Acushnet River Safe Boating Club v. Board of Assessors of the Town of Fairhaven (July 30, 2002)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



ACUSHNET RIVER SAFE 		v.	BOARD OF ASSESSORS OF 
BOATING CLUB					THE TOWN OF FAIRHAVEN

Docket Nos. X291163, F256015		Promulgated:
							July 30, 2002


	These are appeals, one filed under the informal procedure and one filed under the formal procedure, pursuant to G.L. 59, §§ 64 and 65, from the refusal of the appellee to abate taxes on certain real estate located in the Town of Fairhaven owned by and assessed to the appellant under G.L. c. 59, § 38, for fiscal years 2000 and 2001.
	Commissioner Rose heard the appeals and was joined in the decisions for the appellee by Chairman Burns and Commissioners Scharaffa, Gorton and Egan.
	These findings of fact and report are issued pursuant to a request by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32.

Rebecca R. Carey, Esq. and Christopher J. Carey, Esq., for the appellant.

	Raymond A. Letourneau, Esq., for the appellee.
FINDINGS OF FACT AND REPORT
	On January 1, 1999 and January 1, 2000, Acushnet River Safe Boating Club ("the appellant") was the assessed owner of a parcel of real estate located at 82 Middle Street in the Town of Fairhaven.  For fiscal year 2000, the Fairhaven Board of Assessors ("Assessors") valued the property at $40,000 and assessed a tax thereon at the rate of $18.13 per thousand, in the amount of $725.20.  The appellant paid the tax and, on November 9, 1999, the appellant timely filed an application for abatement with the Assessors.  The Assessors denied the abatement request on February 7, 2000, and on April 25, 2000, the appellant seasonably filed an appeal with the Appellate Tax Board ("Board"). 
For fiscal year 2001, the Assessors valued the subject property at $40,000 and assessed a tax thereon at the rate of $18.17 per thousand in the amount of $726.80.  The appellant paid the tax, and on November 3, 2000, the appellant timely filed an application for abatement with the Assessors.  The Assessors denied the abatement application on January 31, 2001, and on April 9, 2001, the appellant seasonably filed an appeal with this Board.  On this basis, the Board found that it had jurisdiction over the appeals for fiscal years 2000 and 2001.     
The appellant is a Massachusetts Chapter 180 corporation (G.L. c. 180, §§ 1-27) with an Internal Revenue Code § 501(c)(3) federal classification.  Accordingly, the appellant is a charitable organization exempt from federal tax and is also entitled to a state tax exemption for Massachusetts corporate excise purposes.  The appellant was incorporated in March 1960 to hold title to the organization's headquarters and boat mooring facilities and to serve as a voluntary United States Coast Guard auxiliary organization.  Pursuant to its articles of organization, the appellant's purpose is "to assist the United States Coast Guard" in the following activities:

a.	Promote safety and to effect rescues on and over the high seas and on navigable waters;
b.	To promote efficiency in the operation of motorboats and yachts;
c.	To foster a wider knowledge of, and better compliance with, the laws, rules and regulations governing the operation of motorboats and yachts; and
d.	To facilitate other operations of the Coast Guard;
e.	To indoctrinate all owners and operators of small craft in safety requirements in the operation and navigation of small craft;
f.	To utilize the Auxiliary craft and personnel, after suitable training and indoctrination, in carrying out certain duties of the Coast Guard, with particular reference to those concerned with the safety of navigation and to perform all the activities allowed by the laws of the United States, the Commonwealth of Massachusetts, and the United States Coast Guard Auxiliary Organization.

