Wing's Neck Conservation Foundation, Inc. v. Board of Assessors of the Town of Bourne (July 8, 2003)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


WING'S NECK CONSERVATION		v.	BOARD OF ASSESSORS OF
FOUNDATION, INC.				THE TOWN OF BOURNE


Docket Nos. F262914, F262915		Promulgated:
            F262916				July 8, 2003



	These are appeals filed 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 located in the Town of Bourne assessed under G.L. c. 59, §§ 11 and 38 for fiscal year 2002.
	Commissioner Rose heard these appeals and was joined in the decision for the appellee by Chairman Burns and Commissioners Scharaffa, Gorton and Egan.
	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.

	Walter G. Van Dorn, Esq. and Anne P. Hristov, Esq., for the appellant.

	Donna Barakauskas, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT
Wings Neck is a 400-acre peninsula, which extends into Buzzards Bay at the western entrance to the Cape Cod Canal.  Wings Neck Trust ("the Trust") was formed in 1902 for the purpose of acquiring approximately 350 acres of land on Wings Neck.  Although most of the land was later sold to individual homeowners, approximately 70 acres are still owned by the Trust in "Conservation Restriction."  In addition, the Trust has improved a 1.65-acre parcel with two tennis courts.  Only Wings Neck landowners who belong to the Wings Neck Trust Association, a group of landowners who pay an annual assessment to the Trust for use of Trust lands, are permitted access onto the Trust lands that are clearly marked "Private Property."
Mr. Nicholas Baker, who testified on behalf of the Foundation, and his wife Joan ("the Bakers") established the Foundation on August 11, 1998.  Under the Foundation By-Laws, its membership is limited to five members.  The Bakers were the only original members.  Until Joan's death in June of 2000, the Bakers were also the only officers of the Foundation and members of the three-member board of directors.  Pursuant to its Articles of Organization, the Foundation was formed to "promote and carry out charitable, educational and scientific purposes, including, (i) the acquisition and preservation of environmentally or ecologically significant land for open-space conservation purposes."  According to Mr. Baker, the Foundation's goal is "protecting wildlife habitat" on Wings Neck.
	On January 1, 2001, the Foundation was the assessed owner of three parcels of real estate located at 173 and 187 South Road, and 335 Wings Neck Road, on Wings Neck ("the subject properties").  On January 14, 2002, the Foundation timely filed three applications for abatement with the Board of Assessors of the Town of Bourne ("the assessors"), which were denied on April 8, 2002.  Subsequently, on April 16, 2002, the Foundation timely filed its appeals with the Appellate Tax Board ("the Board").  On the basis of these facts, the Board found that it had jurisdiction over the subject appeals.
	The first of the three parcels at issue in these appeals is a 2.6-acre parcel of vacant land located at 335 Wings Neck Road.  The Foundation purchased the parcel on March 10, 1999 for $250,000.  Members of the Hardon family had owned the land for many years, and also own the adjacent property, which is improved with a residence.  The Hardons wished to dispose of the 2.6-acre parcel but did not want additional development on Wings Neck.  The parcel is surrounded by privately owned lands, which are improved with residences.  
The second parcel at issue is a 2.0-acre parcel of vacant land located at 173 South Road.  The Foundation purchased this parcel in May of 1999 for $1,000,000.  According to the Foundation's August 1999 newsletter, this particular parcel was carved out of a larger 7.06-acre parcel owned by the Lombard family.  The Foundation purchased the 2.0-acre parcel from the Lombards, who, at the same time, sold the remaining 5.06 acres to a third party, Eric Schwarz.  The property purchased by Mr. Schwarz is improved with a residence, a garage and a tennis court. Members of Mr. Schwarz's extended family own the properties adjacent to the parcels sold by the Lombards.
In its newsletter, the Foundation suggested that its purchase of this parcel "effectively prohibits further development of the original 7.0-acre lot."  A diagram attached to the August 1999 newsletter indicates that the parcel had been improved with a driveway, which is the only access from South Road to the Schwarz property.  As part of the sale transaction, the Foundation gave a right-of-way easement to the Schwarz family for continued use of the driveway.
The third parcel at issue is a 2.0-acre parcel of vacant land located at 187 South Road, which the Foundation purchased on June 6, 2000 for $300,000.  This lot was also carved out of a larger 6.4-acre lot owned by the Lombards.  The Lombards retained ownership of the remaining 4.4 acres.  As evidenced by the Foundation's June 2000 newsletter and accompanying diagram, the Lombards intended to build a driveway "splitting-off" from the existing driveway located on the Foundation's property at 173 South Road.
In its first year of existence, the Foundation reported contributions totaling $1,316,856, of which the Bakers themselves contributed approximately eighty-seven percent, $1,142,986.  In its second and third year, the Foundation's contributions decreased significantly.  During these years, a majority of the donations came from members of the Baker family and other Wings Neck landowners.  
In support of its contention that the subject properties were purchased in furtherance of the Foundation's charitable purpose to acquire and preserve environmentally and ecologically sensitive land, the Foundation offered the report and testimony of Donald Schall.  Mr. Schall holds a Bachelor degree in biology and a Masters degree in forest ecology.  Mr. Schall described Wings Neck as a predominantly forest habitat, which includes native trees and shrubbery, some rare plant species, and various wildlife species.
In his report, Mr. Schall noted the existence of many species of large and small mammals, including white-tailed deer, gray squirrel, Eastern chipmunk, and white-footed mouse.  He also reported the existence of an Eastern box turtle, a "Special Concern species." He explained the importance of maintaining the forest as it functions as a breading area for birds and mammals, as well as a wildlife food source and shelter.  Ultimately, he concluded that a landscape management plan should be implemented to monitor invasive, non-native plants that present a potential threat to the native plant communities. 
The Foundation also offered the testimony of Stephen Johnson, an environmental consultant.  Mr. Johnson echoed the sentiments of Mr. Schall that, if left in their natural, undisturbed state, the Foundation's properties are well suited to protect the existing populations of native and threatened plant and animal species.  He also noted the importance of protecting the properties from residential development and from undue pressure from public access.  He explained that, given the small size of the Foundation properties, it would be "very unusual that there would be formal public access provided."  He suggested that a hike across two acres would not be a very strenuous walk yet, the same two acres could provide a critical habitat.  He opined that opening up properties such as these would not only bring increased human traffic, which may be more than the small parcels can sustain and still serve to protect the habitat, but it would also bring increased domestic animals which would negatively affect the habitat.  He concluded that the properties, left in their undeveloped state, help to protect the native species located on Wings Neck.  
Based on the evidence presented, the Board made the following findings of fact.  Wings Neck peninsula is a 400-acre tract of land located at the mouth of the Cape Cod Canal.  The majority of properties are owned by individuals and are improved with residences.  Although the main roads on Wings Neck are open to the public, they lead only to privately owned properties on Wings Neck.  There are no public parking or other public areas on Wings Neck.  Consequently, for all practical purposes, only residents and their guests go to Wings Neck.  Although the Wings Neck Trust owns a large portion of land, its properties are open only to members of its association, comprised of existing Wings Neck landowners who pay an association fee, and their guests.  Similarly, the Foundation's properties, which are at issue in these appeals are also closed to the general public.  As a result, there are no "public" lands for non-residents to visit.   
The Foundation argued that to allow public access to the subject properties would negatively "affect the delicate environment" thereby contravening its charitable purpose.  The Foundation suggested that it acquired the subject properties "to prevent development and intrusion that would perpetually affect the delicate environment."  
The Board found that although the conservation of open-space for the benefit of the general public is a most laudable goal, in the present appeals the Foundation failed to prove that it was in actual operation a charitable organization.  The Board found that the appellant's acquisition of the subject properties was primarily for the benefit of a limited class of beneficiaries, the Bakers themselves and existing Wings Neck landowners, and that the benefit to the public, if any, was merely incidental.  
The Board also found that the Foundation allowed use of its properties by adjacent landowners.  For example, as part of the sale transaction for 173 South Road, the Foundation granted a right-of-way easement for continued use of an existing driveway, which traverses the Foundation's property.  Also, the Foundation indicated that it would allow the owners of 181 South Road to construct a split-off from the existing driveway on Foundation property.  Accordingly, the building of this additional driveway would result in the type of increased pedestrian and vehicle traffic over the Foundation's property, which the appellant's experts testified would be detrimental to the delicate environment of Wings Neck.  
Accordingly, the Board found that the benefit to the general public through the conservation of open-space was only incidental and that the primary benefit was to the residents of Wings Neck.  Accordingly, the Board issued a Decision for the appellee.

