R. I. Seekonk Holdings, LLC v. Board of Assessors of the Town of Seekonk (October 27, 2015)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


R.I. SEEKONK HOLDINGS, LLC	   v.	BOARD OF ASSESSORS OF 
THE TOWN OF SEEKONK

Docket Nos.: F320846, F320847
	        F320848, F320849		   	Promulgated:
								October 27, 2015


	These are appeals under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Seekonk (the "assessors" or "appellee") to abate taxes on certain condominium buildings (the "subject buildings") in Seekonk owned by and assessed to R.I. Seekonk Holdings, LLC (the "appellant") under G.L. c. 59, §§ 11 and 38, for fiscal year 2013 (sometimes referred to as the "fiscal year at issue").
	The parties brought cross motions for summary judgment to determine whether, as the appellant asserted, the subject buildings were exempt from taxation under G.L. c. 183A, § 14, as common area, or whether, as the assessors contended, the subject buildings were taxable to the appellant as separate parcels.  Chairman Hammond denied the appellant's motion in part and allowed the assessor's motion in part, ruling that the subject buildings were taxable as separate parcels but the overvaluation claims remained.  After the appellant withdrew its overvaluation claims, Commissioners Scharaffa, Rose, Chmielinski, and Good joined Chairman Hammond in the decision for the appellee.
	These findings of fact and report are made pursuant to a request by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32.        
	
	Edmund A. Allcock, Esq. and David M. Rogers, Esq. for the appellants.

	Theodora Gabriel, Town Assessor, for the appellee.

FINDINGS OF FACT AND REPORT
	Based on the parties' submissions during the summary judgment hearing and their acknowledgement and agreement that there is no dispute as to the material facts, the Appellate Tax Board (the "Board") made the following findings of fact.
	On January 1, 2012 and at all relevant times, the appellant was the assessed owner of the four subject buildings known as Unit 15, Unit 16, Unit 19, and Unit 6000 of the Greenbrier Village Primary Condominium (the "Condominium") in Seekonk (collectively referred to as the "Subject Units").  Unit 15 is comprised of four living units located at 184, 186, 188, and 190 Greenbrier Drive, and, for assessment purposes, is described on Map 10A as Lot 15.  Unit 16 is comprised of four living units located at 192, 194, 196, and 198 Greenbrier Drive, and, for assessment purposes, is described on Map 10A as Lot 16.  Unit 19 is comprised of four living units located at 200, 202, 205, and 206 Greenbrier Drive, and for assessment purposes, is described on Map 10A as Lot 19.  Unit 6000 is comprised of 24 living units located at 9 Springhouse Trail, and, for assessment purposes, is described on Map 10B as Lot 6000.  As of June 30, 2012, Units 15 and 16 were 100% complete, Unit 19 was 90% complete, and Unit 6000 was 30% complete.  Prior to January 1, 2012, the Town of Seekonk had accepted the provisions of G.L. c. 59, § 2A(a)  which allows municipalities to tax in the current fiscal year all new construction built in the six months following the January first valuation and assessment date for that fiscal year.   
	For fiscal year 2013, the assessors valued and assessed real estate taxes, including a Community Preservation Act ("CPA") addition, on the Subject Units as follows:
	Unit 15	Unit 16	Unit 19	Unit 6000	
Assessed Value	$ 637,700	$ 637,700	$ 590,500	$ 352,000	
Tax Rate/$1,000	$12.75	$12.75	$12.75	$12.75	
Tax Assessed	$8,216.38	$8,216.38	$7,607.05	$4,528.16	

Seekonk's Collector of Taxes mailed the actual real estate tax bills on December 31, 2012.  In accordance with G.L. c. 59,     § 57A, the appellant timely paid the taxes due without incurring interest.  In accordance with G.L. c. 59, § 59, the appellant timely filed its abatement applications on January 29, 2013, which the assessors denied on April 25, 2013.  On July 1, 2013, in accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed its petitions with this Board.  On the basis of these facts, the Board found and ruled that it had jurisdiction over these appeals.
	The Condominium is a condominium established under      G.L. c. 183A by a master deed dated August 12, 2008 and recorded, along with a site plan, on August 14, 2008 (the "Master Deed"), with the Bristol County North District Registry of Deeds.  The Master Deed, Section 13.1, provides in pertinent part that: 
The Land described in Schedule A, together with Units 2 through 9, shall initially comprise the Condominium.  The Condominium may consist of additional Phases constructed and to be constructed on the Land described in Schedule A.  Until such time as additional Phases are added to the Condominium by the recording of "Phasing Amendments" . . . any buildings or portions thereof existing on the Land . . . (other than Phase 1) shall not be part of the Condominium or subject to the Act [c. 183A], and shall be exclusively owned by the [appellant].

