MCC Management Group, Inc. v. Board of Assessors of the City of New Bedford (November 2, 2000)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD

MCC MANAGEMENT GROUP, INC.	v.    BOARD OF ASSESSORS OF
						   	 THE CITY OF NEW BEDFORD

Docket No. F238975			 	Promulgated: 
							November 2, 2000 


	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 assessed on certain property, located in the City of New Bedford, owned by the Commonwealth of Massachusetts and assessed to the appellant under G.L. c. 59, §  2B, for fiscal year 1996.  
	Then-Chairman Gurge heard the appeal and was joined in the decision for the appellant by Chairman Burns, Commissioners Scharaffa and Gorton and then-Commissioner  Lomans.
	These findings of fact and report are made at the request of the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

	Roberta F. Sawyer, Esq. for the appellant.
	Burton Peltz, Esq. for the appellee.



FINDINGS OF FACT AND REPORT
The issue in this appeal is whether the assessors for the City of New Bedford ("the assessors") properly assessed a real estate tax for fiscal year 1996 on certain property owned by the Commonwealth but operated and managed by a private, for-profit entity.  On the basis of a Statement of Agreed Facts, a Supplemental Statement of Agreed Facts and testimony and exhibits introduced at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.
On January 1, 1995, the Commonwealth of Massachusetts, Department of Environmental Management ("DEM"), Division of Forests and Parks, was the owner of a parcel of real estate with improvements in New Bedford, classified as "commercial" by the City.  The appellant operated an ice skating rink, the Stephen Hetland Memorial Skating Rink ("Hetland Arena"), located on the subject parcel of real estate.  On or about June 15, 1996, the assessors valued the property at $799,600.00 and assessed $21,989.00 in real estate taxes against the appellant as a result of its operation of the Hetland Arena.  The appellant timely paid the assessed real estate taxes.  On July 11, 1996, the appellant seasonably filed an application for abatement with the assessors.  August 6, 1996, the assessors denied the appellant's application for abatement.  The appellant then filed its appeal with this Board on August 19, 1996.  On the basis of the foregoing, the Board found it had jurisdiction to hear this appeal.
The parcel of land at issue in this appeal consists of the Hetland Arena and the real property on which it is situated.  This property is owned by the Commonwealth.  The land is approximately 4.64 acres, which consists of 31,656 square feet of building and 21,000 square feet of paving.  The paved areas are used for parking, fund-raising car washes and equipment sales and swaps for youth hockey programs.  The remaining approximately 149,462 square feet of land consists of grassed areas at the back and side of the building, which contain picnic tables maintained for use by parents and friends of the rink's patrons, as well as by the general public.  In addition, youth hockey and high school hockey groups use the lawn area for "dry-land training and conditioning" to supplement their on-ice practices.
The Hetland Arena and surrounding land are under the oversight and control of DEM, specifically its Division of Forests and Parks.  Pursuant to Chapter 726 of the Acts of 1976, the Massachusetts Legislature authorized DEM to expend sums of money to develop, among other facilities, skating rinks outside the metropolitan parks district.  In addition, the Commonwealth has entered into an agreement with the United States Department of the Interior and thereby receives funds relating to energy conservation modifications to the Hetland Arena pursuant to the Land and Water Conservation Fund Act of 1965.
The City of New Bedford conveyed the real property on which the Hetland Arena is located and the surrounding area to the Commonwealth in 1976.  The City of New Bedford's City Council authorized the conveyance on March 25, 1971 "in consideration of the Department of Natural Resources completing a skating rink and holding and administering that facility as a State Recreational Area for the benefit of the general public." The Hetland Arena is listed on the government publication "Massachusetts Forests and Parks" under the heading "State Skating Rinks and Swimming Pools," and DEM's Regional Forest and Parks offices continue to incorporate rink attendance into their compilation of regional park attendance.  
DEM operated the rink until 1992, at which time DEM  entered  into  a  contract  for  the management of the 
Hetland Arena with appellant MCC Management Group, Inc. ("MCC"), doing business as Southeastern Mass Arena.  MCC is a private, for-profit corporation formed under the laws of the Commonwealth.  MCC operated the Hetland Arena under a Concession Agreement ("the Agreement") which covered the period from December 1, 1992 until June 1, 1996.  By its terms, the Agreement was to terminate on November 30, 1995, but the parties extended it to June 1, 1996.  The Agreement was executed by the Director of the Division of Forests and Parks and by the Commissioner of DEM.  For the period June 1, 1996 to May 31, 2001, the Hetland Arena will be operated under a Management and Operations Permit ("the Permit") executed on behalf of the Commonwealth by the Director of the Division of Forests and Parks and the Commissioner of DEM.  Under both the Agreement and the Permit, "the premises will be occupied and used for the purpose of operating a public rink program for the citizens of the Commonwealth."  Prior to its private management by MCC, the Hetland Arena was open to the public six months a year.  Under the current management, it is open virtually year round. 
