Willowdale, LLC v. Board of Assessors of the Town of Topsfield (March 15, 2010)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


WILLOWDALE LLC			    v.	  BOARD OF ASSESSORS OF 
							  THE TOWN OF TOPSFIELD


Docket Nos. F288893 (07)    	       Promulgated:
		  F297036 (08)			  March 15, 2010 


	These are appeals filed under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the Board of Assessors of the Town of Topsfield ("appellee") to abate taxes assessed on certain property, located in Topsfield, owned by the Commonwealth of Massachusetts and assessed to Willowdale LLC ("Willowdale" or "appellant") under G.L. c. 59, §§ 2B, for fiscal years 2007 and 2008.
	Commissioner Rose heard these appeals and was joined by Chairman Hammond and Commissioners Scharaffa and Egan in decisions for the appellee.
	These findings of fact and report are promulgated at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.
	Kevin J. Joyce, Esq. for the appellant.

	Richard P. Bowen, Esq. and Jeffrey T. Blake, Esq. for the appellee.


FINDINGS OF FACT AND REPORT
	The issue in the present appeals is whether the Topsfield Board of Assessors ("assessors") properly assessed a real estate tax on certain property owned by the Commonwealth but leased to and operated by a private, for-profit entity.  On the basis of an Agreed Statement of Facts and Briefs submitted by the parties, the Appellate Tax Board ("Board") made the following findings of fact.
In 1994 the Massachusetts State Legislature authorized the Department of Environmental Management ("DEM") to lease all of the twenty-three historic real properties enumerated in § 44 of c. 85 of the Acts of 1994 (as amended by § 50, c. 15 of the Acts of 1996) (collectively the "Enabling Act"), to any person or organization to ensure that the properties are adequately preserved and maintained for the purpose of providing public access to the historic qualities of the properties for present and future generations.  Palmer Mansion, located at 28 Asbury Street in Bradley Palmer State Park, Topsfield ("Palmer Mansion" or "subject property") is a historic property, which is enumerated in the Enabling Act.  Subsequently, the DEM established the historic curator program to further the objectives of the Enabling Act.  
On September 24, 1999, pursuant to the authority of the historic curator program, the Department of Conservation and Recreation ("DCR"), the legal successor in interest to the DEM, and Willowdale entered into a lease agreement for Palmer Mansion.  The lease agreement provides for a term of fifty years with a right to one extension for an additional term of ten years.  The lease agreement limits Willowdale's legal usage of Palmer Mansion to only "reuse and rehabilitation of the structures and grounds."  The lease agreement further provides that Willowdale's use of Palmer Mansion shall be "limited to operation of an inn and/or bed and breakfast, operation of a conference center, rooms for functions and/or classes, gift shop and restaurant."  Willowdale did not dispute that it used Palmer Mansion "in connection with a business conducted for profit" for purpose of the relevant taxing statute at issue, G.L. c. 59, § 2B. 
	Willowdale is required to bear the sole cost for restoring Palmer Mansion in compliance with the historic standards and building plans that have been approved by the Massachusetts Historical Commission and DCR.  However, Willowdale is entitled to a credit toward the rental payments due under the lease equal to the value of improvements, maintenance and management services it provides.  Further, the lease agreement provides that "in the event real estate taxes or property taxes shall be levied on the Premises or any part therefore for any reason, Lessee agrees to pay such taxes when and as due."
From September 24, 1999 to August 28, 2007, Willowdale was in the process of rehabilitating Palmer Mansion.  Accordingly, during the fiscal year 2007 period of July 1, 2006 through June 30, 2007, Willowdale earned no income from the use of the subject property.  Notwithstanding the ongoing renovations, on July 7, 2007, July 12, 2007 and August 25, 2007, Willowdale held wedding events at Palmer Mansion for which it received fees.  
On August 28, 2007, the Commonwealth of Massachusetts issued a Certificate of Use and Occupancy for Palmer Mansion.  Since that time, the appellant has consistently operated Palmer Mansion for use as a bed-and-breakfast style inn with related uses of conferences, special events, functions and educational workshops.  
During fiscal year 2008, Palmer Mansion was the site of numerous weddings and social events.  Fees for use of Palmer Mansion ranged from $3,000 to $6,500 for a typical five-hour wedding, and $2,000 to $3,000 for a three-hour block of time for other social events.  Business and corporate events were priced individually and there was no charge for community events and public tours.  Also, individuals could access other areas of Palmer State Park independently without going through Palmer Mansion.  During the fiscal year 2008 period of July 1, 2007 through June 30, 2008, the appellant received $180,000 in gross revenue from fifteen wedding events held at the Palmer Mansion.
For fiscal years 2007 and 2008, the assessors valued the subject property at $1,406,700 and $1,323,500, respectively.  The assessors assessed taxes at the rate of $11.57 per $1,000 for fiscal year 2007 and $12.02 per $1,000 for fiscal year 2008, resulting in tax assessments of $16,275.52 for fiscal year 2007 and $15,908.47 for fiscal year 2008.  In accordance with G.L. c. 59, § 57C, the appellant timely paid each fiscal year's taxes without incurring interest.  
On January 30, 2007 and January 30, 2008, in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement with the assessors for fiscal years 2007 and 2008, respectively.  The appellant's fiscal year 2007 abatement application was denied on March 2, 2007, and the appellant's fiscal year 2008 abatement application was deemed denied on April 30, 2008.  In accordance with G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, the appellant seasonably appealed these denials by filing Petitions Under Formal Procedure with the Board on May 29, 2007 for fiscal year 2007 and on June 23, 2008 for fiscal year 2008.  On the basis of these facts, the Board found and ruled that it had jurisdiction to hear these appeals.
For the reasons more fully explained in the following Opinion, the Board found that Willowdale was subject to real estate tax under G.L. c. 59, § 2B because the subject property was leased or occupied for other than public purposes and was used in connection with a business conducted for profit and was not used in a manner reasonably necessary to the public purpose of a park.  Accordingly, the Board issued decisions for the appellee in these appeals. 

