Adda Realty Trust v. Board of Assessors of the Town of Berlin (August 23, 2000)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



ADDA REALTY TRUST			v.	BOARD OF ASSESSORS OF 
							THE TOWN OF BERLIN

Docket No. F245651			 	Promulgated: 
							August 23, 2000
	

	This is an appeal under the formal procedure pursuant to G.L. c. 61, § 3 from the refusal of the appellee, Board of Assessors of the Town of Berlin, to abate a withdrawal penalty tax assessed against the appellant, under G.L. c. 61, § 7, for the ten-year period from fiscal year 1987 through and including fiscal year 1996.
	Chairman Burns heard the appeal and was joined in the decision for the appellant by then-Chairman Gurge and Commissioners Scharaffa, Lomans and Gorton. 
	These findings of fact and report are promulgated at the request of the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

	Jeffrey R. Gould, Esq., for the appellant.
Gary S. Brackett, Esq., for the appellee.

FINDINGS OF FACT AND REPORT
Based on an agreed statement of facts and the testimony and exhibits entered into evidence at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.
The appellant, ADDA Realty Trust, ("ADDA") is a Massachusetts trust established by Declaration of Trust dated January 21, 1986 and duly recorded at the Middlesex South District Registry of Deeds.
At all material times, ADDA owned seven contiguous parcels of land totaling approximately seventy-eight acres located at Gates Pond Road and Fosgate Road in the Town of Berlin.  ADDA's land was managed under a certified ten-year Forest Management Plan (the "first plan"), effective through December 31, 1996.  The first plan was approved by the State Forester and the Commonwealth of Massachusetts Department of Environmental Management ("DEM") and was recorded with the Town.  Pursuant to ADDA's filing of the first plan and the necessary applications for certification under Chapter 61, the appellee Board of Assessors of the Town of Berlin ("assessors") classified and taxed ADDA's land as forest land under Chapter 61 from at least fiscal year 1988 through fiscal year 1997.
On September 30, 1996, ADDA timely filed a written application with the assessors requesting that six of its seven parcels of land, consisting of 77.12 acres, be reclassified from forest land under Chapter 61 to agricultural/horticultural land under G.L. c. 61A ("61A application"), effective for fiscal year 1997.  The assessors voted to allow ADDA's 61A application more than a year later, on December 2, 1997.
On November 20, 1996, ADDA Realty filed a new forest management plan with DEM and the assessors ("new forest management plan.")  The new forest management plan designated three parcels, consisting of 34.80 of the 77.12 acres, to be used primarily for raising forest products under a planned program certified by the State Forester and DEM.  ADDA sought to reclassify the land to agricultural/horticultural land, so that its land could be used to graze horses and cattle, in addition to raising forest products. 
On May 9, 1997, the State Forester and DEM certified that the 34.80 acres of land was being managed under an approved forest management plan, effective immediately upon 

expiration of the first forest management plan, from January 1, 1997 through December 31, 2006.
On July 24, 1997, the assessors sent ADDA a bill for a withdrawal penalty tax in the amount of $155,047.63.  The assessors calculated the withdrawal penalty tax by: 1) determining the amount of tax which would have been due over the prior ten-year period if the land had been taxed under Chapter 59; 2) subtracting the tax which was actually paid over the ten-year period under Chapter 61; 3) adding interest on the difference.  On August 21, 1997, ADDA Realty timely paid the withdrawal penalty tax shown as due on the July 24, 1997 bill.
On September 2, 1997, ADDA timely filed an application to abate the withdrawal penalty tax with the assessors seeking an abatement of $154,455.66. On September 9, 1997, the assessors denied the application and sent ADDA written notice of the denial dated September 18, 1997.  ADDA timely appealed the assessors' denial to the Board on October 28, 1997.  On the basis of the foregoing, the Board determined that it had jurisdiction to hear and decide this appeal.
Prior to the hearing of this appeal, the assessors determined that they had mistakenly included eleven, rather than ten, years of tax and interest in the withdrawal penalty tax bill.  Accordingly, the assessors refunded the amount of $13,862.96, leaving a total withdrawal penalty tax at issue in this appeal of $140,592.70.
The Board found that at all material times, the subject land was continuously certified by DEM and the State Forester as being managed under an approved forest management plan.  The first ten year plan, pursuant to which the assessors classified the land under Chapter 61, was effective through December 31, 1996.  The second plan, under which ADDA would continue to raise forest products on some of the land and graze horses and cattle on other parts, was approved by the DEM and the State Forester and was effective from January 1, 1997 through December 31, 2006.  Accordingly, at all times during the ten years preceding the reclassification of the land from Chapter 61 forest land to Chapter 61A agricultural/horticultural land, and at all material times thereafter, the land was certified by the appropriate officials as being managed under an approved forest management plan.
On the basis of the foregoing, and for the reasons detailed in the following Opinion, the Board ruled that ADDA did not "withdraw" or "remove" its land from classification for purposes of G.L. c. 61, § 7 and therefore no withdrawal penalty tax was due.  Accordingly, the Board issued a decision for ADDA and granted an abatement in the amount of $140,592.70

OPINION
The present appeal raises two issues: 1) whether the Board has jurisdiction over appeals of withdrawal penalty taxes; and 2) whether a withdrawal penalty tax was due in the circumstances of this appeal.  

