AMB Fund III v. Bd. of Assessors of Bos.

82 Mass.App.Ct. 1123

978 N.E.2d 591

AMB FUND III

v.BOARD OF ASSESSORS OF BOSTON.

No. 11–P–2141.

Appeals Court of Massachusetts.

November 27, 2012.

OPINION TEXT STARTS HEREBy the Court (GREEN, FECTEAU & MILKEY, JJ.).

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

AMB Fund III (taxpayer) appeals from a decision of the Appellate Tax Board (board) upholding the refusal of the board of assessors of Boston (assessors) to abate local real estate taxes assessed against the taxpayer's leasehold interest in the International Cargo Port (the property), which is owned by the Massachusetts Port Authority (Massport). On appeal, the taxpayer argues that the board erred in concluding that G.L.c. 91 App., § 1–17 (§ 17), which generally exempts from taxation the properties of Massport and the lessees thereof, subjected the property to taxation. As we determine that the board's decision is both reasonable and lawful, we affirm.

The property is located within the Commonwealth Flats, an area of South Boston consisting of former tidal lands which, pursuant to legislative enactment, underwent development for occupation during the Eighteenth and Nineteenth Centuries. From January 22, 2004, through the fiscal years here at issue, ¹ the taxpayer has held a leasehold interest in the ground lease, sub-leasing and using the property in connection with business conducted for profit. The taxpayer sought board review, under formal procedure, of the assessors' denial of its applications to abate real estate taxes assessed to the taxpayer (see note 1, infra ), and asserted exemption from local real estate taxation. The board's decision, entered on April 16, 2010, found that for the purposes of § 17, the property was located within the Commonwealth Flats and leased for business purposes. Furthermore, the board construed “lands of the Authority” to include any properties located within this portion of the Commonwealth Flats, whether originally transferred to or thereafter acquired by Massport, and it ultimately ruled that the property was taxable by the assessors under the “first exception” to § 17. The taxpayer timely appealed.

Taxation of the Commonwealth Flats. The city's authority to tax the Commonwealth Flats was originally authorized in 1904 by St.1904, c. 385, § 1, which provided in relevant part: “The lands of the Commonwealth, situate in that part of the city of Boston called South Boston and known as the Commonwealth Flats, shall, if leased for business purposes, be taxed by the city of Boston to the lessees thereof....” ² Upon codification of the statutes as the General Laws of 1921, the provision was added, in part, to G.L.c. 59, § 5, second.³ See Opinion of the Attorney General, Rep. A.G ., Pub. Doc. No. 12, at 22 (Feb. 8, 1943). “Legislative history discloses the fact that ... it was the legislative intent that the Commonwealth flats at South Boston should, as an exception to the general rule applicable to Commonwealth property, be assessable when leased for business purposes....” Id. at 21.

As an extension of long-established tax principle, when the Legislature created Massport in 1956 ⁴ pursuant to St.1956, c. 465, Massport-owned properties were to enjoy a general freedom from taxation, subject only to two enumerated exceptions, namely, when leased for business purposes, the city maintained taxing authority over (1) “lands of the Authority, except lands acquired by the commonwealth under the provisions of chapter seven hundred and five of the acts of nineteen hundred and fifty-one,⁵ situate in that part of the city called South Boston and constituting a part of the Commonwealth Flats,” (the “first exception”), and (2) “lands acquired by the Authority which were subject to taxation on the assessment date next preceding the acquisition thereof” (the “second exception”). St.1956, c. 465, § 17. Section 17, as originally enacted, embodied the general tax exemption applicable to property of the Commonwealth, contemporaneously reflecting the settled practice that when leased for business purposes, lands within the Commonwealth Flats were indeed taxable.

Recognizing that originally, “the exemption was created largely in part to enable the Authority to put its projects on a sound financial footing,” see St.1977, c. 949, § 1, but, by 1977, Massport had as a result of the exemption “achieved its essential purpose” while adversely affecting Boston and Chelsea, the cities in which its operations were centered, the Legislature substantively amended § 17, levying upon Massport an excise tax for the privilege of further operating its projects in Boston and Chelsea. St.1977, c. 949, §§ 1, 8. By the 1977 amendments, the Legislature narrowed Massport's general exemption from taxation to include an annual excise tax on Massport operations in Boston and Chelsea, in addition to the statute's two original exceptions.⁶ In 1978, the excise tax provisions were removed and language calling for annual payments in lieu of taxes (PILOT) to Boston and Chelsea was added. See St.1978, c. 332, § 3.

