Harvard Student Agencies, Inc. v. Board of Assessors of the City of Cambridge (November 17, 2000)

	
COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD




HARVARD STUDENT AGENCIES,	v.	BOARD OF ASSESSORS OF
INC.    				 		THE CITY OF CAMBRIDGE
				

Docket Nos. F239691, F245876 		Promulgated:
		                   		November 17, 2000


	These are appeals under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the City of Cambridge to abate real estate taxes assessed under G.L. c. 59, 38, for fiscal years 1997 and 1998. 
	Commissioner Scharaffa heard the appeals and was joined by Chairman Burns and Commissioners Gorton, Egan and Rose in decisions for the appellee.  These findings of fact and report are promulgated at the request of the appellant Harvard Student Agencies, pursuant to G.L. c. 58A, § 13 and 831 C.M.R. 1.32. 
 
Richard L. Wulsin, Esq. for the appellant.

Gail S. Gabriel, Esq. for the appellee.



FINDINGS OF FACT AND REPORT
These appeals raise the issue of whether the Board of Assessors of the City of Cambridge ("Assessors") properly denied an application for abatement filed by appellant Harvard Student Agencies, Inc. ("HSA") for fiscal years 1997 and 1998.  For both fiscal years at issue, HSA claimed that thirty percent of its building located at 67-69 Mt. Auburn Street (the "subject property") should be exempt from real estate tax because it was occupied by it for the charitable purposes for which it was organized.  HSA does not seek exemption for the seventy percent of the building occupied by its for-profit subsidiary, and various retail tenants.  Based on testimony and exhibits offered at the hearing of these appeals, the Appellate Tax Board ("Board") made the following findings of fact.

I.  Jurisdiction
	HSA purchased the subject property on June 19, 1996.  Thus, HSA was the owner of record on July 1, 1996 and July 1, 1997, and was the assessed owner of the real estate at all times relevant in these appeals.  G.L. c. 59, § 5.     
For fiscal year 1997, the Assessors valued the property at $1,583,300 and assessed a tax at the rate of $35.78 per thousand in the amount of $56,650.46.  HSA timely paid the first half tax bill, mailed on October 11, 1996.  HSA did not request an abatement under G.L. c. 59, § 59 within thirty days of the mailing of the first half tax bill.  Therefore, HSA failed to invoke its right of appeal under G.L. c. 59, § 59.  
On January 13, 1997, HSA filed a direct appeal to the Board, purportedly under G.L. c. 59, § 5B.  However, HSA failed to file its Form 3ABC prior to the Assessors' issuance of the fiscal year 1997 first half tax bill on October 11, 1996.  In fact, HSA filed its form 3ABC with the Assessor on January 10, 1997.  At the time the fiscal year 1997 tax bill was issued to HSA, there was no request by HSA for a charitable exemption.  Therefore, the issuance of the tax bill was not a determination of any claim for exemption by HSA.  As a result, HSA's January 13, 1997 appeal directly to this Board was insufficient to invoke the Board's jurisdiction over the fiscal year 1997 appeal.  On the basis of the foregoing, the Board found that it lacked jurisdiction to hear the appeal for fiscal year 1997.
For fiscal year 1998, HSA timely filed its Form 3ABC and a copy of its Form PC with the Assessors on February 13, 1997.  The Assessors valued the property for fiscal year 1998 at $1,583,300 and assessed a tax at the rate of $35.98 per thousand in the amount of $56,967.13.  HSA timely paid the first half tax bill on November 3, 1997 and filed its abatement application on October 6, 1997, within 30 days of the mailing of the first half tax bill.  The application was denied on October 29, 1997.  On January 22, 1998, HSA timely filed its appeal with the Board.  On this basis, the Board found that it has jurisdiction to hear the fiscal year 1998 appeal.

II:  Merits of the Exemption Claim  
HSA was formed in 1957.  Pursuant to its Articles of Incorporation, HSA was formed: 
to conduct and supervise enterprises for the benefit of students of Harvard University who are in need of financial assistance to defray the expenses of their education; to provide opportunities for such students to be gainfully employed; to study, cultivate, promote and encourage new business ventures to afford additional employment opportunities for such students; to provide experience for its members in the practical management and conduct of business affairs, to foster, encourage and inculcate in its members qualities and habits of work, thrift and self-reliance; all in close collaboration with said Harvard University and its Office of Student Employment and without profit to any of its members or any other person. 

