Nantucket Islands Land Bank Commission v. Board of Assessors of the Town of Nantucket (December 4, 2002)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



NANTUCKET ISLANDS LAND   	 v.  BOARD OF ASSESSORS
BANK COMMISSION				OF THE TOWN OF NANTUCKET 
     
Docket No. F242423 		        	Promulgated:		   
							December 4, 2002



	This is an appeal under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain real estate in the Town of Nantucket assessed under G.L. c. 59, § 38 for fiscal year 1997.
Former Commissioner Lomans heard the appeal and was joined in the revised decision for the appellant by Chairman Burns, Former Chairman Gurge, and Commissioners Scharaffa and Gorton.
These findings of fact and report are made at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Thomas G. Schnorr, Esq. and Laurie M. Ruskin, Esq., for the appellant.

Deborah Dilworth, Assessor, for the appellee.


FINDINGS OF FACT AND REPORT
On the basis of an Agreed Statement of Facts and testimony and exhibits introduced at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.  The Nantucket Islands Land Bank ("the Land Bank"), created by Chapter 669 of the Acts of 1983, is a body politic and corporate and a public instrumentality whose exercise of power is deemed to be the performance of an essential government function.  See St. 1983, Chapter 669, § 1, as amended by St. 1984, Chapter 407, § 1.  The Land Bank was created for the purpose of acquiring, holding, and managing land in Nantucket County.  
On January 1, 1996, the relevant assessment date for fiscal year 1997 ("the tax year at issue"), the Land Bank was the record owner of a parcel of land and the buildings located thereon at 22 Broad Street, Nantucket, identified on the tax bill as Parcel No. 4242-034 ("the subject property").  The subject property contained: (1) administrative offices of the Land Bank; and (2) two apartments which the Land Bank leased to third parties.  The Board of Assessors for Nantucket ("the assessors") valued the subject property at $561,700.00, and assessed to the Land Bank a tax at the rate of $6.74 per $1,000.00 in the amount of $3,785.86.  The Land Bank timely paid the tax due without incurring interest.
On January 10, 1997, the Land Bank filed with the assessors an application for abatement in which it claimed that the subject property was exempt from real estate taxes.  By notice dated April 7, 1997, the assessors gave notice of their decision to grant a partial abatement for the subject property in the amount of $2,942.01, based on the assessors' determination that the portion of the subject property containing the administrative offices of the Land Bank was exempt from tax.  The assessors denied the exemption for the portion of the subject property that contained the leased apartments.  The Land Bank seasonably filed a petition with the Board on June 19, 1997, by which it sought an abatement of the tax on the portion of the subject property containing the leased apartments.  On this basis, the Board found it had jurisdiction over this appeal.
The Board initially rendered a decision for the assessors, determining that the portion of the subject property containing the leased apartments was subject to tax.  The Land Bank subsequently filed a motion for reconsideration with the Board.  After hearing the motion, the Board took the matter under advisement.  
For the reasons stated more fully in the Opinion that follows, the Board ruled that the portion of the subject property containing the leased apartments should have been exempt from real estate tax.  Accordingly, the Board issued a revised decision for the Land Bank abating $843.55, representing that portion of the fiscal year 1997 taxes not previously abated.

OPINION
	Tax exemption provisions are ordinarily to be strictly construed.  See Old Colony Trust Co. v. Commissioner of Corps. and Tax'n, 343 Mass. 613, 620 (1962).  However, when property falls "clearly and unmistakably within the express words of a legislative command," the exemption will be granted.  The Children's Hospital Medical Center v. Board of Assessors of Boston, 353 Mass. 35, 43 (1967).  The Land Bank argued that the leasing of property held in its name fell within the clear and unambiguous terms of an exemption created by the Nantucket Islands Land Bank Act ("Land Bank Act"), Chapter 669 of the Acts of 1983, as amended by Chapter 407 of the Acts of 1984 and Chapter 666 of the Acts of 1987.
   