Pursuant to the Agreement and Permit, the amount MCC may charge individuals and groups for ice time is capped by DEM, and MCC must pay the Commonwealth a percentage of all gross revenues (eight percent under the Permit) and must make monthly payments for the costs of energy improvements which the Commonwealth mandated be made by Northeast Energy Savings Company, Inc.  Moreover, under the Permit, DEM has the right to inspect the premises at any time and maintains a set of keys for that purpose.  A manager from the Regional Parks Office of DEM's Division of Forests and Parks performs an in-depth inspection of the facility on a monthly basis to ensure that the facility is being operated to DEM's specifications.  MCC is given a written report of each inspection and instructed to make any changes necessary to comply with DEM standards.  On a quarterly basis, a "meeting/facility" tour is held at the rink with a representative of DEM's Forest and Parks Director and MCC management to review programming, facility conditions, management issues and plan for capital repairs and improvements.  DEM sets forth operational procedures and controls to be followed by MCC, controls alterations of the physical plant or surrounding landscape, and controls any advertisements on the outside of the building.  In addition, an annual public meeting is held every May with a representative of DEM's Forest and Parks Director, MCC management and the rink users to discuss ice scheduling, facility conditions and all operational issues.  DEM also has priority use of the Hetland Arena meeting room every Monday through Friday from eight in the morning until five in the evening, and every Thursday evening from six until ten, free of charge.  DEM also retains the right to use the facilities during any period when the rink is not in use, free of charge. 
Past and current agreements between the Commonwealth and MCC specifically provide that the premises must be occupied and used "for the purposes of operating a public rink program for the citizens of the Commonwealth."  Under the Permit, MCC must make the rink available for a certain number of hours each day for designated ice use.  The vast majority of users of the Arena are either non-profit youth programs, such as Hetland Youth Hockey, Bay State Warriors Girls Hockey, Skating Club of Southern New England and the Monarchs Hockey, or municipal groups, such as New Bedford High School, New Bedford Vocational High School, Dartmouth High School, Old Rochester Regional High School, Bishop Stang High School and the University of Massachusetts at Dartmouth.  MCC is also required to provide DEM on a monthly basis with an in-depth report on the operation of the facility.  This monthly report contains a narrative of the rink operation, detailed listing of revenue from all sources, attendance statistics, operating expenses, facility repairs and improvements, copies of ice schedules, and all programming and marketing information.     
Under the terms of the Agreement and the Permit, MCC is required to operate the facility as a "public program" and therefore is required to comply with all rules and regulations that are applicable to agencies of federal, state and local governments in the operation of such a facility, including Massachusetts Forest and Parks Policy Directive #208.  Furthermore, as part of its 1996 bid, incorporated into its Permit, MCC estimated that it would invest more than $20,000.00 over a five-year period into the community in connection with programs available at the Hetland Arena, including but not limited to discounted skating programs, scholarships, fundraising activities and free skating admissions at all times to senior citizens.
Pursuant to the terms of the Agreement and the Permit, MCC also participates in a Community Investment Program which requires it to contribute portions of its revenues to fund various public programs and work with nonprofit charitable organizations to raise money for various charitable causes.  These include a fund-raising program called "Pack the Place" through which a non-profit youth program, such as a skating group, hockey team or school club, can sponsor a public skating session to raise money for its group or program.  The youth program receives all gate receipts above the cost of hosting the event.  If the group does not generate sufficient receipts from its event to cover the cost, MCC donates twenty-five percent of gate receipts to the group or program.  Other programs include a scholarship program called "Dollars for Scholars" and the MCC's Great Skate Program which provides free public skating or reserved ice time for official school groups; day care center programs at no cost; free weekday public skating for non-profit civic groups such as the YMCA, Boy and Girl Scouts and church groups, along with minimal fee ($25) charges for the entire group during weekends; a Student/Member Reward and Incentive Program, which makes free skating passes available as awards to members who achieve or excel; and a Car Wash Fundraisers program, which enables a group to hold a car wash fundraiser at the Hetland Arena to benefit its group.  
In a letter dated January 3, 1997, then-Deputy Commissioner Frederick Laskey of the Department of Revenue ("DOR") acknowledged to DEM's Chief of Staff, Susan Frechette, that DEM "ha[d] presented a number of very valid arguments concerning why [G.L. c. 59] Section 2B should not be read to impose property tax liability on the management companies operating the skating rinks."  According to Mr. Laskey, factors supporting MCC's arguments, which the Board found to be true on the present record, include:
. . . that the Concession Agreements entered into with the management companies provide [DEM] with such close operation and control that, in essence, [DEM] continues to operate the rinks.  Among other things, [DEM] sets the minimum operating season and hours of operation, establishes the ice rental schedules and restricts the types of special events that may be held at the rink.  Moreover, [DEM] has the authority to inspect the premises at any time and maintains a set of keys for that purpose.  [DEM] also retains the right to use the rink without charge during any period of non-use.  In addition, the management company's profit, if any, is equivalent to a fee paid by [DEM] to maintain the rinks.  All of this is in keeping with [DEM's] statutory mandate, under c. 726 of the Acts of 1970, to improve, maintain and operate public skating rinks throughout the commonwealth.