I.	JURISDICTION
G.L. c. 61, § 7 provides in pertinent part:
When the owner of classified land withdraws such land or any part thereof from classification, or upon a final determination that said land should be withdrawn from classification, he shall pay to the city or town a withdrawal penalty tax equal to the difference between the amount of taxes which would have been paid under chapter fifty-nine and the sum of the products tax established by section three of this chapter and the land taxes paid from the last prior certification under the provisions of this chapter, or from the immediately preceding five years, whichever period is longer.  There shall be added to the tax due, under this chapter, for each taxable year, an amount of interest determined at the rate as is established under section thirty-two of chapter sixty-two C.

	Section 7 contains no explicit grant of jurisdiction to the Board.  For that matter, § 7 grants no jurisdiction to the assessors or any other entity to review withdrawal penalty tax assessments.  Accordingly, unless § 7 can be interpreted to provide for a review of withdrawal penalty tax assessments, or another statutory grant of jurisdiction exists, a taxpayer assessed a withdrawal penalty tax under § 7 would have no recourse to challenge the assessment.  Such a result might well deprive the taxpayer of its right to due process guaranteed under both the federal and state constitutions.  Cf. Lincoln Hotel Co. v. Assessors of Boston, 317 Mass 505 (1945)(conditioning Board's review of tax assessments on taxpayer's timely payment of tax not sufficient deprivation of remedy to violate constitutional rights); Old Colony R. Co. v. Assessors of Boston, 309 Mass. 439 (1941).
	Two sections of Chapter 61 provide for an appeal to the Board, although neither section explicitly addresses the appeal of a withdrawal penalty tax.  The first, G.L. c. 61, § 2 provides that if the assessors determine that land classified as forest land under Chapter 61 is no longer being "managed under a program, or is being used for purposes incompatible with forest production, or does not otherwise qualify under this chapter," the assessors may appeal to the State Forester requesting removal of the land from classification.  The State Forester then initiates a proceeding to remove the land, with notice to the land owner, with a right of appeal to a regional panel composed of members nominated by the interested parties and then a further right of appeal either to the Appellate Tax Board or the Superior Court.
	Section 2, however, contemplates a procedure initiated by an appeal of the assessors to the State Forester.  No such appeal was made here.  Rather, either the assessors "removed" the land from Chapter 61 classification without resort to the procedures outlined in § 2 or ADDA voluntarily "removed" the land when they took some action inconsistent with classification under Chapter 61, such as applying for Chapter 61A classification.
	ADDA argues that it never removed the land from classification because at all times the land was being managed under an approved forest management plan.  Indeed, the criteria in § 2 allowing for the assessors to remove land from Chapter 61 classification center on the issue of land management under an approved program.  Accordingly, because the land has been continuously managed pursuant to a certified forest management plan, the only actions by which ADDA could be said to have voluntarily removed the land from classification would be either its application for certification under Chapter 61A or its grazing of cattle and horses on part of the land.
	The difficulty in finding jurisdiction under § 2 over a withdrawal penalty tax assessment, regardless of who removed the land from classification, is that none of the contemplated preliminary appeals have been taken.  The assessors have not appealed to the State Forester for removal, there has been no review and decision by the State Forester and no review and decision by the regional panel from which to appeal to this Board.  Moreover, the appeal under § 2 appears to be limited to the question of whether the assessors' removal of the land from classification was proper.  Although a withdrawal from classification is a prerequisite to the imposition of a withdrawal penalty tax, the § 2 procedures appear to be limited to the issue of removal and not to the subsequent withdrawal penalty tax.  In fact, the language of § 7, under which the land owner becomes liable for the withdrawal penalty tax "upon a final determination that the land should be withdrawn from classification" suggests that the tax is imposed only after the § 2 appeal process is completed.
	A second grant of jurisdiction in Chapter 61 is found at G.L. c. 61, § 3, which provides for the imposition of the annual tax for property classified under Chapter 61.  The annual tax is composed of two components: a products tax equal to eight percent of the stumpage value of forest products cut during the year and a land tax based on five percent of the fair cash value of the land.  The tax imposed under § 3 is committed to the town's tax collector for collection in the same manner as taxes assessed under the normal property tax provisions of Chapter 59 and late payments are subject to interest under G.L. c. 59, § 57.  
	Section 3 goes on to provide that:
Any person aggrieved by the assessment of a tax under this section may within sixty days of the date of notice of the tax apply in writing to the assessors upon a form approved by the commissioner of revenue for abatement thereof . . . Any person aggrieved by the refusal of the assessors to so abate a tax in whole or in part or by their failure to act upon such application may appeal to the appellate tax board within thirty days after the date of notice of decision of the assessors or within three months of the date of the application for abatement, whichever is later.