Pursuant to the corporation's by-laws, the Board of Directors of HSA consists of seven Harvard student-HSA employees, seven Harvard faculty or staff, and seven Harvard alumni.
In support of its exemption claim, HSA called Mr. Brad Howe and Ms. Anne Chisholm to testify.  Mr. Howe has a long-standing relationship with HSA, working for HSA as a student starting in 1959, serving as general manager of HSA from 1972 through 1975, and serving on the Board of Directors from 1975 to the date of the hearing.  Ms. Chisholm has been employed at HSA since 1992 in a professional staff position as assistant general manager. 
Ms. Chisholm explained that HSA qualified as a charitable organization under Section 501(c)(3) of the Internal Revenue Code.  As a parent corporation, it operated approximately seven branches providing a variety of goods and services for purchase.  Sales were not limited to the Harvard community, but many of the goods and services would not appeal to the general public.  Through its non-profit branches, HSA provided the following: contract waitstaff and bartenders, holiday and exam baskets, summer-time barbecues, Harvard insignia items, dorm furnishings and class rings, rental of small appliances and computers, distribution of flyers and advertisements door-to-door on campus to Harvard students, linen rental and laundry service, graphic design services, computer software and website design and testing services, and miscellaneous services such as dog walking, tutoring, transcription, and research.  Further, HSA published and distributed to Harvard freshmen, free of charge, the unofficial guide to life at Harvard.  HSA also wholly owned and operated a for-profit subsidiary, "Let's Go," which produced travel guides, and operated an advertising sales division and a retail travel agency.
Mr. Howe testified that employees of HSA must be Harvard degree candidates.  Although students receiving financial aid are given preference in job selection, any Harvard student may obtain employment at HSA.  Ms. Chisholm testified that students did not receive course credit in relation to HSA employment.  Instead, students were paid for their work.  There was no restriction on the manner in which the student could use the money earned, and no deduction was taken for payment of tuition.
Mr. Howe testified that the professional staff of HSA, numbering between five and seven people, provided continuity in administering the program.  Ms. Chisholm testified that the professional staff members were appointed as Harvard officers and were not considered faculty members.  The professional staff was paid by Harvard University and received Harvard University benefits. However, HSA reimbursed Harvard for the costs related to employing the professional staff. 
Mr. Howe stated that once in the 1970s HSA was unable to reimburse Harvard because of cash flow problems, and Harvard University absorbed the debt.  More recently, because of the purchase of the subject property, HSA was in arrears approximately $600,000 in reimbursing the University for its payment of staff salaries.  In order to pay down the arrearage, HSA sought and received a bank line of credit and negotiated favorable repayment terms with the University.  The bank line of credit is guaranteed by the president and fellows of Harvard College.  However, Mr. Howe testified that the guarantee was secured by a second mortgage on the HSA land and buildings and further secured by a conditional assignment to Harvard University of various leases and rights held by HSA.  
Ms. Chisholm testified that HSA was included on Harvard's Centrex phone system and computer network, but received a bill from the College for phone and computer useage. HSA contracted for and carried its own insurance.  HSA used the Harvard name and components of its shield on letterhead with the approval of the College trademark office.  Harvard assisted HSA's fundraising efforts by identifying possible donors from the ranks of former HSA employees and allowing donations to Harvard to be earmarked for HSA.
Mr. Howe testified that HSA used the subject property for both its administrative offices and space for its various student-staffed enterprises.  Prior to the purchase of the subject property, HSA occupied Harvard University owned property, for which HSA compensated Harvard for its use and occupancy.  
HSA asserted that due to its close affiliation with Harvard and its employment of Harvard students, it supported Harvard's "goals" and should be afforded the same charitable and educational status as Harvard University. The Board found that HSA, not Harvard University, owned and occupied the subject property. HSA was the owner of record resulting from the June 19, 1996 conveyance.  Accordingly, the Board declined to ascribe Harvard's charitable and educational purpose to HSA on the mere basis of the alleged close relationship between the two entities or HSA's support of Harvard's goals.  
The Board found that, consonant with its articles of incorporation, HSA's dominant purposes included creating and administering businesses that employ Harvard students.  The Board further found that HSA used and occupied its property to further its dominant purpose.  Although an asserted dominant purpose was to help students with financial need to defray the expense of their education, HSA employed Harvard students regardless of need and did not ensure that the student earnings were used to fund educational expenses. Further, the students did not receive course credit, a course of instruction, or an educational benefit related to HSA employment, aside from the experience of participating in work activity.  Under these facts, HSA did not distinguish itself from any other commercial enterprise that offered the experience of employment to Harvard students.  Therefore, the Board found that HSA's purpose and its occupation of its property to further its purpose was commercial rather than charitable or educational. 
Further, the Board found that only Harvard students and those who purchased HSA's goods and services benefited from the operation of HSA.  The benefit the students received was pecuniary - a paycheck in exchange for labor.  The Board found that the benefits the purchaser received were the goods or services for which they paid.  Therefore, no charitable benefit was afforded to the general public, and the class of beneficiaries was limited. Further, HSA's occupation of its property was for the primary benefit of its members and did not benefit the general public at large.    
On the basis of the foregoing, the Board issued a decision for the appellee for fiscal year 1997 based on lack of jurisdiction and a decision for the appellee for fiscal year 1998.   