OPINION
	All property, real and personal, situated within the Commonwealth is subject to local property tax, unless expressly exempt.  G.L. c. 59, § 2.  G.L. c. 59, § 5 lists those classes of property which are exempt from property tax.  Specifically, § 5, Clause Third, exempts from taxation all "personal property of a charitable organization, . . . and real estate owned . . . and occupied by it or its officers for the purposes for which it is organized . . . ."  G.L. c. 59, § 5(Third).
	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 Association, 40 Mass. 518, 525 (1960)(citing American Institute for Economic Research, 324 Mass. 509, 512-514 (1949)).  The "party claiming exemption bears a grave burden of proving the claim."  Harvard Community Health Plan, Inc. v. Assessors of Boston, 384 Mass. 536, 543 (1981).  See also Meadowbrooke Day Care Center, Inc. v. Assessors of Lowell, 374 Mass. 509, 513 (1978); Boston Lodge Order of Elks v. Boston, 217 Mass. 176, 177 (1914).  "Any doubt must operate against the one claiming a tax exemption."  Boston Symphony Orchestra, 294 Mass. 248, 257 (1936) (citing Springfield Young Men's Christian Association v. Board of Assessors, 284 Mass. 1, 5 (1933)). 
	Statutory exemptions from taxation must be strictly construed.  Children's Hospital Medical Center v. Boston Board of Assessors, 388 Mass. 832, 838 (1983)(citing Assessors of Wilmington v. Avco Corporation, 357 Mass. 704, 706 (1970)).  "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."  Boston Chamber of Commerce, 315 Mass. 712, 716 (1943).
	A charitable organization which owns and occupies real estate is "'not entitled to tax exemption if the property is occupied by it for a purpose other than that for which it is organized.'"  Lynn Hospital v. Board of Assessors of Lynn, 383 Mass. 14, 18 (1981)(quoting Milton Hospital & Convalescent Home v. Assessors of Milton, 360 Mass. 63, 69 (1971)).  Therefore, to qualify for the charitable exemption the taxpayer must (1) be a charitable organization and (2) occupy the property for its charitable purpose.
	A qualified "charitable organization" may include literary, charitable, benevolent or scientific institutions and temperance societies.  G.L. c. 59, § 5, Third.  The Supreme Judicial Court has consistently held that "the term 'charitable' includes more than almsgiving and assistance to the needy."  Harvard Community Health Plan v. Assessors of Cambridge, 384 Mass. at 543.  See also Assessors of Boston v. The Vincent Club, 351 Mass. 10, 12 (1966); New England Sanitarium v. Stoneham, 205 Mass. 335, 342 (1910).  A traditionally accepted definition of a charity is that it is 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 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.