	The denial notice by which the assessors informed ADDA of their decision to deny the application for abatement of the withdrawal penalty tax also advised ADDA that it could appeal their decision to the Board.  In the notice, the assessors track the language of § 3 concerning the time frame within which an appeal to the Board must be filed.  Although neither the actions of the assessors nor the good faith of ADDA can confer jurisdiction on the Board where none exists (see Assessors of Boston v. Suffolk Law School, 295 Mass. 489 (1936)), the assessors' notification to ADDA that the assessment could be appealed to the Board within the time frame provided in § 3 indicates that the assessors, who, like the Board, are charged with the administration of this statute, interpreted § 3 as conferring jurisdiction on the Board.  See General Dynamics v. Assessors of Quincy, 388 Mass. 24, 41 (language used by assessors on tax bill presumed not to have been for purpose of misleading taxpayer); Henry Perkins Co. v. Assessors of Bridgewater, 377 Mass. 117, 121 (as agency charged with administration of statute, Appellate Tax Board's interpretation entitled to weight).
	Another possible grant of jurisdiction to the Board for withdrawal penalty tax appeals is G.L. c. 59, § 64 which provides that a person aggrieved by the refusal of assessors to abate "a tax on a parcel of real estate" may appeal to the Board.  There is some logic in finding a grant of jurisdiction in § 64 since the withdrawal penalty tax is calculated based on what the tax under Chapter 59 would have been had the property not been classified and taxed under Chapter 61.  However, the Appeals Court has held in a case involving an appeal of the annual tax under G.L. c. 61, § 3, that the jurisdictional provisions contained in Chapter 61 supercede those of Chapter 59 for appeals involving taxes assessed under Chapter 61. See W.D. Cowls, Inc. v. Board of Assessors of Shutesbury, 34 Mass. App. Ct. 944 (1993).  The implication of the Cowls decision is that taxes assessed under Chapter 61 must be challenged pursuant to the procedures outlined in Chapter 61 and not the general real estate tax abatement procedures of Chapter 59.
In determining whether and from what source the Board has jurisdiction over a withdrawal penalty tax appeal "[t]he statutes bearing on the subject matter before us should be read as a whole and 'ought, if possible, to be so construed as to make . . . [them] . . . effectual piece[s] of legislation in harmony with common sense and sound reason." Eastern Racing Association v. Assessors of Revere, 300 Mass. 578, 581 (1938) quoting Morrison v. Selectman of Weymouth, 279 Mass. 486, 492 (1932).  Reading Chapter 61 as a whole, the Board ruled that it had jurisdiction over appeals of withdrawal penalty tax.  The Board has jurisdiction over the taxes which enter into the calculation of the withdrawal penalty, the annual Chapter 61 tax under G.L. c. 61, § 3 and the tax under Chapter 59, and also has jurisdiction over appeals regarding whether land has been properly removed from classification.  It would be anomalous for the Legislature to have intentionally exempted withdrawal penalty taxes from the Board's jurisdiction where the other taxes assessed and determinations made under Chapter 61 are within the Board's jurisdiction, particularly where no other review by any other entity is explicitly provided for in Chapter 61.  The Board presumes that the Legislature intended that landowners have some redress for withdrawal penalty taxes particularly since, as is evidenced in this appeal, the amount at issue can be substantial.  Reading Chapter 61 as a whole, the Board ruled that the Legislature intended to grant it jurisdiction over appeals of withdrawal penalty taxes.  See also Eastern Racing Association v. Assessors of Revere, 300 Mass. 578, 581-582 (1938) ("In creating what is now the Appellate Tax Board, it was the clear intention of the Legislature to establish a comprehensive system whereby all appeals from actions of taxing authorities of the Commonwealth and its municipalities should be heard and determined by that board.") 
In reviewing the provisions of Chapter 61, the Board ruled that it has jurisdiction over withdrawal penalty tax appeals under § 3 which provides that "[a]ny person aggrieved by the refusal of the assessors to so abate a tax in whole or in part . . . may appeal to the appellate tax board."  Although a narrow reading of the phrase "to so abate a tax" would indicate that the tax in question is the annual Chapter 61 tax assessed under §3, the Board reads that phrase to include a withdrawal penalty tax under § 7 as well.  Such a reading is consistent with the Legislature's intent to confer jurisdiction to the Board of withdrawal penalty tax assessments.