Discussion. The taxpayer's central contention is that neither the first nor the second exception to the general exemption provided by § 17 applies to the property. The first exception does not apply, according to the taxpayer, because it connotes both a geographic (lands located within the Commonwealth Flats) and a temporal (lands transferred to Massport at its creation) limitation. The taxpayer contends that the second exception does not apply because the property was acquired after the creation of Massport and the property was not subject to taxation immediately prior to its acquisition. The board disagreed, concluding that the property is within the first exception, and thus does not enjoy the exemption otherwise created by § 17.

The issue is one of statutory construction. “We accord the board's decision great deference and will not disturb its decision ‘if [it] is based on both substantial evidence and a correct application of the law.’ “ AA Transp. Co. v. Commissioner of Rev., 454 Mass. 114, 118 (2009), quoting from Boston Professional Hockey Assn. v. Commissioner of Rev., 443 Mass. 276, 285 (2005). “Notwithstanding this deference, a question of statutory interpretation ‘is a question of law for us to resolve.’ “ AA Transp. Co., supra at 118–119, quoting from Bell Atl. Mobile of Mass. Corp., Ltd., v. Commissioner of Rev., 451 Mass. 280, 283 (2008), S. C., 456 Mass. 728 (2010). “[B]ecause the board is an agency charged with administering the tax law and has ‘expertise in tax matters,’ ... we give weight to its interpretation of tax statutes, ... and will affirm its statutory interpretation if [it] is reasonable.” MASSPCSCO v. Assessors of Woburn, 80 Mass.App.Ct. 398, 402 (2011), quoting from AA Transp. Co., supra at 119.

Furthermore, “[e]xemption 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.” MASSPCSCO, supra at 401–402, quoting from Willowdale LLC v. Assessors of Topsfield, 78 Mass.App.Ct. 767, 769 (2011). Ultimately, the taxpayer bears the “heavy burden,” AA Transp. Co., supra at 121, of “demonstrat[ing] entitlement to the exemption claimed.” Global Cos., LLC v. Commissioner of Rev., 459 Mass. 492, 494 (2011). It is well settled that “[w]here the language of a statute is clear and unambiguous, it is conclusive as to legislative intent.” South St. Nominee Trust v. Assessors of Carlisle, 70 Mass.App.Ct. 853, 856 (2007), quoting from Commonwealth v. Mandell, 61 Mass.App.Ct. 526, 528 (2004). However, where a statute is “susceptible to multiple interpretations, each of which is not wholly unreasonable, but none of which perfectly harmonizes all of the statutory language,” South St. Nominee Trust, supra at 856–857, or where words of a statute may “be regarded as surplusage,” Ropes & Gray LLP v. Jalbert, 454 Mass. 407, 412 (2009), the statute is ambiguous. The taxpayer argues that the statute is ambiguous, requiring resort to legislative history for its construction, because the board's broad construction of the first exception renders the second exception superfluous. That is to say, if the first exception is construed to encompass all “lands of the Authority,” then the second exception, which is limited to after-acquired property subject to taxation immediately prior to its acquisition, adds nothing. However, the argument ignores the geographic constraints of the first exception, limiting its application to lands within the Commonwealth Flats. The board's construction preserves meaning for the second exception, since the second exception applies to land acquired by Massport, wherever located, if such land was subject to taxation before its acquisition.⁷ See 3A Singer & Singer, Statutes and Statutory Construction § 66:9, at 100 (7th ed. 2010) (“If the standard granting an exemption is capable of two interpretations, one granting an exemption and the other denying it, the construction which denies the exemption must be adopted”).⁸

To the extent the taxpayer contends that ambiguity arises from the intended meaning of “a part of the Commonwealth Flats,” as the phrase appears in the first exception, the issue is foreclosed by Boston v. U.N.A. Corp., 11 Mass.App.Ct. 298, 300–301 (1981). Given the plain meaning of the statutory language of § 17, therefore, the relevant inquiry in U.N.A. Corp. turned on geography, not legislative intent. Where “a statute speaks with clarity to an issue[,] judicial inquiry into the statute's meaning, in all but the most extraordinary circumstance, is finished.” Beaupre v. Cliff Smith & Assocs., 50 Mass.App.Ct. 480, 491 (2000), quoting from Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475 (1992). Even if we were to conclude that the statute is ambiguous, we would conclude that the board's interpretation is, for the reasons we have explained, at least reasonable. See AA Transport Co. 454 Mass. at 119 (“[I]...