	In the light of these Findings and for the reasons stated in the Opinion which follows, the Board found that MCC was not subject to real estate tax under G.L. c. 59, § 2B because the property was owned by the Commonwealth and used in a manner reasonably necessary for the public purpose of a park.  Accordingly, the Board issued a decision for the appellant in this appeal and granted an abatement of tax in the amount of $21,989.00.

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."  However, § 2B goes on to provide that:
This 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 this appeal was whether MCC's management of the Hetland Arena was a use or occupancy which was reasonably necessary to the public purpose of a park available for the use of the general public.

Is the Hetland Arena a "park" within the meaning of G.L. c. 59, § 2B?

The first question for the Board was whether the Hetland Arena is a "park" within the meaning of the statute. The Massachusetts Legislature intended to include ice skating rinks under the rubric of public parks.  Chapter 726 of the Acts of 1970 in § 1 "authorized and directed" DEM to appropriate funding "for projects for the construction and development, redevelopment and improvement of . . . skating rinks."  Section 2 of this Act further provides "that all such facilities shall, upon completion, be held and administered by the department under the provisions of chapter one hundred and thirty-two A of the General Laws."  G.L. c. 132A, § 2A, authorizes and directs the Commissioner of DEM to establish programs of "state parks, state forest recreation areas and state reservations. . . ."  Clearly, an ice skating rink would not be a state forest recreation area, nor a state reservation; therefore, the Legislature must have intended for the Commissioner of DEM to establish and maintain ice skating rinks as "state parks."  DEM's classification of the Hetland Arena as a state park, and DEM's listing of the Hetland Arena in a government publication entitled "Massachusetts Forests and Parks," is consistent with the legislative intent to treat skating rinks like the subject property as "parks."   
Because the term "park" is not defined in § 2B, the Board also looked to common law.  The Supreme Judicial Court of Massachusetts regards the term "park" as "comprehensive and generic" and, depending upon the particular "connection" in which the term is used, it may include "playgrounds."  General Outdoor Advertising v. Dept. of Pub. Works, 289 Mass. 149, 194 (1935), appeal dismissed, sub nom General Outdoor Advertising v. Hoar, 297 U.S. 725 and Brink v. Callahan, 297 U.S. 725 (1936).  The Supreme Judicial Court has also noted that land contained indoors may constitute a park: "as used in modern and present times in America, 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 ..."   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); see also Cohen v. City of Lynn, 33 Mass.App.Ct. 271, 278 (1992), rehr'g denied, 413 Mass. 1107 (1993)("While we find no precise and widely accepted definition of 'park' or 'park purposes,' we believe the expansive view expressed by the park commissioners to be in accord with the general definition of the authorities").