Similarly, the appellant's by-laws state that its purpose is to "aid Flotilla 1-605 in promoting safe boating, and fostering efficiency in the operation of all boats."  The by-laws also state that one of the appellant's purposes is to "provide and maintain a clubhouse and marina for its members."  
Membership in the appellant organization is open only to members of the U.S. Coast Guard Auxiliary Flotilla 1-605.  Membership dues are set by the Board of Directors annually.  The appellant maintains that members are required to take an 8-week safe boating class and also a 12-week basic seamanship class.  Each class is between two and three hours per week.  The appellant also maintains that it offered classes in weather, search and rescue, and communication.  However, at the hearing of these appeals, the appellant failed to produce supporting documentation, such as class listings, schedules, and/or attendance rosters, to substantiate this claim.  
The appellant acquired the subject property in 1985.  Subsequent to the acquisition, the appellant demolished the existing structure and used the property for its current use, a parking lot.  The parking lot was open to the appellant's members and the general public.  The appellant alleged that it also maintained a safety inspection station on the property where its members conducted boat inspections and issued compliance stickers in appropriate cases.  The Board, however, found that the appellant failed to show whether the inspections were done for members only or for the general public as well.  The appellant also failed to offer documentation or other evidence to support this claimed activity.  Accordingly, the Board could not determine the extent to which this activity actually occurred, if at all, during the fiscal years at issue or for whom this activity was conducted.    
Beyond its bare allegations that its members inspected boats and issued compliance stickers at the subject property, and that its members and the general public used the lot for parking, the appellant failed to offer evidence to show how the subject property was used for its stated charitable purposes, which, in general, consists of promoting boating safety and assisting the Coast Guard.  Instead, the appellant relied on the Assessors' grant of exemption for the adjacent clubhouse property and argued that the subject property was used in conjunction with the exempt clubhouse and was, therefore, exempt from taxation.  However, the appellant failed to present evidence to establish that the clubhouse property was occupied by it for its charitable purposes and also that the subject property was used in conjunction with any such charitable activities.
Based on the evidence presented, the Board found that the appellant failed to demonstrate that it occupied the subject property in furtherance of a charitable purpose for the fiscal years at issue.  To the extent that the appellant's claim of exemption depends on the use of the subject property as ancillary to the appellant's clubhouse, the Board further found that the appellant failed to prove that it occupied the clubhouse for a charitable purpose.  Rather, the Board found that the clubhouse was more like a social club that existed for the benefit of its members and not the general public.  Accordingly, the Board issued decisions for the appellee in these two appeals.

OPINION
Massachusetts General Laws imposes a local tax upon "[a]ll property, real and personal, situated within the commonwealth, . . .  unless expressly exempt."  G.L. c. 59, § 2.  Section 5 of Chapter 59 lists the numerous types and classes of property, which "shall be exempt from taxation."  Specifically, G.L. c. 59, § 5, Third, exempts from taxation all "real estate owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized. . . ."  Therefore, to qualify for exemption, the appellant must prove that (1) it is a charitable organization and (2) it occupies the subject property in furtherance of its stated charitable purposes. 
First, it must be determined whether or not the appellant is a charitable organization in accordance with c. 59, § 5, Third.  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, 543 (1981).  A traditionally accepted definition of a charity is a gift which "lessen[s] the burden of government."  Boston Symphony Orchestra v. Board of Assessors of Boston, 294 Mass. 248, 254-55 (1936).  Although an organization's § 501(c)(3) federal tax exempt status is a factor (Harvard Community Health Plan, Inc., 384 Mass. at 541-543), classification as a charitable organization ultimately "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 administration.'"  Assessors of Boston v. The Vincent Club, 351 Mass. 10, 12 (1966)(quoting Little v. Newburyport, 210 Mass. 414, 415 (1912)).    
Pursuant to its articles of organization and its by-laws, the appellant's purpose is "to assist the U.S. Coast Guard" in promoting boat safety; fostering a wider knowledge of, and better compliance with, the laws, rules and regulations governing the operation of motorboats and yachts; and, all other activities necessary to assist the U.S. Coast Guard.  Merely having charitable purposes, however, is not enough to qualify for the property tax exemption.  The appellant must also prove that "it is in fact so conducted that in actual operation it is a public charity" not a mere 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. at 415).  See also Rockridge Lake Shores Property Owners' Association v. Board of Assessors of Monterey, 2001 ATB Adv. Sh. 581, 588 (July 20, 2001; Marshfield Rod & Gun Club v. Assessors of Marshfield, 1998 ATB Adv. Sh. 1130, 1140 (November 20, 1998).
"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.
In Marshfield Rod & Gun Club, the taxpayer owned approximately 113 acres of land, a majority of which was kept in its natural state.  Located on the property was a clubhouse, indoor and outdoor shooting ranges, a skeet shooting field, small buildings to hold equipment, a stocked pond, and archery targets throughout the woods.  Marshfield Rod & Gun Club, 1998 ATB Adv. Sh. at 1131.  Pursuant to its articles of organization, the taxpayer's charitable purposes were as follows:
To educate the sportsmen of tomorrow through safety courses.  To work as a body to educate the public on the subject of gun control and as related to the integrity of the Constitution of the United States and the Bill of Rights.  To influence the proper protection, propagation and distribution of game, fish and other wildlife and to conserve and preserve our forestry and other natural resources.  To conduct youth activities for the education and enjoyment of the youth in the region and for the community in general.  To furnish and maintain public grounds in the form of recreational facilities, membership to which is open to the entire community.