OPINION
I.  Jurisdiction
	There is no question that HSA complied with the jurisdictional prerequisites set forth in G.L. c. 59, § 5, clause 3, for filing its appeal to the Board for fiscal year 1998.  It timely filed with the Assessors the "list, statement, and affidavit required by section 29" of chapter 59 (Form 3ABC) and a "true copy of the report required for such year required by section 8F of Chapter Twelve" (Form PC). 
HSA timely filed its application for abatement with the Assessors on October 6, 1997, and timely paid the disputed  tax  on  November 3, 1997.  Further,  HSA  timely
filed an appeal with the Board on January 22, 1998, within three months of the October 29, 1997 denial of its abatement request by the Assessors. 
For fiscal year 1997, however, HSA failed to properly invoke the jurisdiction of the Board.  First, HSA failed to file an application for abatement with the Assessors within thirty days of the Assessors' sending of the bill.  See G.L. c. 59, § 59.  Accordingly, the Board has no jurisdiction under G.L. c. 59, §§ 64 and 65 because there was no "assessors' decision on an application for abatement."  Id.
HSA attempted to invoke the Board's jurisdiction under G.L. c. 59, § 5B, which provides in pertinent part:
Any person of a city or town aggrieved by a determination of the board of assessors as to the eligibility or non-eligibility of a corporation or trust for the exemption granted pursuant to the clause Third of section five may appeal therefrom by filing a petition with the clerk of the appellate tax board in accordance with the provisions of section seven of chapter fifty-eight A within three months of said determination.  As used in this section, the term "person" shall mean the corporation or trust applying for exemption . . . (emphasis added).
 
In order for HSA to appeal under § 5B, there must have been a "determination" by the Assessors regarding HSA's eligibility for a charitable exemption.  In The Trustees of Reservations v. Board of Assessors of the Town of Windsor, 14 Mass. App. Tx. Bd. 22 (1991), this Board ruled that by filing a Form 3ABC, the taxpayer was "applying for an exemption" and the Assessors' issuance of a tax bill after the filing of a Form 3ABC constituted their "determination" regarding that application.  Id. at 29.  Accordingly, the Board held that it had jurisdiction to hear an appeal which a taxpayer brought directly to this Board after the assessors issued a tax bill which taxed property listed as exempt on the taxpayer's Form 3ABC.  Id. at 23.
In the present appeal, HSA did not file a Form 3ABC prior to the issuance of the fiscal year 1997 tax bill.  Accordingly, HSA could not be said to have applied for an exemption at the time the bill was issued, and, therefore, the bill did not constitute a "determination" on the application from which HSA could appeal.  Trustees of Reservations at 28-29, G.L. c. 59, § 5B.  Accordingly, HSA's attempt to characterize the late-filed Form 3ABC as notice to the Assessors of a claim for exemption fails.  The Assessors had no opportunity to act on the proposed claim by way of decision or by way of issuing a tax bill, since  the  tax  bill  had  long  since been issued.  HSA's
filing of its appeal to this Board three days after it filed the Form 3ABC with the Assessors did not properly invoke the Board's jurisdiction under § 5B. 
Since HSA did not apply to the Assessors for an exemption, either by application for abatement or by a timely filed Form 3ABC, the Assessors could not and did not make a determination regarding HSA's claim for charitable exemption.  Thus, HSA was not a "person aggrieved" as contemplated by G.L. c. 59, §§ 5B, 64 or 65.    Accordingly, the Board lacks jurisdiction to adjudicate the substantive claim relating to fiscal year 1997.

