Rockridge Lake Shores Property Owners' Association v. Board of Assessors of the Town of Monterey (July 20, 2001)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



ROCKRIDGE LAKE SHORES 		v.		BOARD OF ASSESSORS 
PROPERTY OWNERS'					OF THE TOWN OF 
ASSOCIATION						MONTEREY 

Docket No. F239742					Promulgated: 
								July 20, 2001
	

	This is an appeal 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 Monterey to abate taxes on certain real estate, owned by and assessed to Rockridge Lake Shores Property Owners' Association for fiscal year 1997. 
	Former Commissioner Lomans heard this appeal and on May 8, 1998 issued a single member decision for the appellee, in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20.
	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.

	Louis Kerlinsky, Esq., for the appellant.
Hugh C. Cowhig, Esq., for the appellee.

FINDINGS OF FACT AND REPORT


	Based on the facts stipulated to by the parties, the Appellate Tax Board ("Board") made the following findings of fact.
As of January 1, 1996, Rockridge Lakeshores Property Owners' Association, Inc. (the "appellant") was the assessed owner of a 16,117 square foot parcel of real estate located at Lime Rock and Lake Shore Lanes, in Monterey, Massachusetts (the "subject property"). For fiscal year 1997, the Monterey Board of Assessors ("Assessors") valued the subject property at $85,900.00, at a tax rate of $8.72 per thousand, with a resulting tax liability of $749.05. 
 	On November 19, 1996, the appellant filed an application for abatement for fiscal year 1997, in which it claimed a charitable exemption under G.L. c. 59, § 5, Third.  The Assessors denied the application, by written notice dated December 4, 1996.  Subsequently, by petition dated January 28, 1997, the appellant timely appealed the Assessors' denial with this Board.

Based on the foregoing, the Board found that it had jurisdiction to hear and consider this matter.  	
The subject property was conveyed to the appellant by deed dated December 6, 1987.  The property is identified on the Assessors' map as Map 16, Lot 119.   The subject property, within subdivision "C" of the Rock Ridge Lake Shores - Lake Garfield Estates, has frontage on Lake Garfield.  All owners of lots of the Rock Ridge Lake Shores - Lake Garfield Estates subdivisions have deeded rights, in common, to use the subject property for bathing, docking and general beach purposes.
During the relevant period, the appellant was a non-profit organization, exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code ("IRC"). 
By a January 19, 1991 agreement between the parties, entered into pursuant to an earlier appeal filed with this Board, the Assessors agreed that the subject property would remain exempt from local taxation in all years that certain conditions were met.    These  conditions  were  that   the 
organization retained its exempt status under IRC § 501(c)(3), forms ABC and PC, or their replacement, were timely filed, and the property was used for tax-exempt purposes.  The subject property apparently fulfilled these conditions to the satisfaction of the Assessors, and therefore remained exempt from local taxation until the fiscal year at issue.
The Board found that the appellant failed to provide any evidence, such as a charter, articles of association, constitution or by-laws, documenting its original charitable purpose.  The Board, therefore, found that the appellant failed to submit any evidence to demonstrate that it should properly be classified as a charitable organization of any type.  The Board further found that the appellant failed to provide any evidence to demonstrate a dominant charitable use of the subject property during the relevant time period.  Further, the Board found that the existence of deeded rights, held in common by all subdivision property owners, to use the subject property for bathing, docking and general beach purposes, demonstrated a substantial benefit to a definite class of users, rather than an indefinite number of persons.
	
On this basis, and to the extent it is a finding of fact, the Board found and ruled that the appellant was not a charitable organization occupying the property for charitable purposes, as required by G.L. c. 59, § 5, Third.
	Accordingly, and for the reasons detailed in the following Opinion, the Board denied the appellant's abatement request for fiscal year 1997 and issued a decision for the appellee. 
 
OPINION
Massachusetts cities and towns are authorized to impose 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 classes of property which "shall be exempt from taxation . . . ."   G.L. c. 59, § 5.
Specifically, section 5, Third, exempts from taxation all "personal property of a charitable organization, . . . and real estate owned by . . . and occupied by it or its officers for the purpose for which it is organized . . . ."  G.L. c. 59, § 5, Third. (Emphasis added.)  A charitable organization that 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).  To qualify for the charitable exemption, therefore, 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. 536, 543 (1981).  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 v. Board of Assessors of Boston, 294 Mass. 248, 254-255 (1936). (Emphasis added.)  As the Supreme Judicial Court has explained, 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 its serves and the method of its administration.'"  Assessors of Boston v. The Vincent Club, 351 Mass. at 12 (1966), quoting Little v. Newburyport, 210 Mass. 414, 415 (1912).  See also H-C Health Services, Inc. v. Board of Assessors of South Hadley, 42 Mass. App. Ct. 596, 598 (1997).
	Charitable purposes alone, as specified in the association's or corporation's organizational documents, however, will not suffice to establish the property tax exemption.  As noted above, to qualify for the charitable exemption, the taxpayer must also occupy the property for its charitable purpose.  Such occupancy means

something more than that which results from simple ownership and possession.  It signifies an active appropriation to the immediate uses of the charitable cause for which the owner was organized . . . .  [T]he nature of the occupation must be such as to contribute immediately to the promotion of the charity and physically to participate in the forwarding of its beneficent objects. 