Id. at 1134.  
The taxpayer argued that it occupied the subject property for its charitable purposes by providing the following activities: firearm safety courses; a junior's firearms safety program; children's bow and arrow class; a senior adult rifle team; skeet shooting; an archery group; an annual fishing derby; sponsorship of two Cub Scouts troops; use of its facilities by local police for training; and, a $1,000 scholarship.  Id.  Based on the evidence presented, the Board found that the educational programs offered were minimal and that the taxpayer's activities were "primarily recreational in nature, available for the benefit of the members."  Id.
Many of the listed activities were available to members only and their guests.  The appellant argued that the property could be used by the general public for activities such as walking, jogging and biking.  The Board, however, found that there were two ways to access the property - one entrance had a posted "No Trespassing" signs and the other had a locked gate.  Accordingly, the Board found that "[t]he fact that parts of the property were physically accessible by the public does little to detract from the reality that the property . . . was primarily used by the Appellant's members and their guests."  Id. at 1136.   The appellant's "occupation of the premises was more akin to a social club operated primarily for the benefit of its members and that occupation for charitable purposes was merely incidental" and, therefore, the taxpayer was not entitled to the charitable exemption.  Id. at 1137.
Similarly, in the present appeal, the evidence supports the conclusion that the subject property and the adjacent clubhouse property were used primarily for the benefit of its members and that any occupation of the property for charitable purposes was incidental.  Accordingly, as in Marshfield Rod & Gun, the Board found that the subject property was not entitled to a charitable exemption.
Mere ownership is insufficient to qualify for the property tax charitable exemption.  Meadowbrooke Day Care Center, Inc. v. Board of Assessors of Lowell, 374 Mass. 509, 511 (1978).  The appellant must also prove that the property is actually occupied by the charitable organization and the "nature of the occupation must be such as to contribute immediately to the promotion of the charity and physically to participate in forwarding of its beneficent objects."  Board of Assessors of Boston v. Vincent Club, 351 Mass. at 14.  
Real estate which is both owned and occupied by a charitable organization 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. Board of Assessors of Milton, 360 Mass. 63, 69 (1971)).
Although use of the property need not be exclusively for charitable purposes, such non-charitable use must be incidental.  "If the principal occupation is . . . for [its] purposes, occasional and incidental use for other purposes might not render it liable to taxation . . . ."  Salem Lyceum v. City of Salem, 154 Mass. 15, 17 (1891).  "It is the dominant use of the property which is controlling."  Brockton Knights of Columbus v. Board of Assessors of Brockton, 321 Mass. 110, 114 (1946) (citing Phi Beta Epsilon Corp. v. Boston, 182 Mass. 457 (1902)).  The "nature of the occupation must further the organization's stated purpose."  Brockton Knights of Columbus at 110.  
	 In the present appeals, the appellant claimed to offer various boating related safety classes, educate boaters in the rules and regulations applicable to boating, perform boat inspections and assist the Coast Guard in rescue operations.  Although such activities could potentially benefit the public at large, the appellant failed to offer substantial evidence to demonstrate that the claimed activities actually occurred during the fiscal years at issue in these appeals or were conducted on the subject property.  Furthermore, the appellant failed to prove that such activities were offered to the general public and not members only.  See Marshfield Rod & Gun Club, 1998 ATB Adv. Sh. at 1137 (holding that property operated primarily for the benefit of taxpayer's members is not entitled to charitable exemption).