Pursuant to Section 13 of the Master Deed, there are eleven added phases to the Condominium.  
	On February 9, 2012, the appellant recorded the Seventh Phasing Amendment to the Condominium's Master Deed, which consists of subject Units 15 and 16.  On July 11, 2012, the appellant recorded the Eighth Phasing Amendment to the Condominium's Master Deed, which consists of subject Unit 19.  On March 26, 2013, the appellant recorded the Ninth Phasing Amendment to the Master Deed which consists of subject Unit 6000, along with that Unit's "as-built" plans.  On March 26, 2013, the appellant also recorded the Site Plan for Phase X.
	The Master Deed, Section 13.4, provides in pertinent part that:  "[The appellant] reserves for the benefit of itself . . . exclusive ownership of [] Buildings or portions of Buildings [not part of Phase 1 or included in a Phasing Amendment], as well as the right to fully construct, develop and finish same."  In addition, the Master Deed provides in Section 6 that: "The Common Areas and Facilities of the Condominium . . . consist of the entire Land exclusive of the Units . . . (and exclusive of any and all rights, interests and/or easements reserved by the [appellant]."  (Emphasis in the original).   
	Relying on the plain language of these sections in the Master Deed, the Board found that the Subject Units were not part of Phase 1 and the Master Deed excluded them from the Condominium and the application of c. 183A until the recording of the Phasing Amendments naming them.  The Board further found that the appellant reserved exclusive ownership of the Subject Units at least until the recording of the Phasing Amendments naming them.  Once named, they became "Units" of the Condominium.  As "Units," they were not, by definition, part of the Condominium's common area.  Accordingly, the Board found that the Subject Units were not common area before being named in a Phasing Amendment because their ownership was reserved to the appellant, and they were not part of the Condominium or subject to c. 183A.  
More specifically, the Board found that subject Units 19 and 6000 could not be part of the Condominium's common area because they were not part of the Condominium and had not been placed under the provisions of c. 183A during the relevant time period.  Instead, they had been retained by the appellant and, as a result, were subject to assessment to the appellant as separate parcels to the extent of their completion as of June 30, 2012.   The Board similarly found that subject Units 15 and 16 had been retained by the appellant and were not part of the Condominium until they were placed under the provisions of c. 183A on February 9, 2012.  However, even as of that date, they were not part of the Condominium's common area because they were "Units."                                  
Based on the parties' agreed upon facts and the Board's findings, and for the reasons set forth in the Opinion below, the Board ultimately found and ruled that the Subject Units were not common area of the Condominium and were properly taxable to the appellant as separate parcels.  Upon the appellant's withdrawal of its overvaluation claims, the Board decided these appeals for the appellee.

OPINION
	Pursuant to G.L. c. 59, § 2A (a):
Real property for the purpose of taxation shall include all land within the commonwealth and all buildings and other things thereon or affixed thereto, unless otherwise exempted from taxation under other provisions of law.  The assessors of each city and town shall determine the fair cash value of such property for the purpose of taxation on the first day of January of each year.  Notwithstanding the foregoing, in any city or town which accepts the provisions of this sentence, buildings and other things erected on or affixed to land during the period beginning on January second and ending on June thirtieth of the fiscal year preceding that to which the tax relates shall be deemed part of such real property as of January first.