II.  Substantive Merits of Charitable Exemption Claim
 Cities and towns are authorized to impose a local tax upon "[a]ll property, rea1 and personal, situated within the Commonwealth, . . . unless expressly exempt. . . ." G.L. c. 59, § 2.  Section 5 of Chapter 59 lists the numerous classes of property which "shall be exempt from taxation . . ." G.L. c. 59, § 5.	 Section 5, Third exempts from taxation all "personal property of a charitable organization . . . and  real estate owned by .  .  . and occupied by it or its officers for the purposes for which it is organized."  Therefore, to qualify for the charitable exemption, the taxpayer must (1) be a charitable organization and (2) occupy the property for its charitable purposes.
Character of Organization, Purpose, and Occupancy
	The Courts have consistently held that the term charitable includes more than almsgiving and assistance to the needy.  Harvard Community Health Plan, Inc. v. Assessors of Cambridge, 384 Mass. 536 (1981).   See also New England Sanitarium v. Stoneham, 205 Mass. 335 (1910); Assessors of Boston v. The Vincent Club, 351 Mass. 10, 12 (1966).  Charity is traditionally defined as a "gift, to be applied consistently with existing laws, 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 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."  Boston Symphony Orchestra v. Board of Assessors of Boston, 294 Mass. 248, 254-55 (1936).  
	Classification as a charitable organization "depends upon the 'language of its charter or articles of association, constitution and by-laws, and upon the object it serves and the method of its administration.'"  Assessors of Boston v. The Vincent Club, 351 Mass. 10, 12 (1966) (quoting Little v. Newburyport, 210 Mass. 414, 415 (1912)).  
HSA asserted that it must be a charitable organization because it possessed federal tax exempt status under I.R.C. § 501(c)(3).  Although an organization's § 501(c)(3) status, organization under G.L. c. 180, or exemption from Commonwealth sales tax status may be factors in determining whether an organization is "charitable" for the purpose of the Massachusetts property tax exemption, it is not dispositive.  See generally H-C Health Services v.Board of Assessors of South Hadley, 42 Mass. App. Ct. 596 (1997).
"An institution will be classed as charitable if the dominant purpose of its work is for the public good and the work done for its members is but the means adopted for this purpose."  Massachusetts Medical Society v. Assessors of Boston, 340 Mass. 327, 332 (1960).  If the dominant purpose of its work is to benefit the members, such organization will not be classified as "charitable" even though the public will derive an incidental benefit.  Id.
	HSA organized and managed businesses where goods and services were provided to purchasers at market prices.  Harvard students staffed the businesses and were paid for their efforts.  There was no administrative control or guarantee that the wages were used for any charitable purpose.  Harvard students comprised a limited class of members who benefited from this organization.  The general public received no benefit except goods or services for which they paid market prices.  There was no showing that any educational purpose was advanced by HSA's activities, other than a generalized assertion that the student workers benefited from their employment experience in a manner no different from innumerable part-time employment opportunities available to college students.  Based on these facts, the Board found that HSA was not a charitable, but rather a commercial, organization. 
Even if the Board were to conclude that HSA was a charitable organization, HSA would have to satisfy the second prong of the test for charitable exemption which requires that the organization demonstrate that it had a charitable purpose and that "it is in fact so conducted that in actual operation it is a public charity" and not a pleasure, recreation or social club or mutual benefit society.  Jacob's Pillow Dance Festival, Inc. v. Assessors of Becket, 320 Mass. 311, 313 (1946) (citing Little v. Newburyport, 210 Mass. 414, 415 (1912)). 
The organization must prove that the property was occupied "directly for the fulfillment of its [the organization's] charitable purposes."  Boston Symphony, 294 Mass. at 255, citing Burr v. Boston, 208 Mass. 537, 543 (1911).  See also Brockton Knights of Columbus v. Assessors of Brockton, 321 Mass. 110, 114 (1946).  Such occupancy means more than that which results from simple ownership and possession.  It "signifies an active appropriation to the immediate uses of the charitable cause for which the owner was organized . . . [t]he nature of the occupation must be such as to contribute immediately to the promotion of the charity and physically to participate in the forwarding of its beneficent object."  Board of Assessors of Boston v. The Vincent Club, 351 Mass at 14, quoting Babcock Leopold Morse Home for Infirm Hebrew & Orphanage, 225 Mass. 418, 421-22 (1917).  Under the analysis below, the Board found that HSA did not possesses an educational or a charitable purpose.  The Board further found that HSA did not occupy the property in furtherance of any educational or charitable purpose.
B.  Educational Purpose and Occupancy