II.	ADDA'S LIABILITY FOR WITHDRAWAL PENALTY TAX
Having determined that it has jurisdiction over this appeal, the Board turns to the issue of whether a withdrawal penalty tax was due.  The event triggering the imposition of the disputed tax was apparently ADDA's application under Chapter 61A by which it notified the assessors that it intended to graze cattle and horses in addition to raising forest products.  A review of the procedures and criteria established in Chapters 61 and 61A reveals that the use of land classified under those chapters, and their treatment by DEM and the State Forester, are substantially similar.
G.L. c. 61A, § 1 includes in the definition of "agricultural use" the raising of animals including cattle and horses.  In addition, G.L. c. 61A, § 2 includes in the definition of "horticultural use" land that is "primarily and directly used in raising forest products under a program certified by the State Forester to be a planned program to improve the quantity and quality of a continuous crop for the purpose of selling such products in the regular course of business."
Accordingly, under both Chapter 61 and Chapter 61A, a forest management plan certified by the State Forester is required.  Neither the State Forester nor DEM distinguishes between land classified under Chapter 61 and land classified under Chapter 61A.  The regulations governing certification under both chapters provide:
Certification means approval of a forest management plan by the State Forester and whenever used or defined shall include any subsequent certification or "recertification.

Classification means the tax status attaching by operation of law to all land qualifying under 304 CMR 8.00, which qualification is duly certified by the State Forester.

See 304 CMR 8.02 (as amended through Register No. 807 Supp. # 1, effective December 27, 1996).  No separate mention of certification under the individual classification statutes is mentioned.
	In addition, the certification issued by the State Forester on the DEM approved certificate also makes no distinction between the two chapters when it provides as follows:
The [DEM] . . . acting by and through its State Forester pursuant to the authority of Chapter 61/Chapter 61A of the General Laws hereby certifies that the described land is being managed under a planned program to improve the quantity and quality of a continuous forest crop.  This certifies that the above listed acres of forestland, owned by the above, is being managed under an approved Forest Management Plan.


The legislative purpose in enacting Chapters 61 and 61A is clearly to encourage the preservation of land for agricultural and horticultural uses including raising forest products.  To achieve this intent, the Legislature primarily relied on two means: 1) property tax incentives if the land was certified and classified as being used for the desired purposes; and 2) disincentives by way of penalties, conveyance and rollback taxes, to discourage a change in use of the land, particularly development of the land.  
Assessing a withdrawal penalty in the circumstances of this appeal would be contrary to this intent.  First, there appears to be little or no change in use of the subject property.  The land is still certified by the State Forester and the DEM as being managed under an approved forest plan.  The only change appears to be that some of the land is used for grazing cattle and horses, an agricultural use consistent with classification under Chapter 61A.  Accordingly, the land has gone from one tax-favored classification to another, with the land still being managed and used pursuant to an approved forest plan.  
Second, by assessing ADDA a withdrawal penalty tax, the assessors have treated the "conversion" of part of the land to another tax-favored use as if the land were being cleared for a subdivision or some other use consistent with development.  In fact, a prudent landowner faced with the prospect of a withdrawal penalty tax of over $140,000 in these circumstances would be forced to convert the land to a development or other commercial use in order to pay the tax.  Such a result is contrary to the clear legislative intent of Chapters 61 and 61A.
Accordingly, the Board ruled that the subject land was not "withdrawn" from classification for purposes of G.L. c. 61, § 7.  Accordingly, the Board issued a decision for the appellant and granted an abatement in the amount of $140,592.70. 

						APPELLATE TAX BOARD
				
					By:							
						Abigail A. Burns, Chairman




A true copy,
Attest: 					
	   Clerk of the Board

 ADDA voluntarily withdrew the seventh parcel of land from forest land classification.
 The discrepancy between the amount paid by ADDA and the amount of the abatement it sought is due to the voluntary withdrawal of one parcel resulting in a withdrawal penalty tax of $591.97 which ADDA does not challenge. 
 Although § 2 speaks of "removal" from classification, the withdrawal penalty tax under § 7 is based on a "withdrawal" from classification, either voluntarily by the land owner or after a "final determination" that the land should be "withdrawn from classification."  There appears to be no significance to the change in terminology and, therefore, the Board concludes that "removal" and "withdrawal" have the same meaning in Chapter 61.

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