The Legislature originally created the Land Bank "for the purpose of acquiring, holding and managing land and interests in land" of the types specified in § 5 of the Land Bank Act.  St. 1983, Chapter 669, § 2.  Section 5 provides that "[l]and to be acquired and held as part of the land bank, or interests in which are to be so acquired and held, shall be situated in Nantucket county, and may consist of any of the following" enumerated types of land interests: (a) ocean, harbor and pond frontages consisting of beaches, dunes and adjoining backlands; (b) barrier beaches; (c) fresh and salt water marshes and estuaries and the adjoining uplands; (d) heathland and moors; (e) land that provides access to ocean, harbor and pond frontages and land used for bicycle paths; (f) land for future public recreational facilities and use; (g) recreation land used to protect existing and future wellfields and acquifer recharge areas; and, (h) land used or to be used for agricultural purposes.  St. 1983, Chapter 669, § 5, as amended by St. 1987, Chapter 666, § 2.
Initially, the Legislature authorized funding for the Land Bank from four sources: monies appropriated by the county commissioners or town meeting; voluntary contributions; fees charged at the rate of two percent of the purchase price of all transfers of land in Nantucket County; and, proceeds from the Land Bank's disposal of real property or interests in property.  See St. 1983, Chapter 669, § 8.  Proceeds from these sources were to be deposited into a "Land Bank Fund" out of which the Land Bank was to meet its financial obligations. Id.
One year after enacting the Land Bank Act, the Legislature amended the Act to enable the Land Bank to raise additional revenues for acquiring and maintaining land and interests in land by issuing notes and bonds.  St. 1984, Chapter 407, § 2.  As part of this amendment, § 4G provided for a tax exemption as follows:
The land bank and all its revenues, income and real and personal property used solely by the land bank in furtherance of its public purposes shall be exempt from taxation and from betterments and special assessments and the land bank shall not be required to pay any tax, excise or assessment to or for the commonwealth or any of its political subdivisions.  Bonds and notes issued by the land bank, their transfer and the income therefrom, including any profit made on the sale thereof, shall at all times be exempt from taxation within the commonwealth.
 
St. 1983, Chapter 669, § 4G, as added by St. 1984, Chapter 407, § 2 (emphasis added).  
In 1987, the Legislature again amended the Land Bank Act.  Among other changes, the 1987 Act amended § 4, the section delineating the Land Bank's powers.  St. 1987, Chapter 666, § 1.  The amendment specifically grants to the Land Bank the power to "lease real property as may be held by the land bank for purposes consistent with this act."  
Additionally, the 1987 Act amended § 8, pertaining to the contents and management of the Land Bank fund, to provide a tax exemption as follows:
Real property held in the name of the Nantucket Islands land bank or its designee shall be exempt from property taxes as of the date of acquisition of title by the Nantucket Islands land bank or its designee; and any taxes assessed against such real property interests shall be abated for that portion of any fiscal year during which the real property interests was [sic] owned by the Nantucket Islands land bank or its designee.

St. 1983, Chapter 669, § 8, as amended by St. 1987, Chapter 666, § 3 (emphasis added).  
	The appellant relied on this 1987 amendment to argue that all real property owned in the name of the Land Bank is exempt from property taxation.  The assessors, however, exclusively relied on a letter dated July 15, 1993 from Harry Grossman, then-Chief of the Department of Revenue's Property Tax Bureau, to argue that the assessment of the portion of the subject property that was leased to private parties must be upheld.