OPINION
G.L. c. 59, § 2B provides for the taxation of real estate owned or held in trust for the benefit of the Commonwealth or a city or town, if such property is "used in connection with a business conducted for profit or leased or occupied for other than public purposes."  It is undisputed that Palmer Mansion is used in connection with a business conducted for a profit within the meaning of § 2B.  
However, § 2B goes on to provide that, "[t]his section shall not apply to a use, lease or occupancy which is reasonably necessary to the public purpose of a public airport, port facility, Massachusetts Turnpike, transit authority or park, which is available to the use of the general public . . . ." (Emphasis added).  The issue in the present appeals is whether the appellant's use, lease and occupancy of Palmer Mansion is reasonably necessary to the public purpose of a park.
There is "no precise and widely accepted definition of 'park'." Cohen v. City of Lynn, 33 Mass. App. Ct. 271, 278 (1992), In general, 
the term 'park' usually signifies an open or inclosed tract of land set apart for the recreation and enjoyment of the public; or, 'in the general acceptance of the term, a public park is said to be a tract of land, great or small, dedicated and maintained for the purposes of pleasure, exercise, amusement, or ornament; a place to which the public at large may resort to for recreation, air, and light.'  

Salem v. Attorney General, 344 Mass. 626, 630 (1962) (quoting King v. Sheppard, 157 S.W.2d 682, 685 (Tex. Civ. App. 1941) (emphasis added). 
In support of its argument that the subject property was exempt from taxation, the appellant cited MCC Management Group, Inc. v. Assessors of New Bedford, Mass. ATB Findings of Fact and Reports 2000-886.  In MCC Management, the Board found and ruled that a skating rink, which was located on state-owned land and leased to a for-profit corporation, was a "park" within the meaning of G.L. c. 59, § 2B.  MCC Management, Mass. ATB Findings of Fact and Reports at 2000-902. 
In MCC Management, the Board found that the Legislature authorized the DEM to appropriate funding for the construction and development of skating rinks which were to be held and administered in accordance with G.L. c. 132A, § 2A as a state park.  MCC Management, Mass. ATB Findings of Fact and Reports at 2000-896, 897.  Accordingly, the Board found and ruled that the "Massachusetts Legislature intended to include ice skating rinks under the rubric of public parks."  Id.  Furthermore, the Board found and ruled that the term "'park' . . . must be defined broadly so as to include a wide variety of recreational activities with respect to land," which "may include indoor recreational facilities" such as, swimming  pools, bathhouses, concession stands,  and winter  sports  facilities, among others. MCC Management, Mass. ATB Findings of Fact and Reports at 2000-900, 901 (citations omitted).  Ultimately, a "park" is a "pleasure ground set apart for recreation of the public, to promote its health and enjoyment."  Id. (quoting Rivet v. Burdick, 6 N.Y.S.2d 79, 83 (1938)).
The present appeals, however, are distinguishable from MCC Management.  First, the Enabling Act does not provide that the subject property is to be held and administered as a state park pursuant to the provisions of G.L. c. 132A, § 2A.  Furthermore, Palmer Mansion is leased and occupied by Willowdale to be operated as a bed-and-breakfast style inn with related uses of conferences, special events, functions and educational workshops.  It is not occupied or operated for any recreational uses.  Accordingly, although Palmer Mansion is located within the Palmer State Park, the Board found that the Palmer Mansion is not itself a park under the meaning of G.L. c. 59, § 2B.  
