Hasco Associates v. Board of Assessors of the Town of Wareham (March 24, 2000)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



HASCO ASSOCIATES		 v.     BOARD OF ASSESSORS
						   OF THE TOWN OF WAREHAM

Docket Nos. F245858			   Promulgated:
	       F250939			   March 24, 2000


	These are appeals 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 Town of Wareham, owned by and assessed to the appellant under G.L. c. 59, § 38, for fiscal years 1998 and 1999.  
	Commissioner Scharaffa heard the appeals and was joined in the decision for the appellee by Chairman Burns and Commissioners Gorton and Egan.
	These findings of fact and report are made at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

	David G. Saliba, Esq. for the appellant.
	Leonard Kopelman, Esq., Richard Bowen, Esq. and Thomas W. McEnaney, Esq. for the appellee.

FINDINGS OF FACT AND REPORT
	At issue in the subject appeals is whether certain property located on the premises owned by the appellant, Hasco Associates ("Hasco"), was properly included in the appellant's real estate tax assessment for fiscal years 1998 and 1999.  On January 1, 1997 and January 1, 1998, the relevant dates of assessment, Hasco owned a parcel of real estate located in the Town of Wareham on Cranberry Highway, which included two buildings affixed to foundations.  Hasco leased the land and buildings to Storeco, Inc. ("Storeco"), which operated a mini storage business at the site.  On these same assessment dates, there were also forty-nine other structures (the "Structures") located on this parcel. Storeco had purchased these Structures from Shelter Shed, Inc. ("Shelter Shed") and had transported them to the leased property by flatbed truck for use in its storage business.
	The Board of Assessors of the Town of Wareham ("Assessors") valued the subject real property for fiscal years  1998  and  1999  by   including the value of the forty-nine Structures.  Hasco timely paid the taxes and filed its applications for abatement of the taxes assessed on the Structures for both tax years.  Hasco then seasonably appealed to the Appellate Tax Board ("Board") from the Assessors' denial of these two applications for abatement.  On this basis, the Board found that it had jurisdiction over these appeals.
The principal issue in these appeals concerns whether the Assessors may assess a real estate tax on Hasco for the Structures, which Hasco claims are both personal property and owned by Storeco, the lessee.  Hasco argued that the Structures were improperly assessed as real property, because they were portable, were not affixed to the land in any way, nor were they erected on the land.  For these reasons, Hasco argued that the Structures were the personal property of Storeco, a business corporation, and were, therefore,   exempt  from  local   taxation   pursuant   to
G.L. c. 59, § 5, cl. 16.  The Assessors, however, argued that the Structures were properly taxable as real property to Hasco, because they were buildings located on Hasco's property as of the date of assessment, and they were not required to be affixed to the property to be taxable to Hasco.
Both parties introduced documentary evidence and testimony at the hearing of these appeals.  On the basis of this evidence, the Board made the following findings of fact.
	The forty-nine Structures were rectangular storage containers made of metal with wooden floors.  They varied somewhat in size, but most were approximately eight feet wide by forty feet long, and weighed between six and eight thousand pounds.  They had aluminum roofs, and some had patches of black rubber tacking to correct and prevent leaks.  They had no electricity, plumbing or other utilities.  The Structures had previously been used as shipping containers.  Shelter Shed had modified about half of the Structures by installing roll-up doors and interior plywood partitions that created up to eight individual storage units per Structure. 
The Structures were advertised as safe and secure storage locations.  Customers leased space inside the Structures for the storage of their personal belongings, such as furniture, pursuant to a "Month-to-Month Tenancy" agreement, which required an initial security deposit.  Storeco also offered optional insurance in order to protect their customers against loss or theft of their stored goods.  Paying customers could keep their goods stored in the Structures indefinitely, so long as they continued to pay according to their lease agreements, unless Storeco had to remove a Structure from the site.  Storeco had only removed one Structure from the site within the two years prior to the hearing of these appeals. 
	The Structures did not have foundations and were not permanently attached to the ground.  They were arranged in rows and elevated upon wood blocks, enabling them to be moved, if necessary, by trailer truck or forklift.  When a Structure was moved on occasion, it left a depression in the pavement.  
On this basis, the Board found that the forty-nine Structures constituted "real property" for purposes of G.L. c. 59, § 2A(a).  The fact that the Structures were portable and lacked foundations or physical attachment to the land was not a controlling factor, because the Board ruled that the degree of physical attachment to land does not conclusively determine whether property is taxable as "real property" under § 2A.  As durable edifices, complete with walls, floors and weather-proof roofs, leased to customers as shelters for the storage of property for as long as they continued to pay the "Month-to-Month Tenancy," the Structures were in the nature of real estate rather than personal property in both purpose and function.  Accordingly, the Board found that Hasco, as owner of the land upon which the Structures were located, was properly assessed a real estate tax on the value of those Structures pursuant to G. L. c. 59, § 2A.  The Board issued a decision for the appellee. 
  