Board of Assessors of Boston v. The Vincent Club, 351 Mass. at 14, quoting Babcock v. Leopold Morse Home for Infirm Hebrew & Orphanage, 225 Mass. 418, 421 (1917).  The appellant, therefore, must prove that "it is in fact so conducted that in actual operation it is a public charity" and 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 Hairenik Association v. City of Boston, 313 Mass. 274, 279 (1943); Assessors of Boston v. Boston Pilots' Relief Society, 311 Mass. 232, 236-237 (1942).  
Use of the property need not be exclusively for charitable purposes.  "If the principal occupation is . . . for [its charitable] 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). (Emphasis added.)  "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. 237, 332 (1960). If, however, the dominant purpose of its work is to benefit its members or a limited class of persons, 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 v. Board of Assessors of Great Barrington, 324 Mass. 509, 513 (1949); Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 716-717 (1944); Newton Centre Woman's Club, Inc. v. Newton, 258 Mass. 326 (1927); Little v. Newburyport, 210 Mass. at 417.  
The Board found and ruled that the appellant failed to provide any documentary evidence demonstrating a declared charitable purpose.  The appellant provided the Board with neither charter, articles of association, constitution or by-laws, by which its declared purpose could be ascertained.  The Board, therefore, could not find the appellant to be a charitable organization of any category or type.
The appellant asserts that it qualifies for the charitable exemption because it is exempt from federal income tax under IRC § 501(c)(3). Although an organization's § 501(c)(3) tax-exempt status is a relevant factor in considering whether the organization is "charitable" for purposes of the Massachusetts' property tax exemption, the Board ruled that it is not determinative.  See generally Harvard Community Health Plan, Inc. v. Board of Assessors of Cambridge, 384 Mass. at 541-543.  See also H-C Health Services, Inc. v. Board of Assessors of South Hadley, 42 Mass. App. Ct. at 599.
Further, the Board found and ruled that the appellant failed to demonstrate, by any means, that its occupancy of the subject property during the relevant time period was in pursuit of any charitable purpose.  
Moreover, the Board found and ruled here that the existence of deeded rights, granted in common to other lot owners within the subdivision, to use the subject property for bathing, boating, docking and general beach purposes, demonstrates a dominant use of the subject property for the benefit of a definite class of members.  As noted above, an organization will not be classified as charitable if "the dominant purpose of its work is to benefit its members or a limited class of persons . . . even though the public will derive an incidental benefit from such work." Massachusetts Medical Society v. Assessors of Boston, 340 Mass. at 332.	Finally, the Board found and ruled that the appellant's argument that its earlier 1991 agreement with the Assessors requires the Board to uphold its charitable exemption from local property tax is without merit.  Notably, by failing to use the subject property for charitable purposes, the appellant has in fact failed to fulfill all the terms of that 1991 agreement.  Further, qualification for the charitable exemption must be determined on a yearly basis, as of July first of each year.  See G.L. c. 59, § 5; G.L. c. 59, § 5, clause 3(b). The appellant has failed to qualify for the charitable exemption in fiscal year 1997, and cannot rely upon an agreement made in an earlier year to override the statutory prerequisite. "[W]hat property is taxable and what is exempt is a subject covered by laws . . . .  They cannot be varied by a contract between the town and the taxpayer." Assessors of Dover v. Dominican Fathers Province of St. Joseph, 334 Mass 530, 537 (1956), citing Southborough v. Boston & Worcester Street Railway Co., 250 Mass. 234, 239 (1924); Waltham Watch & Clock Co. v. City of Waltham, 272 Mass. 396, 412 (1930).
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 v. Assessors of Great Barrington, 324 Mass. at 512-514.  The "party claiming exemption bears a grave burden of proving the claim."  Harvard Community Health Plan, Inc. v. Assessors of Boston, 384 Mass. at 543. 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 v. Board of Assessors of Boston, 294 Mass. at 257, 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 Board of 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 v. Assessors of Boston, 315 Mass. at 716.
	Accordingly, and based on these principles, the Board found and ruled that the appellant failed to meet its burden of proving that it was a charitable organization and 



that the subject property was dominantly 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

 For the year at issue, timely payment of real estate tax was not a prerequisite to the Board's jurisdiction because the full fiscal year tax on the subject property was $2,000 or less. See G.L. c. 59, § 64. As of January 1, 1999, that dollar amount was increased to $3,000 or less. St. 1998, c. 485, §§ 3 and 23.
 Appellate Tax Board Docket number 177653.  

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ATB 2001  - 593