  
In his letter, Mr. Grossman relied on the language of the 1984 amendment to the Act, which provided a tax exemption to real estate "used solely by the land bank in furtherance of its public purpose."  Mr. Grossman believed that the 1987 Act's exemption of all "[r]eal property held in the name of the Nantucket Islands land bank" did not negate the 1984 amendment's requirement that property be "used solely by the land bank in furtherance of its public purposes" in order to qualify for the exemption, because the 1987 Act amended § 8 but kept § 4G intact.  Therefore, because he believed that the portion of the subject property being leased to private parties was not being used in furtherance of the Land Bank's public purposes, Mr. Grossman concluded that the Act's exemption did not extend to the leased portion of the subject property.
Mr. Grossman also concluded that the use of the subject property as leased residential housing was not "within any of the specific purposes for the acquisition of land bank property," which are listed in § 5 of the Land Bank Act.  Finding no specific authorization in § 5 for the leasing of property for residential purposes, Mr. Grossman concluded that this portion of the subject was not being used "for a specified land bank purpose."  Accordingly, he was of the opinion that the taxing provisions of G.L. c. 59, § 2B were applicable, and thus advised the assessors to deny an exemption for that portion of the subject property. 
Upon reconsideration of the issues involved in this appeal, the Board ruled that Land Bank's ownership of the subject property, a portion of which it leased to third parties for use as residential apartments, qualified for the property tax exemption provided in the Land Bank Act.  
First, the Board found that the Legislature's 1987 amendment to § 8 could not have been more clear:  all "real property held in the name of" the Land Bank "shall be exempt from property taxes."  There is no qualifying language such as that found in § 4G of the 1984 Act requiring the land to be held "solely by the land bank in furtherance of its public purpose."  The Board declined to read into the 1987 amendment a restriction that the Legislature did not see fit to insert.  
The subsequent amendments of the Land Bank Act, and particularly the exemption contained in the 1987 amendment to § 8, demonstrate an evolution of the Act as the Legislature addressed the need to provide additional revenues to the Land Bank to enable it to carry out its purpose.  Accordingly, to the extent that the 1987 amendment of § 8 can be considered inconsistent with the 1984 exemption for real estate used in furtherance of the Land Bank's public purposes, the later amendment must be given its full effect.  "It can be assumed that new legislation alters existing law."  Morrison v. Lennett, 415 Mass. 857, 863 (1993) (cited in Farrell Enterprises, Inc. v. Commissioner of Revenue, 46 Mass. App. Ct. 564, 570 (1999)).  See also Town of Marshfield v. City of Springfield, 337 Mass. 633, 637-38 (1958) ("Presumably some change of meaning was intended by the 1926 substitution, in place of the word "eligible," of the words "whose service  . . . qualifies him" and the words "qualified by his service.").  The Legislature is "'presumed to understand and intend all consequences' of its acts."  Charland v. Muzi Motors, Inc., 417 Mass. 580, 583 (1994) (quoting Boston Water & Sewer Comm'n v. Metropolitan Dist. Comm'n, 408 Mass. 572, 578 (1990) and Rambert v. Commonwealth, 389 Mass. 771, 774 (1983)).  
Moreover, even if the 1984 Act's requirement that property be used in furtherance of the Land Bank's purposes can be considered a requirement for property tax exemption notwithstanding the 1987 amendment, the leased property would still be exempt.  The Land Bank's use of a portion of the subject property for rental apartments is consistent with § 4(h), which specifically grants to the Land Bank the power to "lease real property as may be held by the land bank."  St. 1983, Chapter 669, § 8, as amended by St. 1987, Chapter 666, § 3 (emphasis added). This language unambiguously grants the Land Bank the power to lease its property to third parties.  
Furthermore, the Land Bank is authorized to engage in various types of revenue-generating activities to carry out its purposes.  Section 8 directs the Land Bank to "meet its financial obligations" by establishing "a revolving or sinking account," and permits the Land Bank to engage in various revenue-generating activities to fund this account.  St. 1983, Chapter 669, § 8.  Specifically, § 8 provides that proceeds from the disposition of interest in real estate, such as the rental payments received by the Land Bank in this appeal, are to be included in the Land Bank fund from which the Land Bank meets its financial obligations.  Therefore, disposition of a leasehold interest in the subject property to generate rental income to be used in furtherance of the Land Bank's statutory purposes is consistent with the Land Bank's statutory powers and purposes.  Accordingly, even applying the standard of the 1984 Act limiting tax exemption to property used solely in furtherance of the Land Bank's public purposes, the portion of the subject property used as rental apartments still would qualify for an exemption from property tax.
Finally, the Legislature has mandated that the Land Bank Act "shall be liberally construed" to effect its purpose.  St. 1983, Chapter 669, § 14B, as amended by St. 1984, Chapter 407, § 4.  Construing the Land Bank Act in a manner that would most effect its purpose, the Board ruled that the Land Bank's ability to generate income by the leasing of its real property is consistent with the purposes of the Land Bank Act and, accordingly, the subject property should be included within the Act's property tax exemption.  See Fluet v. McCabe, 299 Mass. 173, 178 (1938) ("The well established general rule is that when a general power is given or duty enjoined, every particular power, necessary for the exercise of the one, or the performance of the other, is given by implication.").  
Contrary to the assessors' assertions, the provisions of § 5 of the Act do not support a conclusion that the leased property should be taxable.  Section 5 describes two general categories of property to be acquired and held by the Land Bank, but only the first, that the land "shall be situated in Nantucket county," is mandatory.  St. 1983, Chapter 669, § 5, as amended by St. 1987, Chapter 666, § 2.  The second category, that the interests in land "may consist of any of the following types of land and interests therein," is discretionary.  Id.  Although the properties enumerated in § 5 may be the types of land the Land Bank was created to acquire, maintain, and preserve in furtherance of the public good, the Board ruled that the Act nonetheless clearly contemplated the acquisition and disposition of other interests in real estate to produce revenue for use in acquiring the enumerated properties.  
The subsequent amendments to the original 1983 Land Bank Act evidence a legislative concern with creating further sources of revenue for the Land Bank and expanded tax exemption for its property and income, thus ensuring that the Land Bank would have sufficient resources to carry out its public purposes.  Therefore, the Board ruled that whether the subject property was one of the property types enumerated in § 5 was not the deciding factor in determining qualification for property tax exemption.  In fact, the assessors' granting of an exemption for that part of the subject property used by the Land Bank for its administrative offices supports this ruling, since such office use can nowhere be found among the listed property types in § 5.
Moreover, because the subject property is exempt under the specific provisions of the Land Bank Act, it is not taxable under G.L. c. 59, § 2B, as argued by the assessors.
G.L. c. 59, § 2B imposes a tax on real estate owned by an instrumentality of the Commonwealth, county, city or town under certain circumstances:
[R]eal estate owned in fee or otherwise or held in trust for the benefit of the United States, the commonwealth, or a county, city or town, or any instrumentality thereof, if used in connection with a business conducted for profit or leased or occupied for other than public purposes, shall for the privilege of such use, lease or occupancy, be valued, classified, assessed and taxed annually as of January first to the user, lessee or occupant in the same manner and to the same extent as if such user, lessee or occupant were the owner thereof in fee, whether or not there is any agreement by such user, lessee or occupant to pay taxes assessed under this section . . . .