Citing Vincent Club, HSA claimed that it was so closely affiliated with, or controlled by, Harvard that it shared Harvard's educational purpose.  Board of Assessors of Boston v. The Vincent Club, 351 Mass. 10 (1966).  In Vincent Club, the SJC ruled that the Club occupied its property not for commercial purposes, but in furtherance of its own legitimate charitable purpose of "rais[ing] funds in aid of the Vincent Memorial Hospital in Boston, Massachusetts . . ."  Id. at 10 - 11.  The SJC ruled that the Vincent Club's fund-raising activities fulfilled the Club's stated purpose.  The SJC also held that fund-raising can be a legitimate charitable purpose, and was distinguishable from "a money-making organization which distributes earnings or profits to members . . ."  Id. at 13.  The support of the Hospital's goals as a factor in determining whether the Vincent Club operated in a charitable fashion was not discussed because the Vincent Club occupied the property in furtherance of its own legitimate charitable purpose.  Therefore, HSA's reliance on this case to support the assertion that it occupied its real estate to further Harvard's charitable purposes is misplaced. 
In order to fall under the umbrella of Harvard's educational or charitable purpose, Harvard must own HSA. "'Concurrence of ownership of corporate property of the charitable institution and occupancy by it for its corporate purposes is required for an exemption from taxation upon real estate under § 5, Third.'"  Milton Hospital and Convalescent Home v. Board of Assessors of Milton, 360 Mass. 63, 67 (1971) (citing Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 337 (1941)).  See also The Brockton Knights of Columbus Building Ass'n v. Assessors of Brockton, 321 Mass. 110 (1947); Worcester Masonic Charity and Educational Association v. Assessors of Worcester, 326 Mass. 409 (1950).  HSA was not owned by Harvard, but instead maintained a relationship with Harvard.  As close as that relationship may have been, the facts demonstrated that HSA was a separate entity.  Due to the requirements of identity of ownership and occupancy in furtherance of the owners' charitable purpose, the Board found that HSA could not assume Harvard's educational or charitable purpose by demonstrating a mere relationship with Harvard.  Instead, HSA must demonstrate that it concurrently owned and occupied property in fulfillment of its own educational or charitable purpose. 
HSA did not establish that it possessed its own educational purpose.  HSA's articles of organization contained two arguably educational purposes of "study[ing], . . . new business ventures" and "providing experience . . . in the practical management . . . of business affairs."  However, HSA did not provide class credit or instruction by Harvard's or HSA teachers or professors.  In fact, HSA did not have a teaching faculty of any sort.  HSA did not present evidence that students received instruction aside from the limited practical training or supervision required for performance of a particular job, nor did it present evidence that education was its dominant purpose.
The facts of the case at bar are analogous to those of Phi Beta Epsilon Corp. v. City of Boston, 182 Mass. 457 (1903).  In Phi Beta, a fraternity providing housing to its members attempted to claim exemption from property tax based on educational occupancy and use.  The court ruled "the housing and boarding of students is not of itself an educational process any more than the housing or boarding of any other class of human beings.  The nature of the process, so far as respects its educational features, is not determined solely by the character of those who partake of its benefits."  Id. at 459.  The SJC further found that the dominant use of the property was as a dormitory, "and was in no way necessary or convenient for such slight and incidental educational . . . instruction furnished by the plaintiff, and therefore was in no proper sense a part  of  .  .  . such instruction." Id. at 460.  
Like Phi Beta, HSA was not entitled to an education-based exemption simply because Harvard students were its beneficiaries, because it occupied its property to employ Harvard students, or because some incidental educational benefit was furnished by HSA.  If any educational benefit was accorded to HSA's student employees, it was limited and incidental to the primary purpose of providing employment for a paycheck.  The Board found that HSA did not have an educational purpose, nor did HSA use and occupy its property in furtherance of an educational purpose.  Thus, HSA cannot be granted an exemption on this basis.
C.  Charitable Purpose and Occupancy  
The primary charitable purposes set forth in the HSA's Articles of Incorporation include assisting Harvard students in need of financial assistance to defray the cost of their education and creating businesses to employ Harvard students.  The Board found that in actual operation, the organization undermined its asserted "financial assistance" charitable purpose because any Harvard student could work for pay without regard to financial need and there was no guarantee that the pay was used to defray educational expenses.  Thus, there was no operational assurance that the alleged "financial assistance" charitable purpose was being accomplished.  	Furthermore, pursuant to its Articles of Incorporation and its actual operation, HSA occupied the property to create businesses and provide jobs for its student members.  