As of June 30, 2012, Units 15 and 16 were 100% complete, Unit 19 was 90% complete, and Unit 6000 was 30% complete.  As of January 1, 2012, Seekonk had accepted the provisions of G.L. c. 59,     § 2A(a) which allow municipalities to tax in the current fiscal year all new construction built in the six months following the valuation and assessment date for that fiscal year.  Accordingly, it follows that the subject buildings should be taxed to the appellant to the extent of their degree of completion.  
	Nevertheless, the appellant contended that, under        G.L. c. 183A, the Subject Units could only be taxed as "common areas and facilities to unit owners based on their percentage of ownership" and not as taxable parcels on their own because the Master Deed had not been amended as of January 1, 2012 to change the subject properties from future as opposed to present interests.  The Board found, however, that several sections in the Master Deed excluded the Subject Units from the Condominium and from the provisions of G.L. c. 183A until "the recording of the 'Phasing Amendments'" while also reserving for the appellant exclusive ownership of the Subject Units.  The Board further found that the Master Deed excluded "Units" from the definition of "common area and facilities."  
Section 13.1 of the Master Deed states in pertinent part that: "Until such time as additional Phases are added to the Condominium by the recording of 'Phasing Amendments' . . . any buildings or portions thereof existing on the Land . . . (other than Phase 1) shall not be part of the Condominium or subject to the Act, and shall be exclusively owned by the [appellant]."  The parties agreed and the Board found that the Subject Units were not part of Phase 1.  In addition, section 13.4 of the Master Deed provides in pertinent part that: "[The appellant] reserves for the benefit of itself . . . exclusive ownership of [] Buildings or portions of Buildings [not part of Phase 1 or included in a Phasing Amendment], as well as the right to fully construct, develop and finish same."  In addition, the Master Deed provides in Section 6 that: "The Common Areas and Facilities of the Condominium . . . consist of the entire Land exclusive of the Units . . . (and exclusive of any and all rights, interests and/or easements reserved by the [appellant]."  (Emphasis in the original).   
	Relying on the plain language of these sections in the Master Deed, the Board found that: the appellant reserved exclusive ownership of the Subject Units; the Subject Units were not part of Phase 1; and the Master Deed excluded the Subject Units from the Condominium and the application of c. 183A until the recording of the Phasing Amendments naming them.  The Board further found that, once named, the Subject Units became "Units" of the Condominium.  As "Units," they were not, by definition, part of the Condominium's common areas and facilities.  See Master Deed, Section 6.  Accordingly, the Board determined that the Subject Units were not part of the Condominium's common areas and facilities before being named in a Phasing Amendment because their ownership was reserved to the appellant and they were not part of the Condominium or subject to c. 183A, and they were not part of the Condominium's common areas and facilities after being named in a Phasing Amendment because as Units, they were, by definition, not part of the Condominium's common areas and facilities.  
Therefore, the Board found and ruled that the Subject Units could not be part of the Condominium's common area either before or after being named on a Phasing Amendment and they were instead subject to assessment to the appellant as separate parcels to the extent of their completion as of June 30, 2012.                            
	Furthermore, c. 183A specifically allows an owner to retain and exclude from its application other interests in real property not expressly declared to be subject to it.  "The provisions of this chapter shall not be deemed to preclude or regulate the creation or maintenance of other interests in real property not expressly declared by the owner . . . ."        G.L. c. 183A, § 2.  In addition, c. 183A defines a "Condominium" as "the land . . . which is submitted to the provisions of this chapter, the building or buildings . . . thereon . . . which have been submitted to the provisions of this chapter," and defines the "Master deed" as "the instrument by which the condominium is submitted to the provisions of this chapter."  Notably, neither buildings nor units are included in c. 183A's definition of "Common areas and facilities."  G.L. c. 183A, § 1.  Further, c. 183A, § 1 specifically recognizes that a master deed may provide or stipulate its own definition for common area and facilities, which was done here.  See G.L. c. 183A, § 1 ("‛Common area and facilities' shall, except as otherwise provided or stipulated in the master deed, mean and include . . . .").  The Board found and ruled here that, in accordance and consistent with c. 183A, the Master Deed excluded the Subject Units from the Condominium and the application of c. 183A until the recording of the Phasing Amendments naming them, and, once named, the Subject Units were not part of the Condominium's common area and facilities by definition.  Accordingly, the Subject Units were subject to assessment to the appellant as separate parcels.                            
The appellant's exemption theory primarily relied on    G.L. c. 183A, § 14, which mandates the taxation of "common areas and facilities . . . to unit owners based on their percentage of ownership," and two Massachusetts Appeals Court cases from 2000 - First Main Street Development Corp. v. Assessors of Acton,   49 Mass. App. Ct. 20 (2000) and Spinnaker Island Yacht Club Holding Trust v. Assessors of Hull, 49 Mass. App. Ct. 20 (2000) - holding that unexercised condominium development rights are future, not present interests, and are therefore part of the common areas and facilities of the condominium and not separately taxable under G.L. c. 59, § 11. 	Here, however, the Board not only found that the subject properties were not part of the Condominium or subject to the provisions of c. 183A, but that they had been either completed or partially constructed as of the relevant valuation and assessment date - June 30, 2012.  See G.L. c. 59, § 2A(a).  In discussing the distinction between present and future interests, the Appeals Court observed that an unexercised development right could be converted into a present interest by initiating affirmative actions, such as, "build[ing] the additional buildings and facilities and amend[ing] the master deed."  First Main Street, 49 Mass. App. Ct. at 28.  Conspicuously, the Court did not hold that an exercise of development rights requires an amendment to the master deed to be recorded - likely because such an interpretation would allow an owner to escape taxation indefinitely despite the property being fully developed.  Consequently, even if the subject properties could be considered part of the Condominium and subject to the provisions of c. 183A, under the facts and circumstances here - where actual construction has taken place and the appellant has taken full possession of the property - the Board ruled that the appellant had a present interest in the subject buildings and the assessors were warranted in assessing the subject properties to the appellant.

On the basis of the parties' agreed upon facts and the Board's findings and rulings, the Board ultimately found and ruled that the subject buildings were not part of the common area and facilities of the Condominium and were properly taxable to the appellant as separate parcels.  Therefore, upon the appellant's withdrawal of its overvaluation claims, the Board decided these appeals for the appellee.

                               APPELLATE TAX BOARD			


  By: _________________________________
	 Thomas W. Hammond, Jr., Chairman
	     		           

A true copy,

Attest: ____________________________
	   Assistant Clerk of the Board

 G.L. c. 183A, § 14 provides in pertinent part that: "Each unit and its interest in the common areas and facilities shall be considered an individual parcel of real estate for the assessment and collection of taxes, but common areas and facilities . . . shall not be deemed to be a taxable parcel."
 That provision is set forth in the Opinion portion of this Findings of Fact and Report.  
 Section 11 provides in pertinent part that: "[w]henever the commissioner deems it proper, he may, authorize the assessment of taxes upon any present interest in real estate to the owner of such interest on January first, and taxes on such interest may thereupon be assessed to such person."

ATB 2015-568