Boston Symphony Orchestra, 294 Mass. at 254-255 (emphasis added).
	Ultimately, an organization's classification as a charitable organization "depends upon 'the language of its charter or articles of association, constitution and by-laws, and upon the objects which it serves and the method of its administration.'"  The Vincent Club, 351 Mass. at 12 (quoting Little v. Newburyport, 210 Mass. 414, 415 (1912)).
	Stated charitable purposes, as specified in the association or corporation's organizational documents, however, will not by themselves suffice to establish the property tax exemption.  The appellant must prove that "it is in fact so conducted that in actual operation it is a public charity," not a mere pleasure, recreational or social club or mutual benefit society.  Jacob's Pillow Dance Festival, Inc. v. Assessors of Becket, 320 Mass. 311, 313 (1946)(citing Little, 210 Mass. at 415).
	"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, however, 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.  See also American Institute for Economic Research, 324 Mass. at 513; Boston Chamber of Commerce, 315 Mass. at 716-717; Newton Centre Woman's Club, Inc. v. Newton, 258 Mass. 326 (1927); Little, 210 Mass. at 417.  "The umbrella for charitable organizations is broad, but not limitless . . . .  The test for charitable nature is whether the organization works for the good of society."  New England Legal Foundation v. City of Boston, 423 Mass. 602, 610 (1996).
Even where an organization's activities are of a noble cause, such as the preservation of open space, where the primary benefits inure to a limited class of private individuals, the organization will not qualify as charitable.  In Massachusetts Medical Society, the court found the taxpayer's activities, "aimed at improving the knowledge and skills of the medical profession," to be "most laudable."  340 Mass. at 333.  The court concluded, however, that although the public will derive a benefit from a more enlightened medical profession, "this indirect benefit is not sufficient to bring the society within the class traditionally recognized as charities."  Id.  In Boston Chamber of Commerce, the court also found the organization's activities to be "highly commendable and of great public benefit."  315 Mass. at 718.  Nevertheless, the Court held that "since the primary benefit would accrue to the business community rather than to the public it was not entitled to an exemption."  Id. 
In the present appeal, the Board found and ruled that although the conservation of ecologically and environmentally significant lands and wildlife is a commendable activity, the Foundation failed to establish that it was in actual operation a charitable organization.  Although the general public may derive an incidental benefit from the preservation of rare species of plants and wildlife, the Foundation's primary purpose was in fact to benefit a limited class of individuals, the Bakers themselves and existing Wings Neck landowners.  The Board found and ruled that any benefit to the public was merely incidental.  
	Moreover, the absence of public access to land has consistently proven fatal to a landowner's claim of charitable exemption.  See, e.g., Animal Rescue League v. Assessors of Pembroke, 2000 Mass. ATB Adv. Sh. 96, aff'd 54 Mass. App. Ct. Rep. 1113 (although leaving property in its natural state was beneficial to animals and therefore in furtherance of owner's charitable purpose, exemption denied where there were no trails for hiking or recreation, the public was not invited to use the land, and "no trespassing" signs were posted on land); Nature Preserve, Inc. v. Assessors of Pembroke, 2000 Mass. ATB Adv. Sh. 796 (maintenance of "nature trails" on land preserved in its natural state did not justify exemption where access limited to appellant's members); Marshfield Rod & Gun Club v. Assessors of Marshfield, 1998 Mass. ATB Adv. Sh. 1130 (charitable exemption denied where only members and their guests could access majority of property).  Similarly, in the present appeals, the Board found that the appellant's properties were not open to the general public and that only residents of Wing's Neck and their guests had access to the parcels.


Accordingly, the Board found and ruled that the Foundation failed to meet its burden of proving that it was a charitable organization and that the subject property was used in furtherance of charitable purposes.  The Board, therefore, issued a Decision for the appellee.

						APPELLATE TAX BOARD

					BY:						
					    Abigail A. Burns, Chairman


A true copy,



Attest:					
Clerk of the Board

ATB 2003-344