Further, the Board found that the use of Palmer Mansion is not "reasonably necessary to the public purpose of the park."  Pursuant to the lease entered into by Willowdale and DCR, the subject property may be used for the "operation of an inn and/or bed and breakfast, operation of a conference center, rooms for functions and/or classes, gift shop and restaurant."  For each of these uses Willowdale charges a fee which ranges from $3,300-$6,500 for a five-hour block of time and $2,000-$3,000 for a three-hour block of time.  Moreover, the Board found that individuals were able to access and use other areas of Palmer State Park without the involvement of Willowdale and its operations at Palmer Mansion.  Accordingly, the appellant's use, lease and occupancy of the Palmer Mansion is not reasonably necessary to the public purpose of Palmer State Park.  
"Property owned by a municipality may serve a public purpose even though it is managed or operated by a private, for-profit entity, and even though the private entity charges admission to the facility."  MCC Management, Mass. ATB Findings of Fact and Reports at 2000-903 (citing Miller v. Commissioner of the Department of Environmental Management, 23 Mass. App. Ct. 968, 969-70 (1987).  In Miller, the Commonwealth entered into a "limited exclusive use permit" with a private for-profit entity, Snowmass, to "operate a cross country skiing program in the State forest."  Miller, 23 Mass. App. Ct. at 968-969.  The Appeals Court found that the "aim is clearly to enhance the use of the trails in the State forest for a legislatively approved recreational purpose" and that a "private entity experienced in making artificial snow and managing cross country skiing facilities is an appropriate party to operate such a facility."  Miller, 23 Mass. App. Ct. at 969-970.  
Similarly, in MCC Management, the Board found that the ice skating rink "served the public for recreational purposes."  MCC Management, Mass. ATB Findings of Fact and Reports at 2000-903.  Relying on the court's decision in Miller, the Board found that MCC's management of the ice skating rink was "necessary to achieve the public purpose of the state-owned property, because MCC was experienced in the operation and management of an ice skating rink.  This experience enabled DEM to maintain the Hetland Arena as a state park."  MCC Management, Mass. ATB Findings of Fact and Reports at 2000-904.  
The present appeals, however, are distinguishable from both Miller and MCC Management.  In the present appeals, the appellant has been granted a lease to operate a bed-and-breakfast style inn and conference center which are not recreational activities for the "'amusement, pleasure, and entertainment'" of the general public.  See MCC Management, Mass. ATB Findings of Fact and Reports 2000-904 (quoting In re Spectrum Arena, Inc., 330 F.Supp. 125, 127 (E.D. Pa. 1971)).  Therefore, the Board found that while the subject property is located within a State Park, appellant's occupancy and use of the subject property was not reasonably necessary to the public purpose of Palmer State Park.
It is well settled that the burden of proof is on the party seeking an abatement. "'The burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax.'" Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)). Further, an even greater burden rests on a party claiming an exemption from taxation. "'Exemption 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.'" New England Legal Foundation v. City of Boston, 423 Mass. 602, 609 (1996) (quoting Massachusetts Medical Soc'y v. Assessors of Boston, 340 Mass. 327, 331 (1960).       

Accordingly, the Board found and ruled that the Willowdale was subject to real estate tax under G.L. c. 59, § 2B because the subject property was leased or occupied for other than public purposes and was used in connection with a business conducted for profit and was not used in a manner reasonably necessary to the public purpose of a park and, therefore, decided these appeals for the appellee.


 				  THE APPELLATE TAX BOARD

				By: ___________________________________
					Thomas W. Hammond, Jr., Chairman





A true copy,


Attest:	____________________________
		    Clerk of the Board

					
			

 Docket Numbers F297036 (Fiscal Year 2008) and F288893 (Fiscal Year 2007) are appeals of the assessment of the same property and were tried together at the Board.  However, due to a clerical error, the Board's decision in F288893 was not issued together with its decision in F297036.  Therefore, the Board's decision in F288893 is issued simultaneously with these Findings.

ATB 2010-239