	The assessors cited Dunphy v. Commonwealth, 368 Mass. 376 (1975), as authority for the proposition that an artificial skating rink is not a park.  However, the assessors' reliance on Dunphy for that proposition is misplaced.  First, the Supreme Judicial Court did not make a specific determination as to whether the rink was a park. The plaintiffs sought a declaration that the cutting of trees and the erection of the proposed rink would be an unlawful breach of a charitable trust by which the town held the land.  The trial court judge found that the proposed rink was not a park but ultimately found that the restriction placed by the charitable trust was no longer enforceable.  Id. at 381.  The defendants had no reason to appeal because the trial court ruling supported their efforts to construct the skating rink.  Similarly, the plaintiffs had no reason to challenge the trial judge's finding that the proposed rink was not a park.  The issue on appeal addressed by the parties and the court was whether the restriction was enforceable.  The Supreme Judicial Court never ruled on the issue of whether an artificial skating rink could be classified as a park and never specifically adopted the trial court's finding on this issue.  Accordingly, there is no reason to interpret the court's decision in Dunphy as limiting its broad interpretation of the term "park" in Salem and General Outdoor.  See also, Cohen, supra.
Second, the trial judge's decision was rendered within the context of determining whether the proposed use as a skating rink was consistent with "the intention of Mr. Reed when he made his gift to the Town of Rockland."  Id. at 380.  This specific context limits Dunphy to its facts.
In addition, the subject property is significantly different from the rink at issue in Dunphy.  Unlike the rink in Dunphy, in which the rink and surrounding paved area covered ninety percent of the land, the Hetland Arena does not cover such a large percentage of the land.  Of the 4.64 acres of land, the building occupies 31,656 square feet, and the paved area occupies 21,000 square feet.  Only a little more than one quarter of the land is occupied by the rink and parking lot.  The remaining three quarters of property consists of open grassed areas that are maintained for use by both parents and friends of the rink's patrons and the general public.  Picnic tables are maintained by the Facility Management, while the youth hockey and high school hockey groups use the land for "dry-land training and conditioning."  This large percentage of grassed area, which the public uses for training activities and picnicking, distinguishes the Hetland Arena from the facility in Dunphy.  
	Finally, the Board noted that courts in other jurisdictions have found that "park" and "park purposes" must be defined broadly so as to include a wide variety of recreational activities with respect to land.  Many of these decisions include indoor recreational facilities.  See, e.g., Nichols v. City of Rock Island, 121 N.E.2d 799, 802 (Ill. 1954)(swimming pool, bathhouse, concessions stand, greenhouses, pavilion, picnic areas, tennis courts, duck pond and horseshoe court, among others, served "legitimate park purposes" so did not deviate from dedication of land as a "public park"); Johnson City v. Cloniger, 372 S.W.2d 281, 283 (Tenn. 1963)(golf course, swimming pool, croquet court, baseball diamond, band shell and zoo served "park purposes").  One court in particular has specifically held that ice skating facilities can be considered "public parks."  The court in Rivet v. Burdick, 6 N.Y.S.2d 79, 83 (1938) authorized the financing and constructing of various winter sports facilities on property designated as a "public park" because skating, among other winter sport activities, "has become a recognized sport . . . now to be seen in many public parks."  Moreover, "'[a] park is a pleasure ground set apart for recreation of the public, to promote its health and enjoyment.'  It need not, and should not, be a mere field or open space."  Id. (citations omitted).
	For the reasons above, the Board found and ruled that the Hetland Arena was a park under the meaning of G.L. c. 59, § 2B.

Is use/lease/occupancy of the Hetland Arena by MCC reasonably necessary to the public purpose of a park?