OPINION
The issue to be resolved in these appeals is whether the forty-nine Structures were properly assessed to Hasco as "real estate" pursuant to G. L. c. 59, § 2A.   
 Section 2A(a) provides, in pertinent part, that "[r]eal 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 the law" (emphasis added).  The plain language of § 2A(a) does not require the Structures to be affixed to the subject property for them to be classified as taxable "real property."  The use of "or" provides an alternative:  the Structures could be "affixed" to the site, but they also could merely be "thereon." 
Hasco's observation, that the Structures were not erected on the site but were manufactured off site and then transported as prefabricated property, is not relevant to a classification as real property under the amended version of § 2A.  Under the prior version of this provision, § 3, "real estate" included land and "buildings and other things erected thereon or affixed thereto."  However, § 3 was repealed in 1978 and replaced in 1979 by § 2A.  See St. 1979, c. 797, § 11.  Under § 2A, the word "erected" was deleted, indicating a legislative intent to broaden the real property classification to include buildings and "other things" regardless of whether or where they were erected, so long as the buildings or "other things" are located on the land as of the relevant date of assessment.  
Even under the prior, more restricted version of § 2A, Massachusetts case law supports the conclusion that certain movable objects not affixed to property may nevertheless be taxable as real estate.  For example, the Supreme Judicial Court ruled that a movable lunch cart, standing on its own wheels, resting "up against" but not attached to the wall of an adjacent building, and which "may be removed at any time by the lessees" from its four cement pole abutments, was nonetheless properly classified as real property. Franklin v. Metcalfe, 307 Mass. 386, 389 (1940).  "The law is well settled that land and buildings erected thereon or affixed thereto are properly taxed as a unit and this rule is not affected by private agreements or by the degree of physical attachment to the land." Id.(emphasis added).  See also Ellis v. Board of Assessors of Acushnet, 358 Mass. 473  (1970) (mobile home properly classified as real property despite its mobility).
Equally unpersuasive is Hasco's argument that the Structures are owned by Storeco and were taxed to them as personal property under the corporate excise.  First, ownership of the Structures is not relevant to an inquiry under § 2A.  The Structures were properly assessed to Hasco as owner of the land upon which they were located.  See McGee v. Salem, 149 Mass. 238 (1889) (even if under separate ownership, buildings must be taxed to owner of land upon which they are located); Phinney v. Foster, 189 Mass. 182 (1905) (tax on land and buildings situated thereon is one and indivisible).  Second, Storeco's inclusion of the value of the Structures on its corporate excise return filed with the Department of Revenue is inapposite.  Classification of property as real estate for purposes of G. L. c. 59  "is not affected by private agreements" as to the ownership of property, nor by its treatment by that owner.  Franklin, 307 Mass. at 389.  See also Milligan v. Drury, 130 Mass. 428 (1881) (taxation unaffected by private contracts treating buildings as personal property between interested parties); Five Cent Savings Bank v. Assessors of Woburn, 2 Mass. B.T.A. 361, 364 (1936) (intention of parties to classify as personal property not controlling under "express language of the statute"). 
Under § 2A, "buildings" are properly taxable as real property.  In Hemenway v. Bartevian, 321 Mass. 226, 229 (1947), the Supreme Judicial Court defined a "building" as "an erection intended for use and occupation as a habitation or for some purpose of trade, manufacture, ornament or use, constituting a fabric or edifice, such as a house, a store, a church, a shed."  As rectangular eight-foot-by-forty-foot edifices with walls, floors and weather-proof roofs, weighing between six to eight thousand pounds and leased to customers as shelters for the storage of property, these Structures fit the Hemenway definition of "buildings."  The Supreme Judicial Court has found structures less durable and permanent in nature than these to be properly classified as buildings subject to the real estate tax.  Noyes v. Ambler, 296 Mass. 524 (1937) (barn, small store and outhouses "of cheap construction and in poor condition," secured merely by posts, without cellars); Milligan, 130 Mass. at 429 (wooden houses and stable erected "expressly for the purpose of removing the same," as "[n]o excavation of any sort was made in the earth, and nothing was driven into the earth, and the only foundations were the timbers" laid "on top of the ground").  
Moreover, while it is not controlling, the definition contained in G. L. c. 143, concerning the inspection and regulation of buildings, is informative as to the type of structure that is properly classified as a "building."  Section one of c. 143 defines "building" as "a combination of any materials, whether portable or fixed, having a roof, to form a structure for the shelter of persons, animals or property.  For the purpose of this definition 'roof' shall include an awning or any similar covering, whether or not permanent in nature."  This definition is consistent with real estate tax cases that have found certain structures, regardless of their lack of permanence or mobility, to be classified as real property.  Franklin, 307 Mass. at 389 (movable lunch cart properly assessed as real property); Ellis, 358 Mass. at 475 (mobile home "identical to any other conventional home which is classified as real estate"); Noyes, 296 Mass. at 527 (barn, store and outhouses "of cheap construction and in poor condition"); Milligan, 130 Mass. at 429 (wooden structures erected "on top of the ground" and "expressly for the purpose of removing the same").  
Based on the above, the Board finds that the Structures were "buildings" within the meaning of G.L. c. 59, § 2A, and, therefore, taxable as real estate.  Yet even if they were not found to be "buildings," the Structures  nonetheless would be taxable as real estate, because § 2A also encompasses "other things" upon land that can properly be classified as real property.  The Board found that these large, eight-foot-by-forty-foot storage Structures, weighing between six to eight thousand pounds and sealed with weather-proof aluminum roofs, were strongly akin, in purpose and in function, to long-established items of real property, such as outhouses and sheds, e.g., Noyes, 296 Mass. at 530, and were thus properly classified as real property.  The Board was justified in looking to the characteristics of the Structures in determining their tax classification under § 2A.  See Ellis, 358 Mass. at 475 (Board properly held mobile home to be taxable as real estate, where "in almost every practical respect concerning the design, architecture, size, accommodations, durability, permanence, character, and use, the structure looks like and serves the purpose of a conventional home . . .").
	

      Based on the foregoing, the Board ruled that the appellants were properly assessed a tax on the value of the Structures pursuant to G. L. c. 59, § 2A.  Accordingly, the Board issued a decision for the appellee in these appeals.




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




A true copy:



Attest: _____________________
	    Clerk of the Board
						


	

1


ATB 2000-189



ATB 2000 - 178