	It has long been established that an organization "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, 340 Mass. 518, 525 (1960) (citing American Inst. for Economic Research v. Assessors of Great Barrington, 324 Mass. 509, 512-514 (1949)).  Based on the evidence presented, the Board found and ruled that the appellant failed to prove the necessary elements of the statute: that it was operating as a charitable organization within the meaning of clause Third, and that it occupied the subject property for its charitable purposes.
	Statutory exemptions from taxation must be strictly construed.  Children's Hospital Medical Center v. Boston Board of Assessors, 368 Mass. 8322, 838 (1983).  "A party claiming exemption bears a grave burden of proving the claim."  Harvard Community Health Plan, 384 Mass. at 543.  "Any doubt must operate against the one claiming a tax exemption."  Boston Symphony, 294 Mass. at 257 (citing Springfield Young Men's Christian Association v. Board of Assessors, 284 Mass. 1, 5 (1933)).  
	In the present appeals, the appellant attempted to meet its burden by arguing that since the Assessors treated its clubhouse as exempt, then its parking lot used in conjunction with the clubhouse must also be exempt.  However, in order for the Board to grant an exemption for the subject parking lot, it must determine, based on substantial evidence, that the parking lot was occupied by the appellant in furtherance of its stated charitable purposes.  Although the Assessors stipulated to the fact that they granted an exemption to the appellants for the clubhouse parcel, they did not, and could not, stipulate to the legal qualification of the parcel for exemption under G.L. c. 59, § 5, Third, because stipulations concerning questions of law are of no effect.  See, e.g., Hon. Paul J. Liacos, Handbook of Massachusetts Evidence §§ 2.4.2 and 2.5 and cases cited (6th ed. 1994).  The appellant would need to introduce affirmative evidence to establish that the clubhouse was occupied in furtherance of its charitable purpose and that the use of the subject parking lot was ancillary and necessary to the furtherance of appellant's charitable purpose.  The Board found that the appellant failed to introduce such evidence.
	Based on the evidence presented, the Board found that although the appellant's stated purposes may be classified as charitable, the appellant did not meet its burden of proving that it was in actuality operated as a charity and
that the subject property was used in furtherance of its stated charitable purposes.  Accordingly, the Board issued decisions in these appeals for the appellee.

						APPELLATE TAX BOARD

						By:						
						   Abigail A. Burns, Chairman





A true copy,



Attest:					
	    	Clerk of the Board

 

On November 9, 1999, the appellant also filed fourteen additional applications for abatement for fiscal years 1986 through 1999, inclusive.  The Assessors denied the abatement requests, and on February 7, 2001, the appellant filed a single appeal with this Board that included all fiscal years from 1986 through 2000.  Pursuant to General Laws c. 59, § 59, "any person upon whom a tax has been assessed" may apply for an abatement of the tax "on or before October first of the year to which the tax relates," or, if the tax bill was mailed after September first, within thirty days of the mailing.  Accordingly, the Board found that the appellant's abatement requests for fiscal years 1986 through 1999 were filed well beyond their statutory due dates.  Therefore, the Board found and ruled that it had no jurisdiction over the appeals for fiscal years 1986 through 1999.  See Bible Baptist Church of Plymouth, Inc. v. Board of Assessors of Plymouth, 391 Mass. 1015 (1984)(holding that where the Board of Assessors had no jurisdiction to consider an application for abatement that was not timely filed, "the Appellate Tax Board, therefore, had no jurisdiction to review disallowance of the application.")  

ATB 2002-387