	As set forth in the Statement of Agreed Facts, the City of New Bedford's transfer to the Commonwealth of the real property on which the Hetland Arena is located was made "in consideration of the Department of Natural Resources completing a skating rink and holding and administering that facility . . . for the benefit of the general public."  By this conveyance, New Bedford has thus acknowledged that the operation of a skating rink can be "for the benefit of the general public."  Moreover, MCC has met the conveyance's condition.  Past and current agreements between the Commonwealth and MCC specifically provide that the premises must be occupied and used "for the purposes of operating a public rink program for the citizens of the Commonwealth."  
In addition, the Commonwealth has entered into an agreement with the United States Department of the Interior and receives funds relating to energy conservation modifications to the Hetland Arena pursuant to the Land and Water Conservation Fund Act of 1965.  Under the terms of the Act, the Commonwealth would only be entitled to these funds if the rink served the public for recreational purposes.  See also City of Boston v. Merchants National Bank of Boston, 338 Mass. 245, 251 (1958)(citing Carlisle v. Bangor Recreation Center, 150 Me. 33, 35-36 (1954)(a city-owned indoor auditorium containing facilities for sports, including an ice skating rink, "held to be a public purpose for which tax funds might be expended")). 
In addition, 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.  In fact, the Massachusetts Court of Appeals has found that management by a for-profit entity may be necessary to serve that public purpose.  See Miller v. Commissioner of the Department of Environmental Management, 23 Mass.App.Ct. 968, 969-70 (1987).  The property at issue in Miller was a ski facility owned by Commonwealth and operated by a for-profit entity.  The Appeals Court ruled that even though "the arrangement is a commercial one" it nonetheless serves public interest because "[a] private entity experienced in making artificial snow and managing cross country skiing facilities is an appropriate party to operate such a facility.  Such an entity would not be expected to undertake the responsibility without an arrangement for fees and some expectation of exclusivity."  Id.  Here, the Board found that MCC's management of the Hetland Arena 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.  
Other jurisdictions have also found that publicly owned land is used for public purposes, even when the state or municipality that owns the property enters into a contract with a private corporation to operate the facility on that property, and even if it charges the public a fee for the use of that property.  See White v. Metropolitan Dade Country, 563 So.2d 117 (Fla. Dist. Ct. App. 1990); Hanna v. Sunrise Recreation, Inc. 94 So.2d 597 (Fla. 1957).  The United States District Court for the Eastern District of Pennsylvania found that the publicly owned skating rink where the Philadelphia Flyers play hockey served a public use of the property, even though the facility charged admission fees:  "By providing the public with amusement, pleasure, and entertainment, the municipally owned Spectrum clearly is public property used for public purposes."  In re Spectrum Arena, Inc., 330 F.Supp. 125, 127 (E.D.Pa. 1971).
	For the reasons above, the Board found and ruled that the occupancy of the Hetland Arena by MCC was reasonably necessary to the public purpose of a park.
	
Is the Hetland Arena available for the use of the general public?

As stipulated to by the parties, the Hetland Arena is open virtually year round and serves individual skaters as well as various youth, high school and senior citizens' hockey teams and leagues.  The vast majority of users of the Arena are either non-profit youth programs, such as Hetland Youth Hockey, Bay State Warriors Girls Hockey, Skating Club of Southern New England and the Monarchs Hockey, or municipal groups, such as New Bedford High School, New Bedford Vocational High School, Dartmouth High School, Old Rochester Regional High School, Bishop Stang High School and the University of Massachusetts at Dartmouth.  According to the terms of the Agreement and the Permit under which it operates the Hetland Arena, MCC must operate the facility as a "public program" and therefore must comply with all rules and regulations that are applicable to agencies of federal, state and local governments in the operation of such a facility, including Forest and Parks Policy Directive #208.
Beyond the operation of the rink, MCC also ensures that the surrounding area benefits the public.  As explained in the Findings above, the paved grounds are used for fund-raising car washes, equipment sales and swaps for youth hockey programs.  The grassed areas at the back and side of the building hold picnic tables for use by both the parents and friends of the rink's patrons as well as the general public.  Youth hockey and high school hockey groups also benefit from the use of this lawn area for "dry-land training and conditioning" to supplement their on-ice practices. 
Furthermore, as also described in the Findings, MCC sponsors many charitable activities.  Pursuant to the terms of the Agreement and the Permit, MCC participates in a Community Investment Program which requires it to contribute portions of its revenues to fund various public programs and work with nonprofit charitable organizations to raise money for various charitable causes. Other MCC sponsored programs include a scholarship program called "Dollars for Scholars" and the MCC's Great Skate Program.  Moreover, as part of its 1996 bid, incorporated into its operating permit, MCC estimated that it would invest more than $20,000.00 over a five-year period into the community in connection with programs available at the Hetland Arena, including but not limited to discounted skating programs, scholarships, fundraising activities and free skating admissions at all times to senior citizens.  
 For the reasons above, the Board found and ruled that under the management of MCC, the Hetland Arena, including the rink and the surrounding area, was available for the use of the general public.
	Based on the foregoing, the Board ruled that MCC was not subject to real estate tax under G.L. c. 59, § 2B.  Accordingly, the Board issued a decision for the appellant in this appeal.

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




A true copy:



Attest: _____________________
	    Clerk of the Board
						

   Now known as the DEM.
  Now known as Facility Management Corporation

1


ATB 2000 - 907