It is settled that the "occupation of real estate by an institution which entitles it to exemption of such real estate is occupation directly for the charitable purposes for which it is incorporated and not occupation for profit even if such profit is used for such charitable purposes."  Assessors of Boston v. Garland School of Home Making, 296 Mass. 378, 391 (1937).  In this case, HSA occupied the property to produce income that might or might not have been used to further the asserted charitable purposes.  Further, HSA demonstrated that its revenue generating activities were primary and not merely incidental to the character of its operation and occupation.  "The 'distinction [between exempt and non-exempt property] is between activities primarily commercial in character carried on to obtain revenue to be used for charitable purposes . . . and activities carried on to accomplish directly the charitable purposes of the corporation, incidentally yielding revenue.'"  Hairenik Ass'n, Inc. v. City of Boston, 313 Mass. 274, 279 (1943) (citing McKay v. Morgan Memorial Co-Operative Industires and Stores, Inc., 272 Mass. 121, 124 (1930)).  The facts demonstrated that the primary objective of HSA's operation and occupation of its premises was that of generating revenue.  Therefore, the Board found that HSA was more akin to a commercial rather than a charitable entity. 
D.  Limited Class of Beneficiaries
The commercial tenor of the occupation, coupled with the fact that the income of the organization was used to pay its student members for their work, accentuated the fact that the organization benefited only its members.  The statute clearly prohibits exemption "to ostensibly charitable organizations if 'any of the income or profits of the business of the charitable organization is divided among the  . . . members (of the corporation) or is used for other than charitable purposes.'"  Harvard Community Health Plan, Inc. v. Assessors of Cambridge, 384 Mass. 536, 541 (1981).  See also G.L. c. 59, § 5, cl. 3(a).  
In this case, student-members of the corporation received the income of the organization's businesses.  As pointed out by the court in HCHP, distribution of the organization's income to its members prohibits classification as a charitable organization and prohibits a charitable exemption.  Id.  See also Hairenik Association, Inc. v. City of Boston, 313 Mass. 274 (1943).  Thus, the Board found that HSA neither possessed a charitable purpose nor occupied its property in furtherance of a charitable purpose, but rather occupied the property for the purpose of developing and managing a commercial enterprise which distributed its income to its member employees.
 To qualify for a charitable exemption, the organization must charitably benefit a large enough class of people.  "[I]f the dominant purpose of [the organization's] work [is] to benefit its members or a limited class of persons, [the organization will not be classed as a charity], even though the public will derive an incidental benefit from such work."  Massachusetts Medical Society v. Assessors of Boston, 340 Mass. 327, 332 (1960) (citing Little v. Newburyport, 210 Mass. 414,417 (1912)).  Pursuant to its by-laws, HSA membership was open to any candidate for a Harvard degree who was employed by HSA for the purpose of financing his or her Harvard education.  The students could retain membership as long as they were employed by HSA.  The students were paid for their work.  Thus, the group of individuals primarily benefited by the organization was limited to its members.  
Further, HSA did not provide a charitable benefit to the general public.  The facts demonstrated that the general public received goods and services for which they paid.  Therefore, because of the limited class who received HSA benefits, the Board found that HSA did not charitably serve a large segment of society.  See New England Legal Foundation v. City of Boston, 423 Mass. 602, 612 (1966). As in the American Institute case, the Board concluded that the property was "maintained for the benefit of a few individuals rather than as a charity for the public."  American Institute for Economic Research, 324 Mass. 509, 513 (1949).  The Board further found that the general public derived no benefit from HSA other than that for which they contracted and paid market price.
It has long been established that "[a] corporation claiming that its property is exempt under § 5, Third, has the burden of proving that it comes within the exemption, and that it is in fact operated as a public charity."  Town  of Norwood v. Norwood Civic Ass'n, 340 Mass. 518, 525 (1960) (citing American Institute for Economic Research v. Assessors of Great Barrington, 324 Mass. 509, 512-514 (1949)).  Under the facts, the Board found and ruled that HSA did not sustain its burden of proving that it qualified for the exemption.
"Exemptions from taxation by statute must be strictly construed."  Children's Hospital v. Boston Board of Assessors, 388 Mass. 832, 838 (1983) (citing Board of Assessors of Wilmington v. Avco Corp., 357 Mass. 704, 706 (1970)).  It is a well established rule that a "party claiming exemption bears a grave burden of proving the claim."  Harvard Community Health Plan v. Assessors of Cambridge, 384 Mass. 536, 543 (1981).  "Any doubt must operate against the one claiming a tax exemption."  Boston Symphony Orchestra, Inc. v. Board of Assessors of the City of Boston, 294 Mass. 248, 257 (1936) (citing Springfield Young Men's Christian Ass'n v. Board of Assessors, 284 Mass. 1, 8 (1933)).

