our conclusions, we need not reach the question whether the taxpayers "occupied" the properties for charitable purposes.
On a final note, we echo the board's observation that the taxpayers "perform[] an important housing function for the elderly in Milton." But we are compelled to conclude, with the board, that on the record before us "that function does not rise to the level necessary for a Clause Third exemption."
The decisions of the Appellate Tax Board are affirmed.
So ordered.
Massing, Singh & Hershfang, JJ.
The panelists are listed in order of seniority.