(emphasis added).  See e.g., Sisk v. Board of Assessors of Essex, 426 Mass. 651, 654 (1998) (finding that land leased from the government was properly assessed as if owned by the lessees in fee).  
However, the Supreme Judicial Court in Board of Assessors of Newton v. Pickwick Ltd., 351 Mass. 621 (1967) held that, where another statute speaks to an exemption for a particular property, the more particular exemption controls and trumps the general taxing statute. 

In Pickwick, the Court ruled that St. 1947, Chapter 544, § 14, as amended by St. 1949, Chapter 572, § 6, exempted all property held by the Metropolitan Transit Authority "whether or not used in the transit system," and therefore, also exempted property occupied by a private third party lessee.  Id. at 624.   The Court then ruled that the specific exemption trumped the more general taxation provision: "[t]his specific exemption of the site from taxation renders G.L. c. 59, § 3A inapplicable, even if this section were otherwise applicable."  Id. at 625-26 (citing Cabot v. Assessors of Boston, 335 Mass. 53, 64-65 (1956)).  This standard of honoring the more specific provision is consistent with the long-standing principle of Massachusetts taxation, that "[t]axing statutes are to be construed strictly against the taxing authority, and all doubts resolved in favor of the taxpayer."  DiStefano v. Commissioner of Revenue, 394 Mass. 315, 325-26 (1985) (quoting Dennis v. Commissioner of Corps. & Tax'n, 340 Mass. 629, 631 (1960)). 




In accordance with the Court's ruling in Pickwick, the Board ruled that the Land Bank Act's specific exemption for Land Bank property rendered the general taxation provision of G.L. c. 59, § 2B inapplicable.    On the basis of the foregoing, the Board ruled that the subject property was exempt from property tax.  Accordingly, the Board issued a revised decision for the appellant in this appeal and granted an abatement in the amount of $843.55.


					      APPELLATE TAX BOARD
	
							
By:____________________________
					    Abigail A. Burns, Chairman




A true copy:



Attest: _____________________
	    Clerk of the Board
						

ATB 2002-674