Conclusion
For the foregoing reasons, the Board found that the HSA was not a charitable or educational organization, did not possess a charitable or educational purpose, and did not use and occupy the property in a charitable or educational manner.  Further, the Board found that the membership benefited was comprised of a limited class, and that the general public received no educational or charitable benefit from the operation of the organization. 




Thus, HSA did not meet its burden of proving that the organization was educational or charitable or that the property was dominantly used for educational or charitable purposes.  Accordingly, the Board issued a decision for the Assessors of Cambridge.


					The Appellate Tax Board



				By:______________________________
				    Abigail A. Burns, Chairman





A true copy,


Attest:_______________________
    Clerk of the Board
									
                       
		

 Public charities are required to file annually the Form PC with the Division of Public Charities of the Office of the Attorney General.  The Form PC is a written report containing such "financial and other information as the director [of the division of public charities] may require."  G.L. c. 12, § 8F.
   The Board notes that it would have been impossible for HSA to timely file its Form 3ABC for fiscal year 1997.  For that year, HSA would have had to have filed its Form 3ABC no later than April 1, 1996.  G.L. c.59, § 29.  However, HSA did not purchase the property until June 19, 1996.  Because HSA failed to properly appeal under either G.L. c.59, § 59 or G.L. c. 59, § 5B, the Board need not reach the issue of whether HSA's failure to timely file its Form 3ABC, under the circumstances where it would have been impossible to do so, would have deprived the Board of jurisdiction of the fiscal year 1997 appeal.  See Children's Hospital Medical Center v. Assessors of Boston, 388 Mass. 832 (1983).

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